QPAGOS Corporation, through
its subsidiaries Qpagos S.A.P.I de C.V. (“Qpagos”) and Redpag Electronicos S.A.P.I de C.V. (“Redpag”),
provides physical and virtual payment services to the Mexican market. The Company provides an integrated network of kiosks, terminals
and payment channels that enable consumers in Mexico to deposit cash, convert it into a digital form and remit the funds to any
merchant in our network quickly and securely. The Company helps consumers and merchants connect more efficiently in markets and
consumer segments, such as Mexico, that are largely cash-based and lack convenient alternatives for consumers to pay for goods
and services in physical, online and mobile environments. For example, our licensed technology can be used to pay bills, add minutes
to mobile phones, purchase transportation and tickets, shop online or at a retail store, buy digital services or send money to
a friend or relative.
The accompanying unaudited
condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.
GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly,
these unaudited condensed consolidated financial statements do not include all of the information and disclosures required by
U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial
statements include all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary, for
a fair presentation of those financial statements. The results of operations and cash flows for the three months ended March 31,
2018 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year.
The information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements
of QPAGOS for the year ended December 31, 2017, included in the Annual Report on Form 10-K as filed with the Securities and Exchange
Commission (the “SEC”) on April 17, 2018.
Accounts receivable are reported
at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue
is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number
of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral
part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state
of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates.
Revisions to the allowance for doubtful accounts estimates are recorded as an adjustment to bad debt expense. Receivables deemed
uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries
of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. There were no recoveries
during the three months ended March 31, 2018 and December 2017.
Other than the sale of kiosks
to customers, the provision of services through the Company’s kiosks is conducted on a cash basis. Customers are required
to deposit cash with the Company to meet anticipated demand for services provided through kiosks either owned or operated by them.
The services provided through the customer owned or operated kiosks are deducted from the deposits held on their behalf, the Company
requires that these deposits be replenished as and when the services are provided.
We have analyzed our revenue transaction
pursuant to ASC 606, Revenue, and we have no material impact as a result of the transition from ASC 605 to 606. Our revenues are
recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration
that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services,
as defined below. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized
as it fulfills its obligations under each of its revenue transactions:
On May 1, 2015, Qpagos Corporation
entered into a renewable ten-year license with the Licensor for the non-exclusive right to license technology to provide payment
services. Subsequently, on November 1, 2015, Qpagos Corporation and the Licensor concluded an additional amendment to the License
Agreement by which the Licensor agreed to the exclusivity to the Mexican market subject to the payment of $20,000 per year payable
in quarterly installments. The agreement may be terminated early by the Licensor if Qpagos Corporation fails to comply with its
terms and conditions.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Loans payable consist of the
following:
|
|
Interest
|
|
|
Maturity
|
|
|
March 31,
|
|
|
December 31,
|
|
Description
|
|
Rate
|
|
|
Date
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
—
|
|
|
|
|
|
|
155,500
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable – Related parties
|
|
|
|
|
|
|
|
$
|
155,500
|
|
|
$
|
—
|
|
Strategic IR
Strategic IR advanced the Company
$155,500 between January 16 and March 28, 2018. These funds have no fixed terms of repayment and have not been formalized into
an agreement yet, accordingly no interest has been provided thereon.
8
|
CONVERTIBLE
NOTES PAYABLE
|
Convertible
notes payable consists of the following:
Description
|
|
Interest
rate
|
|
Maturity Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
Unamortized
debt discount
|
|
|
March 31,
2018
Balance,
net
|
|
|
December 31,
2017
Balance,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Up Lending Group
|
|
8
|
%
|
|
April 20, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,017
|
|
|
|
8
|
%
|
|
June 30, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,034
|
|
|
|
8
|
%
|
|
August 30, 2018
|
|
|
53,000
|
|
|
|
1,591
|
|
|
|
(27,875
|
)
|
|
|
26,716
|
|
|
|
9,165
|
|
|
|
8
|
%
|
|
October 30, 2018
|
|
|
68,000
|
|
|
|
984
|
|
|
|
(51,914
|
)
|
|
|
17,070
|
|
|
|
—
|
|
|
|
8
|
%
|
|
January 15, 2019
|
|
|
68,000
|
|
|
|
75
|
|
|
|
(66,847
|
)
|
|
|
1,228
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labrys Fund, LP
|
|
8
|
%
|
|
June 14, 2018
|
|
|
78,000
|
|
|
|
1,829
|
|
|
|
(32,143
|
)
|
|
|
47,686
|
|
|
|
7,577
|
|
|
|
8
|
%
|
|
August 12, 2018
|
|
|
88,000
|
|
|
|
907
|
|
|
|
(65,149
|
)
|
|
|
23,758
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JSJ Investments, Inc.
