{"url_path":"/sec/lott/10-q/2026/cover-page","section_key":"cover-page","section_title":"Cover Page","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/1568969/0001493152-26-024593-index.html","accession_number":"0001493152-26-024593","cik":"0001568969","ticker":"LOTT","issuer_name":"Techlott Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1568969/0001493152-26-024593-index.html","primary_entity_key":"0001568969","primary_entity_name":"APPYEA, 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EXCHANGE COMMISSION**\n\n**Washington,\nD.C. 20549**\n\n** **\n\n**FORM\n10-Q**\n\n \n\n(Mark\nOne)\n\n** **\n\n**☒\nQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**\n\n \n\nFor\nthe quarterly period ended March 31, 2026\n\n** **\n\n**☐\nTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**\n\n \n\nFor\nthe transition period from _________ to _________\n\n \n\nCommission\nFile Number: 000-55403\n\n** **\n\n**APPYEA,\nINC.**\n\n*(Exact\nname of registrant as specified in its charter)*\n\n \n\n**Nevada**\n \n**46-1496846**\n\n*(State\nor other jurisdiction\nof incorporation or organization)*\n \n*(I.R.S.\nEmployer\nIdentification No.)*\n\n \n \n \n\n**6\nBalfour Street, Jerusalem, Israel**\n \n**9210207**\n\n*(Address\nof principal executive offices)*\n \n*(Zip\nCode)*\n\n \n\n**(800)\n674-3561**\n\n*(Registrant’s\ntelephone number, including area code)*\n\n \n\n*Securities\nregistered pursuant to Section 12(b) of the Act:*\n\n \n\n*Title\nof each class*\n \n*Trading\nSymbol(s)*\n \n*Name\nof each exchange on which registered*\n\nNone\n \nN/A\n \nN/A\n\n \n\nIndicate\nby check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange\nAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)\nhas been subject to such filing requirements for the past 90 days. Yes ☒ No ☐\n\n \n\nIndicate\nby check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule\n405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant\nwas required to submit such files). Yes ☒ No ☐\n\n \n\nIndicate\nby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting\ncompany, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”\n“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.\n\n \n\nLarge\naccelerated filer ☐\nAccelerated\nfiler ☐\n\n \n \n\nNon-accelerated\nfiler ☒\nSmaller\nreporting company ☒\n\n \n \n\n \nEmerging\ngrowth company ☒\n\n \n\nIf\nan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying\nwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐\n\n \n\nIndicate\nby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒\n\n \n\nAs\nof May 20, 2026, the registrant had 890,742,444 shares of common stock outstanding, par value $0.0001 per share.\n\n \n\n \n\n \n\n \n\n \n\n \n\n**APPYEA,\nINC.**\n\n**FORM\n10-Q**\n\n**FOR\nTHE QUARTERLY PERIOD ENDED MARCH 31, 2026**\n\n** **\n\n**TABLE\nOF CONTENTS**\n\n** **\n\n \n**Page**\n\n \n \n\n**PART\nI — FINANCIAL INFORMATION**\n \n\n \n \n\n[Item\n1. Unaudited Condensed Consolidated Financial Statements](#ns_013)\n4\n\n[Condensed\nConsolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025](#a_001)\n5\n\n[Condensed\nConsolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (unaudited)](#a_002)\n6\n\n[Condensed\nConsolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025 (unaudited)](#a_003)\n7\n\n[Condensed\nConsolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited)](#a_004)\n9\n\n[Notes\nto Unaudited Condensed Consolidated Financial Statements](#a_005)\n10\n\n[Item\n2. Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ns_001)\n14\n\n[Item\n3. Quantitative and Qualitative Disclosures About Market Risk](#ns_002)\n21\n\n[Item\n4. Controls and Procedures](#ns_003)\n21\n\n \n \n\n**PART\nII — OTHER INFORMATION**\n \n\n \n \n\n[Item\n1. Legal Proceedings](#ns_005)\n22\n\n[Item\n1A. Risk Factors](#ns_006)\n22\n\n[Item\n2. Unregistered Sales of Equity Securities and Use of Proceeds](#ns_007)\n22\n\n[Item\n3. Defaults Upon Senior Securities](#ns_008)\n22\n\n[Item\n4. Mine Safety Disclosures](#ns_009)\n22\n\n[Item\n5. Other Information](#ns_010)\n22\n\n[Item\n6. Exhibits](#ns_011)\n23\n\n \n \n\n**SIGNATURES**\n24\n\n \n\n2\n\n \n\n \n\n**APPYEA\nINC. AND ITS SUBSIDIARIES**\n\n**CONDENSED\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**AS\nOF MARCH 31, 2026**\n\n** **\n\n3\n\n \n\n** **\n\n**APPYEA\nINC. AND ITS SUBSIDIARIES**\n\n** **\n\n**CONDENSED\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**AS\nOF MARCH 31, 2026**\n\n** **\n\n**INDEX\nTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n \n**Page**\n\n \n \n\n[Condensed Consolidated Balance Sheets](#a_001)\n3\n\n \n \n\n[Condensed Consolidated Statements of Operations](#a_002)\n4\n\n \n \n\n[Condensed Consolidated Statements of Changes in Deficiency](#a_003)\n5\n\n \n \n\n[Condensed Consolidated Statements of Cash Flows](#a_004)\n7\n\n \n \n\n[Notes to the Condensed Consolidated Financial Statements](#a_005)\n8-11\n\n** **\n\n4\n\n \n\n \n\n**APPYEA\nINC.**\n\n**CONDENSED\nCONSOLIDATED BALANCE SHEETS**\n\n**(U.S.\ndollars in thousands)**\n\n \n\n  \nMarch 31  \nDecember 31, \n\n  \n2026  \n2025 \n\n  \nUnaudited  \nAudited \n\nASSETS \n    \n   \n\nCurrent assets \n    \n   \n\nCash and cash equivalents \n 811  \n 408 \n\nOther accounts receivables \n 48  \n 113 \n\nInventory \n 50  \n 50 \n\nMarketable Securities \n 5  \n - \n\nTotal current assets \n 914  \n 571 \n\n  \n    \n   \n\nNon-current assets \n    \n   \n\nProperty and equipment, net \n 5  \n 5 \n\nIntangible assets, net \n 20,622  \n 21,157 \n\nTotal non-current assets \n 20,627  \n 21,162 \n\n  \n    \n   \n\nTotal assets \n 21,541  \n 21,733 \n\n  \n    \n   \n\n**LIABILITIES AND DEFICIENCY**\n\n \n    \n   \n\nCurrent liabilities \n    \n   \n\nTrade payables \n 24  \n 26 \n\nOther accounts payable and related party payables \n 903  \n 685 \n\nShort-term loans from related party \n 84  \n 84 \n\nDerivative liability – Anti-dilution rights (note 4) \n 7,837  \n 7,103 \n\nConvertible loans – At fair value \n -  \n - \n\nTotal current liabilities \n 8,848  \n 7,897 \n\n  \n    \n   \n\nNon-current liabilities \n    \n   \n\nLong term convertible loans at fair value (note 4) \n 878  \n 901 \n\nTotal non-current liabilities \n 878  \n 901 \n\n  \n    \n   \n\nTotal liabilities \n 9,726  \n 8,798 \n\n  \n    \n   \n\n**STOCKHOLDERS’ EQUITY**\n\n \n    \n   \n\nAppYea Inc. Stockholders’ Equity: \n    \n   \n\nConvertible preferred A stock, $0.0001 par value \n -  \n - \n\nConvertible preferred B stock, $0.0001 par value \n -  \n - \n\nConvertible preferred stock \n -  \n - \n\nCommon stock, $0.0001 par value \n 87  \n 84 \n\nShares to be issued \n 117  \n 117 \n\nAdditional Paid in Capital \n \n38,662\n  \n 38,217 \n\nTreasury Stocks \n (14) \n (14)\n\nAccumulated deficit \n (27,023) \n (25,455)\n\nTotal AppYea Inc. stockholders’ equity \n 11,829  \n 12,949 \n\nNon-controlling interests \n (14) \n (14)\n\n  \n    \n   \n\nTotal Stockholders’ Equity \n 11,815  \n 12,935 \n\n  \n    \n   \n\nTotal liabilities and equity \n 21,541  \n 21,733 \n\n \n\nThe\naccompanying notes are an integral part of the financial statements.\n\n \n\n5\n\n \n\n \n\n**APPYEA\nINC.**\n\n**CONDENSED\nCONSOLIDATED STATEMENTS OF OPERATIONS**\n\n**(U.S.