Table of Contents

 

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, 2020

 

or

 

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: 0001070050

 

AppTech Corp.

(Exact name of registrant as specified in its charter)

 

Wyoming 65-0847995
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification
Number)

 

5876 Owens Ave. Suite 100

Carlsbad, California 92008

(Address of Principal Executive Offices & Zip Code)

 

(760) 707-5959

(Registrant’s telephone number, including area code)

 

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 Pink Open 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 14,2020, the latest practicable date, the registrant had 86,538,325 shares of common stock (par value 0.001)

 

 

 

 

AppTech Corp.

 

Form 10-Q

 

Table of Contents

 

Page
Part I
  Special Note Regarding Forward-Looking Statements and Projections 2
Item 1. Financial Statements (unaudited) 4
  Condensed Consolidated Balance Sheet as of March 31, 2020 and December 31, 2019 5
  Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 6
  Condensed Consolidated Statements of Stockholder’s Deficit for the three months ended March 31, 2020 and 2019 7
  Legal Proceedings Condensed Consolidated Statements of Cash Flows for the three  months ended March 31, 2020 and 2019 8
  Notes to the Unaudited Consolidated Financial Statements 9
Item 2. Legal Proceedings Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
Item 3. Legal Quantitative and Qualitative Disclosures about Market Risk 24
Item 4. Controls and Procedures 24
Part II
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 26
Item 4. Mine Safety Disclosures 26
Item 5. Other Information 26
Item 6. Exhibits 26
  Signatures 28

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

 

Various statements in this Quarterly on Form 10-Q of AppTech Corp. (we, our, AppTech or the Company) 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. Meaningful factors that could cause actual results to differ include:

 

  uncertainty associated with anticipated launch of our Secure Text Payment System;
     
  dependence on third-party channel and referral partners, who comprise a significant portion of our sales force, for gaining new clients;
     
  the possibility that we may fail to sustain the listing standards required to up-list to the OTCQB Market, and the possibility that even if we do sustain potential compliance, we may again fail to comply with the OTCQB listing standards in the future;
     
  a slowdown or reduction in our sales in due to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances;

 

2 

 

 

  uncertainty regarding our ability to achieve profitability and positive cash flow through the commercialization of our Secure Text Payment System in the U.S. and other regions of the world where we intend to sell the product;
     
  dependence on third-party payment processors to facilitate our merchant services capabilities;
     
  general economic uncertainty associated with the Covid-19 pandemic;
     
  the adverse effects of COVID-19, and its unpredictable duration, in regions where we have customers, employees and distributors;
     
  the adverse effects of COVID-19 on processing volumes resulting from (a) limitations on in-person access to our merchants’ businesses or (b) the unwillingness of to visit our merchants’ businesses;
     
  the possibility that the economic impact of COVID-19 will lead to changes in how consumers make purchases
     
  the possibility that the economic impact of COVID-19, and its associated high unemployment rate, will lead to less consumer spending thus resulting in loss of revenues;
     
  the possibility that the economic impact of COVID-19, will result in our merchants’ businesses failing to reopen once restrictions are further eased;
     
  delay in or failure to obtain regulatory approval of our Secure Text Payment System or any future products in additional countries;
     
  our ability to operate our business while timely making payments to our loan agreements;
     
  our need to raise additional financing;
     
  our ability to retain and recruit appropriate employees, in particular a productive sales force; 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 consolidated financial statements contained in this Annual 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” “we,” “us,” the “registrant” or the “Company” refer to AppTech Corp.

 

3 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

APPTECH CORP. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS 

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

Pages
Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 (unaudited) 5
Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 (unaudited) 6
Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2020 and 2019 (unaudited) 7
Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited) 8
Notes to the Unaudited Consolidated Financial Statements 9

 

4 

 

 

APPTECH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2020 and DECEMBER 31, 2019
(UNAUDITED)

 

    March 31,   December 31,
    2020   2019
         
ASSETS                
Current assets                
Cash   $ 15,163     $ 24,159  
Accounts receivable     26,691       29,836  
Prepaid rent     4,910        
Deposit escrow           25,000  
Security deposit           5,948  
Total current assets     46,764       84,943  
                 
Right of use asset     295,711        
Security deposit     7,537        
TOTAL ASSETS   $ 350,012     $ 84,943  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities                
Accounts payable   $ 1,717,804     $ 1,707,878  
Accrued liabilities     2,399,213       2,334,480  
Right of use liability     39,002        
Stock repurchase liability     430,000       430,000  
Loans payable related parties     65,351       93,401  
Convertible notes payable     620,000       620,000  
Convertible notes payable related parties     372,000       372,000  
Notes payable     1,104,081       1,104,081  
Notes payable related parties     708,493       708,493  
Total current liabilities     7,455,944       7,370,333  
                 
Long-term liabilities                
Accounts payable     140,000       160,000  
Right of use liability     264,342        
Total long-term liabilities     404,342       160,000  
TOTAL LIABILITIES     7,860,286       7,530,333  
                 
Commitments and contingencies (Note 8)                
                 
Stockholders' Deficit                
Series A preferred stock; $0.001 par value; 100,000 shares authorized; 14 shares issued and outstanding at March 31, 2020 and December 31, 2019            
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 86,503,325 and 84,153,825 and outstanding at March 31, 2020 and December 31, 2019, respectively     86,504       84,154  
Additional paid-in capital     34,627,685       33,230,869  
Accumulated deficit     (42,224,463 )     (40,760,413 )
Total stockholders' deficit     (7,510,274 )     (7,445,390 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $ 350,012     $ 84,943  

 

See accompanying notes to the consolidated financial statements.

 

5 

 

 

APPTECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019
(UNAUDITED)

 

    March 31,   March 31,
    2020   2019
         
Revenues   $ 58,157     $ 56,800  
                 
Cost of revenues     23,225       22,537  
                 
Gross profit     34,932       34,263  
                 
Operating expenses:                
General and administrative, including stock based compensation of $1,209,185 and $7,208, respectively     1,415,899       189,645  
Research and development     12,000       6,820  
                 
Total operating expenses     1,427,899       196,465  
                 
Loss from operations     (1,392,967 )     (162,202 )
                 
Other income (expenses)                
Interest expense     (71,083 )     (76,039 )
                 
Total other expenses     (71,083 )     (76,039 )
                 
Loss before provision for income taxes     (1,464,050 )     (238,241 )
                 
Provision for income taxes            
                 
Net loss   $ (1,464,050 )   $ (238,241 )
                 
Basic and diluted net loss per common share   $ (0.02 )   $ (0.00 )
                 
Weighted-average number of shares used basic and diluted per share amounts     84,289,100       86,922,132  

 

See accompanying notes to the consolidated financial statements.