|
|
8
|
%
|
|
November 29, 2018
|
|
|
75,000
|
|
|
|
2,005
|
|
|
|
(49,932
|
)
|
|
|
27,073
|
|
|
|
7,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS Capital Partners, LLC
|
|
8
|
%
|
|
May 22, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,112
|
|
|
|
8
|
%
|
|
June 16, 2018
|
|
|
56,000
|
|
|
|
3,609
|
|
|
|
(11,814
|
)
|
|
|
47,795
|
|
|
|
65,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
15
|
%
|
|
December 8, 2018
|
|
|
10,000
|
|
|
|
1,063
|
|
|
|
—
|
|
|
|
11,063
|
|
|
|
10,693
|
|
|
|
15
|
%
|
|
December 8, 2018
|
|
|
20,164
|
|
|
|
2,130
|
|
|
|
—
|
|
|
|
22,294
|
|
|
|
21,548
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
53,740
|
|
|
|
5,278
|
|
|
|
—
|
|
|
|
59,018
|
|
|
|
57,031
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
115,535
|
|
|
|
11,347
|
|
|
|
—
|
|
|
|
126,882
|
|
|
|
122,610
|
|
|
|
8
|
%
|
|
October 23, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,709
|
|
|
|
8
|
%
|
|
January 9, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
%
|
|
February 14, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
%
|
|
February 14, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
%
|
|
February 15, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria Akhmetova
|
|
15
|
%
|
|
December 8, 2018
|
|
|
20,164
|
|
|
|
2,130
|
|
|
|
—
|
|
|
|
22,294
|
|
|
|
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
|
|
|
30,000
|
|
|
|
388
|
|
|
|
(25,151
|
)
|
|
|
5,237
|
|
|
|
—
|
|
|
|
8
|
%
|
|
February 26, 2019
|
|
|
37,000
|
|
|
|
268
|
|
|
|
(33,655
|
)
|
|
|
3,613
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W and Patricia G Abrams
|
|
15
|
%
|
|
December 10, 2018
|
|
|
26,247
|
|
|
|
2,750
|
|
|
|
—
|
|
|
|
28,997
|
|
|
|
28,027
|
|
|
|
15
|
%
|
|
January 27, 2019
|
|
|
3,753
|
|
|
|
319
|
|
|
|
—
|
|
|
|
4,072
|
|
|
|
3,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman Shefer
|
|
15
|
%
|
|
December 24, 2018
|
|
|
10,000
|
|
|
|
990
|
|
|
|
—
|
|
|
|
10,990
|
|
|
|
10,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown Bridge Partners, LLC
|
|
8
|
%
|
|
August 14, 2018
|
|
|
15,499
|
|
|
|
1,307
|
|
|
|
(5,775
|
)
|
|
|
11,031
|
|
|
|
30,846
|
|
|
|
8
|
%
|
|
February 27, 2019
|
|
|
55,000
|
|
|
|
386
|
|
|
|
(50,178
|
)
|
|
|
5,208
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOBA Management
|
|
8
|
%
|
|
August 31, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,768
|
|
|
|
8
|
%
|
|
October 3, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,155
|
|
|
|
8
|
%
|
|
December 24, 2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,630
|
|
|
|
8
|
%
|
|
March 26, 2019
|
|
|
65,513
|
|
|
|
72
|
|
|
|
(64,616
|
)
|
|
|
969
|
|
|
|
—
|
|
|
|
8
|
%
|
|
March 26, 2019
|
|
|
31,618
|
|
|
|
35
|
|
|
|
(31,184
|
)
|
|
|
469
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anna Mosk
|
|
8
|
%
|
|
January 9, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable
|
|
|
|
|
|
|
$
|
980,233
|
|
|
$
|
39,463
|
|
|
$
|
(516,233
|
)
|
|
$
|
503,463
|
|
|
$
|
724,776
|
|
Interest
expense, together with amortized debt discount totaled $484,801 and $119,779 for the three months ended March 31, 2018 and 2017,
respectively.
