Shares of AppTech Payments Corp. (NASDAQ: APCX, $APCX) have been red-hot, with the first days of May adding to a massive 86% surge since March. The more excellent news- the rally is expected to continue. And not based on hype but instead on APCX doing the right things at the right time to create potentially significant shareholder value this year. Thus, while weak small-cap markets may have brought AppTech shares lower, consider it more of an opportunity than an omen. In fact, current levels make the APCX value proposition two things- attractive and compelling.
Last week at $1.46, the stock was a screaming buy. Now, trading at $1.86, it’s no less compelling, just more expensive. But the increase was expected. After all, AppTech Payments used 2021 to position 2022 for breakout growth. And beyond making deals that strengthen its market position, they also have a sizable cash war chest and a capital structure that could help fuel the rally in progress. At the end of the last quarter, APCX reported having more than $13 million in cash, only about 16.35 million shares outstanding, and an acquisition strategy doing well to add appreciable revenue-generating firepower to an already impressive asset and intellectual property (IP) portfolio.
That’s not all pushing share prices higher. Insiders reported owning about 33% of the float, which can motivate retail investors to take a position. When management’s financial interests are vested, investors can do well by following that lead. That may be one of the reasons shares are moving substantially higher. But that’s not all of them.
Transformative Acquisition Of Hothand, Inc.
Investors are likely clued to the value inherent to its imminent acquisition of Hothand, Inc., a deal expected to add significantly more revenue-generating firepower through an IP arsenal that can help enhance APCX’s already strong competitive position. It also adds to operational and fundamental strength more robust than at any time in its history. In fact, not many investors are betting against APCX.
That’s evidenced by short-sellers holding less than 0.3% of the trading float. While that may not trigger a short squeeze, for investors, it shows that the intrinsic and inherent strength at APCX is formidable. Keep in mind that shorts are feasting on small and micro-cap stocks, knowing that a risk-off sentiment takes away the liquidity that can squeeze their trade. However, those same traders apparently don’t want to take APCX to the task. And that overall bullish sentiment helps make APCX, even after its 86% spike, a value too good to ignore.
Many investors aren’t. AppTech shares have been moving appreciably higher, and with bearish interest feeding elsewhere, it’s a trend likely to continue. Technicals also support a continuance of the bullish trend, supported by higher lows and significantly higher trading volumes than the start of 2022. Thus, following the money may be a good idea in markets where volume tends to precede price.
In fact, the current run puts 52-week highs in AppTech’s near-term crosshairs. And after announcing its definitive agreement to acquire Hothand, that target may be reached sooner than later. Investors that understand the value inherent to that deal won’t disagree. And they shouldn’t, noting that it will add at least 12 new patents that increase the IP strength at APCX and accelerate its mission to penetrate a fintech sector with best-in-class products meeting surging demand. Thus, since March, the 86% gains may be a precursor of better things to come.
More Than An Acquisition Play
Still, while a near-term pop could be in order from that deal, the better way to consider APCX is from a longer-term perspective. That way, investors can benefit from the accretive nature of the assets and the more than 200 years of combined financial and technology expertise that created its innovative and comprehensive fintech platform. It’s a robust one that delivers continuous digital financial innovation and commerce experiences. Taking it a step further, in many ways, it’s considered the gold standard for a sector that can present nothing short of excellence to be successful. And in an industry where billions of dollars can exchange hands in a millisecond, having a trusted platform is the lifeblood of success. APCX has one. Better still, it’s getting noticed.
And it should, especially since it fits ideally into the fintech revolution. To those not keeping up with a finance industry in transition, fintech is the backbone of new technology aiming to compete with traditional methods of delivering financial services. More importantly for APCX and its investors, new fintech is winning. And that is more than good news for early investors to the AppTech proposition; it also gives exposure to one of the hottest investment sectors. Behind EV and cybersecurity, fintech is undoubtedly the place to be.
Still, while its market potential in the next few years may be smaller than the two listed above, it’s a multi-billion dollar market opportunity where investors in the right company can do incredibly well. Being in AppTech qualifies as being in the right place at the right time.
How big is fintech? Well, in a word- massive. In fact, most people are already integrated into the system by utilizing online financial services to purchase consumer goods, transfer money or crypto, and/or pay bills through digital channels. Not only that, whether they realize it or not, they are helping to embed new technologies to make digitally-focused finance mainstream. Again that’s good news for consumers and the companies facilitating the technology.
