On December 31, 2019, Innovative
Payment Solutions consummated the disposal of Qpagos Corporation, including the two Mexican subsidiaries, Qpagos Mexico and Redpag
in exchange for 2,250,000 shares of common stock of Vivi Holdings, of which nine percent (9%) was allocated to the following:
Gaston Pereira (5%), Andrey Novikov (2.5%), and Joseph Abrams (1.5%). The SPA was closed on December 31, 2019 after the satisfaction
of customary conditions, the receipt of a final fairness opinion and the approval of our shareholders. Innovative Payment Solutions
no longer have any business operations in Mexico and has retained its U.S. operations based in Calabasas, California.
Innovative Payment Solutions,
Inc. - Parent Company
Qpagos, S.A. P.I de C.V., a Mexican
entity (99.996% owned) – disposed of effective December 31, 2019.
Redpag Electrónicos,
S.A. P.I. de C.V., a Mexican entity (99.990% owned) – disposed of effective December 31, 2019.
Due to the lack of available
information, the Vivi Shares were valued by a modified market method, whereby the value of the assets disposed of were determined
by management using the enterprise value of the entire Company less the liabilities and assets retained by the Company.
Loans
payable consisted of the following:
Description
|
|
Interest
Rate
|
|
|
Maturity
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanislav Minaychenko
|
|
|
4.0
|
%
|
|
June 16, 2020
|
|
|
23,930
|
|
|
|
-
|
|
Maxim Pukhoskiy
|
|
|
4.0
|
%
|
|
June 16, 2020
|
|
|
17,683
|
|
|
|
-
|
|
Wakatec OU
|
|
|
4.0
|
%
|
|
December 21, 2020
|
|
|
-
|
|
|
|
-
|
|
Alexander Motorin
|
|
|
4.0
|
%
|
|
December 23,2020
|
|
|
20,018
|
|
|
|
-
|
|
Andrey Novikov
|
|
|
8.0
|
%
|
|
December 9, 2020
|
|
|
-
|
|
|
|
-
|
|
Victoria Akhmetova
|
|
|
15
|
%
|
|
January 11, 2020
|
|
|
-
|
|
|
|
56,044
|
|
Boba Management Corporation
|
|
|
10
|
%
|
|
December 26, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
February 22, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
March 1, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
March 26, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
April 12, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
May 7, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
May 13,2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
May 20, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
May 23, 2020
|
|
|
-
|
|
|
|
-
|
|
Global Business Partnership AG
|
|
|
10
|
%
|
|
January 14, 2020
|
|
|
-
|
|
|
|
-
|
|
Total loans payable
|
|
|
|
|
|
|
|
$
|
61,631
|
|
|
$
|
56,044
|
|
Interest
expense totaled $7,513 and $6,044 for the year ended December 31, 2019 and 2018, respectively.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
7
|
LOANS
PAYABLE (continued)
|
Stanislav
Minaychenko
On
December 17,2019, in terms of a settlement agreement entered into between the Company, Qpagos Corporation and Stanislav Minaychenko,
the Company issued a promissory note to Mr. Minaychenko in settlement of $23,893 owing to him in terms of a service agreement
dated September 1, 2015. The promissory note bears interest at 4% per annum, is unsecured and matures on June 16, 2020. The balance
of the promissory note, including interest thereon at December 31, 2019 is $23,930.
Maxim
Pukhoskiy
On
December 17, 2019, in terms of a settlement agreement entered into between the Company, Qpagos Corporation and Maxim Pukhoskiy,
the Company issued a promissory note to Mr. Pukhoskiy in settlement of $17,856 owing to him in terms of a service agreement dated
May 1, 2015. The promissory note bears interest at 4% per annum, is unsecured and matures on June 16, 2020. The balance of the
promissory note, including interest thereon at December 31, 2019 is $17,683.
Wakatec
OU
On
December 21, 2019, the Company issued a promissory note to Waketec OU in settlement of a $93,000 trade payable owing by Qpagos
Corporation to Waketec OU. The promissory note bears interest at 4% per annum, is unsecured and matures on December 21, 2020.
On
December 23, 2019, in terms of two debt purchase agreements and assignment agreements entered into Wakatec disposed of $30,000
and $20,000 of the promissory note to Vladimir Skigin and Alexander Motorin. The remaining principal outstanding of $43,000 was
disposed of in terms of the sale of Qpagos Corporation to Viv Holdings, Inc. (Note 4 above).
Alexander
Motorin
On
December 23, 2019, in terms of a debt purchase agreement entered into with Waketec OU, Mr. Motorin acquired $20,000 of the promissory
note issued to Waketec OU by Qpagos Corporation. On December 23, 2019, the Company entered into a debt settlement agreement whereby
the company agreed to the assignment of the debt owed to Mr. Motorin by Qpagos Corporation to the Company in exchange for a new
promissory note in the principal amount of $20,000 issued by the Company. The promissory note is unsecured, bears interest at
4% per annum and matures on December 23, 2020. The balance of the promissory note, including interest thereon at December 31,
2019 is $20,018.
Andrey
Novikov
On
December 9, 2019, in terms of a settlement agreement entered into between the Company, Qpagos Corporation and Andrey Novikov,
the Company issued a promissory note to Mr. Novikov in settlement of $131,906 of a total debt owing to Mr. Novikov of $156,206
owing to him in terms of a service agreement dated September 1, 2015, the balance remaining as owing to Mr. Novikov by Qpagos
Corporation. The promissory note bears interest at 8% per annum, is unsecured and matures on December 9,2020.
On
December 11, 2019, Mr. Novikov entered into two debt purchase agreements, whereby he disposed of the promissory note as follows;
(i) a portion of the note in the principal amount of $65,953 was sold and assigned to Strategic IR and; (ii) a portion of the
note in the principal amount of $65,953 was sold and assigned to Vladimir Skigin, thereby extinguishing the liability owing to
Mr. Novikov.
Viktoria
Akhmetova
On
April 17, 2018, the Company issued a Promissory Note in the aggregate principal amount of $50,000 to Viktoria Akhmetova. The note
had a maturity date of September 13, 2018 and a coupon of 18% 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% per annum.
