NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
|
ORGANIZATION
AND DESCRIPTION OF BUSINESS
|
On
May 12, 2016, QPAGOS (formerly known as Asiya Pearls, Inc.), a Nevada corporation (“QPAGOS”), entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with Qpagos Corporation, a Delaware corporation (“Qpagos Corporation”),
and Qpagos Merge, Inc., a Delaware corporation and wholly owned subsidiary of QPAGOS (“Merger Sub”). Pursuant to the
Merger Agreement, on May 12, 2016, the merger was consummated and Qpagos Corporation and Merger Sub merged (the “Merger”),
with Qpagos Corporation continuing as the surviving corporation of the Merger.
Pursuant
to the Merger Agreement, upon consummation of the Merger, each share of Qpagos Corporation’s capital stock issued and outstanding
immediately prior to the Merger was converted into the right to receive two shares of QPAGOS common stock, par value $0.0001 per
share (the “Common Stock”). Additionally, pursuant to the Merger Agreement, upon consummation of the Merger, QPAGOS
assumed all of Qpagos Corporation’s warrants issued and outstanding immediately prior to the Merger, which were exercisable
for approximately 6,219,200 shares of Common Stock, respectively, as of the date of the Merger. Prior to and as a condition to
the closing of the Merger, the then-current QPAGOS stockholder of 5,000,000 shares of Common Stock agreed to return to QPAGOS
4,975,000 shares of Common Stock held by such holder to QPAGOS and the then-current QPAGOS stockholder retained an aggregate of
25,000 shares of Common Stock and the other stockholders of QPAGOS retained 5,000,000 shares of Common Stock. Therefore, immediately
following the Merger, Qpagos Corporation’s former stockholders held 49,929,000 shares of QPAGOS common stock which represented
approximately 91% of the outstanding Common Stock.
The Merger was treated as a reverse acquisition of QPAGOS, a public shell company, for financial accounting
and reporting purposes. As such, Qpagos Corporation was treated as the acquirer for accounting and financial reporting purposes
while QPAGOS was treated as the acquired entity for accounting and financial reporting purposes.
QPAGOS
Corporation (“QPAGOS”) was incorporated on May 1, 2015 under the laws of the state of Delaware to effectuate a reverse
merger transaction with Qpagos, S.A.P.I. de C.V. (Qpagos) and Redpag Electrónicos S.A.P.I. de C.V. (Redpag). Each of the
entities were incorporated in November 2013 in Mexico.
QPagos,
S.A.P.I. de C.V. was formed to process payment transactions for service providers it contracts with, and Redpag Electrónicos
S.A.P.I. de C.V. was formed to deploy and operate kiosks as a distributor.
On
May 27, 2016 Asiya changed its name to QPAGOS. QPAGOS and its direct and indirect subsidiaries Qpagos Corporation, QPagos, S.A.P.I.
de C.V. and Redpag Electrónicos S.A.P.I. de C.V., will be referred to hereafter as “the Company”.
On
June 1, 2016, the board of directors changed the Company’s fiscal year end from October 31 to December 31.
|
b)
|
Description
of the business
|
QPAGOS
Corporation, through its subsidiaries Qpagos S.A.P.I de C.V. (“Qpagos”) and Redpag Electronicos S.A.P.I de C.V. (“Redpag”),
provides physical and virtual payment services to the Mexican market. The Company provides an integrated network of kiosks, terminals
and payment channels that enable consumers in Mexico to deposit cash, convert it into a digital form and remit the funds to any
merchant in our network quickly and securely. The Company helps consumers and merchants connect more efficiently in markets and
consumer segments, such as Mexico, that are largely cash-based and lack convenient alternatives for consumers to pay for goods
and services in physical, online and mobile environments. For example, our licensed technology can be used to pay bills, add minutes
to mobile phones, purchase transportation and tickets, shop online or at a retail store, buy digital services or send money to
a friend or relative.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
|
ACCOUNTING
POLICIES AND ESTIMATES
|
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation
S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and disclosures
required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary,
for a fair presentation of those financial statements. The results of operations and cash flows for the three months and six months
ended June 30, 2018 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire
fiscal year. The information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial
statements of QPAGOS for the year ended December 31, 2017, included in the Annual Report on Form 10-K as filed with the Securities
and Exchange Commission (the “SEC”) on April 17, 2018.
All
amounts referred to in the notes to the unaudited condensed consolidated financial statements are in United States Dollars ($)
unless stated otherwise.
|
b)
|
Principles
of Consolidation
|
The
unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary
and its indirect subsidiaries. All significant inter-company accounts and transactions have been eliminated in the consolidated
financial statements. The entities included in these consolidated financial statements are as follows:
QPAGOS
– Parent Company
Qpagos
Corporation – 100% owned
Qpagos,
S.A.P.I de C.V., a Mexican entity (99.996% owned)
Redpag
Electrónicos, S.A.P.I. de C.V., a Mexican entity (99.990% owned)
The
financial statements of the Company’s Mexican operations are measured using local currencies as their functional currencies.
The
Company translates the assets and liabilities of its Mexican subsidiaries at the exchange rates in effect at period end and the
results of operations at the average rate throughout the period. The translation adjustments are recorded directly as a separate
component of stockholders’ equity, while transaction gains (losses) are included in net income (loss). All sales to customers
are in Mexico.
The
preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions, which are evaluated on an ongoing basis, that affect the amounts reported in the unaudited condensed
consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various
other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from
other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments
include those related to: the estimated useful lives for plant and equipment, the fair value of warrants and stock options granted
for services or compensation, estimates of the probability and potential magnitude of contingent liabilities, derivative liabilities,
the valuation allowance for deferred tax assets due to continuing operating losses, those related to revenue recognition and the
allowance for doubtful accounts.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management
considered in formulating its estimate could change in the near-term due to one or more future confirming events. Accordingly,
the actual results could differ significantly from our estimates.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
Certain
conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which
will only be resolved when one or more future events occur or fail to occur.
The
Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the
assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable
and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they
involve guarantees, in which case the guarantee would be disclosed.
|
f)
|
Fair
Value of Financial Instruments
|
The
Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify
the inputs used in measuring fair value as follows:
Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level
2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived
from or corroborated by observable market data.
Level
3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants
would use in pricing the asset or liability based on the best available information.
The
carrying amounts reported in the balance sheets for cash, accounts receivable, other current assets, other assets, accounts payable,
accrued liabilities, and notes payable, approximate fair value due to the relatively short period to maturity for these instruments.
The Company did not identify any other assets or liabilities that are required to be presented on the balance sheets at fair value
in accordance with the accounting guidance.
ASC
825-10 “Financial
Instruments
” allows entities to voluntarily choose to measure certain financial assets and
liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is
irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses
for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair
value option to any outstanding instruments.
|
g)
|
Risks
and Uncertainties
|
The Company’s operations
will be subject to significant risk and uncertainties including financial, operational, regulatory and other risks, including the
potential risk of business failure. The recent global economic crisis has caused a general tightening in the credit markets, lower
levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income
markets. These conditions not only limit the Company’s access to capital, but also make it difficult for its customers, vendors
and the Company to accurately forecast and plan future business activities.
The
Company’s operations are carried out in Mexico. Accordingly, the Company’s business, financial condition and results
of operations may be influenced by the political, economic and legal environment in Mexico and by the general state of that economy.
The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, and rates and methods of taxation, among other things.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
|
h)
|
Recent
Accounting Pronouncements
|
In
June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based
Payment Accounting.
The
amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services
from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on
inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards
vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment
transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing
share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively
provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of
a contract accounted for under Topic 606, Revenue from Contracts with Customers.
The
amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including
interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after
December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but
no earlier than an entity’s adoption date of Topic 606.
In
July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements.
The
amendments in this Update provide entities with an additional (and optional) transition method to adopt the new leases standard.
Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect
adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests.
The
amendments in this Update provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease
components from the associated lease component and, instead, to account for those components as a single component if the non-lease
components otherwise would be accounted for under the new revenue guidance (Topic 606) and both of the following are met: 1. The
timing and pattern of transfer of the non-lease component(s) and associated lease component are the same. 2. The lease component,
if accounted for separately, would be classified as an operating lease.
