20FR12G

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 20-F

x

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended ______________________

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________

OR

¨

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ………………………………

Snipp Interactive Inc.

(Exact name of Registrant as specified in its charter)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

6708 Tulip Hill Terrace, Bethesda, MD 20816

(Address of principal executive offices)

Securities to be registered pursuant to Section 12(b) of the Act:

None

Securities to be registered pursuant to Section 12(g) of the Act:

Common Shares, without par value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the Company’s classes of capital or common stock as of the close of the period covered by the annual report.      52,452,638 Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   

Yes ¨     No  x

If this report is an annual or a transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨  No ¨

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.            

Yes ¨  No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨  

Accelerated filer  ¨  

Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨

International Financial Reporting Standards as issued

Other ¨

by the International Accounting Standards Board x

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  ¨  Item 18 x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  x N/A ¨

Page 2 of 129

Index to Exhibits on Page 73

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Snipp Interactive Inc.

Form 20-F Registration Statement

Table of Contents

	PART I	Page
Item 1.	Identity of Directors, Senior Management and Advisors	5
Item 2.	Offer Statistics and Expected Timetable	5
Item 3.	Key Information	5
Item 4.	Information on the Company	12
Item 5.	Operating and Financial Review and Prospects	27
Item 6.	Directors, Senior Management and Employees	41
Item 7.	Major Shareholders and Related Party Transactions	50
Item 8.	Financial Information	51
Item 9.	The Offer and Listing	51
Item 10.	Additional Information	54
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	71
Item 12.	Description of Other Securities Other Than Equity Securities	71
	PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	72
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	72
Item 15.	Controls and Procedures	72
Item 16.	Reserved	72
Item 16A.	Audit Committee Financial Expert	72
Item 16B.	Code of Ethics	72
Item 16C.	Principal Accountant Fees and Services	72
Item 16D.	Exemptions from Listing Standards for Audit Committees	72
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers	72
Item 16F.	Change in Registrant’s Certifying Accountant	72
Item 16G.	Corporate Governance	72
Item 16H.	Mine Safety Disclosure	72
	PART III
Item 17.	Financial Statements	73
Item 18.	Financial Statements	73
Item 19.	Exhibits	73

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INTRODUCTION

Snipp Interactive Inc. (“Snipp” or the “Company”) was incorporated in British Columbia under the Business Corporations Act (British Columbia) on January 21, 2010 under the name Alya Ventures Ltd. (“Alya”). The Company was originally classified as a Capital Pool Corporation ("CPC") and changed its name to Snipp Interactive Inc. after completion of its qualifying transaction through a reverse merger transaction with Consumer Impulse, Inc., a corporation incorporated under the laws of the State of Delaware on March 30, 2007.

BUSINESS OF SNIPP INTERACTVE INC.

Snipp Interactive is a technology company that develops and sells mobile marketing related solutions. The Company builds mobile solutions for brands to engage and interact with their customers. Snipp provides print publishers, advertising agencies and corporate/consumer brands with four main solution sets:

·

Mobile Promotions and Loyalty Programs: A full range of turnkey mobile promotion solutions from text to win and sample programs all the way to sophisticated and full-fledged loyalty programs.

·

Shopper Marketing & Receipt Processing: Snipp’s unique SnippCheck mobile receipt processing solution allows brands to execute any kinds of purchase related Shopper Marketing programs they wish to – without the need to coordinate with retailers, or for consumers to download an app.

·

Mobile Sites and Apps: Snipp’s SiteBuilder solution allows the company to create and deploy new mobile sites for brand campaigns easily and at scale.

·

Augmented Reality: Snipp produces cutting edge augmented reality campaigns for leading brands around the world.

Snipp generates revenue by designing, constructing, implementing and managing these mobile solutions for its customers. Snipp is headquartered in Bethesda, MD, with international operations in Canada, Mexico and India.

FINANCIAL AND OTHER INFORMATION

In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in United States Dollars.

FORWARD-LOOKING STATEMENTS

Certain statements in this document constitute “forward-looking statements”. Some, but not all, forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” statements that an action or event “may,” “might,” “could,” “should,” or “will” be taken or occur, or other similar expressions. Although the Company has attempted to identify important factors that could cause actual results to differ materially from expected results, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Registrant, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company does not undertake any obligation to update or revise such forward-looking information to reflect subsequent information, events, or circumstances.

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PART I

Item 1.  Identity of Directors, Senior Management and Advisors

Table No. 1

Company Officers and Directors

Name	Position	Business Address
Atul Sabharwal	President, CEO and Director	6708 Tulip Hill Terrace Bethesda, MD 20816
John D. Fauller	Chief Operating Officer	2266 North Prospect Ave, Suite 522, Milwaukee, WI 53202
Wilson (Andy) Bell	Chief Technology Officer	985 Worman Drive, King George, VA 22485
Jaisun Garcha	Chief Financial Officer	14873 80B Ave, Surrey, BC, V3S 7H4
Ritesh Bhavnani	Chairman and Director	6708 Tulip Hill Terrace Bethesda, MD 20816
Michael Dillon	Director	120 Tokeneke Rd, Darien, CT, 06820
Jim Santora	Director	1285 Avenue of the Americas, New York, NY 10019
Conrad Swanson	Director	888 - 700 West Georgia Street, Vancouver, BC, V7Y 1G5

The Company’s auditor is MNP LLP, Chartered Professional Accountants, 701 Evans Avenue, 8^th Floor, Toronto, Ontario, Canada, M9C 1A3. MSCM was the Company’s auditor for fiscal 2012 prior to its merger with MNP LLP, Chartered Professional Accountants, in 2013. The Company’s prior auditor was Davidson & Company LLP, 1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, British Columbia, Canada V7Y 1G6.

Item 2.  Offer Statistics and Expected Timetable

Not Applicable

Item 3.  Key Information

As used within this Annual Report, the terms “Snipp”, “Alya”, “Consumer Impulse”, “the Company”, “Issuer” and “Registrant” refer collectively to Snipp Interactive Inc., its predecessors and affiliates.

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SELECTED FINANCIAL DATA

The selected financial data of the Company for the fiscal year ended December 31, 2013 were derived from the financial statements of the Company which have been audited by MNP LLP, Chartered Professional Accountants, as indicated in its audit report which is included elsewhere in this Registration Statement. The financial data for the fiscal year ended December 31, 2012 was derived from the financial statements as audited by MSCM LLP, Chartered Accountants, which merged with MNP LLP, Chartered Professional Accountants, in 2013. The financial data for fiscal 2011, 2010 and 2009 have been derived from the financial statements of the Company as audited by Davidson & Company LLP, Chartered Accountants, which are not included herein.

The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Registration Statement.

The Company has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.

Table No. 2 is derived from the financial statements of the Company, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Under the merger agreement between Snipp and Consumer Impulse, Consumer Impulse is the purchaser and parent company for accounting purposes. Therefore, the financial information for the fiscal years 2011, 2010, and 2009, ended December 31, are taken from the financial statements of Consumer Impulse.

Table No. 2

Selected Financial Data

IFRS

(US$ in 000, except per share data)

	Six Months Ended June 30, 2014	Six Months Ended June 30, 2013	Year Ended Dec. 31, 2013	Year Ended Dec. 31, 2012	Year Ended Dec. 31, 2011	Year Ended Dec. 31, 2010	Year Ended Dec. 31, 2009
Revenue	$762	$382	$870	$512	$379	$278	$154
Interest and Other Income	$202	$798	$906	($635)	$0	$7	($26)
Net Income (Loss)	($189)	$167	$76	($2,238)	($16)	($34)	$51
Total Comprehensive Income (Loss)	($181)	$67	($45)	($2,260)	($16)	($34)	$50
Basic and Diluted Loss Per Share	($0.00)	$0.00	$0.00	($0.05)	($0.01)	($0.02)	$0.03
Dividends Per Share	$0	$0	$0	$0	$0	$0	$0
Working Capital (Deficit)	$384	$233	$266	$716	($37)	($21)	$13
Long-Term Debt	$0	$0	$0	$0	$0	$0	$0
Shareholder’s Equity (Deficit)	$401	($92)	$434	($366)	($37)	($21)	$13
Total Assets	$1,105	$630	$819	$1,117	$99	$55	$133
Weighted Avg. Shares	57,995	48,053	48,952	41,590	1,998	1,998	1,998
Shares outstanding at period end	58,803	48,053	52,453	48,053	1,998	1,998	1,998

In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in United States Dollars ($).  

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Statement of Capitalization and Indebtedness

Table No. 3

Capitalization and Indebtedness

	Amount Authorized	Amount Outstanding as of September 30, 2014
Common Shares	Unlimited	69,422,638
Preferred Shares	Unlimited Issuable in Series	None
Common Share Options	10,010,527	4,129,500
Common Share Purchase Warrants		20,843,688
Finder’s Unit Options		792,000
Capital Leases		Nil
Guaranteed Debt		Nil
Secured Debt		Nil

Risk Factors

An investment in the Common Shares of the Company must be considered speculative due to the nature and level of development of the Company’s business. In particular, the following risk factors apply:

Risks Related to Our Business

The Company has a limited operating history.

The Company has a limited operating history and has limited revenues derived from operations.  The Company began business operations in 2007 and did not generate its first commercial revenues until 2008.  The Company’s focus has been in actively developing reference accounts and building sales, marketing and support capabilities.  The Company may not be able to sustain long term profitability which would have a negative effect on the stock price.

The Company has limited marketing, sales and distribution experience.

The Company and its personnel have limited experience in the marketing and sales of the Company’s products and services. The Company intends to recruit a direct sales force that will require substantial resources and management attention. The Company may not be successful in developing its own marketing and sales force on a larger scale, which would have a negative effect on the Company’s operations and financial position.

The Company may use acquisitions or other business transactions to expand its business and operations.

The Company may, when and if the opportunity arises, acquire other products, technologies or businesses involved in activities, or having product lines, that are complementary to its business. Acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies and products of the acquired companies, the diversion of management’s attention from other business concerns, risks associated with entering new markets or conducting operations in industry segments in which the Company has no or limited experience and the potential loss of key employees of the acquired company.  Even if such acquisitions are made, there can be no assurances that any anticipated benefits of an acquisition will be realized.  Future acquisitions by the Company could result in potentially dilutive issuances of equity securities, the use of cash, the incurrence of debt and contingent liabilities, and write-off of acquired research and development costs, all of which could materially adversely affect the Company’s operations and financial condition.

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The Company has a significant number of competitors.

The mobile marketing industry is very competitive, and the Company completes with a substantial number of other companies, both public and private, who offer similar products and services. A number of these other companies have greater financial and personnel resources than the Company, and have greater sales and marketing experience. If these competitors are able to provide more cost-effective products than the Company, or if the Company’s systems and technology fail to achieve or maintain market acceptance, or if new technologies are introduced by competitors that are more favorably received than the Company’s technology, demand for the Company’s products will decline which will have a negative effect on the Company’s operations and financial condition.

Rapid technological change could make the Company’s products obsolete.

New developments in products, methods or technology may negatively affect the development and sale of some or all of the products utilizing the Company’s products and technology, and may render them obsolete. New product development and/or modification is costly, requires significant research and development time and expense, and may not necessarily result in the successful commercialization of any new product. If the Company fails to invest sufficiently in research and product development, or is unsuccessful in its efforts to enhance and improve its products, or to develop and introduce new products that incorporate new technologies that achieve market acceptance, it will have a negative effect on the Company’s operations and financial position.

The Company has a reliance on third-parties to support its operations.

The Company relies on certain technology services provided to it by third parties, and there can be no assurance that these third party service providers will be available to the Company in the future on acceptable commercial terms or at all. If the Company were to lose one or more of these service providers, it may not be able to replace them in a cost effective manner, or at all. The Company may also be required to collaborate with third parties to develop its products and may not be able to do so on a timely and cost-effective basis, if at all. This may have a negative effect on the Company’s operations and financial condition.

The Company’s products face security risks.

The business of the Company faces certain security risks in several areas, including information technology, network and data. Any failure to adequately address these risks could have an adverse effect on the business and reputation of the Company. Computer viruses, break-ins, or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to clients, which may have a negative effect on the Company’s operations and financial condition.

Operations may be subject to changes in laws and regulations.

A number of new laws and regulations may be adopted with respect to mobile phone services covering issues such as user privacy, "indecent" materials, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights and information security. Adoption of any such laws or regulations may have a negative impact on the Company’s ability to deliver increasing levels of technological innovation, and will likely add to the cost of creating and delivering its products. Such changes may have a negative effect on the Company’s operations and financial condition.

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Protection of the Company’s intellectual property rights is limited.

The Company’s products utilize a variety of proprietary rights that are important to its competitive position and success.  These proprietary rights are protected through trade secrets and copyrights, but to-date not through patenting. Because the Intellectual Property associated with the Company’s technology is evolving and rapidly changing, current intellectual property rights may not adequately protect the Company. The Company may not be successful in securing or maintaining proprietary or future patent protection for the technology used in its systems or services, and protection that is secured may be challenged and possibly lost.  The Company generally enters into confidentiality or license agreements, or has confidentiality provisions in agreements with employees, consultants, strategic partners and clients and controls access to and distribution of its technology, documentation and other proprietary information.  The Company’s inability to protect its Intellectual Property adequately for these and other reasons could result in weakened demand for its systems or services, which may have a negative effect on the Company’s operations and financial position.

The Company’s products may be subject to litigation from third party intellectual property rights holders.

The Company could become subject to litigation regarding intellectual property rights that could significantly harm its business.  The Company’s commercial success will also depend in part on its ability to make and sell its systems and services without infringing on the patents or proprietary rights of third parties.  Competitors, many of whom have substantially greater resources than the Company and have made significant investments in competing technologies or products, may seek to apply for and obtain patents that will prevent, limit or interfere with the Company’s ability to make or sell its own systems or provide its own services. Any litigation filed by third parties may result in the diversion of management’s attention from the Company’s business operations and require the expenditure of significant financial resources.

International operations may be subject to additional risks associated with doing business in foreign countries.

The Company currently operates within the United States, Canada, Mexico, India and the Middle East, and the Company expects to do business in South America and potentially other parts of Asia and Europe.  As a result, it may face significant additional risks associated with doing business internationally.  In addition to the language barriers, different presentations of financial information, different business practices, and other cultural differences and barriers, ongoing business risks may result from the international political situation, uncertain legal systems and applications of law, prejudice against foreigners, corrupt practices, uncertain economic policies and potential political and economic instability. The Company may also be subject to such risks, including, but not limited to,  currency  fluctuations,  regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, expropriation, corporate and personal liability for violations of local laws, possible difficulties in collecting accounts receivable, increased costs of doing business in countries with limited infrastructure, risks related to shipment of raw materials and  finished  goods  across  national  borders and cultural and language  differences.  The Company may face competition from local competitors that have longer operating histories, greater name recognition, and broader customer relationships and industry alliances in their local markets, and it may be difficult to operate profitably in some markets as a result of such competition.  Foreign economies may differ favorably or unfavorably from the United States economy or Canadian economy in growth of gross national  product, rate of inflation, market development,  rate of savings, and capital investment, resource  self-sufficiency  and  balance  of  payments  positions,  and in other respects.

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When doing business in foreign countries, the Company may be subject to uncertainties with respect to those countries' legal system and application of laws, which may impact its ability to enforce agreements and may expose it to lawsuits. Legal systems in many foreign countries are new, unclear, and continually evolving.  There can be no certainty as to the application of laws and regulations in particular instances.  Many foreign countries do not have a comprehensive system of laws, and the existing regional and local laws are often in conflict and subject to inconsistent interpretation, implementation and enforcement.  New laws and changes to existing laws may occur quickly and sometimes unpredictably.  These factors may limit our ability to enforce agreements with our current and future clients and vendors.  Furthermore, it may expose us to lawsuits by our clients and vendors in which we may not be adequately able to protect ourselves.

The Company may be unable to fully comply with local and regional laws that may expose it to financial risk. When doing business in foreign countries, the Company may be required to comply with informal laws and trade practices imposed by local and regional government administrators.  Local taxes and other charges may not be predictable or evenly applied.  These local and regional taxes/charges and governmentally imposed business practices may affect the cost of doing business and may require the Company to constantly modify its business methods to both comply with these local rules and to lessen the financial impact and operational interference of such policies.  Any failure on the part of the Company to maintain compliance with the local laws may result in fines and fees which may have a negative effect on the Company’s operations and financial condition.

Risks Relating to the Financing of the Company

The Company has a history of operating losses and limited cash flow to sustain operations.

The Company historically has reported operating losses and negative operating cash flow from operations. The Company has incurred net operating losses of $830,879 in fiscal 2013 and $1,603,155 in fiscal 2012, and has an accumulated deficit of $2,201,752 since inception as of December 31, 2013. The Company has paid no dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future.  The Company has historically relied upon the sale of common shares to help fund its operations and meet its obligations. Any future additional equity financing would cause dilution to current stockholders. If the Company does not have sufficient capital for its operations, management would be forced to reduce or discontinue its operational activities which would have a negative effect on the Company’s operations and financial condition.

The Company will require additional financing which could result in substantial dilution to existing shareholders.

The Company will require additional capital in order to fulfill its growth plans as well as for general and administrative expenses.  The Company’s growth plans are dependent upon the Company’s ability to obtain financing through the sale of common or preferred shares, debt financing, or other means. Such sources of financing may not be available on acceptable terms, if at all.  Any transaction involving the issuance of previously authorized but unissued shares of common or preferred stock, or securities convertible into common stock, could result in dilution, possibly substantial, to present and prospective holders of common stock. These financings may be on terms less favorable to the Company than those obtained previously. Failure to obtain such financing may result in the Company’s ability to expand its product offerings and operations, and have a negative effect on the Company’s operations and financial position.

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Risks Relating to an Investment in the Securities of the Company

The Company has a dependence upon key management employees, the loss or absence of which could have a negative effect on the Company’s operations.

The Company strongly depends on the business and technical expertise of its management and key personnel, including Chief Executive Officer Atul Sabharwal, Chairman Ritesh Bhavnani, Chief Operating Officer John Fauller, Chief Financial Officer Jaisun Garcha, and Chief Technology Officer Wilson (Andy) Bell. There is little possibility that this dependence will decrease in the near term. With the exception of the Consulting agreement with Atul Sabharwal, the Company only has "at-will" employment agreements with its key management employees and they are free to leave their employment with the Company at any time. The Company carries no “Key Man” insurance on any of its management, and the loss of any of these individuals is likely to have a negative effect on the Company’s operations. As the Company’s operations expand, additional general management resources will be required. The Company may not be able to attract and retain the additional qualified personnel that may be required.

Certain officers and directors may have conflicts of interest.

The Company may contract with affiliated parties or other companies or members of management of the Company or companies that members of management own or control. These persons may obtain compensation and other benefits in transactions relating to the Company. Certain members of management of the Company will have other business activities other than the business of the Company. Although management intends to act fairly, there can be no assurance that the Company will not possibly enter into arrangements under terms one could argue are less favorable than what could have been obtained had the Company or any other company had been dealing with unrelated persons.

The market for the Company’s common stock has been subject to volume and price volatility which could negatively effect a shareholder’s ability to buy or sell the Company’s shares

The market for the common shares of the Company may be highly volatile for reasons both related to the performance of the Company or events pertaining to the industry, as well as factors unrelated to the Company or its industry.  The Company’s common shares can be expected to be subject to volatility in both price and volume arising from market expectations, announcements and press releases regarding the Company’s business, and changes in estimates and evaluations by securities analysts or other events or factors.  

In recent years the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly small-capitalization companies such as the Company, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values, or prospects of such companies.  For these reasons, the price of the Company’s common shares can also be expected to be subject to volatility resulting from purely market forces over which the Company will have no control.  Further, despite the existence of a market for trading the Company’s common shares in Canada, stockholders of the Company may be unable to sell significant quantities of common shares in the public trading markets without a significant reduction in the price of the stock.

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Broker-Dealers may be discouraged from effecting transactions in our common shares because they are considered "Penny Stocks" and are subject to the Penny Stock Rules.

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on FINRA broker-dealers who make a market in "a penny stock".  A penny stock generally includes any equity security that has a market price of less than $5.00 per share that is not registered on certain national securities exchanges or quoted on the NASDAQ system. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000 in each of the last two years, or US$300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.

In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the US Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.

As a “Foreign Private Issuer”, the Company is exempt from the Section 14 Proxy Rules and Section 16 of the 1934 Securities Act.

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result is shareholders having less complete and timely data.  The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.

Item 4.  Information on the Company

Description of Business

Introduction

Snipp’s executive office is located at:

6708 Tulip Hill Terrace

Bethesda, Maryland 20816

Telephone: (888) 997-6477

Website:  www.snipp.com

E-Mail: info@snipp.com

The Contact persons are Atul Sabharwal, Chief Executive Officer, and Jaisun Garcha, Chief Financial Officer.

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Atul Sabharwal, Chief Executive Officer, provides office space to the Company.

The Company’s fiscal year ends December 31^st.

The Company's common shares trade on the TSX Venture Exchange under the symbol "SPN".

The authorized share capital of the Company consists of an unlimited number of common shares, and an unlimited number of preferred shares, issuable in series. As of September 30, 2014, the end of the most recent fiscal quarter, there were 69,422,638 common shares issued and outstanding, and no preferred shares issued and outstanding.

Corporate Background

The Company was originally incorporated in British Columbia under the Business Corporations Act (British Columbia) on January 21, 2010.

The Company presently has two wholly-owned subsidiaries.

·

Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), a Delaware Corporation; and

·

Snipp Canada Inc., a Canada Corporation.

Currently, the Company develops and sells mobile marketing and information solutions, primarily to publishers, advertising agencies and brands.

History and Development of the Business

The Company was incorporated in British Columbia under the Business Corporations Act (British Columbia) on January 21, 2010 under the name “Alya Ventures Ltd.”. The Company was classified as a Capital Pool Company (“CPC”) and began trading on the TSX Venture Exchange under the symbol “ALY.P” on August 25, 2010. In the Company’s initial public offering, a total of 6,050,000 common shares were issued at a purchase price of C$0.10 per share for gross proceeds of C$605,000.

Under the TSX Venture Exchange’s Policy 2.4, a company with only minimal working capital is allowed to list on the Exchange for the purposes of negotiating an acquisition of, or the participation in, assets or businesses. Such companies are classified as a “Capital Pool Company”, or “CPC” and are governed by a specific set of rules and regulations.  The sole purpose of a CPC is to identify and evaluate existing businesses or assets for possible acquisition which, if acquired, would provide the company with a full listing on the TSX-V. The only business a CPC is allowed to conduct prior to its Initial Public Offering and listing on the TSX-V is to prepare for its offering. This typically consists of raising a limited amount of seed capital, establishing a management team and board of directors, as well as hiring professionals to assist in the offering, including an auditor, legal counsel, and an agent for the Offering. Once the IPO is completed, the company will use the net proceeds to seek and finance a business in order to complete its “Qualifying Transaction” (“QT”). Once a suitable asset or business has been identified, the CPC will attempt to negotiate an acquisition or participation in the asset or business. The management of the CPC will negotiate with the targeted acquisition regarding acquisition terms. The Board of Directors of the CPC will examine proposed acquisitions on the basis of business fundamentals before approving any proposed transaction.

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From the date of listing on the TSX-V, the CPC has 24 months to complete its QT. If the CPC had not completed its QT in that timeframe, the CPC’s shares would be suspended from trading, and possibly face delisting, until such time as a QT has been approved and completed. The CPC may use cash, secured or unsecured debt, the issuance of securities, or a combination thereof, in order to finance its acquisition as its QT. Any QT is subject to approval by the majority of the minority shareholders of the CPC, approval from the TSX-V, and sponsorship of a TSX-V member firm. Trading in the CPC stock will initially be halted from trading before the announcement of a pending QT. The stock will remain halted until the Exchange has completed any preliminary background investigations into the proposed transaction and a sponsor firm has been retained.

All securities which will be held by Principals of the proposed post-QT issuer are required to be held in escrow. Shares will be released from escrow subject to a formula prescribed in the CPC Escrow Agreement which is subject to approval by the TSX-V. Once the QT is complete, the company will resume trading on the TSX-V under its new name and symbol.

On November 18, 2011, the Company announced that it had entered into a definitive agreement with Consumer Impulse, Inc. (“Consumer Impulse”), a Delaware Corporation doing business as “Snipp”, to acquire a 100% interest in Consumer Impulse. Snipp is a provider of a full suite of mobile marketing services in the US and Canada to print publishers, advertising agencies, and corporations and consumer brands. Snipp generates its revenue from the design, construction, implementation and management of these mobile marketing services for customers. Under the agreement, the Company agreed to acquire Consumer Impulse through the issuance of 22,742,308 Alya common shares and 6,188,692 common stock warrants, with each warrant exercisable into one Alya share at a price of C$0.13 per share for a period of five years from closing. Concurrent with the transaction, the Company would close the private placement of 13,333,333 common stock units at a price of C$0.15 per unit for gross proceeds of C$2,000,000. Each Unit consists of one Share and one share purchase warrant entitling the holder to purchase one Share at an exercise price of C$0.22 per Share until March 1, 2013 and at an exercise price of C$0.27 until March 1, 2014. The transaction with Consumer Impulse is the Company’s “Qualifying Transaction” under TSX Venture Exchange rules and closed on March 1, 2012. For accounting purposes, the transaction was treated as a reverse takeover with Consumer Impulse as the acquirer and the Company’s financial statements reflecting Consumer Impulse’s history from its inception on March 30, 2007.

Following the closing of the Qualifying Transaction, the Company changed its name to “Snipp Interactive Inc.” and resumed trading on the TSX Venture Exchange under the new symbol “SPN” on March 6, 2012.

In May 2012, the Company announced an agreement with VirKet S.A. de C.V., a leading Mexican provider of digital marketing services, to establish a strategic partnership to offer mobile marketing solutions in Mexico. The initial term of the agreement was for one year with an option for VirKet to extend for a second year and a right-of-first refusal for an extended exclusive license beyond the initial two year term.

In June 2012, the Company added its new mobile marketing technology, “QR in the Cloud”, to its Mobilize Me platform. The technology allows users to scan quick response (“QR”) codes without a smartphone or reader app.

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In September 2012, the Company expanded its international operations to the Middle East, with its first campaigns in Kuwait, and in October 2012 the Company signed an agreement with VirKet S.A. de C.V. and Anuncios en Directorios, S.A. de C.V., Mexico’s leading yellow pages and multi-media advertising company to develop mobile solutions for their clients.

In October 2012, the Company launched its first receipt validation campaign with Arm & Hammer. Customers who purchased 2 boxes of Arm & Hammer Baking Soda could send in their receipts to qualify for a coupon from 1-800-FLOWERS.com.

In November of 2012 the company signed an agreement with eWinery and NXT wine to market its solutions to the wine industry in North America.

The Company partnered with Meredith Corporation in November 2012 to launch an annual program that provided Meredith’s advertisers with customized mobile websites and allowed the reader to engage with the advertiser in a variety of ways. This program began in March 2013 with Meredith’s Midwest Living magazine utilizing the Company’s Mobile Site Builder Solution to create mobile reader response cards.

In February 2013, the Company officially launched SnippCheck, which validates the authenticity of pictures submitted by customers through their mobile phone. The technology has uses in multiple industries, including receipt validation for contests, rewards and rebates.

In March 2013, the Company launched SnippWine, a full service mobile marketing solution for the wine industry, with its first two clients.

In June 2013, SnippQR, a free custom QR code generator, was launched. With SnippQR, users can create high-resolution QR codes with no restrictions on the number of scans per code. In January 2014, the Company entered into a three-year agreement with VirKet S.A. de C.V. where VirKet will use the SnippQR platform for use by Seccion Amarilla’s small business clients.

In the latter half of 2013, from September to December, Snipp worked with Quantum Rewards and launched a series of SnippCheck receipt validation campaigns for the launch of new EA Games video games at Walmart. Snipp conducted campaigns for the launch of Madden 25, Battlefield 4 and Forza Motorsport 5.

In January 2014, the Company announced that Domaine Chandon, a leading winery, has partnered with the Company to use the Company’s newly launched text alerts solution, SnippAlerts. SnippAlerts allows for the delivery of multiple types of targeted messages to opt-in consumers and is a new addition to Snipp’s Mobilize Me platform.

During the first six months of fiscal 2014, the Company announced a slew of new mobile marketing campaigns for clients which utilized a combination of several of the Company’s mobile solutions, including SnippCheck, the receipt processing solution, SnippWin, the contest and promotions platform, and SnippRewards, the mobile rewards platform.

Since May 2014, the Company has launched at least six new major campaigns each month, all with well known consumer brands. At least thrice in the past quarter the company has launched six campaigns within the same week itself.

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Business Overview

The Company is a provider of mobile marketing and mobile promotions solutions that allow brands to engage and interact with their customers. The primary clients for the Company’s products are advertising agencies, print publishers and corporate/consumer brands, including Fortune 500 companies.

