Standard Metals Processing, Inc. - FORM 10-K

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EXCEL - IDEA: XBRL DOCUMENT - Standard Metals Processing, Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Standard Metals Processing, Inc.	v404838_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - Standard Metals Processing, Inc.	v404838_ex31-1.htm
EX-23.1 - EXHIBIT 23.1 - Standard Metals Processing, Inc.	v404838_ex23-1.htm
EX-32.2 - EXHIBIT 32.2 - Standard Metals Processing, Inc.	v404838_ex32-2.htm
EX-31.2 - EXHIBIT 31.2 - Standard Metals Processing, Inc.	v404838_ex31-2.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Year Ended December 31, 2014

Commission File Number: 000-14319

STANDARD METALS PROCESSING, INC.

(Exact Name of Small Business Issuer as Specified in its Charter)

(Former Company Name)

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

611 Walnut Street, Gadsden, Alabama 35901

(Address of Principal Executive Offices)

Issuer’s telephone number including area code: (888) 960-7347

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, $0.001 PAR VALUE

Title of Class

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x .

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No x

The Registrant’s revenues for its most recent fiscal year: None.

As of March 27, 2015, the Registrant’s non-affiliates owned shares of its common stock having an aggregate market value of approximately $69,340,936 (based upon the closing sales price of the Registrant’s common stock on that date on the OTCQB).

On March 27, 2015 there were 103,760,936 shares of common stock issued and outstanding, which is the Registrant’s only class of voting stock.

Documents Incorporated by Reference: None.

STANDARD METALS PROCESSING, INC.

Annual Report on Form 10-K

For the Year Ended December 31, 2014

Table of Contents

		Page
PART I
Item 1.	Description of Business	3
Item 1A.	Risk Factors	8
Item 2.	Description of Properties	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	13

PART II
Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 8.	Consolidated Financial Statements and Supplementary Data	20
Item 9.	Changes and Disagreements with Accountants on Accounting and Financial Disclosure	21
Item 9A.	Controls and Procedures	21
Item 9B.	Other Information	22

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	22
Item 11.	Executive Compensation	24
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	27
Item 13.	Certain Relationships, Related Transactions and Director Independence	29
Item 14.	Principal Accountant Fees and Services	29
Item 15.	Exhibits and Financial Statement Schedules	30

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains both historical statements and statements that are forward-looking in nature. Historical statements are based on events that have already happened. Certain of these historical events provide some basis to our management, with which assumptions are made relating to events that are reasonably expected to happen in the future. Management also relies on information and assumptions provided by certain third party operators of our projects as well as assumptions made with the information currently available to predict future events. These future event predictions, or forward-looking statements, include (but are not limited to) statements related to the uncertainty of the quantity or quality of ore or tailings grades, the fluctuations in the market price of such reserves, as well as gold, silver and other precious minerals, general trends in our operations or financial results, plans, expectations, estimates and beliefs. You can identify forward-looking statements by terminology such as “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “continue,” “expect,” “intend,” “plan,” “predict,” “potential” and similar expressions and their variants. These forward-looking statements reflect our judgment as of the date of this Annual Report with respect to future events, the outcome of which is subject to risks, which may have a significant impact on our business, operating results and/or financial condition. 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. We undertake no obligation to update forward-looking statements. The risks identified in Item 1A, among others, may impact forward-looking statements contained in this Annual Report.

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS OVERVIEW

Standard Metals Processing, Inc. (“we,” “us,” “our,” “Standard Metals” or the “Company”) is an exploration stage company having offices in Gadsden, Alabama, New York, New York and through its subsidiary, a property in Tonopah, Nevada. Our business plan is to purchase equipment and build a facility on our Tonopah property to serve as a permitted custom processing toll milling facility (which includes an analytical lab, pyrometallugircal plant, and hydrometallurgical recovery plant).

The Company will 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.

We 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.

Any reference herein to “Standard Metals,” “the Company,” “we,” “our,” or “us” is intended to mean Standard Metals Processing, Inc. a Nevada corporation, and all of our subsidiaries unless otherwise indicated.

Corporate History

The Company was incorporated in the State of Colorado on July 10, 1985 as Princeton Acquisitions, Inc. On December 7, 2009, the Company changed its name to Standard Gold, Inc. Effective March 5, 2013, the Company moved its domicile from Colorado to Nevada and changed its name from Standard Gold, Inc. to Standard Gold Holdings. Inc. We determined that, due to a lack of connection to Colorado, it was in the best interest of the Company to move its domicile to Nevada. Effective December 6, 2013, the Company changed its name to Standard Metals Processing, Inc. to more accurately reflect the business of the Company.

On September 29, 2009, we completed a share exchange agreement with Hunter Bates Mining Corporation, a Minnesota corporation (“Hunter Bates”) and certain of its shareholders, in which Hunter Bates’ shareholders exchanged all of their capital securities into similar capital securities of ours (the “Hunter Bates Share Exchange”) and we adopted the business model of Hunter Bates of mineral exploration and mining. Accordingly, the Hunter Bates Share Exchange represented a change in control and Hunter Bates became our wholly owned subsidiary.

Prior to September 29, 2009, Wits Basin Precious Minerals, Inc., a Minnesota corporation and public reporting company quoted on the Pink Sheets under the symbol “WITM” (“Wits Basin”) was the majority shareholder of Hunter Bates. Hunter Bates was formed in April 2008 to acquire the prior producing gold mine properties (consisting of land, buildings, equipment, mining claims and permits) located in Central City, Colorado, known as the “Bates-Hunter Mine.” On April 29, 2011 we transferred our entire interest and related debt of the Bates-Hunter Mine, to Wits Basin in exchange for the cancellation of a promissory note issued by Hunter Bates payable in favor of Wits Basin in the approximate amount of $2.5 million.

On December 10, 2012, the Company filed two Statements of Correction with the state of Colorado correcting the Second Amended and Restated Articles that had been incorrectly amended in part on March 15, 2011 and in full on March 25, 2011. After the correct Articles of Incorporation were reinstated by the Statements of Correction, the Company filed Articles of Amendment with the state of Colorado on January 4, 2013 to correct and define the Series A Preferred Stock once all board approval and documentation were complete. The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon achievement of a market value of our equity equaling $200,000,000 or more. Additional details regarding the Series A Preferred Stock can be found in our Articles of Amendment, which were filed with the Colorado Secretary of State on January 4, 2013 and in the Form 8-K filed with the Commission on March 13, 2013.

Series B Preferred Stock

The Company designated 2,500,000 shares of Series B Preferred shares effective November 4, 2013. As of the date of this filing, no shares of our Series B Preferred Stock are issued and outstanding. Shares of our Series B Preferred Stock are entitled to receive, when and as declared by our Board of Directors, dividends at a rate of 8% per share annually, payable on October 1 of each year. Such dividends shall be cumulative and shall accrue, whether or not earned or declared, from and after the date of issuance of the Series B Preferred Stock, whichever is later. Each share of Series B Preferred Stock shall be convertible, at any time and at the option of the holder, into ten shares of common stock (the “Stock Conversion Rate”). The Stock Conversion Rate is subject to certain adjustments for stock-splits, combinations, reclassifications, exchanges, substitutions, reorganizations, mergers and/or consolidations.

Upon any liquidation, dissolution, or winding up of the Company, before any payment of cash or distribution of other property shall be made to the holders of common stock or any other class or series of stock subordinate in liquidation preference to the Company’s preferred stock, the assets of the Company shall be distributed as follows: first, the holders of the Series A Preferred Stock shall be entitled to the preferences detailed in the Certificate of Designation of Series A Preferred Stock; second, the holders of the Series B Preferred Stock shall be entitled to receive, pro rata according to the stated value of their shares, out of the assets of the Company legally available for distribution to its shareholders, the greater of: (i) the stated value per share or (ii) the amount such holder of Series B Preferred Stock would be entitled to receive if the shares of Series B Preferred Stock were converted into Common Stock at the Stock Conversion Rate.

Shares of Series B Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series B Preferred Stock shall be entitled to one vote.

Additional details regarding the Series B Preferred Stock can be found in our Articles of Amendment, which are on file with the Nevada Secretary of State.

TOLL MILLING AND THE SHEA EXCHANGE AGREEMENT

On March 15, 2011, in an effort to enter the precious metal toll milling business, we entered into an exchange agreement by and between us, Shea Mining, Afignis, LLC, Leslie Lucas Partners, LLC, Wits Basin and Alfred A. Rapetti (the “Shea Exchange Agreement”) whereby we acquired certain assets from Shea Mining, which assets include those located in Tonopah, Nevada (financed through a note payable assigned to us), mine dumps, a property lease and a contract agreement in exchange for 35,000,000 shares of our unregistered shares (an ownership interest of approximately 87% of our then currently outstanding common stock - approximately 56% ownership interest on a fully diluted basis). The Shea Exchange Agreement did not include any operable toll milling equipment, employees or operational processes and therefore has been accounted for as a purchase of a group of assets. Simultaneous with these transactions, pursuant to the Shea Exchange Agreement, Wits Basin exchanged 19,713,544 shares of our common stock it held for 10 million shares of Series A Preferred Stock.

Pursuant to the assignment of a note payable, we executed an Assignment and Assumption of Loan Documents and Loan Modification Agreement, by and between us, Shea Mining and NJB Mining, Inc. (the “Loan Modification Agreement”), dated March 15, 2011, for those assets located in Tonopah, Nevada (“Tonopah”), consisting of land, buildings, mine tailings, a dormant milling facility, abandoned milling equipment and water permits. The land encompasses 1,183 deeded acres, one of the largest private land holdings in Esmeralda County, Nevada. Approximately 334 acres of this land has an estimated 2.2 million tons of tailings known as the Millers Tailings from the historic gold rush of Goldfield and Tonopah, Nevada sitting on it.

The Tonopah property was subject to an existing $2.5 million first deed of trust, which was in default at the time of the Shea Exchange Agreement and included accrued interest of $375,645, which was also assumed in the transaction. As part of the assignment, NJB Mining, Inc. (“NJB”) modified the related note to allow us until May 14, 2011 to refinance this mortgage, which was subsequently extended numerous times. On July 7, 2011, we issued 555,556 shares of our unregistered common stock to NJB as a partial principal payment of $500,000 (valued at $0.90 per share). On August 31, 2011, we were still in default under the terms of the Loan Modification Agreement, and therefore entered into a forbearance agreement with NJB, (the “NJB Forbearance Agreement”), in which we agreed to issue an additional 200,000 shares of common stock valued at $180,000 and pay interest aggregating $52,952 prior to October 1, 2011. In exchange, NJB agreed to forbear from initiating legal proceedings, including forbearance of the deed of trust and enforcement of its collection remedies. The NJB Forbearance Agreement further provided for additional extensions up through December 9, 2011; subject to the issuance of additional 1,500,000 shares of common stock, $141,497 payments of additional accrued interest amounts and subject to the issuance of additional 5,000,000 shares of common stock upon default. On December 9, 2011, Pure Path Capital Management Company, LLC (“Pure Path”) purchased the Loan Modification Agreement and the NJB Forbearance Agreement directly from NJB. On December 21, 2011, we entered into an amended and restated forbearance agreement with Pure Path (the “A&R Forbearance”). In connection with the assignment of the Forbearance Agreement, the Parties executed an Agreement in Principle setting forth terms of the Forbearance Agreement (collectively the “Pure Path Agreements”). Pure Path provided an additional extension to stay any action of the A&R Forbearance until June 8, 2012; such extension was provided without additional consideration. If by June 8, 2012, the balance was not paid or another agreement executed, the Company would be required to issue 5,000,000 shares to Pure Path. The Company did not pay the balance of the mortgage on June 8, 2012 and pursuant to the terms of the A&R Forbearance Agreement, the Company was required to issue 5,000,000 shares to Pure Path. The 5,000,000 shares were approved for issuance by the Board of Directors on October 9, 2012 and were issued to Pure Path on December 6, 2012. After multiple extensions to stay any action of the Forbearance Agreement without consideration, the Company entered into a Settlement and Release Agreement (the “Agreement”) with Pure Path. On October 10, 2013. Pursuant to the Agreement, Pure Path relinquished its right to receive participation payments on a quarterly basis for seven years after the final closing at a rate of 5% of adjusted gross revenue as such terms are defined in the Pure Path Agreements, past and future consulting fees for approximately $1,150,000, collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust, registration rights, rights of first refusal, tag along rights, preemptive rights, exclusive worldwide rights pertaining to financing and joint ventures, and other negative covenants regarding approval of corporate actions. Pure Path also agreed to forbear 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 and relinquishment of rights by Pure Path, in exchange for the foregoing, the Company issued 27,000,000 restricted shares and a Promissory Note in the amount of $1,933,345 bearing interest of 8% per year for the current balance of the amounts owed under the Pure Path Agreements.

In connection with the Shea Exchange Agreement, we also were assigned the ownership of approximately 100,000 tons of tailings spread out over a six square mile section of mine dump material in Manhattan, Nevada (“Manhattan”).

The other assets we acquired consisted of a property lease, which allowed us the use of an assay lab property and the associated water permits, (with a right to purchase for $6 million) and a contract agreement, which allowed us the use of processing permits, located in Amargosa Valley, Nevada (“Amargosa”). We were required to pay a monthly base rent of $17,500 on this lease and $5,000 on the contract agreement. In January 2012, the landlord of the Amargosa lease caused to have served a Five Day Notice To Pay Rent Or Quit due to default in the monthly lease payments. The Company began immediate communications with the landlord, which resulted in a delay of further actions by the landlord to pursue any remedies. Then on February 9, 2012, the landlord caused to have served an Order For Summary Eviction (“Eviction”) due to continued default in lease payments. Effective with the Eviction, a total of $87,500 in lease payments remain unpaid as well as $23,000 in contract payments and $10,500 in late fees required pursuant to the terms of the lease. On February 10, 2012, the Beatty County Sheriff completed the Eviction at Amargosa and we as such, no longer have access to the assay lab or permits at Amargosa.

Additionally, we obtained the right to transfer our entire interest and related debt of the Bates-Hunter Mine, at any time prior to June 13, 2011, to Wits Basin in exchange for the cancellation of a promissory note issued by Hunter Bates payable in favor of Wits Basin in the approximate amount of $2.5 million. On April 29, 2011, our Board of Directors approved this transfer back to Wits Basin due to the following: (1) the amount of liabilities directly attached to the Bates-Hunter Mine, (2) the prior failed attempts to drain the single mine shaft, (3) the metallurgical results of the approximately 12,000 feet drilling program, (4) its location at approximately 9,000 feet in elevation and (5) the estimated capital required to simply begin sampling below ground. The Company filed a Form 8-K with the Commission on May 5, 2011, regarding the transfer.

Furthermore, Wits Basin had entered into certain commitments which involved shares of our common stock and as a result of their exchange of substantially all of the Company’s common stock they held for Series A Preferred, they could no longer honor those commitments. In consideration of Wits Basin agreeing to the exchange, the Company agreed to enter into two stock option agreements as follows: (1) the Company granted to one of Wits Basin’s major lenders a replacement stock option, on substantially the same terms as the stock option issued by Wits Basin, to purchase 1,299,000 shares of the Company’s common stock at an exercise price of $1.00 per share expiring on December 14, 2014 and (2) the Company granted to Wits Basin a replacement stock option, expiring on December 19, 2014, to purchase up to 630,000 shares of the Company’s common stock, at an exercise price of $0.50 per share.

SUBSIDIARIES

The Company has two wholly owned subsidiaries, Tonopah Milling and Metals Group, Inc. (“TMMG”), a Nevada corporation, incorporated on January 7, 2013 and Standard Renewable Energy, Inc., a Nevada corporation, incorporated on November 21, 2013. TMMG has three wholly owned subsidiaries, Tonopah Resources, Inc., a Nevada corporation, incorporated on January 10, 2013, Tonopah Custom Processing, Inc., a Nevada corporation, incorporated on January 10, 2013, and Standard Metals Acquisitions, Inc., a Nevada corporation, incorporated on January 6, 2014.

Water Pollution Control Permit with the Nevada Department of Environmental Protection

Through the Company’s wholly owned subsidiary, Tonopah Custom Processing, Inc. (“TCP”), it filed a Water Pollution Control Permit (“WPCP”) Application 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. We are still in the technical review stage of our WPCP. While the Company awaits approval, we are preparing for construction of our processing facility which includes working with contractors that will be building the new 21,875 square foot processing plant, cleaning and preparing the property, and refurbishing a trailer that will act as our construction office.

In 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. We hired Allstate-Nevada Environmental Management, Inc., as our CEM to assist us with obtaining an NDEP WPCP and to help us fulfill all the requirements of NDEP including the Meteoric Profile II analysis, as well as advise on the overall site cleanup and assisting with any other NDEP requirements.

Survey

In March 2013, Advanced Surveying & Professional Services, as our 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 1,183 acres. The scope of work our 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 AutoCad software.

Equipment, Facility and Site Preparation

The Company received leased heavy equipment on August 1, 2013, which was used to begin cleanup of the site to prepare it for the new construction. We ordered a pre-fabricated building on November 4, 2013 and took delivery of the building on March 21, 2014.

The Company accepted delivery of additional large heavy equipment on April 1, 2014. We 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 the preparation of the new 21,875 square foot processing plant. With the additional large heavy equipment onsite, we have completed the removal of all the extra and unnecessary materials and old equipment that have accumulated on the land.

In April 2014 we purchased a complete Concrete Batch Plant, including four cement trucks, to reduce the overall cost of construction activities on site. This purchase is estimated to reduce the overall cost of construction by at least $500,000. In August 2014 we purchased an extensive array of heavy-duty construction and milling equipment for use in the construction and operation of the Tonopah facility. The recently acquired heavy equipment allows us to move forward with construction of the processing plant and tailings ponds using our own equipment, saving the cost of expensive lease payments. The heavy equipment includes the necessary machinery for construction including dozers, loaders, water trucks and heavy transport tractors as well as equipment required for production including crushers, screening plants, and conveyors.

PRODUCTS AND SERVICES

The Company’s business plan 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.

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, Standard Metals is in a unique position among processing facilities because it is 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.

Currently, the Company is waiting for the approval of pending applications for the permits required for us to commence construction of our facilities to conduct permitted custom processing toll milling operations.

TOLL MILLING

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 minerals in the gold, silver and platinum metal groups. Custom milling and refining that are designed specifically for each ore load can include many different processes to maximize the extraction of precious metals from ore, carbon or concentrates.

Procedure

Ore is sent to our facility at the responsibility and cost of the customer. The Company will take a sample of the ore through a specific ore sampling procedure. The Company’s metallurgist will test the sample on site. To obtain a quantitative determination of the amount of a given substance in a particular sample, the Company can perform wet methods and dry methods. In the wet method, the sample is dissolved in a reagent, like acid, until the purified metal is separated out. In the dry method, the sample is mixed with a flux (a substance such as borax or silica that helps lower the melting temperature) and then heated so that the impurities in the metal fuse with the flux, leaving the purified metal as residue.

If it is determined that the sample is approved for processing, the customer and the Company will then agree upon a value of the metal grade per ton. If there is any disagreement on the value, a third party referee determines the value by testing the sample. The Company charges either a flat fee per ton of the ore processed or a percentage of the precious metals extracted during processing, or a combination of both based on the amount of work that is performed.

