NOTES TO THE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
|
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
On May 12, 2016, Innovative
Payment Solutions, Inc. (formerly known as QPAGOS and Asiya Pearls, Inc.), a Nevada corporation (“IPS”), entered into
an Agreement and Plan of Merger (the “Merger Agreement”) with Qpagos Corporation, a Delaware corporation (“Qpagos
Corporation”), and Qpagos Merge, Inc., a Delaware corporation and wholly owned subsidiary of IPS (“Merger Sub”). Pursuant
to the Merger Agreement, on May 12, 2016, the merger was consummated, and Qpagos Corporation and Merger Sub merged (the “Merger”),
with Qpagos Corporation continuing as the surviving corporation of the Merger.
Pursuant to the Merger Agreement,
upon consummation of the Merger, each share of Qpagos Corporation’s capital stock issued and outstanding immediately prior
to the Merger was converted into the right to receive two shares of IPS common stock, par value $0.0001 per share (the “Common
Stock”). Additionally, pursuant to the Merger Agreement, upon consummation of the Merger, IPS assumed all of Qpagos Corporation’s
warrants issued and outstanding immediately prior to the Merger, which were exercisable for approximately 6,219,200 pre reverse
split (621,920 post reverse split) shares of Common Stock, respectively, as of the date of the Merger. Prior to and as a condition
to the closing of the Merger, the then-current IPS stockholder of 5,000,000 pre reverse split (500,000 post reverse split) shares
of Common Stock agreed to return to IPS 4,975,000 pre reverse split (497,500 post reverse split) shares of Common Stock held by
such holder to IPS and the then-current IPS stockholder retained an aggregate of 25,000 pre reverse split (2,500 post reverse
split) shares of Common Stock and the other stockholders of IPS retained 5,000,000 pre reverse split (500,000 post reverse split)
shares of Common Stock. Therefore, immediately following the Merger, Qpagos Corporation’s former stockholders held 49,929,000
pre reverse split (4,992,900 post reverse split) shares of IPS common stock which represented approximately 91% of the outstanding
Common Stock.
The Merger was treated as a
reverse acquisition of IPS, a public shell company, for financial accounting and reporting purposes. As such, Qpagos Corporation
was treated as the acquirer for accounting and financial reporting purposes while IPS was treated as the acquired entity for accounting
and financial reporting purposes. Further, as a result, the historical financial statements that are reflected in this Quarterly
Report on Form 10-Q and that will be reflected in the Company’s financial statements filed with the United States Securities
and Exchange Commission (“SEC”) will be those of Qpagos Corporation, and the Company’s assets, liabilities and
results of operations will be consolidated with the assets, liabilities and results of operations of Qpagos Corporation.
QPAGOS Corporation (“Qpagos”)
was incorporated on May 1, 2015 under the laws of the state of Delaware to effectuate a reverse merger transaction with Qpagos,
S.A.P.I. de C.V. (Qpagos Mexico) and Redpag Electrónicos S.A.P.I. de C.V. (Redpag). Each of the entities were incorporated
in November 2013 in Mexico.
Qpagos, S.A.P.I. de C.V. was
formed to process payment transactions for service providers it contracts with, and Redpag Electrónicos S.A.P.I. de C.V.
was formed to deploy and operate kiosks as a distributor.
On May 27, 2016 Asiya changed
its name to QPAGOS. QPAGOS and its direct and indirect subsidiaries Qpagos Corporation, Qpagos, S.A.P.I. de C.V. and Redpag Electrónicos
S.A.P.I. de C.V., will be referred to hereafter as “the Company”.
On June 1, 2016, the board
of directors changed the Company’s fiscal year end from October 31 to December 31.
On November 1, 2019, the Company
changed its name to Innovative Payment Solutions Inc.
Also on November 1, 2019, immediately following the name change, the Company filed a Certificate of Change
with the Secretary of State of the State of Nevada to effect a reverse split of Company’s common stock at a ratio of 1-for-10,
effective on November 1, 2019. As a result of the Reverse Stock Split, each ten pre-split shares of common stock outstanding automatically
combined into one new share of common stock without any action on the part of the holders, and the number of outstanding shares
common stock was reduced from 320,477,867 shares to 32,047,817 after rounding for fractional shares.
|
b)
|
Description of the business
|
QPAGOS Corporation, through
its subsidiaries Qpagos S.A.P.I de C.V. (“Qpagos”) and Redpag Electronicos S.A.P.I de C.V. (“Redpag”),
provides physical and virtual payment services to the Mexican market. The Company provides an integrated network of kiosks, terminals
and payment channels that enable consumers in Mexico to deposit cash, convert it into a digital form and remit the funds to any
merchant in our network quickly and securely. The Company helps consumers and merchants connect more efficiently in markets and
consumer segments, such as Mexico, that are largely cash-based and lack convenient alternatives for consumers to pay for goods
and services in physical, online and mobile environments. For example, the Company’s 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.
On August 5, 2019, the Company
entered into a Stock Purchase Agreement (“SPA”) with Vivi Holdings, Inc., a Delaware corporation (“Vivi Holdings”),
to sell Qpagos Corporation, a Delaware corporation (“QPAG Sub”), which operates the Company’s business in Mexico
as the holding company for Qpagos, S.A.P.I. de C.V. and Redpag Electrónicos S.A.P.I. de C.V., to Vivi Holdings for 2,250,000
shares of common stock of Vivi Holdings (the “Stock Sale”) “), of which nine percent (9%) is to be allocated
to Gaston Pereira (5%), Andrey Novikov (2.5%), and Joseph Abrams (1.5%). After the sale. the Company will no longer have any business
operations in Mexico and will retain its U.S. operations based in Calabasas, California.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2
|
ACCOUNTING POLICIES AND ESTIMATES
|
The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.
Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and disclosures
required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary,
for a fair presentation of those financial statements. The results of operations and cash flows for the three months and nine
months ended September 30, 2019 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 IPS for the year ended December 31, 2018, included in the Annual Report on Form 10-K as filed
with the Securities and Exchange Commission (the “SEC”) on April 9, 2019.
All amounts referred to in
the notes to the unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.
|
b)
|
Principles of Consolidation
|
The unaudited condensed consolidated
financial statements include the financial statements of the Company and its wholly owned subsidiary and its indirect subsidiaries.
All significant inter-company accounts and transactions have been eliminated in the consolidated financial statements. The entities
included in these consolidated financial statements are as follows:
QPAGOS – Parent Company
Qpagos Corporation –
100% owned
Qpagos, S.A.P.I de C.V., a
Mexican entity (99.996% owned)
Redpag Electrónicos,
S.A.P.I. de C.V., a Mexican entity (99.990% owned)
The financial statements of
the Company’s Mexican operations are measured using local currencies as their functional currencies.
The Company translates the
assets and liabilities of its Mexican subsidiaries at the exchange rates in effect at period end and the results of operations
at the average rate throughout the period. The translation adjustments are recorded directly as a separate component of stockholders’
equity, while transaction gains (losses) are included in net income (loss). All sales to customers are in Mexico.
The preparation of unaudited
condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions,
which are evaluated on an ongoing basis, that affect the amounts reported in the unaudited condensed consolidated financial statements
and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes
are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results
could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to;
the estimated useful lives for plant and equipment, the fair value of warrants and stock options granted for services or compensation,
estimates of the probability and potential magnitude of contingent liabilities, derivative liabilities, the valuation allowance
for deferred tax assets due to continuing operating losses, those related to revenue recognition and the allowance for doubtful
accounts.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible
that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed
consolidated financial statements, which management considered in formulating its estimate could change in the near-term due to
one or more future confirming events. Accordingly, the actual results could differ significantly from the Company’s estimates.
INNOVATIVE PAYMENT SOLUTIONS,
INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2
|
ACCOUNTING POLICIES AND ESTIMATES (continued)
|
Certain conditions may exist
as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved
when one or more future events occur or fail to occur.
The Company’s management
assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that
a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would
be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees,
in which case the guarantee would be disclosed.
|
f)
|
Fair Value of Financial Instruments
|
The Company adopted the guidance
of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair
value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring
fair value as follows:
Level 1-Inputs are unadjusted
quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted
quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities
in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by
observable market data.
Level 3-Inputs are unobservable
inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing
the asset or liability based on the best available information.
The carrying amounts reported
in the balance sheets for cash, accounts receivable, other current assets, other assets, accounts payable, accrued liabilities,
and notes payable, approximate fair value due to the relatively short period to maturity for these instruments. The Company did
not identify any other assets or liabilities that are required to be presented on the balance sheets at fair value in accordance
with the accounting guidance.
ASC 825-10 “Financial
Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value
(fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new
election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should
be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding
instruments.
|
g)
|
Risks and Uncertainties
|
The
Company’s operations will be subject to significant risk and uncertainties including financial, operational, regulatory
and other risks associated, including the potential risk of business failure. The current credit environment does not favor small
venture capital or emerging growth companies, resulting in lower levels of liquidity, increases in the rates of default and bankruptcy.
