UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission file number:
(Exact Name of Registrant as Specified in its Charter)
| 7389 | ||||
|
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
(
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| OTC Venture Market | ||
| OTC Venture Market |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of November 13, 2025, the registrant had shares of common stock issued and outstanding.
AppTech Payments Corp.
Form 10-Q
Table of Contents
| Page | ||
| Part I | ||
| Special Note Regarding Forward-Looking Statements and Projections | 3 | |
| Item 1. | Consolidated Financial Statements (unaudited) | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 25 |
| Item 4. | Controls and Procedures | 25 |
| Part II | ||
| Item 1. | Legal Proceedings | 26 |
| Item 1A. | Risk Factors | 26 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 26 |
| Item 3. | Defaults Upon Senior Securities | 26 |
| Item 4. | Mine Safety Disclosures | 26 |
| Item 5. | Other Information | 26 |
| Item 6. | Exhibits | 27 |
| Signatures | 28 |
| 2 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS
Various statements in this report of AppTech Payments Corp. are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are subject to risks and uncertainties and are based on information currently available to our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “contemplates,” “predict,” “project,” “target,” “likely,” “potential,” “continue,” “ongoing,” “will,” “would,” “should,” “could,” or the negative of these terms and similar expressions or words, identify forward-looking statements. The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from those projected in our forward-looking statements.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this report identify important factors which you should consider in evaluating our forward-looking statements. These risks include, but are not limited to, the following:
| · | delays and uncertainty associated with the boarding of clients to our platform; | |
| · | substantial investment and costs associated with new potential revenue streams and their corresponding contractual obligations; | |
| · | a slowdown or reduction in our sales due to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances; | |
| · | uncertainty regarding adverse macroeconomic conditions, including inflation, a recession, changes to fiscal and monetary policy, tighter credit, higher interest rates, consumer confidence and spending, and high unemployment; | |
| · | dependence on third-parties needed to facilitate our automated clearing house (“ACH”) and merchant service capabilities; | |
| · | delay in or failure to obtain regulatory approval for any future products in additional countries, and; | |
| · | current and future laws and regulations. |
All written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We caution investors not to rely too heavily on the forward-looking statements we make or that are made on our behalf. We undertake no obligation and specifically decline any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please see, however, any further disclosures we make on related subjects in any annual, quarterly or current reports that we may file with the Securities and Exchange Commission (SEC).
We encourage you to read the discussion and analysis of our financial condition and our financial statements contained in this Quarterly Report on Form 10-Q. There can be no assurance that we will in fact achieve the actual results or developments we anticipate or, even if we do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore, we can give no assurances that we will achieve the outcomes stated in those forward-looking statements and estimates.
Unless the context otherwise requires, throughout this Quarterly Report on Form 10-Q, the words “AppTech Payments,” “we,” “us,” the “registrant” or the “Company” refer to AppTech Payments Corp.
| 3 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
APPTECH PAYMENTS CORP.
CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO UNAUDITED FINANCIAL STATEMENTS
(The financial statements have been condensed for presentation purposes)
| 4 |
APPTECH PAYMENTS CORP.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024
(UNAUDITED)
(in thousands, except shares and per share data)
| September 30, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Equity receivable | ||||||||
| Total current assets | ||||||||
| Note receivable | ||||||||
| Interest receivable | ||||||||
| Right of use asset | ||||||||
| Security deposit | ||||||||
| Intangible assets, net of accumulated amortization | ||||||||
| Goodwill | ||||||||
| Capitalized software development, net of accumulated amortization | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Notes payable | ||||||||
| Convertible notes payable, net of discount of $ | ||||||||
| Right of use liability | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Right of use liability, net of current portion | ||||||||
| Notes payable, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ equity | ||||||||
| Series A preferred stock; $ par value; shares authorized; shares issued and outstanding at September 30, 2025 and December 31, 2024 | ||||||||
| Common stock, $ par value; shares authorized; and issued and outstanding at September 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| 5 |
APPTECH PAYMENTS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 and 2024
(UNAUDITED)
(in thousands, except shares and per share data)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative, including stock-based compensation of $ and $ for the three months ended September 30, 2025 and 2024, respectively, $ and $ for the nine months ended September 30, 2025 and 2024, respectively | ||||||||||||||||
| Research and development, including stock-based compensation of $ and $ for the three months ended September 30, 2025 and 2024, respectively, $ and $ for the nine months ended September 30, 2025 and 2024, respectively | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on debt extinguishment | ||||||||||||||||
| Debt discount amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Deemed dividend related to warrant resets | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per common share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted-average number of shares used basic and diluted per share amounts | ||||||||||||||||
See accompanying notes to the consolidated financial statements.