There are various methods of extraction. The Company determines which method to use based upon the sample sent to the Company. In most situations, a series of tests will be performed on a bulk sample ranging in size from 250 to 1,000 pounds. A metallurgist will determine the best process or processes to use for the extraction based on several factors. These include the composition of the host rock, mineralization of the host rock, whether or not it is an oxide or sulphide ore body, and the particle size of the precious metal. After the metallurgist reviews these characteristics, the Company will run ore on a gold table and assays the concentrates, middlings, and tails. An assay is an investigative procedure for qualitatively assessing or quantitatively measuring the presence or amount of precious metals in ore. If there is too much gold in the middling or tails, the size of the grind is adjusted to increase yield or if there is not enough gold in the middlings or tails the Company grinds the material to a coarser mesh.

Some of our miner 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.

Concentrate/Leach Circuit

Concentration is the separation of precious minerals from other materials by utilizing different properties of the minerals to be separated including density, magnetic or electric and physiochemical. The Company will attempt to create a “concentrate” of minerals to reduce the size of each ton processed. The Company may also receive concentrates from customers, especially those where transport of tons of raw ore is not feasible.

The leaching process uses chemicals to extract the metals from the solid materials (concentrates) and bring them into a solution. Once the metals are in the solution, it is passed through carbon or resin columns where the precious metals are deposited onto the carbon/resin.

The metals will then be stripped from the carbon back into a different solution where they are pumped through an electrowinning circuit in a process called carbon stripping. The metals are then deposited onto stainless steel in the electrowinning circuit. After this stage, the metals are either sold or further refined off-site. The solution is recycled and used again to process additional material.

EMPLOYEES

As of December 31, 2014, we did not have any employees. The Company’s and its subsidiaries’ officers, directors and independent contractors conduct all operations.

FINANCIAL INFORMATION IN INDUSTRY SEGMENTS

During the years ended December 31, 2014 and 2013, our operations included one reportable segment: that of the development of the related services of custom permitted processing toll milling.

AVAILABLE INFORMATION

You can request a free copy of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material, or furnish it to the Securities and Exchange Commission (“SEC”) the above filings by writing or calling us at:

Standard Metals Processing, Inc.

611 Walnut Street

Gadsden, Alabama 35901

(888) 960-7347

ITEM 1A. RISK FACTORS

An investment in our common stock is highly speculative and involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described below together with all of the other information included in this prospectus. The statements contained in or incorporated into this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the value of our common stock could decline, and an investor in our securities may lose all or part of their investment.

RISKS RELATING TO OUR CAPITAL STOCK

INVESTORS MAY BE UNABLE TO ACCURATELY VALUE OUR COMMON STOCK.

Investors often value companies based on the stock prices and results of operations of other comparable companies. Currently, we do not believe another publicly traded permitted custom processing toll milling company exists that is directly comparable to our size and scale. Prospective investors, therefore, have limited historical information about our permitted custom processing toll milling capabilities on which to base an evaluation of our performance and prospects and an investment in our common stock. As such, investors may find it difficult to accurately value our common stock.

Investors may face significant restrictions on the resale of our common stock due to federal regulation of penny stocks.

The SEC has defined any equity security with a market price of less than $5.00 per share as a “penny stock.” Penny stocks are subject to the requirements or Rule 15(g)-9 of the Securities Exchange Act of 1934. Our common stock is quoted on the OTCQB under the symbol SMPR and is currently below $5.00 per share. Therefore our common stock is deemed a “penny stock” and is subject to the requirements of Rule 15(g)-9. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the transaction. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

WE DO NOT INTEND TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE.

We have never declared or paid any dividends on our common stock. We intend to retain all of our earnings, if any, for the foreseeable future to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. Our Board of Directors retains the discretion to change this policy.

THE MARKET FOR OUR COMMON STOCK MAY FLUCTUATE.

Currently, our common stock is traded on the Over the Counter Venture Capital Market (“OTCQB”). Stock prices on the Over the Counter Markets can be more volatile than stocks trading on national market systems such as NSADAQ, NYSE or AMEX. Our stock price may be affected by factors outside of our control and unrelated to our business operations.

OUR SERIES A PREFERRED STOCK HAS A SIGNIFICANT LIQUIDATION PREFERENCE.

The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Company, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Company shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value; then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the common stock.

Although there are requirements that must be met before the liquidation preference is payable to holders of the Series A Preferred Stock, if we are successful in the operation of our business and our market value increases, or if we consummate a change of control transaction that requires payment of the $10,000,000 liquidation preference (plus accrued interest), there may be significantly less funds remaining after the payment of the liquidation preference for holders of our common stock or we could be forced to accrue this liability on our financials.

RISKS RELATING TO OUR FINANCIAL CONDITION

WE CURRENTLY DO NOT HAVE ENOUGH CASH TO FUND OPERATIONS AND/OR REDUCE OUR DEBT DURING 2015.

We have very limited funds, and such funds are not adequate to develop our current business plan, or even to satisfy our existing working capital requirements. We will be required to raise additional funds to effectuate our current business plan for permitted custom processing toll milling and to satisfy our working capital requirements. Without significant additional capital, we will be unable to start operations. With respect to our proposed permitted custom processing toll milling operations, the costs and ability to successfully operate have not been fully verified because none of our proposed tolling operations have begun and we may incur unexpected costs or delays in connection with starting operations. The cost of designing and building our operations and of finding customers and sources of ore for our toll milling sources can be extensive and will require us to obtain additional financing, and there is no assurance that we will have the resources necessary or the financing available to attain operations or to acquire customers and ore sources necessary for our long-term business. Our ultimate success will depend on our ability to raise additional capital. Additionally, such additional capital may not be available to us at acceptable terms or at all. Further, if we increase our capitalization and sell additional shares of our capital stock, a shareholder’s position in our Company will be subject to dilution. In the event that we are unable to obtain additional capital, we may be forced to cease our search for additional business opportunities, reduce our operating expenditures or to cease operations altogether.

WE HAVE NOT YET BEGUN OPERATIONS AND WE EXPECT TO INCUR LOSSES FOR THE FORESEEABLE FUTURE.

We have yet to commence active operations. We have no prior operating history from which to evaluate our success, or our likelihood of success in operating our business, generating any revenues, or achieving profitability. This provides a limited basis for you to assess our ability to commercialize our services and the advisability of investing in our securities. We have not generated revenue from our toll milling services to date and there can be no assurance that our plans for permitted custom processing toll milling will be successful, or that we will ever attain significant revenue or profitability. Also, toll milling is a new area of business for us, and our management team has little experience in permitted custom processing toll milling operations. Although we intend to hire knowledgeable and experienced employees and/or consultants with significant experience in toll milling operations, there is no guarantee that we will reach profitability in the near future, if at all. As we develop our Tonopah property to prepare for operations, we are subject to unforeseen costs, expenses, problems and difficulties inherent in new business ventures.

OUR INDEPENDENT AUDITORS HAVE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

The financial statements for each of these periods were prepared assuming that we would continue as a going concern. We have had net losses for each of the years ended December 31, 2014 and 2013, and we have an accumulated a deficit as of December 31, 2014. In the view of our independent auditors, these conditions raise substantial doubt about our ability to continue as a going concern. Furthermore, since we do not expect to generate any significant revenues from operations for the foreseeable future, our ability to continue as a going concern depends, in large part, on our ability to raise additional capital through equity or debt financing transactions. If we are unable to raise additional capital, we may be forced to discontinue our business.

RISKS RELATED TO THE COMPANY

WE HAVE LIMITED ASSETS.

Our assets to be used in the development of a toll milling service have not yet been utilized, we will need to acquire additional equipment and construct additional facilities and there can be no guarantee that we will be successful in utilizing our current assets or obtaining the additional equipment and facilities that we will need to operate going forward. We do not anticipate having any revenues from our permitted custom toll milling processing for the foreseeable future. Additionally, without adequate funding, we may never produce any significant revenues.

OUR MAJOR ASSETS ARE ENCUMBERED UNDER A DEED OF TRUST.

The Tonopah property is subject to a $2,500,000 first deed of trust held by Pure Path. Pursuant to the terms of the Pure Path Settlement Agreement, Pure Path has agreed to forbear collection remedies and legal proceedings against the Company for this deed of trust until April 10, 2015.

OUR MANAGEMENT TEAM MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGIES.

If our management team is unable to execute our business strategies, then our development could be materially and adversely affected. In addition, we may encounter difficulties in effectively managing the budgeting, forecasting and other process control issues presented by any future growth. We may seek to augment or replace members of our management team or we may lose key members of our management team, and we may not be able to attract new management talent with sufficient skill and experience.

OUR SUCCESS IN THE FUTURE MAY DEPEND ON OUR ABILITY TO ESTABLISH AND MAINTAIN STRATEGIC ALLIANCES, AND ANY FAILURE ON OUR PART TO ESTABLISH AND MAINTAIN SUCH RELATIONSHIPS WOULD ADVERSELY AFFECT OUR MARKET PENETRATION AND REVENUE GROWTH.

We may be required to establish strategic relationships with third parties in the mining and toll milling industries. Our ability to establish strategic relationships will depend on a number of factors, many of which are outside our control, such as the suitability of our property, facilities and equipment relative to our competitors, or the quality grade of precious minerals we are able to extract from the ore we process. We can provide no assurance that we will be able to establish strategic relationships in the future.

In addition, any strategic alliances that we establish, will subject us to a number of risks, including risks associated with sharing proprietary information, loss of control of operations that are material to developed business and profit-sharing arrangements. Moreover, strategic alliances may be expensive to implement and subject us to the risk that the third party will not perform its obligations under the relationship, which may subject us to losses over which we have no control or expensive termination arrangements. As a result, even if our strategic alliances with third parties are successful, our business may be adversely affected by a number of factors that are outside of our control.

RISKS RELATING TO OUR BUSINESS

WE WILL REQUIRE ADDITIONAL FINANCING TO FUND OUR PERMITTED CUSTOM PROCESSING TOLL MILLING DEVELOPMENT AND OPERATIONS.

Substantial additional financing will be needed in order to fund the current plan to begin toll milling services and develop and maintain the Tonopah property. Our means of acquiring investment capital is limited to private equity and debt transactions. We have no significant sources of currently available funds to engage in additional development. Without significant additional capital, we will be unable to fund our current property interests or effectuate our current business plan for permitted custom processing toll milling and mining services. See “—Risks Relating to Our Financial Condition – We Currently Do Not Have Enough Cash to Fund Operations, and/or Reduce Debt During 2015.”

OUR PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS IN MINERAL PRICES.

The profitability of any permitted custom processing toll milling services could be significantly affected by changes in the market price of minerals. Demand for minerals can be influenced by economic conditions and attractiveness as an investment vehicle. Other factors include the level of interest rates, exchange rates and inflation. The aggregate effect of these factors is impossible to predict with accuracy.

In particular, mine production and the willingness of third parties such as central banks to sell or lease gold affects the supply of gold. Worldwide production levels also affect mineral prices. In addition, the price of gold, silver and other precious minerals have, on occasion, been subject to very rapid short-term changes due to speculative activities.

OUR PERMITTED CUSTOM PROCESSING TOLL MILLING OPERATIONS ARE SUBJECT TO ENVIRONMENTAL REGULATIONS AND PERMITTING, WHICH COULD RESULT IN THE INCURRENCE OF ADDITIONAL COSTS AND OPERATIONAL DELAYS.

All phases of our operations are subject to current environmental protection regulation. There is no assurance that future changes in environmental regulation, such as greenhouse gas emissions, carbon footprint and the like, will not adversely affect our operations. Some of our proposed operations will require additional permits, which could incur additional cost and may delay startup and cash flow. In addition, each toll milling mineral source must be fully permitted for its own operation, a process over which we have no control.

OUR PERMITTED CUSTOM PROCESSING TOLL MILLING OPERATIONS WILL REQUIRE US TO DEPEND ON THIRD PARTIES AND OTHER ELEMENTS BEYOND OUR CONTROL, WHICH COULD RESULT IN HARM TO OUR BUSINESS.

Our permitted custom processing toll milling operations will rely on mineral material produced by others, and we have no control over their operations. Delivery of ore to our processing facilities is also subject to the risks of transportation, including trucking and aviation operations run by others, regulations and permits, fuel cost, weather, and travel conditions. Toll milling requires that the mineral producer and the mineral processor agree on the grade of the incoming material, which can be a source of conflict between parties. Although a third party will be utilized for any such conflict, any disagreements with mineral producers, or problems with the delivery of ore, could result in additional costs, disruptions and other problems in the operation of our business.

U.S. FEDERAL LAWS

Under the U.S. Resource Conservation and Recovery Act, companies such as ours may incur costs for generating, transporting, treating, storing, or disposing of hazardous waste. Our permitted custom processing toll milling operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment which are subject to review, monitoring and/or control requirements under the Federal Clean Air Act and state air quality laws. Permitting rules may impose limitations on our production levels or create additional capital expenditures in order to comply with the rules.

The U.S. Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (CERCLA) imposes strict joint and several liability on parties associated with releases or threats of releases of hazardous substances. The groups who could be found liable include, among others, the current owners and operators of facilities which release hazardous substances into the environment and past owners and operators of properties who owned such properties at the time the disposal of the hazardous substances occurred. This liability could include the cost of removal or remediation of the release and damages for injury to the surrounding property. We cannot predict the potential for future CERCLA liability with respect to our property.

THE GLOBAL FINANCIAL CRISIS MAY HAVE IMPACTS ON OUR BUSINESS AND FINANCIAL CONDITION THAT WE CURRENTLY CANNOT PREDICT.

The continued credit crisis and related instability in the global financial system has had, and may continue to have, an impact on our business and our financial condition. We may face significant challenges if conditions in the financial markets do not improve. Our ability to access the capital markets may be severely restricted at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions. The credit crisis could have an impact on any potential lenders or on our customers, causing them to fail to meet their obligations to us.

ITEM 2. DESCRIPTION OF PROPERTIES

On March 15, 2011, in an effort to enter the precious metal toll milling business, we completed the Shea Exchange Agreement, whereby we acquired the Tonopah property, consisting of land, buildings, mining tailings, a dormant milling facility, abandoned milling equipment and water permits.

Our Tonopah property consists of 1,183 acres of land, buildings, mining tailings, a dormant milling facility, abandoned milling equipment and water permits. The Tonopah property was transferred to Tonopah Milling and Metals Group, Inc. (“TMMG”), the Company’s wholly owned subsidiary and then transferred to Tonopah Resources, Inc., a wholly owned subsidiary of TMMG.

Our corporate office is located at 611 Walnut Street, Gadsden, Alabama 35901. We are using the office space of the Company’s secretary, Tina Gregerson. Our New York office is located at 114 West 47^th Street, 17^th Floor, New York, New York 10036. We believe that our facilities are adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

Mark Dacko

Mark Dacko, the Company’s former Chief Financial Officer, made a Demand for Arbitration on December 21, 2012 with the American Arbitration Association for legal claims against the Company involving his previous employment. The Company and Mr. Dacko were in dispute regarding his employment with the Company as well as the details of his termination. On December 30, 2013, the Company entered into a settlement agreement with Mark Dacko.

Midwest Investment Partners, LLC v. Standard Gold Holdings, Inc.

On September 6, 2013, Midwest Investment Partners, LLC filed suit in the United States District Court for the Southern District of Indiana, Evansville Division against Standard Gold Holdings, Inc. alleging a breach of the Company’s obligations under a $50,000 6% Convertible Promissory Note, dated April 5, 2011, and a $25,000 6% Convertible Promissory Note, dated September 2, 2011, by (i) failing to repay the April 5, 2011 Note when due on October 6, 2011, and (ii) failing to repay the September 2, 2011 Note when due on February 29, 2012. On January 10, 2014, Standard Gold filed an Answer with Affirmative and Other Defenses to Midwest’s Complaint and Demand for Jury Trial. On April 3, 2014, Midwest filed a Motion for Summary Judgment. On August 28, 2014, the Court entered an Order granting Midwest’s Motion for Summary Judgment and closed judgment in favor of Midwest against Standard Gold.

Midwest Investment Partners, LLC v. Standard Metals Processing, Inc.

On March 17, 2014, Midwest Investment Partners, LLC filed suit against Standard Metals Processing, Inc. in Vanderburgh County Superior Court, Vanderburgh, Indiana, alleging that Standard Metals had wrongfully refused to remove a transfer restriction on Midwest’s shares of Standard Metals stock pursuant to Rule 144 of the Securities Act. On March 27, 2014, Standard Metals filed a Notice of Removal of a Civil Action requesting that the case proceed in the United States District Court for the Southern District of Indiana, Evansville Division as an action properly removed pursuant to 28 U.S.C. §§ 1441 (a) and (b). On April 15, 2014, Standard Metals served and filed its Answer and Affirmative Defenses to Plaintiff’s Complaint and Demand for Jury Trial. On November 26, 2014, Standard Metals filed a Motion for Summary Judgment. On February 11, 2015, the Court issued an Order granting Standard Metals’ Motion for Summary Judgment and entered a Final Judgment in favor of Standard Metals and terminating the action.

Standard Metals Processing, Inc. v. Steven E. Flechner, and fictitious parties A-Z who are individuals, entities, corporations, trusts, organizations or others who may have been issued stock options by Plaintiff pursuant to the January 21, 2011 Plan Amendment

On April 21, 2014, Standard Metals Processing, Inc. filed a Complaint for Declaratory Judgment in the Circuit Court of Etowah County, Alabama requesting that the Court issue a declaratory judgment finding that the January 21, 2011 amendment to the Stock Option Agreement approved by the Board of Directors on March 22, 2010 was invalid because it lacked required shareholder approval and rescinding any stock option awards issued thereafter; declaring that Stephen E. Flechner’s option rights allowed only for a pro-rata portion of available options, which must include appropriate and customary restrictive legends and declaring that the fictitious parties’ option rights allowed only for a corresponding pro-rata portion; or in the alternative, declaring that Flechner and the fictitious parties’ option rights were void.

On May 28, 2014, Stephen E. Flechner filed a Notice of Removal to the United States District Court for the Northern District of Alabama, Middle Division. On May 28, 2014, Flechner also filed a Motion to Dismiss the Complaint for Declaratory Judgment or, in the Alternative, a Motion to Change Venue to the United States District Court for the District of Colorado. On June 10, 2014, Standard Metals Processing, Inc. filed a Motion to strike Flechner’s declaration filed as an exhibit to his Notice of Removal, and a Motion to Remand the action back to the Circuit Court of Etowah, Alabama. On November 7, 2014, Standard Metals filed a Motion for leave to file an amended Complaint. On November 21, 2014, Flechner filed his opposition to Standard Metals’ Motion for leave to file an amended Complaint. On November 26, 2014, Standard Metals filed a Response to Flechner’s Opposition to Standard Metals’ Motion for leave to file an amended Complaint. To date, the Court has not issued a decision regarding Standard Metals’ Motion for leave to file an amended Complaint. On December 22, 2014, Standard Metals filed a Response to Flechner’s Motion to Dismiss the Complaint for Declaratory Judgment or, in the Alternative, a Motion to Change Venue to the United States District Court for the District of Colorado. To date, the Court has not issued a decision regarding Standard Metals’ Motion to Dismiss the Complaint for Declaratory Judgment or, in the Alternative, a Motion to Change Venue to the United States District Court for the District of Colorado. On December 30, 2014, the Court entered an Order denying Standard Metals’ Motion to strike Flechner’s declaration filed as an exhibit to his Notice of Removal and Standard Metals’ Motion to Remand. The Court also ordered Standard Metals to show cause why this matter should not be transferred to the United States District Court for the District of Colorado. On January 8, 2015, Standard Metals filed a Brief to show cause why this case should not be transferred. On January 16, 2015, Flechner filed a Response to Standard Metals’ Brief to show cause why this case should not be transferred. On January 21, 2015, Standard Metals filed a Sur-Response to Flechner’s Response to Standard Metals’ Brief to show cause why this case should not be transferred. On January 23, 2015, Flechner filed a Motion for leave to file a Reply to Standard Metals’ Sur-Response to Flechner’s Response to its Brief to show cause why this case should not be transferred. To date, the Court has not issued a decision regarding Flechner’s Motion for leave to file a Reply to Standard Metals’ Sur-Response to Flechner’s Response to its Brief to show cause why this case should not be transferred. Standard Metals intends to continue to vigorously prosecute its claims against Stephen E. Flechner.