Mobile marketing is a relatively new industry that has evolved with the advances in mobile telephone technology. The dramatically increased power and capabilities of smartphones has also increased the types of marketing and promotional materials that can be pushed to the consumer via the mobile gateway. Overall, promotions marketing is estimated to be an almost $80 billion annual industry in North America. This number includes incentives, promotions, coupons and consumer incentives. The mobile portion of the annual spending has been growing dramatically as advertising agencies and brands have identified the benefits of mobile marketing. These benefits include targeted delivery of marketing materials to specific consumers (those that have already purchased a specific product, or are physically present in-store, for example). Mobile marketing is also very good at delivering specific materials and messages to targeted consumers based on specific activities or patterns. It can also be less expensive than more traditional advertising and marketing methods, such as television advertising, and make other forms of marketing more effective when used in conjunction with them, such as print or packaging materials. Mobile marketing is also very popular among traditional “brick and mortar” retailers, who are looking for creative and effective ways to engage consumers and draw them to shop in physical locations rather than online. The Company’s mobile solutions enable consumers to participate in promotions and campaigns in a manner that is easier and with greater transparency than traditional “mail-in” alternatives. The Company’s solutions also enable brands to create new types of incentive programs and unique qualification criteria that would not have been possible with traditional solutions.

Currently the Company offers four main solution suites:

·

Mobile Promotions and Loyalty Programs: A full range of turnkey mobile promotion solutions from text to win and sample programs through to sophisticated and full fledged loyalty programs.

·

Shopper Marketing & Receipt Processing: The Company’s unique SnippCheck mobile receipt processing solution allows brands to execute any kinds of purchase related Shopper Marketing programs without the need to coordinate with retailers, or requiring consumers to download an app.

·

Mobile Sites and Apps: The Company’s SiteBuilder solution allows the company to create and deploy new mobile sites for brand campaigns easily and at scale.

·

Augmented Reality: The Company has been producing cutting edge augmented reality campaigns for some of the leading brands around the world.

The Company’s clients are advertising agencies, brands and publishers/media looking to “mobilize" their traditional display-based marketing and information campaigns. In addition to the solutions, the Company delivers end-to-end service including comprehensive advice in conceptualizing mobile promotion marketing programs, rapid and flexible deployment based on the Company’s Mobilize Me technology platform and tracking & analysis of customer data. These components span the entire product purchase life-cycle.

The Company is able to customize the marketing campaign for each customer by utilizing its various solution components individually or together. These components include:

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SnippCheck

SnippCheck is a mobile receipt processing solution. Consumers can submit receipts to validate their purchases in exchange for coupons, rebates, expenses and loyalty programs, using just their phone. SnippCheck does not require consumers to download an app, or use a smartphone as it is compatible with any camera-equipped mobile phone.

The program allows a customer to submit a photograph of their receipt directly from their phone to the Company, either through messaging or e-mail. Additional information is submitted through a mobile web form. Any receipt from any store can be processed by the program. Submissions are validated through sophisticated Optical Character Recognition (OCR) which enables the Company to handle large volumes of receipts quickly. Receipts can also be manually validated by the Company’s operations team, if required. Manual and automated fraud detection measures prevent duplicate submissions as well as other attempts to violate program rules. The program can also be customized to support other kinds of submissions, such as multiple image submissions, registrations, or proofs of purchase. Users can check their submission status at any time, and are notified if submissions are incomplete or invalid.

For the Company’s customers, the benefits for SnippCheck over traditional submission programs include:

·

Consumer convenience: No requirement to photocopy, print or mail submissions

·

Detailed Tracking, Reporting and Analytics: Brands receive detailed information about their customers and buying habits. Who the customers are, as well as what they are buying and where.

·

Customizable Qualification Rules: The system is extremely versatile and allows for a variety of different qualification rules for programs, enabling brands to create sophisticated promotions.

·

Processing speed: Turnaround time is days rather than weeks for traditional submission programs, and all workflow is digitally transcribed as part of the process.

·

“Pop-up” capability: Campaigns can be set up very quickly, even overnight, and can last for short-periods of time.

·

Cost-effective: No postage costs or expensive product packaging changes are required.

Each campaign has a dedicated mobile site with program instructions, functionality for users to check submission status, view/retrieve submissions, and more. Consumers are notified at each step of the program and have full transparency into their submission status via the dedicated mobile site. Each campaign is completely customizable and supports multiple variations, including multiple submissions, user registration, customized messaging, participation limits and more. The Company also provides multiple reward and redemption options, from electronic coupons to paper checks.

SnippCheck can also validate photographs, which is useful for brand engagement campaigns. Such campaigns include contests to display a customer’s use of a brand’s product. The Company validates all images and ensures that inappropriate content is flagged. It can also integrate with Social Media where all content can be posted, as a form of entry, or reposted by the client for brand marketing.

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An example of SnippCheck’s use in brand promotion was a campaign for Quantum Rewards. Quantum was looking for an innovative way to promote the launch of the new Madden Football Game for the Xbox 360 video console in Walmart Stores for their client, EA Games. The agency and brand wanted to create a promotion whereby they encouraged consumers to purchase the game in conjunction with a snack product. They wanted the promotion to be launched nationwide and done without having to integrate into the Walmart Point-of-Sale system which would be too time consuming for the promotion. Therefore, SnippCheck was used for the promotion. Consumers were informed about the promotion using in-store promotional materials. In order to qualify for at $10 eGift card from Walmart, consumers had to purchase the game along with one qualifying snack product and submit a photo of their receipt through their mobile phones. SnippCheck received the purchase submissions and once validated, consumers were sent back their Walmart eGift code via text message to their phones.

Snipp’s solutions can also operate campaigns based on dollar amounts spent as opposed to simply products purchased. Quantum Rewards also used SnippCheck for another EA Games’ promotion at Walmart. In this campaign, their co-promotion partner, M&M’s candies, wanted the qualification to be based on a dollar amount spent. Consumers had to purchase EA’s Forza Motorsport 5 video game at Walmart as well as $8 worth of qualifying M&M’s. SnippCheck was able to process the mobile receipt submission and determine if the required dollar purchases had been made before returning the rewards to the qualifying consumers.

SnippCheck and other Snipp solutions are recognized by brands as an effective method to obtain important consumer behavior information. Smithfield and Gwaltney brands conduct various NASCAR related sweepstakes each year to incentivize consumers to purchase additional branded products, including meet and greets with Smithfield sponsored drivers. They were previously handing all contests through mail-in, but this method did not provide the means to capture important information or tie spending to specific retailers. It also did not provide on-going connection to consumers by opting participants into future promotions. The newest sweepstakes solved those issues by going digital through the use of SnippCheck. Consumers text in a keyword based on the retailer they are shopping at for instructions, then send in a picture of their qualifying receipt. Snipp also alerts the winners once they have been chosen.  

Snipp also created a similar campaign for Henkel called the “Fuel Your Summer” promotion. Consumers that spent $25 on Henkel’s family of beauty care brands, including Dial, Tone, RightGuard and Dry Idea, received a $10 Shell gift card. Purchases could be made at any retailer, and could be made over multiple transactions. Snipp charged for actual rewards redeemed rather than anticipated, and provided daily reports that allowed Henkel to track participation and analyze spending behavior.

Promotions such as the above allow brands to tie their programs to a more detailed return on investment than they could have in previous promotions.

Mobile Site Builder

Mobile Site Builder is a template-driven solution that allows clients to efficiently create interactive HTML5 mobile sites with out-of-the-box functionality. Components include:

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Form Builder: Simple creation of forms with rich pre-built functionality including entry limits, duplicate checking, and more

Lead Capture: Sends multimedia e-mails with file attachments to users; stores e-mails captured as leads for clients.

Sampler / Contests: Easy access entries to a giveaway or contest. Can accommodate most contest and giveaway formats, including text to win, scan to win, photo contests, and scavenger hunts. Includes automatic address verification and automatic duplicate entry checking. Uses SMS or Mobile Web Form Address Collection options.

Social Media: Allows users to connect with a brand’s social media pages, display twitter feeds, and more.

Image Galleries: Customizable image galleries and slideshows

Video: Easily incorporates mobile video, with post-roll capabilities, bandwidth sniffing to ensure minimal buffering, device detection to fit video to the screen, and multi-format encoding to ensure delivery to 98% of all phones.

Polls, Surveys and Quizzes: Allows for multi-branched quizzes, surveys and polls. Permits multiple types of question structures with branching and segmentation logic based on prior answers. Results can be displayed in real-time on charts to display on screen.

Button Panels: Create and design panels with fully customizable style buttons

Expandable Text Elements: Accordion like text blocks that expand to show more content

Maps and Geolocation: Automated map and directions components.

An example of the use of Snipp’s solutions was by Meredith & Mary Kay. The campaign used Snipp’s Mobile Me platform to distribute samples of Mary Kay’s newest products through advertisements in seven different Meredith magazine titles, including Parents, Fitness, Family Circle, Ladies Home Journal, and Better Homes and Gardens. Magazine readers texted a designated keyword found in the print advertisement to receive a free product sample from Mary Kay. If the reader was one of the first 5,000 registrants per magazine, they received a text back with confirmation and a link to a mobile website where they provided their personal information, and opted-in for further communications from Mary Kay. In total, 35,000 samples were distributed across the titles, and on average the sampling program sold-out in just two weeks across the seven titles. This was the second campaign Meredith and Mary Kay have run with Snipp. Previously, they ran a similar program but distributed only 5,000 samples across three titles. Due to the success of the prior program, they decided to expand the scope of the program significantly.

Meredith has also teamed with Snipp in their mobile reader response program for their Midwest Living Magazine. Instead of the traditional mail-based response cards, the new program provides participating advertisers with elegant and customized mobile websites in addition to their ads placed in the print magazine. The mobile websites feature a variety of different ways may engage with the advertiser, including requesting additional information by mail or e-mail, special deals and offers, interacting with their social media pages, watching a video or connecting with the advertiser’s website, or contacting the advertiser directly. Readers interesting in receiving more information from a particular advertiser no longer have to fill out and mail lengthy paper forms, then wait six to eight weeks for a response. Instead, they simply visit the advertiser’s custom mobile website to quickly receive the information they want. For instance, a reader could submit their e-mail address and immediately receive a digital advertising brochure. The solutions also provide significant benefits to the advertisers, who can convert leader much faster and more efficiently, as well as cost-effectively as they no longer have expenditures for postage and printing.

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These solutions also allow clients to engage customers through sweepstakes and contents. Guinness wanted to create an Instant Win sweepstakes that rewarded customers that purchased Guinness Black Lager as well as strengthen the affiliation of the brand with music and music events. Snipp created a mobile sweepstakes where consumers could participate completely on their phones. In conjunction with their promotions agency Colangelo, the Company utilized the SnippWin contest platform to incorporate all contest rules as well as age-gating participants and to verify that multiple parties could not use the same code. To enters, users texted Game Codes on specially marked Guinness Black Lager packages. They are notified immediately whether they have won and are then provided a discount code to be used on the Ticketmaster website to claim their reward. If they do not win immediately, consumers could keep trying by re-entering their Game Code on subsequent days. Those winning prizes of $50 or more were also required to submit a photo ID by text message to claim their prize.

Clients also integrate the maps and geolocation components in conjunction with marketing solutions. A retail client uses Snipp’s Store Locator program to effectively deliver coupons. Consumers can scan a tag or send a text message and receive back the location of the store nearest to their current location. The program utilizes the GPS capabilities of the consumer’s smart phone to determine their location and the location of the nearest retail outlet. It will also automatically detect if the consumer does not have a smartphone and ask for the zip code instead. For this client, Snipp also delivered coupons to the consumer in conjunction with the store location request. In the campaign, the Company found that 45+% of consumers that received a coupon through the service went and redeemed the coupon at the store location to which they were directed through the program.  

Couponing

The Company offers a variety of couponing solutions as a component of most any mobile marketing campaign. These include:

·

Text-Based Coupon Codes: Simple keyword-based text message campaigns in which the user receives back a special coupon code they are able to redeem in-store or online.

·

One-Time Use Coupon Codes: One-time use coupon codes ensure that multiple users do not “share” the same coupon code as it can only be redeemed once. 

·

Purchase-Related Coupons: SnippCheck can validate a consumer purchase and issue a coupon. This solution works across all retailers and channels. 

·

Paper Coupons: Address can be collected with mobile forms and used to deliver paper-based coupons by mail. The mobile forms are able to check for duplicate entries, set sample limits, automatically clean addresses and more.

Snipp also provided a mobile couponing solution for Kingsford and their agency. Kingsford wanted to incentivize potential customers to try their charcoal without being limited to a particular retailer for the expense of physical fulfillment costs. Beginning May 19, 2014, consumers that purchased any brand of charcoal grill at any retailer could submit their receipts using SnippCheck to receive a coupon for a free bag of Kingsford Charcoal, with the entire process and fulfillment managed by Snipp. To leverage Kingsford’s relationship with Walmart, Snipp created a separate keyword and e-mail to track Walmart consumer activation.

SnippCheck is retailer agnostic, so any receipt, both online and physical, can be sent in by text, e-mail or web upload.

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Quick Response (QR) Codes

Quick Response (QR) Codes are a type of matrix optical barcode that contains information about the product to which it is connected. In product marketing, it is often emplaced on the item, or within product advertising or marketing material. The embedded information is decoded using a reader device and interpretative software, which is included in many smartphones. The Company has a suite of QR Code solutions which include:

·

QR IN THE CLOUD: Allows users to scan QR codes even if they do not have a QR code reader on their phone – all they need to do is take a photo of the QR code and send it in by messaging. Our solution decodes the QR code for them and sends the contents back in a text message. 

·

SNIPP QR: A custom QR code generator that allows users to create their own QR code in seconds and customize it in minutes. The codes are fully customizable from the shape to its color and more.

·

Built-In Reporting & Tracking: All QR codes created through our system have comprehensive measurement and tracking, including device detection. 

An example of the use of Snipp’s QR code solution was Taco Bell’s College Football mobile campaign with ESPN. Taco Bell added mobile bar codes on packs of tacos that let users access content about the upcoming Bowl Championship Series college football games. Once users scan the QR code or tap the SMS link, they are taken to the ESPN mobile site to watch video coverage of the BCS games, which is sponsored by Taco Bell.

Snipp teamed up with Allure Magazine and Dior to launch a year-long campaign for buyers of Dior products. When scanned from their phone, the consumer is taken to a customized microsite where they can view ten different videos from celebrity makeup artist Ricky Wilson, who advises customers on how to use and apply the product. The program has bandwidth detection to ensure the best possible viewing experience and, when the video is complete, triggers a post-roll redirect to Macy’s website. The entire campaign, including 30 mobile optimized videos in two languages, the post-roll redirect and site design, was deployed in just two weeks.

Image Recognition 

Snipp’s solution uses sophisticated image recognition technology to identify and match a submitted image, and in response send back the appropriate content. As an alternative to QR or bar codes, clients can incorporate any kind of image tag in their campaigns, including:

§

Product Packaging

§

Logos

§

Wine Labels

§

Ad Pages

The solution requires no downloaded app, as the consumer is only required to take a photograph of the specific image and submit via their phone. Works with any camera equipped phone, not just smartphones. The images are fully customizable, and work with any kind of image, including print, product packaging, outdoor and even television advertising. The solution is deployable quickly and is ideal for use in popup campaigns.

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Oreo used Snipp’s Image Recognition to create custom tags from Oreo packaging. Using the image recognition technology, Oreo fans could take photographs of Oreo cookie packages and submit them using MMS to receive back special content and coupons. Users could also text in the UPS code on the back of Oreo packaging to receive the content. In the first campaign, users would receive a music video, and in the second they would receive a special Valentine’s Day message from Oreos.

Face-in-the-Hole

Face-in-the-Hole is a unique solution which marries the camera phone with sophisticated facial recognition and image manipulation technologies to create fun, viral mobile campaigns. The concept is a high-tech version of the cardboard cutouts that allow a person to stick their own face onto a fun body. A customer only has to take a photograph of their face, send it in to the Company and receive back a photograph of their face on a new body which can be shared via social media or E-mail. Clients can offer customers an almost endless number of templates to leverage their brand. Examples include:

§

Try On a Product: Consumers could virtually try on accessories (e.g. sunglasses, hats, hair color products) through Face in the Hole.

§

Sports Teams: Brands sponsoring a sport or team can enable consumers to get back a photo of them in team uniform.

§

Meet A Star: Enable consumers to have a photo of them with a famous celebrity

§

Travel: Create picture postcards showing consumers in specific locations

Mobile OCR

The Mobile OCR solution integrates OCR technologies with mobile messaging and image processing. No app is required. Consumers can take a photo of any printed text and submit the photo by messaging. The text contained within the image is automatically decoded and the appropriate action taken. Examples include: 

§

Loyalty Programs: Consumers can take photos of rewards coupons and submit them to be decoded and have those points credited to their account automatically. It is easier and often more accurate than having consumers type in rewards codes onto a website or submitting via text.

§

Business Cards: Consumers can take a photo of a business card and send it in by messaging. The solution can decode the business card and send the user back a vCard with all the contact information encoded within so it can be easily added to their address book.

Universal Scanning App

The Company’s universal scanning app can be rebranded by clients to serve as a companion to their media or services.  The app can support all types of mobile activation technologies including QR Codes, MS Tags, Digital Watermarks and other images. The app can also incorporate XML feeds from client websites to provide news, image galleries, and other content to consumers.

An example of this solution is used by James Hardie, a leader in fiber cement siding and backerboard products, for delivering product information. James Hardie’s product packaging available in Lowes and Home Depot features tags to allow contractors and customers to receive product information, user guides and video instruction via their mobile phones.

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Augmented Reality

Augmented Reality is an interactive experience where a visual overlay is introduced onto a view of the physical world. SnippAR allows clients to create seamless and immersive augmented reality experiences for their customers.

The Company’s Augmented Reality engine can support various image and location based triggers that can deliver a wide range of content, including sound, photos, and video. SnippAR can be integrated with other Snipp solutions into a full interactive experience, including built-in QR code reader and sophisticated image recognition. Integration and the addition of new and updated content is easy.

Examples of uses of SnippAR include:

·

360 degree tours

·

Training and Education

·

Store and location finders

·

Print-to-mobile activations

·

Interactive city tours and maps

·

Virtual home visits

·

Virtual Gaming

·

Product Catalog activations

An example of Snipp’s Augmented Reality App was the debut campaign for Lexus Kuwait. Branded as Snipp Khayal in the Middle East, the campaign was used at an exclusive press-only event in Kuwait. At the event, journalists were given phones with Khayal pre-installed in order to experience Lexus’ new 2014 IS range. The app displayed an in-phone video and virtually displayed color options, lights and a 360 degree tour of its interior.

Burger King Kuwait used the Augmented Reality App to offer an interactive mobile game and create a unique brand experience. QR codes were placed on their packaging to drive consumers to “Go Mega”, an interactive style soccer game that could be played from any mobile device. After entering their information, consumers go to game play where they defend the goal while collecting Burger King burgers along the way. They are encouraged to share with friends and family through social media channels, and the top 3 eligible scorers won a grand prize of two tickets to Spain to attend a Spanish Soccer League (La Liga) match in Barcelona.

Mobile Alerts

The Company’s Mobile Alerts interface allows clients to attach mobile links, images, video and more to alert messages. Alerts can be keyword based and clients can specify frequency of alerts.

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Current and Anticipated Activities

The Company aims to increase its business in its current segments by continuing to evolve its suite of mobile-based promotions solutions by improving its current solutions and developing additional products.  The Company also intends to recruit a sales force to market its products to customers directly. It also will actively develop indirect sales channels through partnerships in select industries and regions both within and outside of North America. The Company also intends to enhance its portfolio of technology offerings and market position, which may include various forms of strategic partnering and merger and acquisition activity.

Management believes that the Company has multiple directions for growth:

1.

Continued product innovation to the platform

2.

Multiplier effect of its current organic business model 

3.

Effect of recruiting a sales force and attendance in further industry events

4.

Global deployments with and without regional partners

5.

Increasing requests for long term licensing and services contract revenue

1. Continued Product Innovation to the Platform

The Company has developed components within its Mobilize Me platform that span the entire purchase life-cycle. In particular, the company is seeing significant traction with SnippCheck, its mobile receipt processing solution that is a relatively unique product offering in its customizability and flexibility in meeting customer needs. Significant promotions activity is tied to purchase, and SnippCheck enables brands to validate consumer purchases for various promotions. SnippCheck also serves as an effective engine around which to continue to add promotions-related features and functionality requested by clients. The Company plans to continually build on these components that allow for a closed-loop, single-platform solution for marketers across the path to purchase. The Company has solutions for each component of this path and will continue to launch pieces to further enhance the platforms capabilities:

A. Build Awareness:

·

SnippSites SiteBuilder

o

Apps

o

Mobile video

o

Mobile microsites

o

Print to mobile activations (QR, SMS, Augmented Reality)

o

Mobile Alerts

o

Polls & Surveys

o

Text/scan for info

B. Increase Engagement:

·

SnippWin

o

Contests & sweepstakes

o

Sampling programs

o

Mobile Alerts

o

Geolocation targeting

o

Mobile coupons

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C. Drive Purchases

·

SnippCheck

o

Mobile receipt processing

o

Purchase promotions

o

Mobile Rebate

o

Mobile coupons

D. Enhance Loyalty

·

SnippWin & SnippRewards 

o

Punchcard loyalty programs

o

Rewards programs

o

Retargeting

o

Mobile Alerts

Management believes significant opportunities exist in acquiring point solutions that further add or enhance platform capabilities. The Company is constantly evaluating companies that will be complementary to its existing platform and/or allow it to acquire new customer relationships. The promotion market space is highly fragmented and management believes under the right circumstances an opportunity exists to consolidate companies in different parts of the promotion marketing eco-system. 

2. Multiplier Effect of the Company’s Current Organic Business Model

The Company is positioned at the intersection of three traditional elements in the marketing world that will help it accelerate its business. 

a.

Promotion Windows: Large brands across industry categories build their marketing plans around promotion windows. There are over traditional 80 promotional windows in the year (e.g. New Years Day, Valentines Day, Back to School, Thanksgiving, Christmas). These do not include promotion tactics marketers have to take as a response to competitive action or declines in sales. In a given year a brand runs multiple promotions to take advantage of the various promotion windows that exist, giving the Company multiple opportunities to sell its promotions solutions.

b.

Multi-Brand Nature of Its Clients: The Company continues to receive an increasing amount of interest from Fortune 500 clients across industries as well as leading global marketing and advertising agencies many of whom belong to the “Big Four” agency holding groups. Snipp is currently executing a number of new and repeat campaigns with such clients who invariably work with Snipp across multiple brands as the relationship expands. Each of these clients has a large portfolio of brands. Snipp also works with leading global marketing and advertising agencies that serve multiple large brand clients. A majority of the agencies that Snipp currently works with belong to the “Big Four” agency holding companies. Breaking into these multi-brand companies and agencies leads to additional opportunities with multiple brands within the parent company or in the agency portfolio.

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c.

Channel Specific Promotions: Brands and agencies plan promotions specifically for different retail channels across their promotion windows. There are numerous retail channels (e.g., Walmart, Target, CVS, Walgreens) and each channel typically has a brand-funded "channel budget". Many large brands run the same promotion across multiple channels at the same time or at different points to maintain the illusion of exclusivity. The Company’s promotion solutions are unique in their ability to target any specific combination of channels, thereby making them very attractive to brands looking to run channel-specific promotions.

The combination of Promotion Windows, Multi-brand Clients/Agencies, and Channel Specific Promotions create significant opportunities for the Company’s continued revenue growth. 

3. Effect of Recruiting a Sales Force and Attendance in Further Industry Events

To date, a majority of the Company’s revenue has been as a result of clients calling the company based on the reputation of the work done and the relevance of the solutions it has launched over the past two years. The Company has undertaken very little outbound marketing and until late in 2013 had only participated in one industry conference. Management believes that the opportunity to generate business by building a direct sales force is significant, particularly now that it has a core set of campaigns under its belt.

4. Global deployments (with and without regional partners)

In 2013, Snipp attracted a partner in Brazil. Previously the company had attracted partners in Mexico and had its own presence in the Middle East. Management believes that this trend will continue. While the path to monetization is longer with overseas partners, the Company believes that a significant opportunity exists in these areas and other parts of the world. Operations in the Middle East continue to grow rapidly and we believe opportunities are now arising in Brazil and Mexico that will add to the Company’s revenues. 

5. Increasing requests for long term licensing and services contract revenue

Management is currently engaged in conversations with multiple agencies and large promotions companies who are interested in licensing components of the Snipp platform in longer-term contracts for their existing and new clients. Significant opportunities exist to consummate such licensing & service deals with these companies over the course of 2014.

Management is focused on achieving cash-based profitability in 2014 after sustaining 9 straight quarters of growth since the public offering. Management continues to believe that the company can continue its quarterly growth with the prudent reinvestment of its cash flows to support the growth, Management also believes that with the continued development of the platform and its components, the company is in a strong position to further penetrate the promotions marketing industry not only in the United States of America but globally and achieve its goal of enhancing shareholder value.

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Item 5.  Operating and Financial Review and Prospects

Overview

The Company's financial statements are stated in United States Dollar and are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Standards Board (IASB) and by the IFRS Interpretations Committee (IFRIC).

The Company has since inception primarily financed its activities through the issuance of equity.  The Company anticipates having to raise additional funds by equity issuance in the next several years, as the Company’s operations have not yet generated positive operating cash flow. The timing of such offerings is dependent upon the success of the Company’s operations as well as the general economic climate.

Results of Operations

Six Months Ended June 30, 2014 vs. Six Months Ended June 30, 2013

During the period ended June 30, 2014, the Company entered into a 3 year agreement with Virket in Mexico to provide a custom branded mobile marketing toolkit for small business and launched new large-scale mobile shopper marketing campaigns using SnippCheck and other Company solutions for various clients, including the Company’s first campaigns in the United Kingdom.

Revenue for the six months ended June 30, 2014 was $762,440, an increase of $380,913, or 100%, from revenues of $381,527 for the six month period ended June 30, 2013.

Expenses for the current six months rose to $1,154,027 from $1,012,255. Significant changes in expenses occurred in Salaries and Compensation, which rose to $719,495 from $512,053 as the Company has been testing new sales models to assess which model would result in the highest return. General and administrative costs rose to $61,995 from $45,707 incurred in the year-ago period, and Software Development increased to $58,254 from $36,159, which is consistent with the higher levels of sales. Campaign Infrastructure increased to $138,130 from $71,487. These costs are associated with maintaining the Company’s short code for mobile messaging services and cellular network usage required to support client services. Professional fees, which are for legal and accounting services, rose to $58,254 from $36,159, and Marketing and Investor Relations declined to $27,964 from $62,898. Travel increased to $37,216 from $23,397. Amortization of Intangibles rose to $31,011 from $18,271 and Depreciation of Equipment rose to $2,607 from $2,454, due to amortization of a higher level of intangible assets and depreciation of equipment. Stock-based Compensation declined to $40,768 from $93,412. This expense related to stock options granted to directors, officers and employees and fell due to fewer options granted in the current period compared to the year-ago six-month period. For the six-month period ended June 30, 2013, the Company recorded strategic sales partnership compensation of $113,009 compared to $nil in the current period. This compensation is a non-cash expense to reflect the valuation of warrants issued in connection with a strategic sales partnership agreement.

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Net Operating loss was $391,587 compared to $630,728 for the six month period ended June 30, 2014. Interest income fell to $1,216 from $2,721 due to lower levels of cash held in guaranteed investment certificates during the current period.  Foreign exchange gain declined to a loss of $9,521 from a gain of $86,878 due to unfavorable exchange rates prevailing during the current period. Change in fair value of derivative liability declined to $210,092 from $707,984. This is a non-cash expense and is recognized as the Company’s share purchase warrants are fixed in Canadian dollars while the functional currency of the Company is US dollars. The value of such warrants vary from period to period using the Black-Scholes pricing model and the change in exchange rates. The Cumulative translation adjustments of a gain of $8,684 and a loss of $99,867 relate to changes in exchange rates.

Comprehensive loss for the six month period ended June 30, 2014 was $181,116, or $0.00 per share, compared to comprehensive income of $66,988, or $0.00 per share, for the six month period ended June 30, 2013.

Year Ended December 31, 2013 vs. Year Ended December 31, 2012

During the year ended December 31, 2013, the Company launched several new solutions to their product platform, including SnippCheck, SnippWine, and SnippQR.

Revenue for the year ended December 31, 2013 was $870,420, an increase of $358,566, or 70%, from revenues of $511,854 for the year ended December 31, 2012.

