The Company does not anticipate that the implementation of this guidance would have a material impact on the
Company.
The Company does not anticipate that the implementation of this guidance would have a material impact on the
Company.
The Company does not anticipate that the implementation of this guidance would have a material impact on the
Company.
All of the Company’s intangible assets are subject to amortization. The Company evaluates 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, the Company recognizes an impairment loss
measured as the difference between the estimated fair value of the intangible and its book value.
The Company provides a secure means for end-users to pay for certain services, such as utilities through its
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.
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 $17,246,258 as of September 30, 2018 and has not generated
sufficient revenue to cover its operating expenditures, 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.
Depreciation expense totaled $8,959 and $16,301 for the three months ended September 30, 2018 and 2017, respectively,
and $31,108 and $80,648 for the nine months ended September 30, 2018 and 2017, respectively.
Strategic IR advanced the
Company $168,000 between January 16 and June 15, 2018. This loan was formalized into a written note on October 13, 2018
and bears interest at the rate of 10% per annum and matures on February 10, 2019. The note may be prepaid at anytime without
premium or penalty.
On April 17, 2018, the Company issued a Promissory Note in the aggregate principal amount of $50,000 to Viktoria
Akhmetova. The note had 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. On September 13, 2018, the maturity date of the note was extended to
January 11, 2019.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES
PAYABLE
|
Convertible
notes payable consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Interest
|
|
|
|
|
|
|
Accrued
|
|
|
Unamortized
|
|
|
Balance,
|
|
|
Balance,
|
|
Description
|
|
rate
|
|
Maturity
Date
|
|
Principal
|
|
|
interest
|
|
|
debt
discount
|
|
|
net
|
|
|
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
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
January
15, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
March
15,2019
|
|
|
63,000
|
|
|
|
1,781
|
|
|
|
(32,856
|
)
|
|
|
31,925
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
April
30, 2019
|
|
|
63,000
|
|
|
|
994
|
|
|
|
(47,028
|
)
|
|
|
16,966
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labrys Fund, LP
|
|
|
8
|
%
|
|
June
14, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,577
|
|
|
|
|
8
|
%
|
|
August
12, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
December
22, 2018
|
|
|
150,000
|
|
|
|
3,288
|
|
|
|
(68,033
|
)
|
|
|
85,255
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JSJ Investments, Inc.
|
|
|
8
|
%
|
|
November
29, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,101
|
|
|
|
|
8
|
%
|
|
July
26, 2019
|
|
|
100,000
|
|
|
|
1,447
|
|
|
|
(81,918
|
)
|
|
|
19,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS Capital Partners, LLC
|
|
|
8
|
%
|
|
May
22, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,112
|
|
|
|
|
8
|
%
|
|
June
16, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,909
|
|
|
|
|
8
|
%
|
|
May
3, 2019
|
|
|
105,000
|
|
|
|
3,452
|
|
|
|
(61,849
|
)
|
|
|
46,603
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
May
11, 2019
|
|
|
80,000
|
|
|
|
2,490
|
|
|
|
(48,877
|
)
|
|
|
33,613
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
August
14, 2019
|
|
|
150,000
|
|
|
|
1,545
|
|
|
|
(130,685
|
)
|
|
|
20,860
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
August
14, 2019
|
|
|
150,000
|
|
|
|
625
|
|
|
|
(141,543
|
)
|
|
|
9,082
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
September
19, 2019
|
|
|
70,698
|
|
|
|
170
|
|
|
|
(68,567
|
)
|
|
|
2,301
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
%
|
|
September
19, 2019
|
|
|
33,252
|
|
|
|
80
|
|
|
|
(32,250
|
)
|
|
|
1,082
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
15
|
%
|
|
December
8, 2018
|
|
|
10,000
|
|
|
|
1,815
|
|
|
|
—
|
|
|
|
11,815
|
|
|
|
10,693
|
|
|
|
|
15
|
%
|
|
December
8, 2018
|
|
|
20,164
|
|
|
|
3,646
|
|
|
|
—
|
|
|
|
23,810
|
|
|
|
21,548
|
|
|
|
|
15
|
%
|
|
