For the transition period from ____________________ to ________________________

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 1934during 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.

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~~ (or for such shorter period that the registrant was required to submit such files). Yes☒ x No ☐o

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~~“emerging growth company” inRule 12b-2 of the Exchange Act.

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. ☐o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐o No ☒x

As of ~~November 11, 2021,~~August 4, 2022, the registrant had ~~113,389,601~~16,562,708 shares of common stock (par value 0.001) issued and outstanding.

Various statements in this Quarterly on Form 10-Q of AppTech Payments Corp. ~~(we,~~(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,~~“anticipate,” ~~“believe,~~“believe,” ~~“estimate,~~“estimate,” ~~“expect,~~“expect,” ~~“intend,~~“intend,” “may,” “plan,” ~~“contemplates,~~“contemplates,” “predict,” “project,” ~~“target,~~“target,” “likely,” “potential,” ~~“continue,~~“continue,” “ongoing,” ~~“will,~~“will,” ~~“would,~~“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:~~include:~~

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 declineany obligation, to update or revise any forward-looking statements, whether as a resultof new information, future events or otherwise. Please see, however,anyfurther disclosures wemake on related subjects in any annual, quarterly or current reports thatwemay file withtheSecurities and Exchange Commission (SEC).

We encourage you to read the discussion and analysis of our financial condition and our financial statements contained in this Quarterly Report on Form 10-Q. There can be no assurance thatwe will in fact achieve the actual results or developments we anticipate or, evenifwe do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore, we cangive 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,~~“we,” “us,” the “registrant” or the “Company” refer to AppTech Payments Corp.

PART I – FINANCIAL INFORMATION

~~Item~~Item 1. Financial Statements

APPTECH PAYMENTS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

(The financial statements have been condensed for presentation purposes)

	Pages

Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (unaudited)	5

Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	6

Consolidated Statements of ~~Operations~~Stockholders’ Equity (Deficit) for the three ~~months~~ and ~~the nine~~six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (unaudited)	7

Consolidated Statements of ~~Stockholders’ Equity (Deficit)~~Cash Flows for the ~~periods~~six months ended ~~September 30, 2021 & 2020,~~ June 30, 2022 and 2021 ~~& 2020 and March 31, 2021 & 2020~~ (unaudited)	8

~~Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)~~	9

Notes to the Unaudited Financial Statements	109

6 4

APPTECH PAYMENTS CORP.

CONSOLIDATED BALANCE SHEETS

~~SEPTEMBER~~JUNE 30, ~~2021~~2022 AND DECEMBER 31, ~~2020~~2021

(UNAUDITED)

(in thousands, except per share data)


	June 30, 2022			December 31, 2021
ASSETS
Current assets
Cash	$	7,790		$	8
Accounts receivable		50			40
Prepaid expenses		466			95
Prepaid license fees - current		479			479
Total current assets		8,785			622

Prepaid offering cost		—			92
Prepaid license fees - long term		3,180			3,180
Intangible assets		407			—
Note receivable		26			26
Right of use asset		158			189
Security deposit		8			8
Capitalized software development and license		3,625			3,440
TOTAL ASSETS	$	16,189		$	7,557

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	394		$	1,255
Accrued liabilities		1,651			3,136
Right of use liability		64			61
Stock repurchase liability		430			430
Convertible notes payable, net of $37 and $51 debt discount		680			679
Notes payable		1,104			438
Notes payable related parties		—			685
Derivative liabilities		426			599
Total current liabilities		4,749			7,283

Long-term liabilities
Right of use liability		131			163
Notes Payable, net of current portion		67			67
Total long-term liabilities		198			230

TOTAL LIABILITIES		4,947			7,513

Commitments and contingencies (Note 9)

Stockholders’ Equity
Series A preferred stock; $0.001 par value; 10,526 shares authorized; 14 shares issued and outstanding on June 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value; 105,263,157 shares authorized; 16,562,708 and 11,944,607 and outstanding at June 30, 2022 and December 31, 2021, respectively		16			12
Additional paid-in capital		145,001			124,225
Accumulated deficit		(133,775	)		(124,193	)
Total stockholders’ equity		11,242			44
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,189		$	7,557

September 30, December 31,
2021 2020

ASSETS
Current assets
Cash $ 22,495 $ 57,497
Accounts receivable 34,829 40,635
Prepaid expenses 93,516 6,696
Total current assets 150,840 104,828

Capitalized prepaid software development and license 7,058,922 0
Prepaid offering cost 25,000 0
Note receivable 25,500 17,500
Right of use asset 203,938 249,825
Security deposit 7,536 7,536
TOTAL ASSETS $ 7,471,736 $ 379,689

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 1,732,924 $ 1,635,384
Accrued liabilities 1,726,628 2,632,334
Right of use liability 58,979 52,161
Stock repurchase liability 430,000 430,000
Loans payable related parties 0 34,400
Convertible notes payable, net of $63,578 and $280,174 debt discount 665,922 639,826
Convertible notes payable related parties 0 372,000
Notes payable 384,742 1,104,981
Notes payable related parties 684,863 708,493
Derivative liabilities 492,830 597,948
Total current liabilities 6,176,888 8,207,527

Long-term liabilities
Accounts payable 15,000 75,000
Right of use liability 179,195 224,492
Notes Payable, net of current portion 160,040 67,400
Total long-term liabilities 354,235 366,892

TOTAL LIABILITIES 6,531,123 8,574,419

Commitments and contingencies (Note 9)

Stockholders’ Equity (Deficit)
Series A preferred stock; $0.001 par value; 100,000 shares authorized; 14 shares issued and outstanding at September 30, 2021 and December 31, 2020 0 0
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 113,125,715 and 88,511,657 and outstanding at September 30, 2021 and December 31, 2020, respectively 113,126 88,512
Additional paid-in capital 121,269,598 36,664,488
Accumulated deficit (120,442,111 ) (44,947,730 )
Total stockholders’ equity (deficit) 940,613 (8,194,730 )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 7,471,736 $ 379,689

See accompanying notes to the financial statements.

APPTECH PAYMENTS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE ~~MONTHS~~ AND ~~THE NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

(in thousands, except per share data)

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2021 2020 2021 2020

Revenues $ 92,410 $ 105,357 $ 258,688 $ 241,367

Cost of revenues 41,774 48,759 112,032 103,721

Gross profit 50,636 56,598 146,656 137,646
Operating expenses:
General and administrative, including stock based compensation of $31,352, $1,066,386, $1,620,703 and $2,357,125, respectively 1,360,187 1,089,808 6,733,594 2,781,912
Excess fair value of equity issuance over assets received 1,090,716 0 66,124,606 0
Research and development 0 2,999 0 49,250

Total operating expenses 2,450,903 1,092,807 72,858,200 2,831,162

Loss from operations (2,400,267 ) (1,036,209 ) (72,711,544 ) (2,693,516 )

Other income (expenses)
Interest expense (478,009 ) (71,723 ) (3,038,568 ) (213,890 )
Change in fair value of derivative liability 135,469 0 80,370 0
Forgiveness of debt 0 0 0 9,000
Other income (expenses) 161 0 175,361 0

Total other expenses (342,379 ) (71,723 ) (2,782,837 ) (204,890 )

Loss before provision for income taxes (2,742,646 ) (1,107,932 ) (75,494,381 ) (2,898,406 )

Provision for income taxes 0 0 0 0

Net loss $ (2,742,646 ) $ (1,107,932 ) $ (75,494,381 ) $ (2,898,406 )

Basic and diluted net loss per common share $ (0.02 ) (0.01 ) $ (0.74 ) $ (0.03 )
Weighted-average number of shares used basic and diluted per share amounts 111,906,997 86,984,021 106,250,552 85,941,115


	For the Three Months Ended June 30,						For the Six Months Ended June 30, 2022
	2022			2021			2022			2021

Revenues	$	123		$	151		$	227		$	252
Cost of revenues		62			36			113			70
Gross profit		61			115			114			182

Operating expenses:
General and administrative, including stock based compensation of $0.1 million and $0.2 million, for the three months ended, and $0.9 million and $1.3 million for the six months ended June 30, 2022 and 2021, respectively		1,320			3,561			4,101			5,341
Research and development, including stock based compensation of $2.0 million and $0 million, for the three months ended, $3.7 million and $0 million for the six months ended June 30, 2022 and 2021, respectively		2,884			—			4,936			—
Excess fair value of equity issuance over assets received		72			1,091			904			65,034
Total operating expenses		4,276			4,652			9,941			70,375

Loss from operations		(4,215	)		(4,537	)		(9,827	)		(70,193	)

Other income (expenses)
Interest expense		(41	)		(2,432	)		(96	)		(2,561	)
Change in fair value of derivative liability		37			453			173			(55	)
Other income (expenses)		92			175			168			175
Total other income (expenses)		88			(1,804	)		245			(2,441	)

Loss before provision for income taxes		(4,127	)		(6,341	)		(9,582	)		(72,634	)

Provision for income taxes		—			—			—			—

Net loss	$	(4,127	)	$	(6,341	)	$	(9,582	)	$	(72,634	)

Basic and diluted net loss per common share	$	(0.25	)		(0.58	)	$	(0.60	)		(6.70	)
Weighted-average number of shares used basic and diluted per share amounts		16,246,260			10,832,745			15,857,753			10,832,745

See accompanying notes to the financial statements.

APPTECH PAYMENTS CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE ~~PERIODS~~THREE AND SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, 2022 AND 2021 ~~& 2020, June 30, 2021 & 2020~~

~~AND March 31, 2021 & 2020~~(UNAUDITED)

~~(UNAUDITED)~~(in thousands, except per share data)

Series A Preferred Common Stock Additional Paid- Accumulated Stockholders’ Equity
Shares Amount Shares Amount in Capital Deficit (Deficit)

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 )

Net loss — — — — — (326,424 ) (326,424 )
Imputed interest — — — — 3,450 — 3,450
Common stock issued for services — — 174,500 174 81,380 — 81,554
Proceeds from sale of repurchase option — — — — 19,250 — 19,250

Balance June 30, 2020 14 $ — 86,677,825 $ 86,678 $ 34,731,765 $ (42,550,887 ) $ (7,732,444 )

Net loss — — — — — (1,107,932 ) (1,107,932 )
Imputed interest — — — — 3,450 — 3,450
Common stock issued for services — — 1,044,000 1,044 924,397 — 925,441
Common stock issued for services with warrant exercise 100,000 100 165,845 165,945
Proceeds from sale of repurchase option — — — — 45,000 — 45,000

Balance September 30, 2020 14 $ — 87,821,825 $ 87,822 $ 35,870,457 $ (43,658,819 ) $ (7,700,540 )

Balance December 31, 2020 14 $ — 88,511,657 $ 88,512 $ 36,664,488 $ (44,947,730 ) $ (8,194,730 )

Net loss — — — — — (66,293,498 ) (66,293,498 )
Imputed interest — — — — 3,450 — 3,450
Issuance of stock options for board of directors — — — — 17,559 — 17,559
Issuance of stock options for services — — — — 29,999 — 29,999
Issuance of options for capitalized prepaid software development and license — — — — 1,891,414 — 1,891,414
Common stock issued for board of directors — — 87,500 87 49,087 49,174
Common stock issued for services — — 247,000 247 315,743 — 315,990
Common stock issued for merchant equity — — 5,000 5 16,245 — 16,250
Common stock issued for judgment — — 200,000 200 999,800 — 1,000,000
Common stock issued for capitalized prepaid software development and license — — 18,011,515 18,012 67,525,170 — 67,543,182
Common stock cancelled — — (150,000 ) (150 ) (9,850 ) — (10,000 )
Proceeds from sale of repurchase option — — — — 1,972,750 — 1,972,750

Balance March 31, 2021 14 $ — 106,912,672 $ 106,913 $ 109,475,855 $ (111,241,228 ) $ (1,658,460 )

Net loss — — — — — (6,458,237 ) (6,458,237 )
Imputed interest — — — — 3,450 — 3,450
Issuance of stock options for board of directors — — — — 15,217 — 15,217
Issuance of stock options for services — — — — 2,746,385 — 2,746,385
Issuance of options for capitalized prepaid software development and license — — — — 1,090,716 — 1,090,716
Common stock issued for board of directors — — 87,500 88 49,087 49,175
Common stock issued for services — — 106,053 106 174,905 — 175,011
Common stock issued for merchant equity program — — 26,250 26 2,095 — 2,121
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable — — 4,756,895 4,757 3,945,225 — 3,949,982
Proceeds from sale of repurchase option — — — — 458,000 — 458,000

Balance June 30, 2021 14 $ — 111,889,370 $ 111,890 $ 117,960,935 $ (117,699,465 ) $ 373,360

Net loss — — — — — (2,742,646 ) (2,742,646 )
Imputed interest — — — — 3,450 — 3,450
Issuance of stock options for board of directors — — — — 4,682 — 4,682
Issuance of stock options for services — — — — 853,556 — 853,556
Issuance of stock options for capitalized prepaid software development and license — — — — 1,090,716 — 1,090,716
Common stock issued for board of directors — — 29,168 29 16,363 — 16,392
Common stock issued for services — — 20,000 20 14,940 — 14,960
Common stock issued for forbearance — — 53,383 53 63,525 — 63,578
Common stock issued for services with warrant exercise — — 115,000 115 28,636 — 28,751
Common stock issued for convertible notes payable — — 1,018,794 1,019 1,232,795 — 1,233,814

Balance September 30, 2021 14 $ — 113,125,715 $ 113,126 $ 121,269,598 $ (120,442,111 ) $ 940,613


	Series A Preferred				Common Stock					Additional Paid- in			Accumulated			Stockholders’ Equity
	Shares		Amount		Shares			Amount		Capital			Deficit			(Deficit)

Balance December 31, 2020		14	$	—		9,317,017		$	9	$	36,744		$	(44,948	)	$	(8,195	)
Net loss		—		—		—			—		—			(66,293	)		(66,293	)
Imputed interest		—		—		—			—		3			—			3
Stock based compensation		—		—		35,737			—		429			—			429
Issuance of options for capitalized prepaid software development and license		—		—		—			—		1,891			—			1,891
Common stock issued for purchase of judgment		—		—		21,053			—		1,000			—			1,000
Common stock issued for capitalized prepaid software development and license		—		—		1,895,949			2		67,541			—			67,543
Common stock cancelled		—		—		(15,789	)		—		(10	)		—			(10	)
Net Proceeds from sale of repurchase option		—		—		—			—		1,973			—			1,973
Balance Balance March 31, 2021		14		—		11,253,967			11		109,571			(111,241	)		(1,659	)
Net loss		—		—		—			—		—			(6,340	)		(6,340	)
Imputed interest		—		—		—			—		3			—			3
Stock based compensation		—		—		23,137			—		2,988			—			2,988
Issuance of options for capitalized prepaid software development and license		—		—		—			—		1,091			—			1,091
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable		—		—		500,726			1		3,945			—			3,946
Net Proceeds from sale of repurchase option		—		—		—			—		458			—			458
Balance June 30, 2021		14	$	—		11,777,830		$	12	$	118,056		$	(117,581	)	$	487

Balance December 31, 2021		14	$	—		11,944,600		$	12	$	124,225		$	(124,193	)	$	44
Net loss		—		—		—			—		—			(5,455	)		(5,455	)
Common Stock Issued for Forbearance		—		—		2,104			—		3			—			3
Stock based compensation		—		—		310,223			—		2,732			—			2,732
Common stock cancelled		—		—		(126,315	)		—		—			—			—
Net Proceeds from sale of Offering Shares		—		—		3,614,458			4		13,391			—			13,395
Balance Mar 31, 2022		14		—		15,745,070			16		140,351			(129,648	)		10,719
Net loss		—		—		—			—		—			(4,127	)		(4,127	)
Common stock issued for Stock Based Compensation		—		—		140,681			—		2,120			—			2,120
Anti-Dilution Provision (Infinios)		—		—		451,957					2,123						2,123
Common stock issued for HotHand Patents		—		—		225,000			—		407			—			407
Balance June 30, 2022		14	$	—		16,562,708		$	16	$	145,001		$	(133,775	)	$	11,242

See accompanying notes to the financial statements.