 

6 

 

 

APPTECH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019
(UNAUDITED)

 

  Series A Preferred   Common Stock            
  Shares   Amount   Shares   Amount   Additional
Paid-
in Capital
  Accumulated
Deficit
  Stockholders'
Deficit 
Balance December 31, 2018     14     $       86,797,132     $ 86,797     $ 32,284,735     $ (39,417,203 )   $ (7,045,671 )
Net loss                                   (238,241 )     (238,241 )
Imputed interest                             3,450             3,450  
Common stock issued for subscriptions                 275,000       275       68,475             68,750  
Common stock issued for services                 12,000       12       7,196             7,208  
Common stock cancelled                 (3,450,000 )     (3,450 )     3,450              
Proceeds from sale of repurchase option                             123,750             123,750  
Balance March 31, 2019     14     $       83,634,132     $ 83,634     $ 32,491,056     $ (39,655,444 )   $ (7,080,754 )
                                                         
Balance December 31, 2019     14     $       84,153,825     $ 84,154     $ 33,230,869     $ (40,760,413 )   $ (7,445,390 )
Net loss                                   (1,464,050 )     (1,464,050 )
Imputed interest                             3,450             3,450  
Common stock issued for services                 2,349,500       2,350       1,206,835             1,209,185  
Proceeds from sale of repurchase option                             186,531             186,531  
Balance March 31, 2020     14     $       86,503,325     $ 86,504     $ 34,627,685     $ (42,224,463 )   $ (7,510,274 )

 

See accompanying notes to the consolidated financial statements.

 

7 

 

 

APPTECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019
(UNAUDITED)

 

    March 31,   March 31,
    2020   2019
         
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (1,464,050 )   $ (238,241 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock issued for services     1,209,185       7,208  
Imputed interest on notes payable     3,450       3,450  
Depreciation and amortization           16  
Changes in operating assets and liabilities:                
Accounts receivable     3,145       (98 )
Prepaid rent     (4,910 )        
Accounts payable     (10,074 )     106,039  
Accrued liabilities     64,733       (69,035 )
Right of use asset and liability     7,633        
Net cash used in operating activities     (190,888 )     (190,661 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Deposit escrow     25,000        
Security deposit     (1,589 )      
Net cash provided by investing activities     23,411        
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds (payments) on loans payable - related parties     (28,050 )     69,500  
Payments on notes payable           (36,000 )
Proceeds from sale of repurchase option     186,531       123,750  
Proceeds from sale of common stock           68,750  
Net cash provided by financing activities     158,481       226,000  
                 
Changes in cash and cash equivalents     (8,996 )     35,339  
Cash and cash equivalents, beginning of period     24,159       1,384  
Cash and cash equivalents, end of period   $ 15,163     $ 36,723  
                 
Supplemental disclosures of cash flow information:                
Cash paid for interest   $     $  
Cash paid for income taxes   $     $  

 

See accompanying notes to the consolidated financial statements.

 

8 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

AppTech Corp. (“AppTech” or the “Company”) is a Wyoming Corporation incorporated on July 2, 1998.

 

AppTech Corp. is a FinTech company providing electronic payment processing technologies and merchant services. This includes credit card processing, Automated Clearing House (“ACH”) processing, gift and loyalty cards and e-commerce. The Company expanded its core services to include global Short Messaging Service (“SMS”) patented text messaging and secure mobile payments based on Multi-factor authentication technologies. The patented two-way text chat platform enables secure SMS services including mobile payments, notifications, authentication, marketing, information queries and reporting. Other services include digital marketing, lead generation, mobile app development, and intellectual property rights development.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Also see Note 3.

 

Principles of Consolidation

 

The Company’s accounts include financials of the Company and its wholly owned subsidiaries, Transcendent One, Inc. and TransTech One, LLC. All significant inter-company transactions have been eliminated in consolidation. The operations of Transcendent One, Inc. and TransTech One, LLC are insignificant and the Company dissolved the subsidiaries on October 8, 2019.

 

Use of Estimates

 

The preparation of the consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, and realization of tax deferred tax assets. Actual results could differ from those estimates.

 

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.

 

The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses three financial institutions to service their merchants for which represented 100% of accounts receivable as of March 31, 2020 and 2019. The loss of one of these financial institutions would not have a significant impact on the Company’s operations as there are additional financial institutions available to the Company. For the three months ended March 31, 2020 and 2019, the one merchant (customer) represented approximately 43% and 40% of the total revenues, respectively. The loss of this customer would have significant impact on the Company’s operations.

 

Cash and Cash Equivalents

 

The Company classifies its highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations of each investment as of the balance sheet date for each reporting period. The Company classifies its investments as either short-term or long-term based on each instrument’s underlying contractual maturity date. Investments with maturities of less than 12 months are classified as short-term and those with maturities greater than 12 months are classified as long-term. The cost of investments sold is based upon the specific identification method.

 

9 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable is recorded net of an allowance for doubtful accounts, if needed. The Company considers any changes to the financial condition of its financial institutions used and any other external market factors that could impact the collectability of its receivables in the determination of its allowance for doubtful accounts. The Company does not expect to have write-offs or adjustments to accounts receivable which could have a material adverse effect on its consolidated financial position, results of operations or cash flows as the portion which is deemed uncollectible is already taken into account when the revenue is recognized.

 

Revenue Recognition

 

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, codified as 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. The Company adopted ASC 606 effective January 1, 2019 using modified retrospective basis and the cumulative effect was immaterial to the consolidated financial statements.

 

The Company provides merchant processing solutions for credit cards and electronic payments. In all cases, the Company acts as an agent between the merchant which generates the credit card and electronic payments, and the bank which processes such payments. The Company’s revenue is generated on services priced as a percentage of transaction value or a specified fee transaction, depending on the card or transaction type. Revenue is recorded as services are performed which is typically when the bank processes the merchant’s credit card and electronic payments.

