Quarterly report pursuant to Section 13 or 15(d)

STOCK WARRANTS AND STOCK OPTIONS

v3.21.2
STOCK WARRANTS AND STOCK OPTIONS
6 Months Ended
Jun. 30, 2021
STOCK WARRANTS AND STOCK OPTIONS  
NOTE 12. STOCK WARRANTS AND STOCK OPTIONS

NOTE 12.  STOCK WARRANTS AND STOCK OPTIONS

 

Stock Warrants

 

The Company accounts for employee stock options and 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 June 30, 2021 and December 31, 2020 are 144,317. 

On May 4, 2020, the Company entered into an agreement with a vendor to provide investor relations services.  Under the terms of the agreement, we issued warrants to purchase up to 120,000 shares of our common stock at an exercise price of $2.00 per share. The warrants expire five years after the date of issuance. Approximately $220,000 of expense was recognized for the warrants issued for the services provide by the vendor.

 

On June 5, 2020, at closing of the Transaction, the Company entered into a Waiver Under Asset Purchase Agreement and Post-Closing Covenant Agreement under which we issued warrants to IDTEC to purchase up to 320,000 shares of our common stock (post-split) at an exercise price of $0.50 per share. The warrants expire five years after the date of issuance.

 

During March, April and May 2021, the Company issued through the Offering convertible notes payable with warrants, see Note 7, to purchase up to 1,002,500 shares of our common stock at an exercise price of $3 per share. The warrants expire two years after the date of issuance.

 

The total outstanding balance of all stock warrants in the Company is 1,409,879 and 584,317 at June 30, 2021 and December 31 2020, respectively. There were 1,002,500 detached free-standing stock warrants granted during the six-month period ended June 30, 2021, and 320,000  detached free-standing stock warrants granted during the six month period ended June 30, 2020. The fair value of these non-employee stock warrants granted during the six-month periods ended June 30, 2021 and 2020 totaled $1,092,708 and $695,454, respectively, and were determined using the Black-Scholes option pricing model based on the following assumptions:

 

 

 

June 30,

2021

 

 

June 30,

2020

 

Exercise Price 

 

$ 3.00

 

 

$ 0.50

 

Dividend Yield 

 

 

0 %

 

 

0 %

Volatility 

 

 

158 %

 

 

153 %

Risk-free Interest Rate 

 

           0.14%-0.16

%

 

 

0.29 %

Life of Warrants

 

 2 Years

 

 

   5 Years

 

The following table summarizes the changes in the Company’s outstanding warrants during the six-month period ended June 30, 2021 and 2020, and as of June 30, 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

 

 

320,000

 

 

$ 0.50

 

 

4.93Years

 

$ 0.50

 

 

$ 768,000

 

Warrants Exercised

 

 

(454,097 )

 

$

0.13304 - 0.15299

 

 

 

 

$ 0.1451

 

 

 

 

 

Warrants Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2020

 

 

464,317

 

 

$

0.50- 1.039375

 

 

4.16 Years

 

$ 0.66765

 

 

$ 1,036,521

 

 

 

 

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

 

 

1,002,500

 

 

$ 3.00

 

 

1.79 Years

 

$ 3.00

 

 

$ 952,375

 

Warrants Exercised

 

 

(176,938 )

 

$ 0.50

 

 

 

 

$ 0.50

 

 

 

 

 

Warrants Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

1,409,879

 

 

$

0.50 – 3.00

 

 

2.15 Years

 

$ 2.4605

 

 

$ 2,099,993

 

 

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  June 30, 2021 and December 31, 2020, the Company has granted stock options to acquire 2,909,422 and 2,521,921 shares of common stock under the plan, respectively. As of June 30, 2021, the plan has 1,600,986 vested shares and 1,308,436 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 June 30, 2021 and December 31, 2020 the plan has options available to be issued of 939,045 and 1,326,546, respectively.  The stock options are held by our officers, directors, employees, and certain key consultants. 

In total for the six months ended June 30, 2021 and 2020, the Company recorded $243,023 and $296,932, respectively, of share-based compensation expense related to stock options and restricted stock units. The unrecognized compensation expense as of June 30, 2021, was approximately $1,325,000 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 six-month period ended June 30, 2021 and 2020 were as follows:

 

 

 

June 30, 2021

 

 

June 30, 2020

 

Exercise Price

 

$

2.77 - $3.38

 

 

$ 2.00

 

Dividend Yield

 

 

0 %

 

 

0 %

Expected Volatility

 

    152% - 158

%

 

 

153 %

Risk-free Interest Rate

 

0.27% - 0.34

%

 

 

0.29 %

Expected Life

 

2 - 5 years

 

 

5 years

 

 

The following table summarizes the changes in the Company’s outstanding stock options during the six-month period ended June 30, 2021 and 2020, and as of June 30, 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

 

 

140,000

 

 

$

0.26341-2.00

 

4.54 Years

 

$ 1.7504

 

 

$ 160,732

 

Options Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Cancelled

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2020

 

 

2,521,239

 

 

$

0.2634 – 2.00

 

8.15 Years

 

$ 0.3170

 

 

$ 6,512,360

 

 

 

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

 

 

387,500

 

$

2.772 – 3.377

 

2.94 Years

 

$ 3.2854

 

 

$ 257,540

 

Options Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Cancelled

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

2,959,727

 

$

0.2634 – 3.377

 

6.43 Years

 

$ 0.8646

 

 

$ 9,132,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2020

 

 

1,253,030

 

$

0.2634 – 3.300

 

7.4 Years

 

$ 0.3165

 

 

$ 3,299,765

 

Exercisable at June 30, 2021

 

 

1,651,291

 

$

0.2634 – 3.377

 

6.78 Years

 

$ 0.4540

 

 

$ 5,772,880

 

 

Executive Stock Options

 

The Company has 1,328,230 and 981,771 outstanding executive stock options exercisable at $0.2634 to $3.38 per share as of  June 30, 2021, and December 31, 2020, respectively.