10-Q: AppTech Payments Reports Revenue Surge Amid Nasdaq Delisting

AppTech Payments Corp. saw significant revenue growth in Q2 2025 but faces 'going concern' doubts and was delisted to the OTCQB market.

Summary

• AppTech Payments Corp. reported revenues of $291 thousand for the three months ended June 30, 2025, a 283% increase from $76 thousand in the same period of 2024.
• For the six months ended June 30, 2025, revenues increased by 181% to $508 thousand, up from $181 thousand in the prior year.
• The net loss for the three months ended June 30, 2025, was $(1,860) thousand, an improvement from $(2,922) thousand in Q2 2024.
• The net loss for the six months ended June 30, 2025, was $(4,501) thousand, an improvement from $(5,959) thousand in the first half of 2024.
• The company was delisted from Nasdaq to the OTCQB market on May 20, 2025, due to not meeting the $1.00 minimum bid price requirement.
• Management has identified recurring operating losses and limited revenues as factors raising substantial doubt about the company's ability to continue as a going concern.
• Cash and cash equivalents decreased significantly to $138 thousand as of June 30, 2025, from $868 thousand at December 31, 2024.
• Total stockholders' equity declined to $2,535 thousand as of June 30, 2025, from $5,467 thousand at December 31, 2024.
• The company has a high customer concentration, with 66% of its revenue for the six months ended June 30, 2025, generated from two customers.
• Recent financing activities include collecting $1,350 thousand from an equity receivable and entering into new convertible note agreements totaling $660 thousand in July 2025.

Sentiment

Score: 3

Explanation: While the company shows strong revenue growth and reduced operating losses, these operational improvements are overshadowed by severe liquidity issues, a 'going concern' warning, and the recent delisting from Nasdaq. The reliance on continuous capital raises and high customer concentration present significant risks, indicating a fundamentally unstable financial position despite some positive trends.

Positives

• Revenue for the three months ended June 30, 2025, increased by 283% to $291 thousand compared to $76 thousand in the prior year.
• Revenue for the six months ended June 30, 2025, increased by 181% to $508 thousand compared to $181 thousand in the prior year.
• Net loss for the three months ended June 30, 2025, improved to $(1,860) thousand from $(2,922) thousand in the same period last year.
• Net loss for the six months ended June 30, 2025, improved to $(4,501) thousand from $(5,959) thousand in the same period last year.
• Selling, general and administrative expenses decreased by $1,165 thousand for the three months ended June 30, 2025, and by 35% for the six months ended June 30, 2025, primarily due to lower salaries and professional services.
• Net cash used in operating activities decreased to $(3,080) thousand for the six months ended June 30, 2025, from $(3,901) thousand in the prior year period.
• Management has successfully remedied its equity deficiency, although this was not sufficient to prevent Nasdaq delisting.

Negatives

• The company was delisted from Nasdaq to the OTCQB market on May 20, 2025, due to failure to meet the $1.00 minimum bid price requirement.
• Recurring operating losses and limited revenues raise substantial doubt about the company's ability to continue as a going concern.
• Cash and cash equivalents significantly decreased to $138 thousand as of June 30, 2025, from $868 thousand at December 31, 2024.
• Total stockholders' equity decreased to $2,535 thousand as of June 30, 2025, from $5,467 thousand at December 31, 2024.
• Research and development expenses increased by $277 thousand for the three months ended June 30, 2025, and by $414 thousand for the six months ended June 30, 2025, due to higher third-party development costs.
• A high customer concentration exists, with 66% of revenue for the six months ended June 30, 2025, generated from two customers.
• An outstanding payable of $1,200 thousand related to the Alliance Partners acquisition remains, secured by substantially all the company's assets.
• The company is involved in an ongoing arbitration case with a former law firm for $416 thousand in unpaid invoices.

Risks

• Delays and uncertainty associated with boarding clients to the company's platform.
• Substantial investment and costs associated with new potential revenue streams and their corresponding contractual obligations.
• A slowdown or reduction in sales due to reduced end-user demand, unanticipated competition, regulatory issues, or other unexpected circumstances.
• Uncertainty regarding adverse macroeconomic conditions, including inflation, recession, changes to fiscal and monetary policy, tighter credit, higher interest rates, consumer confidence and spending, and high unemployment.
• Dependence on third-parties needed to facilitate automated clearing house (ACH) and merchant service capabilities.
• Delay in or failure to obtain regulatory approval for any future products in additional countries.
• Impact of current and future laws and regulations on business operations.
• Recurring operating losses and limited revenues raise substantial doubt about the company's ability to continue as a going concern.
• The loss of a top customer would have a significant impact on the company's financials due to high customer concentration.

