Global Clean Energy Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS AND WARRANTS

STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2021

Disclosure Text Block [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE G – STOCK OPTIONS AND WARRANTS

2020 Equity incentive Plan

In April 2020, the Company’s Board of Directors adopted the Global Clean Energy Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) wherein 2,000,000 shares of the Company’s common stock were reserved for issuance thereunder. Options and awards granted to new or existing officers, directors, employees, and non-employees vest ratably over a period as individually approved by the Board of Directors generally over three years, but not in all cases. The 2020 Plan provides for a three-month exercise period of vested options upon termination of service. The exercise price of options granted under the 2020 Plan is equal to the fair market value of the Company’s common stock on the date of grant. Options issued under the 2020 Plan have a maximum term of ten years for exercise and may be exercised with cash consideration or through a cashless exercise in which the holder forfeits a portion of the award in exchange for shares of common stock of the remaining portion of the award. As of June 30, 2021, there were 548,480 shares available for future option grants under the 2020 Plan.

During the six months ended June 30, 2021 the Company granted stock options for the purchase of a total of 376,500 shares of Common Stock under the 2020 Plan, of which 336,500 were to employees and 40,000 were to directors.

The Company previously granted stock options that were not issued under the 2020 Plan. A summary of the option award activity in 2021 and awards outstanding at June 30, 2021 is as follows:

	Shares Under Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Outstanding at December 31, 2020		19,230,214			0.16		2.81	$	30,044,649

Granted		376,500			5.60				-
Exercised		(60,978	)		0.15				-
Forfeited		(108,001	)		0.66				-
Expired		(562	)		0.66				-

Outstanding at June 30, 2021		19,437,173			0.32		2.59	$	99,096,555

Vested and exercisable at June 30, 2021		18,394,034			0.22		2.51	$	95,562,337

The fair value of stock option grants with only continued service conditions for vesting is estimated on the grant date using a Black-Scholes option pricing model. The following table illustrates the assumptions used in estimating the fair value of options granted during the periods presented:

	Six months ended June 30, 2021
Expected Term (in Years)		2 to 5
Volatility		87	%
Risk Free Rate		0.377	%
Dividend Yield		0	%
Suboptimal Exercise Factor (1)		1.3
Exit Rate Pre-vesting (2)		0	%
Exit Rate Post-vesting (3)		0	%
Aggregate Grant Date Fair Value	$	788,039

(1)

The suboptimal exercise factor estimates the value realized by the holder upon exercise of the option and the estimated point at which an option holder would exercise an in-the-money option. The Company estimated the suboptimal factor based on the holder realizing a pre-tax profit of $500,000.

(2)

Assumed forfeiture rate for market condition option awards prior to vesting.

(3)

Assumed expiration or forfeiture rate for market condition option awards after vesting.

For the six months ended June 30, 2021 and 2020, the Company recognized stock compensation expenses related to stock option awards of $256,244 and $503,403 respectively. The Company recognizes all stock-based compensation in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of June 30, 2021, there was approximately $408,000 of unrecognized compensation cost related to option awards that will be recognized over the remaining service period of approximately 2.2 years.

Stock Purchase Warrants and Call Option

In the six months ended June 30, 2021, the Company issued warrants to purchase 19,840 shares of Global Clean Energy Holdings, Inc. The warrants have an exercise price of $6.25 per share, a five-year term and are fully vested. If the warrants are exercised, the Company will receive additional proceeds of $124,000.

In 2020, the Company issued, to a party interested in Camelina development, a non-transferable warrant for the purchase of an approximately eight-percent interest in its subsidiary, Sustainable Oils, Inc. for approximately $20 million. The warrant had an expiration date of June 1, 2021, and was not exercised. The value of the warrant upon issuance was determined to be immaterial.

Concurrently with the acquisition of the Bakersfield Biorefinery, GCEH, through its subsidiary, GCE Acquisitions, issued an option right to the seller of the refinery to purchase up to 33 1/3% of the membership interests of GCE Acquisitions. The fair value of the option right on the date of issuance was $5.5 million and expires at ninety days after the refinery meets certain operational criteria.