APCX.OQBApptech Payments CORP
10-Q/A: AppTech Payments Corp. Reports Q3 2024 Results, Amends Filing for Clarity
Sentiment:
Quarterly Report
AppTech Payments Corp. has filed an amended 10-Q report for Q3 2024 to clarify stock issuance pricing following investor questions, while reporting a net loss and decreased revenue compared to the same period last year.
Capital raiseThe company is actively pursuing additional funding options.The company completed a private placement offering of a 6% convertible debenture for $1.1 million and warrants to purchase 750,000 shares of common stock.The company entered into a warrant inducement agreement with Armistice Capital Master Fund Ltd. resulting in the exercise of warrants for $1.167 million and the issuance of new warrants.The company received $600 thousand from a potential investor in October and is working to finalize the terms of the investment.
Worse than expectedThe company's revenue decreased significantly compared to the same period last year.The company reported a net loss for the quarter and nine-month period.The company's cash position is very low, and it has a working capital deficit.
Summary
- AppTech Payments Corp. filed an amended 10-Q report for the quarter ended September 30, 2024, to provide clarification on stock issuances after receiving investor inquiries.
- The company experienced a net loss of $2.025 million for the three months ended September 30, 2024, compared to a net loss of $2.891 million for the same period in 2023.
- Revenue decreased to $43 thousand for the three months ended September 30, 2024, from $140 thousand in the same period of 2023.
- For the nine months ended September 30, 2024, the net loss was $7.984 million, compared to $15.125 million for the same period in 2023.
- Revenue for the nine months ended September 30, 2024, was $224 thousand, down from $363 thousand in the same period of 2023.
- The company's cash and cash equivalents stood at $104 thousand as of September 30, 2024.
- The company has a working capital deficit of $4.8 million and total stockholders' equity of $1.4 million as of September 30, 2024.
- The company is actively pursuing additional funding options and expects to generate revenue in the next twelve months.
- The company has taken cost-cutting measures to reduce expenses.
Sentiment
Score: 3
Explanation: The document reveals significant financial challenges, including declining revenue, net losses, low cash reserves, and a working capital deficit. The company is also facing potential delisting from Nasdaq. While management is pursuing funding and expects revenue generation, the overall outlook is concerning, indicating a negative sentiment.
Positives
- The company is actively pursuing additional funding options.
- The company expects to begin generating revenue in the next twelve months.
- The company has taken cost-cutting measures to reduce expenses.
- The company successfully completed a private placement offering of a convertible debenture and warrants.
- The company entered into a warrant inducement agreement that generated $1.167 million in proceeds.
- The company has a flexible architecture and can be fully white labeled to allow for rich, personalized payment and banking experiences.
Negatives
- The company experienced a significant decrease in revenue for both the three and nine months ended September 30, 2024, compared to 2023.
- The company reported a net loss for both the three and nine months ended September 30, 2024.
- The company has a working capital deficit of $4.8 million as of September 30, 2024.
- The company's cash and cash equivalents are very low at $104 thousand as of September 30, 2024.
- The company is facing potential delisting from Nasdaq due to non-compliance with minimum bid price and stockholders' equity requirements.
- The company has experienced recurring operating losses, primarily due to limited revenues, raising substantial doubt about its ability to continue as a going concern.
Risks
- The company's ability to continue as a going concern is in doubt due to recurring operating losses and limited revenues.
- The company is facing potential delisting from Nasdaq due to non-compliance with minimum bid price and stockholders' equity requirements.
- The company is dependent on a small number of customers for a significant portion of its revenue.
- The company is subject to risks associated with the boarding of clients onto its platform.
- The company is subject to risks associated with substantial investment and costs associated with new potential revenue streams and their corresponding contractual obligations.
- The company is subject to risks associated with a slowdown or reduction in sales due to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances.
- The company is subject to risks associated with adverse macroeconomic conditions, including inflation, a recession, changes to fiscal and monetary policy, tighter credit, higher interest rates, consumer confidence and spending, and high unemployment.
- The company is dependent on third-parties needed to facilitate its automated clearing house (ACH) and merchant service capabilities.
- The company is subject to risks associated with delays in or failure to obtain regulatory approval for any future products in additional countries.
- The company is subject to risks associated with current and future laws and regulations.
Future Outlook
Management is actively pursuing additional funding options and is confident that it will begin generating revenue during the following twelve months from the issuance date of these financial statements, although no assurances can be made. Management intends to maintain adequate working capital and adhere to prudent financial forecasting.
Management Comments
- Management is actively pursuing additional funding options.
- Management is confident that it will begin generating revenue during the following twelve months.
- Management intends to maintain adequate working capital and adhere to prudent financial forecasting.
Industry Context
The financial services industry is experiencing rapid growth due to technological advancements and the rise of contactless transactions. AppTech is positioning itself to capitalize on this trend with its FinZeo platform, which offers Payments-as-a-Service (PaaS), Banking-as-a-Service (BaaS), and a Commerse Portal.
Comparison to Industry Standards
- The company's revenue of $43 thousand for the quarter is significantly below the average for publicly listed fintech companies, which often report revenues in the millions or tens of millions.
- The net loss of $2.025 million for the quarter is also concerning, as many established fintech companies are either profitable or have a clear path to profitability.