The
amendments in this Update related to separating components of a contract affect the amendments in Update 2016-02, which are not
yet effective but can be early adopted.
Any
new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a
future date are not expected to have a material impact on the financial statements upon adoption.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
No
segmental information is required as the Company currently only has one segment of business, providing physical and virtual payment
services in the Mexican Market.
|
j)
|
Cash
and Cash Equivalents
|
The
Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be
cash equivalents. At June 30, 2018 and December 31, 2017, respectively, the Company had no cash equivalents.
The
Company assesses credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution
in the United States. The balance at times may exceed federally insured limits. At June 30, 2018 and December 31, 2017, cash balances
in the United States did not exceed the federally insured limit.
|
k)
|
Accounts
Receivable and Allowance for Doubtful Accounts
|
Accounts
receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period
the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables
based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience
is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly
assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables
or reserve estimates. Revisions to the allowance for doubtful accounts estimates are recorded as an adjustment to bad debt expense.
Receivables deemed uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off.
Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. There were no
recoveries during the three months and six months ended June 30, 2018 and December 2017.
|
l)
|
Cost
Method Investments
|
Investee
companies not accounted for under the consolidation or the equity method are accounted for under the cost method of accounting.
Under this method, the Company’s share of earnings or losses of such investee companies is not included in the condensed
consolidated balance sheet or statement of operations and comprehensive loss. However, impairment charges are recognized in the
condensed consolidated statement of operations and comprehensive loss. If circumstances suggest that the value of the investee
company has subsequently recovered, such recovery is not recorded. There is no impairment of investment at June 30, 2018 and December
31, 2017.
The
Company primarily values inventories at net realizable value applied on a first-in, first-out basis. The Company identifies and
writes down its excess and obsolete inventories to net realizable value based on usage forecasts, order volume and inventory aging.
With the development of new products, the Company also rationalizes its product offerings and will write-down discontinued product
to the lower of cost or net realizable value.
|
n)
|
Advances
received from customers
|
Other
than the sale of kiosks to customers, the provision of services through the Company’s kiosks is conducted on a cash basis.
Customers are required to deposit cash with the Company to meet anticipated demand for services provided through kiosks either
owned or operated by them. The services provided through the customer owned or operated kiosks are deducted from the deposits
held on their behalf, the Company requires that these deposits be replenished as and when the services are provided.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
Plant
and equipment is stated at cost, less accumulated depreciation. Plant and equipment with costs greater than $1,000 are capitalized
and depreciated. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated
useful lives of the assets are as follows:
Description
|
Estimated
Useful Life
|
Kiosks
|
7
years
|
Computer
equipment
|
3
years
|
Leasehold
improvements
|
Lesser
of estimated useful life or life of lease
|
Office
equipment
|
10
years
|
The
cost of repairs and maintenance is expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation
are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.
All
of our intangible assets are subject to amortization. We evaluate the recoverability of intangible assets periodically by taking
into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Where intangibles are deemed to be impaired we recognize an impairment loss measured as the difference between the estimated fair
value of the intangible and its book value.
i)
License Agreements
License
agreements acquired by the Company are reported at acquisition value less accumulated amortization and impairments.
ii)
Amortization
Amortization is reported in the
income statement on a straight-line basis over the estimated useful life of the intangible assets, unless the useful life is indefinite.
Amortizable intangible assets are amortized from the date that they are available for use. The estimated useful life of the license
agreement is five years which is the expected period for which the Company expects to derive a benefit from the underlying license
agreements.
Assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
The
Company’s revenue recognition policy is consistent with the requirements of Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 606, Revenue.
The Company has analyzed its
revenue transaction pursuant to ASC 606, Revenue, and it has no material impact as a result of the transition from ASC 605 to 606.
The Company’s revenues are recognized when control of the promised goods or services are transferred to a customer, in an
amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company derives
its revenues from the sale of its services, as defined below. The Company applies the following five steps in order to determine
the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its revenue transactions:
|
i.
|
identify
the contract with a customer;
|
|
ii.
|
identify
the performance obligations in the contract;
|
|
iii.
|
determine
the transaction price;
|
|
iv.
|
allocate
the transaction price to performance obligations in the contract; and
|
|
v.
|
recognize
revenue as the performance obligation is satisfied.
|
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
|
r)
|
Revenue
Recognition (continued)
|
The
Company has the following sources of revenue which is recognized on the basis described below.
|
●
|
Revenue
from the sale of services
.
|
Prepaid
services are acquired from providers and is sold to end-users through kiosks that the Company owns or kiosks that are owned by
third parties. The Company recognizes the revenue on the sale of these services when the end-user deposits funds into the terminal
and the prepaid service is delivered to the end-user. The revenue is recognized at the gross value, including margin, of the prepaid
service to the Company, net of any value-added tax which is collected on behalf of the Mexican Revenue Authorities.
|
●
|
Payment
processing provided to end-users
|
The
Company provides a secure means for end-users to pay for certain services, such as utilities through our kiosks. The Company earns
either a fixed per-transaction fee or a fixed percentage of the service sold. The Company acts as a collection agent and recognizes
the payment processing fee, net of any value-added taxes collected on behalf of the Mexican Revenue Authorities, when the funds
are deposited into the kiosk and the customer has settled his liability or has acquired a prepaid service.
|
●
|
Revenue
from the sale of kiosks.
|
The
Company imports, assembles and sell kiosks that are used to generate the revenues discussed above. Revenue is recognized on the
full value of the kiosks sold, net of any valued added taxation collected on behalf of the Mexican Revenue Authorities, when the
customer takes delivery of the kiosk and all the risks and rewards of ownership are passed to the customer.
The
Company does not enter into any leasing of kiosks arrangements with customers and the Company does not generate any revenues from
merchants who access its terminals as yet.
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 $17,518,803 as of June 30, 2018 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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Inventory
consisted of the following:
|
|
June
30,
2018
|
|
|
December
31,
2017
|
|
|
|
|
|
|
|
|
Kiosks
and accessories
|
|
$
|
496,452
|
|
|
$
|
504,794
|
|
|
|
$
|
496,452
|
|
|
$
|
504,794
|
|
Plant
and Equipment consisted of the following:
|
|
June
30,
2018
|
|
|
December
31,
2017
|
|
|
|
|
|
|
|
|
Kiosks
|
|
$
|
265,043
|
|
|
$
|
263,709
|
|
Computer
equipment
|
|
|
73,343
|
|
|
|
73,448
|
|
Office
equipment
|
|
|
9,896
|
|
|
|
9,911
|
|
Leasehold
improvement
|
|
|
8,596
|
|
|
|
8,608
|
|
Total
cost
|
|
|
356,878
|
|
|
|
355,676
|
|
Less:
accumulated depreciation and amortization
|
|
|
(216,807
|
)
|
|
|
(195,375
|
)
|
Plant
and equipment, net
|
|
$
|
140,071
|
|
|
$
|
160,301
|
|
Depreciation expense totaled
$10,856 and $20,286 for the three months ended June 30, 2018 and 2017, respectively, and $22,417 and $35,295 for the six months
ended June 30, 2018 and 2017, respectively.
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, Qpagos Corporation 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 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,
2018
|
|
|
December
31,
2017
|
|
|
|
|
|
|
|
|
Software
Localization Agreement
|
|
$
|
215,000
|
|
|
$
|
215,000
|
|
|
|
|
|
|
|
|
|
|
Total
cost
|
|
|
215,000
|
|
|
|
215,000
|
|
Less:
accumulated amortization
|
|
|
(111,083
|
)
|
|
|
(89,583
|
)
|
Intangibles,
net
|
|
$
|
103,917
|
|
|
$
|
125,417
|
|
Amortization expense was $10,750
and $10,750 for the three months ended June 30, 2018 and 2017, respectively, and $21,500 and $21,500 for the six months ended
June 30, 2018 and 2017, respectively.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Loans
payable consist of the following:
|
|
Interest
|
|
|
Maturity
|
|
June
30,
|
|
|
December
31,
|
|
Description
|
|
Rate
|
|
|
Date
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
IR
|
|
|
—
|
|
|
|
|
|
168,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria
Akhmetova
|
|
|
18
|
%
|
|
September 13, 2018
|
|
|
51,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
payable
|
|
|
|
|
|
|
|
$
|
219,507
|
|
|
$
|
—
|
|
Strategic
IR
Strategic
IR advanced the Company $168,000 between January 16 and June 15, 2018. These funds have no fixed terms of repayment and have not
been formalized into an agreement yet, accordingly no interest has been provided thereon.