These conditions not only limit the Company’s access to capital, but also make it difficult for its customers, vendors and
the Company to accurately forecast and plan future business activities.
The Company’s operations
were carried out in Mexico. Accordingly, the Company’s business, financial condition and results of operations may be influenced
by the political, economic and legal environment in Mexico and by the general state of that economy. The Company’s results
may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures,
and rates and methods of taxation, among other things.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2
|
ACCOUNTING POLICIES AND ESTIMATES (continued)
|
|
h)
|
Adoption of accounting standards
|
In February 2016,
the Financial Accounting Standards Board (“FSAB”) issued Accounting Standards Update (“ASU”), No. 2016-02,
Leases (Topic 842) (ASC 842)
The amendments in this update
establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires
a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on
the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve
months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, with early adoption
permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning
of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that
entities may elect to apply. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, an update
which provides another transition method, the prospective transition method, which allows entities to initially apply the new lease
standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period
of adoption. The Company adopted the new standard on January 1, 2019 using the prospective transition method.
The Company has identified
all leases and reviewed the leases to determine the impact of ASC 842 on its unaudited condensed consolidated financial
statements. The Company has elected to apply all of the practical expedients to all leases, which include not reassessing (1)
whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases,
and (3) initial direct costs for any existing leases. The adoption of the new standard resulted in the recording of a
right-of-use asset and a lease liability on the consolidated balance sheet on January 1, 2019 of MXN Pesos 639,400 ($32,996)
utilizing an incremental borrowing rate of 10.65% and the subsequent amortization of the asset and the lease liability.
|
i)
|
Recent accounting pronouncements
|
The FASB issued several updates
during the period, none of these standards are either applicable to the Company or require adoption at a future date and are not
expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption.
No segmental information is
required as the Company currently only has one segment of business, providing physical and virtual payment services in the Mexican
Market.
|
k)
|
Cash and Cash Equivalents
|
The Company considers all highly
liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At September
30, 2019 and December 31, 2018, respectively, the Company had no cash equivalents.
The Company assesses credit
risk associated with cash by periodically evaluating the credit quality of its primary financial institution in the United States.
The balance at times may exceed federally insured limits. At September 30, 2019 and December 31, 2018, cash balances in the United
States did not exceed the federally insured limit.
|
l)
|
Accounts Receivable and Allowance for Doubtful Accounts
|
Accounts receivable are reported
at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue
is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number
of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral
part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state
of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates.
Revisions to the allowance for doubtful accounts estimates are recorded as an adjustment to bad debt expense. Receivables deemed
uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries
of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. There were no recoveries
during the three months and nine months ended September 30, 2019 and December 2018.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2
|
ACCOUNTING POLICIES AND ESTIMATES (continued)
|
|
m)
|
Cost Method Investments
|
Investee companies not accounted
for under the consolidation or the equity method are accounted for under the cost method of accounting. Under this method, the
Company’s share of earnings or losses of such investee companies is not included in the condensed consolidated balance sheet
or statement of operations and comprehensive loss. However, impairment charges are recognized in the condensed consolidated statement
of operations and comprehensive loss. If circumstances suggest that the value of the investee company has subsequently recovered,
such recovery is not recorded. There is no impairment of investment at September 30, 2019 and December 31, 2018.
The Company primarily values inventories
at net realizable value applied on a first-in, first-out basis. The Company identifies and writes down its excess and obsolete
inventories to net realizable value based on usage forecasts, order volume and inventory aging. With the development of new products,
the Company also rationalizes its product offerings and will write-down discontinued product to the lower of cost or net realizable
value. The Company created an inventory reserve of $166,247 for slower moving kiosk inventory in its discontinued operation.
|
o)
|
Advances received from customers
|
Other than the sale of kiosks
to customers, the provision of services through the Company’s kiosks is conducted on a cash basis. Customers are required
to deposit cash with the Company to meet anticipated demand for services provided through kiosks either owned or operated by them.
The services provided through the customer owned or operated kiosks are deducted from the deposits held on their behalf, the Company
requires that these deposits be replenished as and when the services are provided.
Plant and equipment is stated
at cost, less accumulated depreciation. Plant and equipment with costs greater than $1,000 are capitalized and depreciated. Depreciation
is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets
are as follows:
Description
|
|
Estimated Useful Life
|
Kiosks
|
|
7 years
|
Computer equipment
|
|
3 years
|
Leasehold improvements
|
|
Lesser of estimated useful life or life of lease
|
Office equipment
|
|
10 years
|
The cost of repairs and maintenance
is expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts,
and any resulting gains or losses are included in income in the year of disposition.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2
|
ACCOUNTING POLICIES AND ESTIMATES (continued)
|
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.
License agreements acquired by
the Company are reported at acquisition value less accumulated amortization and impairments.
Amortization is reported in the
statement of operations on a straight-line basis over the estimated useful life of the intangible assets, unless the useful life
is indefinite. Amortizable intangible assets are amortized from the date that they are available for use. The estimated useful
life of the license agreement is five years which is the expected period for which the Company expects to derive a benefit from
the underlying license agreements.
Assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows
expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the assets.
The Company’s revenue
recognition policy is consistent with the requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 606, Revenue.
The Company’s revenues
are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration
that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services,
as defined below. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized
as it fulfills its obligations under each of its revenue transactions:
|
i.
|
identify the contract with a customer;
|
|
ii.
|
identify the performance obligations in the contract;
|
|
iii.
|
determine the transaction price;
|
|
iv.
|
allocate the transaction price to performance obligations in the contract; and
|
|
v.
|
recognize revenue as the performance obligation is satisfied.
|
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2
|
ACCOUNTING POLICIES AND ESTIMATES (continued)
|
|
s)
|
Revenue Recognition (continued)
|
The Company has the following
sources of revenue which is recognized on the basis described below.
|
●
|
Revenue from the sale of services.
|
Prepaid services are acquired
from providers and is sold to end-users through kiosks that the Company owns or kiosks that are owned by third parties. The Company
recognizes the revenue on the sale of these services when the end-user deposits funds into the terminal and the prepaid service
is delivered to the end-user. The revenue is recognized at the gross value, including margin, of the prepaid service to the Company,
net of any value-added tax which is collected on behalf of the Mexican Revenue Authorities.
|
●
|
Payment processing provided to end-users
|
The Company provides a secure
means for end-users to pay for certain services, such as utilities through our kiosks. The Company earns either a fixed per-transaction
fee or a fixed percentage of the service sold. The Company acts as a collection agent and recognizes the payment processing fee,
net of any value-added taxes collected on behalf of the Mexican Revenue Authorities, when the funds are deposited into the kiosk
and the customer has settled his liability or has acquired a prepaid service.
|
●
|
Revenue from the sale of kiosks.
|
The Company imports, assembles
and sell kiosks that are used to generate the revenues discussed above. Revenue is recognized on the full value of the kiosks sold,
net of any valued added taxation collected on behalf of the Mexican Revenue Authorities, when the customer takes delivery of the
kiosk and all the risks and rewards of ownership are passed to the customer.
The Company does not enter into
any leasing of kiosks arrangements with customers and the Company does not generate any revenues from merchants who access its
terminals as yet.
|
t)
|
Reclassification of prior year presentation
|
Certain prior year amounts have
been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results
of operations.
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 $21,988,521 as of September 30, 2019 and has not generated sufficient revenue to cover its operating expenditure, raising
substantial doubt about the Company’s ability to continue as a going concern. 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 in the United States by deploying more kiosks through various channels, thereby increasing revenues, in addition,
the Company is exploring the acquisition of other businesses and 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 for at least the next twelve months from the date the financial statements
were issued.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
4
|
DISCONTINUED OPERATIONS
|
On August 5, 2019, the Company
entered into a Stock Purchase Agreement (“SPA”) with Vivi Holdings, Inc., a Delaware corporation (“Vivi Holdings”),
to sell Qpagos Corporation, a Delaware corporation (“QPAG Sub”), which operates the Company’s business in Mexico
as the holding company for Qpagos, S.A.P.I. de C.V. and Redpag Electrónicos S.A.P.I. de C.V., to Vivi Holdings for 2,250,000
shares of common stock of Vivi Holdings (the “Stock Sale”) “), of which nine percent (9%) is to be allocated
to Gaston Pereira (5%), Andrey Novikov (2.5%), Joseph Abrams (1.5%). Upon consummation of the Stock Sale, the Company will no longer
have any business operations in Mexico. The Company will retain its U.S. operations based in Calabasas, California.