- The company's cash position of $104 thousand is extremely low compared to industry standards, where companies typically maintain a cash runway of several quarters or years.
- The working capital deficit of $4.8 million is a significant red flag, indicating that the company may struggle to meet its short-term obligations.
- The company's reliance on a small number of customers for a large portion of its revenue is a risk factor, as the loss of any of these customers could have a significant impact on its financials.
- The company's potential delisting from Nasdaq is a major concern, as it could negatively impact its ability to raise capital and its overall valuation.
- Compared to companies like Block (formerly Square) or PayPal, which have established market positions and significant revenue streams, AppTech is in a very early stage of development and faces significant challenges in achieving scale and profitability.
- The company's reliance on debt financing and equity offerings to fund its operations is also a concern, as it may not be sustainable in the long term.
Legal Proceedings
- The company is involved in a settlement agreement with Infinios Financial Services, with additional compensation payments due if the settlement is not made within specified time frames.
- The company is facing a lawsuit from three former employees regarding severance claims, with key proceedings scheduled for the first half of 2025.
Related Party Transactions
- PayToMe.co is a related party to AppTech, with senior members of the company sitting on PayToMe.co's board of directors and AppTech's CFO being married to its founder and CEO.
- The company has payables due to a related party of $1.2 million as of September 30, 2024, related to the acquisition of FinZeo.
Stakeholder Impact
- Shareholders are at risk due to the company's financial challenges and potential delisting from Nasdaq.
- Employees may be impacted by cost-cutting measures and the company's uncertain future.
- Customers may be affected by the company's ability to provide services if it faces financial difficulties.
- Suppliers and creditors may be at risk due to the company's low cash reserves and working capital deficit.
Next Steps
- The company will continue to pursue additional funding options.
- The company will work to generate revenue in the next twelve months.
- The company will adhere to prudent financial forecasting.
- The company will appeal the Nasdaq delisting determination.
- The company will finalize the terms of the potential investment received in October.
Key Dates
| Date | Description |
|---|---|
| 2020-12-30 | Date of unsecured note payable with the U.S. Small Business Administration. |
| 2020-12-31 | Date of unsecured note payable with the U.S. Small Business Administration. |
| 2021-01-01 | Start of Infinios Financial Services agreement. |
| 2022-12-31 | End of Infinios Financial Services agreement. |
| 2023-02-01 | Start of Registered Direct Offering. |
| 2023-02-28 | End of Registered Direct Offering. |
| 2023-05-31 | Date of Equity Incentive Plan. |
| 2023-06-01 | Start of Infinios Capitalized Software Development. |
| 2023-06-30 | End of Infinios Capitalized Software Development. |
| 2023-08-01 | Start of ATM Offering. |
| 2023-08-31 | End of ATM Offering. |
| 2023-10-12 | Date of Membership Interest Purchase Agreement with Alliance Partners, LLC. |
| 2023-10-13 | Date of Membership Interest Purchase Agreement with Alliance Partners, LLC. |
| 2023-10-25 | Date of Securities Purchase Agreement. |
| 2023-10-26 | Date of Securities Purchase Agreement and closing of Alliance Partners, LLC acquisition. |
| 2023-10-30 | Date of Securities Purchase Agreement. |
| 2023-10-31 | Date of Securities Purchase Agreement and Lease Agreement. |
| 2024-03-25 | Date of Underwriting Agreement. |
| 2024-03-26 | Date of Underwriting Agreement. |
| 2024-04-03 | Date of grant to Current Employees and Consultants. |
| 2024-04-04 | Date of grant to Current Employees and Consultants. |
| 2024-05-31 | Date of Equity Incentive Plan. |
| 2024-06-09 | Date of unsecured note payable with Black Ice Advisors, LLC. |
| 2024-06-10 | Date of unsecured note payable with Black Ice Advisors, LLC. |
| 2024-06-30 | End of quarter. |
| 2024-07-01 | Start of Equity Plan. |
| 2024-07-03 | Date of grant to Employees and Consultants. |
| 2024-07-09 | Date of Convertible Note. |
| 2024-07-10 | Date of Convertible Note and closing of private placement offering. |
| 2024-08-12 | Repayment of note and accrued interest to Black Ice Advisors, LLC. |
| 2024-08-28 | Date of Warrant Inducement Agreement. |
| 2024-08-29 | Date of Peak One Warrant exercise. |
| 2024-08-30 | Date of Warrant Inducement Agreement. |
| 2024-09-26 | Date of filing. |
| 2024-09-27 | Date of filing. |
| 2024-09-30 | End of quarter. |
| 2024-10-22 | Date of Notice of Conversion from Peak One Opportunity Fund, LP. |
| 2024-11-06 | Nasdaq issued a Staff Determination Letter, notifying the Company that its securities are subject to delisting. |
| 2024-11-12 | The Company formally requested a Hearing to appeal the delisting determination. |
| 2024-11-14 | Date of share count. |
| 2024-11-18 | Date of filing. |
Keywords
Fintech, Payments, Digital Banking, Merchant Services, Software Development, Convertible Debenture, Warrants, Nasdaq, Financial Results, Revenue, Net Loss, Stock Issuance, Capital Raise, Delisting
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