Viktoria
Akhmetova
On April 17, 2018, the Company
issued a Promissory Note in the aggregate principal amount of $50,000 to Viktoria Akhmetova. The note has a maturity date of September
13, 2018 and a coupon of eighteen percent per annum. The Company has the right to prepay the note without penalty prior to maturity
date.
The
balance of the note plus accrued interest at June 30, 2018 was $51,507.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE
|
Convertible
notes payable consists of the following:
Description
|
|
Interest rate
|
|
|
Maturity
Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
Unamortized
debt discount
|
|
|
June
30,
2018
Balance, net
|
|
|
December
31,
2017
Balance, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power
Up Lending Group
|
|
|
8
|
%
|
|
April
20, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,017
|
|
|
|
|
8
|
%
|
|
June
30, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,034
|
|
|
|
|
8
|
%
|
|
August
30, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,165
|
|
|
|
|
8
|
%
|
|
October
30, 2018
|
|
|
68,000
|
|
|
|
2,340
|
|
|
|
(29,735
|
)
|
|
|
40,605
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
January
15, 2019
|
|
|
68,000
|
|
|
|
1,431
|
|
|
|
(45,871
|
)
|
|
|
23,560
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
March
15,2019
|
|
|
63,000
|
|
|
|
511
|
|
|
|
(51,601
|
)
|
|
|
11,910
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labrys
Fund, LP
|
|
|
8
|
%
|
|
June
14, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,577
|
|
|
|
|
8
|
%
|
|
August
12, 2018
|
|
|
88,000
|
|
|
|
2,661
|
|
|
|
(20,906
|
)
|
|
|
69,755
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
December
22, 2018
|
|
|
150,000
|
|
|
|
263
|
|
|
|
(143,442
|
)
|
|
|
6,821
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JSJ
Investments, Inc.
|
|
|
8
|
%
|
|
November
29, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS
Capital Partners, LLC
|
|
|
8
|
%
|
|
May
22, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,112
|
|
|
|
|
8
|
%
|
|
June
16, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,909
|
|
|
|
|
8
|
%
|
|
May
3, 2019
|
|
|
105,000
|
|
|
|
1,335
|
|
|
|
(88,315
|
)
|
|
|
18,020
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
May
11, 2019
|
|
|
80,000
|
|
|
|
877
|
|
|
|
(69,041
|
)
|
|
|
11,836
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
IR
|
|
|
15
|
%
|
|
December
8, 2018
|
|
|
10,000
|
|
|
|
1,437
|
|
|
|
—
|
|
|
|
11,437
|
|
|
|
10,693
|
|
|
|
|
15
|
%
|
|
December
8, 2018
|
|
|
20,164
|
|
|
|
2,884
|
|
|
|
—
|
|
|
|
23,048
|
|
|
|
21,548
|
|
|
|
|
15
|
%
|
|
December
26, 2018
|
|
|
53,740
|
|
|
|
7,288
|
|
|
|
—
|
|
|
|
61,028
|
|
|
|
57,031
|
|
|
|
|
15
|
%
|
|
December
26, 2018
|
|
|
115,535
|
|
|
|
15,668
|
|
|
|
—
|
|
|
|
131,203
|
|
|
|
122,610
|
|
|
|
|
8
|
%
|
|
October
23, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,709
|
|
|
|
|
8
|
%
|
|
January
9, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
February
14, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
February
14, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
February
15, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria
Akhmetova
|
|
|
15
|
%
|
|
December
8, 2018
|
|
|
20,164
|
|
|
|
2,884
|
|
|
|
—
|
|
|
|
23,048
|
|
|
|
21,548
|
|
|
|
|
8
|
%
|
|
October
20, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,893
|
|
|
|
|
8
|
%
|
|
August
24,2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,782
|
|
|
|
|
8
|
%
|
|
September
18, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,234
|
|
|
|
|
8
|
%
|
|
September
26, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,387
|
|
|
|
|
8
|
%
|
|
January
31, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
February
26, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
W and Patricia G Abrams
|
|
|
15
|
%
|
|
December
10, 2018
|
|
|
26,247
|
|
|
|
3,732
|
|
|
|
—
|
|
|
|
29,979
|
|
|
|
28,027
|
|
|
|
|
15
|
%
|
|
January
27, 2019
|
|
|
3,753
|
|
|
|
460
|
|
|
|
—
|
|
|
|
4,213
|
|
|
|
3,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman
Shefer
|
|
|
15
|
%
|
|
December
24, 2018
|
|
|
10,000
|
|
|
|
1,364
|
|
|
|
—
|
|
|
|
11,364
|
|
|
|
10,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown
Bridge Partners, LLC
|
|
|
8
|
%
|
|
August
14, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,846
|
|
|
|
|
8
|
%
|
|
February
27, 2019
|
|
|
55,000
|
|
|
|
1,483
|
|
|
|
(36,466
|
)
|
|
|
20,017
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
May
14, 2019
|
|
|
26,000
|
|
|
|
268
|
|
|
|
(22,652
|
)
|
|
|
3,616
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
June
12, 2019
|
|
|
26,000
|
|
|
|
102
|
|
|
|
(24,718
|
)
|
|
|
1,384
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOBA
Management
|
|
|
8
|
%
|
|
August
31, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,768
|
|
|
|
|
8
|
%
|
|
October
3, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,155
|
|
|
|
|
8
|
%
|
|
December
24, 2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,630
|
|
|
|
|
8
|
%
|
|
March
26, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
March
26, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anna
Mosk
|
|
|
8
|
%
|
|
January
9, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616796
BC, Ltd.
|
|
|
8
|
%
|
|
June
20, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
convertible notes payable
|
|
|
|
|
|
|
|
$
|
988,603
|
|
|
$
|
46,988
|
|
|
$
|
(532,747
|
)
|
|
$
|
502,844
|
|
|
$
|
724,776
|
|
Interest expense, together with
amortized debt discount totaled $523,344 and $333,777 for the three months ended June 30, 2018 and 2017, respectively and $1,191,772
and $453,555 for the six months ended June 30, 2018 and 2017, respectively.
The
remaining convertible notes have variable conversion prices based on a discount to market price of trading activity over a specified
period of time. The variable conversion features were valued using a Black Scholes valuation model. The difference between the
fair market value of the common stock and the calculated conversion price on the issuance date was recorded as a debt discount
with a corresponding credit to derivative financial liability.
The total value of the beneficial
conversion feature recorded as a debt discount during the three months ended June 30, 2018 and 2017 was $495,388 and $687,366,
respectively, and for the six months ended June 30, 2018 and 2017 was $1,124,737 and $1,145,366 respectively.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Power
Up Lending Group Ltd.
On July 10, 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 $83,000 to Power Up Lending Group Ltd. The note had a maturity date of April 20, 2018 and the Company had 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
was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company
had the right to prepay the note in terms of agreement. The outstanding principal amount of the note was 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 58% of the average lowest three closing bid
prices of the Company’s common stock for the ten trading days prior to conversion.
On
January 9, 2018, in terms of an assignment agreement entered into with Anna Mosk, the $83,000 convertible note plus accrued interest
thereon of $3,329 was exchanged for a new note with a principal sum of $86,329 bearing interest at 8% per annum with the maturity
date extended to January 9, 2019.
On September 14, 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 $63,000 to Power Up Lending Group Ltd. The note had a maturity date of June 30, 2018 and the Company had 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
was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company
had the right to prepay the note in terms of agreement. The outstanding principal amount of the note was 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 58% of the average lowest three closing bid
prices of the Company’s common stock for the ten trading days prior to conversion.
On
March 26, 2018, in terms of a debt purchase agreement entered into with Boba Management Corp., the $63,000 convertible note plus
accrued interest thereon of $2,513 was exchanged for a new note with as principal sum of $65,513 bearing interest at 8% per annum
with the maturity date extended to March 26, 2019.
