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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ________________________

Commission file number: 000-39158

AppTech Payments Corp.

(Exact Name of Registrant as Specified in its Charter)

Delaware

7389

65-0847995

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

5876 Owens Avenue

Suite 100

Carlsbad, California 92008

(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	OTC Venture Market
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $4.15	APCXW	OTC Venture Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 15, 2026, the registrant had 42,003,934 shares of common stock issued and outstanding.

AppTech Payments Corp.

Form 10-Q

Table of Contents

		Page
	Part I

	Special Note Regarding Forward-Looking Statements and Projections	3
Item 1.	Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	32

	Part II

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
	Signatures	34

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

Various statements in this report of AppTech Payments Corp. are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are subject to risks and uncertainties and are based on information currently available to our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “contemplates,” “predict,” “project,” “target,” “likely,” “potential,” “continue,” “ongoing,” “will,” “would,” “should,” “could,” or the negative of these terms and similar expressions or words, identify forward-looking statements. The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from those projected in our forward-looking statements.

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this report identify important factors which you should consider in evaluating our forward-looking statements. These risks include, but are not limited to, the following:

	·	delays and uncertainty associated with the boarding of clients to our platform;

	·	substantial investment and costs associated with new potential revenue streams and their corresponding contractual obligations;

	·	a slowdown or reduction in our sales due to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances;

	·	uncertainty regarding adverse macroeconomic conditions, including inflation, a recession, changes to fiscal and monetary policy, tighter credit, higher interest rates, consumer confidence and spending, and high unemployment;

	·	dependence on third-parties needed to facilitate our automated clearing house (“ACH”) and merchant service capabilities;

	·	delay in or failure to obtain regulatory approval for any future products in additional countries, and;

	·	current and future laws and regulations.

All written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We caution investors not to rely too heavily on the forward-looking statements we make or that are made on our behalf. We undertake no obligation and specifically decline any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please see, however, any further disclosures we make on related subjects in any annual, quarterly or current reports that we may file with the Securities and Exchange Commission (SEC).

We encourage you to read the discussion and analysis of our financial condition and our financial statements contained in this Quarterly Report on Form 10-Q. There can be no assurance that we will in fact achieve the actual results or developments we anticipate or, even if we do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore, we can give no assurances that we will achieve the outcomes stated in those forward-looking statements and estimates.

Unless the context otherwise requires, throughout this Quarterly Report on Form 10-Q, the words “AppTech Payments,” “we,” “us,” the “registrant” or the “Company” refer to AppTech Payments Corp.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

APPTECH PAYMENTS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO UNAUDITED FINANCIAL STATEMENTS

(The financial statements have been condensed for presentation purposes)

	Pages

Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025	5

Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025	6

Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2026 and 2025	7

Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025	8

Notes to the Consolidated Financial Statements	9

APPTECH PAYMENTS CORP.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2026 AND DECEMBER 31, 2025

(UNAUDITED)

(in thousands, except shares and per share data)


	March 31, 2026			December 31, 2025
ASSETS
Current assets
Cash and cash equivalents	$	110		$	244
Accounts receivable		665			350
Prepaid expenses		14			25
Other current assets		250			250
Interest receivable		51			46
Total current assets		1,090			915
Right of use asset		–			18
Security deposit		32			32
Intangible assets, net of accumulated amortization		3,862			4,151
Goodwill		2,956			2,956
Capitalized software development, net of accumulated amortization		1,196			1,321
TOTAL ASSETS	$	9,136		$	9,393
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	2,752		$	2,566
Accrued liabilities		1,310			1,321
Notes payable		250			250
Notes payable – related party		1,000			1,000
Convertible notes payable, net of discount of $38 and $66, respectively		524			717
Deferred revenue		20			5
Contingent consideration		826			564
Right of use liability		–			18
Total current liabilities		6,682			6,441
Long-term liabilities
Notes payable – related party, net of current portion		2,098			1,000
Notes payable, net of current portion		59			59
Total long-term liabilities		2,157			1,059
TOTAL LIABILITIES		8,839			7,500
Commitments and contingencies (Note 7)		–			–
Stockholders’ equity
Series A preferred stock; $0.001 par value; 100,000 shares authorized; 14 shares issued and outstanding at March 31, 2026 and December 31, 2025		–			–
Common stock, $0.001 par value; 105,263,158 shares authorized; 42,003,934 and 40,488,934 issued and outstanding at March 31, 2026 and December 31, 2025, respectively		42			40
Additional paid-in capital		180,180			178,470
Accumulated deficit		(179,925	)		(176,617	)
Total stockholders’ equity		297			1,893
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	9,136		$	9,393

See accompanying notes to the consolidated financial statements.

APPTECH PAYMENTS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 and 2025

(UNAUDITED)

(in thousands, except shares and per share data)


	For the Three Months Ended March 31,
	2026			2025
Revenues	$	1,457		$	217
Cost of revenues		646			128
Gross profit		811			89

Operating expenses:
Selling, general and administrative, including stock-based compensation of $1,712 thousand and $836 thousand, for the three months ended March 31, 2026 and 2025, respectively		3,284			1,965
Research and development		375			780
Total operating expenses		3,659			2,745

Loss from operations		(2,848	)		(2,656	)

Other income (expenses)
Interest expense		(196	)		(33	)
Gain on debt extinguishment		29			13
Loss on change in fair value of contingent consideration		(262	)		–
Debt discount amortization		(28	)		–
Other income (expenses)		(3	)		35
Total other income (expenses)		(460	)		15

Loss before provision for income taxes		(3,308	)		(2,641	)
Provision for income taxes		–			–
Net loss	$	(3,308	)	$	(2,641	)
Basic and diluted net loss per common share	$	(0.08	)	$	(0.08	)
Weighted-average number of shares used basic and diluted per share amounts		41,744,934			33,287,045

See accompanying notes to the consolidated financial statements.