Expenses for the current year declined to $1,701,299 from $2,115,009. Changes in expenses occurred in Salaries and compensation, which declined to $1,098,609 from $1,117,689 as the Company has been testing new sales models to assess which model would result in the highest return. General and administrative costs fell to $84,407 from $124,876 incurred in the prior year.  In order to keep overhead low and to ensure the acquisition of the best possible talent regardless of location, the Company has no central offices and most of its employees work from either their homes or temporary offices rented in the cities where they are based.  Software development rose to $101,679 from $75,861 due to expenditures required to maintain the Company’s product platform. Communications infrastructure expense was $119,986 compared to $91,018 in the prior fiscal year. These costs are associated with maintaining the Company’s short code for mobile messaging services and cellular network usage required to support client services with the year over year increase consistent with the Company’s higher level of revenues. Travel costs declined to $67,675 from $85,875 and professional fees declined to $41,086 from $141,662. Both categories were higher in fiscal 2012 ended December 31, 2012 due to the completion of the Company’s Qualifying Transaction and implementation of its new business plan. Marketing and investor relations declined to $70,169 from $174,676. The expenses were higher in the prior year due to the initial marketing and shareholder expenses related to the Company’s new business plan following the Qualifying Transaction.  Amortization expense increased to $42,821 from $13,905 and depreciation rose to $4,908 from $3,366 due to the amortization of a higher level of intangible assets and depreciation of equipment. Stock-based compensation expense totaled $229,890 compared to $99,150 in the year ended December 31, 2012. The expense represents the non-cash pro-rated portion of stock options granted to directors, officer and employees, and a higher number of grants were made in the current fiscal year.

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During fiscal 2012 the company began to recognize non-cash strategic sales partnership compensation from warrants issued to a strategic partner. These warrants had multiple conditions regarding vesting, expiry and possible mandatory exercise. In fiscal 2012, the Company recognized an expense of $174,931. During fiscal 2013, these warrants had not met the vesting conditions and expired. The Company recognized a credit of $174,931 during fiscal 2013 to reverse the expense taken in fiscal 2012.

Net operating loss was $830,879 compared to $1,603,155 for fiscal 2012 ended December 31, 2012. Interest income fell to $3,397 from $10,919 due to lower levels of cash held in guaranteed investment certificates during the current year.  Foreign exchange gain rose to $106,961 from $Nil due to favorable exchange rates prevailing during the year. Change in fair value of derivative liability increased to a gain of $796,461 from a loss of $147,650. This is a non-cash expense and is recognized as the Company’s share purchase warrants are fixed in Canadian dollars while the functional currency of the Company is US dollars. The value of such warrants vary from period to period through the Black-Scholes pricing model and the change in exchange rates. Unrealized loss on marketable securities was $343 compared to $3,524 in the prior year. During fiscal 2012, the Company also recorded accretion on note receivable of $15,787, Foreign exchange gain of $4,018, and listing expense of $514,284, which is the excess fair value associated with the shares issued on the closing of the Company’s Qualifying Transaction over the fair value of the net assets acquired by the accounting acquirer.

The Cumulative translation adjustments of $120,686 and $21,705 relate to changes in exchange rates.

Comprehensive net loss for the year ended December 31, 2013 was $45,089, or $0.00 per share, compared to comprehensive loss of $2,259,594, or $0.05 per share, for the year ended December 31, 2012.

Year Ended December 31, 2012 vs. Year Ended December 31, 2011

During the year ended December 31, 2012, the Company completed its Qualifying Transaction and implemented its new business plan in mobile marketing sector.

Revenue for the year ended December 31, 2012 was $511,854, an increase of $132,632, or 35%, from revenues of $379,222 for the year ended December 31, 2011.

Expenses for the current year were $2,115,009 compared to expenses of $394,960 in the prior year. The increase in overall expenses was largely due to the costs related to the Qualifying Transaction (“QT”). Salaries and compensation increased to $1,117,689 from $182,611 as additional consultants and employees were hired after the completion of the QT, as well as for one-time expenses for the signing bonus and severance payments for the Company’s former Chief Executive Officer. General and administrative expenses increased to $124,876 from $7,679.  

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Software development rose to $75,861 from $47,250 due to expenditures required to maintain the Company’s product platform. Communications infrastructure expense was $91,018 compared to $52,042 in the prior fiscal year. These costs are associated with maintaining the Company’s short code for mobile messaging services and cellular network usage required to support client services with the year over year increase consistent with the Company’s higher level of revenues. Professional fees increased to $141,662 from $53,218 and marketing and investor relations rose to $174,676 from $34,091, which much of the increases due to additional costs incurred for the QT. Travel increased to $85,875 from $18,069 due to the implementation of the new business plan. Bad debt expense totaled $12,000 as certain uncollectable accounts were written off in fiscal 2012. Amortization of intangibles was $13,905 and depreciation of equipment totaled $3,366 compared to $Nil in fiscal 2011 as the Company only began capitalizing equipment and intangible assets during the first quarter of 2012. Stock-based compensation expense was $99,150 for fiscal 2012 compared to $Nil in fiscal 2011. The expense represents the non-cash pro-rated portion of stock options granted to directors, officer and employees, and there were no options granted in fiscal 2011. During fiscal 2012 the company began to recognize non-cash Strategic Sales Partnership Compensation from warrants issued to a strategic partner. These warrants had multiple conditions regarding vesting, expiry and possible mandatory exercise. In fiscal 2012, the Company recognized an expense of $174,931.

Net operating loss was $1,603,155 for fiscal 2012 ended December 31, 2012 compared to $15,738 in fiscal 2011.

Interest income from cash held in guaranteed investment certificates was $10,919 during the current year compared to $Nil in fiscal 2011.  Other income in 2012 was $15,787 from the forgiveness of a related party loan. Accretion on note receivable was $4,018 from a note receivable with an unrelated company, while unrealized loss on marketable securities received in relation to the note receivable was $3,524. Listing expense of $514,284 was recorded in fiscal 2012 which is the excess fair value associated with the shares issued on the closing of the Company’s Qualifying Transaction over the fair value of the net assets acquired by the accounting acquirer. Change in fair value of derivative liability was a loss of $147,650. This is a non-cash expense and is recognized as the Company’s share purchase warrants are fixed in Canadian dollars while the functional currency of the Company is US dollars. The value of such warrants vary from period to period through the Black-Scholes pricing model and the change in exchange rates.

The cumulative translation adjustments of $21,705 and $306 relate to changes in exchange rates.

Comprehensive net loss for the year ended December 31, 2012 was $2,259,594, or $0.05 per share, compared to comprehensive loss of $16,044, or $0.01 per share, for the year ended December 31, 2011.

Liquidity and Capital Resources

The Company’s working capital position at December 31, 2013 was $265,766, including cash and cash equivalents of $213,046. At the close of the most recent three-month period ended March 31, 2014, the Company’s working capital position was $582,916, including cash and cash equivalents of $321,549. Subsequent to the end of the period, the Company completed the private placement of 10,400,000 common stock units for gross proceeds of C$1,560,000. The current working capital is sufficient to meet its contractual obligations and anticipated general and administrative expenses for the remainder of Fiscal 2014. However, depending on the Company’s strategic direction, the Company may require additional capital to add or enhance it platform capabilities which may include the acquisition of complementary assets or companies.

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The Company has financed its operations through the issuance of common shares. The following sales and issuances of common stock have been completed during the last 5 fiscal years.

Table No. 5

Common Share Issuances

Fiscal Period	Type of Share Issuance	Number of Common Shares Issued (Cancelled)	Price *	Number of Preferred Shares Issued (Cancelled)	Price	Gross Proceeds or Deemed Value
Fiscal Year 2010	No Issuances
Fiscal Year 2011	No Issuances
Fiscal Year 2012	Elimination of Consumer Impulse Common and Preferred Shares	(1,998,200)	-	(700,000)	-	-
	Alya Shares acquired by Snipp	10,550,000	-			US$814,969
	Transaction shares issued by Alya	23,142,305	-	37,499,997		US$3,807
	Redemption of Preferred Shares	-	-	(37,499,997)		(US$3,807)
		13,333,333	C$0.15			US$2,030,600
	Exercise of Stock Options	422,000	C$0.10			US$44,566
	Exercise of Agent’s Options	605,000	C$0.10			US$59,891
Fiscal Year 2013	Private Placement	2,000,000	C$0.10			US$192,520
	Private Placement	2,400,000	C$0.10			US$225,216
Fiscal Year 2014	Private Placement	6,350,000	C$0.10			US$573,469
Through September 30, 2014	Private Placement Exercise of Stock Options Exercise of Warrants	10,400,000 100,000 120,000	C$0.15 C$0.10 US$0.20			C$1,560,000 C$10,000 US$24,000

* The Company’s private placements of common share units have been denominated in Canadian dollars. Proceeds from the share issuances are denominated in United States dollars as the Company’s functional currency.

Six Months Ended June 30, 2014

At the close of the six month period ended June 30, 2014, the Company's working capital was $384,474 compared to working capital of $265,766 as of December 31, 2013.

Operating Activities used cash of $346,352, which included the net loss for the period of $189,800. Adjustments for items not involving cash included amortization of intangibles of $31,011, Depreciation of equipment of $2,607, Stock-based compensation of $40,768, and decrease in fair value of derivative liability related to the value of stock purchase warrants of $210,092.  

Changes in non-cash working capital included an increase in accounts receivable of $150,884, an increase in HST (Canadian sales taxes) receivable of $3,002, a decrease in deposits and prepaid expenses of $12,210, a decrease in accounts payable and accrued liabilities of $112,463, and an increase in due to related parties of $8,367.

Investing Activities used cash of $80,441. Change in marketable securities was $1, additions to equipment used cash of $3,390, and additions to intangible assets used cash of $77,052.

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Financing Activities provided cash of $515,972. Proceeds from the issuance of common shares provided cash of $573,469, share issuance costs used cash of $40,338 and proceeds from share subscriptions was $17,159.

The effect of exchange rate changes was an increase of $8,684 during the period. Cash and cash equivalents totaled $310,909 as of June 30, 2014, compared to cash and cash equivalents of $213,046 as of December 31, 2013, an increase of $97,863.  

During the period the Company completed the private placement of 6,350,000 common share units at a price of C$0.10 per unit for gross proceeds of US$573,469 (C$650,000) which was the second tranche of a non-brokered private placement. Each unit consisted of one common share and one-half of a common share purchase warrant, with each full warrant exercisable into one common share at a price of C$0.15 until January 24, 2016. The Company paid finder’s fees of $36,124 (C$40,000) and filing fees of $4,214 in conjunction with the placement.

Fiscal Year Ended December 31, 2013

At the close of the fiscal year ended December 31, 2013, the Company's working capital was $265,766 compared to working capital of $716,265 as of December 31, 2012.

Operating Activities used cash of $655,927, which included the net income for the year of $75,597. Adjustments for items not involving cash included amortization of intangibles of $42,821, depreciation of equipment of $4,908, Stock-based compensation for the grant of stock options of $229,890, reversal of previously expensed Strategic sales partnership compensation of $174,931, and decrease in fair value of derivative liability related to the value of stock purchase warrants of $796,461.  

Changes in non-cash working capital included an increase in accounts receivable of $143,327, a decrease in HST (Canadian sales taxes) receivable of $5,674, a decrease in deposits and prepaid expenses of $28,759, a decrease in deferred revenue of $60,326, a decrease in accounts payable and accrued liabilities of $22,457, and an increase in due to related parties of $153,926.

Investing Activities used cash of $77,889. Decrease in note receivable provided cash of $50,255, and change in marketable securities was $371. Additions to intangible assets used cash of $128,515.

Financing Activities provided cash of $416,878. Proceeds from the issuance of common shares provided cash of $417,736 and proceeds from share subscriptions provided cash of $17,159, while share issuance costs used cash of $18,017.

The effect of exchange rate changes was a decrease $120,686 during the year. Cash and cash equivalents totaled $213,046 as of December 31, 2013, compared to cash and cash equivalents of $650,670 as of December 31, 2012, a decrease of $437,624.  

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During the year the Company completed two private placements of common shares. Under the first, the Company issued 2,000,000 common shares at a price of C$0.10 per share for gross proceeds of $192,520 (C$200,000). Under the second placement, the Company sold 2,400,000 common share units at a price of C$0.10 per unit for gross proceeds of $225,216 (C$240,000) as the first tranche of a non-brokered private placement. Each unit consisted of one common share and one-half of a common share purchase warrant, with each full warrant exercisable into one common share at a price of C$0.15 until December 6, 2015. The Company paid finder’s fees of $18,017 (C$19,200) for the first tranche.

Fiscal Year Ended December 31, 2012

At the close of the fiscal year ended December 31, 2012, the Company's working capital was $716,265 compared to negative working capital of $37,022 as of December 31, 2011.

Operating Activities used cash of $1,368,779, which included the net loss for the year of $2,237,889. Adjustments for items not involving cash included amortization of intangibles of $13,905, depreciation of equipment of $3,366, Other income from the forgiveness of a related party loan of $15,787, stock-based compensation for the grant of stock options of $99,150, strategic sales partnership compensation related to the grant of warrants of $174,931, listing expense related to the value of consideration provided in the QT greater than the value of assets acquired of $514,284, and change in fair value of derivative liability related to the value of stock purchase warrants of $147,650.  

Changes in non-cash working capital included an increase in accounts receivable of $131,814, an increase in HST (Canadian sales taxes) receivable of $11,378, an increase in deposits and prepaid expenses of $33,740, an increase in deferred revenue of $50,161, an increase in accounts payable and accrued liabilities of $47,952, and an increase in due to related parties of $10,430.

Investing Activities used cash of $216,320. An increase in note receivable used cash of $50,255, an increase in marketable securities was $503, additions to equipment used cash of $24,472, and additions to intangible assets used cash of $141,090.

Financing Activities provided cash of $2,197,216. Cash acquired from the Qualifying Transaction was $276,551.Proceeds from the issuance of common shares provided cash of $2,030,600 and proceeds from exercise of stock options provided cash of $104,457. Redemption of preferred shares used cash of $3,807 and share issuance costs used cash of $210,585.

The effect of exchange rate changes was a decrease $21,705 during the year. Cash and cash equivalents totaled $650,670 as of December 31, 2012, compared to cash and cash equivalents of $60,258 as of December 31, 2011, an increase of $590,412.  

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During the year the Company completed its Qualifying Transaction with Consumer Impulse. Prior to the QT, the Company had 10,550,000 common shares outstanding and Consumer Impulse had 1,998,020 common shares and 700,000 Series A preferred shares outstanding. Pursuant to the Company issued 22,742,305 common shares, 6,188,688 common stock warrants and 37,499,997 Series 1 preferred shares. All of the Series 1 preferred shares were redeemed immediately after closing the transaction for $3,807, and the previously outstanding 10,550,000 common shares of the Company were deemed to have been issued as part of the accounting for the transaction. The Company also issued 400,000 common shares pursuant to a finder’s fee.

As a condition for closing the QT, the Company completed a private placement of 13,333,333 units at a price of C$0.15 per unit for gross proceeds of $2,030,600 (C$2,000,000). Each unit consisted of one common share and one warrant which entitles the holder to purchase one additional common share at a price of C$0.22 if exercised within one year of closing and at a price of C$0.27 per share within two years of closing, with the warrants expiring two years after the transaction closing date. In connection with the private placement, the Company paid a corporate finance fee of $20,306, $142,142 in commissions, and issued 1,333,333 broker’s warrants which are exercisable on the same terms as the financing warrants.

Fiscal Year Ended December 31, 2011

At the close of the fiscal year ended December 31, 2011, the Company had negative working capital of $37,022.

Operating Activities provided cash of $73,060, which included the net loss for the year of $15,738. Changes in non-cash working capital included a decrease in accounts receivable of $16,353, an increase in deferred revenue of $10,165, an increase in accounts payable and accrued liabilities of $56,229, and an increase in due to related parties of $6,051.

There were no Investing or Financing Activities during the year. Effect of exchange rate changes was ($306) during the year.

Cash and cash equivalents $60,258 as of December 31, 2011, an increase of $72,754 from the negative cash balance of $12,496 as of January 1, 2011.  

Significant Accounting Policies

Management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  On a regular basis, management evaluates its estimates and assumptions. The estimates are based on historical experience, past results, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form that basis for making judgments about the carrying values of assets, including mineral properties, and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates due to events or circumstances which may be beyond the control of the Company.

The financial statements have been prepared in accordance with International Accounting Standard (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

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The consolidated financial statements have been prepared on a historical cost basis except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, the financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Equipment

Equipment are recorded at cost and depreciated over their estimated useful lives as follows:

Office equipment	5 years	Straight-line
Computer equipment	5 years	Straight-line

Intangible assets

Software platform

Certain costs incurred in connection with the development of software to be used internally or for providing services to customers are capitalized once a project has progressed beyond a conceptual, preliminary stage to that of application development. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:

·

It is technically feasible to complete the software product so that it will be available for use;

·

Management intends to complete the software product and use or sell it;

·

There is an ability to use or sell the software product;

·

It can be demonstrated how the software product will generate probable future economic benefits;

·

Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

·

The expenditure attributable to the software product during its development can be reliably measured.

Costs that qualify for capitalization include both internal and external costs. These costs are amortized over their expected useful lives estimated at 5 years. Residual values are reviewed at the end of each reporting period and adjusted if appropriate.

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Use of estimates

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported expenses during the period. Actual results could differ from these estimates. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

i)

The recoverability of accounts receivable that are included in the consolidated statements of financial position based on historical collection of receivables.

ii)

The inputs used in accounting for share-based payments expense included in profit and loss calculated using the Black-Scholes option pricing model or the Binomial Tree option pricing model.

iii)

The carrying value of intangible assets (capitalized software development) that are included in the consolidated statements of financial position are based on management assessments of the recoverable amount of the asset. As well, management estimates the capitalized costs that are directly attributable to the development of the intangible asset.

iv)

The estimates used in determining the fair value for the Derivative Liability, which is composed of valuations of both the Transaction warrants and Financing warrants, as defined and described in Note 11, utilizes estimates made by management in determining the appropriate input variables in the Black-Scholes valuation model as disclosed in Note 10.

Revenue recognition

The Company provides a full suite of mobile marketing services in the US, Canada, Mexico and the Middle East, and generates revenue by designing, constructing, implementing and managing these mobile marketing services for its customers. Revenue is recognized in the period in which the services are rendered to the customer and collection is reasonably assured.

Cash received in advance of services performed is recorded as deferred revenue.

Deferred taxes

Deferred taxes are recorded using the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs.  To the extent that the Company does not consider it more probable than not that a deferred tax asset will be recovered, it does not recognize the asset.

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Foreign currencies

IFRS requires that the functional currency of each entity in the consolidated group be determined separately and that each entity’s financial results and position should be measured using the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian Dollar, the functional currency of the legal subsidiary, Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), is the U.S. Dollar and the functional currency of its subsidiary, Snipp Canada Inc., is the Canadian Dollar.   The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates (“IAS 21”).

The presentation currency of the Company’s consolidated financial statements is the U.S. dollar (“$”). Under IFRS, when the Company translates the financial statements of entities from their functional currency to the presentation currency, assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the end of the reporting period. Share capital, warrants, equity reserves, other comprehensive income, and deficit are translated into U.S. dollars at historical exchange rates. Revenues and expenses are translated into U.S. dollars at the average exchange rate for the period. Foreign exchange gains and losses on translation are included in other comprehensive income. Within each entity, transactions denominated in foreign currencies are translated into the functional currency using the exchange rate in effect at the dates of the transactions, and monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the end of the reporting period.   Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in profit or loss.

Financial instruments

Financial assets

The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing them in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in profit or loss.

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Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for- sale. They are carried at fair value with changes in fair value recognized in other comprehensive income or loss. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognized in profit or loss.

Financial liabilities

The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing them in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.

Other financial liabilities: This category includes amounts due to related parties and accounts payables and accrued liabilities, all of which are recognized at amortized cost.

The Company has classified its cash and cash equivalents, marketable securities and derivative liability at fair value through profit or loss. The Company’s accounts receivable, and note receivable, are classified as loans and receivables. The Company’s due to related parties and accounts payable and accrued liabilities are classified as other financial liabilities.

Disclosures are also required on the inputs used in making fair value measurements, including their classification within a hierarchy that prioritizes their significance.  The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

Impairment

Financial assets

A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between the asset’s carrying value and its fair value. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

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Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Loss per share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company.  In calculating the diluted loss per share, the weighted average number of common shares outstanding assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. For the periods presented, this calculation proved to be anti-dilutive.

Share-based payments

The Company uses the fair value method whereby the Company recognizes compensation costs for the granting of all stock options and direct awards of stock based on their fair value over the period of vesting using the Black-Scholes option pricing model or the Binomial Tree option pricing model. Any consideration paid by the option holders to purchase shares is credited to capital stock.

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity settled share based payment transactions and measured at the fair value of goods or services received. If the fair value of the goods or services received cannot be estimated reliably, the share based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or the services.

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Changes in accounting policies

As of January 1, 2013, the Company adopted the following new IFRS standards and amendments in accordance with the transitional provisions of each standard.

IFRS 10 “Consolidated Financial Statements” supersedes IAS 27 “Consolidation and Separate Financial Statements” and SIC-12 “Consolidation – Special Purpose Entities”. This standard provides a single model to be applied in control analysis for all investees, including special purpose entities. The adoption of this standard had no impact on the Company's consolidated financial statements.

IFRS 11 “Joint Arrangements” divides joint arrangements into two types, joint operations and joint ventures, each with their own accounting model. All joint arrangements are required to be reassessed on transition to IFRS 11 to determine their type to apply the appropriate accounting. The adoption of this standard had no impact on the Company's consolidated financial statements.

IFRS 12 “Disclosure of Interests in Other Entities” combines in a single standard the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities. The adoption of this standard had no impact on the Company's consolidated financial statements.

IFRS 13 “Fair Value Measurement” defines fair value, establishes a framework for measuring fair value, and sets out disclosure requirements for fair value measurements. This standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also requires additional annual fair value disclosures, as well as additional interim disclosures, as per IAS 34. The adoption of this standard had no impact on the Company's consolidated financial statements.

Recent accounting pronouncements

IFRS 9 was issued in November 2009 and subsequently amended as part of an ongoing project to replace IAS 39 Financial instruments: Recognition and measurement. The standard requires the classification of financial assets into two measurement categories based on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. The two categories are those measured at fair value and those measured at amortized cost. The classification and measurement of financial liabilities is primarily unchanged from IAS 39. However, for financial liabilities measured at fair value, changes in the fair value attributable to changes in an entity’s “own credit risk” is now recognized in other comprehensive income instead of in profit or loss. This new standard will also impact disclosures provided under IFRS 7 Financial instruments: disclosures.

In November 2013, the IASB amended IFRS 9 for the significant changes to hedge accounting. In addition, an entity can now apply the “own credit requirement” in isolation without the need to change any other accounting for financial instruments. The mandatory effective date of January 1, 2015 has been removed to provide sufficient time for preparers of financial statements to make the transition to the new requirements. The effective date for IFRS 9 has not yet been determined. Early adoption is permitted and the standard is required to be applied retrospectively. Management does not expect there to be a significant impact for the Company upon implementation of the issued standard.

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Research and Development

The Company performs Research and Development in relation to its technology products. During the last 3 fiscal years, the Company expended $101,679, $75,861 and $47,250 on software development. The Company protects its Intellectual Property through trade secrets and copyrights, and currently does not have any patents.

Trend Information  

The Company knows of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s operations or financial condition.

Off-Balance Sheet Arrangements

The Company has no Off-Balance Sheet Arrangements.

Tabular Disclosure of Contractual Obligations

The Company has no contractual obligations. During the year ended December 31, 2012, the Company entered into a lease agreement for office space in Washington, D.C. However, on November 1, 2012, the Company assigned this lease to an unrelated company and no longer has any lease obligations.

Safe Harbor

Not Applicable

Item 6.  Directors, Senior Management and Employees

Table No. 6 lists as of September 30, 2014 the names of the Directors of the Company.  The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.  All Directors are residents of the United States with the exception of Conrad Swanson, who is a resident of Canada. Each director was re-elected at the Annual General Meeting held on December 12, 2013 except for Michael Dillon, who was named to the Board in April 2014 and will stand for election for the first time at the next Annual General Meeting..

Table No. 6

Directors

Name	Age	Date First Elected/Appointed
Ritesh Bhavnani (1)	39	March 1, 2012
Atul Sabharwal	39	March 1, 2012
Michael Dillon	49	April 10, 2014
Jim Santora (1)	53	June 1, 2012
Conrad Swanson (1)	65	January 21, 2010
(1)  Member of Audit Committee.

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Members of the Audit Committee meet periodically to approve and discuss the annual financial statements and each quarterly report before filing and mailing. The committee operates under a written charter as adopted by the Board of Directors on June 19, 2011 and included in the Company's Management Information Circular dated November 12, 2013.  Details of the charter are contained in Item 6, “Board Practices” below.

Table No. 7 lists, as of September 30, 2014, the names of the Executive Officers of the Company.  The Executive Officers serve at the pleasure of the Board of Directors.  All Executive Officers are residents of the United States with the exception of Jaisun Garcha, who is a resident of Canada.

Table No. 7

Executive Officers

Name	Position	Age	Date of Appointment
Atul Sabharwal	Chief Executive Officer	39	March 1, 2012
Ritesh Bhavnani	Chairman	39	March 1, 2012
John Fauller	Chief Operating Officer	36	May 22, 2012
Jaisun Garcha	Chief Financial Officer	34	February 3, 2013
Wilson (Andy) Bell	Chief Technology Officer	52	March 1, 2012

Atul Sabharwal serves as Chief Executive Officer and a Director. He was one of the founders of Snipp and has over 17 years' experience in the telecommunications and digital media/mobile space industry. From 2006 to 2012, he served as the Executive Director of the ACME Group, a large telecommunications and energy infrastructure company with interests in South Asia and Africa. Between 2009 and 2011 he served as a board member of eSolar Inc., a Pasadena, CA-based company that is backed by Idealab, Google.org, General Electric Inc., Oak Investment Partners and the Quercus Trust. Mr. Sabharwal stepped down as a director after a successful investment by General Electric Inc. in the company. Mr. Sabharwal also is the founder of the Finalysis Group, a consulting company focused on helping growth businesses with a South Asian component. Between 2005 and 2007 he founded and ran a successful venture that provided remote services such as call center management and lead generation to corporate clients. His earlier roles also include positions at AOL, IBM Business Services (previously PWC Consulting), the Boston Consulting Group and Star TV, a subsidiary of News Corporation. Mr. Sabharwal has a Bachelor of Science degree in Economics (Hons. First Class) from St. Xaviers College, Calcutta, India and a Master of Business Administration degree from the Australian Graduate School of Management, Sydney, Australia and the Wharton School, University of Pennsylvania. Mr. Sabharwal spends 100% of his time on the Company’s affairs.

John Fauller serves as the Company’s Chief Operating Officer. His responsibilities include managing, advising, and conceptualizing industry-leading mobile programs. Mr. Fauller’s previous role was at Condé Nast where he served as Director, Print to Mobile Solutions and spearheaded development of its mobile solutions for reader engagement and advertising. With Condé Nast he created a range of pioneering mobile marketing programs, including the first 2D barcode program in a major publication for Golf Digest, the first truly integrated marketing initiative encompassing print, email, web, SMS, mobile web and 2D barcodes for Allure Magazine, and companion apps for Lucky Magazine and Brides Magazine. He has over 17 years of experience in integrated media, spanning print operations, web design, software development and mobile solutions. Mr. Fauller spends 100% of his time on the Company’s affairs.

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Jaisun Garcha serves as Snipp’s Chief Financial Officer. He has over 10 years experience in the financial accounting industry and is experienced in managing all aspects of public company financial and management reporting, forecasting and analysis, corporate governance and risk management. He holds a Bachelor of Science degree, with a double major in computer science and general biology, as well as a Diploma in Accounting from the University of British Columbia. He is a Certified General Accountant (CGA) and is a member of the Certified General Accountants Association of British Columbia. Mr. Garcha also serves as Chief Financial Officer for Multivision Communications Corp., a public company traded on the TSX Venture Exchange. Mr. Garcha spends 30% of his time on the Company’s affairs.

Wilson (Andy) Bell serves as the Chief Technology Officer. He is the chief architect of Snipp’s Mobile Marketing Platform, having served in that position since January 2007.  He is an expert software developer and manager of mission critical systems with over 25 years in the business. Prior to joining Snipp he held a wide range of roles at SAIC in the US and overseas, and served in the US Marine Corps. He obtained his B.S. in Mathematics from the University of Mary Washington. Mr. Bell spends 100% of his time on the Company’s affairs.

Ritesh Bhavnani serves as chairman of the Company. He is one of the founders of Snipp and is a 12 year veteran of the digital media/mobile space industry. Mr. Bhavnani founded Snipp in March 2007 and has been working at the Company full-time since May 2010. From 2005 to May 2010, Mr. Bhavnani was employed at McKinsey & Company in its Media, Technology and Telecommunications practices, where he advised Fortune 500 companies, including large media conglomerates and cable providers, on issues related to digital convergence, strategy and online growth. In April 2000, Mr. Bhavnani founded Unsurface Inc., a consumer-facing digital media distribution service that was funded and whose assets were eventually acquired by Sony Music Corporation. From 2001 to 2003, Mr. Bhavnani was the General Manager at Precicompo Pvt Ltd. in India, an automobile component manufacturing business. Mr. Bhavnani has a Bachelor of Science degree from Stanford University, and a Master of Business Administration degree (with distinction) from INSEAD in France and Singapore. Mr. Bhavnani spends 100% of his time on the Company’s affairs.

