UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

(Mark one)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal period ended December 31, ~~2023~~2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number – 000-55648

INNOVATIVE PAYMENT SOLUTIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		33 - 1230229
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

56B 5^th Street, Lot 1, #AT

Carmel by the Sea, CA 93921

(Address of principal executive offices) (Zip Code)

(866) 477-4729

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act: Common Stock, $0.0001 par value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, ~~2023~~2024, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $42,~~628~~000,~~228~~025 (based upon the closing sale price of the registrant’s common stock reported on June 3028, ~~2023~~2024 of $0.42155 per share). This calculation excludes shares held by the registrant’s current ~~directors~~ directors and executive officers and stockholders that the registrant has concluded are affiliates of the registrant.

As of March 2730, ~~2024~~2025, the issuer had 1370,~~819~~377,~~889~~ 731 shares of common stock outstanding.

Documents incorporated by reference: None

FORM 10-K

TABLE OF CONTENTS

		Page
PART I.	~~PART I.~~	1
Cautionary Note Regarding Forward-Looking Statements		1
Item 1.	Business	4
Item 1A.	Risk Factors	98
Item 1B.	Unresolved Staff Comments	2019
Item 1C.	Cybersecurity	2019
Item 2.	Properties	2019
Item 3.	Legal Proceedings	2019
Item 4.	Mine Safety Disclosures	21
	PART II.	22
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Reserved	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	2928
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	3029
Item 9A.	Controls and Procedures	3029
Item 9B.	Other Information	3029
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	3029
	PART III.	3130
Item 10.	Directors, Executive Officers and Corporate Governance	3130
Item 11.	Executive Compensation	3433
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	3837
Item 13.	Certain Relationships and Related Transactions, and Director Independence	3938
Item 14.	Principal Accountant Fees and Services	4039
	PART IV.	4140
Item 15.	Exhibits and Financial Statement Schedules	4140
Item 16.	Form 10-K Summary	4241
SIGNATURES		4342

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.

Unless the context requires otherwise, all share and per share numbers reflected in this Report take into account a 1-for-30 reverse stock split of our common stock which became effective on August 30, 2023.

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 IPSIPay Express joint venture or other digital payment solutions we may seek to develop or commercialize in the future;

●

acceptance by the marketplace of our products and services, notably IPSIPay Express;

●

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 such as IPSIPay Express 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 of 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.

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 with our current IPSIPay Express business model.

●

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 ~~may never complete our proposed business combination with Business Warrior. ● 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.

●

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 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.

●

Our stock price has been subject to significant volatility, and future volatility may result in our investors incurring substantial losses.

●

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 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.

Item 1. Business

Company Overview

We are a provider of digital payment solutions and services to businesses and consumers.

~~Our~~The Company is currently ~~historical~~a ~~core~~fintech ~~business~~provider ~~was~~of digital payment solutions presently focused on, ~~operating~~through ~~and~~its ~~developing~~participation ~~“e-wallets”~~in ~~that~~IPSIPay ~~enabled~~Express, ~~consumers~~developing a new account-to-account ~~deposit~~payment ~~cash,~~application ~~convert it~~called ~~into~~Instant aDirect ~~digital~~Payments ~~form,~~as ~~and~~well ~~remit~~as ~~the~~traditional ~~funds~~credit tocard ~~Mexico~~processing ~~and~~services. ~~other~~The ~~countries~~Company has ~~quickly~~in ~~and~~the ~~securely.~~past ~~Our~~(under ~~flagship~~the ~~e-wallet,~~ name IPSIPay~~®, was~~) ~~focused~~and onmay in the ~~consumer~~future ~~market~~develop and ~~was~~operate ~~fully~~“e-wallets” ~~launched~~that inenable ~~July~~consumers ~~2022~~to ~~after~~deposit cash, convert it into a ~~soft~~digital ~~launch~~form inand ~~December~~remit ~~2021~~funds quickly and securely.

~~The~~ IPSIPay platform (which can be used both business-to-business and business-to-consumer) facilitated the transfer of funds in digital form to other countries, initially Mexico but also, India and the Philippines, primarily from hand-held devices as well as on desktop or laptop computers.Express

~~Our launch~~On ~~plan~~April ~~for~~28, ~~IPSIPay was to target lower income~~2023, ~~migrant~~the Company ~~communities~~formed ina ~~California~~new ~~(notably~~company incalled ~~the~~IPSIPay ~~agriculture~~Express. ~~industry)~~This ~~and~~entity ~~expanding to~~was ~~other~~formed ~~states~~as ~~with~~a ~~large~~Delaware ~~migrant~~limited ~~populations~~liability ~~such~~company asjoint ~~Texas~~venture ~~and Florida~~with OpenPath, Inc. We(“OpenPath”) ~~not~~and ~~only~~EfinityPay, ~~believed~~LLC ~~that~~(“EfinityPay”, and the ~~addressable~~Company, ~~market~~collectively ~~for~~with ~~IPSIPay was~~OpenPath ~~large~~ and ~~growing~~EfinityPay, the ~~but~~“Members”) to ~~that~~develop ~~servicing~~and ~~this~~ market a isproprietary ~~socially~~consumer ~~responsible.~~to ~~Based~~merchant onreal-time ~~our~~payment ~~public~~platform ~~announcement~~initially ~~in May 2023, described~~focused ~~below,~~on ~~we exited~~ the efast-~~wallet~~growing ~~line~~online ofgaming ~~business by novating all of our rights~~ and ~~obligations~~entertainment ~~thereunder to a third party~~sectors. ~~We may in future develop another e-wallet product.~~

On ~~April~~June 2819, 2023, ~~we formed~~the aCompany ~~new~~entered ~~company~~into ~~called~~a ~~IPSIPay~~Limited ~~Express~~Liability ~~LLC~~Company Operating Agreement (the “~~IPSIPay~~Operating ~~Express~~Agreement”). ~~This entity was formed as a Delaware limited liability company joint venture~~ with ~~OpenPath,~~ ~~Inc. (“~~OpenPath”) and EfinityPay, to ~~LLC~~jointly ~~(“EfinityPay”,~~provide ~~and~~for the ~~Company,~~governance ~~collectively with~~of ~~OpenPath~~ and ~~EfinityPay,~~rights of the “Members~~”) to~~ ~~develop~~with ~~and~~respect ~~market a proprietary consumer~~ to ~~merchant~~IPSIPay ~~real-time payment~~Express. ~~platform~~The ~~initially~~effective ~~focused~~date onof the ~~fast-growing~~Operating Agreement ~~online~~is ~~gaming~~April ~~and~~28, ~~entertainment sectors~~2023.

On June 19, 2023, we 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 iswas 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~~ percentage interest in IPSIPay Express will be reduced pro rata accordingly. Should the Company contribute the full IPSI Capital Contribution, ~~the~~ 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 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~~ paid in September 2023 and (iv) the third $500,000 Tranche was expected to be paid on or before November 30, 2023,. ~~subsequently,~~In welate ~~made~~2023, athe ~~decision~~Company ~~not~~agreed towith ~~advance~~its ~~the~~joint ~~third~~venture ~~tranche~~partners tothat ~~IPSIPay~~such ~~Express~~investment aswas ~~the~~not ~~joint~~required ~~venture~~as IPEX is not operational ~~as yet~~. The need for any ~~additional~~ additional advances will be addressed with the joint venture partners once ~~the~~IPEX ~~joint venture~~ becomes operational and begins generating revenue, ~~our~~the Company’s current ~~shareholding~~equity holding in ~~the~~IPSIPay ~~joint~~Express ~~venture~~ 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.

~~Also,~~Simultaneously with ~~May~~the ~~12,~~funding ~~2023,~~of wethe ~~entered~~initial ~~into~~Tranche, anthe ~~agreement~~Company ~~with~~issued ~~one~~to each of ~~our~~OpenPath ~~technology~~and ~~partners,~~EfinityPay ~~Frictionless~~a ~~Financial~~five-year ~~Technologies,~~Common ~~Inc.~~Stock purchase warrant (the “~~Frictionless~~IPEX Warrant”) to purchase 133,334 shares of Common Stock with an exercise price of $0.45 per share. We are still obligated to, ~~among~~issue ~~other~~to ~~things~~each of OpenPath and EfinityPay an additional IPEX Warrant to purchase 199,999 shares ~~divest~~of ~~ourselves~~Common Stock with an exercise price equal to the average public closing price of ~~our~~the ~~interest~~Common inStock ~~Frictionless~~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 inEfinityPay ~~Beyond~~an ~~Fintech~~additional IPEX Warrant to purchase 166,667 shares ~~Inc~~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., aShould ~~joint~~we decide ~~venture~~to ~~entity~~fund a third Tranche, we ~~owned~~will be obligated to issue to each of OpenPath and EfinityPay an additional IPEX Warrant to purchase 166,667 shares of Common Stock with ~~Frictionless~~an ~~which~~exercise ~~has~~price ~~been~~equal ~~developing~~to anthe ~~application~~average ~~called~~public ~~Beyond~~closing ~~Wallet.~~price ~~See~~of ~~Note~~the ~~1(b)~~Common Stock for the three trading days immediately prior to the ~~accompanying~~funding ~~financial~~of ~~statements~~the third Tranche. If the full IPSI Capital Contribution is funded, OpenPath and EfinityPay will receive IPEX ~~for~~Warrants ~~further~~to ~~information~~purchase an aggregate of 1,333,334 shares of Common Stock.

~~2023~~Merger agreement with Business ~~Developments~~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.

~~Having~~On July 28, 2024, the ~~achieved~~Company ~~full~~entered ~~commercial~~into ~~integration~~an Agreement and ~~launch~~Plan of ~~the~~Merger ~~IPSIPay~~by ~~app~~and ~~during~~among the ~~third~~Company, ~~quarter~~IPSI ofMerger ~~2022~~Sub, ~~the~~Inc., ~~key~~a ~~for~~Delaware ~~our~~corporation ~~business~~and ~~was~~a ~~to scale~~newly ~~the~~formed, ~~number~~wholly ofowned ~~IPSIPay~~subsidiary ~~downloads~~of ~~achieved~~the ~~and~~Company ~~revenue~~(“Merger ~~generated~~Sub”) ~~from~~and ~~transactions~~Business ~~process by customers via IPSIPay~~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.

We2024 ~~generated~~Business nominal IPSIPay-related revenue during the first half of 2023, with the initial goal of increasing revenues over time. In the current environment, it was taking longer than expected to win a customer’s trust and resulting fees generated by the usage of IPSIPay. Based on the slow growth rate in revenues, we elected to novate our rights and obligations to the IPSIPay platform and related e-wallet business to a third party. However, we retain the rights to develop e-wallets under the name “IPSIPay” in the future.Developments

IPSIPay Express

While we believe 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 expect that revenue will be generated by IPSIPay Express 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 or the proposed IPEX account-to-account payment solution, it is necessary to work with qualified banking institutions through which transactions are processed. ~~Our~~As ~~management has taken the primary responsibility for securing these banking relationships for IPSIPay Express, and as~~ of the date of this Report, such relationships are not in place.

●

Assisting with Payment Logistics. We have been working with our IPSIPay Express joint venture partners to establish the systems and technology necessary to effectuate payments through IPEX. As of the date of this Report, the establishment of such systems and technology is still ongoing, which is the primary reason why IPEX has not been commercially launched to date.

●

Securing Customers. Our management has also been working to secure potential customers for IPEX. These customers would include gaming and entertainment businesses.

No assurances can be given that IPSIPay Express will be successfully launched or will generate revenues or otherwise have a positive impact on our results of operations. We believe IPSIPay Express 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) we will be able to raise funds satisfactory to fulfill all of our capital contributions to IPSIPay Express or (ii) that we will ever receive distributions of free cash flow from IPSIPay Express. Moreover, the IPSIPay Express product offering will be targeting so-called “high risk” sectors such as online gaming and entertainment, which also carries certain risks.

Frictionless Financial Technologies

On May 12, 2023, we entered into an agreement with one of our technology partners, Frictionless Financial Technologies, Inc. (“Frictionless”), to, among other things, divest ourselves of our interest in Frictionless and in Beyond Fintech, Inc., a joint venture entity we owned with Frictionless which has been developing an application called Beyond Wallet. See Note 1(b) to the accompanying financial statements for further information.

Non-Binding Letter of Intent with Business Warrior

Overview and Cautionary Statement

On February 13, 2024, we signed an amended and restated non-binding letter of intent (the “LOI”) with Business Warrior Corporation, a Wyoming corporation (“BZWR”), pursuant to which we would acquire BZWR on the general terms described below (the “Proposed Transaction”).

Neither we nor BZWR have any legal obligation of any kind with respect to the Proposed Transaction unless and until binding definitive agreements with respect to the Proposed Transaction are executed. Moreover, the Proposed Transaction, assuming definitive agreements are even executed, would be subject to the approval of the stockholders of both our company and BZWR and the satisfaction of other conditions to closing.

In addition, we and BZWR have certain convertible note investors (the “Note Holders”) in common. Therefore, one purpose of the Proposed Transaction would be to convert the indebtedness of both the Company and BZWR held by the Note Holders into equity securities of our company.

Outline of Proposed Transaction Terms

The principal terms of the Proposed Transaction are as follows:

1. Preliminary Structure. At the closing of the Proposed Transaction (the “Closing”), we would acquire 100% of the outstanding equity and equity equivalents of BZWR (including outstanding warrants and other securities that have the right to acquire or convert into equity securities of BZWR) on a cash-free, debt free basis by way of a merger of BZWR into a new subsidiary of our company.

2. Consideration. The total consideration provided to or for the benefit of BZWR equity holders (including holders of warrants and other outstanding preferred stock or other convertible securities of BZWR), as applicable (the “Transaction Consideration”) would be in the form of newly-issued shares (the “Transaction Shares”) of shares of our common stock representing forty percent (40%) of the Common Stock immediately following the Closing.

3. Note Exchange Transaction; Replacement Preferred. Prior to and as a condition to the Closing, the Note Holders of both our company and BZWR shall effect a note exchange transaction pursuant to which all of the outstanding convertible notes of our company and BZWR held by the Note Holders will be cancelled and exchanged for shares of newly-issued Series A Convertible Preferred Stock of the Company (“Replacement Preferred”). The terms of the Replacement Preferred will be negotiated with the Note Holders.

4. BZWR Capitalization Restructure. Prior to the Closing, BZWR shall cause all of its outstanding shares of preferred stock and warrants to be converted into shares of BZWR common stock, net exercised or cancelled, with the effect that only shares of BZWR common stock would be outstanding a Closing, the holders of which would be entitled to receive the Transaction Consideration.

5. Board of Directors. The post-Closing Board of Directors of the Company shall consist of a number of individuals to be agreed upon by IPSI and BZWR, provided that (i) the majority of the post-Closing Board of Directors will be appointed by IPSI and (ii) the majority of the post-Closing Board of Directors will be “independent” as defined under Nasdaq Stock Market rules.

Company Loan to BZWR

On February 12, 2024, and in connection with the LOI and the Proposed Transaction, we (utilizing a portion of the proceeds from the issuance of convertible notes) loaned funds to BZWR in the principal amount of $226,190, which includes an original issue discount equal to $67,857, netting BZWR proceeds $158,333. The loan is memorialized by a secured promissory note (the “BZWR Note”). The BZWR Note does not accrued interest, except in the case of an event of default, which case interest accrues at 15% per annum. The BZWR Note matures on the earlier to occur of December 31, 2025 and the date that BZWR’s securities are listed on a national securities exchange. The BZWR Note may be prepaid at any time for an amount equal to 110% of the then principal and accrued interest. We shall have the right to exchange the BZWR Note for securities issued by BZWR in any subsequent private placement by BZWR. The principal and accrued interest under BZWR Note is convertible into common stock of BZWR at a price equal to $0.0036 per share, subject to certain adjustments and potential resets. BZWR’s obligations under the BZWR Note are guaranteed by BZWR’s subsidiaries and secured by a lien on BZWR’s accounts receivable. The BZWR Note is one of several similar notes issued by BZWR. Keystone Capital Partners LLC is acting as collateral agent for the holders of such notes, include our company as the holder of the BZWR Note.

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 $~~750~~913 billion in ~~2023~~2025, ~~and~~of ~~for~~which ~~the first time~~ digital payments are estimated to ~~exceed~~reach ~~non-digital~~approximately ~~payments~~30% in($273.5 ~~2023~~billion) of total remittances. Our ability to capture even a fraction of this massive global market represents our largest value proposition.

Marketing

We had a formal marketing plan for our IPSIPay business which included an extensive endorsement and social media campaign to attract customers to our platform. We exited this business in September 2023 to focus on our IPSIPay Express business, as disclosed above.

We do not have a formal marketing plan for IPSIPay Express. However, we, together with our joint venture partners, OpenPath and EfinityPay, have been leveraging existing business relationships, particularly in the gaming and entertainment industries, to attract potential customers to use the IPEX 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 for IPEX.

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

~~Previously~~On weApril ~~relied on~~28, a2023, ~~combination~~we formed ofIPSIPay ~~contractual~~Express. ~~rights,~~This ~~copyright,~~entity ~~trademark~~was ~~and~~formed ~~trade~~as ~~secret~~a ~~laws~~joint toventure ~~establish~~with OpenPath, Inc. and ~~protect~~EfinityPay, ~~our~~LLC ~~technology~~to develop and ~~the technology~~market a ~~that~~proprietary weconsumer ~~licensed~~to Wemerchant ~~had~~real-time ~~three~~payment ~~trademark~~platform ~~applications~~initially focused on ~~file~~the fast-growing online gaming and ~~under~~entertainment ~~review~~sectors.

On May 12, 2023, we assigned to Frictionless all shares of common stock of Beyond Fintech owned by us, which included the intellectual property residing in Beyond Fintech.

On April 28, 2023, we formed a new company called IPSIPay Express LLC (“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.

On ~~September 5,~~December ~~2023~~31, 2024, we ~~entered~~fully ~~into~~impaired aour ~~novation~~investment ~~agreement~~in ~~with~~IPSIPay aExpress ~~third~~due ~~party~~to ~~whereby~~ the ~~third~~length ~~party~~of ~~assumed~~time ~~all~~it ofhas ~~our~~taken ~~debts,~~since ~~clients,~~inception ~~and~~to ~~services and~~establish ~~assumes~~a ~~all~~revenue ofstream. The ~~our~~expected ~~rights~~period ~~and~~to ~~responsibilities~~generate ~~under~~any ~~the~~revenues ~~SAAS~~remains ~~Cloud~~uncertain ~~Hosted~~and ~~Services~~we ~~Enablement~~are ~~Master~~unable ~~Services~~to ~~Agreement,~~justify ~~including~~ the ~~information~~carrying ~~technology,~~value ~~supplier~~of ~~access,~~the ~~billing~~joint ~~and~~venture ~~rating technology, mobile wallet, debit card enablement, back-office support~~at ~~services,~~this ~~customer service, and consulting services related to our IPSIPay mobile application~~time.

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 IPSIPay Express, which could have a material adverse effect on our operations and financial condition.

Human Capital/Employees

As of December 31, ~~2023~~2024, we had 3 full time employees, including our Chief Executive Officer and our President and Chief Financial Officer and 2 1 part-time ~~employees or consultants~~ 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 ~~then~~ stockholders of the Company retained 500,000 shares of Common Stock. Therefore, immediately ~~following~~ 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 Carmel By The Sea, California.

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 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.

Corporate Information

Our principal offices are located at 56B 5^th Street, Lot 1, #AT, Carmel by the Sea, CA, 93921, and our telephone number at that office is (866) 477-4729. 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”).

Item 1A. Risk Factors

Risks Relating to Our Company

We have had no revenue generating operations to date with our current IPSIPay Express business model.

We have no operating history in our current IPSIPay Express 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~~ 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 ever generate predictable revenues or achieve positive cash flows or profitability.

For the year ended December 31, ~~2023~~2024 and ~~2022~~2023, we incurred a net loss of approximately $54.86 million and $105.38 million, respectively. We have an accumulated deficit of $5862.28 million through December 31, ~~2023~~2024. We expect to continue to incur operating losses until such time, if ever, as we are able to 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.

As of December 31, ~~2023~~2024, we had cash and cash equivalents of $~~50,433~~526. We believe that based on our current operating plan, our existing cash and cash equivalents ~~(which (which were increased via a private placement in February and March 2024 through which we raised $0.4 million) was~~ will ~~only~~not be sufficient to enable us to fund our operations and our debt and other obligations ~~for a very limited period~~. See “Management’s ~~Discussion~~ Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” below. This raises ~~questions~~ questions about our ability to continue as a going concern. Moreover, we have significant indebtedness due in the first half of ~~2024~~2025, 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~~ 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~~ current economic environment. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or ~~more~~ 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.

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, ~~2023~~2024, we had outstanding convertible notes owed to institutional investors in the aggregate principal amount of approximately $45.1502 million, net of debt discount of $0.08 million, which has either matured or is maturing during ~~2024~~2025. 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 60% of historical trading prices over a trading period to $0.345 per share, which has subsequently been adjusted to $0.04 per share. 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.

~~We may never complete our proposed business combination with Business Warrior.~~9

In February 2024, we signed a non-binding letter of intent relating to a proposed business combination with Business Warrior Corporation. While we believe that such business combination could create benefits for our company, the proposed business combination comes with several significant risks.

First, we may never enter into binding, definitive agreements with respect to the business combination. The non-binding letter of intent we executed is preliminary and subject to ongoing due diligence, negotiation and finalization. For many reasons, including the findings of our due diligence of BZWR, or our inability to come to final terms with BZWR or our Note Holders (who are contemplated to exchange their convertible notes in our company for newly-issued preferred stock of our company), we may elect to not proceed with the business combination.

Second, even if such binding, definitive agreements are entered into, there will be several key conditions to closing the transaction, and if such conditions are not satisfied, we will be unable to closing the transaction. Such conditions include, without limitation (i) approval of BZWR’s stockholders of the transaction and (ii) approval of our stockholders of proposed issuance of newly-issued shares of preferred stock to our and BZWR’s Note Holders. As such, there is a risk that the transaction will not close.

Finally, even if the business combination closes, we may not realize the anticipated benefits of the transaction. For example, it may prove difficult or impossible to combine and successfully integrate the businesses of our company and BZWR. We may also be unable to satisfy the terms of the preferred stock to be issued to the Note Holders. If we are unable to realize the potential benefits of the proposed business combination with BZWR, our business might fail.

In sum, you should not invest in our Common Stock in reliance on the fact that the proposed business combination with Business Warrior will ever occur, or if it occurs, that it will have a positive impact on our business and results of operations.

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, ~~2023~~2024, 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 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 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~~ 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~~ control and disclosure controls and procedures from time to time, our business may be harmed. Moreover, effective internal controls are ~~necessary~~ necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable ~~financial~~ financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported ~~financial~~ 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. Through Frictionless and other service providers, we are dependent on technology networks and systems to process, transmit and securely store electronic information ~~and to communicate~~ with our ~~kiosks, 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~~ damages against us and significant reputational harm, regardless of our responsibility for the failure. In addition, through ~~Frictionless and~~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.

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. As we are targeting the migrant communities in the United States, weakening in the Mexican economy could have a negative impact on users of IPSIPay which could, in turn, negatively impact our business, financial condition and results of operations, particularly if the recessionary environment disproportionately affects some of the market segments that represent a larger portion of our payment processing volume.

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:

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any regulatory action or investigation against us;

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any significant interruption to our systems and operations; and

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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.

~~The laws and regulations indirectly affecting our industry are constantly evolving and failure to comply adversely impact our business.~~11

~~Our~~The ~~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~~ aindirectly ~~failure~~affecting ~~by us,~~ our ~~agents~~industry 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~~ toconstantly 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 have made additional 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~~adversely inimpact ~~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).

13Our 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.

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.

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.

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 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.

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~~ license and/or that we develop in the future. We ~~and our subsidiary~~ have applied for trademark protection for certain marks, but there is a risk that such trademarks will not be approved, which could leave us without important protections for our brand.

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 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~~, and our President and Chief Financial Officer, Richard Rosenblum~~. Our business would be impeded or harmed if we were to lose ~~their~~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.

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~~ volume and significant price fluctuations. These and other factors may further impair our stockholders’ ability to sell their shares ~~when~~ 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 are 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.

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~~ 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 COVID-19 pandemic and its variants, the Russia-Ukraine conflict, the war between Israel and Hamas, rising inflation and ~~recent~~ bank failures 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:

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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;

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investor reaction to our business strategy;

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the success of competitive products or technologies;

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regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products;

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variations in our financial results or those of companies that are perceived to be similar to us;

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our ability or inability to raise additional capital to fund our working capital and business plans, and the terms on which we raise it;

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declines in the market prices of stocks generally;

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our public disclosure of the terms of any financing which we consummate in the future;

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our failure to generate revenue and positive cash flow or to become profitable;

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announcements by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments;

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cancellation of key contracts;

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our failure to meet financial or operational forecasts we publicly disclose;

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the trading volume of our common stock;

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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, ~~such as the continued spread of COVID-19~~ and ~~its variants, 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.

1817

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 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 or exercisable for common stock in connection the conversion or exercise of outstanding convertible notes and warrants ~~(including, potentially, up to 10,217,625 shares registered for resale pursuant to a registration statement filed on February 3, 2023)~~ as well as in ~~connection~~ 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, ~~two~~one of our ~~four~~three directors serve as ~~our~~a senior ~~officers~~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 ~~four~~three directors performed these functions, despite not all being independent directors. Thus, there is potential conflict in that ~~two~~ one of our directors ~~were~~was also engaged in management and participated in decisions concerning management compensation and audit issues ~~that~~ that may affect management and our 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 ~~two~~ executive ~~officers~~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.

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.

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.

Identifying and assessing cybersecurity risk is integrated into our overall risk management systems and processes. Cybersecurity risks related to our business, technical operations, privacy and compliance issues are identified through review by our internal information technology governance, risk and compliance policies. To defend, detect and respond to cybersecurity incidents, we, among other things: may conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data, conduct employee training, monitor emerging laws and regulations related to data protection and information security and implement appropriate changes.

Our risk management program also assesses third party risks, and we perform third-party risk management to identify and mitigate risks from IPSIPay Express and third parties like OpenPath, EfinityPay, vendors, suppliers, and other business partners associated with our use of third-party service providers. Cybersecurity risks are evaluated when determining the selection and oversight of applicable third-party service providers and potential fourth-party risks when handling and/or processing our employee, business or customer data.

Item 2. Properties

The Company ~~operated~~does ~~out of leased premises in Carmel by the Sea, California.~~not ~~The~~operate ~~lease~~out ~~initially commenced on March 22, 2021 and terminated on April 1, 2022, thereafter it was renewed on a month-to-month basis with a monthly rental expense~~ of ~~$4,800~~any ~~per~~leased ~~month.~~or Onowned ~~January 1, 2023 the property lease was renewed on a month-to-month basis, with a 90-day termination notice period, with a monthly rental expense of $5,088~~properties. The previous lease was terminated with effect from August 31, 2023.

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~~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~~ and David Rios. The complaint generally alleged that complainants, four former employees (or independent consultants) of our ~~company~~ 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~~ dismissed the claims of Ms. Rey and Mr. Perez, and they appealed that decision. WePrior 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 ~~May~~November 257, 2022, ~~the~~ ~~parties~~the ~~held~~same five employees filed a ~~mediation~~lawsuit, not in anfederal ~~attempt~~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 ~~resolve~~pay wages and failure to reimburse expenses under the ~~matters~~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 ~~mediation~~amended ~~was~~complaint ~~unsuccessful~~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.

On October 26, 2022, OSHA scheduled a hearing on Ms. Rey’s and Mr. Perez’s appeal for April 5, 2023. On November 8, 2022, the claimants’ counsel informed us that all five former employees intended to exercise their right to file a lawsuit in federal court and asked if we would stipulate to dismissal of Rey’s and Perez’s OSHA claims without prejudice. We agreed and a stipulation of dismissal without prejudice was filed on November 10, 2022.19

20We 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.

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, moved to compel arbitration on February 17, 2023. As a result of that motion and a stipulated order entered by the court, all proceedings were stayed.

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~~ the Hon. William A. Crowfoot granted our and Mr. Corbett’s motion to compel arbitration, concluding that all of the claims alleged in in the former employees’ first amended complaint were subject to arbitration. ~~After~~The the former employees failed to initiate arbitration, Defendants filed a motion to compel the appointment of an arbitrator, which was scheduled for hearing on January 2, 2024. On October 27, 2023, Plaintiffs, Perez, and Rey filed a petition for writ of mandate with the California Court of Appeal, ~~seeking~~subsequently ~~review~~denied the offormer ~~Judge Crowfoot~~employees’~~s order~~ ~~granting our motion to compel arbitration. The California Court of Appeal denied the~~ 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 ~~arbitration~~arbitrator.

Upon motion of our ~~company~~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~~ 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~~ 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~~ 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. ~~Mr.~~We ~~Voloshin claims he would~~ have ~~sold~~not ~~those~~received ~~share~~meaningful information on orthe ~~about~~amount ~~July~~of 1,the ~~2021~~claims ~~for~~of ~~$2.85~~the ~~per~~other ~~share~~two ~~for $950,000~~plaintiffs.

WeAn ~~have~~arbitrator ~~not~~was ~~received~~appointed through ~~any~~the ~~information~~American onArbitration Association and the ~~amount~~arbitrator ofissued ~~the~~a ~~claims~~scheduling order and Notice of Hearing. The ten-day arbitration ~~the~~has ~~other~~been ~~two~~set ~~plaintiffs~~for April 7-11, 2025, and April 14-18, 2025. Management continues its vigorous defense of the claims.

AnIn ~~arbitrator~~mid-April ~~has~~2024, ~~been~~the ~~appointed,~~Company and itMr. isCorbett ~~anticipated~~changed ~~that~~attorneys. ~~hearing~~The onLaw ~~the~~Offices ~~arbitration~~of ~~will~~Jeffrey beB. ~~held~~Neustadt ~~during~~replaced ~~2024~~prior counsel. ~~Management~~Mr. isNeustadt ~~vigorously~~and ~~defending~~Plaintiffs’ counsel ~~the~~conferred ~~claims~~ and ~~intends~~timely tosubmitted ~~continue~~the torequired dojoint sostatement 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 will pay $100,000 (the “First Payment”) and within 60 days the Company will 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.

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.

In order to secure the obligations to the Plaintiff Group, the Company executed two convertible promissory 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.

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~~Company and our Chairman and Chief Executive Officer William Corbett. The complaint asserts ~~six~~ six causes of action for: (i) breach of contract; (ii) nonpayment of wages; (iii) waiting time penalties; (iv) failure to indemnify for ~~alleged~~ alleged employee business expenses; (v) violation of Section 17200 of the California Business and Professional Code; and (vi) wrongful ~~termination~~ 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~~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.

WeThrough 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 ~~and~~filed ~~Mr.~~through ~~Corbett~~prior ~~filed~~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.

