COMMON STOCK

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

COMMON STOCK

7.     COMMON STOCK

At December 31, 2023, the Company’s authorized capital stock was 150,000,000 shares of common stock, par value $0.001 per share, and 25,000,000 shares of preferred stock, par value $0.001 per share. On that date, the Company had issued 53,452,382 shares of common stock and 52,754,374 shares of common stock outstanding, and no shares of preferred stock outstanding.

In 2019, the Company’s stockholders approved the 3Pea International, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”), which was approved by the Board on July 18, 2018. The 2018 Plan permits the Company to issue awards or options to the officers, directors, employees, consultants and other persons who provide services to our Company or any related entity. Pursuant to the 2018 Plan, 5,000,000 shares of the Company’s common stock are reserved for issuance. Any awards or options that are not settled in shares of common stock are not counted against the limit. Stock options granted under the 2018 Plan generally vest over four or five years and expire in 10 years. Stock awards granted under the 2018 Plan generally vest over four or five years. In general, if an employee is terminated, any unvested options or awards as of the date of termination will be forfeited. As of December 31, 2023, there were 100,953 shares available for future grants under the 2018 Plan.

In 2023, the Company’s stockholders approved the Paysign Inc. Equity Incentive Compensation Plan (the “2023 Plan”), which was adopted by the Board on March 17, 2023. The 2023 Plan permits the Company to issue awards or options to the officers, directors, employees, consultants and other persons who provide services to our Company or any related entity. Pursuant to the 2023 Plan, 5,000,000 shares of the Company’s common stock are reserved for issuance. Any awards or options that are not settled in shares of common stock are not counted against the limit. Stock options granted under the 2023 Plan generally vest over four or five years and expire in 10 years. Stock awards granted under the 2023 Plan generally vest over four or five years. In general, if an employee is terminated, any unvested options or awards as of the date of termination will be forfeited. As of December 31, 2023, there were 5,000,000 shares available for future grants under the 2023 Plan.

The Company issues new shares of common stock upon exercise of stock options or vesting stock awards.

Stock-based compensation expense related to Company grants for the years ended December 31, 2023 and 2022 was $2,853,643 and $2,277,717, respectively, and is included in selling, general and administrative expense. As of December 31, 2023, the Company’s unrecognized stock-based compensation expense related to stock options and stock awards was $37,290 and $6,176,942, respectively, which are expected to be recognized over a weighted-average period of .23 year for stock options and 3.10 years for stock awards. As of December 31, 2022, the Company’s unrecognized stock-based compensation expense related to stock options and stock awards was $269,245 and $6,955,350, respectively, which are expected to be recognized over a weighted-average period of 1.08 year for stock options and 3.83 years for stock awards.

2023 Transactions – During the year ended December 31, 2023, the Company issued 802,000 shares of common stock for vested stock awards and the exercise of stock options. The Company received proceeds of $9,600 for the exercise of stock options.

During the year ended December 31, 2023, the Company repurchased 394,558 shares of its common stock at a cost of $1,127,884 or weighted average price of $2.86 per share, respectively.

The Company also granted 670,000 restricted stock awards during the year ended December 31, 2023. For the stock awards granted, the weighted average grant date fair value was $2.91 and vest over a period of two months to five years.

2022 Transactions – During the year ended December 31, 2022, the Company issued 555,000 shares of common stock for vested stock awards. No stock options were exercised.

The Company also granted 2,545,000 restricted stock awards during the year ended December 31, 2022. For the stock awards granted, the weighted average grant date fair value was $1.83 and vest over a period of one to five years.

Stock Options

A summary of stock options activity for the years ended December 31, 2023 and 2022 is presented as follows:

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (Years)		Value
Outstanding at December 31, 2021		1,920,000		$	1.87
Granted		–			–
Exercised		–			–
Forfeited/expired		(80,500	)		3.18
Outstanding at December 31, 2022		1,839,500		$	1.81		5.62	$	1,718,910
Granted		–			–
Exercised		(4,000	)		2.40
Forfeited/expired		(28,500	)		2.92
Outstanding at December 31, 2023		1,807,000		$	1.80		4.61	$	2,061,800
Exercisable at December 31, 2023		1,749,500		$	1.73		4.56	$	2,061,800

A summary of unvested options activity for the years ended December 31, 2023 and 2022 was as follows:

				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Unvested at December 31, 2021		719,200		$	2.25
Granted		–			–
Forfeited/expired		(27,400	)		2.94
Vested		(513,400	)		1.81
Unvested at December 31, 2022		178,400			3.39
Granted		–			–
Forfeited/expired		(5,500	)		3.07
Vested		(115,400	)		3.16
Unvested at December 31, 2023		57,500		$	3.87

The weighted average grant date fair value of options granted and the total intrinsic value of options exercised for the years ended December 31, 2023 and 2022 is as follows:

	2023		2022
Weighted average grant date fair value of options granted	$	–	$	–
Intrinsic value of options exercised	$	3,120	$	–

The Company uses the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with employee stock options, which requires the consideration of historical employee exercise behavior, the volatility of the Company’s stock price, the weighted-average risk-free interest rate and the weighted-average expected life of the options. Forfeitures are included when they are incurred. Any changes in these assumptions may materially affect the estimated fair value of the share-based award. There were no options granted during the years ended December 31, 2023 and 2022.

Stock Awards

A summary of stock awards activity for the years ended December 31, 2023 and 2022 was as follows:

				Weighted-
				Average Grant
	Shares			Date Fair Value
Outstanding at December 31, 2021		1,336,000		$	3.89
Granted		2,545,000			1.82
Forfeited		(62,000	)		3.44
Vested		(600,000	)		2.74
Outstanding at December 31, 2022		3,219,000			2.48
Granted		670,000			2.91
Forfeited		(34,000	)		2.86
Vested		(773,000	)		2.85
Outstanding at December 31, 2023		3,082,000		$	2.48