Michael Dillon serves as a Director for the Company. Mr. Dillon is a seasoned shopper marketing professional with almost twenty years of experience in shopper marketing and retail-related promotion. He is currently Executive Director of Brand Activations & Shopper Marketing at Colangelo and was recently featured in Shopper Marketing's "Who's Who in Shopper Marketing Agencies". Prior to Colangelo, Mr. Dillon was Vice President of Shopper Marketing at Catalina Marketing. Mr. Dillon also formerly worked at PepsiCo where he served as Vice President, Brand Activation, Marketing. Mr. Dillon holds a Bachelor of Arts from the University of Georgia and an MBA from the University of Rochester's William E. Simon School of Business. Mr. Dillon spends 5% of his time on the Company’s affairs.

Jim Santora serves as a Director of the Company. Mr. Santora is currently Executive Vice President, Senior Account Director at BBDO, a leading worldwide advertising agency with headquarters in New York City. Mr. Santora has guided integrated brand communications strategies for clients in numerous industries ranging from soft drinks, fast foods, athletic wear, consumer products and technology. Mr. Santora helped launch the IT campaign for eBay that won multiple awards, including the 2007 Gold Effie, a pre-eminent marketing award formally given by the American Marketing Association. Prior to joining BBDO, Mr. Santora held positions at advertising agencies including Angotti, Thomas Hedge, Inc. where he worked as an account executive and McCann Erikson NY, where he worked as a media planner. Mr. Santora also was a key account sales representative at Helene Curtis Industries, Inc., (now Unilever) a former cosmetic and beauty parlour products firm. Mr. Santora holds a Bachelor of Arts degree with a major in communications from the University of New Hampshire.  Mr. Santora spends 5% of his time on the Company’s affairs.

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Conrad Swanson serves as a Director of the Company. He has 19 years' experience as a director of several publicly traded natural resource companies. Mr. Swanson has been the President and a director of International Samuel Exploration Corp. since April 1996, the Chairman and a director of Gold Reach Resources Ltd. since October 2003, and was a director of Nanika Resources Inc. from May 2008 until December 2009, all of which are mineral exploration and development companies listed on the TSX Venture Exchange. Mr. Swanson has also previously served as a director of Independent Nickel Corp. and of New World Resource Corp., two TSX Venture Exchange listed companies.  Mr. Swanson holds a BC in electronics from Vancouver College. Mr. Swanson spends 5% of his time on the Company’s affairs.

No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he or she is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he or she is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.

There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he or she was selected as a Director or Executive Officer.

COMPENSATION

The Company has no arrangements pursuant to which directors receive cash compensation for their services in their capacity as directors, or for committee participation.  There are no director’s service contracts providing for benefits upon termination of their position as a Director.

To assist the Company in compensating, attracting, retaining and motivating personnel, including Directors, the Company grants incentive stock options under a formal Stock Option Plan which was first approved by shareholders at the

Annual General and Special Meeting of shareholders held on October 5, 2012 and continued by a vote of the shareholders at the Annual and Special Meeting of Shareholders held on December 12, 2013.

Table No. 8 sets forth the compensation paid to the Company’s executive officers and members of its administrative body during the last three fiscal years.

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Table No. 8

Summary Compensation Table

Name	Fiscal Year	Salary	Options Granted	Other Compensation
Atul Sabharwal Chief Executive Officer and Director (1)	2013 2012 2011	N/A N/A N/A	300,000 Nil Nil	$  200,000 174,935 25,000
John Fauller Chief Operating Officer	2013 2012	$  115,000 57,500	400,000 500,000	Nil Nil
Jaisun Garcha Chief Financial Officer (2)	2013 2012	N/A N/A	150,000 Nil	$  36,125 38,388
Wilson (Andy) Bell Chief Technology Officer (3)	2013 2012 2011	$  130,000 108,333 Nil	300,000 Nil Nil	$Nil 21,000 77,000
Ritesh Bhavnani Chairman (4)	2013 2012 2011	$  139,800 9,504 65,000	300,000 Nil Nil	$   60,200 139,222 Nil
Jim Santora Director	2013 2012 2011	N/A N/A N/A	Nil 225,000 Nil	Nil Nil Nil
Conrad Swanson, Director	2013 2012 2011	N/A N/A N/A	Nil Nil Nil	Nil Nil Nil
Erik Hallstrom, Former Chief Executive Officer	2012	$222,048	2,583,440	Nil
Anthony Durcakz, Former Chief Financial Officer and Director (5)	2013 2012 2011	N/A N/A N/A	100,000 Nil Nil	$   3,968 83,463 6,320
Bruce Cousins, Former Director	2012 2011	N/A N/A	Nil Nil	Nil Nil

(1)

“Other Compensation” for Atul Sabharwal is consulting fees for his services as CEO.

(2)

"Other Compensation" for Jaisun Garcha is for consulting fees for his services as CFO. These fees were paid to 681315 B.C., a private company owed by Jaisun Garcha.

(3)

“Other Compensation” for Wilson Bell is for consulting fees. Mr. Bell became an employee during fiscal 2012 and began to receive his compensation as salary at that time.

(4)

“Other Compensation” for Ritesh Bhavnani is consulting fees for services provided in addition to his services as an employee and Chairman .

(5)

Other Compensation" for Anthony Durkacz is for consulting fees for his services as CFO. These fees were paid Fortius Research & Trading Corp., a private company owed by Anthony Durkacz.

No funds were set aside or accrued by the Company during Fiscal 2013 to provide pension, retirement or similar benefits for Directors or Executive Officers.

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Written Management Agreements

As of September 30, 2014, the Company has written agreements in effect with Atul Sabharwal, Ritesh Bhavnani, John Fauller, and Wilson (Andy) Bell.

Under a Consulting agreement between the Company and Finalysis Group LLC (Atul Sabharwal) dated October 31, 2011, Atul Sabhawal will provide consulting services to the Company as a “C” level executive of the Company for a period of three years. Compensation will be a minimum of $150,000 annual, and consultant will be entitled to a severance payment of $75,000 if the consultant is terminated by the Company without “Good Cause” and or by the consultant for “Good Reason”. A copy of this agreement has been filed as an exhibit to this Registration Statement.

Under a Consulting agreement between the Company and Ritesh Bhavnani dated October 31, 2011, Ritesh Bhavnani will provide consulting services to the Company as the Chairman of the Company for a period of three years. Compensation will be a minimum of $150,000 annually, and consultant will be entitled to a severance payment of $75,000 if the consultant is terminated by the Company without “Good Cause” and or by the consultant for “Good Reason”. A copy of this agreement has been filed as an exhibit to this Registration Statement.

Under an Employment Agreement between the Company and John Fauller dated May 16, 2012, Mr. Fauller agrees to act as Chief Operating Officer of the Company at an annual salary of $115,000 per year. The annual salary is subject to adjustment at the Company’s discretion. The employee is also eligible for an annual incentive bonus of up to 30% of his base salary. The agreement is for no specified period and constitutes “at-will” employment. A copy of this agreement has been filed as an exhibit to this Registration Statement.

Under an Employment Agreement between the Company and Wilson A. Bell dated October 31, 2011, Mr. Bell agrees to act as Chief Technology Officer of the Company at an annual salary of $130,000 per year. The annual salary is subject to adjustment at the discretion of the Company’s Board of Directors. The employee is also eligible for an annual incentive bonus of up to 25% of his base salary. The agreement is for no specified period and constitutes “at-will” employment. During the course of Mr. Bell’s employment and for a period of one year after the termination of his employment, he is subject to a “non-competition period” in which he may not engage, or attempt to engage, in any employment, consulting, or other activity which activity competes, directly or indirectly, with the business of the Company. A copy of this agreement has been filed as an exhibit to this Registration Statement.

Board Practices

The Board of Directors’ mandate is to manage or supervise the management of the business and affairs of the Company and to act with a view to the best interests of the Company. The Company’s corporate governance practices are the responsibility of the Board.

Management has been delegated the responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying out the Company's business in the ordinary course, evaluating business opportunities, recruiting staff and complying with applicable regulatory requirements. The Board facilitates its independent supervision over management by reviewing and approving long-term strategic, business and capital plans, material contracts and business transactions, all debt and equity financing transactions. Through its Audit Committee, the Board examines the effectiveness of the Company's internal control processes. The Board reviews and sets executive compensation and recommends incentive stock options.

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The Board of Directors currently consists of five directors: Ritesh Bhavnani (Chairman), Atul Sabharwal (President and CEO), Michael Dillon, Conrad Swanson and Jim Santora. A majority of the Company’s directors are classified as “Independent” as Bhavnani and Sabharwal are Company employees, and Dillon, Swanson and Santora are independent. The operations of the Corporation do not support a large board of directors, and the Board has determined that the current size and constitution of the Board is appropriate for the Corporation’s current stage of development.

The Board meets for formal board meetings periodically on an ad hoc basis during the year to review and discuss the Corporation’s business activities and to consider and, if thought fit, to approve matters presented to the Board for approval, and to provide guidance to management. In addition, management informally provides updates to the Board at least once per quarter between formal Board meetings. In general, management consults with the Board when deemed appropriate to keep the Board informed regarding the Corporation’s affairs.

The Board facilitates the exercise of independent supervision over management through these various meetings. At present, the Board does not have any formal committees, other than the Audit Committee. The composition of the Board is such that the independent directors have significant experience in business affairs and, as a result, are able to provide significant and valuable independent supervision over management.

In the event of a conflict of interest at a meeting of the Board, the conflicted director will in accordance with corporate law and in accordance with his fiduciary obligations as a director of the Corporation, disclose the nature and extent of his interest to the meeting and abstain from voting on or against the approval of such participation.

Nomination of Directors

Once a decision has been made to add or replace a director, the task of identifying new candidates falls on the Board and management. Proposals are put forth by the Board and management and considered and discussed. If a candidate looks promising, the Board and management will conduct due diligence on the candidate and if the results are satisfactory, the candidate is invited to join the Board.

Compensation

The Board does not have a compensation committee. At the Corporation’s current stage of development, the Corporation considers that the functions of such a committee can be served by the Board as a whole. The Corporation may grant stock options to directors of the Corporation in consideration for their services provided to the Corporation.

Assessment of Effectiveness

At present, the Board does not have a formal process for assessing the effectiveness of the Board, its committees and individual directors. These matters are dealt with on a case by case basis at the Board level.

Audit Committee

The Company's Audit Committee operates under a written charter which is reviewed by the Board of Directors on an annual basis. A copy of the current Audit Committee Charter was included in the Company’s Management Information Circular dated November 12, 2013 which has been filed as an exhibit to this Registration Statement.

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The Audit Committee’s primary functions are to assist the Board of Directors (the "Board") in fulfilling its financial oversight responsibilities with respect to financial reporting and disclosure requirements; ensure that an effective risk management and financial control framework has been implemented by management of the Company; and be responsible for external and internal audit processes.

Composition

The Audit Committee shall be composed of a minimum of three members of the Board of Directors, a majority of which are considered to be “independent”. All members of the Audit Committee shall be generally knowledgeable in financial and auditing matters, especially possessing the ability to read and understand fundamental financial statements. The Board shall appoint one member of the Committee as chair.

Role

The Committee shall meet at least four times annually. The Committee assists the Board with its responsibilities relating to the accounting principles, reporting practices, internal controls, and approval of the Company’s annual and quarterly financial statements and related disclosures. The Committee must establish and maintain a direct line of communication with the Company’s internal and external auditors and assess their performance. It also ensures that management has designed, implemented and is maintaining an effective system of financial controls and report regulatory to the Board on the fulfillment of its duties and responsibilities. The auditors may communicate directly with the Committee and bypass management. The Committee may contact directly any employee, and any employee may bring to the Committee any matters involving questionable, illegal or improper financial practices or transactions.

The Committee has been delegated the authority to appoint, retain and oversee the work of the independent auditor and establishing the compensation to be paid to the independent auditor. It must also review the internal audit function and their effectiveness, and reviews the appropriateness and effectiveness of the Company’s internal controls and management reporting. The Company’s regulatory filings are reviewed by the Committee and reviews the policies and procedures used in the preparation of the consolidated financial statements and other disclosure documents.

Composition

The current Audit Committee members are Ritesh Bhavnani, Jim Santora, and Conrad Swanson. Jim Santora and Conrad Swanson are considered to be “independent”. Each member is financially literate.

Staffing

As of September30, 2014, the Company has 5 employees and 4 executive officers. In addition, the Company’s Chairman spends 100% of his time on the Company’s affairs and is compensated as an employee. Consultants are engaged on an as needed basis.

The Company has no central offices and employees work from home or temporary office space. The Company pays for their business expenses, such as phone, internet, supplies and travel expenses.

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Share Ownership

The Registrant is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Registrant is not controlled by another corporation as described below.

Table No. 9 lists, as of September 30, 2014, Directors and Executive Officers who beneficially own the Registrant's voting securities and the amount of the Registrant's voting securities owned by the Directors and Executive Officers as a group.  

Table No. 9

Shareholdings of Directors and Executive Officers

Title of Class		Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Common		Atul Sabharwal (1)	11,026,573	15.28%
Common		Ritesh Bhavnani (2)	11,026,573	15.28%
Common		John Fauller (3)	733,334	1.05%
Common		Jaisun Garcha (4)	2,361,000	3.36%
Common		Wilson (Andy) Bell (5)	3,771,715	5.35%
Common		Michael Dillion (6)	200,000	0.29%
Common		Jim Santora (7)	150,000	0.22%
Common		Conrad Swanson (8)	1,011,000	1.45%
		Total Directors/Officers	30,280,195	38.81%
(1)	Of these shares, 300,000 represent currently exercisable stock options and 2,447,891 represent currently exercisable warrants. 1,335,554 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.
(2)	Of these shares, 300,000 represent currently exercisable stock options and 2,447,891 represent currently exercisable warrants. 1,335,554 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.
(3)	Of these shares, 733,334 represent currently exercisable share purchase options. An additional 166,666 options have been granted but are not yet vested.
(4)	Of these shares, 361,000 represent currently exercisable stock options and 400,000 represent currently exercisable warrants. 550,000 of the common shares are owned by 681315 B.C., a private company owned by Jaisun Garcha. 75,000 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.
(5)	Of these shares, 300,000 represent currently exercisable stock options and 742,642 represent currently exercisable warrants. 409,361 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.
(6)	Of these shares, 200,000 represent currently exercisable stock options.
(7)	Of these shares, 150,000 represent currently exercisable share purchase options. An additional 75,000 options have been granted but are not yet vested.
(8)	Of these shares, 211,000 represent currently exercisable stock options. 120,000 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.

Based upon 69,422,638 common shares outstanding as of September 30, 2014, share purchase warrants and Stock options held by each beneficial holder exercisable within sixty days as detailed in Table No. 13, “Stock Options Outstanding” below.

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Item 7.  Major Shareholders and Related Party Transactions

The Registrant is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Registrant is not controlled by another corporation as described below.  The Company's common shares are issued in registered form and the following information is taken from the records of Computershare Investor Services, 510 Burrard Street, 2nd Floor
Vancouver, British Columbia V6C 3B9

On September 30, 2014, the shareholders' list for the Company's common shares showed 42 registered shareholders, including depositories, and 69,422,638 common shares issued and outstanding. Of the total registered non-depository shareholders, 24 are resident in Canada holding 47,460,358 common shares, or 68% of the total issued and outstanding; 10 are resident in the United States holding 19,020,160 common shares, or 27% of the total issued and outstanding; and 8 are resident in other countries holding 2,942,120 common shares, or 4% of the total issued and outstanding.

The Company is aware of three persons/companies who beneficially own 5% or more of the Registrant's voting securities. Table No. 10 lists as of September 30, 2014, persons and/or companies holding 5% or more beneficial interest in the Company's outstanding common stock

Table No. 10

5% or Greater Shareholders

Title of Class		Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Common		Atul Sabharwal (1)	11,026,573	15.28%
Common		Ritesh Bhavnani (2)	11,026,573	15.28%
Common		Wilson (Andy) Bell (3)	3,771,715	5.35%
(1)	Of these shares, 300,000 represent currently exercisable stock options and 2,447,891 represent currently exercisable warrants. 1,335,554 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.
(2)	Of these shares, 300,000 represent currently exercisable stock options and 2,447,891 represent currently exercisable warrants. 1,335,554 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.
(3)	Of these shares, 300,000 represent currently exercisable stock options and 742,642 represent currently exercisable warrants. 409,361 are common shares that are currently in escrow and will be released in stages over time pursuant to the terms of the Escrow Agreement.

Based upon 69,422,638 common shares outstanding as of September 30, 2014, share purchase warrants and Stock options held by each beneficial holder exercisable within sixty days as detailed in Table No. 13, “Stock Options Outstanding” below.

No shareholders of the Company have different voting rights from any other shareholder.

- 50 -

RELATED PARTY TRANSACTIONS

During fiscal 2012, upon closing of the Company’s Qualified Transaction, Anthony Durkacz, an officer of the Company forgave a $15,787 related party loan to the Company.

As of December 31, 2013, the Company owed a total of $208,476 (2012 - $54,550; 2011 - $Nil) to Officers and Directors which represent unpaid salaries and compensation and unpaid expenses. The amounts are non-interest bearing, unsecured, and have no specified terms of repayment.

Item 8.  Financial Information

The financial statements as required under ITEM #18 are attached hereto and found immediately following the text of this Annual Report.  The audit report of MNP LLP, Chartered Professional Accountants, is included herein immediately preceding the financial statements and schedules.

Current Legal Proceedings

The Company knows of no material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any other material proceeding or pending litigation.  The Company knows of no other active or pending proceedings against anyone that might materially adversely affect an interest of the Company.

Dividends

The Company has not declared any dividends on its common shares since inceptions and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.

Item 9.  Offer and Listing of Securities

As of December 31, 2013, the end of the Company's most recent fiscal year, the authorized capital of the Company consisted of an unlimited number of Common Shares without par value, and an unlimited number of Preferred Shares without par value.  There were 52,452,638 Common Shares and no Preferred Shares issued and outstanding as of December 31, 2013, and 69,422,638 Common Shares and no Preferred Shares issued and outstanding as of September 30, 2014.

NATURE OF TRADING MARKET

The Company's common shares trade on the TSX Venture Exchange in Vancouver, British Columbia, Canada under the stock symbol is “SPN”. The CUSIP number is 83306Y102. The Company's common shares are not registered to trade in the United States in the form of American Depository Receipts (ADR's) or similar certificates.

Table No. 11 lists the volume of trading and high, low and closing sale prices on the TSX Venture Exchange for the Company's common shares for:

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·

each of the last six  months ending September 30, 2014;

·

each of the last twelve fiscal quarters ending the three months ended September 30, 2014; and

·

each of the last four fiscal years ending December 31, 2013.

The Company first commenced trading on August 25, 2010 under the symbol “ALY.P”. Upon the completion of the Company’s Qualifying Transaction, the stock resumed trading under its new symbol “SPN” on March 6, 2012.

Table No. 11

TSX Venture Exchange

Common Shares Trading Activity

	- Sales-
	Canadian Dollars
Period	High	Low	Close
September 2014	$ 0.38	$ 0.22	$ 0.31
August 2014	0.24	0.19	0.24
July 2014	0.20	0.15	0.19
June 2014	0.19	0.14	0.17
May 2014	0.17	0.14	0.14
April 2014	0.12	0.09	0.14
Three Months Ended September 30, 2014	$ 0.38	$ 0.15	$ 0.31
Three Months Ended June 30, 2014	0.19	0.14	0.17
Three Months Ended March 31, 2014	0.22	0.09	0.13
Three Months Ended December 31, 2013	0.13	0.08	0.13
Three Months Ended September 30, 2013	0.11	0.07	0.11
Three Months Ended June 30, 2013	0.12	0.06	0.09
Three Months Ended March 31, 2013	0.12	0.05	0.10
Three Months Ended December 31, 2012	0.18	0.08	0.12
Three Months Ended September 30, 2012	0.24	0.12	0.17
Three Months Ended June 30, 2012	0.21	0.12	0.14
Three Months Ended March 31, 2012 *	0.23	0.15	0.19
Three Months Ended December 31, 2011	0.10	0.10	0.10

Fiscal Year Ended December 31, 2013	$ 0.13	$ 0.05	$ 0.13
Fiscal Year Ended December 31, 2012	0.24	0.08	0.12
Fiscal Year Ended December 31, 2011	0.15	0.10	0.10
Fiscal Year Ended December 31, 2010	0.15	0.11	0.12
*  The Company’s shares were suspended from trading from November 18, 2011 to March 6, 2012 policy for the completion of the Qualifying Transaction as per the TSX Venture Exchange.

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Table No. 12 lists, as of September 30, 2014, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.

Table No. 12

Share Purchase Warrants Outstanding

Number of Share Purchase Warrants Outstanding	Exercise Price/share	Expiration Date
1,200,000	C$0.15	December 6, 2015
3,175,000	C$0.15	January 24, 2016
6,188,688	$0.13	March 1, 2017
10,280,000	$0.20	July 14, 2017
TOTAL           20,843,688

Table No. 12a lists, as of September 30, 2014, Finder’s Options outstanding, the exercise price, and the expiration date of the share purchase warrants.

Table No. 12a

Finder’s Options Outstanding

Number of Finder’s Options  Outstanding	Exercise Price/Unit	Expiration Date
792,000	C$0.15*	July 14, 2017
* The Finder’s Options were issued pursuant to the private placement of common share units completed on July 15, 2014. Each Finder’s Option entitles the holder to purchase one Finder’s Unit at an exercise price of C$0.15 until July 14, 2017. Each Finder’s Unit will consist of one common share and one common share purchase warrant, with each warrant entitling the holder to purchase one common share at an exercise price of $0.20 until July 14, 2017.

American Depository Receipts.  Not applicable.

Other Securities to be Registered. Not applicable

The TSX Venture Exchange

The Company's common stock is currently listed and trading on the TSX Venture Exchange (“TSX-V”).

The TSX-V was created through the acquisition of the Canadian Venture Exchange by the Toronto Stock Exchange.  The Canadian Venture Exchange was a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange which took place on November 29, 1999. On August 1, 2001, the Toronto Stock Exchange completed its purchase of the Canadian Venture Exchange from its member firms and renamed the Exchange the TSX Venture Exchange. The TSX-V currently operates as a complementary but independent exchange from its parent.

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The initial roster of the TSX-V was made up of venture companies previously listed on the Vancouver Stock Exchange or the Alberta Stock Exchange and later incorporated junior listings from the Toronto, Montreal and Winnipeg Stock Exchanges. The TSX-V is a venture market as compared to the TSX Exchange which is Canada’s senior market and the Montreal Exchange which is Canada’s market for derivatives products.

The TSX-V is a self-regulating organization owned and operated by the TMX Group.  It is governed by representatives of its member firms and the public.

The TMX Group acts as a business link between TSX Venture Exchange members, listed companies and investors.  TSX-V policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established. Listings are predominately small and medium sized companies.

Regulation of the TSX Venture Exchange, its member firms and its listed companies is the responsibility of Investment Industry Regulatory Organization of Canada ("IIROC"). IIROC is a not-for-profit, independent Canadian self-regulatory organization that, among other things, oversees trading in exchanges and marketplaces.

IIROC administers, oversees and enforces the Universal Market Integrity Rules (“UMIR”). To ensure compliance with UMIR, IIROC monitors real-time trading operations and market-related activities of marketplaces and participants, and also enforces compliance with UMIR by investigating alleged rule violations and administering any settlements and hearings that may arise in respect of such violations.

Investors in Canada are protected by the Canadian Investor Protection Fund (“CIPF”). The CIPF is a private trust fund established to protect customers in the event of the insolvency of the Dealer Members of the IIROC.

Item 10.  Additional Information

Share Capital

The Company has financed its operations through the issuance of common shares through private placements, the exercise of warrants issued in the private placements, and the exercise of stock options. The changes in the Company’s share capital since inception are as follows:

During Fiscal 2014 through September 30, 2014, the Company completed the second tranche of a private placement. The tranche consisted of 6,350,000 common share units at a price of C$0.10 per unit for gross proceeds of $573,469 (C$635,000). Each unit consisted of one common share and one-half of a common stock purchase warrant, with each full warrant exercisable into a common share at a price of C$0.15 until January 24, 2016. The Company also completed the private placement of 10,400,000 common share units at a price of $0.15 per unit for gross proceeds of C$1,560,000. Each unit consisted of one common share and one common stock purchase warrant, with each warrant exercisable at a price of $0.20 until July 14, 2017.the Company paid finder’s fees of $118,000 cash and issued 792,000 finder’s options. Each finder’s option allows the holder to convert into one common share unit at a price of C$0.15, with each unit consisting of one common share and one common share purchase warrant, with each warrant exercisable at a price of $0.20 until July 14, 2017.

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During Fiscal 2013 ended December 31, 2013, the Company issued a total of 4,400,000 common shares through two private placements. Under the first placement, the Company issued 2,000,000 common shares at a price of C$0.10 per share for gross proceeds of $192,520 (C$200,000). Under the second placement, the Company sold 2,400,000 common share units at a price of C$0.10 per unit for gross proceeds of $225,216 (C$240,000) as the first tranche of a non-brokered private placement. Each unit consisted of one common share and one-half of a common share purchase warrant, with each full warrant exercisable into one common share at a price of C$0.15 until December 6, 2015.

During Fiscal 2012 ended December 31, 2012, the Company issued a total of 35,504,618 new common shares:

·

The Company completed its Qualifying Transaction with Consumer Impulse. Prior to the QT, the Company had 10,550,000 common shares outstanding and Consumer Impulse had 1,998,020 common shares and 700,000 Series A preferred shares outstanding. Pursuant to the Company issued 22,742,305 common shares, 6,188,688 common stock warrants and 37,499,997 Series 1 preferred shares. All of the Series 1 preferred shares were redeemed immediately after closing the transaction for $3,807, and the previously outstanding 10,550,000 common shares of the Company were deemed to have been issued as part of the accounting for the transaction. The Company also issued 400,000 common shares pursuant to a finder’s fee.

·

As a condition for closing the QT, the Company completed a private placement of 13,333,333 units at a price of C$0.15 per unit for gross proceeds of $2,030,600 (C$2,000,000). Each unit consisted of one common share and one warrant which entitles the holder to purchase one additional common share at a price of C$0.22 if exercised within one year of closing and at a price of C$0.27 per share within two years of closing, with the warrants expiring two years after the transaction closing date.

During Fiscal 2011 ended December 31, 2011, the Company issued no common shares.

During Fiscal 2010 ended December 31, 2010, the Company issued no common shares.

Shares Issued for Assets Other Than Cash

During fiscal 2012 ended December 31, 2012, the Company completed its Qualifying Transaction with Consumer Impulse. Prior to the QT, the Company had 10,550,000 common shares outstanding and Consumer Impulse had 1,998,020 common shares and 700,000 Series A preferred shares outstanding. Pursuant to the Company issued 22,742,305 common shares, 6,188,688 common stock warrants and 37,499,997 Series 1 preferred shares. All of the Series 1 preferred shares were redeemed immediately after closing the transaction for $3,807, and the previously outstanding 10,550,000 common shares of the Company were deemed to have been issued as part of the accounting for the transaction. The Company also issued 400,000 common shares pursuant to a finder’s fee.

Other than the shares issued pursuant to the QT, the Company has issued no shares for assets other than cash during the last 5 fiscal years.

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Shares Held By Company

-No Disclosure Necessary-

ESCROW SHARES

The Company currently has common shares in escrow subject to two separate escrow agreements.

IPO Escrow Agreement

Under Canadian National Policy 46-201, Escrow for Initial Public Offerings, certain of the Company's common shares are subject to an escrow agreement.

Under an agreement between the Company and Computershare Investor Services as Escrow Agent dated July 15, 2010, 4,500,000 common shares held by insiders were held in escrow pursuant to the Company's Initial Public Offering pursuant to the rules of the TSX Venture Exchange.

The Escrow Agreement restricts the sale, assignment, hypothecation and transfer of all Escrowed Shares except as set out in Part 5 of the Escrow Agreement. The Escrow Agreement permits a transfer of escrowed shares to directors, senior officers or other principals of the Company as defined therein. In the event of the bankruptcy or death of a holder of Escrowed Shares, the Escrow Agent, may transmit such holders‟ escrowed shares to the trustee in bankruptcy, executor, administrator or such other person as is legally entitled to become the registered owner of the escrowed shares. Escrowed Shares transferred upon death will be released from escrow to the applicable legal representative unless the Exchange objects. The Escrow Agreement allows the holders to transfer Escrowed Shares to other parties upon a realization of pledged, mortgaged or charged escrow shares or into the escrow holders‟ Registered Retirement Savings Plans, Registered Retirement Income Funds or similar registered plans, subject to the Escrow Agent receiving satisfactory supporting documentation in accordance with the Escrow Agreement.

