AppTech Payments Corp S-1/A, filed Dec 17, 2021

AppTech Payments Corp. (APCX)

S-1/A 2021-12-17

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Delaware		7389		66-0847995
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

Title of Each Class of Securities to Be Registered (1)	Proposed Maximum Aggregate Offering Price		Amount of Registration Fee

Units consisting of shares of Common Stock, par value $0.001 per share, and Warrants to purchase shares of Common Stock included as part of the Units (2)(3)	$	17,250,000	$	1,599.08
Common Stock included as part of the Units (4)	$		$	—
Warrants to purchase shares of Common Stock included as part of the Units (3)(4)	$	—	$	—
Shares of Common Stock issuable upon exercise of the Warrants (5)	$	21,570,871	$	1,999.62
Total (6)	$	38,820,871	$	3,598.70

(1)	In the event of a stock split, stock dividend, or similar transaction involving our Common Stock, the number of shares registered shall automatically be increased to cover the additional shares of Common Stock issuable pursuant to Rule 416 under the Securities Act.
(2)	Each Unit consists of one share of Common Stock and one Warrant, each Warrant is exercisable for one share of Common Stock at a price per share equal to 125% of the public offering price per Unit.
(3)	Includes shares and Warrants that may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any (the “Over-Allotment Option”).
(4)	In accordance with Rule 457(i) under the Securities Act, because the shares of the registrant’s common stock underlying the Warrants are registered hereby, no separate registration fee is required with respect to the Warrants registered hereby.
(5)	Includes shares of common stock which may be issued upon exercise of additional Warrants which may be issued upon exercise of the Over-Allotment Option.
(6)	The registrant previously paid $3,678.85 in connection with a prior filing of this registration statement.

	Per Share	Total

Public offering price	$	$
Underwriting discount (1)	$	$
Proceeds, before expenses, to us	$	$

	Page
PROSPECTUS SUMMARY	1
RISK FACTORS	13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	30
DIVIDEND POLICY	33
CAPITALIZATION	34
DILUTION	36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38
BUSINESS	45
MANAGEMENT	56
EXECUTIVE COMPENSATION	62
DIRECTOR COMPENSATION	66
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	67
PRINCIPAL STOCKHOLDERS	69
DESCRIPTION OF CAPITAL STOCK	70
SHARES ELIGIBLE FOR FUTURE SALE	76
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO U.S. AND NON-U.S. HOLDERS	78
UNDERWRITING	83
LEGAL MATTERS	91
EXPERTS	92
WHERE YOU CAN FIND MORE INFORMATION	92
INDEX TO FINANCIAL STATEMENTS	F-1

	●	Increasing our customer base by offering unique and compelling, patent protected technology solutions;

	●	Driving growth in our merchant services business through new and flexible technologies, including our secure text payment system, that will enable our customers to adapt to a rapidly changing marketplace;

	●	Rolling-out our API-driven, account-based, issuer processing solution for card, digital token, and payment transfer transactions that will enable us to target multi-currency and multi-channel digital banking and embedded B2B payment opportunities;

	●	Providing advanced technology to our clients to engage end-users via lead generation and text marketing services to enable businesses to better communicate with their customers and integrate our full suite of products;

	●	Maintaining technological leadership by continuing to innovate and improve our scalable, extensible, cloud-based technology;

	●	Pursuing strategic acquisitions, investments, or partnerships to complement and bolster our suite of fintech products;

	●	Creating cross-selling synergies through white-labeling or SaaS distribution enabling us to provide a holistic suite of products and services to financial institutions, technology companies, and SMEs;

	●	Utilizing a scalable business model to eliminate certain barriers to rapid growth; and

	●	Expanding into the telehealth sector by offering advanced remote patient monitoring technologies.