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 that was effected in November 2019) 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 CONSOLIDATED FINANCIAL STATEMENTS
7
|
LOANS
PAYABLE (continued)
|
Boba
Management Corporation
|
●
|
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 10% 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 that was effected in November 2019) 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.
|
●
|
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 10% 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 that was effected in November 2019) 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.
|
●
|
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 10% 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 that was effected in November 2019) 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.
|
●
|
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 10% 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.
|
On
November 19, 2019, in terms of a debt exchange agreement entered into, Boba Management exchanged principal in the aggregate of
$34,955 and interest thereon of $469 into 1,968,014 shares of common stock at a conversion price of $0.04 per share, thereby extinguishing
the debt and realizing a loss on exchange of $37,392.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
7
|
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 that was effected in November 2019) shares of common stock at a conversion price of $0.01 per
share.
|
●
|
On
April 12, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $20,000 to Boba Management Corporation.
|
|
●
|
On
May 7, 2019, the Company issued a Promissory Note in the aggregate principal amount of
$10,000 to Boba Management Corporation.
|
|
●
|
On
May 13, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $15,000 to Boba Management Corporation.
|
|
●
|
On
May 20, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $15,000 to Boba Management Corporation.
|
|
●
|
On
May 23, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $5,000 to Boba Management Corporation.
|
Global
Business Partnership AG
On
October 16, 2019, the Company issued a Promissory Note in the aggregate principal amount of $24,980 to Global Business Partners
AG. The note had a maturity date of January 14, 2020 and a coupon of 10% per annum. The Company had the right to prepay the note
without penalty prior to maturity date.
On
November 14, 2019, Global Business Partners entered into a share purchase agreement whereby the principal sum of $24,980 and interest
thereon of $198 was settled by the issue of 1,398,803 shares of common stock.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE
|
Convertible
notes payable consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized
|
|
|
December 31,
2019
|
|
|
December 31,
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
|
|
|
|
|
12
|
%
|
|
November 12, 2020
|
|
|
93,000
|
|
|
|
1,223
|
|
|
|
(82,580
|
)
|
|
|
11,643
|
|
|
|
-
|
|
|
|
|
12
|
%
|
|
December 23, 2020
|
|
|
63,000
|
|
|
|
166
|
|
|
|
(61,623
|
)
|
|
|
1,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS Capital Partners, LLC
|
|
|
8
|
%
|
|
May 11, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41,543
|
|
|
|
|
8
|
%
|
|
August 14, 2019
|
|
|
10,000
|
|
|
|
17,557
|
|
|
|
-
|
|
|
|
27,557
|
|
|
|
61,693
|
|
|
|
|
8
|
%
|
|
August 14, 2019
|
|
|
150,000
|
|
|
|
24,789
|
|
|
|
-
|
|
|
|
174,789
|
|
|
|
53,056
|
|
|
|
|
8
|
%
|
|
September 19, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,557
|
|
|
|
|
8
|
%
|
|
September 19, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,134
|
|
|
|
|
8
|
%
|
|
February 4, 2020
|
|
|
48,000
|
|
|
|
6,228
|
|
|
|
(4,985
|
)
|
|
|
49,243
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
February 4, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viktoria Akhmetova
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W and Patricia G Abrams
|
|
|
15
|
%
|
|
December 10, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,964
|
|
|
|
|
15
|
%
|
|
January 27, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman Shefer
|
|
|
15
|
%
|
|
December 24, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown Bridge Partners, LLC
|
|
|
8
|
%
|
|
May 14, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,796
|
|
|
|
|
8
|
%
|
|
June 12, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,437
|
|
|
|
|
8
|
%
|
|
July 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
12,856
|
|
|
|
|
8
|
%
|
|
August 31, 2019
|
|
|
27,500
|
|
|
|
3,303
|
|
|
|
-
|
|
|
|
30,803
|
|
|
|
9,927
|
|
|
|
|
8
|
%
|
|
October 16, 2019
|
|
|
27,500
|
|
|
|
2,887
|
|
|
|
-
|
|
|
|
30,387
|
|
|
|
6,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Pereira
|
|
|
8
|
%
|
|
November 11, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinvest Commercial, LTD
|
|
|
15
|
%
|
|
December 16, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,307
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
65,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOBA Management Corp
|
|
|
8
|
%
|
|
January 23, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
October 8, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
July 16, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Consulting Alliance
|
|
|
8
|
%
|
|
September 15, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
May 24, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dieter Busenhart
|
|
|
6
|
%
|
|
November 12, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
6
|
%
|
|
November 18, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Odyssey Funding LLC
|
|
|
10
|
%
|
|
November 15, 2020
|
|
|
200,000
|
|
|
|
2,521
|
|
|
|
(174,863
|
)
|
|
|
27,658
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Black Ice Advisors, LLC
|
|
|
10
|
%
|
|
November 25, 2020
|
|
|
52,500
|
|
|
|
575
|
|
|
|
(47,336
|
)
|
|
|
5,739
|
|
|
|
-
|
|
Total convertible notes payable
|
|
|
|
|
|
|
|
$
|
671,500
|
|
|
$
|
59,249
|
|
|
$
|
(371,387
|
)
|
|
$
|
359,362
|
|
|
$
|
790,093
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Interest
expense totaled $188,159 and $196,496 and amortization of debt discount totaled $1,349,071 and $2,023,379 for the year ended
December 31, 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 year ended December 31, 2019 and 2018
was $882,448 and $2,141,024, respectively.
Power
Up Lending Group Ltd
|
●
|
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 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.
|
●
|
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 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.
|
●
|
On
November 21, 2019, the Company issued a Convertible Promissory Note in the aggregate
principal amount of $93,000 to Power up Lending Group Ltd. The note had a maturity date
of November 12, 2020 and a coupon of 12% per annum. The Company may prepay the note with
prepayment penalties ranging from 115% to 135%. 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 61% of the lowest three trading
prices during the previous fifteen trading days.
|
The
balance of the note plus accrued interest at December 31, 2019 was $11,643, less unamortized debt discount of $82,580.
|
●
|
On
December 23, 2019, 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 December 23, 2020 and a coupon of 12% per annum. The Company may prepay the note with
prepayment penalties ranging from 115% to 135%. 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 61% of the lowest three trading
prices during the previous fifteen trading days.
|
The
balance of the note plus accrued interest at December 31, 2019 was $1,542, less unamortized debt discount of $61,623.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Labrys
Fund, LP
|
●
|
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
that was effected in November 2019) per share, into 10,070,334 pre reverse split (1,007,034 post reverse split that was effected
in November 2019) shares of common stock, thereby extinguishing the note.
|
●
|
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 that was effected in November 2019) 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 that was effected in November 2019) 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.
JSJ
Investments Inc.
|
●
|
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
that was effected in November 2019) into 8,304,805 pre reverse split (830,481 post reverse split that was effected in November
2019) shares of common stock, thereby extinguishing the convertible note.
|
●
|
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 that
was effected in November 2019), into 14,832,564 pre reverse split (1,483,257 post reverse split that was effected in November
2019) 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
JSJ
Investments Inc. (continued)
|
●
|
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.
|
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 that was effected in November 2019) shares of common stock at a conversion price of $0.0025
pre reverse split ($0.025 post reverse split that was effected in November 2019) per share. The Company incurred a loss on conversion
of $24,996.