The following assets and liabilities
are recorded as held for disposal:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Current Assets
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
9,953
|
|
|
$
|
60,523
|
|
Inventory
|
|
|
163,691
|
|
|
|
330,632
|
|
Recoverable IVA taxes and credits
|
|
|
117,594
|
|
|
|
98,493
|
|
Other current assets
|
|
|
59,569
|
|
|
|
169,564
|
|
Total current assets
|
|
|
350,807
|
|
|
|
659,212
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Plant and equipment, net
|
|
|
189,301
|
|
|
|
228,103
|
|
Right of use asset
|
|
|
8,459
|
|
|
|
-
|
|
Intangibles, net
|
|
|
50,167
|
|
|
|
82,417
|
|
Investment
|
|
|
3,000
|
|
|
|
3,000
|
|
Other assets
|
|
|
12,282
|
|
|
|
10,373
|
|
Total non-current assets
|
|
|
263,209
|
|
|
|
323,893
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale
|
|
$
|
614,016
|
|
|
$
|
983,105
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
82,641
|
|
|
$
|
40,136
|
|
Operating lease liability
|
|
|
8,492
|
|
|
|
-
|
|
ICA and other taxes payable
|
|
|
9,979
|
|
|
|
18,969
|
|
Advances from clients
|
|
|
152,528
|
|
|
|
120,909
|
|
Liabilities held for sale
|
|
$
|
253,640
|
|
|
$
|
180,014
|
|
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
4
|
DISCONTINUED OPERATIONS (continued)
|
The statement of operations from
discontinued operations is as follows:
|
|
Three months ended
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
3,480,878
|
|
|
$
|
1,944,466
|
|
|
$
|
7,550,475
|
|
|
$
|
5,111,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
3,767,192
|
|
|
|
1,931,715
|
|
|
|
7,748,178
|
|
|
|
5,049,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross (loss) profit
|
|
|
(286,314
|
)
|
|
|
12,751
|
|
|
|
(197,703
|
)
|
|
|
61,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
278,960
|
|
|
|
281,974
|
|
|
|
832,623
|
|
|
|
898,814
|
|
Depreciation and amortization
|
|
|
11,276
|
|
|
|
12,488
|
|
|
|
33,885
|
|
|
|
37,241
|
|
Total Expense
|
|
|
290,236
|
|
|
|
294,462
|
|
|
|
866,508
|
|
|
|
936,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(576,550
|
)
|
|
|
(281,711
|
)
|
|
|
(1,064,211
|
)
|
|
|
(874,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income
|
|
|
(866
|
)
|
|
|
783
|
|
|
|
1,007
|
|
|
|
(935
|
)
|
Foreign currency (loss) gain
|
|
|
(15,436
|
)
|
|
|
116,944
|
|
|
|
(21,412
|
)
|
|
|
106,581
|
|
Loss before taxation
|
|
|
(592,852
|
)
|
|
|
(163,984
|
)
|
|
|
(1,084,616
|
)
|
|
|
(769,166
|
)
|
Taxation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss from discontinued operations, net of taxation
|
|
$
|
(592,852
|
)
|
|
$
|
(163,984
|
)
|
|
$
|
(1,084,616
|
)
|
|
$
|
(769,166
|
)
|
Loans payable consist of the
following:
Description
|
|
Interest
Rate
|
|
|
Maturity
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Victoria Akhmetova
|
|
|
15
|
%
|
|
January 11, 2020
|
|
$
|
60,425
|
|
|
$
|
56,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boba Management Corporation
|
|
|
10
|
%
|
|
February 20, 2020
|
|
|
-
|
|
|
|
—
|
|
|
|
|
10
|
%
|
|
March 1, 2020
|
|
|
20,866
|
|
|
|
—
|
|
|
|
|
10
|
%
|
|
March 26, 2020
|
|
|
20,827
|
|
|
|
—
|
|
|
|
|
10
|
%
|
|
April 12, 2020
|
|
|
20,690
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
December 26, 2019
|
|
|
34,994
|
|
|
|
-
|
|
Total loans payable
|
|
|
|
|
|
|
|
$
|
157,802
|
|
|
$
|
56,044
|
|
Interest expense totaled $1,148
and $2,269 for the three months ended September 30, 2019 and 2018, respectively and $6,803 and $3,775 for the nine months ended
September 30, 2019 and 2018, respectively.
Viktoria Akhmetova
January 11,
2020
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 had 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. On March 19, 2019, the note was extended
to January 11, 2020, and the interest rate changed to 15%.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split (0.063 post reverse split) per share.
The balance of the note as
of July 30, 2019, plus accrued interest thereon was $60,425 and was converted into 974,592 post reverse split shares of
common stock on November 18, 2019.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
5
|
LOANS PAYABLE (continued)
|
Boba Management Corporation
February 20, 2020
On February 22, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $20,000 to Boba Management Corporation. The note had a maturity date
of February 22, 2020 and a coupon of ten percent per annum. The Company had the right to prepay the note without penalty prior
to maturity date.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split ($0.063 post reverse split) per share.
The balance of the note as
of July 30, 2019, plus accrued interest thereon was $20,866 and was converted into 336,545 post reverse split shares of
common stock on November 18, 2019.
March 1, 2020
On March 1, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $20,000 to Boba Management Corporation. The note had a maturity date
of March 1, 2020 and a coupon of ten percent per annum. The Company had the right to prepay the note without penalty prior to maturity
date.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split ($0.063 post reverse split) per share.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $20,827 and was converted into 335,926 post reverse split shares of common stock on November 18, 2019.
March 26, 2020
On March 26, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $20,000 to Boba Management Corporation. The note had a maturity date
of March 26, 2020 and a coupon of ten percent per annum. The Company had the right to prepay the note without penalty prior to
maturity date. The balance of the note plus accrued interest at September 30, 2019 was $20,690.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split ($0.063 post reverse split) per share.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $20,690 and was converted into 333,717 post reverse split shares of common stock on November 18, 2019.
September 26, 2019
On September 26, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $34,955 to Boba Management Corporation. The note had a maturity date
of December 26, 2019 and a coupon of ten percent per annum. The Company had the right to prepay the note without penalty prior
to maturity date. The balance of the note plus accrued interest at September 30, 2019 was $34,994.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
5
|
LOANS PAYABLE (continued)
|
Boba Management Corporation
(continued)
On July 15, 2019, the Company
entered into Securities Purchase Agreements with Boba Management Corp whereby the following notes totaling $65,000 previously advanced
to the Company during the period April 12 to May 23, 2019, was converted into 6,500,000 pre reverse split (650,000 post reverse
split) shares of common stock at a conversion price of $0.01 per share.
April 12, 2020
On April 12, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $20,000 to Boba Management Corporation.
May 7, 2020
On May 7, 2019, the Company issued
a Promissory Note in the aggregate principal amount of $10,000 to Boba Management Corporation.
May 13, 2020
On May 13, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $15,000 to Boba Management Corporation.
May 20, 2020
On May 20, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $15,000 to Boba Management Corporation.
May 23, 2020
On May 23, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $5,000 to Boba Management Corporation.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
6
|
CONVERTIBLE NOTES PAYABLE
|
Convertible notes payable consists
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized
|
|
|
2019
|
|
|
2018
|
|
Description
|
|
Interest
rate
|
|
|
Maturity
Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
debt
discount
|
|
|
Balance,
net
|
|
|
Balance,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Up Lending Group
|
|
|
8
|
%
|
|
April 30, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,645
|
|
|
|
|
8
|
%
|
|
September 15, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labrys Fund, LP
|
|
|
8
|
%
|
|
December, 22 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
129,758
|
|
|
|
|
8
|
%
|
|
April 25, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
126,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JSJ Investments, Inc.