APPTECH PAYMENTS CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 and 2025

(UNAUDITED)

(in thousands, except shares and per share data)


	Series A Preferred				Common Stock				Additional Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance December 31, 2024		14	$	–		33,278,934	$	33	$	174,131	$	(168,697	)	$	5,467
Net loss		–		–		–		–		–		(2,641	)		(2,641	)
Stock-based compensation		–		–		10,000		–		836		–			836
Balance March 31, 2025		14	$	–		33,288,934	$	33	$	174,967	$	(171,338	)	$	3,662

	Series A Preferred				Common Stock				Additional Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance December 31, 2025		14	$	–		40,488,934	$	40		$	178 ,470	$	(176,617	)	$	1,893
Net loss		–		–		–		–			–		(3,308	)		(3,308	)
Stock-based compensation		–		–		1,515,000		2			1,710		–			1,712
Balance March 31, 2026		14	$	–		42,003,934	$	42		$	180 ,180	$	(179,925	)	$	297

See accompanying notes to the consolidated financial statements.

APPTECH PAYMENTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 and 2025

(UNAUDITED)

(in thousands, except shares and per share data)


	March 31, 2026			March 31, 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,308	)	$	(2,641	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,712			836
Amortization of intangible assets and software		415			379
Gain on debt extinguishment		(29	)		(13	)
Loss on change in fair value of contingent consideration		262			–
Amortization of debt discount		28			–
Changes in operating assets and liabilities:
Accounts receivable		(315	)		(45	)
Prepaid expenses		11			(76	)
Interest receivable		(5	)		–
Accounts payable		217			(48	)
Accrued liabilities		85			(192	)
Deferred revenue		14			–
Right of use asset and liability, net		–			(1	)
Net cash used in operating activities		(913	)		(1,801	)

CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities		–			–

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity receivable		–			1,350
Proceeds from notes payable – related party		1,000			–
Repayment of convertible notes payable		(221	)		–
Net cash provided by financing activities		779			1,350

Changes in cash and cash equivalents		(134	)		(451	)
Cash and cash equivalents, beginning of period		244			868
Cash and cash equivalents, end of period	$	110		$	417

Supplemental disclosures of cash flows information:
Cash paid for interest	$	98		$	34
Cash paid for income taxes	$	–		$	–

See accompanying notes to the consolidated financial statements.

APPTECH PAYMENTS CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

AppTech Payments Corp. (“AppTech” or the “Company”), a Delaware corporation, is a Fintech Company headquartered in Carlsbad, California. AppTech utilizes innovative payment processing and digital banking technologies to complement its core merchant services capabilities. The Company’s proprietary software will provide progressive and adaptable products that are available through a suite of synergistic offerings directly to merchants, banking institutions, and business enterprises.

AppTech has a highly secure digital payments platform that we acquired and are further developing digital banking products to power commerce experiences for clients and their customers. Based upon industry standards for payment and banking protocols, we will offer standalone products and fully integrated solutions that deliver innovative, unparalleled payments, banking, and financial services experiences. Our processing technologies can be taken off-the-shelf or tapped into via our RESTful APIs to build fully branded and customizable experiences while supporting tokenized, multi-channel, and multi-method transactions.

AppTech trades under the symbol “APCX” and its warrants trade under the symbol “APCXW”.

Purchase of Infinitus Pay, Inc.

On October 31, 2025 (the “Acquisition Date”), the Company acquired 100% of the outstanding equity interests of Infinitus Pay Inc. (“IP”), a provider of payment platform solutions, pursuant to a Stock Purchase and Share Exchange Agreement dated October 30, 2025. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The acquisition enhances the Company’s Banking-as-a-Service (BaaS) and digital commerce offerings by integrating IP’s technology platform and customer relationships.

Total consideration transferred was $3,555 thousand, consisting of $2,000 thousand in cash, $800 thousand in common stock (valued at the closing market price on the acquisition date), $365 thousand in equity-classified warrants (recorded in additional paid-in capital at fair value using an option pricing model), and $390 thousand related to contingent consideration.

The purchase price was allocated to the identifiable assets acquired and liabilities assumed based on estimated fair values at the acquisition date. Identifiable intangible assets totaled $1,760 thousand, resulting in goodwill of $1,795 thousand. Net acquired assets totaled $3,504 thousand, including $1,387 thousand related to software, which is being amortized on a straight-line basis over five years.

Liquidity and 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.

In late 2024, we reorganized senior leadership and initiated actions to reduce indebtedness to improve the current financial condition. In addition, we are actively pursuing additional funding options and are confident that our revenue streams will begin generating cash, although no assurances can be made.

Management continues to maintain adequate working capital and adhere to prudent financial forecasting.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended March 31, 2026 and March 31, 2025. Although management believes that the disclosures in these unaudited financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in unaudited condensed consolidated financial statements that have been prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes related thereto and included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 31, 2026. The interim results for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ended December 31, 2026 or for any future interim periods.

Basis of Consolidation

The consolidated unaudited financial statements include the accounts of AppTech, and wholly owned subsidiaries of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Concentration of Credit Risk

Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000 per institution that pays Federal Deposit Insurance Corporation (“FDIC”) insurance premiums. The Company has never experienced any losses related to these balances.

As of March 31, 2026, 36% of the accounts receivable balance was generated from two customers. As of December 31, 2025, one customer accounted for 16% of the accounts receivable balance.

For the three months ended March 31, 2026, 28% of the Company’s revenue was generated from two customers. For the three months ended March 31, 2025, the top two customers represented 74% of total revenues.