WeAs ~~expect~~expected, ~~that~~ the plaintiff-initiated ~~will, most likely, initiate~~ arbitration before the American Arbitration Association (“AAA”) based on ~~this~~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 ~~that~~ the dispute likely will be resolved bythrough AAA arbitration. Management is vigorously defending the claims and intends to continue to do so.

In mid-April 2024, the Company and Mr. Corbett changed attorneys. The Law Offices of Jeffrey B. Neustadt replaced prior counsel. Mr. Neustadt’s office submitted the cost bill and an attorneys’ fees motion that will be decided on September 10, 2024, by the trial court for the fees incurred on the successful appeal. As with the Voloshin matter, we are contractually bound to proceed through arbitration and to that end completed the process of selecting an arbitrator under the AAA rules. That appointment was made on August 7, 2024. Henceforth, the Minkovich matter will track along the same lines as the Voloshin matter but on a smaller scale as there is only one plaintiff in the Minkovich matter as opposed to five in the Voloshin matter. The arbitration hearing (“trial”) in the Minkovich matter was set for June 30, 2025 to July 3, 2025 at the continued “preliminary conference” held on October 7, 2024. Before the arbitration hearing, the parties will engage in discovery and some motion work which may (1) either dispose of all or some of the case, and/or (2) result in the Minkovich matter being sent back to the Superior Court for final determination.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

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 2728, ~~2024~~2025, was $0.~~1314~~0026 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 2730, ~~2024~~2025, there were approximately 6867 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, ~~2023~~2024:

Plan Category	Number of securities to be issued upon exercise of outstanding options		Weighted- average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders
2018 Equity Incentive Plan		—	$	—		26,667
2021 Equity Incentive Plan		1,~~520~~513,~~002~~335		4.4647		~~246~~253,~~665~~332
Equity compensation plans not approved by security holders		—		—		—
Total		1,520,002	$	4.46		273,332
None		—		—		—
Total		1513,335	$	4.47		279,999

Recent Sales of Unregistered Securities

On October 19 10, ~~2023~~2024, the Company ~~closed~~entered ainto two ~~transaction~~Securities ~~with~~Purchase ~~Red~~Agreements ~~Road~~with ~~Holdings~~accredited ~~Corporation~~investors, pursuant to which the Company ~~received~~issued ~~net~~two ~~proceeds~~senior ofpromissory ~~$60,000, after~~notes aneach ~~original~~with a ~~issue~~principal ~~discount~~amount ~~and~~totaling ~~fees of~~ $1366,~~450~~667 in(totaling ~~exchange~~$133,334), for ~~the~~gross ~~issuance~~proceeds of a $7350,~~450~~000 ~~Convertible~~each ~~Note~~(totaling $100,000), ~~bearing interest~~including ~~at 13%,~~an ~~which~~aggregate ~~interest~~original ~~is earned on~~ issuance discount of ~~the note~~$16, ~~an effective interest rate of~~667 ~~27.8%,~~(totaling ~~and maturing on July 30, 2024. The Note has mandatory monthly repayments of~~ $933,~~222~~334), ~~which~~for ~~commenced~~each ~~on November 30, 2023~~note. The ~~Note~~notes ismature ~~convertible~~on ~~into~~October ~~shares~~10, of2025 ~~Common~~and bear ~~Stock~~interest at ~~a variable conversion rate of~~ 608.5% ofper ~~the lowest trading price twenty trading days before conversion~~annum.

On ~~December~~October 2022, ~~2023~~2024, the Company ~~closed~~ entered into a ~~transaction~~Securities ~~with~~Purchase ~~Red~~Agreement ~~Road~~with ~~Holdings~~an ~~Corporation~~accredited investor, pursuant to which the Company received ~~net~~an ~~proceeds~~aggregate of $50100,000, through the ~~after~~issuance of a convertible promissory note and a five-year warrant to purchase an ~~original~~aggregate of 289,855 shares of common ~~issue~~stock, ~~discount~~at ~~and~~an ~~fees~~exercise price of $~~13,250~~0.345 inper ~~exchange~~share ~~for~~(as ~~the~~adjusted ~~issuance~~for ofstock asplits, ~~$63~~stock combinations,~~250~~ dilutive issuances and similar events). The note matures on ~~Convertible~~October ~~Note~~22, ~~bearing~~2025 and bears interest at 158%~~, which~~ ~~interest~~per isannum ~~earned~~and onare ~~issuance~~convertible ofinto ~~the~~shares ~~note,~~of anCommon Stock ~~effective~~at ~~interest~~a ~~rate~~conversion price of ~~32.~~ $0%,.084 per ~~and~~share ~~maturing~~(as onadjusted ~~September~~for 30stock splits, ~~2024~~stock combinations, dilutive issuances and similar events). The ~~Note has~~note ~~mandatory~~may ~~monthly~~be ~~repayments~~prepaid ofat ~~$8,082~~any time without penalty. The ~~Note~~Company is ~~convertible~~under ~~into~~no ~~shares~~obligation ofto ~~Common~~register ~~Stock~~the atshares aof ~~variable~~Common ~~conversion rate of 60%~~Stock ofunderlying the ~~lowest~~notes ~~trading~~or ~~price~~the ~~twenty~~warrants ~~trading~~for ~~days~~public ~~before conversion~~resale.

~~Between~~The note and warrant contain conversion limitations ~~October~~providing 20that a holder thereof may not convert the notes or exercise the warrants, ~~2023~~to ~~and~~the ~~November~~extent 27that, ~~2023~~if after giving effect to such conversion, the ~~Company~~holder ~~entered~~or ~~into~~any ~~Securities~~of ~~Purchase~~its ~~Agreements~~affiliates ~~with~~would 3beneficially ~~accredited~~own ~~investors,~~in ~~pursuant~~excess of 4.99% (the “Maximum Percentage”) of the outstanding shares of the Common Stock immediately after giving effect to ~~which~~such conversion or exercise. The holder may increase or decrease its beneficial ownership limitation upon notice to the Company ~~received~~provided anthat ~~aggregate~~in ofno ~~$350,000~~event such limitation exceeds in9.99%, and ~~gross~~that ~~proceeds~~any inincrease ashall ~~private~~not ~~placement~~be ~~through~~effective until the ~~issuance~~61st ~~of:~~day after such notice.

●Between ~~Convertible~~November ~~Promissory~~26, ~~Notes~~2024 (and November 27, 2024, the ~~“2023~~Company ~~Notes”~~entered ~~and~~into two Securities Purchase Agreements with accredited investors, pursuant to which the Company issued two senior promissory notes each with a ~~“2023~~principal ~~Note”~~amount totaling $66,667 (totaling $133,334);, for gross proceeds of $50,000 each (totaling $100,000), including an aggregate original issuance discount of $16,667 (totaling $33,334), for each note. The notes mature on July 15, 2025 and bear interest at 0% per annum.

●Between ~~five~~January 7, 2025 and February 20, 2025, the Company entered into Securities Purchase Agreements pursuant to which the Company issued two convertible promissory notes and two warrants to one accredited investment entity for total gross proceeds of $223,000. The notes are unsecured, mature 12 months from issuance date and bear interest at a rate of 8% per annum based on a 360 day trading-year, ~~warrants~~and (are convertible into shares of common stock of the ~~“2023~~Company ~~Warrants”~~at a conversion price of $0.084 per share (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. In terms of the Securities Purchase Agreement, the Company issued five-year warrants to purchase an aggregate 1 of 2,~~104~~654,~~493~~ 761 shares of the Common Stock at an exercise price of $0.~~345~~ 084 per share (as adjusted for stock splits, stock combinations, ~~dilutive issuances~~ and similar events). The Company is under no obligation to register the shares of Common Stock underlying the Note or the Warrant, for public resale.

~~The~~Between ~~2023 Notes~~January ~~mature 12 months~~7, ~~bear~~2025 ~~interest~~and atMarch 8%21, ~~and~~2025, ~~are~~The Company ~~convertible~~received ~~into~~conversion ~~shares~~notices offrom ~~Common~~convertible ~~Stock~~note atholders aconverting ~~conversion~~an ~~price~~aggregate of $~~0.345 per~~226,917 ~~share (as~~into ~~adjusted~~51,296,285 ~~for~~shares ~~stock~~of ~~splits,~~ common stock ~~combinations,~~at ~~dilutive~~conversion ~~issuances~~prices ~~and~~ranging ~~similar~~from ~~events)~~$0.0325 ~~The~~to ~~2023 Notes may be prepaid at any time without penalty~~$0.001105 ~~The~~per ~~Company~~share, isresulting ~~under~~in noa ~~obligation~~loss toon ~~register~~conversion ~~the shares~~ of ~~Common Stock underlying the Notes or the 2023 Warrants for public resale~~$101,254.

On December 14, 2023, two notes totaling $225,000 which matured on December 31, 2023 were rolled over for an additional 3 months to March 30, 2024. In exchange for the roll-over, the Company issued the note holders warrants exercisable for 292 463 shares of common stock at an exercise price of $0.345 per share.

Between February 6 and February 21, 2024, the Company entered into Securities Purchase Agreements pursuant to which the Company issued convertible promissory notes to four accredited investment entities for total gross proceeds of $308,335. The Notes are unsecured, mature 12 months from issuance date and bear interest at a rate of 8% per annum, and are convertible into shares of common stock of the Company at a conversion price of $0.345 per share (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 March 4, 2024, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued a convertible promissory note and a warrant exercisable for shares of common stock to an accredited investor. The Company realized gross proceeds of $100,000 after an original issue discount of $14,286 and a once off interest charge of $9,143. The note matures on September 4, 2024. Principal and interest payments are due in four equal instalments of $30,871 commencing on May 3, 2024. The note is convertible into common stock at a fixed price of $0.345 per share, unless the note is in default, whereby the conversion price will be 70% of the lowest closing bid price for the 5 trading days prior to conversion. The note may be prepaid at any time for the full outstanding principal and outstanding interest.

Issuer Purchases of Equity Securities

There were no issuer purchases of equity securities during the fiscal year ended December 31, ~~2023~~2024.

Item 6. Reserved

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, through ~~its~~our participation in IPSIPay Express, developing a new account-to-account payment application called Instant Settlement in RealTime as well as traditional credit card processing services. 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 IPSIPay Express

Our principal business as of the date of this Report consists of our participation in the IPSIPay Express joint venture. Since May 2023, we have been working with our joint venture partners OpenPath and EfinityPay to establish the necessary elements to commercially launch IPEX. This remains our top business priority. As described in Item 1. Business, we have been responsible for certain key aspects of establishing and launching IPEX. We will continue these efforts during ~~2024~~2025, and our results of operations for ~~2023~~2024 should be viewed in light of our ~~exit from our previous IPSIPay business and our~~ work on IPEX. No assurances can be given that we will be able to launch IPEX with our joint venture partners or that IPSIPay Express will generate revenues for us.

Potential Business Combination with Business Warrior Corporation

As described in Item 1. Business, on February 13, 2024, we signed an amended and restated non-binding letter of intent relating to a potential business combination with Business Warrior Corporation (“BZWR”), pursuant to which we would acquire BZWR. As of the date of this Report, neither we nor BZWR have any legal obligation of any kind with respect to the proposed transaction. We are presently conducting due diligence on BZWR and working with legal counsel on draft documentation for the transaction.

BZWR 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 believe that a potential combination with a fintech company that generates some revenue monthly would complement the development and commercial launch of our IPSIPay Express products and potentially other product offerings. In addition, we and BZWR have certain convertible note investors in common. Therefore, one purpose of the proposed transaction would be to convert the indebtedness of both our company and BZWR held by such note holders into equity securities of our company.

No assurances can be given, however, the business combination will ever take place. While this is a transaction we are presently interested in pursuing, we may elect to forego the transaction as we deemed appropriate. Moreover, even if we enter into definitive agreements with respect to the transaction, the transaction will be subject to material conditions to closing which may not be satisfied.

Inflation

Macro-economic conditions could affect consumer spending adversely and consequently our future operations when we fully launch our e-wallet products commercially. The U.S. has entered a period of significant 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 due to recent inflationary concerns in the U.S.

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.

24Results of Operations for the years Ended December 31, 2024 and December 31, 2023

Results of Operations for the years Ended December 31, 2023 and December 31, 2022

Net revenue

We ~~recorded~~ ~~minimal~~had ~~revenues~~revenue of $~~410~~ 0 and $~~847~~410 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively. We pivoted to focus our attention on the IPSIPay Express joint venture, where we expect to generate initial revenues ~~through~~during the ~~joint~~2025 ~~venture~~fiscal inyear, ~~the~~dependent ~~foreseeable~~on ~~future~~product testing, which is currently underway, and market acceptance. We are focusing all of our efforts on developing and launching IPSIPay Express, which we believe has a higher possibility for revenue generation in the near and longer term.

Cost of goods sold

~~Cost~~ We had cost of goods sold ~~was~~of $~~3,547~~0 and $53,~~052~~547 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively,. ~~and~~In ~~consists~~the ~~primarily~~prior year cost of goods sold of bank and ~~merchant~~ merchant related fees and chargebacks.

General and administrative expenses

General and administrative expenses were $31,~~576~~883,~~352~~257 and $53,~~452~~576,~~579~~352 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $1,~~876~~693,~~227~~095 or 3447.43%. The decrease is primarily due to the following;

(i) Salaries and wages were $1979,~~114,424~~514 and $21,~~361~~114,~~615~~424 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $1134,~~247,191~~910 or 5212.81%. The decrease is primarily due to the ~~decrease~~following; in(i) ~~stock~~the ~~based~~decrease in compensation of $~~855~~223,~~826~~882, onprimarily ~~immediately~~due ~~vested~~to ~~options~~the ~~granted~~voluntary toreduction of salary by our ~~officers~~CEO and ~~directors~~a reduction in ~~the~~health ~~prior~~care ~~year.~~benefits Inno ~~addition,~~longer inoffered ~~the~~to ~~prior year~~executives, we(ii) ~~incurred~~ a ~~restricted~~reduction in stock ~~expense~~based compensation of $~~361~~157,~~064~~440 ~~related~~due to ~~restricted~~the ~~stock~~full ~~issued~~vesting toof ~~our~~all ~~CEO~~options ~~which~~during ~~was~~the ~~fully~~current ~~vested~~year; on(iii) ~~January~~a 1,reduction ~~2023.~~in ~~Certain~~employer ~~prior~~taxation ~~year~~of ~~expenses~~$30,781 ~~amounting~~due to ~~$38,254~~the ~~were~~reduction ~~reclassified~~in tosalaries ~~payroll~~discussed ~~expenses~~above; ~~(previously~~and ~~stated~~offset asby ~~$2,323.361~~(iv) asan ~~they~~increase ~~related~~in severance accrual of $278,000 due to ~~direct~~the ~~employee~~settlement ~~health~~of ~~care~~the ~~costs~~Voloshin ~~and~~matter ~~employee~~in ~~benefits~~March 2025.

(ii) ~~Consulting~~Professional fees were $~~108~~43,~~000~~726 and $~~371~~620,~~000~~381 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $~~263~~576,~~000~~655 or 7093.90%. The decrease is primarily due to ~~the~~a ~~following~~decrease ~~major movements; (i)~~ in ~~the~~fees ~~prior~~paid ~~year,~~to weFrictionless ~~issued 4,000,000 restricted shares valued at $168,000 and made additional cash payments~~ of $67490,~~900~~293 due to ~~sales~~the ~~related~~disposal ~~consultants;~~ and ~~(ii)~~novation weof ~~paid~~all ~~$31,500 as consulting fees to a previous board director, Clifford Henry. The remaining movement~~ of ~~$4,400~~the isIPSIPAY ~~immaterial.~~operations ~~Certain~~in the prior year ~~expenses~~and ~~amounting~~a toreduction ~~$31,500~~in ~~were~~solicitation ~~reclassified~~agent ~~from professional~~ fees toof ~~consulting fees (previously stated as~~ $~~339~~71,~~500)~~180, ~~that~~the ~~related~~solicitation toagent ~~consulting~~was ~~fees~~used ~~paid~~during toour ~~Clifford~~2023 ~~Henry,~~annual ageneral ~~former board director~~meeting.

(iii) ~~Directors’~~Legal fees were $52414,~~500~~801 and $~~105~~965,~~000~~989 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $52551,~~500~~188 or 5057.01%, ~~due~~primarily related to ~~the~~a ~~lack~~reduction ofin ~~business~~legal activity, and therefore expenses on the ~~Fees~~two ~~paid~~ongoing tolegal ~~directors~~matters. ~~were~~Management ~~reduced~~is bymobbing ~~50%~~towards insettling the ~~current~~one ~~year~~matter with the other matter still ongoing.

(iv) Selling and marketing costs were $~~428~~154,~~909~~864 and $~~891~~428,~~489~~909 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $~~462~~274,~~580~~045 or 5164.90%. The decrease is due to a decrease in endorsement fees of $~~151~~141,~~874~~423 related to the ~~immediate~~conclusion ~~vesting~~ of ~~certain~~the ~~warrants~~three ~~issued~~year tomarketing andeal ~~affiliate~~with of Mario Lopez in ~~2022~~July as2024 ~~part~~and ~~of the promotion of our prior IPSIPay business,~~ a reduction in direct marketing ~~spend of $117,323~~ and ~~a reduction in~~ social ~~media~~marketing spend of $~~197~~132,~~732~~622 ~~on certain internet platforms~~ due to the strategic shift away from the e-wallet business. Certain prior year expenses amounting to $269,228 were reclassified to selling and marketing expenses and expenses amounting to $378 were reclassified to discontinued operations (selling and marketing costs were previously stated as ~~$622,639).~~we ~~The~~focus ~~expenses~~our ~~reclassified~~attention ~~were~~ion ~~primarily~~the ~~social~~IPSIPay ~~media~~Express ~~costs~~joint ~~that were previously classified as professional fees and other immaterial general and administrative expenses~~venture.

2524

(v) ~~Professional~~Insurance ~~fees~~expense ~~were~~was $~~620,381~~793 and $~~743~~105,~~949~~380 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $~~123~~104,~~568~~587 or 1699.62%., ~~The decrease is~~ primarily due to ~~a decrease in fees paid to Frictionless of $87,681 due to~~ the ~~novation~~cancellation of ~~the~~certain ~~IPSIPAY~~policies ~~operations to Frictionless~~ during ~~May~~the ~~2023 and a decrease in proxy solicitation fees of $38,756. Certain~~ prior year expenses amounting to $(301,437) were reclassified to selling and marketing expenses, consulting fees and general and administrative expenses and expenses amounting to $71,680 were reclassified to discontinued operations. (professional fees were previously stated at $1,117,066). The expenses reclassified to selling and marketing expenses ($271,658) consisted primarily of social media costs, the reclassification to consulting fees ($31,500), consisted of consulting fees from a former director. The reclassification of certain general and administrative expenses was $1,721, and is immaterial.

(vi) ~~Legal~~Consulting fees were $~~965~~83,~~989~~913 and $~~470~~108,~~316~~000 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ana ~~increase~~decrease of $~~495~~24,~~673~~087 or ~~105~~22.43%,. The decrease is primarily due to ~~two~~the ~~legal~~decrease ~~cases,~~in ~~one~~technical ~~with~~consulting aexpenses ~~previous~~of ~~employee~~$24,087 ~~and~~as ~~the~~we ~~other~~focus ~~with~~our aattention ~~consultant~~on ~~who was to provide services to~~ the ~~Group.~~IPSIPay ~~These~~Express ~~cases~~joint ~~are ongoing and are being defended~~venture.

(vii) ~~Insurance~~Directors’ ~~expense~~fees ~~was~~were $~~105~~36,~~380~~000 and $~~186~~52,~~431~~500 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $8116,~~051~~500 or 4331.54%, ~~primarily~~ due to the ~~cancellation~~resignation of ~~certain~~a ~~policies during the current year. Certain prior year expenses amounting to $37~~director,~~625~~ ~~were~~who ~~reclassified~~was tonot ~~payroll~~replaced ~~expenses~~during ~~(previously~~the ~~stated~~prior ~~as $224,056) as they related to direct employee health care costs~~year.

(viii) Other general and administrative expenses were $~~180~~169,~~769~~646and ~~and~~ $~~322~~180,~~780~~769 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $~~142~~11,~~011~~173 or 446.02%. The decrease is made up of several individually insignificant balances, in line with management’s overall objective of decreasing operational expenditure during the ~~2023~~2024 fiscal year.

Depreciation

Depreciation was $~~380~~2,~~634~~ 169 and $~~132~~380,~~394~~634 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ana ~~increase~~decrease of $~~248~~378,~~240~~465 or 99.4%. The ~~increase~~decrease is primarily due to the ~~September~~depreciation ~~2022~~of ~~commencement~~the ofsoftware ~~amortization~~platform ofand ~~the~~purchased ~~platform~~software of $374,298, prior to ~~its~~the novation of the platform to a third party during the ~~current~~prior year.

Investment impairment charge

Investment impairment charge was $0 and $1 for the years ended December 31, 2023 and 2022, respectively, the amount is immaterial.

Loss on debt conversion

Loss on debt conversion was $90,761 and $0 for the years ended December 31, 2023 and 2022, respectively, an increase of $90,761. The loss on debt conversion during the current year represents a loss realized on the conversion of convertible notes, into equity at fixed conversion prices of $0.345 per share, when the stock price ranged from $0.35 per share to $0.60 per share, resulting in a loss of $90,761. A total of $432,500 was converted from convertible debt to equity during the year ended December 31, 2023.

Loss on convertible notes

Loss on convertible ~~notes~~ notes was $734,~~562~~764,680 and $4164,~~602,709~~323 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, aan ~~decrease~~increase of $4,~~529~~600,~~147 or 98~~357.~~4%.~~ The ~~decrease~~loss on isconvertible ~~due~~notes during the ~~following~~current year related to; (i) ina ~~the~~loss ~~current~~of ~~year~~$4,318,669 werealized ~~extended~~on ~~the~~an ~~maturity~~anti-dilution ~~date~~adjustment to the conversion feature of ~~two~~certain convertible notes; ~~and~~(ii) ~~issued~~a ~~the~~loss ~~noteholders~~of ~~additional warrants~~$56,329 ~~exercisable~~realized ~~for~~on ~~292,463~~the ~~shares~~conversion feature of ~~common~~a ~~stock,~~convertible note which ~~resulted~~through ina no notice default clause, triggered a ~~loss~~variable onpriced ~~debt~~conversion ~~extinguishment~~liability; (iii) a loss of $64170,~~256;~~246 ~~and~~realized ~~(ii)~~on weconversion ~~early settled~~of ~~two~~ certain convertible notes ~~resulting~~at inprices anlower ~~early~~than ~~settlement~~the ~~penalty~~current ofmarket ~~$9,306.~~price Induring the ~~prior~~current year; we(iv) ~~repaid~~a ~~one~~loss ~~convertible~~on ~~note~~debt ~~and~~extinguishment of $102,353 ~~modified~~and ~~the~~(v) ~~maturity~~a ~~date~~penalty ofincurred ~~two~~on default of convertible notes, ~~resulting~~and inpenalties ~~the~~on ~~triggering~~conversion ofamounting ato ~~full~~$117,083. ~~rachet~~In ~~provision~~the onprior ~~certain warrants~~year, the ~~reduction~~ inloss ~~the~~on debt conversion ~~price~~was of$90,761 ~~certain~~and ~~convertible~~penalty ~~notes~~on ~~and~~default ~~the~~was ~~exchange~~$9,306. ofIn ~~certain~~addition, ~~warrants~~an ~~for~~expense ~~promissory~~was ~~notes,~~incurred ~~discussed~~on ~~fully~~debt inextinguishment ~~note~~of 16$64,256 toby extending the ~~financial~~maturity ~~statements~~date of certain convertible notes.

Fair value on price protected warrants

Fair value on price protected warrants was $2,051,405 and $0 for the years ended December 31, 2024 and 2023, respectively. During the current 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 novation

Loss on novation was $0 and $1,066,165 ~~and $0~~ for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ana ~~increase~~decrease of $1,066,165 or 100%. ~~The~~In the prior year, the loss on novation arose due the novation of the IPSIPay platform and all rights and obligations associated with the service agreement ~~with~~ with Frictionless to a third party.

Fair value of warrants issued

Fair value of warrants issued was $~~14,176~~0 and $014,176 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ana ~~increase~~decrease of $14,176 or 100.0%. In the prior Weyear, we issued a replacement warrant exercisable for 33,334 shares to an investor ~~during the current period~~.

Interest expense

Interest expense was $~~424~~603,~~177~~588 and $~~199~~424,~~788~~117 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, an increase of $~~224~~179,~~389~~471 or ~~112~~42.3%. The increase is related to ~~the~~new ~~additional $2,461,666 of~~ convertible note funding ~~raised~~of ~~during~~$885,502, ~~the~~less ~~current~~repayments ~~year~~of to$381,832 ~~fund~~and ~~the~~$577,778 ~~company’s investment~~of inpromissory ~~the~~note ~~IPSIPay~~funding ~~Express~~during ~~joint~~the ~~venture~~current year ~~which~~for isworking ~~expected~~capital ~~to become operational in the foreseeable future~~purposes.

Interest income

Interest income was $32,838 and $0 for the years ended December 31, 2024 and 2023, respectively, an increase of $32,838 or 100.0%. The interest income relates to funds advanced to Business Warrior prior to the cessation of our merger plans with them.

Amortization of debt discount

Amortization of debt discount was $~~770~~1,~~372~~037,914 and $~~263~~770,~~200~~372 for the ~~years~~ years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, an increase of $~~507~~267,~~172~~542 or ~~192~~34.7%. The increase is primarily due to the amortization of of debt discount ~~related~~on toconvertible ~~the~~notes ~~valuation~~carried ofover ~~warrants,~~from ~~derivative~~the ~~liabilities~~prior ~~and~~year ~~OID’s~~ and ~~fees~~additional ~~paid~~debt discount on ~~the~~new ~~$2,461,666 of~~ convertible ~~debt~~ ~~raised~~notes ~~during~~issued during the current year to fund working capital.

Derivative liability movements

Derivative liability movements were $16,~~501~~892,~~446~~395 and $~~411~~1,~~752~~501,446 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively., an increase of $5,390,949 or 359.1%. The derivative liability arose primarily due to the ~~issuance~~revaluation of ~~convertible~~certain ~~securities~~repriced ~~with~~conversion ~~variable~~features ~~conversion~~on ~~prices~~convertible notes and nothe reset ~~floor~~of ~~conversion~~the exercise price. ~~The~~and ~~credit~~full ratchet reset of certain warrants during the current year, ~~represents~~and the subsequent mark-to-market of these ~~the~~derivatives ~~derivative~~due ~~liability~~to ~~outstanding~~a asdeclining ofstock ~~December~~price ~~31,~~on ~~2023,~~the ~~primarily~~exercise ~~as a result~~ of acertain ~~decrease in~~convertible ~~the~~notes ~~share~~during ~~price over~~ the ~~prior~~current year.

~~Net~~Operating loss from equity method investment

Net loss from equity method investment was $~~403,282~~819 and $0403,282 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ana ~~increase~~decrease of $~~403~~402,~~282~~463 or ~~100~~99.08%. ~~On April 28, 2023, we formed a new Delaware limited~~ ~~liability~~The ~~company~~loss ~~called~~in ~~IPSIPay Express LLC as a three-way joint venture with two other entities to develop and market a proprietary consumer to merchant real-time payment platform initially focused on~~ the ~~fast-growing~~prior ~~online~~year ~~gaming~~related ~~and~~is ~~entertainment~~due ~~sectors. On June 19, 2023, we entered into the IPEX Operating Agreement with OpenPath, Inc. and EfinityPay, LLC~~ to ~~memorialize~~ the ~~terms~~dilutive effect of ~~our~~withdrawals ~~IPSIPay Express joint venture. The loss represents our proportionate share~~ of ~~the~~cash ~~operating~~out ~~expenses~~ of the joint venture ~~and~~by the ~~additional~~other ~~loss~~joint venture ~~associated~~parties, ~~with~~impacting ~~the~~on ~~increase in~~ the ~~basis~~overall value of ~~our investment from 11~~the.~~11%~~ toIPSIPay ~~22.22%,~~Express ~~based~~Joint onventure ~~the~~attributes ~~net~~to ~~asset value of~~ the ~~joint venture~~Company.

Impairment of equity method investments

Impairment of equity method investments was $705,142 and $0 for the years ended December 31, 2024 and 2023, respectively, an increase 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 from continuing operations

Net loss from continuing operations was $54,~~301~~126,~~112~~341 and $105,~~243~~301,~~124~~112 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease ~~in loss~~ of $41,~~942~~174,~~012~~ 771 or 4822.2%. The decrease is primarily due to the decrease in general and administrative expenses, ~~the~~a decrease in ~~the~~depreciation ~~penalty~~and onamortization, ~~convertible~~a ~~notes~~decrease in loss on novation and the movement in derivative ~~liabilities~~liability, offset by, ~~the~~an ~~loss on novation, the~~ increase in ~~interest~~loss ~~expense~~on ~~and~~convertible ~~the~~notes ~~increase~~and ~~in the~~fair ~~amortization~~ value of ~~debt~~price ~~discount~~protected warrants, ~~all~~as discussed in detail above.

Operating loss from discontinued operations

Operating loss from discontinued operations was $~~40,821~~0 and $8840,~~300~~821 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $4740,~~479~~821 or 53100.80%. On May 12, 2023, we entered into an agreement with Frictionless to unwind the equity ownership stakes that we and Frictionless have in each other and in Beyond Fintech. ~~was~~We ~~disposed~~assigned to Frictionless all common stock of inFrictionless ~~May~~owned ~~2023~~by us and all shares of common stock of Beyond Fintech owned by us.

Loss on disposal of subsidiary

Loss on disposal of subsidiary was $~~495,424~~0 and $0495,424 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ana ~~increase~~decrease of $495,424 or 100.0%. OnThis ~~May 12, 2023, the Company entered into an Agreement with Frictionless to unwind the equity ownership stakes that the Company~~relates ~~and Frictionless have in each other and in Beyond Fintech. The Company assigned~~ to ~~Frictionless all common stock of Frictionless owned by~~ the ~~Company~~unwinding ~~and all shares~~ of ~~common~~our ~~stock~~relationship ofwith ~~Beyond~~Frictionless ~~Fintech~~as ~~owned~~described ~~by the Company~~above. The consideration toreceived ~~the~~by ~~Company~~us for the assignment of ~~the~~our equity in Beyond Fintech ~~Shares~~ to Frictionless was $250,000, resulting in a net loss on disposal of $495,424.

Net loss

Net loss was $54,~~837~~126,~~357~~ 341 and $105,~~331~~837,~~424~~357 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $41,~~494~~711,~~067~~016 or 4329.53%. the decrease is primarily attributable to the decrease in net loss from continuing operations and the decrease in loss on disposal of subsidiary and investment, as ~~discussed~~described ~~in detail~~ above.

