Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 04, 2022 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-27569 | |
Entity Registrant Name | AppTech Payments Corp. | |
Entity Central Index Key | 0001070050 | |
Entity Tax Identification Number | 65-0847995 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 5876 Owens Ave. | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Carlsbad | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92008 | |
City Area Code | (760) | |
Local Phone Number | 707-5959 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 16,562,708 | |
Common Stock, $0.001 par value per share | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | APCX | |
Security Exchange Name | NASDAQ | |
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $5.19 | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $5.19 | |
Trading Symbol | APCXW | |
Security Exchange Name | NASDAQ |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 7,790 | $ 8 |
Accounts receivable | 50 | 40 |
Prepaid expenses | 466 | 95 |
Prepaid license fees - current | 479 | 479 |
Total current assets | 8,785 | 622 |
Prepaid offering cost | 92 | |
Prepaid license fees - long term | 3,180 | 3,180 |
Intangible assets | 407 | |
Note receivable | 26 | 26 |
Right of use asset | 158 | 189 |
Security deposit | 8 | 8 |
Capitalized software development and license | 3,625 | 3,440 |
TOTAL ASSETS | 16,189 | 7,557 |
Current liabilities | ||
Accounts payable | 394 | 1,255 |
Accrued liabilities | 1,651 | 3,136 |
Right of use liability | 64 | 61 |
Stock repurchase liability | 430 | 430 |
Convertible notes payable, net of $37 and $51 debt discount | 680 | 679 |
Notes payable | 1,104 | 438 |
Notes payable related parties | 685 | |
Derivative liabilities | 426 | 599 |
Total current liabilities | 4,749 | 7,283 |
Long-term liabilities | ||
Right of use liability | 131 | 163 |
Notes Payable, net of current portion | 67 | 67 |
Total long-term liabilities | 198 | 230 |
TOTAL LIABILITIES | 4,947 | 7,513 |
Stockholders’ Equity | ||
Series A preferred stock; $0.001 par value; 10,526 shares authorized; 14 shares issued and outstanding on June 30, 2022 and December 31, 2021 | ||
Common stock, $0.001 par value; 105,263,157 shares authorized; 16,562,708 and 11,944,607 and outstanding at June 30, 2022 and December 31, 2021, respectively | 16 | 12 |
Additional paid-in capital | 145,001 | 124,225 |
Accumulated deficit | (133,775) | (124,193) |
Total stockholders’ equity | 11,242 | 44 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 16,189 | $ 7,557 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Debt discount | $ 37 | $ 51 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,526 | 10,526 |
Preferred Stock, Shares Issued | 14 | 14 |
Preferred Stock, Shares Outstanding | 14 | 14 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 105,263,157 | 105,263,157 |
Common Stock, Shares Issued | 16,562,708 | 11,944,607 |
Common Stock, Shares, Outstanding | 16,562,708 | 11,944,607 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenues | $ 123 | $ 151 | $ 227 | $ 252 |
Cost of revenues | 62 | 36 | 113 | 70 |
Gross profit | 61 | 115 | 114 | 182 |
Operating expenses: | ||||
General and administrative, including stock based compensation of $0.1 million and $0.2 million, for the three months ended, and $0.9 million and $1.3 million for the six months ended June 30, 2022 and 2021, respectively | 1,320 | 3,561 | 4,101 | 5,341 |
Research and development, including stock based compensation of $2.0 million and $0 million, for the three months ended, $3.7 million and $0 million for the six months ended June 30, 2022 and 2021, respectively | 2,884 | 4,936 | ||
Excess fair value of equity issuance over assets received | 72 | 1,091 | 904 | 65,034 |
Total operating expenses | 4,276 | 4,652 | 9,941 | 70,375 |
Loss from operations | (4,215) | (4,537) | (9,827) | (70,193) |
Other income (expenses) | ||||
Interest expense | (41) | (2,432) | (96) | (2,561) |
Change in fair value of derivative liability | 37 | 453 | 173 | (55) |
Other income (expenses) | 92 | 175 | 168 | 175 |
Total other income (expenses) | 88 | (1,804) | 245 | (2,441) |
Loss before provision for income taxes | (4,127) | (6,341) | (9,582) | (72,634) |
Provision for income taxes | ||||
Net loss | $ (4,127) | $ (6,341) | $ (9,582) | $ (72,634) |
Basic and diluted net loss per common share | $ (0.25) | $ (0.58) | $ (0.60) | $ (6.70) |
Weighted-average number of shares used basic and diluted per share amounts | 16,246,260 | 10,832,745 | 15,857,753 | 10,832,745 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
General and Administrative Expense [Member] | ||||
Share-Based Payment Arrangement, Expense | $ 100 | $ 200 | $ 900 | $ 1,300 |
Research and Development Expense [Member] | ||||
Share-Based Payment Arrangement, Expense | $ 2,000 | $ 0 | $ 3,700 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED) - USD ($) $ in Thousands | Series A Preferred Stocks [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 9 | $ 36,744 | $ (44,948) | $ (8,195) | |
Beginning balance, shares at Dec. 31, 2020 | 14 | 9,317,017 | |||
Net loss | (66,293) | (66,293) | |||
Imputed interest | 3 | 3 | |||
Stock based compensation | 429 | 429 | |||
Stock based compensation, shares | 35,737 | ||||
Issuance of options for capitalized prepaid software development and license | 1,891 | 1,891 | |||
Common stock issued for purchase of judgment | 1,000 | 1,000 | |||
Common Stock issued for purchase of judgement, shares | 21,053 | ||||
Common stock issued for capitalized prepaid software development and license | $ 2 | 67,541 | 67,543 | ||
Common stock issued for capitalized prepaid software development and license, shares | 1,895,949 | ||||
Common stock cancelled | (10) | (10) | |||
Common stock cancelled, shares | (15,789) | ||||
Net Proceeds from sale of repurchase option | 1,973 | 1,973 | |||
Ending balance, value at Mar. 31, 2021 | $ 11 | 109,571 | (111,241) | (1,659) | |
Ending balance, shares at Mar. 31, 2021 | 14 | 11,253,967 | |||
Net loss | (6,340) | (6,340) | |||
Imputed interest | 3 | 3 | |||
Stock based compensation | 2,988 | 2,988 | |||
Stock based compensation, shares | 23,137 | ||||
Issuance of options for capitalized prepaid software development and license | 1,091 | 1,091 | |||
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable | $ 1 | 3,945 | 3,946 | ||
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable, Shares | 500,726 | ||||
Net Proceeds from sale of repurchase option | 458 | 458 | |||
Ending balance, value at Jun. 30, 2021 | $ 12 | 118,056 | (117,581) | 487 | |
Ending balance, shares at Jun. 30, 2021 | 14 | 11,777,830 | |||
Beginning balance, value at Dec. 31, 2021 | $ 12 | 124,225 | (124,193) | 44 | |
Beginning balance, shares at Dec. 31, 2021 | 14 | 11,944,600 | |||
Net loss | (5,455) | (5,455) | |||
Common Stock Issued for Forbearance | 3 | 3 | |||
Common stock issued for forbearance, shares | 2,104 | ||||
Stock based compensation | 2,732 | 2,732 | |||
Stock based compensation, shares | 310,223 | ||||
Common stock cancelled | |||||
Common stock cancelled, shares | (126,315) | ||||
Net Proceeds from sale of Offering Shares | $ 4 | 13,391 | 13,395 | ||
Net Proceeds from sale of Offering Shares, Shares | 3,614,458 | ||||