|
|
|
8
|
%
|
|
July 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,751
|
|
|
|
|
8
|
%
|
|
October 8, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,855
|
|
|
|
|
8
|
%
|
|
March 29, 2020
|
|
|
75,000
|
|
|
|
3,041
|
|
|
|
(37,090
|
)
|
|
|
40,951
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS Capital Partners, LLC
|
|
|
8
|
%
|
|
May 11, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41,543
|
|
|
|
|
8
|
%
|
|
August 14, 2019
|
|
|
100,000
|
|
|
|
11,567
|
|
|
|
-
|
|
|
|
111,567
|
|
|
|
61,693
|
|
|
|
|
8
|
%
|
|
August 14, 2019
|
|
|
150,000
|
|
|
|
15,715
|
|
|
|
-
|
|
|
|
165,715
|
|
|
|
53,056
|
|
|
|
|
8
|
%
|
|
September 19, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,557
|
|
|
|
|
8
|
%
|
|
September 19, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,134
|
|
|
|
|
8
|
%
|
|
February 4, 2020
|
|
|
96,000
|
|
|
|
5,008
|
|
|
|
(33,403
|
)
|
|
|
67,605
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
February 4, 2020
|
|
|
96,000
|
|
|
|
4,419
|
|
|
|
(36,178
|
)
|
|
|
64,241
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria Akhmetova
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
20,164
|
|
|
|
6,157
|
|
|
|
-
|
|
|
|
26,321
|
|
|
|
24,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W and Patricia G Abrams
|
|
|
15
|
%
|
|
December 10, 2019
|
|
|
26,247
|
|
|
|
7,993
|
|
|
|
-
|
|
|
|
34,240
|
|
|
|
31,964
|
|
|
|
|
15
|
%
|
|
January 27, 2020
|
|
|
3,753
|
|
|
|
1,069
|
|
|
|
-
|
|
|
|
4,822
|
|
|
|
4,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman Shefer
|
|
|
15
|
%
|
|
December 24, 2019
|
|
|
10,000
|
|
|
|
2,988
|
|
|
|
-
|
|
|
|
12,988
|
|
|
|
12,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown Bridge Partners, LLC
|
|
|
8
|
%
|
|
May 14, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,796
|
|
|
|
|
8
|
%
|
|
June 12, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,437
|
|
|
|
|
8
|
%
|
|
July 26, 2019
|
|
|
8,800
|
|
|
|
2,343
|
|
|
|
|
|
|
|
11,143
|
|
|
|
12,856
|
|
|
|
|
8
|
%
|
|
August 31, 2019
|
|
|
27,500
|
|
|
|
2,471
|
|
|
|
-
|
|
|
|
29,971
|
|
|
|
9,927
|
|
|
|
|
8
|
%
|
|
October 16, 2019
|
|
|
27,500
|
|
|
|
2,104
|
|
|
|
(1,205
|
)
|
|
|
28,399
|
|
|
|
6,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Pereira
|
|
|
8
|
%
|
|
November 11, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings
|
|
|
15
|
%
|
|
On demand
|
|
|
52,494
|
|
|
|
15,856
|
|
|
|
-
|
|
|
|
68,350
|
|
|
|
63,798
|
|
|
|
|
8
|
%
|
|
August 31, 2019
|
|
|
405,735
|
|
|
|
39,438
|
|
|
|
|
|
|
|
445,173
|
|
|
|
155,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest Commercial, LTD
|
|
|
15
|
%
|
|
December 16, 2019
|
|
|
20,000
|
|
|
|
6,041
|
|
|
|
-
|
|
|
|
26,041
|
|
|
|
24,307
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
54,123
|
|
|
|
16,126
|
|
|
|
-
|
|
|
|
70,249
|
|
|
|
65,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOBA Management Corp
|
|
|
8
|
%
|
|
January 23, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
October 8, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
July 16, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bellridge Capital LP
|
|
|
18
|
%
|
|
April 25, 2019
|
|
|
200,000
|
|
|
|
16,735
|
|
|
|
-
|
|
|
|
216,735
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Consulting Alliance
|
|
|
8
|
%
|
|
September 15, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
May 24, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Point Partners, LLC
|
|
|
8
|
%
|
|
September 3, 2020
|
|
|
26,527
|
|
|
|
157
|
|
|
|
(24,570
|
)
|
|
|
2,114
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable
|
|
|
|
|
|
|
|
$
|
1,399,843
|
|
|
$
|
159,228
|
|
|
$
|
(132,446
|
)
|
|
$
|
1,426,625
|
|
|
$
|
1,009,236
|
|
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
6
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Interest expense, together with
amortized debt discount totaled $516,472 and $453,177 for the three months ended September 30, 2019 and 2018, respectively and
$1,658,643 and $2,161,352 for the nine months ended September 30, 2019 and 2018, respectively.
The 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, 2019 and 2018 was $33,327 and $1,027,684,
respectively, and for the nine months ended September 30, 2019 and 2018 was $427,721 and $2,055,533 respectively.
Power Up Lending Group Ltd.
April 30, 2019
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 had a
maturity date of April 30, 2019 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 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.
On January 23, 2019, in terms
of a debt purchase agreement entered into with BOBA Management Corp., BOBA purchased the $63,000 convertible note plus interest
and penalty interest thereon of $25,461. BOBA incurred expenses of $4,423 in purchasing the note, The Company replaced the convertible
note purchased by BOBA for a new convertible note with a principal sum of $92,884, bearing interest at 8% per annum and maturing
on January 23, 2020.
September 15, 2019
On November 21, 2018, 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 September 15, 2019 and a coupon of 8% per annum. The Company may not prepay the note. The outstanding principal
amount of the note was 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 three trading prices during the previous ten (10) trading days.
On May 25, 2019, in terms of
a debt purchase agreement entered into with Global Consulting Alliance., the $83,000 convertible note, plus accrued interest thereon
of $3,275, was acquired by Global Consulting Alliance for gross proceeds of $86,275 and an additional payment directly to Power
Up to settle the penalty interest of $34,510.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
6
|
CONVERTIBLE NOTES PAYABLE (continued)
|
Labrys Fund, LP
February 28, 2019
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 had a maturity
date of December 22, 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 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. In December 2018
the maturity date was extended to February 28, 2019.
Between December 26, 2018 and
February 13, 2019, the Company received conversion notices converting an aggregate principal amount of $150,000 and interest thereon
of $7,116, at an average conversion price of $0.0156 pre reverse stock split ($0.156 post reverse stock split) per share, into
10,070,334 pre reverse split (1,007,034 post reverse split) shares of common stock, thereby extinguishing the note.
April 25, 2019
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. In connection with the issuance of the note, the Company was required to issue
825,718 shares of common stock as a commitment fee valued at $165,254. The shares are returnable to the Company if no Event of
Default has occurred prior to the date the note is fully repaid. The Company may not prepay the note. The outstanding principal
amount of the note was 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 April 25, 2019, the Company
received conversion notices converting the interest outstanding of $11,967 at a conversion price of $0.0006 per share, into 1,869,979
pre reverse split (186,998 post reverse split) shares of common stock. The note was not repaid and not converted prior to the maturity
date, therefore the 825,718 pre reverse split (82,572 post reverse split) commitment share valued at $165,254 were expensed and
the interest rate on the convertible note increased to 18%, the default interest rate as provided for in the Promissory Note.
On May 15, 2019, in terms of
a debt purchase agreement entered into with Strategic IR, the $300,000 convertible note plus accrued interest thereon of $2,367
was acquired by Strategic IR for gross proceeds of $302,367.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
6
|
CONVERTIBLE NOTES PAYABLE (continued)
|
JSJ Investments Inc.
July 26, 2019
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 had 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.
Between January 28, 2019 and
March 11, 2019, the Company received conversion notices, converting an aggregate principal amount of $100,000 and interest thereon
of $4,533, at an average conversion price of $0.0126 pre reverse stock split ($0.126 post reverse stock split) into 8,304,805 pre
reverse split (830,481 post reverse split) shares of common stock, thereby extinguishing the convertible note.
October 8, 2019
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 had 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.
Between April 17, 2019 and June
3, 2019 the Company received conversion notices, converting an aggregate principal amount of $88,000 and fees thereon of $1,500,
at an average conversion price of $0.0583 pre reverse stock split ($0.583 post reverse stock split), into 14,832,564 pre reverse
split (1,483,257 post reverse split) shares of common stock.
On July 16, 2019, Boba Management
Corp entered into a debt purchase agreement with JSJ Investments, Inc., whereby the remaining balance of the October 8, 2018 convertible
note in the aggregate principal amount of $12,000 plus accrued interest thereon of $4,862, was acquired for gross proceeds of $16,862.
In addition to this Boba Management Corp paid additional settlement costs of $6,800 including an early settlement penalty to JSJ
Investments, Inc.
March 29, 2020
On April 2, 2019, the Company
received the proceeds of a convertible promissory note issued to JSJ Investments, Inc. on March 29, 2019, with the aggregate principal
amount of $75,000. The note had a maturity date of March 29, 2020 and a coupon of 8% per annum. The Company may prepay the note
at a premium ranging from 120% to 140% of the principal plus accrued interest. 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 three trading prices during the previous ten (10) trading days.
The balance of the note plus
accrued interest at September 30, 2019 was $40,951, net of unamortized discount of $37,090.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
6
|
CONVERTIBLE NOTES PAYABLE (continued)
|
GS Capital Partners, LLC
May 11, 2019
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 had a
maturity date of May 11, 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 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.
Between December 27, 2018 and
May 6, 2019, the Company received conversion notices converting an aggregate principal amount of $80,000 and interest thereon of
$5,290, at an average conversion price of $0.01055 pre reverse stock split ($0.1055 post reverse stock split) per share, into 8,087,331
pre reverse split (808,733 post reverse split) shares of common stock thereby extinguishing the note.
August 14, 2019
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 had a
maturity date of August 14, 2019 and a coupon of 8% per annum. The Company had 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.
Between August 12, 2019 and September
11, 2019, the Company received notices of conversion from GS Capital Partners converting $50,000 of principal and $3,945 of
interest into 17,432,265 pre reverse split (1,743,227 post reverse split) shares of common stock at an average conversion price
of $0.00309 pre reverse stock split ($0.031 post reverse stock split) per share. The Company incurred a loss on conversion of $56,315.
As of August 14, 2019 the note
is in default and accrues interest at the default interest rate of 24% per annum.
The balance of the note plus
accrued interest at September 30, 2019 was $111,567.
INNOVATIVE PAYMENT SOLUTIONS, INC.
(formerly QPAGOS)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
6
|
CONVERTIBLE NOTES PAYABLE (continued)
|
GS Capital Partners, LLC (continued)
August 14, 2019
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 was 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.
As of August 14, 2019 the note is in default and accrues interest at the default interest rate of 24%
per annum.
The balance of the note plus accrued interest at
September 30, 2019 was $165,715.
September 19, 2019
On September 21, 2018, pursuant
to 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 a maturity date of 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.
