AppTech Payments Corp. 10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
For the fiscal year ended December 31, 2024
or
For the transition period from to
Commission file number: 001-39158
AppTech Payments Corp.
(Exact Name of Registrant as Specified in its Charter)
5876 Owens Avenue
Suite 100
Carlsbad, California92008
(760) 707-5959
(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
Common Stock, $0.001 par value per share APCX Nasdaq Capital Market
Securities registered pursuant to Section 12(g)
of the Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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. Yes ☒ No ☐
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). Yes ☒
No ☐
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 ☐
Non-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 has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of common stock of the
registrant held by non-affiliates as of June 30, 2024, was approximately $19.0
million. As of March 31, 2025, 33,283,329shares of common stock, $0.0001 par value were issued and outstanding.
DOCUMENTS INCORPORATED
BY REFERENCE
Specified portions
of the registrant’s proxy statement with respect to the registrant’s 2025 Annual Meeting of Stockholders, which is to be filed
pursuant to Regulation 14A within 120 days after the end of the registrant’s fiscal year ended December 31, 2024, are incorporated
by reference into Part III of this Annual Report on Form 10-K.
AppTech Payments Corp.
Form 10-K
Table of Contents
Page
Part I
Special Note Regarding Forward-Looking Statements and Projections 1
Item 1. Business 2
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 8
Item 1C. Cybersecurity 8
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Mine Safety Disclosures 10
Part II
Item 6. [Reserved] 11
Item 7A. Qualitative and Quantitative Disclosures about Market Risk 19
Item 8. Financial Statements and Supplementary Data 19
Item 9A. Controls and Procedures 19
Item 9B. Other Information 20
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 20
Part III
Item 10. Directors, Executive Officers and Corporate Governance 21
Item 11. Executive Compensation 21
Item 14. Principal Accountant Fees and Services 22
Part IV
Item 15. Exhibits and Financial Statements Schedules 23
Index to Financial Statements 24
Exhibit Index 46
Signatures 51
i
PART I
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:
· 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 consolidated financial statements contained both in our Form S-1 that was filed with the Securities
and Exchange Commission on January 3, 2022, and in this Annual Report on Form 10-K. 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 Annual Report on Form 10-K, the words “AppTech Payments,” “we,” “us,” the “registrant”
or the “Company” refer to AppTech Payments Corp.
Item 1. Business
Business Overview
The financial services industry is going through a
period of intensive growth driven by the advancement of technology and the rapid rise of contactless transactions due to societal changes.
End-users expect ease of use and an enhanced user experience in all their daily financial interactions. In this rapidly evolving digital
marketplace, businesses have broad and frequently changing requirements to meet consumer expectations and operational efficiencies to
maintain their competitive edge.
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, FinZeoTM,
delivers best-in-class 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”), Instant Bank Analysis, Automated Underwriting,
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 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.
The FinZeo Portal empowers Independent Sales Organizations
(“ISOs”) and Independent Software Vendors (“ISVs”) to seamlessly integrate their businesses, facilitating swift
technology adoption. By leveraging the FinZeo, 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, PaaS and FinZeo Portal to create a one-hub connection point of multitenant portals giving
the merchant, ISO/ISV, and each customer a well-defined user experience.
Corporate Information
AppTech Corp. reincorporated in Delaware on December
23, 2021, and changed its name to AppTech Payments Corp. The Company’s principal executive offices are located at 5876 Owens Avenue,
Suite 100, Carlsbad, California 92008. Its phone number is (760) 707-5959. Its website address is www.apptechcorp.com and www.finzeo.com.
AppTech does not incorporate the information on or accessible through our website into this report. AppTech has included our website address
in this report solely as an inactive textual reference.
Industry Background
The financial technology and payment processing industries
have become crucial components of the global financial structure, constantly evolving due to technological advancements, shifting consumer
behavior, and new business models. As digital transformation accelerates, sectors like Automated Clearing House (ACH) payments and card
processing play a pivotal role in reshaping the payment landscape.
Automated Clearing House (ACH) Payments, the ACH network
has experienced remarkable growth, both in the volume of transactions and their monetary value. In 2022, ACH processed 30 billion payments
valued at $76.7 trillion, reflecting a 3% increase in transaction volume and a 5.6% rise in the transaction value from the previous year1.