| 6 |
APPTECH PAYMENTS CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 and 2024
(UNAUDITED)
(in thousands, except shares and per share data)
| Series A Preferred | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||||||
| Net proceeds from sale of common shares | – | |||||||||||||||||||||||||||
| Balance March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||||||
| Shares issued with note payable | – | |||||||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||||||
| Shares issued with convertible note payable | – | |||||||||||||||||||||||||||
| Offering costs | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Warrants issued with convertible note payable | – | – | ||||||||||||||||||||||||||
| Warrant repricing | – | – | ( | ) | ||||||||||||||||||||||||
| Warrant exercise, net of offering costs | – | |||||||||||||||||||||||||||
| Warrant exercise - cashless | – | |||||||||||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Series A Preferred | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Net proceeds from sale of common shares | – | |||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Net proceeds from sale of common shares | – | |||||||||||||||||||||||||||
| Balance September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
| 7 |
APPTECH PAYMENTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 and 2024
(UNAUDITED)
(in thousands, except shares and per share data)
| September 30, 2025 | September 30, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Amortization of intangible assets and software | ||||||||
| Write off of note receivable | ||||||||
| Gain on debt extinguishment | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Interest receivable | ( | ) | ||||||
| Accounts payable | ||||||||
| Security deposit | ||||||||
| Accrued liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Right of use asset and liability, net | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capitalized software development | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from sale of common stock | ||||||||
| Proceeds from equity receivable | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Proceeds from note payable | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Changes in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosures of cash flows information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Issuance of stock for prepaid services | $ | $ | ||||||
| Non-cash discount on issuance of convertible notes payable | $ | $ | ||||||
| Common stock issued with convertible note payable | $ | $ | ||||||
| Warrants issued with the convertible note payable | $ | $ | ||||||
| Assumption of note payable through issuance of note receivable | $ | $ | ||||||
| Common stock issued with note payable | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| 8 |
APPTECH PAYMENTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
AppTech Payments Corp. (“AppTech” or the “Company”), a Delaware corporation, 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 proprietary software will provide progressive and adaptable products that will be available through a suite of synergistic offerings directly to merchants, banking institutions, and business enterprises.
AppTech has a highly secure digital payments platform that we acquired and are further developing digital banking products to power 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 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.
The Company was delisted to the middle tier of the Over-The-Counter Venture Market (“OTCQB”) on May 20, 2025. AppTech trades under the symbol “APCX” and its warrants trade under the symbol “APCXW”.
In June 2023, the Company entered into licensing agreements with InstaCash and PayToMe.co. The licensing arrangement with InstaCash was terminated in December 2024.
The shares related to the 7.5% preferred share equity stake in PayToMe.co have not been issued as of the date of this filing. Additionally, PayToMe.co was a related party to AppTech. A former senior member of the Company sits on PayToMe.co's board of directors and AppTech's former Chief Financial Officer is married to its founder and Chief Executive Officer.
Purchase of Alliance Partners, LLC
On October 13, 2023, the Company entered into
a purchase agreement to acquire 100% of Alliance Partners, LLC, a Nevada based software development limited liability company (“Alliance
Partners”). As consideration for the purchase, the Company agreed to pay the seller total consideration of $
The Company closed the Purchase on October 26, 2023.
On October 31, 2023, the Company issued million shares of its common stock to an entity owned by the seller. In exchange for the shares, the seller waived, cancelled, and forgave the long-term debt of Alliance Partners.
The remaining outstanding payable related to the
original purchase price as of September 30, 2025 is $
Management’s Plan to Address Going Concern Considerations
The Company has experienced recurring operating losses, primarily due to limited revenues. The Company's current financial conditions and recurring losses raise substantial doubt about its ability to continue as a going concern.
| 9 |
In late 2024, we reorganized senior leadership and initiated actions to reduce indebtedness to improve the current financial condition of the Company. In addition, we are actively pursuing additional funding options and are confident that our revenue streams will begin generating cash, although no assurances can be made.
Management continues to maintain adequate working capital and adhere to prudent financial forecasting.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated 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 September 30, 2025 and September 30, 2024. 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 unaudited condensed consolidated financial statements that have been prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes related thereto and included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025. The interim results for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future interim periods.
Basis of Consolidation
The consolidated unaudited financial statements include the accounts of AppTech, and wholly owned subsidiaries 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.
Concentration of Credit Risk
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000 per institution that pays Federal Deposit Insurance Corporation (“FDIC”) insurance premiums. The Company has never experienced any losses related to these balances.
The accounts receivable from merchant services
are paid by the financial institutions on a monthly basis. As of September 30, 2025,
For the nine months ended September 30, 2025,
| 10 |
Revenue Recognition
The Company accounts for revenue under Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
Merchant Processing Services
The Company provides merchant processing solutions for credit card and ACH transactions. We act as an intermediary between merchants, who initiate transactions and banks that process them. We collect either a flat fee, a fee for each transaction, and or a fee calculated as a percentage of its value, from both credit cards and ACHs. Revenue is recognized when transactions are processed by banks or at month-end based on the processing activity. Payments to channel partners are recorded as cost of revenues.
Intangible Assets and Intellectual Property
Intellectual Property
The Company amortizes intellectual property based on the estimated period over which the economic benefits of the intangible assets are expected to be consumed. Typically, the Company amortizes its intellectual property, including patents and other identifiable intangible assets, on a straight-line basis. The amortization periods generally range from three years to fifteen years, depending on the nature of the asset and its expected useful life.