The
convertible notes disclosed above with a coupon of 15%, have a fixed conversion price of $0.20 per common share.
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 March 31, 2018
and 2016 was $668,545 and $247,770, 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 has a maturity date of April 20, 2018
and the Company has agreed to pay interest on the unpaid principal balance of the note at the rate of eight percent per annum
from the date on which the note is issued until the same becomes due and payable, whether at maturity or upon acceleration or
by prepayment or otherwise. The Company has the right to prepay the note in terms of agreement. The outstanding principal amount
of the note is convertible at any time and from time to time at the election of the purchaser during the period beginning on the
date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal
to 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 has a maturity
date of June 30, 2018 and the Company has agreed to pay interest on the unpaid principal balance of the note at the
rate of eight percent per annum from the date on which the note is issued until the same becomes due and payable, whether at maturity
or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the note in terms of agreement. The outstanding
principal amount of the note is convertible at any time and from time to time at the election of the purchaser during the period
beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion
price equal to 58% of the average lowest three closing bid prices of the Company’s common stock for the ten trading days
prior to conversion.
On
March 26, 2018, in terms of a debt purchase agreement entered into with Boba Management Corp., the $63,000 convertible note plus
accrued interest thereon of $2,513 was exchanged for a new note with as principal sum of $65,513 bearing interest at 8% per annum
with the maturity date extended to March 26, 2019.
On
November 14, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $53,000 to
Power Up Lending Group LTD. The note has a maturity date of August 30, 2018 and a coupon of eight percent (8%) per annum.
The Company has the right to prepay the note without penalty for the first 180 days. The outstanding principal amount of
the note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading
days, including the date the notice of conversion is received.
The
balance of the note plus accrued interest at March 31, 2018 was $26,716, net of unamortized discount of $27,875.
On
January 24, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $68,000 to Power Up Lending
Group LTD. The note has a maturity date of October 30, 2018 and a coupon of eight percent (8%) per annum. The Company has
the right to prepay the note without penalty for the first 180 days. The outstanding principal amount of the note is convertible
at any time and from time to time at the election of the holder into shares of the Company’s common stock at a conversion
price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received.
The
balance of the note plus accrued interest at March 31, 2018 was $17,070, net of unamortized discount of $51,914.
On
March 26, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $68,000 to Power Up Lending
Group LTD. The note has a maturity date of January 15, 2019 and a coupon of eight percent (8%) per annum. The Company has
the right to prepay the note without penalty for the first 180 days. The outstanding principal amount of the note is convertible
at any time and from time to time at the election of the holder into shares of the Company’s common stock at a conversion
price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received.
The
balance of the note plus accrued interest at March 31, 2018 was $1,228, net of unamortized discount of $66,847.
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 has 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 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 231,931 shares was not recorded.
The
Company has the right to prepay the note without penalty for the first 180 days. The outstanding principal amount of the
note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading
days, including the date the notice of conversion is received.
The
balance of the note plus accrued interest at March 31, 2018 was $47,686, net of unamortized discount of $32,143.
On
February 12, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $88,000 to Labrys
Fund, LP. The note has a maturity date of August 12, 2018 and a coupon of 8% per annum. In connection with the issuance of
the note, the Company was required to issue 440,000 shares of common stock as a commitment fee valued at $70,400. The shares are
returnable to the Company if no Event of Default has occurred prior to the date the note is fully repaid. Management had determined
that it is probable that the Company would meet the conditions under the note and therefore it more likely than not that the Company
would not be in Default as defined in the note. As a result, management has concluded that it was probable that the shares would
be returned and therefore the value of the 440,000 shares was not recorded.
The
Company has the right to prepay the note without penalty for the first 180 days. The outstanding principal amount of the
note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading
days, including the date the notice of conversion is received.
The
balance of the note plus accrued interest at March 31, 2018 was $23,758, net of unamortized discount of $65,149.
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 has a maturity date of November 29, 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 March 31, 2018 was $27,073, net of unamortized discount of $49,932.
Q
PAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
GS
Capital Partners, LLC
On
May 22, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $75,000 to GS Capital
Partners, LLC., (“GS Capital”). The note has a maturity date of May 22, 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 62% of lowest trading bid prices during the previous ten (10) trading
days, including the date the notice of conversion is received.
On
November 11, 2017, GS Capital converted $20,000 of the principal amount of the convertible note into equity at a conversion
price of $0.1023 per share for an aggregate 203,516 shares of common stock.
