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RELATED PARTY TRANSACTIONS
 9 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS
15 RELATED PARTY TRANSACTIONS

 

The following transactions were entered into with related parties:

 

NOTES PAYABLE

 

    Interest     Maturity     September 30,     December 31,  
Description   Rate     Date     2017     2016  
                         
Gibbs International Holdings – Equipment funding   N/A     November 1, 2017     $ 294,620       —  
Vladimir Skigin – Equipment funding   N/A     November 1, 2017       55,295       —  
Gibbs International Holdings   15%     June 13, 2017       —       50,986  
Cobbolo Limited   10%     May 30, 2017       —       101,466  
Delinvest Commercial LTD   15%     June 29, 2017       —       50,836  
                             
Notes payable – Related parties               $ 349,915     $ 203,288  

 

Interest expense totaled $0 and $3,025 for the three months ended September 30, 2017 and 2016, respectively, and $11,534 and $0 for the nine months ended September 30, 2017 and 2016, respectively. 

 

Jimmy Gibbs

Jimmy Gibbs is the principal and has control over Gibbs Investment Holdings and Gibbs International Holdings.

 

  ● Gibbs International Holdings (“Gibbs”) – Inventory funding

The Company entered into an agreement with Gibbs, whereby the importation of kiosks and accessories was arranged and funded by Gibbs. In terms of the agreement entered into with Gibbs, 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 Gibbs.

 

  ● Gibbs International Holdings 

Effective October 20, 2016, the Company executed an unsecured promissory note for $50,000 with an investor, bearing interest at 10% per annum payable on February 19, 2017. On February 19, 2017, the Company executed an amended and restated promissory note extending the maturity date to June 19, 2017 and increasing the interest rate to 15% per annum.

 

Effective June 19, 2017, the note, principal amount of $50,000 and accrued interest thereon of $2,494 was exchanged for a convertible note, refer note to 9 below.

 

Vladimir Skigin

Vladimir Skigin is the principal and has control over Newvello Limited and Cobbolo Limited and has personally advanced the Company inventory funding.

 

  ● Vladimir Skigin (“Skigin”) – Inventory funding

 

The Company entered into an agreement with Gibbs, whereby the importation of kiosks and accessories was arranged and funded by Gibbs, Skigin funded a portion of the kiosks and accessories purchased under the same terms and conditions of the agreement entered into with Gibbs. In 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.

  

  ● Cobbolo Limited 

Between October 21, 2016 and November 25, 2016, the Company executed unsecured promissory notes totaling $100,000 with an investor, bearing interest at 10% per annum maturing between February 17, 2017 and March 25, 2017. The maturity date of these notes has been extended to May 30, 2017 and further extended to June 29, 2017.

 

On June 29, 2017, the notes; i) principal amount of $50,000 and accrued interest thereon of $3,438; and ii) principal amount of $50,000 and accrued interest thereon of $2,959, were exchanged for two convertible notes, refer to note 9 below.

 

Alex Motorin

Alex Motorin is the principal of Delinvest Commercial LTD.

 

  ● Delinvest Commercial, LTD 

Effective October 31, 2016, the Company executed an unsecured promissory note for $50,000 with an investor, bearing interest at 10% per annum payable on March 1, 2017. On March 1, 2017, the Company executed an amended and restated promissory note extending the maturity date to June 29, 2017 and increasing the interest rate to 15% per annum.

 

On June 29, 2017, the note, principal amount of $50,000 and accrued interest thereon of $4,123 was exchanged for a convertible note, refer to note 9 below.

 

Viktoria Akhmetova 

On May 12, 2017, the Company executed an unsecured promissory note for $20,000 with an investor, bearing interest at 10% per annum payable on June 11, 2017.

 

Effective June 11, 2017, the note, principal amount of $20,000 and accrued interest thereon of $164 was exchanged for a convertible note, refer to note 9 below.