APPTECH PAYMENTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

September 30, September 30,
2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (75,494,381 ) $ (2,898,406 )
Adjustments to reconcile net loss to net cash used in operating activities:
Issuance of stock options for board of directors 37,458 0
Issuance of stock options for service 5,058,682 0
Stock issued for board of directors 114,741 0
Stock issued for services 505,961 2,063,680
Stock issued for merchant equity 16,250 0
Stock issued for exercise of warrants 0 140,945
Stock issued for purchase of judgment 1,000,000 0
Stock issued for excess fair value of equity over assets received 64,724,614 0
Excess fair market value of shares issued recorded as interest expense 2,705,904 0
Imputed interest on notes payable 10,350 10,350
Amortization of debt discount 280,175 0
Gain on extinguishment of accounts payable (174,925 ) 0
Change in fair value of derivative liabilities (80,370 ) 0
Changes in operating assets and liabilities:
Accounts receivable 5,806 (8,391 )
Prepaid expenses (86,820 ) 0
Accounts payable 420,717 147,265
Accrued liabilities 127,578 218,233
Right of use asset and liability 7,408 23,089
Net cash used in operating activities (820,852 ) (303,235 )

CASH FLOWS FROM INVESTING ACTIVITIES
Deposit escrow 0 25,000
Capitalized prepaid software development and license (1,567,500 ) 0
Payments on notes receivable (8,000 ) 0
Security deposit 0 (1,589 )
Net cash provided by (used in) investing activities (1,575,500 ) 23,411

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for prepaid offering costs (25,000 ) 0
Proceeds on loans payable – related parties 0 750
Payments on loans payable - related parties (34,400 ) (42,750 )
Repurchase of common stock - related party (10,000 ) 0
Proceeds on note payable 0 68,200
Proceeds from exercise of warrants 0 25,000
Proceeds from sale of repurchase options 2,430,750 250,781
Net cash provided by financing activities 2,361,350 301,981
Changes in cash and cash equivalents (35,002 ) 22,157
Cash and cash equivalents, beginning of period 57,497 24,159
Cash and cash equivalents, end of period $ 22,495 $ 46,316

Supplemental disclosures of cash flow information:
Cash paid for interest $ 0 $ 0
Cash paid for income taxes $ 0 $ 0
Non-cash investing and financing activities:
Common stock issued for conversion of accounts payable $ 206,250 $ 152,500
Forgiveness of debt through conversion of accounts payable $ 174,925 $ 0
Common stock issued convertible notes, accrued interest and derivative liabilities $ 1,620,411 $ 0
Common stock and options issued for capitalized software and licensing costs $ 5,491,422 $ 0
Common stock issued with forbearance agreements recorded as a discount $ 63,578 $ 0

(in thousands, except per share data)


	June 30, 2022			June 30, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,582	)	$	(72,634	)
Adjustments to reconcile net loss to net cash used in operating activities:
Issuance of stock based compensation		4,603			4,815
Common Stock Issued for Forbearance		3			—
Stock issued for purchase of judgment		—			1,000
Stock issued for excess fair value of equity over assets received		904			66,125
Imputed interest on notes payable		—			7
Amortization of debt discount		32			177
Gain on extinguishment of accounts payable		—			(175	)
Change in fair value of derivative liabilities		(173	)		55
Changes in operating assets and liabilities:
Accounts receivable		(10	)		(32	)
Prepaid expenses		(29	)		(30	)
Accounts payable		(861	)		(23	)
Accrued liabilities		(266	)		(16	)
Right of use asset and liability		1			5
Net cash used in operating activities		(5,378	)		(726	)
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized prepaid software development and license		(185	)		(1,340	)
Net cash used in investing activities		(185	)		(1,340	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on loans payable - related parties		—			(34	)
Payments on notes payable		(50	)		—
Net Proceeds from offering		13,395			—
Repurchase of common stock		—			(10	)
Proceeds from sale of repurchase options		—			2,406
Net cash provided by financing activities		13,345			2,362
Changes in cash and cash equivalents		7,782			296
Cash and cash equivalents, beginning of period		8			58
Cash and cash equivalents, end of period	$	7,790		$	354

Supplemental disclosures of cash flow information:
Non-cash investing and financing transactions	$	—		$	5,491
Common stock issued for conversion of accounts payable		—			206
Forgiveness of debt through conversion of accounts payable		—			175
Common stock issued convertible notes, accrued interest and derivative liabilities		—			1,253
Issuance of stock for prepaid services		250			—
Issuance of stock for intangible assets		407			—

See accompanying notes to the financial statements.

APPTECH PAYMENTS CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

(In thousands, except per share data)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

In 2013, AppTech merged with Transcendent One, Inc., whereby Transcendent One, Inc. and its management took controlling ownership of the Company. During this time, AppTech operated as a merchant services provider, continuing the business conducted by Transcendent One, Inc.

In 2017, the Company acquired assets from GlobalTel Media, Inc. The assets included patented, enterprise-grade software for advanced text messaging. In addition to the software, this acquisition included associated databases, four patents in text technology, and additional intellectual property for mobile payments.

In 2020, AppTech entered into a strategic partnership with Infinios (formerly “NEC Payments”), to extend its product offering to include flexible, scalable, and secure payment acceptance and issuer payment processing that supports the digitization of business and consumer financial services and the migration of cash and other legacy payment types to contactless card and real time payment transactions.

In 2021, the Company announced its intent to launch an innovative and patented mobile text payment solution in addition to a suite of digital banking and payment acceptance products designed in the Business-to-Business (“B2B”) and Business-to-Consumer (“B2C”) payment and software space.

On December 23, 2021, AppTech Payments Corp. (“AppTech” or the “Company”) isre-domiciled to Delaware and changed its name from “AppTech Corp.” to “AppTech Payments Corp.” AppTech stock trades under the symbol “APCX” and its warrants trade under the symbol “APCXW.”

The Company successfully completed its capital raise and uplisting onto NASDAQ (herein referred to as its “Offering”) on January 7, 2022. As part of the Offering, the Company executed a ~~Wyoming Corporation incorporated on July 2, 1998.~~

~~AppTech Corp. is~~9.5 to 1 reverse split of its common stock. In addition, the Offering sold 3,614,458 units of our common stock (a unit consisting of one share of common stock and a ~~FinTech company providing electronic payment processing technologies~~warrant to purchase one share of common stock) at $4.15 per unit. In addition, 542,168 warrants were granted by EF Hutton and ~~merchant services. These technologies allow businesses~~the Offering warrants of 3,614,458, all having a 5 five-year expiration and an exercise price of $5.19. The Offering provided net proceeds of approximately $13.4 million. All shares and share prices within this 10-Q have been adjusted to accept cashless and/or contactless payments, such as credit cards, ACH, wireless payments, and more. Their patented, exclusively licensed and/or proprietary merchant services software offers or will offer integrated solutions for frictionless digital and mobile payment acceptance; AppTech is supplementing these capabilities with software that solves for multi-use case, multi-channel, API-driven, account-based issuer processing for card, digital tokens, and payment transfer transactions.reflect the stock split.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The ~~Company’s~~accompanying consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). ~~Also see Note 3.~~In the opinion of the Company’s management, the accompanying financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2022 and June 30, 2021. Although management believes that the disclosures in these unaudited financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC.

The accompanying consolidated unaudited financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022. The interim results for the three months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or for any future interim periods.

Basis of Consolidation

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

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, and realization of tax deferred tax ~~assets and capitalization of software development.~~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~~250 thousand 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 ~~nine~~seven financial ~~institutions~~institutions to service their merchants for which represented 100% of accounts receivable as of ~~September~~June 30, ~~2021 and 2020.~~2022. 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the one merchant (customer) represented approximately ~~16%~~8% and ~~36%~~ 40%of the total revenues, respectively. The loss of this customer would not have significant impact on the Company’s operations.

Software Development Costs

The Company capitalizes software development costs in developing internal use software when capitalizing requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred.

~~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 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.

Consideration paid to customers such as amounts earned under our customer equity incentive program, are recorded as a reduction to revenues. There were no amounts paid or incurred during the nine months ended September 30, 2021 and 2020.

Fair Value Measurements

The Company follows FASB ASC 820, Fair Value Measurements and Disclosures (“(“ASC 820”) to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820 are described below:

	Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

	Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

	Level 3		Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts reported in the Company’s financial statements for cash, accounts payable and accrued expenses approximate their fair value because of the immediate or short-term ~~mature~~maturity of these financial instruments.

Transactions involving related parties cannot be presumed to be carried out on an ~~arm’s-length~~arms-length basis, as the requisite conditions of competitive, free-marketing dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

The following table presents liabilities that are measured and recognized at fair value as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 on recurring ~~basis:~~basis (in thousands):

Schedule of derivative liabilities
	September 30, 2021								June 30, 2022
							Total Carrying		Level 1		Level 2		Level 3		Total Carrying Value
	Level 1		Level 2		Level 3		Value
Derivative liabilities	$	—	$	—	$	492,830	$	492,830	$	—	$	—	$	426	$	426

December 31, 2020
Total Carrying
Level 1 Level 2 Level 3 Value
Derivative liabilities $ — $ — $ 597,948 $ 597,948

	December 31, 2021
	Level 1		Level 2		Level 3		Total Carrying Value
Derivative liabilities	$	—	$	—	$	599	$	599

See Note 76 for discussion of valuation and roll forward related to derivative liabilities.

Intangible Assets and Patents

Our intangible assets only consist of patents. We amortize the patents on a straight-line basis over 15 years, which approximates the way the economic benefits of the intangible asset will be consumed.

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 six months ended June 30, 2022 and 2021 were $4.9 million and $0, respectively.

Per Share Information

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

The number of common stock equivalents not included in diluted income per share was ~~12,498,187~~ 6,176,102and ~~5,616,624~~ 1,272,001 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share, because the effects are anti-dilutive.

Schedule of anti dilutive stock
	September 30, 2021		September 30, 2020		June 30, 2022		June 30, 2021

Series A preferred stock		10,920		10,920		1,149		1,149
Convertible debt		1,639,217		5,605,704		174,060		186,325
Warrants		200,000		—		4,275,464		21,053
Options		7,272,500		—		1,061,132		706,053
Common stock		3,375,550		—		664,297		357,421
Total		12,498,187		5,616,624		6,176,102		1,272,001

Derivative Liability

The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. In addition, the Company issued warrants with variable anti-dilution provisions. The conversion terms of the convertible notes and warrants are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and at each reporting period.

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 financial statements, during the nine months ended September 30, 2021 and 2020, the Company incurred a net loss of $75,494,381~~ ~~and $2,898,406~~ ~~and used cash of $3,027,981 and $303,235 in operating activities. In addition, the Company had a working capital deficit of $6,026,048~~ ~~and an accumulated deficit of $120,442,111~~ as of September 30, 2021. 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 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, the Company intends to raise additional funds through public or private debt and/or equity offerings. During 2021, the Company received $~~2,430,750~~ from eleven sales of a repurchase option. 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. Subsequent to September 30, 2021, the Company has received an additional $127,500 through October 28, 2021. As of the date of these 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 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 the Company derives its 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 it processes, and thus its revenues. In addition, such a downturn could cause its 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 pandemic had significant impact on revenue at the beginning of the pandemic and the processors gave significant concessions of reduced fees to minimize the impact of the pandemic. The revenue began to increase after several months as the economy began to reopen using different methods of purchasing especially online purchasing, as well as, the Company has been able to add new customers. The continuing 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. Also, if the development of the Company’s payment platform is not successful, the software development costs will need to be expensed instead of capitalized.

NOTE 43 – PATENTS

Patents

On ~~September~~June 22, 2017, AppTech executed an Amendment to Asset Purchase Agreement with GlobalTel Media, Inc. ~~In connection with~~, the ~~asset purchase~~details of which were previously disclosed by AppTech. The referenced 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, allacquired 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 specificallyassets including 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~~AppTech intends to ~~AppTech on July 25, 2017. AppTech,~~use these assets as an integral 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.future business expansion and product development. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, amounts included~~2021, there were zero dollars in accounts payable related to the assumption of liabilities in connection with the patents.

In April 2022, the Company fully executed a Definitive Agreement to acquire HotHand Inc. (“HotHand”), a patent-holding company. HotHand did not have any operations, so the transaction was an asset acquisition of its portfolio of thirteen patents ~~were $280,000~~including USPTO 7,693,752; USPTO 8,554,632; USPTO 8,799,102; USPTO 9,436,956; USPTO 10,102,556; USPTO 10,127,592; USPTO 10,600,094; USPTO 10,621,639; USPTO 10,846,726; USPTO 10,846,727; USPTO 10,909,593; USPTO 11,107,140; USPTO 11,345,715. These patents are focused on the delivery, purchase, or request of any products or services within specific geolocation and ~~$280,000, respectively.~~time parameters, provided by a consumer’s cell phone anywhere in the United States. Additionally, HotHand’s family of patents includes a patent that protects advertising on a store’s mobile application when the cell phone is in the store and the ads shown are being triggered by geolocation tagging.

AppTech is currently integrating the HotHand Intellectual Property (“IP”) into an elite digital platform. In addition to offering an embedded, highly secure, and patent-backed product, AppTech will offer licensing agreements for its IP. The Company ~~has expensed~~anticipates generating revenues from the ~~cost~~HotHand IP near the end of the ~~patents~~first quarter of 2023.

HotHand was acquired for 225,000 shares of common stock and was recorded as ~~research and development costs as~~an intangible asset based on the ~~future estimated cash flow expected cannot be reasonably estimated at the time~~fair market value of the ~~expense.~~common stock on the date of acquisition (April 18, 2022). The Company expects to amortize the asset over fifteen years. Further, the purchase agreement outlines revenue milestones that may trigger $500 thousand payables to HotHand’s former owners. As of August 4, 2022, the shares have not been issued.

See Note 98 for more information on capitalized prepaid software development and license.

NOTE 54 – ACCRUED LIABILITIES

Accrued liabilities as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consist of the ~~following:~~following (in thousands):

Schedule of Accrued Liabilities
	September 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021

Accrued interest – related parties	$	—	$	1,039,977
Accrued interest – third parties		1,420,690		1,395,133	$	1,197	$	1,420
Accrued payroll		21,672		—		316		294
Accrued PTO		56,071		—
Accrued residuals		100,615		62,174		35		98
Accrued merchant equity		88,903		91,023
Anti-dilution provision						72		1,290
Other		38,677		44,027		31		34
Total accrued liabilities	$	1,726,628	$	2,632,334	$	1,651	$	3,136

Accrued Interest

Notes payable and convertible notes payable incur interest at rates between 10% and ~~15%~~24%, ~~per~~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~~Anti-dilution provision

The agreement between the Company ~~provided all merchants~~and Infinios, formerly NEC Payments B.S.C., has an anti-dilution provision. To remain in compliance, the ~~opportunity to earn~~Company accrued 73,848 shares of ~~the Company’s~~its 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 Companyat $17.46 per share for a ~~period~~total value of ~~three years for the shares to vest. All merchants became fully vested when the Company ended the program effective~~$1.3 million as of December 31, ~~2015.~~

~~The Company accounts for the value of the shares under the program as a sales incentive and thus the amounts~~2021. Further, in connection with the ~~Program are recorded as a reduction to revenues. As of September 30, 2021,~~capital raise discussed in Note 1, the Company ~~has~~issued an ~~obligation to issue approximately 750,000~~additional 378,109 shares of ~~the Company’s~~its common stock ~~issuable under~~at $2.20 per share for a value of $832 thousand or a total value of $2.1 million. The 451,957 total shares were issued in May 2022.

Further, in connection with the ~~Program.~~shares to be issued as part of the HotHand acquisition, and to be in compliance with its anti-dilution provision with Infiinios, the Company accrued an additional 39,706 shares of its common stock at $1.81 per share for a total of $72 thousand. The shares have not been issued to Infinios as of August 4, 2022.

NOTE 65 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

The Company ~~funds~~funded 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 ~~September~~June 30, ~~2021 and 2020.~~2022. 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 nine months ended September 30, 2021 and 2020, the Company paid $34,400 and $42,000 loans payable from related parties, net. As of September 30, 2021 and December 31, 2020, the balance of the loans payable was $0 and $34,400, 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~~$350 thousand in subordinated notes payable to third ~~parties. The subordinated notes payable were due in 30 to 180 days and~~parties that incurred interest at 10% per annum. ~~As of September 30, 2021 and December 31, 2020, accrued interest related to the subordinated notes was $0 and $153,545, respectively.~~ On September 30, 2021, the Company converted the notes issued for ~~$529,795~~$530 thousand of principal and interest into ~~529,795~~55,767 shares of the Company’s common stock. Since the notes were converted to equity, there will no longer be any accrued interest related to the subordinated notes.

