NOTE G – STOCK OPTIONS AND WARRANTS

2010 Stock Plan

In 2010, the Company’s Board of Directors adopted the Global Clean Energy Holdings, Inc. 2010 Equity Incentive Plan (the “2010 Plan”) wherein 20,000,000 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 four years, but not in all cases. The 2010 Plan provides for a three-month exercise period of vested options upon termination of service. The exercise price of options granted under the 2010 Plan is equal to the fair market value of the Company’s common stock on the date of grant. Options issued under the 2010 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, 2019, there were no shares available for future option grants under the 2010 Plan. The 2010 Plan expired in April 2020 and was replaced with the 2020 Equity Incentive Plan. See Note J for additional information.

The Company’s Board of Directors has granted stock options to certain officers, directors, employees, and non-employees, which options were not part of the 2010 Plan or any other formal equity incentive plan.

During the fiscal years ended December 31, 2016, 2017, 2018 and 2019, the Company granted the following stock options under the 2010 Plan and outside of the 2010 Plan:

2016:

On May 26, 2016, the Company granted employees and consultants a total of 2,300,000 incentive stock options and 1,000,000 non-qualified stock options respectively. These options vest 25% annually on the anniversary of the date of grant beginning on May 25, 2017 and each year thereafter until fully vested. The options expire five years from the date of grant and have an exercise price of $0.003.

On July 1, 2016, the Company granted its Chairman of the Board a five-year non-qualified stock option to purchase 500,000 shares of Common Stock at an exercise price of $0.003. The options vest monthly over one year beginning on the grant date.

On December 14, 2016, the Company granted employees and consultants a total of 3,000,000 incentive stock options and 500,000 non-qualified stock options respectively. These options vest quarterly over three years beginning on the grant date. The options expire five years from the date of grant and have an exercise price of $0.0017.

2017:

On July 1, 2017, the Company granted its Chairman of the Board a five-year non-qualified stock option to purchase 500,000 shares of Common Stock at an exercise price of $0.015. The options vest monthly over one year beginning on the grant date.

On November 1, 2017, the Company granted employees and consultants a total of 2,500,000 incentive stock options and 500,000 non-qualified stock options respectively. These options vest quarterly over three years beginning on the grant date. The options expire five years from the date of grant and have an exercise price of $0.0022.

2018:

For legal services rendered, on January 29, 2018 the Company granted to one of its attorneys a fully vested, five-year, non-qualified stock option to purchase 750,000 shares of the Company’s common stock at an exercise price of $0.0056 per share.

On July 1, 2018, the Company granted its Chairman of the Board a five-year non-qualified stock option to purchase 500,000 shares of Common Stock at an exercise price of $0.0056. The options vest monthly over one year beginning on the grant date.

On September 17, 2018, the Company granted its Executive Vice President a five-year non-qualified stock option to purchase 5,000,000 shares of Common Stock at an exercise price of $0.035. The options vested immediately upon grant.

On October 16, 2018, the Company granted its Chief Executive Officer a five-year non-qualified stock option to purchase 110 million shares of Common Stock at an exercise price of $0.0154, subject to the Company’s achievement of certain market capitalization goals.

On December 14, 2018, the Company granted a non-qualified stock option to purchase up to 2,500,000 to a consultant. The option (i) has an exercise price of $0.007(equal to the closing market price on the date of the grant), (ii) has a five-year term, and (iii) was fully vested and immediately exercisable upon grant.

2019:

On January 15, 2019, the Company granted its Executive Vice President a five-year non-qualified stock option to purchase 50 million shares of Common Stock at an exercise price of $0.02, subject to the Company’s achievement of certain market capitalization goals.

On June 21, 2019 the Company entered into a Board Advisor Agreement with a prospective Board member (who subsequently became a member of the Board of Directors). As compensation for his services under the Board Advisor Agreement, the Board granted to this Director a non-qualified stock option to purchase up to 500,000 shares of the Company’s common stock, which option has an exercise price of $0.08 (based on the closing market price), a five year term, and the following vesting schedule: (i) Options to purchase 125,000 shares vested immediately as of the date grant, and (ii) options to purchase 125,000 additional shares vested on each of September 20, 2019, December 20, 2019 and March 20, 2020. The Board also granted to this prospective Director a second non-qualified stock option to purchase up to 500,000 shares of the Company’s common stock, which option has an exercise price of $0.08, a five year term, and would vest if/when this prospective Director joins the Board of Directors of the Company, provided that this prospective Director is appointed to the Board during the term of the Board Advisor Agreement. This appointment occurred in May 2020.

On June 21, 2019 the Company granted its Executive Vice President a five-year non-qualified stock option to purchase 10,000,000 shares at an exercise price of $0.0165.  The option vests at 25% at issuance and the balance over 36 months.

On July 1, 2019, the Company granted its Chairman of the Board a five-year non-qualified stock option to purchase 500,000 shares of Common Stock at an exercise price of $0.065. The options vest monthly over one year beginning on the grant date.

On July 5, 2019 the Company granted to a consultant a five-year non-qualified stock option to purchase 5,000,000 shares of Common Stock at an exercise price of $0.09.  The option vesting is conditional upon the Company consummating its contemplated acquisition by March 31, 2020 and upon such acquisition will vest at one-third upon closing and one-third each on the first and second anniversary of closing.

A summary of the option award activity and awards outstanding at December 31, 2019 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 Company estimates the fair value of stock options that have both service and market conditions on the grant date using a lattice model. The following table illustrates the assumptions used in estimating the fair value of options granted during the periods presented: 

During the years ended December 31, 2019 and 2018 the Company granted 110,000,000 and 50,000,000 options, respectively, to related parties that have both requisite service conditions and market conditions. The requisite service period for the market condition options granted during 2019 was three years and the options vest in three tranches: 28% of the award vests when the market cap exceeds $7 million for a thirty day period; 33% of the award vests when the market cap exceeds $15 million for a thirty day period; and 40% of the award vests when the market cap exceeds $25 million for a thirty day period. The requisite service period for the market condition options granted during 2018 was three years and the options vest in three tranches: 28% of the award vests when the market cap exceeds $7 million for a thirty day period; 36% of the award vests when the market cap exceeds $15 million for a thirty day period; and 36% of the award vests when the market cap exceeds $25 million for a thirty day period. As of May 31, 2019, all of the outstanding market condition awards issued during 2019 and 2018 were fully vested.

For the years ended December 31, 2019, 2018, 2017, and 2016 the Company recognized stock compensation expenses related to stock option awards of $577,645; $69,289; $35,560; and $31,311; respectively. The Company recognizes all stock-based compensation in general and administrative expenses in the accompanying consolidated statements of operations. As of December 31, 2019, there was approximately $106,000 of unrecognized compensation cost related to option awards that will be recognized over the remaining service period of approximately 2.25 years.

Stock Purchase Warrants

The Company has, from time to time, previously issued warrants for the purchase of Common Stock. During the year ended December 31, 2016 all 3,083,332 previously outstanding fully vested stock warrants expired. As of December 31, 2019 there were no outstanding stock warrants.

In 2020, the Company issued, to a party interested in Camelina development, a non-transferable warrant for approximately eight-percent interest in its subsidiary, Sustainable Oils, Inc. for approximately $20 million. The warrant expires on June 1, 2021.