27Net loss attributable to non-controlling interest

Net loss attributable to non-controlling interest was $0 and $1,597 for the years ended December 31, 2024 and 2023, respectively, a decrease of $1,597 or 100.0%. We disposed of our Beyond Fintech subsidiary in the prior year, thereby eliminating minority shareholders’ interests.

Deemed dividend

Deemed dividend was $426,807 and $0 for the years ended December 31, 2024 and 2023, respectively, an increase of $426,807 or 110.0%. 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.

Net loss attributable to Innovative Payment Solutions Inc., stockholders

Net loss was $4,553,148 and $5,835,760 for the years ended December 31, 2024 and 2023, respectively, a decrease of $1,282,612 or 22.0%. the decrease is primarily attributable to the decrease in net loss and the deemed dividend discussed above.

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 $~~58,235,618~~62.8 million through December 31, ~~2023~~2024 and incurred negative cash flow from operations of $~~1,416,809~~0.65 million for the year ended ~~December~~ December 31, ~~2023~~2024. Our primary focus ~~was~~is on ~~launching~~our ~~and~~IPSIPay ~~operating~~Express eLLC three-~~wallets~~way ~~that~~joint ~~enable~~venture ~~consumers~~ to ~~deposit~~develop ~~cash,~~and ~~convert it into~~ market a ~~digital~~proprietary consumer ~~form~~to ~~and~~merchant ~~remit~~real-time ~~the~~payment ~~funds~~platform toinitially ~~Mexico~~focused ~~and~~on ~~other~~the ~~countries~~fast-growing ~~quickly~~online gaming and ~~securely,~~entertainment ~~which~~sectors. ~~will~~To ~~require us to spend~~date, ~~substantial~~this ~~amounts in connection~~joint ~~with~~venture ~~implementing~~has ~~our~~not ~~business~~generated ~~strategy.~~revenue, ~~During~~but ~~the~~we ~~second~~believe ~~quarter~~much of ~~2023~~the webackground ~~formed~~work anecessary ~~new~~for ~~Delaware limited liability company called~~ IPSIPay Express ~~as a three-way joint venture with two other entities~~ to ~~develop~~commence ~~and~~revenue ~~market a~~generating operations ~~proprietary~~from ~~consumer to merchant real-time~~ payment ~~platform~~ ~~initially~~processing ~~focused~~has onbeen ~~the~~completed. ~~fast-growing~~No ~~online~~assurances ~~gaming~~can ~~and~~be ~~entertainment sectors. On June 19~~given, ~~2023~~however, wethat ~~entered~~such ~~into~~revenue ~~the~~generation ~~IPEX~~will ~~Operating~~commence ~~Agreement~~or be meaningful to ~~memorialize~~us ~~the~~as ~~terms~~an ofapproximately ~~the~~22% joint venture partner in IPSIPay Express.

At December 31, ~~2023~~2024, we had cash of $~~50,433~~526 and working capital deficit of $810.4 million,~~143,976~~ including a derivative liability of $1~~,434,196~~.1 million. After eliminating the derivative liability our working capital deficit is $~~6,709,780~~9.3 ~~Subsequent to December 31, 2023, up to March 4, 2024, we raised $408,335 through the issuance of convertible notes to accredited investors~~million.

We used cash of $~~1,416,809~~0.65 million and $~~3,061,953~~1.45 million in operations for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively. Overall cash used in ~~operations~~ operations decreased by $~~1,645,144~~0.8 million due to cost containment ~~efforts~~ to preserve cash balances.

We invested ~~a further~~ $~~80,296~~0.3 million in ~~our~~Business ~~e-wallet~~Warrior ~~platforms~~in tothe ~~enhance~~form ~~the~~of ~~product~~notes ~~offering~~receivable ~~and~~for tostrategic ~~further~~purposes ~~develop~~during the ~~Beyond~~year ~~Wallet~~ended ~~application~~December ~~(which~~31, ~~was~~2024. ~~discontinued in~~In ~~May~~the ~~2023).~~prior Weyear we ~~also~~had invested $~~999,000~~0.1million in our ~~IPSIPay~~payment ~~Express~~platforms ~~joint~~which ~~venture~~we tosubsequently ~~develop~~disposed ~~and~~of ~~market a~~or ~~proprietary~~novated ~~consumer~~ to ~~merchant real-time~~other ~~payment~~parties ~~platform~~and ~~initially~~we ~~focused~~invested on$1.0 million ~~the~~in ~~fast-growing~~our ~~online~~equity ~~gaming~~method ~~and entertainment sectors~~investment.

We generated cash ~~from financing activities~~ of $~~2,157,312~~1.3 ~~during~~million ~~the~~from ~~current~~promissory ~~year,~~notes ~~primarily~~and ~~$2,461,666 from~~ convertible notes ~~issued to investors to bridge our working capital~~ and repaid $~~304,354~~0.4 million of convertible notes. ~~Cash~~In ~~utilized in financing activities for~~ the prior year ~~ended~~we generated ~~December~~$2.4 ~~31,~~million ~~2022~~from ~~included the repayment of a~~ convertible ~~note~~notes ofand repaid $~~1,147,063~~0.3 million.

At December 31, ~~2023~~2024, we had outstanding convertible notes, including interest thereon of $45.0 million,~~391,782~~ ~~(before~~net of unamortized debt discount of $~~687,502)~~0.1 ~~and~~million ~~outstanding~~and outstanding promissory notes, including interest thereon of $1.7 million,~~062,007~~ net of unamortized debt discount of $0.1 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 a rates ofranging from 8% to 32 24.098% per annum. and are convertible into our common stock at conversion prices ranging from fixed conversion prices of $0.~~345~~084 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events), to variable conversion prices of 60% to 70% of lowest trading prices over a 2010 ~~trading~~to 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.

~~Pursuant~~Given toour ~~the~~losses ~~IPSIPay~~and ~~Express~~negative ~~joint~~cash ~~venture agreement~~flows, we ~~were~~will be required to ~~invest~~raise ~~another~~significant ~~$500,000~~additional infunds ~~IPSIPay~~by ~~Express~~issuing byequity ~~November~~or ~~30,~~equity-linked ~~2023~~securities to progress our existing business model with IPSIPay Express. InAdditional ~~late~~debt ~~2023~~financing, ~~we agreed~~if ~~with~~available, ~~our~~may ~~joint~~involve ~~venture~~covenants ~~partners~~restricting ~~that~~our ~~such~~operations or ~~investment~~our ~~was~~ability ~~not~~to ~~required~~incur additional debt. ~~Therefore~~Any ~~our~~additional ~~share~~debt offinancing ~~the~~or ~~outstanding~~additional equity ~~interests of~~that ~~IPSIPay~~we ~~Express~~raise ~~remains~~may atcontain ~~22.22%.~~terms ~~There~~that isare not nofavorable ~~penalty~~to ~~for~~us ~~non-payment~~or ~~other~~our ~~than~~stockholders ~~our~~and ~~share~~require ofsignificant ~~the~~debt ~~joint~~service ~~venture~~payments, ~~remaining~~which atdiverts 22resources from other activities.~~22%~~ ~~and~~Moreover, ~~not~~there ~~increasing~~is a risk that financing may be unavailable to 33support our operations on favorable terms, or at all.~~33%.~~

~~Given~~There ~~our~~is ~~losses~~also ~~and~~a significant ~~negative~~risk ~~cash~~that ~~flows,~~none weof ~~will~~our beplans ~~required~~ to raise ~~significant~~financing ~~additional~~will ~~funds~~be toimplemented ~~progress~~in ~~our~~a ~~business~~manner asnecessary ~~planned~~to bysustain ~~issuing~~us ~~equity~~for ~~or equity-linked~~an ~~securities.~~extended ~~Should~~period ~~this~~of ~~occur,~~time. If ~~our~~adequate ~~stockholders~~funds ~~would~~are ~~experience~~not ~~dilution,~~available ~~perhaps~~to ~~significantly.~~us ~~Additional~~when ~~debt financing~~needed, if ~~available,~~we may ~~involve~~be ~~covenants~~required ~~restricting~~to ~~our~~continue ~~operations~~with reduced or ~~our~~discontinued ~~ability~~operations or to ~~incur~~obtain funds ~~additional~~through ~~debt.~~arrangements ~~Any~~that ~~additional~~may ~~debt~~require ~~financing~~ us to relinquish rights to technologies or ~~additional~~potential ~~equity~~markets, ~~that~~any weof ~~raise~~which ~~may~~could ~~contain~~have ~~terms~~a ~~that~~material adverse ~~are~~effect ~~not~~on ~~favorable~~our Company. In addition, our inability to ussecure oradditional ~~our~~funding ~~stockholders~~when ~~and~~needed ~~require~~could ~~significant~~cause ~~debt~~our ~~service~~business to fail ~~payments,~~or ~~which~~become ~~diverts~~bankrupt ~~resources~~or ~~from~~force ~~other~~us ~~activities.~~to ~~Moreover,~~wind ~~there~~down isor adiscontinue ~~risk~~operations, ~~that~~accordingly, ~~financing~~there ~~may~~is besubstantial ~~unavailable~~doubt relating to ~~support~~ our ~~operations~~ability onto ~~favorable~~continue ~~terms,~~as ora atgoing ~~all~~concern.

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.

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 ~~2024~~2025 fiscal year.

Critical Accounting Policies

Preparation of our consolidated 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 Consolidated 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 Consolidated 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 ~~only~~ 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.

2928

Item 8. Financial Statements and Supplemental Data

		Page
Report of the Independent, Registered Public Accounting firm		F-2
Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022		F-4
Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023		F-3
Consolidated Statements of Operations for the years ended December 31, 2023 and December 31, 2022		F-5
Consolidated Statements of Operations for the years ended December 31, 2024 and December 31, 2023		F-4
Consolidated Statements of Deficit for the years ended December 31, 2023 and December 31, 2022		F-6
Consolidated Statements of Deficit for the years ended December 31, 2024 and December 31, 2023		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and December 31, 2022		F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and December 31, 2023		F-6
Notes to the Consolidated Financial Statements		F-87

F-1

New York Office: 805 Third Avenue New York, NY 10022 ~~Tel.~~ 212.838.5100 ~~Fax 212.838.2676~~ www.rbsmllp.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Innovative Payment Solutions, Inc.

Innovative Payment Solutions, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Innovative Payment Solutions, Inc. (the Company) as of December 31, ~~2023~~2024 and ~~2022~~2023, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the ~~two~~ years in the two-year period ended December 31, ~~2023~~2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2023~~2024 and ~~2022~~2023, and the results of its operations and its cash flows for each of the ~~two~~ years in the two-year period ended December 31, ~~2023~~2024, 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 consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has an accumulated deficit, ~~and~~which ~~has~~raises ~~stated that~~ substantial doubt ~~exists~~ 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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.

F-2

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, ~~2023~~2024, RBSM determined there were no CAM’s for the audit of the year ended December 31, ~~2023~~2024.

PCAOB ID 587 We have served as the Company’s auditor since 2014. ~~PCAOB ID 587~~ New York, NY March 2931, ~~2023~~2025

F-32

INNOVATIVE PAYMENT SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2023			2022
	2024			2023
Assets
Current Assets
Cash	$	~~50,433~~526		$	~~373~~50,~~822~~433
Other current assets		387,~~818~~894			9738,~~042~~818
Assets held for sale		-			807,263
Notes receivable – current portion		371,170			-
Total Current Assets		89379,~~251~~590			189,~~278,127~~251
Non-current assets
Plant and equipment		74,~~027~~858			407,~~362~~027
Intangible assets		-			1,401,491
Security deposit		-			5,000
Security deposit		5,000			32,592
Equity method investment		1			703,938
Equity method investment		703,938			-
Total Non-Current Assets		4,859			715,965
Total Non-Current Assets		715,965			1,474,445
Total Assets	$	384,449		$	805,216
Total Assets	$	805,216		$	2,752,572
Liabilities and Equity (Deficit)
Current Liabilities
Accounts payable	$	2,~~023~~986,~~375~~039		$	~~727~~2,~~922~~023,375
Liabilities held for sale		-			33,810
Federal relief loans – current portion		8,869			9,369
Federal relief loans – current portion		9,369			-
Notes payable, net of unamortized discount of $89,062 and $0, respectively		1,669,873			1,062,007
Notes payable		1,062,007			964,268
Convertible debt, net of unamortized discount of $80,971 and $687,503, respectively		5,016,205			3,704,280
Convertible debt, net of unamortized discount of $687,503 and $263,200, respectively		3,704,280			2,266,602
Derivative liability		1,138,204			1,434,196
Derivative liability		1,434,196			2,550,642
Total Current Liabilities		10,819,190			8,233,227
Total Current Liabilities		8,233,227			6,543,244
Non-Current Liabilities
Federal relief loans		150,000			~~163~~150,~~978~~000
Total Non-Current Liabilities		150,000			~~163~~150,~~978~~000
Total Liabilities		810,~~383~~969,~~227~~190			68,~~707~~383,~~222~~227
Equity (Deficit)
Stockholders’ Equity (Deficit)
Preferred stock, $0.0001 par value, 25,000,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2023 and December 31, 2022.		-			-
Preferred stock, $0.0001 par value, 25,000,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2024 and December 31, 2023.		-			-
Common stock, $0.0001 par value; 750,000,000 shares authorized, 13,819,889 and 12,563,426 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.*		1,382			1,256
Common stock, $0.0001 par value; 750,000,000 shares authorized. 19,081,446 and 13,819,889 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively.*		1,908			1,382
Additional paid-in-capital*		5052,~~656~~202,~~225~~117			4850,~~442~~656,~~355~~225
Accumulated deficit		(5862,~~235~~788,~~618~~766	)		(5258,~~399~~235,~~858~~618	)
Total equity (deficit) attributable to Innovative Payment Solutions, Inc. Stockholders		(7,578,011	)		(3,956,247	)
Total Stockholders’ Equity (deficit)		(10,584,741	)		(7,578,011	)
Non-controlling interest		-			1,597
Total Liabilities and Stockholders’ Equity (Deficit)	$	384,449		$	805,216
Total Equity (Deficit)		(7,578,011	)		(3,954,650	)
Total Liabilities and Equity (Deficit)	$	805,216		$	2,752,572

*	After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The accompanying notes are an integral part of these audited consolidated financial statements.

F-43

INNOVATIVE PAYMENT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Twelve months ended			Twelve months ended
	December			December
	2023			2022
	2024			2023
Net Revenue	$	~~410~~-		$	~~847~~410
Cost of Goods Sold		~~3,547~~-			53,~~052~~547
Gross loss		~~(3,137~~-	)		(43,~~205~~137	)
General and administrative		31,~~576~~883,~~352~~257			53,~~452~~576,~~579~~352
Depreciation		~~380~~2,~~634~~169			~~132~~380,~~394~~634
Total Expense		31,~~956~~885,~~986~~426			53,~~584~~956,~~973~~986
Loss from Operations		(31,~~960~~885,~~123~~426	)		(53,~~589~~960,~~178~~123	)
Investment impairment charge		-			(1	)
Loss on convertible notes		(4,764,680	)		(164,323	)
Loss on debt conversion		(90,761	)		-
Fair value adjustment to price protected warrants		(2,051,405	)		-
Loss on convertible notes		(73,562	)		(4,602,709	)
Loss on novation		-			(1,066,165	)
Loss on novation		(1,066,165	)		-
Fair value of warrants issued		-			(14,176	)
Fair value of warrants issued		(14,176	)		-
Loss on disposal of assets		(2,600	)		-
Interest expense, net		(424,117	)		(199,788	)
Interest expense		(603,588	)		(424,117	)
Amortization of debt discount		(770,372	)		(263,200	)
Interest income		32,838			-
Derivative liability movements		1,501,446			411,752
Amortization of debt discount		(1,037,914	)		(770,372	)
Loss before income taxes		(4,897,830	)		(10,243,124	)
Derivative liability movements		6,892,395			1,501,446
Loss before income taxes		(3,420,380	)		(4,897,830	)
Income taxes		-			-
Net loss after income taxes		(43,~~897~~420,~~830~~380	)		(104,~~243~~897,~~124~~830	)
Net loss from equity method investments		(403,282	)		-
Operating loss from equity method investments		(819	)		(403,282	)
Net loss from continuing operations		(5,301,112	)		(10,243,124	)
Impairment of equity method investment		(705,142	)		-
Total loss from equity method investment		(705,961	)		(403,282	)
Net loss from continuing operations		(4,126,341	)		(5,301,112	)
Discontinued operations
Operating loss from discontinued operations		~~(40,821~~-	)		(8840,~~300~~821	)
Loss on disposal of subsidiary and investment		~~(495,424~~-	)		-(495,424	)
Net loss from discontinued operations		~~(536,245~~-	)		(88536,~~300~~245	)
Net loss		(54,~~837~~126,~~357~~341	)		(105,~~331~~837,~~424~~357	)
Net loss attributable to non-controlling interest		~~1,597~~-			431,~~267~~597
Net loss attributable Innovative Payment Solutions, Inc. Stockholders’	$	(5,835,760	)	$	(10,288,157	)
Deemed dividend		(426,807	)		-
Net loss attributable to Innovative Payment Solutions, Inc. Stockholders’	$	(4,553,148	)	$	(5,835,760	)
Basic and diluted loss per share*
Continuing operations*	$	(0.4130	)	$	(0.8341	)
Discontinued operations*		~~(0.04~~-	)		(0.0004	)
	$	(0.4530	)	$	(0.8345	)
Weighted Average Number of Shares Outstanding - Basic and diluted		12,844,609			12,406,677
Weighted Average Number of Shares Outstanding - Basic and diluted*		15,077,923			12,844,609

*	After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The accompanying notes are an integral part of these audited consolidated financial statements.

F-54

INNOVATIVE PAYMENT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE PERIOD JANUARY 1, ~~2022~~2023 TO DECEMBER 31, ~~2023~~2024

	Preferred Stock Shares		Amount		Common Stock Shares	Common Stock Shares*		Amount		Amount*	Additional Paid-in Capital		~~Additional~~Accumulated Paid-in Capital*Deficit			~~Accumulated~~Non-controlling ~~Deficit~~shareholders interest			~~Non-controlling~~Total ~~shareholders~~Stockholders’ ~~interest~~Equity (Deficit)			~~Total Stockholders’ Equity (Deficit)~~
Balance at December 31, 2021		-	$	-			12,263,426			$	1,226		$	45,806,576		$	(42,111,701	)	$	35,211		$	3,731,312
Balance at December 31, 2022		-	$	-		12,563,426		$	1,256		$	48,442,355	$	(52,399,858	)	$	1,597		$	(3,954,650	)
Fair value of warrants issued		-		-			-				-			708,063			-			-			708,063
Conversion of convertible debt		-		-		1,253,625			126			523,135		-			-			523,261
Shares issued for services		-		-			233,333				23			332,977			-			-			333,000
Additional shares issued on reverse stock split		-		-		2,838			-			-		-			-			-
Stock based option expense		-		-			-				-			1,233,682			-			-			1,233,682
Fair value of warrants issued for services		-		-		-			-			159,004		-			-			159,004
Restricted stock awards		-		-			66,667				7			361,057			-			-			361,064
Fair value of warrants issued to convertible debt holders		-		-		-			-			1,045,655		-			-			1,045,655
Proceeds from non-controlling shareholders		-		-			-				-			-			-			9,653			9,653
Stock based compensation		-		-		-			-			377,856		-			-			377,856
Net loss		-		-			-				-			-			(10,288,157	)		(43,267	)		(10,331,424	)
Fair value of warrants issued for equity method investments		-		-		-			-			108,220		-			-			108,220
Balance at December 31, 2022		-	$	-			12,563,426			$	1,256		$	48,442,355		$	(52,399,858	)	$	1,597		$	(3,954,650	)
Net loss		-		-		-			-			-		(5,835,760	)		(1,597	)		(5,837,357	)
Conversion of convertible debt		-		-			1,253,625				126			523,135			-			-			523,261
Balance at December 31, 2023		-	$	-		13,819,889		$	1,382		$	50,656,225	$	(58,235,618	)	$	-		$	(7,578,011	)
Additional shares issued on reverse stock split		-		-			2,838				-			-			-			-			-
Conversion of convertible debt		-		-		5,261,557			526			611,691		-			-			612,217
Fair value of warrants issued for services		-		-			-				-			159,004			-			-			159,004
Fair value of warrant anti-dilution		-		-		-			-			426,807		(426,807	)		-			-
Fair value of warrants issued to convertible debt holders		-		-			-				-			1,045,655			-			-			1,045,655
Fair value of warrants issued for services		-		-		-			-			75,357		-			-			75,357
Stock based compensation		-		-			-				-			377,856			-			-			377,856
Fair value of warrants issued to convertible debt holders		-		-		-			-			109,268		-			-			109,268
Fair value of warrants issued for equity method investments		-		-			-				-			108,220			-			-			108,220
Fair value of warrants issued on debt extinguishment		-		-		-			-			102,353		-			-			102,353
Net loss		-		-			-				-			-			(5,835,760	)		(1,597	)		(5,837,357	)
Stock based compensation		-		-		-			-			220,416		-			-			220,416
Balance at December 31, 2023		-	$	-			13,819,889			$	1,382		$	50,656,225		$	(58,235,618	)	$	-		$	(7,578,011	)
Net loss		-		-		-			-			-		(4,126,341	)		-			(4,126,341	)
Balance at December 31, 2024		-	$	-		19,081,446		$	1,908		$	52,202,117	$	(62,788,766	)	$	-		$	(10,584,741	)

* After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The accompanying notes are an integral part of these audited consolidated financial statements.

F-65

INNOVATIVE PAYMENT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Twelve months ended			Twelve months ended
	December 31,			December 31,
	2023			2022
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(54,~~837~~126,~~357~~341	)	$	(105,~~331~~837,~~424~~357	)
Net loss from discontinued operations		~~536,245~~-			88536,~~300~~245
Net loss from continuing operations		(54,~~301~~126,~~112~~341	)		(105,~~243~~301,~~124~~112	)
Adjustment to reconcile net loss to net cash used in operating activities:
Derivative liability movements		(16,~~501~~892,~~446~~395	)		(~~411~~1,~~752~~501,446	)
Depreciation		~~380~~2,~~634~~169			~~132~~380,~~394~~634
Amortization of debt discount		~~770~~1,~~372~~037,914			~~263~~770,~~200~~372
Loss on novation		~~1,066,165~~-			-1,066,165
Investment impairment charge		-			1
Loss on convertible notes		4,764,680			164,323
Loss on conversion of debt to equity		90,761			-
Fair value of price protected warrants		2,051,405			-
Loss on convertible notes		73,562			4,602,709
Fair value of warrants issued for services		75,357			159,004
Fair value of warrants issued for services		159,004			359,125
Deemed interest income		(28,439	)		-
Unrealized loss on equity method investments		~~403,282~~819			-403,282
Shares issued for services		-			333,000
Impairment of equity method investment		705,142			-
Stock based compensation		~~377~~220,~~856~~416			1377,~~594,746~~856
Impairment of deposit		5,000			-
Changes in Assets and Liabilities
Other current assets		5825,~~224~~001			~~(12~~58,~~008~~224	)
Accounts payable and accrued expenses		1962,~~577,888~~663			~~288~~1,~~018~~577,888
Interest accruals		~~392~~548,~~714~~533			~~111~~392,~~528~~714
Cash used in operating activities - continuing operations		(1648,~~452,096~~076	)		(21,~~982~~452,~~163~~096	)
Cash generated by operating activities - discontinued operations		~~35,287~~-			~~(79~~35,~~790~~287	)
CASH USED IN OPERATING ACTIVITIES		(1648,~~416,809~~076	)		(31,~~061~~416,~~953~~809	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in equity method investment		(999,000	)		-
Investment in notes receivable		(338,333	)		-
Intangibles acquired		(44,405	)		(778,462	)
Investment in equity method investment		(500	)		(999,000	)
Investment in deposits		-			(12,792	)
Intangibles acquired		-			(44,405	)
Deposits refunded		14,800			-
Investment in deposits		-			-
Plant and equipment purchased		-			(43,049	)
Deposits refunded		-			14,800
Net cash used in investing activities – continuing operations		(1338,~~028,605~~833	)		(~~834~~1,~~303~~028,605	)
Net cash used in investing activities – discontinued operations		~~(36,230~~-	)		(4136,~~320~~230	)
NET CASH USED IN INVESTING ACTIVITIES		(1338,~~064,835~~833	)		(~~875~~1,~~623~~064,835	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short term notes and convertible notes		21,~~461~~318,~~666~~834			-2,461,666
Repayment of convertible notes		(~~304~~381,~~354~~832	)		(1304,~~147,063~~354	)
Proceeds from non-controlling shareholders		-			~~9,653~~-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2,157,312			(1,137,410	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		937,002			2,157,312
NET DECREASE IN CASH		(~~324~~49,~~332~~907	)		(5324,~~074,986~~332	)
CASH AT BEGINNING OF YEAR		~~374~~50,~~765~~433			5374,~~449,751~~765
CASH AT END OF YEAR	$	~~50,433~~526		$	~~374~~50,~~765~~433
RECONCILIATION OF OPENING CASH WITHIN THE BALANCE SHEET TO THE STATEMENT OF CASH FLOWS
Cash	$	373,822		$	5,367,551
Cash included in assets held for resale		943			82,200
CASH AT BEGINNING OF THE YEAR	$	374,765		$	5,449,751
RECONCILIATION OF CLOSING CASH WITHIN THE BALANCE SHEET TO THE STATEMENT OF CASH FLOWS
Cash	$	50,433		$	373,822
Cash included in assets held for resale		-			943
CASH AT END OF THE YEAR	$	50,433		$	374,765
CASH AT BEGINNING OF THE YEAR	$	50,433		$	374,765
RECONCILIATION OF CLOSING CASH WITHIN THE BALANCE SHEET TO THE STATEMENT OF CASH FLOWS
Cash	$	526		$	50,433
CASH AT END OF THE YEAR	$	526		$	50,433
CASH PAID FOR INTEREST AND TAXES:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	(3155,~~403~~055	)	$	88(31,~~260~~403	)
NON-CASH INVESTING AND FINANCING ACTIVITIES
Warrants issued for software development	$	-		$	348,938
Fair value of warrants issued with convertible notes	$	109,268		$	1,045,655
Fair value of warrants issued with convertible notes	$	1,045,655		$	-
Conversion of convertible debt to equity	$	441,971		$	432,500
Conversion of convertible debt to equity	$	432,500		$	-
Fair value of warrants issued on debt extinguishment	$	102,353		$	-
Fair value of warrants issued for equity method investments	$	~~108,220~~-		$	-108,220

The accompanying notes are an integral part of these audited consolidated financial statements.

F-76

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND DESCRIPTION OF BUSINESS

a) ~~Organization~~Organizational history

On May 12, 2016, Innovative Payment Solutions, Inc., a Nevada corporation (“IPSI” or the “Company”) (originally formed on September 23, 2013 under the name “Asiya Pearls, Inc.”), entered into an Agreement and Plan of Merger (the “Qpagos 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 Qpagos Merger Agreement, on May 12, 2016, the merger was consummated, and Qpagos Corporation and Merger Sub merged (the Qpagos “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 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 $0.0001 per share (the “Common Stock”). Additionally, pursuant to the Qpagos 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 Qpagos Merger. Prior to and as a condition to the closing of the Qpagos 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 ~~then~~ stockholders of the Company retained 500,000 shares of Common Stock. Therefore, immediately following the Qpagos Merger, Qpagos Corporation’s former stockholders held 4,992,900 shares of Common Stock which represented approximately 91% of the outstanding Common Stock.

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.

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 “Reverse Stock Split”). As a result of the 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.

~~F-8~~On June 21, 2021, the Company acquired a 10% strategic interest in Frictionless Financial Technologies, Inc. (“Frictionless”). Frictionless delivered to the Company, a live fully compliant financial payment Software as a Service solution for use by the Company as a digital payment platform (which was subsequently branded as IPSIPay) that enabled payments within the United States and abroad, including Mexico, together with a service agreement providing a full suite of product services to facilitate the Company’s anticipated product offerings. The Company had an irrevocable right to acquire up to an additional 41% of the outstanding common stock of Frictionless at a purchase price of $300,000 for each 1% acquired.

On August 26, 2021, the Company formed a new subsidiary, Beyond Fintech, Inc. (“Beyond Fintech”), in which it owns a 51% stake, with Frictionless owning the remaining 49%. Beyond Fintech acquired an exclusive license to a product known as Beyond Wallet, to further its objective of providing virtual payment services allowing U.S. persons to transfer funds to Mexico and other countries.

F-7

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND DESCRIPTION OF BUSINESS (continued)

Organizational history (continued)

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 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, 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 was impaired.

On August 30, 2023, the Company implemented a 1 for 30 reverse stock split of its Common Stock. Unless the context expressly requires otherwise, as used in this Report, all share and per share numbers reflect such reverse stock split.

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.

Description of current business

The Company is currently a fintech provider of digital payment solutions presently focused on, through its participation in IPSIPay Express ~~(as defined below)~~, developing a new account-to-account payment application called Instant ~~Settlement~~Direct inPayments ~~RealTime~~ as well as traditional 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 ~~LLC (“IPSIPay Express”)~~. This entity was formed as a Delaware limited liability ~~company~~ company joint venture with OpenPath, Inc. (“OpenPath”) and EfinityPay, LLC (“EfinityPay”, and the Company, ~~collectively~~ 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.

~~Simultaneously with the funding of the initial Tranche, the Company issued to each of OpenPath and EfinityPay a five~~F-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.8

Frictionless Financial Technologies

On June 21, 2021. the Company acquired a 10% strategic interest in Frictionless Financial Technologies, Inc. (“Frictionless”). Frictionless agreed to deliver to the Company, a live fully compliant financial payment Software as a Service solution for use by the Company as a digital payment platform (which was subsequently branded as IPSIPay) 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 the Company’s anticipated product offerings. The Company had an irrevocable right to acquire up to an additional 41% of the outstanding common stock of Frictionless at a purchase price of $300,000 for each 1% acquired.

F-9

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND DESCRIPTION OF BUSINESS (continued)

Description of current business (continued)

OnSimultaneously ~~August~~with ~~26,~~the ~~2021~~funding of the initial Tranche, the Company ~~formed~~ issued to each of OpenPath and EfinityPay a ~~new~~five-year ~~subsidiary, Beyond~~Common ~~Fintech,~~Stock ~~Inc.~~purchase warrant (the “~~Beyond~~IPEX ~~Fintech~~Warrant”) to purchase 133,334 shares inof ~~which~~Common itStock ~~owns a~~with an exercise price of $0.45 ~~51%~~per ~~stake~~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 ~~Frictionless~~an ~~owning~~exercise price equal to the ~~remaining 49%~~average public closing price of the Common Stock for the three trading days immediately prior to the funding of the initial Tranche. ~~Beyond~~ ~~Fintech~~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 ~~acquired~~166,667 shares of Common Stock with an ~~exclusive~~exercise ~~license~~price equal to athe ~~product known~~average public closing price of the Common Stock for the three trading days immediately prior to the funding of the second Tranche. asShould ~~Beyond~~we ~~Wallet~~decide to fund a third Tranche, we will be obligated to ~~further~~issue ~~its~~to ~~objective~~each of ~~providing~~OpenPath ~~virtual~~and ~~payment~~EfinityPay ~~services~~an additional IPEX Warrant to purchase ~~allowing~~166,667 shares ~~U.S.~~of ~~persons~~Common Stock with an exercise price equal to ~~transfer~~the ~~funds~~average public closing price of the Common Stock for the three trading days immediately prior to ~~Mexico~~the funding of the third Tranche. If the full IPSI Capital Contribution is funded, OpenPath and ~~other~~EfinityPay ~~countries~~will receive IPEX Warrants to purchase an aggregate of 1,333,334 shares of Common Stock.