 

The Company provides various Cloud services to business clients. Revenues generated from the services as agreed upon in a Cloud Service Agreement. The revenue is recorded as the services are performed and billed in advance on a monthly basis. Revenues from these services represent less than 5% of the Company’s total revenues.

 

Consideration paid to customers, such as amounts earned under our customer equity incentive program, are recorded as a reduction to revenues.

 

Fair Value of Financial Instruments

 

ASC 820, Fair Value Measurements and Disclosures defines fair value 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. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

The standard describes three levels of inputs that may be used to measure fair value:

 

The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows:

 

Level 1 Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities;
   
Level 2 Observable inputs – other than the quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and
   
Level 3 Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable.

 

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, vendor deposits, accounts payable, accrued expenses, etc. The carrying value of these assets and liabilities is representative of their fair market value, due to the short maturity of these instruments.

 

Research and Development

 

In accordance with ASC 730, Research and Development (“R&D”) costs are expensed when incurred. R&D costs include costs of acquiring patents and other unproven technologies, contractor fees and other costs associated with the development of the SMS short code texting platform, contract and other outside services. Total R&D costs for the three months ended March 31, 2020 and 2019 were $12,000 and $6,820, respectively.

 

10 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Property and Equipment

 

Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

 

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. As of March 31, 2020 and December 31, 2019, there were no asset impairments.

 

Lease Commitment

 

The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.

 

Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.

 

The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.

 

Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.

 

Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line as expense arising from fixed lease payments. As of March 31, 2020, management determined that there were no variable lease costs.

 

11 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Income Taxes

 

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of operations in the period that includes the enactment date.

 

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. As of March 31, 2020 and 2019, the Company does not believe any provisions are required in connection with uncertain tax positions as there are none.

 

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 period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period.

 

As of March 31, 2020 and 2019, the Company had potential dilutive securities related to options, warrants, Series A preferred stock and convertible notes payable. These dilutive securities were not included within the calculation of dilutive net loss per common share as the effects would have been anti-dilutive.

 

Convertible Debt

 

Convertible debt is accounted for under the guidelines established by ASC 470-20 Conversion and Other Options. ASC 470-20 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the instruments where derivative accounting does not apply. The amount of the value of additional stock and other consideration in addition to the beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. The discounts are accreted over the term of the debt using the straight line method due to the short terms of the notes.

 

The Company accounts for modifications of its embedded beneficial conversions, in accordance with ASC 470-50 Modifications and Extinguishments. ASC 470-50 requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment.

 

Stock Based Compensation

 

The Company recognizes as compensation expense all share-based payment awards made to employees, directors, and consultants including grants of stock options and warrants, based on estimated fair values. Fair value is generally determined based on the closing price of the Company’s common stock on the date of grant and is recognized over the service period. 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. The Company has entered into board of directors agreements that have share based payment awards based on service. These agreements require the Company to issue common stock to the directors, earned on a monthly basis, over the one year term of the agreement. The Company records the fair market value of the common stock issuable at the end of the month when the director is appointed to the board based upon the closing market price of the Company’s common stock

 

12 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

New Accounting Pronouncements

 

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

 

NOTE 3 – GOING CONCERN

 

As reflected in the accompanying consolidated financial statements, during the three months ended March 31, 2020 and 2019, the Company incurred a net loss of $1,464,050 and $238,241 and used cash of $190,888 and $190,661 in operating activities. In addition, the Company had a working capital deficit of $7,409,180 and an accumulated deficit of $42,224,463 at March 31, 2020. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. We have evaluated the conditions or events that raise substantial doubt about the Company’s ability as a going concern within one year of issuance of the consolidated financial statements.

 

While the Company is continuing operations and generating revenues, the Company’s cash position is not significant enough to support the Company’s daily operations. To fund operations and reduce the working capital deficit, we intend to raise additional funds through public or private debt and/or equity offerings. During 2020, the Company raised $205,781from a sale of a repurchase option to fund operations. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern, however, such are not guaranteed. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect, nor can there be assurance that such funds will be at acceptable terms. As of the date of these consolidated financial statements, the Company has not finalized a commitment for additional capital. The ability of the Company to continue as a going concern is dependent upon our ability to further implement its business plan and generate revenues and cash flows. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Risks and uncertainties

 

On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. Since we derive our revenues from processing of purchases from our merchant services clients, a downturn in economic activity, such as associated with the current coronavirus pandemic, could reduce the volume of purchases we process, and thus our revenues. In addition, such a downturn could cause our merchant customers to cease operations permanently decreasing our payment processing unless new customers are found. We may also face additional difficulty in raising capital during an economic downturn. The effects of the potential impact cannot be estimated at this time.

 

Additionally, it is reasonably possible that the estimates made in the financial statements have been, or will be materially and adversely impacted in the near term as a result of these conditions.

 

13 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 – PATENTS

 

Patents

 

On June 22, 2017, AppTech executed an Amendment to Asset Purchase Agreement with GlobalTel Media, Inc. In connection with the asset purchase agreement, 5,000,000 shares of common stock were issued to GlobalTel Media, Inc. The Company valued the common stock issuance at $1,000,000 based on the closing market price of the Company’s common stock on the date in which the performance was complete. This amendment revived the original asset purchase agreement dated December 4, 2013 to purchase the assets of GlobalTel Media, Inc. (AppTech and GlobalTel agree that the asset purchase agreement dated September 30, 2015 is null and void), which include, but is not limited to, all intellectual property, United States Patent Trademark Office (“USPTO”) issued patents, enterprise-grade, patent protected software and intellectual property for advanced messaging incorporating secure payments, databases, documentation, copyrights, trademarks, registrations, and all current development work in process of USPTO application approval; more specifically but not limited to USPTO 8,073,895 & 8,572,166 “System and Method for Delivering Web Content to a Mobile Device”, USPTO 8,315,184 “Computer to Mobile Two-Way Chat System and Method”, and USPTO 8,369,828 “Mobile-to-Mobile Payment System and Method”. GlobalTel’s technology focuses on SMS text-based applications, social media and mobile payment. The USPTO assigned the patents to AppTech on July 25, 2017. AppTech, as part of the various agreements, agreed to pay $1,600,000 which included an assumption of certain liabilities, including costs incurred to continue development of the patents, as well as guaranteed payment of 25% of the net proceeds on revenue created by the patents up to $26,600,000. As of March 31, 2020 and December 31, 2019, amounts included in accounts payable related to the assumption of liabilities in connection with the patents were $380,000 and $415,000, respectively. The Company has expensed the cost of the patents as research and development costs as the future estimated cash flow expected cannot be reasonably estimated.

