STOCKHOLDERS’ DEFICIT

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

NOTE 9 – STOCKHOLDERS’ DEFICIT

Common Stock

During the three months ended March 31, 2022 and 2021, the Company issued 233,816 and 247,000, respectively, shares of common stock to several consultants in connection with business development and professional services. The Company valued the common stock issuances at $466 thousand and $316 thousand, respectively, based upon the closing market price of the Company’s common stock on the date in which the performance was complete or issued based upon the vesting schedule and the closing market price of the Company’s common stock on the date of the agreement. The amounts were expensed to general and administrative expenses on the accompanying statements of operations.

During the three months ended March 31, 2022 and 2021, the Company granted 76,664 and 9,211 shares of common stock to the board of directors valued at $103 thousand and $49 thousand, respectively. The shares vest quarterly over the period of approximately one year.

See Note 8 – Significant Contracts for additional common stock issuance.

Stock Options

During the year ended December 31, 2021:

a) options to purchase 353,368 shares of common stock at a weighted average price of $16.25 were granted as compensation to employees. The options vest in equal monthly installments over 6 and 12 months. The options were valued at $6.3 million using a Black-Scholes options pricing model.

b) options to purchase 38,421 shares of common stock at a weighted average price of $8.55 were granted as compensation for various services including accounting, sales, and marketing. The options were valued at $825 thousand using a Black-Scholes options pricing model. 13,158 shares were exercised.

The fair value of the options for the year ended December 31, 2021 is estimated using a Black-Scholes option pricing model with the following range of assumptions:

Market value of common stock on issuance date	$5.34 - $33.25
Expected price	$0.095 - $19.34
Expected volatility	450% - 608%
Expected term (in years)	0.3 - 3.0
Risk-free interest rate	0.11%
Expected dividend yields	—

During the three months ended March 31, 2022:

a) options to purchase 298,685 shares of common stock at a weighted average price of $3.00 were granted as compensation to employees. The options vest in equal monthly installments ranging from instantly to 24 months months. The options were valued at $897 thousand using a Black-Scholes options pricing model.

b) options to purchase 36,842 shares of common stock at a weighted average price of $12.04 were granted as compensation for various services including engineering, accounting, and sales. The options were valued at $444 thousand using a Black-Scholes options pricing model.

The fair value of the options for the three months ended March 31, 2022 is estimated using a Black-Scholes option pricing model with the following range of assumptions:

Market value of common stock on issuance date	$1.24 - $12.45
Expected price	$1.24 - $12.04
Expected volatility	415% - 442%
Expected term (in years)	0.0 - 5.0
Risk-free interest rate	0.11%
Expected dividend yields	—

The following table summarizes option activity:

	Number of   shares			Weighted   Average   exercise price		Weighted   Average   remaining years
Outstanding December 31, 2021		1,055,184		$	6.62
Issued		335,527		$	4.00
Exercised		—		$	—
Cancelled		(391,579	)	$	2.44
Outstanding as of March 31, 2022		999,132		$	7.38		2.37
Outstanding as of March 31, 2022, vested		667,235		$	7.75		2.37

The remaining expense outstanding through March 31, 2022 is $2.5 million which is expected to be expensed over the next 23 months in general and administrative expense.

See Note 8 – Significant Contracts for additional stock options granted.

On December 7, 2021, the board authorized the Company’s Equity Incentive Plan in order to facilitate the grant of equity incentives to employees (including our named executive officers), directors, independent contractors, merchants, referral partners, channel partners and employees of our company to enable our company to attract, retain and motivate employees, directors, merchants, referral partners and channel partners, which is essential to our long-term success. A total of 1,052,632 shares of common stock were authorized under the Equity Incentive Plan, for which as of March 31, 2022 a total of 796,547 are available for issuance.

Warrants

In 2020, the Company entered into a security purchase agreement with an investor pursuant to which the Company agreed to sell the investor a $300 thousand convertible note bearing interest at 12% per annum. The Company also sold warrants to the investors to purchase up to an aggregate of 21,052 shares of common stock, with an exercise term of five (5) years, at a per share price of $14.25 which may be exercised by cashless exercise. The number of warrants adjusted in the period ending March 31, 2022 due to a reset event on January 7, 2022 changed the exercise price from $9.50 to $2.52 and increased the number of warrants from 31,578 to 119,095. The warrants were deemed a derivative liability and recorded as a debt discount at its date of issuance.

In total, the Company has 4,275,464 warrants outstanding. 3,614,201 were related to the Offering, 542,168 were granted on January 7 and the reset event added an additional 119,095. See Note 1 for information on warrants issued during the Offering and note 6 for additional information on the derivative liability.