STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

STOCKHOLDERS' EQUITY

11 STOCKHOLDERS’ EQUITY

a) Common Stock

The Company has 100,000,000 common shares with a par value of $0.0001 each authorized, has issued and outstanding 55,835,442 shares of common stock as of September 30, 2017 and 55,454,000 as of December 31, 2016.

On June 12, 2017, a convertible note holder converted debt and accrued interest thereon, totaling $11,556 into 57,143 shares of common stock, valued at $18,285 resulting in a loss on conversion of $6,730.

On June 22, 2017, a convertible note holder converted debt and accrued interest thereon, totaling $20,125 into 100,000 shares of common stock valued at $37,000 resulting in a loss on conversion of $16,875.

On August 10, 2017, a convertible note holder converted debt and accrued interest thereon, totaling $24,000 into 224,299 shares of common stock valued at $44,860 resulting in a loss on conversion of $20,860.

The Company has recorded an expense of $0 and $144,000 for the nine months ended September 30, 2017 and 2016, respectively, relating to restricted stock awards, which were fully vested in April 2016.

b) Preferred Stock

The Company has authorized 25,000,000 shares of preferred stock with a par value of $0.0001 authorized, no preferred stock is issued and outstanding as of September 30, 2017.

c) Warrants

In connection with the Merger, outstanding Qpagos Corporation warrants were assumed by QPAGOS and converted to QPAGOS warrants at a ratio of two QPAGOS warrants for each Qpagos Corporation warrant issued.

During the period June 2015 to December 2015, pursuant to the private placement agreement and individual Securities Purchase Agreements entered into, new, qualified investors, acquired 4,784,000 (2,392,000 pre-merger) common units of the Company at a price of $0.625 ($1.25 pre-merger) per unit, each unit consisting of one share of Common Stock and a five year warrant exercisable for one share of common stock at an exercise price of $0.625 ($1.25 pre-merger) per share.

The placement agent was also issued, in terms of a placement agent agreement, five year warrants to purchase 717,600 (358,800 pre-QPAGOS Merger) units at $0.625 ($1.25 pre-QPAGOS Merger)) per unit, each consisting of one share of Common stock and an additional five year warrant exercisable for one share of Common Stock at an exercise price of $0.625 ($1.25 pre-QPAGOS Merger)) per share, giving a total of 1,435,200 (717,600 pre-QPAGOS Merger) warrants to purchase common shares at an exercise price of $0.625 ($1.25 pre-QPAGOS Merger)) per share if all placement agent warrants are exercised.

During the period June 8, 2017 to July 31, 2017, the Company issued warrants to the 12% convertible note holders, disclosed in note 9 above, to acquire 2,308,513 shares of common stock at a variable exercise price of; i) $0.20 per share if the convertible notes underlying the warrant issue are converted to common stock prior to maturity date; or ii) $0.30 per share if the convertible notes underlying the warrants are not converted to common stock prior to the maturity date. These warrants were issued to investors who had invested a cumulative minimum of $30,000 in convertible notes prior to August 31, 2017.

The Warrants were valued using a Black-Scholes valuation model and the proceeds received from the convertible notes were allocated based on the percentage of the value of the warrants to the total value of the debt securities in this offering, resulting in a total debt discount of $37,083. 

The following assumptions were used in the Black-Scholes valuation model:

	Nine Months Ended September 30, 2017
Exercise price	$	0.20
Risk free interest rate		1.50 to 1.53	%
Expected life of warrants		3 years
expected volatility of underlying stock		159.7 to 168.7	%
Expected dividend rate		0	%

A summary of the Company’s warrant activity for the period January 1, 2016 to September 30, 2017, is as follows:

	No. of shares		Exercise price per share		Weighted average exercise price
Outstanding January 1, 2016		6,219,200	$	0.625	$	0.63
Granted		—		—		—
Forfeited/cancelled		—		—		—
Exercised		—		—		—
Outstanding December 31, 2016		6,219,200	$	0.625		0.63
Granted		2,308,513		0.20		0.20
Forfeited/cancelled		—		—		—
Exercised		—		—		—
Outstanding September 30, 2017		8,527,713	$	0.20 to 0.625	$	0.51

The warrants outstanding and exercisable at September 30, 2017 are as follows:

	Warrants outstanding						Warrants exercisable
Exercise price	No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price
$0.625		6,219,200		3.00				6,219,200
$0.20		2,308,513		2.75				2,308,513
		8,527,713		2.94	$	0.51		8,527,713	$	0.51

The warrants outstanding have an intrinsic value of $0 and $0 as of September 30, 2017 and December 31, 2016, respectively.