Cash and Cash Equivalents

The Company's cash consists of cash on deposit at its bank. Cash equivalents, if applicable, represents highly liquid investments with maturities of three months or less at the date of purchase. Management determines the appropriate classification.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount and presented net of an allowance for credit losses, when applicable. The Company estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical loss experience is generally the starting point for estimating expected credit losses, which is then adjusted for current conditions and reasonable and supportable forecasts of future economic conditions, as applicable. The Company regularly monitors receivables for collectability and updates its estimate of expected credit losses at each reporting date.

Historically, the Company has not experienced significant credit losses on its accounts receivable and, as a result, maintains an allowance for credit losses of $0 as of March 31, 2026 and December 31, 2025, respectively. The Company has not written off any material accounts receivable balances in the periods presented.

Loan Receivables and Interest Income

Loan receivable represents amounts due to the Company under contractual lending arrangements. Loans are recorded at their outstanding principal balance, net of any allowance for expected credit losses, when applicable. The Company evaluates loan receivables for collectability on a regular basis and considers relevant factors such as payment history, financial condition of the borrower, and current economic conditions.

Interest income is recognized over the term of the loan using the effective interest method, based on the principal amount outstanding. Accrual of interest is discontinued when, in management’s opinion, the collectability of principal or interest becomes uncertain. Payments received on nonaccrual loans are applied to principal unless otherwise determined by management.

Convertible Notes

Convertible notes represent debt instruments that may be converted into the Company’s equity securities upon the occurrence of certain events or at the option of the holder, in accordance with the terms of the agreement. Convertible notes are recorded at their principal amount, net of any unamortized debt discount and issuance costs.

The Company evaluates the terms of each convertible note to determine whether any embedded features, including conversion options, should be accounted for separately or as a component of the note. Debt discounts, including those arising from embedded derivative liabilities or other embedded elements, are amortized to interest expense over the term of the notes using the effective interest method.

Upon conversion, the carrying value of the convertible note, including any unamortized discount, is reclassified to equity.

Revenue Recognition

The Company accounts for revenue under Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.

Setup 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 are based upon a percentage of the amounts processed by these merchant accounts.

Intangible Assets and Intellectual Property

Intellectual Property

The Company amortizes intellectual property based on the estimated period over which the economic benefits of the intangible assets are expected to be consumed. Typically, the Company amortizes its intellectual property, including patents and other identifiable intangible assets, on a straight-line basis. The amortization periods generally range from three years to fifteen years, depending on the nature of the asset and its expected useful life.

Capitalized Software Development Cost

The Company capitalizes certain costs related to the development of its digital payment and banking platform, including employee compensation and consulting fees for third-party developers, only when it is probable that the development will result in new or additional functionality. Costs incurred during the preliminary project planning phase and post-implementation phase are expensed as incurred. The capitalized software development costs are amortized on a straight-line basis over the estimated useful life of the asset.

Goodwill

The Company accounts for goodwill in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”). ASC 350 requires that goodwill and other intangibles with indefinite lives should be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. Goodwill represents the excess of the purchase price over the estimated fair values of the net tangible and intangible assets of acquired entities. The Company performs a goodwill impairment test annually and more frequently if an event or circumstance indicates that impairment may have occurred. Triggering events that may indicate a potential impairment include, but are not limited to, significant adverse changes in customer demand or business climate and related competitive considerations. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a goodwill impairment test to calculate the fair value of the applicable reporting unit(s) and compares it to its carrying amount. We recognize an impairment on any amount of the carrying value over the fair value. If the Company determines that the implied fair value of a reporting unit is greater than its carrying amount, the goodwill impairment test is not required. Management performed the analysis and no impairment was deemed necessary.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the estimated fair value of the asset or asset group. Long-lived assets to be disposed of by sale are reported at the lower of their carrying amounts or their estimated fair values less costs to sell and are not depreciated. During the first quarter ended March 31, 2026 and March 31, 2025, there was $0 in asset impairments.

Research and Development

Research and Development (R&D) expenses include internal and outsourced service costs incurred to maintain the FinZeo and Infintus Pay, Inc platforms. Per ASC 730, R&D costs are expensed as incurred. Total R&D expenses for the three months ended March 31, 2026 and 2025 were approximately $375 and $780 thousand, respectively.

Per Share Information

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year, increased by the potentially dilutive common shares that were outstanding during the year. Dilutive securities include stock options, warrants granted, and convertible preferred stock.

The number of common stock equivalents not included in diluted income per share was 35,735,129 and 25,577,892 for the three months ended March 31, 2026 and 2025, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share because the effects are anti-dilutive.


	March 31, 2026		March 31, 2025
Series A preferred stock		1,148		1,148
Warrants		28,781,627		19,281,627
Options		6,952,354		6,295,117
Total		35,735,129		25,577,892

Stock Based Compensation

Stock options are valued using the estimated grant-date fair value method of accounting in accordance with ASC Topic 718, Compensation – Stock Compensation. Fair value is determined based on the Black-Scholes Model using inputs reflecting our estimates of expected volatility, term and future dividends. We recognize forfeitures as they occur. The Company has several consulting agreements that have share-based payment awards based on performance. These agreements typically require the Company to issue common stock to the consultants on a monthly basis. The Company records the fair market value of the common stock issuable at each month end when the performance is complete based upon the closing market price of the Company’s common stock.

Segment Reporting

In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision makers (“CODMs”) in deciding how to allocate resources and assess performance.

The CODMs have been identified as the Chief Executive Officer and Chief Financial Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment.

The key measures of segment profit or loss reviewed by our CODMs are revenue and operating expenses. Revenue is monitored by the CODMs to understand the performance of its verticals. Operating expenses are reviewed and monitored by the CODMs to manage and forecast cash. The CODMs also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and internal budgets.

Fair Value Measurements

The Company measures certain assets and liabilities at fair value in accordance with applicable accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company categorizes fair value measurements within a three-level hierarchy based on the nature of the inputs used in the valuation, as follows:

	·	Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
	·	Level 2 — Inputs are observable for the asset or liability, either directly or indirectly, but do not include quoted prices for identical instruments in active markets. These inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, and other observable inputs such as interest rates and yield curves.
	·	Level 3 — Inputs are unobservable and reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available in the circumstances.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of the asset or liability within the fair value hierarchy.