December
26, 2018
|
|
|
53,740
|
|
|
|
9,320
|
|
|
|
—
|
|
|
|
63,060
|
|
|
|
57,031
|
|
|
|
|
15
|
%
|
|
December
26, 2018
|
|
|
115,535
|
|
|
|
20,037
|
|
|
|
—
|
|
|
|
135,572
|
|
|
|
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
|
|
|
|
3,646
|
|
|
|
—
|
|
|
|
23,810
|
|
|
|
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
|
|
|
|
4,724
|
|
|
|
—
|
|
|
|
30,971
|
|
|
|
28,027
|
|
|
|
|
15
|
%
|
|
January
27, 2019
|
|
|
3,753
|
|
|
|
602
|
|
|
|
—
|
|
|
|
4,355
|
|
|
|
3,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman Shefer
|
|
|
15
|
%
|
|
December
24, 2018
|
|
|
10,000
|
|
|
|
1,742
|
|
|
|
—
|
|
|
|
11,742
|
|
|
|
10,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown Bridge Partners,
LLC
|
|
|
8
|
%
|
|
August
14, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,846
|
|
|
|
|
8
|
%
|
|
February
27, 2019
|
|
|
37,475
|
|
|
|
2,503
|
|
|
|
(15,401
|
)
|
|
|
24,577
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
May
14, 2019
|
|
|
27,500
|
|
|
|
838
|
|
|
|
(17,027
|
)
|
|
|
11,311
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
June
12, 2019
|
|
|
27,500
|
|
|
|
663
|
|
|
|
(19,212
|
)
|
|
|
8,951
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
July
26, 2019
|
|
|
27,500
|
|
|
|
398
|
|
|
|
(22,527
|
)
|
|
|
5,371
|
|
|
|
—
|
|
|
|
|
8
|
%
|
|
August
31, 2019
|
|
|
27,500
|
|
|
|
181
|
|
|
|
(25,240
|
)
|
|
|
2,441
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
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616796BC Ltd.
|
|
|
8
|
%
|
|
June
20, 2019
|
|
|
—
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—
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—
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—
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—
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Total
convertible notes payable
|
|
$
|
1,372,028
|
|
|
$
|
65,987
|
|
|
$
|
(813,013
|
)
|
|
$
|
625,002
|
|
|
$
|
724,776
|
|
Interest expense, together with amortized debt discount totaled $396,478 and $641,495 for the three months
ended September 30, 2018 and 2017, respectively and $1,748,183 and $1,108,782 for the nine months ended September 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 September 30, 2018
and 2017 was $621,950 and $385,862, respectively, and for the nine months ended September 30, 2018 and 2017 was $1,785,883 and
$238,507 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 a 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 had a maturity date of October 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 July 25, 2018, the Company repaid the convertible
promissory note together with interest and early settlement penalty interest thereon for gross proceeds of $95,402.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Power Up Lending Group Ltd. (continued)
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 had 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 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 September 21, 2018, in terms of a debt purchase agreement entered into with GS Capital Partners LLC, the convertible
note issued to Power Up Lending Group LTD of $68,000 plus accrued interest thereon of $2,698 was exchanged for a new note with
a principal sum of $70,698 bearing interest at 8% per annum with the maturity date extended to September 19, 2019.
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 September 30, 2018 was $31,925, net of unamortized discount of $32,856.
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 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 62% 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 September 30, 2018 was $16,966, net of unamortized discount of $47,028.
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 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 August 14, 2018, $18,000 of the principal
together with interest of $3,520 was converted into 170,769 shares of common stock at a conversion price of $0.126 per share. On
the same day the balance of the principal of $70,000 was repaid thereby extinguishing the note.
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 September 30, 2018 was $85,255, net of unamortized discount of $68,033.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES PAYABLE (continued)
|
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.