Convertible Notes Payable

In 2020, the Company entered into a Securities Purchase Agreement with an investor pursuant to which the Company agreed to sell to the investor a ~~$300,000~~$300 thousand convertible note bearing interest at 12% per annum (the “Note”). The Note matures in 365 days from the date of issuance. Upon maturity of the convertible note, interest rate will be increased to 24%. The Note is convertible at the option of the holder at any time into shares of the Company’s common stock at ~~$1.00~~nine dollars and fifty cents $9.50 for the ~~180~~one hundred and eighty (180) days immediately following the issue date and thereafter shall equal the lower of: 1) the lowest closing price of the common stock during the preceding twenty-five (25) trading ~~days,~~day, ending on the last complete trading day prior to the issue date of the Note. 2) seventy-five (75) percent of the lowest trading price for the common stock during the twenty-five (25) consecutive trading days preceding the conversion date with a minimum trading volume of ~~1,000~~one thousand (1,000) shares.

In the event of a default of the Note, the Holder, in its sole discretion may elect to use a conversion price equal to the lower of: 1) the lowest trading price of the common stock on the trading day immediately preceding the issue date or 2) seventy-five (75) percent of either the lowest trading price or the closing bid price, whichever is lower during any trading day in which the event of default has not been cured.

The embedded conversion feature of this Note was deemed to require bifurcation and liability classification, at fair value. Pursuant to the Securities Purchase Agreement, the Company also sold warrants to the investors to purchase up to an aggregate of ~~200,000~~21,052 shares of common stock exercisable at ~~$1.50~~fourteen dollars and twenty-five cents $14.25 and expire in five (5) years. The fair value of the derivative liability and warrants as of the date of issuance was in excess of the Note (see Note 76 for valuation) resulting in full discount of the Note. The conversion feature and warrants have various reset provisions for which lower the exercise price and share and warrants issuable.

~~Total interest expense on convertible notes payable, inclusive of amortization of debt discount of $280,175 amounted to $310,588 for the nine months ended September 30, 2021.~~ As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the convertible note payable balance was $280 thousand and $280 thousand, and has accrued interest of $85 thousand and $39 thousand, respectively.

As of June 30, 2022, the convertible note payable discount is ~~$63,578 and $280,174 and will be amortized over the life of the convertible note payable in 2021. As of September 30, 2021, and December 31, 2021, the derivative liability is as follows:~~$0.

Schedule of notes and convertible notes payable
September 30, 2021 December 31, 2020

Convertible notes payable $ 245,551 $ 378,134
Warrants 247,279 219,814
Total notes and convertible notes payable $ 492,830 $ 597,948

See Note ~~9 – Convertible note and warrant lawsuit.~~6– Derivative Liabilities.

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 December 31, 2020, accrued interest related to the convertible notes was $76,187. 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. On February 24, 2021, the chief executive officer assigned $200,000 in convertible notes to a direct relative. On April 29, 2021, the Company issued 3,055,875 shares of the Company’s common stock to the convertible notes payable holders in connection with debt conversion. The closing market price of the Company’s common stock on the date of the agreement was used to value the excess fair value of equity issuance. The amounts were reflected as a reduction of convertible notes payable, accrued interest, and excess fair value of equity issuance as follows:

Schedule of Convertible note and warrant lawsuit
Convertibles note payable $ 222,000
Accrued interest 83,588
Excess fair value of equity issuance 1,379,193
Total $ 1,684,781

In 2015, the Company issued ~~$50,000~~$50 thousand 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~~$9.50 per share. ~~As of September 30, 2021 and December 31, 2020, the accrued interest related to the convertible notes was $29,584 and $25,833, respectively.~~ The Company ~~is currently in default on~~amended the convertible note ~~payable.~~on March 2, 2022 and an agreed offer of a $10 thousand discount on the principal and interest, resulting in a $72 thousand payment in full.

In 2014, the Company issued ~~$400,000~~$400 thousand 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~~$3.14 to ~~$1.00~~$9.50 per share. In addition, the Company issued ~~400,000~~42,105 shares of common stock in connection with the convertible notes payable. The Company had ~~the~~an obligation to repurchase the ~~400,000~~42,105 shares of common stock at ~~$1.00~~$9.50 per share within one year of the note issuance date. On March 30, 2022, the Company entered into three forbearance agreements which granted the holders 2,105 shares of our common stock in exchange for not enforcing the terms of the agreement for a period of twelve months. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company held the obligation to repurchase the shares for ~~$400,000.~~$400 thousand. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the accrued interest related to the convertible notes was ~~$257,833~~$278 thousand and ~~$227,083,~~$268 thousand, 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 December 31, 2020, accrued interest related to the convertible notes was $564,013 of which $265,875 was due to related parties. On April 29, 2021, the Company issued 1,500,021 shares of the Company’s common stock, of which 705,625 shares of common stock were issued to related parties to the convertible note holders in connection with debt conversion. On September 27 – 30, 2021, the Company issued 1,018,793 shares of the Company’s common stock, of which 50,631 shares of common stock were issued to related parties to the convertible note holders in connection with debt conversion. The closing market price of the Company’s common stock on the date of the agreement was used to value the excess fair value of equity issuance. The amounts were reflected as a reduction of convertible notes payable, accrued interest, and excess fair value of equity issuance as follows:

Schedule of convertible notes payables
Convertible notes payable $ 170,000
Convertible notes payable – related parties 150,000
Accrued interest 306,637
Accrued interest – related parties 273,375
Excess fair value of equity issuance 587,723
Excess fair value of equity issuance – related parties 523,968
Total $ 2,011,703

Notes Payable

In 2020, the Company entered into a 30-year unsecured note payable with U.S. Small Business Administration for ~~$68,200~~$68 thousand in proceeds. The notes payable incurred a $100 fee upon issuance and incurs interest at 3.75% per annum. All payments of principal and interest are deferred for ~~twelve~~thirty months ~~with~~from the ~~first $333 payment due July 1, 2021.~~date of the note. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 the balance of the note payable was ~~$68,300,~~$68 thousand and $68 thousand, and accrued interest was ~~$3,202~~$5 thousand and ~~$1,281,~~$4 thousand, respectively.

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. On September 27, 2021 and September 30, 2021, the Company converted two of the notes issued for $74,000 into 74,000 shares of the Company’s common stock. On September 30, 2021, the Company entered into a forbearance agreement which granted the holders 1,650 shares of the Company’s common stock with a current fair market value of $1,931 in exchange for not enforcing the terms of the agreement for a period of twelve months.

Two significant shareholders funded the Company’s operations through notes payable in primarily 2009 and 2010. The notes payable incur interest at 10% per annum and were due on December 31, 2016. ~~As of September 30, 2021, and December 31, 2020, the aggregate balance of the notes payable was $596,726 and $620,356 and accrued interest was $382,917 and $638,016, respectively.~~ On May 2, 2021, the Company entered into a debt reduction and confirmation agreement with a significant shareholder. The parties agreed to reduce the outstanding accrued interest in the amount of ~~$275,000.~~$275 thousand. On September 29, 2021, the Company converted notes issued for ~~$50,631~~$51 thousand of principal and accrued interest into ~~50,631~~5,329 shares of the Company’s common stock. On September 29, 2021, the Company entered into a forbearance agreement which granted the holder ~~29,836~~3,140 shares with a current fair market value of ~~$34,908~~$35 thousand in exchange for not enforcing the terms of the agreement for a period of twelve months.

~~In 2008, the Company entered into a note payable with a third party for $10,000 in total proceeds. The note payable has a flat interest amount due of $21,000. As of September 30, 2021,~~ On February 4, 2022 and 2020, the entire amount of $21,000 has been included in accrued interest. Since the notes payable do not incur interest, the Company imputed interest at $750 and $750, respectively, which represented an interest rate of 10% per annum during the nine months ended September 30, 2021 and 2020.

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,June 29, 2022, the Company entered into an ~~agreement whereby they would repay~~amended forbearance agreement. The parties agreed to reduce the ~~principal and~~outstanding accrued interest in the amount of ~~$145,000 by April 4, 2018~~$150 thousand along with a $100 thousand payment of accrued interest. As of June 30, 2022, and ~~issue~~December 31, 2021, the ~~holders 800,000 shares of common stock. The Company recorded the fair market value~~aggregate balance of the ~~common stock issued at $336,000 based on the date~~notes payable was $597 thousand and accrued interest was $133 thousand and $383 thousand, respectively.

In Q3 of ~~issuance as interest expense. Other than the issuance of shares of common stock. On September 27,~~ 2021, the Company converted notes issued for ~~$225,000 of principal and accrued interest~~$503 thousand into ~~225,000~~52,942 shares of the Company’s common stock.

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 September 30, 2021, and December 31, 2020, the balance on the note payable was $88,136 and accrued interest related to the note payable was $67,892 and $59,900, respectively. On September 30, 2021, Also, the Company entered into a forbearance agreement which granted the ~~holder 4,407~~holders 2,760 shares of the Company’s common stock with a current fair market value of ~~$5,156~~$120 thousand in exchange for not enforcing the terms of the agreement for a period of twelve months.

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 entire amount of $37,496 has been included within accrued interest. Since the note payable did not incur interest, the Company imputed interest at $9,600 and $9,600, respectively, which represented an interest rate of 10% per annum during the nine months ended September 30, 2021 and 2020. On September 27, 2021, the Company entered into a forbearance agreement which granted the holder 6,400 shares with a current fair market value of $8,608 in exchange for not enforcing the terms of the agreement for a period of twelve months.

In 2007, the Company entered into note payable with a third party for $221,800 in proceeds. The note payable incurs interest at 10% per annum. On December 31, 2013, the holder received an arbitration settlement for the principal and accrued interest. As of September 30, 2021, and December 31, 2020, the Company was in default of the arbitration settlement. As of September 30, 2021, and December 31, 2020, accrued interest related to the note payable was $500,384 and $470,143, respectively. On September 30, 2021, the Company entered into a forbearance agreement which granted the holder 11,090 shares with a current fair market value of $12,975 in exchange for not enforcing the terms of the agreement for a period of twelve months.

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 September 30, 2021, and December 31, 2020, accrued interest related to the note payable was $0 and $76,372, respectively. On September 30, 2021, the Company converted notes issued for $139,368 of principal and accrued interest into 139,368 shares of the Company’s common stock.

NOTE 7–6–DERIVATIVE LIABILITIES

The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. In addition, the Company issued warrants with variable conversion provisions. The conversion terms of the convertible notes and warrants are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants were recorded as derivative liabilities on the issuance date and revalued ~~as of September~~at June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Based on the convertible notes described in Note 6, the derivative liability day one loss is ~~$389,712~~$390 thousand and the change in fair value ~~as of September~~at June 30, ~~2021~~2022 and December 31, ~~2020~~2021 is ~~$(105,118)~~$173 thousand and ~~$71,464.~~($26 thousand), respectively. The fair value of applicable derivative liabilities on ~~note,~~notes, warrants and change in fair value of derivative liability are as follows for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022 (in thousands).

Schedule of fair value of derivative liabilities
	Derivative Liability Convertible Notes			Derivative Liability Warrants			Total
Balance as of December 31, 2021	$	274		$	325		$	599
Change in fair value		(60	)		(113	)		(173	)
Balance as of June 30, 2022	$	214		$	212		$	426

Schedule of fair value of derivative liabilities
Derivative Liability Convertible Notes Derivative
Liability Warrants Total
Balance as of December 31, 2020 $ 378,134 $ 219,814 $ 597,948
Change in fair value (107,835 ) 27,465 (80,370 )
Change in fair value due to conversion (24,748 ) — (24,748 )
Balance as of September 30, 2021 $ 245,551 $ 247,279 $ 492,830

As of ~~September~~June 30, ~~2021,~~2022, the fair value of the derivative liability convertible notes is estimated using a Monte Carlo pricing model with the following assumptions:

Schedule of pricing mode with assumptions
Market value of common stock	$	1.17		$	0.59
Expected volatility		66.2	%		91.8	%
Expected term (in years)		0.11			0.25
Risk-free interest rate		0.13	%		2.36	%

As of ~~September~~June 30, ~~2021,~~2022, the fair value of the derivative liability – warrants is estimated using a Monte Carlo pricing model with the following assumptions:


Market value of common stock	$	1.17		$	0.59
Expected volatility		97.7	%		115.0	%
Expected term (in years)		4.39			3.39
Risk-free interest rate		0.59	%		2.56	%

NOTE 8–7–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. 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 ~~September~~June 30, ~~2021,~~2022, including the total amount of related imputed ~~interest:~~interest (in thousands):

Years ended December 31:

Schedule of Future Minimum Rental Payments for Operating Leases
2021	$	20,691
2022		85,039	$	43
2023		87,590		88
2024		90,217		90
2025		7,536		7
Operating Lease Total				228
Less: Imputed interest				(33	)
Total			$	195

Operating Lease Total $ 291,073
Less: Imputed interest (52,899 )
Total $ 238,174

The rent expense was $~~45,885~~31 thousand and $~~70,404~~31 thousand for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ respectively.

NOTE 98 - COMMITMENTS AND ~~CONTIGENCIES~~CONTINGENCIES

Litigation

Former Shareholders Lawsuit

In November 2017, two shareholders of AppTech, Laura Farris and Eric Ottens, filed a lawsuit against the Company in the State of California, claiming conversion, aiding and abetting conversion, breach of fiduciary duty, breach of contract, breach of implied covenant of good faith and fair dealing and declaratory relief. The lawsuit was removed to the United States District Court for the Southern District of California. On December 19, 2019, the Company entered into a settlement and release agreement with the ~~plaintiffs pursuant to which the Company will pay the plaintiffs an aggregate of $240,000 in installments over three years, commencing on February 15, 2020.~~plaintiffs. On January 24, 2021, the parties entered a stipulation modifying the repayment schedule of the settlement to which altered the timing of payments over the three-year repayment period. The ~~Company is current on the modified repayment schedule.~~

~~Years ended December 31:~~

Schedule of payment of lawsuit
2021 $ 20,000
2022 75,000
Total $ 95,000

~~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 alleged 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 was paid in monthly installments of $15,000. The settlement installments paid for the year ended December 31, 2020 was $135,000. On December 30, 2020, full payment was made in ~~accordance with a modified settlement payment schedule.~~March 2022. The litigants are now paid in full and no further action is warranted by the Company.

Other Resolved Lawsuit

OnIn July ~~23,~~ 2020, Flowpay Corporation, a Delaware corporation (“Flowpay”), and R. Wayne Steiger, the President of Flowpay, having a non-binding Memorandum of Understanding (“MOU”) filed a ~~complaint~~lawsuit against AppTech Payments Corp. (formally “AppTech Corp.”) in the ~~Superior Court of California,~~ County of San Diego, ~~North Division against the Company, Luke D’Angelo (the Chairman~~State of the Board, Chief Executive Officer, Executive Officer and Chief Investment Officer of the Company), Robert Sanchez (the former Chief Executive Officer of GlobalTel Media, Inc., and former Chief Technology Officer of the Company) and Christopher Williams (the former Chairman and Chief Operating Officer of Flowpay and current member of the Company’s board of directors). In the complaint, Flowpay and Mr. Steiger allegedCalifornia. The claims included breach of contract, intentional misrepresentation, ~~and~~ negligent misrepresentation, byand unjust enrichment. Management believes the non-binding MOU terminated after no definite agreement was executed between the parties, and negotiations ceased December 20, 2016. On May 19, 2022, AppTech entered into a Settlement and Release Agreement (the “Settlement Agreement”) with Flowpay and Mr. Steiger. Under the terms of the Settlement Agreement, Flowpay and Mr. Steiger dismissed with prejudice all claims against the Company, its Chief Executive Officer, a Director and ~~Mr. D’Angelo in connection with~~ a Memorandum of Understanding, dated May 7, 2016, between the Plaintiffs and the Company and Mr. D’Angelo, as the Company’s CEO, and unjust enrichment, and violation of the California Uniform Trade Secrets Act by the Company in connection with certain patents, and trade secrets of Flowpay. In the complaint, the plaintiffs sought general and special damages, punitive and exemplary damages, disgorgement of profits, prejudgment interest, costs and other relief to be determined by the court. The Plaintiffs filed an amended complaint on March 15, 2021 which removed the cause of action related to violation of the California Uniform Trade Secrets Act. The Company filed an answer with affirmative defenses on April 26, 2021. The lawsuit is presently in the discovery phase. We believe the plaintiffs’ claims are meritless and intend to vigorously defend against this lawsuit.third party individual.