Capitalized Software Development Cost
The Company capitalizes certain costs related to the development of its digital payment and banking platform, including employee compensation and consulting fees for third-party developers, only when it is probable that the development will result in new or additional functionality. Costs incurred during the preliminary project planning phase and post-implementation phase are expensed as incurred. The capitalized software development costs are amortized on a straight-line basis over the estimated useful life of the asset.
Goodwill
The Company accounts for goodwill in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”). ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. The Company performs a goodwill impairment test annually.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
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 our core banking platform, contract and other outside services. Total
R&D costs for the nine months ended September 30, 2025 and 2024 were approximately $
| 11 |
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, and convertible preferred stock.
The number of common stock equivalents not included in diluted income per share was and for the nine months ended September 30, 2025 and 2024, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share because the effects are anti-dilutive.
| September 30, 2025 | September 30, 2024 | |||||||
| Series A preferred stock | ||||||||
| Warrants | ||||||||
| Options | ||||||||
| Total | ||||||||
Stock-Based Compensation
Stock options are valued using the estimated grant-date fair value method of accounting in accordance with ASC Topic 718, Compensation – Stock Compensation. Fair value is determined based on the Black-Scholes Model using inputs reflecting our estimates of expected volatility, term and future dividends. We recognize forfeitures as they occur. The Company has several consulting agreements that have share-based payment awards based on performance. These agreements typically require the Company to issue common stock to the consultants on a monthly basis. The Company records the fair market value of the common stock issuable at each month end when the performance is complete based upon the closing market price of the Company’s common stock.
Segment Reporting
In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision makers (“CODMs”) in deciding how to allocate resources and assess performance.
The CODMs have been identified as the Chief Executive Officer and Chief Financial Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment.
The key measures of segment profit or loss reviewed by our CODMs are revenue and operating expenses. Revenue is monitored by the CODMs to understand the performance of its verticals. Operating expenses are reviewed and monitored by the CODMs to manage and forecast cash. The CODMs also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and internal budgets.
| 12 |
New Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) issues Accounting Standards Updates (“ASUs”) to amend the authoritative accounting guidance in the Accounting Standards Codification (“ASC”).
On November 4, 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures. This ASU provides guidance to public companies regarding footnote disclosures of natural expense components (such as employee compensation, depreciation, and amortization) included within each relevant income statement expense caption. The guidance is effective for public companies for fiscal years beginning after December 15, 2026. The Company is currently assessing the impact of the new guidance on its financial statement disclosures.
Except as noted above, the Company believes that recent ASUs issued by the FASB either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company, or (iv) are not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
NOTE 3 – INTANGIBLE ASSETS
Intellectual Property
The Company has two patent portfolios. As of September
30, 2025 and December 31, 2024, the gross value of patents is $
As of September 30, 2025 and December 31, 2024,
the gross value of acquired technology is $
| Intellectual Property | September 30, 2025 | December 31, 2024 | ||||||
| Beginning balance | $ | $ | ||||||
| Amortization expenses | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Capitalized Development Cost
The Company capitalizes certain costs related to the development of its digital payment and banking platform.
As of September 30, 2025, and December 31, 2024,
the gross value of capitalized development cost is $
| Capitalized Development Cost | September 30, 2025 | December 31, 2024 | ||||||
| Beginning balance | $ | $ | ||||||
| Additions | ||||||||
| Amortization expenses | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
| 13 |
Goodwill
On October 26, 2023, the Company completed the
Purchase of Alliance Partners. The difference between the fair value of the purchase price and the net assets acquired is recorded as
goodwill. As of September 30, 2025, the Company recorded goodwill of approximately $
See Note 1 - Purchase of Alliance Partners, LLC.
NOTE 4 – ACCRUED LIABILITIES
Accrued liabilities as of September 30, 2025 and December 31, 2024 are as follows:
| September 30, 2025 | December 31, 2024 | |||||||
| Payables due to seller for acquisition | $ | $ | ||||||
| Accrued payroll | ||||||||
| Accrued residuals | ||||||||
| Other | ||||||||
| Total accrued liabilities | $ | $ | ||||||
In connection with the original Purchase of Alliance Partners, $1,200 thousand remained outstanding as of September 30, 2025 and December 31, 2024. The payable amount is secured by substantially all the Company's assets.
See Note 1 – Purchase of Alliance Partners, LLC.
