RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2015

QPAGOS Corporation - Parent Company [Member]

Schedule of restatement of previously issued financial statements

The restated Consolidated Balance Sheet as of December 31, 2015 and 2014, the related Consolidated Statements of Operations for the years ended December 31, 2015 and 2014 and the Statement of Cash Flows for the year ended December 31, 2015, are presented below:

QPAGOS

RESTATED CONSOLIDATED BALANCE SHEET

December 31, 2015

	As
	Previously								As
	Reported			Adjustments			Notes		Restated
Assets
Current Assets
Cash	$	832,159							$	832,159
Accounts receivable		242,075								242,075
Inventory		668,567								668,567
Recoverable IVA taxes and credits		412,143			5,754			(A), (B)		417,897
Other current assets		20,509			31,505			(B)		52,014
Total Current Assets		2,175,453			37,259					2,212,712
Non-Current Assets
Plant and equipment, net		70,537								70,537
Intangibles, net		211,417								211,417
Other assets		11,712								11,712
Total Non-Current Assets		293,666			-					293,666
Total Assets	$	2,469,119		$	37,259				$	2,506,378
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	38,372							$	38,372
Notes payable		103,320								103,320
IVA and other taxes payable		181,946			10,098			(A), (B)		192,044
Advances from customers		1,986								1,986
Total Current Liabilities		325,624			10,098					335,722
Total Liabilities		325,624			10,098					335,722
Stockholders' Equity
Common stock, $0.0001 par value; 100,000,000 shares authorized, 44,784,000 shares issued and outstanding as of December 31, 2015.		22,392			(17,914	)		(D)		4,478
Additional paid-in-capital		5,717,947			17,914			(D)		5,735,861
Accumulated deficit		(4,019,428	)		29,739					(3,989,689	)
Accumulated other comprehensive income		422,584			(2,578	)		(C)		420,006
Total stockholder's equity - controlling interest		2,143,495			27,161					2,170,656
Non-controlling interest		-			-					-
Total Stockholders' Equity		2,143,495			27,161					2,170,656
Total Liabilities and Stockholders' Equity	$	2,469,119		$	37,259				$	2,506,378

CONSOLIDATED BALANCE SHEET

December 31, 2014

	As
	Previously								As
	Reported			Adjustments			Notes		Restated
Assets
Current Assets
Cash	$	173,828							$	173,828
Accounts receivable		15,914								15,914
Inventory		646,986								646,986
Recoverable IVA taxes and credits		171,200								171,200
Other current assets		50,000							$	50,000
Total Current Assets		1,057,928			-					1,057,928
Non-Current Assets
Plant and equipment, net		99,985								99,985
Other assets		6,192								6,192
Total Non-Current Assets		106,177			-					106,177
Total Assets	$	1,164,105		$	-				$	1,164,105
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable	$	102,501							$	102,501
Notes payable		2,324,422								2,324,422
IVA and other taxes payable		8,625								8,625
Advances from customers		3,092								3,092
Total Current Liabilities		2,438,640			-					2,438,640
Total Liabilities		2,438,640			-					2,438,640
Stockholders' Deficit
Common stock, $0.0001 par value; 100,000,000 shares authorized, 9,238,628 shares issued and outstanding as of December 31, 2014.		4,619			(3,695	)		(D)		924
Additional paid-in-capital		58,282			3,695			(D)		61,977
Accumulated deficit		(1,490,185	)							(1,490,185	)
Accumulated other comprehensive income		152,749								152,749
Total stockholder's deficit - controlling interest		(1,274,535	)		-					(1,274,535	)
Non-controlling interest		-			-					-
Total Stockholders' Deficit		(1,274,535	)		-					(1,274,535	)
Total Liabilities and Stockholders' Deficit	$	1,164,105		$	-				$	1,164,105