	●	our going concern and history of losses;

	●	uncertainty associated with anticipated launch of our financial services platform and other potential advanced payment solutions we intend to launch in the future;

	●	substantial investment and costs associated with new potential revenue streams and their corresponding contractual obligations;

	●	dependence on third-party channel and referral partners, who comprise a significant portion of our sales force, for gaining new clients;

	●	a slowdown or reduction in our sales in due to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances;

	●	uncertainty regarding our ability to achieve profitability and positive cash flow through the commercialization of the products we offer or intend to offer in the future;

	●	dependence on third-party payment processors to facilitate our merchant services capabilities;

	●	delay in or failure to obtain regulatory approval of our financial services platform or any future products in additional countries;

	●	our ability to operate our business while timely making payments pursuant to our loan agreements;

	●	our need to raise additional financing to fund daily operations and successfully grow our Company;

	●	our ability to retain and recruit appropriate employees, in particular a productive sales force;

	●	current and future laws and regulations;

	●	general economic uncertainty associated with the COVID-19 pandemic;

	●	the adverse effects of COVID-19, and its unpredictable duration, in regions where we have customers, employees and distributors;

	●	the adverse effects of COVID-19 on processing volumes resulting from (a) limitations on in-person access to our merchants’ businesses or (b) the unwillingness of customers to visit our merchants’ businesses;

	●	the possibility that the economic impact of COVID-19 will lead to changes in how consumers make purchases that we are unable to monetize; and

	●	the other factors described in “Risk Factors.”

Offered Securities:	2,912,621 Units, each Unit consisting of one share of our Common Stock and one Warrant to purchase one share of our Common Stock from the date of issuance until the fifth anniversary of such date for an assumed $6.44 per share (125% of the assumed $5.15 public offering price of one Unit, the midpoint of the price range set forth on the cover page of this prospectus). The Units will not be certificated or issued in stand-alone form. The shares of our Common Stock and the Warrants underlying the Units are immediately separable upon issuance and will be issued separately in this offering.

Offering Price per Unit (assumed):	Assumed $5.15 per Unit, the midpoint of the price range set forth on the cover page of this prospectus.

Over-Allotment Option:	We have granted the underwriters a 45-day option to purchase up to an aggregate of 436,893 additional shares and/or436,893 additional Warrants at the public offering price, less underwriting discounts and commissions, on the same terms as set forth in this prospectus, solely to cover over-allotments, if any.

Description of Warrants:	Each Warrant will have an exercise price per share of 125% of the public offering price per Unit, will be exercisable immediately and will expire on the fifth anniversary of the original issuance date. Each Warrant is exercisable for one share of common stock, subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting our common stock as described herein. Each holder of purchase Warrants will be prohibited from exercising its Warrant for shares of our common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding. However, any holder may increase such percentage to any other percentage not in excess of 9.99%. The terms of the Warrants will be governed by a Warrant Agent Agreement, dated as of the effective date of this offering, between us and Transfer Online, Inc., as the warrant agent (the “Warrant Agent”). This offering also relates to the offering of the shares of common stock issuable upon the exercise of the Warrants (the “Warrant Shares”). For more information regarding the Warrants, you should carefully read the section titled “Description of Securities—Warrants” in this prospectus.

Common Stock Outstanding Before Offering (1):	113,389,601 shares

Common stock Outstanding After Offering (2):	15,285,261 shares, or 15,787,689 shares of if the underwriters exercise their over-allotment option in full, in each case assuming none of the Warrants issued in this offering are exercised.

Use of Proceeds:	We estimate that we will receive net proceeds from this offering of approximately $13.471 million, or approximately $15.541 million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $5.15 per Unit, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We currently intend to use the net proceeds from this offering, together with our existing cash, to fund the research and development of our technologies, expand our marketing efforts and for general working capital purposes. See “Use of Proceeds” below.

Underwriters Compensation:	In connection with this offering, the underwriters will receive an underwriting discount equal to 8% of the gross proceeds from the sale of Units in the offering. We will also reimburse the underwriter for certain out-of-pocket actual expenses related to the offering and the representative of the underwriter shall be entitled to a non-accountable expense allowance equal to one percent (1%) of the public offering price. See “Underwriting” starting on page 82of this prospectus.

Nasdaq Capital Market Listing and Symbols:	Our common stock is presently quoted on the over the counter markets under the symbol “APCX.” We have been approved to list our common stock and Warrants on Nasdaq under the symbols “APCX” and “APCXW,” respectively. No assurance can be given that a trading market will develop for the common stock and Warrants.

Lock-Up Agreements:	We and our directors, officers and certain stockholders have agreed with the underwriter not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our Common Stock or securities convertible into Common Stock for a period of 360 days after the date of this prospectus. See “Underwriting-Lock-Up Agreements” on page 82 of this prospectus.