The shares will be released from escrow under the following schedule:

Release Dates	Percentage of Total Escrowed Shares to be Released	Total Number of Originally Escrowed Shares to be Released
Date of Canadian exchange listing	10%	450,000
6 months following listing	15%	675,000
12 months following Bulletin	15%	675,000
18 months following Bulletin	15%	675,000
24 months following Bulletin	15%	675,000
30 months following Bulletin	15%	675,000
36 months following Bulletin	15%	675,000

The Company’s shares began trading on the TSX Venture Exchange under the symbol “ALY.P” on August 25, 2010, and the initial 10% of escrowed shares were released on that date.

- 56 -

The current Company insiders with common shares subject to the IPO escrow agreement are as follows:

Name of Insider	Original Number of Shares Subject to Escrow	Shares to be Released on March 5, 2015
Conrad Swanson	550,000	120,000
Jaisun Garcha	425,000	75,000

A copy of the IPO Escrow Agreement has been filed as an exhibit to this Registration Statement.

Merger Escrow Agreement

Under a separate escrow agreement dated March 1, 2012 between the Company and Computershare Investor Services as Escrow Agent related to the merger agreement,

23,142,305 common shares owned by insiders of Consumer Impulse pursuant to the merger agreement were held in escrow. Upon closing of the merger agreement, 10% of the common shares were released from escrow, with 15% released on every 6 month anniversary thereafter.

The insiders with common shares subject to the merger escrow agreement are as follows:

Name of Insider	Original Number of Shares Subject to Escrow	Shares to be Released on March 5, 2015
Atul Sabharwal	8,903,682	1,335,554
Ritesh Bhavani	8,903,682	1,335,554
Wilson A. Bell	2,729,073	409,361

A copy of the Merger Escrow Agreement has been filed as an exhibit to this Registration Statement.

Stock Options

Stock Options to purchase securities from Registrant can be granted to Directors and Employees of the Company on terms and conditions acceptable to the regulatory authorities in Canada, notably the TSX Venture Exchange.

The Company has a “Fixed” Stock Option Plan (the "Plan") which is required to be approved by shareholders annually. The Plan was originally approved by shareholders at the Annual and Special Meeting of shareholders held on October 5, 2012 and continued by a vote of the shareholders at the Annual and Special Meeting held on December 12, 2013.

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Under the Plan, stock options may be issued to qualified Officers, Directors, Employees and Consultants. The number of common shares reserved for issuance under the Plan is 20% of the currently issued common shares of the Company as at the record date of the Company’s previous Annual General Meeting. The Board shall not grant options to any one person in any 12 month period which will exceed 5% of the issued and outstanding shares of the Company as determined at the time of the grant of the option, unless the Company has obtained disinterested shareholder approval. The number of options granted to any one consultant in a 12 month period shall not exceed 2% of the issued and outstanding shares at the time of the grant of the option. The aggregate number of options granted to any person conducing investor relations activities in any 12 month period shall not exceed 2% of the issued and outstanding shares at the time of the grant.

Upon expiry of an option, or in the even an option is otherwise terminated for any reason, the number of shares in respect of the expired or terminated option shall again be available for the purposes of the Plan. If the option holder ceases to be a director of the Company or ceases to be employed by the Company, other than by reason of death, or ceases to be a consultant of the Company as the case may be, then the option granted shall expire no later than the 90^th day following the date that the option holder ceases to be a director, ceases to be employed by the Company or ceases to be a consultant of the Company, subject to the terms and conditions set out in the Plan. In the case of death of the Optionee, the options shall terminate on the first anniversary of the date of death of the Optionee, also subject to the terms and conditions of the Plan.

The exercise price of the option under the Plan may not be less than the closing price of the common shares on the TSX Venture Exchange on the day immediately preceding the date of grant, less the applicable discount allowed by the policies on the TSX Venture Exchange. An option granted under the Plan must be exercised within a period of ten years from granting. Within this ten year period, the Company's Board of Directors may determine the limitation period during which an option may be exercised and whether a particular grant will have a minimum vesting period. Any agreement to decrease the option price of options previously granted to insiders will require the approval of "disinterested shareholders".

A complete copy of the Company’s Stock Option Plan as approved by shareholders at the Annual General Meeting held on December 12, 2013 has been included as an exhibit to this Form 20-F Registration Statement.

The names and titles of the Directors/Executive Officers of the Registrant to whom outstanding stock options have been granted and the numbers of common shares subject to such options are set forth in Table No. 13 as of September 30, 2014, as well as the number of options granted to Directors and all employees as a group.

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Table No. 13

Stock Options Outstanding

Name	Number of Options	Number of Options Currently Vested	CDN$ Exercise Price	Expiration Date
Atul Sabharwal, CEO and Director	100,000 200,000	100,000 200,000	$  0.10 0.12	February 25, 2018 December 18, 2018
Ritesh Bhavnani, Chairman and Director	100,000 200,000	100,000 200,000	$  0.10 0.12	February 25, 2018 December 18, 2018
John Fauller, Chief Operating Officer	500,000 200,000 200,000	333,334 200,000 200,000	$  0.19 0.10 0.12	August 27, 2017 February 25, 2018 December 18, 2018
Jaisun Garcha, Chief Financial Officer	211,000 50,000 100,000	211,000 50,000 100,000	$  0.10 0.10 0.12	August 25, 2015 February 25, 2018 December 18, 2018
Wilson (Andy) Bell, Chief Technology Officer	100,000 200,000	100,000 200,000	$  0.10 0.12	February 25, 2018 December 18, 2018
Michael Dillon, Director	200,000	200,000	$0.105	April 10, 2019
Jim Santora, Director	225,000	150,000	$  0.19	August 27, 2017
Conrad Swanson, Director	211,000	211,000	$  0.10	August 25, 2015
Employees/Consultants/ Former Officers/Directors	55,000 227,500 100,000 400,000 100,000 350,000 100,000	36,666 227,500 100,000 400,000 100,000 50,000 12,500	$  0.19 0.10 0.10 0.12 0.10 0.185 0.25	August 27, 2017 February 25, 2018 July 15, 2018 December 18, 2018 April 20, 2019 August 11, 2019 September 10, 2019
Total Officers and Directors	2,797,000	2,555,334
Total Employees/Consultants/ Former Officers/Directors	1,332,500	926,666
Total	4,129,500	3,482,000

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Resolutions/Authorization/Approvals

-No Disclosure Necessary-

Memorandum and Articles of Association

The Company was originally incorporated on January 21, 2010 under the name “Alya Ventures Ltd.” under the provisions of the Business Corporations Act (B.C.) (the "Act"). The Company changed its name to “Snipp Interactive Inc.” effective March 5, 2012.

There are no restrictions on the business the company may carry on in the Articles of Incorporation.

Under the Company’s articles and bylaws any director or senior officer that has a disclosable interest in a contract or transaction shall be liable to account to the Company for any profits that accrue to the director or senior officer in accordance with the provisions of the Act. A director is not allowed to vote on any transaction or contract with the Company in which he has a disclosable interest unless all directors have a disclosable interest in that transaction or contract, in which case all of those directors may vote on such resolution. A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Act.

Part 16 of the Company’s bylaws address the powers and duties of the directors, while Part 8 discusses the Borrowing Powers. The Company may, if authorized by the directors, may:

a)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that the directors think appropriate;

b)

issue bonds, debentures, and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

c)

guarantee the repayment of money by any other person or the performance of any obligation of any other person;

d)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

A Director need not to be a shareholder as qualification for his or her office. There are no age limit requirements pertaining to the retirement or non-retirement of directors and a director need not be a shareholder of the Company. At each annual general meeting of the Company, all the directors shall retire and the shareholders shall elect a Board of Directors consisting of the number of directors for the time being set pursuant the Company's Articles. A retiring director shall be eligible for re-election.

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The remuneration of the directors may from time to time be determined by the directors or, if the directors shall so decide, by the shareholders. Such remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such who is also a director. The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company. If any director shall perform any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director or shall otherwise be specially occupied in or about the Company's business, he may be paid a remuneration to be fixed by the Board or, at the option of that director, fixed by ordinary resolution, and such remuneration my be either in addition to or in substitution for any other remuneration that he may be entitled to receive.

Part 21 deals with indemnification and payment of expenses of directors and officers. Subject to the provisions of the Act, the Company must indemnify a director, former director, or alternate director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and alternate director is deemed to have contracted with the Company on the terms of the indemnity contained in Article 21.2. Subject to restrictions in the Business Corporations Act, the Company may indemnify any person. The failure of a director, alternate director, or officer of the Company to comply with the provisions of the Act or these Articles shall not invalidate any indemnity to which he is entitled under this Part. The directors may cause the Company to purchase and maintain insurance for the benefit of eligible parties.

The majority required for the passage of a special resolution or a special separate resolution shall be 2/3 of the votes cast on the resolution.

The rights, preferences and restrictions attaching to each class of the Company’s shares are as follows:

The authorized share structure of the Company consists of an unlimited number common shares without par value, and an unlimited number of preferred shares, without par value, issuable in series, which includes an unlimited number of Series 1 voting preferred shares, without par value, redeemable at C$0.0001 per share.  

Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders.  Directors may from time to time declare and authorize payment of such dividends, if any, as they deem advisable and need not give notice of such declaration to any shareholder. Dividends are subject to the rights, if any, of shareholders holding shares with special rights as to dividends. No dividend shall be paid otherwise than out of funds and/or assets properly available for the payment of dividends and a declaration by the directors as the amount of such funds or assets available for dividends shall be conclusive.

Holders of Series 1 voting preferred shares are entitled to receive notice and attend all meetings of shareholders and receive one vote for each share held of record, except meetings of which holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series. No dividends shall be declared or paid on the Series 1 preferred shares. I the event of the liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, or any other distribution of assets of the Company, the holders of the Series 1 preferred shares are not entitled to receive any return on capital or proceeds from the liquidation, dissolution or winding-up of the Company. The Company may, at its option, redeem all or from time to time any part of the outstanding Series 1 preferred shares on payment to the holders thereof, for the shares to be redeemed, of the redemption price per share. The price at which the Company may redeem the whole or any part of the Series 1 preferred shares outstanding shall be the sum of 1/100^th of $0.01 for each Series 1 preferred share. Series 1 preferred shares redeemed by the Company shall be cancelled and may not be reissued.

- 61 -

The Company may by resolution of its directors make any changes to the authorized share structure as may be permitted under Section 54 of the Act, or in its name as may be permitted under Section 263 of the Act, and may by resolution of its directors make or authorize the making of any alterations to these Articles and the notice of articles as may be required by such changes. The Company may by ordinary resolution create or vary special rights and restrictions as provided in Section 58 of the Act. No alteration, as provided in Article 9, will be valid as to any part of the issued shares of any class unless the holders of all the issued shares of that class consent to the alteration in writing or consent by special separate resolution. The Company may alter its Articles by resolution of its directors and, if required by such alteration, may by resolution of its directors alter the Notice of Articles.

Subject to the provisions of the Act, the Company or the Directors on behalf of the Company, may pay a reasonable commission or allow a reasonable discount to any person in consideration of his purchasing or agreeing to purchase, whether absolutely or conditionally, any shares, debentures, share rights, warrants or debenture stock in the Company, or procuring or agreeing to procure purchasers, whether absolutely or conditionally, for any such shares, debentures, share rights, warrants or debenture stock. The Company may also pay such brokerage as may be lawful.

An annual general meeting shall be held once every calendar year at such time (not being more than 15 months after the annual reference date for the preceding calendar year) and place as may be determined by the Directors. The Directors may, as they see fit, convene an extraordinary general meeting. An extraordinary general meeting, if requisitioned in accordance with the Act, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided in the Act.

There are no limitations upon the rights to own securities.

There are no provisions that would have the effect of delaying, deferring, or preventing a change in control of the Company.

There is no special ownership threshold above which an ownership position must be disclosed.

A copy of the Company’s Articles has been filed as an exhibit to this 20-F Registration Statement.

Material Contracts

1.

Cross-Marketing Agreement between e-Winery Solutions, NXT-Wine Mobile LLC and the Company dated November 9, 2012. Under the agreement, the Company will provide mobile marketing services to e-Winery customers. The initial term of the agreement is for two years, and shall be renewed annually thereafter unless either party gives notice of cancellation at least 60 days prior to the anniversary date of the renewal. A copy of this agreement has been filed as an exhibit to this Registration Statement.

2

Consulting agreement between the Company and Finalysis Group LLC (Atul Sabharwal) dated October 31, 2011. Under the agreement, Atul Sabhawal will provide consulting services to the Company as a “C” level executive of the Company for a period of three years. Compensation will be a minimum of $150,000 annually, and consultant will be entitled to a severance payment of $75,000 if the consultant is terminated by the Company without “Good Cause” and or by the consultant for “Good Reason”. A copy of this agreement has been filed as an exhibit to this Registration Statement.

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3.

Consulting agreement between the Company and Ritesh Bhavnani dated October 31, 2011. Under the agreement, Ritesh Bhavnani will provide consulting services to the Company as the Chairman of the Company for a period of three years. Compensation will be a minimum of $150,000 annually, and consultant will be entitled to a severance payment of $75,000 if the consultant is terminated by the Company without “Good Cause” and or by the consultant for “Good Reason”. A copy of this agreement has been filed as an exhibit to this Registration Statement.

4.

Employment Agreement between the Company and John Fauller dated May 16, 2012. Under the agreement, Mr. Fauller agrees to act as Chief Operating Officer of the Company at an annual salary of $115,000 per year. The annual salary is subject to adjustment at the Company’s discretion. The employee is also eligible for an annual incentive bonus of up to 30% of his base salary. The agreement is for no specified period and constitutes “at-will” employment. A copy of this agreement has been filed as an exhibit to this Registration Statement.

5.

Employment Agreement between the Company and Wilson A. Bell dated October 31, 2011. Under the agreement, Mr. Bell agrees to act as Chief Technology Officer of the Company at an annual salary of $130,000 per year. The annual salary is subject to adjustment at the discretion of the Company’s Board of Directors. The employee is also eligible for an annual incentive bonus of up to 25% of his base salary. The agreement is for no specified period and constitutes “at-will” employment. During the course of Mr. Bell’s employment and for a period of one year after the termination of his employment, he is subject to a “non-competition period”. A copy of this agreement has been filed as an exhibit to this Registration Statement.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

Canada has no system of exchange controls.  There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.  There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Company's securities, except as discussed in ITEM 10, ”Taxation" below.

Restrictions on Share Ownership by Non-Canadians:  There are no limitations under the laws of Canada or in the Company’s organizing documents on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.

TAXATION

The following summary of the material Canadian federal income tax consequences are stated in general terms and are not intended to be advice to any particular shareholder. Each prospective investor is urged to consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of shares of Common Stock. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder’s particular circumstances.  

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This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm’s length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada.  Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.

This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act" or “ITA”)and the Canada-United States Tax Convention (the “Tax Convention”) as at the date of the Annual Report and the current administrative practices of Canada Customs and Revenue Agency.  This summary does not take into account provincial income tax consequences.

Management urges each holder to consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.

CANADIAN INCOME TAX CONSEQUENCES

Disposition of Common Stock

The summary below is restricted to the case of a holder (a “Holder”) of one or more common shares (“Common Shares”) who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arm’s length with the Company.

Dividends

A Holder will be subject to Canadian withholding tax (“Part XIII Tax”) equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares. Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

Disposition of Common Shares

A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common Share constituted “taxable Canadian property” as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arm’s length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.

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A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one half of the capital gain (“taxable capital gain”) in computing his taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one half of any capital loss (“allowable capital loss”) arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of common shares of the Company. This discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (“the Code”), Treasury Regulations, published Internal Revenue Service (“IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time.  In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company. Each holder and prospective holder of common shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company applicable to their own particular circumstances.

U.S. Holders

As used herein, a (“U.S. Holder”) includes a holder of common shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a “functional currency” other than the U.S. dollar, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.

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This summary is limited to U.S. Holders who own common shares as capital assets. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.

Distribution on Common Shares of the Company

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s United States Federal Income tax liability or, alternatively, individuals may be deducted in computing the U.S. Holder’s United States Federal taxable income by those individuals who itemize deductions.  (See more detailed discussion at “Foreign Tax Credit” below).  To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder’s adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.

Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.  A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a “foreign personal holding company” or a “passive foreign investment company”, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company.  The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.

Under current Treasury Regulations, dividends paid on the Company’s common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of the Company’s common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

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Foreign Tax Credit

For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(j), the limitation on credit does not apply.

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax.  This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year.  There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation. The various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process.  In addition, this limitation is calculated separately with respect to specific classes of income such as “passive income”, “high withholding tax interest”, “financial services income”, “shipping income”, and certain other classifications of income. Dividends distributed by the Company will generally constitute “passive income” or, in the case of certain U.S. Holders, “financial services income” for these purposes.  The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.

Disposition of Common Shares of the Company

A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the difference, if any, between (I) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s tax basis in the common shares of the Company.  Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts. This gain or loss will be capital gain or loss if the common shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.  Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders, which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses. For U.S. Holders, which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Company.

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Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Company’s outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 60% (50% after the first tax year) or more of the Company’s gross income for such year was derived from certain passive sources (e.g. from interest income received from its subsidiaries), the Company would be treated as a “foreign personal holding company.”  In that event, U.S. Holders that hold common shares of the Company would be required to include in gross income for such year their allocable portions of such passive income to the extent the Company does not actually distribute such income.

The Company does not believe that it currently has the status of a “foreign personal holding company”. However, there can be no assurance that the Company will not be considered a foreign personal holding company for the current or any future taxable year.

Foreign Investment Company

If 50% or more of the combined voting power or total value of the Company’s outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31), and the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a “foreign investment company” as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gains.

Passive Foreign Investment Company

As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (“PFIC”), as defined in Section 1297 of the Code, depending upon the percentage of the Company’s income which is passive, or the percentage of the Company’s assets which is held for the purpose of producing passive income.

The rule governing PFICs can have significant tax effects on U.S. shareholders of foreign corporations who are subject to U.S. Federal income taxation under alternative methods at the election of each such U.S. shareholder.  As a PFIC, each U.S. shareholder’s income or gain, with respect to a disposition or deemed disposition of the PFIC’s shares or a distribution payable on such shares will generally be subject to tax at the highest marginal rates applicable to ordinary income and certain interest charges, unless the U.S. shareholder has timely made a “qualified electing fund” election or a “mark-to-market” election for those shares.

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A U.S. shareholder who elects to treat the PFIC as a Qualified Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be required to currently include in his income, for any taxable year in which the corporation qualifies as a PFIC, his pro-rata share of the corporation's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder, and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in which (or with which) the corporation’s taxable year ends, regardless of whether such amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to generally treat any gain realized on the disposition of his common shares (or deemed to be realized on the pledge of his common shares) as capital gain; treat his share of the corporation's net capital gain, if any, as long-term capital gain instead of ordinary income, and either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the corporation's annual realized net capital gain and ordinary earnings

The procedure a U.S. Holder must comply with in making a timely QEF election will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which the corporation is a PFIC. If the U.S. shareholder makes a QEF election in such first year, then the U.S. shareholder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files a tax return for such first year. If, however, the corporation qualified as a PFIC in a prior year during the U.S. shareholder’s holding period, then the U.S. shareholder may make a retroactive QEF election, provided he has preserved his right to do so under the protective statement regime or he obtains IRS permission.

If a U.S. shareholder has not made a QEF Election at any time (a "Non-electing U.S. Holder"), then special taxation rules under Section 1291 of the Code will apply to gains realized on the disposition (or deemed to be realized by reason of a pledge) of his common shares, and certain "excess distributions" by the corporation. An excess distribution is a current year distribution received by the U.S. shareholder on PFIC stock to the extent that the distribution exceeds its ratable portion of 125% of the average amount received by the U.S. shareholder during the preceding three years.

A Non-electing U.S. shareholder generally would be required to pro-rate all gains realized on the disposition of his common shares and all excess distributions over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. shareholder (other than years prior to the first taxable year of the corporation during such U.S. Holder's holding period and beginning after January 1, 1987 for which it was a PFIC) would be taxed at the highest marginal tax rate for each such prior year applicable to ordinary income. The Non-electing U.S. shareholder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-electing non-corporate U.S. shareholder must treat this interest charge as "personal interest" which is wholly non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.

If a corporation is a PFIC for any taxable year during which a Non-electing U.S. shareholder holds common shares, then the corporation will continue to be treated as a PFIC with respect to such common shares, even if it is no longer by definition a PFIC. A Non-electing U.S. shareholder may terminate this deemed PFIC status by electing to recognize a gain, which will be taxed under the rules for Non-Electing U.S. Holders, as if such common shares had been sold on the last day of the last taxable year for which it was a PFIC. If the corporation no longer qualifies as a PFIC in a subsequent year, then normal Code rules and not the PFIC rules will apply with respect to a U.S. shareholder who has made a QEF election.

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In certain circumstances, a U.S. Holder of stock in a PFIC can make a “qualified electing fund election” to mitigate some of the adverse tax consequences of holding stock in a PFIC by including in income its share of the corporation’s income on a current basis. However, we do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. Management urges US persons to consult with their own tax advisors with regards to the impact of these rules.  

Controlled Foreign Corporation

A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporation’s tax year, owned (directly or indirectly) by U.S. Shareholders. If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the Company could be treated as a “controlled foreign corporation” under Subpart F of the Code.  This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC’s Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFC’s earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts.

In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation which is or was a United States Shareholder at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was “controlled”) attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.

The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holder’s federal income tax liability.

Filing of Information Returns.  Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and management urges United States Investors to consult their own tax advisors concerning these requirements.

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Statement by Experts

The Company’s auditors for the financial statements for its fiscal year ended December 31, 2013, was MNP LLP, Chartered Professional Accountants. The auditor for its financial statements for the year ended December 31, 2012 was MSCM LLP, Charter Accountants, prior to the acquisition by MNP LLP, Chartered Professional Accountants. The auditor for its financial statements for the fiscal year ended December 31, 2011 was Davidson & Company LLP. The audit reports are included with the related financial statements and their consents have been filed as exhibits to this Registration Statement.

Documents on Display

All documents incorporated in this 20-F Registration Statement may be viewed at the Company’s head office located at 6708 Tulip Hill Terrace, Bethesda, MD 20816.

Item 11.  Disclosures about Market Risk

The Company is subject to certain kinds of Market Risk.

Interest Rate Risk

The Company is exposed to interest rate risk to the extent that the cash maintained at financial institutions is subject to a floating rate of interest. The interest rate risks on cash and on the Company’s obligations are not considered significant. A plus or minus 1% change in interest rates would affect profit or loss and comprehensive profit or loss by approximately $900.

Foreign Currency Risk

The Company is exposed to foreign currency risk on fluctuations related to cash and cash equivalents, accounts receivable, note receivable, HST receivable and accounts payable and accrued liabilities that are denominated in a foreign currency. A plus or minus 1% change in foreign exchange rates would affect profit or loss and comprehensive profit or loss by approximately $600.

Marketable Securities Price Risk

The Company is exposed to marketable securities price risk to the extent that the marketable securities held by the Company are subject to volatile fluctuations in market price. The marketable securities price risk on marketable securities is considered significant. A plus or minus $0.10 change in share price would affect profit or loss and comprehensive profit or loss by approximately $200.

Derivative Liability Price Risk

The Company is exposed to fluctuations in the fair value of the derivative liability due to fluctuations in the market price of its own stock. Assuming that the other input variables of the Black-Scholes valuation model stay the same, a plus or minus 1% change in the market price of the Company’s stock would cause an increase in value of $3,149 and a decrease in value of $3,082.

Item 12.  Description of Other Securities

Not Applicable

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Part II

Item 13.  Defaults, Dividend Arrearages and Delinquencies

Not Applicable

Item 14.  Modifications of Rights of Securities Holders and Use of Proceeds

Not Applicable

Item 15.  Controls and Procedures

Not Applicable

Item 16.  Reserved

Item 16A.  Audit Committee Financial Expert

Not Applicable

Item 16B.  Code of Ethics

Not Applicable

Item 16C.  Principal Accountant Fees and Services

Not Applicable

Item 16D.  Exemptions from Listing Standards for Audit Committees

Not Applicable

Item 16E.  Purchase of Equity Securities by the Issuer and Affiliated Purchasers

Not Applicable

Item 16F.  Change in Registrant’s Certifying Accountant

Not Applicable

Item 16G.  Corporate Governance

Not Applicable

Item 16H.  Mine Safety Disclosure

Not Applicable

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Part III

Item 17.  Financial Statements

Not applicable

Item 18.  Financial Statements

The Company's financial statements are stated in U.S. Dollars ($) and are prepared in accordance with International Financial Reporting Standards.

The financial statements as required under ITEM #18 are attached hereto and found immediately following the text of this Registration Statement.  The audits reports of MNP LLP, Chartered Professional Accountants, and Davidson & Company, LLP, Chartered Accountants,  are included herein immediately preceding the financial statements.

Item 19.  Exhibits

(A1)  The financial statements thereto as required under ITEM #18 are attached hereto and found immediately following the text of this Registration Statement.  The audit reports of MNP LLP, Chartered Professional Accountants, and Davidson & Company, LLP, Chartered Accountants for the audited financial statements is included herein immediately preceding the audited financial statements.

Audited Financial Statements

Report of Independent Registered Public Accounting Firm of MNP LLP, Chartered Professional Accountants, dated October 17, 2014.

Report of Independent Registered Public Accounting Firm of Davidson & Company LLP, dated October 17, 2014

Statements of Financial Position at December 31, 2013 and 2012.

Statements of Operations and Comprehensive Loss for the years ended December 31, 2013 and 2012 and 2011.

Statements of Cash Flows for the years ended December 31, 2013 and 2012 and 2011.

Statements of Changes in Equity for the years ended December 31, 2013 and 2012.

Notes to Financial Statements

Interim (Unaudited) Financial Statements

Condensed Interim Consolidated Statements of Financial Position at June 30, 2014 and December 31, 2013.

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Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six month periods ended June 30, 2014 and 2013.

Condensed Interim Statements of Cash Flows for the three and six month periods ended June 30, 2014 and 2013.

Statements of Changes in Equity (Deficiency) for the six month periods ended June 30, 2014 and 2013.

Notes to Financial Statements

(B)  Index to Exhibits:

1.

Certificate of Incorporation, Certificates of Name Change, Articles of Incorporation, Articles of Amalgamation and By-Laws:

a)

Certificate of Incorporation dated January 21, 2010

b)

Certificate of Change of Name dated March 1, 2012

c)

Articles and Bylaws dated January 21, 2010

d)

Directors Resolutions dated February 24, 2012

2.

Instruments defining the rights of holders of the securities being registered

***See Exhibit Number 1***

3.

Voting Trust Agreements - N/A

4.

Material Contracts

a.

Cross-Marketing Agreement between e-Winery Solutions, NXT-Wine Mobile LLC and the Company dated November 9, 2012.

b

Consulting Agreement between the Company and Finalysis Group LLC (Atul Sabharwal) dated October 31, 2011.

c.

Consulting Agreement between the Company and Ritesh Bhavnani dated October 31, 2011.

d.

Employment Agreement between the Company and John Fauller dated May 16, 2012.

e.

Employment Agreement between the Company and Wilson A. Bell dated October 31, 2011.

5.

List of Foreign Patents - N/A

6.

Calculation of earnings per share - N/A

7.

Explanation of calculation of ratios - N/A

8.

List of Subsidiaries

9.

Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities – N/A

- 74 -

10.

Other Documents

a)

Consent of MNP LLP, Chartered Professional Accountants, dated October 17, 2014

b)

Consent of Davidson & Company, LLP, Chartered Accountants, dated October 17, 2014.

c)

Copy of 2012 Stock Option Plan

d)

Copy of Management Information Circular for the Annual General Meeting of Shareholders held on December 12, 2013.

e)

Form of Proxy for the Annual General Meeting of Shareholders held on December 12, 2013.

f)

CPC Escrow Agreement between the Company and Computershare dated July 15, 2010.

g)

Value Security Escrow Agreement between the Company and Computershare dated March 1, 2012.

- 75 -

SNIPP INTERACTIVE INC.

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

- 76 -

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of SNIPP Interactive Inc.

We have audited the accompanying consolidated financial statements of SNIPP Interactive Inc. and its subsidiaries (the “Company”), which comprise the consolidated statement of financial position as at December 31, 2013 and 2012, and the consolidated statements of operations and comprehensive loss, changes in equity (deficiency), and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of SNIPP Interactive Inc. and its subsidiaries as at December 31, 2013 and 2012, and their financial performance and their cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Ontario

October 17, 2014

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of

Snipp Interactive Inc.