On
November 12, 2019, Dieter Busenhart entered into a debt purchase agreement with JSJ Investments, Inc., whereby the remaining balance
of the March 29, 2019 convertible note in the aggregate principal amount of $50,000 plus accrued interest thereon of $3,485, was
acquired for gross proceeds of $53,485. In addition to this Mr. Busenhart paid additional settlement costs of $20,000 including
an early settlement penalty to JSJ Investments, Inc.
GS
Capital Partners, LLC
|
●
|
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 that was effected in November 2019) per share, into 8,087,331 pre reverse split (808,733 post reverse split that was effected
in November 2019) shares of common stock thereby extinguishing the note.
|
●
|
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 that was effected in November
2019) shares of common stock at an average conversion price of $0.00309 pre reverse stock split ($0.031 post reverse stock split
that was effected in November 2019) 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.
On
December 30, 2019, the Company repaid the principal sum of $90,000 on the convertible note.
The
balance of the note plus accrued interest at December 31, 2019 was $27,557.
|
●
|
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 December 31, 2019 was $174,789.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
GS
Capital Partners, LLC (continued)
|
●
|
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 that was effected in November 2019) shares of common
stock at an average conversion price of $0.0098 pre reverse stock split ($0.098 post reverse stock split that was effected in
November 2019) 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 that was effected in November
2019) shares of common stock at an average conversion price of $0.00322 pre reverse stock split ($0.032 post reverse split that
was effected in November 2019) per share, thereby extinguishing the note. The Company incurred a loss on conversion of $28,009.
|
●
|
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.
|
●
|
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.
|
On
December 19, 2019, the Company repaid the principal sum of $48,000 on the convertible note.
The
balance of the note plus accrued interest at December 31, 2019 was $49,243.
|
●
|
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.
|
On
October 21, 2019, West point Partners, LLC entered into a debt purchase agreement with GS Capital Partners, whereby the convertible
note in the aggregate principal amount of $96,000 plus accrued interest thereon of $3,745, was acquired for gross proceeds of
$99,745. In addition to this West Point Partners, LLC IR paid additional settlement costs of $22,977 including an early settlement
penalty to GS Capital Partners.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Viktoria
Akhmetova
On
June 11, 2017, the Company exchanged a note issued to Viktoria Akhmetova, with a principal amount of $20,000, together with accrued
interest thereon of $164, totaling $20,164, for a convertible note, principal amount of $20,164, bearing interest at 12% per annum
and matured on December 8, 2017. 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 that was effected in November 2019) 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.
Joseph
W and Patricia G Abrams
|
●
|
Effective
June 13, 2017, the Company exchanged a note issued to Joseph W and Patricia G Abrams
(“Abrams”) with a principal amount of $25,000, together with accrued interest
thereon of $1,247, totaling $26,247, for a convertible note, principal amount of $26,247,
bearing interest at 12% per annum and matured on December 10, 2017. 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 that was effected in November 2019) 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.
|
●
|
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 that was effected in November 2019) 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Roman
Shefer
On
June 27, 2017, the Company entered into a convertible promissory note in the aggregate principal amount of $10,000. The note bore
interest at 12% per annum and matured on December 16, 2017. 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 that was effected in November 2019) 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.
Crown
Bridge Partners
|
●
|
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 that was effected in November 2019), into 2,380,300 pre reverse split (238,030 post reverse split that was effected in November
2019) shares of common stock, thereby extinguishing the note.
|
●
|
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 that was effected in November 2019), into 7,146,260 pre reverse split (714,626 post reverse split
that was effected in November 2019) shares of common stock, thereby extinguishing the note.
|
●
|
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.
|
Between
June 12,2019 and August 7, 2019, the Company received conversion notices, converting an aggregate principal amount of $18,700,
and fees thereon of $1,000, at an average conversion price of $0.0026 pre reverse split ($0.026 post reverse split that was effected
in November 2019), into 7,700,000 pre reverse split (770,000 post reverse split that was effected in November 2019) shares of
common stock.
On
December 16, 2019, the Company received a notice of conversion from Crown Bridge Partners converting $8,800 of principal, fees
thereon of $500 and interest of $2,409 into 1,045,457 shares of common stock at a conversion price of $0.011 per share, thereby
extinguishing the note. The Company incurred a loss on conversion of $58,336.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Crown
Bridge Partners (continued)
|
●
|
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 interest accrues 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 December 31, 2019 was $30,803.
|
●
|
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 December 31, 2019 was $30,387.
Alex
Pereira
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 that was effected in November 2019), into 2,049,981 pre reverse split
(204,999 post reverse split that was effected in November 2019) 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 that was effected in November 2019) shares of common stock at a conversion price of $0.003131 pre
reverse split (0.0313 post reverse split that was effected in November 2019) per share, thereby extinguishing the note. The Company
incurred a loss on conversion of $9,797.
Delinvest
Commercial, LTD.
|
●
|
On
June 19, 2017, the Company issued Delinvest Commercial LTD. (“Delinvest”)
a convertible promissory note in the aggregate principal amount of $20,000. The note
bore interest at 12% per annum and matured on December 16, 2017. 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 that was effected in November 2019) 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Delinvest
Commercial, LTD. (continued)
|
●
|
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 that was effected in November 2019) 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.
BOBA
Management Corporation
|
●
|
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 that was effected in November 2019) shares of common stock at a conversion price of $0.003
pre reverse split ($0.03 post reverse split that was effected in November 2019) per share. The Company incurred a loss on conversion
of $103,947.
|
●
|
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.
|
|
●
|
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 that was effected in November 2019) shares of common stock at a conversion
price of $0.003 pre reverse split ($0.03 post reverse split that was effected in November 2019) 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 that was effected in November 2019) shares of common stock at a conversion price of $0.003 pre reverse
split ($0.03 post reverse split that was effected in November 2019) per share, thereby extinguishing both notes.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Global
Consulting Alliance
|
●
|
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 that was effected in November 2019) shares of common stock at a conversion price
of $0.00304 pre reverse split ($0.0304 post reverse split that was effected in November 2019) per share, thereby extinguishing
the note. The Company incurred a loss on conversion of $88,256.
|
●
|
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 that was effected in November 2019) shares of common stock at a conversion
price of $0.00288 pre reverse split ($0.0288 post reverse split that was effected in November 2019) per share., thereby extinguishing
the note. The Company incurred a loss on conversion of $39,150.
