QPAGOS
CONSOLIDATED
STATEMENT OF CASH FLOWS
Six
Months Ended June 30, 2016
|
|
As
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Notes
|
|
|
Restated
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to the company
|
|
$
|
(3,415,726
|
)
|
|
$
|
(14,547
|
)
|
|
(A)
|
|
|
$
|
(3,430,273
|
)
|
Less:
loss attributable to non-controlling interest
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
Net
loss
|
|
|
(3,415,726
|
)
|
|
|
(14,547
|
)
|
|
|
|
|
|
(3,430,273
|
)
|
Adjustment
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
17,190
|
|
|
|
14,547
|
|
|
(A)
|
|
|
|
31,737
|
|
Amortization
expense
|
|
|
21,500
|
|
|
|
|
|
|
|
|
|
|
21,500
|
|
Equity
based compensation charge
|
|
|
144,000
|
|
|
|
|
|
|
|
|
|
|
144,000
|
|
Shares
issued for services
|
|
|
2,032,274
|
|
|
|
|
|
|
|
|
|
|
2,032,274
|
|
Non-
cash investment in affiliates
|
|
|
(3,000
|
)
|
|
|
|
|
|
|
|
|
|
(3,000
|
)
|
Other
foreign currency movements
|
|
|
—
|
|
|
|
(21,295
|
)
|
|
(A)
|
|
|
|
(21,295
|
)
|
Changes
in Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(145,592
|
)
|
|
|
|
|
|
|
|
|
|
(145,592
|
)
|
Inventory
|
|
|
160,126
|
|
|
|
|
|
|
|
|
|
|
160,126
|
|
Recoverable
IVA taxes and credits
|
|
|
75,813
|
|
|
|
|
|
|
|
|
|
|
75,813
|
|
Other
current assets
|
|
|
33,298
|
|
|
|
|
|
|
|
|
|
|
33,298
|
|
Other
assets
|
|
|
(419
|
)
|
|
|
|
|
|
|
|
|
|
(419
|
)
|
Accounts
payable and accrued expenses
|
|
|
94,783
|
|
|
|
|
|
|
|
|
|
|
94,783
|
|
IVA
and other taxes payable
|
|
|
(103,849
|
)
|
|
|
|
|
|
|
|
|
|
(103,849
|
)
|
Advances
from customers
|
|
|
68,357
|
|
|
|
|
|
|
|
|
|
|
68,357
|
|
Interest
accruals
|
|
|
5,987
|
|
|
|
|
|
|
|
|
|
|
5,987
|
|
CASH
USED IN OPERATING ACTIVITIES
|
|
|
(1,015,258
|
)
|
|
|
(21,295
|
)
|
|
|
|
|
|
(1,036,553
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(453
|
)
|
|
|
|
|
|
|
|
|
|
(453
|
)
|
NET
CASH USED IN INVESTING ACTIVITIES
|
|
|
(453
|
)
|
|
|
—
|
|
|
|
|
|
|
(453
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
on common stock issued
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
Proceeds
from loans payable
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
225,000
|
|
|
|
—
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
92,158
|
|
|
|
21,295
|
|
|
|
|
|
|
113,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
DECREASE IN CASH
|
|
|
(698,552
|
)
|
|
|
|
|
|
|
|
|
|
(698,552
|
)
|
CASH
AT BEGINNING OF PERIOD
|
|
|
833,612
|
|
|
|
|
|
|
|
|
|
|
833,612
|
|
CASH
AT END OF PERIOD
|
|
$
|
135,060
|
|
|
$
|
—
|
|
|
|
|
|
$
|
135,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
PAID FOR INTEREST AND TAXES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
Cash
paid for interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE UNAUDITED VONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
3
|
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
(continued)
|
NOTES
|
A.
|
To correct an error in classifying kiosks acquired in
2015 as inventory and available for sale, to property and equipment, along with the recording of related accumulated
depreciation and depreciation expense.
|
These financial statements have
been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities
in the normal course of business for the foreseeable future. The Company has incurred a loss since inception resulting in an accumulated
deficit of $9,686,511 as of June 30, 2017 and has not generated sufficient revenue to cover its operating expenditure, raising
substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements.
In addition to operational expenses, as the Company executes its business plan, additional capital resources will be required.
The Company will need to raise capital in the near term in order to continue operating and executing its business plan. The ability
to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the
necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
The Company’s plan is to expand its market penetration by deploying more kiosks through various channels, thereby increasing
revenues. In addition, the Company intends to raise additional equity or loan funds to meet its short term working capital needs.
The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the
Company to continue as a going concern.
Inventory consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
Kiosks and accessories
|
|
$
|
309,043
|
|
|
$
|
350,273
|
|
|
|
$
|
309,043
|
|
|
$
|
350,273
|
|
Plant and Equipment
consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
Kiosks
|
|
$
|
269,591
|
|
|
$
|
269,810
|
|
Computer equipment
|
|
|
79,751
|
|
|
|
69,577
|
|
Office equipment
|
|
|
10,809
|
|
|
|
9,430
|
|
Leasehold improvement
|
|
|
9,389
|
|
|
|
8,192
|
|
Total cost
|
|
|
369,540
|
|
|
|
357,009
|
|
Less: accumulated depreciation and amortization
|
|
|
(181,053
|
)
|
|
|
(125,681
|
)
|
Plant and equipment, net
|
|
$
|
188,487
|
|
|
$
|
231,328
|
|
Depreciation expense totaled
$20,286 and $15,614 for the three months ended June 30, 2017 and 2016, respectively, and $35,295 and $31,737 for the six months
ended June 30, 2017 and 2016, respectively.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
License
Localization and implementation
of the different software and technology modules is supported through a Localization Agreement. Under this agreement, at a cost
of $215,000, the licensor allocated engineering and programming resources to the Company. The cost is being amortized over 5 years.
