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Share-Based Compensation & Warrants
 12 Months Ended
Dec. 31, 2021
Equity [Abstract]  
Share-Based Compensation & Warrants

Note 19. Share-Based Compensation & Warrants

 

Options

 

Generally accepted accounting principles require share-based payments to employees, including grants of employee stock options, warrants, and common stock to be recognized in the income statement based on their fair values at the date of grant, net of estimated forfeitures.

 

As of December 31, 2021 and 2020, the Company has granted stock-based compensation to employees, including a 16,667 share stock award, which was issued in 2018 and vests at the end of four years, and a 166,667 stock options that was issued in 2020 and cliff vests at the end of five years. For the years ended December 31, 2021 and 2020, stock-based compensation was $446,112 and $146,114. In 2020, the Company also granted non-statutory stock options, including 133,333 stock options to the Board of Directors, which vests over 1 year, and a 333,334 stock option to a consultant, which vests over 4 years. Non-statutory stock-based compensation was $1,585,000 and $555,000 for the years ended December 31, 2021 and 2020.

 

There were no other options granted during the years ended December 31, 2021 and 2020, respectively.

 

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the options on the date of issuance are as follows:

 

    Year Ended December 31, 2020
Risk-free interest rate   0.27 - 0.38%
Expected dividend yield   None
Expected life of warrants   5-10 years
Expected volatility rate   187 - 273%

  

The following table summarizes all stock option activity of the Company for the years ended December 31, 2021 and 2020: 

               
           Weighted 
       Weighted   Average 
       Average   Remaining 
   Number   Exercise   Contractual 
   of Shares   Price   Life (Years) 
             
Outstanding, December 31, 2019   16,667   $11.10    1.42 
                
Granted   633,333    12.32    8.71 
Exercised   –    –    – 
Forfeited   –    –    – 
Outstanding, December 31, 2020   650,000   $12.00    8.53 
                
Outstanding, December 31, 2021   650,000   $12.00    7.53 
                
Exercisable, December 31, 2020   47,083   $12.00   $6.93 
Exercisable, December 31, 2021   180,000   $12.00   $7.01 

 

As of December 31, 2021 and 2020, the aggregate intrinsic value of the Company’s outstanding options was approximately none. The aggregate intrinsic value will change based on the fair market value of the Company’s common stock.

 

Warrants

 

As of December 31, 2021 and 2020, the Company had no warrants outstanding. These expired or exercised warrants during the year ended December 31, 2020 relate to the warrants issued as an incentive to investors with an investment into the Company. The warrants were issued at $12.00 per share of Common Stock. The warrants were granted for a one-year period.

 

Management uses the Black-Scholes option pricing model to determine the fair value of warrants on the date of issuance. The fair value of warrants issued pursuant to the issuance of notes payable was recorded as deferred debt issuance cost and amortized over the remaining term of the associated debt.

 

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the warrants on the date of issuance are as follows: 

   
Risk-free interest rate  1.2%
Expected dividend yield  None
Expected life of warrants  1 years
Expected volatility rate  119%

  

 

The following table summarizes the activity of the Company’s share purchase warrants: 

               
       Weighted     
       average   Aggregate 
   Number of   exercise   Intrinsic 
   warrants   price   Value 
Balance, December 31, 2019   36,000   $12.00   $– 
Expired   (35,333)   12.00      
Exercised   (667)   12.00      
Balance, December 31, 2020   –   $–   $– 

 

There were no share purchase warrants outstanding as of December 31, 2021 and 2020.