NOTE 5 – NOTES PAYABLE
The
Company has a 30-year unsecured note payable with the U.S. Small Business Administration which incurs interest at
As of September 30, 2025 and December 31,
2024, the balance of the note payable was $
On April 11, 2025, the Company entered a three-party
agreement with one of its banking partners and software providers. Under the terms of the arrangement, AppTech agreed to pay a $103 thousand
perpetual licensing fee (payable in six equal monthly installments through October 1) to the software provider. In addition, the banking
partner held a $250 thousand note receivable bearing 8% interest with the software provider, while the software provider held an offsetting
liability to the banking partner. As part of this arrangement, AppTech assumed the note receivable and offsetting note payable to the
software provider and banking partner, respectively. AppTech further paid the accumulated interest to the bank and established an interest
receivable from the software provider. The note receivable can be converted into equity of the software provider’s Company. The
note receivable matures on June 2026, and may be converted early if a financing event occurs. The note payable is due on demand but no
later than June 30, 2026 and the interest expense incurred is paid out quarterly. As of September 30, 2025, the principal and accrued
interest on the note receivable was $
During the nine months ended September 30, 2025,
the Company entered into multiple unsecured convertible note agreements with third-party lenders, with principal amounts ranging from
approximately $
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Each note may be converted into shares of the Company’s common stock at a fixed conversion price of $2.00 per share, subject to adjustment in the event of default, at which point the conversion price may be reduced to the lower of $2.00 and 80% of the volume-weighted average price (VWAP) of the Company’s common stock for a specified period preceding conversion. Certain notes include provisions for fixed monthly payments beginning after a defined period, and others permit early conversion at the lender’s discretion.
As of September 30, 2025, the aggregate principal
balance of these notes was approximately $
NOTE 6 – RIGHT OF USE ASSET
Lease Agreement
In January 2020, the Company entered into a lease agreement commencing February 8, 2020 for its corporate office in Carlsbad, California, which was set to expire in 2025. In December 2024, the Company extended its lease for fourteen months through March 2026, with an option to extend for an additional fourteen months. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an incremental borrowing rate of 8.5% within the calculation.
The rent expense was $
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company may be involved in various claims and legal actions arising in the ordinary course of business. The Company establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.
Litigation with Former Employees
On May 3, 2024, the Company was sued by three
former employees over severance payments. On February 14, 2025, the Company filed a cross complaint against the plaintiffs for breach
of fiduciary duty and breach of contract. In March 2025, the Company settled its lawsuit for $
Litigation with Former Law Firm
On March 13, 2025, Moses & Singer LLP filed
a case against AppTech Payments Corp. for unpaid fees of approximately $
NOTE 8 – STOCKHOLDERS’ EQUITY
Series A Preferred Stock
The Company is authorized to issue shares
of $ par value Series A preferred stock (“Series A”). There were fourteen () shares of Series A preferred stock outstanding
as of September 30, 2025 and December 31, 2024. Series A stockholders have one vote per share on an “as converted”
basis for all matters submitted to a stockholder vote, without the right to cumulative voting in director elections. They are entitled
to dividends, if declared by the Company’s board of directors (the “Board of Directors”) from legally available funds,
distributed pro rata based on their Series A holdings on an as-converted basis. In the event of liquidation or dissolution, Series A stockholders
share ratably in any remaining assets after liabilities are paid, with no liquidation preferences.
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Common Stock
As of September 30, 2025 and December 31, 2024, the Company was authorized to issue shares of common stock with a par value of $ per share. The number of shares outstanding was as of September 30, 2025 and as of December 31, 2024. Common stockholders are entitled to one vote per share on all matters submitted to a stockholder vote, without the right to cumulative voting in director elections. They are eligible for dividends, if declared by the Board of Directors from legally available funds, subject to the prior rights of any outstanding preferred stock and any contractual restrictions on dividend payments. In the event of liquidation or dissolution, common stockholders share ratably in any assets remaining after payment of liabilities and satisfaction of liquidation preferences of any outstanding preferred stock. Common stock carries no preemptive or subscription rights and is not convertible into other securities.
Stock Issued for Services
During the nine months ended September 30, 2025
and 2024, the Company issued and , respectively, shares of common stock to a consultant in connection with business development
and professional services. The Company valued the common stock issuances at $
Stock Issued related to Acquisition
On March 1, 2024, the Company issued shares of common stock to the former owner of Alliance Partners as consideration for extending the payment due date for the remaining balance of the Purchase consideration due.
See Note 1 - Purchase of Alliance Partners, LLC.
Equity Receivable
$
Stock Options
The Company grants stock options as part of employee compensation and recognizes these options’ expense over the vesting period. If an employee does not meet certain conditions such as sales targets or leaves the Company before the options vest, these options are forfeited as they occur.
On December 7, 2021, the Board of Directors authorized the Company’s Equity Incentive Plan in order to facilitate the grant of equity incentives to employees (including our named executive officers), directors, independent contractors, merchants, referral partners, channel partners and employees of the Company’s to enable the Company to attract, retain and motivate employees, directors, merchants, referral partners and channel partners, which is essential to its long-term success. A total of shares of common stock were previously authorized under the Company’s Equity Incentive Plan. As of September 30, 2025, shares were cancelled as part of employee terminations and thousand shares were added to the plan as part of the shareholder meeting. In total as of September 30, 2025, shares are available for issuance.