On May 1, 2015, Qpagos Corporation
entered into a renewable ten-year license with the Licensor for the non-exclusive right to license technology to provide payment
services. Subsequently, on November 1, 2015, the Company and the Licensor concluded an additional amendment to the License Agreement
by which the Licensor agreed to the exclusivity to the Mexican market subject to the payment of $20,000 per year payable in quarterly
installments, the first two such installments payable December 1, 2015. The agreement may be terminated early by the Licensor if
Qpagos Corporation fails to comply with its terms and conditions.
Intangibles consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
Software Localization Agreement
|
|
$
|
215,000
|
|
|
$
|
215,000
|
|
|
|
|
|
|
|
|
|
|
Total cost
|
|
|
215,000
|
|
|
|
215,000
|
|
Less: accumulated amortization
|
|
|
(68,083
|
)
|
|
|
(46,583
|
)
|
Intangibles, net
|
|
$
|
146,917
|
|
|
$
|
168,417
|
|
Amortization expense was $10,750
and $10,750 for the three months ended June 30, 2017 and 2016, respectively and $21,500 and $21,500 for the six months ended June
30, 2017 and 2016, respectively.
Notes payable consisted of the following:
|
|
Interest
|
|
|
Maturity
|
|
|
June 30,
|
|
|
December 31,
|
|
Description
|
|
Rate
|
|
|
Date
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YP Holdings LLC
|
|
12%
|
|
|
December 31, 2015
|
|
|
$
|
—
|
|
|
$
|
151,353
|
|
Strategic IR
|
|
Undetermined to 10%
|
|
|
January 1, 2017 to
undetermined
|
|
|
|
100,000
|
|
|
|
146,575
|
|
Gibbs International Holdings
|
|
15%
|
|
|
June 13, 2017
|
|
|
|
—
|
|
|
|
50,986
|
|
Cobbolo Limited
|
|
10%
|
|
|
May 30, 2017
|
|
|
|
—
|
|
|
|
101,466
|
|
Joseph W and Patricia G Abrams
|
|
15%
|
|
|
June 13, 2017
|
|
|
|
—
|
|
|
|
25,534
|
|
Delinvest Commercial LTD
|
|
15%
|
|
|
June 29, 2017
|
|
|
|
—
|
|
|
|
50,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notes payable
|
|
|
|
|
|
|
|
$
|
100,000
|
|
|
$
|
526,750
|
|
Interest expense totaled $(8,484)
and $2,992 for the three months ended June 30, 2017 and 2016, respecrtively, and $10,206 and $5,984 for the six months ended June
30, 2017 and 2016, respectively.
YP Holdings, LLC
On September 21, 2015, Qpagos
Corporation borrowed $100,000 from YP Holdings LLC (“YP”), pursuant to an unsecured loan agreement. The unpaid balance
and any accrued interest was due on December 31, 2015. The loan bears interest at a rate of 12%. On May 26, 2017, the Company re-negotiated
the loan with YP Holdings and exchanged the note with a convertible note in the Company, refer to note 9 below.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
8
|
NOTES PAYABLE (continued)
|
Strategic
IR
Effective October 14, 2016 the
Company executed an unsecured promissory note for $50,000, for an advance that took place on September 29, 2016, which matured
on February 13, 2017, bearing interest at 10% per annum. The maturity date of this loan was extended to May 19, 2017 and further
extended to June 29, 2017 by the execution of Extension Agreements.
On June 29, 2017, the note, principal
amount of $50,000 and accrued interest thereon of $3,740 was exchanged for a convertible note, refer to note 9 below.
On May 12, 2017, the Company
executed an unsecured promissory note for $20,000 with an investor, bearing interest at 10% per annum payable on June 11, 2017.
Effective June 11, 2017, the note, principal amount of $20,000 and accrued interest thereon of $164 was exchanged for a convertible
note, refer note to 9 below.
On May 19, 2017, the Company
executed a Secured Grid Note for advances totaling $110,000 which took place between December 12, 2016 and March 6, 2017, bearing
interest at 10% per annum maturing on May 30, 2017 or earlier upon acceleration by Strategic IR. The Company entered into an extension
agreement with Strategic IR extending the maturity date of the note to June 29, 2017.
On June 29, 2017, the note, principal
amount of $110,000 and accrued interest thereon of $5,535 was exchanged for a convertible note, refer to note 9 below.
On June 27, 2017, Strategic IR
advanced the Company $100,000, the terms of this advance are currently being negotiated, the loan currently has no maturity date
and is interest free.
