Yes, AppTech Payments Corp. (NASDAQ: APCX, $APCX) shares have surged by more than 65%* since March. But that doesn't mean they're not positioned to go appreciably higher. They are. In fact, APCX's roughly $24 million market cap doesn't do justice to a fintech company accelerating growth on all cylinders. Not only on the operational side, either. APCX just completed a more than $13 million capital raise, has only about 16.35 million shares outstanding with 33% of that insider owned, and is nearing the close of a transformative acquisition of Hothand, Inc. that will add considerably more revenue-generating firepower to its already impressive asset arsenal. (*share price of $1.64 on 4/26/22, 9:58am EST)
But, that's not all to make the investment proposition compelling. Besides APCX's fundamental strength, the company is well-positioned in the right sector at the right time, capitalizing on substantial value-creating opportunities in a fintech sector that is not only red-hot but could also result in sending shares of APCX considerably higher.
By the way, few traders are doubting that proposition. Short-positions are less than 0.3% of its float, and at a time when short-sellers are feasting on small-cap names, that minimal position is a testament to the operational and competitive strength of APCX. The bears are right to keep their attention elsewhere.
Upside Targets Appreciably Higher
In fact, APCX is doing more than enough to keep 52-week highs in its crosshairs. And that's despite markets that are getting crushed almost daily. Indeed, since March, the path of least resistance has been to the upside. And with several things in play at APCX, it's a trend likely to continue despite bearish market conditions.
Foremost to the investment proposition is that APCX is better positioned than ever to turn milestones into catalysts. And to make that happen, they'll lean into more than 200 years of combined financial and technical expertise to accelerate the adoption of its innovative and comprehensive fintech platform. It's been referred to as the gold standard for delivering continuous digital financial innovation and commerce experiences, earned by its reputation as a robust and powerful platform committed to solving challenges through technology enablement. It's also taking advantage of an industry in fashion-fintech.
Some may be new to the word 'fintech.' If so, they should know they are probably already a significant contributor to the financial revolution. In fact, anyone utilizing online financial services to purchase consumer goods, transfer money or crypto, and/or pay bills through digital channels contribute to the fintech movement. And don't expect that use and adoption to slow. On the contrary, fintech is the new backbone of financial transactions and is not only embedded in everyday applications but will soon replace antiquated systems of financial checks and balances. Still, fintech users aren't the only beneficiaries. The companies, and their investors, can be winners as well.
AppTech Payments Corp. and its investors included.
Growing With Reason And Intent
Proof of that is in the open. Since March, APCX shares have surged, trading 65% higher from period lows. The move suggests that investors are paying attention to the value proposition that APCX presents. And rightfully so. No matter how APCX is evaluated, the common denominator is that they are in the right sector with the right products at the right time. Not only that, they have an expert management team that knows how to get its products and services into the hands of users. The combination could fuel appreciable revenue growth sooner than later.
Making sure that's the case, APCX is adding to an already robust IP portfolio with a definitive agreement to purchase Hothand Inc. and its 12 powerful patents. But, even before that deal closes, AppTech is worthy of higher prices. In fact, while Hothand assets strengthen APCX considerably, don't underestimate their power beforehand.
APCX was already well-positioned to continue penetrating a fintech market with innovative and robust services to a broad range of customers. Its patented and proprietary software already powers an innovative payment processing and digital banking technologies platform that complements its core merchant services capabilities. The patents simply make the next stage of business better.
They also strengthen competitive advantages and help create additional proprietary software solutions that provide progressive and adaptable products through synergistic offerings directly to merchants, banking institutions, and business enterprises. Patents are actually vital to turning a plan into revenue-generating performance. And APCX has good ones.
So good that in addition to de-risking the processes inherent to creating innovative software and technology, APCX IP was instrumental in facilitating the development of an embedded, highly secure digital payments and banking platform that powers commerce experiences for clients and their customers. It's a scalable platform that can drive revenues sharply higher.
And the better news on that front is that based on industry standards for payment and banking protocols, it 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. That difference is also an advantage. With AppTech part of a small group of companies whose processing technologies can integrate with off-the-shelf or tap into via its RESTful API, near-term growth is in the company's sights. And it should be.
Having the ability to make an already excellent product better is usually supported by intense demand. And because APCX solutions enhance client capabilities by enabling fully branded and customizable experiences that support tokenized, multi-channel, and multi-method transactions, seizing a good chunk of that demand is likely.
