[10-Q] APPYEA, INC Quarterly Earnings Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
MARK ONE
for
the Quarterly Period ended
for the transition period from ________ to ________
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Indicate
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| ☐ | Smaller reporting company | ||
| Emerging growth company |
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As
of November 19, 2025, there were outstanding
APPYEA, INC.
Form 10-Q
September 30, 2025
| Page | |
| PART I — FINANCIAL INFORMATION | |
| 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 |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk | 29 |
| Item 4 – Controls and Procedures | 30 |
| PART II — OTHER INFORMATION | 31 |
| Item 1 – Legal Proceedings | 31 |
| Item 1A – Risk Factors | 31 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3 – Defaults upon Senior Securities | 31 |
| Item 4 – Mine Safety Disclosures | 31 |
| Item 5 – Other Information | 32 |
| Item 6 – Exhibits | 32 |
| Exhibit Index | 32 |
| 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 | ||||||||
| Other accounts receivables | ||||||||
| Inventory | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total non-current asset | ||||||||
| Total assets | ||||||||
| LIABILITIES AND DEFICIENCY | ||||||||
| Current liabilities | ||||||||
| Trade payables | ||||||||
| Other accounts payable and related party payables | ||||||||
| Short-term loans from related party | ||||||||
| Convertible loans – At fair value | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Long term convertible loans at fair value | - | |||||||
| Total non-current asset | - | |||||||
| Total liabilities | ||||||||
| DEFICIENCY | ||||||||
| AppYea Inc. Stockholders’ Deficiency: | ||||||||
| Convertible preferred stock, $ | - | - | ||||||
| Common stock, $ | ||||||||
| Shares to be issued | ||||||||
| Additional Paid in Capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total AppYea Inc. stockholders’ deficiency | ( | ) | ( | ) | ||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total Deficiency | ( | ) | ( | ) | ||||
| Total liabilities and deficiency | ||||||||
The accompanying notes are an integral part of the financial statements.
| 5 |
APPYEA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands)
For the period of three months ended September 30, | For the period of nine months ended September, 30 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Unaudited | Unaudited | |||||||||||||||
| Revenues | ||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Research and development expenses | ||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of convertible loans and warrant liability | ( | ) | ( | ) | ||||||||||||
| Financial (expenses) income, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Expenses | ( | ) | - | ( | ) | - | ||||||||||
| Net profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net profit (loss) attributable to AppYea Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Profit (loss) per Common Share | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
Weighted Average number of Common Shares Outstanding basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of the financial statements.
| 6 |
APPYEA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY
(U.S. dollars in thousands except share data)
| Preferred Stock | Common Stock | Shares to be | Additional Paid in | Accumulated | Non-controlling | Total | ||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | issued | Capital | Deficit | Total | interests | Deficiency | |||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Shares to be issued to service providers | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||
| Shares to be issued to investors | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||
| Shares to be issued to service providers | ||||||||||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Shares to be issued upon option exercise | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||
| Balance as of September 30, 2025 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 7 |
| Preferred Stock | Common Stock | Shares to be | Additional Paid in | Accumulated | Non-controlling | Total | ||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | issued | Capital | Deficit | Total | interests | Deficiency | |||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Issuance of Shares | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||
| Shares to be issued to service providers | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Shares to be issued to investors | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Share based compensation to investors | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Share issuance upon conversion of Preferred stock | ( | ) | - | - | ( | ) | - | - | - | - | ||||||||||||||||||||||||||||||
| Shares to be issued upon option exercise | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Shares to be issued | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Options exercise | - | - | - | ( | ) | - | - | |||||||||||||||||||||||||||||||||
| Shares Issuance upon conversion of debt to related party | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Convertible note conversion | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||
| Balance as of September 30, 2024 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 8 |
APPYEA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY
(U.S. dollars in thousands except share data)
| Preferred Stock | Common Stock | Shares to be | Additional Paid in | Accumulated | Non-controlling | Total | ||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | issued | Capital | Deficit | Total | interests | Deficiency | |||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| Balance as of July 1, 2025 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Issuance of Shares | - | - | - | |||||||||||||||||||||||||||||||||||||
| Shares to be issued to service providers | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Net income | - | - | - | ( | ) | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 9 |
| Preferred Stock | Common Stock | Shares to be | Additional Paid in | Accumulated | Non-controlling | Total | ||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | issued | Capital | Deficit | Total | interests | Deficiency | |||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| Balance as of July 1, 2024 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Share issuance from of stock payable | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||
| Shares to be issued | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Convertible note conversion | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Shares to be issued upon equity investment | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Options exercise | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||
| Balance as of September 30, 2024 | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 10 |
APPYEA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
| For The nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Unaudited | ||||||||
| Cash flows from operating activities: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Write-off of intangible assets | ||||||||
| Share based compensation | ||||||||
| Change in fair value of convertible loans and warrant liability and financial expenses, net | ( | ) | ||||||
| Financial expenses, net | ||||||||
| Other expenses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other accounts receivables | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accounts payables – related party | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Research and development expenses capitalization | - | ( | ) | |||||
| Net cash used in investing activities | - | ( | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds
from issuance of Common Stock | ||||||||
| Proceeds
on account of Shares to be issued | - | |||||||
| Proceeds
from convertible Note received, net of issuance expenses | - | - | ||||||
| Net cash provided by financing activities | ||||||||
| Foreign exchange on Cash and cash equivalents | ( | ) | ||||||
| Change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
| Non-cash investing and financing activities | ||||||||
| Related partied debt conversion to option Common stock | - | |||||||
The accompanying notes are an integral part of the financial statements.
| 11 |
APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - GENERAL
AppYea, Inc. (“AppYea”, “the Company”, “we” or “us”) was incorporated in the State of South Dakota on November 26, 2012 to engage in the acquisition, purchase, maintenance and creation of mobile software applications. The Company is in the development stage with no significant revenues and no operating history. On November 1, 2021 the Company was redomiciled in the State of Nevada.
The Company’s common stock is traded on the OTC Markets, OTCQB tier, under the symbol “APYP”.
SleepX LTD is a company formed under the laws of the State of Israel and a wholly owned subsidiary of the Company (“SleepX”). SleepX is a research and development company that has developed a proprietary product for monitoring and treating sleep apnea and snoring. The technology is protected by several international patents, and the Company started serial production in 2023. Subject to raising working capital, of which no assurance can be provided, the Company intends to focus on further development and commercialization of its products.
