APPYEA's Net Loss Widens to $4.85M Amid Strategic Pivot, Convertible Debt Woes

TL;DR

**APYP is burning cash and pivoting to blockchain, making it a highly speculative bet with significant downside risk.**

AI Summary

APPYEA, INC. (APYP) reported a significant increase in net loss for the nine months ended September 30, 2025, reaching $4,850,000, compared to a net loss of $1,575,000 for the same period in 2024. This substantial increase was primarily driven by a negative change in the fair value of convertible loans and warrant liability, which swung from a gain of $31,000 in 2024 to a loss of $3,680,000 in 2025. Revenues remained minimal at $6,000 for the nine months ended September 30, 2025, a decrease from $16,000 in 2024. The company's accumulated deficit grew to $15,208,000 as of September 30, 2025, up from $10,358,000 at December 31, 2024, and stockholders' deficiency worsened to $7,758,000 from $4,142,000. APYEA also announced a strategic pivot on August 21, 2025, to acquire a blockchain-based lottery and gaming platform from Techlott Enterprises Ltd., shifting focus from its AppySleep product. Cash and cash equivalents increased to $468,000 from $79,000 at December 31, 2024, largely due to $735,000 in proceeds from common stock issuance. The company continues to operate on a going-concern basis, dependent on external financing, with no assurances of securing adequate capital.

Why It Matters

This filing reveals APYEA's precarious financial health, with a rapidly expanding net loss and accumulated deficit, raising significant going-concern doubts for investors. The strategic pivot into blockchain lottery and gaming, while potentially offering new growth avenues, introduces substantial execution risk given the company's history of minimal revenue and reliance on external financing. For employees, the continued financial instability and dependence on capital raises could signal job insecurity. Customers of the AppySleep product might face uncertainty regarding future support or development as the company shifts its core focus. In the broader market, this highlights the challenges small, development-stage companies face in commercializing products and the high-risk nature of speculative investments in firms undergoing significant business model changes.

Risk Assessment

Risk Level: high — The company reported an accumulated deficit of $15,208,000 and a stockholders' deficiency of $7,758,000 as of September 30, 2025, indicating severe financial distress. Its net loss for the nine months ended September 30, 2025, was $4,850,000, and it has not generated significant revenues, relying entirely on external financing, which raises substantial doubt about its ability to continue as a going concern.

Analyst Insight

Investors should exercise extreme caution and consider avoiding APYEA (APYP) given the severe going-concern risk, widening losses, and the highly speculative nature of its new blockchain lottery venture. Current shareholders should evaluate their position, recognizing the high probability of further dilution and potential for significant capital loss if the company fails to secure adequate financing or successfully execute its new strategy.

Financial Highlights

debt To Equity

N/A

revenue

$6,000

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

-$4,850,000

eps

N/A

gross Margin

N/A

cash Position

$468,000

revenue Growth

-62.5%

Revenue Breakdown

Key Numbers

• $4.85M — Net loss (for the nine months ended September 30, 2025, significantly wider than $1.575M in 2024)
• $15.21M — Accumulated deficit (as of September 30, 2025, up from $10.36M at December 31, 2024)
• $7.76M — Stockholders' deficiency (as of September 30, 2025, worsened from $4.14M at December 31, 2024)
• $3.68M — Change in fair value of convertible loans and warrant liability (negative impact for the nine months ended September 30, 2025, compared to a $31K gain in 2024)
• $6K — Revenues (for the nine months ended September 30, 2025, a decrease from $16K in 2024)
• $735K — Proceeds from issuance of Common Stock (contributed to cash flow from financing activities for the nine months ended September 30, 2025)
• $468K — Cash and cash equivalents (as of September 30, 2025, an increase from $79K at December 31, 2024)
• 596,723,385 — Common shares outstanding (as of November 19, 2025)

Key Players & Entities

• APPYEA, INC. (company) — registrant
• SleepX LTD (company) — wholly owned subsidiary of APYEA
• Ta-nooma Ltd. (company) — privately held company 66.7% owned by SleepX
• Techlott Enterprises Ltd. (company) — Cypriot company from which APYEA is acquiring a blockchain platform
• Boris Molchadsky (person) — Chairman of APYEA and majority owner of Nexense Technologies USA. Inc.
• Nexense Technologies USA. Inc. (company) — related party lender to SleepX
• SEC (regulator) — Securities and Exchange Commission
• Nevada (regulator) — State of incorporation for APYEA
• OTCQB (regulator) — OTC Markets tier where APYEA common stock is traded