Dieter
Busenhart
|
●
|
On
November 12, 2019, Dieter Busenhart entered into a debt purchase agreement with JSJ Investments,
Inc., whereby the remaining balance of the March 29, 2019 convertible note in the aggregate
principal amount of $50,000 plus accrued interest thereon of $3,485, was acquired for
gross proceeds of $53,485. 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. On November 18, 2019, the Company and Dieter Busenhart
entered into an exchange agreement, replacing the existing note with a new note with
a maturity date of November 18, 2020, removing the conversion limitation of ownership
of 9.99% and reducing the interest rate to 6% per annum.
|
On
November 19, 2019, the Company received a notice of conversion converting the aggregate principal amount of the note outstanding,
including interest thereon, totaling $53,595 into 3,370,725 shares of common stock at a conversion price of $0.159 per share,
thereby extinguishing the note. The Company realized a loss on conversion of $71,122.
|
●
|
On
November 12, 2019, the Company issued a Convertible Promissory Note in the aggregate
principal amount of $23,250 to Dieter Busenhart for penalty interest and expenses incurred
by him on acquiring the JSJ Investments, Inc. note dated March 29, 2019. The note had
a maturity date of November 12, 2020 and bears interest at 6% per annum. 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 average three lowest trading prices during the previous ten trading days.
|
On
November 19, 2019, the Company received a notice of conversion converting the aggregate principal amount of the note outstanding,
including interest thereon, totaling $23,273 into 1,463,706 shares of common stock at a conversion price of $0.159 per share,
thereby extinguishing the note. The Company realized a loss on conversion of $30,884.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
|
CONVERTIBLE
NOTES PAYABLE (continued)
|
Odyssey
Funding, LLC
On
November 15, 2019, the Company issued a Convertible Promissory Note in the aggregate principal amount of $200,000 to Odyssey Funding,
LLC. The note had a maturity date of November 15, 2020 and a coupon of 10% per annum. The Company may prepay the note with prepayment
penalties ranging from 120% to 145%. 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 58% of the lowest trading price during
the previous fifteen trading days.
The
balance of the note plus accrued interest at December 31, 2019 was $27,657, less unamortized debt discount of $174,864.
Black
Ice Advisors, LLC
On
November 25, 2019, the Company issued a Convertible Promissory Note in the aggregate principal amount of $52,500 to Black Ice
Advisors, LLC. The note had a maturity date of November 25, 2020 and a coupon of 10% per annum. The Company may prepay the note
with prepayment penalties ranging from 120% to 145%. 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 58% of the lowest
trading price during the previous fifteen trading days.
The
balance of the note plus accrued interest at December 31, 2019 was $5,739, less unamortized debt discount of $47,336.
Certain
of the short-term convertible notes disclosed in note 8 above and note 14 below, have variable priced conversion rights with no
fixed floor price and will re-price dependent on the share price performance over varying periods of time, due to the variable
priced conversion rights, all convertible notes and any warrants attached thereto, issued subsequent to the variable priced conversion
notes are valued and give rise to a derivative financial liability, which was initially valued at inception of the convertible
notes using a Black-Scholes valuation model. The value of this derivative financial liability was re-assessed at December 31, 2019
and 2018, and $1,981,938 and $4,129,793 was credited to the statement of operations and comprehensive loss, respectively.
The value of the derivative liability will be re-assessed at each financial reporting period, with any movement thereon recorded
in the statement of operations in the period in which it is incurred.
The
following assumptions were used in the Black-Scholes valuation model:
|
|
Year ended
December 31,
2019
|
|
|
Year ended
December 31,
2018
|
|
Conversion price*
|
|
$
|
0.02
to 2.00
|
|
|
$
|
0.20
to 2.50
|
|
Risk free interest rate
|
|
|
1.53
to 2.59
|
%
|
|
|
1.78
to 2.81
|
%
|
Expected life of derivative liability
|
|
|
1
to 12 months
|
|
|
|
3
to 12 months
|
|
Expected volatility of underlying stock
|
|
|
148.5
to 224.3
|
%
|
|
|
169.15
to 230.55
|
%
|
Expected dividend rate
|
|
|
0
|
%
|
|
|
0
|
%
|
*
|
Adjusted
for 10 for 1 reverse stock split effective November 1, 2019.
|
The
movement in derivative liability is as follows:
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
1,833,672
|
|
|
$
|
3,277,621
|
|
Derivative financial liability arising from convertible note
|
|
|
1,053,842
|
|
|
|
2,685,844
|
|
Fair value adjustment to derivative liability
|
|
|
(1,981,938
|
)
|
|
|
(4,129,793
|
)
|
|
|
$
|
905,576
|
|
|
$
|
1,833,672
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
The
Company has authorized 500,000,000 common shares with a par value of $0.0001 each. The Company has issued and outstanding 128,902,124
shares of common stock as of December 31, 2019 and 8,883,922 as of December 31, 2018, after giving effect
to a 10 for 1 reverse stock split.
On
November 1, 2019, 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 (the “Reverse Stock Split”), effective on November 1,
2019. As a result of the Reverse Stock Split, each ten (10) pre-split shares of common stock outstanding was automatically combined
into one (1) new share of common stock without any further action on the part of the holders, and the number of outstanding shares
common stock was reduced from 320,477,867 shares to 32,047,886 shares, after taking into account rounding up for fractional shares.
The
following common shares were issued by the Company during the year ended December 31, 2019.
|
●
|
In
terms of various debt conversion notices received between January 16, 2019 and December
17, 2019, the Company issued an aggregate of 99,106,803 shares of common stock, and in
terms of various debt exchange agreements entered into on November 18, 2019, the Company
issued an aggregate of 17,641,713 shares of common stock, in settlement of $2,792,648
of convertible notes and $791,857 of loans payable, resulting in a net loss on conversion
and exchange of $2,838,599.
|
|
●
|
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.
|
|
●
|
In
terms of subscription agreements entered into with investors between August 5, 2019 and
November 18, 2019, the Company issued 3,177,015 shares of common stock for gross proceeds
of $200,400.
|
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 December 31, 2019 and 2018.
