Subsequent Events

12 Months Ended

Dec. 31, 2024

SUBSEQUENT EVENTS

Resignation of director and officer

With effect 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.

Executive employment 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.

Conversion of convertible notes

Between January 7, 2025 and March 21, 2025, The Company received conversion notices from convertible note holders converting an aggregate of $226,917 into 51,296,285 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.

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 certain 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.

Convertible note funding

Between 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, and are convertible into shares of common stock of the Company 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 of 2,654,761 shares of the Common Stock at an exercise price of $0.084 per share (as adjusted for stock splits, stock combinations, 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.

Settlement of legal dispute

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 24 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.

Innovative Payment Solutions, Inc. 10-K