By 2023, The Clearing House’s ACH network had processed over 19 billion transactions worth $52.4 trillion, showing an 8% growth
compared to 20222. Between 2018 and 2021, the dollar value of ACH payments grew at an annual rate of 12.7%, the highest growth
rate recorded by the Federal Reserve Payments Study3. This continued growth of ACH payments is primarily driven by high-value
transactions, subscription-based businesses, and e-commerce, all of which require efficient and low-cost payment systems to handle recurring
transactions.
Card payment processing remain a dominant force in
the global transaction landscape, with both general-purpose and private-label cards leading the charge. In 2022, the Federal Reserve Payments
Study highlighted the large volume of card payments, underscoring their significant role in consumer transactions. By 2023, card payments
continued to be the most widely used payment method, both for consumer and business transactions. This market continues to evolve, driven
by the growing demand for contactless and instant payment methods, which are pushing the adoption of card-based payments on a global scale.
The fintech sector is expanding rapidly, spurred by
technological advancements and regulatory changes. Between 2024 and 2032, the fintech industry is projected to grow at a compound annual
growth rate (CAGR) of 16.5%4. Within this sector, digital banking—including FDIC-insured neobanks offering banking-as-a-service—is
expected to reach a value of $2.6 trillion by 2027, with over 78 million users. Neobanks are disrupting traditional banking models by
providing digital-first financial services, often lowering costs and enhancing the customer experience. This growth is expected to continue,
especially among younger, tech-savvy consumers.
Small credit unions are increasingly adopting digital
payment solutions to meet the changing demands of consumers. As of mid-2024, 11% of credit unions have incorporated open banking payment
options, signaling a growing trend toward advanced payment solutions5. Digital transformation is enabling credit unions to
attract and retain members by offering secure and convenient digital payment services6. To remain competitive in the rapidly
evolving financial landscape, many small credit unions are forging partnerships with fintech companies to enhance their digital payment
offerings.
The digital payments ecosystem presents significant
revenue opportunities, especially through mobile wallets and ACH systems. PwC’s consumer research estimates a revenue opportunity
of $60 billion for digital payment ecosystems6. As digital payments become more integrated into everyday financial transactions,
businesses and financial institutions are eager to capture a larger share of this rapidly expanding market.
_____________________
1 Federal Reserve Payments Study
(FRPS) – July 202
2 The Clearing House, ACH Report
– March 2024
3 Federal Reserve Payments Study
(FRPS) – 2023
4 Statista: Digital & Trends
– Neobanking US Report – 2023
5 CUInsight: Credit Unions Adopting
Open Banking Payments – 2024
6 PwC Global Consumer Insights
Survey – 2021
Our Competitive Strengths
We believe our adaptable technology and product offerings
differentiate us from our competitors. Our products and solutions help to eliminate much of our sector’s reliance on legacy payment
rails and financial systems. The design and delivery are not being restricted by antiquated foundational technology. Management believes
the applicability and frictionless nature of our products will offer an immediate impact on the digital financial services industry. Further,
the solutions we intend to deliver to our clients will be driven off user-centered design principles to providing seamless, best-in-class
experiences to the end-user.
Digital transformation is complex for most companies
sighting such concerns around shifting company culture, legacy systems, rigidity of platforms and processes, and inefficiencies in skill
sets and knowledge. Additionally, even when these companies see the value in digital transformation, often these companies face an inability
to properly shift resources to new technology while maintaining customers on existing platforms. Non-discretionary spend required to “keep
the lights on” outweighs leadership’s ability to invest in future technology, which results in vulnerabilities and competitive
threats.
Our financial services platform was built to empower
our clients with an extensible, adaptable framework capable of dynamically solving challenges found across the financial services industry.
Further, this ability will allow us to drive deeply and expediently into specific market segments to solve problems that we find to be
a continued burden on our client’s and their customer base. Based on market, client and end-user research and discovery, it is expected
that these unique solutions produced for client’s will be highly leverageable across these segments to deliver experiences at scale
while producing rapid revenue and profitability.
As we increase our client base and deployment of solutions
to meet our client’s specifications, we’ll continue to grow these “off-the-shelf” experiences that will ultimately
lower our development costs while increasing speed to market. In addition, we are positioned to utilize this model to grow industry partnerships
and app marketplace plugins thus further leveraging our capabilities and market reach.
