13. STOCKHOLDERS’ EQUITY

AUTHORIZED CAPITAL

The Company is authorized to issue 500,000,000 shares of common stock, $0.001 par value, and 40,000,000 shares of preferred stock, $0.001 par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 20,000,000 shares to Series A Convertible Preferred Stock; 10,000 shares to Series B Convertible Preferred Stock; 250,000 shares to Series C Convertible Preferred Stock; 13,000 shares to Series D Convertible Preferred Stock; and 19,727,000 shares undesignated.

OMNIBUS INCENTIVE PLANS

On March 31, 2014, the Board of the Company approved the Company’s 2014 Omnibus Incentive Plan (the “2014 Plan”), which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock and dividend equivalent rights to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2014 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an affiliate shall in all cases be non-qualified stock options. The option price must be at least 100% of the fair market value on the date of grant and if issued to a 10% or greater shareholder must be 110% of the fair market value on the date of the grant. The 2014 Plan is to be administered by the Board, which shall have discretion over the awards and grants thereunder. The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2014 Plan is 5,000,000, adjusted as provided in Section 11 of the 2014 Plan. No awards may be issued after December 1, 2016. The 2014 Plan was approved by a majority of the Company’s shareholders on April 17, 2014. As of December 31, 2020 and 2019, options to purchase 8,000 and 22,768 common stock were outstanding to employees and former members of the of the Board of Directors and 43,166 shares of common stock were outstanding to consultants of the Company.

On February 10, 2015, the Board of the Company approved the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”), which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock and dividend equivalent rights to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2015 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an affiliate shall in all cases be non-qualified stock options. The option price must be at least 100% of the fair market value on the date of grant and if issued to a 10% or greater shareholder must be 110% of the fair market value on the date of the grant. The 2015 Plan is to be administered by the Board, which shall have discretion over the awards and grants thereunder. The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2015 Plan is 5,000,000, adjusted as provided in Section 11 of the 2015 Plan. No awards may be issued after March 11, 2017. The 2015 Plan was approved by a majority of the Company’s shareholders on April 21, 2015. As of December 31, 2020 and 2019, options to purchase 1,300 shares of common stock were outstanding to employees. As of December 31, 2020 and 2019, 9,788 shares of common stock were outstanding to consultants of the Company.

On September 7, 2018, the Board of the Company, as well as a majority of the Company’s shareholders approved the Company’s 2018 Incentive Compensation Plan (the “2018 Plan”), which enables the Company to grant stock options, restricted stock, dividend equivalents, stock payments, deferred stock, restricted stock units, stock appreciation rights, performance share awards, and other incentive awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2018 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an affiliate shall in all cases be non-qualified stock options. The option price must be at least 100% of the fair market value on the date of grant and if issued to a 10% or greater shareholder must be at least 110% of the fair market value on the date of the grant. The 2018 Plan is to be administered by the Compensation Committee of the Board, which shall have discretion over the awards and grants thereunder.

OMNIBUS INCENTIVE PLANS - CONTINUED

The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 5,000,000, adjusted as provided in Section 4 of the 2018 Plan. No awards may be issued on or after September 7, 2028.

As of December 31, 2020 and 2019, options to purchase 617,071 and 239,082 shares of common stock were outstanding to employees, respectively. As of December 31, 2020 and 2019, 1,151,299 and 849,919 shares of common stock were outstanding to employees and members of the Board of Directors of the Company, respectively. As of December 31, 2020 and 2019, there were 3,231,630 and 3,910,999 securities available for future issuance under the 2018 Plan, respectively.

AT-THE-MARKET OFFERING

On April 17, 2020, the Company entered into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”) to conduct an “at-the-market” equity offering program (the “ATM”), pursuant to which the Company may issue and sell from time-to-time shares of its common stock having an aggregate offering price of up to $20,000,000 (the “Shares”) through the Agent. Sales of the Shares under the Sales Agreement were made in transactions that were deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the Nasdaq Capital Market, at market prices or as otherwise agreed to with the Agent. A “shelf” registration statement on Form S-3 for the Shares was filed with the SEC, which became effective on September 16, 2019, and a prospectus supplement thereto was filed with the SEC on April 17, 2020.