~~On May 12, 2023, the Company entered into an Agreement with Frictionless (the “May 2023 Frictionless Agreement”~~c) toMerger ~~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~~Business 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.Warrior

OnBusiness Warrior ~~September~~Corporation 5,(“Business ~~2023,~~Warrior”) ~~the~~is ~~Company’s entered into~~ a ~~novation~~publicly ~~agreement~~listed, ~~whereby~~revenue itgenerating ~~assigned~~fintech ~~all~~company ~~its~~that ~~rights~~offers PayPlan, a ~~and~~comprehensive ~~interest~~lending insoftware ~~its~~platform ~~e-wallet product,~~that ~~IPSIPay,~~includes ~~and~~marketing ~~its~~services ~~receivables~~for ~~and~~lenders ~~payables due from~~ and tobusinesses. ~~Frictionless,~~We ~~related~~believed tothat ~~IPSIPay,~~a topotential combination with a ~~third~~fintech ~~party~~company inthat ~~order~~generates tosome ~~concentrate all~~revenue ofmonthly ~~its~~would ~~efforts~~complement on the ~~IPSIPay~~development ~~Express~~and ~~joint~~commercial ~~venture.~~launch ~~See~~of ~~note~~our 5IPSIPay ~~for~~ExpressTM products and ~~further~~potentially ~~information~~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.

ACCOUNTING POLICIES AND ESTIMATES

Basis of Presentation

The accompanying consolidated 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 consolidated financial statements are in United States Dollars ($) unless stated otherwise.

Principles of Consolidation

The consolidated financial statements as of December 31, 2024, include the financial statements of the Company. The consolidated financial statements as of December 31, 2023, include the financial statements of the Company and its subsidiary, Beyond Fintech, in which it had a majority voting interest, until May 12, 2023, the date of disposal. Pursuant to the May 2023 Frictionless Agreement, the Company disposed of its 51% interest in Beyond Fintech. Therefore, as of May 12, 2023 the Company has no subsidiaries. See note 4 for further information.

All significant inter-company accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates

The preparation of consolidated 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 consolidated 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 consolidated 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.

F-109

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

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 consolidated 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.

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.

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. ~~The~~In ~~recent~~particular, ~~war~~there inis ~~Ukraine~~a ~~and~~risk ~~the~~that ~~global~~that ~~inflationary~~IPSIPay ~~environment~~Express ~~which~~business (the commercial launch of which has ~~resulted~~taken inlonger ~~significant~~than ~~interest~~originally ~~rate~~expected) ~~increases~~may innever generate revenue for the UCompany.S Further, the ongoing wars in Ukraine and ~~abroad~~between Israel, Hamas and more recently, Hezbollah and uncertainties regarding the global economic environment which has resulted 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-1110

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

Recent accounting pronouncements

The Financial Accounting Standards Board (“FASB”) issued additional updates during the year ended December 31, ~~2023~~2024. 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 consolidated financial statements upon adoption.

Reporting by Segment

NoThe Company ~~segmental~~adopted ~~information~~FASB issued ASU 2023-07, “Segment Reporting (ASC Topic 280) for the annual reporting period ended December is31, ~~required~~2024. asThe most significant provision was for the Company ~~has~~to ~~only one~~ disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), who is the CEO. All expense categories on the Consolidated Statements of Operations are significant and there are no other significant segment expenses that would require disclosure. The Company’s CODM, reviews financial information presented on a consolidated basis for the purpose of making operating decisions, allocating resources, assessing financial performance and making strategic decisions related to headcount and capital expenditures. The CODM regularly reviews net loss as reported on the Company’s consolidated statements of operations. The CODM uses net loss as the measure of profit or loss to allocate resources and assess performance.

Since the Company operates as one reportable segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements. The CODM does not review segment assets at a level other than that presented in the Company’s consolidated balance sheets. There are no intra-entity sales or transfers, and no significant expense categories regularly provided to the CODM beyond those disclosed in the Consolidated Statements of Operations.

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, ~~2023~~2024 and ~~2022~~2023, respectively, the Company had no 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, ~~2023~~2024 and ~~2022~~2023, the ~~balance~~balances ~~exceeds~~did ~~the~~not exceed federally insured ~~limit by $0 and $120,580, respectively~~limits.

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, ~~2023~~2024 and ~~2022~~2023.

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 20%, and there is no substantial influence. Under the cost method, the stock purchased is recorded on a balance sheet as a non-current asset at the historical acquisition/purchase price, and is not modified unless shares are sold, additional shares are purchased or there is evidence of the fair market value of the investment declining below carrying value. Any dividends received are recorded as income.

The Company ~~recorded~~uses anthe ~~impairment~~equity ~~charge~~method , in terms of $0ASC 323, Equity Method and $1 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 ~~its~~the balance sheet as a non-~~marketable~~current ~~equity~~asset, ~~securities~~initially at historical cost and is adjusted for the ~~years~~Company’s ~~ended~~proportionate ~~December~~share ~~31,~~of ~~2023~~ any gains and ~~2022,~~losses ~~respectively~~reported by the equity method investment. ~~The~~Any ~~impairment~~dividends ~~charge~~received ~~was~~from equity ~~based~~method oninvestments ~~management’s~~decreases ~~determination~~the ~~that~~carrying ~~due~~value toof the ~~lack~~investment. Any additional investment or disposal of ~~ability,~~a toportion ~~date,~~of the investment bywill ~~Vivi~~result ~~Holdings~~in ~~(“Vivi”)~~a change in basis adjustment to ~~fulfill~~the ~~its~~carrying ~~capital~~value ~~raising~~of ~~requirements~~the ~~and~~investment ~~implement~~which ~~its~~will ~~business~~be ~~strategy~~evaluated ~~that~~to ~~there~~determine isif aequity method ~~significant~~accounting ~~risk~~is ~~that~~still ~~Vivi~~appropriate. ~~may~~Equity ~~not~~method beinvestments ~~able~~are evaluated to ~~meet~~determine ~~its~~if ~~obligations~~the fair market value has declined below carrying value, which will result in an impairment charge.

F-1211

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

Plant and Equipment

Plant and equipment is stated at cost, less accumulated depreciation. Plant and equipment with costs greater than $1,000 are capitalized and depreciated. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows:

Description		Estimated Useful Life
Kiosks		7 years
Computer equipment		3 years
Leasehold improvements		Lesser of estimated useful life or life of lease
Office equipment		10 years

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.

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.

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:

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

recognize revenue as the performance obligation is satisfied.

The Company had ~~minimal~~no revenues offor ~~$410~~year ended December 31, 2024 and revenues of $~~847~~410 ~~during~~for the ~~years~~year ended December 31, 2023 ~~and 2022, respectively~~.

F-1312

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

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) ~~Derivative~~Marketing ~~Liabilities~~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 $154,864 and $428,909 for the years ended December 31, 2024 and 2023, respectively.

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.

qr) 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, ~~2023~~2024 and December 31, ~~2022~~2023, there have been no interest or penalties incurred on income taxes.

~~F-14~~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.

F-13

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

rt) ~~Comprehensive~~Reclassification ~~income~~of prior year presentation

s) 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.

LIQUIDITY MATTERS AND GOING CONCERN

The Company’s consolidated 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, ~~2023~~2024, the Company had a net loss of $~~5,837,357~~4.6 million. In connection with preparing the consolidated financial statements for the year ended December 31, ~~2023~~2024, 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 consolidated financial statements for the period ended December 31, ~~2023~~ 2024 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 consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to ~~continue~~ continue as a going concern.

The Company has determined that there is substantial doubt about their ability to continue as a going concern.

DISPOSAL OF INVESTMENT IN FRICTIONLESS AND BEYOND FINTECH

On May 12, 2023, the Company entered into 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 (representing a 10% ownership interest in Frictionless); (ii) the warrant to purchase 1,000,000 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 (representing a 51% ownership interest in Beyond Fintech) (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 is $250,000, which will be paid by Frictionless exclusively in the form of 20% credits against invoices for work done by Frictionless for the Company for the 18-mobnth period following the closing under the existing software services between the Company and Frictionless. The May 2023 Frictionless Agreement has customary representations, indemnification and mutual release provisions. The closing of the transactions contemplated by the May 2023 Frictionless Agreement occurred on May 12, 2023.

F-15

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4 DISPOSAL OF INVESTMENT IN FRICTIONLESS AND BEYOND FINTECH (continued)

The assets and liabilities disposed of as of May 12, 2023 were as follows:

	Amount
Assets

Current Assets
Cash	$	339

Non-current assets
Intangible assets		327,211
Security deposit		15,000
Investment		500,000
		842,211
Total assets		842,550

Liabilities

Current Liabilities
Accounts payable		97,126

Net assets sold		745,424
Proceeds due on disposal		(250,000	)
Net loss on disposal	$	495,424

F-14

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOVATION OF CERTAIN ASSETS AND LIABILITES

On September 5, 2023, the Company entered into a novation agreement with a third party whereby the third party assumed all of the Company’s debts, clients, and services and assumes all the rights and responsibilities of the Company under the SAAS Cloud Hosted Services Enablement Master Services Agreement, dated September 9, 2021 (the “SAAS Agreement”), including the information technology, supplier access, billing and rating technology, mobile wallet, debit card enablement, back-office support services, customer service, and consulting services related to the Company’s IPSIPay mobile application.

Pursuant to the novation agreement, Frictionless released the Company from all its obligations, debts, and liabilities under the SAAS Agreement as of September 5, 2023 and consented to the third party assuming these obligations. Each party agreed to indemnify the other party harmless for any damages, claims or expenses incurred by the other party.

The novation agreement also provided the third party a 30-day transition period in which the Company assisted the third party in transferring all the assets and obligations, including existing customers and wallets to the third party, thereafter the third party will no longer be permitted to operate the IPSIPay app under the brand name “IPSIPay”.

F-16

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5 NOVATION OF CERTAIN ASSETS AND LIABILITES (continued)

The assets and liabilities novated under the agreement as of September 5, 2023, were as follows:

	Amount
Assets

Current Assets
Receivable on sale of subsidiary	$	231,431

Non-current assets
Intangible assets		1,098,598
Total assets		1,330,029

Current Liabilities
Accounts payable		263,864

Net loss on novation	$	1,066,165

DISCONTINUED OPERATIONS

Effective May 12, 2023, the Company disposed of its investment in Beyond Fintech pursuant to the May 2023 Frictionless Agreement, as disclosed in note 4 above.

The following assets and liabilities are reported as discontinued operations:

	December 31,
	2022
Current assets
Cash	$	943
Non-current assets
Intangibles, net		291,320
Investment		500,000
Security deposit		15,000
Assets held for sale	$	807,263
Current liabilities
Accounts payable	$	33,810
Liabilities held for sale	$	33,810

The statement of operations from discontinued operations is as follows:

	Year ended December 31,
	2023			2022
	2024			2023
Net Revenue	$	-		$	-
Cost of Goods Sold		-			-
Gross loss		-			-
General and administrative		~~40,821~~-			8840,~~300~~821
Depreciation and amortization		-			-
Total Expense		-			40,821
Total Expense		40,821			88,300
Loss from operations before income taxes		-			(40,821	)
Loss from operations before income taxes		(40,821	)		(88,300	)
Income Taxes		-			-
Loss from discontinued operations, net of taxation	$	~~(40,821~~-	)	$	(8840,~~300~~821	)

F-1715

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

INTANGIBLES

On August 26, 2021, the Company formed Beyond Fintech to acquire a product known as Beyond Wallet from a third party for gross proceeds of $250,000, together with the logo, use of name and implementation of the product into the Company’s technology. The Company owned 51% of Beyond Fintech with the other 49% owned by Frictionless. ~~During~~Up until the ~~year~~date ~~ended~~of ~~December 31~~disposal, ~~2022 and~~ the ~~nine~~Company ~~months~~invested ~~ended~~a ~~September~~further ~~30, 2023, an additional~~ $4177,~~320 and $35,891, respectively, was spent~~ 211 on the software to further enhance the Beyond Wallet product offering. On May 12, 2023, Beyond Fintech was sold to Frictionless (see note 4 above).

During the year ended December 31, 2021, the Company paid gross proceeds of $375,000 to Frictionless for the development of the IPSIPay wallet, and ~~during~~up until the ~~year~~date ~~ended~~of ~~December 31~~novation, ~~2022 and~~ the ~~nine~~Company ~~months~~invested ~~ended~~a ~~September~~further ~~30, 2023, an additional~~ $1,~~127~~171,~~400 and~~805 ~~$44,405, respectively, was incurred by the Company~~ to facilitate the functioning of the IPSIPay software in the cloud environment. On September 5, 2023, the Company novated all its rights and obligations to its IPSIPay wallet to a third party (see note 5 above).

	December 31, 2023						December 31, 2022
	Cost		Accumulated amortization		Net Book Value		Net book value
Purchased Technology - IPSIPay	$	-	$	-	$	-	$	1,401,491

Amortization expense was $0 and $347,298 for the years ended December 31, 2024 and 2023, respectively.

Amortization expense was $347,298 and $100,909 for the years ended December 31, 2023 and 2022, respectively.

EQUITY METHOD INVESTMENT

On April 28, 2023, the Company formed IPSIPay Express with OpenPath and ~~EFinityPay~~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 $500,000 and the second Tranche of $500,000 of capital contributions was paid by the Company to or on behalf of IPSIPay Express.

The Company accounts for its investment in IPSIPay Express in accordance with ASC 323, Investments – Equity Method and ~~Joint~~ Joint Ventures, the movement in equity method investments related to IPSIPay Express for the period ended December 31, 2024 and 2023 is as follow:

	December 31, 2023
	Year ended December 31,
Cash contribution to IPSIPay Express	$	999,000
	2024			2023
Fair value of warrants issued to third party joint venture partners		108,220
Equity method Investment
		1,107,220
Cash contribution to IPSIPay Express	$	999,500		$	999,000
Equity loss from joint venture		(403,282	)
Fair value of warrants issued to third party joint venture partners		108,220			108,220
	$	703,938
		1,107,720			1,107,220
Equity loss from joint venture		(404,101	)		(403,282	)
	$	703,619			703,938
Receivable from IPSIPay Express		1,524			-
		705,143			703,938
Impairment of investment		(705,142	)		-
Equity method investment		1			703,938
Loss from Equity method investment
Loss from joint venture		819			403,282
Impairment of equity method investment		705,142			-
Total loss from equity method investment	$	(705,961	)	$	(403,282	)

INVESTMENTS

Investment in Frictionless Financial Technologies Inc.

On May 12, 2023, the Company assigned to Frictionless all common stock of Frictionless owned by the Company (representing a 10% ownership interest in Frictionless). refer Note 4 above.

LEASES

On March 22, 2021, the Company entered into a real property lease for an office located at 56B 5^th Street, Lot 1, #AT, Carmel By The Sea, California. The lease commenced on April 1, 2021 and is for a twelve-month period, terminating on April 1, 2022. Following the expiry of the lease term, the landlord has agreed to continue the lease on a month-to-month basis at $4,800 per month. On January 1, 2023, the Company entered into a new month-to-month lease, with a 90-day termination clause, for a monthly rental of $5,088. The lease was terminated effective August 31, 2023.

The Company applied the practical expedient whereby operating leases with a duration of twelve months or less are expensed as incurred.

F-1816

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

LEASES (continued)

Total Lease Cost

Individual components of the total lease cost incurred by the Company is as follows:

	Year ended December 31, 2023		Year ended December 31, 2022
	Year ended December 31, 2024		Year ended December 31, 2023
Operating lease expense	$	~~40,704~~-	$	5740,~~600~~704

Other lease information:

	Year ended December 31, 2023			Year ended December 31, 2022
	Year ended December 31, 2024			Year ended December 31, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	~~(40,704~~	)	$	(5740,~~600~~704	)
Remaining lease term – operating lease		-			Monthly

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 $150,000, bearing interest at 3.75% per annum and repayable in monthly installments of $731 commencing twelve months after inception with the balance of interest and principal repayable on July 7, 2050. The loan is secured by all tangible and intangible assets of the Company. The proceeds are to be used for working capital purposes to alleviate economic injury caused by the COVID-19 pandemic.

The company has accrued interest of $98,~~369~~869 and $139,~~978~~369 on this loan as of December 31, ~~2023~~2024 and ~~2022~~2023, respectively.

NOTES PAYABLE

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 $500,500 and $500,500 from Cavalry and Mercer, respectively, in exchange for the issuance of: (i) Original Issue Discount 12.5% Convertible Notes ~~(the “Notes” and each a “Note”) in the principal amount of $572,000 to each of Cavalry~~ ~~and~~payable ~~Mercer;~~consists ~~and (ii) five-year warrants (the “Original Warrants”) issued to each~~ of ~~Cavalry and Mercer to purchase 2,486,957 shares of~~ the ~~Company’s common stock at an exercise price of $0.24 per share.~~following:

In terms of the December 30, 2022 Note Amendment Transaction, described in more detail in Note 9 below, the Original Warrants issued on February 16, 2021 were irrevocably exchanged for 12-month non-convertible promissory notes in the amount of $482,000 (the “Exchange Notes”) to each of Cavalry and Mercer. This exchange caused the cancellation of the Original Warrants for all purposes. The Company accounted for the aggregate value of the notes issued of $964,000, less the fair value of the warrants exchanged for these notes of $43,608, totaling $920,392 as a component of the loss on convertible debt.

Description	Interest Rate			Maturity date*	Principal		Accrued Interest		Unamortized debt discount			December 31, 2024 Amount, net		December 31, 2023 Amount, net
Cavalry Fund I LP		10.0	%	Matured	$	482,000	$	101,648	$	-		$	583,648	$	531,004
Mercer Street Global Opportunity Fund, LLC		10.0	%	Matured		482,000		101,648		-			583,648		531,003
2024 notes		0.0 to 8.5	%	February 28, 2025 to October 10, 2025		577,778		13,861		(89,062	)		502,577		-

Total notes payable					$	1,541,778	$	217,157	$	(89,062	)	$	1,669,873	$	1,062,007

~~The Exchange~~* ~~Notes~~All ~~have~~notes apayable ~~maturity~~are ~~date~~technically ~~of December~~in ~~30,~~default ~~2023 and~~due ~~carry an interest rate of ten percent (10%). The Company shall have~~ the ~~right,~~default ~~but~~on ~~not~~ the ~~obligation,~~outstanding inRed ~~lieu~~Road ofHoldings aCorporation ~~cash~~and ~~payment upon maturity of~~ the ~~Exchange~~Quick ~~Notes,~~Capital toLLC ~~issue 51,901,711 shares of~~convertible ~~common~~notes ~~stock,~~disclosed ~~as adjusted for any stock splits, dividends or other similar corporate events,~~ in ~~full~~note ~~satisfaction~~13 ofbelow. ~~its~~None ~~obligations under each~~ of the ~~Exchange~~note ~~Notes~~payable ~~(or~~lenders ~~any~~have ~~pro~~formally ~~rata~~declared ~~portion~~a ofdefault ~~such number of shares in partial satisfaction of such obligations). The Company is under no legal obligation~~ to ~~reserve~~the ~~such number of shares for future issuance~~Company.

~~Subsequent~~Interest toexpense ~~year~~totaled ~~end~~$119,151 ~~the~~and ~~maturity~~$97,739 for ~~date of~~ the ~~notes~~years ~~was~~ended ~~extended~~December ~~to April 30~~31, 2024, ~~all~~and ~~other~~2023, ~~terms remain the same as the previous notes~~respectively. ~~The Company will perform an analysis to determine whether the amendment meets the definition of a debt extinguishment or modification in terms of ASC 470.~~

~~F-19~~Amortization of debt discount totaled $55,383 and $0 for the years ended December 31, 2024 and 2023, respectively.

F-17

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES PAYABLE (continued)

~~Notes~~Cavalry ~~payable~~Fund ~~consists~~I ofLP ~~the~~and ~~following:~~Mercer Street Global Opportunity Fund, LLC

Description	Interest Rate			Maturity date	Principal		Accrued Interest		December 31, Amount, net		December 31, 2022 Amount, net
Cavalry Fund I LP		10	%	April 30, 2024		482,000		49,004		531,004		482,134
Mercer Street Global Opportunity Fund, LLC		10	%	April 30, 2024		482,000		49,003		531,003		482,134
Total convertible notes payable					$	964,000	$	98,007	$	1,062,007	$	964,268

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 $500,500 and $500,500 from Cavalry and Mercer, respectively, in exchange for the issuance of: (i) Original Issue Discount 12.5% Convertible Notes (the “Notes” and each a “Note”) in the principal amount of $572,000 to each of Cavalry and Mercer; and (ii) five-year warrants (the “Original Warrants”) issued to each of Cavalry and Mercer to purchase 2,486,957 shares of Common Stock at an exercise price of $0.24 per share.

~~Interest~~In ~~expense~~terms ~~totaled~~of ~~$97~~the December 30,~~739~~ ~~and~~2022 Note Amendment Transaction, described in more detail in note 13 below, the Original Warrants issued on February 16, 2021 were irrevocably exchanged for 12-month non-convertible promissory notes in the amount of $~~268~~482,000 (the “Exchange Notes”) to each of Cavalry and Mercer. This exchange caused the cancellation of the Original Warrants for all purposes. The Company accounted for the ~~year~~aggregate ~~ended~~value ~~December~~of 31the notes issued of $964,000, ~~2023~~less ~~and~~the ~~2022~~fair value of the warrants exchanged for these notes of $43,608, totaling ~~respectively~~$920,392 as a component of the loss on convertible debt.

The Exchange Notes have a maturity date of December 30, 2023 and carry an interest rate of ten percent (10%). The Company had the right, but not the obligation, in lieu of a cash payment upon maturity of the Exchange Notes, to issue a total of 1,730,058 shares of Common Stock, as adjusted for any stock splits, dividends or other similar corporate events, in full satisfaction of its obligations under the Exchange Notes (or any pro rata portion of such number of shares in partial satisfaction of such obligations). The Company is under no legal obligation to reserve such number of shares for future issuance.

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 18% per annum, the default interest rate per the note agreement.

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 $577,778 for gross proceeds of $433,333, after taking into account an aggregate original issuance discount of $144,445.

The 2024 Notes mature between February 28, 2025 and October 10, 2025 and bear interest at rates ranging from 0.0% to 8.5% per annum.

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 120% of the cash amount of the Note, at the note holder’s discretion.

F-18

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE

~~December~~Convertible ~~2022~~notes ~~Note~~payable ~~Amendment~~consists ~~Transaction~~of the following:

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 August 16, 2022. Additionally, on August 30, 2022, the Company entered agreements for an additional maturity date extension to November 16, 2022. In consideration for the second extension, the Company agreed to (i) increase the principal amount outstanding and due to Cavalry and Mercer under the Cavalry/Mercer Notes by twenty percent (20%) and (ii) issue to each of Cavalry and Mercer a new five-year warrant (each, an “Extension Warrant”) to purchase an additional 100,000 (3,000,000 pre-split) shares of Common Stock at an exercise price of $4.50 ($0.15 pre-split) per share. The Extension Warrant contains the same terms and provisions in all material respects as the Original Warrants, except for difference in exercise price.

Description	Interest Rate			Maturity date***	Principal		Accrued Interest		Unamortized debt discount			December 31, 2024 Amount, net		December 31, 2023 Amount, net
Cavalry Fund I LP		18.00	%*	Matured	$	819,371	$	17,571	$	-		$	836,942	$	909,218
Mercer Street Global Opportunity Fund, LLC		18.00	%*	Matured		991,754		59,259		-			1,051,013		1,139,764
Red Road Holdings Corporation		29.32	%**	-		-		-		-			-		41,771
		27.77	%**	-		-		-		-			-		18,683
		32.04	%**	-		-		-		-			-		3,109
		24.98	%**	Matured		19,819		266		-			20,085		-
		24.51	%**	March 30, 2025		197,001		16,840		(40,043	)		173,798		-
Quick Capital LLC		11.12	%**	-		-		-		-			-		-
		11.03	%**	Matured		64,171		-		-			64,171		-

2023 and 2024 convertible notes		8.00 to 12.00	%	Matured to October 22, 2025		2,623,890		287,234		(40,928	)		2,870,196		1,591,735

Total convertible notes payable					$	4,716,006	$	381,170	$	(80,971	)	$	5,016,205	$	3,704,280

	*	The Cavalry Fund LLP and Mercer Street Global Opportunity Fund, LLC, notes are accruing interest at the default interest rate of 18% with effect from November 27, 2024, prior to November 27, 2024, interest was accrued at 10% per annum.
	**	The Red Road Holdings Corporation and Quick Capital LLC, interest rates are effective interest rates as these convertible notes have a fixed interest charge which is earned on the issuance date, regardless of when payments are made.
	***	All convertible notes payable are technically in default due the default on the outstanding Red Road Holdings Corporation and the Quick Capital LLC convertible notes disclosed below. None of the convertible note payable lenders have formally declared a default to the Company.

Interest expense totaled $476,207 and $319,543 for the years ended December 31, 2024 and 2023, respectively.

Amortization of debt discount totaled $982,531 and $770,372 for the years ended December 31, 2024 and 2023, respectively.

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.

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 August 16, 2022. Additionally, on August 30, 2022, the Company entered agreements for an additional maturity date extension to November 16, 2022. In consideration for the second extension, the Company agreed to (i) increase the principal amount outstanding and due to Cavalry and Mercer under the Cavalry/Mercer Notes by twenty percent (20%) and (ii) issue to each of Cavalry and Mercer a new five-year warrant (each, an “Extension Warrant”) to purchase an additional 100,000 shares of Common Stock at an exercise price of $4.50 per share. The Extension Warrant contains the same terms and provisions in all material respects as the Original Warrants, except for the difference in exercise price.

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 $4.50 ~~($0.15 pre-split)~~ to $0.345 ~~($0.0115 pre-split)~~ per share (such reduced conversion price being the current conversion price of the Notes give the passage of the November 16, 2022 maturity date of the Cavalry/Mercer Notes). As a result of this change in conversion price, under the existing terms of the Cavalry/Mercer Notes, the 100,000 ~~(3,000,000 pre-split)~~ shares of Common Stock underlying the Extension Warrants was increased to 1,304,348 ~~(39,130,435 pre-split)~~ shares;

~~(2) The Original Warrants issued on February 16, 2021 were irrevocably exchanged for 12~~F-month non-convertible promissory notes in the amount of $482,000 (the “Exchange Notes”). This exchange caused the cancellation of the Original Warrants for all purposes. The Exchange Notes have a maturity date of December 30, 2023 and carry an interest rate of ten percent (10%). The Company shall have the right, but not the obligation, in lieu of a cash payment upon maturity of the Exchange Notes, to issue 1,730,057 shares of Common Stock, as adjusted for any stock splits, dividends or other similar corporate events, in full satisfaction of its obligations under each of the Exchange Notes (or any pro rata portion of such number of shares in partial satisfaction of such obligations). The Company is under no legal obligation to reserve such number of shares for future issuance;19

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE (continued)

Cavalry and Mercer December 2022 Note Amendment Transaction (continued)

(2)

The Original Warrants issued on February 16, 2021 were irrevocably exchanged for 12-month non-convertible promissory notes in the amount of $482,000 (the “Exchange Notes”). This exchange caused the cancellation of the Original Warrants for all purposes. The Exchange Notes have a maturity date of December 30, 2023 and carry an interest rate of ten percent (10%). The Company shall have the right, but not the obligation, in lieu of a cash payment upon maturity of the Exchange Notes, to issue a total 1,730,058 shares of Common Stock, as adjusted for any stock splits, dividends or other similar corporate events, in full satisfaction of its obligations under the Exchange Notes (or any pro rata portion of such number of shares in partial satisfaction of such obligations). The Company is under no legal obligation to reserve such number of shares for future issuance;

(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 $1.80 ~~($0.06 pre-split)~~ per share or above were amended effective December 30, 2022 to reduce such forced exercise price to $1.20 ~~($0.04 pre-split)~~ per share; and

(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 $0.345 per share. All of the shares of our Common Stock underlying the Cavalry/Mercer Notes as amended and all warrants held by Cavalry and Mercer as adjusted were registered for resale pursuant to a registration statement that was declared effective on February 6, 2023.

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 $836,414, the reduction in the conversion price of the Cavalry/Mercer Notes from $4.50 to $0.345 per share, which was valued at $1,499,577 using a Black-Scholes valuation model, the issuance of additional warrants to the Cavalry and Mercer valued at $238,182 using a Black-Scholes valuation model and the conversion of certain warrants held by Cavalry and Mercer to notes payable, resulting in an additional charge of $920,392, consisting of a mark-to-market warrant cost of $(43,608) and the value of the notes of $964,000 (see note 12 above) and the value of full rachet provisions of certain of the warrants issued to the Cavalry and Mercer amounting to $841,003 (see note 14 below), the amendment of the Cavalry/Mercer Notes was determined to be a debt extinguishment.

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 $500,500, after an original issue discount of $71,500 in exchange for the issuance of a $572,000 Senior Secured Convertible Note, bearing interest at 10% per annum and maturing on February 16, 2022. The Note was convertible into shares of Common Stock at an initial conversion price of $0.23 per share, in addition, the Company issued a warrant exercisable for 82,899 shares of Common Stock at an initial exercise price of $7.20 per share.

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 18% per annum in terms of the agreement.

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 (20%) and (ii) issue a new five-year warrant to purchase an additional 100,000 shares of Common Stock at an exercise price of $4.50 per share. In consideration of the December 30, 2022 extension, the Company agreed to the following terms; (i) the conversion price of the Note was reduced from $4.50 to $0.345 per share; (ii) Cavalry agreed (a) not to convert all or any portion of the Notes until after March 30, 2023 and (b) waive any events of default under the Note and the SPA; (iii) the Company agreed to and registered the shares of Common Stock underlying the Note and the shares underlying all warrants held by Cavalry for resale with the Securities and Exchange Commission and filed the registration statement to satisfy the Company’s registration obligation.