Stephen E. Flechner v. Standard Metals Processing, Inc.

On 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 July 3, 2014, Flechner filed a Response to 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. On July 21, 2014, Standard Metals filed its Reply in Support of its 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 19, 2015, Flechner filed a Motion to Strike Standard Metals’ Motion for Summary Judgment. On January 20, 2015, Standard Metals filed a Response to Flechner’s Motion to Strike its Motion for Summary Judgment. On January 21, 2015, Flechner filed a Reply to Standard Metals’ Response to its Motion to Strike Standard Metals’ 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.

Deborah A. King v. Standard Metals Processing, Inc. f/k/a Standard Gold, Inc., Nevada Corporation

On May 14, 2014, Deborah A. King filed suit against Standard Metals Processing, Inc. in the United States District Court for the District of Nevada. On June 25, 2014, Ms. King filed an Amended Complaint alleging that Standard Metals had refused to allow her to exercise the stock options assigned to her by her former husband, Stephen King, on January 21, 2011, pursuant to a Stock Option Agreement entered into on that date by Mr. King and Standard Metals. On July 16, 2014, Standard Metals filed a Motion to Dismiss the Action or Stay the Proceeding, or, in the Alternative, for a More Definite Statement. On December 9, 2014, the Court issued an Order granting Standard Metals’ Motion to Dismiss the Action and denying its Motion for a More Definite Statement as moot. On December 9, 2014, the Clerk of the Court issued a Judgment in a Civil Case stating that the issues in the case had been heard and a decision to dismiss the action had been rendered by the Court.

Wits Basin Precious Minerals, Inc., Lee Levine, Michael Lepore, Mark McLain, Morton Waldman, Allan Staller, Thomas McAdam, Arthur Brown, DJ Sikka, and Bryan Reichel v. Standard Metals Processing, Inc. f/k/a Standard Gold, Inc., Nevada Corporation

On September 10, 2014, Wits Basin Precious Minerals, Inc. filed suit against Standard Metals Processing, Inc. in the United States District Court for the District of Nevada asserting breach of contract, anticipatory breach of contract and equitable relief. On October 16, 2014, Wits Basin filed an Amended Complaint, adding new parties and alleging that Standard Metals had refused to allow it to exercise its option to purchase shares granted to it pursuant to an Exchange Agreement, dated March 15, 2011, so that Wits Basin could obtain shares to meet its requirements under private option agreements it had entered into with option holders, allowing those option holders certain rights, options and warrants to purchase stock in Standard Metals. On November 5, 2014, Standard Metals filed a Second Motion to Dismiss Wits Basin et al.’s Amended Complaint. On March 13, 2015, the Court issued an Order granting in part and denying in part Standard Metals’ Motion to Dismiss the action. The Court dismissed with prejudice Wits Basin et al.’s claims of breach of contract and anticipatory repudiation of the contract. However, the Court allowed Wits Basin et al’s claim against Standard Metals of interference with contract to go forward. Standard Metals Processing, Inc. intends to continue to vigorously defend against the remaining claim asserted by Wits Basin Precious Minerals Inc. et al.

Blair Mielke v. Standard Metals Processing, Inc., a Nevada corporation, and Does 1 through 20, and Roes Corporations 1 through 20, inclusive

On October 3, 2014, Blair Mielke filed suit against Standard Metals Processing, Inc. in the Eight Judicial District Court for the State of Nevada in and for the County of Clark, alleging that Standard Metals had refused to issue and deliver to him shares of the Company’s common stock pursuant to the filing of a Form 8-K with the United States Securities and Exchange Commission on August 30, 2011. On October 24, 2014, Standard Metals filed a Petition for Removal to the United States District Court for the District of Nevada (Las Vegas). On October 30, 2014, Standard Metals filed a First Motion to Dismiss. On November 17, 2014, Mielke filed a Response to Standard Metals’ First Motion to Dismiss. On November 24, 2014, Standard Metals filed a Reply to Mielke’s Response to its First Motion to Dismiss. To date, the Court has not issued a decision regarding Standard Metals’ First Motion to Dismiss. Standard Metals Processing, Inc. intends to continue to vigorously defend against claims by Blair Mielke.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

PRICE RANGE OF COMMON STOCK

Our common stock is quoted on the OTCQB under the symbol “SMPR.” As of March 27, 2015, the last closing sale price of our common stock as reported by OTCQB was $1.00 per share. The following table sets forth for the periods indicating the range of high and low closing sale prices of our common stock:

Period	High		Low

Quarter Ended March 31, 2013	$	0.51	$	0.15
Quarter Ended June 30, 2013	$	0.58	$	0.19
Quarter Ended September 30, 2013	$	0.51	$	0.38
Quarter Ended December 31, 2013	$	1.20	$	0.34

Quarter Ended March 31, 2014	$	2.25	$	0.80
Quarter Ended June 30, 2014	$	1.35	$	2.20
Quarter Ended September 30, 2014	$	1.54	$	2.09
Quarter Ended December 31, 2014	$	1.76	$	1.00

The quotations from the OTCQB above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflect actual transactions.

RECORD HOLDERS

As of March 30, 2015, there were approximately 141 record holders of our common stock, excluding shareholders holding securities in “street name.”

DIVIDENDS

We have never paid cash dividends on our common stock and have no present intention of doing so in the foreseeable future. Rather, we intend to retain all future earnings to provide for the growth of our Company. Payment of cash dividends in the future, if any, will depend, among other things, upon our future earnings, requirements for capital improvements and financial condition.

RECENT SALES OF UNREGISTERED SECURITIES

In addition to the sales of unregistered securities that we reported in Quarterly Reports on Form 10-Q and Current Reports on Form 8-K during fiscal year ended 2014, we made the following sales of unregistered securities during the year ended December 31, 2014:

Stock Warrants

On July 15, 2014, a holder with an option to purchase a total of 400,000 shares under the 2010 Plan originally granted on September 14, 2010 executed a cashless exercise wherein 282,000 restricted shares were issued and 118,000 shares were surrendered as payment for the issued shares.

Conversion of Unsecured Note

A holder of a convertible promissory note dated January 26, 2011 converted the entirety of the note consisting of $100,000 of principal and $18,559 of interest on February 28, 2014 into 237,118 shares of the Company’s common stock.

Debt Settlements

On January 17, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $193,910 debt was settled for 387,820 shares of restricted common stock. An additional $80,000 of debt was extinguished.

On January 17, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $125,000 debt was settled for 250,000 shares of restricted common stock.

On January 17, 2014, the Company settled a $225,000 debt by converting the entire debt into 800,000 shares of restricted common stock of the Company. Pursuant to a Debt Settlement Agreement previously executed on April 3, 2013 the debt was converted at a per share price of $0.28125.

On February 13, 2014, the Company entered into an agreement with a debt holder wherein $458,250 of accrued expenses was settled for 300,000 shares of restricted common stock.

On March 4, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $100,000 debt was settled for 200,000 shares of restricted common stock.

On April 22, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $100,000 debt was settled for 112,360 shares of restricted common stock.

On June 10, 2014, the Company issued 50,000 unregistered shares of common stock to a former consultant for the settlement of consulting fees.

Sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof and rules promulgated thereunder. Based on representations from the above-referenced lender, we have determined that such lender was “accredited investors” (as defined by Rule 501 under the Securities Act) and were acquiring the shares for investment and not distribution, and that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The lender received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

ITEM 6. SELECTED FINANCIAL DATA

N/A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Financial Statements of the Company and notes thereto included elsewhere in this Annual Report. See “Consolidated Financial Statements and Supplementary Data.”

Cautionary Notice 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 Annual Report.

The information contained in Item 7 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.

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements, which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

History

Standard Metals Processing, Inc. (formerly known as Standard Gold Holdings, Inc., Standard Gold, Inc. and Princeton Acquisitions, Inc.) was incorporated in the State of Colorado on July 10, 1985. On September 29, 2009, we completed a share exchange agreement with Hunter Bates Mining Corporation, a Minnesota corporation (“Hunter Bates”) and certain of its shareholders, in which Hunter Bates’ shareholders exchanged all of their capital securities into similar capital securities of ours (the “Hunter Bates Share Exchange”) and we adopted the business model of Hunter Bates of minerals exploration and mining. Accordingly, the Hunter Bates Share Exchange represented a change in control and Hunter Bates became a wholly owned subsidiary of Standard Gold.

On March 15, 2011, we closed a series of transactions, whereby we acquired certain assets of Shea Mining & Milling, LLC (“Shea Mining”), 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.

The Company re-domiciled from Colorado to Nevada in March 2013. We determined that, due to a lack of connection to Colorado, it was in the best interest of the Company to move its domicile to Nevada.

Overview of the Company

Water Pollution Control Permit

Through the Company’s wholly owned subsidiary, Tonopah Custom Processing, Inc. (“TCP”), 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.

We are preparing for construction of our processing facility, which includes working with contractors that will be building the new 21,875 square foot processing plant, cleaning and preparing the property, and refurbishing a trailer that will act as our construction office.

In connection with the 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. We hired Allstate-Nevada Environmental Management, Inc., as our CEM to assist us with obtaining an NDEP WPCP and to help us fulfill all the requirements of NDEP including the Meteoric Profile II analysis, as well as advise on the overall site cleanup and assisting with any other NDEP requirements.

In March 2013, Advanced Surveying & Professional Services, as our 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 our 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 AutoCAD software.

Water, Wells and Drilling Permit

The existing water rights on the property utilize two wells (points of diversion). We obtained a drilling permit from the Nevada Department of Water Resources (“NDWR”) on September 4, 2014 to move the point of diversion of one of our existing wells. The historic production well has not been used in recent years and is too far away from our new production plant. We are moving the point of diversion closer to our proposed production plant site to provide a localized source of fresh water. We hired Bruce Mackay Pump and Well Service to drill the new process/fresh water well that will change the point of diversion and drill a new well. The drilling of our new point of diversion process well was completed in January 2015.

We placed a new 14,600 gallon water tank on the Tonopah property and completely rebuilt our existing domestic well to provide a supply of water for construction on the property, the construction office, and the newly built Recreational Vehicle (“RV”) park. The service of the domestic well included replacing the existing well pump with a higher volume submersible pump, installing a two inch supply line from the well to a 1,500 gallon fresh water supply tank, and a secondary water system including two 80 gallon pressure bladders and individual supply lines.

On March 10, 2014, we retained Interflow Hydrology, Inc. (“Interflow”) to engineer, design and oversee the installation of our four monitoring wells. The monitoring wells will be utilized by taking water samples up-gradient and down-gradient of our processing plant. A gradient is a direction of flow or convergence of the underground aquifer on the property. NDEP permitted us to begin the installation of up to one up-gradient and three down-gradient monitoring wells. We will take samples from the monitoring wells each quarter once they are operational to compare the laboratory water test results from up-gradient and down-gradient to act as a control. The baseline values of water quality are compared between up-gradient and down-gradient monitoring wells to show our site is not releasing any pollutants into the water table. Interflow will also provide us with an interpretation of groundwater gradient under our processing plant.

During the second quarter of 2014 we completed the installation of three monitoring wells and completed the background water testing (NDEP mandated Profile 1 water quality testing). We were notified that our three wells are sufficient and we do not need to drill a fourth.

Site and Facility Preparation

We installed approximately one mile of perimeter security fencing around the new building site and completed an electrical service line extension to power the RV park.

We contracted NV Energy to provide a new service line agreement to provide up to 4,000+ amps of power that will be required for our operations. Although electrical service to our property is currently in place, we have to construct a new on-site electrical substation to provide the necessary power to our new processing plant.

We engaged SI International to assist us with numerous projects including designing and engineering our main building, our substation, the RV park, our water and sprinkler systems and our concrete footings and related soil testing.

In August 2014 we purchased an extensive array of heavy-duty construction and milling equipment for use in the construction and operation of the Tonopah facility. The recently acquired heavy equipment allows us to move forward with construction of the processing plant and tailings ponds using our own equipment, saving the cost of expensive lease payments. The heavy equipment includes the necessary machinery for construction including dozers, loaders, water trucks and heavy transport tractors as well as equipment required for production including crushers, screening plants, and conveyors.

There is a severe housing shortage in the Tonopah area. Any available lodging has become increasingly expensive. In order to efficiently continue the rapid growth and improvements upon the Tonopah property, the Company completed a newly constructed, landscaped 5-space RV park complete with laundry facilities. The RV park allows us to house our construction contractors and provide onsite housing for future employees at a significant cost savings. The RV park was designed to easily allow future upgrades and up to 10 additional spaces. The new water supply system provides individual water lines to each RV space.

We engaged CivilWise Engineering to perform all civil engineering including the creation of a master site plan, a topographical study of the property, site drainage plans, sewer plans, vehicle access roadway and path plans and a soils and geology study.

RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014 COMPARED TO THE YEAR ENDED DECEMBER 31, 2013.

Revenues

We had no revenues from operations for the years 2014 and 2013. Furthermore, we do not anticipate having any significant future revenues until we have sufficiently funded operations.

Operating Expenses

General and administrative expenses were $14,938,972 for 2014 as compared to $6,050,082 for 2013. Of the $14,938,972 in 2014, we recorded $12,798,786 of compensation expense related to options and warrants as compared to $4,107,806 of compensation expenses related to options in 2013. In 2014, compensation expenses as well as operating expenses increased due to the employment agreements the Company entered into with its key officers and the increase in preparation for building infrastructure through permits, research, agreements and construction. We anticipate that future compensation expenses will increase and that certain operating expenses will continue to increase for fiscal 2014 as we continue to build the infrastructure to proceed with custom processing tolling milling services and possible entrance into other properties.

Depreciation and amortization expenses were $17,613 for 2014 as compared to $0 for 2013.

Other Income and Expenses

Interest Expense

Interest expense for 2014 was $183,804 compared to 2013, which was $332,665. The 2014 and 2013 amounts relate to the interest due on the following notes payable: (i) the $2,500,000 secured, convertible promissory note issued to Pure Path on October 10, 2013 in accordance with the settlement agreement of same date. All prior debt was subsumed under this note, the outstanding of which was $2,092,097 plus accrued interest at 8% per annum on December 31, 2014; (ii) the short-term note payable; and (iii) the convertible notes issued in 2011 and 2012.

The conversion of all but $100,000 of item (iii) above contributed to the significant decreases from the 2013 amounts. The non-cash interest expense for the year ended December 31, 2014 was $183,804 compared to $0 for the same period in 2013.

LIQUIDITY AND 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 advances from Pure Path Management LLC and the exercise of common stock purchase warrants. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next 12 months. We had a working capital deficit of $5,388,486 at December 31, 2014. Cash and cash equivalents were $36,095 at December 31, 2014, representing a decrease of $107,004 from the cash and cash equivalents of $143,099 at December 31, 2013.

We receive monthly payments of $529 from American Tower Corporation for a cellular tower located on our Tonopah property.

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 estimated at approximately $200,000 per month and we continue to have debt service commitments, which includes $2,174,597 (plus accrued interest) due to Pure Path and $100,000 (plus accrued interest) if none of the convertible note holders convert any portion of their notes payable. Above the basic operational expenses, we estimate that we need approximately $17,500,000 to complete our planned four circuit tolling operations. If we are not able to raise additional working capital, we may have to cease operations altogether.

For the years ended December 31, 2014 and 2013, we had net cash used in operating activities of $1,550,701 and $648,081 respectively.

For the years ended December 31, 2014 and 2013, we had net cash used in investing activities of $2,403,998 and $89,349, respectively. The amount in 2014 was due to the funds require to purchase equipment and make down payment on our first new building in Nevada.

For the years ended December 31, 2014 and 2013, we had net cash provided by financing activities of $3,847,695 and $880,435 respectively.

During 2014, we received $3,790,195 in cash proceeds from the exercise of warrants to purchase common stock and $82,500 from proceeds from debt. During 2013 we received $497,785 in cash proceeds from the exercise of warrants to purchase common stock and $382,650 from proceeds from debt.

Summary

Our existing sources of liquidity will not provide cash to fund operations and make the required payments on our debt service for the next twelve months. Our ability to continue as a going concern is dependent entirely on raising funds through the sale of equity or debt. We will continue our attempt to raise additional capital. Some of the possibilities available to us are through private equity transactions, to develop a credit facility with a lender or the exercise of options and warrants. However, such additional capital may not be available to us at acceptable terms or at all. In the event that we are unable to obtain additional capital, we would be forced to cease operations altogether.

Off-Balance Sheet Arrangements

During the year ended December 31, 2014, we did not engage in any off balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm of Turner, Stone & Company L.L.P.	F-1
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013	F-3
Consolidated Statements of Shareholders’ Equity (Deficit) for the Years Ended December 31, 2014 and 2013	F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013	F-5
Notes to Consolidated Financial Statements	F-6

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Standard Metals Processing, Inc.

