AppTech Payments Corp. (NASDAQ: APCX, $APCX) stock offers a compelling investment opportunity. Why? Because they are in the right sector with the right products at the right time- fintech. And with the sector red-hot, finding undervalued investment opportunities, especially those with the revenue-generating strength of $APCX, could deliver exponential gains as part of an aggressive growth stock portfolio.
But, AppTech has more than inherent potential; they have assets that already justify a much higher share price. Thus, don't be misled by weak markets pulling even the best stocks lower; AppTech Payments is positioned to surge, making the investment proposition timely and compelling.
In fact, trading at $1.46, the share price does little justice to a company accelerating growth in multiple channels. But it's not only the operational strength investors should pay attention to. The fundamentals are equally impressive, with APCX having more than $13 million in cash, only about 16.35 million shares outstanding, and an acquisition strategy adding considerable revenue-generating firepower to an already impressive asset portfolio. Better still, insiders own approximately 33% of the float, which aligns their interest well with its shareholders.
Actually, the case for higher prices gets even better. Besides APCX's fundamental and operational strength, they are about to close a transformational 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. Once completed, this NASDAQ-listed company is expected to move appreciably higher. By the way, not many investors are betting against that premise.
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Bears Aren't Feeding On AppTech Stock
Short-sellers hold positions equaling less than 0.3% of the trading float. That's a testament to the intrinsic and inherent strength at a time when small-cap stocks are getting crushed by short-sellers as investors are not stepping up to defend the bid. But, that's not the case for AppTech.
Its shares have been moving higher at an impressive pace, and with bearish interest elsewhere, that trend should continue. And rightfully so. The immediate and long-term prognosis for APCX to drive revenues higher is better than ever. So, despite the likelihood of some consolidation, the path of least resistance for APCX is to the upside.
In fact, recent trading action has put 52-week highs in its crosshairs. And after announcing its definitive agreement to acquire Hothand, that target may be reached sooner than later. Investors that understand the deal know that it should. After all, it will add at least 12 new patents that increase the IP strength at APCX and accelerate the mission to penetrate a fintech sector with best-in-class products meeting surging demand. Thus, the 84% gains since March may be a precursor of better things to come. Indeed, with an acquisition catalyst on the near-term horizon, that's likely.
Still, don't get bullish on APCX purely due to an accretive acquisition. They have much more to offer. The company already leverages the power of 200 years of combined financial and technology expertise through its innovative and comprehensive fintech platform delivering continuous digital financial innovation and commerce experiences. In many ways, it's the gold standard for a sector that must present nothing short of excellence to be successful. With billions of dollars trading hands by the millisecond, anything less is a failure.
AppTech is on the right side of that equation and is doing well to ensure its clients recognize the standard of excellence embedded into its robust and powerful platform committed to solving challenges through technology enablement. That mission to deliver is underway. And APCX investors are likely to benefit.
The Revolution Called Fintech
Actually, they should. Fintech is the backbone of new technology aiming to compete with traditional methods of delivering financial services. Moreover, new fintech is winning. And so are the companies in the sector promoting its value. But not only are companies earning exponential growth but so are early investors in the opportunity. Remember, while the word fintech is making headlines, it's still a sector in its infancy. But that doesn't mean millions, even billions, of people aren't already utilizing its power.
They likely are but just don't know it. In fact, people utilizing online financial services to purchase consumer goods, transfer money or crypto, and/or pay bills through digital channels are part of the fintech revolution. Not only that, whether they realize it or not, they are also part of the reason for how quickly fintech has become embedded into everyday finance. And those services aren't only good news for users; companies providing them are expected to see their valuations surge as more mainstream fintech solutions replace the "traditional" ways of doing business. Thus, fintech for users is a boom for companies like AppTech Payments, which are more than in the right sector at the right time; they also have the products and services needed to meet demand.
Indeed, the recent share price surge in APCX stock indicates that investors are paying attention to the opportunity, taking advantage of a valuation disconnect that is too big to ignore. Early investors to APCX likely already see what others soon will; the company is in its best position to capitalize on opportunities that could turn a roughly $24 million company into a revenue-generating juggernaut.
