Annual report pursuant to Section 13 and 15(d)

STOCK OPTIONS AND WARRANTS

v3.23.1
STOCK OPTIONS AND WARRANTS
 12 Months Ended
Dec. 31, 2022
Disclosure Text Block [Abstract]  
STOCK OPTIONS AND WARRANTS
NOTE H – 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. In June 2022, the 2020 Plan was amended and approved by the Company's stockholders to add an additional
5,000,000
shares of the Company's common stock. 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 December 31, 2022, there were 2,443,540 shares available for future option grants under the 2020 Plan.
 
During the year ended December 31, 2022, the Company granted stock options for the purchase of a total of 3,091,203 shares of Common Stock under the 2020 Plan, of which 2,991,203 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) 600,000 shares of Common Stock 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)
600,000 shares of Common Stock will vest in equal quarterly installments on the last day of each of the next 12 quarters beginning on September 30, 2022.
 
During the year ended December 31, 2021, the Company granted stock options for the purchase of a total of 543,240 shares of Common Stock.
 
For the years ended December 31, 2022 and December 31, 2021, the Company recognized stock compensation expenses related to stock option awards of $2.4 million and $0.7 million, respectively. The Company recognizes all stock-based compensation in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of December 31, 2022, there was approximately $1.1 million of unrecognized compensation cost related to service-based option awards that will be recognized over the remaining service period of approximately 2 years, and there was approximately $1.0 million of unrecognized compensation cost related to market-based stock option awards that will be recognized over the remaining derived service period of 2 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, 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. Option awards outstanding at December 31, 2022 includes 50,000, 17,845,714 and 4,289,862 options under the 2010 Equity Incentive Plan, the non-plan and the 2020 Plan, respectively.
 
The
following table shows options award activity for service based options for the years ended December 31,2022 and December 31, 2021:
 
 
 
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
 
 
543,240
 
 
 
5.58
 
 
 
 
 
 
 
-
 
Exercised
 
 
(112,432
)
 
 
0.04
 
 
 
 
 
 
 
616,314
 
Forfeited
 
 
(109,878
)
 
 
5.63
 
 
 
 
 
 
 
-
 
Expired
 
 
(3,624
)
 
 
4.76
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2021
 
 
19,547,520
 
 
$
0.36
 
 
 
2.11
 
 
$
87,636,744
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested and exercisable at December 31, 2021
 
 
18,743,542
 
 
$
0.25
 
 
 
2.04
 
 
$
85,801,930
 
 

 
 
Shares Under
Option
 
 
Weighted Average
Exercise Price
 
 
Weighted Average
Remaining
Contractual Life
(Years)
 
 
Aggregate
Intrinsic Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2021
 
 
19,547,520
 
 
$
0.36
 
 
 
2.11
 
 
$
87,636,744
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
2,491,203
 
 
 
2.88
 
 
 
 
 
 
 
-
 
Exercised
 
 
(317,166
)
 
 
0.42
 
 
 
 
 
 
 
1,207,435
 
Forfeited
 
 
(155,553
)
 
 
2.61
 
 
 
 
 
 
 
-
 
Expired
 
 
(14,428
)
 
 
5.05
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2022
 
 
21,551,576
 
 
$
0.63
 
 
 
1.45
 
 
$
17,347,879
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested and exercisable at December 31, 2022
 
 
19,561,631
 
 
$
0.39
 
 
 
1.16
 
 
$
17,322,740
 
 
The
following table shows the status of the Company’s non-vested stock options for the years ended December 31, 2022 and December 31, 2021:
 
 
 
Shares Under Option
 
 
Weighted Average Grant Date
Fair Value
 
 
 
 
 
 
 
 
Non-vested at December 31, 2020
 
 
1,193,451
 
 
$
0.51
 
 
 
 
 
 
 
 
 
 
Granted
 
 
543,240
 
 
 
3.24
 
Vested
 
 
(916,857
)
 
 
1.25
 
Forfeited
 
 
(15,856
)
 
 
3.11
 
 
 
 
 
 
 
 
 
 
Non-vested at December 31, 2021
 
 
803,978
 
 
$
3.00
 
 
 