\ndollars in thousands)**\n\n** **\n\n  \nUnaudited  \nUnaudited \n\n  \nFor\nthe three months\nended March 31, \n\n  \n2026  \n2025 \n\n  \nUnaudited  \nUnaudited \n\n  \n   \n  \n\nRevenues \n -  \n 3 \n\nCost\nof sales \n - \n (4)\n\nGross\nprofit \n - \n (1)\n\n \n    \n   \n\nResearch\nand development \n (215) \n 6 \n\nAmortization of intangible assets \n (533) \n - \n\nSales\nand marketing \n (23) \n (17)\n\nGeneral\nand administrative \n (413) \n (111)\n\n  \n    \n   \n\nOperating\nloss \n (1,184) \n (123)\n\n  \n    \n   \n\nChange\nin fair value  \n (386) \n (44)\n\n  \n    \n   \n\nFinancial\n(expenses) income \n 2 \n (1)\n\n  \n    \n   \n\nLoss\nbefore income tax benefit \n (1,568) \n (166)\n\n  \n    \n   \n\nIncome\ntax benefit  \n -   \n - \n\nNet\nloss \n (1,568) \n (166)\n\n  \n    \n   \n\nNet\nloss attributable to AppYea Inc. \n (1,568) \n (166)\n\n  \n    \n   \n\n**Net\nLoss per Common Share:** \n    \n   \n\n  \n    \n   \n\nBasic\nand Diluted \n (0.0018) \n (0.0003)\n\n  \n    \n   \n\n**Weighted\nAverage number of Common Shares Outstanding basic and diluted** \n 873,696,989  \n 527,945,974 \n\n \n\nThe\naccompanying notes are an integral part of the financial statements.\n\n \n\n6\n\n \n\n \n\n**APPYEA\nINC.**\n\n**CONDENSED\nCONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY**\n\n**(U.S.\ndollars in thousands except share data)**\n\n** **\n\n  \nNumber  \nNumber  \nNumber  \nAmount  \nStocks  \nCapital  \nissued  \nDeficit  \nTotal  \ninterests  \nEquity \n\n  \nPreferred\nStock - Series A  \nPreferred\nStock – Series B  \nCommon\nStock  \nTreasury  \nAdditional\nPaid in  \nShares\nto be  \nAccumulated  \n   \nNon-\n\ncontrolling  \nTotal \n\n  \nNumber  \nNumber  \nNumber  \nAmount  \nStocks  \nCapital  \nissued  \nDeficit  \nTotal  \ninterests  \nEquity \n\n  \nUnaudited \n\nBalance\nas of January 1, 2026 \n 230,598  \n 35,684  \n 856,651,534  \n 84  \n (14) \n 38,217  \n 117  \n (25,455) \n 12,949  \n (14) \n 12,935 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nShare\nbased Compensation \n    \n    \n    \n    \n    \n  78  \n    \n    \n 78   \n -  \n 78 \n\nNet\nloss \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (1,568) \n (1,568) \n -  \n (1,568)\n\nShares\nissuance to service providers \n    \n    \n -   \n    \n    \n    \n    \n    \n    \n -  \n   \n\nShares\nissuance to investors \n    \n    \n - 34,090,910  \n 3  \n  369  \n    \n    \n    \n  372  \n -  \n  372 \n\nShare\nto be issued to investors \n    \n    \n \n\n  \n \n\n  \n   \n    \n    \n    \n   \n   \n  \n\nRepurchase of stock options\n \n    \n    \n    \n    \n    \n (2)  \n    \n    \n (2 )  \n -  \n (2) \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nBalance\nas of March 31, 2026 \n 230,598  \n 35,684  \n 890,742,444  \n 87  \n (14) \n 38,662   \n 117   \n (27,023) \n 11,829  \n (14) \n 11,815 \n\n \n\n7\n\n \n\n \n\n  \nNumber  \nAmount  \nNumber  \nAmount  \nCapital  \n   \nDeficit  \nTotal  \ninterests  \nEquity \n\n  \nPreferred Stock  \nCommon Stock  \nAdditional Paid in  \n   \nAccumulated  \n   \nNon-controlling  \nTotal \n\n  \nNumber  \nAmount  \nNumber  \nAmount  \nCapital  \n   \nDeficit  \nTotal  \ninterests  \nEquity \n\n  \nUnaudited \n\nBalance as of January 1, 2025 \n 230,598  \n -  \n 521,133,474  \n 50  \n 5,886  \n 294  \n (10,358) \n (4,128) \n (14) \n (4,142)\n\nBalance  \n 230,598  \n -  \n 521,133,474  \n 50  \n 5,886  \n 294  \n (10,358) \n (4,128) \n (14) \n (4,142)\n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nShare based Compensation \n -  \n     -  \n -  \n -  \n (20) \n -  \n -  \n (20) \n -  \n (20)\n\nNet loss \n -  \n -  \n -  \n -  \n -  \n -  \n (166) \n (166) \n -  \n (166)\n\nShares issuance to service providers \n -  \n -  \n 6,125,000  \n 1  \n 16  \n (16) \n -  \n 1  \n -  \n 1 \n\nShares issuance to investors \n -  \n -  \n 7,500,000  \n 1  \n 74  \n (75) \n -  \n -  \n -  \n - \n\nShare to be issued to investors \n    \n    \n    \n    \n    \n 124  \n    \n 124  \n    \n 124 \n\nShare to be issued to service providers \n -  \n -  \n    \n -  \n    \n 10  \n -  \n 10  \n -  \n 10 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nBalance as of March 31, 2025 \n 230,598  \n -  \n 534,758,474  \n 52  \n 5,956  \n 337  \n (10,524) \n (4,179) \n (14) \n (4,193)\n\nBalance  \n 230,598  \n -  \n 534,758,474  \n 52  \n 5,956  \n 337  \n (10,524) \n (4,179) \n (14) \n (4,193)\n\n \n\nThe\naccompanying notes are an integral part of the financial statements.