IPSI 10-K
Innovative Payment Solutions, Inc. (IPSI)
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
FORM
(Mark one)
For the fiscal period
ended
or
For the transition period from ________ to ________
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(Exact Name of Registrant as Specified in Its Charter)
| - 1230229 | ||
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| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
| ☒ | Smaller reporting company | ||||
| Emerging growth company | |||||
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As of June 30, 2025, the last business day
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As of March 31, 2026, the issuer had
Documents incorporated by reference:
FORM 10-K
TABLE OF CONTENTS
i
PART I
Unless the context requires otherwise, references in this Report to “we,” “us,” “our,” “the Company” “IPSI” and “Innovative Payment Solutions,” refer to Innovative Payment Solutions, Inc. and its subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) that reflect our current expectations and views of future events. Readers are cautioned that significant known and unknown risks, uncertainties and other important factors (including those over which we may have no control and others listed in report and in the “Risk Factors” section of this Annual Report On Form 10-K) may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “project,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:
| ● | our ability to implement our business plan, including our ability to launch and generate revenue from our joint ventures or other digital payment solutions we may seek to develop or commercialize in the future; |
| ● | acceptance by the marketplace of our products and services; |
| ● | our ability to formulate, implement and modify as necessary effective sales, marketing, and strategic initiatives to drive revenue growth; |
| ● | the viability of our current intellectual property and intellectual property created in the future; |
| ● | our ability to comply with currently applicable laws and government regulations and those that may be applicable in the future; |
| ● | our ability to retain key employees and third-party service providers; |
| ● | adverse changes in general market conditions for payment solutions and other products and services we offer; |
| ● | our ability to generate cash flow and profitability and continue as a going concern; |
| ● | our future financing plans and ability to repay outstanding indebtedness; and |
| ● | our ability to adapt to changes in market conditions which could impair our operations and financial performance. |
These forward-looking statements involve numerous and significant risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results of operations or the results of other matters that we anticipate herein could be materially and adversely different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” sections contained in this Annual Report on Form 10-K. You should thoroughly read this Annual Report on form 10-K with the understanding that our actual future results may be materially different from, and worse than, what we expect. We qualify all our forward-looking statements by these cautionary statements.
The forward-looking statements made in this Annual Report on Form 10-K relate only to events or information as of the date of this Annual Report on Form 10-K. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Considering the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.
1
Summary Risk Factors
Our business faces significant risks and uncertainties of which investors should be aware before making a decision to invest in our common stock. If any of the following or similar risks are realized, our business, financial condition and results of operations could be materially and adversely affected. The following is a summary of the more significant risks relating to the Company. A more detailed description of our risk factors set forth under the caption “Risk Factors” in this Annual Report on Form 10-K.
| ● | We have had no revenue generating operations to date. |
| ● | We have generated and we will likely continue to generate, operating losses and experience negative cash flows, and it is uncertain whether we will achieve profitability. |
| ● | We have a present need for additional funding, which raises questions about our ability to continue as a going concern. We may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts. |
| ● | We have not generated sufficient revenue or cash flow to pay our convertible notes, and conversion of such debt into shares of common stock, which could cause significant dilution. |
| ● | Servicing our debt requires a significant amount of cash. Our ability to generate sufficient cash to service our debt depends on many factors beyond our control. |
| ● | Covenant restrictions under our indebtedness may limit our ability to operate our business. |
| ● | We identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. |
| ● | The payment services industry is highly competitive, and many of our competitors are larger and have greater financial and other resources. |
| ● | There is uncertainty as to market acceptance of our technology, products and services. |
| ● | We are dependent on technology networks and systems to process, transmit and securely store electronic information and we could be subject to liability if our technology systems fail to be secure. |
| ● | We are subject to economic risks that could impact the overall level of consumer spending. |
| ● | If consumer confidence in our business deteriorates, our business, financial condition and results of operations could be adversely affected. |
| ● | We expect to be subject to extensive government regulation if we are deemed to be engaged in a regulated business and we are faced with the risk that new regulations applicable to our business will be enacted. |
| ● | The regulatory regime governing digital assets and offerings of digital assets is evolving and uncertain, and new regulations or policies may materially adversely affect our development. |
| ● | The laws and regulations indirectly affecting our industry is constantly evolving and failure to comply could adversely impact our business. |
| ● | We may have difficulty managing our growth, which may divert resources and limit our ability to successfully expand our operations. |
| ● | We may not be able to complete or integrate successfully any potential future acquisitions, partnerships or joint ventures. |
| ● | We are subject to the discretion of administrative enforcement agencies. |
| ● | Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, could adversely affect our business, financial condition and results of operations. |
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| ● | As our business develops, we will need to implement enhanced compliance processes, procedures and controls with respect to the rules and regulations that apply to our business. |
| ● | If we cannot keep pace with rapid developments and change in our industry and provide new services to our clients, the use of our services could decline, reducing our potential revenues. |
| ● | Our systems and our third-party providers’ systems may fail due to factors beyond our control, which could interrupt our service, cause us to lose business and increase our costs. |
| ● | Unauthorized disclosure of data, whether through cybersecurity breaches, computer viruses or otherwise, could expose us to liability, protracted and costly litigation and damage our reputation. |
| ● | Customer complaints or negative publicity about our customer service could affect attractiveness of our services adversely and, as a result, could have an adverse effect on our business, financial condition and results of operations. |
| ● | Our payment system might be used for fraudulent, illegal or improper purposes, which could expose us to additional liability and harm our business. |
| ● | We may not be able to successfully protect the intellectual property we license or own and may be subject to infringement claims. |
| ● | We may use open-source software in a manner that could be harmful to our business. |
| ● | We do not have and may be unable to obtain sufficient insurance to protect ourselves from business risks. |
| ● | We rely on certain key personnel and in a dynamic industry like ours, the ability to attract, recruit, retain and develop qualified personnel is critical to our success and growth. |
| ● | There is currently a limited public trading market for our common stock and one may never develop. |
| ● | Because our common stock may be a “penny stock,” it may be more difficult for investors to sell shares of our common stock, and the market price of our common stock may be adversely affected. |
| ● | Because we became public by means of a reverse merger, we and our shareholders may be faced with regulatory constraints, and we may not be able to attract the attention of brokerage firms. |
| ● | Compliance with the reporting requirements of federal securities laws are expensive and time consuming. |
| ● | Our stock price has been subject to significant volatility, and future volatility may result in our investors incurring substantial losses. |
| ● | Our investors’ ownership will likely be diluted in the future. |
| ● | Our Board of Directors has historically had significant control over us and we have yet to establish committees comprised of independent directors. |
| ● | We do not have an independent compensation committee, which presents the risk that compensation and benefits paid to those executive officers who are board members and other officers may not be commensurate with its financial performance. |
| ● | Limitations on director and officer liability and indemnification of our officers and directors by our articles of incorporation, as amended, and by-laws may discourage stockholders from bringing suit against an officer or director. |
| ● | We are responsible for the indemnification of our officers and directors. |
| ● | We do not expect to pay dividends on our common stock in the foreseeable future. |
3
Item 1. Business
Company Overview
We are a provider of digital payment solutions and services to businesses and consumers.
The Company is currently a fintech provider of digital payment solutions presently focused on, through its participation in joint ventures, to exploit underserved markets and provide sophisticated credit card processing services. The Company has in the past (under the name IPSIPay) and may in the future develop and operate “e-wallets” that enable consumers to deposit cash, convert it into a digital form and remit funds quickly and securely.
IPSIPay Express
On April 28, 2023, the Company formed a new company called IPSIPay Express. This entity was formed as a Delaware limited liability company joint venture with OpenPath, Inc. (“OpenPath”) and EfinityPay, LLC (“EfinityPay”, and the Company, collectively with OpenPath and EfinityPay, the “Members”) to develop and market a proprietary consumer to merchant real-time payment platform initially focused on the fast-growing online gaming and entertainment sectors.
On June 19, 2023, the Company entered into a Limited Liability Company Operating Agreement (the “Operating Agreement”) with OpenPath and EfinityPay to jointly provide for the governance of and rights of the Members with respect to IPSIPay Express. The effective date of the Operating Agreement is April 28, 2023.
IPSIPay Express was formed by the Members with the initial business purposes of providing credit card processing solutions and also a proprietary solution for real time bank-to-bank payment transactions in a manner that provides seamless and frictionless consumer and merchant experiences, with an initial focus on merchants operating in gaming and entertainment sectors. Such solutions are collectively referred to herein as “IPEX.”
Pursuant to the Operating Agreement, the Company agreed to contribute cash to or on behalf IPSIPay Express to be used for the IPEX business in the aggregate amount of up to $1,500,000 (the “IPSI Capital Contribution”). The Company was required to make the IPSIPay Capital Contribution in three tranches of $500,000 (each, a “Tranche”), or such lesser amounts as may be unanimously approved by the Board of Managers of IPSIPay Express. With the full funding of each Tranche, the Company will automatically receive an 11.11% membership interest in IPSIPay Express (or a pro rata portion thereof if less than a full Tranche is funded), and OpenPath and EfinityPay’s percentage interest in IPSIPay Express will be reduced pro rata accordingly. Should the Company contribute the full IPSI Capital Contribution, the Members will each own one-third (1/3) of the membership interests in IPSIPay Express. The IPSI Capital Contribution has been or will be made by the following dates and in the following amounts: (i) $200,000 of the initial Tranche was paid by the Company on June 21, 2023; (ii) the $300,000 balance of the initial Tranche was paid on August 4, 2023; (iii) the second $500,000 Tranche was paid in September 2023 and (iv) the third $500,000 Tranche was expected to be paid on or before November 30, 2023. In late 2023, the Company agreed with its joint venture partners that such investment was not required as IPEX is not operational. The need for any additional advances will be addressed with the joint venture partners once IPEX becomes operational and begins generating revenue, the Company’s current equity holding in IPSIPay Express remains at 22%.
Simultaneously with the funding of the initial Tranche, the Company issued to each of OpenPath and EfinityPay a five-year Common Stock purchase warrant (the “IPEX Warrant”) to purchase 133,334 shares of Common Stock with an exercise price of $0.45 per share. We are still obligated to issue to each of OpenPath and EfinityPay an additional IPEX Warrant to purchase 199,999 shares of Common Stock with an exercise price equal to the average public closing price of the Common Stock for the three trading days immediately prior to the funding of the initial Tranche. Simultaneously with the funding of the second Tranche, we are obligated to issue to each of OpenPath and EfinityPay an additional IPEX Warrant to purchase 166,667 shares of Common Stock with an exercise price equal to the average public closing price of the Common Stock for the three trading days immediately prior to the funding of the second Tranche. Should we decide to fund a third Tranche, we will be obligated to issue to each of OpenPath and EfinityPay an additional IPEX Warrant to purchase 166,667 shares of Common Stock with an exercise price equal to the average public closing price of the Common Stock for the three trading days immediately prior to the funding of the third Tranche. If the full IPSI Capital Contribution is funded, OpenPath and EfinityPay will receive IPEX Warrants to purchase an aggregate of 1,333,334 shares of Common Stock.
Merger agreement with Business Warrior Corporation
Business Warrior Corporation (“Business Warrior”) is a publicly listed, revenue generating fintech company that offers PayPlan, a comprehensive lending software platform that includes marketing services for lenders and businesses. We believed that a potential combination with a fintech company that generates some revenue monthly would complement the development and commercial launch of our IPSIPay ExpressTM products and potentially other product offerings.
On July 28, 2024, the Company entered into an Agreement and Plan of Merger by and among the Company, IPSI Merger Sub, Inc., a Delaware corporation and a newly formed, wholly owned subsidiary of the Company (“Merger Sub”) and Business Warrior.
On January 22, 2025, the Company and Business Warrior mutually agreed to terminate the Agreement and Plan of Merger dated July 28, 2024. This decision reflects our shared understanding and agreement that discontinuing the merger is in the best interest of both parties.
4
2026 Business Developments
IPSIPay Express
Previously, we believed the IPSIPay Express opportunity has great promise, as of the date of this report, IPEX has not been launched, and we have derived no revenue or cash distributions from IPSIPay Express. We have significantly decreased our efforts on developing IPSIPay Express and have focused our attention on new markets, as discussed below.
Jetties Partners, LLC (d/b/a IPSIPAY)(“IPSIPAY”)
On October 29, 2025, we formed a limited liability corporation, Jetties Partners, LLC (“Jetties”), d/b/a IPSIPAY. The Company was formed to develop, market, distribute and operate a merchant processing payment solution, with an initial focus on the gaming industry. The Company consists of two 50% partners, the Company and Brant Point Solutions, LLC (“BP”). The Company issued 200,000,000 shares for its 50% interest in the joint venture, while BP will provide access to and full utilization of technology that may be owned, licensed or controlled by BP, including but not limited to all agreements between BP and United Payment Systems LLC, as well as its presence in the gaming markets.
We expect that revenue will be generated by IPSIPAY through fees derived from merchant processing fees, money transfer fees, and commissions on international bill payment processing. To date, our activities related to IPSIPay Express have included the following:
| ● | Securing Banking Relationships. To engage in traditional credit card processing, it is necessary to work with qualified banking institutions through which transactions are processed. As of the date of this Report, such relationships are not in place. |
| ● | Securing Customers. Our management has also been working to secure potential customers for IPSIPAY. These customers would include gaming and entertainment businesses. |
No assurances can be given that IPSIPAY will be successfully launched or will generate revenues or otherwise have a positive impact on our results of operations. We believe IPSIPAY could be commercially launched and generate initial revenues during the current fiscal year, but no assurances can be provided that this will be achieved or that (i) that we will ever receive distributions of free cash flow from IPSIPAY. Moreover, the IPSIPAY product offering will be targeting so-called “high risk” sectors such as gaming and entertainment, which also carries certain risks.
Our Strategy and Market
We offer digital payment solutions and services to businesses and consumers.
We believe the money remittance business is changing after 50 years of an industry controlled by a very small number of large corporations. According to publicly available data from Statista, total global remittance payments are estimated to reach over $913 billion in 2025, of which digital payments are estimated to reach approximately 30% ($273.5 billion) of total remittances. Our ability to capture even a fraction of this massive global market represents our largest value proposition.
Marketing
We do not have a formal marketing plan. However, we, together with our joint venture partners, have been leveraging existing business relationships, particularly in the gaming and entertainment industries, to attract potential customers to use our payment processing solutions.
Once we have established a core base of customers and are generating sufficient revenues, we will consider the need for a formal marketing plan.
Competition
The payment service business is highly competitive, and continued growth depends on our ability to compete effectively. Companies like Western Union, Money Gram, PayPal, and Venmo, dominate the money remittance business, and most of our competitors have far greater sources of financing, greater name recognition and have been engaged in the industry longer than we have.
Intellectual Property
On April 28, 2023, we formed IPSIPay Express. This entity was formed as a joint venture with OpenPath, Inc. and EfinityPay, LLC to develop and market a proprietary consumer to merchant real-time payment platform initially focused on the fast-growing online gaming and entertainment sectors.
IPSIPay Express was formed by the Members with the initial business purposes of providing credit card processing solutions and also a proprietary solution for real time bank-to-bank payment transactions in a manner that provides seamless and frictionless consumer and merchant experiences, with an initial focus on merchants operating in gaming and entertainment sectors.
On December 31, 2024, we fully impaired our investment in IPSIPay Express due to the length of time it has taken since inception to establish a revenue stream. The expected period to generate any revenues remains uncertain and we are unable to justify the carrying value of the joint venture at this time.
5
Government and Environmental Regulation and Laws
We act as a facilitator between consumers and finance product providers and therefore operate in a highly regulated industry. While we do not believe that our core business as a facilitator presently is subject to significant government regulation our finance product providers are subject to a variety of regulations aimed at preventing money laundering and financing criminal activity and terrorism, financial services regulations, payment services regulations, consumer protection laws, currency control regulations, advertising laws and privacy and data protection laws and therefore may expect to experience periodic investigations by various regulatory authorities in connection with the same, which may sometimes result in monetary or other sanctions being imposed upon them. Many of these laws and regulations are constantly evolving and are often unclear and inconsistent with other applicable laws and regulations, making compliance challenging, and may indirectly increase our operating costs and legal risks (or directly should it be determined that our business model is or becomes subject to more extensive regulation). Any violations of any of the foregoing or similar laws, rules or regulations could adversely affect our ability to maintain our business, which could have a material adverse effect on our operations and financial condition.
Human Capital/Employees
As of December 31, 2025, we had 1 full time employee, our Chief Executive Officer and our President and Chief Financial Officer and 1 part-time consultant. None of our employees are represented by a labor union, and we consider our employee relations to be good.
Our Corporate History and Background
On May 12, 2016, the Company (originally formed on September 23, 2013 under the name “Asiya Pearls, Inc.”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Qpagos Corporation, a Delaware corporation (“Qpagos Corporation”), and Qpagos Merge, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”). Pursuant to the Merger Agreement, on May 12, 2016, the merger was consummated, and Qpagos Corporation and Merger Sub merged (the “Merger”), with Qpagos Corporation continuing as the surviving corporation of the Merger. On May 27, 2016, the Company’s name was changed from “Asiya Pearls, Inc.” to “QPAGOS”.
Pursuant to the Merger Agreement, upon consummation of the Merger, each share of Qpagos Corporation’s capital stock issued and outstanding immediately prior to the Merger was converted into the right to receive two shares of Common Stock. Additionally, pursuant to the Merger Agreement, upon consummation of the Merger, the Company assumed all of Qpagos Corporation’s warrants issued and outstanding immediately prior to the Merger, which were exercisable for an aggregate of approximately 621,920 shares of Common Stock as of the date of the Merger. Prior to and as a condition to the closing of the Merger, a then-current holder of 500,000 shares of Common Stock agreed to return 497,500 shares of Common Stock held by such holder to the Company and such holder retained an aggregate of 2,500 shares of Common Stock. The other stockholders of the Company retained 500,000 shares of Common Stock. Therefore, immediately following the Merger, Qpagos Corporation’s former stockholders held 4,992,900 shares of Common Stock which represented approximately 91% of the outstanding Common Stock.
The Merger was treated as a reverse acquisition of the Company, then a public shell company, for financial accounting and reporting purposes. As such, Qpagos Corporation was treated as the acquirer for accounting and financial reporting purposes while the Company was treated as the acquired entity for accounting and financial reporting purposes.
Qpagos Corporation was incorporated on May 1, 2015 under the laws of the state of Delaware to effectuate a reverse merger transaction with Qpagos, S.A.P.I. de C.V. (“Qpagos Mexico”) and Redpag Electrónicos S.A.P.I. de C.V. (“Redpag”). Each of the entities were incorporated in November 2013 in Mexico. Qpagos Mexico was formed to process payment transactions for service providers it contracts with, and Redpag was formed to deploy and operate kiosks as a distributor.
On June 1, 2016, the board of directors of the Company (the “Board”) changed the Company’s fiscal year end from October 31 to December 31.
On November 1, 2019, the Company changed its corporate name from “QPAGOS” to “Innovative Payment Solutions, Inc.” Additionally, and immediately following the name change, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada to effect a reverse split of the then outstanding Common Stock at a ratio of 1-for-10, effective on November 1, 2019 (the “2019 Reverse Stock Split”). As a result of the 2019 Reverse Stock Split, each ten pre-split shares of Common Stock outstanding automatically combined into one new share of Common Stock without any further action on the part of the holders, and the number of outstanding shares of Common Stock was reduced from 320,477,867 shares to 32,047,817 after rounding for fractional shares.
On December 31, 2019, the Company consummated the disposal of Qpagos Corporation, Qpagos Mexico and Redpag in exchange for 2,250,000 shares (the “Vivi Shares”) of common stock of Vivi Holdings, Inc. (“Vivi. or “Vivi Holdings”) pursuant to a Stock Purchase Agreement dated August 5, 2019 (the “SPA”). Of the 2,250,000 shares of Vivi, nine percent (9%) was allocated as follows: Gaston Pereira (5%), Andrey Novikov (2.5%), and Joseph Abrams (1.5%). The transactions contemplated by the SPA closed on December 31, 2019 after the satisfaction of customary conditions, the receipt of a final fairness opinion and the approval of the Company’s shareholders. As a result, the Company no longer has any business operations in Mexico and has retained its U.S. operations, currently based in Las Vegas, Nevada.
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The Merger was treated as a reverse acquisition of our company, which was then a public shell company, for financial accounting and reporting purposes. As such, Qpagos Corporation was treated as the acquirer for accounting and financial reporting purposes while IPSI was treated as the acquired entity for accounting and financial reporting purposes.
Pursuant to a Stock Purchase Agreement dated June 22, 2021 (the “Frictionless SPA”), we acquired a 10% common stock interest in Frictionless. Frictionless agreed to deliver to us, a live, fully compliant financial payment Software as a Service solution for use by us as a digital payment platform that enables payments within the United States and abroad, including Mexico, together with a service agreement providing a full suite of product services to facilitate our anticipated product offerings. Under the terms of the Frictionless SPA, we were granted irrevocable rights to (i) participate up to fifty percent (50%) in future financings of Frictionless and (ii) acquire up to an additional 41% of the outstanding common stock of Frictionless at a purchase price of $300,000 for each 1% acquired. Further, pursuant to the Frictionless SPA, we agreed to issue to Frictionless or its designees a non-restricted, non-dilutable, five-year warrant to purchase 1,000,000 (30,000,000 pre-split) shares of our common stock at an exercise price of $4.50 ($0.15 pre-split) per share based on the delivery of the financial payment software in accordance with the SPA. On December 30, 2022, we issued a warrant to Frictionless in satisfaction of this obligation. Due to the pricing of financings undertaken by us between the date of the Frictionless SPA and the date the warrant was granted, the exercise price of the warrant was set upon issuance at $0.345 ($0.0115 pre-split) per share. Further, the warrant issued to Frictionless was for restricted shares of common stock and the “non-dilutable” provision was omitted.
