Compelling investment opportunities can indeed come in small-cap packages. And AppTech Payments Corp. (NASDAQ: APCX, $APCX) is a perfect example. In fact, its roughly $30 million market cap doesn't come close to showing the strength behind a company that has more than $13 million in cash, only about 16.35 million shares outstanding with 33% of that insider owned, and an acquisition strategy that is adding considerable revenue-generating firepower to an already impressive asset portfolio.
Its case gets better. Besides APCX's fundamental strength, the company is in the right sector at the right time, seizing a wealth of value-creating opportunities from a fintech sector that could send shares of this NASDAQ-listed company appreciably higher. And with few trading against that premise, it's a likely result.
Short-positions are less than 0.3% of its float, a testament to the intrinsic and inherent strength at APCX that keeps bearish interest elsewhere. In other words, few dare to bet against the immediate and long-term potential in play at APCX. They are right to feed elsewhere.
Upside Prevails In Fintech Sector
The upside in APCX stock, which has 52-week highs in its crosshairs, is the path of least resistance, especially with its definitive agreement to complete a potentially transformative acquisition intended to steepen an already impressive growth trajectory.
And while the company's fundamentals look more impressive than ever, its share price is also wasting no time following that lead. Since March, APCX stock has increased by 86% and shows no signs of losing its bullish momentum. Thus, while AppTech bulls may be running now, they could be set to stampede in the coming days and weeks as APCX milestones turn into catalysts.
Those catalysts can result from AppTech leveraging the power of 200 years of combined financial and technology expertise through its innovative and comprehensive fintech platform, which sets the gold standard for delivering continuous digital financial innovation and commerce experiences. Put more simply, AppTech's success, that of its clients, and its investors will come through a robust and powerful platform committed to solving challenges through technology enablement. That mission to deliver is underway.
Fintech Is In Fashion
For those following the digital revolution, fintech is more than a cool buzzword; it's the backbone of new technology aiming to compete with traditional financial methods in delivering financial services.
Those new to the word 'fintech' should know this- they are already part of the revolution by utilizing online financial services to purchase consumer goods, transfer money or crypto, and/or pay bills through digital channels. Thus, while a new word for many, fintech has become quickly embedded in everyday applications. Not only that, it is ushering in tremendous investment opportunities.
And better still, the investment proposition presents some extraordinary values, which is excellent news for investors understanding that its inevitable sweep of adoption is imminent. Moreover, while fintech solutions have been integrated into daily life, prominent players enhancing the movement remain under the radar. AppTech Payments is one. But that may not be the case for long.
The recent share price surge in APCX stock indicates that investors are starting to pay attention to the valuation disconnect. They likely see what others should; APCX is in the right sector with the right products at the right time. Better yet, they have the expertise to market them, which can fuel appreciable revenue growth faster than many think.
Not only that, APCX is penetrating the fintech sector with a substantial IP portfolio and a supporting suite of products. Competitors who lack what APCX has probably won't be able to compete or even survive in the competitive fintech space. AppTech and its investors don't have those worries, and it could be a reason why APCX has been referred to as a blue-chip fintech company in a small-cap body.
IP Is The Key To Accelerate Growth
But that description may soon change. In fact, even before its recent acquisition of Hothand, Inc., which adds considerable and valuable IP, APCX was already well-protected and positioned to launch market-changing 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 make the next stage of business better.
Patent protection strengthens competitive advantages and helps create additional proprietary software solutions that provide progressive and adaptable products through synergistic offerings directly to merchants, banking institutions, and business enterprises. Patents are what help ambition turn into dollars.
Moreover, owning IP de-risks the process of creating compelling software and technology. Showing how important it is, IP was instrumental in facilitating AppTech's development of an embedded, highly secure digital payments and banking platform that powers commerce experiences for clients and their customers. But better still, it's a scalable platform.
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. It's a difference that's also an advantage, with AppTech part of a small handful of companies whose processing technologies can be taken off-the-shelf or tapped into via its RESTful API.
In other words, 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.
What did APCX own before the Hothand acquisition? A lot. And the better news, post-acquisition, they will own a lot more to make its IP portfolio and competitive position considerably stronger.