\n\n \n\n8\n\n \n\n \n\n**APPYEA\nINC.**\n\n**CONDENSED\nCONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n**(U.S.\ndollars in thousands)**\n\n** **\n\n  \n2026  \n2025 \n\n  \nFor\nThe Three Months\n\nEnded March 31, \n\n  \n2026  \n2025 \n\n  \nUnaudited \n\nCash\nflows from operating activities: \n    \n   \n\nNet\nloss \n (1,568) \n (166)\n\nAdjustments\nto reconcile loss to net cash used in operating activities: \n    \n   \n\nDepreciation\nand amortization \n 533  \n 6 \n\nShare\nbased compensation \n 76  \n (10)\n\nChange\nin fair value of convertible loans and warrant liability \n 387 \n 44 \n\nFinancial\nexpenses, net \n (2)  \n 5 \n\nChanges\nin operating assets and liabilities: \n    \n   \n\nOther\naccounts receivable \n 64  \n 9 \n\nInventory \n -  \n (23)\n\nAccounts\npayables \n 237  \n 27 \n\nAccounts\npayables – related party \n (24) \n 6 \n\nNet\ncash used in operating activities \n (297) \n (103)\n\nCash\nflows from investing activities: \n    \n   \n\nResearch\nand development expenses capitalization \n -  \n (1)\n\nNet\ncash used in investing activities \n -  \n (1)\n\n**Cash\nflows from financing activities:** \n    \n   \n\nProceeds\nfrom issuance of Common Stock \n -  \n - \n\nProceeds\nfrom issuance of common stock net of issuance expenses \n 698  \n 124 \n\nNet\ncash provided by financing activities \n 698  \n 124 \n\n  \n    \n   \n\nForeign\nexchange on Cash and cash equivalents \n 2  \n (5)\n\nChange\nin cash and cash equivalents \n 403  \n 16 \n\nCash\nand cash equivalents at beginning of period \n 408  \n 79 \n\nCash\nand cash equivalents at end of period \n 811  \n 95 \n\n \n\nThe\naccompanying notes are an integral part of the financial statements.\n\n \n\n9\n\n \n\n \n\n**APPYEA\nINC.**\n\n**NOTES\nTO THE FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n1 - GENERAL**\n\n \n\n \n**A**.\nAppYea,\nInc. (“AppYea”, “the Company”, “we” or “us”) was incorporated in the State of South\nDakota on November 26, 2012 to engage in the acquisition, purchase, maintenance and creation of mobile software applications. The\nCompany has not generated significant revenues from operations. On November 1, 2021 the Company was redomiciled in the State of\nNevada.\n\n \n \n \n\n \n \nThe\nCompany’s common stock is traded on the OTC Markets, OTCQB tier, under the symbol “APYP”.\n\n \n \n \n\n \n**B.**\n**Strategic\nDevelopment**\n\n \n \n \n\n \n \nOn\nAugust 20, 2025 the Company entered into an agreement with Techlott Enterprises Ltd. (“Techlott”), a Cypriot company,\nfor the purchase (the “Techlott Purchase Agreement”) of proprietary blockchain-based decentralized lottery and gaming\necosystem leveraging smart contracts, verifiable randomness, and advanced infrastructure to deliver transparent, secure, and\nscalable lottery and gaming experiences (the “Technology”) and the underlying intellectual property for consideration consisting of shares of the Company’s common stock par value $0.0001\nper share (the “Common Stock”). For further details, refer to the Company’s Annual Report on Form 10-K for the year ended December 31,2025.\n\n \n \n \n\n \n**C**.\nSleepX\nLTD is a company formed under the laws of the State of Israel and a wholly owned subsidiary of the Company (“SleepX”).\nSleepX is a research and development company that has developed a proprietary product for monitoring and treating sleep apnea and\nsnoring. The technology is protected by several international patents.