A
summary of warrant activity during the period January 1, 2018 to December 31, 2019 is as follows:
|
|
Shares
Underlying
Warrants*
|
|
|
Exercise
price per
share*
|
|
|
Weighted
average
exercise
price*
|
|
Outstanding January 1, 2018
|
|
|
852,775
|
|
|
$
|
2.00
to 6.25
|
|
|
$
|
5.10
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2018
|
|
|
852,775
|
|
|
$
|
2.00
to 6.25
|
|
|
$
|
5.10
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2019
|
|
|
852,775
|
|
|
$
|
2.00
to 6.25
|
|
|
$
|
5.10
|
|
*
Adjusted for 10 for 1 reverse stock split effective November 1, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
10
|
STOCKHOLDERS’
EQUITY (continued)
|
The
warrants outstanding and exercisable at December 31, 2019 are as follows:
|
|
|
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
Exercise
Price*
|
|
|
Number
Outstanding*
|
|
|
Weighted
Average
Remaining
Contractual
life in years
|
|
|
Weighted
Average
Exercise
Price*
|
|
|
Number
Exercisable*
|
|
|
Weighted
Average
Exercise
Price*
|
|
|
Weighted
Average
Remaining
Contractual
life in years
|
|
$
|
6.25
|
|
|
|
621,920
|
|
|
|
0.75
|
|
|
|
|
|
|
|
621,920
|
|
|
|
|
|
|
|
|
|
$
|
2.00
|
|
|
|
230,855
|
|
|
|
0.50
|
|
|
|
|
|
|
|
230,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
852,775
|
|
|
|
0.68
|
|
|
$
|
5.10
|
|
|
|
852,775
|
|
|
$
|
5.10
|
|
|
|
0.68
|
|
*
|
Adjusted
for 10 for 1 reverse stock split effective November 1, 2019.
|
The
warrants outstanding have an intrinsic value of $0 and $0 as of December 31, 2019 and 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 either specifically granted to it under the Plan.
The
maximum number of securities available under the plan is 8,000,000 shares of common stock. The maximum number of shares of common
stock awarded to any individual during any fiscal year may not exceed 1,000,000 shares of common stock.
No
options or restricted shares were granted for the year ended December 31, 2019.
On
June 29, 2018, the Company granted a director 120,000 shares of restricted common stock in terms of the Stock Incentive Plan.
These shares were valued at $49,200 on the date of grant and were vested immediately.
On
December 27, 2018, the Company granted a director 70,000 shares of restricted common stock in terms of the stock incentive plan.
These shares were valued at $2,975 on the granted date and vested immediately.
On
December 27, 2018, the Company granted ten year options to purchase an aggregate of 2,000,000 shares of common stock at an exercise
price of $0.04 per share, valued at $79,606, to the executive officers of the Company.
On
November 1, 2019m, the 100,000 stock options issued to Gaston Pereira expired as they were not exercised within three months of
his resignation.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
10
|
STOCKHOLDERS’
EQUITY (continued)
|
|
d.
|
Stock
options (continued)
|
The
fair value of the options issued were valued using a Black Scholes option pricing model using the following assumptions:
|
|
Year ended
December 31,
2018
|
|
|
|
|
|
Calculated stock price
|
|
$
|
0.04
|
|
Risk-free interest rate
|
|
|
2.77
|
%
|
Expected life of warrants (in years)
|
|
|
10
|
|
Expected volatility of the underlying stock
|
|
|
174.91
|
%
|
Expected dividend rate
|
|
|
0
|
%
|
The
volatility of the common stock is estimated using historical data of the Company. The risk-free interest rate used in the Black-Scholes
pricing model is determined by reference to historical U.S. Treasury constant maturity rates with maturities approximate
to the life of the options granted. An expected dividend yield of zero is used in the valuation model, because the Company does
not expect to pay any cash dividends in the foreseeable future. As of December 31, 2018, the Company does not anticipate
any of the options will be forfeited in performing the valuation of the options.
A
summary of option activity during the period January 1, 2018 to December 31, 2019 is as follows:
|
|
Shares
Underlying
options*
|
|
|
Exercise
price per
share*
|
|
|
Weighted
average
exercise
price*
|
|
Outstanding January 1, 2018
|
|
|
200,000
|
|
|
$
|
0,40
|
|
|
$
|
0,40
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2018
|
|
|
200,000
|
|
|
|
0.40
|
|
|
|
0.40
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/Cancelled
|
|
|
(100,000
|
)
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2019
|
|
|
100,000
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
*
|
Adjusted
for 10 for 1 reverse stock split effective November 1, 2019.
|
The
options outstanding and exercisable at December 31, 2019 are as follows:
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
Exercise
Price*
|
|
|
Number
Outstanding*
|
|
|
Weighted
Average
Remaining
Contractual
life in years
|
|
|
Weighted
Average
Exercise
Price*
|
|
|
Number
Exercisable
|
|
|
Weighted
Average
Exercise
Price*
|
|
|
Weighted
Average
Remaining
Contractual
life in years
|
|
|
0.40
|
|
|
|
100,000
|
|
|
|
9.00
|
|
|
$
|
0.40
|
|
|
|
100,000
|
|
|
$
|
0.4
|
|
|
|
9.00
|
|
*
|
Adjusted
for 10 for 1 reverse stock split effective November 1, 2019.
|
The
options outstanding have an intrinsic value of $0 and $0 as of December 31, 2019 and 2018, respectively.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
The
Company’s primary operations were based in Mexico and currently enacted tax laws in Mexico are used in the calculation of
income taxes, the holding company is based in the US and currently enacted US tax laws are used in the calculation of income taxes.
Federal
Corporate Income Tax (“CIT”) - Mexico
CIT
applies to Mexican resident taxpayers’ income from worldwide sources, as well as to foreign residents on the income attributed
to their permanent establishments (“Pes”) located in Mexico. The federal CIT rate is 30%.
All
corporate entities, including associations of a civil nature, branches, etc., are subject to the tax rules applicable to Mexican
corporations (unless specifically ruled out).
Provisions
to recognize the effects of inflation for tax purposes in the areas of monetary assets and liabilities (annual monetary adjustment)
and depreciable assets are provided in the Mexican Income Tax Law, even though recent inflation rates have been stable at low
levels
Federal
Income Tax - United States
On
December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed
into law by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to
the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction
for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses
to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to
carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated,
elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments
instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including
changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be
effective in the future). Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal
tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred
tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest
and penalties on income taxes as interest expense or penalties expense. As of December 31, 2019 and 2018, there have been no interest
or penalties incurred on income taxes.