SleepX
has incorporated, together with an unrelated third party, a privately held company under the laws of the State of Israel named Ta-nooma
Ltd. (“Ta-nooma”). Ta-nooma has developed sleeping monitoring technology for which patent applications were filed and has
no revenue from operations. Since its incorporation and as of the financial statements date, Sleepx holds
The company flag product is AppySleep – A Biofeedback snoring monitoring and treatment wristband, combined with the AppySleep App (“AppySleep”).
The AppySleep product is currently in serial manufacturing and commercial stage.
Strategic Development
On August 21, 202 5 the Company entered into a transaction with Techlott Enterprises Ltd. (“Techlott”), a Cypriot company, for the acquisition of proprietary blockchain-based lottery and gaming platform and the underlying intellectual property. The transaction with Techlott represents a strategic business pivot for the Company by focusing it on the rapidly growing institutional lottery market, providing a complete, production-ready technology package engineered for enterprise deployments.
Financial position
The
financial statements are presented on a going-concern basis. To date, the Company has not generated any significant revenues, suffered
recurring losses from operations, incurred negative cash flows from operating activities, and is dependent upon external sources for
financing its operations. As of September 30, 2025 the Company had an accumulated deficit of
The financial statements do not include any adjustments for the values of assets and liabilities and their classification that may be necessary in the event that the Company is no longer able to continue its operations as a “going concern”.
| 12 |
APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The interim financial statements do not include a full disclosure as required in annual financial statements and should be read with the annual financial statements of the Company as of December 31, 2024, from which the accompanying condensed consolidated balance sheet dated December 31, 2024, was derived. The accounting policies implemented in the interim financial statements are consistent with the accounting policies implemented in the annual financial statements as of December 31, 2024, except of the following accounting pronouncement adopted by the Company.
Recently Issued Accounting Pronouncements
Effective January 1, 2024, the Company adopted ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), which is intended to address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. For convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stocks, and enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share guidance on the basis of feedback from financial statement users. The adoption of this new accounting guidance did not have an effect on the consolidated financial statements.
On January 1, 2024, the Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires all public entities to provide enhanced disclosures about significant segment expenses. The amendments in this ASU are to be applied retrospectively. The Company is in the process of determining the potential impact of adopting this guidance on its financial position, results of operations, cash flow and disclosures. The adoption of ASU 2023-07 did not have a material effect on its consolidated 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 $
During
2020, the minority shareholder of Ta-nooma advanced a loan to Ta-nooma in the amount of NIS
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* | ||||||||
| Related party payables | ||||||||
| Short term loans | ||||||||
C. Transactions with related parties
SCHEDULE OF TRANSACTION WITH RELATED PARTIES
For the nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| In U.S. dollars in thousands | ||||||||
| Expenses: | ||||||||
| Salaries and related cost (including stock-based compensation in the amount of $ | ||||||||
Both the Chairman and the chief financial officer are directors in the Company and do not receive compensation for their directorship roles. Company’s Bylaws provide that a director or officer shall be indemnified and held harmless by the Corporation, to the fullest extent permitted by the laws of the State of Nevada.
(*) Includes an amount related to the former Chief Executive Officer, who, as of September 30, 2025, is no longer considered a related party.
| 14 |
APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 - CONVERTIBLE LOANS AND WARRANTS
The following table summarizes fair value measurements by level as of September 30, 2025 and December 31, 2024 measured at fair value on a recurring basis:
SCHEDULE OF FAIR VALUE RECURRING BASIS
| September 30, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | In U.S. dollars | |||||||||||||||
| None | - | - | - | - | ||||||||||||
| Liabilities | ||||||||||||||||
Convertible Loans (including long term) | - | - | ||||||||||||||
| Financial liability | - | - | - | - | ||||||||||||
and December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | In U.S. dollars | |||||||||||||||
| None | - | - | - | - | ||||||||||||
| Liabilities | ||||||||||||||||
Convertible Loans (including long term) | - | - | ||||||||||||||
| Financial liability | - | - | - | - | ||||||||||||
| 15 |
APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 - CONVERTIBLE LOANS AND WARRANTS (cont.)
The Convertible Loans changes consist of the following as of September 30, 2025 and December 31, 2024:
SCHEDULE OF CONVERTIBLE LOANS AT FAIR VALUE CHANGES
| Convertible Loans at Fair Value | ||||||||
September 30, 2025 | December 31, 2024 | |||||||
| $000 | ||||||||
| Opening Balance, (including short term loans from related party which is also convertible) | ||||||||
| Transition from amortized cost to convertible loans measured at fair value | ||||||||
| Change in fair value of convertible loans liability | ||||||||
| Closing balance | ||||||||
The estimated fair values of the Convertible loans were measured according to the Monte Carlo Model using the following assumptions:
SCHEDULE OF FAIR VALUES OF WARRANTS AND CONVERTIBLE LOAN ASSUMPTION USED
As of September 30, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| Expected term (in years) | ||||||||
| Expected average (Monte Carlo) volatility | % | % | ||||||
| Expected dividend yield | - | - | ||||||
| Risk-free interest rate | % | % | ||||||
| WACC | % | % | ||||||
| Debt instrument measurement input | % | % | ||||||
NOTE 5 - STOCK BASED COMPENSATION
The table below depicts the number of options granted to such employee:
SCHEDULE OF NUMBER OF OPTIONS
| Nine months ended September 30, 2025 | ||||||||
Weighted average exercise price | ||||||||
| Number of options |
in USD | |||||||
| Options outstanding on January 1, 2025 | $ | |||||||
| Options granted during the period | $ | |||||||
| Options exercised during the period | - | $ | ||||||
| Options cancelled during the period | ( | ) | $ | |||||
| Options outstanding at the end of period | $ | |||||||
| Options exercisable at the end of period | $ | |||||||
*Includes
For
the nine months ended September 30, 2025 and 2024 the company recognized expenses, to such options, in the amount of $
| 16 |
APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6 – SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow global operating margin and the allocation of budget between cost of revenues, sales and marketing, technology and development, and general and administrative expenses.