On
December 13, 2017, GS Capital converted a further $20,000 of the principal amount of the convertible note into equity
at a conversion price of $0.1240 per share for an aggregate 168,466 shares of common stock.
On
January 17, 2018, GS Capital converted a further $18,000 principal, plus accrued interest thereon of $939 of the convertible
note into equity at a conversion price of $0.0778 per share for an aggregate 243,400 shares of common stock.
On
February 14, 2018, in terms of a debt purchase agreement entered into with Strategic IR, the remaining $17,000 convertible note
plus accrued interest thereon of $984 was exchanged for a new note with as principal sum of $17,984 bearing interest at 8% per
annum with the maturity date extended to February 14, 2019.
On
June 16, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $112,500 to GS
Capital Partners, LLC. The note has a maturity date of June 16, 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 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.
The
balance of the note plus accrued interest at March 31, 2018 was $47,796, net of unamortized discount of $11,813.
Strategic
IR
On
June 11, 2017, the Company issued a convertible promissory note in the aggregate principal amount of $10,000 to Strategic
IR (“Strategic”). The note bears interest at 12% per annum and matured on December 16, 2017. In terms of
an agreement entered into with the note holder , the maturity date of the note was extended to December 8, 2018 and
the interest rate was increased to 15% per annum.
The
note is convertible into common shares at a conversion price of $.20 per share.
The
balance of the note plus accrued interest at March 31, 2018 was $11,063.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Strategic
IR (continued)
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 March 31, 2018 was $22,294.
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 March 31, 2018 was $59,018.
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 March 31, 2018 was $126,883.
On
October 23, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $14,298 to Strategic.
The note has a maturity date of October 23, 2018 and a coupon of eight percent (8%) per annum. The Company has the right
to prepay the note without penalty for the first 180 days. The outstanding principal amount of the note is convertible at
any time and from time to time at the election of the holder into shares of the Company’s common stock at a conversion price
equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including the date
the notice of conversion is received.
On March 7, 2018, in terms of
a conversion notice received on October 25, 2017, the Company, after increasing its authorized share capital, issued 192,216 shares
of common stock at a conversion price of $0.0744 in settlement of the principal of $14,298 and accrued interest thereon of $7,
thereby extinguishing the note.
On January 9, 2018, in terms
of an additional payment made by Strategic IR to Power Up Lending Group to settle outstanding early settlement penalties and interest
thereon, related to the assignment agreement entered into between Anna Mosk and Power up Lending Group, the Company issued a convertible
promissory note to Strategic IR in the aggregate principal amount of $40,521. The note has a maturity date of January 9, 2019 and
a coupon of 8% per annum. The Company has the right to prepay the note, provided it makes a pre-payment penalty as specified in
the note. The outstanding principal amount of the note is convertible at any time and from time to time at the election of the
holder into shares of the Company’s common stock at a conversion price equal to 60% of the three lowest trading bid prices
during the previous ten (10) trading days, including the date the notice of conversion is received.
On March 13, 2018, in terms of
a conversion notice received, the Company issued 479,587 shares of common stock at a conversion price of $0.0856 in settlement
of the principal of $40,521 and accrued interest thereon of $551, thereby extinguishing the note.
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 has a maturity date of February 14, 2019 and a coupon of 8% per annum. The Company has the right
to prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal amount of the
note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of the three lowest trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received.
On March 13, 2018, in terms
of a conversion notice received, the Company issued 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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Strategic
IR (continued)
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 has a maturity date of February 14, 2019 and a coupon of 8% per
annum. The Company has the right to prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding
principal amount of the note is convertible at any time and from time to time at the election of the holder into shares of the
Company’s common stock at a conversion price equal to 60% of the three lowest trading bid prices during the previous ten
(10) trading days, including the date the notice of conversion is received.
On March 13, 2018, in terms of a conversion notice received, the Company issued 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 has a maturity date of February 15, 2019 and a coupon of 8% per annum. The
Company has the right to prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal
amount of the note is convertible at any time and from time to time at the election of the holder into shares of the Company’s
common stock at a conversion price equal to 60% of lowest 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 March 31, 2018 was $22,294.
On
October 31, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $50,000 to Viktoria Akhmetova.