Gibbs
International Holdings
Effective October 20, 2016, the
Company executed an unsecured promissory note for $50,000 with an investor, bearing interest at 10% per annum payable on February
19, 2017. On February 19, 2017, the Company executed an amended and restated promissory note extending the maturity date to
June 19, 2017 and increasing the interest rate to 15% per annum.
Effective June 19, 2017, the note, principal amount of $50,000 and accrued interest thereon of $2,494
was exchanged for a convertible note, refer note to 9 below.
Cobbolo
Limited
Between October 21, 2016 and
November 25, 2016, the Company executed unsecured promissory notes totaling $100,000 with an investor, bearing interest at 10%
per annum maturing between February 17, 2017 and March 25, 2017. The maturity date of these notes has been extended to May 30,
2017 and further extended to June 29, 2017.
On June 29, 2017, the notes;
i) principal amount of $50,000 and accrued interest thereon of $3,438; and ii) principal amount of $50,000 and accrued interest
thereon of $2,959, were exchanged for two convertible notes, refer to note 9 below.
Joseph
W and Patricia G Abrams
Effective October 14, 2016, the
Company executed an unsecured promissory note for $25,000 with an investor, bearing interest at 10% per annum payable on February
13, 2017. On February 13, 2017, the Company executed an amended and restated promissory note extending the maturity date to
June 13, 2017 and increasing the interest rate to 15% per annum.
On June 13, 2017, the note, principal amount of $25,000 and accrued interest thereon of $1,247 was exchanged
for a convertible note, refer to note 9 below.
Delinvest
Commercial, LTD
Effective October 31, 2016, the
Company executed an unsecured promissory note for $50,000 with an investor, bearing interest at 10% per annum payable on March
1, 2017. On March 1, 2017, the Company executed an amended and restated promissory note extending the maturity date to June
29, 2017 and increasing the interest rate to 15% per annum.
On June 29, 2017, the note, principal amount of $50,000 and accrued interest thereon of $4,123 was exchanged
for a convertible note, refer to note 9 below.
Viktoria Akhmetova
On May 12, 2017, the Company
executed an unsecured promissory note for $20,000 with an investor, bearing interest at 10% per annum payable on June 11, 2017.
Effective June 11, 2017, the
note, principal amount of $20,000 and accrued interest thereon of $164 was exchanged for a convertible note, refer to note 9 below.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
9
|
CONVERTIBLE NOTES PAYABLE
|
Convertible notes payable consists
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
|
Interest
rate
|
|
|
Maturity
Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
Unamortized
debt discount
|
|
|
June
30, 2017 Balance, net
|
|
|
December
31, 2016 Balance, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power
Up Lending Group
|
|
|
8%
|
|
|
September
30, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,180
|
|
|
|
|
8%
|
|
|
November
30, 2017
|
|
|
53,000
|
|
|
|
1,498
|
|
|
|
(28,755
|
)
|
|
|
25,743
|
|
|
|
—
|
|
|
|
|
8%
|
|
|
February
10, 2018
|
|
|
33,000
|
|
|
|
477
|
|
|
|
(25,515
|
)
|
|
|
7,962
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labrys
Fund, LP
|
|
|
8%
|
|
|
July
27, 2017
|
|
|
105,000
|
|
|
|
3,544
|
|
|
|
(15,663
|
)
|
|
|
92,881
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JSJ
Investments, Inc.
|
|
|
8%
|
|
|
November
6, 2017
|
|
|
200,000
|
|
|
|
6,312
|
|
|
|
(94,505
|
)
|
|
|
111,807
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vista
Capital Investment, LLC
|
|
|
8%
|
|
|
March
9, 2018
|
|
|
100,000
|
|
|
|
2,477
|
|
|
|
(69,041
|
)
|
|
|
33,436
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crossover
Capital Fund II, LLC
|
|
|
8%
|
|
|
January
6, 2018
|
|
|
100,000
|
|
|
|
1,863
|
|
|
|
(69,091
|
)
|
|
|
32,772
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS
Capital Partners, LLC
|
|
|
8%
|
|
|
May
22, 2018
|
|
|
75,000
|
|
|
|
641
|
|
|
|
(66,986
|
)
|
|
|
8,655
|
|
|
|
—
|
|
|
|
|
8%
|
|
|
June
16, 2018
|
|
|
112,500
|
|
|
|
345
|
|
|
|
(108,185
|
)
|
|
|
4,660
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YP
Holdings, LLC
|
|
|
8%
|
|
|
May
26, 2018
|
|
|
133,321
|
|
|
|
—
|
|
|
|
(105,629
|
)
|
|
|
27,692
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest
Commercial, LTD
|
|
|
12%
|
|
|
December
16, 2017
|
|
|
20,000
|
|
|
|
72
|
|
|
|
(17,666
|
)
|
|
|
2,406
|
|
|
|
—
|
|
|
|
|
12%
|
|
|
December
26, 2017
|
|
|
54,123
|
|
|
|
18
|
|
|
|
(53,823
|
)
|
|
|
318
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria
Akhmetova
|
|
|
12%
|
|
|
December
8, 2017
|
|
|
20,164
|
|
|
|
126
|
|
|
|
(15,332
|
)
|
|
|
4,958
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
IR
|
|
|
12%
|
|
|
December
8, 2017
|
|
|
10,000
|
|
|
|
69
|
|
|
|
(8,833
|
)
|
|
|
1,236
|
|
|
|
—
|
|
|
|
|
12%
|
|
|
December
8, 2017
|
|
|
20,164
|
|
|
|
126
|
|
|
|
(18,036
|
)
|
|
|
2,254
|
|
|
|
—
|
|
|
|
|
12%
|
|
|
December
26, 2017
|
|
|
53,740
|
|
|
|
18
|
|
|
|
(53,441
|
)
|
|
|
317
|
|
|
|
—
|
|
|
|
|
12%
|
|
|
December
26, 2017
|
|
|
115,535
|
|
|
|
38
|
|
|
|
(114,893
|
)
|
|
|
680
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
W and Patricia G Abrams
|
|
|
12%
|
|
|
December
10, 2017
|
|
|
26,247
|
|
|
|
147
|
|
|
|
(16,640
