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
AppTech recognizes the critical importance of cybersecurity in protecting
its operations, customer information, and proprietary data. The Company is committed to implementing robust security measures designed
to mitigate the risk of cyber incidents that could disrupt business operations or compromise data integrity.
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.
Governance
Our board of directors has ultimate oversight
responsibility for our strategic and business risk management and delegates cybersecurity risk management oversight to its audit committee.
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:
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. The Company does not own
any real property.
Item 3. Legal Proceedings
Finzeo
Seller Suit
On October
30, 2025, AppTech Payments Corp. filed a lawsuit in the United States District Court, Southern District of California, against Seller
with claims for trade secret misappropriation, fraud, misrepresentation, conversion, unfair business practices, violation of California
Penal Code section 502, and breach of contract. The litigation relates to AppTech’s acquisition of membership interests in a company
and the company’s related product. The defendant has made claims of an offset based on alleged outstanding payments as part of the
acquisition. On November 4, 2025, the Court entered an order approving the parties Stipulation/Joint re AppTech’s Motion for Temporary
Restraining Order and Order. The case is currently in the discovery stage with the final pretrial conference scheduled for March 18, 2027.
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 April 2026. Invoices for fees and costs to date are reflected in accounts payable.
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 the relationship and commenced good-faith negotiations, and in
October 2023, the parties 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. In March 2025, the Company settled its lawsuit for $172 thousand. As of December 31, 2025, all
monies owed have been paid.
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
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”.
Stockholder Data
As of December 31, 2025, 40,488,934 shares of
our common stock were outstanding and held of record by more than 4,000 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 2025, 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.
Recent Purchases of Equity Securities
We made no repurchases of our equity securities
during the fourth quarter of the fiscal year ended December 31, 2025.
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
2025 was a defining year for AppTech Payments Corp. (“AppTech”).
The Company entered the year with inherited structural, operational, and technological challenges that limited its ability to scale and
compete effectively in the rapidly evolving financial services landscape. The legacy FinZeo acquisition, while strategically intended
to position the Company in digital payments, required significant remediation. The inherited platform architecture was fragmented, the
marketplace model was not commercially viable, and the product required substantial modernization to meet industry expectations. These
issues constrained growth and created operational inefficiencies that needed to be addressed before the Company could pursue new opportunities.
Recognizing these challenges, the new management team undertook a comprehensive
transformation of the Company. This included stabilizing operations, preserving existing revenue streams, restructuring internal processes,
modernizing the technology stack, and repositioning the Company toward scalable, high-value financial technology infrastructure. The objective
was not incremental improvement, but a fundamental repositioning of AppTech into a modern fintech infrastructure provider capable of supporting
digital banking, embedded finance, and omnichannel payments at scale. By year-end, AppTech had rebuilt its foundation, aligned its teams,
and established a clear strategic direction for long-term growth.
This transformation occurred during a period of rapid change in the
financial services industry. Businesses, financial institutions, and technology platforms increasingly require modern, flexible, and compliant
financial technology capable of supporting digital-first interactions, automated onboarding, and embedded financial services. The market
is shifting toward unified platforms that reduce integration complexity, support multi-channel payment experiences, and deliver scalable
financial services without requiring costly or disruptive changes to existing banking systems. Smaller and mid-sized banks, in particular,
face mounting pressure to modernize their digital offerings but often lack the internal resources or infrastructure to do so effectively.
These institutions represent a significant and underserved segment of the market.
To address these needs, AppTech deployed the AppTech Banking Platform,
a modern financial services layer licensed and implemented in 2025. While architecturally similar to Banking-as-a-Service systems, AppTech
positions this platform as a core Company technology rather than a traditional BaaS product. The platform enables digital banking capabilities,
account-based processing, onboarding, compliance, and financial workflows through a unified, cloud-native architecture. It is designed
as a multi-tenant, multi-bank system, allowing AppTech to support multiple financial institutions simultaneously and expand its banking
partnerships over time. Importantly, the platform integrates alongside a bank’s existing core system rather than replacing it, enabling
AppTech to deliver modern digital capabilities without requiring banks to undertake costly or disruptive system changes.
The Company’s first partner bank is now fully online and accepting
clients through the AppTech Banking Platform. This relationship provides AppTech with a compliant and scalable foundation for delivering
digital banking capabilities, account creation, payment services, and financial workflows. The close operational alignment between AppTech
and its partner bank enhances the Company’s ability to deliver efficient onboarding, consistent compliance processes, and a streamlined
path for clients to activate financial products, while maintaining the bank’s regulatory oversight and decision-making authority.