An Impressive Score Of Important IP
AppTech already holds 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. Indeed, it's easy to acknowledge that APCX is working in the right space. But there's more to like.
Another patent protects Mobile-to-Mobile Payment System and Method, a critical tool enabling users to transfer money from cellphone to cellphone, person to person, or person to business. AppTech may have been instrumental in shaping the creation of the P2P (Peer to Peer) payments industry by allowing users to move money by text message, click, tap, or scan. It's now happening up to billions of times a day. Those patents are significant, but there's still more to the APCX value proposition.
They have another patent covering Computer to Mobile Two-Way Chat System and Method. This patent allows communication via SMS text messaging from a computer to a mobile phone device. This or similar 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.
Indeed, just the sum of those parts is enough to support an appreciably higher share price. But as noted, the company is about to get significantly stronger.
Acquisition Of Hothand Is A Game-Changer
Earlier this month, 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 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, leaving the deal's upside ripe for appreciation.
By the way, Hothand must also be bullish on the future, noting that most of their earnout comes after APCX reaches certain sales milestones. And those numbers are significant, with the merger agreement providing 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.
And rightfully so since that appreciation could come quickly and in an accretive way. AppTech will 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.
In addition, APCX benefits from Hothand's family of 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.
Luke D'Angelo, AppTech CEO, certainly thinks so. He said, "The acquisition of Hothand's patents will bolster AppTech's highly anticipated technology stack, which will bring the company to the forefront of the fintech industry. We plan to begin writing and filing a more comprehensive patent combining our technologies with those of Hothand, which will serve as a cornerstone of AppTech's upcoming product offerings."
More simply put, the deal made APCX stronger. Even better, from an investor's perspective, they aren't done maximizing inherent strength anytime soon.
That bodes well for the future.
Accelerating Growth Into 2022
Moreover, capitalizing on the strengths inherent to the Hothand acquisition, APCX can enhance already impressive comparative growth. Even during the most challenging pandemic-related business slowdowns in history, APCX grew its revenues sequentially and year over year. Don't under-appreciate that achievement. Many companies didn't survive the pandemic-induced onslaught.
In a period where any growth is commendable, APCX saw its Q4 revenues increase by 3% on a consecutive basis, driven by larger processing volumes. The increases were equally impressive for the year ending December 31, 2021, with YoY revenues jumping by 7%, driven primarily by new accounts.
Not only are APCX sales trends moving 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 70% higher than Friday's closing price, it may still represent APCX stock as undervalued.
However, markets do correct, and once more appropriate modeling of how the Hothand assets make AppTech a much better company, that gap will close. There's plenty more to justify that bullish assumption.
Best Position Ever To Drive Shareholder Value Higher
Foremost is APCX's successful uplist to the NASDAQ markets in January. That move helped AppTech onboard an expert development team who have already expedited the enhanced platform launch date. Beyond adding development team members, AppTech announced adding its new sales director and head of business development, who will be tasked with building the foundation for its planned expansion. In March, a strategic summit laid the groundwork for that mission to produce results sooner than later, and that go-to plan is in action today.
Moreover, the enhanced initiatives add to an already ambitious plan. 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.
Thus, those paying attention during that buildup caught APCX at values almost too good to be true. Still, with assets able to justify a significantly higher share price, even after its 86% run, current prices could be the new starting point for a more intense and sustained rally.
A Company That Can Justify Higher Prices
Indeed, higher prices make sense for this company. After all, they have done more than earn their recent praise; they have laid the groundwork for revenues to potentially surge in 2022.
In fact, while 2021 was milestone-rich, 2022 can be transformational. And that's not an overly ambitious 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 moves alone make investment consideration in APCX more than timely; it makes it compelling. Also, keep in mind that APCX has 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 that can drive overall growth faster than any time in its history.
But here's potentially the best part of the APCX investment proposition. AppTech is more than in its best position in history to make itself better; it's making sure its investors come along for the ride. And when those two measures align, good things tend to happen. Thus, considering the totality of AppTech Payments Corp., the disconnect between share price and intrinsics is more than attractive from an investment perspective; it's simply too good to ignore. So, best said in a single word, don't.
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