10-Q: Innovative Payment Solutions Reports Soaring Losses, Zero Revenue

Innovative Payment Solutions, Inc. reported a substantial increase in net losses for Q3 2025, driven by derivative liability movements and debt repricing, while continuing to generate no revenue.

Summary

• Net loss for the three months ended September 30, 2025, increased to $22,208,361 from $1,728,064 in the prior year, a 932.2% increase.
• Net loss for the nine months ended September 30, 2025, increased to $46,529,425 from $2,856,602 in the prior year, a 1,372.1% increase.
• The company reported no revenue for both the three and nine months ended September 30, 2025, and 2024.
• Cash on hand as of September 30, 2025, was $7,045, down from $526 at December 31, 2024.
• Working capital deficit was $54.8 million as of September 30, 2025, including a derivative liability of $45.0 million; excluding the derivative liability, the deficit was $9.8 million.
• Most convertible debt and notes payable are technically in default, with one investor formally declaring a default on an $18,812 balance.
• The IPSIPay Express joint venture has not yet launched and has generated no revenue or cash distributions.
• The merger agreement with Business Warrior Corporation was mutually terminated on January 22, 2025.
• The company has an accumulated deficit of $111.1 million through September 30, 2025.
• The CEO concluded that disclosure controls and procedures are not effective due to a lack of written policies and procedures.

Sentiment

Score: 1

Explanation: The company faces severe financial distress with zero revenue, rapidly increasing net losses, critically low cash, and substantial doubt about its ability to continue as a going concern. Widespread debt defaults, ineffective internal controls, and significant legal liabilities further compound the negative outlook.

Positives

• The company successfully increased its authorized common stock to 1,500,000,000 shares on October 3, 2025, providing capacity for future equity financing.
• A new joint venture, Jetties Partners, LLC (d/b/a IPSIPAY), was formed on October 29, 2025, to develop and market real-time financial technology merchant processing payment solutions, potentially expanding market reach.

Negatives

• Significant increase in net loss for both the three-month ($22.2M) and nine-month ($46.5M) periods ended September 30, 2025, compared to the prior year.
• Zero revenue generated for all reported periods, indicating a lack of operational income.
• Substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative operating cash flows.
• Most convertible debt and notes payable are technically in default, with one investor having formally declared a default.
• Cash balance is extremely low at $7,045, and the working capital deficit is $54.8 million.
• The IPSIPay Express joint venture has not launched and has not generated any revenue, despite previous expectations.
• Disclosure controls and procedures were deemed not effective by the CEO due to a lack of written policies.
• The company defaulted on the second installment of a $500,000 legal settlement with former employees, incurring a $25,000 penalty.

Risks

• The company's ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses and establish a revenue stream.
• There is a risk that the IPSIPay Express business may never generate revenue for the company, and its commercial launch has taken longer than expected.
• The company may not be able to raise sufficient funds to fulfill all capital contributions to IPSIPay Express or receive distributions of free cash flow from it.
• Targeting high-risk sectors like online gaming and entertainment for IPEX carries inherent risks.
• Macro-economic conditions, including inflation, could adversely affect consumer spending and increase operational costs.
• Fluctuations in foreign exchange rates could impact future results of operations if the company operates in foreign countries.
• The company faces significant legal proceedings, including a $500,000 settlement with former employees (on which it has defaulted) and another lawsuit seeking $570,000 plus 5% ownership.
• The company's disclosure controls and procedures are not effective, increasing the risk of financial misstatements or fraud.

Future Outlook

The company is focused on developing and marketing its Instant Direct Payments (IPEX) platform through the IPSIPay Express joint venture, targeting online gaming and entertainment sectors. Management believes IPEX could commercially launch and generate initial revenues during the current fiscal year, but provides no assurances regarding successful launch, revenue generation, or ability to raise necessary funds. The company also intends to operate in several foreign countries, which may expose it to foreign exchange risks. A new joint venture, Jetties Partners, LLC, was formed to develop and market real-time financial technology merchant processing payment solutions branded as IPSIPay or PayzliPlus, initially targeting gaming, sportsbook, and casino entertainment markets.

Management Comments

• "We pivoted to focus our attention on the IPSIPay Express joint venture and potential payment processing opportunities to generate revenues, however there can be no guarantees that we will be successful in our endeavors."
• "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."
• "Our management is committed to improving our controls and procedures by, among other matters, continuing to consider and adopt appropriate policies and procedures to address all material transactions and developments impacting our financial statements."
• "Management continues its vigorous defense of the claims [Voloshin legal case]."
• "We intend to negotiate a global settlement whereby we will either collect the funds from Business Warrior or these two investors and utilize the proceeds to settle our notes payable and convertible debt with these two investors, we do not expect to incur a loss or gain on a negotiated settlement with these two investors."