On January 21, 2025, the Company extended the
expiration term of vested and outstanding stock options to the former CFO. On July 8, 2025, the Company extended the expiration term for
the former Corporate Secretary. The fair value was calculated both on the modification date and prior to the modification. The Company
recorded a total option modification expense of $
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During the nine months ended September 30, 2025, the Company granted options to purchase common stock. The grants included:
| 1) | options were awarded to the former and current board of directors. The fair value of these options, which are non-plan with a ten-year expiration term, total $ thousand. These options have an exercise price ranging from $ to $ per share and a weighted average fair value of $ per share on the issuance date. | |
| 2) | On January 21, 2025, the Company granted options to the former CFO with an exercise price of $, a ten-year expiration term, and a fair value on the grant date of $. The Company recognized $ thousand related to this grant. The options were fully vested upon the grant date. | |
| 3) | On February 21, 2025, the Company granted options to the current CFO with an exercise price of $, a ten-year expiration term, and a fair value on the grant date of $. The Company recognized $ thousand related to this grant. The options were fully vested upon the grant date. | |
| 4) |
On June 23, 2025, the Company cancelled all options granted to a former employee and issued him options with an exercise price of $, a three-year expiration term, and a fair value on the grant date of $. The Company recognized $ thousand related to this grant. The options were fully vested upon the grant date. | |
| 5) |
On July 1, 2025, the Company entered into a separation agreement with its former Chief Executive Officer and Chairman of the Board. Under the terms of the arrangement, all previously issued options were canceled and he was instead granted thousand vested options, and thousand performance-based options. The options have a three-year life and carry an exercise price of $. The Company recognized $ thousand related to this grant. |
The following table summarizes option activity:
| Number of shares | Weighted Average exercise price | Weighted Average remaining years | ||||||||||
| Outstanding December 31, 2024 | $ | |||||||||||
| Issued | – | |||||||||||
| Exercised | – | |||||||||||
| Cancelled | ( | ) | – | |||||||||
| Outstanding as of September 30, 2025 | $ | |||||||||||
| Outstanding as of September 30, 2025, vested | $ | |||||||||||
The unvested options include a total of thousand options contingent upon reaching specified sales milestones.
During the nine months ended September 30, 2025,
the Company recorded $
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The options vest in equal monthly installments ranging from immediately to 12 months. For the nine months ended September 30, 2025, the fair value of the options were valued using a Black-Scholes option pricing model with the following assumptions:
| Market value of common stock on issuance date | $ | ||
| Exercise price | $ | ||
| Expected volatility | % - % | ||
| Expected term (in years) | |||
| Risk-free interest rate | % - % | ||
| Expected dividend yields |
Warrants
As of September 30, 2025, the Company has
| Number of Warrants | Weighted Average exercise price | Weighted Average remaining years | ||||||||||
| Outstanding December 31, 2024 | $ | |||||||||||
| Cancelled | – | |||||||||||
| Issued | – | |||||||||||
| Outstanding as of September 30, 2025 | $ | |||||||||||
NOTE 9 – SUBSEQUENT EVENTS
On September 3, 2025, AppTech entered into a letter of intent with Infinitus Pay (“IP”) to acquire 100% of their equity in return for total consideration consisting of up to $3,000 thousand, up to 5,000 thousand shares of our common stock, and up to 4,000 thousand warrants. The purpose of the acquisition was to enhance AppTech’s product offerings while acquiring IP’s platform and book of business. The acquisition was completed on October 31, 2025. The purchase price accounting has not been completed, however, it is anticipated to be completed prior to the end of the allowable measurement period.
To finance the acquisition, AppTech entered into the following arrangements:
| · | On October 30, 2025, $1,000 thousand was invested by two members of the AFIOS group. The original agreement with AFIOS Partners allowed for an additional $1,000 thousand to be invested in return for common stock and warrants. As of the date of this report, the shares and warrants have been issued. | |
| · | On October 29, 2025, we secured a $1,000 thousand loan with an interest rate of 24% with a current investor and board member. The note is interest-only for December 2025 to March 2026, and thereafter will be paid in full with ten equal payments of principal and interest ending on January 2027. The note is secured by our accounts receivable and 10% of the IP stock. |
On October 21, 2025, AppTech entered into a participation agreement with a related party that will invest $1,500 thousand in three equal monthly installments starting on November 15, 2025 and ending on January 15, 2026. In return for its investment, the group receives a percentage of gross revenues, until its invested funds are repaid with an IRR up to 28%. The investment group has the option to invest up to an additional $1,000 thousand.
On October 31, 2025, the current CEO provided a short term, non-interest bearing loan of $50,000 to the Company.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included elsewhere in this report. Certain statements contained in this report, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of our company and the products and services we expect to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also forward-looking statements which involve risks, uncertainties, and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, our actual results may differ materially from the results discussed in the forward-looking statements.
