Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2014 |
Accounting Policies [Abstract] | ' |
Exploration Stage Company [Policy Text Block] | ' |
Exploration-Stage Company |
|
Effective January 1, 2009, due to the shutdown of our contract mining business, we were, and still are, classified as an exploration company as the existence of proven or probable reserves has not been demonstrated and no significant revenue has been earned from the mine. Under the SEC’s Industry Guide 7, a mining company is considered an exploration stage company until it has declared mineral reserves determined in accordance with the guide and staff interpretations thereof. |
Consolidation, Policy [Policy Text Block] | ' |
Principles of Consolidation |
|
The accompanying consolidated financial statements include the accounts of Applied Minerals, Inc. and its inactive subsidiary, which holds 100 acres of timber and mineral property in northern Idaho. |
Use of Estimates, Policy [Policy Text Block] | ' |
Use of Estimates |
|
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. In these condensed consolidated financial statements, the warrant and PIK note derivative liability, stock compensation and impairment of long-lived assets involve extensive reliance on management’s estimates. Actual results could differ from those estimates. |
Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Cash and Cash Equivalents |
|
Cash and cash equivalents include all highly liquid investments with a term of three months or less. The Company minimizes its credit risk by investing its cash and cash equivalents, which sometimes exceeds FDIC limits, with major financial institutions located in the United States with a high credit rating. |
Receivables, Policy [Policy Text Block] | ' |
Receivables |
|
Trade receivables are reported at outstanding principal amounts, net of an allowance for doubtful accounts. Management evaluates the collectability of receivable account balances to determine the allowance, if any. Management considers the other party’s credit risk and financial condition, as well as current and projected economic and market conditions, in determining the amount of the allowance. Receivable balances are written off when management determines that the balance is uncollectable. |
Property, Plant and Equipment, Policy [Policy Text Block] | ' |
Property and Equipment |
|
Property and equipment are carried at cost less accumulated depreciation. Depreciation and amortization is computed on the straight-line method over the estimated useful lives of the assets, or the life of the lease, whichever is shorter, as follows: |
|
| | Estimated Useful Life (years) | | | | | | | | | | | |
Building and Building Improvements | | 20 – 40 | | | | | | | | | | | |
Mining equipment | | 2 – 7 | | | | | | | | | | | |
Office and shop furniture and equipment | | 3 – 7 | | | | | | | | | | | |
Vehicles | | 5 | | | | | | | | | | | |
|
Depreciation expense for the three months ended September 30, 2014 and 2013 totaled $170,759 and $78,864, respectively. Depreciation expense for the nine months ended September 30, 2014 and 2013 totaled $416,338 and $236,552, respectively. The Company currently does not capitalize any amounts related to proven or probable reserves and therefore does not have any depletion expense. |
Fair Value Measurement, Policy [Policy Text Block] | ' |
Fair Value |
|
ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: |
|
Level 1 - quoted prices in active markets for identical assets and liabilities |
|
Level 2 - observable inputs other than quoted prices in active markets for identical assets and liabilities |
|
Level 3 - significant unobservable inputs |
|
Liabilities measured at fair value on a recurring basis are summarized as follows: |
|
| Fair value measurement using inputs | | Carrying amount | |
| Level 1 | | Level 2 | | Level 3 | | 30-Sep-14 | | | 31-Dec-13 | |
| | | | | | | | | | | | | | |
Financial instruments: | | | | | | | | | | | | | | |
Warrant derivative | | $ | 136,000 | | | | $ | 136,000 | | | $ | 950,000 | |
PIK Note derivative | | $ | 529,200 | | | | $ | 529,200 | | | $ | 2,250,000 | |
|
The recorded value of certain financial assets and liabilities, which consist primarily of cash and cash equivalents, receivables, other current assets, and accounts payable and accrued expenses approximate their fair value at September 30, 2014 and December 31, 2013 based upon the short-term nature of the assets and liabilities. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of notes payable approximate fair value. Estimated fair value of the PIK Notes Payable approximates $7,640,000 at September 30, 2014. For the Company's warrant and PIK note derivative liabilities, fair value was estimated using a Monte Carlo Model using the following assumptions: |
|
Warrant derivative liability | | Fair Value Measurements | | | | | | | |
| | Using Inputs | | | | | | | |
| | 30-Sep-14 | | | 31-Dec-13 | | | | | | | |
| | | | | | | | | | | | | | |
Market price and estimated fair value of stock | | $ | 0.72 | | | $ | 1.1 | | | | | | | |