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 had 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 prepayment penalty as set forth in the note. The outstanding principal amount of the note
is convertible at any time 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 September 30, 2018 was $19,529, net of unamortized discount of $81,918.
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 a 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.
Q
PAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES
PAYABLE (continued)
|
GS Capital Partners, LLC (continued)
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 September 30, 2018 was $46,603, net of unamortized discount of $61,849.
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 September 30, 2018 was $33,613, net of unamortized discount of $48,877.
On August 14, 2018, the Company issued
a Convertible Promissory Note in the aggregate principal amount of $150,000 to GS Capital Partners, LLC. The note has a maturity
date of August 14, 2019 and a coupon of 8% per annum. The Company has the right to prepay the note up to 180 days, provided it
makes a pre-payment penalty as specified in the note. The outstanding principal amount of the note is convertible at any time after
the six-month anniversary of the note, 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 September 30, 2018 was $20,860 net of unamortized discount of $130,685.
On September 11, 2018, the
Company issued a Convertible Promissory Note in the aggregate principal amount of $150,000 to GS Capital Partners, LLC. The note
has a maturity date of August 14, 2019 and a coupon of 8% per annum. The note may not be prepaid. The outstanding principal amount
of the note is convertible at any time after the six month anniversary of the note, 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 September 30, 2018 was $9,082 net of unamortized discount of $141,543.
On September 19, 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 $33,252 for the payment of penalty interest and legal fees associated with the March 26, 2018 Power Up convertible note
discussed above. The note has a maturity date of September 19, 2019 and a coupon of 8% per annum. The Company has the right to
prepay the note, provided it makes payment of 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 65% of the two 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 September 30, 2018 was $1,082 net of unamortized discount of $32,250.
On September 21, 2018, in terms of
a debt purchase agreement entered into with GS Capital Partners LLC, the convertible note issued to Power Up Lending Group LTD
on March 26, 2018 of $68,000 plus accrued interest thereon of $2,698 was exchanged for a new note issued to GS Capital Partners
LLC, with a principal sum of $70,698 bearing interest at 8% per annum with the maturity date extended to September 19, 2019. The
note may not be prepaid. 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 65% of the average of the lowest two
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 September 30, 2018 was $2,301, net of unamortized discount of $68,567.
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 $0.20 per share.
The
balance of the note plus accrued interest at September 30, 2018 was $11,815.
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 September 30, 2018 was $23,810.
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 September 30, 2018 was $63,060.
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 September 30, 2018 was $135,572.
On October 23, 2017, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $14,298 to Strategic. The note had a maturity date of
October 23, 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 was 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 had a maturity date of January 9, 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 was 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.
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 September 30, 2018 was $23,810.
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.
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 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.
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 had a maturity date of September
26, 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 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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Viktoria
Akhmetova (continued)
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 September 30, 2018 was $30,971.
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 September 30, 2018 was $4,355.
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 September 30, 2018 was $11,742.
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 $9,501 of 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.
QPAGOS
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Crown Bridge Partners LLC (continued)
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. On
September 7, 2018, in terms of a conversion notice received, the Company issued 206,000 shares of common stock at a conversion
price of $0.0875 in settlement of the principal of $17,525.
The balance of the note plus accrued interest at September 30, 2018
was $24,577 net of unamortized discount of $15,401.
On May 14, 2018, the Company issued
a Convertible Promissory Note in the aggregate principal amount of $27,500 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 September 30, 2018 was $11,311 net of unamortized discount of $17,027.
On June 12, 2018, the Company issued
a Convertible Promissory Note in the aggregate principal amount of $27,500 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 September 30, 2018 was $8,951 net of unamortized discount of $19,212.
On July 26, 2018, the Company issued
a Convertible Promissory Note in the aggregate principal amount of $27,500 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 ten (10) trading days.
The balance of the note plus accrued
interest at September 30, 2018 was $5,371 net of unamortized discount of $22,527.
On August 31, 2018, the Company issued
a Convertible Promissory Note in the aggregate principal amount of $27,500 to Crown Bridge Partners. The note has a maturity date
of August 31, 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 ten (10) trading days.