Between October 9, 2018 and
June 11, 2019, the Company received notices of conversion, converting principal of $40,698 and interest of $1,112 into
4,267,152 pre reverse stock split (426,716 post reverse split) shares of common stock at an average conversion price of
$0.0098 pre reverse stock split ($0.098 post reverse stock split) per share.
Between July 10, 2019 and July
31, 2019, the Company received notices of conversion from GS Capital Partners, converting $30,000 of capital and $1,983 of interest
into 9,936,206 pre reverse stock split (993,621 post reverse stock split) shares of common stock at an average conversion price
of $0.00322 pre reverse stock split ($0.032 post reverse split) per share. The Company incurred a loss on conversion of $28,009.
September 19, 2019
On September 19, 2018, pursuant
to 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 below. 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.
On July 17, 2019, Strategic IR
entered into a debt purchase agreement with GS Capital Partners, whereby the remaining balance of the September 19, 2019 convertible
note in the aggregate principal amount of $33,252 plus accrued interest thereon of $2,165, was acquired for gross proceeds of $35,417.
In addition to this strategic IR paid additional settlement costs of $14,583 including an early settlement penalty to GS Capital
Partners.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
GS
Capital Partners, LLC (continued)
February 4, 2020
On February 4, 2019, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $96,000 to GS Capital Partners LLC. The note has a maturity
date of February 4, 2020 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 62% of the lowest three trading prices during the previous ten (10) trading days.
The balance of the note plus
accrued interest at September 30, 2019 was $67,605 net of unamortized discount of $33,403.
February
4, 2020
On
March 4, 2019, the Company funded a back-end Convertible Promissory Note in the aggregate principal amount of $96,000 from GS
Capital Partners LLC. The note has a maturity date of February 4, 2020 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 62% of the lowest three trading prices during the previous
ten (10) trading days.
The
balance of the note plus accrued interest at September 30, 2019 was $64,241 net of unamortized discount of $36,178.
Viktoria
Akhmetova
December
8, 2019
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. Pursuant to the 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. On February 21, 2019 the maturity date was
extended to December 8, 2019, with the interest rate remaining unchanged. The note is convertible into common shares of the Company
at a conversion price of $0.20 per share.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares was effected on November
1, 2019.
The balance of the note as of July 30, 2019, plus accrued interest thereon was $26,321 and was exchanged
for 424,540 post reverse split shares of common stock on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Joseph
W and Patricia G Abrams
December
10, 2019
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. Pursuant to the 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. On February 21, 2019 the
maturity date was extended to December 10, 2019, with the interest rate remaining unchanged. The convertible note is convertible
into common shares of the Company at a conversion price of $0.20 per share.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $34,239 and was exchanged for 552,250 post reverse split shares of common stock on November 18, 2019.
January
27, 2020
On July
31, 2017, the Company issued a Convertible Promissory Note to Abrams in the aggregate principal amount of $3,753. The note had
a maturity date of January 27, 2018 and a coupon of 12% per annum. Pursuant to 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. On February 21,
2019 the maturity date was extended to January 27, 2020, with the interest rate remaining unchanged. The Company had 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.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as
of July 30, 2019, plus accrued interest thereon was $4,822 and was exchanged for 77,776 post reverse split shares of common
stock on November 18, 2019.
Roman Shefer
December
24, 2019
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. Pursuant to the 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. On February 21, 2019 the
maturity date was extended to December 24, 2019, with the interest rate remaining unchanged. The note is convertible into common
shares at a conversion price of $.20 per share.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $12,988 and was exchanged for 209,479 post reverse split shares of common stock on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Crown
Bridge Partners
May
14, 2019
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 had a maturity
date of May 14, 2019 and a coupon of 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.
Between January 16, 2019 and
February 12, 2019 the Company received conversion notices, converting an aggregate principal amount of $27,500, fees of $1,500
and interest thereon of $1,580, at an average conversion price of $0.0128 pre reverse split ($0.128 post reverse split), into 2,380,300
pre reverse split (238,030 post reverse split) shares of common stock, thereby extinguishing the note.
June 12, 2019
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 had a maturity
date of June 12, 2019 and a coupon of 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.
Between March 15, 2019 and May
24,2019, the Company received conversion notices, converting an aggregate principal amount of $27,500, fees thereon of $1,500 and
interest thereon of $1,896, at an average conversion price of $0.0043 pre reverse split ($0.043 post reverse split), into 7,146,260
pre reverse split (714,626 post reverse split) shares of common stock, thereby extinguishing the note.
July 26, 2019
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 had a maturity
date of July 26, 2019 and a coupon of 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 ten (10) trading days.
On June 12, 2019, the Company
received a conversion notice, converting an aggregate principal amount of $8,950 and fees of $500, at a conversion price of $0.0035
pre reverse split (0.035 post reverse split), into 2,700,000 pre reverse split (270,000 post reverse split) shares of common stock.
On August 7, 2019, the Company
received a notice of conversion from Crown Bridge Partners converting $9,750 of principal into 5,000,000 pre reverse split (500,000
post reverse split) shares of common stock at a conversion price of $0.00205 pre reverse split ($0.0205 post reverse split) per
share. The Company incurred a loss on conversion of $18,750.
As of July 26, 2019 the note
is in default and attracts interest at the default interest rate of 12% per annum and the note holder may require the Company to
pay a penalty of 50% of the value of the note outstanding, including default interest.
The balance of the note plus
accrued interest at September 30, 2019 was $11,143.
August 31, 2019
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 had a maturity
date of August 31, 2019 and a coupon of 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 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.
As of August 31, 2019 the note
is in default and attracts interest at the default interest rate of 12% per annum and the note holder may require the Company to
pay a penalty of 50% of the value of the note outstanding, including default interest.
The balance of the note plus
accrued interest at September 30, 2019 was $29,971.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Crown
Bridge Partners (continued)
October
16, 2019
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.
As
of October 31, 2019 the note is in default and attracts interest at the default interest rate of 12% per annum and the note holder
may require the Company to pay a penalty of 50% of the value of the note outstanding, including default interest.
The
balance of the note plus accrued interest at September 30, 2019 was $28,398, net of unamortized discount of $1,206.
Alex
Pereira
November
5, 2019
On
November 5, 2018, the Company issued a Convertible Promissory Note in the aggregate principal amount of $19,250 to Alex Pereira
as compensation for the expenses incurred on its behalf. 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.
On May 19, 2019, the Company
received a conversion notice, converting an aggregate principal amount of $9,660, at a conversion price of $0.0047 pre reverse
split ($0.047 post reverse split), into 2,049,981 pre reverse split (204,999 post reverse split) shares of common stock.
On July 24, 2019, the Company
received a notice of conversion from Alex Pereira, converting $10,692 into 3,414,786 pre reverse split (341,479 post reverse split)
shares of common stock at a conversion price of $0.003131 pre reverse split (0.0313 post reverse split) per share, thereby extinguishing
the note. The Company incurred a loss on conversion of $9,797.
Gibbs International
Holdings
On Demand
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 was past its maturity date which maturity date has
not been extended as yet, and thereby; (i) became immediately due and payable; (ii) can only be amended with the written consent
of the holder; and (iii) may be sold, assigned or transferred by the holder without the Company’s consent. The note is currently
recorded under current liabilities. The note was convertible into common shares of the Company at a conversion price of $0.20 per
share.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Gibbs International
Holdings (continued)
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $68,350 and were exchanged for 1,102,412 post reverse split shares on November 18, 2019.
August 31, 2019
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 had the right to prepay the note within 180 days without penalties. 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.
As of August 31, 2019 the note
is in default and the note holder may require the Company to pay a penalty of 10% of the principal outstanding.
The balance of the note plus
accrued interest at September 30, 2019 was $445,173.
Delinvest
Commercial, LTD.
December 16, 2019
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. Pursuant to the 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. On February
21, 2019 the maturity date was extended to December 16, 2019, with the interest rate remaining unchanged. The note was convertible
into common shares of the Company at a conversion price of $0.20 per share.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $26,041 and was exchanged for 420,018 post reverse split shares on November 18, 2019.
December 26, 2019
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. Pursuant
to the 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. On February 21, 2019 the maturity date was extended to December 26, 2019, with the interest
rate remaining unchanged. The note was convertible into common shares of the Company at a conversion price of $0.20 per
share.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $70,249 and were exchanged for 1,133,050 post reverse split shares on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
BOBA Management Corporation.
January 23, 2020
On January 23, 2019, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $92,884 to BOBA Management Corporation to assume a Power
up Note dated July 20, 2018. The note had a maturity date of January 23, 2020. The outstanding principal amount of the note was
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 three trading prices during the previous ten (10) trading days.
On July 30, 2019, the Company
received a notice of conversion from Boba Management Corp, converting $96,710 into 32,894,528 pre reverse split (3,289,453 post
reverse split) shares of common stock at a conversion price of $0.003 pre reverse split ($0.03 post reverse split) per share. The
Company incurred a loss on conversion of $103,947.
October 8, 2019
On July 16, 2019, Boba Management
Corp entered into a debt purchase agreement with JSJ Investments, Inc., whereby the remaining balance of the October 8, 2018 convertible
note in the aggregate principal amount of $12,000 plus accrued interest thereon of $4,862, was acquired for gross proceeds of $16,862.
