NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company may be involved in various claims and legal actions arising in the ordinary course of business. The Company establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.

Lawsuit with Former Lawyers

On March 13, 2025, Moses & Singer LLP filed a case against AppTech Payments Corp. for unpaid fees of approximately $445 thousand with the American Arbitration Association. AppTech has brought a counterclaim of legal malpractice for $800 thousand. Arbitration is confidential and ongoing; resolution is expected before or by April 2026. Invoices for fees and costs to date are reflected in accounts payable.

Finzeo Seller Suit

On October 30, 2025, AppTech Payments Corp. filed a lawsuit in the United States District Court, Southern District of California, against Seller with claims for trade secret misappropriation, fraud, misrepresentation, conversion, unfair business practices, violation of California Penal Code section 502, and breach of contract. The litigation relates to AppTech’s acquisition of membership interests in a company and the company’s related product. The defendant has made claims of an offset based on alleged outstanding payments as part of the acquisition. On November 4, 2025, the Court entered an order approving the parties Stipulation/Joint re AppTech’s Motion for Temporary Restraining Order and Order. The case is currently in the discovery stage with the final pretrial conference scheduled for March 18, 2027.

Litigation with Former Employees

On May 3, 2024, the Company was sued by three former employees over severance payments. In March 2025, the Company settled its lawsuit for $172 thousand. As of December 31, 2025, all monies owed have been paid.

Infinios Financial Services Litigation

On October 1, 2020, the Company entered into a strategic partnership with NEC PAYMENTS B.S.C., which subsequently became Infinios Financial Services B.S.C. (“Infinios”); on May 4, 2023, the Company notified Infinios of its intent to terminate the relationship and commenced good-faith negotiations, and in October 2023, the parties entered arbitration.

As of December 31, 2024, the parties settled the lawsuit under a confidential Settlement Confirmation letter whereby the terms of the Settlement Agreement and Mutual Release were fulfilled. Under the settlement, no payments were exchanged between the parties, and both the anti-dilution liability and the payable owed to Infinios of $72 thousand and $249 thousand, respectively, were fully extinguished. The matter is closed.