Reverse Stock Split:	On February 2, 2021, our Board approved a reverse stock split of the Common Stock within the range of 1-for-2 to 1-for-12 of our issued and outstanding shares of our Common Stock, subject to stockholder approval. The holders of a majority of outstanding voting capital stock approved the reverse stock split by written consent in lieu of a meeting on April 16, 2021, and authorized the Board, in its discretion, to determine the final ratio. We intend to effectuate the reverse split of our common stock in a ratio to be determined by the Board prior to consummation of this offering. Unless otherwise stated and other than in our financial statements and the notes thereto, all share and per share information in this prospectus reflects a proposed reverse stock split of the outstanding common stock and treasury stock of the Company at an assumed 1-for-9.5 ratio to occur immediately following the effective date but prior to the closing of the offering.

Dividend Policy:	We have not historically paid dividends on our common stock.

Risk Factors:	An investment in our securities involves a high degree of risk. You should read this prospectus carefully, including the section entitled “Risk Factors” starting on page 13of this prospectus and the consolidated financial statements and the related notes to those statements included in this prospectus, before deciding to invest in our securities.

	●	the exercise of 955,184 shares of common stock issuable up on the exercise of outstanding stock options at a weighted average exercise price of $5.99 per share;

	●	the exercise of 31,579 shares of common stock issuable up on the exercise of outstanding warrants at a weighted average exercise price of $9.50 per share. This does not include any adjustment to the exercise price in connection with potential EMA Financial, LLC reset provisions. Further, upon closing of this Offering, the exercise price will reset to the $5.15 Offering price;

	●	the exercise of 195,728 shares of common stock issuable up on the exercise of outstanding convertible securities at a weighted average exercise price of $5.45 per share. This does not include any adjustment to the conversion price in connection with potential EMA Financial, LLC reset provisions. Further, upon closing of this Offering, the conversion price will reset to the $5.15 Offering price;

	●	the issuance of 115,342 shares of common stock in accordance with our 2020 Equity Incentive Plan currently in reserve;

	●	the conversion of 14shares of series A preferred stock convertible into 1,149 shares of common stock.

	●	shares of common stock listed under footnote (1);

	●	2,912,621 shares of common stock issuable upon the exercise of Warrants included in the units;

	●	436,893 shares of common stock issuable upon the exercise of the underwriter’s over-allotment option to purchase 15% of additional shares of common stock and/or Warrants, in any combination thereof, from us in this offering to cover over-allotments, if any (the “Over-Allotment Option”).

	●	None of the Warrants underlying the Units in this offering have been exercised;

	●	No shares of common stock or Warrants have been issued pursuant to the Underwriters’ Over-Allotment Option;

	●	No awards have been issued pursuant to the Company’s 2020 Equity Incentive Plan.

	For the Nine Months						For the Years
	Ended September 30,						Ended December 31,
	2021			2020			2020			2019

Revenues	$	258,688		$	241,367		$	329,500		$	256,138

Cost of revenues		112,032			103,721			140,372			101,638

Gross profit		146,656			137,646			189,128			154,500
Operating expenses:
General and administrative, including stock based compensation of $1,620,703, $2,357,125, $2,713,857 and $91,414, respectively		6,733,594			2,781,912			3,749,456			1,020,869
Excess fair value of equity issuance over assets received		66,124,606			—						—
Research and development		—			49,250			49,250			82,057

Total operating expenses		72,858,200			2,831,162			3,798,706			1,102,926

Loss from operations		(72,711,544	)		(2,693,516	)		(3,609,578	)		(948,426	)

Other income (expenses)
Interest expense		(3,038,568	)		(213,890	)		(342,321	)		(288,784	)
Sale of Domain		—			—			72,500			—
Day on derivative loss		—			—			(389,712	)		—
Change in fair value of derivative liability		80,370			—			71,764			—
Forgiveness of debt		—			9,000			9,000			—
Other income (expenses)		175,361			—			1,030			(106,000	)

Total other income (expenses)		(2,782,837	)		(204,890	)		(577,739	)		(394,784	)

Loss before provision for income taxes		(75,494,381	)		(2,898,406	)		(4,187,317	)		(1,343,210	)

Provision for income taxes		—			—			—			—

Net loss	$	(75,494,381	)	$	(2,898,406	)	$	(4,187,317	)	$	(1,343,210	)