That's not a stretch of bullish enthusiasm, either. 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 knowing that peer companies have higher valuations without having anything close to the asset portfolio of APCX makes the investment proposition more appealing. Frankly, despite its small-cap price, APCX can rival that of the industry blue chips, and side by side, technology comparisons show they already are.
A Blue-Chip IP Portfolio To Accelerate Growth
In fact, without yet adding the IP firepower from Hothand, APCX is already a powerful and well-protected company positioned to deliver 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 patents also strengthen competitive advantages and help create additional proprietary software solutions providing progressive, adaptable, and synergistic product offerings directly to merchants, banking institutions, and business enterprises. In simpler terms, patents are instrumental in turning ambition into dollars.
Better still, owning IP de-risks the process of creating compelling software and technology. That value showed with AppTech putting significant resources into 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.
On the contrary, 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. It's a difference that's also an advantage and, at the same time, 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 that its processing technologies utilize its RESTful API, allowing for a broad extension of its services reach.
In other words, by being able to integrate into existing platforms, APCX can make an already 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, they needed IP to get where they are, and before the Hothand deal, APCX had plenty of intrinsic strength.
Impressive IP Makes AppTech A Leader
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 can be worth millions in revenue. But as noted, APCx is about to get significantly more potent.
Hothand Acquisition Is A Transformative Deal
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 an exchange of only 225,000 APCX shares and a staged cash earnout 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.
Consider this, too. Hothand must also be bullish on the future, 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. Some likely are and could be the reason for the recent spike in price.
That interest is timely. Appreciation is expected to come quickly and in an accretive way. AppTech is 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.
In addition, APCX 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 year-over-year gains.
Put simply, the deal made APCX significantly stronger. And the better news from an investor's perspective is that APCX is far from being done maximizing the value of its acquisitions anytime soon.
That keeps the growth trajectory intact.
A Tailwind Into 2022
And keep in mind that growth is already impressive. So, capitalizing on the strengths inherent to the Hothand acquisition adds a tailwind to the bullish proposition. Notably, 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 increase by 3% 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 closing out Q4, APCX netted $13.4 million in a public offering. Hence, expect APCX to focus on market opportunities instead of finances. With an ample capital war chest, the intent is to do just that. Thus, APCX makes its own case for investment consideration. They are increasing revenues, have 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 value drivers are near term. That means that while the current rally is well deserved, there is likely more to come. That's a bullish assumption well justified.
Front-Loaded For Growth
And it's one made by a sum of its parts appraisal. APCX successfully uplisted to the NASDAQ markets in January, onboarded an expert development team that expedited the enhanced platform launch date, and announced adding its new sales director and head of business development, who will be tasked with building the foundation for its planned expansion. In other words, APCX is front-loaded for growth, and a strategic summit last month laid the groundwork for that mission to produce results, which should assure investors that the plan is in action.
There's proof of that. The team also 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 researched, identified, and vetted partnership opportunities for blockchain and cryptocurrency use cases with digital asset platform partners. Further, they co-developed an end-to-end, automated product and opportunity intake process to streamline, categorize and prioritize new products/features and business development opportunities. Thus, those paying attention during that buildup caught APCX at values almost too good to be true. Still, even after its 86% run, current prices don't reflect the value that Hothand brings to the table. Therefore, the bullish rally should stay intact.
A Case For Higher Prices In 2022
For all intents and purposes, it should. After all, APCX has laid the groundwork for revenues to potentially surge in 2022. In fact, they are well-positioned to take a milestone-rich 2021 and turn into a catalyst-filled 2022. And that's not an overzealous presumption. 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 business instead of financing.
Those achievements alone can justify a higher price, especially when investors model prices with forward-looking intent. Also, keep in mind that APCX has a backlog of clients, a fintech platform powering commerce experiences using crypto, cash, and whatever new financial tool is on the horizon, and a revenue-generating action plan to generate growth faster than any time in its history.
There's a final consideration. AppTech is not only in the best operating position in its history, but it's set up to take its investors along for the ride. Having a 33% inside ownership position virtually ensures that's the case. Thus, AppTech Payments Corp. now, and then post-acquisition, presents an investment proposition that could deliver near exponential returns sooner than later. Indeed, the pieces are in place for that to happen. And that could make AppTech Payments a fintech shooting star in 2022.
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