Founded on a modern core platform backed by an intelligent
financial technology framework, our ability to rapidly deploy solutions and experiences that are otherwise cumbersome, expensive and often
fall short of expectations will prove successful. Our position is to penetrate deep into certain segments to build a model that will directly
drive growth. Gaining robust insights in these segments while delivering best-in-class experiences will also produce future opportunities
to expand our off-the-shelf solutions to other verticals or sub-verticals that are challenged with solving similar problems.
While our core foundational platform will continue
to adapt and grow based on new innovations, we are launching into the market an extremely robust and innovative set of secure digital
banking and payments features and functionality. This will allow us to quickly deliver the future of digital finance to meet the demands
of the markets we intend to serve without the deployment burdens encumbering the market today.
Additionally, the patent protection for some of our
products is uncommon within the Fintech industry. This protection prevents competitors from replicating our products to carve away at
our anticipated market share. Therefore, backing our text payment and lead generation products with patents strengthens the viability
of such products by limiting direct competition and strengthening strategic partnerships. It is expected that we will also expand our
patent portfolio through new innovations and acquisitions.
Our Growth Strategy
We intend to grow by leveraging our existing IP, continually
developing products and solutions, establishing strategic partnerships and seeking selective acquisitions that uniquely complement our
core business to meet growing market demand. From traditional merchant accounts to customizable inbound and outbound payment solutions,
we intend to modernize and enhance the payment processing and digital banking capabilities for businesses throughout the world. Our business
objective is to generate revenue based on licensing and subscription fees, transactional processing fees, product line growth, and continual
advancement of our IP portfolio.
Our target market is forward-thinking financial institutions,
technology companies, and Small to Medium Enterprises (“SME”) seeking to broaden their distribution through the addition of
digital omnichannel payments and digital banking technologies. We will serve these markets by reducing integration complexity and streamlining
their integrated financial services capabilities.
SMEs generally lack the resources of large enterprises
to invest heavily in technology. As a result, they are more dependent on service providers, like AppTech, to handle critical functions
including payment acceptance and other support services and are likely to be early adopters of new services that will further increase
their efficiency and drive growth. Additionally, we are targeting financial institutions looking to maintain their ability to compete
by digitizing their financial services offerings to meet market demand. By enhancing their customer’s user experience through the
development of innovative and user centric multi-channel digital financial products, they will be able to maintain customer loyalty.
We intend to support a multi-method distribution model
to achieve our vision. By providing delivery flexibility, we can rapidly engage and develop the right go-to-market strategies. As previously
mentioned, not only are off-the-shelf solutions available, but we also offer embedded experiences that can be deployed using a growing
portfolio of Open and Private APIs for developers to build unique experiences based on business cases and requirements.
Further, by offering clients a full array of marketing
technology services, omnichannel payments and digital banking technologies, we will enable them to better interact with their customers
and provide additional, dynamic means of processing both inbound and outbound financial transactions.
Businesses’ financial technology needs are increasingly
complex. As electronic and mobile commerce continues to grow, businesses have no alternative but to use technology to better meet customer’s
expectations. We believe that delivering innovative, adaptive, scalable, and operationally efficient products that meet their financial
services needs will result in rapid market penetration for our anticipated product launches.
While leveraging new technology is vital to our growth
plan, it is equally important that the technology is relevant and seamlessly fits into and benefits our end-user’s daily lives.
Consumers are sometimes reluctant to alter their typical routines, especially when it relates to financial services. The launch of our
payment system and broader digital banking solutions will meet both needs. We will offer financial technologies that do not rely on legacy
rails, thus increasing the opportunity to improve the end-user’s digital experiences. Once properly developed and rolled out, we
anticipate rapid adoption.
We seek to grow our business by pursuing the following
strategies:
Our market growth strategies will focus on the following
elements: (1) new product development and delivery (2) market penetration (3) market expansion (4) IP, strategic acquisitions, and partnerships.
It is imperative that upon entrance into the market
with the new platform, we focus on delivering an enhanced experience to our existing digital client base. As we roll this out, we will
also continue discussions with our current and continually evolving pipeline of prospects to understand these opportunities and the value
that we can bring to solve their needs. This strategy also provides growth opportunities with these clients, increases customer satisfaction
and potential referrals, and produces valuable feedback into our product prioritization and roadmap.
Maintaining focus to deliver our technology to selective
target market segments also allows us to deliver a deeper, more targeted set of solutions and experiences. In turn this will grow our
knowledge within these select segments that will translate into further innovation and market penetration.