Convertible Note and Warrant Lawsuit

On July 14, 2021, EMA Financial LLC, a Delaware limited liability company (“EMAF”), filed a complaint in the Southern District of New York against the Company. In its complaint, EMAF alleged that the Company breached the terms of a convertible note and a related warrant agreement purchased by EMAF pursuant to a securities purchase agreement between the parties. EMAF sought specific performance, payment of damages to be determined but not in excess of ~~$2,750,000,~~$2.75 million, reimbursement of costs and expenses, including reasonable legal fees, and non-interference. On September 2, 2021, EMAF filed a motion for summary judgment. On September 9, 2021, AppTech filed a motion to dismiss on the grounds the agreements were void as a result of the illegal activity by the plaintiff. On October 15, 2021, the parties filed memorandums in opposition to the respective motion. On October 25, 2021, the parties filed memorandums of law in further support of their respective motions. We believe ~~the~~ EMAF’s claims are meritless and intend to vigorously defend against this lawsuit. The parties have engaged in settlement discussions with an expected range of potential liability between $400,000 and $550,000, which includes principal and accrued interest of the convertible notes payable.

Significant Contracts

Capital Raise

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.

In February 2021, the Company entered into an engagement letter with Maxim Group LLC (“Maxim”) as the lead management underwriter for a follow-on offering which is non-binding. ~~This engages~~On October 27, 2021, Maxim ~~through September 30,~~and the Company terminated all relevant agreements and the Company issued Maxim 21,052 shares of the Company’s common stock in association with the termination.

On October 18, 2021, the Company entered into an engagement letter with EF Hutton, division of Benchmark Investments, LLC. (“EF Hutton”) to act as ~~exclusive financial advisor,~~ lead ~~managing~~ underwriter, ~~and sole book running~~deal manager and investment banker ~~in connection with~~for the Company’s proposed firm commitment follow-on public offering and uplisting. This engaged EF Hutton through the earlier of (i) October 2022 or (ii) the closing of a follow-on offering. The Company completed its offering ~~shall consist~~on January 7, 2022. The Company sold 3,614,458 units of our common stock (a unit consisting of one share of common stock and a warrant to purchase one share of common stock) at $4.15 per unit. The offering provided net proceeds of approximately fifteen million worth of securities subject to the due diligence examination of the Company. The actual size of the offering, the precise number of securities to be offered by the Company and Maxim will depend upon the capitalization of the Company among other various factors. Maxim shall be granted an option to acquire an additional 15% of the total number of securities as an over-allotment, an underwriting discount of 7% and an expense allowance equal to 1%.$13.4 million. See note 111 for ~~subsequent events.~~information on the capital raise completed in January 2022.

Silver Alert Services, LLC

In August 2020, the Company entered into a strategic partnership with Silver Alert Services, ~~LLC.~~LLC doing business as Lifelight Systems (“Lifelight”)~~, expanding into the telehealth sphere.~~. The partnership ~~will~~would expand AppTech’s reach into new markets and provide advanced technological solutions for the telehealth and personal emergency response systems markets.

The strategic partnership provides a promissory note to Lifelight for up to $1.0 million dollars with an interest rate of three percent per annum upon successful completion of Lifelight’s Personal Emergency Response System (“PERS”) pilot program. Also, Lifelight is granted an option for the right to purchase 4,500,000 shares of AppTech Corp. for which 1 million are exercisable at $0.01 and 3,500,000 are exercisable at $0.25 for which vest upon the successful completion of the PERS pilot program and are exercisable for 24 months. These options had a grant date fair value of at $1,549,999 and $5,424,987, respectively using a Black-Scholes options pricing model. No stock-based compensation was ~~recorded during the nine months ended September 30, 2021 as vesting was determined to be highly improbable.~~cancelled on February 17, 2022.

On December 30, 2020, the Company amended its strategic partnership agreement and purchase option agreement with Silver Alert dated August 21, 2020. The amendment altered and/or added certain definitions and the loan disbursements in the strategic partnership agreement. Further, the purchase option agreement was amended to incorporate a vesting schedule related to the gross revenue generated from the partnership. The options will vest based on reaching various gross revenue benchmarks for which expire two years after each tranche vests.

On March 29, 2021, the Company amended its strategic partnership agreement and purchase option agreement dated December 30, 2020. The amendment altered the agreement reducing the options to purchase to one million shares at a price of $0.01 and two million five thousand shares of stock at $0.25. These options had a grant date fair value of $2,329,999 and $5,824,980, respectively using a Black-Scholes options pricing model. No stock-based compensation was recorded during the nine months ended September 30, 2021 as vesting was determined to be highly improbable.

The Company’s ability to deliver on the $1,000,000 loan and fulfill its 50% obligation in 2020 was greatly impacted by the ongoing Covid 19 pandemic. Nursing homes and other senior living facilities were in lock down which did not allow the Silver Alert team into facilities for set-up and equipment training. As of August 9, 2021, the team still does not have access to these facilities and thus revenue could not be generated. Both parties agreed the delay was in the best interest of the long-term growth of the partnership. The Company will assess the probability of vesting at the end of each reporting period.

On April 27, 2021, the Company entered an amended and restated strategic partnership agreement and purchase option agreement with Silver Alert Services, LLC which amends and restates earlier agreements dated August 21, 2020, as amended on December 30, 2020 and March 29, 2021. The amended and restated agreements provide for an equity transaction whereby the Company receives a 70% (seventy percent) ownership in Silver Alert, LLC upon certain revenue goals being achieved. Further, upon the occurrence of the revenue goals, the revenue sharing between the companies shall be altered resulting in the Company retaining 70% (seventy percent).

Infinios Financial Services ~~(formally~~(formerly NEC ~~Payments)~~Payments B.S.C.)

On October 1, 2020, the Company entered into a strategic partnership with Infinios Financial Services BSC (formally NEC Payments B.S.C) (“Infinios”) through a series of agreements, which included the following: (a) Subscription License and Services Agreement; (b) Digital Banking Platform Operating Agreement; (c) Subscription License Order Form; and (d) Registration Rights Agreement (collectively the “Agreements”).

The intent of the Agreements was for the Company to deploy Infinios’s technologies, allowing the Company to extend its product offering to include flexible, scalable and secure payment acceptance and issuer payment processing that supports the digitization of business and consumer financial services and the migration of cash and other legally payment types to distanced and contactless card and real time payment transactions. Infinios will assist the Company to complete the development of its text payment solution and provide “best in class” software that complements the Company’s intellectual property. The Agreements, among other things:

	~~(a)~~	~~provide the Company a license to access and use Infinios’s digital banking and payment technology solutions, as identified in the Subscription License Order Form;~~

	~~(b)~~	~~grant the Company conditional exclusivity in the United States for all of Infinios’s payment acceptance processing technologies contingent upon the Company reaching transaction volume target goals;~~

	~~(c)~~	~~grant Infinios a license to develop software without the possibility of infringing upon the Company’s intellectual property;~~

	~~(d)~~	~~creates the parameters in which Infinios shall assist the Company in completing the development of its text payment system related to the Company’s patents;~~

	~~(e)~~	~~award Infinios a fifteen percent (15%) equity stake in the Company, on a fully diluted basis;~~

	~~(f)~~	~~set revenue sharing splits between AppTech and Infinios for all revenues generated from digital banking technologies licensed to AppTech.~~

Under the Agreements, either party had the right to terminate the agreement should the Company fail to secure a funding in the amount of $3,000,000 within 45 days from the effective date of the Agreements.

On November 19, 2020, the Company entered into Amendment No. 1 to the Subscription License and Services Agreement whereby the funding date was amended to amended to no later than December 18, 2020. All other terms of the original Agreements remained in full force and effect.

On February 11, 2021, the Company entered into an amended and restated Subscription License and Services Agreement, Digital Banking Platform Operating Agreement and Subscription License Order Form with Infinios (collectively the “Restated Agreements”). The Restated Agreement created an engagement fee of $100,000 due within three business days from the effective date, reduced the funding amount triggering the enforceability of the Restated Agreements to $707,500 (“Funding”), altered the date in which initial fees are payable to no later than March 5, 2021 (the “Funding Date”) and provided terms to prevent dilution for Infinios’s equity compensation for future funding secured by the Company. The fees in the Restated Agreements are payable within three business days from the effective date, at or before the Funding Date, at the Subscription Service Ready Date annually and monthly. The gross total fees due under the Restated Agreements are ~~$2,212,500,~~$2.2 million excluding pass-through costs associated with infrastructure hosting fees.

On February 19, 2021, the Company completed and validated its contractual obligations and paid to Infinios the ~~$100,000~~$100 thousand engagement fee. On February ~~29,~~28, 2021, the Company paid the initial fee of ~~$707,500~~$708 thousand to Infinios prior to the Funding Date. On March 25, 2021, the Company issued ~~18,011,515~~1,895,948 shares of common stock to ~~NEC~~an Infinios affiliate on a fully diluted basis with piggyback rights. The Company valued the common stock issuance at ~~$67,543,182~~$67.5 million based upon the closing market price on the effective date of the transaction based on the closing market price of the Company’s common stock. The issuance was recorded as a ~~$5,000,000~~$3.8 million asset ~~as capitalized prepaid software development~~ and ~~licensing and $62,543,182 as an~~$63.8 million expense asin excess fair value of equity issuance over assets ~~received,~~received. The capitalized asset was classified as capitalized prepaid software development of ~~September 30, 2021 based on the estimated fair market value~~$2.8 million and capitalized licensing of ~~services had the Company developed improvements and additional functionality of the Infinios platform.~~$1.0 million. The estimated amortization is a 5-years life based on the term of the licensing agreement. The ~~Company may revise~~amortization is set to begin once the ~~value~~platform begins processing transactions (in thousand).

As of June 30, 2022, the following fees were paid (in thousands):

Schedule of fees paid to NECP platform
Engagement Fee (prepaid licensing cost)	$	100
License subscription fee (prepaid licensing cost)		750
Annual maintenance subscription fee (prepaid licensing cost)		113
Implementation fee (capitalized software cost)		325
Infrastructure implementation fee (capitalized software cost)		65
Training fee (50% due at Funding Date)		50
Total	$	1,403

The annual maintenance subscription fee of $113 thousand will be due annually beginning in the month of the ~~asset~~platform launch. In addition, the infrastructure support fee of $72 thousand will be due annually beginning in 2022 and ~~estimated life as more information is made available.~~ending in 2026.

~~The initial fees paid within three business days from the effective date and at or before the Funding Date included the following costs:~~

Schedule of fees paid to NECP platform
Engagement Fee $ 100,000
License subscription fee (50% due at Funding Date) 375,000
Annua l maintenance subscription fee (first year) 112,500
Implementation fee (50% due at Funding Date) 162,500
Infrastructure implementation fee (50% due at Funding Date) 32,500
Training fee (50% due at Funding Date) 25,000
Total $ 807,500

~~As of September 30, 2021, the following payments are due in the intervals noted over the five-year life of the Restated Agreements:~~

License subscription fee (second 50% due at Subscription Ready Date) $ 375,000
Annual maintenance subscription fees ($112,500 annually) 450,000
Implementation fees (50% due at Subscription Ready Date) 162,500
Infrastructure implementation fees (50% due at Subscription Ready Date) 32,500
Training fees (50% due at Subscription Ready Date) 25,000
Infrastructure support fees ($6,000 monthly after Subscription Ready Date) 360,000
Total $ 1,405,000 *

*	~~Infrastructure Hosting Fees, which are pass through hosting fees from a hosting partner are excluded from this calculation.~~

Innovations Realized LLC

On October 2, 2020, the Company entered into an independent contractor services agreement with Innovations Realized, LLC (“IR”) to develop a strategic operating plan focused on the design, execution and ~~go to market~~go-to-market implementation of the ~~NECP~~Infinios platform to enter the United States market.

On February 18, 2021, the Company entered into an amended independent contractor services agreement with IR. On February 19, 2021, the initial payment of $76,000 was made and on February 24, 2021 the second payment of $76,000 was made, on April 5, 2021 the third payment of $152,000 and on May 5, 2021, the fourth and fifth payment of $114,000 was made. The outstanding balance of $171,000 is past due and remains unpaid as of September 30, 2021.

Under the ~~October 2020~~ agreement, the Company granted options to purchase ~~400,000~~42,105 shares at a price of ~~$0.01~~$0.095 and ~~2,500,000~~263,157 shares at ~~$0.25~~$2.375 and exercisable for two years after vesting. These options vest in equal monthly installments over 24 months. ~~In addition, the options early vesting based on the completion date of the statement of work or the IR principle becoming an employee of AppTech Corp.~~ These options had a grant date fair value of ~~$1,399,992~~$1.4 million and ~~$8,749,701~~$8.7 million using a Black Scholes pricing model. The options to purchase 400,000 shares valued at $1,399,992 were recorded as an expense, as excess fair value of equity issuance, and to purchase 141,411 shares valued at $491,421 were recorded as an asset, as capitalized prepaid software development and licensing, as of September 30, 2021 based on the estimated fair market value of services had the Company developed the platform. The estimated amortization is a 5-year life based on the term of the licensing agreement. ~~The Company may revise the estimated life upon completion of the platform.~~

~~Employee versus Contractor Classification~~

The Company compensated various individuals as consultants. Annually, the Company issues Form 1099s for amounts paid to them. In addition, a portion of these consultants did not have arrangements which specified compensation payable to them. The Company risks potential tax and legal actions should these consultants be deemed to be employees by governmental agencies. The Company added all relevant independent contractors as paid full-time employees on April 22, 2021 and April 28, 2021.

~~Executive Compensation~~

On ~~April 28,~~February 18, 2021, the Company entered into ~~new employment~~an amended independent contractor services agreement for $760 thousand with IR. The final payment owed to IR of $171 thousand was paid in January 2022.

Investor Relations

On January 2, 2022, the Company entered into an agreement with an investor relations firm (“IR Firm”) that compensated IR Firm $50 thousand and 100,000 shares upon the successful uplisting onto NASDAQ. In addition, on January 31, 2022, the Company entered into a consulting agreement with IR Firm. The Company agreed to a six-month commitment with IR Firm that pays $5 thousand per month, grants IR Firm a stock ~~options~~purchase agreement to buy 45,000 shares of the Company stock at $0.001 per share and grants a monthly budget of approximately $100 thousand (with monthly automatic renewals unless the agreement were canceled in writing). In return, IR Firm agrees to provide investor relations outreach, public relations, advisory and consulting services, to AppTech. Payment for the two agreements was made in February 2022.

On May 31st, 2022, the Company entered into a six months agreement with ~~its named executive officers.~~another investor relations firm. The ~~agreements, among other things, each employment agreement, apart from~~firm received 100,000 shares of AppTech’s common stock valued at the ~~Chief Executive Officer which implements a guaranteed bonus structure, shall provide~~closing price on May 31st, 2022, in return for ~~a starting base salary~~providing marketing and potential business development revenue sharing at rates ranging from 20-50% of net processing revenue. Each Employment Agreement also provides a potential annual bonus, which is subject to adjustment by the Board from time to time. Further, stock option awards for certain named executives were provided, subject to the applicable vesting schedule. Each Employment Agreement provides that the applicable named executive officer’s employment with us is “at will”. The named executive officers are entitled to receive all other benefits generally available to our executive officers.investor relation services.