Building on this strengthened foundation, AppTech
completed the acquisition of IP in late 2025. IP brings a profitable business, a growing customer portfolio, and a robust
cross-border payments and onboarding platform that integrates directly into the AppTech Banking Platform. Its technology expands AppTech’s
capabilities in global payment acceptance, international payouts, multi-currency transactions, automated recipient onboarding, and compliance
workflows. IP also contributes a sophisticated partner portal that provides detailed reporting, business metrics, and operational insights.
This portal not only supports IP’s existing clients but also enhances AppTech’s broader sales channel by equipping partners
with tools to identify opportunities, monitor client performance, and unlock client potential.
While the Company’s long-term strategy is centered on digital
banking and embedded financial services, AppTech continues to operate and generate revenue from its FinZeo Payments-as-a-Service (“PaaS”)
business. FinZeo remains an active and revenue-producing component of the Company’s operations, contributing approximately 10–15%
of total revenue in 2025. Although the inherited marketplace structure required modernization and the original product did not meet commercial
expectations, the underlying PaaS capabilities continue to serve merchants, ISOs, and technology partners. The Company stabilized this
business, preserved its revenue, and repositioned it as a strategic channel for identifying future opportunities aligned with the Company’s
broader financial technology strategy.
As a result of these efforts, AppTech emerges from 2025 as a fundamentally
different company—one with a modern technology foundation, a scalable business model, a strengthened leadership team, and a clear
strategic direction. The Company is now positioned to participate meaningfully in the next generation of digital financial services, with
a platform capable of supporting financial institutions, technology companies, and SMEs with scalable, customizable financial solutions
that reduce integration complexity and accelerate time-to-market.
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.
Set up Fees
The Company provides one-time customer setup services
that include gathering and validating required compliance documentation for its banking partners and performing the technical integration
necessary to establish an operational merchant profile on the Company’s platform. As part of the setup, customers receive stand-alone
value by receiving a named bank account with our banking partner that they can use independent of us. Setup services are satisfied at
a point in time when the customer or subaccount is fully configured and enabled to transact on the platform. Revenue is recognized upon
completion of setup, which generally coincides with month-end billing.
Monthly Platform and Transaction-Based
Fees
Monthly recurring platform access fees and transaction-based
fees represent consideration for continuous platform access and payment processing services and are recognized monthly as the services
are performed. Transaction-based fees, which represent variable consideration, are recognized in the period in which the underlying transactions
occur. Subaccount setup fees are recognized when the subaccount is established and made available for use.
Customers are invoiced in arrears at month-end, and amounts billed but not yet collected are recorded as accounts receivable.
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 and IP platforms, 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.
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, 2025 and 2024, 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
Other income (expenses)
Loss on change in fair value of contingent consideration (174 ) – (174 ) –
Provision for income taxes – – – –
Revenue
Revenue was approximately $1,395 thousand for
the year ended December 31, 2025, compared to $276 thousand for the year ended December 31, 2024, representing an increase of
$1,119 thousand or 405.4%. The increase was principally driven by the launch of our lending revenue vertical and the revenue generated
from the IP platform.
Cost of Revenue
Cost of revenue was approximately $624 thousand
for the year ended December 31, 2025, compared to $52 thousand for the year ended December 31, 2024, representing an increase
of $572 thousand. The increase was principally driven by bank fees charged by our banking partner for our lending revenue vertical and
an increase to referral partner payouts related to the IP acquisition.
General and Administrative Expenses
General and administrative expenses decreased
23.0% to approximately $6,003 thousand for the year ended December 31, 2025, from $7,794 thousand in 2024. The reduction was mainly due
to lower salaries following the Company’s restructuring plan, lower professional fees, and less stock-based compensation.
Research and Development Expenses
Research and development expenses were approximately
$2,347 thousand for the year ended December 31, 2025, compared to $1,977 thousand for the year ended December 31, 2024, representing
an increase of 18.7%. The increase was solely driven by the Company’s decision to expand the development team to launch its lending
vertical and the additional costs related to managing IP’s platform.
Other Income (Expenses)
Interest Expense
Interest expense was approximately $121 thousand
and $67 thousand for the years ended December 31, 2025 and December 31, 2024, respectively, representing an increase of $54
thousand. The increase was due to the interest expense related to the convertible notes and liability assumption from our banking partner.
Gain on debt extinguishment
The gain on debt extinguishment was approximately
$13 thousand for the year ended December 31, 2025 compared to $1,245 thousand for the year ended December 31, 2024. The decrease
was due to the Company extinguishing less of its past debt.