The following table presents selected financial information with respect to the Company’s single operating segment for the quarters ended September 30, 2025 and 2024:
SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION
For the period of three months ended September 30, | For the period of nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Unaudited | Unaudited | |||||||||||||||
| Revenues | ||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Research and development expenses | ||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of convertible loans and warrant liability | ( | ) | ( | ) | ||||||||||||
| Financial (expenses) income, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses | ( | ) | - | ( | ) | - | ||||||||||
| Net profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net profit (loss) attributable to AppYea Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
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APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7 - CONTINGENT LIABILITIES
On August 11, 2022, a lawsuit was filed in the Tel Aviv Magistrate’s Court against our Chairman and majority shareholder, Boris Molchadsky, G.P.I.S Ltd., an entity controlled by Mr. Molchadsky, Nexsense, Inc. (the former shareholder of SleepX Ltd.) and SleepX, Ltd., our subsidiary (collectively, the “Defendants”) [Civil lawsuit number 25441-08-22]. The suit was filed by a fund operating out of Israel. A copy of the claim was served to the defendants only six months after it was submitted to court, on February 21, 2023. The lawsuit is based on the alleged breach of partnership and loan agreements as well as other related allegations, including violation of agreements reached in a mediation proceeding that took place in 2015. On July 24, 2023, the Defendants (except for Nexsense, Inc.) filed a statement of defense, denying the allegations and argued that the claim should be dismissed, due to the statute of limitations, lack of cause of action, lack of jurisdiction, delay in filing the claim, and respecting SleepX, also due to the lack of legal rivalry between SleepX and the plaintiff.
Recently, the Magistrate’s Court in Tel Aviv accepted the request regarding lack of material jurisdiction, and the claim was then transferred to the economic department of the District Court in Tel Aviv.
A preliminary hearing was held on February 14, 2024. The presiding judge did not rule on the preliminary pleadings and urged the parties to attempt mediation before the ruling. The parties have pursued mediation efforts but the mediation efforts have not succeeded and the matter has been referred back to the court. As of the date of this report, no hearing date has been set.
NOTE 8 - SIGNIFICANT EVENTS DURING THE PERIOD
(i)
On each of July 24 and July 30, 2025, entities controlled by Mr. Yakir Abadi and Mr. Eldar Grady, the new CEO and Chairman of the
Board, who were appointed to these positions as of August 12, 2025, invested
(ii) On August 1, 2025, Mr. Asaf Porat and the Company reached an understanding that Mr. Porat’s position as the Chief Financial Officer has terminated. Mr. Porat continued to provide services to the Company through August 31, 2025.
Effective August 12, 2025, Mr. Ron Mekler, who has served as a director of the Company through August 12, 205, was been appointed as Chief Financial Officer. Mr. Mekler resigned from his position as a director on the board on such date.
(ii)
On August 12, 2025, the Company and the holders of outstanding convertible promissory notes in an aggregate amount of approximately $
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APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
(iv)
In consideration for its efforts in facilitating the extension of the maturity date of the Convertible Notes and the associated
waivers discussed above, the Company agreed to issue to an unrelated third party consultant options for
(v) On August 12, 2025, the Board approved the appointment of Yakir Abadi and Eldar Edmond Grady as directors on the Board, effective immediately. In addition, on such date the Board appointed Mr. Abadi as the new Chief Executive Officer of the Company, following the resignation of Mr. Boris Molchadsky from the position of Company Chief Executive Officer. Mr. Molchadsky continues to serve as a Board member. The Board also appointed on such date Mr. Grady to serve as executive chairman of the Board.
Subject
to the increase in authorized share capital of the Company, the Company and each of Mr. Abadi and Mr. Grady (the “Share Capital
Increase”) agreed that each of these individuals will be issued each options to purchase
(A)
options for
(B)
options for
(C)
options for
(vi)
On September 30, 2025, the Board agreed to change the aforementioned resolution regarding the issuance of such options to Mr. Abadi and
Mr. Grady, and instead, to enter into a subscription agreement for an identical number of shares of the company’s common stocks
at a per share purchase price of $
(vii) On August 20, 2025 ,the company and Techlott Ltd., a private company formed under the laws of the Republic of Cyprus entered into a series of agreements pursuant to which, among other things, the Company purchased rights to certain technology of Techlott comprised of blockchain-based, decentralized lottery ecosystem leveraging smart contracts, verifiable randomness, and advanced infrastructure to deliver transparent, secure, and scalable lottery experiences
Under
the terms of the Intellectual Property Purchase Agreement dated as of August 20, 2025 entered into by the Company and Techlott the Company
agreed to purchase the all rights, title and interest to the Technology in consideration of the issuance to Techlott of
In connection with the above transactions, Techlott and Bary Molchadsky, a Company director and the holder of a majority of the outstanding voting share capital of the Company, entered into a Shareholders Agreement as of such date pursuant to which Techlott is entitled to designate two (2)of the five directors of the Company’s Board of Directors at the closing of the purchase of the Technology under the IP Purchase Agreement. Techlott’s right to designate the Board directors continues so long as it holds at least 20% of the Company’s outstanding capital.
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APPYEA INC.
NOTES TO THE FINANCIAL STATEMENTS
Additionally,
under the Shareholders Agreement the Techlott designated directors have effective veto rights over certain Company actions, including
any changes to the Company’s business, issuance of new equity securities and any mergers and acquisitions. At the closing of the
Technology purchase, Mark Katzenelson, the president of Techlott, will be appointed as President of the Company and Benny Harris, the
CTO of Techlott, will be appointed as CTO of the Company. Techlott was also granted under the Shareholders Agreement anti-dilution protection
for the Techlott Company Shares for any Company capital raise that the Company may raise up to $
(viii)
On September 4, 2025, the Company accepted subscriptions for $
(ix)
On September 30, 2025, the Company entered into a consulting agreement with YK (the “YK Consulting Agreement”) and with EG
(the “EG Consulting Agreement”). Under the terms of each of the YK Consulting Agreement and the EG Consulting Agreement,
each of YA and EG is entitled to a monthly fee of $
On
September 30, 2025, the Company and each of YA and EG also entered into a subscription agreement (the “Subscription Agreement”)
for the purchase by each of YK and EG of
NOTE 9 - SUBSEQUENT EVENTS
(i)
On October 8, 2025, the Company accepted subscriptions for $
(ii) On November 18, 2025, the Company and Ron Mekler (“RM”), formerly a director of the Company who was appointed as the
Company Chief Financial Officer on August 12, 2025 entered into a consulting agreement (the “RM Consulting Agreement”).
Under the terms of RM Consulting Agreement, RM is entitled to a monthly fee of $
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward-looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. The statements herein and their implications are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission, or the SEC, on April 15, 2025, as subsequently amended. As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “AppYea” mean AppYea, Inc. and our wholly-owned subsidiaries Sleepx LTD and Ta-Nooma LTD unless otherwise indicated or as otherwise required by the context.
Overview
AppYea, Inc. is a digital health company, focused on the development of accurate wearable monitoring solutions to treat sleep apnea and snoring and fundamentally improve quality of life.
