STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2025

NOTE 9 – STOCKHOLDERS’ EQUITY

Series A Preferred Stock

The Company is authorized to issue 100,000 shares of Series A preferred stock (“Series A”) with a par value of $0.001 per share. As of December 31, 2025 and 2024, fourteen (14) Series A shares were outstanding. Series A shareholders have one vote per share on an “as converted” basis for all matters submitted to a stockholder vote, without the right to cumulative voting in director elections. They are entitled to dividends, if declared by the Board of Directors from legally available funds, distributed pro rata based on their Series A holdings on an as-converted basis. In the event of liquidation or dissolution, Series A shareholders share ratably in any remaining assets after liabilities are paid, with no liquidation preferences. Each Series A share is convertible into 82 shares of common stock at the holder’s discretion.

Common Stock

As of December 31, 2025 and December 31, 2024, the Company is authorized to issue 105,263,158 shares of common stock with a par value of $0.001 per share. The number of shares outstanding was 40,488,934 as of December 31, 2025 and 33,278,934 as of December 31, 2024. Common stockholders are entitled to one vote per share on all matters submitted to a stockholder vote, without the right to cumulative voting in director elections. They are eligible for dividends, if declared by the Board of Directors from legally available funds, subject to the prior rights of any outstanding preferred stock and any contractual restrictions on dividend payments. In the event of liquidation or dissolution, common stockholders share ratably in any assets remaining after payment of liabilities and satisfaction of liquidation preferences of any outstanding preferred stock. Common stock carries no preemptive or subscription rights and is not convertible into other securities.

Stock Issued as part of an Investment

On December 13, 2024, the Company entered into an agreement with AFIOS Partners (“AFIOS”) for a $5,000 thousand direct investment, including an overage of $1,000 thousand. As part of the arrangement, AFIOS received 6,050,000 shares at an average price of $0.99 per share, 6,250,000 warrants to purchase our common stock at $0.90 per share and 7,970,000 warrants to purchase common stock at $1.20 per share.

During the year ended December 31, 2025, $2,200 thousand related to the AFIOS Partners investment was received. Of the amount received, $1,150 thousand settled the outstanding equity receivable and $1,050 thousand was related to the over-allotment provision in the original contract that allowed AFIOS to invest an additional $1,000 thousand under the original terms. All funds have been received and all shares and warrants have been issued.

Public Offerings

On March 26, 2024, AppTech entered into an underwriting agreement with EF Hutton LLC, as representative of the several underwriters, relating to the public offering of 2,000,000 shares of common stock, par value $0.001 per share, at a purchase price per share to the public of $1.00. Pursuant to the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 300,000 shares of Common Stock at the Offering Price, less any underwriting discounts and commissions. The Company received $1,760 thousand in net proceeds, after deducting fees.

Stock Issued for Services

During the years ended December 31, 2025 and 2024, 10,000 shares and 260,000 shares of common stock were issued to several consultants and employees in connection with business development, professional, and employment services with a value of $5 thousand and $267 thousand, respectively.

Stock Issued with Note Payable

Refer to Note 6 - Note Payables.

Equity Issued related to Acquisition

On March 1, 2024, in connection with the acquisition of Alliance Partners, LLC, the Company issued 15,000 shares of common stock to the former owner as consideration for extending the payment due date for the remaining purchase consideration.

As of December 31, 2024, the payment terms under the Purchase Agreement with Alliance Partners, LLC were further amended. In consideration for modifying the original payment schedule, the seller received an aggregate of 15,000 shares of the Company’s common stock and 55,000 stock options.

See Note 1 – Purchase of Infinitus Pay, Inc.

Stock Options

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

On December 7, 2021, the Board of Directors authorized the Company’s Equity Incentive Plan in order to facilitate the grant of equity incentives to employees (including our named executive officers), directors, independent contractors, merchants, referral partners, channel partners and employees of the Company’s to enable the Company to attract, retain and motivate employees, directors, merchants, referral partners and channel partners, which is essential to its long-term success. A total of 2,702,632 shares of common stock were previously authorized under the Company’s Equity Incentive Plan. As of December 31, 2025, 1,029,842 shares were cancelled as part of employee terminations and 1,250,000 shares were added to the plan as part of the shareholder meeting. In total as of December 31, 2025, 2,788,009 shares are available for issuance.

On March 20, 2024, the Company extended the expiration term of vested and outstanding stock options to 10 years from the original grant date for current employees and consultants, which resulted in an option modification. Also, certain terminated or separated option holders were allowed to retain their vested options through the original expiration date following their termination. The fair value was calculated both on the modification date and prior to the modification. The Company recorded the option modification expense of $325 thousand.

In May 2024, shareholders approved an additional 950,000 shares under a newly adopted 2024 Equity Incentive Plan (the "2024 Plan"), which replaced the previous plan. As a result, a total of 2,702,632 shares of common stock were authorized under the 2024 Plan, with 508,167 shares available for issuance as of December 31, 2024.

As part of the acquisition of FinZeo, the previous management team received 1,500,000 options of AppTech's common stock, which vest if the Company achieves certain sales targets. One million in options were forfeited by the Seller upon his termination in June 2024 and canceled by the Company. No expense for the remaining 500,000 options was recorded during the year ended December 31, 2024 as these options were not determined to be probable of vesting.