As noted, APCX already has a lot to offer.
Important IP Drives Growth
AppTech leverages impressive patent strength protecting aspects of System and Method for Delivering Web Content to a Mobile Device. The patents allow companies to send URLs in text messages and are 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. Right space, right time. But there's more to like.
Another patent protects Mobile-to-Mobile Payment System and Method, a vital tool enabling users to transfer money from cellphone to cellphone, person to person, or person to business. AppTech solutions, in fact, may have been instrumental in helping shape the P2P (Peer to Peer) payments industry by allowing users to move money by text message, click, tap, or scan. That technology is already used up to billions of times a day.
AppTech has another patent covering Computer to Mobile Two-Way Chat System and Method, allowing communication via SMS text messages from a computer to a mobile phone device. This technology is primarily used in social media messenger apps or chat features. Remember, 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. Thus being the middleman to facilitate technology can be lucrative.
Still, as noted, APCX is about to get significantly stronger.
Acquisition Of Hothand Is Transformative
AppTech recently 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 will be finally consummated with an exchange of 225,000 APCX shares and a cash earnout based on reaching certain milestones. So, dilution is minimal, and the managed payouts don't put a ceiling on the shares.
By the way, the earnouts are based on some pretty high revenue numbers. Terms announced provide 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, the recent surge in share price makes sense as investors read between the lines. Revenue expectations are substantial.
Investors are also likely factoring in value from acquiring 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.
In addition, APCX will get 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 year-over-year gains.
Put most simply, APCX is about to get significantly stronger. And investors should share in that event.
Tailwind Of Growth
By all means, they should. A solid tailwind pushing revenue-generating opportunities is in place that can be used to capitalize and maximize the strengths inherent to the Hothand acquisition. And keep in mind, APCX is in growth mode.
Despite challenging pandemic-related obstacles, APCX grew its Q4 revenues by 3% on a consecutive basis, driven by larger processing volumes. Better still, YoY revenues were equally impressive, jumping by 7%, driven primarily by new accounts. And not only are APCX sales trending in the right direction but so is its balance sheet.
After its close of Q4, APCX netted $13.4 million in a public offering. Hence, increasing revenues, a significantly stronger balance sheet, a low O/S count, and insiders owning roughly 33% of the float combine to present a strong case for why AppTech is compelling at current prices. Frankly, even at 52-week highs of $3.15, roughly 117% higher than current levels, may still represent APCX stock as undervalued.
However, that gap may close faster than many expect.
Better Positioned Than Ever To Create Shareholder Value
That's a likely result of APCX's successful uplist to the NASDAQ markets, onboarding an expert development team to expedite the enhanced platform launch date, and adding its new sales director and head of business development, who will be tasked with building the foundation for its planned expansion.
Moreover, its initiatives to make APCX a more significant company are already underway. The team developed vital system functions, including CI/CD pipelines, go-forward scalable and secure AWS infrastructure, POC for Text2Pay Invoice System, and POC for Crypto Payments Invoice System. That's not all they did.
APCX management also researched, identified, and vetted partnership opportunities for blockchain and cryptocurrency use cases with digital asset platform partners. They also co-developed an end-to-end, automated product and opportunity intake process to streamline, categorize and prioritize new products/features and business development opportunities.
Hence, action is creating shareholder value. And trading ahead of the results of those actions is usually a wise investment consideration.
A Case For Higher Share Prices
Indeed, from a sum of its parts calculation, APCX is deserving of a higher valuation. After all, they have done more than earn their recent praise; they have laid the groundwork for revenues to potentially surge in 2022. Not only that, they are positioned to turn a milestone-filled 2021 into a catalyst fueled 2022. And with new partnerships, an enhanced strategic vision that paves the way for its new platform launch, and a fortified balance sheet, revenue and share price growth could be imminent.
Thus, the totality of APCX offers more than an attractive investment proposition; it presents a compelling one. And with a backlog of clients, a fintech platform powering commerce experiences using crypto, cash, and whatever else is on the horizon, and a revenue-generating plan already driving growth, it's a timely one as well. What's more, considering that the disconnect between share price and its compelling asset portfolio is simply too big to ignore, the most notable consideration is that it's actionable.
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