On August 26, 2021, we formed a new subsidiary, Beyond Fintech to acquire a product known as Beyond Wallet from a third party, together with the logo, use of name and implementation of the product into our technology. We own 51% of Beyond Fintech with the other 49% owned by Frictionless.
On April 28, 2023, the Company formed IPSIPay Express. See disclosure above for more information.
On May 12, 2023, the Company entered into an Agreement with Frictionless (the “May 2023 Frictionless Agreement”) to unwind the equity ownership stakes that the Company and Frictionless have in each other and in Beyond Fintech. Pursuant to the May 2023 Frictionless Agreement: (i) the Company assigned to Frictionless all common stock of Frictionless owned by the Company; (ii) the warrant to purchase 1,000,000 (30,000,000 pre-split) shares of Common Stock previously issued by the Company to Frictionless as of December 30, 2022 was cancelled; (iii) the Company assigned to Frictionless all shares of common stock of Beyond Fintech owned by the Company (the “Beyond Fintech Shares”); and (iv) the rights previously granted to the Company to (a) acquire additional equity interests in Frictionless, (b) participate in future financings of Frictionless and (c) appoint a board member of Frictionless, were terminated. The consideration to the Company for the assignment of the Beyond Fintech Shares to Frictionless was a credit against potential future services to be provided by Frictionless to the Company in an amount up to $250,000. As a result of the novation agreement with Frictionless discussed below (see note 5), the Company no longer utilizes, and does not expect to utilize, the services of Frictionless for the foreseeable future. The collectability of the remaining credit receivable of $231,431 has been impaired.
On August 30, 2023, the Company effectuated a 1 for 30 reverse stock split, resulting in the issuance of an additional 2,838 shares to existing stockholders due to rounding of existing shareholdings. All share amounts disclosed in the unaudited condensed consolidated financial statements have been adjusted to reflect the Company’s 1 for 30 reverse stock split effectuated on August 30, 2023.
On September 5, 2023, the Company entered into a novation agreement whereby it assigned all its rights and interest in its e-wallet product, IPSIPay, and its receivables and payables due from and to Frictionless, related to IPSIPay, to a third party in order to concentrate all of its efforts on the IPSIPay Express joint venture. See note 5 to the accompanying financial statements for further information.
On October 29, 2025, we formed a limited liability corporation, Jetties Partners, LLC (“Jetties”), d/b/a IPSIPAY. The Company was formed to develop, market, distribute and operate a merchant processing payment solution, with an initial focus on the gaming industry. The Company consists of two 50% partners, the Company and Brant Point Solutions, LLC (“BP”). The Company issued 200,000,000 shares for its 50% interest in the joint venture, while BP will provide access to and full utilization of technology that may be owned, licensed or controlled by BP, including but not limited to all agreements between BP and United Payment Systems LLC, as well as its presence in the gaming markets.
Corporate Information
Our principal offices are located at 732 S 6th St. #4621, Las Vegas, Nevada, 89101, and our telephone number at that office is (707) 609-4797. Our website address is www.ipsipay.com. Information contained in our website does not form part of this Annual Report on Form 10-K and is intended for informational purposes only.
Available Information
We have included our website address as a factual reference and do not intend it to be an active link to our website. We make available on our website, www.ipsipay.com, our Annual Reports on Form 10-K, quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports are available free of charge through the investor relations page of our internet website as soon as reasonably practicable after those reports are filed with the U.S. Securities and Exchange Commission (“SEC”).
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Item 1A. Risk Factors
Risks Relating to Our Company
We have had no revenue generating operations to date.
We have no operating history in our current business model, which makes it difficult to evaluate our future potential. We have yet to demonstrate our ability to overcome the risks frequently encountered in “start-up” companies, including in the payment services industry in the United States, and are still subject to many of the risks common to early stage companies, including the uncertainty as to our ability to implement our business plan, market acceptance of our proposed business and services, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources and uncertainty of our ability to generate revenues. There is therefore a significant risk that our activities will not result in any material revenues or profit, and the likelihood of our business viability and long-term prospects must be considered in light of the stage of our development. There can be no assurance that we will be able to fulfill our stated business strategy and plans, or that financial, technological, market, or other limitations may force us to modify, alter, significantly delay, or significantly impede the implementation of such plans. We have no results of operations in our current business model for investors to use to identify historical trends. Investors should consider our prospects considering the risk, expenses and difficulties we will encounter as an early-stage company. Our revenue and income potential is unproven and our business model is continually evolving. We are subject to the risks inherent to the operation of a new business enterprise and cannot assure you that we will be able to address these risks, and our inability to address these risks could lead to the failure of our business.
We have generated and we will likely continue to generate, operating losses and experience negative cash flows, and it is uncertain whether we will achieve profitability.
For the year ended December 31, 2025 and 2024, we incurred a net loss of approximately $4.4 and $4.1 million, respectively. We have an accumulated deficit of $69.0 million through December 31, 2025. We expect to continue to incur operating losses until such time, if ever, as we are able to achieve sufficient levels of revenue from operations. There can be no assurance that we will ever generate significant sales or achieve profitability. Accordingly, the extent of future losses and the time required to achieve profitability, if ever, cannot be predicted.
We also expect to experience negative cash flows for the foreseeable future as we fund our operating losses. Although we believe our existing cash and cash equivalents will be sufficient for the near term, if in the long term we do not generate significant revenues or raise additional financing in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability would likely negatively impact the value of our securities and financing activities.
We have a present need for additional funding, which raises questions about our ability to continue as a going concern. We may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts.
As of December 31, 2025, we had cash and cash equivalents of $29,804. We believe that based on our current operating plan, our existing cash and cash equivalents will not be sufficient to enable us to fund our operations and our debt and other obligations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” below. This raises questions about our ability to continue as a going concern. Moreover, we have significant indebtedness due in 2026, and thus we will need significant additional funds to repay our debt, fund our working capital, and fully implement our business plan as we seek to achieve revenues, positive cash flow and profitability. There is a material risk that we will be unable to generate sufficient revenues to pay our expenses, and if our existing sources of cash and cash flows are insufficient to fund our activities, we will need to raise additional funds. Additional equity or debt financing may not be available on acceptable terms, if at all, particularly in the current economic environment. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our new products in development.
Until such time, if ever, as we can generate substantial product revenues, we will be required to finance our cash needs through public or private equity offerings, debt financings and corporate collaboration and licensing arrangements. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we may raise may contain terms, such as liquidation and other preferences, that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, research programs or product candidates or grant licenses on terms that may not be favorable to us.
If we are unable to generate cash flow positive operations or achieve profitability, and if we are unable to raise additional funds on commercially reasonable terms or at all, we may be required to significantly reduce or cease our operations, or our business could fail, which could result in the loss to investors of their investment in our securities.
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We have not generated sufficient revenue or cash flow to pay our convertible notes, and conversion of such debt into shares of common stock, which would cause significant dilution.
As of December 31, 2025, we had outstanding convertible notes owed to institutional investors in the aggregate principal amount of approximately $5.4 million, net of debt discount of $0.2 million, which has either matured or is maturing during 2026. To date, we have not generated sufficient revenue or cash flows to pay the balances owed under these notes and provide sufficient working capital to run our business. The outstanding principal amount of the notes is convertible at any time into shares of our common stock at prices ranging from fixed conversion prices of $0.0005 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events), to variable conversion prices of 90% of the average of the two lowest trading prices over a 20-trading day period. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the notes), the notes each will become immediately due and payable and we have agreed to pay additional default interest rates. We may not have sufficient cash resources or access to funding to repay such notes. Moreover, upon conversion of these notes, our current shareholders will suffer dilution, which given the current conversion price of the notes would be significant.
Servicing our debt requires a significant amount of cash. Our ability to generate sufficient cash to service our debt depends on many factors beyond our control.
Our ability to make payments on and to refinance our debt, to fund planned capital expenditures and to maintain sufficient working capital depends on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or from other sources in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. If our cash flow and capital resources are insufficient to allow us to make scheduled payments on our debt, we may need to seek additional capital or restructure or refinance all or a portion of our debt on or before the maturity thereof, any of which could have a material adverse effect on our business, financial condition or results of operations. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all, or that the terms of that debt will allow any of the above alternative measures or that these measures would satisfy our scheduled debt service obligations. If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. There can be no assurance that we will be able to obtain any financing when needed.
Covenant restrictions under our indebtedness may limit our ability to operate our business.
Our outstanding convertible notes contain, and our future indebtedness agreements may contain covenants that restrict our ability to finance future operations or capital needs or to engage in other business activities. The Notes restrict our ability to:
| ● | incur, assume or guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom other than Permitted Indebtedness (as defined in the notes); |
| ● | repurchase capital stock; |
| ● | repay any Indebtedness (as defined in the notes) other than certain secured notes which are no longer outstanding or Permitted Indebtedness or make other restricted payments including, without limitation, paying dividends and making investments; |
| ● | create liens; |
| ● | sell or otherwise dispose of assets; and |
| ● | enter into transactions with affiliates. |
In addition, the notes contain price protection anti-dilution provisions that will discourage financing at prices below the conversion price of the notes and will result in a decrease in the conversion price of the notes if we should issue securities below such price.
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We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a- 15(f) under the Exchange Act. In connection with our audited financial statements for the year ended December 31, 2025, we identified material weaknesses in our internal controls which included (i) insufficient segregation of duties and oversight of work performed in our accounting and finance function due to limited personnel with the appropriate skill sets and (ii) lack of written policies and procedures to address all material transactions and developments impacting our financial statements. However, given the small size of our company and the current state of our business, we are faced with the risk that we may not always be able to detect errors or omissions in our financial reporting and we face internal control weaknesses in the future. If we fail to comply with the rules under Sarbanes-Oxley related to disclosure controls and procedures in the future, or, if we experience material weaknesses and other deficiencies in our internal control and accounting procedures and disclosure controls and procedures, our stock price could decline significantly and raising capital could be more difficult. If new material weaknesses or significant deficiencies are discovered or if we otherwise fail to address the adequacy of our internal control and disclosure controls and procedures from time to time, our business may be harmed. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our securities could drop significantly.
Risks Related to Our Business
The payment services industry is highly competitive, and many of our competitors are larger and have greater financial and other resources.
The payment services industry is highly competitive, and our continued growth depends on our ability to compete effectively with both traditional and non-traditional payment service providers. We currently expect to face competition from a variety of financial and non-financial business groups which include retail banks, non-traditional payment service providers which provide mobile top-up services, and mobile network operators, traditional kiosk and terminal operators, electronic payment system operators, as well as other companies that provide various forms of payment services, including electronic payment and payment processing services. Competitors in our industry seek to differentiate themselves by features and functionalities such as speed, convenience, network size, accessibility, hours of operation, reliability and price. A significant number of these competitors have greater financial, technological and marketing resources than we have, and operate robust networks and are highly regarded by consumers.
There is uncertainty as to market acceptance of our technology, products and services.
We have conducted our own research into the markets for our technology, products and services; however, because we are a new entrant into the market, there is a risk that the market will not accept our technology, products and services. Further, we have limited information on which to estimate our anticipated level of sales. Our products and services require consumers and service providers to adopt our technology. Our industry is susceptible to rapid technological developments and there can be no assurance that we will be able to match any new technological advances. If we are unable to match the technological changes in the needs of our customers, the demand for our products will be reduced and our ability to generate revenue could be adversely impacted.
We are dependent on technology networks and systems to process, transmit and securely store electronic information and we could be subject to liability if our technology systems fail to be secure.
We could be held liable for damages or our reputation could suffer from security breaches or disclosure of confidential information or personal data. We are dependent on technology networks and systems to process, transmit and securely store electronic information with our partners and with our customers. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential loss or unauthorized disclosure of confidential information or data, including personal data. The theft and/or unauthorized use or publication of our, or our customers’, confidential information or other proprietary business information as a result of such an incident could adversely affect our competitive position and reduce marketplace acceptance of our services. Any failure in the networks or computer systems used by us or our customers could result in a claim for substantial damages against us and significant reputational harm, regardless of our responsibility for the failure. In addition, through our other service providers, we have access to or are required to manage, utilize, collect and store sensitive or confidential customer or employee data, including personal data. As a result, we are subject to numerous U.S. and non-U.S. laws and regulations designed to protect this information, such as various U.S. federal and state laws governing the protection of personal data. If any person, including any of our employees, negligently disregards or intentionally breaches controls or procedures with which we are responsible for complying with respect to such data, or otherwise mismanages or misappropriates that data, or if unauthorized access to or disclosure of data in our possession or control occurs, we could be subject to liability and penalties in connection with any violation of applicable privacy laws and/or criminal prosecution, as well as significant liability to our customers or our customers’ clients’ for breaching contractual confidentiality and security provisions or privacy laws. The loss or unauthorized disclosure of sensitive or confidential customer or employee data, including personal data, whether through breach of computer systems, systems failure, employee negligence, fraud or misappropriation, or otherwise, could damage our reputation and cause us to lose customers. Similarly, unauthorized access to or through our information systems and networks or those we develop or manage for our customers, whether by our employees or third parties, could result in negative publicity, legal liability and damage to our reputation, which could in turn harm our business, results of operations, or financial condition.
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We are subject to economic risks that could impact the overall level of consumer spending.
The payment services industry depends heavily on the overall level of consumer spending. We are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. Economic factors such as employment levels, business conditions, energy and fuel costs, interest rates, and inflation rate could reduce consumer spending or change consumer purchasing habits. A reduction in the amount of consumer spending could result in a decrease in our prospects for revenue and profits. If users of our products and services spend or remit less money per transaction, we will have fewer transactions to process at lower amounts, resulting in lower revenue.
If consumer confidence in our business deteriorates, our business, financial condition and results of operations could be adversely affected.
Our business is built on consumers’ confidence in our brands, as well as our ability to provide fast, reliable payment services. As a consumer business, the strength of our brand and reputation are of paramount importance to us. Several factors could adversely affect consumer confidence in our brand, many of which are beyond our control, and could have an adverse impact on our results of operations. These factors include:
| ● | any regulatory action or investigation against us; |
| ● | any significant interruption to our systems and operations; and |
| ● | any breach of our security systems or any compromises of consumer data. |
We expect to be subject to extensive government regulation if we are deemed to be engaged in a regulated business, and we are faced with the risk that new regulations applicable to our business will be enacted.
Currently, we are indirectly impacted by government regulation, however, we may be directly subject to a variety of regulations aimed at preventing money laundering and financing criminal activity and terrorism, financial services regulations, payment services regulations, consumer protection laws, currency control regulations, advertising laws and privacy and data protection laws which may sometimes result in monetary or other sanctions being imposed on our financial service providers or us. Many of these laws and regulations are constantly evolving and are often unclear and inconsistent with other applicable laws and regulations, making compliance challenging and could directly or indirectly increase our related operating costs and legal risks. In particular, there has been increased public attention and heightened legislation and regulations regarding money laundering and terrorist financing. Our financial service providers or us may be required make significant judgment calls in applying anti-money laundering legislation and risk being found in non-compliance with such laws, which could have an adverse impact on our business.
The regulatory regime governing digital assets and offerings of digital assets is evolving and uncertain, and new regulations or policies may materially adversely affect our development.
We may incorporate digital assets, including cryptocurrencies, as part of our product offerings. The regulatory regime governing digital assets is uncertain and rapidly evolving, and new regulations or policies may materially adversely affect the development and the value of our company. Regulation of digital assets is currently undeveloped and likely to rapidly evolve as government agencies take greater interest in them. Regulation also varies significantly among international, federal, state and local jurisdictions and is subject to significant uncertainty. Various legislative and executive bodies in the United States and in other countries may in the future adopt laws, regulations, or guidance, or take other actions, which may severely impact the digital assets market. In addition, any violations of laws and regulations relating to the safeguarding of private information could subject us to fines, penalties or other regulatory actions, as well as to civil actions by affected parties. Failure by us to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties and fines.
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The laws and regulations indirectly affecting our industry are constantly evolving and failure to comply could adversely impact our business.
Our business is indirectly subject to a wide range and increasing number of laws and regulations, as described below. Liabilities or loss of business resulting from a failure by us, our agents or their subagents to comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to protect consumers, or detect and prevent money laundering, terrorist financing, fraud and other illicit activity, and increased costs or loss of business associated with compliance with those laws and regulations has had and we expect will continue to have an adverse effect on our business, financial condition, results of operations, and cash flows. Our services are subject to increasingly strict legal and regulatory requirements, including those intended to help detect and prevent money laundering, terrorist financing, fraud, and other illicit activity. The interpretation of those requirements by judges, regulatory bodies and enforcement agencies may change quickly and with little notice. Additionally, these requirements or their interpretations in one jurisdiction may conflict with those of another jurisdiction. As United States federal and state as well as foreign legislative and regulatory scrutiny and enforcement action in these areas increase, we expect that our costs of complying with these requirements could continue to increase, perhaps substantially, and may make it more difficult or less desirable for consumers and others to use our services or for us to contract with certain intermediaries, either of which would have an adverse effect on our revenue and operating income. For example, we expect to make investments in our compliance programs based on the rapidly evolving and increasingly complex global regulatory and enforcement environment and our internal reviews. These additional investments relate to enhancing our compliance capabilities, including our consumer protection efforts. Further, failure by us or partners and service providers to comply with any of these requirements or their interpretation could result in the suspension or revocation of a license or registration required to provide money transfer, payment or foreign exchange services, the limitation, suspension or termination of services, changes to our business model, loss of consumer confidence, the seizure of our assets, and/or the imposition of civil and criminal penalties, including fines and restrictions on our ability to offer services. We are subject to numerous regulations such as those imposed by the Foreign Corrupt Practices Act (the “FCPA”) in the United States and similar laws in other countries, which generally prohibit companies and those acting on their behalf from making improper payments to foreign government officials for the purpose of obtaining or retaining business. Some of these laws, such as the Bribery Act, also prohibit improper payments between commercial enterprises. Because our services are offered in other countries, we face significant risks associated with our obligations under the FCPA and other national anti-corruption laws. Any determination that we have violated these laws could have an adverse effect on our business, financial condition, results of operations, and cash flows. Our United States business is subject to reporting, recordkeeping and anti-money laundering provisions of the federal Bank Secrecy Act and could be subject to regulatory oversight and enforcement by U.S. Financial Crimes Enforcement Network (FinCEN).
The remittance and digital payments industry has come under increasing scrutiny from government regulators and others in connection with its ability to prevent its services from being abused by people seeking to defraud others. Our failure to continue to help prevent frauds and increased costs related to the implementation of enhanced anti-fraud measures, or a change in fraud prevention laws or their interpretation or the manner in which they are enforced has had and could in the future have an adverse effect on our business, financial condition, results of operations, and cash flows.
Further, any determination that our partners have violated laws and regulations could seriously damage our reputation and brands, resulting in diminished revenue and profit and increased operating costs. In some cases, we could be liable for the failure of our partners to comply with laws which also could have an adverse effect on our business, financial condition, results of operations, and cash flows. The regulations implementing the remittance provisions of the Dodd-Frank Act also impose responsibility on us for any related compliance failures of our partners.
The requirements under the U.S. Dodd-Frank Act, the European Revised Payment Services Directive and similar legislation enacted or proposed in other countries have resulted and will likely continue to result in increased compliance costs, and in the event we or our agents are unable to comply, could have an adverse impact on our business, financial condition, results of operations, and cash flows. Additional countries may adopt similar legislation.
We may have difficulty managing our growth, which may divert resources and limit our ability to successfully expand our operations.
Our implementation of our business plan and current or future strategic initiatives will place significant demands on our operations and management. Our future success will depend on the ability of our officers and other key employees to continue to implement and improve our operational, credit, financial, management and other internal risk controls and processes, along with our reporting systems and procedures, as the number and geographical scope of our customer and vendor relationships continue to expand. We may be unable to implement improvements to our management information and control systems and control procedures and processes in an efficient or timely manner, and we may discover additional deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate our expected increase in revenue. Our growth strategy may require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to manage future expansion in our operations, we may experience compliance and operational problems, have to slow the pace of growth or have to incur additional expenditures beyond current projections to support such growth, any one of which could adversely affect our business and results of operations. We may be unable to increase the volume of sales at acceptable risk levels, expand our customer base and manage the costs and implementation risks associated with our growth strategy. We also cannot provide you with any assurance that our further expansion will be profitable, that we will be able to maintain any specific level of growth, if any, that we will be able to maintain capital sufficient to support our continued growth or that we will be able to adequately and profitably manage that growth.
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We may not be able to complete or integrate successfully any potential future acquisitions, partnerships or joint ventures.
We have implemented joint ventures and commercial partnerships as part of our business, and from time-to-time, we may evaluate possible acquisition transactions, partnerships or joint ventures, some of which may be material. Potential future acquisitions, partnerships and joint ventures may pose significant risks to our existing operations if they cannot be successfully integrated. These projects would place additional demands on our managerial, operational, financial and other resources, create operational complexity requiring additional personnel and other resources and require enhanced control procedures. In addition, we may not be able to successfully finance or integrate any businesses, services or technologies that we acquire or with which we form a partnership or joint venture. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations. Moreover, even if we were successful in integrating newly acquired assets, expected synergies or cost savings may not materialize, resulting in lower-than-expected benefits to us from such transactions. We may spend time and money on projects that do not increase our revenue. Additionally, when making acquisitions it may not be possible for us to conduct a detailed investigation of the nature of the assets being acquired due to, for instance, time constraints in making the decision and other factors. We may become responsible for additional liabilities or obligations not foreseen at the time of an acquisition. In addition, in connection with any acquisitions, we must comply with various antitrust requirements. It is possible that perceived or actual violations of these requirements could give rise to regulatory enforcement action or result in us not receiving all necessary approvals in order to complete a desired acquisition. To the extent we pay the purchase price of any acquisition in cash, it would reduce our cash reserves, and to the extent the purchase price is paid with our stock, it could be dilutive to our stockholders. To the extent we pay the purchase price with proceeds from the incurrence of debt, it would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations. All of the above risks could have a material adverse effect on our business, results of operations, financial condition, and prospects.