\n\n \n \n \n\n \n \nSleepX\nhas incorporated, together with an unrelated third party, a privately held company under the laws of the State of Israel named Ta-nooma\nLtd. (“Ta-nooma”). Ta-nooma has developed sleeping monitoring technology for which patent applications were filed and\nhas no revenue from operations. Since its incorporation and as of the financial statements date, SleepX holds 66.7% of the voting\ninterest of Ta-nooma.\n\n \n \n \n\n \n**D.**\n**Going\nConcern**\n\n \n\nThe\nfinancial statements are presented on a going-concern basis. To date, the Company has not generated any significant revenues, suffered\nrecurring losses from operations, incurred negative cash flows from operating activities, and is dependent upon external sources for\nfinancing its operations. As of March 31, 2026 the Company had an accumulated deficit of $27,023,000. In 2025, the Company recognized\nan intangible asset in the amount of $21,101,317 in connection with the issuance by the Company of shares of common stock to Techlott Enterprises Ltd. as consideration for the asset acquisition,\nwith the equity component valued at $18,739,546. As\na result of this transaction, the Company recorded an increase in shareholders’ equity at the end of 2025 in the same amount, resulting\nin a total shareholders’ equity surplus of $11,815,000.\n\n \n\nThe\naccumulated deficit raises substantial doubt about the Company’s ability to continue as a going concern. The Company intends to\ncontinue to finance its operating activities by raising capital. There are no assurances that the Company will be successful in obtaining\nan adequate level of financing needed for its long-term research and development activities on commercially reasonable terms or at all.\nIf the Company will not have sufficient liquidity resources, the Company may not be able to continue the development of its product candidates\nor may be required to implement cost reduction measures and may be required to delay part of its development programs.\n\n \n\nThe\nfinancial statements do not include any adjustments for the values of assets and liabilities and their classification that may be necessary\nin the event that the Company is no longer able to continue its operations as a “going concern”.\n\n** **\n\n10\n\n \n\n** **\n\n**APPYEA\nINC.**\n\n**NOTES\nTO THE FINANCIAL STATEMENTS**\n\n** **\n\n**NOTE\n2 - SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\nThe\ninterim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America\n(“U.S. GAAP”). The interim financial statements do not include a full disclosure as required in annual financial statements\nand should be read with the annual financial statements of the Company as of December 31, 2025, from which the accompanying condensed\nconsolidated balance sheet dated December 31, 2025, was derived. The accounting policies implemented in the interim financial statements\nare consistent with the accounting policies implemented in the annual financial statements as of December 31, 2025, except of the following\naccounting pronouncement adopted by the Company.\n\n \n\n**Use\nof Estimates in Preparation of Financial Statements**\n\n \n\nThe\npreparation of consolidated financial statements in conformity with U.S. GAAP accounting principles requires management to make estimates\nand assumptions. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon\ninformation available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets\nand liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts\nof expenses during the reporting period. Actual results could differ from those estimates.\n\n \n\n**NOTE\n3 - RELATED PARTY BALANCES AND TRANSACTIONS**\n\n** **\n\n \n**A.