 

NOTE 5 – ACCRUED LIABILITIES

 

Accrued liabilities as of March 31, 2020 and December 31, 2019 consist of the following:

 

    March 31, 2020   December 31, 2019
         
Accrued interest – related parties   $ 951,559     $ 943,356  
Accrued interest – third parties     1,275,129       1,215,699  
Accrued residuals     36,251       39,064  
Accrued merchant equity     91,023       91,023  
Other     45,251       45,338  
Total accrued liabilities   $ 2,399,213     $ 2,334,480  

 

Accrued Interest

 

Notes payable and convertible notes payable incur interest at rates between 10% and 15%, per annum. The accrued interest in most cases is currently in technical default due to the notes being past their maturity date.

 

Accrued Residuals

 

The Company pays commissions to independent agents which refer merchant accounts. The amounts payable to these independent agents is based upon a percentage of the amounts processed on a monthly basis by these merchant accounts.

 

Accrued Merchant Equity Liability

 

The Company provided all merchants the opportunity to earn shares of the Company’s common stock through their Merchant Equity Program (the “Program”). Under the Program, the merchant earned 1% of their total Visa/MasterCard volume processed during the first year of their contract. For example, if a merchant processes $1.0 million in credit card charges, the merchant will receive 10,000 shares of the Company’s common stock. The merchant must process with the Company for a period of three years for the shares to vest. All merchants became fully vested when the Company ended the program effective December 31, 2015.

 

For merchants in which the shares of common stock are not known as they are within the one-year period, the Company estimates on a quarterly basis as to the estimated amount of shares based upon the expected amount to be processed by the merchant on an annual basis. At the end of the first year, when the number of shares issuable is known, the Company makes an adjustment to the value of the shares, if needed.

 

The Company accounts for the value of the shares under the program as a sales incentive and thus the amounts in connection with the Program are recorded as a reduction to revenues. As of March 31, 2020, the Company has an obligation to issue approximately 776,000 shares of the Company’s common stock issuable under the Program. During the year ended December 31, 2019, the Company issued 37,193 shares of common stock relieving $14,877 in liability under the program.

 

14 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

 

The Company funds operations through cash flows generated from operations and the issuance of loans and notes payable. The following is a summary of loans and notes payable outstanding as of March 31, 2020 and 2019. Related parties noted below are either members of management, board of directors, significant shareholders or individuals in which have significant influence over the Company.

 

Loans Payable – Related Parties

 

During the three months ended March 31, 2020 and 2019, the Company obtained (paid) $(28,050) and $69,500 loans payable from related parties, net. As of March 31, 2020 and December 31, 2019, the balance of the loans payable was $65,351 and $93,401, respectively. The loans payable are due on demand, unsecured and non-interest bearing as there are no formal agreements executed.

 

Subordinated Notes Payable

 

In 2016, the Company issued $350,000 in subordinated notes payable to third parties. The subordinated notes payable were due in 30 to 180 days and incurred interest at 10% per annum. As of March 31, 2020 and December 31, 2019, accrued interest related to the subordinated notes was $127,295 and $118,545, respectively. The Company is currently in default of the subordinated note agreements.

 

Convertible Notes Payable

 

In 2017, the Company received $222,000 in convertible notes payable from related parties. The convertible notes payable are unsecured, were due in 180 days, incur interest at 10% per annum and are convertible at $0.10 per share. As of March 31, 2020 and December 31, 2019, accrued interest related to the convertible notes was $59,538 and $53,988, respectively. On the date of the agreement, Management calculated the beneficial conversion feature in connection with the convertible notes payable and recorded a discount of $222,000. The Company amortized the discount over the term of the convertible notes payable of 180 days. The Company is currently in default on the convertible notes payable.

 

In 2015, the Company issued $50,000 in convertible notes payable. The convertible notes payable are unsecured, were due in nine months, incur interest at 10% per annum and are convertible at $1.00 per share. As of March 31, 2020 and December 31, 2019, the accrued interest related to the convertible notes was $22,084 and $20,833, respectively. The Company is currently in default on the convertible note payable.

 

In 2014, the Company issued $400,000 in convertible notes payable. The convertible notes payable are unsecured, due in periods ranging up to one year, incurring interest between 10% to 12% per annum and are convertible at prices ranging from $0.33 to $1.00 per share. In addition, the Company issued 400,000 shares of common stock in connection with the convertible notes payable. The Company had the obligation to repurchase the 400,000 shares of common stock at $1.00 per share within one year of the note issuance date. As of March 31, 2020 and December 31, 2019, the Company held the obligation to repurchase the shares for $400,000. As of March 31, 2020 and December 31, 2019, the accrued interest related to the convertible notes was $196,333 and $186,083, respectively. The Company is currently in default of the note agreements.

 

In 2008 and 2009, the Company issued $320,000 in convertible notes payable, of which $150,000 was from related parties. The convertible notes payable are currently due on demand, incur interest at 15% per annum, and convertible at $0.60 per share. As of March 31, 2020 and December 31, 2019, accrued interest related to the convertible notes was $528,013 and $516,013 of which $249,000 and $243,375, respectively, was due to related parties. The Company is currently in default of the notes payable agreements.

 

Notes Payable

 

In 2016, the Company issued $143,000 in notes payable to third parties. The notes payable were due in ninety days or less. During 2019, the Company paid $36,000 in notes payable. The Company is currently in default of the note agreements.

 

In 2007 and 2008, the Company entered into notes payable with a related party for $46,000 in proceeds. The notes payable were due on demand and incurred interest at 12% per annum. These were combined into a single note agreement in 2014. As of March 31, 2020 and December 31, 2019, the balance on the note payable was $88,136 and accrued interest related to the note payable was $51,907 and $49,243, respectively. The Company is currently in default of the note payable agreement.

