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. On June 23, 2022, the Company’s shareholders approved an amendment to the 2020 Plan to increase the number of shares authorized for issuance from 2,000,000 to 7,000,000. As of June 30, 2022, there were 3,704,315 shares available for future option grants under the 2020 Plan.

 

During the six months ended June 30, 2022, the Company granted stock options for the purchase of a total of 1,688,728 shares of Common Stock under the 2020 Plan, of which 1,588,728 were to employees and 100,000 were to directors. Included in the amount to employees is an option that was granted to the Company’s President of 1,200,000 shares of Common Stock under the Company’s 2020 Equity Incentive Plan. The option has a five-year term, and an exercise price of $3.60 per share. The foregoing option will vest as follows: (A) 50% in three equal tranches of 200,000 after GCEH’s common stock price has achieved and maintained (i) $10.00 per share for 45 consecutive trading days for tranche one; (ii) after tranche one has vested, $15.00 per share for 45 consecutive trading days for tranche two; and (iii) after tranche two has vested, $20.00 per share for 45 consecutive trading days, for tranche three; and (B) 50% will vest in equal quarterly installments on the last day of each of the next 12 quarters beginning on June 30, 2022.

 

For the three months ended June 30, 2022 and June 30, 2021, the Company recognized stock compensation expenses related to stock option awards of $496,000 and $154,000, respectively. For the six months ended June 30, 2022 and June 30, 2021, the Company recognized stock compensation expenses related to stock option awards of $808,000 and $256,000, 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, 2022, there was approximately $975,000 of unrecognized compensation cost related to

option awards that will be recognized over the remaining service period of approximately 1.8 years

The

Company previously granted stock options that were not issued under the 2010 Equity Incentive Plan or 2020 Plan. All of such options that were issued outside of the 2010 and 2020 Plans are fully vested, and 16 million options that were awarded to two of GCEH’s executive officers had a market capitalization vesting arrangement, 500,000 options were issued to a consultant that had a transaction success arrangement, and 1,175,714 options were awarded to an executive officer that had a merit arrangement and 200,000 options were issued to two directors that were time based.

A summary of the option award activity in 2022 and awards outstanding at June 30, 2022 (includes 50,000, 17,845,714 and 3,016,753 options under the 2010 Equity Incentive Plan, the non-plan and the 2020 Plan, respectively) is as follows:

 

 

 

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 six months ended June 30, 2022: 

 

 

During the three months ended March 31, 2022, the Company issued five-year warrants to our Senior Lenders and investors in our Series C Preferred for an aggregate of 18,547,731 shares of our common stock at an exercise price of $2.25 per share until February 22, 2027. If these warrants are exercised, the Company will receive additional proceeds of $41.7 million. Separately the Company issued the GCEH Tranche II Warrant (which allows for the purchase of up to 6.5 million shares of our common stock at an exercise price of $3.75 per share until February 22, 2028) and a warrant to purchase 33% (19,701,493 shares) of our SusOils subsidiary for an exercise price of $1.675 per share until February 27, 2027. If these warrants are exercised for cash, the Company will receive an additional $24.4 million and $33 million, respectively. There were no warrants issued during the three months ended June 30, 2022.  See Note L - Subsequent Events for revision to certain terms.

 

During the year ended December 31, 2021, the Company issued warrants to investors that invested $3.1 million in a private transaction in April 2021 to purchase 19,840 shares of common stock. 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.