We are subject to the discretion of administrative enforcement agencies.
In certain cases, regulations may provide administrative discretion regarding enforcement, and regulations may be applied inconsistently across the industry, resulting in increased costs for the Company that may not be incurred by competitors. Changes in laws, regulations or other industry practices and standards, or interpretations of legal or regulatory requirements, may reduce the market for or value of our products or services or render our products or services less profitable or obsolete. For example, policymakers may impose heightened customer due diligence requirements or other restrictions, fees or taxes on remittances. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents (such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute certain services and the costs of providing those services.
Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, could adversely affect our business, financial condition and results of operations.
We face certain risks in the event of a sustained deterioration of financial market liquidity, as well as in the event of sustained deterioration in the liquidity, or failure, of our clearing, cash management and custodial financial institutions. In particular, in the event of a major bank or credit card failure, we could be unable to process transactions via our mobile applications: In such a case, or if financial liquidity deteriorates for other reasons, our ability to operate our business and our financial condition and results of operations could be significantly harmed.
As our business develops, we will need to implement enhanced compliance processes, procedures and controls with respect to the rules and regulations that apply to our business.
Our success requires significant public confidence in our ability to handle large and growing payment volumes and amounts of consumer funds, as well as comply with applicable regulatory requirements. Any failure to manage consumer funds or to comply with applicable regulatory requirements could result in the imposition of fines, harm our reputation and significantly diminish use of our products. In addition, if we are not in compliance with anti-corruption laws and other laws governing the conduct of business with government entities and/or officials (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could have an adverse impact on our business, financial condition, results of operations and prospects.
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If we cannot keep pace with rapid developments and change in our industry and provide new services to our clients, the use of our services could decline, reducing our revenues.
The payment services industry in which we operate is characterized by rapid technological change, new product and service introductions, evolving industry standards, changing customer needs and the entrance of more established market players seeking to expand into these businesses. In order to remain competitive, we continually seek to expand the services we offer and to develop new projects. These projects carry risks, such as delays in delivery, performance problems and lack of customer acceptance. In our industry, these risks are acute. Any delay in the delivery of new services or the failure to differentiate our services or to accurately predict and address market demand could render our services less desirable, or even obsolete, to consumers. In addition, if alternative payment mechanisms become widely available, substituting our current products and services, and we do not develop and offer similar alternative payment mechanisms successfully and on a timely basis, our business and prospects could be adversely affected. Furthermore, we may be unable to recover the costs we have incurred in developing new services. Our development efforts could result in increased costs and we could also experience a loss in business that could reduce our earnings or could cause a loss of revenue if promised new services are not timely delivered to our clients, we are not able to compete effectively with our competitors’ or do not perform as anticipated. If we are unable to develop, adapt to or access technological changes or evolving industry standards on a timely and cost-effective basis, our business, financial condition and results of operations could be materially adversely affected.
Our systems and our third-party providers’ systems may fail due to factors beyond our control, which could interrupt our service, cause us to lose business and increase our costs.
We depend on the efficient and uninterrupted operation of numerous systems, including our computer systems, software and telecommunications networks, as well as the data centers that we lease from third parties. Our systems and operations, or those of our third-party providers, could be exposed to damage or interruption from, among other things, fire, flood, natural disaster, power loss, telecommunications failure, vendor failure, unauthorized entry, improper operation and computer viruses. Substantial property and equipment loss, and disruption in operations, as well as any defects in our systems or those of third parties or other difficulties could expose us to liability and materially adversely impact our business, financial condition and results of operations. In addition, any outage or disruptive efforts to our data center would result in the failure of our computers to operate and would, if for an extensive period, adversely impact our reputation, brand and future prospects.
Unauthorized disclosure of data, whether through cybersecurity breaches, computer viruses or otherwise, could expose us to liability, protracted and costly litigation and damage our reputation.
We store and/or transmit sensitive data, and we have ultimate liability to our consumers for our failure to protect this data. If breaches occur our encryption of data and other protective measures may not prevent unauthorized disclosure of data. Unauthorized disclosure of data or a cybersecurity breach could harm our reputation and deter clients from using electronic payments generally, increase our operating expenses in order to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits, result in the imposition of material penalties and fines by state authorities and otherwise materially adversely affect our business, financial condition and results of operations.
Customer complaints or negative publicity about our customer service could affect attractiveness of our services adversely and, as a result, could have an adverse effect on our business, financial condition and results of operations.
Customer complaints or negative publicity about our customer service could diminish consumer confidence in, and the attractiveness of, our services. Breaches of our consumers’ privacy and our security systems could have the same effect. We sometimes take measures to combat risks of fraud and breaches of privacy and security, such as freezing consumer funds, which could damage relations with our consumers. These measures heighten the need for prompt and attentive customer service to resolve irregularities and disputes. Effective customer service requires significant personnel expense, and this expense, if not managed properly, could impact our profitability significantly. Any inability by us to manage or train our customer service representatives properly could compromise our ability to handle customer complaints effectively. If we do not handle customer complaints effectively, our reputation may suffer, and we may lose our customers’ confidence, which could have a material adverse effect on our business, financial condition and results of operations.
Our payment system might be used for fraudulent, illegal or improper purposes, which could expose us to additional liability and harm our business.
Despite measures we have taken and continue to take, our payment system remains susceptible to potentially illegal or improper uses. These may include use of our payment services in connection with fraudulent sales of goods or services, illicit sales of prescription medications or controlled substances, software and other intellectual property piracy, money laundering, bank fraud and prohibited sales of restricted products. In the past there have been news articles on how organized crime groups have used other payment services to transfer money in the course of illegal transactions.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. Our risk management policies and procedures may not be fully effective to identify, monitor and manage these risks. We are not able to monitor in each case the sources for our counterparties’ funds or the ways in which they use them. Increases in chargebacks or other liability could have a material adverse effect on our business, financial condition and results of operations. Furthermore, an increase in fraudulent transactions or publicity regarding chargeback disputes could harm our reputation and reduce consumer confidence in the use of our products.
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We may not be able to successfully protect the intellectual property we license or own and may be subject to infringement claims.
We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and protect our technology and the technology that we license and/or that we develop in the future.
Also, we customarily require our employees and independent contractors to execute confidentiality agreements or otherwise to agree to keep our proprietary information and the information we license confidential when their relationship with us begins. Typically, our employment contracts also include clauses requiring our employees to assign to us all the inventions and intellectual property rights they develop in the course of their employment and to agree not to disclose our confidential information. Nevertheless, others, including our competitors, may independently develop similar technology to that licensed by us, duplicate our services or design around our intellectual property. Further, contractual arrangements may not prevent unauthorized disclosure of our confidential information or ensure an adequate remedy in the event of any unauthorized disclosure of our confidential information. We may have to litigate to enforce or determine the scope or enforceability of our intellectual property rights (including trade secrets and know-how), which could be expensive, could cause a diversion of resources and may not prove successful. The loss of intellectual property protection could harm our business and ability to compete and could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. Additionally, we do not hold any patents for our business model or our business processes, and we do not currently intend to obtain any such patents in the United States or elsewhere.
We may also be subject to costly litigation in the event our services or the technology that we license are claimed to infringe, misappropriate or otherwise violate any third party’s intellectual property or proprietary rights. Such claims could include patent infringement, copyright infringement, trademark infringement, trade secret misappropriation or breach of licenses. We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and might require us to redesign affected services, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our services. In such circumstances, if we cannot or do not license the infringed technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted. Additionally, in recent years, non-practicing entities have been acquiring patents, making claims of patent infringement and attempting to extract settlements from companies in our industry. Even if we believe that such claims are without merit and successfully defend these claims, defending against such claims is time consuming and expensive and could result in the diversion of the time and attention of our management and employees.
We may use open-source software in a manner that could be harmful to our business.
We may use open-source software in connection with our technology and services. The original developers of the open-source code provide no warranties on such code. Moreover, some open-source software licenses require users who distribute open-source software as part of their software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open-source code on unfavorable terms or at no cost. The use of such open-source code may ultimately require us to replace certain code used in our products, pay a royalty to use some open-source code or discontinue certain products. Any of the above requirements could be harmful to our business, financial condition and operations.
We do not have and may be unable to obtain sufficient insurance to protect ourselves from business risks.
While we hold certain mandatory types of insurance policies, we do not currently maintain insurance coverage for business interruption, property damage or loss of key management personnel, as we have been unable to obtain these on commercially acceptable terms. We do not hold insurance policies to cover for any losses resulting from counterparty and credit risks or fraudulent transactions. We also do not generally maintain separate funds or otherwise set aside reserves for most types of business-related risks. Accordingly, our lack of insurance coverage or reserves with respect to business-related risks may expose us to substantial losses, which could materially adversely affect our business, financial condition and results of operations.
We rely on certain key personnel and in a dynamic industry like ours, the ability to attract, recruit, retain and develop qualified personnel is critical to our success and growth.
We rely substantially on the efforts of our current senior management, including our Chief Executive Officer, William Corbett. Our business would be impeded or harmed if we were to lose his services. In addition, our business functions at the intersection of rapidly changing technological, social, economic and regulatory developments that require a wide-ranging set of expertise and intellectual capital. In order for us to compete and grow successfully, we must attract, recruit, retain and develop the necessary personnel who can provide the needed expertise across the entire spectrum of our capital needs. This is particularly true with respect to qualified and experienced software engineers and information technology staff, who are highly sought after. The market for such personnel is highly competitive, and we may not succeed in recruiting additional personnel or may fail to replace effectively current personnel who depart with qualified or effective successors. Our efforts to retain and develop personnel may result in significant additional expenses, which could adversely affect our profitability. We cannot assure you that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations.
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Risks Relating to Our Securities
There is currently a limited public trading market for our common stock and one may never develop.
There currently is a limited public trading market for our securities, and it is not assured that any such public market will develop in the foreseeable future. Moreover, there can be no assurance that even if our common stock is approved for listing on an exchange or is quoted in the over-the-counter market in the future, that an active trading market will develop or be sustained. Therefore, we cannot predict the prices at which our common stock will trade in the future, if at all. As a result, our investors may have limited or no ability to liquidate their investments.
Trading in our common stock is conducted on the OTCQB, as we currently do not meet the initial listing criteria for any registered securities exchange. The OTCQB and OTC Markets are less recognized markets than the registered securities exchanges and is often characterized by low trading volume and significant price fluctuations. These and other factors may further impair our stockholders’ ability to sell their shares when they want to and/or could depress our stock price. As a result, stockholders could find it difficult to dispose of or obtain accurate quotations of the price of our securities because smaller quantities of shares could be bought and sold, transactions could be delayed and security analyst and news coverage of our Company may be limited. If a public market for our common stock does develop, these factors could result in lower prices and larger spreads in the bid and ask prices for our shares of common stock.
Because our common stock may be a “penny stock,” it may be more difficult for investors to sell shares of our common stock, and the market price of our common stock may be adversely affected.
Our common stock is deemed to be a “penny stock” if, among other things, the stock price is below $5.00 per share, it is not listed on a national securities exchange, or it has not met certain net tangible asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This risk-disclosure document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser and obtain the purchaser’s written agreement to the purchase. Broker-dealers must also provide customers that hold penny stock in their accounts with such broker-dealer a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to an investor in violation of the penny stock rules, the investor may be able to cancel its purchase and get their money back.
If applicable, the penny stock rules may make it difficult for stockholders to sell their shares of our common stock. Because of the rules and restrictions applicable to a penny stock, there is less trading in penny stocks and the market price of our common stock may be adversely affected. Also, many brokers choose not to participate in penny stock transactions. Accordingly, stockholders may not always be able to resell their shares of our common stock publicly at times and prices that they feel are appropriate.
Because we became public by means of a reverse merger, we and our shareholders may be faced with regulatory constraints, and we may not be able to attract the attention of brokerage firms.
Additional risks may exist because we became public through a reverse merger. For example, our status as a former “shell company” may limit the ability of shareholders to utilize SEC Rule 144 to sell their shares. Further, as we did not become a public company via a traditional, underwritten initial public offering, securities analysts of brokerage firms may not provide coverage of our company since there is little incentive for brokerage firms to recommend the purchase of our common stock. In addition, institutional investors may have limitations on investing in reverse merger companies, which could limit the universe of potential investors for our company. No assurance can be given that brokerage firms will want to conduct secondary offerings on our behalf in the future. In addition, if we were to attempt to up-list the listing of our securities on a national securities exchange we will likely be subject to additional listing requirements applicable to entities that became public through a reverse merger.
Compliance with the reporting requirements of federal securities laws is expensive and time consuming.
We are a public reporting company in the United States, and accordingly, subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act of 2002. The costs (in terms of expenses and the required dedication of management’s time and attention) of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited reports to stockholders are substantial. If we do not provide current information about our company to market makers, they will not be able to trade our stock. Failure to comply with the applicable securities laws could result in private or governmental legal action against us or our officers and directors, which could have a detrimental impact on our business and financials, the value of our stock, and the ability of stockholders to resell their stock.
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Our stock price has been subject to significant volatility, and future volatility may result in our investors incurring substantial losses.
Our stock price has fluctuated in the past, has been subject to volatility and may be volatile in the future. We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance. For example, the recent war in Iran , the ongoing Russia-Ukraine conflict, and the constant conflicts in the middle east, and volatile inflationary market conditions have caused broad stock market and industry fluctuations. Furthermore, the market prices for companies operating in our industry have experienced extreme volatility. As a result of this volatility, investors may experience losses on their investment in our common stock. The market price for our common stock may be influenced by many factors, including the following:
| ● | conversion of our outstanding convertible notes or exercise of outstanding warrants into shares of common stock at low prices, and the sale of such shares in the public market; |
| ● | investor reaction to our business strategy; |
| ● | the success of competitive products or technologies; |
| ● | regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; |
| ● | variations in our financial results or those of companies that are perceived to be similar to us; |
| ● | our ability or inability to raise additional capital to fund our working capital and business plans, and the terms on which we raise it; |
| ● | declines in the market prices of stocks generally; |
| ● | our public disclosure of the terms of any financing which we consummate in the future; |
| ● | our failure to generate revenue and positive cash flow or to become profitable; |
| ● | announcements by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments; |
| ● | cancellation of key contracts; |
| ● | our failure to meet financial or operational forecasts we publicly disclose; |
| ● | the trading volume of our common stock; |
| ● | sales of our common stock by us or our stockholders; |
| ● | general economic, industry and market conditions; and |
| ● | other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability |
These and similar market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Since the stock price of our common stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects. There can be no guarantee that our stock price will remain at current prices or that future sales of our common stock will not be at prices lower than those sold to investors.
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Our investors’ ownership will likely be diluted in the future.
In the future, we will likely issue additional authorized but previously unissued equity securities, resulting in the dilution of ownership interests of our present stockholders. We expect to need to issue a substantial number of shares of common stock or other securities convertible into or exercisable for common stock in connection the conversion or exercise of outstanding convertible notes and warrants as well as in connection with hiring or retaining employees, future acquisitions, raising additional capital in the future to fund our operations, and other business purposes. Additional shares of common stock issued by us in the future, including shares issued upon exercise of the options, warrants and the outstanding notes, will dilute an investor’s investment in the Company.
Our Board of Directors has historically had significant control over us and we have yet to establish committees comprised of independent directors.
Each of our board members has significant control over all corporate issues. In addition, one of our three directors serve as a senior officer. We have not established board committees comprised of independent members, and we do not have an audit or compensation committee comprised of independent directors. Our three directors performed these functions, despite not all being independent directors. Thus, there is potential conflict in that one of our directors was also engaged in management and participated in decisions concerning management compensation and audit issues that may affect management and our performance.
We do not have an independent compensation committee, which presents the risk that compensation and benefits paid to those executive officers who are board members and other officers may not be commensurate with its financial performance.
A compensation committee consisting of independent directors is a safeguard against self-dealing by company executives. Our Board of Directors is comprised of one executive officer and two other directors, and absent an independent compensation committee currently determines the compensation and benefits of our executive officers, administers our employee stock and benefit plans, and reviews policies relating to the compensation and benefits of our employees. Our lack of an independent compensation committee presents the risk that our executive officers on the board may have influence over their personal compensation and benefits levels that may not be commensurate with its financial performance.
Limitations on director and officer liability and indemnification of our officers and directors by our articles of incorporation, as amended, and by-laws may discourage stockholders from bringing suit against an officer or director.
Our articles of incorporation, as amended, and bylaws provide, with certain exceptions as permitted by Nevada law, that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director or officer, unless the director or officer committed both a breach of fiduciary duty and such breach was accompanied by intentional misconduct, fraud or knowing violation of law. These provisions may discourage stockholders from bringing suit against a director or officer for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by stockholders on behalf of us against a director or officer.
We are responsible for the indemnification of our officers and directors.
Should our officers and/or directors require us to contribute to their defense in an action brought against them in their capacity as such, we may be required to spend significant amounts of our capital. Our articles of incorporation, as amended, and bylaws also provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of us. In addition, we have entered into an indemnification agreement with our Chief Executive Officer. This indemnification policy could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going concern.
We do not expect to pay dividends on our common stock in the foreseeable future.
We have not paid cash dividends on our common stock to date and we do not expect to pay dividends on our common stock for the foreseeable future, and we may never pay dividends. Consequently, the only opportunity for investors to achieve a return on their investment may be if an active trading market develops, and investors are able to sell their shares for a profit or if our business is sold at a price that enables investors to recognize a profit, neither of which we can guarantee will ever take place. Our payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, and growth plans.
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Item 1B. Unresolved Staff Comments
None
Item 1C. Cybersecurity
The manner in which we store and/or transmit sensitive data in connection with our payment processing solutions is an important part of how we operate and plan to operate. We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees and violation of data privacy or security laws.
Our risk management program
also assesses
Item 2. Properties
The Company does not operate out of any leased or owned properties.
Item 3. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Below is a description of our outstanding pending litigation matters. Litigation is subject to inherent uncertainties and an adverse result in the below described or other matters may arise from time to time that may harm our business. Other than as set forth below, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.
Voloshin, et al., v. Innovative Payment Solutions, Inc., et al.
On October 20, 2021, a complaint was filed against our Company and certain of its officers and directors with the Occupational Safety and Health Administration of the United States Department of Labor (“OSHA”), captioned Naum Voloshin, Yulia Rey, Alexander Voloshin, Andrey Novikov, and Frank Perez v. Innovative Payment Solutions, Inc., William Corbett, Richard Rosenblum, Madisson Corbett, Jim Fuller, Cliff Henry and David Rios. The complaint generally alleged that complainants, four former employees (or independent consultants) of our Company and one employee who was on suspension, did not receive compensation to which they claim they were entitled and that they were wrongfully terminated for engaging in protected activities in violation of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A. The complaint sought reinstatement of complainants’ employment, monetary damages including back pay, raises, bonuses, benefits, overtime, emotional distress and loss of reputation, orders of abatement and injunctive relief, and costs of litigation.
In early 2022, OSHA dismissed the claims of Ms. Rey and Mr. Perez, and they appealed that decision. Prior counsel moved to dismiss the remaining claims and as of this writing OSHA took no action with respect to that motion as ultimately the former employees elected to proceed in federal court. Pursuant to agreement and stipulation, dismissal of the OSHA claims was accomplished without prejudice on November 10, 2022.
On November 7, 2022, the same five employees filed a lawsuit, not in federal court, but in the California Superior Court for the County of Los Angeles, against our Company and the same individuals against whom they had asserted their OSHA claim. The complaint asserted claims for, among other things, breach of contract, failure to pay wages and failure to reimburse expenses under the California Labor Code and asserting retaliation claims under the California Labor Code. On December 16, 2022, the same five employees filed an amended complaint dropping all defendants from the case except Mr. Corbett and our Company. The amended complaint asserts claims for violations of California Labor Code Section 1102.5; wrongful termination in violation of public policy; breach of contract; breach of covenant of good faith and fair dealing; violation of California Labor Code Section 201; waiting time penalties (Cal. Lab. Code Sections 201 & 203) and violation of California Labor Code Section 2802.
We and Mr. Corbett, the sole remaining individual defendant, through prior counsel moved to compel arbitration on February 17, 2023. As a result of that motion and a stipulated order entered by the court, all proceedings in the Superior Court were stayed.
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On June 8, 2023, while our motion to compel arbitration was pending in the Superior Court three of the employees (Naum Voloshin, Alexander Voloshin, and Novikov) filed a civil action in the U.S. District Court for the Central District of California. Naum Voloshin, et al., v. Innovative Payment Solutions, Inc., Case No. CV 23-4515-JFW (PVCx), which alleges a single cause of action for retaliation in violation of The Sarbanes-Oxley Act of 2002 (the “Federal Action”). The plaintiffs in the Federal Action made no attempt to serve their complaint or to give notice to any defendant in the Federal Action until August 2023.
On August 30, 2023, the Hon. William A. Crowfoot granted our and Mr. Corbett’s motion to compel arbitration, concluding that all of the claims alleged in the former employees’ first amended complaint were subject to arbitration. The California Court of Appeal subsequently denied the former employees’ petition for writ of mandate on November 1, 2023. On December 15, 2023, all five former employees filed a demand for arbitration. We withdrew our motion to compel appointment of an arbitrator.
Upon motion of our Company and Mr. Corbett, on January 10, 2024, the U.S. District Court for the Central District of California stayed all proceedings in the Federal Action until the arbitration is completed.
Plaintiffs Naum Voloshin, Andrey Novikov, and Alexander Voloshin asserted, in the Federal Action, that they are entitled to damages in the following amounts: Naum Voloshin: $950,000 plus an unstated amount of lost wages and emotional distress damages. The claim is premised upon Mr. Voloshin earning $15,000 per month and a claim that he was entitled to receive 333,334 shares of Common Stock (after giving effect to our August 2023 reverse stock split) on or about June 29, 2021 that he would have sold on July 1, 2021 for $2.85 per share on July 1, 2021 for $950,000. Andrey Novikov: $285,000 plus emotional distress and punitive damages. The claim is premised upon Mr. Novikov earning $15,000 per month and a claim that he was entitled to receive 100,000 shares of Common Stock (after giving effect to our August 2023 reverse stock split) on or about June 29, 2021, that he would have sold at $2.85 per share on July 1, 2021 for $285,000. Alexander Voloshin: $263,000 plus emotional distress and punitive damages. The claim is premised upon an alleged two-year contract signed in May 2021 that paid him $7,000 per month and that promised him 333,334 shares of Common Stock (after giving effect to our August 2023 reverse stock split) on or about June 29, 2021. We have not received meaningful information on the amount of the claims of the other two plaintiffs.