 

15 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

In 2007, the Company entered into note payable with a third party for $128,000 in proceeds. Under the terms of the agreement the holder received a flat interest amount of $37,496. The Company is currently in default of the note payable agreement and the entire amount of $37,496 has been included within accrued interest. Since the note payable did not incur interest, the Company imputed interest at $3,200 and $3,200, respectively, which represented an interest rate of 10% per annum during the three months ended March 31, 2020 and 2019.

 

In 2008, the Company entered into a note payable with a third party for $10,000 in total proceeds. The note payable is currently in default and has a flat interest amount due of $21,000. As of March 31, 2020 and December 31, 2019, the Company was in default of the note agreement and the entire amount of $21,000 has been included within accrued interest. Since the notes payable do not incur interest, the Company imputed interest at $250 and $250, respectively, which represented an interest rate of 10% per annum during the three months ended March 31, 2020 and 2019.

 

In 2008, the Company entered into notes payable with a third party for $26,000 in total proceeds. The notes payable have a flat interest amount due of $80,000. During 2015, the Company received another $50,000 from the third party. During 2017, the Company entered into an agreement whereby they would repay the principal and accrued interest in the amount of $145,000 by April 4, 2018 and issue the holders 800,000 shares of common stock. The Company recorded the fair market value of the common stock issued at $336,000 based on the date of issuance as interest expense. Other than the issuance of shares of common stock, the Company did not perform under the agreement. The Company is currently in default of the note agreement.

 

In 2007, the Company entered into note payable with a third party for $221,800 in proceeds. The note payable is currently in default and incurs interest at 10% per annum. On September 30, 2013, the holder received an arbitration settlement for the principal and accrued interest. As of March 31, 2020 and December 31, 2019, the Company was in default of the arbitration settlement. As of March 31, 2020 and December 31, 2019, accrued interest related to the note payable was $439,931 and $429,861, respectively.

 

In 2007, the Company entered into note payable with a significant shareholder for $58,600 in proceeds. The note payable is currently due on demand and incurs interest at 10% per annum. As of March 31, 2020 and December 31, 2019, accrued interest related to the note payable was $71,978 and $70,513, respectively. The Company is currently in default of the note agreement.

 

Two significant shareholders funded the Company’s operations through notes payable in primarily 2009 and 2010 and continue to support operations on a limited basis. The notes payable incur interest at 10% per annum and were due on December 31, 2016. The Company is currently in default of the note agreements. As of March 31, 2020 and December 31, 2019, the aggregate balance of the notes payable was $620,355 and accrued interest was $591,114 and $575,480, respectively.

 

NOTE 7 – RIGHT OF USE ASSET

 

Lease Agreement

 

In January 2020, the Company entered into a lease agreement commencing February 8, 2020 for its current facility which expires in 2025. The term of the lease is for five years. The Company also entered into a six month option to purchase its current facility under terms and conditions of the lease. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an effective borrowing rate of 12% within the calculation. The following are the expected lease payments as of March 31, 2020, including the total amount of imputed interest related:

 

Years ended December 31, :

 

2020     $ 53,122  
2021       82,561  
2022       85,039  
2023       87,590  
2024       90,217  
2025       7,536  
      $ 406,065  
Less: Imputed interest       (102,721 )
Total     $ 303,344  

 

16 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 8 - COMMITMENTS AND CONTIGENCIES

 

Litigation

 

Shareholder Lawsuit

 

In March 2016, a significant shareholder (“Plaintiff”) of the Company filed a lawsuit against the Company in the state of California alleging breach of contract, fraud and negligent misrepresentation based on supposed oral promises in 2013 to give Plaintiff’s company shares in exchange for stocks in another company and a 2014 consulting agreement. The Company strongly disputed all claims made in the lawsuit. On April 20, 2017, the Company filed an answer that denied each and every purported allegation and cause of action and further denied that they caused any damage or loss. The Company reached an agreement resulting in a voluntary dismissal of the civil case on July 5, 2017. The Plaintiff was not able to fulfill the proper documentation within the allotted 180 days and the 3,450,000 shares of AppTech Corp stock were properly cancelled in 2019.

 

Former Shareholders Lawsuits

 

In April 2014, a shareholder of AppTech filed a lawsuit against the Company in the State of Washington claiming breach of contract related to the sale / transfer of unregistered shares at the time of AppTech acquisition. On August 13, 2014, the Company notified the transfer agent and placed a ’Stop Order’ on the shares. The shareholder claims that the 2.5 million shares received are unrestricted and should be reflected as such. On August 19, 2014, the Company filed a motion to dismiss the lawsuit. The lawsuit was dismissed on October 31, 2014.

 

In November 2017, two shareholders of AppTech, one who previously filed the 2014 lawsuit in the State of Washington, filed another lawsuit against the Company in the State of California, claiming the same accusations as the previously filed lawsuit which was dismissed. The lawsuit has been transferred to the United States District Court for the Southern District of California. The Company filed the defendants answer, affirmative defenses and counter claims. Management believes that the Plaintiff misrepresented and misled AppTech during the merger. The court has encouraged the parties to settle. Even though the Company believes the lawsuit is without merit and will vigorously defend, the Company has made several offers to settle. On December 19, 2019, the Company entered into a settlement and release agreement. The Company has recorded the liability as of December 31, 2019 for the total obligation of $240,000 to be paid out over three years beginning February 15, 2020. The 2019 impact is recorded in other expenses. A stipulation for dismissal of action has been filed with the courts. As of May 14, 2020, we are current on the payment schedule.

 

Former Landlord Lawsuit

 

In September 2018, the landlord for our former office space lease filed a limited civil lawsuit against the Company in the State of California. The Company reached an agreement that resulted in a stipulation for judgment on October 28, 2018. The stipulated judgment was for $42,432 including attorney fees and court costs plus interest for which the Company recorded as a liability as of December 31, 2018. The stipulated judgment was paid in full on August 16, 2019.

