Amounts recognized as expense in the consolidated statements of operations related to share-based payments are as follows:

 

		Year ended December 31,
		2019				2018
Nonemployee common stock		$	7,700			$	--
Nonemployee warrants – fully vested upon issuance			--				25,882
Total share-based expense charged against income		$	7,700			$	25,882
Impact on net loss per common share:
Basic and diluted		$	(0.00	)		$	(0.00	)

 

UPT management agreement

 

In July 2014, Cool Technologies entered into a three year agreement with the Company managing the operations of UPT, whereby it would issue common stock under the following conditions:

 

Condition		Number of Shares
UPT recognizes $100 million of revenue or a change in control			500,000
UPT recognizes $100 million of revenue			150,000
			650,000

On June 30, 2017, the agreement expired. None of the conditions were met prior to expiration, so no expense will be recognized, and no common stock will be issued under this agreement.

 

In July 2014, Cool Technologies entered into a three-year agreement with the Company managing the operations of UPT, whereby CoolTech would issue common stock warrants under the following conditions:

 

				Number of
Vesting Condition		Category		Warrants
Fully vest upon UPT generating $1 million of revenue		Performance			350,000
45,945 warrants for every $3 million of revenue generated by UPT up to $100 million		Performance			1,530,000
60,000 warrants for every three months of completed service managing UPT		Service			720,000
					2,600,000

The common stock warrants have a three-year life and an exercise price of $1.00 per share. The grant date fair value was $2,586,000. On June 30, 2017, the agreement expired. None of the performance conditions were met prior to expiration, so no expense will be recognized, and no common stock warrants will vest under the performance conditions. During the year ended December 21, 2017, 120,000 of the common stock warrants under the service condition vested with the passage of time and the Company recognized expense of $6,118. There is no remaining service award expense to recognize. During 2019, 240,000 of the common stock warrants expired and 120,000 remain outstanding. They will expire during the first 6 months of 2020.

 

Nonemployee common stock  

 

Other

 

During the years ended December 31, 2019 and 2018, Cool Technologies issued or accrued an additional 350,000 and 2,600,000 shares of common stock, respectively, in exchange for services, with a fair value of $7,700 and $130,000, respectively.

 

Nonemployee common stock warrants -- Fully-vested upon issuance

 

Cool Technologies may issue fully vested common stock warrants with a maximum contractual term of 5 years to non-employees in return for services or to satisfy liabilities, such as accrued interest. The following summarizes the activity for common stock warrants that were fully vested upon issuance:

 

		Number of Warrants				Weighted-average Exercise Price				Weighted-average Remaining Life (Years)				Aggregate Intrinsic Value
Outstanding, December 31, 2017			12,945,836			$	0.29
Granted			500,000				0.05
Forfeited or expired			--				--
Outstanding, December 31, 2018			13,445,836				0.27				1.4			$	78,000
Exercisable, December 31, 2018			13,445,836				0.27				1.4			$	78,000
Granted			2,100,000				0.004
Exercised			--				--
Forfeited or expired			(5,810,000	)			0.49
Outstanding, December 31, 2019			9,735,836				0.36				1.3			$	2,000
Exercisable, December 31, 2019			9,735,836			$	0.36				1.3			$	2,000

The following summarizes the Black-Scholes assumptions used to estimate the fair value of fully vested common stock warrants:

 

		Year ended December 31,
		2019				2018
Volatility		125%-148		%			143	%
Risk-free interest rate		1.6%-1.7		%			2.6	%
Expected life (years)		.05 – 4.2					5.0
Dividend yield			--				--

No fully vested common stock warrants were exercised in 2019 and 2018. 

  

Nonemployee common stock warrants -- Service and performance conditions

 

Summary

 

The following summarizes the activity for warrants that have performance and service conditions. There were no grants in 2019.

 

		Number of Warrants				Weighted-average Exercise Price				Weighted-average Remaining Life (Years)				Aggregate Intrinsic Value
Outstanding, December 31, 2017			3,280,000			$	0.84
Granted			--				--
Forfeited or expired			(2,120,000	)			1.00
Outstanding, December 31, 2018			1,160,000				0.52				0.4
Exercisable, December 31, 2018			1,160,000				0.52				0.4
Granted			--				--
Forfeited or expired			(247,498	)			1.00				0.0
Outstanding, December 31, 2019			912,502				0.39				0.5
Exercisable, December 31, 2019			912,502			$	0.39				0.5			$	--

The following summarizes the status of the Company’s non-vested common stock warrants with performance and service conditions as of December 31, 2019 and 2018, and changes during the years then ended:

 

		Number of				Weighted-average Grant Date
		Warrants				Fair Value
Non vested, December 31, 2017			1,880,000			$	0.99
Vested			(1,880,000	)			0.99
Non vested, December 31, 2018			--				0.05
Vested			--				--
Forfeited			--				--
Non vested, December 31, 2019			--			$	--

The following summarizes the Black-Scholes assumptions used to estimate the fair value of warrants with performance and service conditions:

 

		Year ended December 31,
		2019				2018
Volatility		127 -- 143%				141--144%
Risk-free interest rate		1.5 -- 1.6%				1.5--1.6%
Expected life (years)		0.251.08					3.0
Dividend yield			--				--

 

Legal settlement – Replacement warrants  

 

Under the terms of the February 2016 Waiver of Performance and Second Amendment to Settlement Agreement with Spirit Bear, the Company agreed to April issued replacement warrants for previously amended and replaced warrants. Six million of the previously amended and replaced warrants owned by Spirit Bear and by Leonora Lorenzo had their expiration dates extended from January 29, 2017, until January 29, 2020, and had their exercise price reduced from $0.25 to $0.10 per share.

 

In addition, Spirit Bear consented to the withdrawal of a Registration Statement on Form S-1 that was pending before the Securities Exchange Commission (SEC). The proposed registration statement covered the common shares underlying the preferred shares owned by Spirit Bear and the common shares underlying the warrants owned by Spirit Bear and Leonora Lorenzo.  

  

When a replacement equity instrument is issued, expense is recorded if the fair value of the new instruments is greater than the fair value of the original instruments. The Company recorded expense of $423,973 associated with the replacement warrants. The following summarizes the Black-Scholes assumptions used to estimate the fair value of the previously issued warrants and the replacement warrants:

 

		Previously issued				Replacement
Volatility			206	%			151	%
Risk-free interest rate			0.5	%			1.3	%
Expected life (years)			0.2				3.2
Dividend yield			--				--

 

Employee stock options – Fully-vested upon grant

 

Cool Technologies granted stock options to certain members of management in 2014 that were fully vested at the date of grant. There were no grants in 2019 or 2018. The following is a summary of fully vested stock option activity:

 

		Number of Shares				Weighted-average Exercise Price per Share				Weighted-average Remaining Contractual Term				Aggregate Intrinsic Value
Outstanding, December 31, 2017			4,000,000			$	2.00
Outstanding, December 31, 2018			4,000,000				2.00				--			$	--
Exercisable, December 31, 2018			4,000,000				2.00				--				--
Outstanding, December 31, 2019			4,000,000				2.00				--				--
Exercisable, December 31, 2019			4,000,000			$	2.00				--			$	--