Since April 17, 2020 and through December 31, 2020, the Company sold an aggregate of 3,597,833 shares of common stock under the ATM program for aggregate gross proceeds of $19,999,984, less issuance costs of $819,438 which were recorded as a reduction to additional paid-in capital.

PREFERRED STOCK

SERIES D CONVERTIBLE PREFERRED STOCK

On February 22, 2019, JMJ elected to convert 16 shares of Series D Convertible Preferred Stock into 5,128 shares of the Company’s common stock at a conversion price of $3.12 per share.

During the year ended December 31, 2020, a holder elected to convert 5,125 shares of Series D Convertible Preferred Stock into 1,642,628 shares of the Company’s common stock at a conversion price of $3.12 per share. The Company determined that the Series D Convertible Preferred Stock did not include a beneficial conversion feature. There are no longer any currently outstanding shares of Series D Convertible Preferred Stock.

COMMON STOCK

On February 19, 2019, the Company retired 8,066 shares of common stock in accordance with a settlement agreement with the former members of 350 Green LLC. See Note 17 – Commitments and Contingencies – Litigation and Disputes for additional details.

During the year ended December 31, 2019, the Company issued an aggregate of 178,615 shares of common stock to independent board members and an former officer of the Company pursuant to a certain agreement with an aggregate grant date fair value of $474,513 such amount was previously accrued for as of December 31, 2018.

During the year ended December 31, 2019, the Company issued an aggregate of 28,831 shares of common stock to consultants with an aggregate issuance date fair value of $73,728

During the year ended December 31, 2020, the Company issued an aggregate of 113,027 shares of common stock to employees of the Company with an aggregate issuance date fair value of $163,782.

During the year ended December 31,2020 the Company issued an aggregate of 17,695 shares of common stock as compensation to consultants with an aggregate issuance date fair value of $161,697.

During the year ended December 31, 2020, the Company issued 102,402 shares of common stock to employees with a grant date fair value of $200,920. Such amount was previously accrued for as of December 31, 2019.

See Note 9 – Stockholder’s Equity - Preferred Stock for details associated with the issuance of common stock in connection with the conversion of Series D Convertible Preferred Stock.

See elsewhere within this note, Note 3- Business Combinations and Note 15 – Related Parties for additional details.

STOCK-BASED COMPENSATION

The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the years ended December 31, 2020 and 2019 of $948,270 and $728,541, respectively, which is included within compensation expense on the consolidated statement of operations. As December 31, 2020, there was $658,140 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 2.49 years.

Pursuant to the compensation plan approved by the Company’s board of directors on December 11, 2017, each year on the date of the annual meeting of stockholders, each non-employee director of the Company receives an annual award for the number of shares of the Company’s common stock that has a market value of $50,000 based on the closing price of the common stock on the last business day preceding the grant date (the “2017 Board Plan”). The lead independent director receives an additional annual award for the number of shares of the Company’s common stock that has a market value of $15,000. The stock award fully vests the sooner of: (i) 12 months from grant; or (ii) one day before the following year’s annual meeting. All stock awards include a cash payment upon vesting to cover expected ordinary income tax charges and is calculated at the highest individual personal income tax rate. During the fourth quarter of 2020, the Company paid to the Company’s non-employee directors $2.3 million related to the gross-up tax cash payment pursuant to the 2017 Board Plan as a result of the vesting on November 23, 2020 of the annual award to the Company’s non-employee directors granted on December 12, 2019 and March 19, 2020.