 

Patent Acquisition Lawsuit

 

In September 2018, a complaint was filed in San Diego superior court for a breach of contract arising from a written agreement for the purchase of a judgment to which AppTech was not a party. The purchase of the judgment was part of the transaction to acquire the patents. AppTech substantially performed under the agreement but the second agreement to extend the final payment was executed under duress. On October 26, 2018, the Company filed an answer that denied each and every purported allegation and cause of action and further denied that they caused any damage or loss. On December 3, 2019, the Company entered into a conditional settlement providing the terms of the conditional settlement have been completed by October 1, 2020. The conditional settlement amount of $150,000 is paid in monthly installments of $15,000. The settlement installments paid for the three months ended March 31, 2020 was $35,000. $5,000 was paid towards the March 31, 2020 installment and the April 30, 2020 installment was not paid. We are currently in default of the agreement and are in discussions with the plaintiffs to cure the default prior to May 22, 2020.

 

Significant Contract

 

In January 2019, the Company entered into an agreement with a broker dealer to provide capital raising activities. Under the terms of the agreement the broker dealer is to make a minimum of $90,000 in advisory fees. In addition, there are various other provisions within the agreement which include a 10% placement fee, warrants to purchase common stock, a 4% transaction fee, etc.

 

17 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Employee versus Contractor Classification

 

The Company compensates various individuals as consultants. Annually, these consultants are issued Form 1099s for amounts paid to them. In addition, these consultants do not have arrangements in which specify compensation payable to them. The Company risks potential tax and legal actions if these consultants are deemed to be employees by governmental agencies.

 

NOTE 9 – STOCKHOLDERS’ DEFICIT

 

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, 2020 and December 31, 2019. The holders of Series A preferred stock are entitled to one vote per share on an “as converted” basis on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors. The holders of Series A preferred stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available, therefore on a pro rata basis according to their holdings of shares of Series A preferred stock, on an as converted basis. In the event of liquidation or dissolution of the Company, holders of Series A preferred stock are entitled to share ratably in all assets remaining after payment of liabilities and have no liquidation preferences. Holders of Series A preferred stock have a right to convert each share of Series A into 780 shares common stock.

 

Common Stock

 

The Company is authorized to issue 1,000,000,000 shares of $0.001 par value common stock. There were 86,503,325 and 84,153,825, respectively, shares of common stock outstanding as of March 31, 2020 and December 31, 2019. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available, therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions against the payment of dividends on common stock. In the event of liquidation or dissolution of the Company, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities.

 

During the three months ended March 31, 2020 and 2019, the Company issued 2,349,500 and 12,000, respectively, shares of common stock to several consultants in connection with business development and professional services. The Company valued the common stock issuances at $1,209,185 and $7,208, respectively, based upon the closing market price of the Company’s common stock on the date in which the performance was complete. The amounts were expensed to general and administrative expenses on the accompanying consolidated statements of operations.

 

Common Stock Repurchase Option

 

On January 23, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 300,000 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase options were exercised on January 26, 2020 for which the Company received $98,750 in proceeds which was recorded as additional paid-in capital.

 

On February 26, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 266,115 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on February 27, 2020 for which the Company received $25,281 in proceeds which was recorded as additional paid-in capital.

 

On March 18, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 250,000 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on March 19, 2020 for which the Company received $62,500 in proceeds which was recorded as additional paid-in capital.

 

18 

 

 

APPTECH CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 10 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist other than those disclosed below.

 

On April 24, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 55,000 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on April 27, 2020 for which the Company received $19,250 in proceeds which was recorded as additional paid-in capital.

 

See note 8 for additional subsequent events.

 

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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 in conjunction with our consolidated financial statements and related notes included elsewhere in this quarterly report. This discussion contains forward-looking statements, such as 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. 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

 

We are a financial technology company utilizing innovative payment processing technologies to complement our core merchant services capabilities. Our patented and proprietary software for merchant services, text marketing and lead generation are licensable or available through a suite of synergistic offerings directly to our clients. We are developing an enterprise-grade text payment system using the simplicity and familiarity of text messaging with multi-factor authentication to ensure security.

 

Our company’s merchant services provide financial processing for businesses to accept traditional means of cashless payments, such as credit cards, ACH, wireless payments, and more. Through partnerships and proprietary software, we offer our merchants advanced capabilities such as online payment gateways and payment splitting to protect, enhance and expand their business. Further, in part through our intellectual property and patents, we offer integrated, advanced solutions for mobile payment processing, payment facilitation, digital marketing, software development, mobile app development, website development and website hosting.

 

We are expanding our merchant processing services to include enterprise-grade, patent protected software and intellectual property for secure short message system, or SMS, payments and advanced text messaging for lead generation. Our patent protected software and technology manages text messaging for notification, response, authentication, marketing, advertising, information queries and reports. Our software platforms will incorporate advanced intellectual property to transact mobile payments via secure text messaging based on secure multi-factor authentication, or MFA, technology, thereby extending merchants’ marketplace and avenues to receive payments.

 

We believe that our technology will greatly increase the adoption of mobile payment through ease of use including text-based security protocols. To succeed, businesses may need to adopt text messaging to engage with their customers. We believe that our patent protected text platform will allow businesses to communicate regularly with their customers, suppliers and partners knowing that their texts are being read and welcomed.

 

We seek to grow our business by pursuing the following strategies:

 

  Increasing our customer base by offering unique, patent protected technologies;
  Rolling-out our secure text payment system which does not require a data plan or an application;
  Expanding our lead generation services enabling businesses to better engage their customers;
  Maintaining technological leadership by continuing to innovate and improve our technology;
  Pursuing strategic acquisitions or partnerships to complement and bolster our suite of fintech products;
  Creating cross-selling synergies by providing a holistic suite of products and services to merchants;
  Utilizing a scalable business model to eliminate certain barriers to rapid growth.

 

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We are an OTC Pink Open Market traded corporation headquartered in Carlsbad, CA. Our stock trades under the symbol “APCX.” We were founded in 1998 as Health Express USA, Inc. Our business went through name changes in 2005 (CSI Business, Inc.), 2006 (Natural Nutrition Inc.) and 2009 (AppTech Corp.) In 2013, we merged with Transcendent One, Inc., whereby Transcendent One, Inc. and its management took controlling ownership of the Company. From this point forward, we have operated as a merchant services provider, continuing the business conducted by Transcendent One, Inc. In 2017, we acquired certain assets from GlobalTel Media, Inc., or GTM, which included patented, enterprise-grade software for advanced text messaging. In addition to the software and associated databases, the acquisition included four patents and additional intellectual property for mobile payments and advanced MFA security protocols.