Ending balance, value at Mar. 31, 2022 | $ 16 | 140,351 | (129,648) | 10,719 | |
Ending balance, shares at Mar. 31, 2022 | 14 | 15,745,070 | |||
Net loss | (4,127) | (4,127) | |||
Common stock issued for Stock Based Compensation | 2,120 | 2,120 | |||
Common stock issued for Stock Based Compensation, Shares | 140,681 | ||||
Anti-Dilution Provision (Infinios) | 2,123 | 2,123 | |||
Anti-Dilution Provision (Infinios), Shares | 451,957 | ||||
Common stock issued for HotHand Patents | 407 | 407 | |||
Common stock issued for HotHand Patents, Shares | 225,000 | ||||
Ending balance, value at Jun. 30, 2022 | $ 16 | $ 145,001 | $ (133,775) | $ 11,242 | |
Ending balance, shares at Jun. 30, 2022 | 14 | 16,562,708 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (9,582) | $ (72,634) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Issuance of stock based compensation | 4,603 | 4,815 |
Common Stock Issued for Forbearance | 3 | |
Stock issued for purchase of judgment | 1,000 | |
Stock issued for excess fair value of equity over assets received | 904 | 66,125 |
Imputed interest on notes payable | 7 | |
Amortization of debt discount | 32 | 177 |
Gain on extinguishment of accounts payable | (175) | |
Change in fair value of derivative liabilities | (173) | 55 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (10) | (32) |
Prepaid expenses | (29) | (30) |
Accounts payable | (861) | (23) |
Accrued liabilities | (266) | (16) |
Right of use asset and liability | 1 | 5 |
Net cash used in operating activities | (5,378) | (726) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capitalized prepaid software development and license | (185) | (1,340) |
Net cash used in investing activities | (185) | (1,340) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments on loans payable - related parties | (34) | |
Payments on notes payable | (50) | |
Net Proceeds from offering | 13,395 | |
Repurchase of common stock | (10) | |
Proceeds from sale of repurchase options | 2,406 | |
Net cash provided by financing activities | 13,345 | 2,362 |
Changes in cash and cash equivalents | 7,782 | 296 |
Cash and cash equivalents, beginning of period | 8 | 58 |
Cash and cash equivalents, end of period | 7,790 | 354 |
Supplemental disclosures of cash flow information: | ||
Non-cash investing and financing transactions | 5,491 | |
Common stock issued for conversion of accounts payable | 206 | |
Forgiveness of debt through conversion of accounts payable | 175 | |
Common stock issued convertible notes, accrued interest and derivative liabilities | 1,253 | |
Issuance of stock for prepaid services | 250 | |
Issuance of stock for intangible assets | $ 407 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS AppTech Payments Corp. is a Fintech Company headquartered in Carlsbad, California. AppTech utilizes innovative payment processing and digital banking technologies to complement its core merchant services capabilities. The Company’s patented and proprietary software will provide progressive and adaptable products that are available through a suite of synergistic offerings directly to merchants, banking institutions, and business enterprises. AppTech is developing an embedded, highly secure digital payments and banking platform that powers commerce experiences for clients and their customers. Based upon industry standards for payment and banking protocols, we will offer standalone products and fully integrated solutions that deliver innovative, unparalleled payments, banking, and financial services experiences. Our processing technologies can be taken off-the-shelf or tapped into via our RESTful APIs to build fully branded and customizable experiences while supporting tokenized, multi-channel, and multi-method transactions. In 2013, AppTech merged with Transcendent One, Inc., whereby Transcendent One, Inc. and its management took controlling ownership of the Company. During this time, AppTech operated as a merchant services provider, continuing the business conducted by Transcendent One, Inc. In 2017, the Company acquired assets from GlobalTel Media, Inc. The assets included patented, enterprise-grade software for advanced text messaging. In addition to the software, this acquisition included associated databases, four patents in text technology, and additional intellectual property for mobile payments. In 2020, AppTech entered into a strategic partnership with Infinios (formerly “NEC Payments”), to extend its product offering to include flexible, scalable, and secure payment acceptance and issuer payment processing that supports the digitization of business and consumer financial services and the migration of cash and other legacy payment types to contactless card and real time payment transactions. In 2021, the Company announced its intent to launch an innovative and patented mobile text payment solution in addition to a suite of digital banking and payment acceptance products designed in the Business-to-Business (“B2B”) and Business-to-Consumer (“B2C”) payment and software space. On December 23, 2021, AppTech Payments Corp. (“AppTech” or the “Company”) re-domiciled to Delaware and changed its name from “AppTech Corp.” to “AppTech Payments Corp.” AppTech stock trades under the symbol “APCX” and its warrants trade under the symbol “APCXW.” The Company successfully completed its capital raise and uplisting onto NASDAQ (herein referred to as its “Offering”) on January 7, 2022. As part of the Offering, the Company executed a 9.5 to 1 3,614,458 4.15 5 5.19 13.4 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2022 and June 30, 2021. Although management believes that the disclosures in these unaudited financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. The accompanying consolidated unaudited financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022. The interim results for the three months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or for any future interim periods. Basis of Consolidation The consolidated financial statements include the accounts of AppTech Payments Corp., its wholly owned subsidiary of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, and realization of tax deferred tax assets. Actual results could differ from those estimates. Concentration of Credit Risk Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $ 250 The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses seven financial institut ions to service their merchants for which represented 100% 8% 40% of the total revenues, respectively. The loss of this customer would not have significant impact on the Company’s operations. Software Development Costs The Company capitalizes software development costs in developing internal use software when capitalizing requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. Fair Value Measurements The Company follows FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820 are described below: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts reported in the Company’s financial statements for cash, accounts payable and accrued expenses approximate their fair value because of the immediate or short-term maturity of these financial instruments. Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-marketing dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. The following table presents liabilities that are measured and recognized at fair value as of June 30, 2022 and December 31, 2021 on recurring basis (in thousands): Schedule of derivative liabilities June 30, 2022 Level 1 Level 2 Level 3 Total Carrying Value Derivative liabilities $ — $ — $ 426 $ 426 December 31, 2021 Level 1 Level 2 Level 3 Total Carrying Value Derivative liabilities $ — $ — $ 599 $ 599 See Note 6 for discussion of valuation and roll forward related to derivative liabilities. Intangible Assets and Patents Our intangible assets only consist of patents. We amortize the patents on a straight-line basis over 15 years Research and Development In accordance with ASC 730, Research and Development (“R&D”) costs are expensed when incurred. R&D costs include costs of acquiring patents and other unproven technologies, contractor fees and other costs associated with the development of the SMS short code texting platform, contract and other outside services. Total R&D costs for the six months ended June 30, 2022 and 2021 were $ 4.9 0 Per Share Information Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year, increased by the potentially dilutive common shares that were outstanding during the year. Dilutive securities include stock options, warrants granted, convertible debt and convertible preferred stock. The number of common stock equivalents not included in diluted income per share was 6,176,102 and 1,272,001 for the six months ended June 30, 2022 and 2021, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share, because the effects are anti-dilutive. Schedule of anti dilutive stock June 30, 2022 June 30, 2021 Series A preferred stock 1,149 1,149 Convertible debt 174,060 186,325 Warrants 4,275,464 21,053 Options 1,061,132 706,053 Common stock 664,297 357,421 Total 6,176,102 1,272,001 Derivative Liability The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. In addition, the Company issued warrants with variable anti-dilution provisions. The conversion terms of the convertible notes and warrants are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and at each reporting period. New Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. Risks and Uncertainties On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Since the Company derives its revenues from processing of purchases from our merchant services clients, a downturn in economic activity, such as associated with the current coronavirus pandemic, could reduce the volume of purchases it processes, and thus its revenues. In addition, such a downturn could cause its merchant customers to cease operations permanently decreasing our payment processing unless new customers are found. The continuing effects of the potential impact cannot be estimated at this time. |
PATENTS
PATENTS | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PATENTS | NOTE 3 – PATENTS Patents On June 22, 2017, AppTech executed an Amendment to Asset Purchase Agreement with GlobalTel Media, Inc., the details of which were previously disclosed by AppTech. The referenced agreement acquired intellectual property assets including but not limited to USPTO 8,073,895 & 8,572,166 “System and Method for Delivering Web Content to a Mobile Device”, USPTO 8,315,184 “Computer to Mobile Two-Way Chat System and Method”, and USPTO 8,369,828 “Mobile-to-Mobile Payment System and Method”. AppTech intends to use these assets as an integral part of future business expansion and product development. As of June 30, 2022 and December 31, 2021, there were zero dollars in accounts payable related to the assumption of liabilities in connection with the patents. In April 2022, the Company fully executed a Definitive Agreement to acquire HotHand Inc. (“HotHand”), a patent-holding company. HotHand did not have any operations, so the transaction was an asset acquisition of its portfolio of thirteen patents including USPTO 7,693,752; USPTO 8,554,632; USPTO 8,799,102; USPTO 9,436,956; USPTO 10,102,556; USPTO 10,127,592; USPTO 10,600,094; USPTO 10,621,639; USPTO 10,846,726; USPTO 10,846,727; USPTO 10,909,593; USPTO 11,107,140; USPTO 11,345,715. These patents are focused on the delivery, purchase, or request of any products or services within specific geolocation and time parameters, provided by a consumer’s cell phone anywhere in the United States. Additionally, HotHand’s family of patents includes a patent that protects advertising on a store’s mobile application when the cell phone is in the store and the ads shown are being triggered by geolocation tagging. AppTech is currently integrating the HotHand Intellectual Property (“IP”) into an elite digital platform. In addition to offering an embedded, highly secure, and patent-backed product, AppTech will offer licensing agreements for its IP. The Company anticipates generating revenues from the HotHand IP near the end of the first quarter of 2023. HotHand was acquired for 225,000 shares of common stock and was recorded as an intangible asset based on the fair market value of the common stock on the date of acquisition (April 18, 2022). The Company expects to amortize the asset over fifteen years. Further, the purchase agreement outlines revenue milestones that may trigger $500 thousand payables to HotHand’s former owners. As of August 4, 2022, the shares have not been issued. See Note 8 for more information on capitalized prepaid software development and license. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
ACCRUED LIABILITIES | NOTE 4 – ACCRUED LIABILITIES Accrued liabilities as of June 30, 2022 and December 31, 2021 consist of the following (in thousands): Schedule of Accrued Liabilities June 30, 2022 December 31, 2021 Accrued interest – third parties $ 1,197 $ 1,420 Accrued payroll 316 294 Accrued residuals 35 98 Anti-dilution provision 72 1,290 Other 31 34 Total accrued liabilities $ 1,651 $ 3,136 Accrued Interest Notes payable and convertible notes payable incur interest at rates between 10% and 24%, p Accrued Residuals The Company pays commissions to independent agents which refer merchant accounts. The amounts payable to these independent agents is based upon a percentage of the amounts processed on a monthly basis by these merchant accounts. Anti-dilution provision The agreement between the Company and Infinios, formerly NEC Payments B.S.C., has an anti-dilution provision. To remain in compliance, the Company accrued 73,848 17.46 1.3 378,109 2.20 832 Further, i n connection with the shares to be issued as part of the HotHand acquisition, and to be in compliance with its anti-dilution provision with Infiinios, the Company accrued an additional 39,706 1.81 72 |
NOTES PAYABLE AND CONVERTIBLE N