On November 14, 2017, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $53,000 to Power Up Lending Group LTD. The note had a
maturity date of August 30, 2018 and a coupon of eight percent (8%) per annum. The Company had the right to prepay the note without
penalty for the first 180 days. The outstanding principal amount of the note was 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the notice of conversion is
received.
On
May 14, 2018, the Company repaid the convertible promissory note together with interest and early settlement penalty interest
thereon for gross proceeds of $74,373.
On
January 24, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $68,000 to Power Up Lending
Group LTD. The note has a maturity date of October 30, 2018 and a coupon of eight percent (8%) per annum. The Company has the
right to prepay the note without penalty for the first 180 days. 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 lowest three 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, 2018 was $40,605, net of unamortized discount of $29,735.
On
March 26, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $68,000 to Power Up Lending
Group LTD. The note has a maturity date of January 15, 2019 and a coupon of eight percent (8%) per annum. The Company has the
right to prepay the note without penalty for the first 180 days. 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 lowest three 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, 2018 was $23,559, net of unamortized discount of $45,872.
On May 24, 2018, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $63,000 to Power Up Lending Group LTD. The note has a
maturity date of March 15, 2019 and a coupon of eight percent (8%) per annum. The Company has the right to prepay the note without
penalty for the first 180 days. 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 lowest three 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, 2018 was $11,910, net of unamortized discount of $51,601.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Labrys
Fund, LP
On December 14, 2017, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $78,000 to Labrys Fund, LP. The note had a maturity date
of June 14, 2018 and a coupon of 8% per annum. In connection with the issuance of the note, the Company was required to issue 231,591
shares of common stock as a commitment fee valued at $76,537. The shares were returnable to the Company if no Event of Default
had occurred prior to the date the note was fully repaid. The Company had the right to prepay the note without penalty for the
first 180 days. The outstanding principal amount of the note was 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 lowest three
trading bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On June 14, 2018, $15,000 of
the outstanding principal was converted into 118,483 shares of common stock at a conversion price of $0.1266 per share. On June
20, 2018, a further $23,000 of the principal outstanding together with interest of $3,184 was converted into 199,269 shares of
common stock at a conversion price of $0.1314 per share. Labrys Fund LP returned 115,796 of the commitment shares to the Company
and exercised the remaining 115,795 shares of common stock.
On
June 20, 2018, the remaining principal of $40,000 together with interest thereon of $44 was repaid.
On
February 12, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $88,000 to Labrys Fund,
LP. The note has a maturity date of August 12, 2018 and a coupon of 8% per annum. In connection with the issuance of the note,
the Company was required to issue 440,000 shares of common stock as a commitment fee valued at $70,400. The shares are 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 440,000 shares was not recorded. The Company has the right to prepay the note without
penalty for the first 180 days. 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 lowest three 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, 2018 was $69,755, net of unamortized discount of $20,907.
On
June 22, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $150,000 to Labrys Fund,
LP. The note has a maturity date of December 22, 2018 and a coupon of 8% per annum. The Company has the right to prepay the note
without penalty for the first 180 days. 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 lowest three 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, 2018 was $6,820, net of unamortized discount of $143,443.
JSJ
Investments Inc.
On November 29, 2017, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $75,000 to JSJ Investments, Inc. The note had a maturity
date of November 29, 2018 and a coupon of 8% per annum. The Company had the right to prepay the note without penalty for the first
180 days. The outstanding principal amount of the note was 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 lowest three trading
bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On
June 4, 2018, $40,000 of the outstanding principal was converted into 328,407 shares of common stock at a conversion price of
$0.1218 per share. On June 21, 2018, the remaining $35,000 of the principal outstanding together with interest of $3,210 was converted
into 288,943 shares of common stock at a conversion price of $0.1322 per share.
Q
PAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
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., (“GS Capital”).
The note had a maturity date of May 22, 2018 and a coupon of 8% per annum. The Company had the right to prepay the note, provided
it made a pre-payment penalty as specified in the note. The outstanding principal amount of the note was 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.
On
November 11, 2017, GS Capital converted $20,000 of the principal amount of the convertible note into equity at a conversion price
of $0.1023 per share for an aggregate 203,516 shares of common stock. On December 13, 2017, GS Capital converted a further $20,000
of the principal amount of the convertible note into equity at a conversion price of $0.1240 per share for an aggregate 168,466
shares of common stock. On January 17, 2018, GS Capital converted a further $18,000 principal, plus accrued interest thereon of
$939 of the convertible note into equity at a conversion price of $0.0778 per share for an aggregate 243,400 shares of common
stock.
On
February 14, 2018, in terms of a debt purchase agreement entered into with Strategic IR, the remaining $17,000 convertible note
plus accrued interest thereon of $984 was exchanged for a new note with as principal sum of $17,984 bearing interest at 8% per
annum with the maturity date extended to February 14, 2019.
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 had a
maturity date of June 16, 2018 and a coupon of 8% per annum. The Company had 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 was 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.
On
February 22, 2018, GS Capital converted $27,500 principal, plus accrued interest thereon of $1,477 of the convertible note into
equity at a conversion price of $0.0752 per share for an aggregate 385,456 shares of common stock. On March 12, 2018, GS Capital
converted $29,000 principal, plus accrued interest thereon of $1,672 of the convertible note into equity at a conversion price
of $0.0784 per share for an aggregate 391,070 shares of common stock. On April 18, 2018 the remaining principal of $56,000 together
with interest thereon of $3,682 was converted into 518,930 shares of common stock at a conversion price of $0.1150 per share.
On
May 3, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $105,000 to GS Capital Partners,
LLC. The note has a maturity date of May 3, 2019 and a coupon of 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, 2018 was $18,020, net of unamortized discount of $88,315.
On
May 11, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $80,000 to GS Capital Partners,
LLC. The note has a maturity date of May 11, 2019 and a coupon of 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, 2018 was $11,836, net of unamortized discount of $69,042.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Strategic
IR
On June 11, 2017, the Company
issued a convertible promissory note in the aggregate principal amount of $10,000 to Strategic IR (“Strategic”). The
note bears interest at 12% per annum and matured on December 16, 2017. In terms of an agreement entered into with the note holder,
the maturity date of the note was extended to December 8, 2018 and the interest rate was increased to 15% per annum.
The
note is convertible into common shares at a conversion price of $.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $11,437.
On
June 11, 2017, the Company exchanged a note issued to Strategic 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
matured on December 8, 2017. In terms of an agreement entered into with the note holder, the maturity date was extended to December
8, 2018 and the interest rate was increased to 15% per annum.
The
note is convertible into common shares of the Company at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $23,048.
On
June 29, 2017, the Company exchanged a note issued to Strategic 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 which
matured on December 26, 2017. In terms of an agreement entered into with the note holder, the maturity date was extended to December
26, 2018 and the interest rate was increased to 15% per annum.
The
note is convertible into common shares of the Company at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $61,028.
On
June 29, 2017, the Company exchanged a note issued to Strategic 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 matured on December 26, 2017. In terms of an agreement entered into with the note holder the maturity date was extended to
December 26, 2018 and the interest rate was increased to 15% per annum.
The
convertible note is convertible into common shares of the Company at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $131,203.
On
October 23, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $14,298 to Strategic.
The note has a maturity date of October 23, 2018 and a coupon of eight percent (8%) per annum. The Company has the right to prepay
the note without penalty for the first 180 days. 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the notice
of conversion is received.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 192,216 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $14,298 and
accrued interest thereon of $7, thereby extinguishing the note.
On
January 9, 2018, in terms of an additional payment made by Strategic IR to Power Up Lending Group to settle outstanding early
settlement penalties and interest thereon, related to the assignment agreement entered into between Anna Mosk and Power up Lending
Group, the Company issued a convertible promissory note to Strategic IR in the aggregate principal amount of $40,521. The note
has a maturity date of January 9, 2019 and a coupon of 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 three lowest trading bid prices during the previous ten (10) trading days, including the date the notice of conversion
is received.
