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Warrants and Options
 6 Months Ended
Jun. 30, 2021
Share-based Payment Arrangement [Abstract]  
Warrants and Options

Note 11 - Warrants and Options

 

Warrants

 

In connection with the sales of subscription shares of common stock, discussed in Note 10 above, the Company granted the subscribers a total of 1,158,000 warrants to purchase up to 1,158,000 shares of common stock at an exercise price of $0.50 per share, with a term of two years. During 2020, all of these warrants were exercised.

 

The fair value of these warrants was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date. The market price was valued based upon the last price paid by a third party for shares of our common stock.

 

               Market         
               Price         
Reporting  Relative   Term   Exercise   on Grant   Volatility   Risk-free 
Date  Fair Value   (Years)   Price   Date   Percentage   Rate 
11/26/2018  $108,163    2   $0.50   $0.25    717%   0.0286 
2/18/2019  $30,000    2   $0.50   $0.25    717%   0.0227 
4/3/2019  $20,000    2   $0.50   $0.25    717%   0.0233 

 

IPO Warrants: In connection with the sales of shares of common stock under the Company’s Initial Public Offering (“IPO”) and S-1 Registration Statement (see Note 10, Initial Public Offering), the Company issued a total of 1,073,333 warrants consisting of 933,333 warrants issued to the purchasers of the IPO Units and 140,000 warrants issued to the Underwriters of the IPO. These warrants have an exercise price of $8.50 per share, with a term of five years.

 

The fair value of these warrants was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date. The market price was valued based upon the Nasdaq closing price for shares of the Company’s common stock on the date of issuance.

               Market         
               Price         
Reporting  Relative   Term   Exercise   on Grant   Volatility   Risk-free 
Date  Fair Value   (Years)   Price   Date   Percentage   Rate 
11/03/2020  $3,905,739    5   $8.50   $4.90    256%   0.039 

 

Endorsement Warrants: In connection with the execution of an Endorsement Agreement with Tee-2-Green, the Company issued 50,000 warrants with an exercise price of $3.90 and a term of five (5) years.

 

The fair value of these warrants was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date. The market price was valued based upon the Nasdaq closing price for shares of the Company’s common stock on the date of issuance.

               Market         
               Price         
Reporting  Relative   Term   Exercise   on Grant   Volatility   Risk-free 
Date  Fair Value   (Years)   Price   Date   Percentage   Rate 
11/10/2020  $159,489    5   $3.90   $3.94    261%   0.0041 

 

Convertible Note Warrants: In connection with the issuance of three convertible promissory notes, the Company issued 525,000 warrants with a weighted average exercise price of $4.26 and five year term (see Note 7).

 

The following tables summarize all warrants outstanding as of June 30, 2021 and December 31, 2020, and the related changes during the period.

 

   Number of   Exercise 
   Warrants   Price 
Stock Warrants          
Balance at December 31, 2019   1,158,000   $0.50 
Warrants issued in connection with the IPO   1,073,333    8.50 
Exercised   (1,158,000)   0.50 
Warrants issued in Endorsement Agreement   50,000    3.90 
Balance at December 31, 2020   1,123,333   $8.30 
Warrants issued in connection with Convertible Notes (see note 7)   525,000    — 
Balance at June 30, 2021   1,648,333   $8.30 
           
Warrants Exercisable at June 30, 2021   1,648,333   $8.50 

 

 

Options

 

During 2020, certain Directors and a consultant were granted stock options to purchase a total of 211,330 additional shares of the Company’s common stock. The options have a three-year term with an exercise price between $0.25 and $4.49.

 

During the six months ended June 30, 2021, the Company issued a total of 253,400 options with an exercise price between $0.25 and $5.59 and a three-year term to its Officers and Directors.

 

The fair value of these warrants was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date.

 

               Market        
Reporting  Number of   Term   Exercise  

Price on

Grant

   Volatility  Fair 
Date  Options   (Years)   Price   Date   Percentage  Value 
2/25/20 – 11/18/20   211,330    3   $0.25 - 4.49   $ 1.00 – 4.49   169% - 209%  $251,526 
1/01/21 – 6/30/21   253,400    3   $ 0.25 - 5.59   $3.78 - 5.59   148% - 209%  $1,244,179 

 

The Company recognized $1,244,180 and $251,526 as compensation expense in the financial statements for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively.

 

At June 30, 2021, the Company had 609,390 options outstanding.