The Company recorded a contingent consideration of up to $1,000 thousand payable in cash upon achievement of specified performance targets. It was initially measured at fair value using a Monte Carlo simulation and is recorded as a liability, subject to remeasurement at each reporting date with changes recognized in earnings.

This contingent consideration liability is classified as a Level 3 fair value measurement; it is remeasured at each reporting date with changes in fair value recognized in earnings. The following table presents a rollforward of the liability for the period:


$ in thousands
Balance at December 31, 2025	$	564
Loss on change in fair value of contingent consideration		262
Total contingent liability	$	826

New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issues Accounting Standards Updates (“ASUs”) to amend the authoritative accounting guidance in the Accounting Standards Codification (“ASC”).

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures. This ASU provides guidance to public companies regarding footnote disclosures of natural expense components (such as employee compensation, depreciation, and amortization) included within each relevant income statement expense caption. The guidance is effective for public companies for fiscal years beginning after December 15, 2026. The Company is currently assessing the impact of the new guidance on its financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (the “internal-use software update”). This ASU modernizes the accounting for internal-use software costs to better reflect agile development methods. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. Per the guidance, the effective date of the ASU is for annual reporting periods after December 15, 2027.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU clarifies the applicability of interim reporting guidance and reorganizes certain interim disclosure requirements within ASC 270 to improve consistency and usability. The guidance also introduces a disclosure principle requiring entities to disclose material events and changes occurring after the most recent annual reporting period. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. Per the guidance, the effective date of the ASU is for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

Except as noted above, the Company believes that recent ASUs issued by the FASB either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company, or (iv) are not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.

NOTE 3 – OTHER CURRENT ASSETS

On April 11, 2025, the Company entered a three-party agreement with one of its banking partners and software providers. Under the terms of the arrangement, AppTech agreed to pay a $103 thousand licensing fee to the software provider. In addition, the banking partner held a $250 thousand note receivable bearing 8% interest with the software provider, while the software provider held an offsetting liability to the banking partner. As part of this arrangement, AppTech assumed the note receivable and offsetting note payable to the software provider and banking partner, respectively. AppTech further paid the accumulated interest to the bank and established an interest receivable from the software provider. The note receivable matures on June 2026, and may be converted early if a financing event occurs. As of March 31, 2026, the accrued interest on the note receivable was $51 thousand.

NOTE 4 – INTANGIBLE ASSETS

Intellectual Property

As part of the Infintitus Pay, Inc transaction, the Company acquired intangible assets valued at $3,504 thousand, which includes $1,795 thousand of goodwill. $322 thousand in trademarks will not be depreciated, however, the remaining $1,387 thousand in acquired technology will be amortized on a straight-line basis over 60 months.

As of March 31, 2026 and December 31, 2025, the gross value of acquired technology is $6,108 thousand and accumulated amortization is approximately $2,246 thousand and $1,957 thousand, respectively.


Intellectual Property	March 31, 2026			December 31, 2025
Beginning balance	$	4,151		$	3,410
Acquisition of intangible assets		–			1,709
Amortization expenses		(289	)		(968	)
Ending balance	$	3,862		$	4,151

Capitalized Development Cost

The Company capitalizes certain costs related to the development of its digital payment and banking platform.

As of March 31, 2026, and December 31, 2025, the gross value of capitalized development cost is $2,647 thousand and accumulated amortization is approximately $1,451 thousand and $1,326 thousand, respectively.


Capitalized Development Cost	March 31, 2026			December 31, 2025
Beginning balance	$	1,321		$	1,823
Additions		–			–
Amortization expenses		(125	)		(502	)
Ending balance	$	1,196		$	1,321

Goodwill

On October 31, 2025, the Company completed the acquisition of Infinitus Pay, Inc. The difference between the fair value of the purchase price and the net assets acquired is recorded as goodwill. As of March 31, 2026 and December 31, 2025, the goodwill was approximately $2,956 thousand.

NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2026 and December 31, 2025 are as follows:

Schedule of accrued liabilities
	March 31, 2026		December 31, 2025
Payables due to seller for acquisition	$	1,200	$	1,200
Accrued payroll		69		64
Other		41		57
Total accrued liabilities	$	1,310	$	1,321

In connection with the original Purchase of Alliance Partners, $1,200 thousand remained outstanding as of March 31, 2026 and December 31, 2025. The payable amount is secured by substantially all the Company's assets.

NOTE 6 – NOTES PAYABLE

The Company has a 30-year unsecured note payable with the U.S. Small Business Administration. The note payable incurred a $100 fee upon issuance and incurs interest at 3.75% per annum. Payments totaling $4 thousand are due each year through the maturity date of July 1, 2050.

As of March 31, 2026 and December 31, 2025, the balance of the note payable was $59 thousand and $59 thousand, respectively.

Convertible Notes

In fiscal year 2025, the Company entered into multiple unsecured convertible note agreements with third-party lenders, with principal amounts ranging from approximately $300 thousand to $360 thousand, bearing stated interest rates of 10%, and original issue discounts ranging from $50 thousand to $60 thousand. The notes have terms of six to twelve months, with maturities between December 2025 and August 2026. As of March 31, 2026, one note was paid off and two others remained outstanding.

Each note may be converted into shares of the Company’s common stock at a fixed conversion price of $2.00 per share, subject to adjustment in the event of default, at which point the conversion price may be reduced to the lower of $2.00 and 80% of the volume-weighted average price (VWAP) of the Company’s common stock for a specified period preceding conversion. Certain notes include provisions for fixed monthly payments beginning after a defined period, and others permit early conversion at the lender’s discretion.

