NOTE 13 - COMMON STOCK OPTIONS AND WARRANTS

Common Stock Options

During October 2011, LKA issued its Chairman and CEO 250,000 shares of common stock and options to purchase up to 500,000 shares of LKA common stock at $1.00 per share for 3 years. The shares and options were issued for services rendered related to the continued management and operation of the company. The common stock options were allowed to expire unexercised on December 31, 2014. No expense was recognized on these stock options during the year ended December 31, 2014.

The following table summarizes the options outstanding and associated activity for the years ended December 31, 2015 and 2014:

	Number of Options			Weighted Average Price		Weighted Average Remaining Contractual Life
Options exercisable at December 31, 2013		500,000		$	1.00		0.83
Granted		-			-		-
Exercised		-			-		-
Expired		(500,000	)		1.00		-
Options exercisable at December 31, 2014		-			-		-
Granted		-			-		-
Exercised		-			-		-
Expired		-			-		-
Options exercisable at December 31, 2015		-		$	-		-

During 2013, LKA granted 2,000,000 performance restricted common stock options, whereby, it’s Chief Executive Officer has the ability to earn the options upon the issuance of a notice of final determination of the above referenced remediation liability with the EPA that results in no, or a de minimums, assessment. LKA believes this is a remote possibility and none of the common stock options have been earned as of December 31, 2015.

Common Stock Warrants

During April 2011, LKA entered into an interim consulting agreement with Francois Viens to act as a special advisor to the LKA board of directors, with the election of being appointed to a position on the LKA board in the future. As an initial incentive compensation for his services, LKA issued Mr. Viens warrants to purchase up to 250,000 shares of LKA stock in three tranches on a three-year vesting. Each warrant has a term of two and one-half years. In the event the shares underlying the warrants, and the closing price of the common stock of the Company has been $6.00 per share or higher for 10 trading days within a 30 day trading period subject to minimum trading volumes, LKA shall be able to redeem the Warrants at $0.001 per warrant. The value of the warrants was recognized as expense ratably over the vesting term.

The Viens warrant three-year vesting schedule is as follows:

Warrant I for 100,000 shares exercisable at $1.60 per share, to be issued as of May 1, 2011

Warrant II for 75,000 shares exercisable at $2.40 per share, to be issued one year later, or May 1, 2012

Warrant III for 75,000 shares exercisable at $3.60 per share, to be issued one year later, or May 1, 2013

During the years ended December 31, 2015 and 2014, 75,000 and 75,000 warrants related to the above agreement expired unexercised, respectively.

During February 2012, LKA entered into an agreement with Rauno Perttu to act as Chief Geologist and special advisor to the LKA board of directors, with the election of being appointed to a position on the LKA board in the future. As an initial incentive compensation for his services, LKA agreed to issue Mr. Perttu warrants to purchase up to 250,000 shares of LKA stock in three tranches on a three-year vesting schedule. Each warrant has a term of two and one-half years. In the event the shares underlying the warrants, and the closing price of the common stock of the Company has been $6.00 per share or higher for 10 trading days within a 30 day trading period subject to minimum trading volumes, LKA shall be able to redeem the Warrants at $0.001 per warrant. The value of the warrants was recognized as expense ratably over the vesting term. During the year ended December 31, 2014, LKA expensed $1,684 related to the warrants.

The Perttu warrant three-year vesting schedule is as follows:

Warrant I for 100,000 shares exercisable at $0.80 per share, to be issued as of March 1, 2012.

Warrant II for 75,000 shares exercisable at $1.20 per share, to be issued one year later, or March 1, 2013.

Warrant III for 75,000 shares exercisable at $1.60 per share, to be issued one year later, or March 1, 2014.

During the years ended December 31, 2015 and 2014, 75,000 and 100,000 warrants related to the above agreement expired unexercised.

Each warrant has a term of two and one-half years. In the event the shares underlying the warrants, and the closing price of the common stock of the Company has been $6.00 per share or higher for 10 trading days within a 30 day trading period subject to minimum trading volumes, LKA shall be able to redeem the Warrants at $0.001 per warrant.

The Warrant I - III tranches were valued at $44,792, $29,769 and $26,947 using the Black-Scholes option fair value pricing model using the following assumptions:

Stock price on grant date		$0.70
Exercise price	$0.80	–	1.60
Expected time to exercise (in years)		2.5
Risk free interest rate		0.35%
Volatility		121.02%
Expected forfeiture rate		0.00%

The following table summarizes the outstanding warrants and associated activity for the years ended December 31, 2015 and 2014:

	Number of Warrants Outstanding			Weighted Average Price			Weighted Average Remaining Contractual Life
Balance, December 31, 2013		400,000		$	1.85			1.48
Granted		-			-			-
Exercised		-			-			-
Expired		(175,000	)		(1.49	)		-
Balance, December 31, 2014		225,000			2.13			1.08
Granted		-			-			-
Exercised		-			-			-
Expired		(150,000	)		(2.40	)		-
Balance, December 31, 2015		75,000		$	1.60			0.67