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE | NOTE 5 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE The Company funded operations through cash flows generated from operations and the issuance of loans and notes payable. The following is a summary of loans and notes payable outstanding as of June 30, 2022. Related parties noted below are either members of management, board of directors, significant shareholders or individuals in which have significant influence over the Company. Subordinated Notes Payable In 2016, the Company issued $350 thousand in subordinated notes payable to third parties that incurred interest at 10% per annum. On September 30, 2021, the Company converted the notes issued for $530 thousand of principal and interest into 55,767 shares of the Company’s common stock. Since the notes were converted to equity, there will no longer be any accrued interest related to the subordinated notes. Convertible Notes Payable In 2020, the Company entered into a Securities Purchase Agreement with an investor pursuant to which the Company agreed to sell to the investor a $300 thousand convertible note bearing interest at 12% per annum (the “Note”). The Note matures in 365 days from the date of issuance. Upon maturity of the convertible note, interest rate will be increased to 24%. The Note is convertible at the option of the holder at any time into shares of the Company’s common stock at nine dollars and fifty cents $9.50 for the one hundred and eighty (180) days immediately following the issue date and thereafter shall equal the lower of: 1) the lowest closing price of the common stock during the preceding twenty-five (25) trading day, ending on the last complete trading day prior to the issue date of the Note. 2) seventy-five (75) percent of the lowest trading price for the common stock during the twenty-five (25) consecutive trading days preceding the conversion date with a minimum trading volume of one thousand (1,000) shares. In the event of a default of the Note, the Holder, in its sole discretion may elect to use a conversion price equal to the lower of: 1) the lowest trading price of the common stock on the trading day immediately preceding the issue date or 2) seventy-five (75) percent of either the lowest trading price or the closing bid price, whichever is lower during any trading day in which the event of default has not been cured. The embedded conversion feature of this Note was deemed to require bifurcation and liability classification, at fair value. Pursuant to the Securities Purchase Agreement, the Company also sold warrants to the investors to purchase up to an aggregate of 21,052 shares of common stock exercisable at fourteen dollars and twenty-five cents $14.25 and expire in five (5) years. The fair value of the derivative liability and warrants as of the date of issuance was in excess of the Note (see Note 6 for valuation) resulting in full discount of the Note. The conversion feature and warrants have various reset provisions for which lower the exercise price and share and warrants issuable. As of June 30, 2022 and December 31, 2021, the convertible note payable balance was $ 280 280 85 39 As of June 30, 2022, the convertible note payable discount is $ 0 See Note 6– Derivative Liabilities. In 2015, the Company issued $50 thousand in convertible notes payable. The convertible notes payable are unsecured, were due in nine months, incur interest at 10% per annum and are convertible at $9.50 per share. The Company amended the convertible note on March 2, 2022 and an agreed offer of a $10 thousand discount on the principal and interest, resulting in a $72 thousand payment in full. In 2014, the Company issued $400 thousand in convertible notes payable. The convertible notes payable are unsecured, due in periods ranging up to one year, incurring interest between 10% to 12% per annum and are convertible at prices ranging from $3.14 to $9.50 per share. In addition, the Company issued 42,105 shares of common stock in connection with the convertible notes payable. The Company had an obligation to repurchase the 42,105 shares of common stock at $9.50 per share within one year of the note issuance date. On March 30, 2022, the Company entered into three forbearance agreements which granted the holders 2,105 shares of our common stock in exchange for not enforcing the terms of the agreement for a period of twelve months. As of June 30, 2022 and December 31, 2021, the Company held the obligation to repurchase the shares for $ 400 278 268 Notes Payable In 2020, the Company entered into a 30-year unsecured note payable with U.S. Small Business Administration for $68 thousand in proceeds. The notes payable incurred a $100 fee upon issuance and incurs interest at 3.75% per annum. All payments of principal and interest are deferred for thirty months from the date of the note. As of June 30, 2022 and December 31, 2021 the balance of the note payable was $ 68 68 $ 5 4 Two significant shareholders funded the Company’s operations through notes payable in primarily 2009 and 2010. The notes payable incur interest at 10% per annum and were due on December 31, 2016. On May 2, 2021, the Company entered into a debt reduction and confirmation agreement with a significant shareholder. The parties agreed to reduce the outstanding accrued interest in the amount of $275 thousand. On September 29, 2021, the Company converted notes issued for $51 thousand of principal and accrued interest into 5,329 shares of the Company’s common stock. On September 29, 2021, the Company entered into a forbearance agreement which granted the holder 3,140 shares with a current fair market value of $35 thousand in exchange for not enforcing the terms of the agreement for a period of twelve months. On February 4, 2022 and June 29, 2022, the Company entered into an amended forbearance agreement. The parties agreed to reduce the outstanding accrued interest in the amount of $ 150 100 597 as $ 133 383 In Q3 of 2021, the Company converted notes issued for $503 thousand into 52,942 shares of the Company’s common stock. Also, the Company entered into a forbearance agreement which granted the holders 2,760 shares of the Company’s common stock with a current fair market value of $120 thousand in exchange for not enforcing the terms of the agreement for a period of twelve months. |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Liabilities | |
DERIVATIVE LIABILITIES | NOTE 6– DERIVATIVE LIABILITIES The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. In addition, the Company issued warrants with variable conversion provisions. The conversion terms of the convertible notes and warrants are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants were recorded as derivative liabilities on the issuance date and revalued at June 30, 2022 and December 31, 2021. Based on the convertible notes described in Note 6, the derivative liability day one loss is $ 390 173 26 Schedule of fair value of derivative liabilities Derivative Liability Convertible Notes Derivative Liability Warrants Total Balance as of December 31, 2021 $ 274 $ 325 $ 599 Change in fair value (60 ) (113 ) (173 ) Balance as of June 30, 2022 $ 214 $ 212 $ 426 As of June 30, 2022, the fair value of the derivative liability convertible notes is estimated using a Monte Carlo pricing model with the following assumptions: Schedule of pricing mode with assumptions Market value of common stock $ 0.59 Expected volatility 91.8 % Expected term (in years) 0.25 Risk-free interest rate 2.36 % As of June 30, 2022, the fair value of the derivative liability – warrants is estimated using a Monte Carlo pricing model with the following assumptions: Market value of common stock $ 0.59 Expected volatility 115.0 % Expected term (in years) 3.39 Risk-free interest rate 2.56 % |
RIGHT OF USE ASSET
RIGHT OF USE ASSET | 6 Months Ended |
Jun. 30, 2022 | |
Right Of Use Asset | |