As of March 31, 2026 and December 31, 2025, the aggregate principal balance of these notes was approximately $562 thousand and $783 thousand, respectively, and accrued interest totaled approximately $31 thousand for both periods.

Related Party Liabilities

On October 21, 2025, the Company entered into a revenue participation agreement with a related party for an initial $1,500 thousand investment, which increased to $2,000 thousand in February 2026. The holder is entitled to 1.75% of gross contract revenue (subject to increase up to 10%) and minimum monthly payments ranging from $4 thousand to $73 thousand through December 31, 2029, based on the greater of the revenue share or contractual minimums. The obligation is secured by a pledge of 10% of intellectual property-related revenues and 10% of the issued and outstanding equity of Infinitus Pay, Inc. The Company is required to repay the investment over the final 18 months of the term. The agreement includes (i) a participant put option, exercisable beginning December 31, 2027, requiring repayment at an amount that provides a 20% internal rate of return, and (ii) a Company call option permitting early termination subject to payment of a premium designed to provide a 28% internal rate of return. As of March 31, 2026, the balance of the participation liability was $2,000 thousand and interest paid during the three months ended March 31, 2026 was $17 thousand.

On October 29, 2025, we secured a $1,000 thousand loan with an interest rate of 24% with a current investor and board member. The note is interest-only through March 2026, and thereafter will be paid in full with ten equal payments of principal and interest ending on December 2026. The note is secured by our accounts receivable and 10% of the Infinitus Pay, Inc stock. As of March 31, 2026, interest of $80 thousand had been paid.

See Note 9 – Subsequent Events for an update on the loan.

The current CEO is owed approximately $50 thousand related to expense reimbursements. The payable is recorded in accounts payable. The full amount is still outstanding.

NOTE 7 – RIGHT OF USE ASSET

Lease Agreement

In January 2020, the Company entered into a lease agreement commencing February 8, 2020 for its corporate office in Carlsbad, California, which was set to expire in 2025. In December 2024, the Company extended its lease for fourteen months through March 2026, with an option to extend for an additional 14 months. The Company is currently paying rent on a month-to-month basis. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an incremental borrowing rate of 8.5% within the calculation.

The rent expense was $18 thousand and $21 thousand for the three months ended March 31, 2026 and 2025, respectively.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company may be involved in various claims and legal actions arising in the ordinary course of business. The Company establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.

Lawsuit with Former Lawyers

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 by June 2026. Invoices for fees and costs to date are reflected in accounts payable.

Finzeo Seller Suit

On October 30, 2025, AppTech Payments Corp. filed a lawsuit in the United States District Court, Southern District of California, against the former owner of Finzeo (“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 re AppTech’s Motion for Temporary Restraining Order and Order, which enjoins Seller, and those acting in concert with him, from (1) disabling the FinZeo URL, (2) foreclosing upon a security agreement, and (3) disclosing AppTech’s proprietary and confidential information, among other relief, until the order is amended or superseded by Court order. Seller has been given leave to file a Counterclaim against AppTech, its Board of Directors, and two AppTech employees, which must be filed by June 1, 2026. Seller’s proposed Counterclaim includes claims based on alleged outstanding payments due to him as part of the acquisition, as well as other related claims.

As of May 6, 2026, Seller represents himself, in pro per. The case is currently in the discovery stage with fact discovery closing in July 2026, expert discovery closing in October 2026, and the final pretrial conference scheduled for March 18, 2027.

NOTE 9 – STOCKHOLDERS’ EQUITY

Series A Preferred Stock

The Company is authorized to issue 100,000 shares of $0.001 par value Series A preferred stock (“Series A”). There were fourteen (14) shares of Series A preferred stock outstanding as of March 31, 2026 and December 31, 2025. Series A stockholders have one vote per share on an “as converted” basis for all matters submitted to a stockholder vote, without the right to cumulative voting in director elections. They are entitled to dividends, if declared by the Company’s board of directors (the “Board of Directors”) from legally available funds, distributed pro rata based on their Series A holdings on an as-converted basis. In the event of liquidation or dissolution, Series A stockholders share ratably in any remaining assets after liabilities are paid, with no liquidation preferences. Each Series A share is convertible into 82 shares of common stock at the stockholder’s discretion.

Common Stock

As of March 31, 2026 and December 31, 2025, the Company was authorized to issue 105,263,158 shares of common stock with a par value of $0.001 per share. The number of shares outstanding was 42,003,934 as of March 31, 2026 and 40,488,934 as of December 31, 2025. Common stockholders are entitled to one vote per share on all matters submitted to a stockholder vote, without the right to cumulative voting in director elections. They are eligible for dividends, if declared by the Board of Directors from legally available funds, subject to the prior rights of any outstanding preferred stock and any contractual restrictions on dividend payments. In the event of liquidation or dissolution, common stockholders share ratably in any assets remaining after payment of liabilities and satisfaction of liquidation preferences of any outstanding preferred stock. Common stock carries no preemptive or subscription rights and is not convertible into other securities.

Stock Issued to Management

On January 16, 2026, the Board approved 1,500,000 fully vested restricted shares to certain executives with a lock up period that extends until December 31, 2027. The stock price on the date of issuance was $0.34 per share. During the three months ended March 31, 2026, the Company recorded an expense of $503 thousand related to the issuance.

Stock Issued to a Consultant

On February 23, 2026, the Company issued a former consultant 15,000 shares of restricted stock related to a previous arrangement. The stock price on the date of issuance was $0.35 per share and the Company recorded an expense of $5 thousand related to the issuance.

Stock Options

The Company grants stock options as part of employee compensation and recognizes these options’ expense over the vesting period. If an employee does not meet certain conditions such as sales targets or leaves the Company before the options vest, these options are forfeited as they occur.