The balance of the note plus accrued
interest at September 30, 2018 was $2,441 net of unamortized discount of $25,240.
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 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.
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.
QPAGOS
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
8
|
CONVERTIBLE NOTES PAYABLE (continued)
|
BOBA Management (continued)
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.
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 September 30,
2018 and September 30, 2017 and $3,441,118 and $283,668 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:
|
Nine
months
ended
September 30,
2018
|
|
Conversion price
|
$
|
0.08 to
0.25
|
|
Risk free interest rate
|
|
1.78 to
2.81
|
%
|
Expected life of derivative liability
|
|
3 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:
|
|
September
30,
2018
|
|
|
December
31,
2017
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
3,277,621
|
|
|
$
|
113,074
|
|
Derivative financial liability arising from
convertible note
|
|
|
2,194,618
|
|
|
|
2,834,413
|
|
Fair value adjustment
to derivative liability
|
|
|
(3,441,118
|
)
|
|
|
330,134
|
|
Closing
balance
|
|
$
|
2,031,121
|
|
|
$
|
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 83,792,313 and 56,207,424 shares of common
stock as of September 30, 2018 and December 31, 2017, respectively.
In terms of various debt conversion notices received between January 17, 2018 and September 7, 2018, the Company
issued an aggregate of 27,349,094 shares of common stock in settlement of $2,230,980 of convertible notes, resulting in a net loss
on conversion of $3,510,039.
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 September 30, 2018.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
STOCKHOLDERS’
EQUITY (continued)
|
The
warrants outstanding and exercisable at September 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
|
|
|
|
2.00
|
|
|
|
|
|
|
|
6,219,200
|
|
|
|
|
|
$0.20
|
|
|
|
2,308,513
|
|
|
|
1.74
|
|
|
|
|
|
|
|
2,308,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,527,713
|
|
|
|
1.94
|
|
|
$
|
0.51
|
|
|
|
8,527,713
|
|
|
$
|
0.51
|
|
The
warrants outstanding have an intrinsic value of $0 and $0 as of September 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 September 30, 2018 is 7,880,000 shares of common stock.
Revenue
is derived from the following sources:
|
|
Three
months
|
|
|
Three
months
|
|
|
Nine
months
|
|
|
Nine
months
|
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of services
|
|
$
|
1,900,838
|
|
|
$
|
924,573
|
|
|
$
|
5,014,153
|
|
|
$
|
2,735,913
|
|
Payment processing fees
|
|
|
75
|
|
|
|
3,138
|
|
|
|
21,818
|
|
|
|
20,532
|
|
Kiosk sales
|
|
|
27,219
|
|
|
|
—
|
|
|
|
38,336
|
|
|
|
113,921
|
|
Other
|
|
|
16,334
|
|
|
|
3,607
|
|
|
|
36,710
|
|
|
|
19,092
|
|
|
|
$
|
1,944,466
|
|
|
$
|
931,318
|
|
|
$
|
5,111,017
|
|
|
$
|
2,889,458
|
|
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
|
|
|
Nine
months ended
|
|
|
Nine
months ended
|
|
|
|
September
30, 2018
|
|
|
September
30, 2017
|
|
|
September
30, 2018
|
|
|
September
30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,739
|
|
|
$
|
—
|
|
Incentive stock
awards
|
|
|
—
|
|
|
|
—
|
|
|
|
49,200
|
|
|
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
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 ended September
30, 2018, the calculation of diluted income per share is as follows:
|
|
Amount
|
|
|
Number of shares
|
|
|
Per share amount
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
272,545
|
|
|
|
83,554,285
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Convertible debt
|
|
|
310,852
|
|
|
|
14,208,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
583,397
|
|
|
|
97,762,968
|
|
|
$
|
-
|
|
For the nine months ended September
30, 2018 and the three and nine months ended September 30, 2017, all convertible debt and warrants, were excluded from the computation
