Company: IPSI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076595
Chunk: 227

Company: Innovative Payment Solutions, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 227
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 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.

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.

32

Critical Accounting Estimates

Preparation of our financial
statements in accordance with U.S. 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 condensed
Financial Statements included in Part I, Item I of this Form 10-Q for further information.

The critical accounting policies
that involved significant estimation included the following:

Derivative liabilities

We have certain short-term
convertible debt and certain warrants which have fundamental transaction clauses which might result in cash settlement. The conversion
feature of these convertible notes and warrants are recorded as derivative liabilities which are valued at each reporting date.

The derivative liability is
valued using the following inputs:

●Conversion
prices;

●Current
market prices of our equity

●Risk
free interest rates;

●Expected
remaining life of the derivative liability;

●Expected
volatility of the underlying stock; and expected dividend rates

Any change in the above factors
such as a change in risk free interest rates, a significant increase or decrease in our current stock prices and a change in the volatility
of our Common Stock may result