F-20

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE (continued)

~~December~~Cavalry ~~2022~~Fund ~~Note~~LLP ~~Amendment Transaction~~ (continued)

~~The~~Between ~~parties~~August ~~also~~24, ~~acknowledged~~2023 ~~that the principal~~ and ~~accrued~~November ~~interest~~20, ~~under~~2023, ~~the~~ Cavalry~~/Mercer~~ ~~Notes~~converted ~~as of December 28~~$139, ~~2022 is equal to an aggregate~~ 726 of ~~$2,264,784,~~interest orand $1192,~~132,392~~774 ~~for each~~ of ~~Cavalry~~principal ~~and Mercer. In addition~~into 963, ~~as a result~~ 769 shares of ~~the~~Common ~~reduction~~Stock inat ~~the~~a conversion ~~price~~ ~~of the Cavalry/Mercer Notes, certain other warrants held by third parties have their exercise~~ price of ~~such warrants reduced to~~ $0.345 ~~($0.0115 pre-split)~~ per share. ~~All~~realizing ~~of the shares of our Common Stock underlying the Cavalry/Mercer Notes as amended and all warrants held by Cavalry and Mercer as adjusted were registered for resale pursuant to~~ a ~~registration~~loss ~~statement that was declared effective~~ on ~~February~~conversion 6,of ~~2023~~$42,210.

~~The~~Between ~~amendments~~September to5, ~~the~~2024 ~~Cavalry/Mercer~~and ~~Notes~~November ~~were~~11, ~~evaluated in terms of ASC 470~~2024, ~~Debt,~~ ~~to determine if the amendments to the~~ Cavalry~~/Mercer Notes~~ ~~were~~converted ~~considered~~an aaggregate ~~modification~~of $79,608 of ~~the~~principal ~~debt~~and or$88,876 ~~an extinguishment~~ of ~~the debt. Based on the penalty~~ interest ~~incurred on the convertible~~into 2,005,762 shares ~~notes~~ of ~~$836,414,~~Common ~~the~~Stock ~~reduction~~at ina ~~the~~ conversion price of ~~the Cavalry/Mercer Notes from~~ $~~4.50 ($~~0.~~15 pre-split)~~084 ~~to $0.345 ($0.0115 pre-split)~~ per share, ~~which~~realizing ~~was valued at $1,499,577 using~~ a ~~Black-Scholes~~loss ~~valuation~~on ~~model,~~conversion ~~the issuance~~ of ~~additional warrants to the Cavalry and Mercer valued at~~ $~~238~~37,~~182 using~~490. aSuch ~~Black-Scholes valuation model and the~~ conversion ofcaused ~~certain~~a ~~warrants held by~~reduction ~~Cavalry and Mercer to notes payable, resulting~~ in anthe ~~additional charge of~~ $~~920,392, consisting of a mark-to-market warrant cost of $(43,608)~~0.345 ~~and the~~conversion ~~value~~price of the notes ofdescribed ~~$964,000 (see note 11~~ above) ~~and the value of full rachet provisions of certain of the warrants issued~~ to ~~the Cavalry and Mercer amounting to~~ $~~841,003~~0.084 (see note 14 ~~below~~)~~, the amendment of the Cavalry/Mercer Notes was determined to be a debt extinguishment~~.

~~Effective~~The ~~December~~balance ~~30, 2023 on February 27, 2024, the Company again extended the maturity dates~~ of ~~each of~~ the Cavalry~~/Mercer~~ ~~Notes~~Note toplus ~~April~~accrued ~~30, 2024,~~interest ~~other~~at ~~than~~December ~~the~~31, ~~maturity~~2024 ~~date~~was ~~all other terms remained the same~~$836,942. ~~The Company will perform an analysis to determine whether the amendment meets the definition of a debt extinguishment or modification in terms of ASC 470.~~

~~Convertible~~Mercer ~~notes~~Street ~~payable~~Global ~~consists~~Opportunity ofFund, ~~the following:~~LLC

Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			December 31, 2023 Amount, net		December 31, 2022 Amount, net
Cavalry Fund I LP		10.00	%	April 30, 2024		898,980		10,238		-			909,218		1,133,301
Mercer Street Global Opportunity Fund, LLC		10.00	%	April 30, 2024		991,754		148,010		-			1,139,764		1,133,301
Red Road Holdings Corporation		29.32	*%	June 15, 2024		101,679		1,393		(61,301	)		41,771		-
		27.77	*%	July 30 2024		66,606		1,622		(49,545	)		18,683		-
		32.04	*%	September 30, 2024		63,250		668		(60,809	)		3,109		-
2023 convertible notes		8.00 to 12.00	%	December 31, 2023 to September 14, 2024		2,026,666		80,916		(515,847	)		1,591,735		-
Total convertible notes payable					$	4,148,935	$	242,847	$	(687,502	)	$	3,704,280	$	2,266,602

On February 16, 2021, the Company closed a transaction with Mercer, pursuant to which the Company received net proceeds of $500,500, after an original issue discount of $71,500 in exchange for the issuance of a $572,000 Senior Secured Convertible Note, bearing interest at 10% per annum and maturing on February 16, 2022. The Note is convertible into shares of Common Stock at an initial conversion price of $6.90 per share, in addition, the Company issued a warrant exercisable for 82,899 shares of Common Stock at an initial exercise price of $7.20 per share.

*As described ~~The~~more ~~red~~fully ~~Road~~above, ~~Holdings~~the ~~Corporation~~maturity ~~interest~~date ~~rate~~of isthe 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 ~~effective~~automatic ~~interest~~one-month ~~rate~~extension each month until such time as ~~these~~the ~~convertible~~note is declared to be in default, all other terms remain the same as the previous notes. ~~have~~The aautomatic ~~fixed~~extension ~~interest~~of ~~charge~~the ~~which~~maturity date may not extend past November 27, 2024, thereafter all amounts due under the note are immediately due and payable. The Company is ~~earned~~currently onnegotiating with Mercer to place the ~~issuance~~note ~~date~~into forbearance, ~~regardless~~currently interest is being accrued at the default interest rate of ~~when~~18% ~~payments~~per ~~are~~annum ~~made~~in terms of the agreement.

~~Interest~~In ~~expense~~consideration ~~totaled~~for ~~$319~~the November 16,~~543~~ 2022 extension, the Company agreed to (i) increase the principal amount outstanding and due to Mercer by twenty percent (20%) and (ii) issue a new five-year warrant to purchase an additional 100,000 shares of Common Stock at an exercise price of $~~193~~4.50 per share. In consideration of the December 30,~~886~~ 2022 extension, the Company agreed to the following terms; (i) the conversion price of the Note was reduced from $4.50 ~~for~~to $0.345 per share; (ii) Mercer agreed (a) not to convert all or any portion of the ~~years~~Notes ~~ended~~until ~~December~~after 31March 30, 2023 and ~~2022,~~(b) ~~respectively~~waive any events of default under the Note and the SPA; (iii) the Company agreed to and registered the shares of Common Stock underlying the Note and the shares underlying all warrants held by Mercer for resale with the Securities and Exchange Commission and filed the registration statement to satisfy the Company’s registration obligation.

~~Amortization~~Between ofMay ~~debt~~19, ~~discount~~2023 ~~totaled~~and ~~$770~~August 30,~~372~~ ~~and~~2023, Mercer converted an aggregate of $~~263~~100,~~200 for~~000 into 289,856 shares ~~the~~of ~~years~~common ~~ended~~stock ~~December~~at ~~31,~~a ~~2023~~conversion price ~~and~~of ~~2022~~$0.345 per share, ~~respectively~~realizing a loss on conversion of $48,551.

~~The~~Between ~~Cavalry~~August 20, ~~Mercer~~2024 and ~~Red~~November ~~Road~~11, ~~Holdings~~2024, ~~convertible~~Mercer ~~notes~~converted ~~have~~an ~~variable~~aggregate ~~conversion~~of ~~prices~~$197,348 ~~based~~of oninterest ainto 2,349,380 shares ~~discount to market price~~ of ~~trading~~Common ~~activity~~Stock ~~over~~at a ~~specified~~conversion ~~period~~price of ~~time~~$0.084 per ~~The~~share, ~~variable~~realizing ~~conversion~~a ~~features~~loss ~~were~~on ~~valued~~conversion ~~using~~of a$89,527. ~~Black~~Such ~~Scholes~~conversion ~~valuation~~caused ~~model.~~a ~~The~~reduction ~~difference~~in ~~between~~ the ~~fair market value of the Common Stock and the calculated~~ $0.345 conversion price onof the ~~issuance~~notes ~~date~~described ~~was~~above ~~recorded as a debt discount with a corresponding credit~~ to ~~derivative~~$0.084 (see ~~financial~~note ~~liability~~14).

The balance of the Mercer Note plus accrued interest at December 31, 2024 was $1,051,013.

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 $125,000, after an original issue discount and fees of $21,900 in exchange for the issuance of a $146,900 Convertible Note (“RRH Note 1”), bearing interest at 13%, which interest was earned on issuance of the note, an effective interest rate of 29.3%, and matured on June 15, 2024. The RRH Note 1 had mandatory monthly repayments of $18,444 which commenced on October 14, 2023. The RRH Note 1 was convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion.

The RRH note 1 was repaid in full during the quarter ended June 30, 2024.

F-21

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE (continued)

~~Cavalry~~Red ~~Fund~~Road ~~LLP~~Holdings Corporation (continued)

● On ~~February~~ 16October 19, ~~2021~~2023, the Company closed a transaction with ~~Cavalry~~RRH pursuant to which the Company received net proceeds of $~~500~~60,~~500~~000, after an original issue discount and fees of $7113,~~500~~ 450 in exchange for the issuance of a $~~572~~73,~~000 Senior~~450 ~~Secured~~ Convertible Note (“RRH Note 2”), bearing interest at 10 13%, ~~per~~which ~~annum~~interest was earned on issuance of the note, an effective interest rate of 27.8%, and ~~maturing~~matured on ~~February~~July 1630, ~~2022~~2024. The RRH Note 2 had mandatory monthly repayments of $9,222 which commenced on November 30, 2023. The RRH Note 2 was convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion. On August 6, 2024, RRH converted an ~~initial~~aggregate of $13,833, including a penalty of $4,611 into 164,679 shares of Common Stock at a conversion price of $0.23 084 per share, inrealizing ~~addition~~a loss on conversion of $28,984, thereby extinguishing the note. ● On December 20, 2023, the Company ~~issued~~closed a ~~warrant~~transaction ~~exercisable~~with RRH pursuant to which the Company received net proceeds of $50,000, after an original issue discount and fees of $13,250 in exchange for 82 the issuance of a $63,~~899~~ 250 Convertible Note (“RRH Note 3”), bearing interest at 15%, which interest was earned on issuance of the note, an effective interest rate of 32.0%, and matured on September 30, 2024. The RRH Note 3 had mandatory monthly repayments of $8,082. The RRH Note 3 was convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion. The RRH Note 3 was repaid in full during the quarter ended December 31, 2024. ● On April 2, 2024, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $70,000, after an ~~initial~~original ~~exercise~~issue discount and fees of $18,500 in exchange for the issuance of a $88,500 Convertible Note (“RRH Note 4”), bearing interest at 15%, which interest was earned on issuance of the note, an effective interest rate of 24.98%, and matured on December 30, 2024. The RRH Note 4 had mandatory repayments of $61,065 on September 30, 2024 and $13,570 per month on October 30, 2024, November 30, 2024 and December 30, 2024. The RRH Note 4 is convertible into shares of Common Stock at a variable conversion rate of 65% of the lowest trading price ten trading days before conversion. During the quarter ended December 31, 2024, the Company repaid $88,385 of the principal and interest outstanding. The final instalment was not made and a penalty charge of 150% of the total balance outstanding, amounting to $76,695 was recorded by the Company on December 30, 2024. The balance owing on the RRH Note 4 plus accrued interest at December 31, 2024 was $20 ,085. ● On June 25, 2024, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $100,000, after an original issue discount and fees of $25,080 in exchange for the issuance of a $125,080 Convertible Note (“RRH Note 5”), bearing interest at 15%, which interest is earned on issuance of the note, an effective interest rate of 24.51%, and maturing on March 30, 2025. The RRH Note 5 has mandatory repayments of $93,498 on December 30, 2024 and $16,782 per ~~share~~month on January 30, 2025, February 28, 2025 and March 30, 2025. The RRH Note 5 is convertible into shares of Common Stock at a variable conversion rate of 65% of the lowest trading price ten trading days before conversion. The first instalment was not made, automatically placing the note into default, with a penalty charge of 150% of the total balance outstanding of $71,921 recorded by the Company on December 30, 2024. The balance owing on the RRH Note 5 plus accrued interest, net of unamortized debt discount of $40,043 at December 31, 2024 was $173,798.

As described more fully above, the maturity date of the note was extended to August 16, 2022, additionally to November 16, 2022 and again to December 30, 2023. 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 (20%) and (ii) issue a new five-year warrant to purchase an additional 100,000 shares of Common Stock at an exercise price of $4.50 per share. In consideration of the December 30, 2022 extension, the Company agreed to the following terms; (i) the conversion price of the Note was reduced from $4.50 to $0.345 per share; (ii) Cavalry agreed (a) not to convert all or any portion of the Notes until after March 30, 2023 and (b) waive any events of default under the Note and the SPA; (iii) the Company agreed to and registered the shares of Common Stock underlying the Note and the shares underlying all warrants held by Cavalry for resale with the Securities and Exchange Commission and filed the registration statement to satisfy the Company’s registration obligation.

Between August 24, 2023 and November 20, 2023, Cavalry converted $139,726 of interest and $192,774 of interest into 963,769 shares of Common Stock at a conversion price of $0.345 per share realizing a loss on conversion of $42,210.

Subsequent to year end, on February 27, 2024, the maturity date of the notes was extended to April 30, 2024, all other terms remain the same as the previous notes. Based on an analysis performed, the amendment to the agreement was determined to be a debt modification, there were no expenses incurred on the amendment and interest will be accrued at the effective interest rate.

The balance of the Cavalry Note plus accrued interest at December 31, 2023 was $909,218.

Mercer Street Global Opportunity Fund, LLC

As described more fully above, the maturity date of the note was extended to August 16, 2022, additionally to November 16, 2022 and again to December 30, 2023. 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 (20%) and (ii) issue a new five-year warrant to purchase an additional 100,000 shares of Common Stock at an exercise price of $4.50 per share. In consideration of the December 30, 2022 extension, the Company agreed to the following terms; (i) the conversion price of the Note was reduced from $4.50 to $0.345 per share; (ii) Mercer agreed (a) not to convert all or any portion of the Notes until after March 30, 2023 and (b) waive any events of default under the Note and the SPA; (iii) the Company agreed to and registered the shares of Common Stock underlying the Note and the shares underlying all warrants held by Mercer for resale with the Securities and Exchange Commission and filed the registration statement to satisfy the Company’s registration obligation.

Between May 19, 2023 and August 30, 2023, Mercer converted an aggregate of $100,000 into 289,856 shares of common stock at a conversion price of $0.345 per share, realizing a loss on conversion of $48,551.

On February 27, 2024, Cavalry entered into a note amendment with the company extending the maturity date of the convertible note to April 30, 2024.

The balance of the Mercer Note plus accrued interest at December 31, 2023 was $1,139,764.

Quick Capital, LLC

On June 20, 2023, the Company closed a transaction with Quick Capital, LLC pursuant to which the Company received net proceeds of $50,000, after an original issue discount and fees of $12,857 in exchange for the issuance of a $62,857 Convertible Note, bearing interest at 8% per annum, which interest is earned on issuance of the note, and maturing on December 20, 2023. The Note is convertible into shares of Common Stock at an initial conversion price of $0.345 per share, in addition, the Company issued a warrant exercisable for 182,194 shares of Common Stock at an initial exercise price of $0.345 per share.

On December 20, 2023, the Company settled the outstanding principal of $62,857 and interest thereon of $2,514, of the Quick Capital note, thereby extinguishing the debt.

F-22

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE (continued)

~~1800 Diagonal~~Quick ~~Street Lending~~ Capital, LLC

● On May 10, 2023, the Company closed a transaction with 1800 Diagonal Street Lending LLC (“1800 Diagonal”) pursuant to which the Company received net proceeds of $100,000, after an original issue discount and fees of $17,320 in exchange for the issuance of a $117,320 Convertible Note (the “May 1800 Diagonal Note”), bearing interest at 13% per annum, which interest is earned on issuance of the note, and maturing on May 10, 2024. The May 1800 Diagonal Note was convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion.

●

On March 4, 2024, the Company closed a transaction with Quick Capital, LLC (“Quick Capital”) pursuant to which the Company received net proceeds of $94,000, after an original issue discount and fees of $20,286 in exchange for the issuance of a $114,286 Convertible Note (“Quick Cap Note 1”) , bearing interest at an effective interest rate of 11.12% per annum, which interest is earned on issuance of the note, and maturing on September 4, 2024. The Quick Cap Note 1 has monthly 30,875 commencing on May 4, 2024. The Note was convertible into shares of Common Stock at an adjusted conversion price of $0.084 per share, in addition, the Company issued a warrant exercisable for 357,764 shares of Common Stock at an initial exercise price of $0.345 per share. The warrant has full ratchet price protection which has resulted in the number of shares exercisable under the warrant increasing to 1,469,388 and the exercise price being amended to $0.084 per share.

The Company had repaid an aggregate of $92,523 of the principal and interest outstanding and between September 6, 2024 and September 17, 2024, Quick Capital converted an aggregate of $32,906, including a penalty of $2,000 into 391,736 shares of Common Stock at a conversion price of $0.084 per share, realizing a loss on conversion of $13,965, thereby extinguishing the note.

●

On May 28, 2024, the Company closed a transaction with Quick Capital pursuant to which the Company received net proceeds of $46,500, after an original issue discount and fees of $10,644 in exchange for the issuance of a $57,144 Convertible Note (“Quick Cap Note 2”), bearing interest at an effective interest rate of 11.03% per annum, which interest is earned on issuance of the note, and maturing on November 28, 2024. The Quick Cap Note 2 has monthly 15,429 commencing on July 28, 2024. The Note is convertible into shares of Common Stock at an adjusted conversion price of $0.084 per share, in addition, the Company issued a warrant exercisable for 178,882 shares of Common Stock at an initial exercise price of $0.345 per share. The warrant has full ratchet price protection which has resulted in the number of shares exercisable under the warrant increasing to 734,694 and the exercise price being amended to $0.084 per share.

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 24% per annum on the total balance outstanding. The note holder did not apply the penalty interest to the balance outstanding. On November 28, 2024, the maturity date of the note, a penalty charge of 150% of the balance outstanding of $30,856 was recorded by the Company as additional principal outstanding.

On December 6, 2024, Quick Capital converted an aggregate of $29,400, including a penalty of $1,000 into 350,000 shares of Common Stock at a conversion price of $0.084 per share, realizing a loss on conversion of $280.

The balance of the Quick Capital note plus accrued interest at December 31, 2024 was $64,171.

~~● On June 13~~ 2023~~, the Company closed a transaction with 1800 Diagonal, pursuant to which the Company received net proceeds of $50,000, after an original issue discount~~ and ~~fees~~2024 ~~of $12,700 in exchange for the issuance of a $62,700~~ Convertible Note (the “June 1800 Diagonal Note”), bearing interest at 17.33% per annum, which interest is earned on issuance of the note, and maturing on March 13, 2024. The June 1800 Diagonal Note was convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion. On August 3, 2023, the Company settled in full, the outstanding convertible notes owing to 1800 Diagonal, for $194,386, including the principal amount of $180,020, early settlement penalty of $9,306 and interest thereon of $5,060.Notes

~~Red~~Between ~~Road~~February ~~Holdings~~13, ~~Corporation~~2023 and November 27, 2023, the Company entered into Securities Purchase Agreements with 30 accredited investors to purchase convertible notes (the “2023 Convertible Notes”). 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”). The Company received an aggregate of $2,026,666 from the 2023 Convertible Notes and $575,002 from the 2024 Convertible Notes, in gross proceeds in private placements through the issuance of:

● Onthe ~~September 9,~~ 2023, the Company closed a transaction with Red Road Holdings Corporation (“RRH”) pursuant to which the Company received net proceeds of $125,000, after an original issue discount and fees of $21,900 in exchange for the issuance of a $146,900 Convertible ~~Note~~Notes ~~(“RRH Note 1”), bearing interest at 13%, which interest is earned on issuance of the note, an effective interest rate of 29.3%,~~ and maturing on June 15, 2024. The RRH Note 1 has mandatory monthly repayments of $18,444 which commenced on October 14, 2023. The RRH Note 1 is convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion. The balance of the RRH Note 1 plus accrued interest at December 31, 2023 was $41,772, net of unamortized debt discount of $61,301. ● On October 19, 2023, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $60,000, after an original issue discount and fees of $13,450 in exchange for the issuance of a $73,450 Convertible Note (“RRH Note 2”), bearing interest at 13%, which interest is earned on issuance of the note, an effective interest rate of 27.8%, and maturing on July 30, 2024. The RRH Note 2 has mandatory monthly repayments of $9,222 which commenced on November 30, 2023. The RRH Note 2 is convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion. The balance of the RRH Note 2 plus accrued interest at December 31, 2023 was $18,683, net of unamortized debt discount of $49,545. ● On December 20, 2023, the Company closed a transaction with RRH pursuant to which the Company received net proceeds of $50,000, after an original issue discount and fees of $13,250 in exchange for the issuance of a $63,250 Convertible ~~Note~~Notes; ~~(“RRH Note 3”), bearing interest at 15%, which interest is earned on issuance of the note, an effective interest rate of 32.0%,~~ and maturing on September 30, 2024. The RRH Note 3 has mandatory monthly repayments of $8,082. The RRH Note 3 is convertible into shares of Common Stock at a variable conversion rate of 60% of the lowest trading price twenty trading days before conversion. The balance of the RRH Note 3 plus accrued interest at December 31, 2023 was $3,109, net of unamortized debt discount of $60,809.

●

five-year warrants to purchase an aggregate 5,696,586 shares of Common Stock associated with the 2023 Convertible Notes (the “2023 Warrants”) and an aggregate of 579,711 shares of Common Stock associated with the 2024 Convertible Notes (the “2024 Warrants”), at an exercise price of $0.345 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events).

The 2023 Convertible Notes and the 2024 Convertible Notes mature between 3.5 months and 12 months from the date of issuance, bear interest at rates between 8% and 12% per annum and are convertible into shares of Common Stock at a conversion price of $0.345 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events). The 2023 Convertible Notes and 2024 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 and the 2024 Convertible Notes or the 2023 Warrants and the 2024 Warrants, for public resale.

F-23

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE (continued)

2023 and 2024 Convertible Notes (continued)

~~Between~~The ~~February~~2023 13Convertible Notes, the 2024 Convertible Notes and the 2023 Warrants and ~~November~~the ~~27,~~2024 ~~2023,~~Warrants contain conversion limitations providing that a holder thereof may not convert or exercise such securities to the ~~Company~~extent ~~entered~~that, ~~into~~if ~~Securities~~after ~~Purchase~~giving ~~Agreements~~effect ~~with~~to 30such ~~accredited~~conversion ~~investors~~or exercise, the ~~pursuant~~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 ~~which~~such conversion or exercise. A holder may increase or decrease its beneficial ownership limitation upon notice to the Company ~~received~~provided anthat ~~aggregate~~in ofno ~~$2,026,666~~event such limitation exceeds in9.99%, ~~gross~~and ~~proceeds~~that inany aincrease ~~private~~shall not ~~placement~~be ~~through~~effective until the ~~issuance~~61st ~~of:~~day after such notice.

●On December ~~Convertible~~14, ~~Promissory~~2023, ~~Notes~~two notes totaling $225,000 (~~the~~$200,000 and ~~“2023~~$25,000, ~~Notes”~~respectively) which ~~and~~matured ~~each~~on aDecember “31, 2023 were ~~Note”);~~extended for an additional 3 months to March 30, 2024. In exchange for the extension, the Company issued the note holders additional warrants exercisable for 292,463 shares of Common Stock at an exercise price of $0.345 per share. On May 4, 2024, the maturity date of the $200,000 note was further extended to June 14, 2024, and the maturity date of the $25,000 note was further extended to June 30, 2024. In exchange for the maturity date extension, the Company issued to the note holders additional warrants exercisable for 292,463 shares of Common Stock at an exercise price of $0.345 per share.

●On March ~~five-year~~14, ~~warrants~~2024, (the ~~“2023~~Company ~~Warrants”)~~extended tothe ~~purchase~~maturity andate ~~aggregate~~of 511 convertible notes maturing between February 13,~~696~~ 2024 and February 23,~~586~~ ~~shares~~2024 by an additional six months and as consideration for the extension, the note holders were issued additional warrants exercisable for 387,673 shares of Common Stock at an exercise price of $0.345 per share. ~~(as~~The ~~adjusted~~modification ~~for~~was ~~stock~~assessed ~~splits~~in terms of ASC 470 and determined to be a debt extinguishment, ~~stock~~resulting ~~combinations~~in the warrant value of $66,047 being ~~dilutive~~expensed ~~issuances~~as ~~and~~a ~~similar~~loss ~~events)~~on convertible notes.

~~The~~At ~~2023~~December ~~Notes~~31, ~~mature~~2024, ~~between~~notes ~~3.5~~with ~~months~~a ~~and~~principal 12amount ~~months~~of $2,026,666 and ~~bear~~accrued interest atthereon ~~rates~~on ~~between~~$254,901 8%have ~~and 12%~~matured. ~~per~~Between February ~~annum~~11, 2025 and ~~are~~February 19, 2025, convertible ~~into~~note ~~shares~~with ~~of Common Stock at~~ a ~~conversion~~total ~~price~~balance outstanding of $~~0.345 per~~772,669 ~~share~~had maturity ~~(as~~dates ~~adjusted~~extended ~~for~~to ~~stock~~December ~~splits~~31,2025 ~~stock~~in ~~combinations,~~exchange ~~dilutive issuances~~for ~~and~~a ~~similar~~reduction ~~events).~~in ~~The~~the ~~2023~~conversion ~~Notes~~price ~~may~~of bethe ~~prepaid~~convertible atnotes ~~any~~to ~~time~~$0.04 ~~without penalty~~per share. The Company iswill ~~under~~perform noan ~~obligation~~analysis toin ~~register~~ terms of ASC 470 and determine whether the ~~shares~~extension of ~~Common~~the ~~Stock~~maturity ~~underlying~~date and the ~~Notes~~reduction in orthe conversion price of the ~~2023~~note ~~Warrants~~is ~~for~~a ~~public~~debt ~~resale~~modification or extinguishment.

The ~~2023~~balance ~~Notes~~of ~~and~~ the 2023 ~~Warrants~~Convertible ~~contain~~Notes ~~conversion~~and ~~limitations providing that a holder thereof may not convert~~ the ~~2023~~2024 Convertible Notes orplus ~~exercise the~~accrued ~~2023~~interest ~~Warrants~~at toDecember ~~the extent that~~31, if2024 ~~after~~was ~~giving effect to such conversion~~$2,870,196, ~~the~~net ~~holder or any~~ of ~~its affiliates would beneficially~~ ~~own~~unamortized indebt ~~excess~~discount of ~~4.99%~~ (the “Maximum Percentage”) of the outstanding shares of the Common Stock immediately after giving effect to such conversion or exercise. A holder may increase or decrease its beneficial ownership limitation upon notice to the Company provided that in no event such limitation exceeds 9.99%$40, ~~and that any increase shall not be effective until the 61st day after such notice~~928.

On December 14, 2023, two notes totaling $225,000 which matured on December 31, 2023 were rolled over for an additional 3 months to March 30, 2024. In exchange for the roll-over, the Company issued the note holders warrants exercisable for 292,463 shares of common stock at an exercise price of $0.345 per share.

The balance of the 2023 Notes plus accrued interest at December 31, 2023 was $1,591,734, net of unamortized debt discount of $515,847.

DERIVATIVE LIABILITY

The convertible notes and warrants issued by the Company to Cavalry, Mercer and RRH as described ~~herein~~in Note 13 have variable priced conversion ~~rights~~ 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~~ 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.

OnBetween September 12, 2023 and December 3020, ~~2022~~2023, ~~the~~and ~~Company~~between ~~entered~~April ~~into~~2, ~~the~~2024 ~~December~~and ~~2022~~June ~~Note~~25, ~~Amendment~~2024, ~~transaction (“~~the ~~Note~~Company ~~Amendment”)~~entered asinto ~~fully~~a ~~described under~~convertible note 12agreement with ~~above.~~RRH ~~Included~~which inhave ~~the~~variable ~~derivative~~priced ~~liability~~conversion ~~is:~~rights ~~(i)~~with ~~the~~no ~~Original~~fixed ~~Warrants~~floor ~~which~~price ~~were~~and ~~exchanged~~will ~~for non~~re-~~convertible~~price ~~promissory notes,~~dependent ~~(ii)~~on the ~~Cavalry~~share ~~and~~price ~~Mercer~~performance over ~~convertible~~varying ~~notes~~periods of time, which ~~were~~gave ~~subject~~rise to ~~the~~a ~~Note~~derivative ~~Amendment~~financial ~~and~~liability, ~~(ii)~~which ~~the~~was ~~Cavalry~~initially ~~and~~valued ~~Mercer~~at ~~Extension Warrants~~inception asof ~~well~~the asconvertible notes ~~certain~~at ~~other~~$416,317 and ~~warrants~~$268,873, ~~due~~respectively, but limited to ~~Cavalry~~the ~~and~~cash ~~Mercer~~value ~~and~~of ~~certain~~the ~~other~~convertible ~~warrant~~notes ~~holders.~~of ~~The~~$235,000 and ~~Note~~$150,000, respectively, ~~Amendment~~using ~~triggered~~ a ~~repricing~~ ofBlack-Scholes ~~certain~~valuation ~~of these warrants~~model.

The ~~derivative~~net ~~liability on the Cavalry and Mercer convertible notes and the warrants affected by the note amendment were marked-to-market immediately prior to the Note Amendment resulting in a market to market~~ movement on the ~~original~~derivative ~~warrants,~~liability ~~the~~for ~~convertible notes and~~ the ~~extension~~ ~~warrants~~year ~~and~~ended ~~certain~~December ~~other warrants~~31, ~~which~~2023 ~~were~~was ~~subject to~~ a ~~full~~net ~~rachet provision, of $474,614. In addition, the Note and warrant Amendment gave rise~~ mark-to-market ancredit ~~additional derivative liability charge~~ of $21,~~317~~501,~~051~~446 ~~which was recorded as an expense in the loss on convertible~~determined ~~notes~~by ~~charge~~using ina ~~the~~Black-Scholes ~~statement~~valuation ~~of operations~~model.