In addition to this Boba Management Corp paid additional settlement costs of $6,800 including an early settlement penalty to JSJ
Investments, Inc.
July 16, 2020
On July 16, 2019, the Company
issued Boba Management Corp a Convertible Promissory Note in the aggregate principal amount of $6,800. The note had a maturity
date of July 26, 2020 and a coupon of 8% per annum. The Company had 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 was 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.
On July 30, 2019, the
Company received notices of conversion from Boba Management Corp, converting the following: (i) the convertible note acquired
from JSJ Investments, Inc. in the aggregate principal amount of $12,000 plus accrued interest thereon of $4,911 into 5,752,981
pre reverse split (575,299 post reverse split) shares of common stock at a conversion price of $0.003 pre reverse split ($0.03
post reverse split) per share; and (ii) the convertible promissory note in the aggregate principal amount of $6,800 plus accrued
interest thereon of $19 into 2,319,982 pre reverse split (231,999 post reverse split) shares of common stock at a conversion price
of $0.003 pre reverse split ($0.03 post reverse split) per share, thereby extinguishing both notes.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Bellridge Capital LP
April 25, 2019
On June 19, 2019, in terms of
a debt purchase agreement entered into with Strategic IR, Bellridge Capital LP acquired an aggregate principal amount of $200,000
plus accrued interest thereon of $3,124 off the $300,000 convertible promissory note originally issued on October 25, 2018, to
Labrys Fund LP, with a maturity date of April 25, 2019 and an original coupon of 8% per annum.
The Convertible note accrues
interest at 18% per annum, the default interest rate in terms of the original Promissory note.
The balance of the convertible
note as of September 30, 2019 is $216,735 including accrued interest thereon.
Global Consulting Alliance
September 15, 2019
On May 25, 2019, pursuant to
the terms of a debt purchase agreement entered into with Power Up Lending., the $83,000 convertible note dated November 21, 2018,
plus accrued interest thereon of $3,275 was acquired by Global Consulting Alliance. The note had a maturity date of September 15,
2019 and a coupon of 8% per annum. The Company may not prepay the note. The outstanding principal amount of the note was 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 three trading prices during the previous ten (10) trading days.
On July 30, 2019, the Company
received a notice of conversion from Global Consulting Alliance, converting $87,565 into 28,823,153 pre reverse split (2,882,216
post reverse split) shares of common stock at a conversion price of $0.00304 pre reverse split ($0.0304 post reverse split) per
share, thereby extinguishing the note. The Company incurred a loss on conversion of $88,256.
May 24, 2020
On May 25, 2019, the Company
issued a Convertible Promissory Note in the aggregate principal amount of $34,510 to Global Consulting Alliance for penalty interest
and expenses incurred by Global consulting Alliance on assuming the Power up Note dated November 21, 2018. The note had a maturity
date of May 24, 2020. The outstanding principal amount of the note was 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 two trading prices during the
previous ten (10) trading days.
On July 30, 2019, the Company
received a notice of conversion from Global Consulting Alliance, converting $35,016 into 12,158,241 pre reverse split shares (1,215,825
post reverse split) shares of common stock at a conversion price of $0.00288 pre reverse split ($0.0288 post reverse split) per
share., thereby extinguishing the note. The Company incurred a loss on conversion of $39,150.
West Point Partners, LLC
September 3, 2020
On September 3, 2019, the Company
issued West Point Partners, LLC a Convertible Promissory Note in the aggregate principal amount of $26,527. The note had a maturity
date of September 3, 2020 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 two trading bid prices during the previous ten (10)
trading days, including the date the notice of conversion is received.
The balance of the convertible
note as of September 30, 2019 is $2,114 including accrued interest thereon, net of discount of $24,570.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company received subscription
advances of $135,400 from investors during the period June 18, 2019 to August 5, 2019. The Company had insufficient authorized
shares to issue the investors the 2,521,615 shares of common stock, this gave rise to a derivative financial liability of $60,804
which was valued using a Black-Scholes valuation model. The value of the derivative liability is assessed every quarter.
Certain of the short-term convertible
notes disclosed in note 6 above and note 11 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 the derivative financial
liabilities above was re-assessed at September 30, 2019 and 2018 and a total of $123,598 and $1,169,205 for the three months ended
September 30, 2019 and 2018 respectively and $986,011 and 3,441,118 for the nine months ended September 30, 2019 and 2018, respectively,
was credited to the consolidated statement of operations and comprehensive loss. 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,
2019
|
|
Conversion price
|
|
$
|
0.03 to 2.00
|
|
Risk free interest rate
|
|
|
1.75 to 2.59
|
%
|
Expected life of derivative liability
|
|
|
1 to 16 months
|
|
Expected volatility of underlying stock
|
|
|
148.4 to 174.49
|
%
|
Expected dividend rate
|
|
|
0
|
%
|
The
movement in derivative liability is as follows:
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
1,833,672
|
|
|
$
|
3,277,621
|
|
Derivative financial liability arising from convertible notes
|
|
|
630,115
|
|
|
|
2,685,844
|
|
Fair value adjustment to derivative liability
|
|
|
(986,011
|
)
|
|
|
(4,129,793
|
)
|
|
|
$
|
1,477,776
|
|
|
$
|
1,833,672
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On November 1, 2019, the Company
effected a 10 for 1 reverse stock split. The reverse stock split has been applied on a retrospective basis and all per share amounts
and earnings per share calculations have been updated to reflect the reverse stock split.
The Company has authorized 500,000,000
common shares with a par value of $0.0001 each. The Company has issued and outstanding 31,047,897 and 8,883,952 shares of common
stock as of September 30, 2019 and December 31, 2018, after giving effect to the 10 for 1 reverse stock split.
In terms of various debt conversion
notices received between January 16, 2019 and September 11, 2019, the Company issued an aggregate of 22,081,374 shares of common
stock in settlement of $1,022,612 of convertible notes, resulting in a net loss on conversion of $1,037,822.
The Company did not repay a
convertible note issued to Labrys Fund, LP prior to the maturity date, which resulted in the returnable commitment shares being
retained by Labrys Fund, LP. The 82,572 shares of common stock was expensed as a commitment fee, valued at $165,254 on April 25,
2019.
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, 2019.
The
warrants outstanding and exercisable at September 30, 2019 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*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6.25
|
|
|
|
621,920
|
|
|
|
1.00
|
|
|
|
|
|
|
|
621,920
|
|
|
|
|
|
$
|
2.00
|
|
|
|
230,855
|
|
|
|
0.75
|
|
|
|
|
|
|
|
230,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
852,775
|
|
|
|
0.94
|
|
|
$
|
5.10
|
|
|
|
852,775
|
|
|
$
|
5.10
|
|
|
*
|
After giving effect to the 10 for reverse stock split on
November 1, 2019.
|
The
warrants outstanding have an intrinsic value of $0 and $0 as of September 30, 2019 and December 31, 2018, 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 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
|
STOCKHOLDERS’ EQUITY
(continued)
|
|
d)
|
Stock
options (continued)
|
The
options outstanding and exercisable at September 30, 2019 are as follows:
|
|
|
Options outstanding
|
|
|
Options exercisable
|
|
Exercise price*
|
|
|
No. of
shares*
|
|
|
Weighted
average
remaining
years
|
|
|
Weighted
average
exercise
price*
|
|
|
No. of
shares*
|
|
|
Weighted
average
exercise
Price*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.40
|
|
|
|
200,000
|
|
|
|
9.25
|
|
|
$
|
0.40
|
|
|
|
200,000
|
|
|
$
|
0.40
|
|
|
*
|
After giving effect to the 10 for reverse stock split on
November 1, 2019.
|
The
options outstanding have an intrinsic value of $0 and $0 as of September 30, 2019 and December 31, 2018, respectively.
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 and nine months
ended September 30, 2019 and the nine months ended September 30, 2018, all convertible debt, stock options and warrants, were
excluded from the computation of diluted 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 – continuing operations
|
|
$
|
436,529
|
|
|
|
8,355,429
|
|
|
$
|
0.05
|
|
Net loss per share – discontinued operations
|
|
|
(163,984
|
)
|
|
|
8,355,429
|
|
|
|
(0.02
|
)
|
|
|
$
|
272,545
|
|
|
|
8,355,429
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Convertible debt
|
|
|
310,852
|
|
|
|
1,420,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – continuing operations
|
|
$
|
747,381
|
|
|
|
9,776,298
|
|
|
$
|
0.08
|
|
Net loss per share – discontinued operations
|
|
|
(163,984
|
)
|
|
|
9,776,2,98
|
|
|
|
(0.02
|
)
|
|
|
$
|
583,397
|
|
|
|
9,776,298
|
|
|
$
|
0.06
|
|
Dilutive
shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation
because their effect would have been anti-dilutive are as follows:
|
|
Three
Months and nine months ended
September 30,
2019
(Shares)*
|
|
|
Three
Months and nine months ended
September 30,
2018
(Shares)*
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
|
54,292,074
|
|
|
|
1,710,298
|
|
Stock Options
|
|
|
200,000
|
|
|
|
—
|
|
Warrants
|
|
|
852,775
|
|
|
|
852,775
|
|
|
|
|
55,344,849
|
|
|
|
2,563,073
|
|
|
*
|
After giving effect to the 10 for reverse stock split on
November 1, 2019.