|
)
|
|
|
9,754
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs
International Holdings
|
|
|
12%
|
|
|
December
16, 2017
|
|
|
52,494
|
|
|
|
190
|
|
|
|
(49,286
|
)
|
|
|
3,398
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman
Shefer
|
|
|
12%
|
|
|
December
24, 2017
|
|
|
10,000
|
|
|
|
10
|
|
|
|
(5,900
|
)
|
|
|
4,110
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo
Limited
|
|
|
12%
|
|
|
December
26, 2017
|
|
|
53,438
|
|
|
|
18
|
|
|
|
(53,142
|
)
|
|
|
314
|
|
|
|
—
|
|
|
|
|
12%
|
|
|
December
26, 2017
|
|
|
52,959
|
|
|
|
17
|
|
|
|
(52,664
|
)
|
|
|
312
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
convertible notes payable
|
|
|
|
|
|
|
|
$
|
1,400,685
|
|
|
$
|
18,006
|
|
|
$
|
(1,043,026
|
)
|
|
$
|
375,665
|
|
|
$
|
1,180
|
|
Interest expense, together with
amortized debt discount totaled $449,861 and $0 for the six months ended June 30, 2017 and 2016, respectively.
The 12% convertible notes, above
have a fixed conversion price of $0.20 per common share and certain investors who met a minimum investment requirement of $30,000
were issued three-year warrants convertible into common shares at a conversion price of; i) $0.20 per share if the convertible
notes are converted prior to maturity date; and ii) $0.30 per share if the convertible notes are not converted prior to maturity
date. These convertible notes have a beneficial conversion feature and attached warrants valued using a Black-Scholes valuation
model, refer note 11 c) below, the value of the beneficial conversion feature of the notes were determined based on fair market
price of the common stock at the date of the issuance of the note, the difference between the fair market value of the common
stock and the conversion price was recorded as a debt discount with a corresponding credit to additional paid in capital.
The value of the warrants, determined
using Black-Scholes, was calculated as a percentage of the total proceeds raised and was recorded as a debt discount with a corresponding
credit to additional paid in capital.
The total value of the
beneficial conversion feature and warrant value recorded as a debt discount during the six months ended June 30, 2017 was
$473,968.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
9
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Power
Up Lending Group Ltd.
On
December 28, 2016, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible
Promissory Note in the aggregate principal amount of $77,000 to Power Up Lending Group Ltd. The note had a maturity date of September
30, 2017 and a coupon of eight percent per annum. The Company has the right to prepay the note, provided it makes a payment to
the purchaser as set forth in the note within 180 days of its issue date. The note provided that its outstanding principal amount
was convertible at any time and from time to time at the election of the note holder during the period beginning on
the date that is 180 days following the issue date into shares of the Company’s common stock, at a conversion
price equal to 58% of the average of the lowest three closing bid prices of the Company’s common stock for the ten trading
days prior to conversion.
On
June 27, 2017, the Company prepaid this note for a total of $107,005, including accrued interest thereon and an early settlement
penalty of 35% of the principal outstanding.
On
February 21, 2017, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible
Promissory Note in the aggregate principal amount of $53,000 to Power Up Lending Group Ltd. The note has a maturity date of November
30, 2017 and a coupon of eight percent per annum. The Company has the right to prepay the note, provided it makes a payment to
the Purchaser as set forth in the note within 180 days of its issue date. The outstanding principal amount of the note is convertible at
any time and from time to time at the election of the note holder during the period beginning on the date that is 180 days following
the issue date into shares of the Company’s common stock, at a conversion price equal to 60% of the average of
the lowest three closing bid prices of the Company’s common stock for the ten trading days prior to conversion. The balance
of the note plus accrued interest at June 30, 2017 was $25,743, net of unamortized discount of $28,755.
On
April 25, 2017, the Company, entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory
Note in the aggregate principal amount of $33,000 to Power Up Lending Group Ltd. The note has a maturity date of February 10,
2018 and the Company has agreed to pay interest on the unpaid principal balance of the note at the rate of eight percent per annum
from the date on which the note is issued until the same becomes due and payable, whether at maturity or upon acceleration or
by prepayment or otherwise. The Company has the right to prepay the note in terms of agreement. The outstanding principal amount
of the note is convertible at any time and from time to time at the election of the purchaser during the period beginning
on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion
price equal to 60% of the average lowest three closing bid prices of the Company’s common stock for the ten trading days
prior to conversion. The balance of the note plus accrued interest at June 30, 2017 was $7,962, net of unamortized discount of
$25,515.