RIGHT OF USE ASSET | NOTE 7– RIGHT OF USE ASSET Lease Agreement In January 2020, the Company entered into a lease agreement commencing February 8, 2020 for its current facility which expires in 2025. The term of the lease is for five years. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an effective borrowing rate of 12% within the calculation. The following are the expected lease payments as of June 30, 2022, including the total amount of related imputed interest (in thousands): Years ended December 31: Schedule of Future Minimum Rental Payments for Operating Leases 2022 $ 43 2023 88 2024 90 2025 7 Operating Lease Total 228 Less: Imputed interest (33 ) Total $ 195 The rent expense was $ 31 31 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES Litigation Former Shareholders Lawsuit In November 2017, two shareholders of AppTech, Laura Farris and Eric Ottens, filed a lawsuit against the Company in the State of California, claiming conversion, aiding and abetting conversion, breach of fiduciary duty, breach of contract, breach of implied covenant of good faith and fair dealing and declaratory relief. The lawsuit was removed to the United States District Court for the Southern District of California. On December 19, 2019, the Company entered into a settlement and release agreement with the plaintiffs. On January 24, 2021, the parties entered a stipulation modifying the repayment schedule of the settlement which altered the timing of payments over the three-year repayment period. The final payment was made in March 2022. The litigants are now paid in full and no further action is warranted by the Company. Other Resolved Lawsuit In July 2020, Flowpay Corporation, a Delaware corporation (“Flowpay”), and R. Wayne Steiger, the President of Flowpay, having a non-binding Memorandum of Understanding (“MOU”) filed a lawsuit against AppTech Payments Corp. (formally “AppTech Corp.”) in the County of San Diego, State of California. The claims included breach of contract, intentional misrepresentation, negligent misrepresentation, and unjust enrichment. Management believes the non-binding MOU terminated after no definite agreement was executed between the parties, and negotiations ceased December 20, 2016. On May 19, 2022, AppTech entered into a Settlement and Release Agreement (the “Settlement Agreement”) with Flowpay and Mr. Steiger. Under the terms of the Settlement Agreement, Flowpay and Mr. Steiger dismissed with prejudice all claims against the Company, its Chief Executive Officer, a Director and a third party individual. Convertible Note and Warrant Lawsuit On July 14, 2021, EMA Financial LLC, a Delaware limited liability company (“EMAF”), filed a complaint in the Southern District of New York against the Company. In its complaint, EMAF alleged that the Company breached the terms of a convertible note and a related warrant agreement purchased by EMAF pursuant to a securities purchase agreement between the parties. EMAF sought specific performance, payment of damages to be determined but not in excess of $2.75 million, reimbursement of costs and expenses, including reasonable legal fees, and non-interference. We believe EMAF’s claims are meritless and intend to vigorously defend against this lawsuit. Significant Contracts Capital Raise In February 2021, the Company entered into an engagement letter with Maxim Group LLC (“Maxim”) as the lead management underwriter for a follow-on offering which is non-binding. On October 27, 2021, Maxim and the Company terminated all relevant agreements and the Company issued Maxim 21,052 On October 18, 2021, the Company entered into an engagement letter with EF Hutton, division of Benchmark Investments, LLC. (“EF Hutton”) to act as lead underwriter, deal manager and investment banker for the Company’s proposed firm commitment follow-on public offering and uplisting. This engaged EF Hutton through the earlier of (i) October 2022 or (ii) the closing of a follow-on offering. The Company completed its offering on January 7, 2022. The Company sold 3,614,458 units of our common stock (a unit consisting of one share of common stock and a warrant to purchase one share of common stock) at $4.15 per unit. The offering provided net proceeds of approximately $13.4 million. See note 1 for information on the capital raise completed in January 2022. Silver Alert Services, LLC In August 2020, the Company entered into a strategic partnership with Silver Alert Services, LLC doing business as Lifelight Systems (“Lifelight”). The partnership would expand AppTech’s reach into new markets and provide advanced technological solutions for the telehealth and personal emergency response systems markets. The strategic partnership was cancelled on February 17, 2022. Infinios Financial Services (formerly NEC Payments B.S.C.) On October 1, 2020, the Company entered into a strategic partnership with Infinios Financial Services BSC (formally NEC Payments B.S.C) (“Infinios”) through a series of agreements, which included the following: (a) Subscription License and Services Agreement; (b) Digital Banking Platform Operating Agreement; (c) Subscription License Order Form; and (d) Registration Rights Agreement (collectively the “Agreements”). On February 11, 2021, the Company entered into an amended and restated Subscription License and Services Agreement, Digital Banking Platform Operating Agreement and Subscription License Order Form with Infinios (collectively the “Restated Agreements”). The gross total fees due under the Restated Agreements are $2.2 million excluding pass-through costs associated with infrastructure hosting fees. On February 19, 2021, the Company completed and validated its contractual obligations and paid to Infinios the $100 thousand engagement fee. On February 28, 2021, the Company paid the initial fee of $708 thousand to Infinios prior to the Funding Date. On March 25, 2021, the Company issued 1,895,948 shares of common stock to an Infinios affiliate on a fully diluted basis with piggyback rights. The Company valued the common stock issuance at $67.5 million based upon the closing market price on the effective date of the transaction based on the closing market price of the Company’s common stock. The issuance was recorded as a $3.8 million asset and $63.8 million expense in excess fair value of equity issuance over assets received. The capitalized asset was classified as capitalized prepaid software development of $ 2.8 1.0 As of June 30, 2022, the following fees were paid (in thousands): Schedule of fees paid to NECP platform Engagement Fee (prepaid licensing cost) $ 100 License subscription fee (prepaid licensing cost) 750 Annual maintenance subscription fee (prepaid licensing cost) 113 Implementation fee (capitalized software cost) 325 Infrastructure implementation fee (capitalized software cost) 65 Training fee (50% due at Funding Date) 50 Total $ 1,403 The annual maintenance subscription fee of $ 113 72 Innovations Realized LLC On October 2, 2020, the Company entered into an independent contractor services agreement with Innovations Realized, LLC (“IR”) to develop a strategic operating plan focused on the design, execution and go-to-market implementation of the Infinios platform to enter the United States market. Under the agreement, the Company granted options to purchase 42,105 