The note has a maturity date of October 20, 2018 and a coupon of eight percent (8%) per annum. The Company has 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 is convertible at any time and from time to time at the election of the holder into shares of the
Company’s common stock at a conversion price equal to 60% of the average of the lowest three trading bid prices
during the previous ten (10) trading days, including the date the notice of conversion is received.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 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 has a maturity date of September 26, 2018 and a coupon of 8% per annum. The Company has the right to prepay the note
without penalty for the first 180 days. The outstanding principal amount of the note is convertible at any time and
from time to time at the election of the holder into shares of the Company’s common stock at a conversion
price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including
the date the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common shares effective
October 25, 2017. The Company had to increase its number of authorized shares in order to give effect to this conversion. The
Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 270,453 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $20,000 plus
accrued interest thereon of $127, thereby extinguishing the note.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Viktoria
Akhmetova (continued)
On
January 31, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $30,000 to Viktoria Akhmetova.
The note has a maturity date of January 31, 2019 and a coupon of 8% per annum. The Company has 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 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 March 31, 2018 was $5,237, net of unamortized discount of $25,151.
On
February 26, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $37,000 to Viktoria Akhmetova.
The note has a maturity date of February 26, 2019 and a coupon of 8% per annum. The Company has 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 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 March 31, 2018 was $3,613, net of unamortized discount of $33,655.
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 March 31, 2018 was $28,997.
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 March 31, 2018 was $4,072.
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 March 31, 2018 was $10,990.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Crown
Bridge Partners
On
August 14, 2017, the Company issued a Convertible Promissory Note in the aggregate principal amount of $75,000 to Crown
Bridger Partners. The note has a maturity date of August 14, 2018 and a coupon of eight percent (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
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 Capital Partners converted $9,501of the principal outstanding into equity at a conversion price of
$0.0685 per share for an aggregate 146,000 shares of common stock.
The
balance of the note plus accrued interest at March 31, 2018 was $11,031 net of unamortized discount of $5,775.
On
February 27, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $55,000 to Crown
Bridge Capital Partners. The note has a maturity date of February 27, 2019 and a coupon of 8% per annum. The Company
has the right to prepay the note for the first 180 days, subject to a penalty ranging from 10% to 35% of the prepayment,
dependent upon the timing of the prepayment. The outstanding principal amount of the note is convertible at any time and from
time to time at the election of the holder into shares of the Company’s common stock at a conversion price equal to 60%
of the lowest trading price during the previous fifteen (15) trading days.
The
balance of the note plus accrued interest at March 31, 2018 was $5,208 net of unamortized discount of $50,178.
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 has a maturity date of August 31, 2018 and a coupon of eight percent (8%) per annum. The Company has the right
to prepay the note without penalty for the first 180 days. The outstanding principal amount of the note is convertible at
any time and from time to time at the election of the holder into shares of the Company’s common stock at a conversion price
equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including the date
the notice of conversion is received.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common
shares effective October 25, 2017. The Company had to increase its number of authorized shares in order to give effect
to this conversion. The Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,208,251 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $88,847 plus
accrued interest thereon of $1,071, thereby extinguishing the note.
On March 26, 2018, in terms
of a debt purchase agreement entered into with Power Up lending Group, the Company issued Boba Management Corp a new note with
as principal sum of $65,513. The note has a maturity date of March 26, 2019 and a coupon of 8% per annum. The Company has the
right to prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal amount of
the note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of 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 March 31, 2018 was $969 net of unamortized discount of $64,616.
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 has a maturity date of March 26, 2019 and a coupon of 8% per annum. The Company has the right
to prepay the note, provided it makes a pre-payment penalty as specified in the note. The outstanding principal amount of the
note is convertible at any time and from time to time at the election of the holder into shares of the Company’s common
stock at a conversion price equal to 60% of lowest 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 pay early settlement penalties
and fees associated with the Power Up lending note above.
The balance of the note plus
accrued interest at March 31, 2018 was $469, net of unamortized discount of $31,184.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
BOBA
Management (continued)
On
October 25, 2017, in terms of an agreement entered into, Strategic IR assigned a 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 has a maturity date of October 3, 2018 and a coupon of eight percent (8%) per annum. The Company has the right
to prepay the note without penalty for the first 180 days. The outstanding principal amount of the note is convertible at
any time and from time to time at the election of the holder into shares of the Company’s common stock at a conversion price
equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including the date
the notice of conversion is received.
On
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.