An arbitrator was appointed through the American Arbitration Association and the arbitrator issued a scheduling order and Notice of Hearing. The ten-day arbitration has been set for April 7-11, 2025, and April 14-18, 2025. Management continues its vigorous defense of the claims.
In mid-April 2024, the Company and Mr. Corbett changed attorneys. The Law Offices of Jeffrey B. Neustadt replaced prior counsel. Mr. Neustadt and Plaintiffs’ counsel conferred and timely submitted the required joint statement on April 25, 2024.
Initial discovery was served by both sides. Documents were exchanged, and depositions proceeded for all persons.
On March 4, 2025, the Company and Mr. Corbett, entered into a settlement agreement with Naum Voloshin, Andrey Novikov, Frank Perez, Yulia Rey and Alexander Voloshin (the “Plaintiff Group”), whereby the Company agreed to pay $500,000 in settlement and full and final resolution of all claims and causes of action that the Plaintiff Group, or any member thereof, holds or has asserted (or could have asserted) against the Company and Mr. Corbett.
Within 5 days of March 4, 2025, the Company agreed to pay $100,000 (the “First Payment”) and within 60 days the Company agreed to pay a further $100,000 including interest thereon at 10% per annum from March 5, 2025, and within 240 days, a final payment of $300,000, including interest thereon at 10% per annum from March 5, 2025. The initial payment of $100,000 was made on March 24, 2025. The Company has not made the second instalment as of the date of this report and has not issued the convertible notes, securing the obligations, as discussed below, as of the date of this report.
Any breach of the terms of the settlement agreement will result in a payment to the Plaintiffs of liquidated damages of $25,000 for each event of default. We are negotiating with the plaintiffs on the payment of the second instalment, and may be obligated to pay the additional $25,000 default penalty, if we are unable to agree to waive it.
In order to secure the obligations to the Plaintiff Group, the Company is to execute two convertible notes, the first note for $100,000 (“Note 1”) and the second note for $300,000 (“Note 2”). Each note bears interest at the rate of 10% per annum, Note 1 has a maturity date of 60 days and Note 2, 240 days from March 5, 2025. The Notes will be convertible upon an event of default, which includes any failure to pay any of the installments. The Notes plus any accrued interest thereon, are convertible into common stock of the Company at a conversion price of $0.02 per share or the lowest conversion price of the senior secured note holders, as determined and established as the conversion price for all their notes outstanding as of March 5, 2025, if there are any limits on trading or the trading price falls below $0.01 per share, the conversion price will be discounted by a further 15%. The notes provide for certain events such as mergers and consolidations, distributions to shareholders, and stock splits and dividends.
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Minkovich v. Corbett, et al.
On May 26, 2022, Mr. Jan Minkovich (“Minkovich”) filed a lawsuit in California Superior Court in Los Angeles County (Minkovich v. Corbett, et al., CASE NO. 22CHCV00377) against our Company and our Chairman and Chief Executive Officer William Corbett. The complaint asserts six causes of action for: (i) breach of contract; (ii) nonpayment of wages; (iii) waiting time penalties; (iv) failure to indemnify for alleged employee business expenses; (v) violation of Section 17200 of the California Business and Professional Code; and (vi) wrongful termination of employment in violation of public policy. Minkovich seeks $570,000 in damages, penalties, and attorneys’ fees plus shares equal to five percent (5%) ownership of our Company.
He bases his claim in part on the unilateral expectation that he receives 2.7 million shares of the Company. Assuming he is owed any shares, a claim which we dispute, after the reverse 30-1 split he would receive only 90,000 shares.
Through prior counsel, we and Mr. Corbett filed a motion to compel arbitration. The motion was denied on October 4, 2022. We and Mr. Corbett then appealed that decision to the California Court of Appeal. As a result of the appeal, the court case was stayed until the appeal was decided. As a result of the stay, the demurrer (the equivalent of a motion to dismiss) we filed through prior counsel was not decided.
On February 27, 2024, the California Court of Appeal, Second District, reversed the Superior Court’s decision denying our motion to compel arbitration. The Court of Appeal remanded the case to the Superior Court with directions to issue a new order compelling to arbitration the parties’ dispute regarding the enforceability of the arbitration clause. As the prevailing parties, the Company and Mr. Corbett were awarded costs on appeal.
As expected, the plaintiff-initiated arbitration before the American Arbitration Association (“AAA”) based on the appellate ruling. While, as the court order states, the plaintiff may renew his challenge to the arbitration clause before the arbitrator, we believe such challenges are rare and rarely succeed. Accordingly, we expect the dispute likely will be resolved through AAA arbitration. Management is vigorously defending the claims and intends to continue to do so.
After a lull in activity during which the Arbitrator weighed several issues, the new date for commencement of arbitration was set as May 26 to 29, 2026.
Based on several factors, including a recent decision in the Second District Court of Appeals, we moved to set aside the order imposing arbitration in the Los Angeles Superior Court. That hearing, scheduled for February 6, 2026, may change as a new judge was recently assigned to preside over the case in the Superior Court.
Discovery has been re-opened. The parties remain engaged in informal efforts to resolve the matter but to date have been unable to agree on a resolution. As noted previously and above, recent changes in California law may impact the Court’s previous decision that sent this case to arbitration in February 2024.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities
From November 3, 2014 to July 4, 2016, our common stock traded on the OTC Pink Markets under the symbol “ASYP” but no trading took place during this time. Since July 5, 2016 our common stock has traded on the OTCQB Market, and our symbol was changed to “QPAG” on June 2, 2016 and to “IPSI” on December 3, 2019.
The last reported sale price of our common stock on the OTCQB on March 30, 2026, was $0.007 per share. OTC market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
As of March 30, 2026, there were approximately 86 holders of record of our common stock.
Dividend Policy
We have not paid any cash dividends on our common stock to date, and we have no intention of paying cash dividends in the foreseeable future. Whether we declare and pay dividends is determined by our Board of Directors at their discretion, subject to certain limitations imposed under Nevada corporate law. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.
Equity Compensation Plan Information
The purpose of our equity incentive plans is to promote the interests of our company and our stockholders by providing directors, officers, employees and consultants of our company with appropriate incentives and rewards to encourage them to enter into and continue in the employ or service of our company, to acquire a proprietary interest in our long-term success and to reward the performance of individuals in fulfilling long-term corporate objectives.
On June 18, 2018, we established our 2018 Stock Incentive Plan (the “Plan”). The Plan terminates after a period of ten years in June 2028. The Plan is administered by our board of directors or a committee appointed by our board of directors who have the authority to administer the Plan and to exercise all the powers and authorities specifically granted to it under the Plan.
The maximum number of securities available under the Plan is 26,667 shares of Common Stock. The maximum number of shares of Common Stock awarded to any individual during any fiscal year may not exceed 3,333 shares of Common Stock.
On October 22, 2021, our board of directors and stockholders established our 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan terminates after a period of ten years in August 2031.
The maximum number of securities available under the 2021 Plan is 1,766,667 shares of Common Stock.
Under the 2021 Plan, we may award the following: (i) non-qualified stock options; (ii)) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock unit; and (vi) other stock-based awards.
The following presents certain information regarding our equity incentive plans as of December 31, 2025:
| Plan Category | Number of securities to be issued upon exercise of outstanding options | Weighted- average exercise price of outstanding options | Number of remaining | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | ||||||||||||
| 2018 Equity Incentive Plan | 13,334 | $ | 0.09 | 13,333 | ||||||||
| 2021 Equity Incentive Plan | 1,766,667 | 3.01 | — | |||||||||
| Equity compensation plans not approved by security holders | ||||||||||||
| None | — | — | — | |||||||||
| Total | 1,780,001 | $ | 2.99 | 13,333 | ||||||||
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Recent Sales of Unregistered Securities
On November 25, 2025, the Company entered into a securities purchase agreement pursuant to which the Company issued a convertible promissory note for $50,000 and a five year warrant exercisable for 50,000 shares of common stock at an exercise price of $0.01 per share. The note is unsecured and matures on November 26, 2026, bearing interest at 8% per annum based on a 360 day trading-year, and is convertible into shares of common stock of the Company at a conversion price of $0.01 (as adjusted for stock splits, stock combinations, and similar events), unless there is an event of default, as defined in the agreement, whereby the conversion price will be 75% of the lowest volume weighted average prices for the 30 days prior to conversion. The Note may be prepaid at any time without penalty. The Note contains customary events of default. The Company is under no obligation to register the shares of Common Stock underlying the Notes for public resale. The warrants are price protected and any subsequent equity transaction at a lower exercise price will reduce the exercise price of the warrant, to that lower price.
On December 5, 2025, the Company entered into two convertible note agreements pursuant to which the Company issued two convertible promissory notes, each totaling $31,250, each with an original issue discount of $6,250, for net proceeds of $25,000 each. The notes are unsecured and mature on September 6, 2026, bearing interest at 10% per annum based on a 360 day trading-year, and are convertible into shares of common stock of the Company at a conversion price of $0.01 or 90% of the average of the two lowest volume weighted average prices for the 20 days prior to conversion (as adjusted for stock splits, stock combinations, and similar events). The Notes may be prepaid at any time without penalty. The Note contains customary events of default. The Company is under no obligation to register the shares of Common Stock underlying the Notes for public resale.
On February 27, 2026, the Company entered issued a convertible promissory note for $50,000. The note is unsecured and matures on February 27, 2027, bearing interest at 8% per annum based on a 360 day trading-year, and is convertible into shares of common stock of the Company at a conversion price of $0.02 (as adjusted for stock splits, stock combinations, and similar events), unless there is an event of default, as defined in the agreement, whereby the conversion price will be 75% of the lowest volume weighted average prices for the 30 days prior to conversion. The Note may be prepaid at any time without penalty. The Note contains customary events of default. The Company is under no obligation to register the shares of Common Stock underlying the Notes for public resale.
On March 12, 2026, the Company entered issued a convertible promissory note for $25,000. The note is unsecured and matures on March 12, 2027, bearing interest at 8% per annum based on a 360 day trading-year, and is convertible into shares of common stock of the Company at a conversion price of $0.02 (as adjusted for stock splits, stock combinations, and similar events), unless there is an event of default, as defined in the agreement, whereby the conversion price will be 75% of the lowest volume weighted average prices for the 30 days prior to conversion. The Note may be prepaid at any time without penalty. The Note contains customary events of default. The Company is under no obligation to register the shares of Common Stock underlying the Notes for public resale.
On March 16, 2026, the Company entered into securities purchase agreements with two accredited investors, pursuant to which the Company issued each a convertible promissory note for $80,000 (total $160,000) and to each, a five year warrant exercisable for 8,000,000 (total 16,000,000) shares of common stock at an exercise price of $0.01 per share. The notes are unsecured and mature on March 16, 2027, bearing interest at 8% per annum based on a 360 day trading-year, and are convertible into shares of common stock of the Company at a conversion price of $0.01 (as adjusted for stock splits, stock combinations, and similar events), unless there is an event of default, as defined in the agreement, whereby the conversion price will be 75% of the lowest volume weighted average prices for the 30 days prior to conversion. The Notes may be prepaid at any time without penalty. The Notes contains customary events of default. The Company is under no obligation to register the shares of Common Stock underlying the Notes for public resale. The warrants are price protected and any subsequent equity transaction at a lower exercise price will reduce the exercise price of the warrant, to that lower price.
On March 17, 2026, the Company entered issued a convertible promissory note for $25,000. The note is unsecured and matures on March 17, 2027, bearing interest at 8% per annum based on a 360 day trading-year, and is convertible into shares of common stock of the Company at a conversion price of $0.02 (as adjusted for stock splits, stock combinations, and similar events), unless there is an event of default, as defined in the agreement, whereby the conversion price will be 75% of the lowest volume weighted average prices for the 30 days prior to conversion. The Note may be prepaid at any time without penalty. The Note contains customary events of default. The Company is under no obligation to register the shares of Common Stock underlying the Notes for public resale.
The notes and warrants contain conversion limitations providing that a holder thereof may not convert the notes or exercise the warrants, to the extent that, if after giving effect to such conversion, the holder or any of its affiliates would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the outstanding shares of the Common Stock immediately after giving effect to such conversion or exercise. The holder may increase or decrease its beneficial ownership limitation upon notice to the Company provided that in no event such limitation exceeds 9.99%, and that any increase shall not be effective until the 61st day after such notice.
Issuer Purchases of Equity Securities
There were no issuer purchases of equity securities during the fiscal year ended December 31, 2025.
Item 6. Reserved
23
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our audited annual financial statements and the related notes thereto, each of which appear elsewhere in this Annual Report. This discussion contains certain forward-looking statements that involve risks and uncertainties, as described under the heading “About Forward-Looking Statements” in this Annual Report. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these risks and uncertainties. The Management Discussion and Analysis of Financial Condition and Results of Operations below is based upon only the financial performance of Innovate Payment Solutions.
Overview
We are a fintech provider of digital payment solutions presently focused on credit card processing services for undeveloped and underserved markets. We have in the past (under the name IPSIPay) and may in the future develop and operate “e-wallets” that enable consumers to deposit cash, convert it into a digital form and remit funds quickly and securely.
Known Trends, Demands, Commitments, Events or Uncertainties Impacting Our Business
Development of Jetties Partners, LLC (d/b/a IPSIPAY)(“IPSIPAY”)
On October 29, 2025, we formed a limited liability corporation, Jetties Partners, LLC (“Jetties”), d/b/a IPSIPAY. The Company was formed to develop, market, distribute and operate a merchant processing payment solution, with an initial focus on the gaming industry. The Company consists of two 50% partners, the Company and Brant Point Solutions, LLC (“BP”). The Company issued 200,000,000 shares for its 50% interest in the joint venture, while BP will provide access to and full utilization of technology that may be owned, licensed or controlled by BP, including but not limited to all agreements between BP and United Payment Systems LLC, as well as its presence in the gaming markets.
Inflation
Macro-economic conditions could affect consumer spending adversely and consequently our future operations when we fully launch our e-wallet products commercially. The recent war in Iran and uncertainty and volatility in energy markets may have a ripple effect on inflation, and this may impact consumer’s desire to adopt our products and services and may increase our costs overall. However, as of the date of this report, we do not expect there to be any material impact on our liquidity as forecast in our business plan.
Foreign Exchange Risks
We intend to operate in several foreign countries. Changes and fluctuations in the foreign exchange rate between the US Dollar and other foreign currencies may in future have an effect our results of operations.
Results of Operations for the years Ended December 31, 2025 and December 31, 2024
Net revenue
We had revenue of $0 and $0 for the years ended December 31, 2025 and 2024, respectively. We pivoted to focus our attention on new payment processing joint venture, Jetties LLC, doing business as IPSIPay, serving underserved and niche markets where we expect to generate initial revenues during the 2026 fiscal year.
Cost of goods sold
We had cost of goods sold of $0 and $0 for the years ended December 31, 2025 and 2024, respectively.
General and administrative expenses
General and administrative expenses were $1,017,188 and $1,883,257 for the years ended December 31, 2025 and 2024, respectively, a decrease of $866,069 or 46.0%. The decrease is primarily due to the following;
| (i) | Salaries and wages were $422,209 and $979,514 for the years ended December 31, 2025 and 2024, respectively, a decrease of $557,305 or 56.9%. The decrease is primarily due to the following; (i) the decrease in compensation of $180,321, primarily due to the voluntary reduction of salary by our CEO and a reduction in health care benefits no longer offered to executives, (ii) a reduction in stock based compensation of $198,488 due to the full vesting of more expensive options in the prior year options during the current year; (iii) an increase in restricted stock awards of $92,500 for stock issued to Mr. Corbett, our CEO for services rendered and (iv) a decrease in severance accrual of $278,000 due to the settlement of the Voloshin matter in March 2025. |
| (ii) | Professional fees were $40,123 and $43,726 for the years ended December 31, 2025 and 2024, respectively, a decrease of $3,603 or 8.2%. The decrease is primarily due to a decrease in fees paid to soliciting agents, offset by immaterial increases in other professional fees. |
24
| (iii) | Legal fees were $83,120 and $414,801 for the years ended December 31, 2025 and 2024, respectively, a decrease of $331,681 or 80.0%, primarily related to a reduction in legal activity and therefore expenses on the two ongoing legal matters. Management is moving towards settling the remaining outstanding matter. |
| (iv) | Selling and marketing costs were $2,264 and $154,864 for the years ended December 31, 2025 and 2024, respectively, a decrease of $152,600 or 98.5%. The decrease is due to a decrease in endorsement fees of $153,405 related to the conclusion of the three-year marketing deal with Mario Lopez in July 2024, offset by a slight increase in other marketing spend. |
| (v) | Consulting fees were $225,232 and $83,913 for the years ended December 31, 2025 and 2024, respectively, an increase of $141,319 or 168.4%. The increase is primarily due to the increase in business development consulting fees paid to several individuals to assist with the payment processing business plan pursued by the Company. |
| (vi) | Directors’ fees were $36,000 and $36,000 for the years ended December 31, 2025 and 2024, respectively. Directors’ fees remained the same as the prior period. |
| (vii) | Audit fees were $137,500 and $117,500 for the years ended December 31, 2025 and 2024, respectively, an increase of $20,000 or 17.0%. The increase is due to an increase in fees agreed to with our auditors. |
| (vii) | Research and development expenses were $32,000 and $0 for the years ended December 31, 2025 and 2024, respectively, an increase of $32,000 or 100.0%. The increase is due to some research work conducted into the payment processing market. |
| (viii) | Other general and administrative expenses were $38,740 and $52,939 for the years ended December 31, 2025 and 2024, respectively, a decrease of $14,199 or 26.8%. The decrease is made up of several individually insignificant balances, in line with management’s overall objective of decreasing operational expenditure during the 2025 fiscal year. |
Depreciation
Depreciation was $2,169 and $2,169 for the years ended December 31, 2025 and 2024, respectively. No new capital expenditure has been incurred since the prior year.
Investment impairment charge
Investment impairment charge was $424,989 and $0 for the years ended December 31, 2025 and 2024, respectively, an increase of $424,989 or 100.0%. During the current period we impaired the carrying value of the investment made in Business Warrior due to significant doubt over the collectability of the outstanding balance.
Gain (loss) on settlement, cancellation and repricing of securities
Gain (loss) on settlement, cancellation, and repricing of securities was $6,334,116 and $(4,764,680) for the years ended December 31, 2025 and 2024, respectively, an increase of $11,098,796 or 232.9%. The loss on convertible debt during the current year related to; (i) a loss of $4,969,841 realized on repriced and anti-dilution adjustments to the conversion feature of certain convertible debt, compared to a loss of $4,318,669 in the prior year; (ii) a penalty on conversion of $61,729 on conversion of convertible debt which is in default, compared to $117,083 in the prior year ; and (iii) a loss of $1,428,517 realized on conversion of certain convertible debt at prices lower than the current market price during the current period, compared to $170,246 in the prior year, (iv) a gain on the cancellation of certain warrants with derivative liability features of $12,794,203, which were exchange for 10,000,000 shares of common stock. In the prior period, we also incurred a loss of $56,329 realized on the conversion feature of a convertible note which through a no notice default clause, triggered a variable priced conversion liability and an additional loss on debt extinguishment of $102,353.
Fair value adjustment to price protected securities
Fair value on price protected securities was $8,250,469 and $2,051,405 for the years ended December 31, 2025 and 2024, respectively, an increase of $6,199,064 or 302.2%. During the current period, the exercise price of certain warrants was reset due to the anti-dilution price protection and in the case of certain warrants, full ratchet price protection, from an exercise price of $0.084 to $0.0005. This resulted in a Black -Scholes derived valuation difference related to those certain warrants. During the prior year the exercise price of certain warrants were reset due to the anti-dilution price protection and in the case of certain warrants, full ratchet price protection, from an exercise price of $0.345 to $0.084. This resulted in a Black -Scholes derived valuation difference related to those certain warrants of $2,051,405.
Loss on disposal of assets
Loss on disposal of assets was $0 and $2,600 for the years ended December 31, 2025 and 2024, respectively. The loss on disposal of assets relates to costs incurred on disposing of our kiosks in the prior year.
25
Interest expense
Interest expense was $902,194 and $603,588 for the years ended December 31, 2025 and 2024, respectively, an increase of $298,606 or 49.5%. The increase is related to new convertible note funding of $817,000 and increased interest rates on certain notes which have matured.
Interest income
Interest income was $53,818 and $32,838 for the years ended December 31, 2025 and 2024, respectively, an increase of $20,980 or 63.9%. The interest income relates to funds advanced to Business Warrior prior to the cessation of our merger plans with them. These amounts have been fully provided for as we are uncertain as to the collectability of the balance outstanding.
Amortization of debt discount
Amortization of debt discount was $318,100 and $1,037,914 for the years ended December 31, 2025 and 2024, respectively, a decrease of $719,814 or 69.4%. The decrease is primarily due to the full amortization of debt discounts raided in the prior year, with limited debt discount incurred in the current year.
Derivative liability movements
Derivative liability movements were $132,791 and $6,892,395 for the years ended December 31, 2025 and 2024, respectively, a decrease of $6,759,604 or 98.1%. The derivative liability arose primarily due to the revaluation of certain repriced conversion features on convertible notes and the reset of the exercise price and full ratchet reset of certain warrants during the current year, and the subsequent mark-to-market of these derivatives due to a declining stock price on the exercise of certain convertible notes during the current year.