of diluted net loss per share, as the result would have been anti-dilutive. 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:
|
|
Nine months ended
September 30,
2018
(Shares)
|
|
|
Three
Months and nine months ended
September 30,
2017
(Shares)
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
|
17,102,973
|
|
|
|
21,491,850
|
|
Warrants
|
|
|
8,527,713
|
|
|
|
8,527,713
|
|
|
|
|
25,630,686
|
|
|
|
30,019,563
|
|
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED PARTY
TRANSACTIONS
|
The
following transactions were entered into with related parties:
LOANS
PAYABLE TO RELATED PARTIES
|
|
Interest
|
|
Maturity
|
|
|
September 30,
|
|
|
December 31,
|
|
Description
|
|
Rate
|
|
Date
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings – Equipment funding
|
|
36
|
%
|
|
On demand
|
|
|
$
|
—
|
|
|
|
294,620
|
|
Vladimir Skigin – Equipment funding
|
|
36
|
%
|
|
On demand
|
|
|
|
76,299
|
|
|
|
55,296
|
|
Vladimir Skigin
|
|
18
|
%
|
|
January 11, 2019
|
|
|
|
53,228
|
|
|
|
—
|
|
N
otes payable – Related parties
|
|
|
|
|
|
|
|
$
|
129,527
|
|
|
$
|
349,916
|
|
Interest
expense totaled $25,279 and $0 for the three months ended September 30, 2018 and 2017, respectively and $135,854 and $0 for the
nine months ended September 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. On August 20, 2018 the principal of $294,620 together with accrued interest of $111,115
was converted to a convertible promissory note of $405,735.
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. A penalty interest rate has been provided for on the
loan.
The balance
of the note plus accrued interest at September 30, 2018 was $76,299.
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. On September 13, 2018, the maturity date of the note was extended to January 11, 2019.
The balance of the note plus accrued
interest at September 30, 2018 was $53,228.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES
Convertible notes payable to related parties consists
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
Interest
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Description
|
|
rate
|
|
Maturity Date
|
|
Principal
|
|
|
interest
|
|
|
Unamortized debt discount
|
|
|
Balance, net
|
|
|
Balance, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest Commercial, LTD
|
|
|
15
|
%
|
|
December 16, 2018
|
|
|
20,000
|
|
|
|
3,551
|
|
|
|
—
|
|
|
|
23,551
|
|
|
|
21,307
|
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
54,123
|
|
|
|
9,386
|
|
|
|
—
|
|
|
|
63,509
|
|
|
|
57,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings
|
|
|
15
|
%
|
|
December 16, 2018
|
|
|
52,494
|
|
|
|
9,319
|
|
|
|
—
|
|
|
|
61,813
|
|
|
|
55,924
|
|
|
|
|
8
|
%
|
|
August 31, 2019
|
|
|
405,735
|
|
|
|
3,646
|
|
|
|
(361,492
|
)
|
|
|
47,889
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo Limited
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
53,438
|
|
|
|
9,268
|
|
|
|
—
|
|
|
|
62,706
|
|
|
|
56,710
|
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
52,959
|
|
|
|
9,184
|
|
|
|
—
|
|
|
|
62,143
|
|
|
|
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
|
|
|
|
$
|
638,749
|
|
|
$
|
44,354
|
|
|
$
|
(361,492
|
)
|
|
$
|
321,611
|
|
|
$
|
859,190
|
|
Interest
expense, together with amortized debt discount totaled $56,698 and $135,514 for the three months ended September 30, 2018 and
2017, respectively and $413,168 and $144,198 for the nine months ended September 30, 2018 and 2017, respectively.
The
15% convertible notes above have a fixed conversion price of $0.20 per common share.
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 September 2018 was $23,551.
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 September 30, 2018 was $63,509.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED PARTY
TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE TO RELATED PARTIES (continued)
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 September 30, 2018 was $61,813.