Labrys
Fund, LP
On
January 27, 2017, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible
Promissory Note in the aggregate principal amount of $105,000 to Labrys Fund, LP. The note had a maturity date of July 27, 2017
and a coupon of eight percent per annum. In connection with the issuance of the note, the Company was required to issue 150,000
shares of common stock as a commitment fee valued at $66,000. The shares were returnable to the Company if no Event of Default
has occurred prior to the date the note is fully repaid. Management had determined that it is probable that the Company would
meet the conditions under the note and therefore it more likely than not that the Company would not be in Default as defined in
the note. As a result, management has concluded that it was probable that the shares would be returned and therefore the value
of the 150,000 shares was not recorded.
The
Company had the right to prepay the note within 180 days of its Issue Date. After the 180 days, the Company had no right to prepayment.
The outstanding principal amount of the note was convertible at any time and from time to time at the election of the
note holder during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common
stock, at a conversion price equal to 60% of the average of the lowest three closing bid prices of the Company’s common
stock for the ten trading days prior to conversion. The balance of the note plus accrued interest at June 30, 2017 was $92,881,
net of unamortized discount of $15,663.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
9
|
CONVERTIBLE NOTES PAYABLE (continued)
|
JSJ
Investments Inc.
On
February 6, 2017, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible
Promissory Note in the aggregate principal amount of $200,000 to JSJ Investments Inc. The note has a maturity date of November
6, 2017 and a coupon of eight percent per annum. The Company has the right to prepay the note within 180 days of its issue date.
After the 180 days, the Company has no right to prepayment. The outstanding principal amount of the note is convertible at
any time and from time to time at the election of the note holder during the period beginning on the date that is 180 days following
the issue date into shares of the Company’s common stock, at a conversion price equal to 60% of the average of
the lowest three closing bid prices of the Company’s common stock for the ten trading days prior to conversion. The balance
of the note plus accrued interest at June 30, 2017 was $111,807, net of unamortized discount of $94,505.
Vista
Capital Investments, LLC
On
March 9, 2017, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible Promissory
Note in the aggregate principal amount of $100,000 to Vista Capital Investments, LLC. The note has a maturity date of March 9,
2018 and a coupon of eight percent per annum. The Company has the right to prepay the note, provided it makes a payment to the
Purchaser as set forth in the note through the maturity date. The outstanding principal amount of the note is convertible at
any time and from time to time at the election of the note holder during the period beginning on the date that is 150 days following
the issue date into shares of the Company’s common stock, at a conversion price equal to 60% of the average of
the last two lowest trading bid prices during the fifteen trading days prior to conversion. The balance of the note plus accrued
interest at June 30, 2017 was $33,436, net of unamortized discount of $69,041.
Crossover
Capital Fund II, LLC
On
April 6, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $100,000 to Crossover Capital
Fund II, LLC. The note has a maturity date of January 6, 2018 and a coupon of eight percent (8%) per annum. The Company has
the right to prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal amount
of the note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of the average of the two (2) lowest trading bid prices during the previous fifteen
(15) trading days to the date of conversion. The balance of the note plus accrued interest at June 30, 2017 was $32,772, net of
unamortized discount of $69,091.
GS
Capital Partners, LLC
On
May 22, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $75,000 to GS Capital Partners,
LLC. The note has a maturity date of May 22, 2018 and a coupon of eight percent (8%) per annum. The Company has the right to
prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal amount of the note
is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 62% of lowest trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received. The balance of the note plus accrued interest at June 30, 2017 was $8,655, net
of unamortized discount of $66,986.
On
June 16, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $112,500 to GS Capital Partners,
LLC. The note has a maturity date of June 16, 2018 and a coupon of eight percent (8%) per annum. The Company has the right to
prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal amount of the note
is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 62% of lowest trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received. The balance of the note plus accrued interest at June 30, 2017 was $4,660, net
of unamortized discount of $108,185.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
9
|
CONVERTIBLE NOTES PAYABLE (continued)
|
YP
Holdings, LLC
YP Holdings forgave $19,553 of
accrued interest on a note with a principal amount of $100,000 (refer note 8 above), with the remaining accrued interest of $43,759
and was issued in lieu thereof a convertible note with a principal amount of $143,759, bearing interest at 8% per annum, maturing
on May 26, 2018. The Company has the right to prepay the note within 180 days of its issue date. The outstanding principal amount
of the Note is convertible at any time and from time to time at the election of the Note holder during the period beginning
on the date that is 180 days following the Issue Date. The note is convertible into shares of the Company’s common
stock, at a conversion price equal to 70% of the average of the lowest three closing bid prices of the Company’s common stock
for the ten prior trading days.
On June 12, 2017, YP Holdings
converted a total of $11,556 of the principal and interest of the convertible note outstanding into 57,143 common shares of the
Company at a net issue price of $0.202 per share. As of June 30, 2017, the Company has a principal balance of $133,321 and an unamortized
discount balance of $105,629.
Delinvest
Commercial, LTD.
On
June 19, 2017, the Company issued Delinvest Commercial a convertible promissory note in the aggregate principal amount of $20,000.
The note bears interest at 12% per annum and matures on December 16, 2017. The note is convertible into common shares at a conversion
price of $.20 per share.