On ~~May~~August 106, ~~2023 and June 13~~2024, ~~2023,~~ the Company ~~entered~~received ~~into~~a ~~convertible~~conversion ~~note~~notice ~~agreements~~from ~~with~~the ~~1800~~holder ~~Diagonal~~of ~~which~~RRH ~~have~~Note ~~variable~~2 ~~priced~~(see ~~conversion rights~~Note ~~with~~13) nopursuant ~~fixed~~to ~~floor~~which ~~price~~$13,833 of the remaining principal, interest and ~~will~~late ~~re-price~~payment ~~dependent~~penalty onunder the ~~share~~RRH ~~price~~2 ~~performance~~Note ~~over~~was ~~varying~~converted ~~periods~~into 164,679 shares of ~~time,~~Common Stock ~~which~~at ~~gave~~a ~~rise to~~conversion aprice ~~derivative~~of ~~financial~~$0.084 per ~~liability,~~share. ~~which~~As ~~was~~a ~~initially~~result ~~valued~~of atthe ~~inception~~conversion of the ~~convertible~~RRH ~~notes~~Note ~~at $360~~2,~~491 but~~ ~~limited~~all toother outstanding promissory ~~the~~notes ~~cash~~and ~~value~~warrants of the ~~convertible~~Company that contain price-based anti-dilution protection had the conversion prices of such notes and the exercise price of such warrants adjusted to $~~150,000,~~0.084 per ~~using~~share aand ~~Black-Scholes~~certain ~~valuation~~warrants ~~model.~~of ~~These~~the ~~convertible~~Company ~~notes~~that ~~were~~contain ~~subsequently~~“full ratchet” anti-dilution ~~settled~~price onprotection ~~August~~had 3,the ~~2023,~~number ~~resulting~~of inshares exercisable for such warrants increased by the ~~elimination~~full ofratchet provision and the ~~derivative~~conversion ~~liability~~prices of ~~related~~such warrants adjusted to ~~these~~$0.084 per ~~notes~~share (the “Triggering Event”).

F-24

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE LIABILITY (continued)

Convertible ~~Between~~notes ~~September~~with ~~12,~~an ~~2023~~aggregate principal and ~~December~~interest 20balance outstanding on August 6, ~~2023~~2024 of $2,165,578 have ~~the~~such ~~Company~~price-based ~~entered~~anti-dilution protection. ~~into~~Based aon ~~convertible~~the ~~note~~conversion ~~agreement~~by ~~with~~the RRH ~~which~~Note ~~have~~2 ~~variable~~as ~~priced conversion~~described ~~rights~~above, ~~with~~the noconversion ~~fixed~~price ~~floor~~of ~~price~~these ~~and~~notes will ~~re-price~~reset ~~dependent~~to on$0.084. ~~the~~In addition, ~~share~~certain ~~price~~warrants ~~performance~~exercisable ~~over~~for 3,145,342 shares ~~varying~~of ~~periods~~common ofstock ~~time,~~at ~~which gave~~an ~~rise~~exercise toprice of $0.345 per share, have a ~~derivative~~full ~~financial~~ratchet ~~liability,~~provision which ~~was~~resulted ~~initially~~in ~~valued~~an atincrease ~~inception~~in the number of ~~the~~shares ~~convertible~~of ~~notes~~Common atStock ~~$416~~exercisable for such warrants by 9,~~317~~773,028 ~~but limited~~to a total number of shares of Common Stock exercisable for such warrants of 12,918,370. In addition to ~~the~~this, ~~cash~~certain ~~value~~warrants exercisable for 457,897 shares of common stock have exercise price protection which will reduce the ~~convertible~~exercise ~~notes~~price of these warrants to $~~235~~0.084 per share from $0.345 per share,~~000,~~ ~~using~~resulting in a ~~Black-Scholes~~decrease ~~valuation~~in ~~model~~potential proceeds receivable from the exercise price of such warrants by $119,511.

The ~~net~~value ~~movement~~of onthe 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 ~~for~~of $4,318,669 on the ~~year~~convertible ~~ended~~notes ~~December~~and 31$2,051,405 on ~~2023~~the warrants. In addition, a payment was not made on a ~~net~~convertible ~~mark-~~note with a no notice default clause, resulting in the triggering of a variable priced conversion feature, which gave rise to~~-market~~ ~~credit~~a derivative liability on the payment due date, this gave rise to an additional derivative liability of $156,~~501~~329,~~446~~ both determined by using a Black-Scholes valuation model.

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 $6,892,395, determined by using a Black-Scholes valuation model.

The following assumptions were used in the Black-Scholes valuation model:

	Year ended December 31, 2023			Year ended December 31, 2022
	Year ended December 31, 2024			Year ended December 31, 2023
Conversion price	$	0.~~104~~0364 to $0.345		$	0.~~345~~104 to $40.50345
Risk free interest rate		3.6058 to 5.5550	%		03.7960 to 45.7355	%
Expected life of derivative liability	$	~~3.5~~1 to 4741 months			13.5 to 5947 months
Expected volatility of underlying stock		~~158~~24.723 to ~~217~~262.0109	%		~~120~~158.4972 to ~~258~~217.301	%
Expected dividend rate		0.0	%		0.0	%

The movement in derivative liability is as follows:

	December 31, 2023			December 31, 2022
	Year ended December 31, 2024			Year ended December 31, 2023
Opening balance	$	21,~~550~~434,~~642~~196		$	~~407~~2,~~161~~550,642
Derivative financial liability arising from convertible note and warrants		385,000			238,182
Derivative financial liability arising from convertible notes and warrants		226,329			385,000
Derivative financial liability arising on note amendment included in loss on convertible notes		-			2,317,051
Derivative liability arising on anti-dilutive convertible notes and warrants		6,370,074			-
Fair value adjustment to derivative liability		(16,~~501~~892,~~446~~395	)		(~~411~~1,~~752~~501,446	)
	$	1,434,196		$	2,550,642
Closing balance	$	1,138,204		$	1,434,196

15 STOCKHOLDERS’ EQUITY

a. Common Stock

The Company has total authorized Common Stock of 750,000,000 shares with a par value of $0.0001 each. The Company had 13,819,889 and 12,563,426 shares of Common Stock issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.

On July 8, 2022, the Company entered into a consulting agreement with a third-party contractor for a period of twelve months to (i) review the Company’s business plan; (ii) analyze and assess the Company’s revenues, costs, and cash flow; and (iii) introduce the Company to and interface on the Company’s behalf with potential and actual commercial partners.

The Company issued 66,667 (2,000,000 pre-split) shares of Common Stock as compensation for the services rendered which were fully earned on the date of issue. These shares were valued at $84,000 at the date of grant. In addition, the contractor will receive a monthly fee of $3,000 for the term of the Agreement, commencing on August 1, 2022.

On July 8, 2022, the Company entered into a second consulting agreement with a separate third-party contractor for a period of twelve months to (i) review the Company’s business plan; (ii) analyze and assess the Company’s revenues, costs, and cash flow; and (iii) introduce the Company to and interface on the Company’s behalf with potential and actual commercial partners. The Company issued 66,667 (2,000,000 pre-split) shares of Common Stock as compensation for the services rendered which were fully earned on the date of issue. These shares were valued at $84,000 at the date of grant.

On July 11, 2022, the Board approved the issuance of 66,667 (2,000,000 pre-split) restricted shares of Common Stock to Richard Rosenblum, the Company’s President and Chief Financial Officer. These shares were valued at $110,000 at the date of grant.

On August 5, 2022, the Board approved the issuance of 100,000 (3,000,000 pre-split) shares of Common Stock to Samad Harake or his designees as compensation for the services rendered which were fully earned on the date of issue., Mr. Harake is the president and control person of Frictionless. These shares were valued at $165,000 at the date of grant.

F-25

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15 STOCKHOLDERS’ EQUITY ~~(continued)~~

a. Common Stock ~~(continued)~~

OnThe ~~May~~Company ~~19,~~has ~~2023,~~total inauthorized Common ~~terms~~Stock of 750,000,000 shares awith ~~conversion notice received from~~ a ~~convertible~~par ~~note~~value ~~holder,~~of ~~the~~$0.0001 each. The Company ~~issued~~had 7219,~~464~~081,446 and13,819,889 shares of of Common Stock ~~for~~issued ~~the~~and ~~conversion~~outstanding ofas ~~$25,000~~ of ~~convertible~~December ~~debt~~31, ~~refer~~2024 ~~Note~~and 13December ~~above~~31, 2023, respectively.

On ~~August~~May 1619, 2023, in terms of a conversion notice received from a convertible note holder, the Company issued 72,464 shares of Common Stock for the conversion of $25,000 of convertible debt~~, refer Note 13 above~~.

On August 2416, 2023, in terms of a conversion notice received from a convertible note holder, the Company issued ~~173~~72,~~914~~464 shares of of Common Stock for the conversion of $6025,000 of ~~interest on~~ convertible debt~~, refer Note 13 above~~.

On August 24, 2023, in terms of a conversion notice received from a convertible note holder, the Company issued 173,914 shares of Common Stock for the conversion of $60,000 of interest on convertible debt.

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 August 31, 2023, in terms of a conversion notice received from a convertible note holder, the Company issued 144,928 shares of Common Stock for the conversion of $50,000 of convertible debt~~, refer note 13 above~~.

On November 8, 2023, in terms of a conversion notice received from a convertible note holder, the Company issued 289,855 shares of Common Stock for the conversion of $100,000 of convertible debt~~, refer note 13 above~~.

On November 20, 2023, in terms of a conversion notice received from a convertible note holder, the Company issued 500,000 shares of Common Stock for the conversion of $172,500 of convertible debt~~, refer note 13 above~~.

On August 6, 2024, the Company received a conversion notice from the holder of RRH Note 2 (see Note 13) pursuant to which $13,833 of the remaining principal, interest and late payment penalty under the RRH 2 Note was converted into 164,679 shares of Common Stock at a conversion price of $0.084 per share. As a result of the conversion of the RRH Note 2, a warrant, with full ratchet anti-dilution price protection, exercise price was reduced from $0.345 per share to $0.084 per share and the number of shares exercisable was increased from 3,145,342 shares to 12,918,370 shares, resulting in a deemed dividend charge and a credit to additional paid in capital of $426,807.

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 5,261,557 shares of common stock for the conversion of $441,971 of convertible debt at a conversion price of $0.084 per share, realizing an aggregate loss on conversion of $170,246.

Restricted stock awards

OnA ~~December~~summary ~~15, 2020, in terms~~ of ~~an employment agreement entered into with an employee, the Company granted 83,333 (2,500,000 pre-split)~~ restricted ~~shares~~stock ofactivity ~~which 33,333~~during ~~(1,000,000 pre-split) vested on January 1, 2021 and~~ the ~~remaining 50,000 (1,500,000 pre-split) shares vest over a~~ period ofJanuary ~~two years. The 50,000 (~~1,~~500,000 pre-split)~~ ~~shares~~2023 ~~of unvested restricted stock which was not physically issued~~ to ~~the~~December ~~employee~~31, ~~were~~2024 ~~not~~is ~~earned~~as ~~due to the cessation of employment with the Company.~~follows:

A summary of restricted stock activity during the period January 1, 2022 to December 31, 2023 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, 2023		783,167	$	1.50		170,792		$	1.47			612,375	$	1.50
Granted and issued		-		-		-			-			-		-
Forfeited/Cancelled		-		-		-			-			-		-
Vested		-		-		(170,792	)		(1.47	)		170,792		1.47
Outstanding December 31, 2023		783,167	$	1.50		-		$	-			783,167	$	1.50
Granted and issued		-		-		-			-			-		-
Forfeited/Cancelled		-		-		-			-			-		-
Vested		-		-		-			-			-		-
Outstanding December 31, 2024		783,167	$	1.50		-		$	-			783,167	$	1.50

	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, 2022		716,500	$	1.47		341,583		$	1.47			374,917	$	1.47
Granted and issued		66,667		1.65		-			-			66,667		1.65
Forfeited/Cancelled		-		-		-			-			-		-
Vested		-		-		(170,791	)		(1.47	)		170,791		1.47
Outstanding December 31, 2022		783,167	$	1.50		170,792		$	1.47			612,375	$	1.50
Granted and issued		-		-		-			-			-		-
Forfeited/Cancelled		-		-		-			-			-		-
Vested		-		-		(170,792	)		(1.47	)		170,792		1.47
Outstanding December 31, 2023		783,167	$	1.50		-		$	-			783,167	$	1.50

After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The restricted stock granted, issued and exercisable at December 31, 2023 is as follows:

		Restricted Stock Granted and Vested
Grant date Price		Number Granted*		Weighted Average Fair Value per Share*
$	1.47		683,167	$	1.47
$	1.50		33,333		1.50
$	1.65		66,667		1.65
			783,167	$	1.50

* After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The Company has recorded an expense of $0 and $361,064 for the years ended December 31, 2023 and 2022, respectively.

F-26

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ EQUITY (continued)

Restricted stock awards (continued)

The restricted stock granted, issued and exercisable at December 31, 2024 is as follows:

	Restricted Stock Granted and Vested
Grant date Price	Number Granted*		Weighted Average Fair Value per Share*
$1.47		683,167	$	1.47
$1.50		33,333		1.50
$1.65		66,667		1.65
		783,167	$	1.50

After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

Preferred Stock

The Company has authorized 25,000,000 shares of preferred stock with a par value of $0.0001 authorized. No preferred stock was issued and outstanding as of December 31, ~~2023~~2024 and December 31, ~~2022~~2023.

Warrants

~~Effective~~ ~~July~~Between 8February 13, ~~2022~~2023 ~~(the~~and ~~“Effective~~November ~~Date”)~~27, 2023, the Company entered into anSecurities ~~Endorsement~~Purchase ~~Agreement~~Agreements with ~~Pez-Mar,~~30 ~~Inc~~accredited investors., In aterms ~~California~~of ~~corporation (“Pez-Mar”),~~these toSecurities ~~furnish~~Purchase Agreements, the ~~services~~Company ofissued ~~Mario~~five-year ~~Lopez~~warrants ~~(“Lopez”).~~to ~~Pursuant~~purchase toan aggregate 5,696,586 shares of the ~~Endorsement~~Common ~~Agreement,~~Stock ~~Lopez~~at ~~will act~~an asexercise aprice ~~Company~~of ~~spokesperson~~$0.345 per inshare ~~connection~~(as ~~with~~adjusted ~~the~~for ~~promotion~~stock splits, ~~advertisement~~stock combinations, dilutive issuances and ~~endorsement~~similar ofevents). ~~the~~The Company’s ~~physical~~is ~~and~~under ~~virtual payment~~no ~~processing~~obligation ~~and~~to ~~money~~register ~~remittance~~the ~~business~~shares ~~and~~of Common Stock underlying the ~~Company’s~~2023 ~~related~~Notes ~~products~~or ~~and~~the ~~services~~2023 Warrants for public resale.

~~The~~On ~~Endorsement~~August ~~Agreement~~11, ~~has~~2023, athe ~~term~~Company ~~of two (2)~~issued ~~years~~an ~~from~~investor ~~the~~a ~~Effective~~five-year ~~Date~~replacement ~~(the~~warrant ~~“Term”),~~for ~~which~~a iswarrant ~~subject~~that tohad ~~earlier termination~~expired on ~~customary~~February ~~terms and conditions. The parties have agreed to certain deliverables of Lopez during the term of the agreement~~13, ~~including~~ ~~with~~2023 ~~respect to social media posts, television commercials, interviews and photo shoots. The Endorsement Agreement also contains~~exercisable ~~other customary terms~~for 33,334 shares ~~covenants~~of ~~and~~Common ~~conditions,~~Stock ~~including~~at ~~representations~~an ~~and~~exercise ~~warranties,~~price ~~restrictions on endorsements~~ of ~~competitive products~~$1.50 per ~~during the term of the agreement, confidentiality, indemnification, and Pez-Mar and Lopez’s independent contractor status~~share.

AsIn ~~compensation~~connection ~~for~~with the ~~services~~formation ~~provided~~of ~~under~~IPSIPay Express, the ~~Endorsement~~Company ~~Agreement,~~issued ~~Lopez~~to oreach ~~their~~of ~~designees~~the ~~are~~other ~~entitled~~venture topartners, ~~the~~OpenPath ~~following~~and ~~payments: (i)~~EfinityPay, IPEX aWarrants ~~cash~~to ~~endorsement~~purchase ~~fee~~an aggregate of 133,334 shares ~~Three~~of ~~Hundred~~Common ~~Thousand~~Stock Uwith an exercise of $0.S45 per share. ~~Dollars~~The ~~($300,000~~Company ~~USD),~~is obligated ~~payable~~to asissue ~~follows:~~each ~~(i)~~of ~~One~~OpenPath ~~Hundred~~and ~~Twenty-Five~~EfinityPay ~~Thousand Dollars~~additional ~~($125,000)~~IPEX ~~upon~~Warrants ~~execution~~to purchase 199,999 shares of ~~the~~Common ~~Endorsement~~Stock ~~Agreement,~~at ~~(ii)~~a price ~~One~~equal ~~Hundred~~to ~~Twenty-Five~~the ~~Thousand~~average ~~Dollars~~public ~~($125,000)~~closing ~~quarterly~~price ~~during~~ of the ~~Term,~~Common ~~beginning~~Stock onfor the ~~90th day~~three ~~following~~trading ~~the~~days ~~Effective~~immediately ~~Date,~~prior ~~and~~to ~~(iii)~~the ~~Fifty~~funding ~~Thousand~~of ~~Dollars~~the remaining ~~($50,000)~~initial onTranche. orSimultaneously ~~prior to~~with the ~~first~~funding ~~anniversary~~ of the ~~Effective~~second ~~Date~~Tranche ~~and~~in ~~(ii)~~September ~~warrants~~2023, ~~exercisable~~the ~~for~~Company anbecame ~~aggregate~~obligated to issue to each of ~~Five~~OpenPath ~~hundred~~and ~~thousand~~EfinityPay ~~(500,000)~~an additional IPEX Warrant to purchase 166,667 shares of ~~the~~ Common Stock atwith an exercise price equal ofto ~~$1.035~~the ~~per~~average ~~share. The~~public ~~Warrants~~closing ~~shall~~price ~~have~~of athe Common Stock for the three~~-year~~ ~~term~~trading ~~commencing~~days ~~from~~immediately prior to the ~~Effective~~funding of the second ~~Date~~Tranche. ~~The~~ ~~right~~Simultaneously towith ~~exercise~~ the ~~Warrants~~funding ~~shall~~of bethe ~~subject~~third toTranche, ~~vesting~~the ~~during~~Company ~~the~~will ~~Term~~issue ~~but~~to ~~shall~~each ~~vest~~of inOpenPath ~~full~~and ~~upon~~EfinityPay ~~the~~an ~~consummation~~additional IPEX warrant to purchase 166,667 shares of aCommon ~~fundamental~~Stock ~~transaction~~with ~~involving~~an exercise price equal to the ~~Company~~average orpublic ~~upon~~closing ~~certain~~price ~~termination~~of the ~~events~~Common ~~provided~~Stock for inthe three trading days immediately prior to the ~~Endorsement~~funding ~~Agreement.~~of ~~The~~the ~~Exercise Price~~third ~~may~~Tranche. beIf ~~payable~~the ~~via~~full ~~“cashless~~IPSI ~~exercise”~~Capital Contribution is funded, ~~unless~~OpenPath ~~the~~and ~~underlying~~EfinityPay ~~Shares~~will ~~are~~receive ~~registered~~IPEX ~~under~~Warrants to purchase an ~~effective~~aggregate ~~registration~~of 1,333,334 shares of Common Stock. ~~statement~~See ~~under~~note ~~the~~1(b) ~~Securities~~above. ~~Act~~As of ~~1933~~the date of this Report, asit ~~amended.~~is ~~The~~not ~~Shares~~expected ~~are~~that ~~subject~~the tofull ~~certain~~IPSI ~~“piggyback”~~Capital ~~registration~~Contribution ~~rights~~will be required to be funded.

On ~~August~~December 3014, ~~2022~~2023, the ~~Company extended the~~ maturity date of ~~the~~two ~~Cavalry/Mercer~~notes ~~Notes~~totaling $225,000 ($200,000 and ~~agreed~~$25,000, respectively) which matured on December 31, 2023 were extended for an additional 3 months to ~~grant~~March ~~each~~30, 2024. In exchange for the maturity date extension, the Company issued the note ~~holder~~holders afive-year ~~warrant~~warrants exercisable for ~~100~~292,~~000~~463 shares of Common Stock at an exercise price of $40.50345 per share. On ~~with~~May an4, ~~expiration~~2024, the maturity date of the $200,000 note was further extended to June 14, 2024, and the maturity date of the $25,000 ~~August~~note was further extended to June 30, ~~2027~~2024. In exchange for the maturity date extension, the Company issued to note holders warrants exercisable for 292,463 shares of Common Stock at an exercise price of $0.345 per share.

OnDuring 2023, ~~December~~warrants ~~30,~~exercisable ~~2022~~for 33,334 shares ~~the~~expired ~~Company issued~~as tounexercised ~~Frictionless~~and aan ~~5-year~~additional warrant toexercisable ~~purchase~~for 1,000,000 shares of Common Stock ~~at an exercise price of $0.345 per share. The fair value of these warrants~~ was ~~$348,938 determined~~forfeited ~~by using a Black-Scholes valuation model, which fair value was capitalized to purchased technology~~ on the ~~date~~disposal of ~~grant.~~Frictionless Onand ~~May~~Beyond ~~12, 2023, the Company entered into an agreement to cancel this warrant (see note 1(b))~~Fintech.

On December 30, 2022, the Company entered into the December 2022 Note Amendment Transaction, as fully described in note 11 above. In terms of the Note Amendment Transaction the following occurred:

● The warrants issued to Cavalry and Mercer exercisable for 165,798 shares of Common Stock (82,899 for each of Cavalry and Mercer), were exchanged for two promissory notes of $482,000 each, as disclosed in note 11 above;

● The warrants issued to Cavalry and Mercer on August 30, 2022, were subject to repricing and a full rachet increase in the number of warrants issued, resulting in an increase in the number of warrants by 2,408,696 (1,204,348 to each Cavalry and Mercer) and a reset of the exercise price to $0.345 per share. The additional warrants were valued at $841,003 using a Black-Scholes valuation model and was expensed in the statement of operations as a component of the loss on convertible debt.

● An additional 457,895 warrants previously issued to Mercer, Iroquois Master Fund and Bellridge Capital LP were subject to repricing of the exercise price from a range of $1.50 to $4.50 per share to $0.345 per share. The change in the fair value of these warrants of $20,079, using a Black-Scholes valuation model was recorded as a component of the loss on convertible debt.

Between February 13, 2023 and November 27, 2023, the Company entered into Securities Purchase Agreements with 30 accredited investors, as disclosed in note 13 above. In terms of these Securities Purchase Agreements, the Company issued five-year warrants to purchase an aggregate 5,696,586 shares of the Common Stock at an exercise price of $0.345 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events). The Company is under no obligation to register the shares of Common Stock underlying the 2023 Notes or the 2023 Warrants for public resale.

F-27

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ EQUITY (continued)

Warrants (continued)

On ~~August~~March 114, ~~2023~~2024, the ~~company~~Company ~~issued~~entered aninto ~~investor~~ a ~~five-year~~Securities ~~replacement~~Purchase ~~warrant~~Agreement ~~for~~with aan ~~warrant~~accredited ~~that~~investor, ~~had~~as ~~expired~~disclosed onin ~~February~~note 13, ~~2023~~above. ~~exercisable~~In ~~for~~terms 33of the Securities Purchase Agreement,~~334~~ ~~shares~~the Company issued a five-year warrant to purchase an aggregate of 357,764 shares of ~~common~~the ~~stock~~Common Stock at an exercise price of $10.50 345 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events). The Company is under no obligation to register the shares of Common Stock underlying the Note or the Warrant, for public resale.

On ~~December~~March 14, ~~2023~~2024, ~~two~~the ~~notes~~Company ~~totaling~~extended ~~$225,000~~the ~~which~~maturity ~~matured~~date onof ~~December~~11 31convertible notes maturing between February 13, ~~2023~~2024 ~~were~~and ~~rolled~~February ~~over~~23, ~~for~~2024 by an additional 3six months toand ~~March 30,~~as ~~2024.~~compensation ~~In exchange~~ for the ~~roll-over~~extension, the ~~Company issued the~~ note holders ~~five-year~~were issued warrants exercisable for ~~292~~ 387,~~463~~ 673 shares of ~~common stock~~Common Stock at an exercise price of $0.345 per share.

~~During~~Between May 3, 2024 and May 28, 2024, the ~~current~~Company entered into a Securities Purchase Agreements with four accredited investors, as disclosed in note 13 above. In terms of the Securities Purchase Agreement, the Company issued five-year warrants ~~exercisable~~to ~~for~~purchase ~~33,334~~an aggregate of 468,738 shares of ~~expired~~the asCommon ~~unexercised~~Stock ~~and~~at aan ~~further~~exercise ~~warrants~~price ~~exercisable~~of $0.345 per share (as adjusted for 1stock splits,~~000~~ stock combinations,~~000~~ ~~shares~~dilutive issuances ofand ~~common~~similar ~~stock~~events). ~~were~~The ~~forfeited~~Company onis under no obligation to register the ~~disposal~~shares of ~~frictionless~~Common ~~and~~Stock ~~Beyond~~underlying ~~Fintech~~the asNote ~~disclosed~~or inthe ~~note~~Warrant, 4for public ~~above~~resale.

~~The~~On ~~2023~~May ~~Warrants~~4, ~~contain~~2024, ~~conversion~~the ~~limitations~~maturity ~~providing~~date ~~that~~of atwo ~~holder~~notes ~~thereof~~totaling ~~may~~$225,000 which ~~not~~originally ~~exercise~~matured ~~the~~on ~~Warrants~~December to31, ~~the~~2023 ~~extent~~and ~~that,~~which ifmaturity ~~after~~dates ~~giving~~were ~~effect~~extended to ~~such~~March ~~exercise~~30, ~~the~~2024, ~~holder~~on orMay ~~any~~4, of2024, ~~its~~the ~~affiliates~~maturity ~~would~~date ~~beneficially~~of ~~own~~the in$200,000 note ~~excess~~was ~~of 4.99%~~further ~~(the~~extended ~~“Maximum Percentage”)~~to ofJune 14, 2024, and the ~~outstanding~~maturity ~~shares~~date of the ~~Common~~$25,000 note ~~Stock~~was ~~immediately~~further ~~after~~extended ~~giving effect~~ to June ~~such~~30, ~~exercise~~2024. AIn ~~holder~~exchange ~~may~~for ~~increase or~~the ~~decrease~~maturity ~~its~~date ~~beneficial~~extension, ~~ownership~~on June ~~limitation~~14, ~~upon~~2024, ~~notice to~~ the Company ~~provided~~issued ~~that~~to innote noholders ~~event~~warrants ~~such~~exercisable ~~limitation exceeds~~for ~~9.99%~~292, ~~and~~463 shares ~~that~~of ~~any~~Common ~~increase~~Stock ~~shall~~at ~~not~~an beexercise ~~effective~~price of ~~until the 61st~~$0.345 ~~day~~per ~~after such notice~~share.

InOn August ~~connection~~6, ~~with~~2024, the ~~formation of~~Company ~~IPSIPay~~received ~~Express,~~a ~~the~~conversion ~~Company~~notice ~~issued~~from tothe ~~each~~holder of ~~the~~RRH ~~other~~Note ~~venture~~2 ~~partners,~~(see ~~OpenPath~~Note ~~and~~13). ~~EfinityPay,~~As ~~IPEX~~a ~~Warrants~~result toof ~~purchase~~the anconversion ~~aggregate~~ of ~~133~~ the RRH Note 2,~~334 shares~~ all warrants of ~~Common~~the ~~Stock~~Company ~~with~~that ancontain price-based anti-dilution protection had the exercise price of such warrants adjusted to $0.45084 per share. ~~The~~and ~~Company~~certain iswarrants ~~obligated~~of tothe ~~issue~~Company ~~each~~that ofcontain ~~OpenPath and~~“full ~~EfinityPay~~ratchet” ~~additional~~anti-dilution ~~IPEX~~price ~~Warrants~~protection had tothe ~~purchase 199,999 shares~~number of ~~Common~~shares ~~Stock~~exercisable atfor asuch ~~price~~warrants ~~equal~~increased toby the ~~average~~full ~~public~~ratchet ~~closing price~~provision ofand the ~~Common~~conversion ~~Stock~~prices ~~for~~of ~~the~~such ~~three~~warrants adjusted ~~trading~~to ~~days~~$0.084 ~~immediately~~per ~~prior~~share. toCertain ~~the~~warrants ~~funding~~exercisable for 3,145,342 shares of ~~the~~common ~~remaining~~stock ~~initial~~at ~~Tranche.~~an ~~Simultaneously with~~exercise ~~the~~price ~~funding~~ of ~~the~~$0.345 per share, ~~second~~have ~~Tranche~~a infull ~~September~~ratchet ~~2023,~~provision ~~the~~which ~~Company~~results ~~became~~in ~~obligated~~an toincrease ~~issue~~in tothe ~~each~~number of ~~OpenPath~~shares ~~and~~of ~~EfinityPay~~Common ~~an additional~~Stock ~~IPEX~~exercisable ~~Warrant~~for tosuch ~~purchase~~warrants by ~~166~~9,~~667~~773,028 to a total number of shares of Common Stock ~~with~~exercisable anfor ~~exercise~~such ~~price~~warrants ~~equal~~of 12,918,370 and toa reduction in the ~~average~~exercise ~~public closing~~ price ofto ~~the~~$0.084 per ~~Common~~share ~~Stock~~from ~~for~~$0.345 per ~~the~~share, ~~three~~In ~~trading~~addition ~~days~~to ~~immediately~~this, ~~prior~~certain towarrants ~~the~~exercisable ~~funding~~ for 457,897 shares of ~~the~~common ~~second~~stock ~~Tranche.~~have ~~Simultaneously~~exercise ~~with~~price ~~the~~protection ~~funding of~~which reduced the ~~third~~exercise ~~Tranche,~~price ~~the~~of ~~Company~~these ~~will~~warrants ~~issue~~ to ~~each~~$0.084 per ofshare ~~OpenPath~~from ~~and~~$0.345 per share, ~~EfinityPay~~resulting anin ~~additional~~a ~~IPEX~~decrease ~~warrant~~in topotential ~~purchase 166,667 shares of~~proceeds ~~common~~receivable ~~stock~~from ~~with~~the an exercise price ~~equal~~of tosuch ~~the~~warrants ~~average~~by ~~public~~$119,511. ~~closing~~This ~~price~~resulted ofin a ~~the~~fair ~~Common~~value ~~Stock~~adjustment ~~for~~charge ~~the~~of ~~three~~$2,478,211 of ~~trading~~which ~~days~~$2,051,405 was ~~immediately prior~~recorded as a charge to the ~~funding~~statement of ~~the~~comprehensive loss ~~third~~as ~~Tranche.~~it Ifrelated ~~the~~to ~~full~~warrants ~~IPSI~~subject ~~Capital~~to ~~Contribution~~derivative isliability ~~funded~~treatment and $426,807 was ~~OpenPath~~recorded ~~and~~as ~~EfinityPay~~a ~~will~~deemed ~~receive~~dividend ~~IPEX~~expense, ~~Warrants~~as it related to ~~purchase~~a andown ~~aggregate~~round adjustment to the price of 1 a warrant issued during the current year,~~333,334 shares~~ ofwhich ~~Common~~is ~~Stock.~~not ~~See~~subject ~~note~~to ~~1(b)~~derivative liability ~~above~~treatment.