The
provision for income taxes consists of the following:
|
|
|
Year
ended
December 31,
2019
|
|
|
|
Year
ended
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
11
|
INCOME
TAXES (continued)
|
A
reconciliation of the U.S. Federal statutory income tax to the effective income tax is as follows:
|
|
Year ended
December 31,
2019
|
|
|
Year ended
December 31,
2018
|
|
Continuing operations
|
|
|
|
|
|
|
Tax expense at the federal statutory rate
|
|
$
|
(850,030
|
)
|
|
$
|
(1,141,370
|
)
|
State tax expense, net of federal tax effect
|
|
|
-
|
|
|
|
-
|
|
Effect of foreign operations
|
|
|
-
|
|
|
|
27,713
|
|
Effect of income tax rate change
|
|
|
-
|
|
|
|
-
|
|
Permanent timing differences
|
|
|
772,183
|
|
|
|
(147,563
|
)
|
Temporary timing differences
|
|
|
27,299
|
|
|
|
8,271
|
|
|
|
|
(50,548
|
)
|
|
|
(1,252,950
|
)
|
Deferred income tax asset valuation allowance
|
|
|
50,548
|
|
|
|
1,252,950
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
Tax expense at the federal statutory rate
|
|
$
|
66,918
|
|
|
$
|
(1,141,370
|
)
|
State tax expense, net of federal tax effect
|
|
|
-
|
|
|
|
-
|
|
Effect of foreign operations
|
|
|
(27,739
|
)
|
|
|
27,713
|
|
Effect of income tax rate change
|
|
|
-
|
|
|
|
-
|
|
Permanent timing differences
|
|
|
(1,834,306
|
)
|
|
|
(147,563
|
)
|
Temporary timing differences
|
|
|
63,004
|
|
|
|
8,271
|
|
|
|
|
(1,732,123
|
)
|
|
|
(1,252,950
|
)
|
Deferred income tax asset valuation allowance
|
|
|
1,732,123
|
|
|
|
1,252,950
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Significant components of the Company’s
deferred income tax assets are as follows:
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Depreciation and amortization
|
|
$
|
-
|
|
|
$
|
12,618
|
|
Other
|
|
|
27,299
|
|
|
|
(15,412
|
)
|
Net operating losses
|
|
|
3,936,879
|
|
|
|
3,750,027
|
|
Valuation allowance
|
|
|
(3,964,178
|
)
|
|
|
(3,747,233
|
)
|
Net deferred income tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
The valuation allowance for deferred income
tax assets as of December 31, 2019 and December 31, 2018 was $3,964,178 and $3,747,233, respectively. The net
change in the deferred income tax assets valuation allowance was an increase of 216,946 after reducing prior year tax loss carry
forwards by $(313,050) upon assessment, increasing the deferred tax asset by $63,004 for current year temporary timing differences
and by reducing the deferred tax asset by $(1,315,240) for the disposal of Qpagos Corporation and the Mexican operations, effective
December 31, 2019.
As of December 31, 2019,
the prior three years remain open for examination by the federal or state regulatory agencies for purposes of an audit for tax
purposes.
Estimated net operating loss
carry-forwards of Innovative Payment Solutions of $18,747,044 begin to expire in 2034 through 2040. In assessing the realizability
of deferred income tax assets, management considers whether or not it is more likely than not that some portion or all deferred
income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers the projected
future taxable income and tax planning strategies in making this assessment.
The Company’s ability
to utilize the United States Federal operating loss carry-forwards may be subject to an annual limitation if pursuant to IRC Section
382/383 of the Internal Revenue Code of 1986, as amended, if a change of ownership has occurred. Management has not determined
if an ownership change has occurred under IRC Section 382/383, but is evaluating, if such change has occurred. If such change
has occurred it is also possible that the loss carryforward could be eliminated.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
12
|
EQUITY
BASED COMPENSATION
|
Equity
based compensation is made up of the following:
|
|
Year ended December 31,
2019
|
|
|
Year ended December 31,
2018
|
|
|
|
|
|
|
|
|
Incentive stock awards
|
|
$
|
-
|
|
|
|
52,175
|
|
Stock issued for services rendered
|
|
|
162,254
|
|
|
|
34,739
|
|
|
|
$
|
162,254
|
|
|
$
|
86,914
|
|
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 years ended December 31, 2019
and 2018 all warrants options and convertible debt securities were excluded from the computation of diluted net loss per share.
Dilutive
shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation
because their affect would have been anti-dilutive for the years ended December 31, 2019 and 2018 are as follows:
|
|
Year ended
December 31,
2019
(Shares)
|
|
|
Year ended
December 31,
2018
(Shares)
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
|
28,557,283
|
|
|
|
7,791,195
|
|
Stock options
|
|
|
100,000
|
|
|
|
200,000
|
|
Warrants to purchase shares of common stock
|
|
|
852,775
|
|
|
|
852,775
|
|
|
|
|
29,510,058
|
|
|
|
8,843,970
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS
|
The
following transactions were entered into with related parties:
Gaston
Pereira
On
December 27, 2018, the company granted Mr. Pereira ten year options to purchase an aggregate of 100,000 shares of common stock
at an exercise price of $0.40 per share. These options expired on November 1, 2019, three months after his resignation
Andrey
Novikov
On
December 27, 2018, the company granted Mr. Novikov ten year options to purchase an aggregate of 100,000 shares of common stock
at an exercise price of $0.40 per share.
James
Fuller
On
June 29, 2018, the Company granted Mr. Fuller 12,000 shares of restricted common stock in terms of the Stock Incentive Plan.
On
December 27, 2018, the Company granted Mr. Fuller 7,000 shares of restricted common stock in terms of the stock incentive plan.
LOANS
PAYABLE
Description
|
|
Interest Rate
|
|
|
Maturity Date
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir Skigin
|
|
|
18
|
%
|
|
January 11, 2020
|
|
|
-
|
|
|
|
55,474
|
|
|
|
|
4
|
%
|
|
December 12,2020
|
|
|
30,026
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
December 9, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
36
|
%
|
|
On Demand
|
|
|
-
|
|
|
|
81,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
10
|
%
|
|
February 10, 2020
|
|
$
|
-
|
|
|
$
|
177,159
|
|
|
|
|
|
|
|
November 17, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
December 10, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10
|
%
|
|
December 25, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
January 9, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
January 13, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans payable - Related parties
|
|
|
|
|
|
|
|
$
|
30,026
|
|
|
$
|
313,949
|
|
Interest
expense amounted to $24,771 and $14,141 for the years ended December 31, 2019 and 2018, respectively.
Vladimir
Skigin
Mr.
Skigin is considered to be a related party as his shareholding and that of the Company’s under his control exceeds 5%.
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 that was effected in November 2019) 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 CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
LOANS
PAYABLE (continued)
Vladimir
Skigin (continued)
On
December 23, 2019, in terms of a debt purchase agreement entered into with Waketec OU, Mr. Skigin acquired $30,000 of the promissory
note issued to Waketec OU by Qpagos Corporation. On December 23, 2019, the Company entered into a debt settlement agreement whereby
the company agreed to the assignment of the debt owed to Mr. Skigin by Qpagos Corporation to the Company in exchange for a new
promissory note in the principal amount of $30,000 issued by the Company. The promissory note is unsecured, bears interest at
4% per annum and matures on December 23, 2020. The balance of the promissory note, including interest thereon at December 31,
2019 is $30,026.
On
December 11, 2019, Mr. Skigin purchased a portion of a note issued to Andrey Novikov by Qpagos Corporation in the principal amount
of $65,953. On December 17, 2019, the company entered into a debt settlement with Mr. Skigin whereby the Note was assigned from
Qpagos Corporation to the Company and was simultaneously settled by the issue of 2,231,768 shares of common stock at an issue
price of $0.03 per share, thereby extinguishing the note. A loss on settlement of $67,953 was realized.
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 that was effected in November 2019) 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.
Strategic
IR
Strategic
IR is considered to be a related party as its shareholding is approximately 24.0%.
|
●
|
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 that was effected in November 2019) 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 $196,307 and was converted into 3,166,240 post reverse
split shares on November 18, 2019.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
LOANS
PAYABLE (continued)
Strategic
IR
On
November 15, 2019, the Company entered into Securities Purchase Agreements with Strategic IR whereby the following notes totaling
$79,500 previously advanced to the Company during the period August 19, 2019 to October 15, 2019, was converted into 4,486,750
shares of common stock at a conversion price of $0.037 per share, thereby extinguishing the notes and realizing a loss on conversion
of $85,248.
|
●
|
On
August 19, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $15,000 to Strategic IR. The note has a maturity date of November 17, 2019 and a coupon
of ten percent per annum. The Company has the right to prepay the note without penalty
prior to maturity date.
|
|
●
|
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.
|
|
●
|
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.
|
|
●
|
On
October 11, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $3,000 to Strategic IR. The note has a maturity date of January 9, 2020 and a coupon
of ten percent per annum. The Company has the right to prepay the note without penalty
prior to maturity date.
|
|
●
|
On
October 15, 2019, the Company issued a Promissory Note in the aggregate principal amount
of $22,000 to Strategic IR. The note has a maturity date of January 13, 2020 and a coupon
of ten percent per annum. The Company has the right to prepay the note without penalty
prior to maturity date.
|
CONVERTIBLE
NOTES PAYABLE
Description
|
|
Interest
rate
|
|
|
Maturity Date
|
|
Principal
|
|
|
Accrued
interest
|
|
|
Unamortized
debt
discount
|
|
|
December 31,
2019
Balance,
net
|
|
|
December 31,
2018
Balance,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic IR
|
|
|
18
|
%
|
|
April 25, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,193
|
|
|
|
|
15
|
%
|
|
December 8, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,573
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
65,091
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
139,940
|
|
|
|
|
8
|
%
|
|
September 19, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
6
|
%
|
|
July 17,2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobbolo Limited
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,726
|
|
|
|
|
15
|
%
|
|
December 26, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibbs International Holdings
|
|
|
15
|
%
|
|
On demand
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63,798
|
|
|
|
|
8
|
%
|
|
August 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
155,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bellridge Capital LP
|
|
|
18
|
%
|
|
April 25, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Point Partners, LLC
|
|
|
8
|
%
|
|
September 3, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
6
|
%
|
|
November 18, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8
|
%
|
|
October 21, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible
notes payable
|
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
589,812
|
|
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE (continued)
Interest
expense amounted to $58,732 and $67,101 for the years ended December 31, 2019 and 2018, respectively. The amortization of debt
discount amounted to $343,039 and $614,277 for the years ended December 31, 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 year ended December 31, 2019 and 2018
was $141,591and $544,819, respectively.
Strategic
IR
|
●
|
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 that was effected in November
2019) shares of common stock at a conversion price of $0.003 pre reverse split ($0.03 post reverse split that was effected in
November 2019) per share.
On
November 18, 2019, the Company and Strategic IR entered into an exchange agreement, replacing the remaining balance of the May
15, 2019 convertible note purchased from Labrys Fund LP, 2019, including interest thereon with a new note in the aggregate principal
amount of $159,123 with a maturity date of November 18, 2020, removing the conversion limitation of ownership of 9.99% and reducing
the interest rate to 6% per annum.
On
November 19, 2019, in terms of a conversion notice received, the Company received a conversion notice converting the aggregate
principal sum of $159,123 and interest thereon into 10,007,882 shares of common stock at a conversion price of $0.0159 per share,
thereby extinguishing the note and realizing a loss on conversion of $211,166.
|
●
|
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 that was effected in November 2019) 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE (continued)
Strategic
IR (continued)
|
●
|
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 that was effected in November 2019) 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.
|
●
|
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 that was effected in November 2019) 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.
|
●
|
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 that was effected in November 2019) 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE (continued)
Strategic
IR (continued)
|
●
|
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.
On
November 18, 2019, the Company and Strategic IR entered into an exchange agreement, replacing the balance of the July 15, 2019
convertible note purchased from GS Capital Partners, including interest thereon with a new note in the aggregate principal amount
of $37,224 with a maturity date of November 18, 2020, removing the conversion limitation of ownership of 9.99% and reducing the
interest rate to 6% per annum.
On
November 19, 2019, in terms of a conversion notice received, the Company received a conversion notice converting the aggregate
principal sum of $37,224 into 2,386,181 shares of common stock at a conversion price of $0.0156 per share, thereby extinguishing
the note and realizing a loss on conversion of $51,064.
|
●
|
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.
|
On
November 19, 2019, in terms of a conversion notice received, the Company received a conversion notice converting the aggregate
principal sum of $14,583, including interest thereon of $297 into 935,887 shares of common stock at a conversion price of $0.0159
per share, thereby extinguishing the note and realizing a loss on conversion of $19,747.
|
●
|
On
December 11, 2019, Strategic IR purchased a portion of a note issued to Andrey Novikov
by Qpagos Corporation in the principal amount of $65,953. On December 17, 2019, the company
entered into a debt settlement with Strategic IR whereby the Note was assigned from Qpagos
Corporation to the Company and was simultaneously settled by the issue of 2,231,768 shares
of common stock at an issue price of $0.03 per share, thereby extinguishing the note.
A loss on settlement of $67,953 was realized.
|
Vladimir
Skigin
Vladimir
Skigin is the principal and has control over Cobbolo Limited and has also personally advanced the Company funds.
Cobbolo
Limited
|
●
|
On
June 29, 2017, the Company exchanged a note issued to Cobbolo Limited with a principal
amount of $50,000, together with accrued interest thereon of $3,438, totaling $53,438,
for a convertible note, principal amount of $53,438, bearing interest at 12% per annum
and 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.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
|
RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE (continued)
Vladimir
Skigin (continued)
|
●
|
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 that was effected in November 2019) 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.
Gibbs
International Holdings
Gibbs
International Holdings is considered to be a related party as its shareholding is approximately 14.4%.
|
●
|
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.
|
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 that was effected in November 2019) 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.
|
●
|
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 provided for the payment of a penalty of 10% of the principal outstanding,
amounting to $40,573.
On
December 4, 2019, the Company received conversion notices converting the principal sum of $405,735, a once off penalty of $40,573
and interest thereon of $54,529 into 21,000,000 shares of common stock at a conversion price of $0.0238 thereby extinguishing
the note. A loss on conversion of $528,162 was realized.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
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RELATED
PARTY TRANSACTIONS (continued)
|
CONVERTIBLE
NOTES PAYABLE (continued)
Bellridge
Capital LP
Bellridge
Capital LP is considered to be a related party as its shareholding is approximately 10.5%.
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.
On
November 19, 2019, the Company received a notice of conversion from Bellridge Capital LP converting the principal sum of $200,000
and interest thereon of $21,568 into 13,935,112 shares of common stock at a conversion price of $0.0159 per share, thereby extinguishing
the note. The Company incurred a loss on conversion of $294,031.
West
Point Partners, LLC
|
●
|
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.
|
On
November 19, 2019, the Company received a notice of conversion converting the aggregate principal amount of the note outstanding,
including interest thereon, totaling $26,968 into 1,812,390 shares of common stock at a conversion price of $0.149 per share,
thereby extinguishing the note. The Company realized a loss on conversion of $40,090.
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●
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On
October 21, 2019, West point Partners, LLC entered into a debt purchase agreement with
GS Capital Partners, whereby the convertible note in the aggregate principal amount of
$96,000 plus accrued interest thereon of $3,745, was acquired for gross proceeds of $99,745.
On November 18, 2019, the Company and West Point Partners, LLC entered into an exchange
agreement, replacing the existing note with a new note with a maturity date of November
18, 2020, removing the conversion limitation of ownership of 9.99% and reducing the interest
rate to 6% per annum.
|
On
November 19, 2019, the Company received a notice of conversion converting the aggregate principal amount of the note outstanding,
including interest thereon, totaling $102,039 into 6,857,446 shares of common stock at a conversion price of $0.149 per share,
thereby extinguishing the note. The Company realized a loss on conversion of $151,687.
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●
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On
October 21, 2019, the Company issued a Convertible Promissory Note in the aggregate principal
amount of $22,977 to West Point Partners, LLC for penalty interest and expenses incurred
by West Point Partners LLC on acquiring the GS Capital Partners note dated March 4, 2019.
The note had a maturity date of October 21, 2020 and bears interest at 8% per annum.
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 two trading prices during the previous ten trading days.
|
On
November 19, 2019, the Company received a notice of conversion converting the aggregate principal amount of the note outstanding,
including interest thereon, totaling $23,118 into 1,553,621 shares of common stock at a conversion price of $0.149 per share,
thereby extinguishing the note. The Company realized a loss on conversion of $34,366.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
15
|
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 ended on December 16, 2019.
COVID-19 Outbreak
In March 2020, the outbreak of COVID-19
(coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the
outbreak has become increasingly widespread in the United States, including in each of the areas in which the Company operates.
While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual
meetings and the like. The Company continues to monitor the impact of the COVID-19 (coronavirus) outbreak closely. The extent
to which the COVID-19 (coronavirus) outbreak will impact our operations, ability to obtain financing or future financial results
is uncertain.
Debt exchanges
On
January 7, 2020, the Company entered into a debt exchange agreement whereby the aggregate principal sum of $20,000 plus accrued
interest of $33 was exchanged for 1,001,644 shares of common stock at an issue price of $0.02 per share, realizing a loss on exchange
of $20,033.
On January 7, 2020, the Company entered into a debt exchange agreement
whereby the aggregate principal sum of $30,000 plus accrued interest of $49 was exchanged for 1,502,466 shares of common stock
at an issue price of $0.02 per share, realizing a loss on exchange of $30,049.
Convertible
note funding
On
January 13, 2020, the Company issued a Convertible Promissory Note in the aggregate principal amount of $100,000 to Odyssey Funding,
LLC. The note had a maturity date of January 13, 2021 and a coupon of 10% per annum. The Company may prepay the note with prepayment
penalties ranging from 125% to 145%. 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 58% of the lowest trading price during
the previous fifteen trading days.
On
January 22, 2020, the Company issued a Convertible Promissory Note in the aggregate principal amount of $43,000 to Power Up Lending
Group Ltd. The note had a maturity date of January 22, 2021 and a coupon of 12% per annum. The Company may prepay the note with
prepayment penalties ranging from 115% to 135%. 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 61% of the lowest trading
price during the previous fifteen trading days.
On
February 5, 2020, the Company issued a Convertible Promissory Note in the aggregate principal amount of $105,000 to Adar Alef,
LLC. The note had a maturity date of February 5, 2021 and a coupon of 10% per annum. The Company may prepay the note with prepayment
penalties ranging from 120% to 145%. 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 58% of the lowest trading price during
the previous fifteen trading days.
On
February 24, 2020, the Company issued a Convertible Promissory Note in the aggregate principal amount of $78,750 to LG Capital
Funding LLC. The note had a maturity date of February 24, 2021 and a coupon of 10% per annum. The Company may prepay the note
with prepayment penalties ranging from 120% to 145%. 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 58% of the lowest
trading price during the previous fifteen trading days.
INNOVATIVE
PAYMENT SOLUTIONS, INC.
(formerly
QPAGOS)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
16
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SUBSEQUENT EVENTS
(continued)
|
Share
subscriptions
On
February 20, 2020, the Company entered into a Securities Purchase Agreement whereby 1,000,000 shares of common stock and 1,000,000
three year warrants, exercisable at $0.05 per share were sold to an investor for gross proceeds of $25,000.
On
March 16, 2020, the Company entered into a Securities Purchase Agreement whereby 400,000 shares of common stock were sold to an
investor for gross proceeds of $8,000.
Debt
Conversions
Om January 28, 2020, the Company
received a conversion notice from Global Consulting Alliance, converting an aggregate amount of $27,741, at a conversion price
of $0.02449 into 1,132,764 shares of common stock, thereby extinguishing the note.
On
March 11, 2020, the Company received a conversion notice, converting an aggregate principal amount of $7,586.40 and fees thereon
of $500, at a conversion price of $0.01444 into 560,000 shares of common stock.
Shares
issued for services
On
January 30, 2020, the Company entered into a Corporate Brand
Consulting Agreement with Ludlow Business Services, Inc. whereby the consultant agreed to provide corporate consulting, development
of strategies, corporate awareness, business plans and advising on interactions with investment professionals, for a consideration
of $7,500 per month and 535,714 shares of common stock amounting to $30,000, at the average closing price of the common stock ten
days prior to the execution of the agreement.
On
March 19, 2020, the Company issued 2,000,000 shares of common stock to a director for directors fees valued at $88,000.
On April 4, 2020, the Company issued
282,146 shares to Andrey Novikov as compensation in terms of an employment agreement entered into with Mr. Novikov in December
2019.
Other
than disclosed above, the Company has evaluated subsequent events through the date the consolidated financial statements were
available to be issued and has concluded that no such events or transactions took place that would require disclosure herein.