On
March 13, 2018, in terms of a conversion notice received, the Company issued 479,587 shares of common stock at a conversion price
of $0.0856 in settlement of the principal of $40,521 and accrued interest thereon of $551, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Strategic
IR (continued)
On February 14, 2018, in terms
of a debt purchase agreement entered into with GS Capital Partners, LLC, the Company issued a convertible promissory note in the
aggregate amount of $17,984 in exchange for a convertible promissory note in the aggregate amount of $17,000 plus accrued interest
thereon of $984. The note had a maturity date of February 14, 2019 and a coupon of 8% per annum. The Company had the right to prepay
the note, provided it made a pre-payment penalty as specified in the note. The outstanding principal amount of the note was 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 three lowest trading bid prices during the previous ten (10) trading days, including the date the notice
of conversion is received.
On
March 13, 2018, in terms of a conversion notice received, the Company issued 211,188 shares of common stock at a conversion price
of $0.0856 in settlement of the principal of $17,984 and accrued interest thereon of $102, thereby extinguishing the note.
On February 14, 2018, in terms
of an additional payment made by Strategic IR to GS Capital Partners, LLC to settle outstanding early settlement penalties and
interest thereon, related to the convertible note mentioned above, the Company issued a convertible promissory note in the aggregate
principal amount of $7,610. The note had a maturity date of February 14, 2019 and a coupon of 8% per annum. The Company had 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 was 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 three lowest trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received.
On
March 13, 2018, in terms of a conversion notice received, the Company issued 89,367 shares of common stock at a conversion price
of $0.0856 in settlement of the principal of $7,610 and accrued interest thereon of $43, thereby extinguishing the note.
On February 15, 2018, in terms
of a Securities Purchase Agreement, the Company issued a Convertible Promissory Note in the aggregate principal amount of $72,969
to Strategic IR. The note had a maturity date of February 15, 2019 and a coupon of 8% per annum. The Company had the right to prepay
the note, provided it made a pre-payment penalty as specified in the note. The outstanding principal amount of the note was 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the notice
of conversion is received. The proceeds of the convertible note was used to purchase $50,000 of the principal of the Crown Bridge
Capital Partners note dated August 14, 2017 plus accrued interest thereon of $1,994 and early settlement penalty of $20,975.
On
March 13, 2018, in terms of a conversion notice received, the Company issued 856,715 shares of common stock at a conversion price
of $0.0856 in settlement of the principal of $72,969 and accrued interest thereon of $400, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
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 matured on December 8, 2017. In terms of an agreement entered into with the note holder, the maturity date was extended to
December 8, 2018 and the interest rate was increased to 15% per annum. The note is convertible into common shares of the Company
at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $23,048.
On October 31, 2017, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $50,000 to Viktoria Akhmetova. The note had a maturity
date of October 20, 2018 and a coupon of eight percent (8%) per annum. The Company had the right to prepay the note within the
first 180 days at a premium of 110% of the sum of the accrued interest and principal. The outstanding principal amount of the note
was 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 lowest three trading bid prices during the previous ten (10) trading days,
including the date the notice of conversion is received.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 687,968 shares of common stock at a conversion price of $0.074 in settlement of the principal of $50,000 plus
accrued interest thereon of $910, thereby extinguishing the note.
On
October 25, 2017, in terms of an agreement entered into, Strategic IR assigned a note entered into on August 24, 2017 with the
Company to Viktoria Akhmetova. The note had an aggregate principal amount of $113,845 and accrued interest thereon of $1,547.
The note has a maturity date of August 24, 2018 and a coupon of 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the
notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,329,044 shares of common stock at a conversion price of $0.0868 in settlement of the principal of $113,845 plus
accrued interest thereon of $1,547, thereby extinguishing the note.
On
October 25, 2017, in terms of an agreement entered into, Strategic IR assigned a note entered into on September 18, 2017 with
the Company to Viktoria Akhmetova. The note had an aggregate principal amount of $69,047 and accrued interest thereon of $560.
The note has a maturity date of September 18, 2018 and a coupon of 8% per annum. The Company has the right to prepay the note
without penalty for the first 180 days. 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the notice of conversion
is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 935,324 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $69,047 plus
accrued interest thereon of $560, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Viktoria
Akhmetova (continued)
On
October 25, 2017, in terms of an agreement entered into, Strategic IR assigned a note entered into on September 26, 2017 with
the Company to Viktoria Akhmetova. The note had an aggregate principal amount of $20,000 and accrued interest thereon of $127.
The note has a maturity date of September 26, 2018 and a coupon of 8% per annum. The Company has the right to prepay the note
without penalty for the first 180 days. 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the notice of conversion
is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 270,453 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $20,000 plus
accrued interest thereon of $127, thereby extinguishing the note.
On January 31, 2018, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $30,000 to Viktoria Akhmetova. The note had a maturity
date of January 31, 2019 and a coupon of 8% per annum. The Company had the right to prepay the note within the first 180 days at
a premium of 110% of the sum of the accrued interest and principal. The outstanding principal amount of the note was 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 lowest three trading bid prices during the previous ten (10) trading days, including the
date the notice of conversion is received.
On
April 18, 2018, in terms of a conversion notice received, the Company issued 235,691 shares of common stock at a conversion price
of $0.1287 in settlement of the principal of $30,000 plus accrued interest thereon of $329, thereby extinguishing the note.
On February 26, 2018, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $37,000 to Viktoria Akhmetova. The note had a maturity
date of February 26, 2019 and a coupon of 8% per annum. The Company had the right to prepay the note within the first 180 days
at a premium of 110% of the sum of the accrued interest and principal. The outstanding principal amount of the note was 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 lowest three trading bid prices during the previous ten (10) trading days, including the
date the notice of conversion is received.
On
April 18, 2018, in terms of a conversion notice received, the Company issued 292,325 shares of common stock at a conversion price
of $0.1287 in settlement of the principal of $37,000 plus accrued interest thereon of $616, thereby extinguishing the note.
Joseph
W and Patricia G Abrams
Effective
June 13, 2017, the Company exchanged a note issued to Joseph W and Patricia G Abrams (“Abrams”) with a principal amount
of $25,000, together with accrued interest thereon of $1,247, totaling $26,247, for a convertible note, principal amount of $26,247,
bearing interest at 12% per annum and matured on December 10, 2017. In terms of an agreement entered into with the note holder,
the maturity date was extended to December 10, 2018 and the interest rate was increased to 15% per annum.
The
convertible note is convertible into common shares of the Company at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $29,979.
On
July 31, 2017, the Company issued a Convertible Promissory Note to Abrams in the aggregate principal amount of $3,753. The note
has a maturity date of January 27, 2018 and a coupon of 12% per annum. In terms of an agreement entered into with the note holder,
the maturity date was extended to January 27, 2019 and the interest rate was increased to 15% per annum.
The
Company has the right to prepay the note without penalty. 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 of $0.25
per share.
The
balance of the note plus accrued interest at June 30, 2018 was $4,213.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Roman
Shefer
On
June 27, 2017, the Company entered into a convertible promissory note in the aggregate principal amount of $10,000. The note bore
interest at 12% per annum and matured on December 16, 2017. In terms of an agreement entered into with the note holder, the maturity
date was extended to December 24, 2018 and the interest rate was increased to 15% per annum.
The
note is convertible into common shares at a conversion price of $.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $11,364.
Crown
Bridge Partners LLC
On August 14, 2017, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $75,000 to Crown Bridge Partners. The note had a maturity
date of August 14, 2018 and a coupon of eight percent (8%) per annum. The Company had the right to prepay the note for the first
180 days, subject to a penalty ranging from 10% to 35% of the prepayment, dependent upon the timing of the prepayment. The outstanding
principal amount of the note was 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 lowest trading price during the previous fifteen (15) trading
days.
On
February 15, 2018, the Company repurchased $50,000 of the principal outstanding plus accrued interest thereon of $1,994, after
paying an early settlement penalty of $20,975 out of the proceeds of a note issued to Strategic IR.
On
March 6, 2018, Crown Bridge Partners converted $9,501of the principal outstanding into equity at a conversion price of $0.0685
per share for an aggregate 146,000 shares of common stock. On April 5, 2018, Crown Bridge Partners converted $9,356 of the principal
outstanding into equity at a conversion price of $0.0616 per share for an aggregate of 160,000 shares of common stock. On June
19, 2018, Crown Bridge Partners converted the remaining principal of $6,143, together with interest thereon of $3,293, at a conversion
price of $0.1002 per share for an aggregate of 94,183 shares of common stock, thereby extinguishing the note.