Operating loss from equity method investment
Net loss from equity method investment was $0 and $819 for the years ended December 31, 2025 and 2024, respectively, a decrease of $819 or 100.0%. The joint venture has been dormant and no expenditure has been incurred during the current year.
Impairment of equity method investments
Impairment of equity method investments was $0 and $705,142 for the years ended December 31, 2025 and 2024, respectively, a decrease of $705,142 or 100.0%. The equity method investment was impaired due to uncertainty as to when, the joint venture will begin generating revenues and the certainty of future business prospects at this time.
Net loss
Net loss was $4,394,384 and $4,126,341 for the years ended December 31, 2025 and 2024, respectively, an increase of $268,043 or 6.5%. the increase is primarily attributable to the decrease in the derivative liability movements and the increase in the fair value adjustment to price protected securities, the investment impairment charge and the increase in interest expense, offset by the gain on settlement, cancellation and repricing of securities, and the decrease in the amortization of debt discount, as described above.
Deemed dividend
Deemed dividend was $1,815,048 and $426,807 for the years ended December 31, 2025 and 2024, respectively, an increase of $1,388,241 or 325.3%. the deemed dividend in the current period related to a full rachet anti-dilution adjustment to certain fixed exercise price warrants issued to a convertible note holder during the current year. The deemed dividend was recorded as a component of additional paid in capital.
Liquidity and Capital Resources
To date, our primary sources of cash have been funds raised primarily from the sale of our debt and equity securities.
We have an accumulated deficit of $69.0 million through December 31, 2025 and incurred negative cash flow from operations of $0.79 million for the year ended December 31, 2025. Our primary focus is on developing our joint venture arrangement with Brant Point Solutions to provide payment solutions to underserved and under-developed markets with an additional focus on the fast-growing online gaming and entertainment sectors. To date, this joint venture has not generated revenue, but we believe much of the background work necessary for Jetties Partners, d/b/a, IPSIPAY to commence revenue generating operations from payment processing has been completed. No assurances can be given, however, that such revenue generation will commence or be meaningful to us.
At December 31, 2025, we had cash of $29,804 and working capital deficit of $11.6 million, including a derivative liability of $1.6 million. After eliminating the derivative liability our working capital deficit is $10. million.
26
We used cash of $0.79 million and $0.65 million in operations for the years ended December 31, 2025 and 2024, respectively. Overall cash used in operations increased by $0.14 million.
We generated cash of $0.8 million from convertible notes, In the prior year we generated cash of $1.4 million from promissory notes and convertible notes and repaid $0.4 million of convertible notes.
At December 31, 2025, we had outstanding convertible notes, including interest thereon of $5.4 million, net of unamortized debt discount of $0.2 million and outstanding promissory notes, including interest thereon of $2.0 million. The notes contain certain covenants, such as restrictions on: (i) distributions on capital stock, (ii) stock repurchases, and (iii) sales and the transfer of assets. The notes bear interest at rates ranging from 8% to 18% per annum. and are convertible into our common stock at conversion prices ranging from fixed conversion prices of $0.0005 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events), to variable conversion prices of 90% of the average of the two lowest trading prices over a 20-trading day period. Should the investors choose not to convert these convertible notes, we may need to repay these notes together with interest thereon which will impact on our liquidity.
Given our losses and negative cash flows, we will be required to raise significant additional funds by issuing equity or equity-linked securities to progress our existing business model with Jetties Partners, d/b/a as IPSIPAY. Additional debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any additional debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders and require significant debt service payments, which diverts resources from other activities. Moreover, there is a risk that financing may be unavailable to support our operations on favorable terms, or at all.
There is also a significant risk that none of our plans to raise financing will be implemented in a manner necessary to sustain us for an extended period of time. If adequate funds are not available to us when needed, we may be required to continue with reduced or discontinued operations or to obtain funds through arrangements that may require us to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on our Company. In addition, our inability to secure additional funding when needed could cause our business to fail or become bankrupt or force us to wind down or discontinue operations, accordingly, there is substantial doubt relating to our ability to continue as a going concern.
We do not have any off-balance sheet financing arrangements as of the date of this Report.
Capital Expenditures
Our capital expenditure is dependent on our cash resources, currently we are not forecasting any additional capital expenditure for the 2026 fiscal year.
Critical Accounting Policies
Preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. Significant accounting policies are fundamental to understanding our financial condition and results as they require the use of estimates and assumptions which affect the financial statements and accompanying notes. See Note 2 - Summary of Significant Accounting Policies of the Notes to the Financial Statements included in Part II, Item 8 of this Form 10- K for further information.
Recently Issued Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies of the Notes to the Financial Statements included in Part II, Item 8 of this Form 10-K for information regarding recently issued accounting standards.
Contractual Obligations
We have contractual obligations in the form of notes and convertible notes which are described in the financial statements included as part of this Report.
Inflation
The effect of inflation on the Company’s operating results was not significant.
Interest rate sensitivity
We are not subject to interest rate sensitivity; our debt consists primarily of fixed rate convertible debt.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable because we are a smaller reporting company.
27
Item 8. Financial Statements and Supplemental Data
F-1
|
Houston Office:
7915 FM 1960 W, Suite 220
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Innovative Payment Solutions, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Innovative Payment Solutions, Inc. (the Company) as of December 31, 2025 and 2024, and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
The Company's Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the accompanying financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has an accumulated deficit, which raises substantial doubt about Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans in regarding these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. Based on the previous year’s audits and the reviews performed by RBSM during year ended December 31, 2025, RBSM determined there were no CAM’s for the audit of the year ended December 31, 2025.
| PCAOB ID |
| We have served as the Company’s auditor since 2014. |
| March 31, 2026 |
F-2
INNOVATIVE PAYMENT SOLUTIONS, INC.
BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Other current assets | ||||||||
| Notes receivable – current portion | ||||||||
| Total Current Assets | ||||||||
| Non-current assets | ||||||||
| Plant and equipment | ||||||||
| Equity method investment | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Related party payables | ||||||||
| Federal relief loans – current portion | ||||||||
| Notes payable, net of unamortized discount of $ | ||||||||
| Convertible debt, net of unamortized discount of $ | ||||||||
| Convertible debt – related party | ||||||||
| Derivative liability | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Federal relief loans | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ and | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these audited financial statements.
F-3
INNOVATIVE PAYMENT SOLUTIONS, INC.
STATEMENTS OF OPERATIONS
| Twelve months ended | Twelve months ended | |||||||
| December | December | |||||||
| 2025 | 2024 | |||||||
| Net Revenue | $ | $ | ||||||
| Cost of Goods Sold | ||||||||
| Gross loss | ||||||||
| General and administrative | ||||||||
| Depreciation | ||||||||
| Total Expense | ||||||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Investment impairment charge | ( | ) | ||||||
| Gain (loss) on settlement, cancellation and repricing of securities | ( | ) | ||||||
| Fair value adjustment to price protected securities | ( | ) | ( | ) | ||||
| Loss on disposal of assets | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Derivative liability movements | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income taxes | ||||||||
| Net loss after income taxes | ( | ) | ( | ) | ||||
| Operating loss from equity method investments | ( | ) | ||||||
| Impairment of equity method investment | ( | ) | ||||||
| Total loss from equity method investment | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Deemed dividend | ( | ) | ( | ) | ||||
| Net loss attributable to Innovative Payment Solutions, Inc. Stockholders’ | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Number of Shares Outstanding - Basic and diluted | ||||||||
The accompanying notes are an integral part of these audited financial statements.
F-4
INNOVATIVE PAYMENT SOLUTIONS, INC.
STATEMENTS OF CHANGES
IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| Preferred Stock Shares | Amount | Common Stock Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||
| Balance at December 31, 2023 | - | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Conversion of convertible debt | - | |||||||||||||||||||||||||||
| Fair value of warrant anti-dilution | - | - | ( | ) | ||||||||||||||||||||||||
| Fair value of warrants issued for services | - | - | ||||||||||||||||||||||||||
| Fair value of warrants issued to convertible debt holders | - | - | ||||||||||||||||||||||||||
| Fair value of warrants issued on debt extinguishment | - | - | ||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at December 31, 2024 | - | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Conversion of convertible debt | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Fair value of securities, anti-dilution deemed dividend | - | - | ( | ) | ||||||||||||||||||||||||
| Fair value of warrants issued to convertible debt holders | - | - | ||||||||||||||||||||||||||
| Fair value of common stock issued for interest in joint venture | - | |||||||||||||||||||||||||||
| Fair value of stock issued in exchange for warrants cancelled | - | ( | ) | |||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at December 31, 2025 | - | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these audited financial statements.
F-5
INNOVATIVE PAYMENT SOLUTIONS, INC.
STATEMENTS OF CASH FLOWS
| Twelve months ended | Twelve months ended | |||||||
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Derivative liability movements | ( | ) | ( | ) | ||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Gain (loss) on settlement, cancellation and repricing of securities | ( | ) | ||||||
| Fair value adjustment to price protected securities | ||||||||
| Fair value of common stock issued for services | ||||||||
| Fair value of warrants issued for services | ||||||||
| Deemed interest income | ( | ) | ( | ) | ||||
| Unrealized loss on equity method investments | ||||||||
| Impairment of equity method investment | ||||||||
| Impairment of notes receivable | ||||||||
| Stock based compensation | ||||||||
| Impairment of deposit | ||||||||
| Changes in Assets and Liabilities | ||||||||
| Other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Related party payables | ||||||||
| Interest accruals | ||||||||
| CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in notes receivable | ( | ) | ||||||
| Investment in equity method investment | ( | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short term notes and convertible notes | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Proceeds from non-controlling shareholders | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET DECREASE IN CASH | ( | ) | ||||||
| CASH AT BEGINNING OF YEAR | ||||||||
| CASH AT END OF YEAR | $ | $ | ||||||
| CASH PAID FOR INTEREST AND TAXES: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | ( | ) | $ | ( | ) | ||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Fair value of warrants issued with convertible notes | $ | $ | ||||||
| Conversion of convertible debt to equity | $ | $ | ||||||
| Fair value of warrants issued on debt extinguishment | $ | $ | ||||||
| Fair value of common stock issued for equity method investments | $ | $ | ||||||
The accompanying notes are an integral part of these audited financial statements.
F-6
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 1 | ORGANIZATION AND DESCRIPTION OF BUSINESS |
| a) | Organizational history |
On
Pursuant to
the Qpagos Merger Agreement, upon consummation of the Qpagos Merger, each share of Qpagos Corporation’s capital stock issued and
outstanding immediately prior to the Merger was converted into the right to receive two shares of the Company’s common stock, par
value $
The Qpagos Merger was treated as a reverse acquisition of the Company, then a public shell company, for financial accounting and reporting purposes. As such, Qpagos Corporation was treated as the acquirer for accounting and financial reporting purposes while the Company was treated as the acquired entity for accounting and financial reporting purposes.
Qpagos Corporation was incorporated on May 1, 2015 under the laws of the state of Delaware to effectuate a reverse merger transaction with Qpagos, S.A.P.I. de C.V. (“Qpagos Mexico”) and Redpag Electrónicos S.A.P.I. de C.V. (“Redpag”). Each of the entities were incorporated in November 2013 in Mexico. Qpagos Mexico was formed to process payment transactions for service providers it contracts with, and Redpag was formed to deploy and operate kiosks as a distributor.
On June 1, 2016, the board of directors of the Company (the “Board”) changed the Company’s fiscal year end from October 31 to December 31.
On November
1, 2019, the Company changed its corporate name from “QPAGOS” to “Innovative Payment Solutions, Inc.” Additionally,
and immediately following the name change, the Company filed a Certificate of Change with the Secretary of State of the State of
Nevada to effect a reverse split of the then outstanding Common Stock at a ratio of
On
December 31, 2019, the Company consummated the disposal of Qpagos Corporation, Qpagos Mexico and Redpag in exchange for
F-7
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 1 | ORGANIZATION AND DESCRIPTION OF BUSINESS (continued) |
| a) | Organizational history (continued) |
On
June 21, 2021, the Company acquired a
On
August 26, 2021, the Company formed a new subsidiary, Beyond Fintech, Inc. (“Beyond Fintech”), in which it owns
a
On
May 12, 2023, the Company entered into an Agreement with Frictionless (the “May 2023 Frictionless Agreement”) to unwind
the equity ownership stakes that the Company and Frictionless have in each other and in Beyond Fintech. Pursuant to the May 2023 Frictionless
Agreement: (i) the Company assigned to Frictionless all common stock of Frictionless owned by the Company; (ii) the warrant to purchase
On
August 30, 2023, the Company implemented a
On September 5, 2023, the Company’s entered into a novation agreement whereby it assigned all its rights and interest in its e-wallet product, IPSIPay, and its receivables and payables due from and to Frictionless, related to IPSIPay, to a third party in order to concentrate all of its efforts on the IPSIPay Express LLC (“IPSIPay Express”) joint venture. See note 1(b) for further information.
On April 28, 2023, the Company formed a new company called IPSIPay Express. This entity was formed as a Delaware limited liability company joint venture with OpenPath, Inc. (“OpenPath”) and EfinityPay, LLC (“EfinityPay”, and the Company, collectively with OpenPath and EfinityPay, the “Members”) to develop and market a proprietary consumer to merchant real-time payment platform initially focused on the fast-growing online gaming and entertainment sectors.
On June 19, 2023, the Company entered into a Limited Liability Company Operating Agreement (the “Operating Agreement”) with OpenPath and EfinityPay to jointly provide for the governance of and rights of the Members with respect to IPSIPay Express. The effective date of the Operating Agreement is April 28, 2023.
IPSIPay Express was formed by the Members with the initial business purposes of providing credit card processing solutions and also a proprietary solution for real time bank-to-bank payment transactions in a manner that provides seamless and frictionless consumer and merchant experiences, with an initial focus on merchants operating in gaming and entertainment sectors. Such solutions are collectively referred to herein as “IPEX.”
The
Company contributed cash of $
F-8
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 1 | ORGANIZATION AND DESCRIPTION OF BUSINESS (continued) |
| a) | Organizational history (continued) |
Simultaneously
with the funding of the initial Tranche, the Company issued to each of OpenPath and EfinityPay a five-year Common Stock purchase warrant
(the “IPEX Warrant”) to purchase
On July 28, 2024, the Company entered into an Agreement and Plan of Merger by and among the Company, IPSI Merger Sub, Inc., a Delaware corporation and a newly formed, wholly owned subsidiary of the Company (“Merger Sub”) and Business Warrior.
On January 22, 2025, the Company and Business Warrior mutually agreed to terminate the Agreement and Plan of Merger dated July 28, 2024. This decision reflects our shared understanding and agreement that discontinuing the merger is in the best interest of both parties.
| b) | Description of current business |
The Company is a fintech provider of digital payment solutions presently focused on credit card processing services for undeveloped and underserved markets. We have in the past (under the name IPSIPay) and may in the future develop and operate “e-wallets” that enable consumers to deposit cash, convert it into a digital form and remit funds quickly and securely.
Jetties Partners, LLC (d/b/a IPSIPAY)(“Jetties”)
On October
29, 2025, the Company formed a limited liability corporation, Jetties Partners, LLC (“Jetties”), d/b/a IPSIPAY. Jetties was
formed to develop, market, distribute and operate a merchant processing payment solution, with an initial focus on the gaming industry.
Jetties consists of two
We expect that revenue will be generated by Jetties through fees derived from merchant processing fees, money transfer fees, and commissions on international bill payment processing.
| 2 | ACCOUNTING POLICIES AND ESTIMATES |
| a) | Basis of Presentation |
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
All amounts referred to in the notes to the financial statements are in United States Dollars ($) unless stated otherwise.
F-9
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 2 | ACCOUNTING POLICIES AND ESTIMATES (continued) |
| b) | Principles of Consolidation |
The financial statements as of December 31, 2025 and 2024, include the financial statements of the Company.
| c) | Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are evaluated on an ongoing basis, that affect the amounts reported in the financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to, the estimated useful lives for plant and equipment, the fair value of long-lived investments, the fair value of warrants and stock options granted for services or compensation, convertible notes and amendments thereto, derivative liabilities, the valuation allowance for deferred tax assets due to continuing operating losses and the allowance for doubtful accounts.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.
| d) | Contingencies |
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.
The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
F-10
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 2 | ACCOUNTING POLICIES AND ESTIMATES (continued) |
| e) | Fair Value of Financial Instruments |
The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the balance sheets for cash, accounts receivable, other current assets, other assets, accounts payable, accrued liabilities, and notes payable, approximate fair value due to the relatively short period to maturity for these instruments. The Company has identified the short-term convertible notes and certain warrants attached to certain of the notes that are required to be presented on the balance sheets at fair value in accordance with the accounting guidance.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. We evaluate the fair value of variably priced derivative liabilities on a quarterly basis and report any movements thereon in earnings.
| f) | Risks and Uncertainties |
The Company’s operations and prospects are and will be subject to significant risks and uncertainties including financial, operational, regulatory, and other risks, including the potential risk of business failure. In particular, there is a risk that that the Company may never generate revenue for the Company. Further, the recent war in the Middle East, with direct involvement of the U.S., and the ongoing wars in Ukraine and between Israel, Hamas and Hezbollah and uncertainties regarding the global energy supply and the impact on the economic environment which may result in a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets. These conditions may not only limit the Company’s access to capital, but also make it difficult for its customers, vendors and the Company to accurately forecast and plan future business activities, which may have an adverse impact on its business and financial condition and may hamper the Company’s ability to generate revenue and access usual sources of liquidity on reasonable terms.
The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things.
F-11
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 2 | ACCOUNTING POLICIES AND ESTIMATES (continued) |
| g) | Recent accounting pronouncements |
The Financial Accounting Standards Board (“FASB”) issued additional updates during the year ended December 31, 2025. None of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the Company’s financial statements upon adoption.
| h) | Reporting by Segment |
The
Company adopted FASB issued ASU 2023-07, “Segment Reporting (ASC Topic 280) for the annual reporting period ended December
31, 2024.
Since
the Company operates as
| i) | Cash and Cash Equivalents |
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At December 31, 2025 and 2024, respectively, the Company had cash equivalents.
The Company minimizes credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution in the United States. The balance at times may exceed federally insured limits. At December 31, 2025 and 2024, the balances did not exceed federally insured limits.
| j) | Accounts Receivable and Allowance for Doubtful Accounts |
Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates. Revisions to the allowance for doubtful accounts estimates are recorded as an adjustment to bad debt expense. Receivables deemed uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. There were no recoveries during the period ended December 31, 2025 and 2024.
| k) | Investments |
The
Company’s non-marketable equity securities are investments in privately held companies without readily determinable market values.
The carrying value of our non-marketable equity securities is adjusted to fair value for observable transactions for identical or similar
investments of the same issuer or impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity
securities, realized and unrealized, are recognized in other income (expense), net. Non-marketable equity securities that have been remeasured
during the period are classified within Level 3 in the fair value hierarchy because the Company estimates the value based on valuation
methods using the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and
obligations of the securities the Company holds. The cost method is used when the Company has a passive, long-term investment that doesn’t
result in influence over the Company. The cost method is used when the investment results in an ownership stake of less than
F-12
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 2 | ACCOUNTING POLICIES AND ESTIMATES (continued) |
| k) | Investments (continued) |
The Company uses the equity method , in terms of ASC 323, Equity Method and Joint Ventures, to account for investments when the investment results in an ownership stake greater than 20% or the Company exerts significant influence over the operations and management of the investment. Under the equity method, the investment is recorded on the balance sheet as a non-current asset, initially at historical cost and is adjusted for the Company’s proportionate share of any gains and losses reported by the equity method investment. Any dividends received from equity method investments decreases the carrying value of the investment. Any additional investment or disposal of a portion of the investment will result in a change in basis adjustment to the carrying value of the investment which will be evaluated to determine if equity method accounting is still appropriate. Equity method investments are evaluated to determine if the fair market value has declined below carrying value, which will result in an impairment charge.
| l) | Plant and Equipment |
Plant
and equipment is stated at cost, less accumulated depreciation. Plant and equipment with costs greater than $
| Description | Estimated Useful Life | |
| Computer equipment | ||
| Office equipment |
The cost of repairs and maintenance is expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.
| m) | Long-Term Assets |
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
| n) | Revenue Recognition |
The Company’s revenue recognition policy is consistent with the requirements of FASB ASC 606, Revenue.
The Company’s revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services, as defined below. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its revenue transactions:
| i. | identify the contract with a customer; |
| ii. | identify the performance obligations in the contract; |
| iii. | determine the transaction price; |
| iv. | allocate the transaction price to performance obligations in the contract; and |
| v. | recognize revenue as the performance obligation is satisfied. |
The Company had revenues for year ended December 31, 2025 and 2024.
F-13
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 2 | ACCOUNTING POLICIES AND ESTIMATES (continued) |
| o) | Share-Based Payment Arrangements |
Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments is recorded in operating expenses in the consolidated statement of operations.
Prior to the Company’s reverse merger which took place on May 12, 2016, all share-based payments were based on management’s estimate of market value of the Company’s equity. The factors considered in determining managements estimate of market value includes, assumptions of future revenues, expected cash flows, market acceptability of our technology and the current market conditions. These assumptions are complex and highly subjective, compounded by the business being in its early stage of development in a new market with limited data available.
Where equity transactions with arms-length third parties, who had applied their own assumptions and estimates in determining the market value of our equity, had taken place prior to and within a reasonable time frame of any share-based payments, the value of those share transactions have been used as the fair value for any share-based equity payments.
Where equity transactions with arms-length third parties, included both shares and warrants, the value of the warrants have been eliminated from the unit price of the securities using a Black-Scholes valuation model to determine the value of the warrants. The assumptions used in the Black Scholes valuation model includes market related interest rates for risk-free government issued treasury securities with similar maturities; the expected volatility of the Company’s common stock based on companies operating in similar industries and markets; the estimated stock price of the Company; the expected dividend yield of the Company and the expected life of the warrants being valued.
