Stock Warrants

The Company accounts for employee stock options and non-employee stock warrants under ASC 718 and ASC 505, whereby option costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable, utilizing the Black-Scholes pricing model. Unless otherwise provided for, the Company covers option exercises by issuing new shares.

On August 8, 2019, the Company entered into an 8% Series A-1 Convertible Preferred Stock Investment agreement with First Capital Ventures, LLC (“FCV”), an entity controlled by a beneficial owner of the Company. FCV set up a special purpose vehicle (“SPV”) or SOBR SAFE, LLC, an entity controlled by a beneficial owner of the Company, that purchased 1,000,000 of the 8% Series A-1 Convertible Preferred Shares at $1 per share on December 12, 2019. Upon purchase, the Company issued the SPV through FCV a three-year warrant to purchase 144,317 shares of the Company’s common stock at an exercise price of $1.039375 per share. The number of warrants outstanding to the SPV through FCV at March 31, 2021 and December 31, 2020 are 144,317 and 144,317, respectively.

On March 3^rd and 31^st, 2021, the Company issued through the Offering convertible notes payable with warrants (see Note 7) to purchase up to 550,000 shares of our common stock at an exercise price of $3.00 per share. The warrants expire two years after the date of issuance.

The total outstanding balance of all non-employee stock warrants in the Company is 957,379 and 584,317 at March 31, 2021 and December 31 2020, respectively. There were 550,000 non-employee detached free-standing stock warrants granted during the three month period ended March 31, 2021 and 0 non-employee detached free-standing stock warrants granted during the three month period ended March 31, 2020. The fair value of these non-employee stock warrants granted during the three month periods ended March 31, 2021 and 2020 totaled $619,381 and $0, respectively, and were determined using the Black-Scholes option pricing model based on the following assumptions:

The following table summarizes the changes in the Company’s outstanding warrants during the three month period ended March 31, 2021 and 2020, and as of March 31, 2021 and 2020:

Stock Options

On October 24, 2019, the Company’s 2019 Equity Incentive Plan went effective. The plan was approved by the Company’s Board of Directors and the holders of a majority of the Company’s voting stock on September 9, 2019. The plan’s number of authorized shares is 3,848,467. As of March 31, 2021 and December 31, 2020, the Company has granted stock options to acquire 2,521,921 shares of common stock under the plan. As of March 31, 2021, the plan has 1,376,118 vested shares and 1,145,803 non-vested shares. As of December 31, 2020, the plan had 1,202,724 vested shares and 1,319,197 non-vested shares. As of March 31, 2021 and December 31, 2020 the plan has options available to be issued of 1,326,546. The stock options are held by our officers, directors, employees, and certain key consultants.

In total for the three months ended March 31, 2021 and 2020, the Company recorded $105,013 and $39,450 respectively, of share-based compensation expense related to the stock options. The unrecognized compensation expense as of March 31, 2021 was approximately $564,000 for non-vested share-based awards to be recognized over periods of approximately one to seven years.

In applying the Black-Scholes options pricing model, assumptions used to compute the fair value of the stock options granted during the three month period ended March 31, 2021 and 2020 were as follows:

The following table summarizes the changes in the Company’s outstanding stock options during the three month period ended March 31, 2021 and 2020, and as of March 31, 2021 and 2020:

Executive Stock Options

The Company has 1,146,325 and 981,771 outstanding executive stock options exercisable at $0.2634 to $2.97 per share as of March 31, 2021 and December 31, 2020, respectively.