Industry Context

The company operates in the highly competitive fintech and digital payment solutions industry, with a specific focus on the online gaming and entertainment sectors through its IPSIPay Express joint venture. This sector is characterized by rapid technological advancements, evolving regulatory landscapes, and the need for robust banking relationships. The company's pivot to account-to-account payments and traditional credit card processing aligns with broader industry trends towards faster, more integrated payment solutions, particularly in high-growth areas like online gaming. However, the lack of revenue and operational delays suggest significant challenges in executing its strategy compared to established players in the fintech space.

Comparison to Industry Standards

• The company's zero revenue generation stands in stark contrast to revenue-generating fintech companies, including its former merger target, Business Warrior Corporation, which offers a lending software platform and marketing services.
• The significant accumulated deficit and ongoing net losses indicate a financial performance far below industry standards for sustainable growth and profitability in the fintech sector.
• The inability to successfully launch the IPSIPay Express platform, despite substantial investment and focus, suggests a slower pace of development and market entry compared to agile fintech competitors.
• The reliance on dilutive convertible debt and warrants, often with price protection and full ratchet provisions, is typical of distressed companies struggling to secure traditional financing, unlike well-capitalized industry leaders.
• The ineffective disclosure controls and procedures are a governance concern that would be unacceptable for larger, more mature fintech companies, which typically maintain robust internal control frameworks.

Management Changes

Corporate Governance

Legal Proceedings

• Voloshin, et al., v. Innovative Payment Solutions, Inc., et al.: A lawsuit filed by five former employees alleging breach of contract, unpaid wages, and retaliation. A $500,000 settlement was reached on March 4, 2025, but the company defaulted on the second installment, potentially incurring a $25,000 penalty.
• Minkovich v. Corbett, et al.: A lawsuit filed by a former employee seeking $570,000 in damages, penalties, and attorneys' fees, plus shares equal to 5% ownership of the company. The case was remanded to arbitration, with a new arbitration date set for May 26-29, 2026. Recent changes in California law may impact the arbitration decision.

Related Party Transactions

• William Corbett (CEO, President, CFO): Accrued payroll of $240,000 was exchanged for a convertible note on April 18, 2025, with an amended conversion price of $0.005 per share. He was also granted 25,000,000 shares of common stock on August 19, 2025, with a fair market value of $92,500. The company owed Mr. Corbett $7,832 as of September 30, 2025, for operating expenses paid on behalf of the company.
• Richard Rosenblum (former CFO): Accrued payroll of $210,000 was exchanged for a convertible note on April 18, 2025, with an amended conversion price of $0.005 per share.

Stakeholder Impact

• Shareholders: Face significant dilution risk from ongoing convertible debt conversions and warrant exercises at very low prices, as well as the recent increase in authorized share capital. The substantial net losses and going concern doubt pose a severe threat to investment value.
• Employees: The company's financial instability and legal disputes with former employees suggest a challenging environment, potentially impacting morale and future employment security.
• Creditors (Convertible Note Holders): Many notes are in technical default, raising concerns about repayment. While some conversion price modifications have occurred, the company's ability to repay or honor conversion terms is highly uncertain.
• Customers/Partners: The delays in launching IPSIPay Express and the company's financial struggles could impact its ability to deliver on product offerings and maintain partnerships, such as with OpenPath and EfinityPay in the IPSIPay Express joint venture.

Next Steps

• Successfully launch the IPSIPay Express platform and generate revenue from merchant processing fees, money transfer fees, and commissions.
• Secure necessary banking relationships for traditional credit card processing and the IPEX account-to-account payment solution.
• Negotiate a global settlement for outstanding notes payable and convertible debt, many of which are in default.
• Address the default on the second installment of the $500,000 legal settlement with former employees.
• Continue efforts to resolve the Minkovich v. Corbett legal case through arbitration or settlement.
• Improve disclosure controls and procedures by adopting appropriate written policies and procedures.
• Generate at least $250,000 in revenues prior to December 31, 2025, as a condition for certain convertible debt conversion price modifications.

Key Dates

Recommendation

The company exhibits critical financial distress, marked by zero revenue, rapidly escalating net losses ($46.5 million for nine months), and a critically low cash balance ($7,045). Management explicitly states 'substantial doubt about its ability to continue as a going concern.' Most of its convertible debt and notes payable are in technical default, and it has defaulted on a legal settlement. Furthermore, disclosure controls are deemed ineffective, and significant shareholder dilution is ongoing. These factors collectively point to an extremely high-risk investment with a high probability of further value erosion or business failure.

Keywords

Fintech, Digital Payments, IPSIPay Express, Going Concern, Convertible Debt, SEC 10-Q, Financial Results, Net Loss, Working Capital Deficit, Legal Proceedings, Corporate Governance, Capital Raise, Online Gaming, Merchant Processing