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 has a maturity date of January 9, 2019 and
a coupon of 8% per annum. The Company has 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 is convertible at any time and from
time to time at the election of the holder into shares of the Company’s common stock at a conversion price
equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days, including the date
the notice of conversion is received.
On
March 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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Certain
of the short-term convertible notes disclosed in note 7 above and note 12 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 March 31, 2018
and 2017 and $2,531,332 was credited to the statement of comprehensive loss and $247,770 was charged to the statement of
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:
|
|
|
|
|
Three
months
ended
March 31,
2018
|
|
Conversion
price
|
|
|
|
|
|
$
|
0.08
to 0.20
|
|
Risk
free interest rate
|
|
|
|
|
|
|
1.78
to 2.09
|
%
|
Expected
life of derivative liability
|
|
|
|
|
|
|
9
to 12 months
|
|
E
xpected
volatility of underlying stock
|
|
|
|
|
|
|
208.3
to 230.6
|
%
|
Expected
dividend rate
|
|
|
|
|
|
|
0
|
%
|
The
movement in derivative liability is as follows:
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
3,277,621
|
|
|
$
|
113,074
|
|
Derivative financial liability arising from convertible note
|
|
|
668,545
|
|
|
|
2,834,413
|
|
Fair value adjustment to derivative liability
|
|
|
(2,531,332
|
)
|
|
|
330,134
|
|
|
|
$
|
1,414,834
|
|
|
$
|
3,277,621
|
|
On
March 5, 2018, in terms of an amendment to the Company’s Articles of Association, the authorized share capital was increased
to 500,000,000 common shares with a par value of $0.001 each.
The company has authorized 500,000,000 common shares with a par value
of $0.0001 each. The Company has issued and outstanding 77,223,966 and 56,207,424 shares of common stock as of March 31, 2018
and December 31, 2017.
In
terms of various debt conversion notices received between January 17, 2018 and March 13, 2018, the Company issued an aggregate
of 23,675,144 shares of common stock in settlement of $1,778,522 of convertible notes, resulting in a net loss on conversion of
$2,477,791.
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 March 31, 2018.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
STOCKHOLDERS’ EQUITY
(continued)
|
The
warrants outstanding and exercisable at March 31, 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
|
|
|
|
2.51
|
|
|
|
|
|
|
|
6,219,200
|
|
|
|
|
|
$0.20
|
|
|
|
2,308,513
|
|
|
|
2.25
|
|
|
|
|
|
|
|
2,308,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,527,713
|
|
|
|
2.44
|
|
|
$
|
0.51
|
|
|
|
8,527,713
|
|
|
$
|
0.51
|
|
The
warrants outstanding have an intrinsic value of $0 and $0 as of March 31, 2018 and December 31, 2017, respectively.
Revenue
is derived from the following sources:
|
|
Three Months
Ended
March 31, 2018
|
|
|
Three Months
Ended
March 31, 2017
|
|
|
|
|
|
|
|
|
Sales of services
|
|
$
|
1,443,107
|
|
|
$
|
801,692
|
|
Payment processing fees
|
|
|
5,294
|
|
|
|
10,060
|
|
Kiosk sales
|
|
|
—
|
|
|
|
113,921
|
|
Other
|
|
|
16,388
|
|
|
|
1,637
|
|
|
|
$
|
1,464,789
|
|
|
$
|
927,310
|
|
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 March
31, 2018 and 2017, all convertible debt and warrants, were excluded from the computation of diluted net loss per share. Dilutive
shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation
because their effect would have been anti-dilutive are as follows:
|
|
Three
Months Ended
March 31,
2018
(Shares)
|
|
|
Three
Months Ended
March 31,
2017
(Shares)
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
|
9,227,676
|
|
|
|
—
|
|
Warrants
|
|
|
8,527,713
|
|
|
|
6,219,200
|
|
|
|
|
17,755,389
|
|
|
|
6,219,200
|
|
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13
|
RELATED
PARTY TRANSACTIONS
|
The
following transactions were entered into with related parties:
LOANS
PAYABLE
|
|
Interest
|
|
Maturity
|
|
|
March 31,
|
|
|
December 31,
|
|
Description
|
|
Rate
|
|
Date
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings – Equipment funding
|
|
36
|
%
|
|
November 1, 2017
|
|
|
$
|
353,346
|
|
|
|
294,620
|
|
Vladimir Skigin – Equipment funding
|
|
36
|
%
|
|
November 1, 2017
|
|
|
|
66,318
|
|
|
|
55,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N
otes payable – Related parties
|
|
|
|
|
|
|
|
$
|
419,664
|
|
|
$
|
349,915
|
|
Interest
expense totaled $69,748 and $0 for the three months ended March 31, 2018 and 2017, respectively.