Effective August 20, 2018, the Company
exchanged a note issued to Gibbs International Holdings with a principal amount of $294,620, together with accrued interest thereon
of $111,115, totaling $405,735, for a convertible note, principal amount of $405,735, with a coupon of 8% per annum and maturing
on August 31, 2019. The Company has the right to prepay the note within 180 days without penalties. 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.
The balance of the note plus accrued
interest at September 30, 2018 was $47,889 net of unamortized discount of $361,492.
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 September 30, 2018 was $62,706.
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 September 30, 2018 was $62,143.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED PARTY
TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE TO RELATED PARTIES (continued)
Vladimir Skigin (continued)
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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED PARTY
TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE TO RELATED PARTIES (continued)
Vladimir
Skigin (continued)
|
●
|
Vladimir
Skigin (continued)
|
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.
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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14
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RELATED PARTY TRANSACTIONS (continued)
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CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES (continued)
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 dated August 31, 2017, it had purchased from JSJ Investments to Beverly
Pacific Holdings. 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.
15
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COMMITMENTS AND CONTINGENCIES
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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 September 30, 2018 are $10,131 for the year ended December 31, 2018 and $40,524
for the period ended December 16, 2019, subject to exchange rate fluctuations.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Convertible
notes
On
October 8, 2018 Crown Bridge Partners LLC issued a notice of conversion whereby $15,759 consisting of $15,259 of principal and
$500 of fees on a convertible note issued on February 27, 2018 was converted to 206,000 shares of common stock at a conversion
price of $.0765 per share. The company made a loss on conversion of $31,621.
On
October 8, 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 October 8, 2019 and a coupon of eight percent (8%) per annum. The Company has the right to
prepay the note prior to maturity in accordance with penalty provisions set forth in the note. The outstanding principal amount
of the note plus interest and any default interest is convertible at any time after the pre-payment date 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 8. 2018, Qpagos S.A.P.I
de C.V. entered into a joint venture agreement with Surelty Inc. (“Surelty”) and incorporated a separate entity; Surelty
Mexico S.A. de C.V (“Surelty Mexico”). Qpagos S.A.P.I de C.V. owns 49.9% of the outstanding equity of Surelty Mexico
and Surelty owns the remaining 50.1% of the outstanding equity. Surelty Mexico operates in the short term secured micro loan business
with 30 day terms and maximum loans of MXN 4,000 (approximately $200).
On October 9, 2018, GS Capital Partners
LLC issued a notice of conversion whereby $23,058 consisting of $22,968 of principal and $91 of accrued interest on a convertible
note issued on September 19, 2018 was converted to 203,874 shares of common stock at a conversion price of $0.1131 per share.
The company made a loss on conversion of $20,775.
On
October 16, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $27,500 to Crown Bridge
Partners. The note has a maturity date of October 16, 2019 and a coupon of 8% per annum. The Company may not prepay the note.
The outstanding principal amount of the note is convertible after 180 days, 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
October 25, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $300,000 to Labrys Fund
LP. The note has a maturity date of April 25, 2019 and a coupon of 8% per annum. The Company may not prepay the note. The outstanding
principal amount of the note is convertible after 180 days, 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 November 2, 2018, the Company
repaid 50% of the GS Capital convertible note with a principal balance of $105,000 entered into on May 3, 2018 for gross proceeds
of $70,356 including interest and early settlement penalty thereon.
On November 5, 2018, in terms of
a debt purchase agreement entered into between Alex Pereira and GS Capital Partners, the remaining principal amount owing to GS
Capital Partners under the convertible promissory note entered into on May 3, 2018, of $52,500 including accrued interest thereon
of $2,106, was purchased by Alex Pereira.
On November 5, 2018, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $19,250 to Alex Pereira. The note has a maturity date
of November 5, 2019 and a coupon of 8% per annum. The Company has the right to prepay the note prior to maturity in accordance
with penalty provisions set forth in the note. The outstanding principal amount of the note is convertible after 180 days, at the
election of the holder into shares of the Company’s common stock at a conversion price equal to 62% of the lowest trading
price during the previous ten (10) 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.