Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.21.2
Warrants
6 Months Ended
Jun. 30, 2021
Equity [Abstract]  
Warrants Warrants
Historically, Alclear issued warrants to purchase shares of Class B redeemable capital units. These warrants were generally subject to performance-based vesting criteria, such as criteria related to new customer enrollments and technological innovations. The Company recognizes the expense for those warrants expected to vest on a straight-line basis over the requisite service period of the warrants, which generally ranges from three months to six years. For warrants that vest upon issuance, the entire cost is expensed immediately.
As of January 1, 2021, Alclear had 658,382 equity warrants outstanding at a weighted-average exercise price of $222.15 and 70,000 liability warrants outstanding at a weighted-average exercise price of $36.74.
During the six months ended June 30, 2021, Alclear issued the following warrants for Class B redeemable capital units as follows:
Number of Units Weighted-average exercise price
Liability awards 1,000 $ 1.00
Equity awards 114,797 $ 194.85
The fair values of warrants granted in 2021 were estimated based on the Black-Scholes option pricing model using the weighted-average significant unobservable inputs (Level 3 inputs) as follows:
2021
Risk-free interest rate
0.36% - 0.92%
Exercise price
$1.00-$290.00
Expected term
3-5 years
Expected volatility
45.0% - 50.8%
Prior to the Reorganization, during the six months ended June 30, 2021, certain warrant holders exercised their warrants for Class B redeemable capital units as follows:
Number of Warrants Weighted-average exercise price
Liability awards 70,000 $ 36.74
Equity awards 3,400 $ 1.00
On the date of exercise, the fair value of these warrants was estimated based on a Black-Scholes option pricing model using the weighted-average significant unobservable inputs (Level 3 inputs) as follows:
Risk-free interest rate
0.16% -0.19%
Exercise price
$1.00- $36.74
Expected term
2-3 years
Expected volatility
35.1% - 45.0%
As part of the Reorganization, the remaining Alclear warrants were either exchanged for Clear Secure, Inc. warrants representing the right to receive Class A common stock or remained at Alclear and continue to be exercisable for Alclear Units. The exchange was completed at an approximate 19.98 per unit ratio, using a cashless exercise conversion method. The Clear Secure, Inc. warrants are subject to the same vesting terms as applied to Alclear warrants and maintained the same fair value immediately before and after the exchange of the warrants. As such, there was no additional expense that was recorded as a result of the exchange of the warrants.
The following warrants were outstanding as of June 30, 2021:
Classification Number of Warrants Weighted-Average Exercise Price Weighted average Remaining Contractual Term (years)
Exercisable for Class A common stock Equity awards 7,674,502 $ 0.01 1.3
Exercisable for Alclear Units Equity awards 968,043 $ 0.01 3.2
As of June 30, 2021, 2,405,939 warrants were vested and exercisable for Class A common stock and 25,258 were vested and exercisable for Alclear Units at a weighted-average exercise of price of $0.01. The balance of the outstanding warrants are subject to certain performance based vesting criteria which the Company evaluates at each reporting period to determine the likelihood of achievement. Based on the likelihood of achievement of the vesting criteria, as of June 30, 2021 the Company estimated unrecognized warrant expense is $2,683.
The Company recorded the following within general and administrative expense in the condensed consolidated statements of operations:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Liability awards $ 10,903  $ —  $ 12,796  $ — 
Equity awards 1,643  132  1,922  1,564 
Total $ 12,546  $ 132  $ 14,718  $ 1,564