STOCKHOLDERS’ DEFICIT

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

NOTE 9 – STOCKHOLDERS’ DEFICIT

Common Stock

During the six months ended June 30, 2023 and 2022, the Company issued 160,000 and 345,742, respectively, shares of common stock to several consultants in connection with business development and professional services. The Company valued the common stock issuances at $382 thousand and $566 thousand, respectively, based upon the closing market price of the Company’s common stock on the date of the agreement.

During the six months ended June 30, 2023 and 2022, the Company granted 57,500 and 105,414 shares of common stock to the board of directors valued at $84 thousand and $152 thousand, respectively. The shares vest quarterly over the period of approximately one year.

As of June 30, 2023, the Company reserved 10,800 shares of common stock for HotHand's shareholders in relation to incomplete HotHand shareholder contact information and or unexecuted APCX shareholder issuance agreements. These said shares will remain in escrow until each party is identified and new issuance agreement is fully executed.

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

Stock Options

During the six months ended June 30, 2023, no options were granted during the six months ended June 30, 2023.

The following table summarizes option activity:

	Number of shares			Weighted Average exercise price		Weighted Average remaining years
Outstanding December 31, 2022		1,089,868		$	7.00		1.91
Issued		–		$	–
Exercised		–		$	–
Cancelled		(175,658	)	$	7.96
Outstanding as of June 30, 2023		914,210		$	0.92		1.73
Outstanding as of June 30, 2023, vested		881,012		$	0.93		1.72

The Company recorded $1.4 million expenses for the six months ended June 30, 2023, including expenses from repricing of the options at $711 thousand. The remaining expense outstanding through June 30, 2023 is $44 thousand which is expected to be expensed over the next one year in general and administrative expense.

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. The shareholders approved an additional 700,000 shares for the Company's Equity Incentive plan in May 2023. A total of 1,752,632 shares of common stock were authorized under the Equity Incentive Plan, for which as of June 30, 2023 a total of 907,982 are available for issuance.

In May 2023, the shareholders approved the Company's proposed resolution to re-price its options. The options were repriced to $0.7152 and $1.4304 for employees and non-employees respectively. The Company recorded the modification expense of $711 thousand during six months ended June 30, 2023.

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 their date of issuance. At the end of June 30, 2023, the derivative liabilities is zero as the Company settled the convertible note and also extinguished its warrants related to its derivative liability as a result of the settlement.

On February 2, 2023, the Company announced the closing of its previously announced $5.0 million registered direct offering (the “Registered Direct Offering”) with a single institutional investor to sell 1,666,667 shares of its common stock (the “Shares”) and warrants to purchase up to 1,666,667 shares (the “Warrants”) in a concurrent private placement (the “Private Placement”). The combined purchase price for one Share and one Warrant was $3.00. Each of the Warrants has an exercise price of $4.64 per share of common stock and are exercisable on and after August 1, 2023. The Warrants expire five years from the date on which they become exercisable. The aggregate gross proceeds from the Registered Direct Offering and the concurrent Private Placement were approximately $5.0 million before deducting placement agent fees and other estimated offering expenses.

The offering that was completed in February 2023, caused a reset to the exercise price of existing warrants from $5.19 to $4.15. In total, 4,156,626 warrants were reset and $763 thousand was recorded as a result of the reset.

In April 2023, AppTech and EMAF each filed a Stipulation withdrawing the Cross-Appeal, which was then closed in 2023. The related convertible note, warrants, and derivative liabilities were extinguished.

In total, the Company has 5,823,036 warrants outstanding as of June 30, 2023.

See Note 1 for information on warrants issued during the Offering and note 6 for additional information on the derivative liability.