 
 
 
 
 
 
 
Granted
 
 
2,491,203
 
 
 
1.72
 
Vested
 
 
(1,155,099
)
 
 
1.82
 
Forfeited
 
 
(150,137
)
 
 
1.61
 
 
 
 
 
 
 
 
 
 
Non-vested at December 31, 2022
 
 
1,989,945
 
 
$
3.00
 
 
The
following table shows options award activity for market based options for the year ended December 31,2022:
 
 
 
Shares Under
Option
 
 
Weighted Average
Exercise Price
 
 
Weighted Average
Remaining Contractual Life
(Years)
 
 
Aggregate
Intrinsic Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2021
 
 
-
 
 
$
-
 
 
 
 
 
 
$
0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
600,000
 
 
 
2.14
 
 
 
 
 
 
 
3.60
 
Exercised
 
 
-
 
 
 
-
 
 
 
 
 
 
 
-
 
Forfeited
 
 
-
 
 
 
-
 
 
 
 
 
 
 
-
 
Expired
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2022
 
 
600,000
 
 
$
2.14
 
 
 
2.01
 
 
$
1,286,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested and exercisable at December 31, 2022
 
 
-
 
 
$
0.00
 
 
 
0.00
 
 
$
-
 
 

 
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 year
s
ended: 
 
 
 
December 31, 2022
 
 
December 31, 2021
 
Expected Term (in Years)
 
 
3.2
 
 
 
3.3
 
Volatility
 
 
86.89
%
 
 
85.77
%
Risk Free Rate
 
 
2.84
%
 
 
0.51
%
Dividend Yield
 
 
0
%
 
 
0
%
Aggregate Grant Date Fair Value
 
$
1.72
 
 
$
3.24
 
 
The fair value of stock option grants with market based conditions for vesting is estimated on the grant date using a Monte-Carlo simulation under a risk-neutral framework and using the average value over 100,000 model iterations. The following table illustrates the assumptions used in estimating the fair value of options granted during the year ended December 31, 2022: 
 
Expected Term (in Years)
 
 
2.0
 
Volatility
 
 
88.00
%
Risk Free Rate
 
 
2.80
%
Dividend Yield
 
 
0
%
Aggregate Grant Date Fair Value
 
$
2.14
 
 
Stock Purchase Warrants and Call Option
 
On February 23, 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. In August 2022, the exercise date was amended to December 28, 2028. 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. In August 2022, the GCEH Tranche II Warrant was amended to an exercise price of $2.25 per share and the SusOils warrant exercise price was reduced to $0.05076 per share, and the terms for both warrants were extended to December 28, 2028. If these warrants are exercised for cash, the Company will receive an additional $14.6 million and $1 million, respectively. There were new warrants issued in August. The Senior Lenders received warrants to purchase 7,468,929 shares of common stock, exercisable until December 23, 2028 at an exercise price of $2.25. ExxonMobil Renewables received 2,489,643 warrants on the same terms. If these warrants are exercised for cash, the Company will receive an additional $22.4 million.
 
As a result of issuing new immediately-vested warrants and modifying existing outstanding warrants to ExxonMobil in exchange for increasing the committed volumes of renewable diesel and extending the term of the agreement by an additional six months under the existing Offtake Agreement on August 5, 2022, the Company concluded these warrants represent consideration payable to a customer in accordance with ASC 606,
Revenue from Contracts with Customers
. The Company valued this consideration in accordance with ASC 718,
Compensation – Stock Compensation
, using the Black-Scholes option pricing model, and the following assumptions:
 
Expected Term (in Years)
 
 
6.4
 
GCEH Warrant Volatility
 
 
115
%
SusOils Warrant Volatility
 
 
65
%
Risk Free Rate
 
 
2.89
%
Dividend Yield
 
 
0
%
 
 
This amount was determined to be $15.6 million and is reflected initially as a Contract asset - related party on the consolidated balance sheets and will be amortized over the term of the underlying contract as the Company satisfies its performance obligations
under the Company’s Offtake Agreement
. There was no amortization for the year ended December 31, 2022.
 
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 a
dd
itional proceeds of $124,000.