On
June 29, 2017, the Company exchanged a Delinvest Commercial note with a principal amount of $50,000, together with accrued interest
thereon of $4,123, totaling $54,123, for a convertible note, principal amount of $54,123, bearing interest at 12% per annum and
maturing on December 26, 2017. The note is convertible into common shares of the Company at a conversion price of $0.20 per share.
In connection with the convertible
notes above, the Company issued warrants to purchase 370,616 common shares of the Company at a variable exercise price of $0.20
per share, if the convertible note above is converted into common shares prior to its maturity date or $0.30 per share if the convertible
note is not converted prior to its maturity date.
Viktoria Akhmetova
On June 11, 2017, the Company
exchanged a note issued to Viktoria Akhmetova, with a principal amount of $20,000, together with accrued interest thereon of $164,
totaling $20,164, for a convertible note, principal amount of $20,164, bearing interest at 12% per annum and maturing on December
8, 2017. The note is convertible into common shares of the Company at a conversion price of $0.20 per share.
Strategic
IR
On
June 11, 2017, the Company issued a convertible promissory note in the aggregate principal amount of $10,000. The note bears interest
at 12% per annum and matures on December 16, 2017. The note is convertible into common shares at a conversion price of $.20 per
share.
On
June 11, 2017, the Company exchanged a note issued to Strategic IR note with a principal amount of $20,000, together with accrued
interest thereon of $164, totaling $20,164, for a convertible note, principal amount of $20,164, bearing interest at 12% per annum
and maturing on December 8, 2017. The note is convertible into common shares of the Company at a conversion price of $0.20 per
share.
On
June 29, 2017, the Company exchanged a note issued to Strategic IR note with a principal amount of $50,000, together with accrued
interest thereon of $3,740, totaling $53,740, for a convertible note, principal amount of $53,740, bearing interest at 12% per
annum and maturing on December 26, 2017. The note is convertible into common shares of the Company at a conversion price of $0.20
per share.
On
June 29, 2017, the Company exchanged a note issued to Strategic IR grid note with a principal amount of $110,000, together with
accrued interest thereon of $5,535, totaling $115,535, for a convertible note, principal amount of $115,535, bearing interest
at 12% per annum and maturing on December 26, 2017. The convertible note is convertible into common shares of the Company at a
conversion price of $0.20 per share.
In
connection with the convertible notes above, the Company issued warrants to purchase 997,195 common shares of the Company at a
variable exercise price of $0.20 per share, if the convertible note above is converted into common shares prior to its maturity
date or $0.30 per share if the convertible note is not converted prior to its maturity date.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
9
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Joseph
W and Patricia G Abrams
Effective
June 13, 2017, the Company exchanged a note issued to Joseph W and Patricia G Abrams with a principal amount of $25,000, together
with accrued interest thereon of $1,247, totaling $26,147, for a convertible note, principal amount of $26,147, bearing interest
at 12% per annum and maturing on December 10, 2017. The convertible note is convertible into common shares of the Company at a
conversion price of $0.20 per share.
Gibbs
International Holdings
Effective
June 19, 2017, the Company exchanged a note issued to Gibbs International Holdings with a principal amount of $50,000, together
with accrued interest thereon of $2,494, totaling $52,494, for a convertible note, principal amount of $52,494, bearing interest
at 12% per annum and maturing on December 16, 2017. The convertible note is convertible into common shares of the Company at a
conversion price of $0.20 per share.
In
connection with the Convertible note above, the Company issued a warrant to purchase 262,468 common shares of the Company at a
variable exercise price of $0.20 per share, if the convertible note above is converted into common shares prior to its maturity
date or $0.30 per share if the convertible note is not converted prior to its maturity date.
Roman
Shefer
On
June 27, 2017, the Company entered into a convertible promissory note in the aggregate principal amount of $10,000. The note bears
interest at 12% per annum and matures on December 16, 2017. The note is convertible into common shares at a conversion price of
$.20 per share.
Cobbolo
Limited
On
June 29, 2017, the Company exchanged a note issued to Cobbolo Limited with a principal amount of $50,000, together with accrued
interest thereon of $3,438, totaling $53,438, for a convertible note, principal amount of $53,438, bearing interest at 12% per
annum and maturing on December 26, 2017. The convertible note is convertible into common shares of the Company at a conversion
price of $0.20 per share.
On
June 29, 2017, the Company exchanged a note issued to Cobbolo Limited with a principal amount of $50,000, together with accrued
interest thereon of $2,959, totaling $52,959, for a convertible note, principal amount of $52,959, bearing interest at 12% per
annum and maturing on December 26, 2017. The convertible note is convertible into common shares of the Company at a conversion
price of $0.20 per share.
In
connection with the Convertible notes above, the Company issued a warrant to purchase 531,987 common shares of the Company at
a variable exercise price of $0.20 per share, if the convertible note above is converted into common shares prior to its maturity
date or $0.30 per share if the convertible note is not converted prior to its maturity date.