We have audited the accompanying consolidated balance sheets of Standard Metals Processing, Inc. (formerly Standard Gold Holdings, Inc.), and its subsidiaries (the “Company”) as of December 31, 2014 and 2013 and the related consolidated statements of operations, shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements 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. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Standard Metals Processing, Inc. and its subsidiaries as of December 31, 2014 and 2013 and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations since inception and has a working capital deficiency both of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Turner, Stone & Company, LLP

Dallas, Texas

March 31, 2015

F-1

STANDARD METALS PROCESSING, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2014			2013
Assets
Current assets:
Cash	$	36,095		$	143,099
Prepaid expenses		59,010			5,000

Total current assets		95,105			148,099
Shea Mining and Milling Assets		35,159,427			35,159,427
Property, plant and equipment:
Machinery and equipment		1,758,818			21,000
Construction in progress		1,778,532			68,349
		3,537,350			89,349
Accumulated depreciation		(17,613	)		-
Net property, plant and equipment		3,519,737			89,349
Total Assets	$	38,774,269		$	35,396,875

Liabilities and Shareholders’ Equity
Current liabilities:
Senior secured convertible promissory note payable, related party	$	2,174,597		$	-
Short-term notes payable		-			25,000
Convertible notes payable, current portion		175,000			275,000
Due to Wits Basin Precious Minerals Inc.		16,616			16,616
Accounts payable		2,154,512			1,138,951
Accrued interest		246,273			86,143
Accrued expenses		710,286			1,385,251
Accounts payable to related party		6,307			-

Total current liabilities		5,483,591			2,926,961

Commitments and Contingencies (Note 8)

Senior secured convertible promissory note payable, related party		-			2,092,097

Preferred stock, 50,000,000 shares authorized:

Series A, $.001 par value, 10,000,000 and 10,000,000 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively		10,000,000			10,000,000

Shareholders’ equity:
Series B preferred stock, $0.001 par value 2,500,000 shares designated, no shares issued and outstanding,		-			-
Common stock, $0.001 par value, 500,000,000 shares authorized: 103,660,936 and 91,266,411 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively		103,661			91,266
Additional paid-in capital		75,255,143			56,114,271
Accumulated deficit		(52,068,126	)		(35,827,720	)
Total shareholders’ equity		23,290,678			20,377,817
Total Liabilities and Shareholders’ Equity	$	38,774,269		$	35,396,875

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

F-2

STANDARD METALS PROCESSING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended
	December 31, 2014			December 31, 2013

Revenues	$	-		$	-

Operating expenses:
General and administrative		14,938,972			6,050,082
Depreciation and amortization		17,613			-

Total operating expenses		14,956,585			6,050,082
Loss from operations		(14,956,585	)		(6,050,082	)

Other income (expense):
Other income		6,470			5,819
Loss on settlement of debt		(1,106,487	)		(1,372,977	)
Interest expense		(183,804	)		(332,665	)

Total other income (expense)		(1,283,821	)		(1,699,823	)
Loss before income tax provision		(16,240,406	)		(7,749,905	)

Income tax provision		-			-
Net loss	$	(16,240,406	)	$	(7,749,905	)

Basic and diluted net loss per common share	$	(0.16	)	$	(0.12	)

Basic and diluted weighted average common shares outstanding		99,090,384			64,622,893

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

F-3

STANDARD METALS PROCESSING, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

					Additional
	Common stock				paid-in		Accumulated
	Shares		Amount		capital		deficit			Total

BALANCE, December 31, 2012		54,318,756	$	54,318	$	45,831,321	$	(28,077,815	)	$	17,807,824

Stock issued for conversion of convertible debt		4,115,868		4,116		1,862,814		-			1,866,930

Stock issued for the conversion of notes payable, related party		27,000,000		27,000		1,473,000		-			1,500,000

Stock issued for the exercise of common stock warrants		2,275,138		2,275		495,510		-			497,785

Stock issued for the settlement of accrued liabilities		3,556,649		3,557		1,075,766		-			1,079,323

Warrants issued upon conversion of convertible debt		-		-		1,268,054		-			1,268,054

Options and warrants issued for employee compensation		-		-		3,226,501		-			3,226,501

Options issued for consultant compensation		-		-		881,305		-			881,305

Net loss		-		-		-		(7,749,905	)		(7,749,905	)

BALANCE, at December 31, 2013		91,266,411		91,266		56,114,271		(35,827,720	)		20,377,817

Stock issued for conversion of convertible debt		237,118		237		118,325		-			118,562

Stock issued for the exercise of common stock warrants and options		7,307,227		7,308		3,930,355		-			3,937,663

Stock issued for the settlement of accounts payable and accrued expense		2,100,180		2,100		2,296,156		-			2,298,256

Options issued for compensation						8,206,286		-			8,206,286

Stock issued for compensation		2,750,000		2,750		4,589,750		-			4,592,500

Net loss		-		-		-		(16,240,406	)		(16,240,406	)

BALANCE, at December 31, 2014		103,660,936	$	103,661	$	75,255,143	$	(52,068,126	)	$	23,290,678

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

F-4

STANDARD METALS PROCESSING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended
	December 31, 2014			December 31, 2013
OPERATING ACTIVITIES:
Net loss	$	(16,240,406	)	$	(7,749,905	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		17,613			-
Compensation expense related to issuance of common stock, warrants and stock option grants		12,798,786			4,107,806
Loss on extinguishment of debt and accrued expenses		959,019			1,372,977
Stock warrants awarded		147,468
Increase in convertible note payable, related party through the payment of expenses		-			544,164
Changes in operating assets and liabilities:
Prepaid expenses		(54,010	)		3,897
Accounts payable		795,469			306,405
Accrued expenses		19,053			766,575
Accounts payable related party		6,307			-

Net cash used in operating activities		(1,550,701	)		(648,081	)

INVESTING ACTIVITIES:
Purchases of equipment		(1,671,945	)		(21,000	)
Payment for construction in progress		(732,053	)		(68,349	)

Net cash used in investing activities		(2,403,998	)		(89,349	)

FINANCING ACTIVITIES:
Repayment of short term note principal		(25,000	)		-
Cash proceeds from issuance of common stock, warrants and exercise of stock options and warrants		3,790,195			497,785
Cash proceeds from debt		82,500			382,650

Net cash provided by financing activities		3,847,695			880,435

Increase (Decrease) in CASH		(107,004	)		143,005
CASH , beginning of year		143,099			94
CASH , end ofyear	$	36,095		$	143,099

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Debt and accrued interest of Pure Path short-term loan facility converted into common stock		-			1,500,000
Short-term notes payable and accrued interest converted into convertible promissory notes		-			1,866,930
Construction in progress and equipment purchases unpaid		1,044,004
Convertible promissory notes and accrued interest converted into common stock		118,559			-
Common stock issued in lieu of accounts payable and accrued expenses		-			1,079,323

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

F-5

STANDARD METALS PROCESSING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

NOTE 1 – NATURE OF BUSINESS

Standard Metals Processing, Inc. (formerly Standard Gold Holdings, Inc., Standard Gold, Inc. and Princeton Acquisitions, Inc.) (the “Company”) was incorporated in the State of Colorado on July 10, 1985 as a blind pool or blank check company. On September 29, 2009, we completed a share exchange agreement with Hunter Bates Mining Corporation, a Minnesota corporation (“Hunter Bates”) and certain of its shareholders, in which Hunter Bates’ shareholders exchanged all of their capital securities into similar capital securities of ours (the “Hunter Bates Share Exchange”) and we adopted the business model of Hunter Bates of mineral exploration and mining. Accordingly, the Hunter Bates Share Exchange represented a change in control and Hunter Bates became a wholly owned subsidiary of the Company.

Prior to September 29, 2009, Wits Basin Precious Minerals Inc., a Minnesota corporation and public reporting company quoted on the Pink Sheets under the symbol “WITM” (“Wits Basin”) was the majority shareholder of Hunter Bates. Hunter Bates was formed in April 2008 to acquire the prior producing gold mine properties (consisting of land, buildings, equipment, mining claims and permits) located in Central City, Colorado, known as the “Bates-Hunter Mine.” We had not engaged in any exploration or mining activities at the Bates-Hunter Mine properties and on April 29, 2011, we transferred all of our interests of Hunter Bates back to Wits Basin in order to develop the toll milling business as described below.

On March 15, 2011, the Company closed a series of transactions, whereby we acquired certain assets of Shea Mining & Milling, LLC (“Shea Mining”). The exchange agreement was by and between the Company, Shea Mining, Afignis, LLC, Leslie Lucas Partners, LLC, Wits Basin and Alfred A. Rapetti (the “Shea Exchange Agreement”) whereby the Company acquired certain assets from Shea Mining, which assets include those located in Tonopah, Nevada, of land, buildings, a dormant milling facility, abandoned milling equipment, water permits and mine tailings (financed through a note payable assigned to us), mine dumps, a property lease and a contract agreement in exchange for 35,000,000 shares of our unregistered shares. The Shea Exchange Agreement did not include any operable toll milling equipment, employees or operational processes and therefore has been accounted for as a purchase of a group of assets. The Company completed the Shea Exchange Agreement to acquire the Shea Mining assets and develop a toll milling services business 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, lead, zinc and copper, and rare earth metals. See Note 3 – Acquisition of Shea Milling and Mining Assets for a detailed discussion.

Going Concern

The accompanying 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 year ended December 31, 2014, the Company incurred losses from operations of $16,240,406. At December 31, 2014, the Company had an accumulated deficit of $52,068,126 and a working capital deficit of $5,388,486. Our ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the 2014 fiscal year, the Company received net cash proceeds of $3,790,195 from the exercise of warrants. 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.

F-6

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Standard Metals Processing, Inc., and our wholly owned subsidiaries Tonopah Milling and Metals Group, Inc. (and its wholly owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc., Standard Metals Acquisitions, Inc. and Standard Renewable Energy, Inc.

Reclassification

Certain accounts in the prior period were reclassified to conform to the current period financial statements presentation.

Cash and Cash Equivalents

We include as cash equivalents: (a) certificates of deposit, and (b) all other investments with maturities of three months or less, which are readily convertible into known amounts of cash. We maintain our cash in high-quality financial institutions. The balances, at times, may exceed federally insured limits.

Shea Milling and Mining Assets

We have recorded the fair value of the Shea Milling and Mining assets as an aggregate amount. The assets include the mine tailings and dumps, the land, water rights and the milling facility (the buildings and equipment). We classify them under a single listing.

Property, Plant and Equipment

Property and equipment are recorded at cost and depreciated, once placed in service, using the straight-line method over estimated useful lives as follows:

		Years
Buildings		20
Equipment		2-7
Vehicle		2

Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. As items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income.

Mineral Properties

Mineral property acquisition costs are recorded at cost and are deferred until the viability of the property is determined. No properties have reached the development stage 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.

F-7

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.

Long-Lived Assets

We 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. There were no impairment charges during the years ended December 31, 2014 and 2013.

Revenue Recognition and Deferred Revenue

As of December 31, 2014, we have recorded no revenues from custom permitted processing toll milling.

Use of 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.

Off Balance Sheet Arrangements

As of December 31, 2014, we did not have any off-balance sheet activities (including the use of structured finance or special purpose entities) or any trading activities in non-exchange traded commodity contracts that have a current or future effect on our financial condition, changes in the financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources that are material to our investors.

Financial Instruments

The carrying amounts for all financial instruments approximates fair value. The carrying amounts for cash, accounts payable and accrued liabilities approximated fair value because of the short maturity of these instruments. The fair value of short-term debt approximated the carrying amounts based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk.

Net Loss per Common 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.

Income Taxes

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.

F-8

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 December 31, 2014 and 2013. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

Stock-Based Compensation and Issuance of Stock for Non-Cash Consideration

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options and compensatory stock warrants, based on estimated fair values equaling either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. Non-cash consideration pertains to services rendered by consultants and others and has been valued at the fair market value of the Company’s common stock at the date of the agreement.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant begins providing services.

Recent Accounting Standards

During the year ended December 31, 2014 and through March 30, 2015, 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.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage that in prior years it had been in the development stage. The Company adopted ASU No. 2014-10 during the third quarter of the year ended December 31, 2014.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements— Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” Continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. Currently, there is no guidance under US GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). For the period ended September 30, 2014, management evaluated the Company’s ability to continue as a going concern and concluded that substantial doubt has not been alleviated about the Company’s ability to continue as a going concern. While the Company continues to explore further significant sources of financing, management’s assessment was based on the uncertainty related to the amount and nature of such financing over the next twelve months.

F-9

NOTE 3 – ACQUISITION OF SHEA MILLING AND MINING ASSETS

On March 15, 2011, the Company entered into an exchange agreement by and between the Company, Shea Mining, Afignis, LLC, Leslie Lucas Partners, LLC, Wits Basin and Alfred A. Rapetti (the “Shea Exchange Agreement”) whereby the Company acquired certain assets from Shea Mining, which assets include those located in Tonopah (financed through a note payable assigned to us), mine dumps, a property lease and a contract agreement in exchange for 35,000,000 shares of our unregistered shares. The Shea Exchange Agreement did not include any operable toll milling equipment, employees or operational processes and therefore has been accounted for as a purchase of a group of assets. The Company completed the Shea Exchange Agreement to acquire the Shea assets and develop a toll milling services business of precious minerals.

Pursuant to the assignment of a note payable, the Company executed an Assignment and Assumption of Loan Documents and Loan Modification Agreement, by and between us, Shea Mining and NJB Mining, Inc. (the “Loan Modification Agreement”), dated March 15, 2011, for those assets located in Tonopah, Nevada (“Tonopah”), consisting of land, buildings, mining tailings, a dormant milling facility, abandoned milling equipment and water permits. The land encompasses 1,183 deeded acres, one of the largest private land holdings in Esmeralda County, Nevada. Approximately 334 acres of this land has sitting on it an estimated 2,200,000 tons of tailings known as the Millers Tailings from the historic gold rush of Goldfield and Tonopah, Nevada.

The Tonopah property was subject to an existing $2,500,000 first deed of trust, which was in default at the time of the Shea Exchange Agreement and included accrued interest of $375,645, which was also assumed in the transaction. As part of the assignment, NJB Mining, Inc. (“NJB”) modified the related note to allow the Company until May 14, 2011 to refinance this mortgage, which was subsequently extended numerous times. As of August 31, 2011, the Company was still in default under the terms of the Loan Modification Agreement, and therefore entered into a forbearance agreement with NJB, (the “NJB Forbearance Agreement”), in which NJB agreed to forbear from initiating legal proceedings, including forbearance of the deed of trust and enforcement of its collection remedies. The NJB Forbearance Agreement further provided for additional extensions up through December 9, 2011. On December 9, 2011, Pure Path Capital Management Company, LLC (“Pure Path”) purchased the Loan Modification Agreement and the NJB Forbearance Agreement directly from NJB. On December 21, 2011, we entered into an amended and restated forbearance agreement with Pure Path (the “A&R Forbearance”), whereby Pure Path extended the provisions of the NJB Forbearance Agreement. Pure Path provided an additional extension to stay any action of the A&R Forbearance until June 8, 2012, on which date, if not paid or another agreement was not executed, the Company would be required to issue 5,000,000 shares of its common stock to Pure Path; such extension was provided without additional consideration. The Company did not pay the balance of the mortgage on June 8, 2012 and pursuant to the terms of the A&R Forbearance Agreement, the Company was required to issue 5,000,000 shares to Pure Path. The 5,000,000 shares were approved for issuance by the Board of Directors on October 9, 2012 and were issued to Pure Path on December 6, 2012. Pure Path provided additional extensions to stay any action of the Forbearance Agreement until August 31, 2013; such extensions were provided without additional consideration. On October 10, 2013, the Company entered into a Settlement and Release Agreement (the “Agreement”) with Pure Path. Pursuant to the Agreement, Pure Path relinquished the rights and obligations owed to it and agreed to forbear collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust. In connection with the settlement and release of various debts of approximately $1,500,000, consulting fees owed by the Company, and relinquishment of rights by Pure Path, the Company issued 27,000,000 restricted shares and a convertible promissory note for up to $2,500,000 with a principal amount on the date of issuance of $1,933,345 bearing interest of 8% per year for the amounts owed under the Pure Path Agreements.

F-10

In connection with the Shea Exchange Agreement, we also were assigned the ownership of approximately a six square mile section of mine dump material in Manhattan, Nevada (“Manhattan”).

The other assets the Company acquired consisted of a property lease, which allowed the use of an assay lab property and the associated water permits, (with a right to purchase for $6,000,000) and a contract agreement, which allowed the Company use of processing permits, located in Amargosa Valley, Nevada (“Amargosa”). The Company paid a monthly base rent of $17,500 on this lease and $5,000 monthly on the contract agreement. In January 2012, the landlord of the Amargosa lease caused to have served a five Day Notice To Pay Rent Or Quit due to default in the monthly $17,500 lease payments. The Company began immediate communications with the landlord, which resulted in a delay of further actions by the landlord to pursue any remedies. Then on February 9, 2012, the landlord caused to have served an Order For Summary Eviction (“Eviction”) due to continued default in lease payments. Effective with the Eviction, a total of $112,500 in lease and contract payments remain unpaid as well as $10,500 in late fees required pursuant to the terms of the lease. On February 10, 2012, the Beatty County Sheriff completed the Eviction at Amargosa and the Company as such, no longer has access to the assay lab or permits at Amargosa. As a result, all remaining equipment at Amargosa with an aggregate value of $40,925 was written off as impaired.

Pursuant to the Shea Exchange Agreement, the Company issued a total of 35,000,000 shares of our common stock to the equity holders of Shea Mining in exchange for certain of their assets, resulting in those holders owning an ownership interest of approximately 87% of our then currently outstanding common stock (approximately 56% ownership interest on a fully diluted basis). Alfred A. Rapetti, a member of our Board of Directors and our former Chief Executive Officer, was granted an irrevocable voting proxy for half of the shares issued to the Shea Mining equity holders, which continues until the affected shares are publicly sold after a period of at least six months, and thereafter in accordance with all applicable securities laws. In August 2011, these rights were transferred to Blair Mielke, a former director of the Company. All such voting rights have since been canceled by the owners or through a transfer of ownership. The Company also agreed to indemnify Shea Mining from any liabilities arising after March 15, 2011 out of the Loan Modification Agreement or the loan agreements.

The purchase consideration of the assets acquired was calculated as follows:

Issuance of 35,000,000 shares of common stock with an estimated fair value of $0.89 per share (closing sales price on March 15, 2011)	$	31,150,000
Cash consideration		700,000
Assumption of NJB Mining mortgage		2,500,000
Assumption of accrued interest and other liabilities		463,184
Legal costs (includes issuance of 100,000 shares of common stock valued at $89,000)		205,258
Other direct expenses incurred in connection with the Shea Exchange Agreement		140,985
	$	35,159,427

In conformity with accounting principles generally accepted in the United States of America, cost of acquiring a group of assets is allocated to the individual assets within the group based on the relative fair values of the individual assets.

The table below sets forth the final purchase price allocation. The fair value of the mineral properties and property and equipment was determined based on level 3 inputs using cost and market value approaches.

Tonopah mine tailings	$	24,888,252
Tonopah dormant milling facility		8,062,875
Tonopah land		1,760,000
Tonopah water rights		348,300
Manhattan mine dumps		100,000
Total	$	35,159,427

F-11

Simultaneous with these transactions, pursuant to the Shea Exchange Agreement, Wits Basin exchanged 19,713,544 shares of the Company’s common stock it held for 10,000,000 shares of our Series A Preferred Stock. The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon achievement of a market value of our equity equaling $200,000,000 or more. Additional details regarding the Series A Preferred Stock can be found in the Company’s Articles of Amendment, which were filed with the Colorado Secretary of State on January 4, 2013. Additionally, the Company obtained the right to transfer our entire interest and related debt of the Bates-Hunter Mine, at any time prior to June 13, 2011, to Wits Basin in exchange for the cancellation of a promissory note issued by Hunter Bates payable in favor of Wits Basin in the approximate amount of $2,500,000. On April 29, 2011, our Board of Directors approved this transfer effective April 29, 2011.

Furthermore, Wits Basin had entered into certain commitments, which involved shares of the Company’s common stock and as a result of their exchange of substantially all of the Company’s common stock they held for Series A Preferred, Wits Basin could no longer honor those commitments. In consideration of Wits agreeing to the exchange, the Company agreed to enter into two stock option agreements as follows: (1) the Company granted to one of Wits Basin’s major lenders a replacement stock option, on substantially the same terms as the stock option issued by Wits Basin, to purchase 1,299,000 shares of the Company’s common stock at an exercise price of $1.00 per share expiring on December 14, 2014 (of which the holder exercised on 10,000 shares of the option with a payment of $10,000 during 2011) and (2) the Company granted to Wits Basin a replacement stock option, expiring on December 19, 2014, to purchase up to 630,000 shares of the Company’s common stock, at an exercise price of $0.50 per share. As of December 31, 2014 all of these stock options are expired.