Basic and diluted net loss per common share	$	(0.74	)		(0.03	)	$	(0.05	)	$	(0.02	)
Weighted-average number of shares used basic and diluted per share amounts		106,250,552			85,941,115			86,520,231			84,473,862

	September 30,		December 31,
	2021		2020

ASSETS
Current assets
Cash	$	22,495	$	57,497
Accounts receivable		34,829		40,635
Prepaid expenses		93,516		6,696
Total current assets		150,840		104,828

Capitalized prepaid software development and license		7,058,922		—
Prepaid offering cost		25,000		—
Note receivable		25,500		17,500
Right of use asset		203,938		249,825
Security deposit		7,536		7,536
TOTAL ASSETS	$	7,471,736	$	379,689

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	1,732,924	$	1,635,384
Accrued liabilities		1,726,628		2,632,334
Right of use liability		58,979		52,161
Stock repurchase liability		430,000		430,000
Loans payable related parties		—		34,400
Convertible notes payable, net of $63,578 and $280,174 debt discount		665,922		639,826
Convertible notes payable related parties		—		372,000
Notes payable		384,742		1,104,981
Notes payable related parties		684,863		708,493
Derivative liabilities		492,830		597,948
Total current liabilities		6,176,888		8,207,527

Long-term liabilities
Accounts payable		15,000		75,000
Right of use liability		179,195		224,492
Notes Payable, net of current portion		160,040		67,400
Total long-term liabilities		354,235		366,892

TOTAL LIABILITIES		6,531,123		8,574,419

Commitments and contingencies (Note 8)

Digital Banking & Payment Acceptance Business Expansion Including Partnership, Licensing and Development Costs	$	2,100,000
Technology Acquisitions and Partnerships to Support Digital Banking and Payment Acceptance Business and Other Business Integrations	$	2,800,000
Research and Development	$	2,000,000
Personnel Expansion to Support Growth Objectives such as Chief Technology Officer, Chief Operating Officer, Programmers, Accounting and Sales Staff	$	2,700,000
Working Capital and Operating Expenses	$	3,800,000

	As of September 30, 2021
	Actual (Unaudited)			As Adjusted (unaudited)

Cash and cash equivalents	$	22,495		$	13,493,896
Long-term debt, net	$	354,235		$	354,235
Stockholders’ equity:
Common stock, $0.001 par value; 1,000,000,000 shares authorized, 113,125,715shares issued and outstanding (actual); 15,285,261 shares issued and outstanding (as adjusted)		113,126			15,258
Additional paid-in capital		121,269,598			134,838,867
Accumulated deficit		(120,442,111	)		(120,442,111	)
Total shareholders’ equity		940,613			14,412,014
Total capitalization	$	7,471,736		$	20,943,137

	SHARES					TOTAL					AVERAGE
	PURCHASED					CONSIDERATION					PRICE PER
	NUMBER		PERCENT			AMOUNT		PERCENT			SHARE

Existing stockholders		12,372,640¹		80.9	%	$	121,370,816		90.0	%	$	9.81

New investors participating in this offering		2,912,621		19.1	%		13,468,051		10.0	%		4.62

Total		15,285,261		100.0	%	$	134,838,867		100	%	$	8.82

	●	the announcement or introduction of new products by our competitors;

	●	our ability to upgrade and develop our systems and infrastructure to accommodate growth;

	●	our ability to attract and retain key personnel in a timely and cost-effective manner;

	●	technical difficulties;

	●	the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, and infrastructure;

	●	our ability to identify and enter into relationships with appropriate and qualified third-party providers for necessary development and other relevant services;

	●	regulation by federal, state, or local governments;

	●	general economic conditions, as well as economic conditions specific to payment processing, banking and consumer discretionary spending; and

	●	Various risks related to health epidemics, pandemics and similar outbreaks, such as the coronavirus pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows.

	●	a limited availability for market quotations for our securities;

	●	reduced liquidity with respect to our securities;

	●	a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our common stock;

	●	limited amount of news and analyst coverage; and

	●	a decreased ability to issue additional securities or obtain additional financing in the future.

	●	on an actual basis; and

	●	on an as-adjusted basis to reflect the issuance and sale by us of units at the assumed public offering price of $5.15 per unit (the midpoint of the price range set forth on the cover page of this prospectus, as adjusted for a reverse stock split of 1-for-9.5) after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the receipt by us of the proceeds of such sale.