Our solutions are based on our proprietary intellectual property portfolio comprised of Artificial Intelligence (AI) and sensing technologies for the tracking, analysis, and diagnosis of vital signs and other physical parameters during sleep time, offering extreme accuracy at an affordable cost.AI is a broad term generally used to describe conditions where a machine mimics “cognitive” functions associated with human intelligence, such as “learning” and “problem solving. Basic AI includes machine learning, where a machine uses algorithms to parse data, learn from it, and then make a determination or prediction about a given phenomenon. The machine is “trained” using large amounts of data and algorithms that provide it with the ability to learn how to perform the task.
New Business Focus
As disclosed in our public filings, as of August 21, 2025 we have entered into a transaction with Techlott Enterprises Ltd. (“Techlott”), a Cypriot company, for the acquisition of proprietary blockchain-based lottery and gaming platform and the underlying intellectual property. The transaction with Techlott represents a strategic business pivot for the Company by focusing it on the rapidly growing institutional lottery market, providing a complete, production-ready technology package engineered for enterprise deployments. We are building an infrastructure layer that makes fairness and transparency the default in games—spanning lottery and keno, virtual racing, and large multiplayer titles. This is a “digital receipt printer” for every draw or in-game event, the system generates verifiable randomness (VRF), records a public, tamper-evident receipt, and creates an audit trail ready for regulators and operators. The takeaway is simple—operators, regulators, and even players can verify rather than just “trust.” The infrastructure layer plugs into an operator’s stack via SDK/API. The architecture is multi-chain (including support for leading L2s such as Base), engineered for thousands of requests per second, and comes with an audit trail and internal reporting to simplify regulatory compliance.
Following on the heels of that announcement, on September 8, 2025, we issued a development update on our Techlott powered blockchain results engine regarding our plans to complete by the end of this year the adaptation of the platform to new and additional applications such that we can begin commercial pilots with licensed operators and expand dynamic rulebooks (odds, prizes, logic) by jurisdiction and market.
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In connection with the above transactions, Techlott and Bary Molchadsky, a Company director and the holder of a majority of the outstanding voting share capital of the Company, entered into a Shareholders Agreement as of such date (the “Shareholders Agreement”) pursuant to which Techlott is entitled to designate two (2)of the five directors of the Company’s Board of Directors (the “Company Board”) at the closing of the purchase of the Technology under the IP Purchase Agreement. Techlott’s right to designate the Board directors continues so long as it holds at least 20% of the Company’s outstanding capital. Additionally, under the Shareholders Agreement the Techlott designated directors have effective veto rights over certain Company actions, including any changes to the Company’s business, issuance of new equity securities and any mergers and acquisitions. At the closing of the Technology purchase, Mark Katzenelson, the president of Techlott, will be appointed as President of the Company and Benny Harris, the CTO of Techlott, will be appointed as CTO of the Company. Techlott was also granted under the Shareholders Agreement anti-dilution protection for the Techlott Company Shares for any Company capital raise that the Company may raise up to $10 million.
Our current corporate name does not reflect the refocusing of AppYea to its new principal line of business. Accordingly, we have decided to change our name to “MELLATRIX INC..” to better align our corporate name with the new technology. We believe that changing our name to “MELLATRIX INC.” is more in line with our new expected line of business and the potential beneficial effects of the name change are expected to aid us in achieving brand recognition and better position us to obtain future sources of financing. However, as of the date of this report, the name change has not yet been implemented.
While we intend to continue with our legacy health business, we anticipate that our resources and focus will be geared primarily towards our new business focus.
Digital Health Business
Snoring is a general disorder caused due to repetitive collapsing and narrowing of the upper airway. Individuals with snoring problems are at increased risk of accidental injury, depression and anxiety, heart disease and stroke. Currently available treatments include surgical and non-surgical devices.
According to Fior Markets, a market intelligence company, the Global Anti-Snoring Treatment Market is expected to grow from USD 4.3 billion in 2020 to USD 8.6 billion by 2028, with a 9.07% CAGR between 2021 and 2028. While North America had the largest market share of 28.12% in 2020, Asia-Pacific region is witnessing significant growth due to the increasing prevalence of obesity and sedentary lifestyles in emerging economies.
Currently available anti-snoring devices consist mainly of oral appliances that are recommended for use by patients suffering from snoring or obstructive sleep apnea. These appliances are put before sleep and have a simple function of pushing either the lower jaw or the tongue forward. This keeps the epiglottis parted from the uvula and prevents the snoring sound created by the vibration of soft tissues of palate.
Sleep apnea is a severe sleep condition in which individuals frequently stop breathing in their sleeping, this leads to insufficient oxygen supply to the brain and the rest of the body which, in turn may lead to critical problems. There are three main types of apneas: (i) Obstructive Sleep Apnea (“OSA”), the most common form caused by the throat muscles relaxing during sleep; (ii) Central sleep apnea, which occurs when the brain doesn’t send the proper signals to the muscles that control the breathing; and (iii) complex sleep apnea syndrome, which occurs when an individual suffers from both OSA and central sleep apnea. While OSA is a common disorder in the elderly population, affecting approximately 13 to 32% of people aged over 65, sleep apnea can occur at any age and affects approximately 25% of men and nearly 10% of women.
In 2020, North America dominated the sleep apnea device market, as it accounted for 49% of the revenue, the global market size was valued at USD 3.7 billion and is expected to expand by 6.2% CAGR, according to a report by Grand View Research Inc., reaching USD 6.1 billion by 2028.
The global sleep apnea and snoring market is driven in large part by solutions that can be applied in at home-settings or healthcare settings, as these tools will drive decisions regarding specific treatments and the associated outlays. However, despite advances in medical imaging and other diagnostic tools, misdiagnosis remains a common occurrence. We believe that improved diagnoses and outcomes are achievable through the adoption of AI-based decision support tools.
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Our Products and Product Candidates
Our initial focus is on the development of supporting solutions utilizing our proprietary platform. Our current business plan focuses on two principal devices and an App currently in development:
AppySleep – Biofeedback snoring treatment wristband, combined with the AppySleep App. The AppySleep app uses unique algorithms developed by SleepX combined with sensors to monitor physiological parameters during sleep. Based on real time reactions, the wristband will vibrate, when necessary, in order to decrease the snoring and regulate breathing by gently bringing the user to a lighter sleep or change his sleep position and thus ceasing the snoring event. The AppySleep product is currently in serial manufacturing stage and sales.
AppySleep LAB – Is a medical application, intended for downloading on a smartphone, and used to monitor breathing patterns in the sleep and identify sleep apnea episodes without direct contact to the user. The AppySleep LAB product is to begin final calibration, following which we will file for 510(k) FDA approval.