Certain of the short-term convertible
notes disclosed in note 9 above, have variable priced conversion rights with no fixed floor price and will re-price dependent on
the share price performance over varying periods of time. This gives rise to a derivative financial liability, which was initially
valued at inception of the convertible notes using a Black-Scholes valuation model. The value of this derivative financial liability
was re-assessed at June 30, 2017 and 2016, and $118,472 and $0 was credited to the statement of operations and comprehensive loss,
respectively. The value of the derivative liability will be re-assessed at each financial reporting period, with any movement thereon
recorded in the statement of operations in the period in which it is incurred.
The following assumptions were
used in the Black-Scholes valuation model:
|
|
Six Months Ended
|
|
|
Year ended
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Conversion price
|
|
$
|
0.11 to 0.29
|
|
|
$
|
0.22 to 0.23
|
|
Risk free interest rate
|
|
|
1.05 to 1.21
|
%
|
|
|
0.85
|
%
|
Expected life of derivative liability
|
|
|
9 to 12 months
|
|
|
|
9 months
|
|
expected volatility of underlying stock
|
|
|
134.1 to 152.2
|
%
|
|
|
133.0
|
%
|
Expected dividend rate
|
|
|
0
|
%
|
|
|
0
|
%
|
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
10
|
DERIVATIVE LIABILITY (continued)
|
The movement in derivative liability
is as follows:
|
|
June 30, 2017
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
113,074
|
|
|
$
|
—
|
|
Derivative financial liability arising from convertible note
|
|
|
904,412
|
|
|
|
77,000
|
|
Fair value adjustment to derivative liability
|
|
|
(118,472
|
)
|
|
|
36,074
|
|
|
|
$
|
899,014
|
|
|
$
|
113,074
|
|
The Company has 100,000,000
common shares with a par value of $0.0001 each authorized, has issued and outstanding 55,511,143 shares of common stock as of June
30, 2017 and 55,454,000 as of December 31, 2016.
On June 12, 2017, a convertible
note holder converted debt and accrued interest thereon, totaling $11,556 into 57,143 common shares, valued at $18,286 resulting
in a loss on conversion of $6,730.
The Company has recorded an
expense of $0 and $144,000 for the six months ended June 30, 2017 and 2016, respectively, relating to restricted stock awards,
which were fully vested in April 2016.
The
Company has authorized 25,000,000 shares of preferred stock with a par value of $0.0001 authorized, no preferred stock is issued
and outstanding as of June 30, 2017.
In connection with the Merger,
outstanding Qpagos Corporation warrants were assumed by QPAGOS and converted to QPAGOS warrants at a ratio of two QPAGOS warrants
for each Qpagos Corporation warrant issued.
During the period June 2015
to December 2015, pursuant to the private placement agreement and individual Securities Purchase Agreements entered into, new,
qualified investors, acquired 4,784,000 (2,392,000 pre-merger) common units of the Company at a price of $0.625 ($1.25 pre-merger)
per unit, each unit consisting of one share of Common Stock and a five year warrant exercisable for one share of common stock at
an exercise price of $0.625 ($1.25 pre-merger) per share.
The placement agent was also
issued, in terms of a placement agent agreement, five year warrants to purchase 717,600 (358,800 pre-QPAGOS Merger) units at $0.625
($1.25 pre-QPAGOS Merger)) per unit, each consisting of one share of Common stock and an additional five year warrant exercisable
for one shares of Common Stock at an exercise price of $0.625 ($1.25 pre-QPAGOS Merger)) per share, giving a total of 1,435,200
(717,600 pre-QPAGOS Merger) warrants to purchase common shares at an exercise price of $0.625 ($1.25 pre-QPAGOS Merger)) per share
if all placement agent warrants are exercised.
During the period June 8, 2017
to June 29, 2017, the Company issued warrants to the 12% convertible note holders, disclosed in note 9 above, to acquire 2,162,266
shares of common stock at a variable exercise price of; i) $0.20 per share if the convertible notes underlying the warrant issue
are converted to common stock prior to maturity date; or ii) $0.30 per share if the convertible notes underlying the warrants are
not converted to common stock prior to the maturity date. These warrants were issued to investors who had invested a cumulative
minimum of $30,000 in convertible notes prior to June 30, 2017. The convertible debt offering remains open until August 31, 2017.