Jimmy
Gibbs
Jimmy
Gibbs is the principal and has control over Gibbs Investment Holdings and Gibbs International Holdings. Mr Gibbs is considered
to be a related party due to his shareholding and the shareholding under his control in the company exceeds 5%.
|
●
|
Gibbs
International Holdings (“Gibbs”) – Inventory funding
|
The
Company entered into an agreement with Gibbs, whereby the importation of kiosks and accessories was arranged and funded by Gibbs.
In terms of the agreement entered into with Gibbs, a 5% margin has been added to the cost of the kiosks and accessories purchased
and to the liability outstanding. The amount was due on November 1, 2017. The amount has not been paid to date. The agreement
does not provide for any default provisions and management is currently negotiating the terms of repayment with Gibbs.
Gibbs
has indicated a penalty interest is due on the loan, which has been provided for by the Company.
Vladimir
Skigin
Vladimir
Skigin has personally advanced the Company inventory 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”) – Inventory funding
|
The
Company entered into an agreement with Gibbs, whereby the importation of kiosks and accessories was arranged and funded by Gibbs,
Skigin funded a portion of the kiosks and accessories purchased under the same terms and conditions of the agreement entered into
with Gibbs. In terms of the agreement, a 5% margin has been added to the cost of the kiosks and accessories purchased and to the
liability outstanding. The amount was due on November 1, 2017. The amount has not been paid to date. The agreement does not provide
for any default provisions and management is currently negotiating the terms of repayment with Skigin.
As
per Gibbs note above, a penalty interest rate has been provided for on the loan.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Interest
rate
|
|
Maturity
Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
Unamortized
debt discount
|
|
|
March
31,
2018
Balance, net
|
|
|
December
31,
2017
Balance, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest
Commercial, LTD
|
|
15
|
%
|
|
December 16, 2018
|
|
|
20,000
|
|
|
|
2,047
|
|
|
|
—
|
|
|
|
22,047
|
|
|
|
21,307
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
54,123
|
|
|
|
5,316
|
|
|
|
—
|
|
|
|
59,439
|
|
|
|
57,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs
International Holdings
|
|
15
|
%
|
|
December 16, 2018
|
|
|
52,494
|
|
|
|
5,372
|
|
|
|
—
|
|
|
|
57,866
|
|
|
|
55,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo
Limited
|
|
15
|
%
|
|
December 26, 2018
|
|
|
53,438
|
|
|
|
5,249
|
|
|
|
—
|
|
|
|
58,687
|
|
|
|
56,710
|
|
|
|
15
|
%
|
|
December 26, 2018
|
|
|
52,959
|
|
|
|
5,201
|
|
|
|
—
|
|
|
|
58,160
|
|
|
|
56,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir
Skigin
|
|
8
|
%
|
|
January 22, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
105,034
|
|
|
|
8
|
%
|
|
October 10, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36,395
|
|
|
|
8
|
%
|
|
September 28, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,809
|
|
|
|
8
|
%
|
|
January 6, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,245
|
|
|
|
8
|
%
|
|
February 10, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beverly
Pacific Holdings
|
|
8
|
%
|
|
March 9, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
86,411
|
|
|
|
8
|
%
|
|
November 6, 2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
187,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
convertible notes payable
|
|
|
|
|
|
|
$
|
233,014
|
|
|
$
|
23,185
|
|
|
$
|
—
|
|
|
$
|
256,199
|
|
|
$
|
859,190
|
|
Interest
expense, together with amortized debt discount totaled $506,865 and $0 for the three months ended March 31, 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 Company’s
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 March 31, 2018 was $22,047.
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 March 31, 2018 was $59,439.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13
|
RELATED
PARTY TRANSACTIONS (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 March 31, 2018 was $57,866.
Vladimir
Skigin
Vladimir
Skigin is the principal and has control over Cobbolo Limited and has also personally advanced the Company inventory 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 March 31, 2018 was $58,687.
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 March 31, 2018 was $58,160.