AppySleep PRO – is a wristband for the treatment of sleep apnea using biofeedback in combination with AppySleep LAB app. The unique algorithms of AppySleep LAB, combined with the wristband sensors, monitor sleep apnea events and additional physiological parameters during sleep, and when necessary, the wristband vibrates according to real time events, in order to decrease and cease sleep apnea events. The AppySleep PRO and AppySleep LAB are currently in development stages, following which it would be ready to begin the testing stage in preparation for filing for FDA approval.
Our Strategy for the Digital Health Business
During 2024, we successfully piloted the AppySleep product on more than 200 users. After analyzing the proposals, we updated and improved the algorithm, created a new inventory of 3,000 units, and are preparing for sales during the second quarter of 2025.
The License Agreement
Our business derives from a licensing agreement entered into as of March 15, 2020, as subsequently amended (the “License Agreement”), by SleepX Ltd., our Israeli subsidiary, B.G. Negev Technologies and Applications Ltd., a company formed under the laws of the State of Israel (“BGN”) and Mor Research Application Ltd. a company formed under the laws of Israel (“Mor”; together with BGN, the Licensors”). BGN is a company wholly owned by Ben Gurion University of the Negev in Israel and Mor, is the technology transfer arm of the Clalit Health Services, an Israeli non-profit healthcare insurance and service provider. Under the License Agreement, our Israeli subsidiary was granted a worldwide royalty bearing and exclusive license exclusive worldwide license with the right to grant sub-licenses and with a term of 15 years, to certain intellectual property to research, develop, manufacture use, market, distribute, offer for sale and sell sensor and software solutions for monitoring snoring and sleep apnea.
On May 1, 2022, our Israeli subsidiary and the Licensors entered into an amendment to the License Agreement (the “Amended License Agreement”) to include under the license certain sleep apnea treatment solutions that by combining speech descriptors from three separate and distinct speech signal domains, these speech descriptors may provide the ability to estimate the severity of sleep apnea using statistical learning and speech analysis approaches.
As consideration for the licenses above, our Israeli subsidiary has agreed to pay the following to the Licensors:
| (i) | A royalty of 3.0% of net sales received from the licensed products for a period of up to 15 years from initiation of sales in each state using licensed intellectual property; | |
| (ii) | 25% of sublicense fees received prior to attainment of all regulatory approval for marketing and sale of the licensed products in the first jurisdiction where the licensed products are intended to be sold; thereafter, 15% of sublicense fees received after the date regulatory approval, but prior to the first commercial sale of the licensed products; and 10% of sublicense fees received after the first commercial sale; |
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| (iii) | An annual license fee, commencing on fifth anniversary of the License Agreement (i.e., March 2025) of $20,000, and thereafter on each anniversary date as follows |
| Year | Amount ($) | |||
| 6 | $ | 40,000 | ||
| 7 | $ | 60,000 | ||
| 8 | $ | 80,000 | ||
| 9-15 | $ | 100,000 | ||
The Annual Fee is non-refundable, but it shall be credited each year due, against the royalty noted above, to the extent that such are payable, during that year.
| (iv) | Milestone payment of $60,000 upon the attainment of regulatory approval from applicable authority in USA or Europe to market and sell the licensed products |
As of the date of these financials, we have not achieved any of these milestones.
Under the License Agreement, the Licensors are entitled to terminate the License Agreement under certain conditions relating to a material change in the business of our Israeli subsidiary or a breach of any material obligation thereunder or to a bankruptcy event of our Israeli subsidiary. Under certain conditions, our Israeli subsidiary may terminate the License Agreement and return the licensed information to the Licensors.
In the event of an acquisition of all of the issued and outstanding share capital of the Israeli Subsidiary or of the Company and/or consolidation of the Israeli Subsidiary or the Company into or with another corporation (“Non IPO Exit”) or a listing of our common stock on a national exchange such as Nasdaq (the IPO Exit”), then the Licensors shall be entitled to an exit fee equal to 5% of the valuation of our company at the time of such exit and with respect to an IPO Exit, shares of common stock which will reflect in the aggregate 5% of the then outstanding common stock of the Company.
Significant Recent Events
(i) On each of July 24 and July 30, 2025, entities controlled by Mr. Yakir Abadi and Mr. Eldar Grady, the new CEO and Chairman of the Board, who were appointed to these positions as of August 12, 2025, invested 234,000 NIS in the Company by the purchase of units comprised if i) shares of the Company’s common stock, and: 2) warrants to purchase two (2) additional shares of common stocks exercisable through the second anniversary of the issuance of such options, at a per share exercise price of $0.01. The per unit purchase price was $0.005, for a total purchase price of 234,000 NIS (approximately $69,200 as of the date of this report).
(ii) On August 1, 2025, Mr. Asaf Porat and the Company reached an understanding that Mr. Porat’s position as the Chief Financial Officer has terminated. Mr. Porat continued to provide services to the Company through August 31, 2025. Effective August 12, 2025, Mr. Ron Mekler, who has served as a director of the Company through August 12, 205, was been appointed as Chief Financial Officer. Mr. Mekler resigned from his position as a director on the board on such date.
(iii) On August 12, 2025, the Company and the holders of outstanding convertible promissory notes in an aggregate amount of approximately $1.8 million have agreed to extend to February 15, 2026 the maturity date of the Convertible Notes (the “New Maturity Date”), freeze the continuing accrual of interest and to not exercise their right to convert the Convertible Notes through the New Maturity Date, in consideration of the repayment in cash by the New Maturity Date of the outstanding principal and accrued interest on the Notes together with a premium not exceeding 10%. The Company’s obligation to repay these amounts is subject to the Company raising additional operating capital.
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(iv) In consideration for its efforts in facilitating the extension of the maturity date of the Convertible Notes and the associated waivers discussed above, the Company agreed to issue to an unrelated third party consultant options for 45 million shares of Company common stock, which are vested upon grant and exercisable at a per share price of $0.0001, subject to a 12 month lockup.
(v) On August 12, 2025, the Board approved the appointment of Yakir Abadi and Eldar Edmond Grady as directors on the Board, effective immediately. In addition, on such date the Board appointed Mr. Abadi as the new Chief Executive Officer of the Company, following the resignation of Mr. Boris Molchadsky from the position of Company Chief Executive Officer. Mr. Molchadsky continues to serve as a Board member. The Board also appointed on such date Mr. Grady to serve as executive chairman of the Board.