FAQ

Risk Factors

• Deteriorating Financial Condition [high — financial]: The company reported a net loss of $4,850,000 for the nine months ended September 30, 2025, a substantial increase from $1,575,000 in the prior year. The accumulated deficit grew to $15,208,000, and stockholders' deficiency worsened to $7,758,000. This indicates a severe and worsening financial position.
• Dependence on External Financing [high — financial]: APPYEA, INC. continues to operate on a going-concern basis, heavily reliant on external financing. There are no assurances that the company will be able to secure adequate capital to fund its operations and strategic initiatives, posing a significant risk to its survival.
• Volatile Fair Value of Financial Instruments [medium — financial]: A significant driver of the increased net loss was a negative change in the fair value of convertible loans and warrant liability, swinging from a $31,000 gain in 2024 to a $3,680,000 loss in 2025. This volatility introduces unpredictability into financial results.
• Strategic Pivot and Integration Risk [medium — operational]: The company announced a strategic pivot on August 21, 2025, to acquire a blockchain-based lottery and gaming platform, moving away from its AppySleep product. The success of this acquisition and integration into a new business area carries inherent operational and execution risks.
• Minimal Revenue Generation [high — financial]: Revenues remain extremely low at $6,000 for the nine months ended September 30, 2025, down from $16,000 in the prior year. This minimal revenue base highlights the company's lack of established commercial operations and its dependence on financing.
• Stockholder Dilution Risk [medium — financial]: The company raised $735,000 in proceeds from common stock issuance to bolster its cash position. With 596,723,385 common shares outstanding as of November 19, 2025, future equity raises to meet funding needs could lead to significant dilution for existing shareholders.

Industry Context

The blockchain-based lottery and gaming sector is a rapidly evolving market characterized by high growth potential but also significant regulatory scrutiny and technological disruption. APPYEA's strategic pivot positions it within this dynamic space, aiming to leverage blockchain for transparency and efficiency in gaming operations. However, competition is fierce, with established players and new entrants constantly innovating.

Regulatory Implications

The pivot into blockchain-based lottery and gaming exposes APPYEA to a complex and evolving regulatory landscape. Compliance with gaming regulations, anti-money laundering (AML) laws, and data privacy requirements across different jurisdictions will be critical and potentially costly. Failure to navigate these regulations could lead to significant penalties and operational disruptions.

What Investors Should Do

1. Monitor Cash Burn and Future Financing
2. Evaluate Strategic Pivot Execution
3. Assess Volatility of Financial Instruments
4. Scrutinize Revenue Generation Potential

Key Dates

• 2025-08-21: Strategic Pivot Announcement — The company announced a shift in strategy to acquire a blockchain-based lottery and gaming platform, moving away from its AppySleep product. This signals a significant change in business direction and potential future revenue streams.
• 2025-09-30: Nine Months Ended Financial Reporting — This period shows a substantial increase in net loss to $4,850,000, driven by fair value changes in financial instruments, and minimal revenue of $6,000.
• 2024-09-30: Prior Year Nine Months Financial Reporting — Reported a net loss of $1,575,000 and revenues of $16,000, providing a baseline for the significant deterioration in the current year's performance.
• 2024-12-31: Year-End Financial Position — Reported accumulated deficit of $10,358,000 and stockholders' deficiency of $4,142,000, which have worsened significantly by September 30, 2025.
• 2025-12-31: Projected Year-End Financial Position (Implied) — The current trend suggests a further increase in accumulated deficit and stockholders' deficiency if financing is not secured and losses continue.

Glossary

Accumulated Deficit

The total net losses of a company since its inception that have not been offset by profits. It represents a negative retained earnings balance. (APYEA's accumulated deficit has grown to $15,208,000, indicating a long history of unprofitability and a significant hurdle for future profitability.)

Stockholders' Deficiency

Occurs when a company's total liabilities exceed its total assets, resulting in a negative net worth for shareholders. (APYEA's stockholders' deficiency has worsened to $7,758,000, highlighting the precarious financial position and the potential for complete loss of equity investment.)

Fair Value of Convertible Loans and Warrant Liability

The estimated market value of financial instruments that can be converted into equity or give the holder the right to purchase equity. Changes in fair value can significantly impact net income. (A substantial negative swing in the fair value of these instruments ($3,680,000 loss) was the primary driver of APYEA's increased net loss, demonstrating the impact of market fluctuations on the company's reported results.)

Going-Concern Basis

An accounting assumption that a company will continue to operate for the foreseeable future. If substantial doubt exists, it must be disclosed. (APYEA is operating on a going-concern basis, underscoring its dependence on external financing and the uncertainty surrounding its ability to continue operations.)

Year-Over-Year Comparison

APPYEA, INC. has experienced a significant deterioration in its financial performance compared to the prior year. For the nine months ended September 30, 2025, the net loss widened dramatically to $4,850,000 from $1,575,000 in 2024. This was primarily driven by a substantial negative swing in the fair value of convertible loans and warrant liability, which turned a gain into a significant loss. Revenue also declined to a minimal $6,000 from $16,000. The company's financial health indicators, including accumulated deficit and stockholders' deficiency, have worsened considerably, underscoring increased financial risk.