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 has
a maturity date of January 22, 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 1,603,515 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.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13
|
RELATED
PARTY TRANSACTIONS (continued)
|
|
●
|
Vladimir
Skigin (continued)
|
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 has a maturity
date of October 10, 2018 and a coupon of 8% per annum. The Company has 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 is convertible at
any time and from time to time at the election of the holder into shares of the Company’s common stock at
a conversion price equal to 60% of the average of the lowest three trading bid prices during the previous ten (10) trading days,
including the date the notice of conversion is received.
On
March 7, 2018, in terms of a conversion notice received on 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 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 3,325,125 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $246,000 plus
accrued interest thereon of $1,456, thereby extinguishing the note.
On
October 25, 2017 in terms of an agreement entered into, Strategic IR assigned a note entered into on October 3, 2017, with the
Company to Vladimir Skigin. The note had an aggregate principal balance of $100,000 and accrued interest thereon of $4,427. The
note has a maturity date of January 6, 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 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 has a maturity date of January 6, 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 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
13
|
RELATED
PARTY TRANSACTIONS (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 has an aggregate principal balance of $100,000 and accrued interest thereon
of $5,041. The note has a maturity date of March 9, 2018 and a coupon of eight percent per annum. The Company has the
right to prepay the note, provided it makes a payment to the Purchaser as set forth in the note through the maturity date. The
outstanding principal amount of the note is convertible at any time and from time to time at the election of the note holder during
the period beginning on the date that is 150 days following the issue date into shares of the Company’s common stock,
at a conversion price equal to 60% of the average of the last two lowest trading bid prices during the fifteen trading days prior
to conversion.
On
October 25, 2017, the Company received a notice of conversion of the outstanding principal and interest into common
shares effective October 25, 2017. The Company had to increase its number of authorized shares in order to give effect
to this conversion. The Company received a default waiver from the note holder to allow it to increase its authorized shares.
On
March 7, 2018, in terms of a conversion notice received on October 25, 2017, the Company, after increasing its authorized share
capital, issued 1,607,608 shares of common stock at a conversion price of $0.0744 in settlement of the principal of $100,000 plus
accrued interest thereon of $5,041, thereby extinguishing the note.
On
October 25, 2017, in terms of an agreement entered into, Strategic IR assigned a note entered into on August 31, 2017
with JSJ Investments, Inc. The note had an aggregate principal outstanding of $176,000 together with interest thereon of $11,041.
The note had a maturity date of November 6, 2017 and a coupon of eight percent per annum. The Company has the right
to prepay the note within 180 days of its issue date. After the 180 days, the Company has no right to prepayment. The
outstanding principal amount of the note is convertible at any time and from time to time at the election of the note holder during
the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock,
at a conversion price equal to 60% of the average of the lowest three closing bid prices of the Company’s common stock for
the ten trading days prior to conversion.
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.
14
|
COMMITMENTS
AND CONTINGENCIES
|
The
Company operates from an office facility in Mexico. The office is leased under a three (3) year non-cancellable operating lease,
which ends on December 16, 2019. The lease calls for rental payment, including maintenance, of $3,377 per month, as adjusted for
exchange rate changes. The Company also leases space on a month-to-month basis for its data servers at a monthly rate of $1,766.
In addition, Qpagos leases warehouse space on a month-to-month basis for $1,136 per month.
The
future minimum lease installments under the office facility lease agreement as of March 31, 2018 are $30,393 for each year 2018
and $40,524 for the twelve months ended March 31, 2018, subject to exchange rate fluctuations.
QPAGOS
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Conversion
of convertible notes into equity
On
April 5, 2018, the Company received a notice of conversion, converting $9,356 into 160,000 shares of common stock at a conversion
price of $0.0616 per share.
On April
16, 2018, the Company received a notice of conversion, converting $59,682 into 518,930 shares of common stock at a conversion
price of $0.115 per share.
On
April 18, 2018, the Company received conversion notices converting an aggregate of $165,545 of convertible debt into 1,286,486
shares of common stock at an average conversion price of $0.129 per share.
Convertible
notes
On
May 3, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $105,000 to GS Capital
Partners, LLC., (“GS Capital”). 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.
On
May 11, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $80,000 to GS Capital
Partners, LLC., (“GS Capital”). 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.
On
May 14, 2018, the Company prepaid a convertible note of $53,000 issued to Power Up Lending Group for gross proceeds of $74,373.
On May 14, 2018, the Company issued
a Convertible Promissory Note in the aggregate principal amount of $27,500 to Crown Bridge Capital 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.
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.