Make no mistake, the new era of fintech solutions is quickly replacing the “traditional” ways of doing business. Thus, finding the under-the-radar gems to capitalize on the shift may be a more prudent consideration instead of ignoring the obvious. AppTech Payments has earned its way to the gem list. But they may not stay under the radar for long.
Emerging Onto Investor Screens
Actually, the recent surge in APCX stock indicates that shares are already on the screens of investors. And those doing the due diligence know that they are likely taking advantage of a valuation disconnect that undervalues the company by a significant measure. Remember that APCX is only a penny stock in the literal sense. Trading at under $5.00 makes that classification. However, don’t be misled; APCX is already generating more than $24 million in revenues. But new deals, including its imminent acquisition, could accelerate AppTech’s mission to become a revenue-generating juggernaut.
It’s a bullish presumption but not an unjustified one. Considering that APCX will have the IP muscle and supporting suite of innovative products to penetrate the multi-billion dollar fintech sector, it’s an outcome that could happen faster than many think. And taking into consideration that some peer companies have less revenue-generating firepower and still command higher market caps, APCX could move substantially higher to just catch up to a more appropriate valuation. Then, factoring in an expected revenue surge on an organic basis, shares could continue higher from a level more reflective of its market position and pace of growth. Moreover, APCX is proving it can rival the industry blue chips, and side by side, technology comparisons show they already are. Flexing that technological muscle further enhances an already bullish outlook.
In fact, even before closing its Hothand acquisition, APCX is already a robust and well-protected company delivering creative and necessary fintech services and solutions to a broad range of customers. That’s happening today, with its patented and proprietary software powering an innovative payment processing and digital banking technologies platform that complements its core merchant services capabilities. The patents help stake their competitive claim and maintain distance from sector poachers.
Its strong IP portfolio also strengthens competitive advantages and helps create additional proprietary software solutions providing progressive, adaptable, and synergistic product offerings directly to merchants, banking institutions, and business enterprises. In simpler terms, IP assets are the instruments to turn ambition into dollars and de-risk the process of creating compelling software and technology. Having that protection fueled AppTech’s commitment to devote significant resources to developing an embedded, highly secure digital payments and banking platform that powers commerce experiences for clients and their customers. It’s a scalable platform designed to generate significant ROI, especially since it’s not a one-size-fits-all solution.
Being Different Is Good
That’s a significant advantage in the competitive landscape. Unlike many big-box solutions, AppTech solutions can be built client-specific as a standalone product or as a fully integrated solution that delivers innovative, unparalleled payments, banking, and financial services experiences. It’s also a difference that makes APCX one of the small handful of companies able to create solutions based on industry standards for payment and banking protocols. Also unique to APCX is its processing technologies utilizing its RESTful API, allowing for a broad extension of its services.
In other words, being different is good and provides a unique ability for APCX to integrate into existing platforms to make an excellent product better and, at the same time, enhance client capabilities by enabling fully branded and customizable experiences that support tokenized, multi-channel, and multi-method transactions. Of course, owning IP allowed AppTechs positioning, and APCX has plenty of it.
AppTech’s current patents protect aspects of System and Method for Delivering Web Content to a Mobile Device, allowing companies to send URLs in text messages and responsible for helping to create the industry protocol known as Wireless Access Protocol (WAP) Push. WAP is commonly used when receiving a text message with a link to download content or an application to a user’s smartphone. Indeed, it’s easy to acknowledge that APCX is working in the right space.
Another patent protects Mobile-to-Mobile Payment System and Method, an essential bridge enabling users to transfer money from cellphone to cellphone, person to person, or person to business. AppTech has been called instrumental in shaping the creation of the P2P (Peer to Peer) payments industry by helping build solutions allowing users to move money by text message, click, tap, or scan. It’s now happening up to billions of times a day. That’s not all they own.
They have another patent covering Computer to Mobile Two-Way Chat System and Method, allowing and protecting communication via SMS text messaging from a computer to a mobile phone device. This technology is primarily used in social media messenger apps or chat features. Keep in mind that when chatting with friends through digital channels, the messages are not moving from cell phone to cell phone. Instead, the messages sent through a smartphone or device are sent to the app’s computer, processed, and then routed to the receiver’s mobile device. In millisecond speed, the transfer is complete.