On December 7, 2021, the Board of Directors authorized the Company’s Equity Incentive Plan in order to facilitate the grant of equity incentives to employees (including our named executive officers), directors, independent contractors, merchants, referral partners, channel partners and employees of the Company’s to enable the Company to attract, retain and motivate employees, directors, merchants, referral partners and channel partners, which is essential to its long-term success. As of the date of this report, the stockholders have not voted on approving additional shares for the Company’s Equity Incentive Plan. A total of 4,982,474 shares of common stock have been authorized under the Company’s Equity Incentive Plan, for which as of March 31, 2026, a total of 2,788,009 are available for issuance.

On January 16, 2026, the Board ratified the acceleration of previously granted stock options for certain executive officers effective. As part of the resolution, 937,500 non-plan options, with a ten-year expiration term, a fair value on the grant date of $0.86, and an exercise price of $0.97 per share vested. The Company recorded an expense of $844 thousand.

During the three months ended March 31, 2026, the Company granted 1,550,000 options to purchase common stock. The grants included:

700,000 options were awarded to the current board of directors. The fair value of these options, which are non-plan with a five-year expiration term, total $215 thousand. These options have an exercise price of $0.34 per share and a weighted average fair value of $0.31 per share on the issuance date. They are fully vested.

2)	On January 16, 2026, the Company granted 850,000 options to certain members of the management team with an exercise price of $0.34, a five-year expiration term, and a fair value on the grant date ranging from $0.26 to $0.31. The Company recognized $145 thousand related to this grant. Half of the options are fully vested upon the grant date and the others vest on December 31, 2027.

The following table summarizes option activity:

Schedule of option activity
	Number of shares		Weighted Average exercise price		Weighted Average remaining years
Outstanding December 31, 2025		5,402,354	$	0.83		7.25
Issued		1,550,000		0.34		–
Cancelled		–		–		–
Outstanding as of March 31, 2026		6,952,354	$	0.72		6.32
Outstanding as of March 31, 2026, vested		6,039,854	$	0.79		6.75

During the three months ended March 31, 2026, the Company recorded $1,204 thousand in option expenses.

The options vest in equal monthly installments ranging from immediately to 12 months. For the three months ended March 31, 2026, the fair value of the options were valued using a Black-Scholes option pricing model with the following assumptions:

Schedule of fair value assumptions
Market value of common stock on issuance date		$0.34 - $1.01
Exercise price		$0.34 - $3.00
Expected volatility		138% - 151%
Expected term (in years)		5.0
Risk-free interest rate		3.99%
Expected dividend yields		–

Expected Volatility – The Company now has sufficient operating history and company-specific historical data to determine its expected volatility assumption directly from its own traded stock price. Rather than examining the historical volatilities of a group of industry peers, the Company calculates its volatility based on the fluctuations in its own share prices, which are publicly available. The Company expects to continue using this approach going forward, relying on its own historical stock price data to assess volatility.

Expected Term – The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. Given the limited historical exercise data of the Company’s stock options, the Company uses the simplified method for estimating the expected term, which calculates the expected term as the average time-to-vesting and the contractual life of the options for stock options issued to participants.

Risk-Free Interest Rate – The risk-free rate assumption is based on U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

Expected Dividend – The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid any dividends to date and does not intend to pay dividends.

Forfeitures are recognized as they occur. Plan related forfeitures are added back to the equity incentive plan.

Warrants

As of March 31, 2026, the Company has 28,781,627 warrants outstanding. The following table summarizes warrant activity:

Number of

Warrants

Weighted
Average
exercise price

Weighted
Average
remaining years

Outstanding December 31, 2025

28,781,627

1.72

3.86

Cancelled

–

Issued

–

Outstanding as of March 31, 2026

28,781,627

1.72

3.61

NOTE 10 – SUBSEQUENT EVENTS

On April 3, 2026, AppTech Payments Corp. issued an aggregate of $1,000 thousand principal amount of 18% convertible promissory notes to two lenders in a private placement. The notes were issued at a discount for aggregate proceeds of $950 thousand and mature fourteen months from issuance, with amortization payments beginning May 2026.

The notes are convertible into shares of the Company’s common stock at a fixed conversion price of $2.00 per share, subject to customary adjustments and a beneficial ownership limitation. In connection with the financing, the Company issued warrants to purchase an aggregate of 1,000,000 shares of common stock at an exercise price of $1.00 per share, with a five-year term , subject to adjustment provisions for the exercise price.

The Company’s wholly owned subsidiary, Infinitus Pay, Inc., guaranteed the obligations under the notes and pledged certain assets as collateral.

In April 2026, the Company amended its promissory note agreement with Starfish Foundation. Under the amended terms, the Company will make interest-only payments of $20 thousand per month from December 2025 through March 2026, followed by monthly payments beginning April 2026 that include $50 thousand of principal plus declining interest through November 2027, at which time the note is expected to be fully repaid.

In May 2026, the Company received notice from a commercial banking partner of their intent to discontinue providing certain services to one of the Company’s revenue streams and to enable an orderly transition. Management is evaluating the potential impact of this development and is unable to determine whether the matter is material to its operations and financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included elsewhere in this report. Certain statements contained in this report, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of our company and the products and services we expect to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also forward-looking statements which involve risks, uncertainties, and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, our actual results may differ materially from the results discussed in the forward-looking statements.

Business Overview

AppTech Payments Corp. (“AppTech”) continued executing its financial technology platform strategy during 2026, building on the operational and technology foundation established in 2025. The Company now operates as a fintech infrastructure provider delivering digital banking, embedded finance, and omnichannel payment capabilities to financial institutions, enterprises, and technology partners.

The AppTech Banking Platform, licensed and deployed in 2025, is fully operational with the Company’s partner bank and continues onboarding clients in 2026. The platform supports digital account creation, payment services, compliance workflows, and financial operations through a unified, cloud-native architecture that integrates alongside a bank’s existing core system. Operational alignment with the partner bank has strengthened, improving onboarding efficiency and supporting the Company’s ability to scale additional financial institutions over time.