	●	no exercise of outstanding stock options;

	●	no exercise of outstanding warrants;

	●	no conversion of outstanding convertible securities;

	●	no conversion of series A preferred stock;

	●	no exercise by the underwriters of the Over-Allotment Option; and

	●	no exercise of the Warrants underlying the Units.

Assumed public offering price per share	$	5.15
Historical net tangible book value per share as of September 30, 2021	$	(0.51	)
Increase in net tangible book value per share attributable to investors participating in this offering	$	0.99

As adjusted net tangible book value per share immediately after this offering	$	0.48

Dilution in as adjusted net tangible book value per share to new investors participating in this offering	$	(4.67	)

	●	the exercise of outstanding stock options under our stock option plan;

	●	shares available for grant under our stock option plan;

	●	shares of common stock issuable upon the exercise of Warrants to be issued to investors in this offering; and

	●	shares of common stock issuable upon the exercise of the Underwriter Warrants to be issued to the underwriters.

	Three Months Ended September 30
(in thousands)	2021			2020

Revenue	$	92.4		$	105.4
Cost of revenue		41.8			48.8
Gross profit		50.6			56.6

Operating expenses
General and administrative		1,360.2			1,089.8
Excess fair value of equity issuance over assets received		1,090.7			—
Research and development		—			3.0
Total operating expenses		2,450.9			1,092.8
Loss from operations		(2,400.3	)		(1,036.2	)

Other income (expenses)
Interest expense, net		(478.0	)		(71.7	)
Change in fair value derivative liability		135.5			—
Forgiveness of debt		—			—
Other income		0.2			—
Total other income (expenses)		(342.3	)		(71.7	)
Loss before provision for income taxes		(2,742.6	)		(1,107.9	)

Provision for income taxes		—			—
Net Loss	$	(2,742.6	)	$	(1,107.9	)

	Nine Months Ended September 30
(in thousands)	2021			2020

Revenue	$	258.7		$	241.5
Cost of revenue		112.0			103.8
Gross profit		146.7			137.7

Operating expenses
General and administrative		6,733.6			2,781.9
Excess fair value of equity issuance over assets received		66,124.6			—
Research and development		—			49.2
Total operating expenses		72,858.2			2,831.1
Loss from operations		(72,711.5	)		(2,693.4	)

Other income (expenses)
Interest expense, net		(3,038.6	)		(213.9	)
Change in fair value derivative liability		80.4			—
Forgiveness of debt		—			9.0
Other income		175.3			—
Total other income (expenses)		(2,782.9	)		(204.9	)
Loss before provision for income taxes		(75,494.4	)		(2,898.3	)

Provision for income taxes		—			—
Net Loss	$	(75,494.4	)	$	(2,898.3	)

	Nine Months Ended September 30,
	2021			2020

Net cash used in in operating activities	$	(820,852	)	$	(303,235	)
Net cash provided by (used in) investing activities	$	(1,575,500	)	$	23,411
Net cash provided by financing activities	$	2,361,350		$	301,981

	●	Neo-Banking for consumers and SMEs;
	●	Embedded B2B and consumer virtual payments (VCNs);
	●	Multi-currency money management and P2P money transfer;
	●	Payroll, expenses, management and B2C and G2C disbursements;
	●	Treasury management;
	●	Gift, incentive and reward programs for retail, wholesale and employee benefits;
	●	Any other product that requires a prepaid or credit balance to be held and transacted upon.

	●	Patented Technology including a Text-to-Pay patent that enables B2B, B2C and P2P payments via SMS, mobile push, email and other forms of embedded links. Combined with four mobile-to-computer messaging and lead generation patents, we can enable financial institutions, technology companies and businesses to unlock innovative customer experiences.

	●	Personalization and User Experience is also at the core of our Platform. Through marketing automation capabilities, our Platform will provide an industry first online-to-offline customer attribution capability. Licensees of our Platform will be able to link their customer’s online behavior to their buying preferences in real-time in order to personalize the selling and buying experience, streamline checkout and improve conversion rates.

	●	Automation is delivered through our APIs to unlock automated financial transactions and customer experiences. For example, our Platform can be simply configured to create many types of automated customer benefits and incentives including instant cashback or added-value promotions. Further, our Platform will be easily leverageable to create similar money saving experiences like round ups, i.e., rounding to the nearest dollar and depositing the difference between the purchase price and round-up into a digital bank account.

