OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

12 Months Ended

Dec. 31, 2021

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

Disclosure of Compensation Related Costs, Share-based Payments

NOTE 11 – OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

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.

A summary of the status and changes of the warrants issued for 2021 and 2020 is as follows:

	December 31, 2021				December 31, 2020
	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		24,619,623	$	0.16		26,688,373	$	0.15
Issued		-		-		-		-
Exercised		-		-		-		-
Forfeited		13,619,623		0.21		2,068,750		0.04
Outstanding at end of year		11,000,000		0.10		24,619,623		0.16

At December 31, 2021 and 2020, the intrinsic values of the outstanding warrants were $0.

A summary of the status of the warrants outstanding and exercisable at December 31, 2021 is presented below:

Exercise Price			Shares issuable upon exercise of Outstanding Warrants	Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
	$	0.10	11,000,000	0.96	$	0.10
			11,000,000	0.96	$	0.10

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. 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. During 2021 the Company options to 9,450,000 shares of its common stock with an exercise price of $0.03 and a term of five years to certain executives and directors.

The significant assumptions relating to the valuation of the Company's options issued for 2021 were as follows on a weighted average basis:

	2021	2020
Dividend Yield	0%	-
Expected Life (in years)	2.75	-
Expected Volatility	208.0%	-
Risk Free Interest Rate	0.38%	-

A summary of the status and changes of the options granted under stock option plans and other agreements for 2021 and 2020 is as follows:

	December 31, 2021					December 31, 2020
				Weighted					Weighted
				Average					Average
	Shares			Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		56,661,515			0.28		60,676,568		$	0.26
Granted		9,450,000			0.03		-		$	-
Exercised		(9,528,688	)		0.06		-			-
Expired		(3,791,982	)		0.67		(100,000	)		0.22
Forfeited		-			-		(3,915,053	)		0.06
Outstanding at end of year		52,790,845			0.25		56,661,515		$	0.28

A summary of the status of the options outstanding at December 31, 2021 is presented below:

	Options Outstanding						Options Exercisable
Range of per share exercise price	Shares		Weighted average remaining contractual life (years)		Per share weighted average exercise price		Shares		Weighted average remaining contractual life (years)		Per share weighted average exercise price
$0.03 - $0.08		38,409,881		5.41	$	0.06		35,102,381		5.47	$	0.05
$0.10 - $0.84		10,338,904		1.38		0.47		10,338,904		1.38		0.47
$1.10 - $1.66		4,042,060		0.96		1.57		4.042,060		0.96		1.57
		52,790,845		4.28	$	0.25		49,483,345		4.26	$	0.27

Compensation expense of $176,270, and $75,669, has been recognized for the vested options for the years ended December 31, 2021 and 2020, respectively.

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 was scheduled to occur 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. Of the 27.5 million performance options granted to management in August 2017, approximately 14.3 million were outstanding at December 31, 2021. The reduction was due to the forfeiture of options to purchase 0.4 million shares of common stock and the exercise of options to purchase approximately 9.5 million shares of common stock during the three months ended March 31, 2021. In July, 2021, the board accelerated the vesting of 1,195,138 options granted to Christopher Carney in August, 2017 and accelerated the vesting of 333,333 options granted in March 2019 to Sharad Mathur, CTO

In July 2021 the board approved a grant to management of options to purchase 5.7 million shares of common stock at $0.03 per share. The options have a term of five years. Fifty percent (50%) of the grant vested in July 2021 and the remainder vests in equal monthly amounts through June 2022. In July 2021 the board approved a grant to the directors and a consultant of options to purchase 3.75 million shares of common stock at $0.03 per share. The options have a term of five years. Fifty percent (50%) of the grant vested in July 2021 and the remainder vests in equal monthly amounts through June 2022. The fair value of the options granted in July on the grant date using the Black Scholes model was $169,690. As of December 31, 2021, the Company had $47,843 of unamortized compensation expense.