AppTech also advanced the integration of InfinitusPay (“IP”), acquired in late 2025. IP’s cross-border payments engine, multi-currency capabilities, onboarding, and compliance workflows are now incorporated into the Company’s broader product suite. The IP partner portal continues to support both existing clients and AppTech’s broader channel strategy by providing reporting, analytics, and operational insights to partners.

The Company’s FinZeo Payments-as-a-Service business remains an active contributor to revenue in 2026. AppTech continues to support merchants, ISOs, and technology partners while leveraging the PaaS channel to identify opportunities aligned with its broader digital banking and embedded finance strategy.

AppTech’s 2026 priorities include scaling the Banking Platform, expanding cross-border and multi-currency capabilities, increasing transaction-based and subscription revenue, and strengthening partner and enterprise relationships. With its modernized technology stack and integrated product suite, the Company is positioned to participate in the continued shift toward digital financial services and embedded financial infrastructure.

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

Monthly Platform and Transaction-Based Fees

Customers are invoiced in arrears at month-end, and amounts billed but not yet collected are recorded as accounts receivable.

Merchant Processing Services

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 three months ended March 31, 2026 and 2025, respectively.

The following table presents our historical results of operations for the periods indicated:

	Years ended March 31						Change
($ in thousands)	2026			2025			Amount			%

Revenue	$	1,457		$	217		$	1,240			571%
Cost of revenue		646			128			518			405%
Gross profit		811			89			722			811%

Operating expenses
General and administrative		3,284			1,965			1,319			67%
Research and development		375			780			(405	)		(52%	)
Total operating expenses		3,659			2,745			914			33%

Loss from operations		(2,848	)		(2,656	)		(192	)		7%

Other income (expenses)
Interest expense, net		(196	)		(33	)		(163	)		494%
Gain on debt extinguishment		29			13			16			123%
Loss on change in fair value of contingent consideration		(262	)		–			(262	)		–
Debt discount amortization		(28	)		–			(28	)		–
Other income (expense)		(3	)		35			(38	)		(109%	)
Total other income (expenses)		(460	)		15			(475	)		(3,167%	)

Loss before income taxes		(3,308	)		(2,641	)		(667	)		25%

Provision for income taxes		–			–			–			–

Net loss	$	(3,308	)	$	(2,641	)	$	(667	)		25%

Revenue

Revenue was approximately $1,457 thousand for the three months ended March 31, 2026, compared to $217 thousand for the three months ended March 31, 2025, representing an increase of 571%. The increase was driven by our lending revenue vertical, the revenue generated from the IP platform, and an increase of merchant processing revenue from our independent sales organization (“ISO”).

Cost of Revenue

Cost of revenue was approximately $646 thousand for the three months ended March 31, 2026, compared to $128 thousand for the three months ended March 31, 2025, representing an increase of $518 thousand. The increase was principally driven by fees owed to our ISO partner, fees owed to our IP platform processor, and an increase to referral partner payouts related to the IP.

General and Administrative Expenses

General and administrative expenses were approximately $3,284 thousand for the three months ended March 31, 2026, compared to $1,965 thousand for the three months ended March 31, 2025, representing an increase of $1,319. The increase was driven by stock based compensation and the accelerated vesting of performance based shares.

Research and Development Expenses

Research and development expenses were approximately $375 thousand for the three months ended March 31, 2026, compared to $780 thousand for the three months ended March 31, 2025, representing a decrease of $405 thousand. The decrease was solely driven by the Company’s decision to lower its outsourced development team.

Other income (expenses)

Interest Expense

Interest expense was approximately $196 thousand and $33 thousand for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $163 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 $29 thousand and $13 thousand for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $16 thousand. The increase was due to the Company extinguishing less of its past debt.

Loss on change in fair value of contingent consideration

The loss was approximately $262 thousand and $0 for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $262 thousand. The increase was due to the Company adjusting the earnout owed to the Sellers of IP.

Debt discount amortization

The debt discount amortization was approximately $28 thousand and $0 for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $28 thousand. The change was due to the amount of convertible debt incurred in FY 2025.

Other income (expenses)

Other expense was approximately $3 thousand for the three months ended March 31, 2026 and other income of $35 thousand for the three months ended March 31, 2025, representing a decrease of $38 thousand. The change was primarily driven by an adjustment to the state and federal taxes credit.

Liquidity and Capital Resources

The Company routinely evaluates its immediate working capital needs and liquidity sources. For the three months ended March 31, 2026 and March 31, 2025, 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 March 31, 2026 and December 31, 2025 were $110 thousand and $244 thousand, respectively.

Management's Plan to Address Going Concern Considerations

Management is actively pursuing additional funding options and new revenue streams that may contribute additional cash flows over the twelve months following the issuance date of these financial statements.

Management intends to maintain adequate working capital and adhere to prudent financial forecasting. In March 2026, 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 for the following comparative periods ($ in thousands).

	Three Months Ended March 31,
	2026			2025

Net cash used in operating activities	$	(913	)	$	(1,801	)
Net cash provided by investing activities	$	–		$	–
Net cash provided by financing activities	$	779		$	1,350

Cash Flow from Operating Activities

Net cash used in operating activities during the three months ended March 31, 2026, was approximately $913 thousand, which is comprised of (i) our net loss of $3,308 thousand, adjusted for non-cash expenses totaling $2,388 thousand (which includes adjustments for equity-based compensation, depreciation and amortization), and (ii) decreased by changes in operating assets and liabilities of approximately $7 thousand.

