OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 1

– OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status and changes of the warrants issued for 2019 and 2018 is as follows:

	December 31, 2019				December 31, 2018
	Shares issuable upon exercise of		Weighted		Shares issuable upon exercise of			Weighted
	Outstanding Warrants		Average Exercise Price		Outstanding Warrants			Average Exercise Price

Outstanding at beginning of year		26,688,373		0.15		18,813,373		$	0.14
Issued		-		-		9,875,000			0.15
Exercised		-		-		(2,000,000	)		0.04
Forfeited		-		-		-			-
Outstanding at end of year		26,688,373		0.15		26,688,373			0.15

At December 31, 2019 and 2018, the intrinsic values of the outstanding warrants were $0 and $20,688, respectively.

A summary of the status of the warrants outstanding and exercisable at December 31, 2019 is presented below:

Exercise Price		Shares issuable upon exercise of Outstanding Warrants		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
$	1.15		461,340		1.33	$	1.15
$	0.25		3,283,283		1.49	$	0.25
$	0.04		2,068,750		2.68	$	0.04
$	0.10		11,000,000		2.95	$	0.10
$	0.15		9,875,000		1.48	$	0.15
			26,688,373		2.18	$	0.15

During June and July of 2018, the Company issued 9,875,000 units in exchange for $790,000 in cash proceeds. Each unit consists of one share of common stock and a 3-year warrant to purchase one share of common stock for $0.15.

Outstanding Stock Options

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

On December 7, 2016, the stockholders of the Company approved the 2016 Incentive Plan. The purpose of the 2016 Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer eligible employees, consultants, and non-employee directors incentive awards in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. The aggregate number of shares of Common Stock that may be issued or used for reference purposes under the 2016 Incentive Plan or with respect to which awards may be granted may not exceed 15,000,000 shares, which may be either (i) authorized and unissued Common Stock or (ii) Common Stock held in or acquired for the treasury of the Company.

The Compensation Committee of the Company Board of Directors has full authority to administer and interpret the 2016 Incentive Plan, to grant awards under the 2016 Incentive Plan, to determine the persons to whom awards will be granted, to determine the types of awards to be granted, to determine the terms and conditions of each award, to determine the number of shares of Common Stock to be covered by each award and to make all other determinations in connection with the 2016 Incentive Plan and the awards thereunder as the Committee, in its sole discretion, deems necessary or desirable.

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

The significant assumptions relating to the valuation of the Company's options issued for 2019 and 2018 were as follows on a weighted average basis:

	2019	2018
Dividend Yield	0%	0%
Expected Life (in years)	3.81 - 5.00	2.50 - 7.50
Expected Volatility	131% - 152%	69.13% - 167.28%
Risk Free Interest Rate	2.50% - 2.55%	1.42% - 3.09%

A summary of the status and changes of the options granted under stock option plans and other agreements for 2019 and 2018 is as follows:

	December 31, 2019					December 31, 2018
				Weighted					Weighted
				Average					Average
	Shares			Exercise Price		Shares			Exercise Price

Outstanding at beginning of year		54,866,845			0.29		57,057,768		$	0.36
Granted		7,683,334			0.04		5,224,999		$	0.10
Exercised		—			—		—			—
Expired		(1,873,611	)		0.11		(7,415,922	)		0.73
Outstanding at end of year		60,676,568			0.26		54,866,845		$	0.29

During the year ended December 31, 2019, the Company granted 7,683,334 options to purchase the Company’s common stock with a weighted average exercise price of $0.04.

Total grant date fair value was $223,903 of which $34,037 was unamortized compensation expense at December 31, 2019.

Of the 7,683,334 options granted, the options vest as follows:

		Vesting Information
Shares		Frequency	Begin Date	End Date
	833,334	Immediately	01/01/2019	01/01/2019
	750,000	Monthly	02/24/2019	07/24/2019
	600,000	Monthly (1)	03/13/2019	06/13/2019
	4,000,000	Immediately	04/25/2019	04/25/2019
	500,000	Monthly	09/21/2019	01/21/2020
	1,000,000	Annually	12/28/2019	12/28/2021

(1)

450,000 options vested on 03/13/2019, 49,999 options vested on 04/13/2019, 49,999 options vested on 05/13/2019 and 50,002 options vested on 06/13/2019.

During the year ended December 31, 2018, the Company granted 5,224,999 options to purchase the Company’s common stock with a weighted average exercise price of $0.10. Of the 5,224,999 options granted, the options vest as follows:

		Vesting Information
Shares		Frequency	Begin Date	End Date
	347,222	Quarterly(1)	04/30/2018	07/01/2018
	277,777	Monthly(2)	06/01/2018	07/01/2018
	600,000	Monthly	07/08/2018	06/08/2019
	1,000,000	Monthly	03/01/2018	02/01/2019
	2,000,000	Monthly	03/10/2018	02/10/2019
	1,000,000	Annually	12/28/2018	12/28/2021

(1)

138,889 options vested on 04/30/2018 and 208,333 options vested on 07/01/2018.

(2)

69,444 options vested on 06/01/2018 and 208,333 options vested on 07/01/2018.

A summary of the status of the options outstanding at December 31, 2019 is presented below:

	Options Outstanding						Options Exercisable
Range of per share exercise price	Shares		Weighted average remaining contractual life		Per share weighted average exercise price		Shares		Weighted average remaining contractual life		Per share weighted average exercise price
$0.04 - $0.08		42,403,623		7.68	$	0.06		34,801,956		7.67	$	0.06
$0.10 - $0.84		13,330,885		2.92		0.42		13,290,885		2.92		0.42
$1.10 - $1.90		4,942,060		2.72		1.63		4,942,060		2.72		1.63

		60,676,568		6.23	$	0.26		53,034,901		6.02	$	0.29

Compensation expense of $249,116, and $533,089, has been recognized for the vested options for the years ended December 31, 2019 and 2018, respectively. The aggregate intrinsic value of the outstanding options at December 31, 2019 was $0. At December 31, 201

, (i) $34,037 of unamortized compensation expense for time-based unvested options will be recognized over the next 1.31 years on a weighted average basis; and (ii) $223,105 of unamortized compensation expense for performance-based unvested options will be recognized as the performance targets are achieved.

On August 18, 2017, the Company’s management was granted performance-based options to purchase 27.5 million shares of the Company’s common stock at $0.06 per share. The options expire on August 18, 2027. On November 1, 2017, the first fifty percent (50%) of the performance-based options vested as management was able to (i) close the sale of an aggregate of $600,000 of units (consisting of a share of common stock of the Company and a warrant to buy 0.25 of a share of common stock of the Company) at $0.04 per unit and (ii) establish toll processing arrangements with two toll processors of halloysite that, in management’s good faith belief, can process halloysite to the Company’s specifications. An additional twenty-five percent (

%) of the performance-based options vested on January 18, 2018 when management generated $900,000 of additional cash proceeds through (i) the sale of common stock and (ii) the licensing of a right to explore the Dragon Mine property for certain precious metals. The vesting of the remaining 8.3%, 8.3% and 8.4% of the performance-based options occurs when (i) EBITDA is positive over a twelve-month period, (ii) EBITDA is at or greater than $2 million over a twelve-month period and (iii) EBITDA is at or greater than $4 million over a twelve-month period, respectively. At December 31, 2019, management, based on its financial expectations for 2020, did not consider the vesting of the remaining 25% of the option grant to be probable.