On
February 27, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $55,000 to Crown Bridge
Partners. The note has a maturity date of February 27, 2019 and a coupon of 8% per annum. The Company has the right to prepay
the note for the first 180 days, subject to a penalty ranging from 10% to 35% of the prepayment, dependent upon the timing of
the prepayment. 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 lowest trading price during
the previous fifteen (15) trading days.
The
balance of the note plus accrued interest at June 30, 2018 was $20,017 net of unamortized discount of $36,466.
On
May 14, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $26,000 to Crown Bridge Partners.
The note has a maturity date of May 14, 2019 and a coupon of 8% per annum. The Company has the right to prepay the note for the
first 180 days, subject to a penalty ranging from 10% to 35% of the prepayment, dependent upon the timing of the prepayment. 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 lowest trading price during the previous fifteen
(15) trading days.
The
balance of the note plus accrued interest at June 30, 2018 was $3,616 net of unamortized discount of $22,652.
On
June 12, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $26,000 to Crown Bridge Partners.
The note has a maturity date of June 12, 2019 and a coupon of 8% per annum. The Company has the right to prepay the note for the
first 180 days, subject to a penalty ranging from 10% to 35% of the prepayment, dependent upon the timing of the prepayment. 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 lowest trading price during the previous fifteen
(15) trading days.
The
balance of the note plus accrued interest at June 30, 2018 was $1,385 net of unamortized discount of $24,718.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
BOBA
Management
On October 25, 2017, in terms
of an agreement entered into, Strategic IR assigned a note entered into on August 31, 2017 with the Company to BOBA Management.
The note had an aggregate principal amount of $88,847 and accrued interest thereon of $1,071. The note had a maturity date of August
31, 2018 and a coupon of eight percent (8%) per annum. The Company had the right to prepay the note without penalty for the first
180 days. The outstanding principal amount of the note was 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 lowest three trading
bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,208,251 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $88,847 plus
accrued interest thereon of $1,071, thereby extinguishing the note.
On March 26, 2018, in terms of
a debt purchase agreement entered into with Power Up lending Group, the Company issued Boba Management Corp a new note with as
principal sum of $65,513. The note had a maturity date of March 26, 2019 and a coupon of 8% per annum. The Company had the right
to prepay the note, provided it made a pre-payment penalty as specified in the note. The outstanding principal amount of the note
was 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 three lowest trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received.
On
April 18, 2018, in terms of a conversion notice received, the Company issued 511,571 shares of common stock at a conversion price
of $0.1287 in settlement of the principal of $65,313 plus accrued interest thereon of $316, thereby extinguishing the note.
On March 26, 2018, in terms of
a Securities Purchase Agreement, the Company issued a Convertible Promissory Note in the aggregate principal amount of $31,618
to BOBA Management Corp. The note had a maturity date of March 26, 2019 and a coupon of 8% per annum. The Company had the right
to prepay the note, provided it made a pre-payment penalty as specified in the note. The outstanding principal amount of the note
was 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 lowest three trading bid prices during the previous ten (10) trading days, including the
date the notice of conversion was received. The proceeds of the convertible note were used to pay early settlement penalties and
fees associated with the Power Up lending note above.
On
April 18, 2018, in terms of a conversion notice received, the Company issued 246,899 shares of common stock at a conversion price
of $0.1287 in settlement of the principal of $31,618 plus accrued interest thereon of $152, thereby extinguishing the note.
On October 25, 2017, in terms
of an agreement entered into, Strategic IR assigned a note entered into on October 3, 2017 with the Company to BOBA Management.
The note had an aggregate principal amount of $48,880 and accrued interest thereon of $236. The note had a maturity date of October
3, 2018 and a coupon of eight percent (8%) per annum. The Company had the right to prepay the note without penalty for the first
180 days. The outstanding principal amount of the note was 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 lowest three trading
bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 659,980 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $48,880 plus
accrued interest thereon of $236, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
BOBA
Management (continued)
On
October 25, 2017, in terms of an agreement entered into, Strategic IR assigned a previously unclassified amount due to Strategic,
subsequently classified as a Convertible Promissory Note on June 27, 2017 with an aggregate principal amount of $100,000 and accrued
interest thereon of $2,630, to BOBA Management. The note has a maturity date of December 24, 2017 and a coupon of 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 lowest three trading bid prices during the
previous ten (10) trading days.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,379,067 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $100,000 plus
accrued interest thereon of $2,630, thereby extinguishing the note.
Anna
Mosk
On January 9, 2018, in terms
of an assignment agreement entered into with Power Up Lending Group, the Company issued a Convertible Promissory Note in the aggregate
principal amount of $86,329 to Anna Mosk. The note had a maturity date of January 9, 2019 and a coupon of 8% per annum. The Company
had the right to prepay the note within the first 180 days at a premium of 110% of the sum of the accrued interest and principal.
The outstanding principal amount of the note was 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 lowest three trading bid prices
during the previous ten (10) trading days, including the date the notice of conversion is received.
On
March 13, 2018, in terms of a conversion notice received, the Company issued 1,021,745 shares of common stock at a conversion
price of $0.0856 in settlement of the principal of $86,329 and accrued interest thereon of $1,173, thereby extinguishing the note.
616796
BC Ltd.
On June 20, 2018, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $50,000 to 616796 BC, Ltd. The note had a maturity date
of June 20, 2019 and a coupon of 8% per annum. The outstanding principal amount of the note was 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 lowest trading price during the previous ten (10) trading days.
On
June 20, 2018, in terms of a conversion notice received, the Company issued 302,480 shares of common stock at a conversion price
of $0.1653 in settlement of the principal of $50,000, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Certain of the short-term
convertible notes disclosed in note 8 above and note 14 below, 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, due to the variable priced
conversion rights, all convertible notes and any warrants attached thereto, issued subsequent to the variable priced
conversion notes are valued and give 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, 2018 and June 30, 2017 and $2,271,913 and $118,472 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
June
30, 2018
|
|
Conversion price
|
$
|
0.08 to
0.25
|
|
Risk free interest rate
|
|
1.78 to
2.63
|
%
|
Expected life of derivative liability
|
|
9 to 12
months
|
|
Expected volatility of underlying stock
|
|
176.4 to 230.55
|
%
|
Expected
dividend rate
|
|
|
0
|
%
|
The
movement in derivative liability is as follows:
|
|
June
30, 2018
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
|
Opening
balance
|
|
$
|
3,277,621
|
|
|
$
|
113,074
|
|
Derivative
financial liability arising from convertible note
|
|
|
1,163,933
|
|
|
|
2,834,413
|
|
Fair
value adjustment to derivative liability
|
|
|
(2,271,913
|
)
|
|
|
330,134
|
|
Closing
balance
|
|
$
|
2,169,641
|
|
|
$
|
3,277,621
|
|
The Company has authorized 500,000,000
common shares with a par value of $0.0001 each. The Company has issued and outstanding 83,415,544 and 56,207,424 shares of common
stock as of June 30, 2018 and December 31, 2017, respectively.
In terms of various debt conversion
notices received between January 17, 2018 and June 21, 2018, the Company issued an aggregate of 26,972,325 shares of common stock
in settlement of $2,191,935 of convertible notes, resulting in a net loss on conversion of $3,458,238.
On
June 6, 2018, 115,795 of the commitment shares issued to Labrys Fund, LLP, were recorded as issued as the Company had not repaid
the note by the due date of June 16, 2018. The remaining 115,796 commitment shares were returned to the Company and were cancelled.
On
June 29, 2018, in terms of a share option plan recently implemented by the Company, 120,000 restricted shares were issued to a
director as compensation for services rendered.
