It turns out that the software only registers itself for the current user. My php application runs as nt authority\system
which doesnt have the reg code entered in its section of the registry.
To Fix
Copy the RegisterCode value from
HKEY_CURRENT_USER\Software\A-PDF\Watermark\Register
key to
HKEY_USERS\.DEFAULT\Software\A-PDF\Watermark\Register
and then it works fine without the unregistered watermark.