Business Overview
The financial services industry is undergoing accelerated transformation driven by technological innovation and a rapidly evolving regulatory environment surrounding stablecoins and digital assets. Regulatory clarity around asset-backed stablecoins, custody solutions, and tokenized financial instruments is reshaping how digital financial services are structured, offered, and consumed. At the same time, advancements in blockchain infrastructure and real-time settlement capabilities are enabling more seamless, secure, and transparent user experiences. Consumers now expect intuitive access to compliant digital assets, while businesses must adapt to shifting oversight and operational requirements to stay competitive. In this dynamic landscape, organizations are challenged to balance innovation with compliance, delivering scalable, future-proof solutions that meet both market demands and regulatory expectations
To flourish in this environment, businesses need to adopt new technologies to engage, communicate and process payments and manage payouts with their customers from a supplier that widely supports innovation and adaptation as the industry evolves. We believe our technologies will greatly increase the adoption of omni-channel payments and digital banking solutions in sectors that must quickly adapt and migrate to new, secure digital Fintech technologies. By embracing advancements in the payment and banking industries, we are well-positioned to meet the growing needs of existing and prospective clients and intend for our current and future products to be at the forefront of solving these accelerated market needs.
AppTech’s all-in-one Fintech platform, FinZeo™, delivers financial technologies and capabilities through an ever-evolving modular cloud/edge-based architecture. The FinZeo platform houses a large array of financial products and services that can be implemented off-the-shelf or customized via modern APIs. Within its FinZeo platform, AppTech offers Payments-as-a-Service (“PaaS”), and Banking-as-a-Service (“BaaS”).
FinZeo provides PaaS via integrated solutions for frictionless digital and mobile payment acceptance. These solutions provide advanced payment processing solutions by catering to the unique needs of each merchant. FinZeo’s PaaS solutions include ACH (automatic clearing house), credit & debit cards, eCheck, mobile processing, electronic billing, and text-to-pay. PaaS will also solve for multi-use case, multi-channel, API-driven, account-based issuer processing for card, digital tokens, and payment transfer transactions.
AppTech is positioned to further accelerate digital transformation through BaaS, layered with financial management tools that empower financial institutions to provide businesses, professionals, and individuals with the ability to better manage their finances anywhere, anytime at a fraction of the cost of traditional banking and financial services. BaaS fosters an ecosystem of immersive and scalable digital financial management services, including FinZeo's groundbreaking automated underwriting portal. By digitizing the underwriting process, Automated Underwriting expedites business onboarding with its intuitive digital application and e-signature capabilities. This portal offers customizable pricing, risk models, and access to multiple processors, ensuring tailored solutions for diverse needs.
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Also, Fintechs, Independent Sales Organizations (ISOs) and Independent Software Vendors (ISVs), can seamlessly integrate their businesses with the FinZeo Portal or BaaS solution, which facilitates swift technology adoption. By leveraging the FinZeo portal, ISOs/ISVs can streamline operations and foster growth, meeting the economic demands of their merchants. Through personalized portals, ISOs/ISVs have the flexibility to select and integrate FinZeo payments and banking services, thereby enhancing their offerings to clients.
FinZeo has a flexible architecture and can be fully white labeled to allow for rich, personalized payment and banking experiences. This cloud-based platform packages together elements of AppTech’s intellectual property, BaaS, and PaaS to create a one-hub connection point of multi-tenant portals giving the merchant, ISO/ISV, and each customer a well-defined user experience.
Recent Developments
The Company has successfully remedied its equity deficiency; however, it was unable to satisfy the $1.00 minimum bid price requirement for 10 consecutive business days, as mandated by Nasdaq Listing Rule 5550(a)(2). Consequently, the Company was delisted and transitioned to trading on the OTCQB market. Management remains committed to enhancing shareholder value and intends to pursue an uplisting to a national exchange before the end of the fiscal year.
On September 3, 2025, AppTech entered into a letter of intent with Infinitus Pay (“IP”) to acquire 100% of their equity in return for a total package consisting of up to $3,000 thousand, up to 5,000 thousand shares of our common stock, and up to 4,000 thousand warrants The purpose of the acquisition was to enhance AppTech’s product offerings while acquiring IP’s platform and book of business. The acquisition was completed on October 31, 2025. The purchase price accounting has not been completed, however, it is anticipated to be completed prior to the end of the allowable measurement period.
Financial Operations Overview
The following discussion sets forth certain components of our statements of operations as well as factors that impact those items (in thousands, except per share data).
Revenues
Our Revenues. We derive our revenue by providing financial processing services to businesses.
Expenses
Cost of Revenue. Includes costs directly attributable to processing and other services the Company provides. These also include related costs such as residual payments to our business development partners, which are based on a percentage of the net revenue generated from client referrals.
General and administrative. Include salaries, professional services, software costs, regulatory expenses, stock-based compensation, rent, utilities, and other operating costs.
Research and development. Includes the internal and outsourced services costs incurred to maintain and further develop the FinZeo platform, and the development of additional technology needed to pursue new product offerings.
Other income (expenses). Consists of interest on outstanding indebtedness, and the gain/loss on debt extinguishment.
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Results of Operations
This section includes a summary of our historical results of operations, followed by detailed comparisons of our results for the three and nine months ended September 30, 2025 and 2024, respectively.
Revenue
Revenue was approximately $227 thousand for the three months ended September 30, 2025, compared to $43 thousand for the three months ended September 30, 2024, representing an increase of 428%. For the nine months ended September 30, 2025 and 2024, revenue was approximately $735 thousand and $224 thousand representing an increase of 228%. The increase was principally driven by an increase of our ISO and lending revenue.