shares at a price of $0.095 and 263,157 shares at $2.375 and exercisable for two years after vesting. These options vest in equal monthly installments over 24 months. These options had a grant date fair value of $1.4 million and $8.7 million using a Black Scholes pricing model. The estimated amortization is a 5-year life based on the term of the licensing agreement. On February 18, 2021, the Company entered into an amended independent contractor services agreement for $760 thousand with IR. The final payment owed to IR of $171 thousand was paid in January 2022. Investor Relations On January 2, 2022, the Company entered into an agreement with an investor relations firm (“IR Firm”) that compensated IR Firm $50 thousand and 100,000 shares upon the successful uplisting onto NASDAQ. In addition, on January 31, 2022, the Company entered into a consulting agreement with IR Firm. The Company agreed to a six-month commitment with IR Firm that pays $5 thousand per month, grants IR Firm a stock purchase agreement to buy 45,000 shares of the Company stock at $0.001 per share and grants a monthly budget of approximately $100 thousand (with monthly automatic renewals unless the agreement were canceled in writing). In return, IR Firm agrees to provide investor relations outreach, public relations, advisory and consulting services, to AppTech. Payment for the two agreements was made in February 2022. On May 31st, 2022, the Company entered into a six months agreement with another investor relations firm. The firm received 100,000 shares of AppTech’s common stock valued at the closing price on May 31st, 2022, in return for providing marketing and investor relation services. |
STOCKHOLDERS_ DEFICIT
STOCKHOLDERS’ DEFICIT | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ DEFICIT | NOTE 9 – STOCKHOLDERS’ DEFICIT Common Stock During the six months ended June 30, 2022 and 2021, the Company issued 345,742 37,163 566 491 During the six months ended June 30, 2022 and 2021, the Company granted 105,414 and 36,842 shares of common stock to the board of directors valued at $ 152 thousand and $ 197 thousand, respectively. The shares vest quarterly over the period of approximately one year. During the six months ended June 30, 2022, the Company issued 225,000 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 8.55 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 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: Schedule of Black Scholes option pricing 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 six months ended June 30, 2022: a) options to purchase 363,685 2.73 compensation to employees. The options vest in equal monthly installments ranging from instantly to 24 months. The options were valued at $ 992 b) options to purchase 36,842 12.04 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 six months ended June 30, 2022 is estimated using a Black-Scholes option pricing model with the following range of assumptions: Market value of common stock on issuance date $ 0.77 12.45 Exercise 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: Schedule of option activity Number of shares Weighted Average exercise price Weighted Average remaining years Outstanding December 31, 2021 1,055,184 $ 6.62 Issued 400,527 $ 4.01 Exercised — $ — Cancelled (394,579 ) $ 2.56 Outstanding as of June 30, 2022 1,061,132 $ 7.15 2.17 Outstanding as of June 30, 2022, vested 781,767 $ 7.67 2.12 The remaining expense outstanding through June 30, 2022 i s $ 3.5 On December 7, 2021, the board authorized the Company’s Equit y 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 1,052,632 349,297 The Company extended its stock repurchase agreement with the Chief Financial Officer. Terms of the updated agreement state that the Company has until October 21, 2022 to buyback 263,158 shares of its common stock for $500 thousand. 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. In total, the Company has 4,275,464 warrants outstanding. 3,614,458 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist other than those disclosed below. In July 2022, the Company entered into a consulting services agreement with an investor relations firm. The firm is to receive cash compensation, in return for providing marketing and investor relation services. In July 2022, the Company amended its option agreements with all employees, consultants and board of directors. The board of directors are scheduled to meet in August 2022 to vote on the measure. If approved by the board of director’s, the shareholders would vote to ratify the amendment as part of the annual shareholder meeting tentatively scheduled to take place in April 2023. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2022 and June 30, 2021. Although management believes that the disclosures in these unaudited financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. The accompanying consolidated unaudited financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022. The interim results for the three months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or for any future interim periods. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of AppTech Payments Corp., its wholly owned subsidiary of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, and realization of tax deferred tax assets. Actual results could differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $ 250 The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses seven financial institut ions to service their merchants for which represented 100% 8% 40% of the total revenues, respectively. The loss of this customer would not have significant impact on the Company’s operations. |
Software Development Costs | Software Development Costs The Company capitalizes software development costs in developing internal use software when capitalizing requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. |
Fair Value Measurements | Fair Value Measurements The Company follows FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820 are described below: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts reported in the Company’s financial statements for cash, accounts payable and accrued expenses approximate their fair value because of the immediate or short-term maturity of these financial instruments. Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-marketing dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. The following table presents liabilities that are measured and recognized at fair value as of June 30, 2022 and December 31, 2021 on recurring basis (in thousands): Schedule of derivative liabilities June 30, 2022 Level 1 Level 2 Level 3 Total Carrying Value Derivative liabilities $ — $ — $ 426 $ 426 December 31, 2021 Level 1 Level 2 Level 3 Total Carrying Value Derivative liabilities $ — $ — $ 599 $ 599 See Note 6 for discussion of valuation and roll forward related to derivative liabilities. |
Intangible Assets and Patents | Intangible Assets and Patents Our intangible assets only consist of patents. We amortize the patents on a straight-line basis over 15 years |