This continual development process will contribute
to our overall strategy of delivering new, innovative technologies and solutions. It is expected that bringing these to market will expand
opportunities in complimentary and new market segments. Given the Platform’s flexibility and a la carte capabilities, adapting these
solutions and delivering new experiences is a core tenant to growth.
In addition, core to our values and strategy is the
opportunity for growth through intellectual property. This is inclusive of the existing patent portfolio while also coupled with future
innovation. It is also important to continually evaluate new technologies, market entrants and complimentary solutions to ensure continued
growth. We expect that this will include strategic acquisitions of complimentary offerings and portfolio customers, while also focusing
on strategic partnerships where we find synergy in our vision.
With years of Fintech experience and a deep understanding
of the industry, management believes we can leverage this expertise, industry contacts and past clients to accelerate market penetration.
Engaging individuals with the ability to integrate our products may prove invaluable. Further, through our channel partnerships, we have
an expansive network of potential clients that continue to show interest in our strategy and opportunity to embed our financial technologies
into their solutions.
Management believes there are substantial opportunities
in emerging and developing markets for our anticipated products. Our payment systems and digital banking solutions offer innovative avenues
to unbanked and under banked communities to transact and provide remittances. Further, since internet connectivity is not required for
our text payment solution, individuals with limited internet access will still be able to transact. These two factors could open our products
to markets with immense growth potential.
Our Products and Services
We offer Fintech solutions that empowers financial
institutions and enterprise brands to deliver “best-of-breed” B2B (Business to Business) and B2C (Business to Consumer) experiences
through our revolutionary all-in-one platform and deployment model. Our modular platform will seamlessly integrate with legacy and cloud
platforms to power a multitude of commerce experiences, including digital payments, financial wellness and more.
Merchant Services
Our core historical business is merchant transaction
services. We create revenue by processing payments for credit and debit cards via point of sale (“POS”) equipment, eCommerce
gateways, periodic ACH payments and gift & loyalty programs. We currently support over 150 merchants representing dozens of market
verticals in managing their financial transactions.
Each merchant has unique needs for payment processing.
As a result, we have a variety of processing partners to meet each merchant’s requirements. In addition to these needs, we take
into consideration certain aspects of each business in choosing the optimal processing partner including risk, volume, customer service,
integration capabilities, product features and profitability.
Digital Financial Technology Platform consisting
of Omnichannel Payments and Digital Banking
To power commerce experiences, our digital financial
technology platform incorporates two distinct product pillars: (1) omnichannel digital payments featuring patented payment technology
and (2) digital banking capabilities. The omnichannel payments pillar will consist of several stand-alone solutions, including hosted
ecommerce checkout, a flexible payment gateway, patented payment technology, alternative payment methods (“APMs”), as well
as mobile and contactless payments. The FinZeo Platform’s digital banking pillar will supply financial institutions with technology
to give their customers – businesses, professionals, and individuals the ability to better manage their finances anywhere, anytime
and at a fraction of the cost of traditional banking and financial services.
Developing and deploying customized commerce experiences
runs atop the Platform stack. This will include 1) open and private payment and digital banking APIs, 2) select third-party APIs centered
on personalization and automation, 3) white labeling 4) online collaboration and development tools, and 5) optional professional services
engagement and support.
Similar to experience-focused offerings, our FinZeo
Platform powers immersive content, conversion, marketing automation, payment, and value transfer capabilities for nearly every online
and offline shopping, banking, and financial services scenario. Additionally, our Platform experiences can be taken off-the-shelf or tapped
into via modern APIs to build and embed fully branded and customizable experiences.
In many cases, our products and services are both
available off-the-shelf or through embedded commerce experiences. For example, our patented payment capabilities can be licensed off-the-shelf,
so our clients can take advantage of quick market entry while doing this without any lifting or technical requirements. Alternatively,
payment capabilities and feature sets are available via our open APIs so businesses can embed and customize the experience, i.e. alter
the onboarding experience and subscription triggers.