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, 2018.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
STOCKHOLDERS’
EQUITY (continued)
|
The
warrants outstanding and exercisable at June 30, 2018 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
|
|
|
|
2.26
|
|
|
|
|
|
|
|
6,219,200
|
|
|
|
|
|
$0.20
|
|
|
|
2,308,513
|
|
|
|
2.00
|
|
|
|
|
|
|
|
2,308,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,527,713
|
|
|
|
2.19
|
|
|
$
|
0.51
|
|
|
|
8,527,713
|
|
|
$
|
0.51
|
|
The
warrants outstanding have an intrinsic value of $461,703 and $0 as of June 30, 2018 and December 31, 2017, respectively.
On
June 18, 2018, the Company established its 2018 Stock Incentive Plan. The purpose of the plan is to promote the interests of the
Company and the stockholders of the Company by providing directors, officers, employees and consultants of the Company with appropriate
incentives and rewards to encourage them to enter into and continue in the employ or service of the Company, to acquire a proprietary
interest in the long-term success of the Company and to reward the performance of individuals in fulfilling long-term corporate
objectives. The plan terminates after a period of ten years in June 2028.
The
Plan is administered by the Board of Directors or a Committee appointed by the Board of Directors who have the authority to administer
the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan.
The
maximum number of securities available under the plan is 8,000,000 shares of common stock. The maximum number of shares of common
stock awarded to any individual during any fiscal year may not exceed 1,000,000 shares of common stock.
On
June 29, 2018, the Company granted a director 120,000 shares of restricted common stock in terms of the Stock Incentive Plan.
These shares were valued at $49,200 on the date of grant and were vested immediately. The number of securities available under
the plan as of June 30, 2018 is 7,880,000 shares of common stock.
Revenue
is derived from the following sources:
|
|
Three months ended
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
Six months ended
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of services
|
|
$
|
1,670,208
|
|
|
$
|
995,976
|
|
|
$
|
3,113,315
|
|
|
$
|
1,797,668
|
|
Payment processing fees
|
|
|
16,450
|
|
|
|
7,334
|
|
|
|
21,744
|
|
|
|
17,394
|
|
Kiosk sales
|
|
|
11,117
|
|
|
|
—
|
|
|
|
11,117
|
|
|
|
113,921
|
|
Other
|
|
|
3,988
|
|
|
|
13,848
|
|
|
|
20,375
|
|
|
|
15,485
|
|
|
|
$
|
1,701,763
|
|
|
$
|
1,017,158
|
|
|
$
|
3,166,551
|
|
|
$
|
1,944,468
|
|
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12
|
EQUITY
BASED COMPENSATION
|
Equity
based compensation is made up of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
Six months ended
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
$
|
34,739
|
|
|
$
|
—
|
|
|
$
|
34,739
|
|
|
$
|
—
|
|
Incentive stock awards
|
|
|
49,200
|
|
|
|
—
|
|
|
|
49,200
|
|
|
|
—
|
|
|
|
$
|
83,939
|
|
|
$
|
—
|
|
|
$
|
83,939
|
|
|
$
|
—
|
|
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 three months and six
months ended June 30, 2018 and 2017, all convertible debt 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 effect would have been anti-dilutive are as follows:
|
|
Three
Months and six months ended
June 30,
2018
(Shares)
|
|
|
Three
Months and six months ended
June 30,
2017
(Shares)
|
|
|
|
|
|
|
|
|
Convertible
debt
|
|
|
5,828,930
|
|
|
|
7,398,202
|
|
Warrants
|
|
|
8,527,713
|
|
|
|
8,381,466
|
|
|
|
|
14,356,643
|
|
|
|
15,779,668
|
|
14
|
RELATED
PARTY TRANSACTIONS
|
The
following transactions were entered into with related parties:
LOANS PAYABLE TO RELATED PARTIES
|
|
Interest
|
|
Maturity
|
|
|
June 30,
|
|
|
December
31,
|
|
Description
|
|
Rate
|
|
Date
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs
International Holdings – Equipment funding
|
|
36
|
%
|
|
On
demand
|
|
|
$
|
379,789
|
|
|
|
294,620
|
|
Vladimir
Skigin – Equipment funding
|
|
36
|
%
|
|
On
demand
|
|
|
|
71,281
|
|
|
|
55,295
|
|
Vladimir
Skigin
|
|
18
|
%
|
|
September 13, 2018
|
|
|
|
50,983
|
|
|
|
—
|
|
N
otes
payable – Related parties
|
|
|
|
|
|
|
|
$
|
502,053
|
|
|
$
|
349,915
|
|
Interest
expense totaled $32,898 and $0 for the three months ended June 30, 2018 and 2017, respectively and $102,646 and $0 for the six
months ended June 30, 2018 and 2017, respectively.
Jimmy
Gibbs
Jimmy
Gibbs is the principal and has control over Gibbs Investment Holdings and Gibbs International Holdings. Mr Gibbs is considered
to be a related party due to his shareholding and the shareholding under his control in the company exceeds 5%.
|
●
|
Gibbs
International Holdings (“Gibbs”) – Inventory funding
|
The
Company entered into an agreement with Gibbs, whereby the importation of kiosks and accessories was arranged and funded by Gibbs.
In terms of the agreement entered into with Gibbs, a 5% margin has been added to the cost of the kiosks and accessories purchased
and to the liability outstanding. The amount was due on November 1, 2017. The amount has not been paid to date. The agreement
does not provide for any default provisions and management is currently negotiating the terms of repayment with Gibbs.
Gibbs
has indicated a penalty interest is due on the loan, which has been provided for by the Company.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
LOANS PAYABLE TO RELATED PARTIES
(continued)
Vladimir
Skigin
Vladimir Skigin has personally
advanced the Company equipment funding. Mr. Skigin is considered to be a related party as his shareholding and that of the Company’s
under his control exceeds 5%.
|
●
|
Vladimir
Skigin (“Skigin”) – Equipment funding
|
The
Company entered into an agreement with Gibbs, whereby the importation of kiosks and accessories was arranged and funded by Gibbs,
Skigin funded a portion of the kiosks and accessories purchased under the same terms and conditions of the agreement entered into
with Gibbs. In terms of the agreement, a 5% margin has been added to the cost of the kiosks and accessories purchased and to the
liability outstanding. The amount was due on November 1, 2017. The amount has not been paid to date. The agreement does not provide
for any default provisions and management is currently negotiating the terms of repayment with Skigin.
As
per Gibbs note above, a penalty interest rate has been provided for on the loan.
On April 17, 2018, the Company issued a Promissory Note in the aggregate principal amount of $49,941 to
Vladimir Skigin. The note has a maturity date of September 13, 2018 and a coupon of eighteen percent per annum. The Company has
the right to prepay the note without penalty prior to maturity date.
The
balance of the note plus accrued interest at June 30, 2018 was $50,983.
CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES
Convertible notes payable to related parties consists
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Description
|
|
Interest
rate
|
|
Maturity Date
|
|
Principal
|
|
|
Accrued interest
|
|
|
Unamortized debt discount
|
|
|
Balance,
net
|
|
|
Balance,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest Commercial, LTD
|
|
|
15
|
%
|
|
December 16, 2018
|
|
|
20,000
|
|
|
|
2,796
|
|
|
|
—
|
|
|
|
22,796
|
|
|
|
21,307
|
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
54,123
|
|
|
|
7,340
|
|
|
|
—
|
|
|
|
61,463
|
|
|
|
57,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings
|
|
|
15
|
%
|
|
December 16, 2018
|
|
|
52,494
|
|
|
|
7,334
|
|
|
|
—
|
|
|
|
59,828
|
|
|
|
55,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo Limited
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
53,438
|
|
|
|
7,247
|
|
|
|
—
|
|
|
|
60,685
|
|
|
|
56,710
|
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
52,959
|
|
|
|
7,182
|
|
|
|
—
|
|
|
|
60,141
|
|
|
|
56,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir Skigin
|
|
|
8
|
%
|
|
January 22, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
105,034
|
|
|
|
|
8
|
%
|
|
October 10, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36,395
|
|
|
|
|
8
|
%
|
|
September 28, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,809
|
|
|
|
|
8
|
%
|
|
January 6, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,245
|
|
|
|
|
8
|
%
|
|
February 10, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beverly Pacific Holdings
|
|
|
8
|
%
|
|
March 9, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
86,411
|
|
|
|
|
8
|
%
|
|
November 6, 2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
187,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes
payable
|
|
$
|
233,014
|
|
|
$
|
31,899
|
|
|
$
|
—
|
|
|
$
|
264,913
|
|
|
$
|
859,190
|
|
Interest
expense, together with amortized debt discount totaled $7,968 and 6,748 for the three months ended June 30, 2018 and 2017, respectively
and $515,579 and $6,748 for the six months ended June 30, 2018 and 2017, respectively.