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

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 21,875 square foot building and servicing and drilling various wells for our future operations.

Components of our property, plant and equipment are as follows:

	December 31,
	2014			2013
Equipment	$	1,758,818		$	21,000
Construction in Progress		1,778,532			68,349
Less accumulated depreciation		(17,613	)		—
	$	3,519,737		$	89,349

NOTE 5 – SHORT-TERM NOTES PAYABLE

The following table summarizes the Company’s short-term notes payable:

	December 31,
	2014		2013

Promissory note issued on September 7, 2010, in the principal amount of $25,000 to Stephen Flechner, our President at the time, utilized for a potential mining project; stated interest rate of 5%; with a maturity date of November 30, 2010. (1) The principal and interest of this note were paid in full on February 13, 2014.	$	-	$	25,000

Totals	$	-	$	25,000

(1)

Secured by a personal guarantee of Stephen D. King, our CEO at the time.

On February 13, 2014, the Company repaid a promissory note dated September 7, 2010 in the aggregate amount of $29,281 consisting of principal in the amount of $25,000 and interest of $4,281 to Steven Flechner, a former officer of the Company.

F-12

Summary

The following table summarizes the short-term notes payable activity in 2014 and 2013:

	2014			2013
Balance Beginning of year	$	25,000		$	2,160,284
Add: advances from Pure Path		0			382,650
Less repaid principal		(25,000	)
Expenses paid on behalf of the Company					410,411
Principal portion converted into common stock during the restructuring of the Pure Path note payable					(970,000	)
Reclassification of Pure Path short-term to senior secured convertible promissory note					(1,958,345	)
Balance at end of year	$	0		$	25,000

The weighted average interest rate on short-term notes payable at December 31, 2013 was 5%.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

Beginning in January 2011 through November 2011, the Company entered into six-month convertible promissory notes with accredited investors (the “CP Notes”). The terms of the CP Notes are: (i) accrue interest at 6% per annum (ii) include the right to convert into our common stock at any time, at a price of $0.50 per share, and (iii) the issuance of a two-year stock purchase warrant, with an exercise price of $0.50 per share, at a rate of two warrants per $1 of the CP notes.

In June 2012, the Board authorized a reduction in the exercise of the warrant exercise price, from $0.50 to $0.25 per share for any additional CP Notes entered into, but still at a rate of two warrants per $1 of CP Notes. The Company entered into one such CP Note during June 2012 of $25,000.

The warrants created an aggregate debt discount of $1,489,253. In addition, due to proceeds allocated between the debt and warrants, beneficial conversion charges were created totaling an additional debt discount of $1,074,066. Both discounts were amortized over the six-month term of each of the respective CP Notes.

For the year ended December 31, 2012, the Company recorded $131,651 of amortization of the value assigned to the additional beneficial conversion feature of the CP Notes and $149,181 amortization of warrant debt discount. As of December 31, 2012, there is no remaining unamortized debt discount.

During June 2012, one of the note holders assigned an aggregate $500,000 of CP Notes and accrued interest to Pure Path in a private transaction. On June 28, 2012, Pure Path converted $478,186 of principal and $21,814 of accrued interest related to these notes into 1,000,000 shares of unregistered common stock.

In addition to the aforementioned Pure Path conversion, through December 31, 2012, another convertible note holder converted $3,076 of principal plus $6,924 of accrued interest into 20,000 shares of our common stock.

The Company filed a Tender Offer Statement on Schedule TO on July 2, 2013. The Company filed several amendments to the Schedule TO: an amendment was filed on July 8, 2013 to extend the expiration date from 11:59 P.M. (Eastern time) on July 25, 2013 to 11:59 P.M. (Eastern time) on July 30, 2013 and revised the Election to Participate; on July 16, 2013 the Company filed an amendment to change the exercise price of the new warrants from $0.25 for the first 60 days following the tender offer and $0.50 thereafter to $0.25 for the first 180 days following the tender offer and $0.50 thereafter; on July 30, 2013 the Company filed an amendment to extend the expiration date from 11:59 P.M. (Eastern time) on July 30, 2013 to 11:59 P.M. (Eastern time) on August 2, 2013; and on July 31, 2013 the Company filed an amendment to incorporate the press release announcing the extension of the expiration date to 11:59 P.M. (Eastern time) on August 2, 2013.

F-13

The final terms of the Tender Offer included the Company offering to exchange certain of its outstanding unsecured convertible promissory notes issued between January 2, 2011 and November 2, 2011 (the “Original Notes” or “Eligible Notes”) and accompanying warrants to purchase common stock (the “Original Warrants” or “Eligible Warrants”) for the issuance of restricted common stock for the settlement of the balance of the note (principal and interest as of: June 30, 2013) at $.50/share and the issuance of new warrants to purchase common stock (the “New Warrants”) equal to the number of shares received under the conversion of the Eligible Note, exercisable for two years with an exercise price of $0.25 for the first 180 days following the tender offer and $0.50 thereafter, with substantially the same terms as the Original Warrants except the New Warrants will contain a call provision that may be exercised at $0.80 if the Company’s common stock trades above $0.80 for ten consecutive days and upon the terms and subject to the conditions set forth in the Offer to Exchange, dated July 2, 2013 (the “Offer to Exchange”) and the Election to Participate (the “Election to Participate”). The expiration of the tender offer was 11:59 P.M. (Eastern time) on August 2, 2013.

The Schedule TO was intended to satisfy the reporting requirements of Rule 13e-4(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of the close of the tender offer on August 2, 2013, the Company’s tender offer agent had received Elections to Participate representing $1,724,689 of the 2011 unsecured notes.

On October 10, 2013, a Senior Secured Convertible Promissory Note for up to $2,500,000 at 8% per annum with an original principal balance of $1,933,345 maturing on April 10, 2015 was issued to Pure Path pursuant to a Settlement and Release Agreement. The Note is convertible into shares of Series B Preferred Stock. (see Note 9 Related Party transactions).

The following table summarizes the Company’s remaining convertible promissory notes (convertible into common stock):

	December 31,
	2014			2013
Convertible promissory notes net of unamortized discount of $0 at December 31, 2014; interest rate of 6%; accrued interest of $36,665 at December 31, 2013 and all of these CP Notes are past due and original terms apply in the default period.	$	275,000		$	275,000
Debt converted into shares of restricted common stock		(100,000	)
	$	175,000		$	275,000

NOTE 7 – SHAREHOLDERS’ EQUITY

Preferred Stock

Simultaneous with the Shea Exchange Agreement, Wits Basin exchanged 19,713,544 shares of our common stock it held for 10,000,000 shares ($.001 par value each) of “Series A Preferred Stock” with an original issue price of $1.00 per share.

Series A Preferred Stock

Attributes of Series A Preferred Stock include but are not limited to the following:

Distribution in Liquidation

The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Corporation, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Corporation shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock will receive a payment equal to the Original Issue Price for each share of Series A Preferred Stock held by such holder (the “Liquidation Value”). A “Liquidation Event” will have occurred when:

F-14

• The Corporation has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Corporation’s closing sale price on the OTCBB or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issues Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Corporation to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value.

• Any Liquidity Event in which the Corporation receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Corporation; (b) acquisition of the Corporation by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Corporation’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries.

Written notice of any Liquidation Event (the “Liquidation Notice”) shall be given by mail, postage prepaid, or by facsimile to non-U.S. residents, not less than five days prior to the anticipated payment date state therein, to the holders of record of Series A Preferred Stock, such notice to be addressed to each such holder at its address as shown by the records of the Corporation. The Liquidation Notice shall state (i) the anticipated payment date, and (ii) the total Liquidation Value available for distribution to Series A Preferred Stock shareholders upon the occurrence of the Liquidation Event.

Redemption

The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.

Voting Rights

Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote.

Conversion Rights

Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.

Series B Preferred Stock

The Company designated a class of Series B Preferred shares effective November 4, 2013. As of the date of this filing, no shares of our Series B Preferred Stock are issued and outstanding. Shares of our Series B Preferred Stock are entitled to receive, when and as declared by our Board of Directors, dividends at a rate of 8% per share annually, payable on the October 1 of each year. Such dividends shall be cumulative and shall accrue, whether or not earned or declared, from and after the date of issuance of the Series B Preferred Stock, whichever is later. Each share of Series B Preferred Stock shall be convertible, at any time and at the option of the holder, into ten shares of common stock (the “Stock Conversion Rate”). The Stock Conversion Rate is subject to certain adjustments for stock-splits, combinations, reclassifications, exchanges, substitutions, reorganizations, mergers and/or consolidations.

F-15

Additional details regarding the Series B Preferred Stock can be found in our Articles of Amendment, which are on file with the Nevada Secretary of State.

Common Stock Issuances

For Services

On June 18, 2014, the Company issued 1,000,000 restricted common shares to a service provider. These shares were valued at fair market value of $1.67 per share and have been charged as stock compensation to general and administrative expense.

On June 18, 2014, the Company issued 250,000 restricted common shares to the President of our subsidiary, Tonopah Custom Processing, Inc. These shares were valued at fair market value of $1.67 per share and have been charged as stock compensation to general and administrative expense.

On June 18, 2014, the Company issued 1,500,000 restricted common shares to an officer of the Company. These shares were valued at fair market value of $1.67 per share and have been charged as stock compensation to general and administrative expense.

Conversion of Secured Creditor

On October 10, 2013 we issued 27,000,000 shares of restricted common stock in connection with a settlement with our secured creditor. (See Note 9 Related Party Transactions).

Conversion of Unsecured Note

In connection with the Company’s tender offer, 3,916,848 shares of common stock were issued on August 2, 2013 in exchange for $1,762,582 of the 2011 unsecured convertible notes.

Conversion of Promissory Note

On October 29, 2013, we issued 53,995 shares of common stock from the conversion of $25,000 of principal and $1,997 interest of promissory note.

On December 5, 2013, we issued 57,463 shares of common stock for the conversion of $25,000 of principal and $3,732 interest of a promissory note.

F-16

Debt Settlements

During the three months ended March 31, 2013, the Company issued 2,087,562 shares for the conversion of outstanding debts.

During the three months ended September 30, 2013, the Company issued 1,500,000 shares for settlement of outstanding debts and issued 400,000 shares pursuant to a warrant exercise.

On December 5, 2013, we issued 56,649 shares of common stock for the settlement of $28,343 of existing debt of the Company.

On January 17, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $273,910 debt was settled for 387,820 shares of restricted common stock.

On January 17, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $125,000 debt was settled for 250,000 shares of restricted common stock.

On February 13, 2014, the Company entered into an agreement with a debt holder wherein $458,250 of accrued expenses was settled for 300,000 shares of restricted common stock and $21,750 was charged as loss on settlement of debt to general and administrative expense.

On March 4, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $100,000 debt was settled for 200,000 shares of restricted common stock.

On April 22, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $100,000 debt was settled for 112,360 shares of restricted common stock.

On June 10, 2014, the Company issued 50,000 unregistered shares of common stock to a former consultant for the settlement of consulting fees.

On July 15, 2014, the Company entered into a Settlement Agreement with a former director wherein the parties agreed on the number of options issued to the former director under the 2010 Plan, resolved any and all claims against the Company and the Company issued 150,000 warrants at an exercise price of $2.00 per share that expire July 15, 2017. The fair value of the options of $147,468 was recorded as loss on settlement of debt. The fair value was determined using Black-Scholes using an exercise price of $2.00, volatility 75%, and a risk free rate of return of 0.98%.

The Company recorded non-cash loss on settlement of debt of $1,106,487 and $1,372,977 for the years ended December 31, 2014 and 2013, respectively.

Stock Warrants

In the fourth quarter of 2013, we issued 1,775,138 shares of unregistered common stock pursuant to the exercise of outstanding common stock purchase warrants at a price of $0.25 per share and 100,000 at $0.50 per share for an aggregate purchase price of $493,785.

During the year ended December 31, 2014, a total of 7,025,227 warrants to purchase common stock were exercised: 1,830,867 warrants were exercised at a price of $0.25 per share; 520,000 warrants exercised at $0.50 per share; 4,000,000 warrants exercised at $0.60 per share, 244,360 warrants exercised at $0.89 per share and 430,000 at $1.00 per share for an aggregate total of $3,790,197.

F-17

Option Grants

2010 Plan

The Company had one stock option plan: the 2010 Stock Incentive Plan, as amended (the “Plan”). Stock options, stock appreciation rights, restricted stock and other stock and cash awards may be granted under the Plan. In general, options vest over a period ranging from immediate vesting to five years and expire 10 years from the date of grant. Effective January 21, 2011, the Company’s Board of Directors (the “Board”) authorized an amendment to the 2010 Stock Incentive Plan, to increase the number of options available for granting under the Plan from 3,000,000 to 13,500,000 and authorized the Company to file an S-8 Registration Statement with the U.S. Securities and Exchange Commission (subsequently filed on January 27, 2011, File No. 333-171906) for the registration of the shares available in the Plan. On March 15, 2011, with the closing of the Shea Exchange Agreement a “change of control” event was deemed to have occurred and 13,500,000 previously granted stock options vested in full. Effective July 25, 2011, the Plan was amended to increase the total shares of stock which may be issued under the Plan from 13,500,000 to 14,500,000.

The Company has been receiving files from former officers and attorneys. Upon review of the files, the original Plan and Board Resolution were located. The Plan approved by the Board of Directors on March 22, 2010 authorized 3,000,000 shares of common stock for issuance under the Plan. The Board of Directors voted to increase the number of shares available under the Plan on January 21, 2011. Section 9.11 of the Plan as approved by the Board states:

9.11 Amendment of the Plan. The Board of Directors may amend or discontinue the Plan at any time. However, no such amendment or discontinuance shall adversely change or impair, without the consent of the recipient, an Incentive previously granted. Further, no such amendment shall, without approval of the stockholders of the Company, (a) increase the maximum number of shares of Common Stock which may be issued to all participants under the Plan, (b) change or expand the types of Incentives that may be granted under the Plan, (c) change the class of persons eligible to receive Incentives under the Plan, or (d) materially increase the benefits accruing to participants under the Plan.

Pursuant to the terms of the Plan, the stockholders of the Company must approve this increase. As the stockholders of the Company did not approve the increase of shares available under the Plan, the increase on January 21, 2011 was not effective.

As of January 21, 2011 the Company had issued a total of 2,800,000 options to purchase shares under the Plan and had 200,000 shares remaining authorized and unissued. However, also on January 21, 2011, the Board of Directors authorized the issuance of 10,500,000 options. This issuance far exceeded the number of shares available and the excess issuances were not valid. As a correction measure, the Company has divided the 200,000 shares that were available pro-rata between the persons named in the resolution.

As a result of this correction there are a total of 1,631,842 options granted and available for exercise under the Plan outstanding as of the date of this filing.

The Board of Directors terminated the 2010 option plan on August 23, 2013.

Options issued in 2013

The following options were issued in 2013 outside of any option plan:

The Company executed an Employment Agreement with Sharon Ullman dated effective November 13, 2013. As compensation for her employment as the Chief Executive Officer of the Company, Ms. Ullman was granted a total of 4,500,000 options to purchase common stock of the Company at an exercise price of $0.40 per share, with a grant term of 7 years. A total of 1,500,000 options vest upon each of the following: (i) November 13, 2013; (ii) June 1, 2014; and (iii) June 1, 2015.

F-18

The Company executed an Employment Agreement with Jim Stieben dated effective October 15, 2013. Pursuant to the agreement, Mr. Stieben was appointed the President and Director of Operations of Tonopah Custom Processing, Inc. As compensation for his services, Mr. Stieben was granted a total of 1,500,000 options to purchase common stock of the Company at an exercise price of $0.60 per share, with a grant term of 7 years. A total of 750,000 options vested on October 15, 2013, and 375,000 options will vest upon each of the following: (i) the completed construction of a permitted processing building on the Miller’s Mill site; and (ii) the Company achieving profitability.

2014 Option Plan

By Board Resolution effective January 27, 2014, the Company adopted a 2014 Stock Incentive Plan (the “Plan”) to compensate employees and consulting groups in their efforts to enhance the long-term shareholder value of the Company. Pursuant to the Plan, selected persons are offered opportunities to participate in the Company's growth and success and are encouraged to acquire and maintain stock ownership in the Company. The Plan grants options to purchase shares of our common stock vesting at dates beginning on the date of grant and issuable at chronological or performance increments. The Plan Administrator may also grandfather in existing options granted during 2013. The shareholders approved the 2014 Plan at the 2014 annual meeting.

Under administration by the Compensation Committee (the “Plan Administrator”), a maximum of 75,000,000 shares of common stock are available for issuance under the Plan, subject to adjustment from time to time. Awards may be granted under the Plan to officers, directors, employees and consultants of the Company and as the Plan Administrator selects. The Plan Administrator is authorized, in its sole discretion, to issue options as incentive stock options, which shall be appropriately designated. The term of each option to purchase common stock of the Company is established by the Plan Administrator or, if not so established, is 10 years from the grant date.

The Plan Administrator establishes the time at which each option shall vest and become exercisable. If not established in the instrument evidencing the option, the option shall vest and become exercisable according to the following schedule: (i) after one year of the participant’s continuous employment or service with the company or its related corporations, one quarter of the total options will be vested and exercisable; (ii) after each additional six-month period of continuous service completed thereafter, an additional one eighth of the total options will be vested and exercisable; and (iii) after four years, 100% of the options will be vested and exercisable. Under the terms of the Plan, the exercise price for shares shall be paid in cash or check to the Company unless the Plan Administrator determines otherwise.

The Plan Administrator shall determine whether the options will continue to be exercisable, and the terms and conditions of such exercise, if a participant ceases to be employed or provide services to the Company. If not so established in the instrument evidencing such options, any portion of an option that is not vested and exercisable on the date of termination of the participant’s employment or service relationship (the “Employment Termination Date”) shall expire on such date. Any portion of an option that is vested and exercisable on the Employment Termination Date shall expire upon the earliest to occur of: (i) if the participant’s Employment Termination Date occurs by reason of retirement, disability or death, the one-year anniversary of such Employment Termination Date; (ii) if the participant’s Employment Termination Date occurs for reasons other than cause, retirement, disability or death, the three-month anniversary of such Employment Termination Date; or (iii) the last day of the option term. Notwithstanding the foregoing, if the participant dies after the Employment Termination Date while the Option is otherwise exercisable, the portion of the option that is vested and exercisable on such Employment Termination Date shall expire upon the earlier to occur of: (a) the last day of the option term; or (b) the first anniversary of the date of death, unless the Plan Administrator determines otherwise.

If a participant is terminated for cause, the options shall automatically expire at the time the Company first notifies the participant of the termination. If a participant’s employment is suspended pending investigation of whether they will be terminated for cause, the participant’s rights under any option shall be suspended during the period of investigation. Awards granted under the Plan may not be assigned, except, to the extent permitted by Section 422 of the Internal Revenue Code (the “IRC”), and the Plan Administrator may permit such assignment, transfer and exercisability, and may permit a participant to designate a beneficiary who may exercise the award or receive compensation under the award after the participant’s death. Any award permitted to be assigned shall be subject to the terms and conditions contained in the instrument evidencing the award.