~~The~~On ~~fair~~October ~~value~~22, 2024, the Company entered into a Securities Purchase Agreements with an accredited investor, as disclosed in note 13 above. In terms of the ~~warrants~~Securities ~~granted~~Purchase ~~and~~Agreement, the Company issued five-year warrants to purchase an aggregate of 289,855 shares of the Common Stock at an exercise price of $0.345 per share (as ~~described~~adjusted ~~above~~for stock splits, ~~were~~stock ~~determined~~combinations, bydilutive ~~using~~issuances and asimilar ~~Black~~events). ~~Scholes~~The ~~valuation~~Company ~~model~~is ~~using~~under no obligation to register the shares of Common Stock underlying the Note or the Warrant, for ~~following~~public ~~assumptions:~~resale.

	Year ended December 31, 2023
Exercise price	$	0.345 to 0.45
Risk free interest rate		3.77 to 4.86	%
Expected life		5 years
Expected volatility of underlying stock		187.40 to 192.80	%
Expected dividend rate		0	%

The 2023 and 2024 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 4.99% (the “Maximum Percentage”) of the outstanding shares of the Common Stock immediately after giving effect to such exercise. A 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 61^stday after such notice.

A summary of warrant activity during the period January 1, 2022 to December 31, 2023 is as follows:

	Shares Underlying Warrants*			Exercise price per share*		Weighted average exercise price*
Outstanding January 1, 2022		1,243,477		$	1.50 – 5.625	$	3.60
Granted		1,700,000			0.345 – 1.035		0.5478
Increase in warrants due to debt amendment full rachet trigger		2,408,696			0.345		0.345
Cancelled on debt amendment		(165,797	)		4.50		4.50
Exercised		-			-		-
Outstanding December 31, 2022		5,186,376		$	0.345 – 5.625	$	0.9000
Granted		6,289,051			0.345 – 1.50		0.3556
Forfeited		(33,334	)		1.50		1.5000
Cancelled on disposal of investment in Frictionless and Beyond Fintech		(1,000,000	)		0.345		0.3450
Exercised		-			-		-
Outstanding December 31, 2023		10,442,093		$	0.345 – 5.625	$	0.6265

* After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

F-28

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ EQUITY (continued)

Warrants (continued)

The fair value of the warrants ~~outstanding~~granted and ~~exercisable~~issued, atas ~~December~~described 31above, ~~2023~~were ~~are~~determined asby ~~follows~~using a Black Scholes valuation model using the following assumptions:

				Warrants Outstanding*						Warrants Exercisable*
		Year ended December 31, 2024
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
Exercise price		$	0.084 to 0.345
$	0.345				9,055,642		4.16				9,055,642				4.16
Risk free interest rate		3.73 to 4.56		%
$	0.450				266,668		4.48				266,668				4.48
Expected life			1 to 5 years
$	1.035				500,000		1.52				437,500				1.52
Expected volatility of underlying stock			177.78 to 191.61	%
$	1.500				33,334		4.62				33,334				4.62
Expected dividend rate			0	%
$	4.50				505,560		2.21				505,560				2.21
$	5.625				80,889		2.21				80,889				2.21
					10,442,093		3.94	$	0.6265		10,379,593	$	0.6240		3.95

A summary of warrant activity during the period January 1, 2023 to December 31, 2024 is as follows:

	Shares Underlying Warrants*			Exercise price per share*		Weighted average exercise price*
Outstanding January 1, 2023		5,186,376		$	0.345 - 5.625	$	0.9000
Granted		6,289,051			0.345 - 1.500		0.3556
Increase in warrants due to debt amendment full rachet trigger		(33,334	)		1.500		1.5000
Cancelled on debt amendment		(1,000,000	)		0.345		0.3450
Exercised		-			-		-
Outstanding December 31, 2023		10,442,093		$	0.345 - 5.625	$	0.6265
Granted		1,796,493			0.084 - 0.345		0.2670
Increase in warrants due to anti-dilution price protection		9,773,028			0.084		0.0840
Forfeited		-			-		-
Exercised		-			-		-
Outstanding December 31, 2024		22,011,614		$	0.084 - 5.625	$	0.3199

*	After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The warrants outstanding ~~have an intrinsic value of $0~~ and ~~$0 as~~exercisable ofat December 31, ~~2023~~2024 ~~and~~are ~~2022,~~as ~~respectively.~~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
$	0.084		13,376,267		2.87				13,376,267				2.87
$	0.345		7,248,896		3.69				7,248,896				3.69
$	0.450		266,668		3.48				266,668				3.48
$	1.035		500,000		0.52				500,000				0.52
$	1.500		33,334		3.61				33,334				3.61
$	4.500		505,560		1.21				505,560				1.21
$	5.625		80,889		1.21				80,889				1.21
			22,011,614		3.05	$	0.3199		22,011,614	$	0.3199		3.05

After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

The warrants outstanding have an intrinsic value of $0 and $0 as of December 31, 2024 and 2023.

F-29

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ EQUITY (continued)

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 ten years in June 2028.

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.

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 ten years in August 2031.

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 1,766,667 shares of Common Stock.

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.

On July 11, 2022, the Board approved, granted and issued 500,000 ten-year incentive stock options, with immediate vesting, to the Company’s Chairman and Chief Executive Officer at an exercise price of $4.50 per share. This resulted in an immediate expense of $823,854 for the year ended December 31, 2022.

On ~~September~~During 132023, ~~2022,~~ the Company ~~granted~~cancelled ~~ten-year~~ options exercisable for 623,~~667~~891 shares of Common Stock, ~~with~~due ~~immediate vesting,~~ to ~~each~~the ofprevious ~~its~~resignation ~~four~~or termination ~~non-executive directors, totaling options exercisable for 26,668 shares~~ of ~~Common~~employees ~~Stock~~and atofficers anwhose ~~exercise~~stock ~~price of~~options ~~$1.20 per~~were ~~share. This~~not ~~resulted~~exercised in anaccordance ~~immediate~~with ~~expense~~the ofterms ~~$31,970 for~~allowed under the ~~year~~plan ~~ended~~and ~~December~~were therefore ~~31, 2022~~canceled.

During ~~the current financial year~~2024, the Company ~~cancelled~~ options exercisable for 23 6,~~891 (716,666 pre-split)~~ 667 shares of ~~common~~Common ~~stock~~Stock expired due to the ~~previous~~ resignation ~~or termination~~ of ~~employees~~a ~~and~~director ~~officers~~ whose ~~stock~~ options were not exercised in accordance with the terms allowed under the plan and were therefore canceled.

~~F-29~~A summary of option activity during the period January 1, 2023 to December 31, 2024 is as follows:

	Shares Underlying options*			Exercise price per share*		Weighted average exercise price*
Outstanding January 1, 2023		1,543,891		$	1.20 - 12.00	$	4.47
Granted		-			-		-
Forfeited/Cancelled		(23,889	)	$	1.20 - 12.00		5.41
Exercised		-			-		-
Outstanding December 31, 2023		1,520,002		$	1.20 - 12.00	$	4.46
Granted		-			-		-
Forfeited/Cancelled		(6,667	)	$	1.20		1.20
Exercised		-			-		-
Outstanding December 31, 2024		1,513,335		$	1.20 - 12.00	$	4.47

After giving effect to a 1 for 30 reverse stock split on August 30, 2023.

F-30

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ EQUITY (continued)

Stock options (continued)

AThe ~~summary~~options ofoutstanding ~~option~~and ~~activity~~exercisable ~~during~~at ~~the period January 1, 2022 to~~ December 31, ~~2023~~2024 isare as follows:

		Shares Underlying options*				Exercise price per share*				Weighted average exercise price*
				Options Outstanding*										Options Exercisable*
Outstanding January 1, 2022			1,017,223			$	4.50 to 12.00			$	4.50
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
Granted			526,668				1.20 – 4.50				4.20
$	1.20				13,334				7.71						13,334				7.71
Forfeited/Cancelled			-				-				-
$	4.50				1,500,001				6.94						1,500,001				6.94
Exercised			-				-				-
					1,513,335				6.94			$	4.47		1,513,335	$	4.47		6.94
Outstanding December 31, 2022			1,543,891			$	1.20 to 12.00			$	4.47
Granted			-				-				-
Forfeited/Cancelled			(23,889	)		$	1.20 to 12.00				5.41
Exercised			-				-				-
Outstanding December 31, 2023			1,520,002			$	1.20 to 12.00			$	4.46

*The options ~~After~~outstanding ~~giving~~have ~~effect~~an tointrinsic avalue 1of ~~for~~$0 as 30of ~~reverse~~December ~~stock~~31, ~~split~~2024 onand ~~August 30,~~ 2023.

The ~~options~~option ~~outstanding~~expense was $220,416 and ~~exercisable~~$377,856 for atthe years ended December 31, ~~2023~~2024 ~~are~~and as2023, ~~follows:~~respectively.

		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
$	1.20		20,001		5.86				20,001				5.86
$	4.50		1,500,001		7.94				1,388,890				7.96
			1,520,002		7.91	$	4.46		1,408,891	$	4.45		7.93

The options outstanding have an intrinsic value of $0 as of December 31, 2023 and 2022.

The option expense was $377,856 and $1,233,682 for the years ended December 31, 2023 and 2022, respectively.

LOSS ON CONVERTIBLE NOTES

The loss on convertible notes consists of the following:

	December 31, 2023		December 31, 2022
	December 31, 2024		December 31, 2023
Penalty on cash settlement of convertible note	$	9,306	$	247,063
Penalty on convertible note	$	117,083	$	9,306
Expense on extension of maturity date of convertible notes		64102,~~256~~353		~~836~~64,~~414~~256
Fair value of warrants issued to convertible note holders on extension of maturity date		-		238,182
Loss on conversion of convertible notes		170,246		90,761
Fair value of derivative liability arising on the amendment of the exercise price of convertible notes and the full-rachet trigger on certain warrants issued to convertible note holders		-		2,360,658
Loss on anti-dilution price protection adjustment		4,318,669		-
Value of notes exchanged for certain warrants, net of the derivative liability value of $(43,608)		-		920,392
Loss on convertible note default conversion feature		56,329		-
	$	734,~~562~~764,680	$	4164,~~602,709~~323

Penalty on ~~cash settlement of~~ convertible note

On February 4, 2022, the Company cash settled the outstanding balance, including early settlement penalty thereon of $247,063, of a convertible note owing to Bellridge for gross proceeds of $1,235,313.

On August 3, 2023, the Company cash settled the outstanding balance of two convertible notes owing to 1800 Diagonal Street Lending LLC, including an early settlement penalty thereon of $9,306.

F-Between September 6, 2024 and December 6, 2024, $3,000 of additional conversion penalties on convertible note conversions were charged to the Company, in addition between August 6, 2024 and December 30, 2024 as additional penalty of 150% of the outstanding balance, including interest of certain convertible notes was charged to the Company, amounting to $114,083.

Expense on extension of maturity date of convertible notes

On December 14, 2023, the Company extended the maturity date of two convertible notes to March 30, 2024, and issued the note holders additional warrants exercisable for 292,463 shares of common stock, the modification of the terms and the issue of the new warrants was assessed as a debt extinguishment, resulting in a charge of $64,256 for the year ended December 31, 2023.

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 387,673 shares of Common Stock, the modification of the terms and the issue of the new warrants was assessed as a debt extinguishment.

On May 4, 2024, the maturity date of two notes totaling $225,000 which originally matured on December 31, 2023 and which maturity dates were extended to March 30, 2024, on May 4, 2024, the maturity date of the $200,000 note was further extended to June 14, 2024, and the maturity date of the $25,000 note was further extended to June 30, 2024. In exchange for the maturity date extension, on June 14, 2024, the Company issued to note holders warrants exercisable for 292,463 shares of Common Stock, the modification of the terms and the issue of the new warrants was assessed as a debt extinguishment.

The debt extinguishments resulted in a charge of $102,352 for the year ended December 31, 2024

F-31

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

LOSS ON CONVERTIBLE NOTES (continued)

~~Expense~~Loss on ~~extension~~conversion of ~~maturity date of~~ convertible notes

~~On December~~During ~~14, 2023,~~ the prior ~~Company~~year ~~extended~~an ~~the~~aggregate ~~maturity~~amount ~~date~~ of ~~two convertible notes to March 30~~$432,500 ~~2024,~~of ~~and~~convertible ~~issued~~debt ~~the~~was ~~note~~converted ~~holders~~into ~~additional warrants~~equity ~~exercisable~~at ~~for~~a ~~292,463~~fixed ~~shares~~conversion ofprice ~~common stock, the modification~~ of ~~the~~$0.345 ~~terms~~per ~~and the issue of the new warrants was assessed~~share, asrealizing aan ~~debt~~aggregate ~~extinguishment,~~loss ~~resulting~~on inconversion ~~a charge~~ of $6490,~~256 for the year ended December 31, 2023~~761.

InBetween ~~the~~August ~~prior year~~6, ~~The~~2024 ~~Company twice extended the maturity date of its indebtedness to each Cavalry~~ and ~~Mercer.~~December ~~On February 3~~6, ~~2022~~2024, ~~the Company~~in ~~agreed~~terms ~~to extend the maturity date~~ of ~~the~~conversion ~~Notes~~notices toreceived ~~August~~from ~~16,~~4 ~~2022.~~convertible ~~Additionally,~~note ~~on August 30~~holders, ~~2022,~~ the Company ~~entered agreements~~issued 5,261,557 ~~for~~shares anof ~~additional~~common ~~maturity~~stock ~~date~~for ~~extension~~the ~~to November~~conversion ~~16,~~of ~~2022,~~an inaggregate ~~terms~~amount of ~~these extensions~~$441,971 of ~~the~~convertible ~~Company~~debt ~~incurred~~at ~~penalties~~a ~~which increased~~conversion ~~the~~price ~~principle outstanding~~ of ~~these~~$0.084 per share, ~~convertible~~realizing ~~notes~~an inaggregate ~~the~~loss ~~aggregate~~on ~~amount~~conversion of $~~836~~170,~~414~~246.

~~Fair value~~Loss ~~of warrants issued to convertible note holders~~ on ~~extension~~anti-dilution ofprice protection ~~maturity date~~adjustment

InAs ~~addition~~a toresult of the ~~penalty~~conversion ~~on extension~~ of ~~maturity~~the ~~date~~RRH onNote ~~its~~2 ~~indebtedness~~( tosee ~~each~~note of13 ~~Cavalry and Mercer~~above), included in ~~consideration for~~ the ~~second extension~~paragraph ~~on August 30~~above, ~~2022,~~all ~~the~~other ~~Company~~outstanding ~~agreed~~convertible notes ~~to issue to each~~ of ~~Cavalry~~the ~~and~~Company ~~Mercer~~that acontain ~~new~~price-based ~~five~~anti-~~year~~dilution ~~warrant~~protection tohad ~~purchase~~the anconversion ~~additional 100,000 (3,000,000~~prices ~~pre-split) shares~~ of ~~common~~such ~~stock~~notes atadjusted anto ~~exercise price of~~ $~~4.50 ($~~0.~~15 pre-split)~~084 per share. ~~The~~(the ~~fair~~“Triggering ~~value of these warrants were determined as $238,182 on August 30, 2022, using a Black-Scholes valuation model~~Event”).

~~Fair~~The value of the derivative liability ~~arising~~related onto the ~~amendment~~anti-dilution ~~of the exercise~~ price ofprotected convertible notes was evaluated immediately prior to the Triggering Event and immediately after the ~~full-rachet~~Triggering ~~trigger~~Event, onresulting ~~certain warrants~~in ~~issued~~an toadditional derivative liability and loss on convertible ~~note~~notes of ~~holders~~$4,318,669.

~~On December~~Loss ~~30,~~on ~~2022, the Company again extended the maturity dates of each of the Notes to Cavalry and Mercer to December 30, 2023.~~convertible ~~Each~~note ofdefault ~~Cavalry and Mercer entered into Note Amendment Letter Agreement with the Company (the “Note Amendment”) pursuant to which the parties agreed that the~~ conversion price of the Notes was reduced from $4.50 ($0.15 pre-split) to $0.345 ($0.0115 pre-split) per share and in addition, resulted in the 100,000 (3,000,000 pre-split) shares of common stock underlying the Extension Warrants increasing to 1,304,348 (39,130,435 pre-split) shares, in terms of the full-rachet provisions in those warrant agreements. The change in the conversion price and the increase in the number of warrant shares to be issued at the revised exercise price of $0.345 ($0.0115 pre-split) per share, resulted in a derivative liability on December 30, 2022 of $2,340,580, determined by using a Black-Scholes valuation model.feature

InThe ~~addition~~Company was unable to ~~this,~~make ~~certain~~a ~~other~~payment ~~warrants~~on ~~outstanding~~a ~~had~~convertible ~~their~~note ~~conversion~~on ~~price~~July ~~reduced~~28, ~~from~~2024, ~~$1.50~~which ~~($0.05~~resulted ~~pre-split) per~~in ~~share~~the totriggering of a variable priced conversion ~~$0.345~~feature, ~~($0.0115~~giving ~~pre-split) per~~rise ~~share~~to ina ~~terms~~derivative ofliability ~~their~~on ~~warrant~~the ~~agreements~~payment due date, ~~resulting~~this ingave rise to an additional derivative liability onand ~~December~~loss ~~30,~~on ~~2022~~convertible notes of $2056,~~079, determined by using a Black-Scholes valuation model~~329.

Value of notes exchanged for certain warrants, net of the derivative liability value of $(43,608)

On December 30, 2022, the Company also agreed to exchange the Original Warrants issued on February 16, 2021 to Cavalry and Mercer for 12-month non-convertible promissory notes in the amount of $482,000 each. This resulted in an additional charge of $964,000, less the fair value of the derivative liability of the Original warrants of $43,608, valued on December 30, 2022, using a Black-Scholes valuation model.

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 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be effective in the future). Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.

F-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, 2022 and 2021, there have been no interest or penalties incurred on income taxes.

F-32

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES (continued)

Federal Income Tax - United States (continued)

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, 2022 and 2021, there have been no interest or penalties incurred on income taxes.

The provision for income taxes consists of the following:

	Year ended December 31, 2023		Year ended December 31, 2022
	Year ended December 31, 2024		Year ended December 31, 2023
Current
Federal	$	-	$	-
State		-		-
Foreign		-		-
	$	-	$	-
Deferred
Federal	$	-	$	-
State		-		-
Foreign		-		-
	$	-	$	-

A reconciliation of the U.S. Federal statutory income tax to the effective income tax is as follows:

	Year ended December 31, 2023			Year ended December 31, 2022
	Year ended December 31, 2024			Year ended December 31, 2023
Continuing operations
Tax expense at the federal statutory rate	$	(1866,~~225,845~~532	)	$	(21,~~169~~225,~~599~~845	)
State tax expense, net of federal tax effect		(~~170~~226,~~564~~139	)		(~~324~~170,~~289~~564	)
Permanent differences		~~712~~387,~~951~~714			1712,~~194,446~~951
Prior year net operating loss true up		(~~228~~1,~~714~~020,869	)		(3228,~~277~~714	)
		(912,172	)		(1,302,719	)
		(1,725,826	)		(912,172	)
Deferred income tax asset valuation allowance		~~912~~1,~~172~~725,826			1912,~~302,719~~172
	$	-		$	-

Significant components of the Company’s deferred income tax assets are as follows:

	December 31, 2023			December 31, 2022
	December 31, 2024			December 31, 2023
Other	$	241,491		$	241,491
Capital loss		491,275			-491,275
Net operating losses		68,~~900~~625,~~076~~904			6,~~479~~900,~~181~~076
Stock based compensation		511,142			511,142
Valuation allowance		(89,~~143~~869,~~986~~812	)		(78,~~231~~143,~~814~~984	)
Net deferred income tax assets	$	-		$	-

The valuation allowance for deferred income tax assets as of December 31, ~~2023~~2024 and December 31, ~~2022~~2023 was $89,~~143~~869,~~986~~812 and $78,~~231~~143,~~814~~984, respectively. The net change in the deferred income tax assets valuation allowance was an increase of $~~912~~1,~~172~~725,826 and is primarily attributable to tax operating losses and capital losses realized during the current year.

As of December 31, ~~2023~~2024, the prior three years remain open for examination by the federal or state regulatory agencies for purposes of an audit for tax purposes.

As of December 31, ~~2023~~2024, the Company had available for income tax purposes approximately $2632.81 million in federal and $1930.0 million in state net operating loss carry forwards, which may be available to offset future taxable income. $3.5 million of the net operating losses will begin to expire in 2034 and $2328.36 million has an indefinite life. Due to the uncertainty of the utilization and recoverability of the loss carryforwards and other deferred tax assets, Management has determined a full valuation allowance for the deferred tax assets since it is more likely than not that the deferred tax assets will not be realizable.

F-32

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17 INCOME TAXES (continued)

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, ~~2023~~2024 and ~~2022~~2023, 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, ~~2023~~2024 and ~~2022~~2023, there were no penalties or interest recorded in income tax expense.

18 EQUITY BASED COMPENSATION

Equity based compensation is made up of the following:

	Year ended December 31, 2023		Year ended December 31, 2022
Incentive stock awards	$	377,856	$	1,594,746
Securities issued for services rendered		144,828		333,000
	$	522,684	$	1,927,746

19 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, 2023 and 2022 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, 2023 and 2022 are as follows:

	Year ended December 31, 2023 (Shares)		Year ended December 31, 2022 (Shares)
Convertible debt		13,363,993		6,569,863
Stock options		1,520,002		1,543,891
Warrants to purchase shares of common stock		10,442,093		5,186,375
		25,326,088		13,300,129

20 RELATED PARTY TRANSACTIONS

The following transactions were entered into with related parties:

James Fuller

On September 13, 2022, the Company granted Mr. Fuller ten-year options exercisable for 6,667 shares of Common Stock at an exercise price of $1.20 per share.

The option expense for Mr. Fuller was $0 and $7,993 for the years ended December 31, 2023 and 2022, respectively.

Mr. Fuller voluntarily resigned as a member of the Board of Directors effective as of our 2022 annual meeting of shareholders which occurred on November 3, 2022.

William Corbett

On July 11, 2022, the Company granted Mr. Corbett ten-year options exercisable for 500,000 shares of Common Stock at an exercise price of $4.50 per share.

F-33

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2018 ~~RELATED~~NET ~~PARTY~~LOSS ~~TRANSACTIONS~~PER ~~(continued)~~SHARE

OnBasic ~~June~~loss ~~21,~~per ~~2023,~~share ~~Mr.~~is ~~Corbett~~based ~~advanced~~on the ~~company~~weighted-average ~~$50,000 to~~number ~~cover~~of ~~certain~~common ~~working~~shares ~~capital~~outstanding ~~expenses,~~during ~~the~~each ~~advance~~period. isDiluted ~~short~~loss ~~term~~per inshare ~~nature,~~is based ~~bears~~on nobasic ~~interest~~shares ~~and~~as ~~has~~determined noabove ~~fixed~~plus ~~repayment~~common ~~terms~~stock equivalents. ~~This~~The ~~advance~~computation ~~was~~of ~~repaid~~diluted net loss per share does not assume the issuance of common shares that have an anti-dilutive effect on ~~December~~net 4loss per share. For the years ended December 31, 2024 and 2023 all warrants options and convertible debt securities were excluded from the computation of diluted net loss per share.

~~The~~Dilutive ~~option~~shares ~~expense~~which ~~for~~could ~~Mr.~~exist ~~Corbett~~pursuant ~~was~~to ~~$266,346~~ the exercise of outstanding stock instruments and ~~$1,090,201~~ which were not included in the calculation because their affect would have been anti-dilutive for the years ended December 31, ~~2023~~2024 and ~~2022,~~2023 ~~respectively.~~are as follows:

Clifford Henry

	Year ended December 31, 2024 (Shares)		Year ended December 31, 2023 (Shares)
Convertible debt		40,731,757		13,363,993
Stock options		1,513,335		1,520,002
Warrants to purchase shares of common stock		22,011,614		10,442,093
		64,256,706		25,326,088

~~Mr. Henry~~19 ~~has~~RELATED anPARTY oral consulting arrangement with the Company whereby he is paid $3,500 per month for financial and capital markets advice. This consulting agreement commenced in May, 2021 and was approved and ratified by the Board in March 2022. This consulting agreement and related payments were terminated in September 2022.TRANSACTIONS

OnThe ~~September~~following ~~13,~~transactions ~~2022,~~were ~~the~~entered ~~Company~~into ~~granted~~with ~~Mr.~~related ~~Henry, immediately vesting, ten-year options exercisable for 6,667 shares of Common Stock at an exercise price of $1.20 per share, valued at $7,993 using a Black Scholes valuation model.~~parties:

~~The~~William ~~option expense for Mr. Henry was $0 and $7,993 for the years ended December 31, 2023 and 2022, respectively.~~Corbett

~~Mr.~~The ~~Henry~~option ~~voluntary~~expense ~~elected not to stand~~ for ~~re-election~~Mr. atCorbett ~~the~~was ~~company’s~~$155,369 ~~annual~~and ~~general meeting~~$266,346 for ~~his~~the ~~tenure~~years ~~as a director~~ ended ~~on the~~December ~~date of the annual general meeting~~31, ~~November~~2024 ~~30,~~and 2023., respectively.

Madisson Butler

On September 13, 2022, the Company granted Ms. Butler (formerly known as Madisson Corbett), immediately vesting, ten-year options exercisable for 6,667 shares of Common Stock at an exercise price of $1.20 per share, valued at $7,993 using a Black Scholes valuation model.

The option expense for Ms. Butler was $0 and $7,993 for the years ended December 31, 2023 and 2022, respectively.

David Rios

On September 13, 2022, the Company granted Mr. Rios, immediately vesting, ten-year options exercisable for 6,667 shares of Common Stock at an exercise price of $1.20 per share, valued at $7,993 using a Black Scholes valuation model.

The option expense for Mr. Rios was $0 and $7,993 for the years ended December 31, 2023 and 2022, respectively.

Richard Rosenblum

OnThe ~~July~~option ~~11,~~expense ~~2022,~~for ~~the Company granted~~ Mr. Rosenblum 66 was $65,~~667 restricted~~047 ~~shares~~and of$111,510 for ~~Common~~the ~~Stock~~years ~~valued~~ended atDecember ~~$110~~31,~~000,~~ ~~all~~2024 ofand ~~which~~2023, ~~are vested~~respectively.

~~The option~~20 ~~expense~~COMMITMENTS ~~for~~AND ~~Mr. Rosenblum was $111,510 for each of the years ended December 31, 2023 and 2022, respectively.~~CONTINGENCIES

21The Company ~~COMMITMENTS~~has ~~AND~~notes ~~CONTINGENCIES~~payable and convertible notes payable, disclosed under notes 12 and 13 above, which originally matured between May 22, 2024 and October 22, 2025, should the convertible notes not be converted to Common Stock prior to their maturity dates, the Company may need to repay the principal and interest outstanding on these notes.

~~The~~21 ~~Company~~SUBSEQUENT has notes payable and convertible notes payable, disclosed under notes 12 and 13 above, which originally matured between December 30, 2023 and September 14, 2024, of which the notes that had maturity dates between December 30, 2023 and February 23, 2024 have been extended to dates between April 30, 2024 and August 23, 2024. The Company may settle the notes payable, at its option by the issue of common shares and should the convertible notes not be converted to Common Stock prior to their maturity dates, the Company may need to repay the principal and interest outstanding on these notes.EVENTS

22Resignation of ~~SUBSEQUENT~~director ~~EVENTS~~and officer

~~Convertible~~With ~~note~~effect ~~funding~~from January 7, 2025, Mr. Rosenblum resigned his positions of President, Chief Financial Officer and director of the Company. Mr. Corbett, the Company’s CEO has stepped into the role of Chief Financial Officer and President, temporarily.

~~Between February~~Executive 6employment and February 21, 2024, the Company entered into Securities Purchase Agreements pursuant to which the Company issued convertible promissory notes to four accredited investment entities for total gross proceeds of $308,335. The Notes are unsecured, mature 12 months from issuance date and bear interest at a rate of 8% per annum, and are convertible into shares of common stock of the Company at a conversion price of $0.345 per share (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.agreement

On January 7, 2025, the Company entered into an employment agreement with Mr. Corbett, as the Company’s chief executive officer with compensation of $240,000 per annum and the award of options exercisable for 600,000 shares of common stock at an exercise price of $0.09 per share. The options vest as to 300,000 immediately and 300,000 over the next three years, on a monthly basis.

F-34

INNOVATIVE PAYMENT SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2221 SUBSEQUENT EVENTS (continued)

~~On March 4,~~Conversion ~~2024, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued a convertible promissory note and a warrant exercisable for shares~~ of common stock to an accredited investor. The Company realized gross proceeds of $100,000 after an original issue discount of $14,286 and a once off interest charge of $9,143. The note matures on September 4, 2024. Principal and interest payments are due in four equal instalments of $30,871 commencing on May 3, 2024. The note is convertible into common stock at a fixed price of $0.345 per share, unless the note is in default, whereby the conversion price will be 70% of the lowest closing bid price for the 5 trading days prior to conversion. The note may be prepaid at any time for the full outstanding principal and outstanding interest.notes

~~Non-Binding~~Between January 7, 2025 and March ~~Letter~~21, 2025, The Company received conversion notices from convertible note holders converting an aggregate of ~~Intent~~$226,917 ~~with~~into ~~Business~~51,296,285 ~~Warrior~~shares of common stock at conversion prices ranging from $0.0325 to $0.001105 per share, resulting in a loss on conversion of $101,254.

~~Overview~~As a result of the conversion notices received, warrants exercisable for 457,897 shares of common stock that contain price-based anti-dilution protection had the exercise price of such warrants adjusted from $0.084 per share to $0.001105 per share and ~~Cautionary~~certain ~~Statement~~warrants exercisable for 12,918,370 shares of common stock that contain “full ratchet” anti-dilution price protection had the number of shares exercisable for such warrants increased by the full ratchet provision and the exercise prices of such warrants adjusted to $0.001105 per share. In addition, certain convertible notes with an aggregate balance outstanding of $1,968,434 on December 31, 2024, had their conversion price reduced to $0.001105 as of March 21, 2025. Further conversions at conversion prices lower than $0.001105 subsequent to March 21, 2025, will impact the exercise price and the number of warrants outstanding and the conversion price of convertible notes for subsequent reporting periods.