**\n**Short-term\nloans from related parties**\n\n** **\n\nDuring\n2021, SleepX borrowed from Nexense Technologies USA. Inc., a Delaware corporation which is majority\nowned by Boris Molchadsky, the Company’s Chairman. an aggregate amount of $47,623. According to the agreement, the loan\nshall be repaid in the event that the Company’s profits are sufficient to repay the aggregate loan amount and upon such terms and\nin such installments as shall be determined by the Board. The loan shall bear interest at an annual rate equal to the minimum rate approved\nby applicable law in Israel (4.9% in 2026).\n\n \n\nDuring\n2020, 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\nexpense and the repayment terms have yet to be determined. As of March 31, 2026, the loan balance amounted to NIS 115,725 ($36,564).\n\n \n\n \n**B.**\n**Balances\nwith related parties**\n\nSCHEDULE OF BALANCE WITH RELATED PARTIES \n\n  \nMarch\n31, 2026  \nDecember\n31, 2025 \n\n  \nIn\nU.S. dollars in thousands \n\n  \n   \n  \n\nLiabilities: \n    \n   \n\nEmployees\nand payroll accruals \n 850  \n 606 \n\nRelated\nparty payables \n 4  \n 52 \n\nShort\nterm loans \n 84  \n 84 \n\n \n\n11\n\n \n\n \n\n**APPYEA\nINC.**\n\n**NOTES\nTO THE FINANCIAL STATEMENTS**\n\n \n\n \n**C.**\n**Transactions\nwith related parties**\n\nSCHEDULE OF TRANSACTION WITH RELATED PARTIES** **\n\n  \n2026  \n2025 \n\n  \nFor\nthe three months\n\nended March 31, \n\n  \n2026  \n2025 \n\n  \nIn\nU.S. dollars in thousands \n\nExpenses: \n    \n   \n\nConsulting\nfees, Salaries and related cost  \n 390  \n 13 \n\nShare based compensation \n 78  \n  - \n\n \n\nAll\nof the five board members in the Company do not receive cash compensation for their directorship roles. Company’s Bylaws provide\nthat a director or officer shall be indemnified and held harmless by the Corporation, to the fullest extent permitted by the laws of\nthe State of Nevada.\n\n \n\n**NOTE\n4 - CONVERTIBLE LOANS AND WARRANTS AND ANTI-DILUTION LIABILITIES**\n\n \n\nThe\nfollowing table summarizes fair value measurements by level as of March 31, 2026 and December 31, 2025 measured at fair value on a recurring\nbasis:\n\nSCHEDULE OF FAIR VALUE RECURRING BASIS \n\nMarch\n31, 2026 \nLevel\n1  \nLevel\n2  \nLevel\n3  \nTotal \n\n  \nIn\nU.S. dollars \n\nAssets \n    \n    \n    \n   \n\nNone \n  -  \n  -  \n  -  \n  - \n\n  \n    \n    \n    \n   \n\nLiabilities \n    \n    \n    \n   \n\nConvertible\nLoans (including long term) \n  -  \n  -  \n 878  \n 878 \n\nDerivative\nliability - Anti dilution rights \n  -  \n  -  \n 7,837  \n  7,837 \n\n \n\nand\nDecember 31, 2025 \nLevel\n1  \nLevel\n2  \nLevel\n3  \nTotal \n\n  \nIn\nU.S. dollars \n\nAssets \n    \n    \n    \n   \n\nNone \n -  \n -  \n -  \n - \n\n  \n    \n    \n    \n   \n\nLiabilities \n    \n    \n    \n   \n\nConvertible\nLoans\n(including long term) \n -  \n -  \n 901  \n 901 \n\nDerivative\nliability - Anti dilution rights \n -  \n -  \n 7,103  \n 7,103 \n\n \n\n**NOTE\n4 - CONVERTIBLE LOANS AND WARRANTS AND ANTI-DILUTION LIABILITIES (cont.)**\n\n \n\n(i)\nThe\nConvertible Loans changes consist of the following as of March 31, 2026 and December 31, 2025:\n\n SCHEDULE OF CONVERTIBLE LOANS AT FAIR VALUE CHANGES\n\n  \n   \n  \n\n  \nConvertible\nLoans at Fair Value \n\n  \nMarch\n31, 2026  \nDecember\n31, 2025 \n\n  \n$000 \n\nOpening\nBalance, (including short term loans from related party which is also convertible) \n 901  \n 4,163 \n\nConversion\nof convertible loan  \n    \n (869)\n\nTransition\nfrom amortized cost to convertible loans measured at fair value \n    \n   \n\nChange\nin fair value of convertible loans liability \n (23) \n (2,393)\n\nClosing\nbalance \n 878  \n 901 \n\n \n\n12\n\n \n\n \n\n**APPYEA\nINC.