	●	Integration and Embedded Payments are central functions of our Platform. As such, we offer developers and enterprises an open platform with flexible rest APIs to build new payment and financial transaction features in SaaS and cloud apps, or create compelling new digital financial services user experiences from scratch.

Name	Age		Position

Luke D’Angelo		53	Chairman of the Board; Chief Executive Officer; Chief Investment Officer (Principal Executive Officer)
Gary Wachs		65	Chief Financial Officer; Director (Principal Financial and Accounting Officer)
Virgilio Llapitan		60	President; Chief Operating Officer
Benjamin Jenkins		46	Chief Technology Officer
Chad Nelley		50	Chief Operating Officer
William Huff ^(1)(2)(3)		68	Director
Mengyin H. Liang ‘Roz Huang’^(1)(2)(3)		53	Director
Michael O’Neal⁽¹⁾⁽²⁾		66	Director
Christopher Williams⁽³⁾		70	Director
Michael Yadgar*		50	Director

	(1)	Member of the Audit Committee.
	(2)	Member of the Compensation Committee.
	(3)	Member of the Nominating and Corporate Governance Committee.

	●	Our Class I directors are Ms. Huang, Mr. Huff and Mr. O’Neal; and

	●	Our Class II directors are Mr. D’Angelo, Mr. Wachs, Mr. Williams and Mr. Yadgar.

	●	appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;

	●	pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

	●	reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our consolidated financial statements;

	●	reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

	●	coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;

	●	establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;

	●	recommending based upon the audit committee’s review and discussions with management and our independent registered public accounting firm whether our audited financial statements shall be included in our Annual Report on Form 10-K;

	●	monitoring the integrity of our consolidated financial statements and our compliance with legal and regulatory requirements as they relate to our consolidated financial statements and accounting matters;

	●	preparing the audit committee report required by SEC rules to be included in our annual proxy statement;

	●	reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and

	●	reviewing quarterly earnings releases.

	●	annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief Executive Officer;

	●	evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and based on such evaluation (i) recommending to the board of directors the cash compensation of our Chief Executive Officer and (ii) reviewing and approving grants and awards to our Chief Executive Officer under equity-based plans;

	●	reviewing and approving the cash compensation of our other executive officers;

	●	reviewing and establishing our overall management compensation, philosophy and policy;

	●	overseeing and administering our compensation and similar plans;

	●	evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;

	●	reviewing and approving our policies and procedures for the grant of equity-based awards;

	●	reviewing and recommending to the board of directors the compensation of our directors;

	●	preparing our compensation committee report if and when required by SEC rules;

	●	reviewing and discussing annually with management our “Compensation Discussion and Analysis,” if and when required, to be included in our annual proxy statement; and

	●	reviewing and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters.

	●	developing and recommending to the board of directors criteria for board and committee membership;

	●	establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

	●	reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us;

	●	identifying individuals qualified to become members of the board of directors;

	●	recommending to the board of directors the persons to be nominated for election as directors and to each of the board’s committees;

	●	developing and recommending to the board of directors a code of Ethics and Business Conduct, and a set of corporate governance guidelines; and

	●	overseeing the evaluation of our board of directors and management.

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($) (1)		Total ($)

Luke D’Angelo Chairman of the Board, Chief Executive Officer, and Chief Investment Officer		2020		—		—		—		—
		2019		—		—		—		—

Gary Wachs Chief Financial Officer and Director		2020		—		—		—		—
		2019		—		—		—		—

Virgilio Llapitan President and Chief Operating Officer		2020		39,250		—		686,000		725,250
		2019		25,000		—		—		25,000

Jeffrey Moriarty Senior Vice President of Legal Affairs, General Counsel, and Secretary(2)		2020		78,013		—		392,000		470,013
		2019		31,949		—		—		31,949

		Stock Awards
			Market Value of
		Number of Shares or Units of	Shares or Units of Stock That Have
Name	Grant Date	Stock That Have Not Vested (#)	Not Vested ($)

Jeffrey Moriarty	01/06/2020	75,000 (1)		33,750
		75,000 (2)		33,750

	(1)	Represents an award of shares that vested March 31, 2021.
	(2)	Represents an award of shares that was contracted to vest June 30, 2021 but, as the result of new contract negotiations were replaced with stock options.