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
RELATED
PARTY TRANSACTIONS
|
The
following transactions were entered into with related parties:
LOANS
PAYABLE
Description
|
|
Interest Rate
|
|
|
Maturity
Date
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
10
|
%
|
|
February 10, 2020
|
|
$
|
196,307
|
|
|
$
|
177,159
|
|
|
|
|
10
|
%
|
|
December 10, 2019
|
|
|
37,705
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
December 25, 2019
|
|
|
2,003
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir Skigin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment funding
|
|
|
36
|
%
|
|
On Demand
|
|
|
74,662
|
|
|
|
81,316
|
|
Promissory note
|
|
|
15
|
%
|
|
January 11, 2020
|
|
|
59,810
|
|
|
|
55,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable – Related parties
|
|
|
|
|
|
|
|
$
|
370,487
|
|
|
$
|
313,949
|
|
Interest expense totaled $8,413
and $23,248 for the three months ended September 30, 2019 and 2018, respectively and $23,692 and $24,740 for the nine months ended
September 30, 2019 and 2018, respectively.
Strategic IR
February 20, 2020
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. The note had a maturity date of February 10, 2019. On March 18, 2019 the note was extended to February
10, 2020, and the interest rate was changed to 15%.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split ($0.063 post reverse split) per share. The Company did not have sufficient unissued shares to effect the exchange
until the reverse stock split of 10:1 shares came into effect on November 1, 2019.
The balance of the
note as of July 30, 2019, plus accrued interest thereon was $7196,307 and was converted into 3,166,240 post reverse split
shares on November 18, 2019.
December 10, 2019
On September 10, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $37,500 to Strategic IR. The note has a maturity date of December
10, 2019 and a coupon of ten percent per annum. The Company has the right to prepay the note without penalty prior to maturity
date.
The balance of the note plus
accrued interest at September 30, 2019 is $37,705.
December 25, 2019
On September 25, 2019, the Company
issued a Promissory Note in the aggregate principal amount of $2,000 to Strategic IR. The note has a maturity date of December
25, 2019 and a coupon of ten percent per annum. The Company has the right to prepay the note without penalty prior to maturity
date.
The balance of the note plus
accrued interest at September 30, 2019 is $2,003.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
RELATED
PARTY TRANSACTIONS (continued)
|
LOANS PAYABLE (continued)
Vladimir Skigin
Vladimir
Skigin has personally advanced the Company equipment funding. Mr. Skigin is considered to be a related party as his shareholding
and that of the Company’s under his control exceeds 5 %.
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. Pursuant to the
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.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split ($0.063 post reverse split) per share. The Company did not have sufficient unissued shares to effect the exchange
until the reverse stock split of 10:1 shares came into effect on November 1, 2019.
The balance of the note
as of July 30, 2019, plus accrued interest thereon was $74,662, after the interest was adjusted to 19,366 and was converted into
1,204,234 post reverse split shares on November 18, 2019.
Promissory note
On April 17, 2018, the Company
issued a Promissory Note in the aggregate principal amount of $49,491 to Vladimir Skigin. The note had a maturity date of September
13, 2018 and a coupon of eighteen percent per annum. The Company had 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. On February 21, 2019 the maturity
date was extended to September 13, 2019, with the interest rate changed to 15%.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.0063
pre reverse split ($0.063 post reverse split) per share. The Company did not have sufficient unissued shares to effect the exchange
until the reverse stock split of 10:1 shares came into effect on November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $59,810 and was converted into 964,670 post reverse split shares on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
|
December 31
2018
|
|
Description
|
|
Interest
rate
|
|
|
Maturity Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
Unamortized
debt discount
|
|
|
Balance,
net
|
|
|
Balance,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
18
|
%
|
|
April 25, 2019
|
|
|
150,000
|
|
|
|
5,501
|
|
|
|
-
|
|
|
|
155,501
|
|
|
|
-
|
|
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
10,000
|
|
|
|
3,060
|
|
|
|
-
|
|
|
|
13,060
|
|
|
|
12,193
|
|
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
20,164
|
|
|
|
6,157
|
|
|
|
-
|
|
|
|
26,321
|
|
|
|
24,573
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
53,740
|
|
|
|
16,011
|
|
|
|
-
|
|
|
|
69,751
|
|
|
|
65,091
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
115,535
|
|
|
|
34,423
|
|
|
|
-
|
|
|
|
149,958
|
|
|
|
139,940
|
|
|
|
|
8
|
%
|
|
September 19, 2019
|
|
|
33,252
|
|
|
|
2,901
|
|
|
|
|
|
|
|
36,153
|
|
|
|
-
|
|
|
|
|
6
|
%
|
|
July 17,2020
|
|
|
14,583
|
|
|
|
192
|
|
|
|
(11,594
|
)
|
|
|
3,181
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo Limited
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
53,438
|
|
|
|
15,922
|
|
|
|
—
|
|
|
|
69,360
|
|
|
|
64,726
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
52,959
|
|
|
|
15,779
|
|
|
|
—
|
|
|
|
68,738
|
|
|
|
64,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable
|
|
|
|
|
|
|
|
$
|
503,671
|
|
|
$
|
99,946
|
|
|
$
|
(11,594
|
)
|
|
$
|
592,023
|
|
|
$
|
370,669
|
|
Interest expense, together with
amortized debt discount totaled $3,979 and $7,968 for the three months ended September 30, 2019 and 2018, respectively and $7,914
and $515,579 for the nine months ended September 30, 2019 and 2018, respectively.
The 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, 2019 and 2018 was $328,455 and $NIL,
respectively, and for the nine months ended September 30, 2019 and 2018 was $328,455 and $470,759 respectively.
Strategic IR
April 25, 2019
On May 15, 2019, pursuant to
the terms of a debt purchase agreement entered into with Labrys Fund LP. the $300,000 convertible promissory note issued on October
25, 2018, with a maturity date of April 25, 2019 and an original coupon of 8% per annum, was acquired by Strategic IR for gross
proceeds of $302,367, including accrued interest thereon.
The Convertible note earns interest
at 18% per annum, the default interest rate in terms of the Promissory note.
The terms of the convertible
note include a provision for an automatic note penalty of 50% of the note outstanding if the note is in default. Strategic IR enforced
this term resulting in an increase in the principal outstanding in terms of the note of $150,000.
On June 19, 2019, pursuant to
the terms of a debt purchase agreement entered into with Bellridge Capital LP, Strategic IR transferred and assigned the aggregate
principal sum of $200,000 plus accrued interest thereon of $3,124, of the Convertible note acquired from Labrys Fund LP.
On
July 30, 2019, the Company received a notice of conversion from Strategic IR, converting $108,882 of the April
25, 2018 convertible note acquired from Labrys Fund LP, into 37,034,605 pre reverse split (3,703,461 post reverse split) shares
of common stock at a conversion price of $0.003 pre reverse split ($0.03 post reverse split) per share.
The balance of the note plus
accrued interest at September 30, 2019 was $155,501.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE (continued)
Strategic IR (continued)
December 8, 2019
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. Pursuant to the 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. On February 21, 2019 the maturity date was extended to December 8, 2019, with the interest rate remaining unchanged.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $13,060 and was converted into 210,645 post reverse split shares on November 18, 2019.
December 8, 2019
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. On February 21, 2019 the maturity date was extended to December 8, 2019, with the
interest rate remaining unchanged.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $26,321 and was converted into 424,540 post reverse split shares on November 18, 2019.
December 26, 2019
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. On February 21, 2019 the maturity date was extended to December 26, 2019, with the interest
rate remaining unchanged.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $69,751 and was converted into 1,125,020 post reverse split shares on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE (continued)
Strategic IR (continued)
December 26, 2019
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.
Pursuant to the 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. On February 21, 2019 the maturity date was extended to December 26, 2019, with
the interest rate remaining unchanged.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $149,958 and was converted into 2,418,674 post reverse split shares on November 18, 2019.
September 19, 2019
On July 17, 2019, Strategic IR
entered into a debt purchase agreement with GS Capital Partners, whereby the remaining balance of the September 19, 2019 convertible
note in the aggregate principal amount of $33,252 plus accrued interest thereon of $2,165, was acquired for gross proceeds of $35,417.
In addition to this strategic IR paid additional settlement costs of $14,583 including an early settlement penalty to GS Capital
Partners.
As of September 19, 2019, the
note is in default and earns interest at the default interest rate.
The balance of the note outstanding
at September 30, 2019 was $36,153, including interest thereon.
July 17, 2020
On July 17, 2019, the Company
issued Strategic IR a Convertible Promissory Note in the aggregate principal amount of $14,583. The note had a maturity date of
July 17, 2020 and a coupon of 6% 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 convertible
note as of September 30, 2019 is $3,181 including accrued interest thereon, net of discount of $11,594.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE NOTES PAYABLE (continued)
Vladimir Skigin
Vladimir Skigin is the principal
and has control over Cobbolo Limited and has also personally advanced the Company funds.