NOTE 109 – 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 September 30, 2021 and December 31, 2020. 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 113,125,715 and 88,511,657, respectively, shares of common stock outstanding as of September 30, 2021 and December 31, 2020. 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company issued ~~488,053~~345,742 and ~~3,568,000,~~37,163, respectively, shares of common stock to several consultants in connection with business development and professional services. The Company valued the common stock issuances at ~~$2,512,693~~$566 thousand and ~~$2,357,125,~~$491 thousand, respectively, based upon the closing market price of the Company’s common stock on the date in which the performance was complete or issued based upon the vesting schedule and the closing market price of the Company’s common stock on the date of the agreement. The amounts were expensed to general and administrative expenses on the accompanying statements of operations. ~~The accounts payable conversion was $424,885 and $152,500 during 2021 and 2020, respectively.~~

During the ~~year~~six months ended ~~December 31, 2020,~~June 30, 2022 and 2021, the Company granted ~~350,000~~ 105,414 and 36,842 shares of common stock to the board of directors valued at ~~$196,700 or $0.562 per share.~~$152thousand and $197 thousand, respectively. The shares vest quarterly over the period of approximately one year. ~~The Company valued~~

During the ~~stock issuances, earned for the nine~~six months ended ~~September~~June 30, 2021, at $114,741 based on the closing market price of the Company’s common stock on the date of the agreement. The amount was expensed to general and administrative expenses on the accompanying statement of operations. The Company will issue 116,668 shares of common stock during 2021 valued at $65,567 based on the closing market price of the Company’s common stock on the date of the agreement, over the remaining term of the directors.

~~During the nine months ended September 30, 2021,~~2022, the Company issued ~~31,250~~225,000 shares of common stock to ~~a merchant in connection with a new contract extension. The Company valued~~HotHand according to the common stock issuance at $18,371 based upon the closing market price of the Company’s common stock on the date of the agreement. The amount was reflected as a reduction of revenue on the accompanying statement of operations.Merger Agreement.

During the nine months ended September 30, 2021, the Company issued 200,000 shares of common stock in connection with a judgment purchase agreement from a third party. The judgment is for damages in the amount of $516,932 plus statutory interest against FlowPay Corporation and R. Wayne Steiger. 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 of the judgment purchase.

During the nine months ended September 30, 2021, the Company issued 31,250 shares of common stock to two merchants in connection with the merchant equity program. The Company recorded the common stock issuance at the historical price of $2,121 based upon the closing market price of the Company’s common stock on the date of the qualification. The amount was reflected as a reduction of the merchant equity liability.

During the nine months ended September 30, 2021, the Company issued 5,574,689 shares of common stock to several convertible note payable holders of which 3,812,131 shares of common stock were issued to related parties in connection with debt conversions. The closing market price of the Company’s common stock on the date of the agreement was used to value the excess fair value of equity issuance. The amounts were reflected as a reduction of convertible notes payable, accrued interest, and excess fair value of equity issuance as follows:

Schedule of convertible related party
Convertible notes payable $ 797,600
Convertible notes payable – related parties 395,630
Accrued interest 647,199
Accrued interest – related parties 383,964
Excess fair value of equity issuance 794,136
Excess fair value of equity issuance – related parties 1,911,769
Total $ 4,930,298

See Note 98 – Significant Contracts for additional common stock issuance.

Stock Options

On July 28, 2020, the Company entered into an agreement for board of director services. As compensation the Company granted options to purchase 125,000 shares at a price of $0.562 and are exercisable for two years. The options vest in equal monthly installments over 24 months. These options were valued at $70,235 using a Black-Scholes options pricing model.

On August 25, 2020, the Company entered into an agreement for accounting services in general and administrative expenses. As compensation the Company granted options to purchase 100,000 shares of common stock at a price of $0.25 and are exercisable for nine months. These options were valued at $140,945 using a Black-Scholes options pricing model. The options were exercised on August 26, 2020.

On September 21, 2020, the Company entered into an agreement for sales and marketing services in general and administrative expenses. As compensation the Company granted options to purchase 10,000 shares at a price of $0.01 and to purchase 120,000 shares at a price of $0.25 and are exercisable for two years. These options vest upon execution of the contract and in equal quarterly installments of 24 months. These options were valued at $13,498 and $161,999, respectively using a Black-Scholes options pricing model.

On September 22, 2020, the Company entered into an agreement for IT services in general and administrative expenses. As compensation the Company granted options to purchase 52,000 shares at a price of $0.25 and are exercisable for two years. The options vest in equal quarterly installments of 24 months. These options were valued at $77,995 using a Black-Scholes options pricing model.

On October 29, 2020, the Company entered into an agreement for sales and marketing in general and administrative expenses. As compensation the Company granted options to purchase 100,000 shares of common stock at a price of $0.30 and are exercisable for two years. These options were valued at $156,999 using a Black-Scholes options pricing model. The options were exercised on October 29, 2020.

On April 22, 2021, the Company entered into four agreements for administrative services, sales and marketing services in general and administrative expenses. As compensation the Company granted non-statutory stock options to purchase 282,000 shares at a price of $1.91 and are exercisable for three years. These options were valued at $606,278 using a Black-Scholes option pricing model.

On April 28, 2021, the Company entered into three agreements for executive officers’ compensation in general and administrative expenses. As compensation the Company granted non-statutory stock options to purchase 1,600,000 shares at a price of $2.036 and are exercisable for three years. These options were valued at $3,663,820 using a Black-Scholes option pricing model.

During the third quarter, the Company entered into an agreement for administrative services in general and administrative expenses. As compensation, the Company granted non-statutory stock options to purchase 200,000 shares of the Company’s common stock at a price of $1.80 per share. These options were valued at $360,000 using a Black-Scholes option pricing model.year ended December 31, 2021:

a)	options to purchase 353,368shares of common stock at a weighted average price of $16.25 were granted as compensation to employees. The options vest in equal monthly installments over 6 and 12 months. The options were valued at $6.3 million using a Black-Scholes options pricing model.

b)	options to purchase 38,421 shares of common stock at a weighted average price of $8.55 were granted ascompensation for various services including accounting, sales, and marketing. The options were valued at $825thousand using a Black-Scholes options pricing model. 13,158 shares were exercised.

During the third quarter, the Company entered into two agreements for administrative services in general and administrative expenses. As compensation, the Company granted non-statutory stock options to purchase 365,000 shares of the Company’s common stock at prices of $0.25 and $1.304 per share. These options were valued at $354,750 using a Black-Scholes option pricing model.

~~See Note 9 – Significant Contracts for additional stock options granted.~~

The fair value of the options for the year ended December 31, 2021 is estimated using a Black-Scholes option pricing model with the following range of ~~assumptions as of September 30, 2021:~~assumptions:

Schedule of Black Scholes option pricing
Market value of common stock on issuance date	$	~~0.562~~$5.34 - $~~3.50~~33.25
Expected price	$	~~0.01~~$0.095 - $~~2.036~~19.34
Expected volatility		~~467~~450% - 608%	%
Expected term (in years)		0.3 - ~~2.8~~3.0
Risk-free interest rate		0.11	%
Expected dividend yields		0

During the six months ended June 30, 2022:

options to purchase 363,685 shares of common stock at a weighted average price of $2.73 were granted as

compensation to employees. The options vest in equal monthly installments ranging from instantly to 24 months.

The options were valued at $992 thousand using a Black-Scholes options pricing model.

options to purchase 36,842 shares of common stock at a weighted average price of $12.04 were granted as

compensation for various services including engineering, accounting, and sales. The options were valued at $444

thousand using a Black-Scholes options pricing model.

The fair value of the options for the six months ended June 30, 2022 is estimated using a Black-Scholes option pricing model with the following range of assumptions:

Market value of common stock on issuance date	$0.77 - $12.45
Exercise price	$1.24- $12.04
Expected volatility	415% - 442%
Expected term (in years)	0.0 - 5.0
Risk-free interest rate	0.11%
Expected dividend yields	0

The following table summarizes option activity:

Schedule of option activity
	Number of shares			Weighted Average exercise price		Weighted Average remaining years

Outstanding December 31, 2021		1,055,184		$	6.62
Issued		400,527		$	4.01
Exercised		—		$	—
Cancelled		(394,579	)	$	2.56
Outstanding as of June 30, 2022		1,061,132		$	7.15		2.17
Outstanding as of June 30, 2022, vested		781,767		$	7.67		2.12

Schedule of option activity
Weighted Weighted
Number of Average Average
shares exercise price remaining years

Outstanding December 31, 2020 7,707,000 $ 0.21
Issued 2,447,000 $ 2.02
Cancelled (1,079,749 ) $ 0.36
Outstanding as of September 30, 2021 9,074,251 $ 0.56 2.75
Outstanding as of September 30, 2021, vested 3,010,785 $ 1.11 2.80

The remaining expense outstanding through ~~September~~June 30, ~~2021 is $8,869,318 for~~2022 is $3.5 million which ~~$1,701,755~~ is expected to be expensed over the next 3027 months in general and administrative expense and $7,167,563 is expected to be recorded over the next 16 ½ months as an asset, as capitalized prepaid software development and licensing or as an expense excess fair value of equity issuance over assets received.expense.

On ~~July 28, 2020,~~December 7, 2021, the board authorized the Company’s ~~AppTech Equity~~Equity Incentive Plan in order to facilitate the grant of equity incentives to employees (including our named executive officers), directors, independent contractors, merchants, referral partners, channel partners and ~~consultants~~employees of our company to enable our company to attract, retain and motivate employees, directors, merchants, referral partners and channel partners, which is essential to our long-term success. A total of ~~5,000,000~~1,052,632 shares of common stock were authorized under the ~~AppTech~~ Equity Incentive Plan, for which as of ~~September~~June 30, ~~2021~~2022 a total of ~~3,204,500~~349,297 are available for issuance.

The Company extended its stock repurchase agreement with the Chief Financial Officer. Terms of the updated agreement state that the Company has until October 21, 2022 to buyback 263,158 shares of its common stock for $500 thousand.

Warrants

In 2020, the Company entered into a security purchase agreement with an investor pursuant to which the Company agreed to sell the investor a ~~$300,000~~$300 thousand convertible note bearing interest at 12% per annum. The Company also sold warrants to the investors to purchase up to an aggregate of ~~200,000~~21,052 shares of common stock, with an exercise term of five (5) years, at a per share price of ~~one dollar and fifty cents ($1.50)~~$14.25 which may be exercised by cashless exercise. The number of warrants adjusted in the period ending ~~September 30, 2021~~March 31, 2022 due to a reset event on ~~September 27, 2021~~January 7, 2022 changed the exercise price from ~~one dollar and fifty cents ($1.50)~~$9.50 to ~~one dollar ($1.00)~~$2.52 and increased the number of warrants from ~~200,000~~31,578 to ~~300,000.~~119,095. The warrants were deemed a derivative liability and ~~were~~ recorded as a debt discount at their date of issuance.

In total, the Company has 4,275,464 warrants outstanding. 3,614,458 were related to the Offering, 542,168 were granted on January 7 and the reset event added an additional 119,095. See Note 7.1 for information on warrants issued during the Offering and note 6 for additional information on the derivative liability.

~~Common Stock Repurchase Option~~

On February 3, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 2,000,000 shares of common stock from a third party at $0.20 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 for 50,000 shares was exercised on February 11, 2021 for which the Company received $33,750 in proceeds which was recorded as additional paid-in capital.

On February 3, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 2,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 350,000 shares was exercised on February 17, 2021 for which the Company received $222,250 in proceeds which was recorded as additional paid-in capital.

On February 3, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 2,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 850,000 shares was exercised on February 19, 2021 for which the Company received $539,750 in proceeds which was recorded as additional paid-in capital.

On February 3, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 1,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 750,000 shares was exercised on February 22, 2021 for which the Company received $881,250 in proceeds which was recorded as additional paid-in capital.

On February 23, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 500,000 shares of common stock from a third party at $0.225 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 250,000 shares was exercised on March 1, 2021 for which the Company received $193,750 in proceeds which was recorded as additional paid-in capital.

On February 23, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 500,000 shares of common stock from a third party at $0.225 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 150,000 shares was exercised on March 5, 2021 for which the Company received $102,000 in proceeds which was recorded as additional paid-in capital.

On March 4, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 2,000,000 shares of common stock from a related party at $0.20 per share. The common stock repurchase option for 50,000 of the 2,000,000 shares was exercised on March 10, 2021. On March 10, 2021, the Company cancelled the 50,000 shares exercised.

On March 15, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 100,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on April 7, 2021 for which the Company received $117,500 in proceeds which was recorded as additional paid-in capital.

On March 17, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 750,000 shares of common stock from a third party at $0.20 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 for 35,000 shares was exercised on April 8, 2021 for which the Company received $28,000 in proceeds which was recorded as additional paid-in capital.

On June 17, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 706,667 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 500,000 shares was exercised on September 18, 2021 for which the Company received $87,500 in proceeds which was recorded as additional paid-in capital.

On June 18, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 1,000,000 shares of common stock from a third party at $0.15 per share. The Company assigned the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 1,000,000 shares was exercised on September 18, 2021 for which the Company received $225,000 in proceeds which was recorded as additional paid-in capital.

NOTE 1110 – 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 October 4, 2021,~~In July 2022, the Company entered into a ~~loan forbearance~~consulting services agreement with ~~a lender~~an investor relations firm. The firm is to receive cash compensation, in return for providing marketing and investor relation services.

In July 2022, the Company amended its option agreements with ~~a balance outstanding~~all employees, consultants and board of ~~$13,895, including principal and interest,~~directors. The board of directors are scheduled to ~~forebear enforcement~~meet in August 2022 to vote on the measure. If approved by the board of ~~any~~director’s, the shareholders would vote to ratify the amendment as part of the ~~payment terms of the promissory note~~annual shareholder meeting tentatively scheduled to take place in ~~exchange for 5,695 shares of the Company’s common stock as an equity bonus.~~April 2023.

On October 4, 2021, the Company entered into a loan forbearance agreement with a lender with a balance outstanding of $40,189, including principal and interest, to forebear enforcement of any of the payment terms of the promissory note in exchange for 7,009 shares of the Company’s common stock as an equity bonus.

On October 5, 2021, the Company entered into a debt conversion agreement to convert a non-interest bearing promissory note with an outstanding balance of $29,598 for 29,598 shares of the Company’s common stock as of the effective date of the agreement at a conversion price of $1.00 per share.

On August 24, 2021, 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 $0.175 per share. The Company assigned the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 300,000 shares was exercised on October 13, 2021 for which the Company received $127,500 in proceeds which was recorded as additional paid in capital.

On October 18, 2021, the Company entered in an engagement letter with EF Hutton, division of Benchmark Investments, LLC. (“EF Hutton”) to act as lead underwriter, deal manager and investment banker for the Company’s proposed firm commitment public offering and uplisting. The engagement letter is subject to the signing of an underwriting agreement between the parties covering the sale of up to $15,00,000 of securities subject to the due diligence examination of the Company. The actual size of the offering, the precise number of securities to be offered by the Company and EF Hutton will depend upon the capitalization of the Company among other various factors. EF Hutton shall be granted an option to acquire an additional 15% of the total number of securities as an over-allotment, an underwriting discount of 8% and an expense allowance equal to 1%.

On October 20, 2021, the Company entered into a debt conversion agreement to convert a promissory note with an outstanding balance of $35,000, including principal and accrued interest for 35,000 shares of the Company’s common stock as of the effective date at a conversion price of $1.00 per share.

On October 27, 2021, Maxim and the Company terminated all relevant agreements. In satisfaction of all amounts due and owning, and all amounts that shall become due and owing, the Company shall issue Maxim 200,000 shares of the Company’s common stock in association with the termination.

~~Item~~

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 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

Through our scalable cloud-based platform architecture and infrastructure coupled with our commerce experiences development and delivery model, we intend to simplify and streamline digital financial services for corporations, small and midsized enterprises (“SMEs”) and consumers. We will accomplish this through innovative omnichannel payment and digital banking technologies that complement our core merchant services capabilities. We believe there is opportunity to generate significant revenue for the Company the near future by providing innovative commerce solutions and experiences that resonate with clients, their customers, and the market as a whole. Further, our soon to be launched modular platform will equip forward-thinking financial institutions, technology companies, and SMEs with operational efficiencies, such as automated financial controls and reconciliation in addition to manual administration.

Today, our Company’s merchant services solutions provide financial processing for businesses to accept cashless and/or contactless payments, such as credit cards, ACH, wireless payments, and more. Our patented, exclusively licensed, and proprietary merchant services software will offer, new integrated solutions for frictionless digital and mobile payment acceptance including acceptance of alternative payment methods (“APMs”). We are extending and enhancing these capabilities with software that solves for multi-use case, multi-channel, API-driven, account-based issuer processing for card, digital tokens, and payment transfer transactions. Our scalable business model allows for expansive white-labeling, SaaS, and embedded solutions that will drive the digital transformation of financial services and generate diverse revenue streams for our company.