Subject to the increase in authorized share capital of the Company, the Company and each of Mr. Abadi and Mr. Grady (the “Share Capital Increase”) agreed that each of these individuals will be issued each options to purchase 638,961,306 shares of Company common stock, exercisable for a five year period and at the per share price, in each case as set forth below:
| (i) | options for 212,965,804 shares of common stock shall vest and become exercisable upon the aggregate trading volume of the Company’s publicly traded share of common stock being at a value of least $500,000 over any consecutive 30-day period; | |
| (ii) | options for 212,965,804 shares of common stock shall vest and become exercisable upon the aggregate trading volume of the Company’s publicly traded share of common stock trading at a average daily trading price of at least $0.03 for 15 consecutive trading days; and | |
| (iii) | (iii) options for 213,029,698 shares of common stock shall vest and become exercisable upon the Company’s completion of a capital raise of at least $1 million. |
(vi) On September 30, 2025, the Board e agreed to change the aforementioned resolution regarding the issuance of such options to Mr. Abadi and Mr. Grady, and instead, to enter into a subscription agreement for an identical number of shares of the company’s common stocks at a per share purchase price of $0.0001. see Item (xi) below
(x) On September 4, 2025, the Company accepted subscriptions for $550,000 from five qualified investors in consideration of the issuance, in the aggregate, of 45,333,333 shares of the Company’s common stock and warrants to purchase an additional 12,750,000 shares of common stock, exercisable for a period not exceeding 12 months and at per share exercise prices between $0.015 and $0.02.
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(xi) On September 30, 2025, the Company entered into a consulting agreement with YK (the “YK Consulting Agreement”) and with EG (the “EG Consulting Agreement”). Under the terms of each of the YK Consulting Agreement and the EG Consulting Agreement, each of YA and EG is entitled to a monthly fee of $30,000, retroactive to August 12, 2025 (in each case the “Base Fee”) for a three year period. In addition, in the event that the Company decides to terminate a consulting agreement for any reason other than cause (as defined in each agreement) or there is Change of Control (as defined in each agreement), then the Company is to pay to YK or EG, as the case may be, a severance payment equal to 36 months Base Fee. In addition, each of YK and EG is entitled to reimbursement.
On September 30, 2025, the Company and each of YA and EG also entered into a subscription agreement (the “Subscription Agreement”) for the purchase by each of YK and EG of 638,961,306 shares (the “Subscription Shares”) at a per share purchase price of $0.0001. The Subscription Agreement goes into effect upon the increase in the Company’s authorized share capital. The Subscription Agreement provides that if certain specified milestones are not achieved with five (5) years then all or part of the Subscription Shares are to be returned to Company’s treasury. In addition, under the Subscription Agreement, each of YA and EG are entitled to anti-dilution protection, such that in the event of any issuance by the Company of shares of Common Stock or securities convertible into shares of Common Stock, whether for cash, in exchange for assets, services, or pursuant to debt conversion or otherwise, the Company shall issue additional shares to YA and EG so that their respective percentage ownership shall be maintained following such issuance, provided that such anti-dilution protection shall be afforded for up to $7 million of value received by the Company, whether measured in gross proceeds, value of assets recorded on the Company’s financial statements or otherwise. Any adjustment shall be made at the end of each quarter following the release of the financial statements for the quarter in which the value was received.
(xii) On October 8, 2025, the Company accepted subscriptions for $50,000 from a qualified investor in consideration of the issuance, in the aggregate, of 2,000,000 shares of the Company’s common stock at per share prices between $0.019.
Key Financial Terms and Metrics
The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.
Revenues
We have generated $6,000 in revenues from product sales during the nine months ended September 30, 2025.
Research and Development Expenses
The process of researching and developing our product candidates is lengthy, unpredictable, and subject to many risks. We expect to continue incurring substantial expenses for the next several years as we continue to develop our product candidates. We are unable, with any certainty, to estimate either the costs or the timelines in which those expenses will be incurred. The design and development of our devices will consume a large proportion of our current, as well as projected, resources.
Our research and development costs include costs are comprised of:
● internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials and supplies, facilities and maintenance costs attributable to research and development functions; and
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive, administrative and other support staff. Other significant general and administrative expenses include the costs associated with professional fees for accounting, auditing, insurance costs, consulting and legal services, along with facility and maintenance costs attributable to general and administrative functions.
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Financial Expenses
Financial expenses consist primarily impact of exchange rate derived from re-measurement of monetary balance sheet items denominated in non-dollar currencies. Other financial expenses include bank’s fees and interest on long term loans. Financial income derives mainly from change in derivative value of convertible loans.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2025 to the Three and Nine Months Ended June 30, 2024
For the three- months | For
the Nine- months | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| U.S dollars | ||||||||||||||||
| Revenues | 2,000 | 1,000 | 6,000 | 16,000 | ||||||||||||
| Cost of sales | 1,000 | (2,000 | ) | (9,000 | ) | (8,000 | ) | |||||||||
| Gross profit (loss) | 1,000 | (1,000 | ) | (3,000 | ) | 8,000 | ||||||||||
| Research and development expenses | 1,000 | 159,000 | 217,000 | 316,000 | ||||||||||||
| Sales and marketing | 24,000 | 153,000 | 74,000 | 310,000 | ||||||||||||
| General and administrative expenses | 211,000 | 298,000 | 419,000 | 797,000 | ||||||||||||
| Operating loss | (237,000 | ) | (610,000 | ) | (713,000 | ) | (1,415,000 | ) | ||||||||
| Financial income (expenses), net | (4,441,000 | ) | (98,000 | ) | (4,137,000 | ) | (160,000 | ) | ||||||||
| Profit for the period (loss) | (4,678,000 | ) | (512,000 | ) | (4,850,000 | ) | (1,575,000 | ) | ||||||||
Revenues. We recorded revenues of $2,000 and $6,000 for the three and nine months ended September 30, 2025 compared to $1,000 and $16,000, respectively, in each of the corresponding periods in 2024. All revenues were from sales of our AppySleep wristband.
Research and Development Expenses, Research and development expenses decreased from $159,000 and $316,000, respectively, during the three and nine months ended September 30, 2024 to $1,000 and $217,000, respectively for the corresponding periods in 2025. The decrease in each of the three and nine month periods is primarily attributable to write-offs of certain investments in intellectual property and development of our products.
Sales and Marketing. Sales and marketing expenses decreased from $153,000 and $310,000, respectively, during each of the three and nine months ended September 30, 2024 to $24,000 and $74,000, respectively, for the corresponding periods in 2025. The decrease in each of the three and nine month periods is primarily attributable to the decrease in marketing efforts during the period.
General and Administrative Expenses. General and administrative expenses decreased from $298,000 and $797,000, respectively, for the three and nine months ended June 30, 2024, to $211,000 and $419,000, respectively, for the corresponding periods in 2025. The decrease is primarily attributable mostly to reduced salary expenses due to the elimination of former CEO’S position and to the forfeiture of his options during the period, and also due to a reduction in other consulting expenses.