Those patents alone set the stage for potentially millions in additional revenues. But as noted, APCX is about to get significantly more potent, and here’s why.
Hothand Acquisition Is An IP Multiplier
In April, AppTech announced its definitive agreement to purchase Hothand Inc., a patent-holding company that owns the intellectual property rights to a wide array of mobile credit/debit transactions and mobile search, location, offer, and payment fields. The agreement is shareholder-friendly, too, with APCX exchanging only 225,000 APCX shares and staging cash earnout payments based on reaching certain milestones. So, dilution is minimal, and capital can be reserved, making the deal a near-term value driver without too much, if any, overhead resistance. It also leaves money in place to expedite growth.
Here’s something to consider. Hothand must also be bullish on the combination, with most of their earnout coming after APCX reaches certain sales milestones. The merger agreement provides for earnout payments to shareholders of Hothand of up to $2 million in cash, payable in $500,000 installments upon AppTech achieving $10 million, $15 million, $20 million, and $25 million in gross revenue after the closing. Thus, revenue expectations are high, and knowing that due diligence is always part of a deal, investors should be encouraged at the milestones set. The lowest milestone would increase revenues by almost 50% and the highest by 100%. Thus, revenue models set the stage for expected and appreciable growth.
Better yet, they could start to stream quickly, with AppTech set to acquire Hothand’s portfolio of twelve patents focused on delivering, purchasing, or requesting any products or services within specific geolocation and time provided by a consumer from any cell phone anywhere in the United States. They get more than that.
APCX also benefits from Hothand’s patents covering advertising on mobile phones within an application, where the products or services are purchased. So, in addition to complementing AppTech’s current patented and proprietary software, their addition to a synergistic suite of offerings directly to merchants, banking institutions, and business enterprises create new sources of revenues that can add to already impressive and published year-over-year gains.
In simplest terms, the deal makes APCX significantly stronger. And the better news from an investor’s perspective is that APCX could use its added strength to acquire additional accretive assets to accelerate its mission to become a more prominent,and most important, a bottom-line EPS company.
A Revenue-Generating Tailwind Into 2022
Know this, too. APCX growth is already impressive. So, factoring in the imminent Hothand assets, the trajectory may steepen. Notable, too, even during the most challenging pandemic-related business slowdowns in history, APCX grew its revenues sequentially and year over year. That’s a statistic worth paying attention to. Many companies, especially in the fintech space, didn’t survive the pandemic-induced onslaught.
AppTech Payments did more than survive; they thrived. APCX Q4 revenues increased on a consecutive basis, driven by larger processing volumes. The increases were equally impressive YoY, with comparative revenues jumping by 7%, driven primarily by new accounts. And in addition to APCX sales trending in the right direction, so is its balance sheet. After Q4, APCX netted $13.4 million in a public offering, ideally positioning them to capitalize on new opportunities instead being focused on finances.
Furthermore, investors shouldn’t under-appreciate that APCX is increasing revenues, has a cash-rich balance sheet, a low O/S count with insiders owning roughly 33% of the float, and an acquisition expected to add millions in new revenues. Best of all, the combination of value drivers intends to deliver near-term rewards. Thus, while the current rally is gaining momentum, post-acquisition shares could, and probably should, rally to and past 52-week highs. That puts a roughly 76% increase in the crosshairs from current levels.
A Case For A Break Higher In 2022
Even conservative expectations should yield that result. After all, APCX has laid the groundwork for revenues to potentially surge in 2022. In fact, they are better positioned than ever to turn a milestone-rich 2021 into a catalyst-filled 2022. Remember, APCX developed partnerships, enhanced its strategic vision paving the way for its new platform launch, and significantly fortified its balance sheet to focus on creating new business and shareholder value. Thus, there is a lot to hear about as the year rolls.
And as that news hits the wires, it should add fuel to a rally justified by AppTech being in its best operating position in history, a capital structure ideal for keeping pressure to the upside, and a post-acquisition valuation to support significantly higher share prices. Thus, APCX may be presenting a perfect storm of investment opportunity and one that won’t clear anytime soon. Hence, it’s a near and long-term play with proof of concept plain to see.
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