Net cash used in operating activities during the three months ended March 31, 2025, was approximately $1,801 thousand, which is comprised of (i) our net loss of $2,641 thousand, adjusted for non-cash expenses totaling $1,202 thousand (which includes adjustments for equity-based compensation, depreciation and amortization), and (ii) decreased by changes in operating assets and liabilities of approximately $362 thousand.

Cash Flow from Investing Activities

There was no cash used by investing activities during the three months ended March 31, 2026 and 2025.

Cash Flow from Financing Activities

Net cash provided by financing activities during the year ended March 31, 2026 was approximately $779 thousand, primarily reflecting $1,000 thousand of proceeds received from the participation agreement, partially offset by $221 thousand of repayments of notes payable.

During the three months ended March 31, 2025, net cash provided by financing activities was $1,350 thousand, which consists of proceeds received on the outstanding equity receivable at year-end..

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 March 31, 2026, 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.

Equity-Based Compensation: We estimate the fair value of stock options granted using the Black-Scholes option pricing model, which requires input of subjective assumptions. The model inputs include expected stock price volatility, expected term, risk-free interest rate, and dividend yield. The assumptions about future stock price volatility and the option’s expected term involve significant judgments based on historical data and future expectations. The reported equity-based compensation expense is sensitive to changes in the volatility assumption. An increase in expected volatility could materially impact the amount of compensation expense recognized.

Goodwill Impairment

Goodwill Impairment Testing: The process requires an annual test for impairment of goodwill, and more frequent testing if certain indicators suggest that the goodwill might be impaired. This assessment involves comparing the carrying amount of a reporting unit, including goodwill, to its fair value. Key estimates in determining fair value include: a) Cash Flow Projections: Utilizing the DCF method, management estimates future cash flows based on current performance, business plans, and expected market growth, introducing judgment due to forecasting uncertainties. b) Discount Rate: The discount rate, reflecting the WACC and adjusted for unit-specific risks, is crucial for present value calculations, with changes significantly affecting fair value estimations; c) Long-term Growth Rates: Assumptions on sustainable growth rates impact the terminal value in the DCF model, thus influencing the overall fair value of the reporting unit.

Impairment Loss Calculation: The impairment loss, representing the excess of the carrying amount of goodwill over its implied fair value, is highly sensitive to the estimates and assumptions used in the fair value calculation. Small changes in cash flow projections, discount rates, or long-term growth rates can result in significant adjustments to the impairment loss recognized in the income statement. Given the dynamic nature of business conditions, technological advancements, and market competition, estimates used in goodwill impairment testing may change from one period to another. Management is tasked with regularly reviewing and updating these estimates to reflect the latest available information and market conditions.

Once an impairment loss is recognized, it is not reversible in subsequent periods. This finality places additional importance on the accuracy and reasonableness of the underlying estimates and assumptions.

Management concluded that the fair value of the goodwill recorded as part of the Infinitus Pay, Inc and FinZeo acquisitions significantly exceeds its carrying amount, and there is no significant risk of goodwill impairment based on current assumptions and market conditions.

Impairment of Long-Lived Assets

Our company evaluates long-lived assets, including capitalized software, for impairment when there are indicators that the carrying amount may not be recoverable. This process involves comparing the carrying amount to the expected future undiscounted cash flows from the asset. If the carrying amount exceeds the expected cash flows, an impairment charge is recognized to reduce the asset’s carrying amount to its fair value.

Indicators of impairment include significant underperformance against projections, market or economic downturns, and technological obsolescence. The fair value is determined using market data or discounted cash flow models. An impairment loss is recorded as an expense immediately.

Recent Accounting Pronouncements

As of March 31, 2026, there have been no significant changes to our recently issued accounting pronouncements, except as described in Note 2 to our consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established to facilitate off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Because we are allowed to comply with the disclosure obligations applicable to a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, with respect to this Form 10-Q, we are not required to provide the information required by this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2026 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 March 31, 2026, 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 March 31, 2026.

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 not been any changes in our internal control over financial reporting during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

PART II - Other Information

Item 1. Legal Proceedings.

Lawsuit with Former Lawyers

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 and a resolution is expected by June 2026. Invoices for fees and costs to date are reflected in accounts payable.

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 re AppTech’s Motion for Temporary Restraining Order and Order, which enjoins Seller, and those acting in concert with him, from (1) disabling the FinZeo URL, (2) foreclosing upon a security agreement, and (3) disclosing AppTech’s proprietary and confidential information, among other relief, until the order is amended or superseded by Court order. Seller has been given leave to file a Counterclaim against AppTech, its Board of Directors, and two AppTech employees, which must be filed by June 1, 2026. Seller’s proposed Counterclaim includes claims based on alleged outstanding payments due to him as part of the acquisition, as well as other related claims.

Item 1A. Risk Factors.

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the quarter ended March 31, 2026, 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 6. Exhibits.

EXHIBIT INDEX

Exhibit Number		Exhibit Title

10.1		First Amendment to Revenue Participation Agreement, dated as of February 17, 2026, by and between AppTech Payments Corp. and Ascendancy Management, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed with the SEC on February 23, 2026).

31.1		Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 dated May 15, 2026

31.2		Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 dated May 15, 2026

32.1		Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 dated May 15, 2026

32.2		Certification of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 dated May 15, 2026

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Schema Document

101.CAL		Inline XBRL Calculation Linkbase Document

101.DEF		Inline XBRL Definition Linkbase Document

101.LAB		Inline XBRL Label Linkbase Document

101.PRE		Inline XBRL Presentation Linkbase Document

104		Cover Page Interactive Data File (Embedded within the Inline XBRL document)

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AppTech Payments Corp.

Date: May 15, 2026	By:	/s/ Thomas DeRosa
	Name:	Thomas DeRosa
	Title:	Chief Executive Officer

Date: May 15, 2026	By:	/s/ Felipe A. Corrado IV
		Felipe A. Corrado IV
		Chief Financial Officer and Treasurer

AppTech Payments Corp. 10-Q