 

Effects of the COVID-19 Pandemic

 

The unprecedented and adverse effects of COVID-19, and its unpredictable duration, in the regions where we have merchants, employees and consumers have had a material adverse effect on our processing volume and thus on our net revenues and may in the future have a material adverse effect on our liquidity and financial condition.

 

Financial Operations Overview

 

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

 

Revenues

 

Our Revenues. We devise our revenue by providing financial processing services to businesses.

 

Expenses

 

Cost of Revenue. 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. General and administrative expenses include professional services, rent and utilities, and other operating costs.

 

Research and development. Research and development costs include costs of acquiring patents and other unproven technologies, contractor fees and other costs associated with the development of the SMS short code texting platform, contract and outside services.

 

Interest Expense, net. Our interest expense consists of interest on our outstanding indebtedness and amortization of debt issuance costs.

 

Results of Operations

 

This section includes a summary of our historical results of operations, followed by detailed comparisons of our results for the three-month periods ended March 31, 2020 and 2019, respectively. We have derived this data from our consolidated financial statements included elsewhere in this registration statement.

 

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The Three Months Ended March 31, 2020

Compared to the Three Months Ended March 31, 2019

 

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

 

    Three Months Ended March 31
(in thousands)   2020   2019
Revenue   $ 58.2     $ 56.8  
Cost of revenue     23.2       22.5  
Gross profit     35.0       34.3  
                 
Operating expenses                
General and administrative     1,415.9       189.7  
Research and development     12.0       6.8  
Total operating expenses     1,427.9       196.5  
Loss from operations     (1,392.9 )     (162.2 )
                 
Other expenses                
Interest expense, net     71.1       76.0  
Total other expenses     71.1       76.0  
Loss before income taxes     (1,464.0 )     (238.2 )
                 
Provision for income taxes                
Net Loss   $ (1,464.0 )   $ (238.2 )

 

Revenue

 

Revenue increased to $58,157 from $56,800, or 2%, for the three months ended March 31, 2020 from the three months ended March 31, 2019. This increase was principally driven by various insignificant factors.

 

Cost of Revenue

 

Cost of revenue increased to $23,225 from $22,537, or 3%, for the three months ended March 31, 2020 from the three months ended March 31, 2019. This increase was driven primarily by various insignificant factors.

 

General and Administrative Expenses

 

General and administrative expenses increased to $1,415,899 from $189,645, for the three months ended March 31, 2020 from the three months ended March 31, 2019, primarily driven by stock-based compensation due to several significant consulting agreements for marketing and professional related services.

 

Research and Development Expenses

 

Research and development expenses increased to $12,000 from $6,820, or 76%, for the months ended March 31, 2020 from the three months ended March 31, 2019. This increase was primarily due to various insignificant factors.

 

Interest Expense, net

 

Interest expense, net decreased to $71,083 from $76,039, or 7%, for the three months ended March 31, 2020 from the three months ended March 31, 2019. This decrease was primarily driven by the elimination of one-time interest charges for the amortization of the debt discount on new related party notes payable and refinancing charges on other notes payable.

 

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Liquidity and Capital Resources

 

While the company is continuing operations and generating revenues, the company’s cash position is not significant enough to support the company’s daily operations. To the extent that additional funds are necessary to finance operations and meet our long-term liquidity needs as we continue to execute our strategy, we anticipate that they can be obtained through additional indebtedness, equity or debt issuances or both. Using currently available capital resources, management believes we can conduct planned operations for 21 days. Further, management believes we need to raise $1.35M to remain in business for the next 12 months.

 

Since we derive our revenues principally from processing of purchases from our merchant services clients, a downturn in economic activity, such as that associated with the current coronavirus pandemic could reduce the volume of purchases we process, and thus our revenues. In addition, such a downturn could cause our merchant customers to cease operations permanently decreasing our payment processing unless new customers were found. We may also face additional difficulty in raising capital during an economic downturn.

 

Cash Flows

 

The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods.

 

    Three Months Ended March 31,
    2020   2019
         
Net cash used in operating activities   $ (190,888 )   $ (190,661 )
Net cash provided by investing activities   $ 23,411     $  
Net cash provided by financing activities   $ 158,481     $ 226,000  

 

Cash Flow from Operating Activities

 

Net cash used in operating activities increased by $227 for the three months ended March 31, 2020 from the three months ended March 31, 2019. This increase was principally driven by various insignificant factors.

 

Cash Flow from Investing Activities

 

Net cash provided by investing activities increased by $23,411 for the three months ended March 31, 2020 from the months ended March 31, 2019. This increase was principally driven by a refund of a deposit and a prepayment of rent expense.

 

Cash Flow from Financing Activities

 

Net cash provided by financing activities decreased by $67,519 for the three months ended March 31, 2020 from the months ended March 31, 2019. This decrease was principally driven by decreased proceeds from the sale of common stock and proceeds from loans payable related parties.

 

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates including those related to revenue recognition, goodwill and intangible assets, derivative financial instruments, and equity-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

 

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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, 2020, there have been no significant changes to our critical accounting estimates, except as described in Note 2 to our consolidated financial statements.

 

Recent Accounting Pronouncements

 

As of March 31, 2020, 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.

 

Not applicable for smaller reporting companies.

 

Item 4. Control 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 effective as of March 31, 2020.

 

Changes in Internal Control over Financial Reporting

 

There have not been any changes in our internal control over financial reporting during the three-month period ended March 31, 2020 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.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In September 2018, a complaint was filed in San Diego Superior Court for a breach of contract arising from a subsequent agreement regarding the purchase of a judgment for the matter of Svenston Buelow and Amanda Eliot v. GlobalTel Media. The purchase of the judgment was part of the transaction in which we acquired our IP portfolio from GlobalTel Media. We substantially performed under the original agreement, but the plaintiffs alleged we breached the subsequent agreement which was executed to extend the final payment. On October 26, 2018, we filed an answer that denied each and every purported allegation and cause of action, further denied that they caused any damage or loss and asserted the affirmative defense of duress. We recorded as a liability as of December 31, 2019 and 2018 in the amount of $135,000 and $175,000, respectively. On December 3, 2019, the parties entered into a conditional settlement agreement whereby we agreed to pay $150,000 on a payment schedule ending October 1, 2020. Should the repayment enter default without being cured, the court shall order an entry of judgment in favor of the Plaintiffs in the amount of $175,000 less any amounts paid under the settlement, plus pre-judgment and post-judgment interest, court costs and reasonable attorney fees. As of May 14, 2020, we are currently in default of the agreement and are in discussions with the plaintiffs to cure the default by May 22, 2020.