Loss on change in fair value of contingent
consideration
The loss was approximately $174 thousand for the
year ended December 31, 2025 compared to $0 for the year ended December 31, 2024. The change was due to the Company adjusting
the earnout owed to the Sellers of IP.
Debt discount amortization
The debt discount amortization was approximately
$104 thousand for the year ended December 31, 2025, compared to $579 thousand for the year ended December 31, 2024. The change
was due to the amount of convertible debt incurred in FY 2025 versus the prior year.
Other income (expenses)
Other expense was approximately $45 thousand for
the year ended December 31, 2025, compared to other income of approximately $15 thousand for the year ended December 31, 2024, representing
an increase of $30 thousand. The increase was primarily driven by interest income earned on the note receivable related to our banking
parter relationship.
Liquidity and Capital Resources
The Company routinely evaluates its immediate
working capital needs and liquidity sources. For the years ended December 31, 2025 and 2024, the Company maintained its liquidity sources
primarily through cash and cash equivalents, convertible notes, and proceeds received from equity and equity-linked instruments to pay
for services and compensation.
Cash and cash equivalents at December 31, 2025
and 2024 were $244 thousand and $868 thousand, respectively.
See Note 9 – Stockholders’ Equity.
Management's Plan to Address Going Concern
Considerations
The Company has experienced recurring
operating losses, primarily due to limited revenues and net cash used in operations. The Company's current financial conditions and recurring
losses raise substantial doubt about its ability to continue as a going concern.
Management is actively pursuing additional funding
options and is confident that its revenue streams will begin generating revenue in the following twelve months from the issuance date
of these financial statements.
Management intends to maintain adequate working
capital and adhere to prudent financial forecasting. In December 2025, Management began implementing comprehensive expense reduction
strategies across the Company’s operations to enhance financial stability.
Cash Flows
The following table presents a summary of cash
flows from operating, investing and financing activities ($ in thousands):
Net cash used in operating activities $ (4,889 ) $ (7,457 )
Net cash used in investing activities $ (1,884 ) $ (1,159 )
Net cash provided by financing activities $ 6,149 $ 8,203
Cash Flow from Operating Activities
Net cash used in operating activities during the
year ended December 31, 2025 was approximately $4,889 thousand, which is comprised of (i) our net loss of $7,920
thousand, adjusted for non-cash expenses totaling $2,716 thousand (which includes
adjustments for equity-based compensation, depreciation and amortization), and (ii) is decreased by changes in operating assets and liabilities
of approximately $315 thousand.
Net cash used in operating activities during the
year ended December 31, 2024 was approximately $7,457 thousand, which is comprised of (i) our net loss of $8,933
thousand, adjusted for non-cash expenses totaling $2,175 thousand (which includes
adjustments for equity-based compensation, depreciation and amortization), and (ii) is decreased by changes in operating assets and liabilities
of approximately $699 thousand.
Cash Flow from Investing Activities
Net cash used by investing activities during the
year ended December 31, 2025 was approximately $1,884 thousand. This expenditure was primarily attributable to the acquisition of IP.
Net cash used by investing activities during the year ended December
31, 2024 was approximately $1,159 thousand. This expenditure was primarily attributable to capitalized software costs.
Cash Flow from Financing Activities
Net cash provided by financing activities during
the year ended December 31, 2025 was approximately $6,149 thousand, driven by net proceeds received of $3,550 thousand through the
issuance of common shares and warrants, and $2,599 thousand proceeds received from notes payables, net of repayments.
Net cash provided by financing activities during
the year ended December 31, 2024 was approximately $8,203 thousand, driven by net proceeds received of $6,288 thousand through the issuance
of common shares and warrants in our public offerings, $1,010 thousand proceeds received from exercise of warrants, and $910 thousand
net proceeds received from convertible notes payable.
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 intangible assets acquired
as part of the business combination and related contingent consideration. 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 December 31, 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.
Business Combination
Recognition and Measurement: Companies
must recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquiree at their fair value on the acquisition
date.
Goodwill: Arises when the consideration
transferred in a business combination exceeds the fair value of the net identifiable assets acquired. It represents future economic benefits
arising from assets that are not individually identified and separately recognized.
Intangible Assets: Identifiable intangible
assets, distinguishable either by separability from the acquired entity or through contractual or other legal rights, are valued and reported
independently from goodwill. These assets include, but are not limited to, trademarks, customer relationships, proprietary technology,
and patents. The fair value of these intangible assets is determined at the time of acquisition and is subject to subsequent impairment
tests.