Subsequent to the Company’s reverse merger which took place on May 12, 2016, the Company has utilized the market value of its common stock as quoted on the OTCQB, as an indicator of the fair value of its common stock in determining share- based payment arrangements.
| p) | Marketing and Advertising costs |
Marketing
and advertising expenditure incurred on promoting the Company’s previous products were expensed as incurred. Marketing and
advertising costs amounted to $
| q) | Derivative Liabilities |
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re- measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.
F-14
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 2 | ACCOUNTING POLICIES AND ESTIMATES (continued) |
| r) | Income Taxes |
The Company is based in the US and currently enacted US tax laws are used in the calculation of income taxes.
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of December 31, 2025 and December 31, 2024, there have been no interest or penalties incurred on income taxes.
| s) | Comprehensive income |
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. The Company does not have any comprehensive income (loss) for the periods presented.
| t) | Reclassification of prior year presentation |
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
| 3 | LIQUIDITY MATTERS AND GOING CONCERN |
The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows for the near future. For and as of the year ended December 31, 2025, the Company had a net loss of $4.4 million. In connection with preparing the financial statements for the year ended December 31, 2025, management evaluated the risks described in Note 2(f) above on the Company’s business and its future liquidity for the next twelve months from the date of issuance of these financial statements.
The accompanying financial statements for the period ended December 31, 2025 have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay and reduce the scope of the Company’s development and operations. Continuing as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company has determined that there is substantial doubt about their ability to continue as a going concern.
| 4 | NOTES RECEIVABLE |
On February
22, 2024, the Company (utilizing a portion of the proceeds from the issuance of convertible debt) loaned funds to Business Warrior in
the principal amount of $
F-15
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 4 | NOTES RECEIVABLE (continued) |
The debt discount on the Business Warrior’s note is amortized as income utilizing the effective interest rate method.
Between June
19, 2024 and November 27, 2024, the Company (utilizing a portion of the proceeds from the issuance of convertible debt and notes payable)
loaned additional funds to Business Warrior in the aggregate principal amount of $
We have declared the notes with maturity dates prior to the filing of these financial statements, to be in default with Business Warrior and negotiations regarding the repayment of these notes is ongoing. The Company has been unsuccessful in securing repayment of these notes and accordingly has provided against the collectability of these notes as of December 31, 2025.
Loans receivable consists of the following:
| Description | Interest Rate | Maturity date | Principal | Accrued interest | December 31, 2025 Amount, net | December 31, 2024 Amount, net | ||||||||||||||||||
| Business Warrior Corporation | % | $ | $ | $ | $ | |||||||||||||||||||
| % | ||||||||||||||||||||||||
| % | ||||||||||||||||||||||||
| % | ||||||||||||||||||||||||
| % | ||||||||||||||||||||||||
| % | ||||||||||||||||||||||||
| Total Notes receivable | ||||||||||||||||||||||||
| Less: impairment provision | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||
Discount amortized
to income as deemed interest during the year ended December 31, 2025 and 2024 was $
Interest earned
for the year ended December 31, 2025 and 2024 was $
| 5 | EQUITY METHOD INVESTMENT |
On
April 28, 2023, the Company formed IPSIPay Express with OpenPath and EfinityPay (see note 1(b) above). As described in note 1(b), the
Company has agreed to make the IPSI Capital Contributions to IPSIPay Express. As of December 31, 2023, the initial Tranche of $
On October 29, 2025, the Company entered into a Limited Liability Company Operating Agreement with Brant Point Solutions, LLC to form a new Delaware limited liability company, Jetties Partners, LLC (d/b/a IPSIPAY) (the “Joint Venture”).
The purpose of the Joint Venture is to develop, market, distribute, and operate real-time financial technology merchant processing payment solutions branded as IPSIPay or PayzliPlus, initially targeting gaming, sportsbook, and casino entertainment markets.
F-16
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 5 | EQUITY METHOD INVESTMENT (continued) |
The Agreement outlines the parties’ respective contributions, governance structure, management rights, and other material terms relating to the operation of the Joint Venture. The Company believes that this collaboration will expand its reach within the real-time payments and gaming merchant processing industries through the integration of complementary technologies and market relationships.
The
Company issued
There has been no business activity since inception of the joint venture.
The Company accounts for its investment in joint ventures in accordance with ASC 323, Investments – Equity Method and Joint Ventures, the movement in equity method investments for the years ended December 31, 2025 and 2024 is as follow:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Equity method Investment | ||||||||
| IPSIPay Express | ||||||||
| Cash contribution to IPSIPay Express | $ | $ | ||||||
| Fair value of warrants issued to third party joint venture partners | ||||||||
| Equity loss from joint venture | ( | ) | ( | ) | ||||
| Receivable from IPSIPay Express | ||||||||
| Impairment of investment | ( | ) | ( | ) | ||||
| Net Investment in IPSIPay Express | $ | $ | ||||||
| Jetties Partners, LLC | ||||||||
| Fair value of equity issued to joint venture partners | $ | $ | ||||||
| Equity loss from joint venture | ||||||||
| Net Investment in Jetties Partners, LLC | $ | $ | ||||||
| Equity method investments | $ | $ | ||||||
| Loss from Equity method investments | ||||||||
| Loss from joint ventures | $ | $ | ||||||
| Impairment of equity method investments | ||||||||
| Total loss from equity method investments | $ | $ | ( | ) | ||||
Financial information from the Jetties Partners, LLC Joint venture is not available as the joint venture, although formed on November 4, 2025, has not commenced operating. Therefore, no summary information is available.
| 6 | FEDERAL RELIEF LOANS |
Small Business Administration Disaster Relief loan
On
July 7, 2020, the Company received a Small Business Economic Injury Disaster loan amounting to $
The
company has accrued interest of $
F-17
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 7 | NOTES PAYABLE |
Notes payable consists of the following:
| Description | Interest Rate | Maturity date* | Principal | Accrued Interest | December 31, 2025 Amount, net | December 31, 2024 Amount, net | ||||||||||||||||
| Cavalry Fund I LP | % | $ | $ | $ | $ | |||||||||||||||||
| Mercer Street Global Opportunity Fund, LLC | % | |||||||||||||||||||||
| 2024 notes | % | |||||||||||||||||||||
| Total notes payable | $ | $ | $ | $ | ||||||||||||||||||
| * |
Interest
expense totaled $
Amortization
of debt discount totaled $
Cavalry Fund I LP and Mercer Street Global Opportunity Fund, LLC
On
February 16, 2021, the Company entered into separate Securities Purchase Agreements (the “SPAs”), with each of Cavalry Fund
I LP (“Cavalry”) and Mercer Street Global Opportunity Fund, LLC (“Mercer”), pursuant to which the Company received
$
In
terms of the December 30, 2022 Note Amendment Transaction, described in more detail in note 8 below, the Original Warrants issued on February
16, 2021 were irrevocably exchanged for 12-month non-convertible promissory notes in the amount of $
The
Exchange Notes had a maturity date of
On February 27, 2024, the maturity date of the notes was extended to April 30, 2024 with an automatic one-month extension each month until such time as the note is declared to be in default, all other terms remain the same as the previous notes. The automatic extension of the maturity date may not extend past November 27, 2024, thereafter all amounts due under the note are immediately due and payable. The Company performed an analysis in terms of ASC 470 and it was determined that the extension was a debt modification, in addition, no additional consideration was paid for the maturity date extension.
With
effect from November 27, 2024, the notes accrue interest at
On March 30, 2026, effective December 31, 2025, Cavalry and Mercer entered into a forbearance agreement with the Company whereby the notes will forbear until May 1, 2026. Thereafter the notes will be in default.
F-18
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 7 | NOTES PAYABLE (continued) |
2024 Notes
Between
May 29, 2024 and November 27, 2024, the Company entered into nine Securities Purchase Agreements with four accredited investors, pursuant
to which the Company issued nine non-convertible promissory notes (the “2024 Notes”) with an aggregate principal
amount of $
The
2024 Notes matured between February 28, 2025 and October 10, 2025 and bear interest at rates ranging from
The
2024 Notes have restrictions relating to fundamental transactions which require the approval of the note holder, in addition the note
holder has an optional redemption right on subsequent transactions that may require the Company to redeem all or part of the Note, at
a premium of
| 8 | CONVERTIBLE NOTES PAYABLE |
Convertible notes payable consists of the following:
| Description | Interest Rate | Maturity date*** | Principal | Accrued Interest | Unamortized debt discount | December 31, 2025 Amount, net | December 31, 2024 Amount, net | |||||||||||||||||||||||
| Cavalry Fund I LP | %* | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Mercer Street Global Opportunity Fund, LLC | %* | |||||||||||||||||||||||||||||
| Red Road Holdings Corporation | %** | |||||||||||||||||||||||||||||
| %** | ||||||||||||||||||||||||||||||
| Quick Capital LLC | %** | |||||||||||||||||||||||||||||
| 2023, 2024 and 2025 convertible notes | % | ( | ) | |||||||||||||||||||||||||||
| Total convertible notes payable | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||
| * | |
| ** | |
| *** |
Interest
expense totaled $
Amortization
of debt discount totaled $
The Cavalry, Mercer, Red Road Holdings Corporation convertible notes have variable conversion prices based on a discount to market price of trading activity over a specified period of time. The variable conversion features were valued using a Black Scholes valuation model. The difference between the fair market value of the Common Stock and the calculated conversion price on the issuance date was recorded as a debt discount with a corresponding credit to derivative financial liability.
F-19
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
Cavalry and Mercer December 2022 Note Amendment Transaction
The
Company twice extended its indebtedness to each Cavalry and Mercer. On February 3, 2022, the Company agreed to extend the maturity date
of the Cavalry/Mercer Notes to
On December 30, 2022, the Company again extended the maturity dates of each of the Cavalry/Mercer Notes to December 30, 2023. Each of Cavalry and Mercer entered into Note Amendment Letter Agreement with the Company (the “Note Amendment”) pursuant to which the parties agreed to the following:
| (1) | The conversion price of the Cavalry/Mercer Notes was reduced from $ |
| (2) | The Original Warrants issued on February 16, 2021 were irrevocably exchanged for 12-month non-convertible promissory notes in the amount of $ |
| (3) | Each of Cavalry and Mercer agreed (i) not to convert all or any portion of the Cavalry/Mercer Notes until after March 30, 2023 and (ii) waive any events of default under the Cavalry/Mercer Notes and the Cavalry/Mercer SPAs; |
| (4) | Certain other warrants held by Cavalry and Mercer which contain a mandatory exercise provision allowing us to force exercise of such warrants if the price of the Common Stock is $ |
| (5) | The Company was obligated to register the shares of Common Stock underlying the Cavalry/Mercer Notes and the shares underlying all warrants held by Cavalry and Mercer for resale with the Securities and Exchange Commission and the Company filed the registration statement to satisfy such registration obligation. |
As
a result of the reduction in the conversion price of the Cavalry/Mercer Notes, certain other warrants held by third parties have their
exercise price of such warrants reduced to $
The
amendments to the Cavalry/Mercer Notes were evaluated in terms of ASC 470, Debt, to determine if the amendments to the Cavalry/Mercer
Notes were considered a modification of the debt or an extinguishment of the debt. Based on the penalty interest incurred on the convertible
notes of $
F-20
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
Cavalry and Mercer December 2022 Note Amendment Transaction (continued)
Effective December 30, 2023 on February 27, 2024, the Company again extended the maturity dates of each of the Cavalry/Mercer Notes to April 30, 2024 with an automatic one-month extension each month until such time as the note is declared to be in default, all other terms remain the same as the previous notes. The automatic extension of the maturity date may not extend past November 27, 2024, thereafter all amounts due under the note are immediately due and payable. The Company performed an analysis in terms of ASC 470 and it was determined that the extension was a debt modification, in addition, no additional consideration was paid for the maturity date extension.
Cavalry Fund LLP
On
February 16, 2021, the Company closed a transaction with Cavalry pursuant to which the Company received net proceeds of $
As
described more fully above, the maturity date of the note was extended to August 16, 2022, additionally to November 16, 2022, additionally
to December 30, 2023 and again to April 30, 2024, with an automatic one-month extension each month until such time as the note is declared
to be in default, all other terms remain the same as the previous notes. The automatic extension of the maturity date may not extend past
November 27, 2024, thereafter all amounts due under the note are immediately due and payable. The Company is currently negotiating with
Cavalry to place the note into forbearance, currently interest is being accrued at the default interest rate of
In
consideration for the November 16, 2022 extension, the Company agreed to (i) increase the principal amount outstanding and due to Cavalry
by twenty percent (
Between
August 24, 2023 and November 20, 2023, Cavalry converted $
Between
September 5, 2024 and November 11, 2024, Cavalry converted an aggregate of $
Between
January 14, 2025 and August 12, 2025, Cavalry converted an aggregate $
In terms of the agreement with Cavalry,
the conversion price of the convertible note will be adjusted downwards on any dilutive issuances. The conversion price of the convertible
debt has been adjusted to $
On August 13, 2025, the Company entered
into an agreement to modify the conversion price of the Cavalry convertible debt from $
The Company was not able to maintain
its stock price above $
The balance of the Cavalry Note plus
accrued interest at December 31, 2025 was $
F-21
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
Mercer Street Global Opportunity Fund, LLC
On
February 16, 2021, the Company closed a transaction with Mercer, pursuant to which the Company received net proceeds of $
As
described more fully above, the maturity date of the note was extended to August 16, 2022, additionally to November 16, 2022, additionally
to December 30, 2023 and again to April 30, 2024, with an automatic one-month extension each month until such time as the note is declared
to be in default, all other terms remain the same as the previous notes. The automatic extension of the maturity date may not extend past
November 27, 2024, thereafter all amounts due under the note are immediately due and payable. The Company is currently negotiating with
Mercer to place the note into forbearance, currently interest is being accrued at the default interest rate of
In
consideration for the November 16, 2022 extension, the Company agreed to (i) increase the principal amount outstanding and due to Mercer
by twenty percent (
Between
May 19, 2023 and August 30, 2023, Mercer converted an aggregate of $
Between
August 20, 2024 and November 11, 2024, Mercer converted an aggregate of $
Between
January 14, 2025 and August 12, 2025, Mercer converted an aggregate $
In terms of the agreement with Cavalry,
the conversion price of the convertible note will be adjusted downwards on any dilutive issuances. The conversion price of the convertible
debt has been adjusted to $
On August 13, 2025, the Company entered
into an agreement to modify the conversion price of the Mercer convertible debt from $
The Company was not able to maintain
its stock price above $
The balance of the Mercer Note plus
accrued interest at December 31, 2025 was $
F-22
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
Red Road Holdings Corporation
| ● | On September 9, 2023, the Company closed a transaction with Red Road Holdings Corporation (“RRH”) pursuant to which the Company received net proceeds of $
The RRH note 1 was repaid in full during the quarter ended June 30, 2024 | |
| ● | On October 19, 2023, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $ | |
| ● | On December 20, 2023, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $ | |
| ● | On April 2, 2024, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $
On
January 7, 2025 and January 8, 2025, Red Road Holdings converted principal of $ | |
| ● | On June 25, 2024, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $
The first instalment was not made, automatically placing the note into default, with a penalty charge of
Between
January 13, 2025 and May 8, 2025, RRH converted an aggregate principal amount of $
On May 8, 2025, RRH entered into an assignment agreement, whereby the remaining balance of the convertible note of $ |
F-23
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
Quick Capital, LLC
| ● | On May 28, 2024, the Company closed a transaction with Quick Capital pursuant to which the Company received net proceeds of $
No repayments have been made on the Quick Capital Note 2 which provides for a no notice default, whereupon the note accrued penalty interest at a rate of
On December 6, 2024, Quick Capital converted an aggregate of $
Between January 7, 2025 and March 28, 2025, Quick Capital converted an aggregate of $ |
2023, 2024 and 2025 Convertible Notes
Between
February 13, 2023 and November 27, 2023, the Company entered into Securities Purchase Agreements with 30 accredited investors to purchase
convertible notes (the “2023 Convertible Notes”), receiving an aggregate of $
Between
February 6, 2024 and October 23, 2024, the Company entered into Securities Purchase Agreements with 9 accredited investors to
purchase convertible notes (the “2024 Convertible Notes”), receiving an aggregate of $
Between
January 7, 2025 and December 5, 2025, the Company entered into Securities Purchase Agreements with 6 accredited investors to purchase
convertible notes (the “2025 Convertible Notes”), receiving an aggregate of $
On
April 18, 2025, the Company entered into a debt exchange agreement with our previous CFO, Mr. Rosenblum, whereby $
In terms of the above private placements through the issuance of :
| ● | the 2023 Convertible Notes, the 2024 Convertible Notes and the 2025 Convertible notes; and |
| ● | five-year warrants to purchase an aggregate |
F-24
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
2023, 2024 and 2025 Convertible Notes (continued)
The
2023 Convertible Notes, the 2024 Convertible Notes, and the 2025 Convertible Notes bear interest at rates ranging from
The 2023 Convertible Notes, the 2024 Convertible Notes and the 2025 Convertible Notes may be prepaid at any time without penalty.
The Company is under no obligation to register the shares of Common Stock underlying the 2023 Convertible Notes, the 2024 Convertible Notes, the 2025 Convertible Notes or the 2023 Warrants, the 2024 Warrants and the 2025 Warrants, for public resale.
The
2023 Convertible Notes, the 2024 Convertible Notes, the 2025 Convertible Notes and the 2023 Warrants, the 2024 Warrants and the 2025 Warrants,
contain conversion limitations providing that a holder thereof may not convert or exercise such securities to the extent that, if after
giving effect to such conversion or exercise, the holder or any of its affiliates would beneficially own in excess of
On
December 14, 2023, two notes totaling $
On
March 14, 2024, the Company extended the maturity date of 11 convertible notes maturing between February 13, 2024 and February 23, 2024
by an additional six months and as consideration for the extension, the note holders were issued additional warrants exercisable for
On
June 2, 2025, a 2024 convertible note holder converted principal of $
On September 30, 2025, a 2023 convertible
note holder converted principal of $
On
October 9, 2025, a 2023 convertible note holder converted principal of $
On
October 6, 2025, a 2025 convertible note holder with an aggregate principal amount outstanding of $
The
2023 Convertible Notes have an aggregate amount outstanding of $
F-25
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 8 | CONVERTIBLE NOTES PAYABLE (continued) |
2023, 2024 and 2025 Convertible Notes (continued)
The
2024 Convertible Notes have an aggregate amount outstanding of $
One
noteholder with an aggregate amount outstanding of $
The
2025 Convertible Notes have an aggregate amount outstanding of $
| 9 | DERIVATIVE LIABILITY |
The convertible notes and warrants issued by the Company to Cavalry, Mercer and certain of the 2025 noteholders as described in Note 8 have variable priced conversion rights with no fixed floor price and will re-price dependent on the share price performance over varying periods of time and certain notes and warrants have fundamental transaction clauses which might result in cash settlement, due to these factors, all convertible notes and any warrants attached thereto are valued and give rise to a derivative financial liability, which was initially valued at inception of the convertible notes using a Black-Scholes valuation model.