Research and Development | Research and Development In accordance with ASC 730, Research and Development (“R&D”) costs are expensed when incurred. R&D costs include costs of acquiring patents and other unproven technologies, contractor fees and other costs associated with the development of the SMS short code texting platform, contract and other outside services. Total R&D costs for the six months ended June 30, 2022 and 2021 were $ 4.9 0 |
Per Share Information | Per Share Information Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year, increased by the potentially dilutive common shares that were outstanding during the year. Dilutive securities include stock options, warrants granted, convertible debt and convertible preferred stock. The number of common stock equivalents not included in diluted income per share was 6,176,102 and 1,272,001 for the six months ended June 30, 2022 and 2021, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share, because the effects are anti-dilutive. Schedule of anti dilutive stock June 30, 2022 June 30, 2021 Series A preferred stock 1,149 1,149 Convertible debt 174,060 186,325 Warrants 4,275,464 21,053 Options 1,061,132 706,053 Common stock 664,297 357,421 Total 6,176,102 1,272,001 |
Derivative Liability | Derivative Liability The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. In addition, the Company issued warrants with variable anti-dilution provisions. The conversion terms of the convertible notes and warrants are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and at each reporting period. |
New Accounting Pronouncements | New Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
Risks and Uncertainties | Risks and Uncertainties On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Since the Company derives its revenues from processing of purchases from our merchant services clients, a downturn in economic activity, such as associated with the current coronavirus pandemic, could reduce the volume of purchases it processes, and thus its revenues. In addition, such a downturn could cause its merchant customers to cease operations permanently decreasing our payment processing unless new customers are found. The continuing effects of the potential impact cannot be estimated at this time. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of derivative liabilities | Schedule of derivative liabilities June 30, 2022 Level 1 Level 2 Level 3 Total Carrying Value Derivative liabilities $ — $ — $ 426 $ 426 December 31, 2021 Level 1 Level 2 Level 3 Total Carrying Value Derivative liabilities $ — $ — $ 599 $ 599 |
Schedule of anti dilutive stock | Schedule of anti dilutive stock June 30, 2022 June 30, 2021 Series A preferred stock 1,149 1,149 Convertible debt 174,060 186,325 Warrants 4,275,464 21,053 Options 1,061,132 706,053 Common stock 664,297 357,421 Total 6,176,102 1,272,001 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Liabilities | Schedule of Accrued Liabilities June 30, 2022 December 31, 2021 Accrued interest – third parties $ 1,197 $ 1,420 Accrued payroll 316 294 Accrued residuals 35 98 Anti-dilution provision 72 1,290 Other 31 34 Total accrued liabilities $ 1,651 $ 3,136 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Liabilities | |
Schedule of fair value of derivative liabilities | Schedule of fair value of derivative liabilities Derivative Liability Convertible Notes Derivative Liability Warrants Total Balance as of December 31, 2021 $ 274 $ 325 $ 599 Change in fair value (60 ) (113 ) (173 ) Balance as of June 30, 2022 $ 214 $ 212 $ 426 |
Schedule of pricing mode with assumptions | Schedule of pricing mode with assumptions Market value of common stock $ 0.59 Expected volatility 91.8 % Expected term (in years) 0.25 Risk-free interest rate 2.36 % As of June 30, 2022, the fair value of the derivative liability – warrants is estimated using a Monte Carlo pricing model with the following assumptions: Market value of common stock $ 0.59 Expected volatility 115.0 % Expected term (in years) 3.39 Risk-free interest rate 2.56 % |
RIGHT OF USE ASSET (Tables)
RIGHT OF USE ASSET (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Right Of Use Asset | |
Schedule of Future Minimum Rental Payments for Operating Leases | Schedule of Future Minimum Rental Payments for Operating Leases 2022 $ 43 2023 88 2024 90 2025 7 Operating Lease Total 228 Less: Imputed interest (33 ) Total $ 195 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of fees paid to NECP platform | Schedule of fees paid to NECP platform Engagement Fee (prepaid licensing cost) $ 100 License subscription fee (prepaid licensing cost) 750 Annual maintenance subscription fee (prepaid licensing cost) 113 Implementation fee (capitalized software cost) 325 Infrastructure implementation fee (capitalized software cost) 65 Training fee (50% due at Funding Date) 50 Total $ 1,403 |
STOCKHOLDERS_ DEFICIT (Tables)
STOCKHOLDERS’ DEFICIT (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of Black Scholes option pricing | Schedule of Black Scholes option pricing 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 — Market value of common stock on issuance date $ 0.77 12.45 Exercise 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 — |
Schedule of option activity | Schedule of option activity Number of shares Weighted Average exercise price Weighted Average remaining years Outstanding December 31, 2021 1,055,184 $ 6.62 Issued 400,527 $ 4.01 Exercised — $ — Cancelled (394,579 ) $ 2.56 Outstanding as of June 30, 2022 1,061,132 $ 7.15 2.17 Outstanding as of June 30, 2022, vested 781,767 $ 7.67 2.12 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares shares | |
Reverse split | 9.5 to 1 |
Sale of stock | shares | 3,614,458 |
Sale of stock units | $ 4.15 |
Net proceeds | $ | $ 13,400 |
Warrant [Member] | |
Warrant expiration | 5 years |
Warrant exercise price | $ 5.19 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Offsetting Assets [Line Items] | ||
Derivative liabilities | $ 426 | $ 599 |
Fair Value, Inputs, Level 1 [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative liabilities | $ 426 | $ 599 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 6,176,102 | 1,272,001 |
Series A Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 1,149 | 1,149 |
Convertible Debt [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 174,060 | 186,325 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 4,275,464 | 21,053 |
Options Held [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 1,061,132 | 706,053 |
Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 664,297 | 357,421 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Product Information [Line Items] | ||
Federal Deposit Insurance Corporation | $ 250 | |
Intangible assets useful life | 15 years | |
Research and Development Expense | $ 4,900 | $ 0 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,176,102 | 1,272,001 |
Accounts Receivable [Member] | ||
Product Information [Line Items] | ||
Concentration of Credit Risk | 100% | |
Revenue Benchmark [Member] | ||
Product Information [Line Items] | ||
Concentration of Credit Risk | 8% | 40% |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Other Liabilities Disclosure [Abstract] | ||
Accrued interest – third parties | $ 1,197 | $ 1,420 |
Accrued payroll | 316 | 294 |
Accrued residuals | 35 | 98 |
Anti-dilution provision | 72 | 1,290 |
Other | 31 | 34 |
Total accrued liabilities | $ 1,651 | $ 3,136 |
ACCRUED LIABILITIES (Details Na
