Executive Summary / Key Takeaways

• Technology-Driven Growth: AppTech Payments Corp. (OTCQB: APCX) is leveraging its FinZeo platform, offering Payments-as-a-Service (PaaS) and Banking-as-a-Service (BaaS), to capitalize on the accelerating digital transformation in financial services, evidenced by a 283% Q2 2025 revenue increase driven by ISO and lending activities.
• Differentiated Platform: FinZeo provides a modular, API-driven architecture for frictionless digital and mobile payment acceptance, including an automated underwriting portal that expedites business onboarding and offers customizable solutions at a "fraction of the cost" of traditional banking.
• Financial Headwinds and Strategic Response: Despite strong revenue growth, the company faces significant liquidity challenges, recurring operating losses, and a "going concern" warning. Management has initiated cost reductions, pursued additional funding, and aims for cash breakeven by year-end, with recent convertible notes providing capital.
• Competitive Niche: APCX competes against industry giants like Visa (V) and Mastercard (MA) by focusing on customizable, white-label solutions for Fintechs, ISOs, and ISVs, aiming to differentiate through technological agility and specialized integrations, though it lags in scale and overall profitability.
• Critical Juncture: The investment thesis hinges on APCX's ability to convert its technological capabilities and recent revenue momentum into sustainable profitability and improved liquidity, with an uplisting to a national exchange targeted before year-end as a key milestone.

The Digital Frontier: AppTech's FinZeo Platform in a Transforming Industry

The financial services industry is undergoing an accelerated transformation, driven by relentless technological innovation and an evolving regulatory landscape. Stablecoins, digital assets, blockchain infrastructure, and real-time settlement capabilities are reshaping how financial services are structured and consumed. In this dynamic environment, AppTech Payments Corp. (OTCQB: APCX) positions itself at the forefront, aiming to power commerce experiences for clients and their customers through its proprietary, all-in-one fintech platform, FinZeo.

FinZeo is designed with a modular, cloud-edge-based architecture, offering a comprehensive suite of financial technologies and capabilities. This platform provides both Payments-as-a-Service (PaaS) and Banking-as-a-Service (BaaS) solutions. The PaaS offerings facilitate frictionless digital and mobile payment acceptance, encompassing ACH, credit/debit cards, eCheck, mobile processing, electronic billing, and text-to-pay. Critically, FinZeo's PaaS is engineered for multi-use case, multi-channel, API-driven, and account-based issuer processing, supporting traditional cards, digital tokens, and payment transfers. This flexibility allows for highly customizable, white-labeled payment experiences, a key differentiator in a market often dominated by standardized solutions.

The BaaS component further accelerates digital transformation by empowering financial institutions, businesses, and individuals with advanced financial management tools. AppTech highlights that its BaaS can deliver these services "at a fraction of the cost of traditional banking and financial services." A standout feature is FinZeo's groundbreaking automated underwriting portal, which significantly expedites business onboarding through intuitive digital applications and e-signature capabilities. This portal offers customizable pricing, risk models, and access to multiple processors, streamlining a traditionally cumbersome process. For Fintechs, Independent Sales Organizations (ISOs), and Independent Software Vendors (ISVs), FinZeo offers seamless integration, fostering swift technology adoption and enabling them to enhance their client offerings. The recent launch of its Lending Integrations and Processing Platform, with a near-term goal of exceeding 250,000 transactions per month, underscores the platform's potential to drive substantial transaction volume in a marketplace of millions.

APCX operates in a highly competitive landscape, facing off against established giants and agile innovators. Companies like Visa, Mastercard, PayPal (PYPL), Block (SQ), and Fiserv (FISV) command significant market share through extensive networks, brand recognition, and deep financial resources. While these incumbents offer broad payment processing and financial technology services, APCX's strategic positioning emphasizes technological agility, customization, and API-driven integration. Its ability to offer white-label solutions and specialized platforms for ISOs and ISVs allows it to carve out a niche by providing tailored experiences that larger, more generalized platforms may struggle to deliver with the same flexibility. However, APCX's smaller scale and nascent market presence mean it must consistently innovate and execute to gain traction against the formidable network effects and R&D investments of its larger rivals.

Strategic Evolution and Recent Performance

AppTech Payments Corp., incorporated in 1998, has evolved significantly, culminating in the pivotal acquisition of Alliance Partners, LLC in October 2023. This acquisition was instrumental, bringing Alliance Partners' intellectual property and software platform, which became the foundation for FinZeo. This strategic move underscored AppTech's commitment to building a robust, integrated fintech platform. However, this journey has not been without its challenges, including the termination of a licensing agreement with InstaCash in December 2024 and a recent delisting from the Nasdaq Capital Market to the OTCQB Venture Market in May 2025 due to non-compliance with the minimum bid price requirement.

Despite these operational hurdles, AppTech has demonstrated encouraging revenue growth. For the three months ended June 30, 2025, the company reported revenues of $291 thousand, a substantial 283% increase compared to $76 thousand in the same period of 2024. The six-month period ending June 30, 2025, saw revenues climb to $508 thousand, an 181% increase from $181 thousand in the prior year. This growth was "principally driven by an increase of our ISO and lending revenue," indicating early success in its partner-centric and specialized lending platform strategies.