Our white-label, digital banking technology platform
with payment capabilities will equip financial institutions (“Fis”), technology providers and brands with a digital “bank-in-a-box”
– also referred to as our Banking-as-a-Service (BaaS) product. Furthermore, our Platform will enable multi-channel, pure digital
financial services products unlike many other providers in the world. It incorporates a “plug-and-play” capability to facilitate
deep integration with payment gateways, POS merchant services, alternative payment mechanisms, open-banking, ERP (“Enterprise Resource
Planning”), Customer Relationship Management (“CRM”) and web and mobile user interfaces to form an end-to-end, embedded,
payment acceptance and digital banking solution that drives innovative and disruptive digital distribution products. Anticipated products
include:
· Neo-Banking for consumers and SMEs;
· Embedded B2B and consumer virtual payments (“VCNs”);
· P2P money transfer;
· Treasury management;
Other attributes to our FinZeo Platform will include:
Our Platform continues to be developed including integration,
testing and proper technical certifications before market readiness and client delivery. We expect that our Platform will continue to
evolve as discussed to continually provide ongoing improvements, new features and functions and improved opportunities to deliver best
in class experiences to the markets we serve.
Employees
As of the date of this annual report, we have nine
full-time employees. In addition to our employees, we utilize various consultants and contractors for other services on an as-needed basis.
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 1B. Unresolved Staff Comments
Not applicable.
Item 1C.
Cybersecurity
Risk Management and Strategy
We recognize the importance of cybersecurity in protecting
our operations, customer information, and proprietary data. We are committed to implementing robust security measures to mitigate the
risk of cyber incidents that could potentially disrupt our business operations or compromise the integrity of our data.
Engage Third-parties on Risk Management
Due to the difficulties and evolving nature of cybersecurity
threats, AppTech engages with external experts, including cybersecurity consultants and auditors to evaluate and test its risk management
systems. These relationships allow us to utilize specialized knowledge and insights, ensuring our strategies and processes remain in-line
with current best practices. These third-parties provide the Company with regular audits, threat assessments, and consultations on security
enhancements. Also, during onboarding and periodically thereafter, we conduct trainings for the Company’s employees, contractors,
and temporary workers about cybersecurity risks, including sending test phishing emails for training purposes to all users of the Company’s
email system.
Our cybersecurity strategy encompasses a comprehensive
suite of measures designed to protect our systems and data from unauthorized access, use, alteration, or destruction. These measures include,
but are not limited to:
•
Implementation of advanced cybersecurity technologies, including firewalls, intrusion
detection systems, and encryption protocols, to safeguard our network and data.
•
Regular security assessments and penetration testing conducted by external experts to
identify and remediate potential vulnerabilities.
•
Establishing and maintaining incident response and recovery plans to ensure timely and
effective responses to any cybersecurity incidents.
Oversee Third-party Risk
To manage the risks associated with third-party service
providers, AppTech conducts weekly calls with its providers to monitor compliance on an ongoing basis. Issues that arise are addressed
immediately with mitigating measures added to avoid future problems.
Risks from Cybersecurity Threats
Like other companies in our industry, we face several
cybersecurity risks in connection with our business. Although such risks have not materially affected us or are reasonably likely to materially
affect us, including our business strategy, results of operations, or financial condition, to date, we have, from time to time, experienced
threats to and security incidents related to our data and systems, including denial of service and phishing attacks.
Risk Management Personnel
Primary responsibility for assessing, monitoring and
managing our cybersecurity risks rests with our third-party provider, the Company's Director of Information Technology and Director of
Software Engineering (referred to as “IT”).Their knowledge, experience and relationship with our third-party vendor are instrumental
in developing and executing our cybersecurity strategies.
Risk Management Reporting
The
IT Team provides updates to upper Management on a routine basis
or as potentially critical risks from cybersecurity threats or incidents arise. In addition, the audit committee is notified of any material
cybersecurity concerns that may impact internal controls, data storage, or the integrity of our financial reporting.
Risk Management
Despite our diligent efforts to secure our systems and data, we acknowledge
that no cybersecurity measures can completely eliminate the risk of cyber incidents. The evolving nature of cyber threats means that we
must continually adapt our cybersecurity strategies to address new and emerging risks.
In recognition of these risks, we have implemented a comprehensive risk
management framework that includes:
• Continuous monitoring of our networks and systems for signs of unauthorized
activity.
• Regular updates to our cybersecurity measures to address new vulnerabilities
and threats.
• Collaboration with industry partners and government agencies to share information
on threats and best practices for cybersecurity.
• Maintaining cyber insurance to mitigate the financial impact of potential
cybersecurity incidents.
Potential Impact of Cybersecurity Incidents
We recognize that a significant cybersecurity incident could have material
adverse effects on our business, including operational disruptions, financial losses, legal liabilities, and damage to our reputation.
Such incidents could also result in the loss of proprietary information or the exposure of sensitive customer data, leading to further
financial and reputational harm.