The financial services industry is going through a period of intensive change driven by the advancement of technology ~~the adaptation to societal changes resulting from COVID-19,~~ and the rapid rise of contactless ~~transactions.~~transactions due to societal changes, in part, as a response to COVID-19. End-users expect ease of use and an enhanced user experience in all their daily financial interactions. In this rapidly evolving digital marketplace, ~~our prospective clients, such as merchants and independent software vendors (“ISVs”),~~businesses have broad and frequently changing requirements to meet consumer expectations and operational efficiencies to maintain their competitive edge.

Providing basic payment acceptance and “lowest price” models is no longer the winning formula to support the market. These entities recognize that staying competitive in the digital age requires a partner with a platform and services capable of delivering flexibility and growth while streamlining operations to continually deliver increased revenue and profitability opportunities. Our pricing is extremely competitive, but we believe the value we create for financial institutions, technology companies, and SMEs through our technology, deployment model, services and consultative approach will create true differentiation from our competitors.

Our global financial services platform architecture and infrastructure is designed to be flexible and configurable to meet current and future market needs. This will empower our clients to take advantage of future platform development and new innovative digital financial solutions by leveraging off-the-shelf experiences and consuming our APIs. Additionally, by taking a holistic view of all aspects of our clients’ business, including risk, volume, user experience, integration capabilities and technical needs, we will create optimal and extensible financial technology solutions at a rapid pace.

Through exclusive licensing and partnership agreements to complement our patented technology capabilities, we believe we will become leaders in the embedded payment and digital banking sectors by supporting digital, tokenized, multi-channel, embedded API-driven transactions. We intend to accelerate this position through the integration of our merchant services and a secure text payment solution with extensive digital account-based and multi-channel issuer payment processing capabilities. We believe that this will enable us to provide our clients an end-to-end payment acceptance and digital banking solution powering straight-through processing and embedded payment opportunities in the B2B space. We expect to support clients through the development of custom and off-the-shelf experiences by delivering these solutions through public APIs and Webhooks.

A key to the company’s success and market penetration is the continued development of enterprise-grade, patent protected software for SMS text payments via a mobile device. Our patented technology manages text messaging for processing payments, notification, response, authentication, marketing, advertising, information queries and reports. Once an account is established through a multi-currency digital wallet, neither internet connectivity nor a specific application is required to process payments between merchants and end-users. These features will be particularly beneficial for unbanked and under banked individuals in developing or emerging markets where access to the internet on a mobile device and modern banking institutions may not be readily available. In addition, our software platform will extend merchants’ marketplace capabilities by creating new avenues and channels to request and receive frictionless, digital payments and engaging end-users by utilizing a familiar, convenient, and widely adopted technology.

We believe our technologies will greatly increase the adoption of mobile payments and alternate banking solutions in sectors that must quickly adapt and migrate towards new technologies that facilitate convenient and safe contactless payments. To survive and succeed in this environment, businesses need to adopt new technologies to engage, communicate and process payments and manage payouts with their customers from a supplier that widely supports innovation and adaptation as the industry evolves. We believe our technologies will greatly increase the adoption of omni-channel payments and digital banking solutions in sectors that must quickly adapt and migrate to new, secure digital Fintech technologies. By embracing ~~technological advancement~~advancements in the payment and banking industries, we are well-positioned to meet the growing needs of existing and prospective clients and intend for our current and future products to be at the forefront of solving these accelerated market needs.

~~We are also expanding upon our~~AppTech’s platform is currently in the testing phase, with an expected general launch date occurring in the fourth quarter of 2022. The platform will be delivering a best-in-class financial technology foundation into the telehealth and remote patient monitoring sectors in response to cultural shifts and new healthcare demands of society. We have identified a need for the integration of payment acceptance technologies into the burgeoning telehealth sector. We believe this sector’s focus to date has been on providing health-related telecommunications but the way in which fees and payments for these services are requested and accepted is being overlooked. We intend to fill this identified shortfall by developing technologies and ~~payment-related~~capabilities through an ever-evolving modular cloud/edge-based platform. This platform houses a large array of financial products and services that can be taken off-the-shelf or consumed via modern APIs. Within its platform, AppTech offers three primary products: Payments-as-a-Service (“PaaS”), Banking-as-a-Service (“BaaS”), and Commerce-as-a-Service (“CXS”).

The platform will offer PaaS via integrated solutions for frictionless digital and mobile payment acceptance. These solutions will provide advanced payment processing solutions for credit cards, ACH, and gift/loyalty cards by catering to ~~aid companies providing telehealth solutions. Through~~the needs of each merchant. PaaS will also solve for multi-use case, multi-channel, API-driven, account-based issuer processing for card, digital tokens, and payment transfer transactions.

AppTech is positioned to further fuel digital transformation through BaaS, layered with financial management tools that power Financial Institutions to give businesses, professionals, and individuals the ability to better manage their finances anywhere, anytime at a ~~strategic partnership, we plan~~fraction of the cost of traditional banking and financial services. BaaS creates an ecosystem of immersive and scalable digital financial management services backed by Mastercard & Visa processing certifications.

The global financial services platform architecture is designed to ~~help bring~~be flexible and configurable to meet current and future market ~~personal emergency response~~needs. CXS matches the Fintech layer with User Experience. Experiences are a combination of PaaS, BaaS and ~~remote patient monitoring services~~other complimentary technologies that offer seamless integration opportunities to achieve on-demand, immersive customer experiences that drive customer LTV, loyalty, and ~~equipment~~retention.

The platform also incorporates AppTech’s core, patented text payment and geofence triggered ecommerce and/or advertising via cell phone capabilities delivering experiences that focus on frictionless use cases and end-users desire for payment transaction simplicity, control, and comfort. The Company believes that these features will be particularly beneficial for unbanked and under-banked in developing or emerging markets where access to ~~help ensure~~ the ~~safety of elderly~~internet on a mobile device and ~~injured or sick patients~~modern banking institutions may not be readily available. Particularly by extending merchants’ marketplace capabilities via new channels to request and receive frictionless, digital payments and engaging end-users by utilizing a familiar, convenient, and widely adopted technology.

AppTech’s world-class embedded digital Fintech platform delivers scalable solutions for automated and embedded customizable experiences. These Commerce Experiences drive enterprise business growth, value, and operational efficiencies while providing peace of mind to family members, care givers and retirement communities. These solutions increase patients’ access to comprehensive care options and allow medical teams to intervene in a timely manner to avoid more serious health concerns. By providing financial and administrative services we will have the opportunity to receive substantial revenue share from recurring revenue billed through Medicare with the potentialeconomic freedom for ~~substantial growth and substantial profit margins.~~end users.

~~We are an~~ ~~OTCPink~~ ~~Open Market traded corporation~~ ~~headquartered~~ ~~in Carlsbad,~~ ~~CA.~~ ~~Our~~ ~~stock~~ ~~trades under~~ ~~the symbol~~ ~~“APCX.” We~~ ~~werefounded~~ ~~in 1998 as Health Express~~ ~~USA,~~ ~~Inc.~~ ~~Our business went~~ ~~through~~ ~~name changesin 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~~ ~~managementtook~~ ~~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~~.

~~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~~ ~~has an~~ ~~adverse~~ ~~effect~~ ~~on our processing~~ ~~volume 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 aswellasfactors that impact those ~~items.~~items (in thousands, except per share data).

~~Revenues~~

Revenues

Our R~~evenues~~.Revenues. We derive 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 ~~our financial services~~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~~three and six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ respectively. ~~We have derived this data from our financial statements included elsewhere in this quarterly report.~~

~~The Three Months Ended September 30, 2021~~Revenue

~~Compared to the Three Months Ended September 30, 2020~~

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

Three Months Ended September 30
(in thousands) 2021 2020

Revenue $ 92.4 $ 105.4
Cost of revenue 41.8 48.8
Gross profit 50.6 56.6

Operating expenses
General and administrative 1,360.2 1,089.8
Excess fair value of equity issuance over assets received 1,090.7 —
Research and development — 3.0
Total operating expenses 2,450.9 1,092.8
Loss from operations (2,400.3 ) (1,036.2 )

Other income (expenses)
Interest expense, net (478.0 ) (71.7 )
Change in fair value derivative liability 135.5 —
Forgiveness of debt — —
Other income 0.2 —
Total other income (expenses) (342.3 ) (71.7 )
Loss before provision for income taxes (2,742.6 ) (1,107.9 )

Provision for income taxes — —
Net Loss $ (2,742.6 ) $ (1,107.9 )

~~The Nine Months Ended September 30, 2021~~

~~Compared to the Nine Months Ended September 30, 2020~~

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

Nine Months Ended September 30
(in thousands) 2021 2020

Revenue $ 258.7 $ 241.5
Cost of revenue 112.0 103.8
Gross profit 146.7 137.7

Operating expenses
General and administrative 6,733.6 2,781.9
Excess fair value of equity issuance over assets received 66,124.6 —
Research and development — 49.2
Total operating expenses 72,858.2 2,831.1
Loss from operations (72,711.5 ) (2,693.4 )

Other income (expenses)
Interest expense, net (3,038.6 ) (213.9 )
Change in fair value derivative liability 80.4 —
Forgiveness of debt — 9.0
Other income 175.3 —
Total other income (expenses) (2,782.9 ) (204.9 )
Loss before provision for income taxes (75,494.4 ) (2,898.3 )

Provision for income taxes — —
Net Loss $ (75,494.4 ) $ (2,898.3 )

~~Revenue~~

Revenue ~~decreased to $92,410 from $105,357 and increased to $258,688 from $241,367~~ was approximately $123 thousand for the three months ~~and nine~~ ended June 30, 2022, compared to $151 thousand for the three months ended ~~September~~June 30, 2021, ~~and~~ ~~2020.~~representing a decrease of 19%. The decrease ~~in the quarter~~ was principally driven by an adjustment in our revenue related to a processor.

Revenue was approximately $227 thousand for the six months ended June 30, 2022, compared to $252 thousand for the six months ended June 30, 2021, representing a decrease of 10%. The decrease was principally driven by an adjustment in our revenue related to a processor.

Cost of Revenue

Cost of revenue was approximately $62 thousand for the three months ended June 30, 2022, compared to $36 thousand for the three months ended June 30, 2021, representing an increase of 72%, driven primarily by an increase in residual payouts from additional processing revenue.

Cost of revenue was approximately $113 thousand for the six months ended June 30, 2022, compared to $70 thousand for the six months ended June 30, 2021, representing an increase of 61%, driven primarily by an increase in residual payouts from additional processing revenue.

General and Administrative Expenses

General and administrative expenses were approximately $1.3 million for the three months ended June 30, 2022, compared to $3.6 million for the three months ended June 30, 2021, representing a decrease of 63%. The decrease was primarily driven by a decrease in stock based compensation and a one-time stock issuance for the ~~processing volume along with an adjustment in processing fees with one major account.~~purchase of a judgment.

General and administrative expenses were approximately $4.1 million for the six months ended June 30, 2022, compared to $5.3 million for the six months ended June 30, 2021, representing decrease of 23%. The ~~increase year-to-date more than offset this~~ decrease ~~and~~ was ~~principally~~primarily driven by an increase in ~~new accounts~~payroll and ~~an increase in processing volume along with~~ ~~an adjustment in processing fees assessed to the Company~~.

~~Cost of Revenue~~

~~Cost~~ of ~~revenue~~ ~~decreased to $41,774 from $48,759 and $112,032 from $103,721~~ bonuses, which was offset by a one-time stock issuance for the ~~three months~~ ~~and nine months ended September 30, 2021~~ ~~and~~ ~~2020~~. ~~This~~ ~~decrease was~~ ~~driven primarily~~ by ~~an adjustment discussed above related to the decrease in revenue~~.purchase of a judgment.

~~General~~Research and Development Expenses

Research and ~~Administrative Expenses~~

~~General~~ ~~and~~ ~~administrative~~development expenses ~~increased to $1,360,187 from $1,089,808 and $6,733,594 from $2,781,912~~ were approximately $2.9 million for the three months ~~and nine~~ended June 30, 2022, compared to $— for the three months ended ~~September~~June 30, ~~2021 and 2020, the~~2021. The increase was primarily ~~driven~~by~~stock-based compensation~~ due to ~~several significant consulting agreements~~the onboarding of engineers, developers, and the hardware and software needed to complete the platform. Only the salaries of the product development team were capitalized in January 2022.

Research and development expenses were approximately $4.9 million for ~~marketing and professional related services, along with stock-based compensation~~the six months ended June 30, 2022, compared to $— for the six months ended June 30, 2021. The increase was primarily due to ~~executive management~~the onboarding of engineers, developers, and ~~employee contracts~~the hardware and software needed to complete the platform. Only the salaries of the product development team were capitalized in January 2022..

Excess Fair Value of Equity Issuance Over Assets Received

Excess fair value of equity issuance over assets received expenses ~~increased to $1,090,716 from $0 and $66,124,606 from $0~~was $72 thousand for the three months ~~and nine months~~ ended ~~September~~June 30, ~~2021 and 2020. The increase was due~~2022, compared to ~~two major equity issuances for services.~~

~~Research and Development Expenses~~

~~Research and development expenses decreased to $0 from $2,999 and $0 from $49,250,~~ $1.1 million for the three months ended June 30, 2021. In connection with the shares to be issued as part of the HotHand acquisition, and ~~nine~~to be in compliance with its anti-dilution provision with Infiinios, the Company accrued an additional 39,706 shares of its common stock at $1.81 per share for a total of $72 thousand. The shares have not been issued to Infinios as of June 30, 2022.

Excess fair value of equity issuance over assets received expenses was $904 thousand for the six months ended ~~September~~June 30, 2022, compared to $65.0 million for the six months ended June 30, 2021. The excess fair value over assets occurring in 2021 ~~and 2020. This~~ ~~decrease~~ was ~~primarily~~ a one-time event that was due to the timing of the ~~development~~share issuance to Infinios. The shares were issued on a day that the fair value of our ~~financial~~common stock closed at $3.75 per share. Approximately 18 million shares were issued, so the difference between the value of the newly issued shares and the value of the services ~~platform~~.

~~Interest Expense,~~ ~~net~~

~~Interest expense, net increased to $478,009 from $71,723 and $3,038,568 from $213,890 for the three months and nine months ended September 30, 2021 and 2020. The increase~~performed was ~~primarily due to an expense of~~expensed as excess fair value of equity issuance over assets received. See Note 4 for ~~accrued interest and notes payable on convertible notes payable and notes payable conversion~~additional information related to the Anti-dilution provision.

Interest Expense, net

Interest expenses, net was approximately $41 thousand for the three months ended June 30, 2022, compared to $2.4 million for the three months ended June 30, 2021, representing a decrease of 98%. The decrease was primarily due to the Company finalizing all of its forbearance agreements with outstanding debt holders in 2021.

Interest expenses, net was approximately $96 thousand for the ~~second and third quarter.~~six months ended June 30, 2022, compared to $2.6 million for the Six months ended June 30, 2021, representing a decrease of 98%. The decrease was primarily due to the Company finalizing all of its forbearance agreements with outstanding debt holders in 2021.

Change in Fair Value of Derivative Liability

Change in fair value of derivative liability ~~increased to $135,469 from $0 and to $80,370 from $0,~~was approximately $37 thousand for the three months ~~and nine~~ended June 30, 2022, compared to $453 thousand for the three months ended ~~September~~June 30, ~~2021 and 2020.~~2021. The decrease was primarily due to standard market volatility coupled with the resetting terms of the derivative.

Change in fair value of derivative liability was approximately $173 thousand for the six months ended June 30, 2022, compared to a derivative asset of $55 thousand for the six months ended June 30, 2021. The increase was primarily due to ~~a new convertible note agreement.~~standard market volatility coupled with the resetting terms of the derivative.

Liquidity and Capital Resources

~~The Company is in its pre-commercialization phase of its financial services platform. Historically,~~As noted earlier, the Company ~~funded~~successfully completed its ~~operations~~Offering on January 7, 2022. For further discussion, see Note 1.