QPAGOS

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

Year Ended December 31, 2015

	As
	Previously								As
	Reported			Adjustments			Notes		Restated
Revenues
Sales of services		1,122,319		$	(382,425	)		(A)	$	739,894
Kiosk sales		321,239								321,239
Payment processing fees		66,674								66,674
Other		137								137
		1,510,369			(382,425	)				1,127,944
Cost of Goods Sold
Sales of services		1,122,319			(412,164	)		(A), (B)		710,155
Kiosk sales		369,909								369,909
Other		28,900			11,272			(E)		40,172
		1,521,128			(400,892	)				1,120,236
Gross (Loss) Profit		(10,759	)		18,467			(B)		7,708
General and administrative		2,000,714								2,000,714
Depreciation and amortization		37,810								37,810
Total Expense		2,038,524			-					2,038,524
Loss from Operations		(2,049,283	)		18,467					(2,030,816	)
Other (expense) income		(9,991	)		10,194			(E)		203
Interest expense, net		(3,319	)		1,078			(E)		(2,241	)
Foreign currency loss		(466,920	)							(466,920	)
Loss before Provision for Income Taxes		(2,529,513	)		29,739					(2,499,774	)
Provision for Income Taxes		-								-
Net Loss		(2,529,513	)		29,739					(2,499,774	)
Net loss attributable to non-controlling interest		-			-					-
Net Loss Attributable to Controlling Interest	$	(2,529,513	)	$	29,739				$	(2,499,774	)
Net Loss Per Share - Basic and Diluted	$	(0.10	)	$	0.00				$	(0.10	)
Weighted Average Number of Shares Outstanding - Basic and Diluted		25,698,746			25,698,746			(D)		25,698,746
Other Comprehensive Income
Foreign currency translation adjustment		269,835			(2,578	)		(C)		267,257
Total Comprehensive loss		(2,259,678	)		27,161					(2,232,517	)
Comprehensive loss attributable to non-controlling interest		-			-					-
Comprehensive Loss Attributable to Controlling Interest	$	(2,259,678	)	$	27,161				$	(2,232,517	)

QPAGOS

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

Year Ended December 31, 2014

	As
	Previously								As
	Reported			Adjustments			Notes		Restated
Revenues
Sales of services	$	27,081							$	27,081
Kiosk sales		109,981								109,981
Payment processing fees		-								-
Other		188								188
		137,250			-					137,250
Cost of Goods Sold
Sales of services		29,060								29,060
Kiosk sales		102,252								102,252
Other		1,676			2,614			(E)		4,290
		132,988			2,614					135,602
Gross Profit		4,262			(2,614	)				1,648
General and administrative		1,264,535								1,264,535
Depreciation and amortization		30,600								30,600
Total Expense		1,295,135			-					1,295,135
Loss from Operations		(1,290,873	)		(2,614	)				(1,293,487	)
Other income		2,419			2,614			(E)		5,033
Interest expense, net		11								11
Foreign currency loss		(200,875	)							(200,875	)
Loss before Provision for Income Taxes		(1,489,318	)		-					(1,489,318	)
Provision for Income Taxes		-								-
Net Loss		(1,489,318	)		-					(1,489,318	)
Net loss attributable to non-controlling interest		-								-
Net Loss Attributable to Controlling Interest	$	(1,489,318	)	$	-				$	(1,489,318	)
Net Loss Per Share - Basic and Diluted	$	(0.16	)						$	(0.16	)
Weighted Average Number of Shares Outstanding - Basic and Diluted		9,238,628			9,238,628			(D)		9,238,628
Other Comprehensive Income
Foreign currency translation adjustment		147,167								147,167
Total Comprehensive loss		(1,342,151	)		-					(1,342,151	)
Comprehensive loss attributable to non-controlling interest		-								-
Comprehensive Loss Attributable to Controlling Interest	$	(1,342,151	)	$	-				$	(1,342,151	)