Key Financial Figures

• $000 — mber 30, 2025 December 31, 2024 $000 Opening Balance, (including short ter

Filing Documents

• form10-q.htm (10-Q) — 838KB
• ex31-1.htm (EX-31.1) — 12KB
• ex31-2.htm (EX-31.2) — 12KB
• ex32-1.htm (EX-32.1) — 6KB
• ex32-2.htm (EX-32.2) — 7KB
• 0001493152-25-024258.txt ( ) — 3907KB
• apyp-20250930.xsd (EX-101.SCH) — 29KB
• apyp-20250930_cal.xml (EX-101.CAL) — 42KB
• apyp-20250930_def.xml (EX-101.DEF) — 103KB
• apyp-20250930_lab.xml (EX-101.LAB) — 285KB
• apyp-20250930_pre.xml (EX-101.PRE) — 215KB
• form10-q_htm.xml (XML) — 461KB

– Unaudited Condensed Consolidated Financial Statements

Item 1 – Unaudited Condensed Consolidated Financial Statements 4 Condensed Consolidated Balance Sheets – September 30, 2025 (unaudited) and December 31, 2024 5 Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2025 and 2024 (unaudited) 6 Condensed Consolidated Statement of Changes in Stockholders' Equity (deficit) for the three and six months ended September 30, 2025 and 2024 (unaudited) 7-10 Condensed Consolidated Statements of Cash Flows for the six months ended Septmber 30, 2025 and 2024 (unaudited) 11 Notes to Unaudited Condensed Consolidated Financial Statements 12

– Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations 21

– Quantitative and Qualitative Disclosures About Market Risk

Item 3 – Quantitative and Qualitative Disclosures About Market Risk 29

– Controls and Procedures

Item 4 – Controls and Procedures 30

— OTHER INFORMATION

PART II — OTHER INFORMATION 31

– Legal Proceedings

Item 1 – Legal Proceedings 31

– Risk Factors

Item 1A – Risk Factors 31

– Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 31

– Defaults upon Senior Securities

Item 3 – Defaults upon Senior Securities 31

– Mine Safety Disclosures

Item 4 – Mine Safety Disclosures 31

– Other Information

Item 5 – Other Information 32

– Exhibits

Item 6 – Exhibits 32 Exhibit Index 32

SIGNATURES

SIGNATURES 33 2 APPYEA INC. AND ITS SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2025 3 APPYEA INC. AND ITS SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2025 INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Operations 6 Condensed Consolidated Statements of Changes in Deficiency 7-10 Condensed Consolidated Statements of Cash Flows 11 Notes to the Condensed Consolidated Financial Statements 12-20 4 APPYEA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) September 30 December 31, 2025 2024 Unaudited Audited ASSETS Current assets Cash and cash equivalents 468 79 Other accounts receivables 38 29 Inventory 64 23 Total current assets 570 131 Non-current assets Property and equipment, net 6 3 Intangible assets, net 60 251 Total non-current asset 66 254 Total assets 636 385 LIABILITIES AND DEFICIENCY Current liabilities Trade payables 49 33 Other accounts payable and related party payables 419 252 Short-term loans from related party 83 79 Convertible loans – At fair value 7,843 1,302 Total current liabilities 8,394 1,666 Non-current liabilities Long term convertible loans at fair value - 2,861 Total non-current asset - 2,861 Total liabilities 8,394 4,527 DEFICIENCY AppYea Inc. Stockholders' Deficiency: Convertible preferred stock, $ 0.0001 par value - - Common stock, $ 0.0001 par value 58 50 Shares to be issued 363 294 Additional Paid in Capital 7,043 5,886 Accumulated deficit ( 15,208 ) ( 10,358 ) Total AppYea Inc. stockholders' deficiency ( 7,744 ) ( 4,128 ) Non-controlling interests ( 14 ) ( 14 ) Total Deficiency ( 7,758 ) ( 4,142 ) Total liabilities and deficiency 636 385 The accompanying notes are an int

financial statements

financial statements. Use of Estimates in Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. GAAP accounting principles requires management to make estimates and assumptions. The Company's management believes that the estimates, judgments, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. 13 APPYEA INC. NOTES TO THE FINANCIAL STATEMENTS NOTE 3 - RELATED PARTY BALANCES AND TRANSACTIONS A. Short-term loans from related parties During 2021, SleepX borrowed from Nexense Technologies USA. Inc., a Delaware corporation which is majority owned by Boris Molchadsky, the Company's Chairman. an aggregate amount of $ 47,623 . According to the agreement, the loan shall be repaid in the event that the Company's profits are sufficient to repay the aggregate loan amount and upon such terms and in such installments as shall be determined by the Board. The loan shall bear interest at an annual rate equal to the minimum rate approved by applicable law in Israel ( 5.02 % in 2025). During 2020, the minority shareholder of Ta-nooma advanced a loan to Ta-nooma in the amount of NIS 115,725 . The loan does not carry any interest expense and the repayment terms have yet to be determined. As of September 30, 2025, the loan balance amounted to NIS 115,725 ($ 35,004 ). B. Balances with related parties SCHEDULE OF BALANCE WITH RELATED PARTIES September 30, 2025 December 31, 2024 In U.S. dollars in thousands Liabilities: Employees and payroll accruals* 212 61 Related party payables 54 59 Short term loans 83 79 C. Transactions with related

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