ACCRUED LIABILITIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 04, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Other Liabilities Disclosure [Abstract] | |||
Shares issued for anti dilution provision, shares | 39,706 | 378,109 | 73,848 |
Share price | $ 1.81 | $ 2.20 | $ 17.46 |
Shares issued for anti dilution provision, value | $ 72 | $ 832 | $ 1,300 |
NOTES PAYABLE AND CONVERTIBLE_2
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Convertible note payable discount | $ 0 | |
Increase (Decrease) in Accrued Interest Receivable, Net | 150 | |
Payment Of Accrued Interest | 100 | |
Convertible Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
Convertible note payable | 280 | $ 280 |
Accrued interest | 85 | 39 |
Convertible Debt [Member] | ||
Debt Instrument [Line Items] | ||
Accrued interest | 278 | 268 |
Obligation to repurchase shares | 400 | 400 |
Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
Accrued interest | 5 | 4 |
Notes Payable | 68 | 68 |
Notes Payable 1 [Member] | ||
Debt Instrument [Line Items] | ||
Accrued interest | 133 | $ 383 |
Notes Payable | $ 597 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Offsetting Assets [Line Items] | |
Balance as of begining | $ 599 |
Change in fair value | (173) |
Balance as of ending | 426 |
Derivative Liability Convertible Notes [Member] | |
Offsetting Assets [Line Items] | |
Balance as of begining | 274 |
Change in fair value | (60) |
Balance as of ending | 214 |
Derivative Liability Warrants [Member] | |
Offsetting Assets [Line Items] | |
Balance as of begining | 325 |
Change in fair value | (113) |
Balance as of ending | $ 212 |
DERIVATIVE LIABILITIES (Detai_2
DERIVATIVE LIABILITIES (Details 1) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Offsetting Assets [Line Items] | ||
Risk-free interest rate | 0.11% | 0.11% |
Convertible Notes [Member] | ||
Offsetting Assets [Line Items] | ||
Market value of common stock | $ 0.59 | |
Expected volatility | 91.80% | |
Expected term (in years) | 3 months | |
Risk-free interest rate | 2.36% | |
Warrants | ||
Offsetting Assets [Line Items] | ||
Market value of common stock | $ 0.59 | |
Expected volatility | 115% | |
Expected term (in years) | 3 years 4 months 20 days | |
Risk-free interest rate | 2.56% |
DERIVATIVE LIABILITIES (Detai_3
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Derivative Liabilities | ||
Derivative liability day one loss | $ 390 | |
Change in fair value derivative liabilities | $ 173 | $ 26 |
RIGHT OF USE ASSET (Details)
RIGHT OF USE ASSET (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Right Of Use Asset | |
2022 | $ 43 |
2023 | 88 |
2024 | 90 |
2025 | 7 |
Operating Lease Total | 228 |
Less: Imputed interest | 33 |
Total | $ 195 |
RIGHT OF USE ASSET (Details Nar
RIGHT OF USE ASSET (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Right Of Use Asset | ||
Rent expense | $ 31 | $ 31 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Engagement Fee (prepaid licensing cost) | $ 100 |
License subscription fee (prepaid licensing cost) | 750 |
Annual maintenance subscription fee (prepaid licensing cost) | 113 |
Implementation fee (capitalized software cost) | 325 |
Infrastructure implementation fee (capitalized software cost) | 65 |
Training fee (50% due at Funding Date) | 50 |
Total | $ 1,403 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Oct. 27, 2021 | Jun. 30, 2022 | Feb. 19, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Number of shares issue | 21,052 | ||
Capitalized Computer Software, Net | $ 2,800 | ||
Capitalized Licensing | $ 1,000 | ||
Annual maintenance subscription fee | $ 113 | ||
Infrastructure support fee | $ 72 |
Schedule of Black Scholes optio
Schedule of Black Scholes option pricing (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Option Indexed to Issuer's Equity [Line Items] | ||
Risk-free interest rate | 0.11% | 0.11% |
Expected dividend yields | $ 0 | $ 0 |
Minimum [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Market value of common stock on issuance date | $ 5.34 | $ 0.77 |
Exercise price | $ 0.095 | $ 1.24 |
Expected volatility | 450% | 415% |
Expected term (in years) | 3 months 18 days | 0 years |
Maximum [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Market value of common stock on issuance date | $ 33.25 | $ 12.45 |
Exercise price | $ 19.34 | $ 12.04 |
Expected volatility | 608% | 442% |
Expected term (in years) | 3 years | 5 years |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details 1) - Option Activity [Member] | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Option Indexed to Issuer's Equity [Line Items] | |
Option outstanding Begining Balance | shares | 1,055,184 |
Weighted Average Exercise Price, Option outstanding Begining Balance | $ / shares | $ 6.62 |
Option Issued | shares | 400,527 |
Weighted Average Exercise Price, Option Issued | $ / shares | $ 4.01 |
Option Exercised | shares | |
Weighted Average Exercise Price, Option Exercised | $ / shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period | shares | (394,579) |
Weighted Average Exercise Price, Option Cancelled | $ / shares | $ 2.56 |
Option outstanding Ending Balance | shares | 1,061,132 |
Weighted Average Exercise Price, Option outstanding Ending Balance | $ / shares | $ 7.15 |
Options outstanding weighted average remaining years | 2 years 2 months 1 day |
Option outstanding vested | shares | 781,767 |
Weighted Average exercise price, Options, Vested | $ / shares | $ 7.67 |
Weighted Average remaining years Options, Vested | 2 years 1 month 13 days |
STOCKHOLDERS_ DEFICIT (Details
STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Risk-free interest rate | 0.11% | 0.11% | |
Expected dividend yields | $ 0 | $ 0 | |
Remaining expense outstanding | $ 3,500 | ||
Equity Incentive Plan [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Number of Shares Authorized | 1,052,632 | ||
Shares available for grant | 349,297 | ||
Minimum [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Market value of common stock on issuance date | $ 5.34 | $ 0.77 | |
[custom:ExercisePrice] | $ 0.095 | $ 1.24 | |
Expected volatility | 450% | 415% | |
Expected term (in years) | 3 months 18 days | 0 years | |
Maximum [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Market value of common stock on issuance date | $ 33.25 | $ 12.45 | |
[custom:ExercisePrice] | $ 19.34 | $ 12.04 | |
Expected volatility | 608% | 442% | |
Expected term (in years) | 3 years | 5 years | |
Consultants [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Common stock issued for services, shares | 345,742 | 37,163 | |
Common stock issued for services, value | $ 566 | $ 491 | |
Option granted | 353,368 | 38,421 | |
Weighted average price of option granted | $ 16.25 | $ 8.55 | |
Fair value of option granted | $ 6,300 | $ 825 | |
Option exercised | 13,158 | ||
Board Of Directors [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 105,414 | 36,842 | |
Stock Issued During Period, Value, New Issues | $ 152 | $ 197 | |
Hot Hand [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Common stock issued for services, shares | 225,000 | ||
Employees [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Option granted | 363,685 | 36,842 | |
Weighted average price of option granted | $ 2.73 | $ 12.04 | |
Fair value of option granted | $ 992 | $ 444 |