We have audited the accompanying consolidated financial statements of Snipp Interactive Inc., which comprise the consolidated statements of operations and comprehensive loss and cash flows for the year ended December 31, 2011, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.  We conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.  The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.  In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial performance and cash flows of Snipp Interactive Inc. for the year ended December 31, 2011, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
April 26, 2012

- 78 -

SNIPP INTERACTIVE INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in U.S. Dollars)
As at
	December 31, 2013		December 31, 2012
ASSETS
Current
Cash and cash equivalents (Note 3)	$	213,046	$	650,670
Accounts receivable, net of allowance for doubtful accounts of $15,000 (2012 - $12,000)		345,261		201,934
Note receivable (Note 5)		-		50,255
HST receivable		5,704		11,378
Marketable securities (Note 5)		132		503
Deposits and prepaid expenses		25,287		54,046
		589,430		968,786
Equipment (Note 6)		16,198		21,106
Intangible assets (Note 7)		212,879		127,185
	$	818,507	$	1,117,077
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
Current
Deferred revenue	$	-	$	60,326
Accounts payable and accrued liabilities		115,188		137,645
Due to related parties (Note 8)		208,476		54,550
		323,664		252,521
Derivative liability (Note 10)		61,077		1,230,128
		384,741		1,482,649
Shareholders’ equity (deficiency)
Common shares (Note 11)		1,897,817		1,547,304
Share subscriptions (Note 18)		17,159		-
Warrants (Note 11)		534,153		112,357
Warrants – Strategic sales partnership agreement (Note 12)		-		174,931
Contributed surplus		329,040		99,150
Deficit		(2,201,752)		(2,277,349)
Accumulated other comprehensive loss		(142,651)		(21,965)
		433,766		(365,572)
	$	818,507	$	1,117,077
Nature and continuance of operations (Note 1)
Subsequent events (Note 18)

Approved and authorized by the Board of Directors on October 17, 2014.
“Atul Sabharwal”	Director	“Ritesh Bhavnani”	Director
Atul Sabharwal		Ritesh Bhavnani

The accompanying notes are an integral part of these consolidated financial statements.

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SNIPP INTERACTIVE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars)
		Year Ended December 31, 2013		Year Ended December 31, 2012		Year Ended December 31, 2011
REVENUE
Campaign revenue	$	870,420	$	511,854	$	379,222
EXPENSES
Salaries and compensation (Note 8)		1,098,609		1,117,689		182,611
General and administrative		84,407		124,876		7,679
Communications infrastructure		119,986		91,018		52,042
Software development		101,679		75,861		47,250
Professional fees		41,086		141,662		53,218
Marketing and investor relations		70,169		174,676		34,091
Travel		67,675		85,875		18,069
Bad debt expense		15,000		12,000		-
Amortization of intangibles		42,821		13,905		-
Depreciation of equipment		4,908		3,366		-
Stock-based compensation (Note 11)		229,890		99,150		-
Strategic sales partnership compensation (Note 12)		(174,931)		174,931		-
		1,701,299		2,115,009		394,960
Net loss before interest and other income, foreign exchange, accretion on note receivable, unrealized loss on marketable securities, listing expense, change in fair value of derivative liability		(830,879)		(1,603,155)		(15,738)
Interest and other income, foreign exchange, accretion on note receivable, unrealized loss on marketable securities, listing expense, change in fair value of derivative liability
Interest income		3,397		10,919		-
Other income (Note 8)		-		15,787		-
Accretion on note receivable (Note 5)		-		4,018		-
Foreign exchange gain		106,961		-		-
Unrealized loss on marketable securities		(343)		(3,524)		-
Listing expense (Note 16)		-		(514,284)		-
Change in fair value of derivative liability (Note 10)		796,461		(147,650)		-
Net income (loss) for the year		75,597		(2,237,889)		(15,738)
OTHER COMPREHENSIVE LOSS
Cumulative translation adjustment		(120,686)		(21,705)		(306)
Comprehensive loss for the year	$	(45,089)	$	(2,259,594)	$	(16,044)
Basic and diluted income (loss) per common share	$	0.00	$	(0.05)	$	(0.01)
Weighted average number of common shares outstanding		48,952,364		41,590,109		1,998,020

The accompanying notes are an integral part of these consolidated financial statements.

- 80 -

SNIPP INTERACTIVE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
	Year Ended December 31, 2013		Year Ended December 31, 2012		Year Ended December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the year	$	75,597	$	(2,237,889)		$	(15,738)
Items not involving cash:
Amortization of intangibles		42,821		13,905			-
Depreciation of equipment		4,908		3,366			-
Other income		-		(15,787)			-
Stock-based compensation		229,890		99,150			-
Strategic sales partnership compensation		(174,931)		174,931			-
Listing expense		-		514,284			-
Change in fair value of derivative liability		(796,461)		147,650			-
Changes in non-cash working capital items:
Accounts receivable		(143,327)		(131,814)			16,353
HST receivable		5,674		(11,378)			-
Deposits and prepaid expenses		28,759		(33,740)			-
Deferred revenue		(60,326)		50,161			10,165
Accounts payable and accrued liabilities		(22,457)		47,952			56,229
Due to related parties		153,926		10,430			6,051
Net cash flows used in operating activities		(655,927)		(1,368,779)			73,060
CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable		50,255		(50,255)			-
Marketable securities		371		(503)			-
Additions to equipment		-		(24,472)			-
Additions to intangible assets		(128,515)		(141,090)			-
Net cash flows used in investing activities		(77,889)		(216,320)			-
CASH FLOWS FROM FINANCING ACTIVITIES
Cash acquired from Transaction (Note 16)		-		276,551			-
Proceeds from common shares issued		417,736		2,030,600			-
Share issuance costs		(18,017)		(210,585)			-
Proceeds from share subscriptions		17,159		-			-
Proceeds from options exercised		-		104,457			-
Redemption of preferred shares		-		(3,807)			-
Net cash flows provided by financing activities		416,878		2,197,216			-
Effect of exchange rate changes		(120,686)		(21,705)			(306)
Change in cash for the year		(437,624)		590,412			72,754
Cash and cash equivalents, beginning of year		650,670		60,258			(12,496)
Cash and cash equivalents, end of year	$	213,046	$	650,670		$	60,258
Supplemental disclosure regarding cash flows (Note 13)

The accompanying notes are an integral part of these consolidated financial statements.

- 81 -

SNIPP INTERACTIVE INC.
STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
(Expressed in U.S. Dollars)
	Common Shares	Amount	Preferred Shares	Amount	Share Subscriptions	Warrants	Warrants - Strategic Sales Partnership	Contributed Surplus	Accumulated Other Comprehensive Loss	Deficit	Total Shareholders’ Equity (Deficiency)
Balance, December 31, 2011	1,998,020	$      1,998	700,000	$     700	$          -	$            -	$           -	$          -	$       (260)	$       (39,460)	$      (37,022)
Elimination of Consumer Impulse common and preferred shares	(1,998,020)	700	(700,000)	(700)							-
Notionally Snipp acquires Alya	10,550,000	814,969	-	-	-	-	-	-	-	-	814,969
Transaction shares issued by Alya	23,142,305	-	37,499,997	3,807	-	-	-	-	-	-	3,807
Fair value of derivative liability
on 6,188,688 Transaction warrants	-	(404,796)	-	-	-	-	-	-	-	-	(404,796)
Redemption of preferred shares	-	-	(37,499,997)	(3,807)		-	-	-	-	-	(3,807)
Financing shares issued	13,333,333	2,030,600	-	-	-	-	-	-	-	-	2,030,600
Fair value of derivative liability
on 13,333,333 Financing warrants	-	(677,682)	-	-	-	-	-	-	-	-	(677,682)
Financing issuance costs	-	(210,585)	-	-	-	-	-	-	-	-	(210,585)
Fair value of 1,333,333 Broker warrants	-	(112,357)	-	-	-	112,357	-	-	-	-	-
Stock-based compensation (Note 11)	-	-	-	-	-	-	-	99,150	-	-	99,150
Strategic sales partnership compensation	-	-	-	-	-	-	174,931	-	-	-	174,931
Stock options exercised	422,000	44,566	-	-	-	-	-	-	-	-	44,566
Agent’s options exercised	605,000	59,891	-	-	-	-	-	-	-	-	59,891
Cumulative translation adjustment	-	-	-	-	-	-	-	-	(21,705)	-	(21,705)
Net loss for the year	-	-	-	-	-	-	-	-	-	(2,237,889)	(2,237,889)
Balance, December 31, 2012	48,052,638	1,547,304	-	-	-	112,357	174,931	99,150	(21,965)	(2,277,349)	(365,572)
Private placement shares issued	2,000,000	192,520	-	-	-	-	-	-	-	-	192,520
Private placement shares issued	2,400,000	225,216	-	-	-	-	-	-	-	-	225,216
Fair value of derivative liability
on 1,200,000 Financing warrants	-	(49,206)	-	-	-	-	-	-	-	-	(49,206)
Financing issuance costs	-	(18,017)	-	-	-	-	-	-	-	-	(18,017)
Share subscriptions	-	-	-	-	17,159	-	-	-	-	-	17,159
Stock-based compensation (Note 11)	-	-	-	-	-	-	-	229,890	-	-	229,890
Strategic sales partnership compensation	-	-	-	-	-	-	(174,931)	-	-	-	(174,931)
Fair value of amended transaction    warrants	-	-	-	-	-	421,796	-	-	-	-	421,796
Cumulative translation adjustment	-	-	-	-	-	-	-	-	(120,686)	-	(120,686)
Net income for the year	-	-	-	-	-	-	-	-	-	75,597	75,597
Balance, December 31, 2013	52,452,638	$ 1,897,817	-	$       -	$   17,159	$ 534,153	$             -	$ 329,040	$  (142,651)	$  (2,201,752)	$   433,766

The accompanying notes are an integral part of these consolidated financial statements.

- 82 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

1.

NATURE AND CONTINUANCE OF OPERATIONS

Snipp Interactive Inc. (the “Company” or “Snipp”) (formerly Alya Ventures Ltd.) was incorporated under the Business Corporations Act (British Columbia) on January 21, 2010 and was classified as a Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4. The principal business of the Company was to negotiate an acquisition or participation in a business subject to acceptance by regulatory authorities and, in certain cases, shareholder approval (the “Qualifying Transaction”).

On March 1, 2012, the Company completed its Qualifying Transaction (the “Transaction”) with Consumer Impulse, Inc. (“Consumer Impulse”) and a concurrent financing whereby the Company acquired all of the issued and outstanding securities of Consumer Impulse in exchange for the issuance of securities of the Company. For accounting purposes, this share exchange is treated as a reverse takeover with Consumer Impulse being the accounting acquirer and the go-forward financial statements reflect Consumer Impulse’s history from its inception on March 30, 2007 (Note 16). The fiscal year-end of the Company was changed to December 31 from March 31.

Consumer Impulse was incorporated under the laws of the State of Delaware on March 30, 2007 and its business is to provide a full suite of mobile marketing services in the US, Canada, Mexico and the Middle East. The business of Consumer Impulse has become the business of the Company. During the year ended December 31, 2013, Consumer Impulse changed its name to Snipp Interactive Inc.

Unless otherwise indicated in these consolidated financial statements, references to “$” are to U.S. dollars, and references to “C$” are to Canadian dollars.

These consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business.

During the year ended December 31, 2013, the Company recognized net income of $75,597 and used cash of $655,927 in operating activities. During the year ended December 31, 2013, the Company recognized net loss before interest and other income, foreign exchange, accretion on note receivable, unrealized loss on marketable securities, listing expense, change in fair value of derivative liability, of $830,879.At December 31, 2013, the Company had working capital of $265,766 and a deficit of $2,201,752.  

The application of the going concern concept is dependent on the Company’s ability to receive continued financial support from its stakeholders and, ultimately, on the Company’s ability to generate profitable operations. Management is of the opinion that sufficient working capital is available from its financings and will be obtained from operations to meet the Company's liabilities and commitments as they come due for the next twelve months. These consolidated financial statements do not reflect any adjustments or reclassifications of assets and liabilities which would be necessary if the Company were unable to continue as a going concern.

The registered address, head office, principal address and records office of the Company are located at 6708 Tulip Hill Terrace, Bethesda, Maryland, 20816.

The consolidated financial statements were authorized for issuance by the Board of Directors on October 17, 2014.

2.

SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

These consolidated financial statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee (“IFRIC”). The policies applied in these consolidated financial statements are based on IFRS in effect as at December 31, 2013.

- 83 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Basis of presentation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned legal subsidiaries Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), which is incorporated in Delaware, USA and Snipp Canada Inc., which is incorporated in Canada. All material inter-company balances and transactions have been eliminated.  

Equipment

Equipment are recorded at cost and depreciated over their estimated useful lives as follows:

Office equipment	5 years	Straight-line
Computer equipment	5 years	Straight-line

Intangible assets

Software platform

Certain costs incurred in connection with the development of software to be used internally or for providing services to customers are capitalized once a project has progressed beyond a conceptual, preliminary stage to that of application development. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:

•

It is technically feasible to complete the software product so that it will be available for use;

•

Management intends to complete the software product and use or sell it;

•

There is an ability to use or sell the software product;

•

It can be demonstrated how the software product will generate probable future economic benefits;

•

Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

•

The expenditure attributable to the software product during its development can be reliably measured.

Costs that qualify for capitalization include both internal and external costs. These costs are amortized over their expected useful lives estimated at 5 years. Residual values are reviewed at the end of each reporting period and adjusted if appropriate.

Use of estimates

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported expenses during the period. Actual results could differ from these estimates. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

- 84 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Use of estimates (cont’d…)

i)

The recoverability of accounts receivable that are included in the consolidated statements of financial position based on historical collection of receivables.

ii)

The inputs used in accounting for share-based payments expense included in profit and loss calculated using the Black-Scholes option pricing model or the Binomial Tree option pricing model.

iii)

The carrying value of intangible assets (capitalized software development) that are included in the consolidated statements of financial position are based on management assessments of the recoverable amount of the asset. As well, management estimates the capitalized costs that are directly attributable to the development of the intangible asset.

iv)

The estimates used in determining the fair value for the Derivative Liability, which is composed of valuations of both the Transaction warrants and Financing warrants, as defined and described in Note 11, utilizes estimates made by management in determining the appropriate input variables in the Black-Scholes valuation model as disclosed in Note 10.

Revenue recognition

The Company provides a full suite of mobile marketing services in the US, Canada, Mexico and the Middle East, and generates revenue by designing, constructing, implementing and managing these mobile marketing services for its customers. Revenue is recognized in the period in which the services are rendered to the customer and collection is reasonably assured.

Cash received in advance of services performed is recorded as deferred revenue.

Deferred taxes

Deferred taxes are recorded using the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs.  To the extent that the Company does not consider it more probable than not that a deferred tax asset will be recovered, it does not recognize the asset.

Foreign currencies

IFRS requires that the functional currency of each entity in the consolidated group be determined separately and that each entity’s financial results and position should be measured using the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian Dollar, the functional currency of the legal subsidiary, Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), is the U.S. Dollar and the functional currency of its subsidiary, Snipp Canada Inc., is the Canadian Dollar.   The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates (“IAS 21”).

The presentation currency of the Company’s consolidated financial statements is the U.S. dollar (“$”). Under IFRS, when the Company translates the financial statements of entities from their functional currency to the presentation currency, assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the end of the reporting period. Share capital, warrants, equity reserves, other comprehensive income, and deficit are translated into U.S.

- 85 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Foreign currencies (cont’d…)

dollars at historical exchange rates. Revenues and expenses are translated into U.S. dollars at the average exchange rate for the period. Foreign exchange gains and losses on translation are included in other comprehensive income. Within each entity, transactions denominated in foreign currencies are translated into the functional currency using the exchange rate in effect at the dates of the transactions, and monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the end of the reporting period.   Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in profit or loss.

Financial instruments

Financial assets

The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing them in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in profit or loss.

Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for- sale. They are carried at fair value with changes in fair value recognized in other comprehensive income or loss. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognized in profit or loss.

Financial liabilities

The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing them in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.

Other financial liabilities: This category includes amounts due to related parties and accounts payables and accrued liabilities, all of which are recognized at amortized cost.

The Company has classified its cash and cash equivalents, marketable securities and derivative liability at fair value through profit or loss. The Company’s accounts receivable, and note receivable, are classified as loans and receivables. The Company’s due to related parties and accounts payable and accrued liabilities are classified as other financial liabilities.

- 86 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Financial instruments (cont’d…)

Financial liabilities (cont’d…)

Disclosures are also required on the inputs used in making fair value measurements, including their classification within a hierarchy that prioritizes their significance.  The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

See Note 14 for relevant disclosures.

Impairment

Financial assets

A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between the asset’s carrying value and its fair value. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

- 87 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Loss per share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company.  In calculating the diluted loss per share, the weighted average number of common shares outstanding assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. For the periods presented, this calculation proved to be anti-dilutive.

Share-based payments

The Company uses the fair value method whereby the Company recognizes compensation costs for the granting of all stock options and direct awards of stock based on their fair value over the period of vesting using the Black-Scholes option pricing model or the Binomial Tree option pricing model. Any consideration paid by the option holders to purchase shares is credited to capital stock.

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity settled share based payment transactions and measured at the fair value of goods or services received. If the fair value of the goods or services received cannot be estimated reliably, the share based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or the services.

Changes in accounting policies

As of January 1, 2013, the Company adopted the following new IFRS standards and amendments in accordance with the transitional provisions of each standard.

IFRS 10 “Consolidated Financial Statements” supersedes IAS 27 “Consolidation and Separate Financial Statements” and SIC-12 “Consolidation – Special Purpose Entities”. This standard provides a single model to be applied in control analysis for all investees, including special purpose entities. The adoption of this standard had no impact on the Company's consolidated financial statements.

IFRS 11 “Joint Arrangements” divides joint arrangements into two types, joint operations and joint ventures, each with their own accounting model. All joint arrangements are required to be reassessed on transition to IFRS 11 to determine their type to apply the appropriate accounting. The adoption of this standard had no impact on the Company's consolidated financial statements.

IFRS 12 “Disclosure of Interests in Other Entities” combines in a single standard the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities. The adoption of this standard had no impact on the Company's consolidated financial statements.

IFRS 13 “Fair Value Measurement” defines fair value, establishes a framework for measuring fair value, and sets out disclosure requirements for fair value measurements. This standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also requires additional annual fair value disclosures, as well as additional interim disclosures, as per IAS 34. The adoption of this standard had no impact on the Company's consolidated financial statements.

- 88 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Recent accounting pronouncements

IFRS 9 was issued in November 2009 and subsequently amended as part of an ongoing project to replace IAS 39 Financial instruments: Recognition and measurement. The standard requires the classification of financial assets into two measurement categories based on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. The two categories are those measured at fair value and those measured at amortized cost. The classification and measurement of financial liabilities is primarily unchanged from IAS 39. However, for financial liabilities measured at fair value, changes in the fair value attributable to changes in an entity’s “own credit risk” is now recognized in other comprehensive income instead of in profit or loss. This new standard will also impact disclosures provided under IFRS 7 Financial instruments: disclosures.

In November 2013, the IASB amended IFRS 9 for the significant changes to hedge accounting. In addition, an entity can now apply the “own credit requirement” in isolation without the need to change any other accounting for financial instruments. The mandatory effective date of January 1, 2015 has been removed to provide sufficient time for preparers of financial statements to make the transition to the new requirements. The effective date for IFRS 9 has not yet been determined. Early adoption is permitted and the standard is required to be applied retrospectively. Management does not expect there to be a significant impact for the Company upon implementation of the issued standard.

3.

CASH AND CASH EQUIVALENTS

	December 31, 2013	December 31, 2012
Cash on deposit	$      123,727	$      373,765
Cashable Guaranteed Investment Certificates	89,319	276,905
Total	$      213,046	$      650,670

As at December 31, 2013 the Company held C$95,000 in Cashable Guaranteed Investment Certificates (GIC). The terms of the GICs are as follows:

Investment	Amount Invested	Interest Rate	Maturity Date
GIC #1	C$95,000	P-1.75%	December 6, 2015

4.

ECONOMIC DEPENDENCE AND SEGMENTED INFORMATION

Significant customers

As at December 31, 2013, five customers accounted for 77% of accounts receivable. Two customers accounted for 48% of revenue for the year ended December 31, 2013. Sales from these two customers during the year ended December 31, 2013 amounted to $311,126 and $104,700, which represented 36% and 12% of total revenue respectively. Six customers accounted for 89% of accounts receivable and seven customers accounted for 88% of revenue for the year ended December 31, 2012. Sales from five of these customers amounted to $109,000, $78,000, $75,000, $60,030 and $51,000, which represented 21%, 15%, 15%, 12% and 10% of total revenue respectively.

- 89 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

4.

ECONOMIC DEPENDENCE AND SEGMENTED INFORMATION

Geographic information

The Company has one operating segment, which provides a full suite of mobile marketing services in Canada, United States and internationally (Middle East and Mexico).  No significant non-current assets are held outside of the United States.

For the Company’s geographically segmented revenue, the Company has allocated revenue based on the location of the customer, as follows:

	Year Ended December 31, 2013	Year Ended December 31, 2012
United States	$         696,490	$         395,665
International	158,073	61,189
Canada	15,857	55,000
Total	$         870,420	$         511,854

5.

NOTE RECEIVABLE AND MARKETABLE SECURITIES

During the year ended December 31, 2012, the Company advanced $50,255 (C$50,000) to an unrelated company by way of a non-convertible debenture that matured on September 20, 2012. This debenture was to be repaid to the Company with 12% annual interest and 100,000 common shares in the capital of the unrelated company. The initial fair value of this debenture was determined to be C$46,000 with C$4,000 allocated to the 100,000 common shares. During the year ended December 31, 2012, the Company received the 100,000 common shares, which as at December 31, 2013, are being held as marketable securities, and the Company recognized C$4,000 of accretion on this debenture increasing the fair value to C$50,000. This debenture and all accrued interest was repaid to the Company during the year ended December 31, 2013.

6.

EQUIPMENT

December 31, 2013
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated depreciation	Depreciation during the year	Closing depreciation balance	Net book value
Office Equipment	$      7,597	$             -	$            -	$        7,597	$        1,202	$        1,524	$        2,726	$          4,871
Computer Equipment	16,875	-	-	16,875	2,164	3,384	5,548	11,327
	$    24,472	$            -	$            -	$      24,472	$        3,366	$        4,908	$        8,274	$        16,198

- 90 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

6.

EQUIPMENT (cont’d…)

December 31, 2012
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated depreciation	Depreciation during the year	Closing depreciation balance	Net book value
Office Equipment	$            -	$        7,597	$            -	$        7,597	$              -	$        1,202	$        1,202	$          6,395
Computer Equipment	-	16,875	-	16,875	-	2,164	2,164	14,711
	$            -	$      24,472	$            -	$      24,472	$              -	$        3,366	$        3,366	$        21,106

7.

INTANGIBLE ASSETS

December 31, 2013
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated amortization	Amortization during the year	Closing amortization balance	Net book value
Software platform	$   141,090	$    128,515	$            -	$   269,605	$        13,905	$        42,821	$        56,726	$     212,879
	$   141,090	$    128,515	$            -	$   269,605	$        13,905	$        42,821	$        56,726	$     212,879

December 31, 2012
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated amortization	Amortization during the year	Closing amortization balance	Net book value
Software platform	$            -	$    141,090	$            -	$   141,090	$            -	$        13,905	$        13,905	$     127,185
	$            -	$    141,090	$            -	$   141,090	$            -	$        13,905	$        13,905	$     127,185

- 91 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

8.

RELATED PARTY TRANSACTIONS

On closing of the Transaction a $15,787 related party loan was forgiven by an officer of the Company and resulted in a gain as reflected in other income on the consolidated statements of operations and comprehensive income (loss). Related party transactions not disclosed elsewhere included in expenses for the year ended December 31, 2013, and 2012 are salaries and compensation of $681,125 and $893,069, respectively, charged by officers and key management personnel of the Company.

At December 31, 2013, $97,473 (2012 – $13,427) was due to a director, $78,504 (2012 – $15,594) was due to an officer and director, $11,965 (2012 – $11,965) was due to an officer and $20,534 (2012 – $13,564) was due to an officer. The amounts due to related parties represent unpaid salaries and compensation and unpaid expenses. The amounts are non-interest bearing, unsecured and have no specified terms of repayment.

The remuneration of officers and other members of key management personnel during the years ended December 31, 2013, and 2012 are as follows:

	Year Ended December 31, 2013	Year Ended December 31, 2012
Salaries and compensation	$        681,125	$         737,150
One time employee fees	-	155,919
Total	$        681,125	$         893,069

9.

LEASE OBLIGATIONS

During the year ended December 31, 2012, the Company had entered into a lease agreement for office space in Washington, D.C., however on November 1, 2012, the Company assigned this lease to an unrelated company and no longer has any lease obligations.

- 92 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

10.

DERIVATIVE LIABILITY

The derivative liability represents the Black-Scholes valuation of the Company’s warrants that are subject to currency fluctuation as the exercise price of the Company’s warrants is fixed in Canadian dollars and the functional currency of the Company is the U.S. dollar. This results in the warrants being considered a derivative as a variable amount of cash in the Company’s functional currency will be received on exercise. The fair value of this derivative liability fluctuates from period to period based on fluctuations in the share price, changing Black-Scholes inputs and changes in foreign exchange rates. These fair value changes are recognized through profit and loss. The derivative liability is a NON-CASH liability that is not associated with any form of debt or convertible instrument.

		Transaction warrants		Financing warrants		Total
Balance, December 31, 2011	$	-	$	-	$	-
Fair value of warrants issued		404,796		677,682		1,082,478
Change in fair value		216,902		(69,252)		147,650
Balance, December 31, 2012		621,698		608,430		1,230,128
Change in fair value		(199,902)		(596,559)		(796,461)
Allocation to equity on amended warrant terms		(421,796)		-		(421,796)
Fair value of warrants issued		-		49,206		49,206
Balance, December 31, 2013	$	-	$	61,077	$	61,077

On December 18, 2013, the Company received TSX Venture Exchange approval to change the exercise currency of the Transaction warrants from C$ to $ resulting in the elimination of the corresponding derivative liability associated with these Transaction warrants. The fair value of the Transaction warrants on the amendment date was reallocated to equity with the difference recognized through profit and loss.

The following assumptions were used for the Black-Scholes derivative liability valuation of the Financing warrants at December 31, 2013:

Financing warrants ⁽¹⁾

Financing warrants ⁽²⁾

Risk-free interest rate

1.10%

1.10%

Expected life of warrants

0.17 years

1.93 years

Annualized volatility

125%

125%

Dividend rate

0.00%

0.00%

⁽¹⁾ 13,333,333 financing warrants issued on March 1, 2012

⁽²⁾ 1,200,000 financing warrants issued on December 6, 2013

- 93 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

11.

CAPITAL STOCK

Authorized

Unlimited common shares, without par value

Unlimited preferred shares, without par value, issuable in series:

Unlimited Series 1 voting preferred shares, without par value, redeemable at C$0.0001 per share

Share issuances

Prior to the closing of the Transaction (the “Closing”), the Company had 10,550,000 common shares outstanding and Consumer Impulse had 1,998,020 common shares and 700,000 Series A preferred shares outstanding. On Closing the common and preferred shares of Consumer Impulse were eliminated and the Company’s 10,550,000 common shares were deemed to have been issued as part of the accounting for the Transaction.

On Closing the Company acquired all of the issued and outstanding Consumer Impulse shares in exchange for the issuance of the Company’s 22,742,305 common shares, 6,188,688 warrants and 37,499,997 Series 1 preferred shares. The 37,499,997 Series 1 preferred shares were immediately redeemed after Closing for an aggregate of $3,807. Pursuant to a finder’s fee agreement the Company also issued 400,000 shares on Closing. The 6,188,688 warrants can be exercised into 6,188,688 common shares at an exercise price of C$0.13 per common share for a period of five years from Closing. The initial fair value of these warrants was determined to be $404,796 (note 10) using a relative fair value method based on the estimated fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, expected volatility of 125%, risk-free interest rate of 1.12% and an expected life of 5 years. The remaining value of $410,173 remained as common shares issued.

As a condition to Closing, the Company completed a private placement (the “Financing”) of 13,333,333 units with a subscription price of C$0.15 per unit, for gross proceeds of $2,030,600 (C$2,000,000). Each unit consisted of one common share and one financing warrant entitling the holder to purchase one common share of the Company at an exercise price of C$0.22 per share within one year of Closing and an exercise price of C$0.27 per share within two years of Closing, with such financing warrant expiring two years after the Closing. The initial fair value of the 13,333,333 warrants that were issued pursuant to the Financing was determined to be $677,682 using a relative fair value method based on the estimated fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, expected volatility of 125%, risk-free interest rate of 1.12% and an expected life of 2 years. The remaining value of $1,029,976 was allocated to the 13,333,333 financing shares issued. In connection with the Financing, the Company paid to the Agent, a corporate finance fee of $20,306, $142,142 in commissions (7% of gross proceeds), and issued 1,333,333 broker warrants (10% of the securities sold in the Financing) valued at $112,357 using the Black-Scholes model. The broker warrants are exercisable on the same terms as the financing warrants. The Company also paid legal fees of $48,137 associated with the Financing included in financing issue costs.