Between
September 12, 2023 and December 20, 2023, and between April 2, 2024 and June 25, 2024, the Company entered into convertible note agreements
with RRH which have variable priced conversion rights with no fixed floor price and will re-price dependent on the share price performance
over varying periods of time, which gave rise to a derivative financial liability, which was initially valued at inception of the convertible
notes at $
On
August 6, 2024, the Company received a conversion notice from an accredited investor pursuant to which $
Convertible
notes with an aggregate principal and interest balance outstanding on August 6, 2024 of $
The
value of the derivative liability related to the anti-dilution price protected convertible notes and warrants was evaluated immediately
prior to the Triggering Event and immediately after the Triggering Event, resulting in an additional derivative liability of
$
The
net mark-to-market movement of the derivative liability for the year ended December 31, 2024 was a net mark-to-market credit of $
On June 2, 2025, the Company received
a conversion notice from an accredited investor, pursuant to which $
F-26
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 9 | DERIVATIVE LIABILITY (continued) |
Convertible debt with an aggregate principal
and interest balance outstanding on June 2, 2025 of $
The value of the derivative liability
related to the anti-dilution price protected convertible debt and warrants was evaluated immediately prior to the Triggering Event and
immediately after the Triggering Event, resulting in an additional derivative liability of $
On August 13, 2025, the Company entered
into an agreement to modify the conversion price of certain notes issued to Mercer, Cavalry and affiliated entities from conversion prices
ranging from $
The Company was not able to maintain
the terms of the August 13, 2025 agreement which required the conversion price to revert back to the pre-agreement price of $
On October 1, 2025 and
December 5, 2025, the Company entered into convertible note agreements with two accredited investors which have variable priced component
to its conversion feature. The conversion price is the lower of $
The net mark-to-market movement of the
derivative liability for the year ended December 31, 2025 was $
The following assumptions were used in the Black-Scholes valuation model:
| Year ended December 31, 2025 |
Year ended December 31, 2024 |
|||||||
| Conversion price | $ | $ | ||||||
| Risk free interest rate | % | |
% | |||||
| Expected life of derivative liability | |
|||||||
| Expected volatility of underlying stock | % | |
||||||
| Expected dividend rate | % | % | ||||||
The movement in derivative liability is as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||
| Opening balance | $ | $ | ||||||
| Derivative financial liability arising from convertible notes and warrants | ||||||||
| Derivative liability arising on anti-dilutive convertible notes and warrants | ||||||||
| Fair value of derivative liability on cancelled warrants | ( | ) | ||||||
| Fair value adjustment to derivative liability | ( | ) | ( | ) | ||||
| Closing balance | $ | $ | ||||||
F-27
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY |
| a. | Common Stock |
The
Company has total authorized Common Stock of
On
October 3, 2025, the Company filed restated articles of incorporation with the Secretary of State of the State of Nevada, increasing the
authorized capital of the company to
Between
August 6, 2024 and December 6, 2024, in terms of conversion notices received from 4 convertible note holders, including the RRH Note 2
described above, the Company issued
Between January 7, 2025 and December
22, 2025, in terms of conversion notices received from 9 convertible note holders, the Company issued
On June 27, 2025, the Company entered
into a management consulting agreement and granted
On September 28, 2025, the Company
entered into a management consulting agreement and granted
On
October 21, 2025, the Company issued
On December 9, 2025, the Company
issued
| b. | Restricted stock awards |
On August 19, 2025, The Board of Directors
authorized the issue of
A summary of restricted stock activity during the period January 1, 2024 to December 31, 2025 is as follows:
| Total restricted shares |
Weighted average fair market value per share |
Total unvested restricted shares |
Weighted average fair market value per share |
Total vested restricted shares |
Weighted average fair market value per share |
|||||||||||||||||||
| Outstanding January 1, 2024 | $ | $ | $ | |||||||||||||||||||||
| Granted and issued | ||||||||||||||||||||||||
| Forfeited/Cancelled | ||||||||||||||||||||||||
| Vested | ||||||||||||||||||||||||
| Outstanding December 31, 2024 | $ | $ | $ | |||||||||||||||||||||
| Granted and issued | ||||||||||||||||||||||||
| Forfeited/Cancelled | ||||||||||||||||||||||||
| Vested | ||||||||||||||||||||||||
| Outstanding December 31, 2025 | $ | $ | $ | |||||||||||||||||||||
F-28
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY (continued) |
b. Restricted stock awards (continued)
The restricted stock granted, issued and exercisable at December 31, 2025 is as follows:
| Restricted Stock Granted and Vested | ||||||||||
| Grant date Price | Number Granted | Weighted Average Fair Value per Share | ||||||||
| $ | 0.0037 | |||||||||
| $ | 1.4700 | $ | ||||||||
| $ | 1.5000 | |||||||||
| $ | 1.6500 | |||||||||
| $ | ||||||||||
The Company has recorded an expense of $
| c. | Preferred Stock |
The
Company has authorized
As
discussed above, the authorized capital of the company to
| d. | Warrants |
On
March 4, 2024, the Company entered into a Securities Purchase Agreement with an accredited investor. In terms of the Securities Purchase
Agreement, the Company issued a five-year warrant to purchase an aggregate of
On
March 14, 2024, the Company extended the maturity date of 11 convertible notes maturing between February 13, 2024 and February 23, 2024
by an additional six months and as compensation for the extension, the note holders were issued warrants exercisable for shares
of Common Stock at an exercise price of $
Between
May 3, 2024 and May 28, 2024, the Company entered into a Securities Purchase Agreements with four accredited investors. In terms of the
Securities Purchase Agreement, the Company issued five-year warrants to purchase an aggregate of
On
May 4, 2024, the maturity date of two notes totaling $
On
August 6, 2024, the Company received a conversion notice from an accredited investor pursuant to which $
F-29
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY (continued) |
| d. | Warrants (continued) |
Certain
warrants exercisable for
On
October 22, 2024, the Company entered into a Securities Purchase Agreements with an accredited investor. In terms of the Securities Purchase
Agreement, the Company issued five-year warrants to purchase an aggregate of
On January
7, 2025 and February 20, 2025, the Company entered into a Securities Purchase Agreements with one accredited investor. In terms of the
Securities Purchase Agreements, the Company issued five-year warrants to purchase an aggregate of
Between April
29, 2025 and July 24, 2025, the Company entered into Securities Purchase Agreements with two accredited investors. In terms of the Securities
Purchase Agreements, the Company issued five-year warrants to purchase an aggregate of
On March 20, 2025, the Company received
a conversion notice from an accredited investor, pursuant to which $
Certain warrants exercisable
for
On June 2, 2025, the Company received
a conversion notice from an accredited investor, pursuant to which $
F-30
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY (continued) |
| d. | Warrants (continued) |
Certain warrants exercisable for
On
August 12, 2025, the Company received a conversion notice from an accredited investor, pursuant
to which $
On October
3, 2025, the Company entered into a Securities Purchase Agreement with an accredited investor. In terms of the Securities Purchase Agreement,
the Company issued five-year warrants to purchase an aggregate of
The triggering events mentioned above
resulted in a statement of operations charge for warrants subject to derivative liability of $
The deemed dividend charge for repriced
warrants without derivative liability features was $
On November
25 2025, the Company entered into a Securities Purchase Agreement with an accredited investor. In terms of the Securities Purchase Agreement,
the Company issued five-year warrants to purchase an aggregate of
On December
9, 2025, in terms of an agreement entered into with two accredited investors, the Company exchanged warrants exercisable for
The 2023,
2024 and 2025 Warrants contain exercise limitations providing that a holder thereof may not exercise the Warrants to the extent that,
if after giving effect to such exercise, the holder or any of its affiliates would beneficially own in excess of
F-31
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THe FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY (continued) |
| d. | Warrants (continued) |
The fair value of the warrants granted and issued, as described above, were determined by using a Black Scholes valuation model using the following assumptions:
| Year ended December 31, 2025 |
Year ended December 31, 2024 |
|||||||
| Conversion price | $ | $ | ||||||
| Risk free interest rate | % | |
% | |||||
| Expected life of derivative liability | |
|||||||
| Expected volatility of underlying stock | % | |
% | |||||
| Expected dividend rate | % | % | ||||||
A
summary of warrant activity during the period January 1, 2024 to December 31, 2025 is as follows:
| Shares Underlying Warrants | Exercise price per share | Weighted average exercise price | ||||||||||
| Outstanding January 1, 2024 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Increase in warrants issued due to anti-dilution price protection | ||||||||||||
| Forfeited | ||||||||||||
| Exercised | ||||||||||||
| Outstanding December 31, 2024 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Increase in warrants issued due to anti-dilution price protection | ||||||||||||
| Cancellation of warrants exchanged for common stock | ( | ) | ||||||||||
| Forfeited | ( | ) | ||||||||||
| Exercised | ||||||||||||
| Outstanding December 31, 2025 | $ | $ | ||||||||||
The warrants outstanding and exercisable at December 31, 2025 are as follows:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||||||
| Exercise Price* | Number Outstanding | Weighted Average Remaining Contractual life in years | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | Weighted Average Remaining Contractual life in years | ||||||||||||||||||||
| $ | 0.000500 | |||||||||||||||||||||||||
| $ | 0.010000 | |||||||||||||||||||||||||
| $ | 0.345000 | |||||||||||||||||||||||||
| $ | 0.450000 | |||||||||||||||||||||||||
| $ | 1.500000 | |||||||||||||||||||||||||
| $ | 4.500000 | |||||||||||||||||||||||||
| $ | 5.625000 | |||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
The
warrants outstanding have an intrinsic value of $
F-32
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY (continued) |
| e. | Stock options |
On June 18, 2018, the Company established
its 2018 Stock Incentive Plan (the “Plan”). The purpose of the Plan is to promote the interests of the Company and the stockholders
of the Company by providing directors, officers, employees and consultants of the Company with appropriate incentives and rewards to encourage
them to enter into and continue in the employ or service of the Company, to acquire a proprietary interest in the long-term success of
the Company and to reward the performance of individuals in fulfilling long-term corporate objectives. The Plan terminates after a period
of
The Plan is administered by the Board or a committee appointed by the Board, who have the authority to administer the Plan and to exercise all the powers and authorities specifically granted to it under the Plan.
The maximum number of securities available
under the Plan is
On October 22, 2021, the Company established
its 2021 Stock Incentive Plan (“2021 Plan”). The purpose of the Plan is to promote the interests of the Company and the stockholders
of the Company by providing directors, officers, employees and consultants, advisors and service providers of the Company with appropriate
incentives and rewards to encourage them to enter into and continue in the employ or service of the Company, to acquire a proprietary
interest in the long-term success of the Company and to reward the performance of individuals in fulfilling long-term corporate objectives.
The Plan terminates after a period of
The 2021 Plan is administered by the Board or a Compensation Committee appointed by the Board, who have the authority to administer the Plan and to exercise all the powers and authorities specifically granted to it under the Plan.
The maximum number of securities available
under the 2021 Plan is
Under the 2021 Plan the Company may award the following: (i) non-qualified stock options; (ii)) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock unit; and (vi) other stock-based awards.
During 2024, options exercisable for
On January 7, 2025, in terms of an
employment agreement entered into with Mr. Corbett, the Company awarded him ten-year options exercisable for
On April 15, 2025, options exercisable
for
The fair value of the options granted were determined by using a Black Scholes valuation model using the following assumptions:
| Year ended December 31, 2025 |
Year ended December 31, 2024 |
|||||||
| Conversion price | $ | $ | ||||||
| Risk free interest rate | % | % | ||||||
| Expected life of derivative liability | ||||||||
| Expected volatility of underlying stock | % | % | ||||||
| Expected dividend rate | % | % | ||||||
F-33
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 10 | STOCKHOLDERS’ EQUITY (continued) |
| e. | Stock options (continued) |
A summary of option activity during the period January 1, 2024 to December 31, 2025 is as follows:
| Shares Underlying options | Exercise price per share | Weighted average exercise price | ||||||||||
| Outstanding January 1, 2024 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Forfeited/Cancelled | ( | ) | ||||||||||
| Exercised | ||||||||||||
| Outstanding December 31, 2024 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Forfeited/Cancelled | ( | ) | ||||||||||
| Exercised | ||||||||||||
| Outstanding December 31, 2025 | $ | $ | ||||||||||
The options outstanding and exercisable at December 31 2025 are as follows:
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
| Exercise Price* | Number Outstanding | Weighted Average Remaining Contractual life in years | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | Weighted Average Remaining Contractual life in years | ||||||||||||||||||||
| $ | 0.09 | |||||||||||||||||||||||||
| $ | 1.20 | |||||||||||||||||||||||||
| $ | 4.50 | |||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
The options outstanding have an intrinsic
value of
The option expense was $
F-34
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 11 | GAIN (LOSS) ON SETTLEMENT, CANCELLATION AND REPRICING OF SECURITIES |
The gain (loss) on settlement, cancellation and repricing of securities consists of the following:
| December 31, 2025 | December 31, 2024 | |||||||
| Penalty on convertible note | $ | ( | ) | $ | ( | ) | ||
| Loss on conversion of convertible debt | ( | ) | ( | ) | ||||
| Loss on repriced convertible debt | ( | ) | ( | ) | ||||
| Fair value gain on cancellation of price protected warrants | ||||||||
| Expense on extension of maturity date of convertible notes | ( | ) | ||||||
| Loss on convertible note default conversion feature | ( | ) | ||||||
| $ | $ | ( | ) | |||||
Penalty on convertible debt
Between
September 6, 2024 and December 6, 2024, $
Between January
7, 2025 and September 30, 2025, $
Loss on conversion of convertible debt
Between
August 6, 2024 and December 6, 2024, in terms of conversion notices received from 4 convertible note holders, the Company issued
Between January 7, 2025 and December 22, 2025, in terms of conversion
notices received from 8 convertible note holders, the Company issued
Loss on repriced convertible debt
On August 6, 2024, the
Company received a conversion notice from an accredited note holder converted $
F-35
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 11 | GAIN (LOSS) ON SETTLEMENT, CANCELLATION AND REPRICING OF SECURITIES (continued) |
Loss on repriced convertible debt (continued)
The
value of the derivative liability related to the anti-dilution price protected convertible notes was evaluated immediately prior to the
Triggering Event and immediately after the Triggering Event, resulting in an additional derivative liability and loss on convertible notes
of $
On June 2, 2025, an accredited note
holder converted $
The value of
the derivative liability related to the anti-dilution price protected convertible debt was evaluated immediately prior to the Triggering
Event and immediately after the Triggering Event, resulting in an additional derivative liability and loss on convertible debt of $
Fair value gain on cancellation of price protected warrants
On December
9, 2025, the Company issued
Expense on extension of maturity date of convertible notes
On
March 14, 2024, the Company extended the maturity date of 11 convertible notes which matured between February 13, 2024 and February 23,
2024 by six months and issued the note holders additional warrants exercisable for
On
May 4, 2024, the maturity date of two notes totaling $
The
debt extinguishments resulted in a charge of $
Loss on convertible note default conversion feature
The
Company was unable to make a payment on a convertible note on July 28, 2024, which resulted in the triggering of a variable priced conversion
feature, giving rise to a derivative liability on the payment due date, this gave rise to an additional derivative liability and loss
on convertible notes of $
F-36
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 12 | INCOME TAXES |
The Company’s operations are based in the US and currently enacted tax laws in the US are used in the calculation of income taxes.
Federal Income Tax - United States
On
December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed into law
by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction
of the corporate income tax rate from a top marginal rate of
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of December 31, 2025 and 2024, there have been no interest or penalties incurred on income taxes.
The provision for income taxes consists of the following:
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||
| Current | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ||||||||
| $ | $ | |||||||
| Deferred | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ||||||||
| $ | $ |
A reconciliation of the U.S. to the effective income tax is as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||
| Continuing operations | ||||||||
| Tax expense at the federal statutory rate | $ | ( | ) | $ | ( | ) | ||
| State tax expense, net of federal tax effect | ( | ) | ( | ) | ||||
| Permanent differences | ||||||||
| Prior year net operating loss true up | ( | ) | ||||||
| ( | ) | ( | ) | |||||
| Deferred income tax asset valuation allowance | ||||||||
| $ | $ | |||||||
F-37
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 12 | INCOME TAXES (continued) |
Significant components of the Company’s deferred income tax assets are as follows:
| December 31, 2025 | December 31, 2024 | |||||||
| Other | $ | $ | ||||||
| Capital loss | ||||||||
| Net operating losses | ||||||||
| Stock based compensation | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred income tax assets | $ | $ | ||||||
The
valuation allowance for deferred income tax assets as of December 31, 2025 and December 31, 2024 was $
As
of December 31, 2025, the Company had available for income tax purposes approximately $
The Company’s ability to utilize the previous Federal operating loss carryforwards may be adjusted if, pursuant to IRC Section 382/383 of the Internal Revenue Code of 1986, as amended, a change of ownership occurs. Management does not believe an ownership change has occurred under IRC Section 382/383. A future change in ownership may result in an adjustment to the loss carryforward.
The Company is subject to taxation in the U.S. and CA state. U.S. federal income tax returns for 2019 and after, remain open to examination. No income tax returns are currently under examination. As of December 31, 2025 and 2024, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2025 and 2024, there were no penalties or interest recorded in income tax expense.
F-38
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 13 | NET LOSS PER SHARE |
Basic loss per share is based on the weighted-average number of common shares outstanding during each period. Diluted loss per share is based on basic shares as determined above plus common stock equivalents. The computation of diluted net loss per share does not assume the issuance of common shares that have an anti-dilutive effect on net loss per share. For the years ended December 31, 2025 and 2024 all warrants options and convertible debt securities were excluded from the computation of diluted net loss per share.
Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would have been anti-dilutive for the years ended December 31, 2025 and 2024 are as follows:
| Year ended December 31, 2025 (Shares) | Year ended December 31, 2024 (Shares) | |||||||
| Convertible debt | ||||||||
| Stock options | ||||||||
| Warrants to purchase shares of common stock | ||||||||
| 14 | RELATED PARTY TRANSACTIONS |
The following transactions were entered into with related parties:
William Corbett
In terms of an employment agreement
entered into on January 7, 2025, with Mr. Corbett, which is for a term expiring on December 31, 2025 at a base salary of $
The option expense for options still
vesting for Mr. Corbett was $
On April 18, 2025, the Company entered
into a convertible note agreement, whereby $
On August 19, 2025, the board of directors
granted Mr. Corbett
As of December 31, 2025 and 2024, the
company owed Mr. Corbett $
Richard Rosenblum
The option expense for options still
vesting for Mr. Rosenblum was $
On April 18, 2025, the Company entered
into a convertible note agreement, whereby $
Mr. Rosenblum assigned his convertible note to a third party on October 9, 2025.
Mr. Rosenblum resigned all his positions with the Company with effect from January 7, 2025.
F-39
INNOVATIVE PAYMENT SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
| 15 | COMMITMENTS AND CONTINGENCIES |
The
Company has notes payable and convertible notes payable, disclosed under notes 7 and 8 above, which originally matured between
| 16 | SUBSEQUENT EVENTS |
Amendment to the articles of incorporation and increase in authorized shares
On
January 14, 2026, the Board of directors authorized the amendment to the articles of incorporation of the Company to increase the authorized
shares of common stock from
Conversion of convertible notes
On February 9, 2026, the Company
received a conversion notice from a convertible note holder converting an aggregate of $
As
a result of the conversion notices received, warrants exercisable for
Convertible note funding
Between
February 26, 2026 and March 17, 2026, the Company entered into convertible promissory note agreements with five accredited investors
for total gross proceeds of $
Issuance of common stock
On
February 3, 2026, the board of directors of the Company authorized the issuance of
Amendment to convertible debt agreements
Between
February 27, 2026 and March 30, 2026, the Company received agreements signed by investors authorizing the forbearance of convertible
debt until December 31, 2026 with a principal amount outstanding of $
Other than disclosed above, the Company has evaluated subsequent events through the date of the consolidated financial statements were available to be issued and has concluded that no such events or transactions took place that would require disclosure herein.
F-40
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
We have adopted and maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Annual Report, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act, Rule 13a-15, our management, including our Chief Executive Officer (who is our Principal Executive Officer and our President and Chief Financial Officer (who is our Principal Financial Officer), after evaluating the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report have concluded that our disclosure controls are not effective due to a lack of written policies and procedures to address all material transactions and developments impacting the financial statements.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. Management conducted an assessment of our internal control over financial reporting as of December 31, 2025 based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework 2013 (“COSO”). The COSO framework requires rigid adherence to control principles that require sufficient and adequately trained personnel to operate the control system. Our management has concluded that our internal control over financial reporting continued to be ineffective as of December 31, 2025 as a result of continuing insufficient segregation of duties and oversight of work performed in the finance and accounting function due to limited personnel with the appropriate skill sets. During 2026, our management plans to continue to address these matters with a view towards remediating the weaknesses.
Our management, including our Chief Executive Officer and President and Chief Financial Officer, does not expect that our disclosure controls and procedures and our internal control processes, even if improved, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that the breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Changes in Internal Control Over Financial Reporting
Other than disclosed above, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our year ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us provide only management’s report in this annual report.
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
28
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The table below sets certain information concerning our executive officers and directors, including their names, ages, anticipated positions with us. Our executive officers are chosen by our Board and hold their respective offices until their resignation or earlier removal by the Board.
In accordance with our Articles of Incorporation, as amended, incumbent directors are elected to serve until our next annual meeting and until each director’s successor is duly elected and qualified.
Executive Officers and Directors
The table below sets certain information concerning our executive officers and directors, including their names, ages, anticipated positions with us. Our executive officers are chosen by our board and hold their respective offices until their resignation or earlier removal by the board.
In accordance with our Articles of Incorporation, as amended, incumbent directors are elected to serve until our next annual meeting and until each director’s successor is duly elected and qualified.
| Name | Age | Position | ||
| William Corbett | 66 | Chairman of the Board, Chief Executive Officer, Chief Financial Officer and Director | ||
| Madisson Butler | 37 | Director | ||
| David Rios | 83 | Director |
Currently, our Board of Directors consists of three (3) members: William Corbett (Chairman), Madisson Butler, and David Rios. Except for Ms. Butler, who is the daughter of Mr. Corbett, there are no family relationship between the members of our Board of Directors and executive officers.
The following information pertains to the members of our board and executive officers, their principal occupations and other public Company directorships for at least the last five years and information regarding their specific experiences, qualifications, attributes and skills:
William Corbett, Chairman of the Board, Chief Executive Officer, Chief Financial Officer and Director. Mr. Corbett has been serving as the Company’s Chief Executive Officer and a Director since August 6, 2019 and as its Chairman since February 22, 2021. Mr. Corbett also serves as our Chief Financial Officer from January 7, 2025. He was also the Company’s Interim Chief Financial Officer from August 6, 2019 to July 22, 2021.
William Corbett has over thirty years of Wall Street experience. Starting with Bear Stearns in the mid-eighties he became an associate director responsible for managing over 50 brokers and was subsequently hired by Lehman Brothers where he was one of the top producers in the 1990’s. In 1995, he co-founded and became CEO of The Shemano Group, a San Francisco investment banking boutique, which developed into one of the leading banks for funding small cap companies. Mr. Corbett was a managing director at Paulson Investment Co. from October 2013 until October 2016, responsible for West Coast investment banking activities. He also has served as CEO of DPL a lending company, and a wholly owned subsidiary of DPW Holdings, Inc., from October of 2016 until May 2019.
Mr. Corbett’s financial experience on Wall Street, specifically with micro-cap companies, we believe provides him with the attributes that make him a valuable member of the Company’s Board of Directors.
Madisson G. Butler, Director. Ms. Madisson G. Butler (formerly known as Madisson Corbett) was appointed to our Board of Directors in May 2021. Ms. Butler has extensive experience in sales and built the sales development organizations at Series A-C tech companies. Ms. Butler’s career in sales began in San Diego, overseeing global sales and marketing at the top surf wax company in the US. Ms. Butler then worked at the International Surfing Association, recognized by the International Olympic, Committee and helped introduce surfing to the Olympics in 2020. After her time in San Diego, Ms. Butler began working for various Y Combinator companies including payroll & benefits platform, Gusto, hiring software, Lever, and mental health start up, Modern Health. Presently, Ms. Butler works for fintech start-up, Brex.com and has been with the company over the last two years. She built out the entire sales development organization from scratch and oversaw top of funnel production for the Go To Market Team at Brex.com. Ms. Butler managed the increase of recurring annual revenue from $20,000,000 to $100,000,000 in just 18 months and her team accounted for 85% of the net new revenue generated during the period.
We chose Ms. Butler to serve as a member of our Board of Directors due to her extensive business and finance experience, which makes her a valuable member of our Board of Directors.