Cost of Revenue
Cost of revenue was approximately $100 thousand for the three months ended September 30, 2025, compared to $24 thousand for the three months ended September 30, 2024, representing an increase of $76. For the nine months ended September 30, 2025 and 2024, cost of revenue was approximately $335 thousand and $49 thousand, representing an increase of $286 thousand. The increase was driven by the revenue share with our ISO partners.
General and Administrative Expenses
General and administrative expenses were approximately $1,373 thousand for the three months ended September 30, 2025, compared to $1,867 thousand for the three months ended September 30, 2024, representing a decrease of $494 thousand. The reduction was mainly driven by lower salaries and professional services.
General and administrative expenses were approximately $4,493 thousand and $6,669 thousand for the nine months ended September 30, 2025 and 2024, respectively, representing a decrease of 33%. The decrease was driven by lower professional fees, salaries, and stock-based compensation.
Research and Development Expenses
Research and development expenses were approximately $325 thousand for the three months ended September 30, 2025, compared to $2 thousand for the three months ended September 30, 2024, representing an increase of $323 thousand. The increase was due to higher third-party development costs related to maintaining and enhancing the FinZeo platform.
Research and development expenses were approximately $2,015 thousand and $1,278 thousand for the nine months ended September 30, 2025 and 2024, respectively. The increase was driven by higher third-party costs related to maintaining and enhancing the platform.
Interest Income (Expense)
Interest expense was approximately $17 thousand for the three months ended September 30, 2025, compared to an expense of $18 thousand for the three months ended September 30, 2024, representing an increase of $1 thousand. For the nine months ended September 30, 2025 and 2024, interest expense decreased to $24 thousand from $53 thousand. The change was due to the interest related to the assigned agreement with our banking partners.
Gain on Debt Extinguishment
Gain on debt extinguishment was approximately $13 thousand for the nine months ended September 30, 2025, compared to $0 for the nine months ended September 30, 2024, representing an increase of $13 thousand. The increase was driven by various accrued expenses written off.
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Debt Discount Amortization
The amortization on debt discounts was $50 thousand for the three and nine months ended September 30, 2025, compared to $151 thousand for the three and nine months ended September 30, 2024. The changes were due to the amortization periods of each convertible note and the discounted amount.
Other Income (Expenses)
Other expense was $93 thousand for the three months ended September 30, 2025, compared to an expense of $6 thousand for the three months ended September 30, 2024. The increase of $87 thousand was primarily driven by the expensing of a security deposit related to a proposed financing event.
For the nine months ended September 30, 2025 compared to September 30, 2024, other expense decreased from $63 thousand to $8 thousand. The biggest driver was security deposit write off.
Liquidity and Capital Resources
The Company routinely evaluates its immediate working capital needs and liquidity sources. For the three months ended September 30, 2025 and September 30, 2024, the Company maintained its liquidity sources primarily through cash and cash equivalents, and proceeds received from the AFIOS Partners investment.
Cash and cash equivalents at September 30, 2025 and December 31, 2024 were $439 thousand and $868 thousand, respectively.
Management's Plan to Address Going Concern Considerations
The Company has experienced recurring operating losses, primarily due to limited revenues. The Company's current financial conditions and recurring losses raise substantial doubt about its ability to continue as a going concern.
Management has restructured its operations, reduced its headcount, and is actively pursuing additional funding options. We are confident that two of its revenue streams will begin generating revenue in the following twelve months from the issuance date of these financial statements.
Management intends to maintain adequate working capital and adhere to prudent financial forecasting.
Cash Flows
The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods ($ in thousands).
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (3,829 | ) | $ | (4,968 | ) | ||
| Net cash used in investing activities | $ | – | $ | (567 | ) | |||
| Net cash provided by financing activities | $ | 3,400 | $ | 4,358 | ||||
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Cash Flow from Operating Activities
Net cash used in operating activities during the nine months ended September 30, 2025, was approximately $3,829 thousand, which is comprised of (i) our net loss of $6,232 thousand, adjusted for non-cash expenses totaling $2,095 thousand (which includes adjustments for equity-based compensation, depreciation and amortization), and (ii) decreased by changes in operating assets and liabilities of approximately $308 thousand.
Net cash used in operating activities during the nine months ended September 30, 2024, was approximately $4,968 thousand, which is comprised of (i) our net loss of $7,984 thousand, adjusted for non-cash expenses totaling $2,567 thousand (which includes adjustments for equity-based compensation, depreciation and amortization), and (ii) changes in operating assets and liabilities of approximately $449 thousand.
Cash Flow from Investing Activities
There was no cash used by investing activities during the nine months ended September 30, 2025. There was $567 thousand used in investing activities during the nine months ended September 30, 2024.
Cash Flow from Financing Activities
During the nine months ended September 30, 2025, net cash provided by financing activities was $3,400 thousand, which consists of proceeds received on the outstanding equity receivable at year-end, additional funds related to the AFIOS investment, and three convertible notes.