The fair value of identifiable intangible assets
is estimated using income, market, or cost approach methods. The income approach, often applied through the discounted cash flow (DCF)
method, involves projecting future cash flows attributable to the asset and discounting them to present value using a discount rate that
reflects the risk associated with those cash flows. The estimation of fair value is inherently uncertain due to the assumptions and judgments
involved in projecting future cash flows, determining appropriate discount rates, and estimating the useful life of each asset.
Over the reporting period, changes in market conditions,
technological advancements, or strategic shifts in the business may necessitate revisions to the assumptions used in the valuation of
identifiable intangible assets. Management closely monitors these factors and will adjust the valuation of intangible assets as appropriate,
reflecting the impact of any such changes in our financial statements.
Contingent Consideration: Any contingent
consideration, such as earn-outs, is measured at fair value at the acquisition date and can be adjusted in subsequent periods if the fair
value changes.
Smaller Reporting Company
As a smaller reporting company, as defined in
Item(f)(1) of Regulation S-K, we may choose to prepare our disclosures relying on scaled disclosure requirements for smaller reporting
companies in Regulation S-K and in Article 8 of Regulation S-X.
The scaled disclosure requirements for smaller
reporting companies permit us (i) to include less extensive narrative disclosure than required of other reporting companies, particularly
in the description of executive compensation and (ii) to provide audited consolidated financial statements for two fiscal years, in contrast
to other reporting companies, which must provide audited consolidated financial statements for three years.
We may lose our status as a smaller reporting
company on the last day of the fiscal year in which (i) our public float exceeds $250 million or (ii) if we have more than $100 million
in annual revenues and (a) have no public float or (b) have a public float or more than $700 million.
Recent Accounting Pronouncements
As of December 31, 2025, there was 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.
Equity-based Compensation
The Company records stock-based compensation in
accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation
cost for stock-based employee compensation at the fair market value on the grant date and recognize the expense over the employee’s
requisite service period. The Company recognizes in the statement of operations the grant-date fair market value of stock options and
other equity-based compensation issued to employees and non-employees.
During the years ended December 31, 2025,
and 2024, 10,000 shares and 260,000 shares of common stock were issued to consultants and employees in connection with business development,
professional, and employment services with a value of $5 thousand and $267 thousand, respectively.
Related Parties
See Item 13 for a full discussion of related parties.
Item 7A. 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
Annual Report on Form 10-K, we are not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary
Data
The consolidated financial statements and related
financial statement schedules required to be filed are indexed on page 24 and are incorporated herein.
Item 9. Changes in and Disagreements with
Accounts on Accounting and Financial Disclosure
None.
Item 9A. 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 December 31, 2025 due to the material weaknesses in our internal
control over financial reporting as described below.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Our management is also responsible for establishing
and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for us.
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated, as of December 31, 2025, the effectiveness
of our internal control over financial reporting using the framework in Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal
control over financial reporting was not effective as of December 31, 2025.
The management has identified a material weakness
in our internal control over financial reporting, primarily due to insufficient formal financial reporting policies and procedures resulting
in material post-close adjustments.
Policies and procedures should be implemented
to ensure that any significant events requiring disclosure are identified, accounted for, disclosed and reviewed by the management.
Changes in Internal Control over Financial
Reporting
There have been no material changes in our internal
controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fourth quarter of 2025
that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Limitations on the Effectiveness of Controls
Due to 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.
Item 9B. Other Information
For the quarter ended December 31, 2025, there
was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
During the quarter ended December 31, 2025,
no director or officer adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,”
as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and
Corporate Governance
The information required by this item regarding
our executive officers will be presented under the caption “Executive Officers” in our Proxy Statement for the 2026 Annual
Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31,
2025 (the 2026 Proxy Statement) and is incorporated herein by reference.
The information required by this item regarding
our compliance with Section 16 of the Exchange Act of 1934, as amended, will be presented under the caption “Security Ownership
of Certain Beneficial Owners and Management - Delinquent Section 16(a) Reports” in our 2026 Proxy Statement and is incorporated
herein by reference.
The information required by this item regarding
our audit committee will be presented under the caption “Corporate Governance - Board Committee - Audit Committee” in our
2026 Proxy Statement and is incorporated herein by reference.
We have adopted a written code of business ethics and conduct, known
as the “Code of Business Conduct,” which applies to all our directors, officers, and employees, including our Chief Executive
Officer and Chief Financial Officer. The full text is available on our website. The information required by this item regarding
our code of ethics will be presented under the caption “Corporate Governance - Code of Business Conduct” in our 2026 Proxy
Statement and is incorporated herein by reference. There is no material change.
The information required by this item regarding
our insider trading policy will be presented under the caption “Insider Trading Policy” in our 2026 Proxy Statement and is
incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item regarding
executive compensation will be presented under the caption “Executive Compensation” in our 2026 Proxy Statement and is incorporated
herein by reference.