**\n\n**NOTES\nTO THE FINANCIAL STATEMENTS**\n\n \n\nThe\nestimated fair values of the Convertible loans were measured according to the Monte Carlo Model using the following assumptions:\n\nSCHEDULE\nOF FAIR VALUES OF WARRANTS AND CONVERTIBLE LOAN ASSUMPTION USED \n\n** **** **\n**As\nof March 31,**** **** **\n**As\nof December 31,**** **\n\n** **** **\n**2026**** **** **\n**2025**** **\n\nExpected\nterm (in years) \n 1.92   \n 2 \n\nExpected\naverage (Monte Carlo) volatility \n \n53\n% \n 55.38%\n\nExpected\ndividend yield \n -   \n - \n\nRisk-free\ninterest rate \n 3.78% \n 3.40%\n\nWACC \n 27% \n 26%\n\n \n\n(ii)The\nDerivative liability – Anti-dilution rights  changes consist of the following\nas of March 31, 2026 and December 31, 2025:\n\n SCHEDULE\nOF ANTI-DILUTION RIGHTS DERIVATIVE LIABILITY\n\n  \n    \n   \n\n  \nAnti-Dilution Liabilities at Fair value \n\n  \nMarch 31, 2026  \nDecember 31, 2025 \n\n  \n$000 \n\nOpening Balance \n 7,102  \n - \n\nRecognition of anti-dilution rights granted to new investors (see Note 6 – Capital raise) \n 329  \n 7,102 \n\nFair value adjustment \n 406  \n - \n\nClosing balance \n 7,837  \n 7,102 \n\n \n\n**NOTE\n5 - STOCK BASED COMPENSATION**\n\n** **\n\nThe\ntable below depicts the number of options granted to employee:\n\nSCHEDULE\nOF NUMBER OF OPTIONS \n\n  \nThree\nmonths ended March 31, 2026 \n\n  \nNumber\nof  \nWeighted\naverage exercise price \n\n  \noptions  \nin\nUSD \n\n  \n   \n  \n\nOptions\noutstanding on January 1, 2026 \n 95,257,550  \n$0.0001 \n\nOptions\ngranted during the period \n \n15,000,000\n  \n$0.0001 \n\nOptions\nexercised during the period \n -  \n$0.0001 \n\nOptions\ncancelled during the period \n (28,864,131) \n$0.0001 \n\nOptions\noutstanding at the end of period \n 81,393,419  \n$0.0001 \n\nOptions\nexercisable at the end of period \n 73,893,419  \n   \n\n \n\n(*)\nThe aggregate intrinsic value of options outstanding as of March 31, 2026 was approximately $0.76 million, calculated based on the Company’s\nshare price of $0.0104 at that date.\n\n \n\nFor\nthe three months ended March 31, 2026 and 2025 the company recognized expenses, to such options, in the amount of $78,000 and $(20,000), respectively.\nThe expense is non-cash stock-based compensation expense resulting from options awards to the Chief Executive Officer, Chief Financial\nOfficer and advisors. The expense represents the aggregate grant date fair value for the option awards granted and vested during the\nfiscal years presented, determined in accordance with FASB ASC Topic 718.\n\n \n\n**NOTE\n6 - SIGNIFICANT EVENTS DURING AND AFTER THE PERIOD**\n\n** **\n\n \n \n**(i)\nCapital raise**\n\n \n\nOn\nJanuary 27, 2026, the Company received gross proceeds of $750,000\nfrom four qualified investors in consideration for the issuance, in the aggregate, of 34,090,910\nshares of the Company’s common stock. Net proceeds received by the Company, after deduction of offering and placement agent fees, amounted to $ 697,500.\n\n \n\nOne\nof the abovementioned investors, has invested $450,000\nand received warrants to purchase 20,454,545\nadditional shares of common stock, exercisable for a period\nof three years at an exercise price of $0.026\nper share. The investor was granted anti-dilution protection\nrights. Pursuant to the terms of the agreement, the investor is entitled to anti-dilution protection rights designed to maintain its\nownership interest of approximately 1.4%\nof the Company on a fully diluted basis in connection with future capital raises of up to $7\nmillion.\n\n** **\n\n**Derivative liability – Anti-dilution rights**\n\n \n\n(i) These rights entitle the holders\nto receive additional shares of the Company’s common stock upon future capital raises (up to specified thresholds), in order to\nmaintain their relative ownership. As the number of shares to be issued is variable, these rights are not considered indexed to the Company’s\nown stock. Accordingly, under ASC 815-40, such rights are classified as derivative liabilities.