During the nine months ended September 30, 2024, net cash provided by financing activities was approximately $4,358 thousand. This amount primarily consists of $2,438 thousand in net proceeds from the issuance of common shares, $910 thousand from a convertible note, and $1,010 from a warrant exercise.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Significant estimates include those related to the valuation of goodwill impairment and intangible assets, and equity-based compensation. These estimates are based on historical experience and assumptions believed to be reasonable under current conditions. It’s important to note that actual results could differ from these estimates.
Critical accounting policies are those that we consider the most critical to understanding our financial condition and results of operations. The accounting policies we believe to be most critical to understanding our financial condition and results of operations are discussed below. As of September 30, 2025, there have been no significant changes to our critical accounting estimates nor to our recently issued accounting pronouncements, except as described in Note 2 to our consolidated financial statements.
Equity-Based Compensation: We estimate the fair value of stock options granted using the Black-Scholes option pricing model, which requires input of subjective assumptions. The model inputs include expected stock price volatility, expected term, risk-free interest rate, and dividend yield. The assumptions about future stock price volatility and the option’s expected term involve significant judgments based on historical data and future expectations. The reported equity-based compensation expense is sensitive to changes in the volatility assumption. An increase in expected volatility could materially impact the amount of compensation expense recognized.
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Goodwill Impairment
Goodwill Impairment Testing: The process requires an annual test for impairment of goodwill, and more frequent testing if certain indicators suggest that the goodwill might be impaired. This assessment involves comparing the carrying amount of a reporting unit, including goodwill, to its fair value. Key estimates in determining fair value include: a) Cash Flow Projections: Utilizing the DCF method, management estimates future cash flows based on current performance, business plans, and expected market growth, introducing judgment due to forecasting uncertainties. b) Discount Rate: The discount rate, reflecting the WACC and adjusted for unit-specific risks, is crucial for present value calculations, with changes significantly affecting fair value estimations; c) Long-term Growth Rates: Assumptions on sustainable growth rates impact the terminal value in the DCF model, thus influencing the overall fair value of the reporting unit.
Impairment Loss Calculation: The impairment loss, representing the excess of the carrying amount of goodwill over its implied fair value, is highly sensitive to the estimates and assumptions used in the fair value calculation. Small changes in cash flow projections, discount rates, or long-term growth rates can result in significant adjustments to the impairment loss recognized in the income statement. Given the dynamic nature of business conditions, technological advancements, and market competition, estimates used in goodwill impairment testing may change from one period to another. Management is tasked with regularly reviewing and updating these estimates to reflect the latest available information and market conditions.
Once an impairment loss is recognized, it is not reversible in subsequent periods. This finality places additional importance on the accuracy and reasonableness of the underlying estimates and assumptions.
Management concluded that the fair value of the goodwill recorded as part of the FinZeo acquisition significantly exceeds its carrying amount, and there is no significant risk of goodwill impairment based on current assumptions and market conditions.
Impairment of Long-Lived Assets
Our company evaluates long-lived assets, including capitalized software, for impairment when there are indicators that the carrying amount may not be recoverable. This process involves comparing the carrying amount to the expected future undiscounted cash flows from the asset. If the carrying amount exceeds the expected cash flows, an impairment charge is recognized to reduce the asset’s carrying amount to its fair value.
Indicators of impairment include significant underperformance against projections, market or economic downturns, and technological obsolescence. The fair value is determined using market data or discounted cash flow models. An impairment loss is recorded as an expense immediately.
Recent Accounting Pronouncements
As of September 30, 2025, there have been no significant changes to our recently issued accounting pronouncements, except as described in Note 2 to our consolidated financial statements.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established to facilitate off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Because we are allowed to comply with the disclosure obligations applicable to a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, with respect to this Form 10-Q, we are not required to provide the information required by this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2025.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.
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PART II - Other Information
Item 1. Legal Proceedings.
Litigation with Former Employees
On May 3, 2024, the Company was sued by three former employees over severance payments. On February 14, 2025, the Company filed a cross complaint against the plaintiffs for breach of fiduciary duty and breach of contract. In March 2025, the Company settled its lawsuit for $172 thousand. The first payment of $86 thousand was made in March 2025 and the second in May 2025.
Litigation with Former Law Firm
On March 13, 2025, Moses & Singer LLP filed a case against AppTech Payments Corp. for unpaid fees of approximately $445 thousand with the American Arbitration Association. AppTech has brought a counterclaim of legal malpractice for $800 thousand. Arbitration is confidential and ongoing; resolution is expected before or by spring 2026. Invoices for fees and costs to date are reflected in accounts payable.
Item 1A. Risk Factors.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended September 30, 2025, no
director or officer
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Item 6. Exhibits.
EXHIBIT INDEX
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AppTech Payments Corp. | ||
| Date: November 13, 2025 | By: | /s/ Thomas DeRosa |
| Name: | Thomas DeRosa | |
| Title: | Interim Chief Executive Officer | |
| Date: November 13, 2025 | By: | /s/ Felipe A. Corrado IV |
| Name: | Felipe A. Corrado IV | |
| Title: | Chief Financial Officer and Treasurer | |
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