On August 21, 2013, the Company completed a non-brokered private placement financing of 2,000,000 common shares at a price of C$0.10 per common share for gross proceeds of $192,520 (C$200,000).

On December 6, 2013, the Company completed its first tranche of a non-brokered private placement financing of 2,400,000 units with a subscription price of C$0.10 per unit, for gross proceeds of $225,216 (C$240,000). Each unit consisted of one common share and one half-share financing warrant entitling the holder of each whole warrant to purchase one common share of the Company at an exercise price of C$0.15 per share within two years of the date of distribution. The Company paid finder’s fees of $18,017 (C$19,200) for the first tranche.

- 94 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

11.

CAPITAL STOCK (cont’d…)

Escrow shares

On March 20, 2010, the Company issued 4,500,000 common shares at a price of $0.05 per common share for total proceeds of $225,000. An additional 23,142,305 common shares were issued for the Transaction with Consumer Impulse. These common shares were held in escrow and are being released pro-rata to the shareholders as to 10% of the escrow shares upon issuance of notice of final acceptance of the Qualifying Transaction by the TSX Venture Exchange and as to the remainder in six equal tranches of 15% every six months thereafter for a period of 36 months. These escrow shares may not be transferred, assigned or otherwise dealt with without the consent of the regulatory authorities. On March 8, 2012, 2,764,231 shares were released from escrow, on September 5, 2012, 4,146,345 shares were released from escrow, on March 4, 2013, 4,146,845 shares were released from escrow and on September 5, 2013, 4,146,845 shares were released from escrow. The balance of shares remaining in escrow is 12,438,039 as of December 31, 2013 (2012 – 20,731,729).

Stock options

On December 12, 2013, disinterested shareholders approved and the Company adopted a new fixed number incentive stock option plan (the “2013 Option Plan”) which provides that a committee of the Board of Directors appointed in accordance with the 2013 Option Plan (the “Committee”) may from time to time, in its discretion, and in accordance with the TSX-V requirements, grant to directors, officers and consultants of the Company, non-transferable options to purchase common shares (“Options”), reserving 10,010,527 shares, being 20% of the Company’s issued and outstanding shares as at November 12, 2013. Such Options will be exercisable for a period of up to 10 years from the date of grant.  Vesting terms are determined at the time of grant by the Committee. As per the TSX-V, the 6,188,688 Transaction warrants that were issued on Closing of the Company’s Qualifying Transaction, have been treated akin to stock options and are included with the Company’s outstanding stock options for the purposes of being subject to the prescribed limit of the Company’s Option Plan. In fiscal 2013, the Company recognized stock based compensation expense of $229,890 corresponding to 2,310,000 fully vested stock options that were granted during the year ended December 31, 2013. The following assumptions were used for the Black-Scholes valuation of these options granted in fiscal 2013 (Risk-free interest rate: 1.40%/1.26%/1.55%; expected life of option: 5.0 years; annualized volatility: 125%; dividend rate: 0.00%). In fiscal 2012, the Company recognized stock based compensation expense of $99,150 corresponding to 1,927,175 stock options that were granted during the year ended December 31, 2012. Of the 1,927,175 options granted, 982,175 were fully vested and 945,000 vested over a three year period beginning from the grant date. The following assumptions were used for the Black-Scholes valuation of these options granted in fiscal 2012 (Risk-free interest rate: 1.15%/1.31%; expected life of option: 1.0/5.0 years; annualized volatility: 125%; dividend rate: 0.00%).

Stock option activity is presented below:

	Number of Options	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2011	844,000	0.10
Exercised	(422,000)*	0.10
Granted	1,927,175	0.17
Outstanding, December 31, 2012	2,349,175	0.16
Cancelled	(197,500)	0.18
Expired	(982,175)	0.15
Granted	2,310,000	0.11
Outstanding, December 31, 2013	3,479,500	0.13

*Weighted average share price on the date the options were exercised was C$0.17

- 95 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

11.

CAPITAL STOCK (cont’d…)

Stock options (cont’d…)

As at December 31, 2013, the following Options are outstanding and exercisable:

Number of Options Outstanding at December 31, 2013	Number of Options Exercisable at December 31, 2013	Exercise Price	Expiry Date
422,000	422,000	$0.10	August 25, 2015
780,000	260,000	$0.19	August 27, 2017
100,000	100,000	$0.10	February 15, 2018
777,500	777,500	$0.10	February 25, 2018
100,000	100,000	$0.10	July 15, 2018
1,300,000	1,300,000	$0.12	December 18, 2018
3,479,500	2,959,500

Agent’s Options

Agent’s Options activity is presented below:

	Number of Shares	Weighted Average Exercise Price
		C$
Outstanding and exercisable, December 31, 2011	605,000	0.10
Exercised	(605,000)	0.10
Outstanding and exercisable, December 31, 2012 and December 31, 2013	-	-

Broker Warrants

	Number of Shares	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2011	–	–
Issued	1,333,333	0.25
Outstanding, December 31, 2012 and December 31, 2013	1,333,333	0.25

As at December 31, 2013 the following Broker Warrants are outstanding:

Number of Common Shares Issuable	Weighted Average Exercise Price	Expiry Date
1,333,333	C$0.25	March 1, 2014

The following assumptions were used for the Black-Scholes valuation of the Broker Warrants issued during the year ended December 31, 2012:

Risk-free interest rate

1.12%

Expected life of warrants

2.0 years

Annualized volatility

125%

Dividend rate

0.00%

- 96 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

11.

CAPITAL STOCK (cont’d…)

Warrants

	Number of Shares	Weighted Average Exercise Price
Outstanding, December 31, 2011	–	–
Issued – Transaction warrants	6,188,688	$0.13
Issued – Financing warrants	13,333,333	C$0.25
Outstanding, December 31, 2012	19,522,021	C$0.21
Issued – Financing warrants	1,200,000	C$0.15
Outstanding, December 31, 2013	20,722,021	C$0.20

As at December 31, 2013 the following Warrants are outstanding:

Number of Common Shares Issuable	Weighted Average Exercise Price	Expiry Date
6,188,688	$0.13	March 1, 2017
13,333,333	C$0.25	March 1, 2014
1,200,000	C$0.15	December 6, 2015
20,722,021	C$0.20

The following assumptions were used for the Black-Scholes valuation of the Warrants issued during the year ended December 31, 2013:

Risk-free interest rate

1.10%

Expected life of warrants

2.0 years

Annualized volatility

125%

Dividend rate

0.00%

The following assumptions were used for the Black-Scholes valuation of the Warrants issued during the year ended December 31, 2012:

Risk-free interest rate

1.12%

Expected life of warrants

2.0 / 5.0 years

Annualized volatility

125%

Dividend rate

0.00%

- 97 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

12.

STRATEGIC SALES PARTERNSHIP AGREEMENT

On May 30, 2012, the Company announced an agreement with VirKet S.A. de C.V. (“Virket”), a leading Mexican provider of digital marketing services, to establish an exclusive strategic partnership to offer mobile marketing services in Mexico. Under the strategic partnership arrangement, the Company licensed its “Mobilize Me” technology platform and provided mobile marketing services with VirKet in the Mexican market on an exclusive basis, and VirKet correspondingly used the Company as its exclusive provider of mobile marketing technology. The initial term of the arrangement was for one year with an option for VirKet to extend for a second year and a right-of-first refusal for an extended exclusive license beyond the initial two-year term, all subject to reaching certain business performance targets. The arrangement has not been extended beyond the initial term as business performance targets were not reached. The initial term expired on May 30, 2013. The Company had granted VirKet 3,333,333 warrants to purchase the Company’s common shares. These warrants have expired due to the initial term not being extended. The warrants were exercisable at a price of C$0.22 per share and vesting was subject to VirKet achieving certain agreed sales targets. The warrants also had a mandatory exercise clause if the Company’s stock price was equal to or greater than C$0.35 for ten continuous trading days, and any warrants so not exercised would immediately lapse. The Company had taken an approach of valuing the warrants using the binomial tree option pricing model taking into account the probability of the occurrence of the vesting condition and the mandatory exercise clause. The warrants were valued at $287,940 and the Company recognized the corresponding warrant expense over the first year of the agreement, of which $174,931 was recognized in 2012. The warrants expired before the vesting conditions related to certain performance targets were met, therefore the value of the warrants, previously recognized, was reversed by the Company in 2013.

Strategic Sales Partnership Warrants

	Number of Shares	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2011	–	–
Issued – Strategic sales partnership warrants	3,333,333	0.22
Outstanding, December 31, 2012	3,333,333	0.22
Expired	(3,333,333)	0.22
Outstanding, December 31, 2013	–	–

The following assumptions were used for the binomial tree valuation of the Strategic Sales Partnership Warrants issued during the year ended December 31, 2012:

Risk-free interest rate

1.15%

Expected life

2.0 years

Annualized volatility

125%

Dividend rate

0.00%

- 98 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

13.

SUPPLEMENTAL DISCLOSURE REGARDING CASH FLOWS

	Year Ended December 31, 2013	Year Ended December 31, 2012
Cash paid during the year for interest	-	-
Cash paid during the year for income taxes	-	-
Transactions not involving cash:
Transaction shares issued	-	814,969
Receivables acquired	-	31,220
Deposits acquired	-	20,306
Accounts payable and accrued liabilities acquired	-	23,585
FV of warrants issued as part of Transaction – derivative liability	-	621,698
FV of financing warrants – derivative liability	40,265	608,430
FV of financing warrants – derivative liability	20,812	-
FV of broker warrants	-	112,357

14.

FINANCIAL INSTRUMENTS

Fair value

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

The carrying value of accounts receivable, note receivable, HST receivable, due to related parties and accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments while cash and marketable securities are valued using a level 1 fair value measurement and the derivative liability is valued using a level 3 fair value measurement.

	December 31, 2013		December 31, 2012
	Carrying	Fair	Carrying	Fair
	Value	Value	Value	Value
Fair value through profit and loss – assets	$      213,178	$      213,178	$      651,173	$      651,173
Fair value through profit and loss – liabilities	(61,077)	(61,077)	(1,230,128)	(1,230,128)
Loans and receivables	350,965	350,965	263,567	263,567
Other financial liabilities	(323,664)	(323,664)	(252,521)	(252,521)
	$      179,402	$      179,402	$    (567,909)	$    (567,909)

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SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

14.

FINANCIAL INSTRUMENTS (cont’d…)

Financial risk factors

The Company’s risk exposures and the impact on the Company’s financial statements are summarized below.

Credit risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, note receivable and HST receivable. The Company places its cash with major financial institutions to limit risk from cash and cash equivalents. The maximum exposure to credit risk is equal to the fair value or carrying value of the related financial assets. The Company’s receivables consist of amounts due from customers, HST due from the Government of Canada, a note receivable and accrued interest due from an unrelated company.  Some customers send payment past normal trade terms and in cases where amounts become uncollectible the Company recognizes bad debt expense to write off the uncollectible amounts. At December 31, 2013, the Company had $159,897 (2012 - $68,000) in amounts due from customers greater than 90 days and during fiscal 2013 recognized bad debt expense of $15,000 (2012 - $12,000).

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company’s ability to continue as a going concern is dependent on the Company’s ability to receive continued financial support from its stakeholders and, ultimately, on the Company’s ability to generate continued profitable operations.  Management is of the opinion that sufficient working capital is available from its financings and will be obtained from operations to meet the Company's liabilities and commitments as they come due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates and commodity and equity prices. Such fluctuations may be significant.

a)

Interest rate risk

The Company is exposed to interest rate risk to the extent that the cash maintained at financial institutions is subject to a floating rate of interest. The interest rate risks on cash and on the Company’s obligations are not considered significant. A plus or minus 1% change in interest rates would affect profit or loss and comprehensive profit or loss by approximately $900.

b)

Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash and cash equivalents, accounts receivable, note receivable, HST receivable and accounts payable and accrued liabilities that are denominated in a foreign currency. As at December 31, 2013, the Company held material amounts of cash and cash equivalents in Canadian currency and considers foreign currency risk moderate. A plus or minus 1% change in foreign exchange rates would affect profit or loss and comprehensive profit or loss by approximately $600.

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SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

14.

FINANCIAL INSTRUMENTS (cont’d…)

b)

Foreign currency risk (cont’d…)

   The following table summarizes the Company’s exposure to the Canadian currency:

		December 31, 2013		December 31, 2012
Cash and cash equivalents	C$	106,780	C$	297,103
Accounts receivable		428		7,148
Note receivable		-		50,000
HST receivable		6,067		11,320
Accounts payable and accrued liabilities		(51,943)		(37,016)
Total	C$	61,332	C$	328,555

c)

Marketable securities price risk

The Company is exposed to marketable securities price risk to the extent that the marketable securities held by the Company are subject to volatile fluctuations in market price. The marketable securities price risk on marketable securities is considered significant. A plus or minus $0.10 change in share price would affect profit or loss and comprehensive profit or loss by approximately $200.

Further, the Company is exposed to fluctuations in the fair value of the derivative liability due to fluctuations in the market price of its own stock. Assuming that the other input variables of the Black-Scholes valuation model stay the same, a plus or minus 1% change in the market price of the Company’s stock would cause an increase in value of $3,149 and a decrease in value of $3,082.

15.

CAPITAL MANAGEMENT

The Company defines capital as all components of shareholders’ equity (deficiency). The Company has no debt obligations other than deferred revenue, due to related parties and accounts payable and accrued liabilities in the ordinary course of operations. The Board of Directors does not establish quantitative return on capital criteria for management due to the nature of the Company’s business. The Company does not pay dividends. The Company is not subject to any externally imposed capital requirements.

16.

QUALIFYING TRANSACTION

On March 1, 2012, the Company completed its Qualifying Transaction. The acquisition has been accounted for as a reverse takeover (“RTO”) whereby for accounting purposes Consumer Impulse is treated as the accounting parent company (legal subsidiary) and Snipp Interactive Inc. is treated as the accounting subsidiary (legal parent) in these consolidated financial statements. As Consumer Impulse is the deemed acquirer for accounting purposes, its assets, liabilities and operations since incorporation are included in these consolidated financial statements and the assets and liabilities of Snipp Interactive Inc. at March 1, 2012 and the results of its operations after March 1, 2012 are included in these consolidated financial statements.

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SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

16.

QUALIFYING TRANSACTION (cont’d…)

IFRS 2 applies to transactions where an entity grants equity instruments and cannot identify specifically some or all the goods or service received in return. Since the Company issued shares to Consumer Impulse with a value in excess of the assets received, IFRS 2 would indicate that the difference is recognized in comprehensive loss as a listing expense. The amount assigned to listing expense of $514,284 is the difference between the fair value of the consideration of $814,969 and the net identifiable assets of the accounting subsidiary of $304,492 acquired by the accounting parent and included in the consolidated statements of operations and comprehensive income (loss).

The fair value of the consideration is determined based on the percentage of ownership the legal parent’s shareholders have in the combined entity after the reverse takeover transaction. This represents the fair value of the shares that the accounting parent would have had to issue for the ratio of ownership interest in the combined entity to be the same, if the transaction had taken the legal form of Consumer Impulse acquiring 100% of the shares in Snipp Interactive Inc. The fair value of Snipp Interactive’s share capital before the reverse takeover was $2,030,600, which represents the $2,030,600 proceeds raised from the Financing. The percentage of ownership the legal parent’s shareholders had in the combined entity is 31.3% after the issue of 22,742,305 shares to Consumer Impulse shareholders and the issue of 400,000 finder’s fee shares.

The book value of the 6,188,688 warrants that were issued pursuant to the RTO was determined to be $404,796 using a relative fair value method based on the estimated fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, expected volatility of 125%, risk-free interest rate of 1.12% and an expected life of 5 years. The remaining value of the consideration less the relative fair value of the warrants, totalling $410,173, was allocated to the 23,142,305 shares common shares issued (22,742,305 Transaction shares and 400,000 finder’s fee shares).

The fair value of the consideration deemed to have been paid to Snipp Interactive Inc. was estimated as follows:

Estimated fair value of 22,742,305 shares, 400,000 finder’s fee shares and 6,188,688 warrants deemed issued by Consumer Impulse to Snipp Interactive Inc. (formerly Alya Ventures Ltd.)	$	814,969
Redemption value of 37,499,997 Series 1 preferred shares		3,807
Net assets of Snipp Interactive Inc. acquired (as indicated below)		(304,492)
Listing expense	$	514,284

The listing expense of $514,284 is a non-cash expense item that represents the excess fair value associated with the shares issued on Closing of the Qualifying Transaction over the fair value of the net assets acquired by the accounting acquirer (legal subsidiary). Prior to Closing the net asset value of the Company was $304,492 (C$299,904). As a condition to closing of the Transaction, the Company also completed a private placement financing for gross proceeds of $2,030,600 (C$2,000,000). (Note 11)

The fair value of the net assets of the Company prior to Closing was as follows:

Cash and cash equivalents	$	276,551
Receivables		31,220
Deposits		20,306
Accounts payable and accrued liabilities		(23,585)
	$	304,492

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SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

16.

QUALIFYING TRANSACTION (cont’d…)

The Company and Consumer Impulse structured the Transaction with the intention that it qualify as a “tax free reorganization” under §368(A)(1)(F) of the U.S. Tax Code, as a result of the Company being converted into a “domestic corporation” for the purposes of §368(a)(1)(F) of the U.S. Tax Code by virtue of the Consumer Impulse shareholders controlling 80% or more of the vote or value of the Company upon Closing. In order to qualify as a “tax free reorganization”, and as part of the Transaction, the Company issued to Consumer Impulse shareholders 37,499,997 Series 1 Preferred Shares so that such shareholders controlled at least 80% of the Company’s vote at Closing as defined under the U.S. Tax Code, and immediately following such time, the Company redeemed all of the Preferred Shares for $0.0001 per Preferred Share.

17.

INCOME TAXES

Income tax expense differs from the amount that would be computed by applying the federal and state statutory income tax rates to loss before income taxes.  

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

	Year ended December 31, 2013			Year ended December 31, 2012
Net (income) loss before income taxes	$	(75,597)	$		2,237,889
Expected income tax recovery at
statutory rates		25,700			(760,880)
Effect on income taxes of:
Difference in foreign tax rates		(51,230)			93,440
Tax rate changes and adjustments		(36,910)			(46,290)
Non-deductible expenses		14,460			(3,320)
Change in tax benefits not recognized		47,980			717,050
Recorded in the consolidated statements of operations and comprehensive loss	$	-	$		-

The Company’s deferred tax assets are as follows:

	December 31, 2012		December 31, 2012
Deferred tax assets:
Marketable Securities	$	3,870		$	3,520
Equipment		7,530			3,370
Intangible assets		58,540			13,910
Derivative Liability		-			160,510
Share issuance and financing costs		247,840			332,830
Benefit of non-capital loss carry forwards		2,083,110			1,812,060
Unrecognized deferred tax assets	$	2,400,890		$	2,326,200

- 103 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

December 31, 2013

17.

INCOME TAXES   (cont’d…)

As at December 31, 2012, the Company has non-capital loss carry forwards of $1,491,43 in the U.S. and $1,093,200 in Canada available to reduce taxable income otherwise calculated in future years.  The Canadian non-capital loss carry forwards expire in 2033 and the U.S non-capital loss carry forwards expire between 2027 and 2033.

18.

SUBSEQUENT EVENTS

On January 24, 2014, the Company completed its second tranche of a non-brokered private placement financing of 6,350,000 units with a subscription price of C$0.10 per unit, for gross proceeds of $573,469 (C$635,000), which includes $17,159 received as of December 31, 2013. Each unit consists of one common share and one half-share financing warrant entitling the holder with each whole warrant to purchase one common share of the Company at an exercise price of C$0.15 per share within two years of the date of distribution.

On April 10, 2014, the Company granted 200,000 options to a newly appointed director. The options are fully vested and are exercisable at any time at a price of C$0.105 per common share and expire after five years.

On April 20, 2014, the Company granted 100,000 options to an employee. The options are fully vested and are exercisable at any time at a price of C$0.10 per common share and expire after five years.

On July 15, 2014, the Company announced the closing of an oversubscribed non-brokered private placement financing (the “Financing”) with insider participation. The Financing was comprised of 10.4 million units (“Units”) at a price of Cdn.$0.15 per Unit for gross proceeds of Cdn.$1,560,000. Each Unit consists of one common share (“Share”) and one share purchase warrant (“Warrant”), with each Warrant entitling the holder to purchase one Share at an exercise price of Usd.$0.20 for a period of three years from the date of distribution. The Company paid finder's fees of $118,800 in cash and issued 792,000 finder’s options (“Finder’s Options”) in connection with this Financing. Each Finder’s Option entitles the holder to purchase one Unit (“Finder’s Unit”) at an exercise price of Cdn.$0.15 for a period of three years from the date of distribution. Each Finder’s Unit will consist of one Share and one Warrant, with each Warrant entitling the holder to purchase one Share at an exercise price of Usd.$0.20 for a period of three years from the date of distribution. The Shares issued in the Financing and the Shares to be issued pursuant to the exercise of the Warrants are all subject to a hold period expiring on November 15, 2014.

On August 11, 2014, the Company granted 50,000 options to an employee. The options are fully vested and are exercisable at any time at a price of C$0.185 per common share and expire after five years.

On August 11, 2014, the Company conditionally granted 100,000 options to a consultant subject to receiving disinterested shareholder approval on a new fixed stock option plan. The options are to vest on October 12, 2014. The options are to be exercisable at a price of C$0.185 per common share and expire after five years.

On August 11, 2014, the Company conditionally granted 200,000 options to a consultant subject to receiving disinterested shareholder approval on a new fixed stock option plan. The options are to vest one eighth on November 11, 2014 and then in additional one eighth increments every three months thereafter until fully vested. The options are to be exercisable at a price of C$0.185 per common share and expire after five years.

On September 10, 2014, the Company conditionally granted 100,000 options to a consultant subject to receiving disinterested shareholder approval on a new fixed stock option plan. The options are to vest one eighth on September 11, 2014 and then in additional one eighth increments every three months thereafter until fully vested. The options are to be exercisable at a price of C$0.25 per common share and expire after five years.

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SNIPP INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

FOR THE SIX MONTHS ENDED JUNE 30, 2014

NOTICE OF NO AUDIT REVIEW OF INTERIM FINANCIAL STATEMENTS

The Company disclosesthat its auditors have not reviewed the unaudited condensed interim consolidated financial statements for the period ended June 30, 2014.

- 105 -

SNIPP INTERACTIVE INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in U.S. Dollars)
(Unaudited)
As at
	June 30, 2014			December 31, 2013
ASSETS
Current
Cash and cash equivalents (Note 3)	$		310,909	$	213,046
Accounts receivable, net of allowance for doubtful accounts of $15,000 (December 31, 2013 - $15,000)			496,145		345,261
HST receivable			8,706		5,704
Marketable securities (Note 5)			131		132
Deposits and prepaid expenses			13,077		25,287
			828,968		589,430
Equipment (Note 6)			16,981		16,198
Intangible assets (Note 7)			258,920		212,879
	$		1,104,869	$	818,507
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities	$		227,651	$	115,188
Due to related parties (Note 8)			216,843		208,476
			444,494		323,664
Derivative liability (Note 9)			259,018		61,077
			703,512		384,741
Shareholders’ equity
Common shares (Note 10)		2,022,915			1,897,817
Share subscriptions		-			17,159
Warrants (Note 10)		534,153			534,153
Contributed surplus		369,808			329,040
Deficit		(2,391,552)			(2,201,752)
Accumulated other comprehensive loss		(133,967)			(142,651)
			401,357		433,766
	$		1,104,869	$	818,507
Nature and continuance of operations (Note 1)
Subsequent events (Note 16)

Approved and authorized by the Board of Directors on August 29, 2014.
“Atul Sabharwal”	Director	“Ritesh Bhavnani”	Director
Atul Sabharwal		Ritesh Bhavnani

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 106 -

SNIPP INTERACTIVE INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Expressed in U.S. Dollars)
(Unaudited)
	Three Months Ended June 30, 2014		Three Months Ended June 30, 2013			Six Months Ended June 30, 2014		Six Months Ended June 30, 2013
REVENUE
Campaign revenue	$	413,358		$	207,196	$	762,440	$	381,527
EXPENSES
Salaries and compensation (Note 8)		364,408			253,363		719,495		512,053
General and administrative		33,136			22,819		61,995		45,707
Campaign infrastructure		104,896			34,970		138,130		71,487
Software development		31,430			18,115		58,254		36,159
Professional fees		6,164			2,756		36,587		33,408
Marketing and investor relations		7,161			19,691		27,964		62,898
Travel		21,638			16,255		37,216		23,397
Amortization of intangibles		16,532			10,020		31,011		18,271
Depreciation of equipment		1,348			1,227		2,607		2,454
Stock-based compensation (Note 10)		31,927			19,449		40,768		93,412
Strategic sales partnership compensation (Note 11)		-			41,024		-		113,009
		618,640			439,689		1,154,027		1,012,255
Net loss before interest income, foreign exchange, change in fair value of derivative liability		(205,282)			(232,493)		(391,587)		(630,728)
Interest income, foreign exchange, change in fair value of derivative liability
Interest income		451			1,061		1,216		2,721
Foreign exchange gain (loss)		(81,299)			55,229		(9,521)		86,878
Change in fair value of derivative liability (Note 9)		(112,364)			207,895		210,092		707,984
Net income (loss) for the period		(398,494)			31,692		(189,800)		166,855
OTHER COMPREHENSIVE LOSS
Cumulative translation adjustment		85,603			(61,326)		8,684		(99,867)
Comprehensive income (loss) for the period	$	(312,891)		$	(29,634)	$	(181,116)	$	66,988
Basic and diluted income (loss) per common share	$	(0.01)		$	0.00	$	(0.00)	$	0.00
Weighted average number of common shares outstanding		58,802,638			48,052,638		57,995,732		48,052,638

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 107 -

SNIPP INTERACTIVE INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Unaudited)
	Three Months Ended June 30, 2014			Three Months Ended June 30, 2013		Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period	$	(398,494)	$		31,692		$	(189,800)	$		166,855
Items not involving cash:
Amortization of intangibles		16,532			10,020			31,011			18,271
Depreciation of equipment		1,348			1,227			2,607			2,454
Stock-based compensation		31,927			19,449			40,768			93,412
Strategic sales partnership compensation		-			41,024			-			113,009
Change in fair value of derivative liability		112,364			(207,895)			(210,092)			(707,984)
Changes in non-cash working capital items:
Accounts receivable		104,945			(65,377)			(150,884)			(50,237)
HST receivable		(342)			(1,067)			(3,002)			(4,972)
Deposits and prepaid expenses		5,909			19,973			12,210			43,322
Deferred revenue		-			(14,950)			-			(37,476)
Accounts payable and accrued liabilities		115,297			(11,723)			112,463			(32,005)
Due to related parties		(38,003)			(2,439)			8,367			16,788
Net cash flows used in operating activities		(48,517)			(180,066)			(346,352)			(378,563)
CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable		-			7,494			-			33,141
Marketable securities		(4)			17			1			28
Additions to equipment		(1,480)			-			(3,390)			-
Additions to intangible assets		(46,242)			(33,531)			(77,052)			(69,748)
Net cash flows used in investing activities		(47,726)			(26,020)			(80,441)			(36,579)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common shares issued		-			-			573,469			-
Share issuance costs		-			-			(40,338)			-
Proceeds from share subscriptions		-			-			(17,159)			-
Net cash flows provided by financing activities		-			-			515,972			-
Effect of exchange rate changes		85,603			(61,326)			8,684			(99,867)
Change in cash for the period		(10,640)			(267,412)			97,863			(515,009)
Cash and cash equivalents, beginning of period		321,549			403,073			213,046			650,670
Cash and cash equivalents, end of period	$	310,909	$		135,661		$	310,909	$		135,661
Supplemental disclosure regarding cash flows (Note 12)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 108 -

SNIPP INTERACTIVE INC.
STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
(Expressed in U.S. Dollars)
(Unaudited)
	Common Shares	Amount	Share Subscriptions	Warrants	Warrants - Strategic Sales Partnership	Contributed Surplus	Accumulated Other Comprehensive Loss	Deficit	Total Shareholders’ Equity (Deficiency)
Balance, December 31, 2012	48,052,638	$    1,547,304	$        -	$   112,357	$   174,931	$       99,150	$     (21,965)	$    (2,277,349)	$      (365,572)
Stock-based compensation (Note 10)	-	-	-	-	-	93,412	-	-	93,412
Strategic sales partnership compensation	-	-	-	-	113,009	-	-	-	113,009
Cumulative translation adjustment	-	-	-	-	-	-	(99,867)	-	(99,867)
Net income for the period	-	-	-	-	-	-	-	166,855	166,855
Balance, June 30, 2013	48,052,638	1,547,304	-	112,357	287,940	192,562	(121,832)	(2,110,494)	(92,163)
Private placement shares issued	2,000,000	192,520	-	-	-	-	-	-	192,520
Private placement shares issued	2,400,000	225,216	-	-	-	-	-	-	225,216
Fair value of derivative liability
on 1,200,000 Financing warrants	-	(49,206)	-	-	-	-	-	-	(49,206)
Financing issuance costs	-	(18,017)	-	-	-	-	-	-	(18,017)
Share subscriptions	-	-	17,159	-	-	-	-	-	17,159
Stock-based compensation (Note 10)	-	-	-	-	-	136,478	-	-	136,478
Strategic sales partnership compensation	-	-	-	-	(287,940)	-	-	-	(287,940)
Fair value of amended transaction    warrants	-	-	-	421,796	-	-	-	-	421,796
Cumulative translation adjustment	-	-	-	-	-	-	(20,819)	-	(20,819)
Net loss for the period	-	-	-	-	-	-	-	(91,258)	(91,258)
Balance, December 31, 2013	52,452,638	1,897,817	17,159	534,153	-	329,040	(142,651)	(2,201,752)	433,766
Share subscriptions	-	-	(17,159)	-	-	-	-	-	(17,159)
Private placement shares issued	6,350,000	573,469	-	-	-	-	-	-	573,469
Fair value of derivative liability
on 3,175,000 Financing warrants	-	(408,033)	-	-	-	-	-	-	(408,033)
Financing issuance costs	-	(40,338)	-	-	-	-	-	-	(40,338)
Stock-based compensation (Note 10)	-	-	-	-	-	40,768	-	-	40,768
Cumulative translation adjustment	-	-	-	-	-	-	8,684	-	8,684
Net income for the period	-	-	-	-	-	-	-	(189,800)	(189,800)
Balance, June 30, 2014	58,802,638	$    2,022,915	$            -	$   534,153	$              -	$     369,808	$  (133,967)	$    (2,391,552)	$       401,357

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 109 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

1.