Exercise price | | $ | 1.93 | | | $ | 1.93 | | | | | | | |
Term (years) | | | 2.25 | | | | 3 | | | | | | | |
Dividend yield | | | -- | | | | -- | | | | | | | |
Expected volatility * | | | 51.5 | % | | | 76.9 | % | | | | | | |
Risk-free interest rate | | | 0.68 | % | | | 0.78 | % | | | | | | |
|
PIK Note derivative liability | | Fair Value Measurements | | | | | | | |
| | Using Inputs | | | | | | | |
| | 30-Sep-14 | | | 31-Dec-13 | | | | | | | |
| | | | | | | | | | | | | | |
Market price and estimated fair value of stock | | $ | 0.72 | | | $ | 1.1 | | | | | | | |
Exercise price | | $ | 1.4 | | | $ | 1.4 | | | | | | | |
Term (years) | | | 8.92 | | | | 9.58 | | | | | | | |
Dividend yield | | | -- | | | | -- | | | | | | | |
Expected volatility * | | | 60.2 | % | | | 76.9 | % | | | | | | |
Risk-free interest rate | | | 2.42 | % | | | 2.96 | % | | | | | | |
|
* During the first quarter of 2014, the Company revised its assumption for expected volatility by switching from a peer-group average volatility to the Company’s three-year historical volatility in measuring the value of the derivative liabilities mentioned above. Prior to 2011, the occurrence of certain corporate events would not have made the historical volatility calculations meaningful or accurate if included. This reduction in volatility led to a reduced valuation for both the Warrant and PIK Note derivative liabilities of approximately $118,500 and $126,000, respectively. The remaining decrease in the valuation is attributable to the decline in stock price. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | ' |
Impairment of Long-lived Assets |
|
The Company periodically reviews the carrying amounts of long-lived assets to determine whether current events or circumstances warrant adjustment to such carrying amounts. Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, the Company compares the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying amount. |
|
If this comparison indicates impairment, the amount of the impairment is typically calculated using discounted expected future cash flows where observable fair values are not readily determinable. Considerable management judgment is necessary to estimate the fair value of assets. Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value, less cost to sell. |
Revenue Recognition, Policy [Policy Text Block] | ' |
Revenue Recognition |
|
Revenue includes sales of halloysite clay and, commencing in June 2013, iron oxide, and is recognized when title passes to the buyer and when collectability is reasonably assured. Title passes to the buyer based on terms of the sales contract. Product pricing is determined based on related contractual arrangements with the Company’s customers. |
Exploitation Costs, Policy [Policy Text Block] | ' |
Mining Exploration and Development Costs |
|
Land and mining property are carried at cost. The Company expenses prospecting and mining exploration costs. At the point when a property is determined to have proven and probable reserves, subsequent development costs will be capitalized and will be charged to operations using the units-of-production method over proven and probable reserves. Upon abandonment or sale of a mineral property, all capitalized costs relating to the specific property are written off in the period abandoned or sold and a gain or loss is recognized. |
Income Tax, Policy [Policy Text Block] | ' |
Income taxes |
|
The Company uses an asset and liability approach which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences or benefits of temporary differences between the financial reporting basis and the tax basis of assets and liabilities, as well as operating loss and tax credit carry forwards, using enacted tax rates in effect in the years in which the differences are expected to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. A valuation allowance has been provided for the portion of the Company’s net deferred tax assets for which it is more likely than not that they will not be realized. |
|
The Company is subject to U.S. federal income tax as well as income tax of certain state jurisdictions. Federal income tax returns subsequent to 2009 are subject to examination by major tax jurisdictions. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. |
|
The Company follows the provision of ASC Topic 740-10, “Income Taxes”, relating to recognition thresholds and measurement attributes for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and requires increased disclosures. This guidance provides that the tax effects from an uncertain tax position can be recognized in our financial statements, only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. As of September 30, 2014, no amounts are included in the financial statements for unrecognized tax benefits. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Stock Options and Warrants |
|
The Company follows ASC 718 (Stock Compensation) and 505-50 (Equity-Based Payments to Non-employees), which provide guidance in accounting for share-based awards exchanged for services rendered and requires companies to expense the estimated fair value of these awards over the requisite service period. |