Future Outlook

Management intends to pursue an uplisting to a national exchange before the end of the fiscal year. The company is confident that two of its revenue streams will begin generating revenue in the following twelve months from the issuance date of these financial statements. Management also plans to maintain adequate working capital and adhere to prudent financial forecasting.

Management Comments

• Management remains committed to enhancing shareholder value and intends to pursue an uplisting to a national exchange before the end of the fiscal year.
• We are confident that two of its revenue streams will begin generating revenue in the following twelve months from the issuance date of these financial statements.
• Management intends to maintain adequate working capital and adhere to prudent financial forecasting.
• Management concluded that the fair value of the goodwill recorded as part of the FinZeo acquisition significantly exceeds its carrying amount, and there is no significant risk of goodwill impairment based on current assumptions and market conditions.

Industry Context

The financial services industry is undergoing rapid transformation driven by technological innovation and an evolving regulatory environment for stablecoins and digital assets. Regulatory clarity and advancements in blockchain infrastructure are enabling more seamless, secure, and transparent user experiences. Consumers expect intuitive access to compliant digital assets, while businesses must adapt to shifting oversight and operational requirements. AppTech aims to thrive in this dynamic landscape by adopting new technologies to engage, communicate, process payments, and manage payouts, believing its technologies will accelerate the adoption of omni-channel payments and digital banking solutions.

Management Changes

Corporate Governance

Legal Proceedings

• The company was sued by three former employees on May 3, 2024, over severance payments. The company filed a cross complaint on February 14, 2025, and settled the lawsuit for $172 thousand in March 2025, with payments made in March and May 2025.
• Moses Singer, LLP, opened an arbitration case against AppTech on March 13, 2025, for unpaid invoices totaling $416 thousand. The company responded on May 1, 2025, and intends to work towards a resolution before the arbitration hearing.

Related Party Transactions

• The licensing arrangement with PayToMe.co, a related party, has not resulted in the issuance of shares related to the 7.5% preferred share equity stake as of the filing date. A former senior member of AppTech sits on PayToMe.co's board, and AppTech's former CFO is married to its founder and CEO.
• The remaining outstanding payable of $1,200 thousand related to the acquisition of Alliance Partners, LLC is due to the seller, an entity owned by the seller of Alliance Partners.

Stakeholder Impact

• Shareholders: Impacted by the Nasdaq delisting to OTCQB, significant decrease in stockholders' equity, and potential dilution from new capital raises and warrant issuances. Positive revenue growth offers a glimmer of future potential.
• Employees: Affected by 'reorganized senior leadership' in late 2024 and employee terminations, but also benefit from stock option grants and the Equity Incentive Plan.
• Customers: The company's focus on enhancing the FinZeo platform and expanding product offerings aims to improve services for existing and prospective clients. High customer concentration indicates reliance on a few key relationships.
• Creditors: The 'going concern' doubt and significant cash burn raise concerns about the company's ability to meet its obligations, although new convertible notes provide some short-term liquidity. The $1,200 thousand payable to the Alliance Partners seller is secured by substantially all company assets.

Next Steps

• Management intends to pursue an uplisting to a national exchange before the end of the fiscal year.
• Management expects two of its revenue streams to begin generating cash in the following twelve months.
• The company intends to work with Moses Singer, LLP to resolve the arbitration case for $416 thousand in unpaid invoices.

Key Dates

Recommendation

While AppTech Payments Corp. demonstrated strong revenue growth and a reduction in net losses, these operational improvements are overshadowed by critical financial challenges. The delisting from Nasdaq to the OTCQB market, the explicit 'going concern' warning, and the significant decline in cash and stockholders' equity indicate severe liquidity and solvency risks. The company's reliance on new capital raises and high customer concentration further amplify its risk profile. A 'hold' recommendation is warranted to observe if management's stated plans for additional funding and revenue generation materialize and if the company can address its fundamental financial instability and pursue an uplisting to a national exchange. The current risk profile is too high for a 'buy', but the operational improvements prevent a 'sell'.

Keywords

Fintech, Payments-as-a-Service, Banking-as-a-Service, Digital Payments, Merchant Services, SEC Filing, 10-Q, Financial Technology, FinZeo, OTCQB, Nasdaq Delisting, Convertible Notes, Capital Raise, Payment Processing