Profit (loss). Profit (loss) for the three months and nine months ended September 30, 2025 was ($4,678,000) and ($4,850,000) compared to (512,000) and $(1,575,000) for the corresponding periods in 2024, respectively. The increase in the loss during each of the periods is primarily attributable to change in fair value of convertible loans and to a decrease in sale and marketing efforts, and in general and administrative expenses during the period.
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Liquidity and Capital Resources
From inception, we have funded our operations from a combination of loans and sales of equity instruments.
As of September 30, 2025, we had a total of $468,000 in cash resources and approximately $8,394,000 of liabilities, all of which are current liabilities.
AppYea has experienced operating losses since its inception and had a total accumulated deficit of $14,764,000 as of September 30, 2025. We expect to incur additional costs and require additional capital. We have incurred losses in nearly every year since inception. These losses have resulted in significant cash used in operations. During the nine months ended September 30, 2025 and 2024, our cash used in operations was approximately $350,000 and $569,000, respectively. We need to continue and amplify our research and development efforts for our product candidates (which are in various stages of development), strengthen our patent portfolio, establish operations processes and pursue FDA clearance and international regulatory approvals as we continue to conduct these activities, we expect the cash needed to fund operations to increase significantly over the next several years.
The following table provides a summary of operating, investing, and financing cash flows for the period ended September 30, 2025 and 2024 respectively:
| For the nine months ended | ||||||||
September 30, 2025 | September 30, 2024 | |||||||
| US Dollars | ||||||||
| Net cash used in operating activities | $ | 350,000 | 569,0000 | |||||
| Net cash used in investment activities | - | 82,000 | ||||||
| Net cash provided by Financing Activities (income) | $ | (735,000 | ) | (486,000 | ) | |||
Between September 2024 and September 2025, we raised an aggregate of $260,000 from private placement of shares of our common stock at a per share price of $0.01 and the issuance of warrants, exercisable for a two year period from the date of issuance for an identical number of shares at a per share exercise price of $0.04, and additional $124,000 from exercise of outstanding warrants at an exercise price of $0.0066 per share, which was reduced from $0.04 if exercised within a specified shorter duration. In respect of the raise the investors are entitled to an aggregate 26,000,000 shares of our common stock and identical number of warrants, of which 13,500,000 have already been issued. The subscription proceeds are being used to complete the IOS design and development of our biofeedback snoring treatment wristband (AppySleep product) as well as general corporate matters. More recently, we raised in July 2025 through entities controlled by Mr. Yakir Abadi and Mr. Eldad Grady, the new CEO and Chairman of the Board, respectively, appointed as of August 12, 2025, invested 234,000 NIS in the Company by the purchase of units comprised of; 1) Shares of the Company’s common stock at a par value of $0.0001 per share, and: 2) Warrants to purchase two (2) additional shares of common stocks exercisable through the second anniversary of the issuance of such options, at a per share exercise price of $0.01, at a per unit purchase price of $0.005 for a total purchase price of 234,000 NIS (approximately $69,200 as of the date of this report). Each of them received 7,000,000 of Company’s shares of common stock.
On September 4, 2025, the Company accepted subscriptions for $550,000 from five qualified investors in consideration of the issuance, in the aggregate, of 45,333,333 shares of the Company’s common stock and warrants to purchase an additional 12,750,000 shares of common stock, exercisable for a period not exceeding 12 months and at per share exercise prices between $0.015 and $0.02.
On October 8, 2025, the Company accepted subscriptions for $50,000 from a qualified investor in consideration of the issuance, in the aggregate, of 2,000,000 shares of the Company’s common stock prices between $0.019.
As of June 30, 2025, the Company and the holder of outstanding convertible promissory notes in an aggregate amount of approximately $0.8 million have agreed to extend to December 31, 2025 the maturity date of the convertible notes, and not to exercise their right to convert the Convertible Notes through such date in consideration of the repayment in cash by December 31, 2025 of the outstanding principal and accrued interest on the Notes. On August 12, 2025, this holder together with holders of outstanding convertible promissory notes in an aggregate amount of approximately $1.08 million (collectively, the “Convertible Notes”) have agreed to extend to February 15, 2026 the maturity date of the Convertible Notes (the “New Maturity Date”), freeze the continuing accrual of interest and to not exercise their right to convert the Convertible Notes through the New Maturity Date in consideration of the repayment in cash by the New Maturity Date of the outstanding principal and accrued interest on the Notes together with a premium not exceeding 10%. The Company’s obligation to repay these amounts are subject to the Company raising additional operating capital.
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Management believes that funds on hand, will enable us to fund our operations and capital expenditure requirements through March 2026. We need to raise additional operating capital in order to maintain operations as presently conducted and to realize our business plan beyond such date.
Our accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. However, the Company has incurred substantial losses. Our current liabilities exceed our current assets and available cash is not sufficient to fund the expected future operations. The Company is raising additional capital through debt and equity securities in order to continue the funding of its operations. However, there is no assurance that the Company can raise enough funds or generate sufficient revenues to pay its obligations as they become due, which raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying value of assets or liabilities as a result of this uncertainty.
We cannot be sure that future funding will be available to us on acceptable terms, or at all. Due to often volatile nature of the financial markets, equity and debt financing may be difficult to obtain.
We may seek to raise any necessary additional capital through a combination of private or public equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights, future revenue streams, or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through private or public equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Going Concern
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We have a stockholders’ deficit of $7,758,000 and a working capital deficit of $7,824,000 at September 30, 2025 as well as negative operating cash flows. Our report from our independent registered public accounting firm for the quarter ended September 30, 2025 includes an explanatory paragraph stating the Company has recurring losses and limited operations which raise substantial doubt about its ability to continue as a going concern. If the Company is unable to obtain adequate capital, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not Applicable.
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| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Interim Chief Executive Officer, to allow timely decisions regarding required disclosure. Management, with the participation of our Interim Chief Executive Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based on that evaluation, our management, including our Chief Executive Officer, concluded that our disclosure controls and procedures were not effective as of September 30, 2025.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on April 15, 2025, our management concluded that our internal control over financial reporting was not effective at December 31, 2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
As a result of our evaluation, we identified a material weakness in our controls related to segregation of duties and other immaterial weaknesses in several areas of data management and documentation. Our management is composed of a small number of professionals resulting in a situation where limitations on segregation of duties exist. Accordingly, and as a result of the material weakness identified above, we have concluded that the control deficiencies result in a reasonable possibility that a material misstatement of the annual or interim financial statements may not be prevented on a timely basis by the Company’s internal controls. We continue to employ and refine a structure in which critical accounting policies, issues and estimates are identified, and together with other complex areas, are subject to multiple reviews by executives. We expect to be materially dependent upon third parties to provide us with accounting consulting services for the foreseeable future which we believe will mitigate the impact of the material weaknesses discussed above.