The information required by this item regarding
director compensation will be presented under the caption “Corporate Governance - Director Compensation” in our 2026 Proxy
Statement and is incorporated herein by reference.
The information required by this item regarding
our compensation committee will be presented under the caption “Corporate Governance - Compensation Committee Interlocks and Insider
Participation” in our 2026 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
The information required by this item regarding
security ownership and certain beneficial owners and management will be presented under the caption “Security Ownership of Certain
Beneficial Owners and Management” in our 2026 Proxy Statement and is incorporated herein by reference.
Equity Compensation Plan
The following table provides information, as of
December 31, 2025, with respect to shares of our common stock that may be issued, subject to certain vesting requirements, under existing
or future awards under our 2025 Equity Incentive Plan (“2025 Plan”). The 2025 Plan was approved by our Board of Directors
and ratified by our shareholders at our 2025 Annual Shareholder Meeting.
A B C
Equity compensation plans not approved by security holders – – –
Item 13. Certain Relationships and Related
Transactions, and Director Independence
The information required by this item regarding
certain relationships and related persons transactions will be presented under the caption “Certain Relationships and Related Persons
Transactions” in our 2026 Proxy Statement and is incorporated herein by reference.
The information required by this item regarding
director independence will be presented under the caption “Corporate Governance - Independent Directors” in our 2026 Proxy
Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this item regarding
aggregate fees billed to us by our independent registered public accounting firm’s fees will be presented in our 2026 Proxy Statement
and is incorporated herein by reference.
The information required by this item regarding
our audit committee’s pre-approval policies and procedures will be presented in our 2026 Proxy Statement and is incorporated herein
by reference.
____________________
7 The weighted-average exercise price
does not take into account restricted stock units, which do not have an exercise price.
PART IV
Item 15. Exhibits and Financial Statements
Schedules
(a) The following
documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:
(b) Exhibits.
See Item 15(a)(3) above.
(c) Financial
Statement Schedules. See Item 15(a)(2) above.
Item 16. Form 10-K Summary
Not applicable.
APPTECH PAYMENTS CORP. CONSOLIDATED FINANCIAL
STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Pages
Report of Independent Registered Public Accounting Firm (PCAOB ID 3501) 23
Consolidated Balance Sheets 25
Consolidated Statements of Operations 26
Consolidated Statements of Stockholders’ Equity 27
Consolidated Statements of Cash Flows 28
Notes to the Consolidated Financial Statements 29
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and
Stockholders of AppTech Payments Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated
balance sheets of AppTech Payments Corp. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements
of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as
the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of their operations and their cash flows
for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has suffered recurring losses from operations and cash used in operations. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in
Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Critical Audit Matter
The critical audit matter communicated below is
a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated
to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing separate opinion on the critical audit matter, or on the accounts or disclosures to which they relate.
Business Combination
As described in Note 1, the Company completed
the acquisition of Infinitus Pay, Inc. for consideration transferred which included cash, equity, and contingent consideration. The acquisition
resulted in the recognition of goodwill and identifiable intangible assets. The Company engaged a third-party valuation specialist to
assist in valuing the identifiable intangible assets as well as the contingent consideration.
How the Critical Audit Matter was Addressed
in the Audit
Auditing the Company’s accounting for the
acquisition required significant auditor judgment due to the complexity of estimating the fair value of the acquired intangible assets
and contingent consideration. These estimates involved significant assumptions and judgements with respect to forecasted revenue growth
rates, profit margins, royalty rates, and discount rates.
Our audit procedures related to the Company’s
valuation of identifiable intangible assets and the contingent consideration for the businesses combination included the following, among
others:
We gained an understanding of the methods
used by management to account for the business combination, including the use of a third-party valuation specialist. We evaluated
the purchase price allocation performed by the third-party valuation specialist engaged by management. Our procedures included
evaluating the professional qualifications and objectivity of the specialist, assessing the appropriateness of the valuation
methodologies used, and testing the completeness and accuracy of the underlying data provided to the specialist. We evaluated the
reasonableness of key assumptions, including forecasted revenue growth rates, profit margins, royalty rates, and
discount rates by comparing them to relevant industry benchmarks, market data, and the Company's historical performance.
Additionally, we assessed the consistency of these assumptions with the Company's strategic plans and other information obtained
during our audit as well as for indications of management bias.
/s/ dbbmckennon
We have served as the Company’s auditor since 2014
San Diego, California
APPTECH PAYMENTS CORP.
CONSOLIDATED BALANCE SHEETS