29
David Rios, Director. David Rios was appointed to our Board of Directors on July 22, 2021. Mr. Rios is a currently a philanthropist. Prior to turning to philanthropy approximately ten years ago, Mr. Rios was the founder, Chairman, and Chief Executive Officer of D.F. Rios Construction, Inc., the largest framing construction company in the state of California, for over 30 years. Mr. Rios was also President of the California Framers Association and on the Board of Carpenters. Additionally, Mr. Rios sat on the Board of Pan Pacific Bank where he was instrumental in closing its acquisition by California Bank of Commerce in December 2015.
We chose Mr. Rios to serve as a member of our Board of Directors due to his extensive business experience, which makes him a valuable member of our Board of Directors.
Corporate Governance
Code of Conduct and Ethics
Effective as of May 12, 2016, we adopted a Code of Conduct and Ethics that applies to, among other persons, our president or chief executive officer as well as the individuals performing the functions of our chief financial officer, corporate secretary and controller. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
| ● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| ● | full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to regulatory agencies, including the SEC; |
| ● | the prompt internal reporting of violations of the Code of Conduct and Ethics to an appropriate person or persons identified in the Code of Conduct and Ethics; and |
| ● | accountability for adherence to the Code of Conduct and Ethics. |
Our Code of Conduct and Ethics requires, among other things, that all of our personnel be afforded full access to our president or chief executive officer with respect to any matter which may arise relating to the Code of Conduct and Ethics. Further, all of our personnel are to be afforded full access to our Board of Directors if any such matter involves an alleged breach of the Code of Conduct and Ethics by our president or chief executive officer.
In addition, our Code of Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our president or chief executive officer. If the incident involves an alleged breach of the Code of Conduct and Ethics by our president or chief executive officer, the incident must be reported to any member of our Board of Directors or use of a confidential and anonymous hotline phone number. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our Code of Conduct and Ethics by another. Our Code of Conduct and Ethics is available, free of charge, to any stockholder upon written request to our Corporate Secretary at Innovative Payment Solutions, 732 S 6th St. #4621, Las Vegas, Nevada 89101. A copy of our Code of Conduct and Ethics can be found at www.ipsipay.com.
Composition of the Board
In accordance with our Articles of Incorporation, our board is to be elected annually as a single class.
30
Board Committees
We currently do not have a separate Audit Committee, Nominating, Governance Committee or Compensation Committee. Our full board currently serves as our Audit Committee and Compensation Committee. Due to the size of our Board of Directors and our company, we believe the structure is sufficient. None of our directors is considered an “Audit Committee” financial expert. The Audit Committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The Compensation Committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. The Nominating and Governance Committee will assist our Board of Directors in fulfilling its oversight responsibilities and identify, select and evaluate our Board of Directors and committees. No final determination has yet been made as to the memberships of the other committees.
We will reimburse all directors for any expenses incurred in attending directors’ meetings provided that we have the resources to pay these fees. We will provide officers and directors liability insurance.
Leadership Structure
The chairman of our Board of Directors, and Chief Executive Officer positions are currently the same person, Mr. Corbett. Our Bylaws do not require our Board of Directors to separate the roles of chairman and chief executive officer but provides our Board of Directors with the flexibility to determine whether the two roles should be combined or separated based upon our needs. Our Board of Directors believes the combination of the chairman and the chief executive officer roles is the appropriate structure for our company at this time. Our Board of Directors believes the current leadership structure serves as an aid in the Board of Directors’ oversight of management and it provides us with sound corporate governance practices in the management of our business.
Risk Management
Our Board of Directors discharges its responsibilities, and assesses the information provided by our management and the independent auditor, in accordance with its business judgment. Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements, and management is responsible for conducting business in an ethical and risk mitigating manner where decisions are undertaken with a culture of ownership. Our Board of Directors oversees management in their duty to manage the risk of our company and each of our subsidiaries. Our Board of Directors regularly reviews information provided by management as management works to manage risks in the business. Our Board of Directors intends to establish board committees to assist the full Board of Directors’ oversight by focusing on risks related to the particular area of concentration of the relevant committee.
Director Independence
Our Board of Directors, in the exercise of its reasonable business judgment, has determined that David Rios qualifies as independent directors pursuant to Nasdaq Stock Market Rule 5605(a)(2) and applicable SEC rules and regulations.
Potential Conflicts of Interest
Since we did not have an Audit Committee or Compensation Committee comprised of independent directors, the functions that would have been performed by such committees were performed by our directors. Thus, there was an inherent conflict of interest.
Delinquent Section 16 Reports
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10 percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock. Such officers, directors and persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file with the SEC.
31
Item 11. Executive Compensation
Summary Compensation Table
The following table summarizes all compensation earned in each of the last two fiscal years ended December 31, 2025 and 2024 by our: (i) principal executive officer; (ii) principal accounting officer and (iii) most highly compensated executive officer other than the principal executive officer who was serving as an executive officer of our company as of the end of the last completed fiscal year. The tables below reflect the compensation for the IPSI executive officers who are also named executive officers of the combined company.
| Name and principal position | Year | Salary | Bonus | Stock awards | Option awards | All other comp. | Total | |||||||||||||||||||||
| William Corbett, | 2025 | $ | 240,000 | $ | - | $ | - | $ | 21,928 | (a) | $ | 1,797 | (b) | $ | 263,725 | |||||||||||||
| Chairman of the Board and Chief Executive Officer (1) | 2024 | $ | 180,000 | $ | - | $ | - | $ | 155,369 | (a) | $ | 2,541 | (c) | $ | 337,910 | |||||||||||||
| Richard Rosenblum | 2025 | $ | 13,500 | $ | - | $ | - | $ | - | $ | - | $ | 13,500 | |||||||||||||||
| Chief Financial Officer and President (2) | 2024 | $ | 216,000 | $ | - | $ | - | $ | 65,047 | (d) | $ | 4,063 | (e) | $ | 285,110 | |||||||||||||
| (1) | Mr. Corbett was appointed as Chief Executive Officer on August 6, 2019 and appointed as Chairman of the board on February 22, 2021. |
| (2) | Mr. Rosenblum was appointed as our President and Chief Financial Officer on July 22, 2021, and resigned all his executive positions on January 7, 2025. |
| (a) |
On January 7, 2025, Mr. Corbett was granted a ten-year option exercisable for 600,000 shares of common stock at an exercise price of $0.09 per share, of which 400,000 are vested as at December 31, 2025.
On July 11, 2022, Mr. Corbett was granted a ten-year option exercisable for 500,000 shares of common stock at an exercise price of $4.50 per share, of which all vested, in addition, on August 16, 2021, Mr. Corbett was granted an option with a ten-year term exercisable for 666,667 shares of common stock at an exercise price of $4.50 per share, of which all are vested. |
| (b) | Consists of $1,797, of car allowance for the benefit of Mr. Corbett. |
| (c) | Consists of $1,343 of healthcare expenses and $1,198 of car allowance for the benefit of Mr. Corbett. |
| (d) | Mr. Rosenblum was granted a ten-year option exercisable for 333,334 shares of common stock at an exercise price of $4.50 per share on August 31, 2021, of which all are vested. |
| (e) | Consists of $2,046 of healthcare expenses and $2,017 of car allowance for the benefit of Mr. Rosenblum. |
32
Outstanding Equity Awards at Fiscal Year End
The following table lists the outstanding equity awards held by our named executive officers at December 31, 2025:
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||||||||||
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable* | Number of Securities Underlying Unexercised Options Unexercisable* | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options* | Option Exercisable Price* | Option Expiration Date | Number of or have | Market of have | Equity have | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested | |||||||||||||||||||||||||
| William Corbett | 666,667 | - | - | $ | 4.50 | 8/16/2031 | - | $ | - | - | - | |||||||||||||||||||||||
| 500,000 | - | - | $ | 4.50 | 7/11/2032 | - | $ | - | - | - | ||||||||||||||||||||||||
| 600,000 | - | - | $ | 0.09 | 1/7/2035 | - | $ | - | - | - | ||||||||||||||||||||||||
Agreements with Named Executive Officers
William Corbett
The Company entered into an executive employment agreement with William Corbett effective June 24, 2020 (as amended, the “Corbett Employment Agreement”) which provided that Mr. Corbett be (i) employed as the Company’s Chief Executive Officer for a term of three (3) years, provide for a base salary of $12,500 per month, (ii) granted a signing bonus of $25,000, (iii) receive a bonus of up to 50% of his the annual base salary upon the Company’s achievement of $2,000,000 EBITDA and additional performance bonus payments as may be determined by the Company’s Board of Directors and (iv) provide for severance in the event of a termination without cause in amount equal to equal to fifty percent (50%) of his annual base salary rate then in effect, provided that if such termination without cause occurs after an Acquisition of the Company (as defined in the agreement), Mr. Corbett will be entitled to receive severance in an amount equal to equal to 100% of his annual base salary rate then in effect.
Further, pursuant to the Corbett Employment Agreement, the Company granted Mr. Corbett 170,792 shares of the Company’s common stock, which are fully vested and not subject to forfeiture.
On June 24, 2020, the Company entered into a restricted stock agreement with Mr. Corbett pursuant to which the Company granted him a restricted stock award of 512,375 shares of the Company’s common stock, with such shares are subject to forfeiture and which forfeiture restriction lapse 33%, 33% and 34%, respectively, on the first, second and third anniversary of the date of grant.
On June 24, 2020, the Company entered into an indemnification agreement with Mr. Corbett to indemnify him, in connection with his position of employment with the Company and in the discharge of his duties and responsibilities to the Company, to the maximum extent allowed under the laws of the State of Nevada. The Company is not required or obligated to indemnify Mr. Corbett to extent it would violate the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or the rules and regulations thereunder.
On December 14, 2020, the Company entered into an amendment to the Corbett Employment Agreement whereby the Company agreed to increase Mr. Corbett’s base salary to $20,000 per month and to pay Mr. Corbett a bonus of $20,000 for the year ended December 31, 2020.
On February 22, 2021, the Board of Directors of the Company appointed William Corbett, its Chief Executive Officer and Interim Chief Financial Officer, as its Chairman of the board and issued him a five-year warrant to purchase 666,667 shares of the Company’s common stock at an exercise price of $7.20. The board also agreed to increase Mr. Corbett’s monthly base salary to $30,000.
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On August 16, 2021, the Company and Mr. Corbett entered into an Executive Employment Agreement that replaced and superseded the previous executive employment agreement (the “August 2021 Corbett Employment Agreement”). The purpose of the August 2021 Corbett Employment Agreement was to provide a replacement grant for warrants previously granted to Mr. Corbett under the terms of his previous employment agreement with the Company. Pursuant to the August 2021 Corbett Employment Agreement, Mr. Corbett would continue to serve as the Company’s Chief Executive Officer on a full-time basis effective as of the date of the August 2021 Corbett Employment Agreement until the close of business on December 31, 2024. Mr. Corbett’s base salary will be $30,000 per month, which shall be paid in accordance with the Company’s standard payroll practice for its executives, managers and salaried employees. In addition, the August 2021 Corbett Employment Agreement provides that: (1) Mr. Corbett will be eligible for a cash bonus as determined by the board to the extent the Company achieves (or exceeds) annual revenue or other financial performance objectives established by the board, in its sole discretion, from time to time; (2) the Company will grant to Mr. Corbett options to purchase 666,667 shares of common stock of the Company at a per share exercise price of $4.50; and (3) a car allowance for Mr. Corbett in the amount of $800 per month. Fifty percent (50%) of the shares subject to the options shall vest on the grant date and the other 50% of the shares subject to the option shall vest at the rate of 1/36 per month over a three-year period. The options will be exercisable for a period of ten years after the date of grant and the Company shall provide for cashless exercise of the option. The options are being granted pursuant to the Company’s 2021 Stock Incentive Plan.
In addition, the Company and Mr. Corbett entered into an Indemnification Agreement on August 16, 2021 (the “August 2021 Corbett Indemnification Agreement”), pursuant to which the Company agreed to indemnify Mr. Corbett to indemnify Indemnitee to the fullest extent permitted by or under the Nevada Corporation Law in respect of claims, including third-party claims and derivative claims and provides for advancement of expenses. The August 2021 Corbett Indemnification Agreement amends the indemnification agreement in effect prior to entering into the August 2021 Corbett Indemnification Agreement to provide that unless Company shall pay Mr. Corbett’s attorneys’ fees and costs, including the compensation and expenses of any arbitrator, unless the arbitrator or the court determines that (a) Company has no liability in such dispute, or (b) the action or claims by Executive are frivolous in nature. In any other case or matter, the Company and Mr. Corbett shall each bear it’s or his own attorney fees and costs.
With effect from April 1, 2024, Mr. Corbett voluntarily reduced his salary to $10,000 per month, with the resignation of Mr. Rosenblum on January 7, 2025, Mr. Corbett’s salary was increased to $20,000 per month with immediate effect.
Director Compensation
Board of Directors Compensation
The executive directors were not paid any fees for their service as directors; however, each of Messrs. Rosenblum and Corbett received compensation for service as officers of Innovative Payment Solutions, Inc.
The following table sets forth information for the fiscal year ended December 31, 2025 regarding the compensation of our directors who on December 31, 2025 were not also our named executive officers.
| Name | Fees Earned or Paid in Cash | Option Awards | Other | Total | ||||||||||||
| Madisson Butler (1) | $ | 18,000 | $ | - | $ | - | $ | 18,000 | ||||||||
| David Rios(1) | $ | 18,000 | $ | - | $ | - | $ | 18,000 | ||||||||
| (1) | As of December 31, 2025, the following table sets forth the number of aggregate outstanding stock awards held by each of our directors who were not also named executive officers: |
| Aggregate | ||||
| Number of | ||||
| Name | Stock Awards | |||
| Madisson Butler (1) | 5,073,334 | |||
| David Rios(2) | 5,040,001 | |||
| (1) |
On July 22, 2021, the Company granted Ms. Butler, a director of the Company, 66,667 shares of restricted common stock pursuant to the terms of the 2021 Stock Incentive Plan, which was approved by the Board of Directors in August 2021, subject to approval of the 2021 Plan by the shareholders, which approval was obtained at the annual general meeting held on October 22, 2021.
On September 13, 2022, the Company granted Ms. Butler, a director of the Company, an option to purchase 6,667 shares of the Company’s common stock at an exercise price of $1.20 per share.
On August 19, 2025, the Company authorized the issuance of 5,000,000 shares of common stock in settlement of $18,500 of outstanding directors’ fees due to Ms. Butler. |
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| (2) |
On July 22, 2021, the Company granted Mr. Rios, a director of the Company, 33,334 shares of restricted common stock pursuant to the terms of the 2021 Stock Incentive Plan, which was approved by the Board of Directors in August 2021, subject to approval of the 2021 Plan by the shareholders, which approval was obtained at the annual general meeting held on October 22, 2021.
On September 13, 2022, the Company granted Mr. Rios, a director of the Company, an option to purchase 6,667 shares of the Company’s common stock at an exercise price of $1.20 per share.
On August 19, 2025, the Company authorized the issuance of 5,000,000 shares of common stock in settlement of $18,500 of outstanding directors’ fees due to Mr. Rios. |
Each director is reimbursed for travel and other out-of-pocket expenses incurred in attending board of director and committee meetings.
Equity Compensation Plan Information
The purpose of our equity incentive plans is to promote the interests of our company and our stockholders by providing directors, officers, employees and consultants of our company with appropriate incentives and rewards to encourage them to enter into and continue in the employ or service of our company, to acquire a proprietary interest in our long-term success and to reward the performance of individuals in fulfilling long-term corporate objectives.
On June 18, 2018, we established our 2018 Stock Incentive Plan (the “Plan”). The Plan terminates after a period of ten years in June 2028. The Plan is administered by our board of directors, or a committee appointed by our board of directors who have the authority to administer the Plan and to exercise all the powers and authorities specifically granted to it under the Plan.
The maximum number of securities available under the Plan is 26,667 shares of Common Stock. The maximum number of shares of Common Stock awarded to any individual during any fiscal year may not exceed 3,333 shares of Common Stock.
On October 22, 2021, our board of directors and stockholders established our 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan terminates after a period of ten years in August 2031.
The maximum number of securities available under the 2021 Plan is 1,766,667 shares of Common Stock.
Under the 2021 Plan, we may award the following: (i) non-qualified stock options; (ii)) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock unit; and (vi) other stock-based awards.
The following table shows the information regarding our equity incentive plans as of December 31, 2025:
| Plan Category | Number of securities to be issued upon exercise of outstanding options | Weighted- average exercise price of outstanding options | Number of remaining | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | ||||||||||||
| 2018 Equity Incentive Plan | 13,334 | $ | 0.09 | 13,333 | ||||||||
| 2021 Equity Incentive Plan | 1,766,667 | 3.01 | - | |||||||||
| Equity compensation plans not approved by security holders | ||||||||||||
| None | - | - | - | |||||||||
| Total | 1,780,001 | $ | 2.99 | 13,333 | ||||||||
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 28, 2026 for:
| ● | each of our directors and nominees for director; |
| ● | each of our named executive officers; |
| ● | all of our current directors and executive officers as a group; and |
| ● | each person, entity or group, who beneficially owned more than 5% of each of our classes of securities. |
We have based our calculations of the percentage of beneficial ownership on 723,872,547 shares of our common stock on March 30, 2026. We have deemed shares of our common stock subject to options and warrants that are currently exercisable within sixty (60) days of March 30, 2026, to be outstanding and to be beneficially owned by the person holding the warrant or restricted stock unit for the purpose of computing the percentage ownership of that person. We did not deem these, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the principal business address for each of the individuals and entities listed below is 732 S 6th St. #4621, Las Vegas, Nevada 89101.
We have not deemed shares of common stock to be outstanding for variable priced convertible notes for the purposes of calculating beneficial ownership.
The information provided in the table is based on our records, information filed with the SEC, and information provided to us, except where otherwise noted.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership Common Stock Included* | Percentage of Common Stock Beneficially Owned | ||||||
| William Corbett (Chief Executive Officer) | 27,266,501 | (1) | 3.8 | % | ||||
| Madisson Butler (Director) | 5,073,334 | (2) | ** | |||||
| David Rios (Director) | 5,040,001 | (4) | ** | |||||
| All officers and directors as a group (4 persons) | 37,379,836 | 5.2 | % | |||||
| Gary Rulli | 55,001,667 | (4) | 7.6 | % | ||||
| * | Excludes any shares deemed to be outstanding on variable priced convertible securities. |
| ** | Less than 1% |
| (1) | Includes (i) 25,683,167 restricted shares of common stock. (ii) a ten-year option granted to Mr. Corbett on August 16, 2021 exercisable for 666,667 shares of common stock, of which all are vested, (iii) a ten year option granted to Mr. Corbett on July 11, 2022 exercisable for 500,000 shares of common stock at an exercise price of $4.50, all of which are vested, and (iv) a ten year option granted to Mr. Corbett on January 7, 2025 exercisable for 600,000 shares of common stock at an exercise price of $0.09 of which 400,000 are vested and a further 16,667 vest within the next 60 days. |
| (2) | Consists of 5,066,667 shares of restricted common stock and a ten-year option granted to Ms. Butler on September 15, 2022 exercisable for 6,667 shares of common stock at an exercise price of $1.20, all of which are vested. |
| (3) | Consists of 5,033,334 shares of restricted common stock and a ten-year option granted to Mr. Rios on September 15, 2022 exercisable for 6,667 shares of common stock at an exercise price of $1.20, all of which are vested. |
| (4) | Consists of 55,001,667 shares of restricted common stock. |
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Item 13. Certain Relationships and Related Transactions, and Director Independence
Transactions with Related Persons
The following includes a summary of any transaction occurring during the year ended December 31, 2025 for us and our subsidiaries or any proposed transaction, in which we and our subsidiaries were or are to be a participant and the amount involved exceeded or exceeds 1% of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation” above). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions:
There were no transactions concluded with related parties that meet the criteria outlined above.
Item 14. Principal Accountant Fees and Services
The following table sets forth the aggregate fees including expenses billed to us for the years ended December 31, 2025 and 2024 by our auditors:
| Year Ended December 31, | Year Ended December 31, | |||||||
| 2025 | 2024 | |||||||
| Audit fees and expenses | $ | 137,500 | $ | 117,500 | ||||
| Taxation preparation fees | - | - | ||||||
| Audit related fees | - | - | ||||||
| Other fees | - | - | ||||||
| $ | 137,500 | $ | 117,500 | |||||
| (1) | Audit fees and expenses were for professional services rendered for the audit and reviews of the consolidated financial statements of the Company, professional services rendered for issuance of consents and assistance with review of documents filed with the SEC. |
Audit Committee’s Pre-Approval Practice
Prior to our engagement of our independent auditor, such engagement was approved by our board of directors. The services provided under this engagement may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Pursuant our requirements, the independent auditors and management are required to report to our board of directors at least quarterly regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. Our board of directors may also pre-approve particular services on a case-by-case basis. All audit-related fees, tax fees and other fees incurred by us for the year ended December 31, 2025, were approved by our board of directors.
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PART IV
Item 15. Exhibits and Financial Statement Schedules and Reports on Form 10-K
| (a)(2) | All financial statement schedules have been omitted as the required information is either inapplicable or included in the Consolidated Financial Statements or related notes. |
| (a)(3) | The following exhibits are either filed as part of this report or are incorporated herein by reference: |
EXHIBIT INDEX
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| * | Filed herewith. |
| # | Indicates management contract or compensatory plan |
Item 16. Form 10-K Summary
Not applicable
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.
| Innovative Payment Solutions, Inc. | ||
| Date: March 31, 2026 | By: | /s/ William Corbett |
| William Corbett | ||
| Chief Executive Officer, Interim Chief Financial Officer and Chairman | ||
Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Person | Capacity | Date | ||
| /s/ William Corbett | Chief Executive Officer and Chairman | March 31, 2026 | ||
| William Corbett | (Principal Executive Officer) | |||
| /s/ Madisson Butler | Director | March 31, 2026 | ||
| Madisson Butler | ||||
| /s/ David Rios | Director | March 31, 2026 | ||
| David Rios |
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