QPAGOS

CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31, 2015

	As
	Previously								As
	Reported			Adjustments			Notes		Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to the company	$	(2,529,513	)	$	29,739			(B)	$	(2,499,774	)
Less: loss attributable to non-controlling interest		-								-
Net loss		(2,529,513	)		29,739					(2,499,774	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation expense		34,227								34,227
Amortization expense		3,583								3,583
Equity based compensation charge		166,715								166,715
Changes in Assets and Liabilities
Accounts receivable		(226,161	)							(226,161	)
Inventory		(21,581	)							(21,581	)
Recoverable IVA taxes and credits		(240,943	)		(5,754	)		(A), (B)		(246,697	)
Other current assets		29,491			(31,505	)		(B)		(2,014	)
Other assets		(5,520	)							(5,520	)
Accounts payable and accrued expenses		(64,129	)							(64,129	)
IVA and other taxes payable		173,591			10,098			(A), (B)		183,689
Advances from customers		(1,106	)							(1,106	)
Interest accruals		3,320								3,320
CASH USED IN OPERATING ACTIVITIES		(2,678,026	)		2,578					(2,675,448	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(4,779	)							(4,779	)
Intangible assets		(215,000	)							(215,000	)
NET CASH USED IN INVESTING ACTIVITIES		(219,779	)		-					(219,779	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on common stock issued		2,990,000								2,990,000
Share issue expenses		(388,700	)							(388,700	)
Proceeds from loans payable		685,001								685,001
NET CASH PROVIDED BY FINANCING ACTIVITIES		3,286,301			-					3,286,301
Effect of exchange rate changes on cash and cash equivalents		269,835			(2,578	)		(C)		267,257
NET INCREASE IN CASH		658,331								658,331
CASH AT BEGINNING OF PERIOD		173,828								173,828
CASH AT END OF PERIOD	$	832,159		$	-				$	832,159
CASH PAID FOR INTEREST AND TAXES:
Cash paid for income taxes	$	-							$	-
Cash paid for interest	$	-							$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Conversion of debt to equity	$	2,909,423							$	2,909,423

NOTES

A. Management noted an error in the recording of transactions related to a consumer’s use of kiosks to pay for certain services such as utilities through our kiosks.

In these transactions, the Company earns a payment processing fee as an agent, on either a percentage of transaction value or a fixed fee per transaction basis.

This revenue was previously recorded at gross value, the full value of the transaction was recorded as revenue and the full value of the service provided to our end users was recognized as cost of goods sold. The value-added taxation on both the revenue and cost of goods sold was recorded as due to and due from, the Mexican revenue authorities, respectively.

The Restated financial statements reversed the difference between the gross revenue recorded and the payment processing fee actually earned on these transactions; and the cost of goods sold entries originally recorded were reversed. The value-added taxation recorded has been restated and we have brought this restatement to the attention of the Mexican revenue authorities and are in the process of correcting our tax returns.

B. Management noted an error in recording of cost of goods sold of prepaid services sold to end users.

Purchases of prepaid services from providers are recorded as a prepaid asset, which is subsequently expensed to cost of goods sold when the service is sold and the risks and rewards of ownership passed to end users.

The cost of goods sold was incorrectly recorded as equal to revenue on all service sales. The gross profit on these revenue transactions was earned but remained on our balance sheet in prepaid expenditure.

The restated financial statements reduced the costs of goods sold recorded by the gross profit earned on these transactions with a corresponding reduction in prepaid expenditure. The net value added tax effect on these transactions was restated and we have brought this restatement to the attention of the Mexican revenue authorities and are in the process of correcting our tax returns.

C. Represents the restatement of the foreign currency translation adjustment directly related to the restatement of revenues and cost of goods sold discussed in A and B above.

D. To reflect the adjustments necessary to record the recapitalization effect of the reverse merger with Asiya Pearls, Inc.

E. To reclass certain lease payments to retailers for the lease of floor space for the placement of kiosks on their premises from other (expense) income to cost of goods sold.