\n\n \n\n(ii) The derivative liabilities are measured at fair value, with changes\nin fair value recognized in the statement of operations under “change in fair value of derivative liabilities.”\n\n \n\nThe liabilities are presented within current or non-current liabilities\nin the balance sheet, based on the expected timing of settlement.\n\n \n\n(iii) The anti-dilution protection is triggered upon future equity\nfinancings up to $7 million.\n\n** **\n\n**a. Valuation methodology**\n\n \n\n(i) The fair value of the anti-dilution feature was determined using\na scenario-based approach that considers potential future financing outcomes.\n\n \n\n(ii) For each scenario, the Company estimated (i) the value of\nthe shares assuming the anti-dilution protection is in place and (ii) the value assuming no such protection exists. The incremental\nvalue attributable to the anti-dilution feature represents the difference between these two outcomes.\n\n \n\n(iii) The expected value across scenarios was probability-weighted\nand subsequently discounted to present value using an appropriate weighted average cost of capital.\n\n \n\n(iv) Key assumptions include expected future Company valuations, dilution\nrates in potential capital raises, timing of potential financing events, and the probability assigned to each scenario.\n\n \n\n**b. Anti-dilution liability valuation**\n\n \n\n(i) The valuation reflects scenario analysis of potential future\nfinancing events. Two representative scenarios were considered: (i) a financing event at a Company valuation of approximately $50\nmillion, assuming a 15% new share issuance, and (ii) a financing event at a Company valuation of approximately $100 million,\nassuming an 10% new share issuance. These scenarios were assigned probabilities of 80% and 20%, respectively.\n\n \n\n(ii) The resulting fair value reflects the probability-weighted\noutcomes of these scenarios, consistent with the valuation methodology described above. The valuation involves significant\nunobservable inputs and is classified within Level 3 of the fair value hierarchy.\n\n \n\n(iii) Changes in key assumptions, including expected Company valuation and dilution rates, could result in a\nmaterial change in the fair value of the derivative liability.\n\n \n\n**(ii)\nSettlement with former CEO**\n\n** **\n\nIn January 2026, the Company entered into a settlement and release agreement with its former Chief Executive Officer, Mr. Adi Shamer.\n\n \n\nPursuant\nto the agreement, Mr. Shamer agreed to fully release and discharge the Company from any and all claims. In connection with the settlement,\nMr. Shamer returned to the Company 28,864,131 vested but unexercised stock options previously granted to him.\n\n \n\nIn\nconsideration for the foregoing, the Company paid Mr. Shamer NIS 150,000 (approximately $47,318).\n\n \n\nFollowing\nthe execution of the agreement, Mr. Shamer holds 3,008,288 shares of the Company’s common stock.\n\n \n\n**(iii)** In\nconnection with the consulting agreement entered into with the Company’s Chief Financial Officer (“CFO”), the\nCompany agreed to grant an aggregate of 15,000,000 stock options, vesting in two equal tranches: the first tranche vested on March 31,\n2026, and the second tranche shall vest on June 30, 2026. The aggregate grant date fair value of the options was approximately\n$156,000.\n\n \n\n(iv) Subsequent\nto the end of the reporting period, the Company commenced deployment of its technology with its first customer, a local lottery operator\nin The Gambia.\n\n** **\n\n13"}