The Warrants were valued using
a Black-Scholes valuation model and the proceeds received from the convertible notes were allocated based on the percentage of
the value of the warrants to the total value of the debt securities in this offering, resulting in a total debt discount of $473,968.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
11
|
STOCKHOLDERS’ EQUITY (continued)
|
The following assumptions were
used in the Black-Scholes valuation model:
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
2017
|
|
Exercise price
|
|
|
|
|
|
$
|
0.20
|
|
Risk free interest rate
|
|
|
|
|
|
|
1.50 to 1.8
|
%
|
Expected life of derivative liability
|
|
|
|
|
|
|
9 to 12 months
|
|
expected volatility of underlying stock
|
|
|
|
|
|
|
160.7 to 161.6
|
%
|
Expected dividend rate
|
|
|
|
|
|
|
0
|
%
|
A summary
of the Company’s warrant activity for the period January 1, 2016 to June 30, 2017, is as follows:
|
|
No. of shares
|
|
|
Exercise price per share
|
|
|
Weighted average exercise price
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2016
|
|
|
6,219,200
|
|
|
$
|
0.625
|
|
|
$
|
0.63
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited/cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding December 31, 2016
|
|
|
6,219,200
|
|
|
$
|
0.625
|
|
|
|
0.63
|
|
Granted
|
|
|
2,162,266
|
|
|
|
0.20
|
|
|
|
0.20
|
|
Forfeited/cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding June 30, 2017
|
|
|
8,381,466
|
|
|
|
$0.20 to $0.625
|
|
|
$
|
0.52
|
|
The warrants
outstanding and exercisable at June 30, 2017 are as follows:
|
|
|
Warrants outstanding
|
|
|
Warrants exercisable
|
|
Exercise price
|
|
|
No. of shares
|
|
|
Weighted average remaining years
|
|
|
Weighted average exercise price
|
|
|
No. of shares
|
|
|
Weighted average exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.625
|
|
|
|
6,219,200
|
|
|
|
3.26
|
|
|
|
|
|
|
|
6,219,200
|
|
|
|
|
|
$
|
0.20
|
|
|
|
2,162,266
|
|
|
|
3.00
|
|
|
|
|
|
|
|
2,162,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,381,466
|
|
|
|
3.19
|
|
|
$
|
0.52
|
|
|
|
8,381,466
|
|
|
$
|
0.52
|
|
The warrants outstanding have
an intrinsic value of $259,472 and $0 as of June 30, 2017 and December 31, 2016, respectively.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue is derived from the following sources:
|
|
Three
|
|
|
Three
|
|
|
Six
|
|
|
Six
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of services
|
|
$
|
995,976
|
|
|
$
|
595,317
|
|
|
$
|
1,797,668
|
|
|
$
|
1,093,301
|
|
Payment processing fees
|
|
|
7,334
|
|
|
|
12,602
|
|
|
|
17,394
|
|
|
|
13,580
|
|
Kiosk sales
|
|
|
—
|
|
|
|
18,351
|
|
|
|
113,921
|
|
|
|
149,323
|
|
Other
|
|
|
13,848
|
|
|
|
146
|
|
|
|
15,485
|
|
|
|
146
|
|
|
|
$
|
1,017,158
|
|
|
|
626,416
|
|
|
$
|
1,944,468
|
|
|
$
|
1,256,350
|
|
|
13
|
EQUITY BASED COMPENSATION
|
Equity based compensation
is made up of the following:
|
|
Six
Months Ended
June 30,
2017
|
|
|
Six
Months Ended
June 30,
2016
|
|
|
|
|
|
|
|
|
Stock issued for services rendered
|
|
$
|
—
|
|
|
$
|
2,032,274
|
|
|
|
$
|
—
|
|
|
$
|
2,032,274
|
|
Basic loss per share is based
on the weighted-average number of common shares outstanding during each period. Diluted loss per share is based on basic shares
as determined above plus common stock equivalents. The computation of diluted net loss per share does not assume the issuance of
common shares that have an anti-dilutive effect on net loss per share. For the six months ended June 30, 2017 and 2016, all unvested
restricted stock awards and warrants, were excluded from the computation of diluted net loss per share. Dilutive shares which could
exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect
would have been anti-dilutive are as follows:
|
|
Six
Months Ended
June 30,
2017
(Shares)
|
|
|
Six
Months Ended
June 30,
2016
(Shares)
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
7,398,202
|
|
|
—
|
|
Warrants
|
|
|
8,381,466
|
|
|
|
6,219,200
|
|
|
|
|
15,779,668
|
|
|
|
6,219,200
|
|
|
15
|
COMMITMENTS AND CONTINGENCIES
|
The Company operates from an
office facility in Mexico. The office is leased under a three (3) year non-cancellable operating lease, which ends on December
16, 2019. The lease calls for monthly rental payment, including maintenance, of $3,262, as adjusted for exchange rate changes.
The Company also leases space on a month-to-month basis for its data servers at a monthly rate of $1,926. In addition, Qpagos leases
warehouse space on a month-to-month basis for $1,239 per month.
The future minimum lease installments
under the office facility lease agreement as of June 30, 2017 are $19,573 for the remainder of 2017 and $39,146 for each year 2018
and 2019, subject to exchange rate fluctuations.
QPAGOS
(FORMERLY KNOWN AS ASIYA PEARLS, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On July 10, 2017, the Company
entered into a Convertible Promissory Note in the aggregate principal amount of $83,000. The Note has a maturity date of April
20, 2018 and a coupon of eight percent (8%) per annum. The Company has the right to prepay the Note, provided it makes a pre-payment
penalty as specified in the Note. The outstanding principal amount of the Note is convertible at any time and from time
to time at the election of the Holder into shares of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”) at a conversion price equal to 58% of the average of the three (3) lowest trading bid prices during
the previous ten (10) trading days to the date of conversion.
On July 26, 2017, the Company
received a further advance of $109,165 from Strategic IR, the terms of this advance have not been determined as yet. The proceeds
received from Strategic IR were used to repay the convertible note advanced by Labrys Fund, LP on July 26, 2017. The 150,000 shares
of common stock issued to Labrys Fund as a commitment fee for the convertible loan advanced have been returned to the Company and
have been cancelled.
Other than disclosed above, in accordance with ASC 855-10, the Company has analyzed its operations subsequent
to June 30, 2017 to the date these financial statements were issued, and has determined that it does not have any material subsequent
events to disclose in these consolidated financial statements.
Item 2.