However, this revenue expansion came with a corresponding increase in the cost of revenues, which rose to $107 thousand for Q2 2025 (up 664% YoY) and $235 thousand for H1 2025 (up 840% YoY), "driven by the revenue share with our ISO partners." Gross profit for Q2 2025 stood at $184 thousand. Operating expenses reflect a mixed picture: general and administrative expenses decreased significantly due to "lower salaries and professional services" and reduced "stock based compensation," while research and development expenses increased, reflecting ongoing investment in "maintaining and enhancing the FinZeo platform." The net loss for Q2 2025 was $1.86 million, and for H1 2025, it was $4.501 million, highlighting that the company remains in an investment phase, prioritizing platform development and market penetration over immediate profitability.

Liquidity, Capital, and Competitive Standing

AppTech's financial health presents a critical area for investor scrutiny. As of June 30, 2025, cash and cash equivalents stood at $138 thousand, a notable decrease from $868 thousand at December 31, 2024.

Net cash used in operating activities for the first six months of 2025 was $3.08 million. These figures, coupled with recurring operating losses, have led to a "substantial doubt about its ability to continue as a going concern." Management has responded by reorganizing leadership, reducing headcount, and actively pursuing additional funding. Net cash provided by financing activities for H1 2025 was $2.35 million, including proceeds from the AFIOS Partners investment and a convertible note.

Subsequent to the quarter, the company secured additional unsecured convertible notes totaling $660 thousand in principal value in July and August 2025, providing crucial capital. A $1.2 million payable related to the Alliance Partners acquisition remains outstanding, secured by substantially all company assets.

Comparing APCX's financial metrics to its larger competitors underscores its early-stage profile. APCX's TTM Gross Profit Margin of 56.55% is respectable, falling between the high margins of network giants like Visa (80%) and Mastercard (76%) and the slightly lower margins of digital platforms like PayPal (46%) and Block (37%). However, APCX's TTM Operating Profit Margin and Net Profit Margin are deeply negative, contrasting sharply with the robust positive margins of its peers. This reflects APCX's heavy investment in R&D and operational build-out, rather than mature, scaled operations. Its Current Ratio of 0.10 is significantly lower than all listed competitors, signaling acute liquidity constraints. While its Debt/Equity Ratio of 0.26 is lower than some peers, the overall financial picture indicates a company in a high-growth, high-burn phase, reliant on external capital.

APCX's strategy to compete involves leveraging its FinZeo platform's flexibility and API-driven capabilities to offer tailored solutions. This allows it to target specific segments, such as ISOs and ISVs, who can white-label FinZeo to enhance their own offerings. This approach aims to create a competitive moat through superior integration and customization, rather than direct competition on scale. However, a significant vulnerability is customer concentration, with 58% of accounts receivable and 66% of H1 2025 revenue generated from just two customers. The loss of a top customer would have a "significant impact on the Company’s financials," a risk amplified by the intense competition and macroeconomic uncertainties.

Outlook and Investment Implications

Management remains confident in its strategic direction, asserting that "two of its revenue streams will begin generating revenue in the following twelve months." CEO Thomas DeRosa has expressed confidence in "achieving cash break-even by the end of the year," a critical milestone for the company's sustainability. The company also "intends to pursue an uplisting to a national exchange before the end of the fiscal year," which could improve its visibility and access to capital. A recent disclosure of a board member's intent to purchase up to one million shares of common stock in the open market, despite the Nasdaq delisting, signals internal confidence in the company's long-term potential and current undervaluation.

The investment thesis for APCX is rooted in the potential of its FinZeo platform to capture a meaningful share of the rapidly expanding digital payments and banking-as-a-service markets. The significant year-over-year revenue growth demonstrates initial traction for its ISO and lending-focused initiatives. However, this potential is balanced by substantial risks, particularly the ongoing liquidity challenges, the need to achieve profitability, and the inherent competitive pressures from well-capitalized industry leaders. The company's ability to successfully scale its operations, manage its burn rate, and convert its technological differentiation into sustainable, profitable revenue streams will be paramount. Investors should closely monitor the company's progress towards cash breakeven, its ability to diversify its customer base, and its efforts to uplist to a national exchange, as these will be key indicators of its long-term viability and growth trajectory.

Conclusion

AppTech Payments Corp. stands at a pivotal moment, armed with its innovative FinZeo platform and a clear strategy to capitalize on the digital transformation sweeping the financial sector. The recent surge in ISO and lending revenue underscores the market's appetite for its flexible, API-driven PaaS and BaaS solutions. Yet, the company's journey is marked by significant financial challenges, including recurring losses and a pressing need for sustained capital.

The core investment thesis hinges on AppTech's capacity to translate its technological edge and early revenue momentum into a robust, self-sustaining business. While the path to profitability and improved liquidity is fraught with competitive pressures and operational demands, management's stated commitment to achieving cash breakeven and pursuing an uplisting provides a clear roadmap. For discerning investors, APCX represents a high-risk, high-reward opportunity, where successful execution of its technology-centric strategy could unlock substantial value in the evolving fintech landscape.