In conclusion, while AppTech Payment Corp is committed to employing comprehensive
cybersecurity measures to protect against cyber threats, there are inherent risks associated with cybersecurity that could impact our
business. We continue to monitor our cybersecurity landscape actively and adapt our defenses to mitigate these risks as much as possible.
Item 2. Properties
Corporate headquarters is located at 5876 Owens Avenue,
Suite 100, Carlsbad, CA 92008, consisting of approximately 3,000 square feet of leased office space. As of December 31, 2024, the Company
also leases office space in Austin, Texas. The Company does not own any real property.
Item 3. Legal Proceedings
NCR
Litigation
On
November 30, 2022, AppTech filed a complaint against NCR Payment Solutions, LLC in the United States District Court for the Southern District
of California alleging Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, Specific Performance and Accounting.
On March 11, 2024, both parties agreed to dismiss the lawsuit. There was no impact to the Company’s financial statements.
Infinios Financial Services
Litigation
On October 1, 2020, the Company entered into
a strategic partnership with NEC PAYMENTS B.S.C., which subsequently became Infinios Financial Services B.S.C. (“Infinios”).
On May 4, 2023, the Company notified Infinios
of its intent to terminate its relationship and commenced a good-faith negotiation with Infinios.
In October 2023, the Company and Infinios
entered arbitration.
As of December 31, 2024, the parties settled
the lawsuit under a confidential Settlement Confirmation letter whereby the terms of the Settlement Agreement and Mutual Release were
fulfilled. Under the settlement, no payments were exchanged between the parties, and both the anti-dilution liability and the payable
owed to Infinios of $72 thousand and $249 thousand, respectively, were fully extinguished. The matter is closed.
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 settlement amount was accrued for at December
31, 2024.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common
Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Our common stock has been registered with the SEC
since 1999. We successfully uplisted to NASDAQ on January 7, 2022 under the symbol “APCX”. Our warrants are listed under the
symbol “APCXW”. The Company joined the Russell Microcap® Index at the conclusion of the 2023 Russell Indexes annual reconstitution,
effective after the US market opened on June 26, 2023.
Stockholder Data
As of March 31, 2025, 33,283,329 shares of our
common stock were outstanding and held of record by 5,611 stockholders, and 14 shares of preferred stock held by 11 shareholders were
outstanding.
Dividends
We have not declared or paid any cash dividends on
our common stock since our inception.
Equity Compensation Plan
For information regarding securities authorized under
the equity compensation plan, see Item 12.
Recent Sales of Unregistered Securities
In 2024, we did not sell any shares of stock that
were not registered under the Securities Act of 1933, as amended, other than those sales previously reported in a Current Report on Form
8-K.
Item 6. RESERVED
Item 7. 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 going through a
period of intensive growth driven by the advancement of technology and the rapid rise of contactless transactions due to societal changes.
End-users expect ease of use and an enhanced user experience in all their daily financial interactions. In this rapidly evolving digital
marketplace, businesses have broad and frequently changing requirements to meet consumer expectations and operational efficiencies to
maintain their competitive edge.
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, FinZeoTM,
delivers best-in-class 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.
The FinZeo Portal for Independent Sales Organizations
(ISOs) and Independent Software Vendors (ISVs) to seamlessly integrate their businesses, facilitating 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.
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 services to businesses.
Licensing Revenue
The Company is actively pursuing strategic partnership
agreements that license our technology for a fee. The licensing fee is deferred and recognized over the term of the service period or
contract.
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 deducted from revenue.
Accrued Residuals
The Company pays commissions to independent agents
who refer merchant accounts. The amounts payable to these independent agents is based upon a percentage of the amounts processed by these
merchant accounts.
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 and 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, the change in value of derivative liabilities, and the gain/loss on debt extinguishment.
Results of Operations
This section includes a summary of our historical
results of operations, followed by detailed comparisons of our results for the years ended December 31, 2024 and 2023, respectively.
We have derived this data from our annual consolidated financial statements included elsewhere in this report.
The following table presents our historical results
of operations for the periods indicated:
Years ended December 31 Change
Operating expenses
Impairment of Intangible assets – 6,131 (6,131 ) (100% )
Other income (expenses)
Interest expense, net (646 ) (52 ) (594 ) NM
Change in fair value of derivative liability – 27 (27 ) (100% )
Provision for income taxes – – – –
Revenue
Revenue was approximately $276 thousand for the year