{"url_path":"/sec/ipsi/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Legal Proceedings.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1591913/0001213900-26-057675-index.html","accession_number":"0001213900-26-057675","cik":"0001591913","ticker":"IPSI","issuer_name":"Innovative Payment Solutions, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1591913/0001213900-26-057675-index.html","primary_entity_key":"0001591913","primary_entity_name":"Innovative Payment Solutions, Inc."},"word_count":818,"has_tables":true,"body_markdown":"**Item 1. Legal Proceedings.**\n\n \n\nFrom time to time, we may become involved in various\nlawsuits and legal proceedings which arise in the ordinary course of business. Below is a description of outstanding pending litigation\nmatters. As also noted previously, litigation is subject to inherent uncertainties and an adverse result in the below described or other\nmatters 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\nproceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business,\noperating results, financial condition or cash flows.\n\n \n\n*Voloshin, et al., v. Innovative Payment Solutions, Inc., et al.*\n\n \n\nOn March 4, 2025, the Company and Mr. Corbett,\nentered into a settlement agreement with Naum Voloshin, Andrey Novikov, Frank Perez, Yulia Rey and Alexander Voloshin (the “Plaintiff\nGroup”), whereby the Company agreed to pay $500,000 in settlement and full and final resolution of all claims and causes of action\nthat the Plaintiff Group, or any member thereof, holds or has asserted (or could have asserted) against the Company and Mr. Corbett.\n\n \n\nWithin 5 days of March 4,\n2025, the Company agreed to pay $100,000 (the “First Payment”) and within 60 days the Company agreed to pay a further $100,000\nincluding interest thereon at 10% per annum from March 5, 2025, and within 240 days, a final payment of $300,000, including interest thereon\nat 10% per annum from March 5, 2025. The initial payment of $100,000 was made on March 24, 2025. The Company had not made any further\npayments in terms of the settlement agreement.\n\n \n\nAny breach of the terms of\nthe settlement agreement will result in a payment to the Plaintiffs of liquidated damages of $25,000 for each event of default.\n\n \n\nOn\nApril 6, 2026, the Company issued an aggregate of 27,180,823 shares of common stock to settle the outstanding liability of $543,616, including\ninterest and a liquidated damages penalty of $100,000 for not adhering to the original settlement terms, thereby extinguishing the legal\nsettlement liability. The company realized a net gain on settlement of $247,915, including the liquidated damages penalty.\n\n \n\n*Minkovich v. Corbett, et al.*\n\n* *\n\nOn May 26, 2022, Mr. Jan Minkovich (“Minkovich”)\nfiled a lawsuit in California Superior Court in Los Angeles County (Minkovich v. Corbett, et al., CASE NO. 22CHCV00377) against the Company\nand its Chairman and Chief Executive Officer William Corbett. The complaint asserts six causes of action for: (i) breach of contract;\n(ii) nonpayment of wages; (iii) waiting time penalties; (iv) failure to indemnify for alleged employee business expenses; (v) violation\nof Section 17200 of the California Business and Professional Code; and (vi) wrongful termination of employment in violation of public\npolicy. Minkovich seeks $570,000 in damages, penalties, and attorneys’ fees plus shares equal to five percent (5%) ownership of\nour company.\n\n \n\nMr. Minkovich bases his claim in part on the unilateral\nexpectation that he receive 2.7 million shares of the company. Assuming he is owed any shares, a claim which we dispute, after the reverse\n30-1 split he would receive only 90,000 shares.\n\n \n\n36\n\n \n\n \n\nThrough prior counsel, the Company and Mr. Corbett\nfiled a motion to compel arbitration. The motion was denied on October 4, 2022. Again, through prior counsel, the Company and Mr. Corbett\nthen appealed that decision to the California Court of Appeal. As a result of the appeal, the court case was stayed until the appeal was\ndecided. As a result of the stay, the demurrer (the equivalent of a motion to dismiss) filed through prior counsel was not decided.\n\n \n\nOn February 27, 2024, the California Court of\nAppeal, Second District, reversed the Superior Court’s decision denying our motion to compel arbitration. The Court of Appeal remanded\nthe case to the Superior Court with directions to issue a new order compelling to arbitration the parties’ dispute regarding the\nenforceability of the arbitration clause. As the prevailing parties, the Company and Mr. Corbett were awarded costs on appeal. This firm\ntimely filed the cost bill on appeal, which value is less than $2,000.\n\n \n\nThe plaintiff then initiated arbitration before\nthe American Arbitration Association (“AAA”) based on the appellate ruling (AAA case number Case 01-24-0005-5191). Management\nvigorously defended the claims, and intends to continue to do so. After a lull in activity during which the Arbitrator weighed several\nissues, the new date for commencement of arbitration was set: May 26-29, 2026.\n\n \n\nDiscovery re-opened. The parties remain engaged\nin informal efforts to resolve the matter but to date have been unable to agree on a resolution. Recent changes in California law may\nimpact the Court’s previous decision that sent this case to arbitration in February 2024.\n\n \n\nMr. Minkovich’s attorney, Paul Cullen, took\nleave the entire month of March 2026 for surgery. This informal “stay,” while a legitimate exercise, seriously impeded our\npreparation for the arbitration set at the end of May."}