F-19

The Plan may only be amended by the Company’s Board of Directors, as it deems advisable. Shareholder approval shall be required for any amendment to the extent required for compliance with Section 422 of the IRC, as amended or any applicable law or regulation. The Board may suspend or terminate the Plan at any time. Incentive stock options may not be granted more than 10 years after the later of the Plan’s adoption by the Board or the adoption by the Board of any amendment to the Plan that constitutes adoption of a new plan for the purpose of Section 422 of the IRC. Participants who are residents of California shall be subject to additional terms and conditions until the Common Stock becomes a publicly traded security, under the California Securities Code.

The Company grandfathered the following options issued to consultants during the 4^th quarter of 2013 in to the 2014 Plan:

The Company entered into a Strategic Advisory Services Agreement with P5, LLC (“P5”) dated effective October 15, 2013, to provide strategic advisory services. As consideration for such services, the Company granted P5 a total of 17,500,000 options to purchase common stock of the Company, with 7,500,000 shares available for purchase at an exercise price of $0.65 per share and 10,000,000 shares available for purchase at an exercise price of $1.25 per share, with a grant term of seven years and subject to a vesting schedule. With respect to the options to purchase up to 7,500,000 shares at $0.65 per share, 2,500,000 options vest upon each of the following: (i) October 15, 2013 (the “P5 Grant Date”); (ii) 90 days after the P5 Grant Date; and (iii) 180 days after the P5 Grant Date. With respect to the options to purchase up to 10,000,000 shares at an exercise price of $1.25 per share, 2,500,000 options vest upon each of the following: April 1, 2014, July 1, 2014, October 1, 2014 and January 1, 2015.

The Company entered into a Strategic Advisory Services Agreement with a consultant dated effective October 15, 2013. As consideration for the consultant’s assistance in expanding the Company’s operations and securing new business arrangements, the Company granted the consultant an aggregate of 3,500,000 options to purchase common stock of the Company, with 1,500,000 shares available for purchase at an exercise price of $0.65 per share and 2,000,000 shares available for purchase at an exercise price of $1.25 per share, with a grant term of seven years and subject to a vesting schedule. With respect to the options to purchase up to 1,500,000 shares at $0.65 per share, 500,000 options vest upon each of the following: (i) October 15, 2013 (the “Consultant Grant Date”); (ii) 90 days after the Consultant Grant Date; and (iii) 180 days after the Consultant Grant Date. With respect to the options to purchase up to 2,000,000 shares at an exercise price of $1.25 per share, 500,000 options vest upon each of the following: April 1, 2014, July 1, 2014, October 1, 2014 and January 1, 2015.

On December 26, 2013, the Company entered into a Consulting Services Agreement with LR Advisors, LLC (“LRA”). Pursuant to the terms of the agreement, LRA agreed to provide the Company advisory services in connection with the Company’s investor relations. As compensation for such services, LRA was granted a total of 1,500,000 options to purchase common stock of the Company at an exercise price of $1.25 per share, with a grant term of seven years. The options vested in full upon execution of the agreement.

The Company entered into a Consulting Agreement with EAS Advisors, LLC (“EAS”) on January 1, 2014, whereby EAS agreed to provide the Company general corporate advice, guidance and strategic services relating to the Company’s milling assets and the development of mining clients and contacts. As consideration for such services, the Company granted EAS an aggregate of 2,000,000 options to purchase common stock of the Company, with 1,000,000 shares available for purchase at an exercise price of $1.25 per share and 1,000,000 shares available for purchase at an exercise price of $2.25 per share, with a grant term of seven years and subject to a vesting schedule. With respect to the options to purchase up to 1,000,000 shares at $1.25 per share, 250,000 options vest upon each of the following: (i) January 1, 2014 (the “EAS Grant Date”); (ii) 90 days after the EAS Grant Date; (iii) 180 days after the EAS Grant Date; and (iv) 270 days after the EAS Grant Date. With respect to the options to purchase up to 1,000,000 shares at an exercise price of $2.25 per share, 250,000 options vest upon each of the following: July 1, 2014, October 1, 2014, November 1, 2014 and December 1, 2014. The Company estimated the fair value of these options of $1,398,584 using the above Black-Scholes pricing model and will amortize over the vesting term.

F-20

On June 18, 2014, the Company granted 250,000 options to purchase common stock of the Company at an exercise price of $1.67 per share with a term of seven years to a legal advisor. The options vest in full on grant.

On June 18, 2014, the Company granted 750,000 options to purchase common stock of the Company at an exercise price of $1.67 per share with a term of seven years to the President of our Tonopah Custom Processing, Inc. subsidiary. The options vest in full on grant.

On June 18, 2014, the Company granted 1,000,000 options to purchase common stock of the Company at an exercise price of $1.67 per share with a term of seven years to an officer of the Company. The options vest in full on grant.

The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for stock awards. Compensation expense for stock awards is recognized on a straight-line basis over the vesting period of service awards and for performance-based awards, the Company recognizes the expense when the performance condition is probable of being met.

In determining the compensation cost of the stock awards granted during fiscal 2014 and 2013, the fair value of each grant had been estimated on the date of grant using the Black-Scholes pricing model and the weighted average assumptions used in these calculations are summarized below:

	2014	2013
Risk-free interest rate	2.21%	2.11%
Expected volatility factor	75%	75%
Expected dividend	—	—
Expected option term	7 years	7 years

The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to ensure an accurate valuation. The risk-free interest rate is based on the Federal Reserve Board’s constant maturities of the U.S. Treasury bond obligations with terms comparable to the expected life of the options at their issuance date. The Company uses historical data to estimate expected forfeitures, expected dividend yield, expected volatility of the Company’s stock and the expected life of the options.

The Company recorded $8,206,286 and $4,107,806 related to compensation expense for the years ended December 31, 2014 and 2013, respectively. All compensation expense is included in general and administrative expense. There was no tax benefit from recording this non-cash expense due to our income tax valuation allowance and due to a portion of the options being incentive stock options. The compensation expense had a $0.08 and $0.04 per share impact on the loss per share for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014, there was $703,372 in unrecognized compensation expense.

The following tables summarize information about the Company’s stock options:

	Number of Options			Weighted Average Exercise Price
Options outstanding - December 31, 2012		10,438,335		$	0.64

Granted		28,500,000			0.89
Canceled or expired		(6,187,493	)		0.56
Exercised		—			—
Options outstanding - December 31, 2013		32,750,842		$	0.88

Granted		4,000,000			1.71
Canceled or expired		(2,337,000	)		.79
Exercised		(282,000	)		.60
Options outstanding – December 31, 2014		34,131,842		$	0.99

Weighted average fair value of options granted during the year ended December 31, 2013				$	0.27
Weighted average fair value of options granted during the year ended December 31, 2014				$	0.94

F-21

A summary of the Company’s nonvested options at December 31, 2014, and changes during the year ended December 31, 2014, is presented below:

	Options			Weighted Average Grant Date Fair Value
Non-vested, beginning of period		21,750,000		$	0.24
Granted		4,000,000		$	0.94
Vested		(20,500,000	)	$	0.24
Forfeited		—		$	—
Non-vested, end of period		5,250,000		$	0.24

The following tables summarize information about stock options outstanding and exercisable at December 31, 2014:

	Options Outstanding at December 31, 2014
Range of Exercise Prices	Number Outstanding		Weighted Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)

$0.40 to $0.60		6,031,842	6.1 years	$	0.45	$	3,415,603
$0.61 to $1.00		10,600,000	5.5 years	$	0.69	$	3,310,000
$1.01 to $1.50		14,500,000	6.1 years	$	1.25	$	-
$1.51 to $2.25		3,000,000	6.6 years	$	1.86	$	-
$0.40 to $2.25		34,131,842	6.0 years	$	0.99	$	6,625,603

	Options Exercisable at December 31, 2014
Range of Exercise Prices	Number Exercisable		Weighted Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)

$0.40 to $0.60		3,781,842	6.1 years	$	0.44	$	2,115,603
$0.61 to $1.00		10,600,000	5.5 years	$	0.69	$	3,310,000
$1.01 to $1.50		11,500,000	6.1 years	$	1.25	$	-
$1.51 to $2.25		3,000,000	6.6 years	$	1.86	$	-
$0.40 to $2.25		28,881,842	5.9 years	$	1.00	$	5,425,603

(1)

The aggregate intrinsic value in the table represents the difference between the closing stock price on December 31, 2014 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options on December 31, 2014. No options were exercised during 2014.

F-22

Common Stock Purchase Warrants

For warrants granted to non-employees in exchange for services, we recorded the fair value of the equity instrument using the Black-Scholes pricing model unless the value of the services is more reliably measurable.

Pursuant to the terms of the employment agreement executed on February 19, 2013, the Company granted Joseph Rosamilia compensatory common stock purchase warrants for the purchase of 500,000 shares of common stock. The compensatory warrants vested quarterly in increments of 125,000 shares. All 500,000 compensatory warrants have vested. The exercise price of the 500,000 warrants is $0.20 per share. If the Company files a registration statement at any time while the compensatory warrants are exercisable, the shares purchasable under the compensatory warrants will be included in such registration statement. The compensatory warrants will be exercisable for seven years from the date of the Agreement.

On August 6, 2013, 3,916,849 warrants to purchase common stock were issued to tender offer participants. These warrants to purchase common stock were issued in an amount equal to the number of shares received under the conversion of the eligible note being exchanged pursuant to an issuer tender offer filed July 2, 2013, exercisable for two years with an exercise price of $0.25 per share for the first 180 days following the tender offer and $0.50 per share thereafter, with substantially the same terms as the original warrants except the new warrants contained a call provision that may be exercised at $0.80 if the Company’s common stock trades above $0.80 for ten consecutive days.

On October 7, 2014, 466,667 warrants to purchase common stock were exercised at a per share price of $0.60 for a total of $280,000.

On October 17, 2014, 112,360 warrants to purchase common stock were exercised at a per share price of $0.89 for a total of $100,000.

On November 26, 2014, 35,000 warrants to purchase common stock were exercised at a per share price of $0.89 for a total of $31,150.

On November 26, 2014, 283,333 warrants to purchase common stock were exercised at a per share price of $0.60 for a total of $170,000.

On December 5, 2014, 57,000 warrants to purchase common stock were exercised at a per share price of $0.89 for a total of $50,730.

In 2013, the Company issued 153,995 warrants to purchase common stock at an exercise price of $0.25 per share exercisable for two years.

On June 20, 2013, the Company issued 4,500,000 warrants to purchase common stock at an exercise price of $0.89 per share expiring on June 20, 2020.

On September 11, 2013, the Company issued 400,000 warrants to purchase common stock at an exercise price of $0.01 cent per share.

On December 5, 2013, the Company issued 63,500 warrants to purchase common stock at an exercise price of $0.25 per share expiring on August 6, 2015.

F-23

Using the Black-Scholes pricing model, the following assumptions were used to calculate the fair value of the stock purchase warrants granted, for which the fair value of the services were not more reliably measurable: (ii) during 2013: dividend yield of 0%, risk-free interest rate of the “on-the-run” U.S. Treasury bond of the equivalent tenor, expected life equal to the contractual life of the respective warrant, and volatility of 75% and (ii) during 2012: dividend yield of 0%, risk-free interest rate of 2%, expected life equal to the contractual life of two years, and volatility of 153%.

The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to ensure an accurate valuation. The risk-free interest rate is based on the Federal Reserve Board’s constant maturities of the U.S. Treasury bond obligations with terms comparable to the contractual term of the warrants at their issuance date. The Company uses historical data to estimate expected dividend yield and volatility of the Company’s stock.

The following table summarizes information about the Company’s stock purchase warrants outstanding at December 31, 2014 and 2013:

	Number			Weighted Average Exercise Price		Range of Exercise Price		Weighted Remaining Contractual Life
Outstanding at December 31, 2012		11,126,875		$	0.63	$	0.25 – 1.00	1.7 years

Granted		9,534,345		$	0.54	$	0.01-0.89
Cancelled or expired		(4,396,878	)	$	0.50	$	0.50-1.00
Exercised		(2,275,138	)	$	0.22	$	0.01-0.50
Outstanding at December 31, 2013		13,989,207		$	0.67	$	0.20 – 1.00	3.3 years

Granted		150,000		$	2.00	$	2.00
Cancelled or expired		(1,630,000	)		1.00	$	1.00
Exercised		(7,025,227	)	$	0.54	$	0.25 – 1.00
Outstanding at December 31, 2014		5,483,980		$	0.79	$	0.20 – 2.00	4.8 years

Warrants exercisable at December 31, 2014							5,483,980

During the year ended December 31, 2014, a total of 7,025,227 warrants to purchase common stock were exercised: 1,730,867 warrants were exercised at a price of $0.25 per share; 620,000 warrants exercised at $0.50 per share; 4,000,000 warrants exercised at $0.60 per share, 244,360 warrants exercised at $0.89 per share and 430,000 at $1.00 per share for an aggregate total of $3,790,197.

The aggregate intrinsic value of the 5,483,980 outstanding and exercisable warrants at December 31, 2014 was $1,301,875. The intrinsic value is the difference between the closing stock price on December 31, 2014 and the exercise price, multiplied by the number of in-the-money warrants had all warrant holders exercised their warrants on December 31, 2013.

The aggregate intrinsic value of the 13,989,207 outstanding and exercisable warrants at December 31, 2013 was $5,471,473. The intrinsic value is the difference between the closing stock price on December 31, 2013 and the exercise price, multiplied by the number of in-the-money warrants had all warrant holders exercised their warrants on December 31, 2013.

F-24

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Executive Employment Agreements

On November 13, 2013, the Company entered into an employment agreement with Sharon Ullman to serve as Chief Executive Officer (CEO). Ms. Ullman had been serving as the Company’s interim CEO since December 16, 2011, and CEO since October 9, 2012 when the Board removed “interim” from her title, but did not have an agreement in place. The term of the agreement is for a period of three years commencing on November 13, 2013. Ms. Ullman shall be paid a salary consisting of $12,500 per month and shall be reimbursed for out of pocket business expenses already paid by her during her service to the Company and any health insurance payments she has made beginning November 1, 2013. Ms. Ullman was issued options to purchase 4,500,000 shares of Common Stock of the Company at $0.40 per share, of which 1,500,000 vested on November 13, 2013, 1,500,000 will vest on June 1, 2014, and 1,500,000 will vest on June 1, 2015. If there is a change in control of the Company, upon termination of her employment or during a period of disability Ms. Ullman will be entitled to the benefits listed above.

On February 19, 2013, the Company entered into an employment agreement with Joseph Rosamilia to serve as Chief Financial Officer (CFO). The term of the agreement is for a period of Three (3) years, commencing on February 1, 2013. In his first year of employment, Mr. Rosamilia is entitled to a base salary of $5,000 per month for February through April and $7,500 per month for May 2013 through January 2014. The Company granted the Employee compensatory common stock purchase warrants for the purchase of 1,500,000 shares of common stock, with 500,000 compensatory warrants currently vested. The exercise price of the 500,000 compensatory warrants is $0.20 per share. If the Company files a registration statement at any time while the compensatory warrants are exercisable, the shares purchasable under the compensatory warrants will be included in such registration statement. The compensatory warrants will be exercisable for seven years from the date of the agreement. The agreement includes standard confidentiality provisions, as well as a one-year non-solicitation provision and a one-year non-competition provision. The Company and Rosamilia executed an addendum to the employment agreement dated April 1, 2014 cancelling 1,000,000 compensatory warrants.

On June 10, 2014 the Company entered into a one year employment agreement with Robert Geiges to serve as our Chief Financial Officer with a base salary of $1,000 per month.

Except as reported in Item 11, we have not entered into any severance or change of control provisions with any of our other executive officers.

Legal Matters

Mark Dacko

Midwest Investment Partners, LLC v. Standard Gold Holdings, Inc.

F-25

Midwest Investment Partners, LLC v. Standard Metals Processing, Inc.

F-26

Stephen E. Flechner v. Standard Metals Processing, Inc.

Deborah A. King v. Standard Metals Processing, Inc. f/k/a Standard Gold, Inc., Nevada Corporation

Blair Mielke v. Standard Metals Processing, Inc., a Nevada corporation, and Does 1 through 20, and Roes Corporations 1 through 20, inclusive

F-27

Consulting Agreement

In May 2011, the Company entered into an agreement with a consultant to operate and manage a future toll milling facility in Clark County, Nevada as well as to perform other services as requested by the Company. The term of the agreement was for two years and could be renewed by mutual agreement of the parties. In return for these services, the Company had agreed to the following compensation throughout the term of this agreement:

(1)

Issue 300,000 shares of its unregistered common stock, valued at $564,000 or $1.88 per share, the closing price on the date the agreement was executed;

(2)

Pay the consultant a cash payment of $10,000 per month, plus certain living accommodation expenses for a residence in Clark County;

(3)

Pay the consultant 25% of the calculated monthly net profits, as defined in the agreement, of the Clark County toll milling facility; and

(4)

Pay the consultant 10% of the Company’s net profits derived from those contracts originated by the consultant.

The Company has abandoned any plans to construct a facility in Clark County because of zoning and permitting requirements. This location could have only been a laboratory and not a facility that housed both toll milling capabilities and a laboratory. At December 31, 2013, the Company had accrued $458,250 and $183,790 for the future issuance of the common stock and unpaid monthly cash payments, respectively. On February 13, 2014, the Company issued the 300,000 unregistered shares of common stock valued at $480,000 to the consultant.

NOTE 9 – RELATED PARTY TRANSACTIONS

Tina Gregerson/Tina Gregerson Family Properties, LLC

Tina Gregerson was appointed to our board of directors on October 1, 2012 and was appointed to chair the Company’s Compensation Committee. On February 11, 2015, the Company issued an unsecured promissory note (the “Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a director of the Company. The Note for up to $750,000 will be provided in tranches. Maturity of each tranche is one year from the date of receipt. Interest will accrue at 8% per annum on each tranche. As consideration, the Company agreed to issue common stock purchase warrants for the purchase of up to 250,000 shares of common stock exercisable for seven years at $1.23 per share. Under the terms of the Note, the Company received $200,000 on February 11, 2015 and $48,000 on February 13, 2015.

Pure Path Management Company, LLC

Pure Path Management Company, LLC (“Pure Path”) is currently the beneficial owner of 23% of the Company. On October 10, 2013, the Company issued 27,000,000 shares of common stock to Pure Path Management Company, LLC to settle $1,500,000 of the note payable and accrued interest by the Company to Pure Path.

In connection with the assignment of the Forbearance Agreement, the Parties executed an Agreement in Principle setting forth terms of the Forbearance Agreement (collectively the “Pure Path Agreements”). Pursuant to the Pure Path Agreements, Pure Path was to receive participation payments to be received on a quarterly basis for seven years after the final closing at a rate of 5% of adjusted gross revenue as such terms are defined in the Pure Path Agreements, past and future consulting fees for approximately $1,150,000, collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust, registration rights, rights of first refusal, tag along rights, preemptive rights, exclusive worldwide rights pertaining to financing and joint ventures, and other negative covenants regarding approval of corporate actions.