For the year ended December 31, 2025, the Company granted 3,042,911 options to purchase common stock. These grants included:

1)	1,538,332 options were awarded to the former and current board of directors. The fair value of these options, which are non-plan with a ten-year expiration term, total $646 thousand. These options have an exercise price ranging from $0.43 to $1.05 per share and a weighted average fair value of $0.42 per share on the issuance date.

2)	On January 21, 2025, the Company granted 110,000 options to the former CFO with an exercise price of $0.46, a ten-year expiration term, and a fair value on the grant date of $0.47. The Company recognized $52 thousand related to this grant. The options were fully vested upon the grant date. In addition, the options previously issued to the former CFO were extended as part of her separation agreement. The Company recorded the modification expense of $48.

3)	On February 21, 2025, the Company granted 200,000 options to the current CFO with an exercise price of $0.42, a ten-year expiration term, and a fair value on the grant date of $0.41. The Company recognized $85 thousand related to this grant. The options were fully vested upon the grant date.

4)	On June 23, 2025, the Company cancelled all options granted to a former employee and issued him 194,579 options with an exercise price of $1.00, a three-year expiration term, and a fair value on the grant date of $0.17. The Company recognized $33 thousand related to this grant. The options were fully vested upon the grant date.

5)	On July 1, 2025, the Company entered into a separation agreement with its former Chief Executive Officer and Chairman of the Board. Under the terms of the arrangement, all previously issued options were canceled and he was instead granted 700 thousand vested options, and 300 thousand performance-based options. The options have a three-year life and carry an exercise price of $1. The Company recognized $112 thousand related to this grant.

During the year ended December 31, 2024, options to purchase 3,838,500 shares of common stock at a weighted average exercise price of $1.13 were granted as compensation to employees and consultants, of which 1,125 thousand options were contingent upon the Company reaching specified sales milestones.

The following table summarizes the stock options activity:

Schedule of option activity
	Number of shares			Weighted Average exercise price		Weighted Average remaining years
Outstanding December 31, 2024		5,446,785		$	1.29		7.15
Issued		3,042,911			0.78
Exercised		–			–
Cancelled		(3,087,342	)		1.60
Outstanding as of December 31, 2025		5,402,354		$	0.83		7.25
Outstanding as of December 31, 2025, vested		3,977,354		$	0.88		7.45

The unvested options include a total of 1,425 thousand options contingent upon reaching specified sales milestones.

During the year ended December 31, 2025, the Company recorded $976 thousand in option expenses, which includes the modification expense noted above of $49 thousand.

The Company recorded $1,125 thousand in option expenses, which includes the modification expense of $325 thousand and the company-wide grant of 406,000 options valued at $349 thousand during the year ended December 31, 2024.

The Plan options vest in equal monthly installments ranging from instantly to 12 months. The fair value of the options were valued using a Black-Scholes options pricing model with the following range of assumptions:

Schedule of fair value assumptions
			December 31, 2025
Market value of common stock on issuance date			$0.24 - $0.47
Exercise price			$0.42 - $1.77
Expected volatility			134% - 185%
Expected term (in years)			0.25 - 10.0
Risk-free interest rate			3.99% - 4.21%
Expected dividend yields			–

			December 31, 2024
Market value of common stock on issuance date			$0.51 - $1.99
Exercise price			$0.59 - $2.11
Expected volatility			102% - 144%
Expected term (in years)			1.0 - 10.0
Risk-free interest rate			3.58% - 5.00%
Expected dividend yields			–

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

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

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

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

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

Warrants

As of December 31, 2025, the Company has 28,781,627 warrants outstanding. The following table summarizes warrant activity:

Schedule of warrant activity
	Number of shares		Weighted Average exercise price		Weighted Average remaining years
Outstanding December 31, 2024		15,906,627	$	1.76		4.25
Cancelled		–		–
Exercised		–		–
Issued		12,875,000		1.69
Outstanding as of December 31, 2025		28,781,627	$	1.72		3.86

Issuance of New Warrants

As part of the AFIOS Partners (“AFIOS”) agreement, 3,550,000 warrants with an exercise price of $0.90 and 5,325,000 warrants with an exercise price of $1.20 were issued. In addition, 4,000,000 warrants with an exercise price of $3.00 were issued to the Sellers of Infinitus Pay, Inc. In total, as of December 31, 2025, 12,875,000 warrants were issued.

On August 30, 2024, AppTech Payments Corp. entered a Warrant Inducement Agreement with Armistice Capital Master Fund Ltd., leading to the exercise of 1,666,667 October 2023 warrants at $0.70 per share, generating $1,167 thousand in gross proceeds ($1,010 thousand net after fees). Concurrently, the exercise price of 1,666,667 February 2023 warrants was reduced from $4.64 to $0.70, increasing their fair value by $350 thousand, and the Company issued 3,333,334 new warrants at $0.70 per share, valued at $2,200 thousand using the Black-Scholes model. There was zero impact to equity as we recorded both an increase and decrease within Additional Paid-in Capital (APIC) due to the transaction being considered a cost of the capital raise. The new warrants are exercisable after six months and expire in five and a half years.

- Definition

The entire disclosure for equity.

+ References

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+ Details

AppTech Payments Corp. 10-K