 

CONVERTIBLE NOTES PAYABLE

 

Description   Interest
rate		     Maturity Date   Principal     Accrued
interest		     Unamortized
debt discount		     September 30,
2017
Balance,
net		     December 31,
2016
Balance,
net
Delinvest Commercial, LTD   12%     December 16, 2017     20,000       677       (7,444 )     13,233     —
    12%     December 26, 2017     54,123       1,655       (26,160 )     29,618     —
                                               
Viktoria Akhmetova   12%     December 8, 2017     20,164       736       (7,716 )     13,184     —
                                               
Gibbs International Holdings   12%     December 16, 2017     52,494       1,778       (22,456 )     31,816     —
                                               
Cobbolo Limited   12%     December 26, 2017     53,438       1,634       (25,829 )     29,243     —
    12%     December 26, 2017     52,959       1,619       (25,597 )     28,981     —
                                               
Total convertible notes payable – Related parties    $ 253,178     $ 8,099     $ (115,202 )   $ 146,075   $ —

  

Interest expense, together with amortized debt discount totaled $135,514 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $144,198 and $0 for the nine months ended September 30, 2017 and 2016, respectively.

 

The 12% convertible notes, above have a fixed conversion price of $0.20 per common share and certain investors who met a minimum investment requirement of $30,000 were issued three-year warrants convertible into common shares at a conversion price of; i) $0.20 per share if the convertible notes are converted prior to maturity date; and ii) $0.30 per share if the convertible notes are not converted prior to maturity date. These convertible notes have a beneficial conversion feature and attached warrants valued using a Black-Scholes valuation model, refer note 11 c) below, the value of the beneficial conversion feature of the notes were determined based on fair market price of the common stock at the date of the issuance of the note, the difference between the fair market value of the common stock and the conversion price was recorded as a debt discount with a corresponding credit to derivative financial liability.

  

The total value of the beneficial conversion feature and warrant value recorded as a debt discount during the nine months ended September 30, 2017 was $251,299. 

 

Alex Motorin

Alex Motorin is the principal of Delinvest Commercial LTD.

 

  ● 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 bears interest at 12% per annum and matures on December 16, 2017. The note is convertible into common shares at a conversion price of $.20 per share. The balance of the note plus accrued interest at September 30, 2017 was $13,233, net of unamortized discount of $7,444.

 

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 maturing on December 26, 2017. The note is convertible into common shares of the Company at a conversion price of $0.20 per share. The balance of the note plus accrued interest at September 30, 2017 was $29,618, net of unamortized discount of $26,160.

 

In connection with the convertible notes above, the Company issued warrants to purchase 370,616 common shares of the Company at a variable exercise price of $0.20 per share, if the convertible note above is converted into common shares prior to its maturity date or $0.30 per share if the convertible note is not converted prior to its maturity date.

 

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 maturing on December 8, 2017. The note is convertible into common shares of the Company at a conversion price of $0.20 per share. The balance of the note plus accrued interest at September 30, 2017 was $13,184, net of unamortized discount of $7,716.

 

Jimmy Gibbs

Jimmy Gibbs is the principal and has control over Gibbs Investment Holdings and Gibbs International Holdings.

 

  ● Gibbs International Holdings 

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 maturing on December 16, 2017. The convertible note is convertible into common shares of the Company at a conversion price of $0.20 per share. The balance of the note plus accrued interest at September 30, 2017 was $31,816, net of unamortized discount of $22,456.

 

In connection with the Convertible note above, the Company issued a warrant to purchase 262,468 common shares of the Company at a variable exercise price of $0.20 per share, if the convertible note above is converted into common shares prior to its maturity date or $0.30 per share if the convertible note is not converted prior to its maturity date.

 

Vladimir Skigin

Vladimir Skigin is the principal and has control over Newvello Limited and Cobbolo Limited and has also personally advanced the Company inventory funding.

 

  ● 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 maturing on December 26, 2017. The convertible note is convertible into common shares of the Company at a conversion price of $0.20 per share. The balance of the note plus accrued interest at September 30, 2017 was $29,243, net of unamortized discount of $25,829.

 

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 maturing on December 26, 2017. The convertible note is convertible into common shares of the Company at a conversion price of $0.20 per share. The balance of the note plus accrued interest at September 30, 2017 was $28,981, net of unamortized discount of $25,597.

 

In connection with the Convertible notes above, the Company issued a warrant to purchase 531,987 common shares of the Company at a variable exercise price of $0.20 per share, if the convertible note above is converted into common shares prior to its maturity date or $0.30 per share if the convertible note is not converted prior to its maturity date.