~~On February~~Convertible ~~13,~~note 2024, the Company signed an amended and restated non-binding letter of intent (the “LOI”) with Business Warrior Corporation, a Wyoming corporation (“BZWR”), pursuant to which the Company would acquire BZWR on the general terms described below (the “Proposed Transaction”).funding

~~Neither IPSI~~Between ~~nor~~January ~~BZWR~~7, ~~shall~~2025 ~~have~~and ~~any~~February ~~legal~~20, ~~obligation~~2025, ofthe ~~any~~Company ~~kind~~entered ~~with~~into ~~respect~~Securities Purchase Agreements pursuant to which the ~~Proposed~~Company ~~Transaction~~issued two ~~unless~~convertible promissory notes and ~~until~~two ~~binding~~warrants ~~definitive~~to ~~agreements~~one accredited investment entity for total ~~with~~gross ~~respect~~proceeds toof ~~the~~$223,000. ~~Proposed~~The ~~Transaction~~notes are ~~executed.~~unsecured, ~~Moreover~~mature 12 months from issuance date and bear interest at a rate of 8% per annum based on a 360 day trading-year, and are convertible into shares of common stock of the ~~Proposed~~Company ~~Transaction,~~at ~~assuming~~a ~~definitive~~conversion ~~agreements~~price ~~are~~of ~~even~~$0.084 per share ~~executed~~(as adjusted for stock splits, ~~would~~ stock combinations, and similar events). The Notes may be ~~subject~~prepaid at any time without penalty. The Note contains customary events of default. The Company is under no obligation to register the ~~approval~~shares of Common Stock underlying the ~~stockholders~~Notes for public resale. In terms of ~~both~~the ~~IPSI~~Securities ~~and~~Purchase ~~BZWR~~Agreement, ~~and~~the Company issued five-year warrants to purchase an aggregate of 2,654,761 shares of the ~~satisfaction~~Common Stock at an exercise price of ~~other~~$0.084 per ~~conditions~~share (as adjusted for stock splits, stock combinations, and similar events). The Company is under no obligation to ~~closing~~register the shares of Common Stock underlying the Note or the Warrant, for public resale.

~~BZWR~~Termination isof ~~a publicly~~merger ~~listed,~~plan revenue generating fintech company that offers PayPlan, a comprehensive lending software platform that includes marketing services for lenders and businesses. The Company believes that a potential combination with a ~~fintech company that generates some revenue monthly would complement the development and commercial launch of the Company’s IPSIPay~~Business ~~ExpressTM products and potentially other product offerings.~~ Warrior

~~In addition~~On January 22, 2025, the Company and Business ~~BZWR~~Warrior ~~have~~mutually ~~certain~~agreed ~~convertible~~to ~~note~~terminate ~~investors (~~the ~~“Note~~Agreement ~~Holders”)~~and inPlan ~~common.~~of ~~Therefore,~~Merger ~~one purpose~~dated ofJuly ~~the~~28, ~~Proposed~~2024. ~~Transaction~~This ~~would~~decision bereflects toour ~~convert~~shared understanding ~~the~~and ~~indebtedness~~agreement ofthat ~~both~~discontinuing the ~~Company~~merger ~~and~~is ~~BZWR~~in ~~held by~~ the ~~Note~~best ~~Holders~~interest ~~into equity securities~~ of ~~the~~both ~~Company~~parties.

~~Outline~~Settlement of ~~Proposed~~legal ~~Terms~~dispute

~~The~~On ~~principal~~March ~~terms~~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 ~~Proposed~~Plaintiff ~~Transaction~~Group, ~~are~~or asany ~~follows:~~member thereof, holds or has asserted (or could have asserted) against the Company and Mr. Corbett.

1.Within 5 ~~Preliminary~~days ~~Structure.~~of AtMarch ~~the~~4, ~~closing~~2025, of the ~~Proposed~~Company ~~Transaction~~will pay $100,000 (the “~~Closing~~First Payment”), ~~the~~and ~~Company~~within ~~would~~60 ~~acquire~~days ~~100% of~~ the ~~outstanding~~Company ~~equity~~will ~~and~~pay ~~equity~~a ~~equivalents~~further $100,000 ~~of BZWR (~~including ~~outstanding~~interest ~~warrants~~thereon ~~and~~at ~~other~~10% ~~securities~~per ~~that~~annum ~~have~~from ~~the~~March ~~right~~5, to2025, ~~acquire~~and orwithin ~~convert~~24 ~~into~~days, ~~equity~~a ~~securities~~final payment of ~~BZWR)~~$300,000, onincluding ainterest thereon ~~cash-free,~~at ~~debt~~10% ~~free~~per ~~basis~~annum byfrom ~~way~~March of5, a2025. ~~merger~~The ofinitial ~~BZWR~~payment ~~into~~of a$100,000 ~~new~~was ~~subsidiary~~made ofon ~~the~~March ~~Company~~24, 2025.

2.Any breach ~~Consideration.~~of ~~The total consideration provided to or for~~ the ~~benefit~~terms of ~~BZWR equity holders (including holders of warrants and other outstanding preferred stock or other convertible securities of BZWR), as applicable (~~the ~~“Transaction~~settlement ~~Consideration”)~~agreement ~~would~~will beresult in ~~the~~a ~~form~~payment ofto ~~newly-issued shares (~~the ~~“Transaction~~Plaintiffs ~~Shares”)~~ of ~~Company~~liquidated ~~common~~damages ~~stock~~of ~~representing~~$25,000 ~~forty~~for ~~percent~~each ~~(40%)~~ event of ~~the Common Stock immediately following the Closing~~default.

3.In order ~~Note~~to ~~Exchange~~secure ~~Transaction;~~the ~~Replacement~~obligations ~~Preferred.~~to ~~Prior~~the toPlaintiff ~~and~~Group, asthe aCompany ~~condition~~executed totwo convertible promissory notes, the ~~Closing~~first note for $100,000 (“Note 1”) and the second note for $300,000 (“Note ~~Holders~~2”). Each note bears interest at the rate of ~~both~~10% ~~IPSI~~per annum, Note 1 has a maturity date of 60 days and ~~BZWR~~Note ~~shall~~2, ~~effect~~240 adays ~~note~~from ~~exchange~~March ~~transaction~~5, ~~pursuant~~2025. toThe Notes will be convertible upon an event of default, which ~~all~~includes any failure to pay any of the ~~outstanding~~installments. The Notes plus any accrued interest thereon, are convertible ~~notes~~into common stock of ~~IPSI~~the ~~and~~Company ~~BZWR~~at ~~held~~a byconversion price of $0.02 per share or the ~~Note~~lowest ~~Holders~~conversion ~~will~~price beof ~~cancelled~~the senior secured note holders, as determined and ~~exchanged~~established as the conversion price for ~~shares~~all their notes outstanding as of ~~newly-issued~~March ~~Series~~5, A2025, ~~Convertible~~if ~~Preferred~~there ~~Stock~~are ofany ~~IPSI~~limits ~~(“Replacement~~on ~~Preferred”).~~trading ~~The~~or ~~terms~~the trading ofprice falls below $0.01 per share, the ~~Replacement~~conversion ~~Preferred~~price will be ~~negotiated~~discounted ~~with~~by ~~the~~a ~~Note~~further ~~Holders~~15%. The notes provide for certain events such as mergers and consolidations, distributions to shareholders, and stock splits and dividends.

5. Board of Directors. The post-Closing Board of Directors of IPSI shall consist of a number of individuals to be agreed upon by IPSI and BZWR, provided that (i) the majority of the post-Closing Board of Directors will be appointed by IPSI and (ii) the majority of the post-Closing Board of Directors will be “independent” as defined under Nasdaq Stock Market rules.

Company Loan to BZWR

On February 12, 2024, and in connection with the LOI and the Proposed Transaction, the Company (utilizing a portion of the proceeds from the issuance of convertible Notes) loaned funds to BZWR in the principal amount of $226,190, which includes an original issue discount equal to $67,857, netting BZWR proceeds $158,333. The loan is memorialized by a secured promissory note (the “BZWR Note”). The BZWR Note does not accrued interest, except in the case of an event of default, which case interest accrues at 15% per annum. The BZWR Note matures on the earlier to occur of December 31, 2025 and the date that BZWR’s securities are listed on a national securities exchange. The BZWR Note may be prepaid at any time for an amount equal to 110% of the then principal and accrued interest. IPSI shall have the right to exchange the BZWR Note for securities issued by BZWR in any subsequent private placement by BZWR. The principal and accrued interest under BZWR Note is convertible into common stock of BZWR at a price equal to $0.0036 per share, subject to certain adjustments and potential resets. BZWR’s obligations under the BZWR Note are guaranteed by BZWR’s subsidiaries and secured by a lien on BZWR’s accounts receivable. The BZWR Note is one of several similar notes issued by BZWR. Keystone Capital Partners LLC is acting as collateral agent for the holders of such notes, include IPSI as the holder of the BZWR Note.

F-35

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, ~~2023~~2024 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, ~~2023~~2024 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 ~~2024~~2025, 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, ~~2023~~2024 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

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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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.

Name	Age	Position
William Corbett	6465	Chairman of the Board, Chief Executive Officer, and Director
Richard Rosenblum	65	President, Chief Financial Officer, Secretary and Director
Madisson Butler	36	Director
Madisson Butler	35	Director
David Rios	82	Director
David Rios	81	Director

Currently, our Board of Directors consists of four (4) members: William Corbett (Chairman), Richard Rosenblum, Madisson Butler, and David Rios. Except for Ms. Butler, who is the daughter of Mr. Corbett, there are no family relationships 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 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. 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.

Richard Rosenblum, President, Chief Financial Officer, Secretary and Director. Mr. Rosenblum has been serving as the Company’s President, Chief Financial Officer and a Director since July 22, 2021. Mr. Rosenblum has also served as the Secretary of the Company since August 26, 2021.

Richard Rosenblum has been, since its founding in 1994, Chief Executive Officer and Principal at Harborview Capital Advisors LLC (“Harborview”), which provided strategic advisory services in the areas of capital formation, merchant banking and management consulting. Additionally, Mr. Rosenblum has been the owner of Harborview Property Management (“HPM”) for over twenty-five (25) years, where he invests and manages domestic and international commercial real- estate, and multi-family real-estate assets. From 2008 to 2014, Mr. Rosenblum was a Director, President and Executive Chairman of Alliqua Biomedical Inc. (NASDAQ: ALQA), which developed and marketed hydrogel manufacturing technology in the wound care sector. His philanthropic and community-centered activities include being a founding board member of the Dr. David Feit Memorial Foundation (DFM), which for over 15 years raised money for the benefit and support of youth activities. Since 2018. Effective January 17, 2022, Mr. Rosenblum was appointed as an independent director to the board of H-Cyte, Inc. H-CYTE is a medical biosciences company with a mission is to become a leader in next-generation, cellular therapeutics for the treatment of chronic health conditions. Mr. Rosenblum graduated Summa Cum Laude from SUNY Buffalo with a B.A. in Finance & Accounting.

Mr. Rosenblum’s experience as an executive of a publicly traded company and his financial experience, including in investment banking and as an investor in publicly traded companies, we believe provide him with the attributes that make him a valuable member of the Company’s Board.

31Mr. Rosenblum resigned from all positions on January 7, 2025, with immediate effect.

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.

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, 56B 5^th Street, Lot 1, #AT, Carmel by the Sea, California, 93921. 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.

3231

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.

3332

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, ~~2023~~2024 and ~~2022~~2023 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		~~Salary~~		Bonus		~~Bonus~~		Stock awards		~~Stock awards~~		Option awards		~~Option awards~~		All other comp.		~~All other comp.~~		Total		~~Total~~
William Corbett,	2024	~~2023~~	$	180,000	$	~~360,000~~	$	-	$	-	$	-	$	-	$	155,369	$(a)	~~266,346~~	~~(b)~~$	2,541	$(b)	~~15,247~~	~~(c)~~$	337,910	$	~~641,594~~
Chairman of the Board and Chief Executive Officer (1)	2023	~~2022~~	$	360,000	$	~~360,000~~	$	-	$	-	$	-	$	~~251,064~~	~~(a)~~$	266,346	$(a)	~~1,090,201~~	~~(b)~~$	15,247	$(c)	~~15,632~~	~~(d)~~$	641,594	$	~~1,716,897~~
Richard Rosenblum	2024	~~2023~~	$	216,000	$	~~216,000~~	$	-	$	-	$	-	$	-	$	65,047	$(e)	~~111,510~~	~~(f)~~$	4,063	$(g)	~~19,034~~	~~(g)~~$	285,110	$	~~346,548~~
Chief Financial Officer and President (2)	2023	~~2022~~	$	216,000	$	~~216,000~~	$	-	$	-	$	-	$(d)	~~110,000~~	~~(e)~~$	111,510	$(e)	~~111,510~~	~~(f)~~$	19,034	$(h)	~~22,645~~	~~(g)~~$	346,544	$	~~460,155~~

(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.
(a)	On July 11, 2022, Mr. Corbett was granted ~~683,167~~a ~~restricted~~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 ~~January~~August 116, ~~2020~~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)	OnConsists ~~July~~of 11$1,343 ~~2022, Mr. Corbett was granted a ten year option exercisable for 500,000 shares~~ of ~~common~~healthcare ~~stock~~expenses atand ~~an exercise price of~~ $~~4.50 per share~~1,198 of ~~which~~car ~~all~~allowance ~~vested,~~for inthe ~~addition,~~benefit onof ~~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 592,594 are vested and the remaining 74,073 vest equally over the next 8 months.~~
(c)	~~Consist~~Consists of $8,059 of ~~health~~healthcare ~~care~~ expenses and $7,188 of car allowance for the benefit of Mr. Corbett.
(d)	~~Consists~~Mr. ofRosenblum ~~$13,236~~was ofgranted ~~health~~2,000,000 ~~care~~restricted ~~expenses~~shares ~~and~~of ~~$2,396~~common ofstock ~~car~~on ~~allowance~~July ~~for~~11, ~~the~~2022, ~~benefit~~all of ~~Mr.~~which ~~Corbett~~are vested.
(e)	Mr. Rosenblum was granted ~~2,000,000~~a ~~restricted~~ten-year option exercisable for 333,334 shares of common stock at an exercise price of $4.50 per share on ~~July~~August 1131, ~~2022~~2021, ~~all~~ of which all are vested.
(f)	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 296,297 are vested and the remaining 37,037 vest equally over the next 8 months.
(g)	Consists of $2,046 of healthcare expenses and $2,017 of car allowance for the benefit of Mr. Rosenblum.
(g)	Consists of healthcare reimbursements for the benefit of Mr. Rosenblum.
(h)	Consists of healthcare reimbursements for the benefit of Mr. Rosenblum.

Outstanding Equity Awards at Fiscal Year End

The following table lists the outstanding equity awards held by our named executive officers at December 31, ~~2022~~2024:

	OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
	OPTION AWARDS									STOCK 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 Shares or Units of Stock that have Not Vested	~~Number of Shares or Units of Stock that have Not Vested~~		Market Value of Shares or Units of Stock that have not Vested	~~Market Value of Shares or Units of Stock that have not Vested~~		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested	~~Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested~~		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested	~~Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested~~
William Corbett		~~592~~666,~~594~~667		~~74,073~~-		-	$	4.50	8/16/2031		-	-	$	$-	-		-	-		-	-
		500,000		-		-	$	4.50	7/11/2032		-	-		-	-		-	-		-	-
Richard Rosenblum		~~296~~333,~~297~~334		~~37,037~~-		-	$	4.50	8/16/2031		-	-	$	$-	-		-	-		-	-

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.

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 its 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.

Richard Rosenblum

On July 22, 2021, the Company appointed Richard Rosenblum as President and Chief Financial Officer of the Company. In addition, Mr. Rosenblum was elected to the Board of Directors of the Company to serve until the Company’s next annual meeting of shareholders.

On July 27, 2021, the Company and Mr. Rosenblum entered into an Executive Employment Agreement (the “Employment Agreement”), pursuant to which Mr. Rosenblum will serve as the Company’s President and Chief Financial Officer on a full time basis effective as of July 1. The effectiveness of the Employment Agreement is subject to the approval of the Employment Agreement by the board, unless earlier terminated as provided in the Employment Agreement. The term of the Employment Agreement is until December 31, 2024. Mr. Rosenblum’s base salary will be $18,000 per month. In addition, the Employment Agreement provides that: (1) Mr. Rosenblum 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; and (2) the Company will grant to Mr. Rosenblum options to purchase 333,334 shares of common stock of the Company at a per share exercise price equal to the fair market value of the Company’s common stock, as reflected in the closing price of the Company’s common shares on the OTC exchange or, in the event the stock is up listed, on the NASDAQ exchange, on the date of grant (the “Options”)”. 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 (10) years after the date of grant and the Company shall provide for cashless exercise of the Option by Executive. The Options are being granted pursuant to the Company’s 2021 Stock Incentive Plan.

If Mr. Rosenblum’s employment with Company is terminated at any time during the term of the Employment Agreement other than for Cause (as defined in the Employment Agreement), or due to voluntary termination, retirement, death or disability, then Mr. Rosenblum shall be entitled to severance equal to fifty percent (50%) of his annual base salary rate in effect as of the date of termination. If Mr. Rosenblum’s employment with Company is terminated at any time during the term of the Employment Agreement other than for Cause (as defined in the Employment Agreement), or due to voluntary termination, retirement, death or disability, within 12 months following an Acquisition (as defined in the Employment Agreement), then Mr. Rosenblum shall be entitled to severance equal to 100% of his annual base salary rate in effect as of the date of termination. Severance payments shall be subject to execution and delivery of a general release in favor of the Company.

On August 16, 2021, the Company entered into an amendment to the Rosenblum Executive Employment Agreement (the “First Amendment”) with Mr. Rosenblum. Under the terms of the Executive Employment Agreement, the Company had agreed to grant to Mr. Rosenblum an option to purchase 333,334 common shares of Company Stock at a per share exercise price equal to the fair market value of the Company’s common stock, as reflected in the closing price of the Company’s common shares on the OTC exchange or, in the event the stock is uplisted, on the NASDAQ exchange, on the date of grant (the “Option”).” The First Amendment provided that the Option was granted on August 31, 2021 at an exercise price of $4.50.

In addition, the Company and Mr. Rosenblum entered into an Indemnification Agreement, pursuant to which the Company agreed to indemnify Mr. Rosenblum 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.

36Mr. Rosenblum resigned all his positions with the Company with effect from January 7, 2025.

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, ~~2023~~2024 regarding the compensation of our directors who on December 31, ~~2023~~2024 were not also our named executive officers.

Name	Fees Earned or Paid in Cash		Option Awards		Other		Total
Clifford Henry(1)(2)	$	16,500	$	-	$	-	$	16,500
Madisson Butler (1)	$	18,000	$	-	$	-	$	18,000
Madisson Butler (2)		18,000		-		-		18,000
David Rios(1)	$	18,000	$	-	$	-	$	18,000
David Rios(2)	$	18,000	$	-	$	-	$	18,000

(1)	Mr. Henry voluntary elected not to stand for re-election at the company’s annual general meeting, his tenure as a director ended on the date of the annual general meeting, November 30, 2023.
(2)	As of December 31, 2023, 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:

(1)

As of December 31, 2024, 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)		73,334
David Rios(2)		40,~~000~~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.

(2)

On July 22, 2021, the Company granted Mr. Rios, a director of the Company, 33,~~333~~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.

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

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.

3736

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.

The following table shows the information regarding our equity incentive plans as of December 31, 2023:

Plan Category	Number of securities to be issued upon exercise of outstanding options		Weighted- average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders
2018 Equity Incentive Plan		—	$	—		26,667
2021 Equity Incentive Plan		1,~~520~~513,~~002~~335		4.4647		~~246~~253,~~665~~332
Equity compensation plans not approved by security holders		—		—		—
Total		1,520,002	$	4.46		273,332
None		—		—		—
Total		1,513,335	$	4.47		279,999

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 2928, ~~2024~~2025 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 1370,~~819~~377,~~889~~ 731 shares of our common stock on March 2930, ~~2024~~2025. We have deemed shares of our ~~common~~ common stock subject to options and warrants that are currently exercisable within sixty (60) days of March 2930, ~~2024~~2025, 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 56B 5th Street, Lot 1 #AT, Carmel by the Sea, CA 93921.

We have not deemed shares of common stock to be outstanding for variable priced convertible notes for the purposes of calculating beneficial ownership.

3837

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)		12,~~822~~183,~~057~~168	(1)		123.20	%
Richard Rosenblum (President and Chief Financial Officer)		~~319~~466,~~445~~668	(2)		~~3.2~~**	%
Madisson Butler (Director)		73273,334	(3)		**
David Rios (Director)		40240,001	(4)		**
All officers and directors as a group (4 persons)		23,~~388~~163,171			154.64	%

*	Excludes any shares deemed to be outstanding on variable priced convertible securities.

**	Less than 1%

(1) Includes (i) 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 ~~638,889~~all are vested, and (~~inclusive~~iii) ofa ~~18,518~~ten ~~options~~year ~~which~~option ~~vest~~granted ~~within~~to ~~sixty~~Mr. ~~days~~Corbett ofon ~~March~~July 3111, ~~2024)~~2022 ~~and~~exercisable afor ~~further 28~~500,~~778~~000 ~~are~~shares ~~subject~~of tocommon ~~vesting~~stock onat aan ~~monthly~~exercise ~~basis~~price ~~through~~of ~~August 16~~$4.50, ~~2024~~all of which are vested, and (~~iii~~iv) a ten year option granted to Mr. Corbett on ~~July~~January 117, ~~2022~~2025 ~~exercisable~~of ~~for~~which ~~500~~316,~~000~~667 ~~shares~~are ofvested ~~common~~and ~~stock~~a atfurther ~~an exercise price of $4.50~~16,667 ~~all~~vest ofwithin ~~which~~the ~~are~~next ~~vested~~60 days.

(2) Consists of 133,334 shares of restricted common stock and options exercisable for 333,334 shares of common stock of which ~~319,445~~all are vested ~~(inclusive of 9,259 options which vest within sixty days of March 31, 2024) and a further 13,889 are subject to vesting on a monthly basis through August 16, 2024~~.

(3) Consists of 66266,667 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.

(4) Consists of 33233,334 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.

Transactions with Related Persons

The following includes a summary of any transaction occurring during the year ended December 31, ~~2022~~2024 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 ~~for~~ 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:

~~William~~There were no transactions concluded with related parties that meet ~~Corbett~~the criteria outlined above.

~~On July 11, 2022, the Company granted Mr. Corbett ten-year options exercisable for 500,000 shares of Common Stock at an exercise price of $4.50 per share.~~38

On June 21, 2023, Mr. Corbett advanced the company $50,000 to cover certain working capital expenses, the advance is short term in nature, bears no interest and has no fixed repayment terms. This advance was repaid on December 4, 2023.

Clifford Henry

On September 13, 2022, the Company granted Mr. Henry, immediately vesting, ten-year options exercisable for 6,667 shares of Common Stock at an exercise price of $1.20 per share, valued at $7,993 using a Black Scholes valuation model.

Mr. Henry voluntary elected not to stand for re-election at the company’s annual general meeting, his tenure as a director ended on the date of the Company’s annual general meeting, dated November 30, 2023.

Madisson Butler

David Rios

Richard Rosenblum

On July 11, 2022, the Company granted Mr. Rosenblum 66,667 restricted shares of Common Stock valued at $110,000, all of which are vested.

Item 14. Principal Accountant Fees and Services

RBSM LLP serves as our independent registered public accounting firm.

The following table sets forth the aggregate fees including expenses billed to us for the years ended December 31, ~~2023~~2024 and ~~2022~~2023 by our auditors:

	Year Ended December 31,		Year Ended December 31,
	2023		2022
	2024		2023
Audit fees and expenses	$	81117,~~000~~500	$	~~130~~81,~~500~~000
Taxation preparation fees		-		~~10,000~~-
Audit related fees		~~15,000~~-		-15,000
Other fees		-		-
	$	96117,~~000~~500	$	~~140~~96,~~500~~000

(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, ~~2023~~2024, were approved by our board of directors.

4039

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

Exhibit No.		Description
2.1		Agreement and Plan of Merger, dated as of May 12, 2016, by and among Asiya Pearls, Inc., QPAGOS Merge, Inc. and Qpagos Corporation (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 333-192877) filed with the Securities and Exchange Commission on May 13, 2016)
3.1		Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-192877) filed with the Securities and Exchange Commission on December 16, 2013)
3.2		Bylaws (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 333-192877) filed with the Securities and Exchange Commission on May 13, 2016)
3.3		Certificate of Amendment to Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 333-192877) filed with the Securities and Exchange Commission on June 2, 2016)
3.4		Certificate of Amendment to Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on March 6, 2018)
3.5		Certificate of Amendment to the Articles of Incorporation of the Registrant (Name Change) (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on November 4, 2019)
3.6		Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation of the Company, dated August 24, 2023, to effect a 1-for-30 reverse stock split (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on August 30, 2023)
4.1#		2018 Stock Incentive Plan (Incorporated by reference to Exhibit B to the Definitive Information Statement on Schedule 14C (File No. 000-55648) filed with the Securities and Exchange Commission on May 14, 2018)
4.2#		2021 Stock Incentive Plan (Incorporated by reference to Appendix C to the Definitive Information Statement on Schedule 14A (File No. 000-55648) filed with the Securities and Exchange Commission on September 15, 2021)
4.3		Warrant issued to Pinz Capital Special Opportunities Fund, LP., dated August 5, 2020 (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on August 6, 2020)
4.4		Form of Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 3, 2021)
4.5		Form of Original Issue Discount 12.5% Convertible Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 17, 2021)
4.6		Form of Warrant Agreement, dated February 16, 2021 (Incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 17, 2021)
4.7		Warrant Agreement, dated February 22, 2021, issued to William D. Corbett (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 26, 2021)
4.8		Form of Warrant (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on March 15, 2021)
4.9		Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on March 15, 2021)
4.10		Description of Securities (Incorporated by reference to Exhibit 4.9 to the Annual Report on Form 10-K (File No. 000-55648) filed with the Securities and Exchange Commission on March 31, 2022)
4.11		Extension with Cavalry Fund I LP, dated February 3, 2022 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 8, 2022).
4.12		Extension with Mercer Street Global Opportunity Fund, LLC, dated February 3, 2022. (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 8, 2022)
4.13		Extension Letter Agreement with Cavalry Fund I LP, dated August 30, 2022. (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on September 2, 2022)
4.14		Extension Letter Agreement with Mercer Street Global Opportunity Fund, LLC, dated August 30, 2022 (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on September 2, 2022).
4.15		Promissory Note (Warrant Exchange), dated December 30, 2022, by the Company in favor of Cavalry Fund I LP. (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on January 5, 2023)
4.16		Promissory Note (Warrant Exchange) for Mercer Street Global Opportunity Fund, LLC. (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on January 5, 2023)

4140

4.17		Form of Convertible Promissory Note relating to February 2023 private placement (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 17, 2023)
4.18		Form of Warrant relating to February 2023 private placement (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 17, 2023)
4.19		Form of Convertible Promissory Note relating to 2023 note financings (Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q (File No. 000-55648) filed with the Securities and Exchange Commission on August 14, 2023)
4.20		Form of Warrant relating to 2023 note financings (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 000-55648) filed with the Securities and Exchange Commission on August 14, 2023)
10.1#		Executive Employment Agreement between Innovative Payment Solutions, Inc. and William Corbett, effective June 24, 2020 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8- K (File No. 000-55648) filed with the Securities and Exchange Commission on June 29, 2020)
10.2#		Restricted Stock Agreement between Innovative Payment Solutions, Inc. and William Corbett, effective June 24, 2020 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on June 29, 2020)
10.3#		Indemnification Agreement between Innovative Payment Solutions, Inc. and William Corbett, effective June 24, 2020 (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on June 29, 2020)
10.4#		Amendment, dated December 14, 2020, to the Executive Employment Agreement between Innovative Payment Solutions, Inc. and William Corbett (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on December 16, 2020)
10.5#		Executive Employment Agreement between Innovative Payment Solutions, Inc. and Richard Rosenblum, effective July 27, 2021 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8- K (File No. 000-55648) filed with the Securities and Exchange Commission on July 28, 2021)
10.6#		Executive Employment Agreement between Innovative Payment Solutions, Inc. and Richard Rosenblum, First Amendment, effective August 16, 2021 (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8- K (File No. 000-55648) filed with the Securities and Exchange Commission on August 20, 2021)
10.7#		Indemnification Agreement between Innovative Payment Solutions, Inc. and Richard Rosenblum, effective August 20, 2021 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on August 20, 2021)
10.8		Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 3, 2021)
10.9		Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 3, 2021)
10.10		Form of Securities Purchase Agreement, dated February 16, 2021 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 17, 2021)
10.11		Form of Registration Rights Agreement, dated February 16, 2021 (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on February 17, 2021)
10.12		Note Amendment, dated December 30, 2022, between the Company and Cavalry Fund I LLP (Incorporated by reference to Exhibit10.1 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on January 5, 2023).
10.13		Note Amendment, dated December 30, 2022, between the Company and Mercer Street Global Opportunity Fund, L.L.C. (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-55648) filed with the Securities and Exchange Commission on January 5, 2023)
14.1		Code of Ethics (Incorporated by reference to Exhibit 14.1 to the Current Report on Form 8-K (File No. 333-192877) filed with the Securities and Exchange Commission on May 13, 2016)
21		List of Subsidiaries (Incorporated by reference to Exhibit 21 to the Annual Report on Form 10-K (File No. 000-55648) filed with the Securities and Exchange Commission on March 31, 2021)
31.1*		Certification of William Corbett, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a)
31.2*		Certification of Richard Rosenblum, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a)
32.1*		Certification of William Corbett, Chief Executive Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Richard Rosenblum, Chief Financial pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002
99.1		Assignment and Transfer Agreement by and between Pinz Capital Special Opportunities Fund, L.P. and Cavalry Fund I LP, dated October 20, 2020 (Incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-1 (File No. 333-250132) filed with the Securities and Exchange Commission on November 16, 2020)
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Inline Cover Page Interaction Data File (embedded within the Inline XBLR document)

*	Filed herewith.
#	Indicates management contract or compensatory plan

Item 16. Form 10-K Summary

Not applicable

4241

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.

	Innovative Payment Solutions, Inc.

Date: March 31, 2025	By:	/s/ William Corbett
		William Corbett
		Chief Executive Officer, Interim Chief Financial Officer and Chairman

Date: March 29, 2024	By:	/s/ William Corbett
		William Corbett
		Chief Executive Officer and Chairman
Date: March 29, 2024	By:	/s/ Richard Rosenblum
		Richard Rosenblum
		Chief Financial Officer, President and Director

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 2931, ~~2024~~2025
William Corbett	(Principal Executive Officer)
/s/ Richard Rosenblum	Chief Financial Officer, President and Director	March 29, 2024
/s/ Madisson Butler	Director	March 31, 2025
Nathen Fuentes, CPA	(Principal Financial and Accounting Officer)
/s/ Madisson Butler	Director	March 29, 2024
Madisson Butler
/s/ David Rios	Director	March 2931, ~~2024~~2025
David Rios

4342

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