As of June 30, 2022, we had cash and cash equivalents of approximately $7.8 million, working capital of approximately $4.0 million, and stockholders’ equity of approximately $11.2 million.

During the six months ended June 30, 2022, we met our immediate cash requirements through ~~private investment, such~~existing cash balances. Additionally, we used equity and equity-linked instruments to pay for services and compensation.

Net cash used in or provided by, operating, investing and financing activities were as ~~convertible notes,~~follows (in thousands):

	Six Months Ended June 30,
	2022			2021

Net cash used in operating activities	$	(5,378	)	$	(726	)
Net cash provided by (used in) investing activities		(185	)		(1,340	)
Net cash provided by financing activities		13,345			2,362

Operating Activities

Net cash used in operating activities during the six months ended June 30, 2022 was approximately $5.4 million, which is comprised of (i) our net loss of $9.6 million, adjusted for non-cash expenses totaling $5.4 million (which includes adjustments for equity-based compensation, depreciation and amortization), and (ii) increased by changes in operating assets and liabilities of approximately $1.2 million.

Net cash used in operating activities during the ~~assignment~~six months ended June 30, 2021 was approximately $0.7 million, which is comprised of ~~repurchase option agreements~~(i) our net loss of $72.6 million, adjusted for non-cash expenses totaling $72.0 million (which includes adjustments for equity-based compensation, depreciation and amortization), and (ii) changes in operating assets and liabilities using approximately $96 thousand.

Investing Activities

Net cash used by investing activities during the six months ended June 30, 2022 was approximately $185 thousand and was primarily due to ~~third parties. The current~~the internal capitalized software costs.

Net cash ~~position from continuing operations is not significant~~used by investing activities during the six months ended June 30, 2021 was approximately $1.3 million and was primarily due to ~~support~~ the ~~company’s daily operations for~~purchase of capitalized software costs.

Financing Activities

Net cash provided by financing activities during the next twelve months. 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 note that our current public offering will fund our expenses required to generate profits and eliminate the Company’s going concern upon effectiveness. As a result, no additional indebtedness is anticipated at this time. Using currently available capital resources, management believes we can conduct planned operations for 45 days, however, management believes we need to raise $5,000,000 to remain in business for the next 12 months. Thesix months ended June 30, 2022 was approximately $13.3 million, which principally consists of net proceeds of ~~this offering will fund~~$13.4 million through the issuance of common shares and warrants in our ~~anticipated expenses for~~public offering.

Net cash provided by financing activities during the ~~next 36 months regardless if the Company generates a profit.~~

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 corona virus 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.~~

Nine Months Ended September 30,
2021 2020

Net cash used in in operating activities $ (820,852 ) $ (303,235 )
Net cash provided by (used in) investing activities $ (1,575,500 ) $ 23,411
Net cash provided by financing activities $ 2,361,350 $ 301,981

~~Cash Flow from Operating Activities~~

~~Net~~ ~~cash used in~~ ~~operating activities increased by $517,617~~ ~~for the nine~~six months ended ~~September~~June 30,, 2021 ~~from the~~ ~~nine months ended September 30, 2020~~. ~~This~~ ~~increase~~ was approximately $2.4 million, which principally ~~driven byan increase in residual payouts, professional fees and services, and new executive management and employee contracts~~.

~~Cash Flow from Investing Activities~~

~~Net~~ ~~cash~~ ~~used in investing activities increased~~ by ~~$1,598,911~~ ~~for the nine months ended September 30, 2021~~ ~~from~~ ~~the nine months ended September 30, 2020. This~~ ~~increase was~~ ~~principally~~ ~~driven~~by a ~~significant investment in a capitalized asset~~.

~~Cash Flow from Financing Activities~~

~~Net~~ ~~cash~~ ~~provided~~ by~~financing~~ ~~activities increased~~ by ~~$2,059,369~~ ~~for the nine months ended September 30, 2021~~ ~~from~~ ~~the nine months ended September 30, 2020~~. ~~This increase~~ ~~was~~ ~~principally~~ ~~driven~~ ~~by the increase in~~consists of net proceeds ~~from~~of $2.4 million through the sale of repurchase options.

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 amountsof assets, liabilities, revenues and expenses. On an ongoingbasis,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.

Critical accounting policies arethose that weconsider 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 ~~September~~June 30, ~~2021,~~ 2022, there have been no significant changes to our critical accounting estimates, except as described in Note 2 to our financial statements.

Software Development Costs

Recent ~~Acc~~oAccounting Pronouncementsun~~ting Pr~~o~~nou~~nceme~~nts~~

As of ~~September~~June 30, ~~2021~~,2022, there have been no significant changes to our recently issued accounting pronouncements, except as described in Note 2 to our 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 RegulationS-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 DisclosuresAboutMarket Risk.

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

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 ~~September~~ June 30, ~~2021.~~2022.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting duringthe ~~three-month period~~ six months ended ~~September~~ June 30, ~~2021~~ 2022 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 anabsolute, 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 instancesof fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In November 2017, two shareholders of AppTech, Laura Farris and Eric Ottens, filed a lawsuit against the Company in the State of California, claiming conversion, aiding and abetting conversion, breach of fiduciary duty, breach of contract, breach of implied covenant of good faith and fair dealing and declaratory relief. The lawsuit was removed to the United States District Court for the Southern District of California. On December 19, 2019, the Company entered into a settlement and release agreement with two shareholders. The total obligation was for $240 thousand and the ~~plaintiffs pursuant to which~~final payment was made in March 2022. The litigants are now paid in full and no further action is warranted by the Company will pay the plaintiffs an aggregate of $240,000 in installments over three years, commencing on February 15, 2020. On January 24, 2021, the parties entered a stipulation modifying the repayment schedule of the settlement to which altered the timing of payments over the three-year repayment period. The Company is current on the modified repayment schedule.

Company.

~~Other Lawsuit~~

third party individual.

~~Convertible Note and Warrant Lawsuit~~

Item 1A. Risk Factors.

As a smaller reporting company, as defined in Rule12b-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~~ ~~the~~ ~~nine months ended September 30,~~ ~~2021, 393,053~~ ~~shares~~ ~~of common stock~~ ~~were issued~~ to ~~several~~ ~~consultants in connection~~ ~~with~~ ~~business development~~ ~~and professional~~ ~~services rendered~~ ~~valued~~ ~~at $767,000.~~

~~During~~ ~~the nine months ended September 30, 2021,~~ ~~233,336 shares~~of ~~common stock were~~ ~~issued~~ to ~~members~~of~~the~~ ~~Board of~~ ~~Directors valued at $131,134.~~None.

~~During the nine months ended September 30, 2021, 200,000 shares of common stock were issued to purchase a judgment valued at $1,000,000.~~

~~During the nine months ended September 30, 2021, 31,250 shares of common stock were issued to a merchant valued at $18,371.~~

~~During the nine months ended September 30, 2021, 18,011,515 shares of common stock were issued in connection with a strategic partnership valued at $67,543,182.~~

~~During the nine months ended September 30, 2021, 400,000 and 2,500,000 options to purchase common stock were issued at a price of $0.01 and $0.25 valued at $1,399,992 and $8,749,701, respectively.~~

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) and were issued as restricted securities as~~defined~~in ~~Rule 144 of the Act.~~

Item 3. Defaults Upon Senior Securities.

~~Five~~ ~~convertible~~ ~~notes~~ ~~payable in the amount of $737,416 are currently in default.~~Not applicable.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

~~None.~~

Item 6. Exhibits.

EXHIBIT INDEX

Exhibit		Description

~~3.1~~31.1		~~AppTech Corp. Articles of Conversion filed October 25, 2006 (incorporated by reference to Exhibit 3.1 to Form 10-12G/A filed February 14, 2020)~~

~~3.2~~		~~AppTech Corp. Articles of Incorporation filed October 25, 2006 (incorporated by reference to Exhibit 3.2 to Form 10-12G/A filed February 14, 2020)~~

~~3.3~~		~~AppTech Corp. Certificate of Designation filed May 09, 2007 (incorporated by reference to Exhibit 3.3 to Form 10-12G/A filed February 14, 2020)~~

~~3.4~~		~~AppTech Corp. Certificate of Correction filed September 04, 2007 (incorporated by reference to Exhibit 3.4 to Form 10-12G/A filed February 14, 2020)~~

~~3.5~~		~~AppTech Corp. Certificate of Designation filed September 06, 2007 (incorporated by reference to Exhibit 3.5 to Form 10-12G/A filed February 14, 2020)~~

~~3.6~~		~~AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed November 17, 2008 (incorporated by reference to Exhibit 3.6 to Form 10-12G/A filed February 14, 2020)~~

~~3.7~~		~~AppTech Corp. Certificate of Amendment filed October 26, 2009 (incorporated by reference to Exhibit 3.7 to Form 10-12G/A filed February 14, 2020)~~

~~3.8~~		~~AppTech Corp. Certificate of Amendment filed October 27, 2009 (incorporated by reference to Exhibit 3.8 to Form 10-12G/A filed February 14, 2020)~~

~~3.9~~		~~AppTech Corp. Certificate of Designation filed April 21, 2010 (incorporated by reference to Exhibit 3.9 to Form 10-12G/A filed February 14, 2020)~~

~~3.10~~		~~AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed April 27, 2010 (incorporated by reference to Exhibit 3.10 to Form 10-12G/A filed February 14, 2020)~~

~~3.11~~		~~AppTech Corp. Certificate of Change filed July 22, 2010 (incorporated by reference to Exhibit 3.11 to Form 10-12G/A filed February 14, 2020)~~

~~3.12~~		~~AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed October 26, 2010 (incorporated by reference to Exhibit 3.12 to Form 10-12G/A filed February 14, 2020)~~

~~3.13~~		~~AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed October 26, 2010 (incorporated by reference to Exhibit 3.13 to Form 10-12G/A filed February 14, 2020)~~

~~3.14~~		~~AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed October 28, 2010 (incorporated by reference to Exhibit 3.14 to Form 10-12G/A filed February 14, 2020)~~

~~3.15~~		~~AppTech Corp. Amendment to Certificate of Designation After Issuance of Class or Series filed April 08, 2011 (incorporated by reference to Exhibit 3.15 to Form 10-12G/A filed February 14, 2020)~~

~~3.16~~		~~AppTech Corp. Certificate of Amendment filed September 06, 2011 (incorporated by reference to Exhibit 3.16 to Form 10-12G/A filed February 14, 2020)~~

~~3.17~~		~~AppTech Corp. Articles of Domestication filed July 18, 2011 (incorporated by reference to Exhibit 3.17 to Form 10-12G/A filed February 14, 2020)~~

~~3.18~~		~~AppTech Corp. Bylaws dated May 07, 2013 (incorporated by reference to Exhibit 3.18 to Form 10-12G/A filed February 14, 2020)~~

~~3.19~~		~~AppTech Corp. Certificate of Domestication filed July 09, 2013 (incorporated by reference to Exhibit 3.19 to Form 10-12G/A filed February 14, 2020)~~

~~3.20~~		~~AppTech Corp. Articles of Amendment filed October 31, 2013 (incorporated by reference to Exhibit 3.20 to Form 10-12G/A filed February 14, 2020)~~

~~3.21~~		~~AppTech Corp. Certificate of Incorporation filed July 29, 2015(incorporated by reference to Exhibit 3.21 to Form 10-12G/A filed February 14, 2020)~~

~~4.1~~		~~Specimen Stock Certificate of AppTech Corp.’s Common Stock (incorporated by reference to Exhibit 4.1 to Form 10-12G/A filed February 14, 2020)~~

~~10.1~~		~~Asset Purchase Agreement dated December 04, 2013 (incorporated by reference to Exhibit 10.1 to Form 10-12G/A filed February 14, 2020)~~

~~10.2~~		~~Amendment to Asset Purchase Agreement dated September 22, 2017 (incorporated by reference to Exhibit 10.2 to Form 10-12G/A filed February 14, 2020)~~

~~10.3~~		~~Lease Agreement dated November 15, 2018 (incorporated by reference to Exhibit 10.3 to Form 10-12G/A filed February 14, 2020)~~

~~10.4~~		~~Engagement Letter dated September 23, 2019 (incorporated by reference to Exhibit 10.4 to Form 10-12G/A filed February 14, 2020)~~

~~10.5~~		~~Lease & Purchase Option Agreement dated January 22, 2020 (incorporated by reference to Exhibit 10.5 to Form 10-K filed March 30, 2020)~~

~~10.6~~		Subscription License and Service Agreement dated as of October 02, 2020, by and among AppTech Corp. and NEC Payments B.S.C. (c) (incorporated by reference to Exhibit 10.1 to Form 8-K filed October 7, 2020)

~~10.7~~		Digital Banking Platform Operating Agreement dated as of October 02, 2020, by and among AppTech Corp. and NEC Payments B.S.C. (c) (incorporated by reference to Exhibit 10.2 to Form 8-K filed October 7, 2020)

~~10.8~~		~~Subscription License Order Form dated as of October 02, 2020, by and among AppTech Corp. and NEC Payments B.S.C. (c) (incorporated by reference to Exhibit 10.3 to Form 8-K filed October 7, 2020)~~

~~10.9~~		~~Registration Rights Agreement dated as of October 02, 2020, by and among AppTech Corp. and NEC Payments B.S.C. (c) (incorporated by reference to Exhibit 10.4 to Form 8-K filed October 7, 2020)~~

~~10.10~~		Strategic Partnership Agreement dated as of August 21, 2020, by and among AppTech Corp. and Silver Alert Services LLC, doing business as LifeLight Systems (incorporated by reference to Exhibit 10.1 to Form 8-K filed August 26, 2020)

~~10.11~~		Amendment No. 1 to the Strategic Partnership Agreement dated as of August 21, 2020, by and among AppTech Corp. and Silver Alert Services LLC, doing business as LifeLight Systems (incorporated by reference to Exhibit 10.11 to Form S-1 filed February 16, 2021)

~~10.12~~		~~Amended and Restated Subscription License and Service Agreement dated as of February 11, 2021, by and among AppTech Corp. and NEC Payments B.S.C. (c).~~~~PURSUANT TO REG S-K ITEM 601, CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED~~ ~~(incorporated by reference to Exhibit 10.1 to the Form 8-K filed February 18, 2021)~~

~~10.13~~		~~Amended and Restated Digital Banking Platform Operating Agreement dated as of February 11, 2021, by and among AppTech Corp. and NEC Payments B.S.C. (c).~~ ~~PURSUANT TO REG S-K ITEM 601, CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED~~ ~~(incorporated by reference to Exhibit 10.2 to the Form 8-K filed February 18, 2021)~~

~~10.14~~		~~Amended and Restated Subscription License Order Form dated as of February 11, 2021, by and among AppTech Corp. and NEC Payments B.S.C. (c).~~ ~~PURSUANT TO REG S-K ITEM 601, CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED~~ ~~(incorporated by reference to Exhibit 10.3 to the Form 8-K filed February 18, 2021)~~

~~10.15~~		~~Independent Contractor Agreement, dated as of February 23, 2021 by and among AppTech Corp. and Innovations Realized, LLC.~~ ~~PURSUANT TO REG S-K ITEM 601, CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED~~ ~~(incorporated by reference to Exhibit 10.1 to the Form 8-K filed March 01, 2021)~~

~~10.16~~		Amended and Restated Strategic Partnership Agreement dated as of April 27, 2021, by and among AppTech Corp. And Silver Alert Services LLC, doing business as LifeLight Systems (incorporated by reference to Exhibit 10.1 to the Form 8-K filed May 03, 2021)

14		~~AppTech Code of Business Conduct (incorporated by reference to Exhibit 4.2 to Form 10-K filed March 30, 2020)~~

~~31.1~~		Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 dated ~~November 11, 2021~~August 4, 2022

31.2		Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 dated ~~November 11, 2021~~August 4, 2022

32.1		Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 dated ~~November 11, 2021~~August 4, 2022

32.2		Certification of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 dated ~~November 11, 2021~~August 4, 2022

~~99.1~~		~~Audit Committee Charter (incorporated by reference to Exhibit 4.3 to Form 10-Q filed November 16, 2020)~~

~~99.2~~		~~Compensation Committee Charter (incorporated by reference to Exhibit 4.3 to Form 10-Q filed November 16, 2020)~~

~~99.3~~		~~Corporate Governance and Nominating Committee Charter (incorporated by reference to Exhibit 99.3 to Form S-1 filed February 16, 2021)~~

Signatures

Pursuant to the requirements of the Securities and ExchangeAct of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.

