Company: IPSI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110820
Chunk: 32

Company: Innovative Payment Solutions, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 32
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 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 per share or above were amended effective December 30, 2022 to reduce such forced exercise
price to $1.20 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