The
15% convertible notes above have a fixed conversion price of $0.20 per common share.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES (continued)
Alex
Motorin
Alex Motorin is the principal
of Delinvest Commercial LTD. Mr. Motorin is considered to be a related party as his shareholding and that of the Companies under
his control exceeds 5%.
|
●
|
Delinvest
Commercial, LTD.
|
On
June 19, 2017, the Company issued Delinvest Commercial LTD. (“Delinvest”) a convertible promissory note in the aggregate
principal amount of $20,000. The note bore interest at 12% per annum and matured on December 16, 2017. In terms of an agreement
entered into with the note holder, the maturity date was extended to December 16, 2018 and the interest rate was increased to
15% per annum. The note is convertible into common shares of the Company at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $22,796.
On
June 29, 2017, the Company exchanged a Delinvest 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 matured
on December 26, 2017. In terms of an agreement entered into with the note holder, the maturity date was extended to December 26,
2018 and the interest rate was increased to 15% per annum. The note is convertible into common shares of the Company at a conversion
price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $61,463.
Jimmy
Gibbs
Jimmy
Gibbs is the principal and has control over Gibbs Investment Holdings and Gibbs International Holdings. Mr. Gibbs is considered
to be a related party due to his shareholding and the shareholding under his control in the company exceeds 5%.
|
●
|
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 matured on December 16, 2017. In terms of an agreement entered into with the note holder, the maturity date
was extended to December 16, 2018 and the interest rate was increased to 15% per annum. The note is convertible into common shares
of the Company at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $59,828.
Vladimir
Skigin
Vladimir
Skigin is the principal and has control over Cobbolo Limited and has also personally advanced the Company inventory and other
funding. Mr. Skigin is considered to be a related party as his shareholding and that of the Company’s under his control
exceeds 5%.
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 matured on December 26, 2017. In terms of an agreement entered into with the note holder, the maturity date was extended
to December 26, 2018 and the interest rate was increased to 15% per annum. The note is convertible into common shares of the Company
at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $60,685.
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 matured on December 26, 2017. In terms of an agreement entered into with the note holder, the maturity date was extended
to December 26, 2018 and the interest rate was increased to 15% per annum. The note is convertible into common shares of the Company
at a conversion price of $0.20 per share.
The
balance of the note plus accrued interest at June 30, 2018 was $60,141.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES (continued)
Vladimir
Skigin
On October 25, 2017, in terms
of an agreement entered into, Strategic IR assigned a note entered into on July 26, 2017 with the Company to Vladimir Skigin. The
Note had an aggregate principal amount of $117,000 and accrued interest thereon of $2,334. The note had a maturity date of January
22, 2018 and a coupon of 8% per annum. The Company had 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 was 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 lowest three
trading bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,603,515 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $117,000 plus
accrued interest thereon of $2,334, thereby extinguishing the note.
On October 11, October 12 and
October 26, 2017, the Company received three installments of $50,000 each from Vladimir Skigin totaling $150,000 and issued a Convertible
Promissory Note in the aggregate principal amount of $150,000 to him. The note had a maturity date of October 10, 2018 and a coupon
of 8% per annum. The Company had the right to prepay the note within the first 180 days at a premium of 110% of the sum of the
accrued interest and principal. The outstanding principal amount of the note was 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 lowest three trading bid prices during the previous ten (10) trading days, including the date the notice of conversion is
received.
On
March 7, 2018, in terms of a conversion notice received on January 22, 2018, the Company, after increasing its authorized share
capital, issued 2,070,459 shares of common stock at a conversion price of $0.074 in settlement of the principal of $150,000 plus
accrued interest thereon of $3,124, thereby extinguishing the note.
On October 25, 2017 in terms
of an agreement entered into, Strategic IR assigned a note entered into on September 28, 2017 with the Company to Vladimir Skigin.
The note had an aggregate principal amount of $246,000 and accrued interest thereon of $1,456. The note has a maturity date of
September 28, 2018 and a coupon of 8% per annum. The Company had the right to prepay the note without penalty for the first 180
days. The outstanding principal amount of the note was 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 lowest three trading bid
prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 3,325,125 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $246,000 plus
accrued interest thereon of $1,456, thereby extinguishing the note.
On October 25, 2017 in terms
of an agreement entered into, Strategic IR assigned a note entered into on October 3, 2017, with the Company to Vladimir Skigin.
The note had an aggregate principal balance of $100,000 and accrued interest thereon of $4,427. The note had a maturity date of
January 6, 2018 and a coupon of 8% per annum. The Company had the right to prepay the note without penalty for the first 180 days.
The outstanding principal amount of the note was 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 lowest three trading bid prices
during the previous ten (10) trading days, including the date the notice of conversion is received.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES (continued)
Vladimir
Skigin
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,607,070 shares of common stock at a conversion price of $0.0650 in settlement of the principal of $100,000 plus
accrued interest thereon of $4,427, thereby extinguishing the note.
On October 25, 2017, in terms
of an agreement entered into, Anna Mosk, the principal of Strategic IR, assigned a note entered into on October 23, 2017 to Vladimir
Skigin. The note had an aggregate principal balance of $33,000 and accrued interest thereon of $1,324. The note had a maturity
date of February 10, 2018 and a coupon of 8% per annum. The Company had the right to prepay the note without penalty for the first
180 days. The outstanding principal amount of the note was 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 lowest three trading
bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 461,215 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $33,000 plus
accrued interest thereon of $1,324, thereby extinguishing the note.
Beverly
Pacific Holdings
On October 25, 2017, in terms
of an agreement entered into, Strategic IR assigned a note entered into on September 18, 2017 with the Company to Beverly Pacific
Holdings. The note had an aggregate principal balance of $100,000 and accrued interest thereon of $5,041. The note had a maturity
date of March 9, 2018 and a coupon of eight percent per annum. The Company had 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 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
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.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,607,608 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $100,000 plus
accrued interest thereon of $5,041, thereby extinguishing the note.
On October 25, 2017, in terms
of an agreement entered into, Strategic IR assigned a note entered into on August 31, 2017 with JSJ Investments, Inc. The note
had an aggregate principal outstanding of $176,000 together with interest thereon of $11,041. The note had a maturity date of November
6, 2017 and a coupon of eight percent per annum. 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.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 2,513,321 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $186,000 plus
accrued interest thereon of $11,041, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 rental payment, including maintenance, of $3,377 per month, 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 $1,766.
In addition, Qpagos leases warehouse space on a month-to-month basis for $1,136 per month.
The
future minimum lease installments under the office facility lease agreement as of June 30, 2018 are $30,393 for the year ended
December 31, 2018 and $40,524 for the period ended December 16, 2019, subject to exchange rate fluctuations.
Convertible
notes
On
July 20, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $63,000 to Power up Lending
Group, Ltd. The note has a maturity date of April 30, 2019 and a coupon of 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.
On July 25, 2018, the Company
repaid a Convertible Promissory note in the aggregate principal amount of $68,000 issued to Power Up Lending Group, Ltd., together
with interest and a prepayment penalty thereon for gross proceeds of $95,361.
On
July 26, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $100,000 to JSJ Investments,
Inc. The note has a maturity date of July 26, 2019 and a coupon of 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 lowest trading bid prices during the previous ten (10) trading days, including the date the notice of conversion
is received.
On
July 26, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $26,000 to Crown Bridge Partners.
The note has a maturity date of July 26, 2019 and a coupon of 8% per annum. The Company has the right to prepay the note for the
first 180 days, subject to a penalty ranging from 10% to 35% of the prepayment, dependent upon the timing of the prepayment. 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 lowest trading price during the previous fifteen
(15) trading days.
Other than disclosed above, the
Company has evaluated subsequent events through the date of the unaudited condensed consolidated financial statements were available
to be issued and has concluded that no such events or transactions took place that would require disclosure herein.
Item
2.