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. Pursuant to the 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. On February 21, 2019 the maturity date was extended to December 26,
2019, with the interest rate remaining unchanged.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 pre reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as
of July 30, 2019, plus accrued interest thereon was $69,360 and was converted into 1,118,711 post-reverse split shares on
November 18, 2019.
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. Pursuant to the 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. On February 21, 2019 the maturity date was extended to December 26,
2019, with the interest rate remaining unchanged. The note is convertible into common shares of the Company at a conversion price
of $0.20 per share.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.0063 pre reverse split ($0.063 post reverse split) per share. The Company
did not have sufficient unissued shares to effect the exchange until the reverse stock split of 10:1 shares came into effect on
November 1, 2019.
The balance of the note as of
July 30, 2019, plus accrued interest thereon was $68,738 and was converted into 1,108,674 post-reverse split shares on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11
|
COMMITMENTS
AND CONTINGENCIES
|
The Company operates out of sub-let
premises in Calabasas, California. The sub-lease is on a month to month basis at $4,000 per month.
The discontinued operations of
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.
Conversion of convertible
notes into equity
On October 3, 2019, the Company
received a notice of conversion from JSJ Investments, converting $25,000 into 9,999,200 pre reverse stock split (999,920 post reverse
split) shares of common stock at a conversion price of $0.0025 pre reverse split ($0.025 post reverse split) per share. The Company
incurred a loss on conversion of $24,996.
Debt Purchase agreements
On October 21, 2019, West Point
Partners, LLC purchased the February 4, 2019 convertible note issued to GS Capital Partners. The note has an aggregate principal
balance of $96,000 including interest thereon of $3,745 for gross proceeds of $99,745. In addition, West Point Capital Partners,
LLC paid an additional $22,977 to GS Capital Partners as a settlement amount for early settlement and fees thereon.
The Company issued West Point
Partners, LLC a Convertible Promissory Note in the aggregate principal amount of $22,977 as compensation of the settlement amount
paid. The note had a maturity date of October 21, 2020 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 two trading
bid prices during the previous ten (10) trading days, including the date the notice of conversion is received.
Company name change
On November 1, 2019, the Company
changed its name to Innovative Payment Solutions, Inc.
Reverse Stock Split
Immediately after changing its
name to Innovative Payment Solutions, the Company effected a 10 for 1 reverse stock split, thereby reducing the number of shares
in issue from 320,477,867 to 32,047,897, after rounding to the nearest whole share.
Settlement of loans payable
On November 18, 2019, after the
reverse stock split was effected, the Company effected the conversions below.
On July 30, 2019, the holders
of loans payable by the Company, entered into debt exchange agreements, whereby the aggregate principal amount of the loans payable,
together with accrued interest thereon until July 30, 2019 were exchanged for shares of common stock at an exchange price of $0.063
per share ($0.0063 pre-reverse stock split).
In terms of settlement agreements
entered into, the following loans payable were settled by the issuance of shares of common stock:
Description
|
|
Interest rate
|
|
|
Maturity Date
|
|
Principal
|
|
|
Accrued interest
|
|
|
Amount settled
|
|
|
Common Shares issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
15
|
%
|
|
February 10, 2020
|
|
|
168,000
|
|
|
|
28,307
|
|
|
|
196,307
|
|
|
|
3,166,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria Akhmetova
|
|
|
15
|
%
|
|
January 11, 2020
|
|
|
50,000
|
|
|
|
10,425
|
|
|
|
60,425
|
|
|
|
974,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boba Management Corporation
|
|
|
10
|
%
|
|
February 20, 2020
|
|
|
20,000
|
|
|
|
866
|
|
|
|
20,866
|
|
|
|
336,545
|
|
|
|
|
10
|
%
|
|
March 1, 2020
|
|
|
20,000
|
|
|
|
827
|
|
|
|
20,827
|
|
|
|
335,926
|
|
|
|
|
10
|
%
|
|
March 26, 2020
|
|
|
20,000
|
|
|
|
690
|
|
|
|
20,690
|
|
|
|
333,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir Skigin
|
|
|
36
|
%
|
|
On Demand
|
|
|
55,296
|
|
|
|
19,366
|
|
|
|
74,662
|
|
|
|
1,204,234
|
|
|
|
|
15
|
%
|
|
January 11, 2020
|
|
|
49,491
|
|
|
|
10,319
|
|
|
|
59,810
|
|
|
|
964,670
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12
|
SUBSEQUENT
EVENTS (continued)
|
Settlement of fixed price
convertible notes
On November 18, 2019, after the
reverse stock split was effected, the Company effected the conversions below.
On July 30, 2019, the holders
of convertible notes with a $0.20 fixed price conversion feature, entered into debt exchange agreements with the Company, whereby
the aggregate principal amount of the convertible notes, together with accrued interest thereon until July 30, 2019 were exchanged
for shares of common stock at an exchange price of $0.063 per share ($0.0063 pre-reverse stock split).
In terms of agreements entered
into, the following fixed price convertible notes were settled by the issuance of shares of common stock:
Description
|
|
Interest rate
|
|
|
Maturity Date
|
|
Principal
|
|
|
Accrued interest
|
|
|
Amount settled
|
|
|
Common Shares issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
10,000
|
|
|
|
3,060
|
|
|
|
13,060
|
|
|
|
210,645
|
|
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
20,164
|
|
|
|
6,157
|
|
|
|
26,321
|
|
|
|
424,540
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
53,740
|
|
|
|
16,011
|
|
|
|
69,751
|
|
|
|
1,125,020
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
115,535
|
|
|
|
34,423
|
|
|
|
149,958
|
|
|
|
2,418,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria Akhmetova
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
20,164
|
|
|
|
6,157
|
|
|
|
26,321
|
|
|
|
424,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W and Patricia G Abrams
|
|
|
15
|
%
|
|
December 10, 2019
|
|
|
26,247
|
|
|
|
7,992
|
|
|
|
34,239
|
|
|
|
552,250
|
|
|
|
|
15
|
%
|
|
January 27, 2019
|
|
|
3,753
|
|
|
|
1,069
|
|
|
|
4,822
|
|
|
|
77,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman Shefer
|
|
|
15
|
%
|
|
December 24, 2019
|
|
|
10,000
|
|
|
|
2,988
|
|
|
|
12,988
|
|
|
|
209,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings
|
|
|
15
|
%
|
|
December 16, 2019
|
|
|
52,494
|
|
|
|
15,856
|
|
|
|
68,350
|
|
|
|
1,102,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest Commercial, LTD
|
|
|
15
|
%
|
|
December 16, 2019
|
|
|
20,000
|
|
|
|
6,041
|
|
|
|
26,041
|
|
|
|
420,018
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
54,123
|
|
|
|
16,126
|
|
|
|
70,249
|
|
|
|
1,133,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo Limited
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
53,438
|
|
|
|
15,922
|
|
|
|
69,360
|
|
|
|
1,118,711
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
52,959
|
|
|
|
15,779
|
|
|
|
68,738
|
|
|
|
1,108,674
|
|
Subsequent share issuances
for funds received
On July 19 and August 5, 2019,
the Company received subscription advances from an individual subscribing for 19,166,667 pre reverse spilt (1,916,667 post reverse
split) shares of common stock for gross proceeds of $100,000. The Company did not have sufficient unissued shares to issue these
shares until the reverse stock split of 10:1 shares came into effect on November 1, 2019. The $100,000 advance was reflected under
other payables in the financial statements.
Between June 18, 2019 and July
12, 2019, the Company received subscription advances from Strategic IR subscribing for 6,103,448 pre reverse split (610,348 post
reverse split) shares of common stock for gross proceeds of $35,400. The Company did not have sufficient unissued shares to issue
these shares until the reverse stock split of 10:1 shares came into effect on November 1, 2019. The $100,000 advance was reflected
under other payables in the financial statements.
Proposed Sale of Qpagos Corporation
to Vivi Holdings, Inc.
On August 5, 2019, the Company
entered into a Stock Purchase Agreement (“SPA”) with Vivi Holdings, Inc., a Delaware corporation (“Vivi Holdings”),
to sell Qpagos Corporation, a Delaware corporation (“QPAG Sub”), which operates the Company’s business in Mexico
as the holding company for Qpagos, S.A.P.I. de C.V. and Redpag Electrónicos S.A.P.I. de C.V., to Vivi Holdings for 2,250,000
shares of common stock of Vivi Holdings (the “Stock Sale”) “), of which nine percent (9%) is to be allocated
to Gaston Pereira (5%), Andrey Novikov (2.5%), Joseph Abrams (1.5%). The SPA provides that the Stock Sale is subject to customary
conditions, including the Company’s receipt of a final fairness opinion and the approval of the Company’s shareholders.
Upon consummation of the Stock Sale, the Company will no longer have any business operations in Mexico. The Company will retain
its U.S. operations based in Calabasas, California
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.