WARRANT AND OPTION VALUATION

The Company has computed the fair value of certain warrants and options granted using the Black-Scholes option pricing model. Option forfeitures are reduction of previous expensed amount at the time of occurrence. The expected term used for options issued is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatility of the Company over a period equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

STOCK OPTIONS

In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:

During the year ended December 31, 2019, the Company issued five and ten-year immediately vested options to purchase an aggregate of 4,700 shares of common stock to the Chief Executive Officer with exercise prices ranging from $2.55 to $3.30 per share. The options had an aggregate grant date fair value of $12,522, which was recognized immediately.

During the year ended December 31, 2019, the Company granted options to purchase an aggregate of 72,000 shares of common stock to an executive with an exercise price of $3.45 per share. The options vest ratably over a six-month period from the date of grant. The options had an aggregate grant date fair value of $220,831, which will be recognized ratably over the vesting period. During the year ended December 31, 2019, the Company recognized $147,221 of expense related to this award.

During the year ended December 31, 2019, the Company granted five-year options to purchase an aggregate of 4,467 shares of common stock to an executive with an exercise prices ranging from $2.45-$2.63 per share. 2,313 options vested immediately, and the remainder will vest on September 28, 2020. The options had an aggregate grant date fair value of $4,467 which will be recognized ratably over the vesting period.

During the year ended December 31, 2019, the Company granted options to employees with an aggregate value of $122,011 for bonuses earned during 2018. The option grants will vest in three tranches with each tranche having a six-year, seven-year, and eight-year contractual term. The tranches vest yearly from the date of grant. The number of options issued under this award is 42,176. The Company recognized $40,671 expense related to the award during the year ended December 31, 2019.

During the year ended December 31, 2019, the Company granted six-year vested, options to an employee to purchase an aggregate of 260,000 shares of common stock with exercise prices and value to be determined on each grant date. One-third of the options will be granted immediately and will vest one year from the date of grant. The second third will be granted on the first anniversary of the first grant and will be vest one year from the date of grant. The final third will be granted on the first anniversary of the first grant and will be vest one year from the date of grant. The Company recognized $47,902 of expense related to these awards during the year ended December 31, 2019.

STOCK OPTIONS – CONTINUED

During April 2020, the Company granted five-year options to purchase an aggregate of 160,416 shares of common stock to executives with an exercise prices ranging from of $1.83-$2.01 per share. 54,325 options will vest one year from the date of grant, 53,433 options will vest the second year and 52,658 will vest the third year. The options had an aggregate grant date fair value of $180,000, which will be recognized over the vesting period.

During June 2020, the Company granted five-year options to purchase an aggregate of 150,000 shares of common stock to executives with an exercise price of $2.20 per share. One-third of the options will vest on February 7, 2021, the second third will vest on February 7, 2022 and the final third will vest on February 7, 2023. The options had an aggregate grant date fair value of $298,911, which will be recognized over the vesting period.

During September 2020, the Company granted five-year options to purchase an aggregate of 603 shares of common stock to employees with an exercise price of $9.14 per share. The options vest on September 27, 2021. The options had an aggregate grant date fair value of $5,000, which will be recognized over the vesting period.

During October 2020, the Company granted five-year, immediately vested options to purchase an aggregate of 10,000 shares of common stock to an employee with an exercise price of $9.64 per share. The options had an aggregate grant date fair value of $85,787, which will be recognized over the vesting period.

During the year ended December 31, 2020, the Company issued an aggregate of 8,256 shares of the Company’s common stock pursuant to the cashless exercise of options.

A summary of the option activity during the year ended December 31, 2020 is presented below:

The following table presents information related to stock options at December 31, 2020:

STOCK WARRANTS

See Note 8 – Accrued Issuable Equity, Note 12– Fair Value Measurement, and elsewhere within this note for additional details.

During the year ended December 31, 2020, the Company issued an aggregate of 3,827,181 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $16,264,687.

During the year ended December 31, 2020, the Company issued an aggregate of 253,038 shares of the Company’s common stock pursuant to the cashless exercise of warrants.

The following table accounts for the Company’s warrant activity for the year ended December 31, 2020:

The following table presents information related to stock warrants at December 31, 2020: