UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 31, 2019
Innovative Payment Solutions, Inc.
(Exact name of registrant as specified in charter)
Nevada
(State or other jurisdiction of incorporation)
| 000-55648 | 33-1230229 | |
| (Commission File Number) | (IRS Employer Identification No.) |
4768 Park Granada, Suite 200
Calabasas, CA 91302
(Address of principal executive offices)
(818) 864-8404
(Registrant’s telephone number, including area code)
(Former Name and Former Address)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
þ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01. Completion of Acquisition or Disposition of Assets
Stock Purchase Agreement
Effective December 31, 2019, Innovative Payment Solutions, Inc., a Delaware corporation (the “Company”) sold 100% of the outstanding common stock, par value $.001, of QPAGOS Corporation, a Delaware corporation (“QPAGOS Corp.”), to Vivi Holdings, Inc., a Delaware corporation (“Vivi”), together with 99.9% of two (2) Mexican entities: QPagos S.A.P.I. de C.V. and Redpag Electrónicos S.A.P.I. de C.V. (herein, the “Sale”). The Sale was conducted pursuant to a Stock Purchase Agreement (the “Purchase Agreement”) between the Company and Vivi, dated August 5, 2019. The Purchase Agreement contains customary representations, warranties and covenants made by Company and Vivi.
As consideration for the Acquisition, and in accordance with the Purchase Agreement, Vivi issued an aggregate of 2,250,000 fully-paid and non-assessable shares of its common stock, par value $.001 (the “Shares”) as follows: 2,047,500 Shares to the Company; 56,250 Shares to the Company’s designee, Mr. Andrey Novikov; 33,750 Shares to the Company’s designee, the Joseph W. & Patricia G. Abrams Family Trust; and 112,500 Shares to the Company’s designee, Mr. Gaston Pereira. In addition, in connection with the closing of the Sale, the Company received an unsecured non-interest bearing promissory note from Qpagos Corp. (the “Note”) relating to refunds of certain Value Added Tax amounts anticipated to be received for tax years 2015 through 2019 (each, a “VAT Refund”) from the Mexican Tax Administration, or the applicable Mexican governmental authority. QPAGOS Corp. has agreed to diligently file the VAT Refund for tax years 2015 through 2019 and to pay the Company forty-six percent (46%) of each VAT Refund received by it, up to $130,000.
The foregoing description of the terms of the Purchase Agreement does not purport to be complete and is subject to, and are qualified in their entirety by reference to the provisions of such Purchase Agreement which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 8, 2019 and incorporated herein by reference. The foregoing description of the terms of the Note is qualified in its entirety by reference to the provisions of such Note, which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
| (a) | Financial Statements of Business Sold. |
| (b) | Pro Forma Financial Information is filed in this Current Report on Form 8-K as Exhibit 99.1 |
| (c) | Shell Company Transactions. |
Not applicable.
| (d) | Exhibits. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INNOVATIVE PAYMENT SOLUTIONS, INC. | |||
| Date: January 7, 2020 | By: | /s/ William Corbett | |
| Name: | William Corbett | ||
| Title: | Chief Executive Officer | ||
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Exhibit 10.2
PROMISSORY NOTE
Up to $130,000.00
| Interest Rate: None | December 31, 2019 |
WHEREAS, in connection with that certain Stock Purchase Agreement, dated as of August 5th, 2019 (the “Purchase Agreement”) by and between Innovative Payment Solutions, Inc., a Nevada corporation (the “Holder”) and ViVi Holdings, Inc., a Delaware corporation (“ViVi”), ViVi purchased all of the stock of Qpagos Corporation, a Delaware corporation, (the “Issuer”).
WHEREAS, the parties acknowledge that the Issuer’s subsidiaries, Qpagos S.A.P.I de C.V. (“Qpagos Mexico”) and Redpag Electronicos S.A.P.I de C.V. (“Redpag,” and with Qpagos Mexico, the “Subsidiaries”), are owed approximately USD$320,000.00 as a refund of VAT from the Mexican Federal Tax Administration, or the applicable Mexican governmental authority or entity (the “Mexican Governmental Authority”) for each of the tax years of 2015, 2016, 2017, 2018 and 2019 (each, a “VAT Refund” and collectively, the “VAT Refunds”);
WHEREAS, the Issuer and the Holder have agreed that Holder shall receive forty-six percent (46%) of each VAT Refund, which in the aggregate is expected to equal approximately One Hundred and Thirty Thousand Dollars and 00/100 ($130,000.00) (the “Principal Amount”);
NOW, FOR VALUE RECEIVED, the Issuer hereby promises to pay to the order of Holder, the principal sum of up to One Hundred and Thirty Thousand Dollars and 00/100 ($130,000.00), as provided herein.
1. Maturity. This note shall mature five (5) business days following the receipt of final VAT Refund by the Issuer (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder.
2. Payment of Principal. Issuer shall make payments of forty-six percent (46%) of each VAT Refund received from the applicable Mexican Governmental Authority for each of the tax years of 2015, 2016, 2017, 2018 and 2019 within five (5) business days after the receipt by Issuer to Holder (each, a “Payment Date”).
3. Prepayment. The Issuer may, at its sole option at any time, prepay this Note, without penalty or premium, in whole or in part, together with interest on the outstanding principal balance of this Note.
4. Manner of Payment. All sums payable under this Note shall be paid in lawful money of the United States of America and in immediately available funds. Payments shall be made to the Holder by wire transfer to such account as shall be specified by the Holder to the Issuer. If any payment under this Note shall become due on a day that is not a business day, such payment shall be made on the next succeeding business day.
5. Right to Offset. The Principal Amount due under this note is subject to downward adjustment and offset by the Issuer in the event a claim is asserted against the Issuer, the Subsidiaries, or Mr. Pereira, arising from any guaranty or indemnification (a “Claim”) provided by the foregoing in connection with Contrato de Arrendamiento (the “Lease Agreement”) dated November 1, 2019, entered into by and between Alvaro Hernandez Gonzalez (“Lessor”) and Andrei Vadimovich Novikov (as “Lessee”). In addition, the Issuer may also offset against this Note arising from any costs, fees or other charges incurred by the Issuer in defense of any such Claim.
6. Information Rights. The Issuer agrees that so long as Holder holds this Note, the Issuer shall furnish the Holder with a copy of its applications for the VAT Refunds, as and when filed, a copy of any correspondence relating to the VAT Refunds with the applicable Mexican Governmental Authority and advisory/accounting firm that the Issuer has retained to collect the VAT Refunds, within 5 business days’ of receipt and proof of payment of any VAT Refund, upon 5 business days’ notice.
7. Events of Default; Remedies.
(a) General. The occurrence of any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Note:
(i) Failure to Pay. The Issuer fails to pay the Principal Amount due on a Payment Date under this Note when due and such failure continues for a period of ten (10) days after written notice from Holder;
(ii) Default in Covenants. The Issuer shall default in the observance or performance of any of the covenants set forth in this Note and such failure continues for a period of ten (10) days after written notice from Holder;
(iii) Bankruptcy. The Issuer shall: (i) admit in writing its inability to pay its debts as they become due; (ii) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Issuer or any of its property, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiesce in, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Issuer or for any part of its property; or (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Issuer and, if such case or proceeding is not commenced by the Issuer or converted to a voluntary case, such case or proceeding shall be consented to or acquiesced in by the Issuer or shall result in the entry of an order for relief.
(b) Waiver of Events of Default. The Holder may waive any Event of Default hereunder. Such waiver shall be evidenced by written notice or other document specifying the Event of Default or Events of Default, as the case may be, being waived.
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(c) Remedies. In addition to all rights and remedies legally or equitably available to the Holder, as long as an Event of Default has occurred and is continuing for a period of fifteen (15) calendar days, the Holder shall have the option to declare the entire then unpaid Principal Amount of this Note immediately due and payable in full (irrespective of whether any VAT Refunds have been received) without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived.
8. Covenants and Waivers. As a material inducement for the Holder entering into the Purchase Agreement, the Issuer and all others who now or may at any time become liable for all or any part of the obligations evidenced hereby, expressly agree hereby to be jointly and severally bound, and jointly and severally:
(a) Filing for VAT Refunds. The Issuer agrees to cause its Subsidiaries to: (i) diligently prepare and file the appropriate documentation in order to receive the VAT Refunds for 2015, 2016, 2017, 2018 and 2019 however not later than one (1) year from the issuance date of this Note; and (ii) provide the Holder, as may be reasonably requested from time to time, with information status updates on the collection of these funds from the applicable Mexican Governmental Authority; and (iii) notify Holder within five (5) business days of any change in the advisory/accounting firm retained to collect the VAT Refunds on the Subsidiaries’ behalf and thereupon provide Holder with their retainer agreement with the new advisory/account firm.
(b) Presentment. Waive presentment and demand for payment, notices of nonpayment and of dishonor, protest of dishonor, and notice of protest;
(c) Notices. Except as expressly provided herein, waive any and all notices in connection with the delivery and acceptance hereof and all other notices in connection with the performance, default, or enforcement of the payment hereof or hereunder;
(d) Diligence or Delays. Waive any and all lack of diligence and delays in the enforcement of the payment hereof;
9. Mutilated, Destroyed, Lost or Stolen Notes. In case this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Issuer shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note. In the case of a mutilated or defaced Note, the Holder shall surrender such Note to the Issuer. In the case of any destroyed, lost or stolen Note, the Holder shall furnish to the Issuer: (i) evidence to its satisfaction of the destruction, loss or theft of such Note and (ii) such security or indemnity as may be reasonably required by the Issuer to hold the Issuer harmless.
10. Waiver of Demand, Presentment, etc. The Issuer hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder.
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11. Assignment. The rights and obligations of the Issuer and the Holder of this Note shall be binding upon, and inure to the benefit of, the successors and permitted assigns of the parties hereto. The Holder may not assign, pledge or otherwise transfer this Note or any interest therein without the prior written consent of the Issuer. Interest and principal are payable only to the registered Holder of this Note on the books and records of the Issuer.
12. Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Issuer and the Holder.
13. Notices. All notices, demands, requests, consents, approvals and other communications that may or are required to be given by either party to the other party hereunder shall be deemed to be sufficient if in writing and (i) delivered in person, (ii) delivered and received by facsimile, if a confirmatory mailing in accordance herewith is also made, (iii) duly sent by registered mail return receipt requested and postage prepaid, or (iv) duly sent by overnight delivery service, in each case as addressed to such party at the address set forth below:
If to the Issuer, to:
Qpagos Corporation, Inc.
951 Yamato Road, Suite 101
Boca Raton, FL 33431
Attention: Gaston Pereira, President
Email:
With a copy to:
Bruce C. Rosetto, Esq.
Greenberg Traurig PA
5100 Town Center Circle, Suite 400
Boca Raton, FL 33486
Facsimile #:
Email:
If to the Holder:
Innovative Payment Solutions, Inc.
4768 Park Granada, Suite 200
Calabasas, CA 91302
Attention: William Corbett, CEO
Email:
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With a copy to:
Hank Gracin, Esq.
Gracin & Marlow. LLP
1825 NW Corporate Blvd, Suite 110
Boca Raton, FL 33431
Facsimile #:
Email:
All notices, demands, requests, consents, approvals and other communications shall be deemed to have been received (i) at the same time it was personally delivered, (ii) on the receipt of delivery by email transmission or by facsimile, (iii) five (5) days after mailing via registered mail return receipt requested whether signed for or not, to the foregoing persons at the addresses set forth above or (iv) the next day when sent by overnight delivery service. The above shall constitute service despite rejection or other refusal to accept or inability to deliver because of changed address for which no notice has been received.
14. Construction; Governing Law. All issues and questions concerning the construction, validity and interpretation of this Note and all matters pertaining hereto shall be governed by and construed in accordance with the laws of the state of Delaware, without regard to any choice of law or conflict of law rules or provisions (whether of the state of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of Delaware.
15. Consent to Jurisdiction. TO INDUCE THE HOLDER TO ACCEPT THIS NOTE, THE ISSUER IRREVOCABLY AGREES THAT, SUBJECT TO THE HOLDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED SOLELY IN THE VENUE AND JURISDICTION OF THE COURTS ENCOMPASSING THE STATE OF DELAWARE. THE ISSUER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN THE STATE OF DELAWARE, WAIVES PERSONAL SERVICE OF PROCESS UPON THE ISSUER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE ISSUER AT THE ADDRESS STATED IN THE PREAMBLE AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT. THE PREVAILING PARTY(IES) IN ANY SUCH ACTION OR PROCEEDING SHALL BE ENTITLED TO RECOVER ITS REASONABLE ATTORNEYS’ FEES AND COSTS FROM THE OTHER PARTY(IES).
16. Waiver of Jury Trial. THE ISSUER AND THE HOLDER (BY ACCEPTANCE OF THIS NOTE), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE HOLDER, THE ISSUER OR ANY SUCCESSOR OR ASSIGN OF THE HOLDER OR THE ISSUER (a) UNDER THIS NOTE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS NOTE OR (b) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE ISSUER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST THE HOLDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
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17. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.
18. Headings. Section headings in this Note are for convenience only, and shall not be used in the construction of this Note.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Issuer has caused this Note to be issued as of the date first above written.
| QPAGOS CORPORATION, INC. |
| By: | /s/ Gaston Pereira | |
| Name: Gaston Pereira | ||
| Title: President | ||
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Exhibit 99.1
INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial statements are based upon our historical consolidated statements, adjusted to give effect to the sale of our subsidiary Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the Company in accordance with the Stock Purchase Agreement between the Company and Vivi Holdings. These unaudited pro forma condensed consolidated financial statements are derived from, and should be read in conjunction with, the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on April 9, 2019 and the Quarterly Reports on Form 10-Q for the interim periods ended March 31, 2019, June 30, 2019 and September 30, 2019 filed with the SEC on August 19, 2019, May 20, 2019, and November 19, 2019, respectively.
The unaudited pro forma condensed consolidated balance sheet gives effect to the sale of our subsidiary, Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the Company, as if it had occurred on September 30, 2019. The proceeds, in the form of securities in Vivi Holdings and the receivable from Qpagos Corporation and the impact of the resulting gain are only included in the September 30, 2019 unaudited pro forma condensed consolidated balance sheet. The unaudited pro forma condensed consolidated statements of operations for the three months and the nine months ended September 30, 2019 give effect to the sale of Qpagos Corporation, and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V. as if it had occurred on September 30, 2019.
The pro forma adjustments related to the sale of our subsidiary Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the Company, is based on available information and assumptions that management believes are (1) directly attributable to the sale of Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V.; (2) factually supportable; and (3) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on consolidated operating results. Certain of the most significant assumptions are set forth under the Notes to Pro Forma Unaudited Condensed Consolidated Financial Statements.
We have included the following unaudited pro forma condensed consolidated financial information solely for the purpose of illustrating the sale of our subsidiary Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the company. The unaudited pro forma condensed consolidated financial information is not necessarily indicative of the results of operations or financial position that might have been achieved for the dates or periods indicated, nor is it indicative of the results of operations or financial position that may occur in the future.
The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of operations would have been had the sale of our subsidiary Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the company, occurred on the respective dates assumed, nor is it necessarily indicative of our future operating results. The unaudited pro forma condensed consolidated financial information does not purport to reflect what we anticipate the actual state of operations to be following the completion of the sale of our subsidiary Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the company. Furthermore, in future reports that we file with the SEC, the pro forma adjustments may differ from those that will be calculated for purposes of reporting discontinued operations in future filings. We caution stockholders that our future results of operations, including uses of cash and financial position, will significantly differ from those described in these unaudited pro forma condensed consolidated financial statements, and accordingly, these unaudited pro forma condensed consolidated financial statements should be read in conjunction with the disclosures in this form 8-K to which they are attached regarding the nature of our business following completion of the transaction The unaudited pro forma consolidated financial information and the accompanying unaudited notes should be read in conjunction with our consolidated financial statements and notes thereto included by reference in this form 8-K.
INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 282 | $ | 71,294 | ||||
| Other current assets | 8,134 | 9,575 | ||||||
| Receivable on disposal of subsidiary | 185,000 | - | ||||||
| Assets held for resale | - | 983,105 | ||||||
| Total current assets | 193,416 | 1,063,974 | ||||||
| Non-Current Assets | ||||||||
| Investment | 13,907,030 | - | ||||||
| Total Non-Current Assets | 13,907,030 | - | ||||||
| Total Assets | $ | 14,100,446 | $ | 1,063,974 | ||||
| Liabilities and Stockholders’ (Deficit) Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 368,466 | $ | 508,755 | ||||
| Liabilities held for resale | - | 180,014 | ||||||
| Loans payable | 351,257 | 56,044 | ||||||
| Loans payable - Related parties | 400,487 | 313,949 | ||||||
| Convertible debt, net of unamortized discount of $421,316 and $532,747, respectively | 1,426,625 | 1,009,236 | ||||||
| Convertible debt - Related parties, net of unamortized discount of $0 and $0 respectively | 592,023 | 370,669 | ||||||
| Derivative liability | 1,477,776 | 1,833,672 | ||||||
| Total Current Liabilities | 4,616,634 | 4,272,339 | ||||||
| Total Liabilities | 4,616,634 | 4,272,339 | ||||||
| Stockholders’ (Deficit) Equity | ||||||||
| Preferred stock, $0.0001 par value, 25,000,000 shares authorized and 0 shares issued and outstanding as of September 30, 2019 and December 31, 2018. | - | - | ||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized, 31,047,897 and 8,883,952 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. | 3,105 | 888 | ||||||
| Additional paid-in-capital | 17,086,236 | 14,865,765 | ||||||
| Accumulated deficit | (7,605,529 | ) | (18,455,925 | ) | ||||
| Accumulated other comprehensive income | - | 380,907 | ||||||
| Total Stockholders’ (Deficit) Equity | 9,483,812 | (3,208,365 | ) | |||||
| Total Liabilities and Stockholders’ (Deficit) Equity | $ | 14,100,446 | $ | 1,063,974 | ||||
See notes to the pro forma unaudited condensed consolidated financial statements
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INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
| Three months | Three months | Nine months | Nine months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Cost of Goods Sold | - | - | - | - | ||||||||||||
| Gross profit | - | - | - | - | ||||||||||||
| General and administrative | 139,855 | 155,533 | 493,847 | 683,135 | ||||||||||||
| Total Expense | 139,855 | 155,533 | 493,847 | 683,135 | ||||||||||||
| Loss from Operations | (139,855 | ) | (155,533 | ) | (493,847 | ) | (683,135 | ) | ||||||||
| Loss on debt conversion | (486,763 | ) | (51,802 | ) | (1,037,822 | ) | (3,510,039 | ) | ||||||||
| Penalty on convertible notes | (151,184 | ) | - | (151,184 | ) | - | ||||||||||
| Interest expense, net | (540,256 | ) | (517,779 | ) | (1,751,138 | ) | (2,329,283 | ) | ||||||||
| Derivative liability movements | 123,598 | 1,169,205 | 986,011 | 3,441,118 | ||||||||||||
| Foreign currency (loss) gain | - | (7,562 | ) | - | (7,562 | ) | ||||||||||
| (Loss) Profit before taxation from continuing operations | (1,194,460 | ) | 436,529 | (2,447,980 | ) | (3,088,901 | ) | |||||||||
| Taxation | - | - | - | - | ||||||||||||
| Net (Loss) Profit from continuing operations | (1,194,460 | ) | 436,529 | (2,447,980 | ) | (3,088,901 | ) | |||||||||
| Gain on sale of subsidiaries | 14,382,992 | - | 14,382,992 | - | ||||||||||||
| Operating loss from discontinued operations, net of taxation | (592,852 | ) | (163,984 | ) | (1,084,616 | ) | (769,166 | ) | ||||||||
| Net income (loss) | $ | 12,595,680 | $ | 272,545 | $ | 10,850,396 | $ | (3,858,067 | ) | |||||||
| Other Comprehensive loss | ||||||||||||||||
| Foreign currency translation adjustment | (398,631 | ) | (55,448 | ) | (380,907 | ) | (47,044 | ) | ||||||||
| Total Comprehensive income (loss) | $ | 12,197,049 | $ | 217,097 | $ | 10,469,489 | $ | (3,905,111 | ) | |||||||
See notes to the pro forma unaudited condensed consolidated financial statements
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INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
NOTES TO THE PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On August 2, 2019, the Company, after receiving the draft fairness opinion of ValuCorp, Inc., an independent valuation firm, that the terms of the Stock Sale were fair to QPAGOS stockholders, approved the sale of Qpagos corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the Company, for 2,250,000 shares of common stock of Vivi Holdings (the “Stock Sale”), of which nine percent (9%) is to be allocated to Gaston Pereira (5%), Andrey Novikov (2.5%), Joseph Abrams (1.5%).
The 2,250,000 shares of common stock of Vivi holdings were valued at $6.7922 per share or $15,282,450. The Company is obligated to allocate a total of 9% of the stock to certain individuals as compensation for facilitating the transaction.
Net proceeds to the Company:
| Amount | ||||
| Value of 2,250,000 Vivi Holdings shares of common stock | $ | 15,282,450 | ||
| Receivable from subsidiary upon disposal | 185,000 | |||
| 15,467,450 | ||||
| Fees paid as compensation (9% of 2,250,000 shares of common stock in Vivi Holdings) | (1,375,420 | ) | ||
| Net proceeds received | $ | 14,092,030 | ||
The net asset value of Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., which constitutes substantially all of the assets of the Company, was approximately $105,383 as of September 30, 2019.
We also recorded an accumulated other comprehensive income of $396,345 on our Balance sheet as of September 30, 2019 relating to the foreign currency translation adjustment on our Mexican subsidiaries. This foreign currency translation adjustment becomes a realized foreign currency gain on the disposal of Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V.
The gain on disposal is calculated as follows:
| Amount | ||||
| Net proceeds received | 14,092,030 | |||
| Net asset value of subsidiaries sold | (105,383 | ) | ||
| Foreign exchange gain on disposal of subsidiaries | 396,345 | |||
| $ | 14,382,992 | |||
4
INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
NOTES TO THE PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following adjustments were made to each statement presented:
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2019
| ● | The disposal of Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., was recorded in terms of the analysis presented above. |
Pro Forma Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and nine months ended September 30, 2019
| ● | The disposal of Qpagos Corporation and its Mexican subsidiaries, Qpagos S.A.P.I de C.V. and Redpag Electronicos S.A.P.I de C.V., was recorded in terms of the analysis presented above. |
5
INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
NOTES TO THE PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2019
| Disposal of | ||||||||||||
| subsidiary | Pro Forma | |||||||||||
| September 30, | and Mexican | September 30, | ||||||||||
| 2019 | Operations | 2019 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Assets | ||||||||||||
| Current Assets | ||||||||||||
| Cash | $ | 53,307 | $ | (53,025 | ) | $ | 282 | |||||
| Other current assets | 8,134 | - | 8,134 | |||||||||
| Receivable on disposal of subsidiary | - | 185,000 | 185,000 | |||||||||
| Assets held for disposal | 614,016 | (614,016 | ) | - | ||||||||
| Total Current Assets | 675,457 | (482,041 | ) | 193,416 | ||||||||
| Non-Current Assets | ||||||||||||
| Investment | - | 13,907,030 | 13,907,030 | |||||||||
| Total Non-Current Assets | - | 13,907,030 | 13,907,030 | |||||||||
| Total Assets | $ | 675,457 | $ | 13,424,989 | $ | 14,100,446 | ||||||
| Liabilities and Stockholders’ (Deficit) Equity | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable | $ | 899,939 | $ | (531,473 | ) | $ | 368,466 | |||||
| Loans payable | 157,802 | 193,455 | 351,257 | |||||||||
| Liabilities held for disposal | 253,640 | (253,640 | ) | - | ||||||||
| Loans payable - Related parties | 370,487 | 30,000 | 400,487 | |||||||||
| Convertible debt, net of unamortized discount of $421,316 and $532,747, respectively | 1,426,625 | - | 1,426,625 | |||||||||
| Convertible debt - Related parties, net of unamortized discount of $0 and $0 respectively | 592,023 | - | 592,023 | |||||||||
| Derivative liability | 1,477,776 | - | 1,477,776 | |||||||||
| Total Current Liabilities | 5,178,292 | (561,658 | ) | 4,616,634 | ||||||||
| Total Liabilities | 5,178,292 | (561,658 | ) | 4,616,634 | ||||||||
| Stockholders’ (Deficit) Equity | ||||||||||||
| Preferred stock, $0.0001 par value, 25,000,000 shares authorized and 0 shares issued and outstanding as of September 30, 2019 and December 31, 2018. | - | - | - | |||||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized, 31,047,897 and 8,883,952 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. | 3,105 | - | 3,105 | |||||||||
| Additional paid-in-capital | 17,086,236 | - | 17,086,236 | |||||||||
| Accumulated deficit | (21,988,521 | ) | 14,382,992 | (7,605,529 | ) | |||||||
| Accumulated other comprehensive income | 396,345 | (396,345 | ) | - | ||||||||
| Total Stockholders’ (Deficit) Equity | (4,502,835 | ) | 13,986,647 | 9,483,812 | ||||||||
| Total Liabilities and Stockholders’ (Deficit) Equity | $ | 675,457 | $ | 13,424,989 | $ | 14,100,446 | ||||||
6
INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
NOTES TO THE PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the three months ended September 30, 2019
| Three months | Disposal of | Pro Forma three | ||||||||||
| ended | subsidiary | months ended | ||||||||||
| September 30, | and Mexican | September 30, | ||||||||||
| 2019 | operations | 2019 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Net Revenue | $ | - | $ | - | $ | - | ||||||
| Cost of Goods Sold | - | - | - | |||||||||
| Gross profit | - | - | - | |||||||||
| General and administrative | 139,855 | - | 139,855 | |||||||||
| Total Expense | 139,855 | - | 139,855 | |||||||||
| Loss from Operations | (139,855 | ) | - | (139,855 | ) | |||||||
| Loss on debt conversion | (486,763 | ) | - | (486,763 | ) | |||||||
| Penalty on convertible notes | (151,184 | ) | - | (151,184 | ) | |||||||
| Interest expense, net | (540,256 | ) | - | (540,256 | ) | |||||||
| Derivative liability movements | 123,598 | - | 123,598 | |||||||||
| Loss before taxation from continuing operations | (1,194,460 | ) | - | (1,194,460 | ) | |||||||
| Taxation | - | - | - | |||||||||
| Net loss from continuing operations | (1,194,460 | ) | - | (1,194,460 | ) | |||||||
| Gain on sale of subsidiaries | 14,382,992 | $ | 14,382,992 | |||||||||
| Operating loss from discontinued operations, net of taxation | (592,852 | ) | - | $ | (592,852 | ) | ||||||
| Net (loss) income | $ | (1,787,312 | ) | $ | 14,382,992 | $ | 12,595,680 | |||||
| Other Comprehensive loss | ||||||||||||
| Foreign currency translation adjustment | (2,286 | ) | (396,345 | ) | $ | (398,631 | ) | |||||
| Total Comprehensive (loss) income | (1,789,598 | ) | 13,986,647 | 12,197,049 | ||||||||
7
INNOVATIVE PAYMENT SOLUTIONS, INC
(formerly QPAGOS)
NOTES TO THE PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the nine months ended September 30, 2019
| Pro Forma | ||||||||||||
| Nine months | Disposal of | nine months | ||||||||||
| ended | subsidiary | ended | ||||||||||
| September 30, 2019 | and Mexican operations | September 30, 2019 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Net Revenue | $ | - | $ | - | $ | - | ||||||
| Cost of Goods Sold | - | - | - | |||||||||
| Gross profit | - | - | - | |||||||||
| General and administrative | 493,847 | - | 493,847 | |||||||||
| Total Expense | 493,847 | - | 493,847 | |||||||||
| Loss from Operations | (493,847 | ) | - | (493,847 | ) | |||||||
| Loss on debt conversion | (1,037,822 | ) | - | (1,037,822 | ) | |||||||
| Penalty on convertible notes | (151,184 | ) | (151,184 | ) | ||||||||
| Interest expense, net | (1,751,138 | ) | - | (1,751,138 | ) | |||||||
| Derivative liability movements | 986,011 | - | 986,011 | |||||||||
| Loss before taxation from continuing operations | (2,447,980 | ) | - | (2,447,980 | ) | |||||||
| Taxation | - | - | - | |||||||||
| Net loss from continuing operations | (2,447,980 | ) | - | (2,447,980 | ) | |||||||
| Gain on sale of subsidiaries | 14,382,992 | 14,382,992 | ||||||||||
| Operating loss from discontinued operations, net of taxation | (1,084,616 | ) | - | $ | (1,084,616 | ) | ||||||
| Net (loss) income | $ | (3,532,596 | ) | $ | 14,382,992 | $ | 10,850,396 | |||||
| Other Comprehensive income (loss) | ||||||||||||
| Foreign currency translation adjustment | 15,438 | (396,345 | ) | (380,907 | ) | |||||||
| Total Comprehensive (loss) income | $ | (3,517,158 | ) | $ | 13,986,647 | $ | 10,469,489 | |||||
8