Quarterly report pursuant to Section 13 or 15(d)

STOCK WARRANTS AND STOCK OPTIONS

v3.21.1
STOCK WARRANTS AND STOCK OPTIONS
3 Months Ended
Mar. 31, 2021
STOCK WARRANTS AND STOCK OPTIONS  
NOTE 12. STOCK WARRANTS AND STOCK OPTIONS

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 3rd and 31st, 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:

 

 

 

March 31,

2021

 

 

 March 31,

2020

 

Exercise Price

 

$ 3.00

 

 

 

-

 

Dividend Yield

 

 

0 %

 

 

-

 

Volatility

 

 

158 %

 

 

-

 

Risk-free Interest Rate

 

 

0.14 %

 

 

-

 

Life of Warrants

 

 2 Years

 

 

 

-

 

 

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:

 

 

 

Warrants

Outstanding

Number of

Shares

 

 

Exercise Price

Per

Share

 

 

Weighted Average Remaining Contractual Life

 

Weighted Average

Exercise Price Per Share

 

 

Aggregate

Intrinsic

Value

 

Balance at December 31, 2019

 

 

598,414

 

 

$

0.13304 – 1.039375

 

 

3.97 Years

 

$ 0.3607

 

 

$ 1,276,870

 

Warrants Granted

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants Exercised

 

 

(454,097 )

 

$

0.13304 - 0.15299

 

 

 

 

$ 0.1451

 

 

 

 

 

Warrants Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

144,317

 

 

$ 1.039375

 

 

2.70 Years

 

$ 1.039375

 

 

$ 18,000

 

 

 

 

Warrants

Outstanding

Number of

Shares

 

 

Exercise Price

Per

Share

 

 

Weighted Average Remaining Contractual Life

 

Weighted Average

Exercise Price Per Share

 

 

Aggregate

Intrinsic Value

 

Balance at December 31, 2020

 

 

584,317

 

 

$

0.50 – 2.00

 

 

3.80 Years

 

$ 0.9413

 

 

$ 1,173,737

 

Warrants Granted

 

 

550,000

 

 

$ 3.00

 

 

1.96 Years

 

$ 3.00

 

 

$ 66,000

 

Warrants Exercised

 

 

(176,938 )

 

$ 0.50

 

 

 

 

$ 0.50

 

 

 

 

 

Warrants Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

 

 

957,379

 

 

$

0.50 – 3.00

 

 

2.52 Years

 

$ 2.2055

 

 

$ 875,493

 

 

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:

 

 

 

March 31,

2021

 

 

March 31,

2020

 

Exercise Price

 

 

-

 

 

$ 0.2634

 

Dividend Yield

 

 

-

 

 

 

0 %

Expected Volatility

 

 

-

 

 

 

171 %

Risk-free Interest Rate

 

 

-

 

 

 

0.43 %

Expected Life

 

 

-

 

 

 2.2 years

 

 

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:

 

 

 

Options

Outstanding

Number of

Shares

 

 

Exercise Price

Per

 Share

 

 

Weighted Average Remaining Contractual Life

 

Weighted Average

Exercise Price Per Share

 

 

Aggregate

Intrinsic

Value

 

Balance at December 31, 2019

 

 

2,381,239

 

 

$

 0.2634-1.039

 

 

 8.86 Years

 

$ 0.2948

 

 

$ 5,238,080

 

Options Granted

 

 

20,144

 

 

$ 0.26341

 

 

 2.96 Years

 

$ 0.2627

 

 

$ 18,144

 

Options Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Cancelled

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

2,401,383

 

 

$

 0.2634 – 1.039

 

 

 8.57 Years

 

$ 0.2945

 

 

$ 2,088,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options

Outstanding

Number of

Shares

 

 

 Exercise Price

Per Share

 

 

Weighted Average Remaining Contractual Life

 

Weighted Average

Exercise Price Per Share

 

 

Aggregate

Intrinsic

Value

 

Balance at December 31, 2020

 

 

2,572,227

 

 

$

 0.2634 – 3.300

 

 

 7.45 Years

 

$ 0.4999

 

 

$ 6,302,277

 

Options Granted

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Cancelled

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

 

 

2,572,227

 

 

$

 0.2634 – 3.300

 

 

 7.21 Years

 

$ 0.4999

 

 

$ 6,739,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2020

 

 

 1,253,030

 

 

0.2634 – 3.300

 

 

7.4 Years

 

 $

 0.3165

 

 

 $

 3,299,765

 

Exercisable at March 31, 2021

 

 

 1,426,424

 

 

$

0.2634 – 3.300

 

 

7.12 Years

 

 $

 0.3488

 

 

 $

 3,952,883

 

     

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.