F-28

Pursuant to the Settlement and Release Agreement, Pure Path relinquished the foregoing rights and obligations owed to it and agreed to forbear 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 and relinquishment of rights by Pure Path, the Company issued 27,000,000 restricted shares and a Promissory Note (the “Pure Path Note”)in the 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.

Under the terms of the Pure Path Note noted above, the Company received $82,500 on December 26, 2014 and $53,000 on February 4, 2015, such amounts were added to the principal of the Pure Path Note.

NOTE 10 - INCOME TAXES

The components of income tax expense for the years ended December 31, 2014 and 2013 consist of the following:

	2014			2013
Current tax provision	$	—		$	—
Deferred tax benefit		(5,519,000	)		(2,635,000	)
Valuation allowance		5,519,000			2,635,000
Total income tax provision	$	—		$	—

Reconciliations between the statutory rate and the effective tax rate for the years ended December 31, 2014 and 2013 consist as follows:

	2014			2013
Federal statutory tax rate		(34.0	)%		(34.0	)%
State taxes, net of federal benefit		0	%		0	%
Permanent differences		—			—	%
Expiration of Stock Options		—			—	%
Other		—			—	%
Valuation allowance		34	%		34	%
Effective tax rate		—			—

Significant components of the Company's estimated deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	9,093,000		$	3,574,000
Total deferred tax asset		9,093,000			3,574,000
Valuation allowance		(9,093,000	)		(3,574,000	)
	$	-		$	-

As of December 31, 2014, we had approximately $20,785,000 of federal net operating loss carry forwards. These carry forwards, if not used, will begin to expire in 2028. Future utilization of our net operating loss carry forwards is subject to certain limitations under Section 382 of the Internal Revenue Code. We believe that the issuance of our common stock in exchange for the Shea Mining and Milling properties in March of 2011 resulted in an “ownership change” under the rules and regulations of Section 382. Accordingly, our ability to utilize our net operating losses generated prior to this date is limited to approximately $1,000,000 annually.

We provide for a valuation allowance when it is more likely than not that we will not realize a portion of the deferred tax assets. We have established a valuation allowance against our net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying financial statements. Our net deferred tax asset and valuation allowance decreased by $5,519,000 in the year ended December 31, 2014.

F-29

We reviewed all income tax positions taken or that we expect to be taken for all open years and determined that our income tax positions are appropriately stated and supported for all open years. The Company is subject to U.S. federal income tax examinations by tax authorities for years after 2010 due to unexpired net operating loss carryforwards originating in and subsequent to that year. The Company may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction.

NOTE 11 – EARNINGS (LOSS) PER SHARE

At December 31, 2014 and 2013, the weighted average shares from stock options of 35,604,540 and 11,000,842, respectively and warrants of 9,654,908 and 13,989,207, respectively 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.

NOTE 12 – SUBSEQUENT EVENTS

On January 16, 2015 Jonathan Spier was appointed as Chief Operating Officer the Company. Mr. Spier will receive monthly compensation of $1 for January through March 2015 and $12,500 thereafter. Mr. Spier was granted 2,250,000 options under the 2014 Plan with an exercise price of $1.15 per share for a term of seven years. The options shall vest and become exercisable as follows: (i) 750,000 shall vest on the Date of Grant; (ii) 187,500 shall vest on each of the following dates: April 1, 2015, July 1, 2015, October 1, 2015, January 1, 2016, April 1, 2016, July 1, 2016, October 1, 2016 and January 1, 2017. On March 27, 2015 the Company and Mr. Spier executed an addendum to his agreement wherein he agreed to take on additional responsibilities. As consideration, the Company issued an additional 7,000,000 options under the 2014 Plan with an exercise price of $1.00 for a term of seven years.

Promissory Notes

On February 11, 2015, the Company issued an unsecured promissory note (the “Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a director of the Company. The Note for up to $750,000 will be provided in tranches. Maturity of each tranche is one year from the date of receipt. Interest will accrue at 8% per annum on each tranche. As consideration, the Company agreed to issue common stock purchase warrants for the purchase of up to 250,000 shares of common stock exercisable for seven years at $1.23 per share. Under the terms of the Note, the Company received $200,000 on February 11, 2015 and $48,000 on February 13, 2015.

Under the terms of the Pure Path Note, the Company received $53,000 on February 4, 2015.

Warrant Exercise

On March 2, 2015, a holder of common stock purchase warrants purchased 100,000 shares at a per share price of $0.89.

Payment Agreement

On March 12, 2015 the Company and a vendor of certain equipment entered into an agreement in which the Company agreed to make monthly payments of $50,000 commencing April 15, 2015, as an inducement to enter into the agreement the Company granted the vendor 100,000 shares of it restricted common stock and 150,000 common stock purchase warrants exercisable for three years at a per share price of $1.25.

F-30

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

Under the supervision of, and the participation of, our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Annual Report on Form 10-K to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were not effective as of December 31, 2014, because of the identification of the material weaknesses in internal control over financial reporting described below. Notwithstanding the material weaknesses that existed as of December 31, 2014, our Chief Executive Officer and Chief Financial Officer have each concluded that the consolidated financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, the financial position, results of operations and cash flows of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We are currently taking steps to remediate such material weaknesses as described below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of December 31, 2009.

As a result of our continued material weaknesses described below, management has concluded that, as of December 31, 2014, our internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment, management identified the following control deficiencies, which were previously identified, that still represent material weaknesses at December 31, 2014:

·		The Company, at times in the past prior to the period covered by this annual statement, entered into material transactions without timely obtaining the appropriate signed agreements, stock certificates and board approval prior to releasing cash funds called for by the transaction. Management believes the approval process currently in place is sufficient to alleviate any misappropriation of funds and will change procedures if and when circumstances indicate they are needed. Although the Company has taken steps to prevent this from happening by utilizing an escrow agent, agreements entered into by prior management will continue to cause an issue until such prior agreements terminate or expire.

	·		Management did not design and maintain effective control relating to the quarter end closing and financial reporting process due to lack of evidence of review surrounding various account reconciliations and properly evidenced journal entries. Due to the Company’s limited resources, the Company has insufficient personnel resources and technical accounting and reporting expertise to properly address all of the accounting matters inherent in the Company’s financial transactions. Additionally, though the Company has recently formed a formal audit committee, the Company has not yet formalized processes and controls that would provide proper board oversight role within the financial reporting process. Management continues to search for additional board members that are independent and can add financial expertise, and intends to formalize oversight processes in this area in an effort to remediate part of this material weakness.

	·		The Company’s change in management, board members and officer positions resulting in changes of the responsible person for certain duties has caused delays in the timely review of financial data and banking information. The Company has very limited review procedures in place. This material weakness, previously identified, continued in 2014 as a result of additional management changes. Management plans to establish a more formal review process by the board members in an effort to reduce the risk of fraud and financial misstatements.

We are in the process of establishing certain steps in response to the identification of these material weaknesses that should result in certain changes in our internal control over financial reporting, but due to the Company’s limited funds and inability to add certain staff personnel, the changes may be limited and may also not be completely effective. There were no additional material weaknesses noted during the quarter ended December 31, 2014.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below are the names of all directors and executive officers of the Company, their respective ages and all positions and offices with the Company held by each person as of March 31, 2014:

Name	Age	Positions with the Company

Sharon L. Ullman	68	Chief Executive Officer, President and Director (Executive Chairwoman)
Robert (Bob) Geiges	68	Chief Financial Officer
Tina Gregerson	59	Director and Secretary
James (Jim) Stieben	41	Director

Sharon L. Ullman

Sharon L. Ullman was appointed to our board of directors on March 18, 2011, in connection with the Shea Exchange Agreement. Effective December 16, 2011, Ms. Ullman was appointed to serve as the Company’s interim Chief Executive Officer and Executive Chairperson of the Board. On October 9, 2012, the Board of Directors voted to remove “interim” from her title and approve her position as Chief Executive Officer and Chairman of the Board. On February 6, 2014, the Board of Directors voted to appoint Ms. Ullman the Company’s President and Executive Chairwoman of the Board of Directors.

Since June 2010, Ms. Ullman has served as the Manager of Afignis, LLC (“Afignis”), a New York limited liability company, which was established to identify and develop mining, natural resource and agricultural opportunities on a global basis, with a focus on emerging markets. Afignis has made several investments, including holding approximately 19% of our outstanding common stock and the acquisition of mining and agricultural interests in Sierra Leone, Africa. The Sierra Leone investment is managed by Afignis Sierra Leone Limited, a Sierra Leone company, which is a strategic partnership between the Mende tribe and Afignis. Ms. Ullman has been the President of Afignis Sierra Leone Limited since 2010. Afignis Sierra Leone Limited is involved in gold and diamond mining operations and had interests in large parcels of arable land for agriculture including acres of cacao and coffee plantations.

Ms. Ullman is active in philanthropic and government relations through her work as the Founder, President and Chief Executive Officer of S. L. Ullman & Associates, formed in 2007 as a private consulting firm, and has been recognized for her achievements in these areas.

Ms. Ullman served as the Executive Director and President of the 23rd Street Association (the “Association”). Through her efforts, the Association was involved in the development of Project 9A, the Hudson River Waterfront and the High Line. She was a prominent leader in the revitalization of historic Madison Square Park, helping to raise millions for its restoration and maintenance. She successfully led the effort to establish the Flatiron/23rd Street Partnership, a Business Improvement District in the Flatiron/23rd Street area. Her efforts as the founding member and member of the Board, helped reinforce the Flatiron/23rd Street area’s growing stature as one of the city’s premier destination spots.

Ms. Ullman has worked with all levels of government and government agencies and has been widely acknowledged for her contributions. Her numerous awards include being voted a top 100 New Yorker. She was written into the congressional record with remarks in recognition of her outstanding leadership by congresswoman Carolyn Maloney in 2004 and 2007, she received letters of recognition and outstanding citizen citations from President Bill Clinton, Governor George Pataki, Mayors Michael Bloomberg and Rudolf Giuliani, and she received letters of recognition from then senator Hillary Rodham Clinton and Charles E. Schumer.

Ms. Ullman has been awarded the Outstanding Citizen Award from Speaker Christine Quinn, Council of the City of New York, and letters of recognition from State Senators, State Assembly Members, City Council Members and Police Commissioners. She received the Tilden Humanitarian Award and the Humanitarian of the Year Award from Concerned Citizen’s Speak. She has participated in Mayor Bloomberg’s “Friday Morning Breakfasts” for outstanding community leaders to discuss important issues affecting the city.

Tina Gregerson

Tina Gregerson was appointed to our board of directors on September 27, 2012 and was appointed Secretary of the Company on November 29. 2012. She also serves on the compensation committee and as chairman of the compensation committee.

Since 1981, Tina Gregerson has owned and served as the CEO of Personnel Staffing, Inc., one of Alabama’s largest independent staffing companies. Under Tina’s leadership, Personnel Staffing has grown to produce over $96,000,000 in annual revenue and now operates five Alabama branches, one Texas branch, and one branch in Tennessee. Personnel Staffing is certified through the National Women’s Business Enterprise (“WBENC”) and won the Best Minority-Owned Business Award for 2008 for 26+ employees, named by The Birmingham Business Journal. In 1994, Personal Staffing was recognized as Business of the Year by the Alabama Business Woman Association and in 2002, it was recognized as Small Business of the Year by the Gadsden Etowah Chamber of Commerce.

In 2010, Tina received the Woman of Distinction Award by the Alabama Girl Scouts. In 2010, Ms. Gregerson sold The Signature Group, a financing company where she held the position of Managing Member, to North Carolina Mutual Life. She is also the owner of Gregerson Management Services. Ms. Gregerson currently serves on the Board of Directors for Capstone Bank of Tuscaloosa, the Executive Board for the National Independent Staffing Association, and the Executive Board of Staffing CEO’s. She currently serves on the Executive Board of Staffing CEO’s. She has also served as the Chairperson for the Gadsden Chamber of Commerce and on the Chamber Board for five years and was a member of the Riverview Regional Medical Center Board of Trustees for two years. For her continued leadership, dedication and service to the community Ms. Gregerson received commendation from the Governor of Alabama in August of 2011.

James “Jim” Stieben

Jim Stieben is a member of the Board of Directors. He has spent the last six years working in the mining and milling industry engineering, designing and fabricating mineral processing equipment. Mr. Stieben has been employed by the Company since 2009 and has been an integral part of developing the Company’s toll milling operations in Tonopah, Nevada. Mr. Stieben’s contributions to the daily operations and growth of the Tonopah property include: overseeing the clean up of the property to meet the requirements of the US Environmental Protection Agency (“EPA”), providing engineering support for the fabrication and construction of our 21,875 square foot processing plant, managing consultants, independent contractors, geologists and engineers on the Tonopah property, and working with metallurgical engineers to engineer and design our precious metal processing facility. He is leading the permitting process of the mineral processing facility for the Company with Nevada Department of Environmental Protection (“NDEP”). On October 15, 2013, Mr. Stieben was appointed the Director of Operations of Tonopah Custom Processing, Inc., a subsidiary of Tonopah Milling and Metals Group, LLC, a subsidiary of the Company.

Prior to his work with the Company, Mr. Stieben spent 18 years working in engineering and production environments and 23 years working in the manufacturing industry. He has worked on several large-scale projects involving plant design, intricate small scale tooling design, and machining.

As a sales manager for various silicone and rubber companies, he serviced the commercial, aircraft, automotive and heavy truck industry. In 2001, Mr. Stieben established ElastoFab Technologies, a US government contracting business providing durable custom rubber and plastic products to the US government and military. He designed and built a complete rubber fabrication plant including extrusions, molding, die cutting and splicing capabilities. ElastoFab Technologies provided the U.S. Army and U.S. Navy with engineered rubber products located on a variety of large pieces of equipment from the M1-Abrams tank to CVN Aircraft Carriers. In 2005 he designed and developed a new manufacturing process to fabricate silicone hose increasing plant output by 300%. This proprietary method is still being used today by a select group of silicone hose manufactures. He still owns the tooling, which he designed and machined himself.

Mr. Stieben is a member of the Society of Manufacturing Engineers (“SME”). He is an accomplished designer using both 2D and 3D CAD software programs such as AutoCad and Solidworks suites.

Robert “Bob” Geiges

Robert Geiges has over 35 years of broad accounting and management experience with multi-billion dollar international businesses such as Drake International, the Thomson Corporation and several other entrepreneurial companies. He has experience in both domestic and international operations including establishing and managing facilities in Asia and Europe.

Mr. Geiges is currently a consultant with Eventus Consulting P.C. and managing member of Geiges & Associates LLC, a strategic planning and financial consulting practice. Geiges & Associates LLC places a heavy emphasis on early stage businesses and turnaround opportunities.

Mr. Geiges was the Chief Financial Officer and Controller for several international entities including Baywood International, Inc., The Producers, Inc., Power Trade Media, LLC, a Drake International company – ComputerPREP, Inc., Clarion Management Ltd., Huebcore Communication, Inc. and Thomson Corporation. Mr. Geiges also performed audit services for both public and private clients during his time at Deloitte LLP in the Philadelphia, Pennsylvania office.

An accomplished lecturer, he has lectured globally on various strategic business topics. Mr. Geiges made presentations on “Global Logistics Management” in Shanghai, China, “Financing Growth,” at the Financial Forum in Atlanta, Georgia, and “Computer Models for Growth,” at the CFO Forum in Westchester, New York. He has lectured on Financial and Management Accounting and on the Analysis of Financial Statements and Strategic Direction. He is affiliated with the American Institute of Certified Public Accountants, the Pennsylvania Institute, the Arizona Society of Certified Public Accountants, the Information Industry Association, and the Association of Business Publishers where he acted as the former chair of the Finance Committee. He is also a member of Beta Gamma Sigma, the national business honorary society.

CODE OF ETHICS

We adopted a Code of Ethics that applies to our principal executive officer, principal financial officer and persons performing similar functions on October 5, 2012.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, officers and holders of more than 10% of our common stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely upon our review of such filings, we are not aware of any failures by such persons to make any such filings on a timely basis.

AUDIT COMMITTEE, COMPENSATION COMMITTEE AND FINANCIAL EXPERT

The Company does have a formal audit committee but currently does not have a financial expert. The audit committee consists of Tina Gregerson and Sharon Ullman. There were two audit committee meetings held during 2014. Financial information relating to quarterly reports was disseminated to all board members for review. The audited financial statements for the years ended December 31, 2014 and 2013 were provided to each member of the board in which any concerns by the members were directed to management and the auditors.

The Company has a compensation committee comprised of Sharon Ullman and Tina Gregerson. There was one compensation committee meeting during 2014.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation of each named executive officer for the fiscal years ended December 31, 2014 and 2013 awarded to or earned by (i) each individual serving as our principal executive officer and principal financial officer of the Company and (ii) each individual that served as an executive officer of the Company at the end of such fiscal years who received compensation in excess of $100,000.

	Annual Compensation					Option			All Other
Name and Principal Position	Year	Salary		Bonus		Awards ⁽¹⁾			Compensation			Total ($)

Chief Executive Officer and President
Sharon L. Ullman	2013	$	117,750	$	—	$	395,117	⁽²⁾	$	7,226	⁽³⁾	$	520,093
	2014	$	250,000	$	—	$	—		$	12,637	⁽³⁾	$	262,637

Director and President subsidiary
James Stieben	2014	$	133,333	$	—	$	880,660	⁽⁴⁾	$	13,139	⁽⁵⁾	$	1,027,132

Secretary and Director
Tina Gregerson	2013	$	—	$	—	$	—		$	—		$	—
	2014	$	—	$	—	$	1,174,213	⁽⁶⁾	$	—		$	1,174,213

Chief Financial Officer
Joseph Rosamilia⁽⁸⁾	2013	$	75,000	$	—	$	130,169	⁽⁷⁾	$	—		$	205,169
	2014	$	30,000	$	—	$	—		$	—		$	30,000

Chief Financial Officer
Robert Geiges ⁽⁹⁾	2014	$	6,000	$	—	$	—		$	—		$	6,000

	(1)	The amounts shown are the aggregate grant date fair values of these awards computed in accordance with Financial Accounting Standards Board (“FASB”) guidance now codified as Accounting Standards Codification (“ASC”) FASB ASC Topic 718, “Stock Compensation” (formerly under FASB Statement No. 123(R)).
	(2)	Ms. Ullman was granted 4,500,000 options exercisable at $0.40 per share. As of December 31, 2014, 3,000,000 options have vested and are currently exercisable. Please see Note 8 in the Notes to the Financial Statements for a discussion of the assumptions made in the valuation of the Company’s options.
	(3)	other compensation consists of healthcare payments made pursuant to Ms. Ullman’s employment agreement.
	(4)	Mr. Stieben was granted 750,000 options exercisable at $1.67 per share and vested at grant June 18, 2014. Please see Note 7 in the Notes to the Financial Statements for a discussion of the assumptions made in the valuation of the Company’s options.
	(5)	The listed above as other compensation consists of healthcare payments and Truck allowance made pursuant to Mr. Stieben’s agreement with the Compensation committee.
	(6)	Ms. Gregerson was granted 1,000,000 options exercisable at $1.67 per share and vested at grant June 18, 2014. Please see Note 7 in the Notes to the Financial Statements for a discussion of the assumptions made in the valuation of the Company’s options.
	(7)	Mr. Rosamilia was granted 500,000 options exercisable at $0.20 per share on February 19, 2013. 1,000,000 options were canceled on April 1, 2014. The 500,000 compensatory warrants to purchase common stock are vested and fully exercisable. Please see Note 8 in the Notes to the Financial Statements for a discussion of the assumptions made in the valuation of the Company’s options.
	(8)	As of June 9, 2014, Joseph Rosamilia is no longer serving as the CFO of the Company.
	(9)	Mr. Geiges was appointed as the CFO on June 10, 2014.