Changes in Internal Control Over Financial Reporting
Except for the material weakness noted above, during the quarter ended September 30, 2025, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
In August 11, 2022, a lawsuit was filed in the Tel Aviv Magistrate’s Court against our Chairman and majority shareholder, Boris Molchadsky, G.P.I.S Ltd., an entity controlled by Mr. Molchadsky, Nexsense, Inc. (the former shareholder of SleepX Ltd.) and SleepX, Ltd., our subsidiary (collectively, the “Defendants”) [Civil lawsuit number 25441-08-22]. The suit was filed by a fund operating out of Israel. A copy of the claim was served to the defendants only six months after it was submitted to court, on February 21, 2023.
The lawsuit is based on the alleged breach of partnership and loan agreements as well as other related allegations, including violation of agreements reached in a mediation proceeding that took place in 2015.
The suit alleges that the Defendants, amongst other things, did not disclose to the plaintiff certain transactions to which the Plaintiff was presumably entitled to compensation and hence the plaintiff demanded an accounting of the transactions and refund of amounts invested. With respect to SleepX. the plaintiff alleged that it made a deal with Nexsense, Inc. which wasn’t disclosed to the plaintiff, while allegedly the technology and patents of Nexsense, Inc. were transferred to SleepX (which was established shortly before the reverse merger between AppYea and SleepX), thus allegedly aimed to the concealment of assets from the plaintiff.
On July 24, 2023, the Defendants (except for Nexsense, Inc.) filed a statement of defense, denying the allegations and argued that the claim should be dismissed, due to the statute of limitations, lack of cause of action, lack of jurisdiction, delay in filing the claim, and respecting SleepX, also due to the lack of legal rivalry between SleepX and the plaintiff.
In addition, the Defendants submitted several preliminary requests to dismiss the claim outright, including a plea to dismiss the claim on the grounds it was submitted to the magistrate court, which is not the competent court according to law, due to the economic nature of the claim. Nexsense, Inc. submitted a request to dismiss the claim against it because it was not properly served under the law (given the different service rules for defendants whose domicile is outside of Israel).
The Magistrate’s Court in Tel Aviv accepted the request regarding lack of material jurisdiction, and the claim was then transferred to the economic department of the District Court in Tel Aviv.
A preliminary hearing was held on February 14, 2024. The presiding judge did not rule on the preliminary pleadings and urged the parties to attempt mediation before the ruling. The parties have pursued mediation efforts but the mediation efforts have not succeeded and the matter has been referred back to the court. As of the date of this report, no hearing date has been set.
We cannot, at this stage, know the effects, if any, of these actions on our subsidiary SleepX and / or the Company. However, SleepX together with the other Defendants, intend to vigorously defend against the lawsuit.
Aside from the disclosure above, from time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any such legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any such legal proceedings or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition, or results of operations.
| ITEM 1A. | RISK FACTORS |
An investment in the Company’s Common Stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on April 15, 2025, in addition to other information contained in our reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our Common Stock. There have been no material changes to our risk factors contained in such registration statement.
| ITEM 2. | UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS |
(i) On September 4, 2025, the Company accepted subscriptions for $550,000 from five qualified investors in consideration of the issuance, in the aggregate, of 45,333,333 shares of the Company’s common stock and warrants to purchase an additional 12,750,000 shares of common stock, exercisable for a period not exceeding 12 months and at per share exercise prices between $0.015 and $0.02.
(ii) On October 8, 2025, the Company accepted subscriptions for $50,000 from a qualified investor in consideration of the issuance, in the aggregate, of 2,000,000 shares of the Company’s common stock at per share prices between $0.019
We relied upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) by virtue of Section 4(a)(2) thereof and/or Regulation S promulgated by the SEC under the Act with respect to the issuance of such securities.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None
| ITEM 4. | SAFETY DISCLOSURES |
None.
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| ITEM 5. | OTHER INFORMATION: |
(i) During the fiscal quarter ended September 30, 2025, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
(ii) On November 18, 2025, the Company and Ron Mekler (“RM”), formerly a director of the Company who was appointed as the Company’s Chief Financial Officer on August 12, 2025 entered into a consulting agreement (the “RM Consulting Agreement”). Under the terms of RM Consulting Agreement, RM is entitled to a monthly fee of $10,000, retroactive to August 12, 2025 (the “Base Fee”) for a two year period. In addition, in the event that the Company decides to terminate the RM Consulting Agreement or any reason other than cause (as defined in the agreement), then the Company is to pay to RM, a severance payment equal to the lesser of 6 months Base Fee and the duration of the Term. If the Company elects to not renew the term of the agreement upon its scheduled termination, then RM shall be entitled to three (3) months’ Base Salary. In addition under the RM Consulting agreement, RM is entitled to options for 15 million shares to vest over two quarters in equal quarterly instalments of 7,500,000 option shares on each of March 31 and June 30, 2026.
| ITEM 6. | EXHIBITS |
Exhibit Index:
| 4.1 | Form of Warrant (incorporated by reference from the Current Report on Form 8-K filed on September 5, 2025) | |
| 10.1 | Form of Subscription Agreement (incorporated by reference from the Current Report on Form 8-K filed on September 5, 2025) | |
| 10.1 | IP Purchase Agreement dated as of August 20, 2025 by and between AppYea Inc. and Techlott Ltd. (incorporated by reference from the Current Report on Form 8-K filed on August 21, 2025). | |
| 10.2 | Shareholders Agreement dated as of August 20, 2025 by and between Techlott Ltd. and the AppYea controlling shareholder(incorporated by reference from the Current Report on Form 8-K filed on August 21, 2025). | |
| 10.3 | Shareholders Agreement dated as of August 20, 2025 by and between Techlott Ltd. and the AppYea controlling shareholder(incorporated by reference from the Current Report on Form 8-K filed on August 21, 2025). | |
| 31.1 | Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
| 31.2 | Certification of Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
| 32.1 | Certification of Chief Executive Officer (Principal Executive Officer), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AppYea, Inc. | |||
| (Registrant) | |||
| By: | /s/ Yakir Abadi | By: | /s/ Ron Mekler |
| Yakir Abadi | Ron Mekler | ||
| Chief Executive Officer | Chief Financial Officer | ||
| (Principal Executive Officer) | (Principal Financial and Accounting Officer) | ||
| Date: November 19, 2025 | Date: November 19, 2025 | ||
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