OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

3 Months Ended

Mar. 31, 2020

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

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

NOTE 9 – OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status and changes of the warrants issued for the three months ended March 31, 2020:

	Shares Issuable
	upon Exercise of		Weighted Average
	Outstanding Warrants		Exercise Price
Outstanding at January 1, 2020		26,688,373	$	0.15
Issued		-		-
Exercised		-
Forfeited		-		-
Outstanding at March 31, 2020		26,688,373	$	0.15

At March 31, 2020, the intrinsic value of the outstanding warrants was $0.

A summary of the status of the warrants outstanding and exercisable at March 31, 2020 is presented below:

		Warrants Outstanding and Exercisable
		Shares Issuable		Weighted Average
		upon Exercise of		Remaining		Weighted Average
Exercise Price		Outstanding Warrants		Contractual Life (years)		Exercise Price
$	1.15		461,340		1.08	$	1.15
$	0.25		3,283,283		1.24	$	0.25
$	0.04		2,068,750		2.43	$	0.04
$	0.10		11,000,000		2.70	$	0.10
$	0.15		9,875,000		1.23	$	0.15
			26,688,373		1.93	$	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.

In May, 2016, the Company adopted the 2016 Long-Term Incentive Plan (“2016 LTIP”). The number of shares of common stock for issuance or for reference purposes subject to the 2016 LTIP was 2,000,000. 

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.

On December 14, 2017, the Board of Directors approved the 2017 Incentive Plan (“2017 IP”). Forty million (40,000,000) shares of Common Stock are subject to the 2017 IP.

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. 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 Company did not grant any stock option awards during the three months ended March 31, 2020.

A summary of the status and changes of the options granted under stock option plans and other agreements for the three months ended March 31, 2020:

	Shares Issued		Weighted
	Upon Exercise of		Average
	Options		Exercise Price
Outstanding at December 31, 2019		60,676,568	$	0.26
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at March 31, 2020		60,676,568	$	0.26

A summary of the status of the options outstanding at March 31, 2020 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		7.43	$	0.06		34,861,956		7.42	$	0.06
$0.10 - $0.84		13,330,885		2.68		0.42		13,330,885		2.68		0.42
$1.10 - $1.90		4,942,060		2.47		1.63		4,942,060		2.47		1.63
		60,676,568		5.98	$	0.26		53,134,901		5.77	$	0.29

Compensation expense of $6,570 and $65,323 was recognized for vested options for the three months ended March 31, 2020 and 2019, respectively. The aggregate intrinsic value of the outstanding options at March 31, 2020 was $0. At March 31, 2020, (i) $27,466 of unamortized compensation expense for time-based unvested options will be recognized over the next 1.15 years on a weighted average basis; (ii) $223,105 of unamortized compensation expense for performance-based unvested options will be recognized if 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 (25%) 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 March 31, 2020, management, based on its financial expectations for 2020, did not consider the vesting of the remaining 25% of the option grant to be probable.