GOLDEN PARACHUTE COMPENSATION TABLE

	Annual Compensation
Name and Principal Position	Cash ($)			Equity ($)		Perquisites/ Benefits ($)		Other ($)		Total ($)
Chief Executive Officer and President
Sharon L. Ullman	$	300,000	(*)	$		$	—	$	—	$	300,000

Director
James Stieben	$	—		$	—	$	—	$	—	$	—

Secretary and Director
Tina Gregerson	$	—		$	—	$	—	$	—	$	—

Chief Financial Officer
Robert Geiges	$	—		$	—	$	—	$	—	$	—

Chief Financial Officer
Joseph Rosamilia	$	—		$	—	$	—	$	—	$	—

(*)We entered into a change of control termination agreement with Ms. Ullman. The change of control termination agreement commenced on November 13, 2013 and is to remain effective until May 16, 2016. If Ms. Ullman is terminated (a) by the Company other than for cause, retirement or disability or (b) by Ms. Ullman for good reason, then she is entitled to a lump sum severance payment equal to Two (2) times the sum of the annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the notice of termination given in respect of them in addition to other benefits listed below. The $300,000.00 listed above is calculated based upon her current salary as included in her employment contract. Other benefits Ms. Ullman will be entitled to if there is a change in control of the Company pursuant to her Change of Control Termination Agreement that cannot be calculated without knowing specific timing and facts of the termination are as follows:

(i)

during any period of incapacity due to physical or mental illness, Ms. Ullman will continue to receive her base salary at the rate in effect at the commencement of any such period, together with all amounts payable under any compensation plan of the Company during such period;

(ii)

if her employment is terminated by the Company for cause or by Ms. Ullman other than for good reason, disability, death or retirement, the Company shall pay the full base salary through the date of termination at the rate in effect at the time notice of termination is given, plus all other amounts and benefits to which she is entitled under any compensation plan of the Company at the time such payments are due; and

(iii)

if employment by the Company is terminated (a) by the Company other than for cause, retirement or disability or (b) by Ms. Ullman for good reason, then she is entitled to the following benefits: (A) the Company will pay the full base salary through the date of termination at the rate in effect at the time notice of termination is given, plus all other amounts and benefits to which she is entitled under any compensation plan of the Company, at the time such payments are due; (B) in lieu of any further salary payments for periods subsequent to the date of termination, the Company shall pay as severance pay a lump sum severance payment (together with the payments provided in paragraphs C and D, below) equal to Two (2) times the sum of the annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the notice of termination given in respect of them; (C) the Company shall pay any deferred compensation, including, but not limited to deferred bonuses, allocated or credited as of the date of termination; (D) in lieu of shares of common stock of the Company (the “Company’s Shares”) issuable upon exercise of outstanding options (“Options”), if any, granted under the Company’s Stock Option Plans she shall receive an amount in cash equal to the product of (i) the excess of the closing price of the Company’s Shares as reported on the NASDAQ-NMS Automatic Quotation System on or nearest the date of termination (or, if not so reported, on the basis of the average of the lowest asked and highest bid prices on or nearest the date of termination), over the per share exercise price of each Option held by Ms. Ullman (whether or not then fully exercisable) plus the amount of any applicable cash appreciation rights, times (ii) the number of the Company’s Shares covered by each such Option; (E) the Company shall also pay all legal fees and expenses incurred by Ms. Ullman as a result of such termination; and (F) the payments provided for in paragraphs (B), (C), and (D) above, shall be made no later than the fifth day following the date of termination, provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay Ms. Ullman on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest) as soon as the amount can be determined but in no event later than the 30th day after the date of termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company payable on the fifth day after demand by the Company (together with interest).

EXECUTIVE EMPLOYMENT AGREEMENTS

On June 10, 2014 the Company entered into an employment agreement with Robert Geiges to serve as the Chief Financial Officer. The term is for one year and Mr. Geiges will receive a salary of $1,000 per month.

On November 13, 2013, we entered into an employment agreement with Sharon Ullman to serve as our Chief Executive Officer. Ms. Ullman had been serving as the Company’s interim CEO since December 16, 2011, and CEO since October 9, 2012 when the Board removed “interim” from her title, but did not have an agreement in place. The term of the agreement is for a period of Three years commencing on November 13, 2013. Ms. Ullman shall be paid a salary consisting of $12,500 per month and shall be reimbursed for out of pocket business expenses already paid by her during her service to the Company and any health insurance payments she has made beginning November 1, 2013. Ms. Ullman was issued options to purchase 4,500,000 shares of Common Stock of the Company at $0.40 per share, of which 1,500,000 vested on November 13, 2013, 1,500,000 vested on June 1, 2014, and 1,500,000 will vest on June 1, 2015. If there is a change in control of the Company, upon termination of her employment or during a period of disability Ms. Ullman will be entitled to the benefits listed above.

On February 19, 2013, we entered into an employment agreement with Joseph Rosamilia to serve as our Chief Financial Officer. The term of the agreement is for a period of Three years, commencing on February 1, 2013. In his first year of employment, Mr. Rosamilia is entitled to a base salary of $5,000 per month for February through April and $7,500 per month for May 2013 through January 2014. The Company granted the Employee compensatory common stock purchase warrants for the purchase of 1,500,000 shares of common stock, with 500,000 compensatory warrants currently vested. The exercise price of the 500,000 compensatory warrants is $0.20 per share. If the Company files a registration statement at any time while the compensatory warrants are exercisable, the shares purchasable under the compensatory warrants will be included in such registration statement. The compensatory warrants will be exercisable for Seven years from the date of the agreement. The agreement includes standard confidentiality provisions, as well as a one-year non-solicitation provision and a one-year non-competition provision. The Company and the CFO executed an addendum to the employment agreement dated April 1, 2014 cancelling 1,000,000 compensatory warrants. Mr. Rosamilia resigned on June 9, 2014.

Except as reported above, we have not entered into any severance or change of control provisions with any of our other executive officers.

OUTSTANDING EQUITY AWARDS TABLE

No options were exercised by our named executive officers during the year ended December 31, 2014. The following table sets forth information of outstanding option awards held by named executive officers as of December 31, 2014.

Name	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
Sharon L. Ullman		3,000,000		—		1,500,000	$	0.40	11/13/2020
Joseph Rosamilia		500,000		—		—	$	0.20	2/19/2020

DIRECTOR COMPENSATION

Members of our board who are also employees of ours receive no compensation for their services as directors. Non-employee directors are reimbursed for all reasonable and necessary costs and expenses incurred in connection with their duties as directors. In addition, we issue options to our directors as determined from time to time by the Board.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The following information sets forth the number and percentage of shares of the Company’s common stock owned beneficially, as of March 31, 2015, by any person, who is known to the Company to be the beneficial owner of five percent or more of the Company’s common stock, and, in addition, by each director and each executive officer of the Company, and by all directors and executive officers as a group.

Information as to beneficial ownership is based upon statements furnished to the Company by such persons and the shareholder list provided by the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, as of March 31, 2015.

Name and Address	Amount of Beneficial Ownership (1)			Percentage of Class %

Sharon Ullman		23,400,000	⁽²⁾		22.6	%
611 Walnut Street
Gadsden, AL 35901

Jim Stieben		2,000,000	⁽³⁾		2	%
611 Walnut Street
Gadsden, AL 35901

Tina Gregerson		15,270,000	⁽⁴⁾		14.7	%
611 Walnut Street
Gadsden, AL 35901

Joseph Rosamilia		500,000	⁽⁵⁾		*
611 Walnut Street
Gadsden, AL 35901

All directors and officers as a group (4 persons)		41,170,000			40	%

Pure Path Capital Management, LLC		23,400,000			22.6	%
5348 Vegas Drive
Suite 623
Las Vegas, NV 89108

Ashford Capital Management, Inc.		10,245,000			9.9	%
One Walker’s Mill Road
Wilmington, DE 19807

(*)

Represents less than 1%.

(1)

Except as otherwise indicated, each person possesses sole voting and investment power with respect to the shares shown as beneficially owned. Shares are deemed owned in the same percentage as the individual’s ownership in the entity owning such shares.

	(2)	18,900,000 of these shares are held in the name of Afignis, LLC of which Ms. Ullman is the Managing Manager. Includes 4,500,000 options of which 3,000,000 of these options are currently vested and exercisable.

	(3)	Includes 250,000 shares and 1,500,000 warrants currently vested and exercisable and 750,000 options not yet vested.

	(4)	Tina Gregerson, our Secretary and a member of the Board of Directors, indirectly owns 14,270,000 shares held by Gregerson Family Properties, LLC and 1,000,000 beneficial stock options granted directly to Tina Gregerson.

	(5)	Includes 500,000 shares issuable upon the exercise of compensatory warrants that are currently exercisable.

EQUITY COMPENSATION

The following table sets forth certain information regarding equity compensation plan information as of December 31, 2014:

						Number of securities
						remaining available for
						future issuance under
						equity compensation
	Number of securities to			Weighted-average		plans (excluding
	be issued upon exercise			exercise price of		securities reflected in
Plan category	of outstanding options			outstanding options		column (a))
	(a)					(b)
Equity compensation plans approved by security holders		23,500,000	⁽¹⁾	$	1.10		51,500,000
		—			—		—

Equity compensation plans not approved by security holders		800,000	⁽²⁾	$	0.90
		800,000	⁽³⁾	$	0.90
		31,843	⁽⁴⁾	$	0.51
		3,750,000	⁽⁵⁾	$	0.42
Total		28,881,843

(1) granted pursuant to the 2014 Option Plan, for individual grants. See the notes to the financial statements

(2) granted to Stephen King

(3) granted to Steven Flechner

(4) represents 26,223 granted to Stephen King and 5,619 granted to Steven Flechner in accordance with the correction and adjustment. See Note 8 in the financial statements regarding the adjustment/correction of the 2010 Option Plan

(5) represents 3,000,000 options granted and vested to Sharon Ullman and 750,000 options granted and vested to Jim Stieben

ITEM 13.

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The following describes certain relationships and related transactions that we have with persons deemed to be affiliates of ours. We believe that each of the transactions described below were on terms at least as favorable to our Company as we would have expected to negotiate with unaffiliated third parties.

Pure Path Capital Management Company, LLC

As of December 31, 2014, Pure Path Capital Management Company, LLC (“Pure Path”) is currently the direct beneficial owner of approximately 22.6% of the Company. On October 11, 2013, we issued 27,000,000 shares of common stock to Pure Path Capital Management Company, LLC to settle a portion of the debt the Company owes to Pure Path.

Pure Path purchased the Loan Modification Agreement and the NJB Forbearance Agreement directly from NJB Mining, Inc. on December 9, 2011. The Company entered into an amended and restated forbearance agreement with Pure Path (the “Forbearance Agreement”) on December 21, 2011, whereby Pure Path extended the provisions of the NJB Forbearance Agreement. Pure Path provided additional extensions to stay any action of the Forbearance Agreement until August 31, 2013; such extensions were provided without additional consideration.

Pursuant to the Agreement, Pure Path relinquished the foregoing rights and obligations owed to it and agreed to forbear 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 and relinquishment of rights by Pure Path, the Company issued 27,000,000 restricted shares and a Promissory Note in the amount of $1,933,345 bearing interest of Eight Percent (8%) per year for the current balance of the amounts owed under the Pure Path Agreements.

DIRECTOR INDEPENDENCE

In determining whether the members of our Board are independent, we have elected to use the definition of “independence” set forth by Section 121 of the Listing Standards for the American Stock Exchange (“AMEX”), although we are not currently listed on AMEX, whereby a majority of the members of a listed company’s board of directors must qualify as “independent” as determined by the board. Consistent with these considerations, and after review of all relevant transactions or relationships between each director, or any of his family members, and Standard Metals Processing, Inc., its senior management, the Board has determined that none of its members are currently independent within the meaning of the applicable listing standard of AMEX.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our Board of Directors appointed and shareholders ratified the engagement of Turner, Stone & Company, L.L.P. (“Turner”) to audit our financial statements for the year ended December 31, 2014.

AUDIT FEES:

The aggregate fees billed for professional services rendered by Turner for the audit of the Company's annual consolidated financial statements and review of consolidated financial statements included in the Company's Form 10-K and 10-Q for 2014, and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $75,400 for the year ended December 31, 2014.

AUDIT RELATED FEES:

There were no fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Company's financial statements.

TAX FEES:

There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

ALL OTHER FEES:

There were no other fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

The Company has an audit committee, but has yet to formalize processes and controls that would provide proper Board oversight. Our Board approves each engagement for audit or non-audit services before we engage our independent auditor to provide those services. The Board has not established any pre-approval policies or procedures that would allow our management to engage our independent auditor to provide any specified services with only an obligation to notify the audit committee of the engagement for those services. None of the services provided by our independent auditors for fiscal year 2014 was obtained in reliance on the waiver of the pre-approval requirement afforded in SEC regulations.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed as part of this Annual Report on Form 10-K, or are incorporated herein by reference.

Exhibit		Description
3.1		Articles of Incorporation filed with the State of Nevada
3.2		Articles of Amendment, effective January 4, 2013.
3.3		Amendment to the Articles of Incorporation and Plan of Conversion filed with the State of Colorado with effective dates of March 4 and March 5, 2013.
3.4		Amended and Restated By-Laws effective January 12, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 13, 2010).
10.1		2010 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 27, 2011).
10.2		Exchange Agreement, dated March 15, 2011, by and between the Company, Shea Mining & Milling, LLC, Afignis, LLC, Leslie Lucas Partners, LLC, Wits Basin Precious Minerals Inc. and Alfred A. Rapetti, (incorporated by reference to Exhibit 10.13 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.3		Assignment and Assumption of Loan Documents and Loan Modification Agreement, dated March 15, 2011, by and between the Company, Shea Mining & Milling, LLC and NJB Mining, Inc, (incorporated by reference to Exhibit 10.14 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.4		Term Loan Agreement, dated August 25, 2009, by and between Shea Mining & Milling, LLC and NJB Mining, Inc (assumed by the Company on March 15, 2011), (incorporated by reference to Exhibit 10.15 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.5		Promissory Note, dated August 25, 2009, issued by Shea Mining & Milling, LLC to NJB Mining, Inc (assumed by the Company on March 15, 2011), (incorporated by reference to Exhibit 10.16 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.6		Deed of Trust and Security Agreement with Assignment of Rents and Fixture Filing, dated August 21, 2009, executed by Shea Mining & Milling, LLC in favor of NJB Mining, Inc (assumed by the Company on March 15, 2011), (incorporated by reference to Exhibit 10.17 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.7		Assignment of Lease and Rents, dated August 21, 2009, executed by Shea Mining & Milling, LLC in favor of NJB Mining, Inc (assumed by the Company on March 15, 2011), (incorporated by reference to Exhibit 10.18 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.8		Environmental Indemnity, dated August 25, 2009, by and between Shea Mining & Milling, LLC and NJB Mining, Inc (assumed by the Company on March 15, 2011), (incorporated by reference to Exhibit 10.19 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.9		Lease Agreement, dated April 6, 2010, by and between Father Gregory Ofiesh, Mary Jane Ofiesh and Shea Mining (assumed by the Company on March 15, 2011), (incorporated by reference to Exhibit 10.20 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.10		First Amendment to Lease Agreement and Contract Agreement, effective as of March 15, 2010, by and between Father Gregory Ofiesh, Mary Jane Ofiesh, the Company and Liberty Processing, LLC, (incorporated by reference to Exhibit 10.21 to Form 10-K for the year ended December 31, 2010 (File No. 000-14319)).
10.11		Employment Agreement with Mark D. Dacko dated May 19, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 19, 2011).

10.12	Standard Gold, Inc. 2010 Stock Incentive Plan (amended as of July 25, 2011), (incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended September 30, 2011 (File No. 000-14319)).
10.13	Forbearance Agreement, dated September 1, 2011, by and between Standard Gold, Inc. and NJB Mining, Inc. (incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended September 30, 2011 (File No. 000-14319)).
10.14		Amended and Restated Forbearance Agreement dated December 21, 2011 between Standard Gold, Inc., and Pure Path Capital Management Company, LLC, (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on December 23, 2011).
10.15		Articles of Amendment to the Articles of Incorporation of Standard Gold, Inc. (incorporated by reference to Exhibit A to the Company’s Schedule 14C filed on February 11, 2013).
10.16		Plan of Conversion of Standard Gold, Inc., a Colorado corporation, into Standard Gold, Inc., a Nevada corporation (incorporated by reference to Exhibit B to the Company’s Schedule 14C filed on February 11, 2013).
10.17		Articles of Incorporation of Standard Gold, Inc. (incorporated by reference to Exhibit C to the Company’s Schedule 14C filed on February 11, 2013).
10.18		Bylaws of Standard Gold, Inc. (incorporated by reference to Exhibit D to the Company’s Schedule 14C filed on February 11, 2013).
10.19		Statement of Correction (Document Number 20111157771) (incorporated by reference to Exhibit 3(i).01 to the Company’s Form 8-K filed on March 13, 2013).
		Statement of Correction (Document Number 20111178093) (incorporated by reference to Exhibit 3(i).02 to the Company’s Form 8-K filed on March 13, 2013).
		Articles of Amendment (Document Number 20131009270) (incorporated by reference to Exhibit 3(i).03 to the Company’s Form 8-K filed on March 13, 2013).
23.1**		Consent of Independent Registered Public Accounting Firm.
24**		Power of Attorney (included on the signature page hereto).
31.1**		Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**		Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**		XBRL Instance Document
101.SCH**		XBRL Taxonomy Extension Schema
101.CAL**		XBRL Taxonomy Extension Calculation
101.DEF**		XBRL Taxonomy Extension Definition
101.LAB**		XBRL Taxonomy Extension Label
101.PRE**		XBRL Taxonomy Extension Presentation

** Filed herewith electronically

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		STANDARD METALS PROCESSING, INC.


Dated: March 31, 2015	By:	/s/ Sharon L. Ullman
		Sharon Ullman
		Chief Executive Officer

Each person whose signature to this Annual Report appears below hereby constitutes and appoints Sharon L. Ullman and Robert Geiges as their true and lawful attorney-in-fact and agent, with full power of substitution, to sign on his behalf individually and in the capacity stated below and to perform any acts necessary to be done in order to file all amendments to this Annual Report and any and all instruments or documents filed as part of or in connection with this Annual Report or the amendments thereto and each of the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or his substitutes, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company, in the capacities and dates indicated.

Name	Title	Date

/s/ Sharon L. Ullman	Chief Executive Officer and Director	March 31, 2015
Sharon Ullman


/s/ Robert Geiges	Chief Financial Officer	March 31, 2015
Joseph Rosamilia

/s/ Tina Gregerson	Director	March 31, 2015
Tina Gregerson

/s/ James Stieben	Director	March 31, 2015
James Stieben

Standard Metals Processing, Inc. - FORM 10-K - March 31, 2015

Attached files

Standard Metals Processing, Inc. Reports