  

In September 2018, the landlord for our former office space lease filed a limited civil lawsuit against us in the State of California. We reached an agreement that resulted in a stipulation for judgment on October 28, 2018. The stipulated judgment was for $42,432 including attorney fees and court costs plus interest for which we recorded as a liability as of September 30, 2019 and December 31, 2018. The stipulated judgment was paid in full on August 16, 2019.

 

In November 2017, two shareholders of AppTech, one who previously filed a 2014 lawsuit in the State of Washington, filed another lawsuit against us in the State of California, claiming the same accusations as the previously filed lawsuit which was dismissed. The lawsuit has been transferred to the United States District Court for the Southern District of California. We filed an answer, affirmative defenses and counter claims. Management believes that the Plaintiff misrepresented and mislead us during the merger between ourselves and Transcendent One, Inc. The court has encouraged the parties to settle. Even though the Company believes the lawsuit is without merit and will vigorously defend, the Company has made several offers to settle. On December 19, 2019, the Company entered into a settlement and release agreement. The Company has recorded the liability as of December 31, 2019 for the total obligation of $240,000 to be paid out over three years beginning February 15, 2020. A stipulation for dismissal of action has been filed with the courts. As of May 14, 2020, we are current on the payment schedule.

 

In March 2016, a significant shareholder (“Plaintiff”) of ours filed a lawsuit against us in the state of California alleging breach of contract, fraud and negligent misrepresentation based on supposed oral promises in 2013 to give Plaintiff’s company shares in exchange for stock in another company and a 2014 consulting agreement. We strongly disputed all claims made in the lawsuit. On April 20, 2017, we filed an answer that denied each and every purported allegation and cause of action and further denied that they caused any damage or loss. We reached an agreement resulting in a voluntary dismissal of the civil case on July 5, 2017. The Plaintiff was not able to fulfill the proper documentation within the allotted 180 days and the 3,450,000 shares of our common stock were properly cancelled in 2019.

 

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.

 

During 2020 year-to-date, we assigned our rights to stock repurchase option agreements to third parties resulting in net proceeds of $205,781.

 

During the three months ended March 31, 2020, 2,349,500 shares of common stock were issued to several consultants in connection with business development and professional services rendered valued at $1,209,185. During the three months ended March 31, 2020, we assigned our rights to stock repurchase option agreements to third parties resulting in net proceeds of $186,531. During the three months ended March 31, 2020, no shares of common stock were issued to the management or members of the Board of Directors.

 

All Issuances were exempt from registration requirements of Section 5 of the Securities Act of 1933 as they did not involve a public offering under Section 4(a)2(2) and were issued as restricted securities as defined in Rule 144 of the Act.

 

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Item 3. Defaults Upon Senior Securities.

 

All subordinated notes payable, convertible notes payable and notes payable are currently in default.

 

Item 4. Mine Safety Disclosures.

 

Not Applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

EXHIBIT INDEX

 

Exhibit   Exhibit
Number   Title
3.1   AppTech Corp. Articles of Conversion filed October 25, 2006 (filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.2   AppTech Corp. Articles of Incorporation filed October 25, 2006 (filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.3   AppTech Corp. Certificate of Designation filed May 09, 2007 (filed as Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.4   AppTech Corp. Certificate of Correction filed June 04, 2007 (filed as Exhibit 3.4 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.5   AppTech Corp. Certificate of Designation filed June 06, 2007 (filed as Exhibit 3.5 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.6   AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed November 17, 2008 (filed as Exhibit 3.6 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.7   AppTech Corp. Certificate of Amendment filed October 26, 2009 (filed as Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.8   AppTech Corp. Certificate of Amendment filed October 27, 2009 (filed as Exhibit 3.8 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.9   AppTech Corp. Certificate of Designation filed April 21, 2010 (filed as Exhibit 3.9 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.10   AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed April 27, 2010 (filed as Exhibit 3.10 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.11   AppTech Corp. Certificate of Change filed July 22, 2010 (filed as Exhibit 3.11 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.12   AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed October 26, 2010 (filed as Exhibit 3.12 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.13   AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed October 26, 2010 (filed as Exhibit 3.13 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.14   AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed October 28, 2010 (filed as Exhibit 3.14 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.15   AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed April 08, 2011 (filed as Exhibit 3.15 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)

  

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3.16   AppTech Corp. Certificate of Amendment filed June 06, 2011 (filed as Exhibit 3.16 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.17   AppTech Corp. Articles of Domestication filed July 18, 2011 (filed as Exhibit 3.17 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.18   AppTech Corp. Bylaws dated May 07, 2013 (filed as Exhibit 3.18 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.19   AppTech Corp. Certificate of Domestication filed July 09, 2013 (filed as Exhibit 3.19 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.20   AppTech Corp. Articles of Amendment filed October 31, 2013 (filed as Exhibit 3.20 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.21   AppTech Corp. Certificate of Incorporation filed July 29, 2015 (filed as Exhibit 3.21 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
3.22   AppTech Corp. Bylaws (Amended and Restated) dated March 27, 2020 (filed as Exhibit 3.22 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
4.1   AppTech Corp. Non-Employee Equity Incentive Plan dated March 27, 2020 (filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
4.2   AppTech Code of Business Conduct (filed as Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
10.2   Amendment to Asset Purchase Agreement dated June 22, 2017 (filed as Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
10.5   Lease & Purchase Option Agreement dated January 22, 2020 (filed as Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K, as filed on March 30, 2020, and incorporated herein by reference)
     
31.1   Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 dated May 14, 2020
     
31.2   Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 dated May 14, 2020
     
32.1   Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 dated May 14, 2020
     
32.2   Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 dated May 14, 2020

  

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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 Corp.
     
Date: May 14, 2020 By: /s/ Luke D’Angelo
    Luke D’Angelo
    Interim Chief Executive Officer and Chairman
     
Date: May 14, 2020 By: /s/ Gary Wachs
    Gary Wachs
    Chief Financial Officer

 

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