Earnings Per Share, Policy [Policy Text Block] | ' |
Per share data |
|
Loss per share for the three months ended September 30, 2014 and 2013, respectively, is calculated based on 94,985,716 and 94,508,983 weighted average outstanding shares of common stock. Loss per share for the nine months ended September 30, 2014 and 2013 respectively, is calculated based on 94,847,462 and 94,205,611 weighted average outstanding shares of common stock. |
|
At September 30, 2014 and 2013, respectively, the Company has outstanding options and warrants to purchase 23,258,046 and 22,083,046 shares of Company common stock, and at September 30, 2014 had notes payable which were convertible into 7,500,000 shares of Company common stock, none of which were included in the diluted computation as their effect would be anti-dilutive. |
Environmental Costs, Policy [Policy Text Block] | ' |
Environmental Matters |
|
Expenditures for ongoing compliance with environmental regulations that relate to current operations are expensed or capitalized as appropriate. Expenditures resulting from the remediation of existing conditions caused by past operations that do not contribute to future revenue generations are expensed. Liabilities are recognized when environmental assessments indicate that remediation efforts are probable and the costs can be reasonably estimated. |
|
Estimates of such liabilities are based upon currently available facts, existing technology and presently enacted laws and regulations taking into consideration the likely effects of inflation and other societal and economic factors, and include estimates of associated legal costs. These amounts also reflect prior experience in remediating contaminated sites, other companies’ clean-up experience and data released by The Environmental Protection Agency or other organizations. Such estimates are by their nature imprecise and can be expected to be revised over time because of changes in government regulations, operations, technology and inflation. Recoveries are evaluated separately from the liability and, when recovery is assured, the Company records and reports an asset separately from the associated liability. |
|
Based upon management’s current assessment of its environmental responsibilities, the Company cannot reasonably estimate any reclamation or remediation liability that may occur in the future, if any. |
New Accounting Pronouncements, Policy [Policy Text Block] | ' |
Recent Accounting Pronouncements |
|
ln August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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" ("ASU 2014-15"). ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). lt also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. Management is currently evaluating the impact of the adoption of ASU 2014-14 on our financial statement disclosures. |
|
On June 19, 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which clarifies that entities should treat performance targets tha can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Under the ASU, an entity would not record compensation expense related to an award for which transfer to the employee is contingent on the entity's satisfaction of a performance target until it becomes probable that the performance target will be met. The adoption of this ASU will be required, either on a retrospective basis or prospective basis, beginning with our Quarterly Report on Form 10-Q for the quarter ending March 31, 2016. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements. |
|
In June 2014, the FASB issued Accounting Standards Update (“ASU”) ASU 2014-10 Development Stage Entities. The amendments in ASU 2014-10 remove the definition of a development stage entity from Topic 915 Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and shareholder’s 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 entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company could early adopt ASU 2014-10 for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. The Company elected to adopt this ASU effective with Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and its adoption resulted in the removal of inception-to-date information in the Company’s statements of operations and cash flows. |
|
In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. The amendments in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605 Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers. |
|
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: |
|
Step 1: Identify the contract(s) with a customer. |
|
Step 2: Identify the performance obligations in the contract. |
|
Step 3: Determine the transaction price. |
|
Step 4: Allocate the transaction price to the performance obligations in the contract. |
|
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. |
|
ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating these new requirements to determine the method of implementation and any resulting estimated effects on the financial statements. |