	AppTech Payments Corp.

Date: ~~November 11, 2021~~August 4, 2022	By:	/s/ Luke D’Angelo
		Luke D’Angelo
		Chief Executive Officer, Chairman and ~~Chairman (Principal Executive Officer)~~Director

Date: ~~November 11, 2021~~August 4, 2022	By:	/s/ Gary Wachs
		Gary Wachs
		Chief Financial Officer, ~~(Principal Financial Officer)~~Treasurer and Director

4229

~~Wyoming~~Delaware	7389	65-0847995
(State or other jurisdiction of incorporation or organization)	(Primary Standard IndustrialClassification Code Number)	(I.R.S. Employer Identification Number)~~Number)~~

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, $0.001 par value per share	APCX	~~OTC~~ Nasdaq~~Pink Open~~ Capital Market
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $5.19	APCXW	Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated Filer	☐☒	Smaller reporting company	☒

		Emerging growth company	☐

	●	~~our going concern and history of losses;~~

	●	uncertainty associated with anticipated launch of our ~~financial services~~ text payment platform and other potential advanced payment solutions we intend to launch in the future;

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

	●	dependence on third-party channel and referral partners, who comprise a~~significant~~ portion of our sales force, for gaining new clients;

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


	●	uncertainty regarding our ability to achieve profitability and positive cash flow through the commercialization of the products we offer or intend to offer in the future;

	●	our current dependence on third-party payment processors to facilitate our merchant services capabilities;

	●	delay in or failure to obtain regulatory approval of our ~~financial services platform~~ text payment system or any future products in additional countries;

	●	~~our~~ ~~ability to operate~~ ~~our business while~~ ~~timely~~ ~~making~~ ~~payments pursuant to~~ ~~our~~ ~~loan~~ ~~agreements;~~

	●	~~our need~~ ~~to raise additional~~ ~~financing to fund daily operations and successfully grow our Company;~~

	●	~~our~~ ~~ability to retain and~~ ~~recruit~~ ~~appropriate~~ ~~employees,~~ ~~in particular a~~ ~~productive~~ ~~sales force;~~

	●	~~current and future laws~~ ~~and~~ ~~regulations;~~

	●	~~general economic~~ uncertainty associated with our ability to achieve profitability through the ~~Covid-19 pandemic;~~

	●	~~the adverse effects of COVID-19, and its unpredictable duration, in regions where we have customers, employees and distributors;~~HotHand patents;

	●	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 customers to visit our merchants’ businesses; ~~and~~

	●	~~the possibility that the economic impact of COVID-19 will lead to changes in how consumers make purchases, and we are unable to monetize such changes;~~

		Page
	Part I
	Special Note Regarding Forward-Looking Statements and Projections	43
Item 1.	Consolidated Financial Statements (unaudited)	4
	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	5
	Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021	6
	~~Balance Sheets as~~Consolidated Statements of ~~September~~Stockholder’s Equity (Deficit) for the three and six months ended June 30, ~~2021~~2022 and ~~December 31, 2020 (unaudited)~~2021	7
	~~Statements of Operations for the three months and nine months ended September 30, 2021 and 2020 (unaudited)~~	8
	~~Statements of Stockholders’ Equity (Deficit) for the periods ended September 30, 2021 & 2020, June 30, 2021 & 2020 and March 31, 2021 & 2020 (unaudited)~~	9
	Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021	10
	~~Notes to the Unaudited Financial Statements~~	118
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3022
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3626
Item 4.	Controls and Procedures	3626
	Part II
Item 1.	Legal Proceedings	3727
Item1A.	Risk Factors	3727
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3827
Item 3.	Defaults Upon Senior Securities	3827
Item 4.	Mine Safety Disclosures	3827
Item 5.	Other Information	3827
Item 6.	Exhibits	3928
	Signatures	4229


	September 30,			December 31,
	2021			2020

ASSETS
Current assets
Cash	$	22,495		$	57,497
Accounts receivable		34,829			40,635
Prepaid expenses		93,516			6,696
Total current assets		150,840			104,828

Capitalized prepaid software development and license		7,058,922			0
Prepaid offering cost		25,000			0
Note receivable		25,500			17,500
Right of use asset		203,938			249,825
Security deposit		7,536			7,536
TOTAL ASSETS	$	7,471,736		$	379,689

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	1,732,924		$	1,635,384
Accrued liabilities		1,726,628			2,632,334
Right of use liability		58,979			52,161
Stock repurchase liability		430,000			430,000
Loans payable related parties		0			34,400
Convertible notes payable, net of $63,578 and $280,174 debt discount		665,922			639,826
Convertible notes payable related parties		0			372,000
Notes payable		384,742			1,104,981
Notes payable related parties		684,863			708,493
Derivative liabilities		492,830			597,948
Total current liabilities		6,176,888			8,207,527

Long-term liabilities
Accounts payable		15,000			75,000
Right of use liability		179,195			224,492
Notes Payable, net of current portion		160,040			67,400
Total long-term liabilities		354,235			366,892

TOTAL LIABILITIES		6,531,123			8,574,419

Commitments and contingencies (Note 9)

Stockholders’ Equity (Deficit)
Series A preferred stock; $0.001 par value; 100,000 shares authorized; 14 shares issued and outstanding at September 30, 2021 and December 31, 2020		0			0
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 113,125,715 and 88,511,657 and outstanding at September 30, 2021 and December 31, 2020, respectively		113,126			88,512
Additional paid-in capital		121,269,598			36,664,488
Accumulated deficit		(120,442,111	)		(44,947,730	)
Total stockholders’ equity (deficit)		940,613			(8,194,730	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	7,471,736		$	379,689


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2021			2020			2021			2020

Revenues	$	92,410		$	105,357		$	258,688		$	241,367

Cost of revenues		41,774			48,759			112,032			103,721

Gross profit		50,636			56,598			146,656			137,646
Operating expenses:
General and administrative, including stock based compensation of $31,352, $1,066,386, $1,620,703 and $2,357,125, respectively		1,360,187			1,089,808			6,733,594			2,781,912
Excess fair value of equity issuance over assets received		1,090,716			0			66,124,606			0
Research and development		0			2,999			0			49,250

Total operating expenses		2,450,903			1,092,807			72,858,200			2,831,162

Loss from operations		(2,400,267	)		(1,036,209	)		(72,711,544	)		(2,693,516	)

Other income (expenses)
Interest expense		(478,009	)		(71,723	)		(3,038,568	)		(213,890	)
Change in fair value of derivative liability		135,469			0			80,370			0
Forgiveness of debt		0			0			0			9,000
Other income (expenses)		161			0			175,361			0

Total other expenses		(342,379	)		(71,723	)		(2,782,837	)		(204,890	)

Loss before provision for income taxes		(2,742,646	)		(1,107,932	)		(75,494,381	)		(2,898,406	)

Provision for income taxes		0			0			0			0

Net loss	$	(2,742,646	)	$	(1,107,932	)	$	(75,494,381	)	$	(2,898,406	)

Basic and diluted net loss per common share	$	(0.02	)		(0.01	)	$	(0.74	)	$	(0.03	)
Weighted-average number of shares used basic and diluted per share amounts		111,906,997			86,984,021			106,250,552			85,941,115


	Series A Preferred				Common Stock						Additional Paid-			Accumulated			Stockholders’ Equity
	Shares		Amount		Shares			Amount			in Capital			Deficit			(Deficit)

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	)

Net loss		—		—		—			—			—			(326,424	)		(326,424	)
Imputed interest		—		—		—			—			3,450			—			3,450
Common stock issued for services		—		—		174,500			174			81,380			—			81,554
Proceeds from sale of repurchase option		—		—		—			—			19,250			—			19,250

Balance June 30, 2020		14	$	—		86,677,825		$	86,678		$	34,731,765		$	(42,550,887	)	$	(7,732,444	)

Net loss		—		—		—			—			—			(1,107,932	)		(1,107,932	)
Imputed interest		—		—		—			—			3,450			—			3,450
Common stock issued for services		—		—		1,044,000			1,044			924,397			—			925,441
Common stock issued for services with warrant exercise						100,000			100			165,845						165,945
Proceeds from sale of repurchase option		—		—		—			—			45,000			—			45,000

Balance September 30, 2020		14	$	—		87,821,825		$	87,822		$	35,870,457		$	(43,658,819	)	$	(7,700,540	)


Balance December 31, 2020		14	$	—		88,511,657		$	88,512		$	36,664,488		$	(44,947,730	)	$	(8,194,730	)

Net loss		—		—		—			—			—			(66,293,498	)		(66,293,498	)
Imputed interest		—		—		—			—			3,450			—			3,450
Issuance of stock options for board of directors		—		—		—			—			17,559			—			17,559
Issuance of stock options for services		—		—		—			—			29,999			—			29,999
Issuance of options for capitalized prepaid software development and license		—		—		—			—			1,891,414			—			1,891,414
Common stock issued for board of directors		—		—		87,500			87			49,087						49,174
Common stock issued for services		—		—		247,000			247			315,743			—			315,990
Common stock issued for merchant equity		—		—		5,000			5			16,245			—			16,250
Common stock issued for judgment		—		—		200,000			200			999,800			—			1,000,000
Common stock issued for capitalized prepaid software development and license		—		—		18,011,515			18,012			67,525,170			—			67,543,182
Common stock cancelled		—		—		(150,000	)		(150	)		(9,850	)		—			(10,000	)
Proceeds from sale of repurchase option		—		—		—			—			1,972,750			—			1,972,750

Balance March 31, 2021		14	$	—		106,912,672		$	106,913		$	109,475,855		$	(111,241,228	)	$	(1,658,460	)

Net loss		—		—		—			—			—			(6,458,237	)		(6,458,237	)
Imputed interest		—		—		—			—			3,450			—			3,450
Issuance of stock options for board of directors		—		—		—			—			15,217			—			15,217
Issuance of stock options for services		—		—		—			—			2,746,385			—			2,746,385
Issuance of options for capitalized prepaid software development and license		—		—		—			—			1,090,716			—			1,090,716
Common stock issued for board of directors		—		—		87,500			88			49,087						49,175
Common stock issued for services		—		—		106,053			106			174,905			—			175,011
Common stock issued for merchant equity program		—		—		26,250			26			2,095			—			2,121
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable		—		—		4,756,895			4,757			3,945,225			—			3,949,982
Proceeds from sale of repurchase option		—		—		—			—			458,000			—			458,000

Balance June 30, 2021		14	$	—		111,889,370		$	111,890		$	117,960,935		$	(117,699,465	)	$	373,360

Net loss		—		—		—			—			—			(2,742,646	)		(2,742,646	)
Imputed interest		—		—		—			—			3,450			—			3,450
Issuance of stock options for board of directors		—		—		—			—			4,682			—			4,682
Issuance of stock options for services		—		—		—			—			853,556			—			853,556
Issuance of stock options for capitalized prepaid software development and license		—		—		—			—			1,090,716			—			1,090,716
Common stock issued for board of directors		—		—		29,168			29			16,363			—			16,392
Common stock issued for services		—		—		20,000			20			14,940			—			14,960
Common stock issued for forbearance		—		—		53,383			53			63,525			—			63,578
Common stock issued for services with warrant exercise		—		—		115,000			115			28,636			—			28,751
Common stock issued for convertible notes payable		—		—		1,018,794			1,019			1,232,795			—			1,233,814

Balance September 30, 2021		14	$	—		113,125,715		$	113,126		$	121,269,598		$	(120,442,111	)	$	940,613

Schedule of Convertible note and warrant lawsuit
Convertibles note payable	$	222,000
Accrued interest		83,588
Excess fair value of equity issuance		1,379,193
Total	$	1,684,781

Schedule of convertible notes payables
Convertible notes payable	$	170,000
Convertible notes payable – related parties		150,000
Accrued interest		306,637
Accrued interest – related parties		273,375
Excess fair value of equity issuance		587,723
Excess fair value of equity issuance – related parties		523,968
Total	$	2,011,703

Schedule of fair value of derivative liabilities
	Derivative Liability Convertible Notes			Derivative Liability Warrants		Total
Balance as of December 31, 2020	$	378,134		$	219,814	$	597,948
Change in fair value		(107,835	)		27,465		(80,370	)
Change in fair value due to conversion		(24,748	)		—		(24,748	)
Balance as of September 30, 2021	$	245,551		$	247,279	$	492,830

Operating Lease Total	$	291,073
Less: Imputed interest		(52,899	)
Total	$	238,174

Schedule of payment of lawsuit
2021	$	20,000
2022		75,000
Total	$	95,000

Schedule of fees paid to NECP platform
Engagement Fee	$	100,000
License subscription fee (50% due at Funding Date)		375,000
Annua l maintenance subscription fee (first year)		112,500
Implementation fee (50% due at Funding Date)		162,500
Infrastructure implementation fee (50% due at Funding Date)		32,500
Training fee (50% due at Funding Date)		25,000
Total	$	807,500

License subscription fee (second 50% due at Subscription Ready Date)	$	375,000
Annual maintenance subscription fees ($112,500 annually)		450,000
Implementation fees (50% due at Subscription Ready Date)		162,500
Infrastructure implementation fees (50% due at Subscription Ready Date)		32,500
Training fees (50% due at Subscription Ready Date)		25,000
Infrastructure support fees ($6,000 monthly after Subscription Ready Date)		360,000
Total	$	1,405,000	*

Schedule of convertible related party
Convertible notes payable	$	797,600
Convertible notes payable – related parties		395,630
Accrued interest		647,199
Accrued interest – related parties		383,964
Excess fair value of equity issuance		794,136
Excess fair value of equity issuance – related parties		1,911,769
Total	$	4,930,298

Schedule of option activity
				Weighted		Weighted
	Number of			Average		Average
	shares			exercise price		remaining years

Outstanding December 31, 2020		7,707,000		$	0.21
Issued		2,447,000		$	2.02
Cancelled		(1,079,749	)	$	0.36
Outstanding as of September 30, 2021		9,074,251		$	0.56		2.75
Outstanding as of September 30, 2021, vested		3,010,785		$	1.11		2.80

	Three Months Ended September 30
(in thousands)	2021			2020

Revenue	$	92.4		$	105.4
Cost of revenue		41.8			48.8
Gross profit		50.6			56.6

Operating expenses
General and administrative		1,360.2			1,089.8
Excess fair value of equity issuance over assets received		1,090.7			—
Research and development		—			3.0
Total operating expenses		2,450.9			1,092.8
Loss from operations		(2,400.3	)		(1,036.2	)

Other income (expenses)
Interest expense, net		(478.0	)		(71.7	)
Change in fair value derivative liability		135.5			—
Forgiveness of debt		—			—
Other income		0.2			—
Total other income (expenses)		(342.3	)		(71.7	)
Loss before provision for income taxes		(2,742.6	)		(1,107.9	)

Provision for income taxes		—			—
Net Loss	$	(2,742.6	)	$	(1,107.9	)

	Nine Months Ended September 30
(in thousands)	2021			2020

Revenue	$	258.7		$	241.5
Cost of revenue		112.0			103.8
Gross profit		146.7			137.7

Operating expenses
General and administrative		6,733.6			2,781.9
Excess fair value of equity issuance over assets received		66,124.6			—
Research and development		—			49.2
Total operating expenses		72,858.2			2,831.1
Loss from operations		(72,711.5	)		(2,693.4	)

Other income (expenses)
Interest expense, net		(3,038.6	)		(213.9	)
Change in fair value derivative liability		80.4			—
Forgiveness of debt		—			9.0
Other income		175.3			—
Total other income (expenses)		(2,782.9	)		(204.9	)
Loss before provision for income taxes		(75,494.4	)		(2,898.3	)

Provision for income taxes		—			—
Net Loss	$	(75,494.4	)	$	(2,898.3	)

	Nine Months Ended September 30,
	2021			2020

Net cash used in in operating activities	$	(820,852	)	$	(303,235	)
Net cash provided by (used in) investing activities	$	(1,575,500	)	$	23,411
Net cash provided by financing activities	$	2,361,350		$	301,981