NATURE AND CONTINUANCE OF OPERATIONS

Snipp Interactive Inc. (the “Company” or “Snipp”) (formerly Alya Ventures Ltd.) was incorporated under the Business Corporations Act (British Columbia) on January 21, 2010 and was classified as a Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4. The principal business of the Company was to negotiate an acquisition or participation in a business subject to acceptance by regulatory authorities and, in certain cases, shareholder approval (the “Qualifying Transaction”).

On March 1, 2012, the Company completed its Qualifying Transaction (the “Transaction”) with Consumer Impulse, Inc. (“Consumer Impulse”) and a concurrent financing whereby the Company acquired all of the issued and outstanding securities of Consumer Impulse in exchange for the issuance of securities of the Company. For accounting purposes, this share exchange is treated as a reverse takeover with Consumer Impulse being the accounting acquirer and the go-forward financial statements reflect Consumer Impulse’s history from its inception on March 30, 2007 (Note 15). The fiscal year-end of the Company was changed to December 31 from March 31.

Consumer Impulse was incorporated under the laws of the State of Delaware on March 30, 2007 and its business is to provide a full suite of mobile marketing services in the US, Canada, Mexico and the Middle East. The business of Consumer Impulse has become the business of the Company. During the year ended December 31, 2013, Consumer Impulse changed its name to Snipp Interactive Inc.

Unless otherwise indicated in these consolidated financial statements, references to “$” are to U.S. dollars, and references to “C$” are to Canadian dollars.

These condensed interim consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business.

During the six months ended June 30, 2014, the Company recognized net loss of $189,800 and used cash of $346,352 in operating activities. During the six months ended June 30, 2014, the Company recognized net loss before interest income, foreign exchange, change in fair value of derivative liability, of $391,587.At June 30, 2014, the Company had working capital of $384,474 and a deficit of $2,391,552.  

The application of the going concern concept is dependent on the Company’s ability to receive continued financial support from its stakeholders and, ultimately, on the Company’s ability to generate profitable operations. Management is of the opinion that sufficient working capital is available from its financings and will be obtained from operations to meet the Company's liabilities and commitments as they come due for the next twelve months. These condensed interim consolidated financial statements do not reflect any adjustments or reclassifications of assets and liabilities which would be necessary if the Company were unable to continue as a going concern.

The registered address, head office, principal address and records office of the Company are located at 6708 Tulip Hill Terrace, Bethesda, Maryland, 20816.

The condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on August 29, 2014.

2.

SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

These condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). These condensed interim consolidated financial statements do not include all of the information required by International Financial Reporting Standards ("IFRS") for complete annual financial statements, and should be read in conjunction with the Company’s consolidated financial statements as at and for the year ended December 31, 2013 as filed on SEDAR at www.sedar.com.

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Basis of presentation

The condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Basis of consolidation

These condensed interim consolidated financial statements include the accounts of the Company and its wholly owned legal subsidiaries Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), which is incorporated in Delaware, USA and Snipp Canada Inc., which is incorporated in Canada. All material inter-company balances and transactions have been eliminated.  

Equipment

Equipment are recorded at cost and depreciated over their estimated useful lives as follows:

Office equipment	5 years	Straight-line
Computer equipment	5 years	Straight-line

Intangible assets

Software platform

Certain costs incurred in connection with the development of software to be used internally or for providing services to customers are capitalized once a project has progressed beyond a conceptual, preliminary stage to that of application development. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:

•

It is technically feasible to complete the software product so that it will be available for use;

•

Management intends to complete the software product and use or sell it;

•

There is an ability to use or sell the software product;

•

It can be demonstrated how the software product will generate probable future economic benefits;

•

Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

•

The expenditure attributable to the software product during its development can be reliably measured.

Costs that qualify for capitalization include both internal and external costs. These costs are amortized over their expected useful lives estimated at 5 years. Residual values are reviewed at the end of each reporting period and adjusted if appropriate.

Use of estimates

The preparation of these condensed interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and the reported expenses during the period. Actual results could differ from these estimates. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Use of estimates (cont’d…)

i)

The recoverability of accounts receivable that are included in the condensed interim consolidated statements of financial position based on historical collection of receivables.

ii)

The inputs used in accounting for share-based payments expense included in profit and loss calculated using the Black-Scholes option pricing model or the Binomial Tree option pricing model.

iii)

The carrying value of intangible assets (capitalized software development) that are included in the condensed interim consolidated statements of financial position are based on management assessments of the recoverable amount of the asset. As well, management estimates the capitalized costs that are directly attributable to the development of the intangible asset.

iv)

The estimates used in determining the fair value for the Derivative Liability, which is composed of valuations of both the Transaction warrants and Financing warrants, as defined and described in Note 10, utilizes estimates made by management in determining the appropriate input variables in the Black-Scholes valuation model as disclosed in Note 9.

Revenue recognition

The Company provides a full suite of mobile marketing services in the US, Canada, Mexico and the Middle East, and generates revenue by designing, constructing, implementing and managing these mobile marketing services for its customers. Revenue is recognized in the period in which the services are rendered to the customer and collection is reasonably assured.

Cash received in advance of services performed is recorded as deferred revenue.

Deferred taxes

Deferred taxes are recorded using the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs.  To the extent that the Company does not consider it more probable than not that a deferred tax asset will be recovered, it does not recognize the asset.

Foreign currencies

IFRS requires that the functional currency of each entity in the consolidated group be determined separately and that each entity’s financial results and position should be measured using the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian Dollar, the functional currency of the legal subsidiary, Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), is the U.S. Dollar and the functional currency of its subsidiary, Snipp Canada Inc., is the Canadian Dollar.   The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates (“IAS 21”).

The presentation currency of the Company’s condensed interim consolidated financial statements is the U.S. dollar (“$”). Under IFRS, when the Company translates the financial statements of entities from their functional currency to the presentation currency, assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the end of the reporting period. Share capital, warrants, equity reserves, other comprehensive income, and deficit are translated into U.S. dollars at historical exchange rates. Revenues and expenses are translated into U.S. dollars at the

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Foreign currencies (cont’d…)

average exchange rate for the period. Foreign exchange gains and losses on translation are included in other comprehensive income. Within each entity, transactions denominated in foreign currencies are translated into the functional currency using the exchange rate in effect at the dates of the transactions, and monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the end of the reporting period.   Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in profit or loss.

Financial instruments

Financial assets

The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing them in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in profit or loss.

Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for- sale. They are carried at fair value with changes in fair value recognized in other comprehensive income or loss. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognized in profit or loss.

Financial liabilities

The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing them in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.

Other financial liabilities: This category includes amounts due to related parties and accounts payables and accrued liabilities, all of which are recognized at amortized cost.

The Company has classified its cash and cash equivalents, marketable securities and derivative liability at fair value through profit or loss. The Company’s accounts receivable, and note receivable, are classified as loans and receivables. The Company’s due to related parties and accounts payable and accrued liabilities are classified as other financial liabilities.

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Financial instruments (cont’d…)

Financial liabilities (cont’d…)

Disclosures are also required on the inputs used in making fair value measurements, including their classification within a hierarchy that prioritizes their significance.  The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

See Note 14 for relevant disclosures.

Impairment

Financial assets

A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between the asset’s carrying value and its fair value. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Loss per share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company.  In calculating the diluted loss per share, the weighted average number of common shares outstanding assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. For the periods presented, this calculation proved to be anti-dilutive.

Share-based payments

The Company uses the fair value method whereby the Company recognizes compensation costs for the granting of all stock options and direct awards of stock based on their fair value over the period of vesting using the Black-Scholes option pricing model or the Binomial Tree option pricing model. Any consideration paid by the option holders to purchase shares is credited to capital stock.

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity settled share based payment transactions and measured at the fair value of goods or services received. If the fair value of the goods or services received cannot be estimated reliably, the share based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or the services.

Recent accounting pronouncements

IFRS 9 was issued in November 2009 and subsequently amended as part of an ongoing project to replace IAS 39 Financial instruments: Recognition and measurement. The standard requires the classification of financial assets into two measurement categories based on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. The two categories are those measured at fair value and those measured at amortized cost. The classification and measurement of financial liabilities is primarily unchanged from IAS 39. However, for financial liabilities measured at fair value, changes in the fair value attributable to changes in an entity’s “own credit risk” is now recognized in other comprehensive income instead of in profit or loss. This new standard will also impact disclosures provided under IFRS 7 Financial instruments: disclosures.

In November 2013, the IASB amended IFRS 9 for the significant changes to hedge accounting. In addition, an entity can now apply the “own credit requirement” in isolation without the need to change any other accounting for financial instruments. The mandatory effective date of January 1, 2015 has been removed to provide sufficient time for preparers of financial statements to make the transition to the new requirements. The effective date for IFRS 9 has not yet been determined. Early adoption is permitted and the standard is required to be applied retrospectively. Management does not expect there to be a significant impact for the Company upon implementation of the issued standard.

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

3.

CASH AND CASH EQUIVALENTS

	June 30, 2014	December 31, 2013
Cash on deposit	$        203,131	$         123,727
Cashable Guaranteed Investment Certificates	107,778	89,319
Total	$        310,909	$         213,046

As at June 30, 2014 the Company held C$115,000 in a Cashable Guaranteed Investment Certificate (GIC). The terms of the GIC are as follows:

Investment	Amount Invested	Interest Rate	Maturity Date
GIC #1	C$115,000	P-1.80%	January 29, 2015

4.

ECONOMIC DEPENDENCE AND SEGMENTED INFORMATION

Significant customers

As at June 30, 2014, four customers accounted for 56% of accounts receivable. As at December 31, 2013, five customers accounted for 77% of accounts receivable. Four customers accounted for 56% of revenue for the three months ended June 30, 2014. Sales from four of these customers during the three months ended June 30, 2014 amounted to $72,500, $60,000, $52,000 and $40,000, which represented 18%, 15%, 13% and 10% of total revenue respectively. Two customers accounted for 52% of revenue for the six months ended June 30, 2014. Sales from these two customers during the six months ended June 30, 2013 amounted to $268,700 and $127,000, which represented 35%, and 17% of total revenue respectively.

Five customers accounted for 75% of revenue for the three months ended June 30, 2013. Sales from five of these customers during the three months ended June 30, 2013 amounted to $44,000, $35,500, $27,889, $25,000 and $23,480, which represented 21%, 17%, 13%, 12% and 11% of total revenue respectively. Two customers accounted for 49% of revenue for the six months ended June 30, 2013. Sales from these two customers during the six months ended June 30, 2013 amounted to $149,126 and $39,000, which represented 39%, and 10% of total revenue respectively.  

Geographic information

The Company has one operating segment, which provides a full suite of mobile marketing services in Canada, United States and internationally (Middle East and Mexico).  No significant non-current assets are held outside of the United States.

For the Company’s geographically segmented revenue, the Company has allocated revenue based on the location of the customer, as follows:

	Three Months Ended June 30, 2014	Three Months Ended June 30, 2013	Six Months Ended June 30, 2014	Six Months Ended June 30, 2013
United States	$       391,884	$       150,700	$       705,167	$       310,151
International	21,474	55,519	57,273	55,519
Canada	-	977	-	15,857
Total	$       413,358	$       207,196	$       762,440	$       381,527

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

5.

MARKETABLE SECURITIES

During the year ended December 31, 2012, the Company advanced $50,255 (C$50,000) to an unrelated company by way of a non-convertible debenture that matured on September 20, 2012. This debenture was repaid to the Company with 12% annual interest and 2,000 common shares in the capital of the unrelated company. The 2,000 common shares are being held as marketable securities

6.

EQUIPMENT

June 30, 2014
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated depreciation	Depreciation during the year	Closing depreciation balance	Net book value
Office Equipment	$      7,597	$             -	$            -	$        7,597	$        2,726	$           762	$        3,488	$        4,109
Computer Equipment	16,875	3,390	-	20,265	5,548	1,845	7,393	12,872
	$    24,472	$     3,390	$            -	$      27,862	$        8,274	$        2,607	$      10,881	$      16,981

December 31, 2013
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated depreciation	Depreciation during the year	Closing depreciation balance	Net book value
Office Equipment	$      7,597	$             -	$            -	$        7,597	$        1,202	$        1,524	$        2,726	$        4,871
Computer Equipment	16,875	-	-	16,875	2,164	3,384	5,548	11,327
	$    24,472	$            -	$            -	$      24,472	$        3,366	$        4,908	$        8,274	$      16,198

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

7.

INTANGIBLE ASSETS

June 30, 2014
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated amortization	Amortization during the year	Closing amortization balance	Net book value
Software platform	$   269,605	$      77,052	$            -	$   346,657	$        56,726	$        31,011	$        87,737	$     258,920
	$   269,605	$      77,052	$            -	$   346,657	$        56,726	$        31,011	$        87,737	$     258,920

December 31, 2013
	Opening cost balance	Additions	Disposals	Closing cost balance	Opening accumulated amortization	Amortization during the year	Closing amortization balance	Net book value
Software platform	$   141,090	$    128,515	$            -	$   269,605	$        13,905	$        42,821	$        56,726	$     212,879
	$   141,090	$    128,515	$            -	$   269,605	$        13,905	$        42,821	$        56,726	$     212,879

8.

RELATED PARTY TRANSACTIONS

Related party transactions not disclosed elsewhere included in expenses for the three months ended June 30, 2014, and 2013 are salaries and compensation of $144,506 and $155,306, respectively, charged by officers and key management personnel of the Company. Related party transactions not disclosed elsewhere included in expenses for the six months ended June 30, 2014, and 2013 are salaries and compensation of $388,911 and $315,566, respectively, charged by officers and key management personnel of the Company.

At June 30, 2014, $120,508 (December 31, 2013 – $97,473) was due to a director, $65,295 (December 31, 2013 – $78,504) was due to an officer and director, $11,662 (December 31, 2013 – $11,965) was due to an officer, $14,273 (December 31, 2013 – $20,534) was due to an officer and $5,105 (December 31, 2013 - $0) was due to an officer. The amounts due to related parties represent unpaid salaries and compensation and unpaid expenses. The amounts are non-interest bearing, unsecured and have no specified terms of repayment.

The remuneration of officers and other members of key management personnel during the three and six months ended June 30, 2014, and 2013 are as follows:

	Three Months Ended June 30, 2014	Three Months Ended June 30, 2013	Six Months Ended June 30, 2014	Six Months Ended June 30, 2013
Salaries and compensation	$       144,506	$       155,306	$       388,911	$       315,566
Total	$       144,506	$       155,306	$       388,911	$       315,566

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

9.

DERIVATIVE LIABILITY

The derivative liability represents the Black-Scholes valuation of the Company’s warrants that are subject to currency fluctuation as the exercise price of the Company’s warrants is fixed in Canadian dollars and the functional currency of the Company is the U.S. dollar. This results in the warrants being considered a derivative as a variable amount of cash in the Company’s functional currency will be received on exercise. The fair value of this derivative liability fluctuates from period to period based on fluctuations in the share price, changing Black-Scholes inputs and changes in foreign exchange rates. These fair value changes are recognized through profit and loss. The derivative liability is a NON-CASH liability that is not associated with any form of debt or convertible instrument.

		Transaction warrants		Financing warrants		Total
Balance, December 31, 2011	$	-	$	-	$	-
Fair value of warrants issued		404,796		677,682		1,082,478
Change in fair value		216,902		(69,252)		147,650
Balance, December 31, 2012		621,698		608,430		1,230,128
Change in fair value		(199,902)		(596,559)		(796,461)
Allocation to equity on amended warrant terms		(421,796)		-		(421,796)
Fair value of warrants issued		-		49,206		49,206
Balance, December 31, 2013	$	-	$	61,077	$	61,077
Fair value of warrants issued		-		408,033		408,033
Change in fair value				(210,092)		(210,092)
Balance, June 30, 2014	$	-	$	259,018	$	259,018

On December 18, 2013, the Company received TSX Venture Exchange approval to change the exercise currency of the Transaction warrants from C$ to $ resulting in the elimination of the corresponding derivative liability associated with these Transaction warrants. The fair value of the Transaction warrants on the amendment date was reallocated to equity with the difference recognized through profit and loss.

The following assumptions were used for the Black-Scholes derivative liability valuation of the Financing warrants at June 30, 2014:

Financing warrants ⁽¹⁾

Financing warrants ⁽²⁾

Risk-free interest rate

1.09%

1.09%

Expected life of warrants

1.44 years

1.57 years

Annualized volatility

125%

125%

Dividend rate

0.00%

0.00%

⁽¹⁾ 1,200,000 financing warrants issued on December 6, 2013

⁽²⁾ 3,175,000 financing warrants issued on January 24, 2014

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SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

10.

CAPITAL STOCK

Authorized

Unlimited common shares, without par value

Unlimited preferred shares, without par value, issuable in series:

Unlimited Series 1 voting preferred shares, without par value, redeemable at C$0.0001 per share

Share issuances

Prior to the closing of the Transaction (the “Closing”), the Company had 10,550,000 common shares outstanding and Consumer Impulse had 1,998,020 common shares and 700,000 Series A preferred shares outstanding. On Closing the common and preferred shares of Consumer Impulse were eliminated and the Company’s 10,550,000 common shares were deemed to have been issued as part of the accounting for the Transaction.

On Closing the Company acquired all of the issued and outstanding Consumer Impulse shares in exchange for the issuance of the Company’s 22,742,305 common shares, 6,188,688 warrants and 37,499,997 Series 1 preferred shares. The 37,499,997 Series 1 preferred shares were immediately redeemed after Closing for an aggregate of $3,807. Pursuant to a finder’s fee agreement the Company also issued 400,000 shares on Closing. The 6,188,688 warrants can be exercised into 6,188,688 common shares at an exercise price of C$0.13 per common share for a period of five years from Closing. The initial fair value of these warrants was determined to be $404,796 (note 10) using a relative fair value method based on the estimated fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, expected volatility of 125%, risk-free interest rate of 1.12% and an expected life of 5 years. The remaining value of $410,173 remained as common shares issued.

As a condition to Closing, the Company completed a private placement (the “Financing”) of 13,333,333 units with a subscription price of C$0.15 per unit, for gross proceeds of $2,030,600 (C$2,000,000). Each unit consisted of one common share and one financing warrant entitling the holder to purchase one common share of the Company at an exercise price of C$0.22 per share within one year of Closing and an exercise price of C$0.27 per share within two years of Closing, with such financing warrant expiring two years after the Closing. The initial fair value of the 13,333,333 warrants that were issued pursuant to the Financing was determined to be $677,682 using a relative fair value method based on the estimated fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, expected volatility of 125%, risk-free interest rate of 1.12% and an expected life of 2 years. The remaining value of $1,029,976 was allocated to the 13,333,333 financing shares issued. In connection with the Financing, the Company paid to the Agent, a corporate finance fee of $20,306, $142,142 in commissions (7% of gross proceeds), and issued 1,333,333 broker warrants (10% of the securities sold in the Financing) valued at $112,357 using the Black-Scholes model. The broker warrants are exercisable on the same terms as the financing warrants. The Company also paid legal fees of $48,137 associated with the Financing included in financing issue costs.

On August 21, 2013, the Company completed a non-brokered private placement financing of 2,000,000 common shares at a price of C$0.10 per common share for gross proceeds of $192,520 (C$200,000).

On December 6, 2013, the Company completed its first tranche of a non-brokered private placement financing of 2,400,000 units with a subscription price of C$0.10 per unit, for gross proceeds of $225,216 (C$240,000). Each unit consisted of one common share and one half-share financing warrant entitling the holder of each whole warrant to purchase one common share of the Company at an exercise price of C$0.15 per share within two years of the date of distribution. The Company paid finder’s fees of $18,017 (C$19,200) for the first tranche.

On January 24, 2014, the Company completed its second tranche of a non-brokered private placement financing of 6,350,000 units with a subscription price of C$0.10 per unit, for gross proceeds of $573,469 (C$635,000). Each unit consisted of one common share and one half-share financing warrant entitling the holder of each whole warrant to purchase one common share of the Company at an exercise price of C$0.15 per share within two years of the date of distribution. The Company paid finder’s fees of $36,124 (C$40,000) and filing fees of $4,214 for the second tranche.

- 120 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

10.

CAPITAL STOCK (cont’d…)

Escrow shares

On March 20, 2010, the Company issued 4,500,000 common shares at a price of $0.05 per common share for total proceeds of $225,000. An additional 23,142,305 common shares were issued for the Transaction with Consumer Impulse. These common shares were held in escrow and are being released pro-rata to the shareholders as to 10% of the escrow shares upon issuance of notice of final acceptance of the Qualifying Transaction by the TSX Venture Exchange and as to the remainder in six equal tranches of 15% every six months thereafter for a period of 36 months. These escrow shares may not be transferred, assigned or otherwise dealt with without the consent of the regulatory authorities. On March 8, 2012, 2,764,231 shares were released from escrow, on September 5, 2012, 4,146,345 shares were released from escrow, on March 4, 2013, 4,146,845 shares were released from escrow, on September 5, 2013, 4,146,845 shares were released from escrow and on March 4, 2014, 4,145,345 shares were released from escrow. The balance of shares remaining in escrow is 8,292,694 as of June 30, 2014 (December 31, 2013 – 12,438,039).

Stock options

On December 12, 2013, disinterested shareholders approved and the Company adopted a new fixed number incentive stock option plan (the “2013 Option Plan”) which provides that a committee of the Board of Directors appointed in accordance with the 2013 Option Plan (the “Committee”) may from time to time, in its discretion, and in accordance with the TSX-V requirements, grant to directors, officers and consultants of the Company, non-transferable options to purchase common shares (“Options”), reserving 10,010,527 shares, being 20% of the Company’s issued and outstanding shares as at November 12, 2013. Such Options will be exercisable for a period of up to 10 years from the date of grant.  Vesting terms are determined at the time of grant by the Committee. As per the TSX-V, the 6,188,688 Transaction warrants that were issued on Closing of the Company’s Qualifying Transaction, have been treated akin to stock options and are included with the Company’s outstanding stock options for the purposes of being subject to the prescribed limit of the Company’s Option Plan. In fiscal 2013, the Company recognized stock based compensation expense of $229,890 corresponding to 2,310,000 fully vested stock options that were granted during the year ended December 31, 2013. The following assumptions were used for the Black-Scholes valuation of these options granted in fiscal 2013 (Risk-free interest rate: 1.40%/1.26%/1.55%; expected life of option: 5.0 years; annualized volatility: 125%; dividend rate: 0.00%). In fiscal 2012, the Company recognized stock based compensation expense of $99,150 corresponding to 1,927,175 stock options that were granted during the year ended December 31, 2012. Of the 1,927,175 options granted, 982,175 were fully vested and 945,000 vested over a three year period beginning from the grant date. The following assumptions were used for the Black-Scholes valuation of these options granted in fiscal 2012 (Risk-free interest rate: 1.15%/1.31%; expected life of option: 1.0/5.0 years; annualized volatility: 125%; dividend rate: 0.00%).

Stock option activity is presented below:

	Number of Options	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2012	2,349,175	0.16
Cancelled	(197,500)	0.18
Expired	(982,175)	0.15
Granted	2,310,000	0.11
Outstanding, December 31, 2013	3,479,500	0.13
Granted	300,000	0.11
Outstanding, June 30, 2014	3,779,500	0.13

- 121 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

10.

CAPITAL STOCK (cont’d…)

Stock options (cont’d…)

As at June 30, 2014, the following Options are outstanding and exercisable:

Number of Options Outstanding at June 30, 2014	Number of Options Exercisable at June 30, 2014	Exercise Price	Expiry Date
422,000	422,000	C$0.10	August 25, 2015
780,000	260,000	C$0.19	August 27, 2017
100,000	100,000	C$0.10	February 15, 2018
777,500	777,500	C$0.10	February 25, 2018
100,000	100,000	C$0.10	July 15, 2018
1,300,000	1,300,000	C$0.12	December 18, 2018
200,000	200,000	C$0.105	December 18, 2018
100,000	100,000	C$0.10	December 18, 2018
3,779,500	3,259,500

Broker Warrants

	Number of Shares	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2012 and December 31, 2013	1,333,333	0.25
Expired	(1,333,333)	0.25
Outstanding, June 30, 2014	–	–

Warrants

	Number of Shares	Weighted Average Exercise Price
Outstanding, December 31, 2012	19,522,021	C$0.21
Issued – Financing warrants	1,200,000	C$0.15
Outstanding, December 31, 2013	20,722,021	C$0.20
Issued – Financing warrants	3,175,000	C$0.15
Expired – Financing warrants	(13,333,333)	C$0.25
Outstanding, June 30, 2014	10,563,688	C$0.14

As at June 30, 2014 the following Warrants are outstanding:

Number of Common Shares Issuable	Weighted Average Exercise Price	Expiry Date
6,188,688	$0.13	March 1, 2017
1,200,000	C$0.15	December 6, 2015
3,175,000	C$0.15	January 24, 2016
10,563,688	C$0.14

- 122 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

10.

CAPITAL STOCK (cont’d…)

Warrants (cont’d…)

The following assumptions were used for the Black-Scholes valuation of the Warrants issued during the period ended June 30, 2014:

Risk-free interest rate

0.98%

Expected life of warrants

2.0 years

Annualized volatility

125%

Dividend rate

0.00%

The following assumptions were used for the Black-Scholes valuation of the Warrants issued during the year ended December 31, 2013:

Risk-free interest rate

1.10%

Expected life of warrants

2.0 years

Annualized volatility

125%

Dividend rate

0.00%

11.

STRATEGIC SALES PARTERNSHIP AGREEMENT

On May 30, 2012, the Company announced an agreement with VirKet S.A. de C.V. (“Virket”), a leading Mexican provider of digital marketing services, to establish an exclusive strategic partnership to offer mobile marketing services in Mexico. Under the strategic partnership arrangement, the Company licensed its “Mobilize Me” technology platform and provided mobile marketing services with VirKet in the Mexican market on an exclusive basis, and VirKet correspondingly used the Company as its exclusive provider of mobile marketing technology. The initial term of the arrangement was for one year with an option for VirKet to extend for a second year and a right-of-first refusal for an extended exclusive license beyond the initial two-year term, all subject to reaching certain business performance targets. The arrangement has not been extended beyond the initial term as business performance targets were not reached. The initial term expired on May 30, 2013. The Company had granted VirKet 3,333,333 warrants to purchase the Company’s common shares. These warrants have expired due to the initial term not being extended. The warrants were exercisable at a price of C$0.22 per share and vesting was subject to VirKet achieving certain agreed sales targets. The warrants also had a mandatory exercise clause if the Company’s stock price was equal to or greater than C$0.35 for ten continuous trading days, and any warrants so not exercised would immediately lapse. The Company had taken an approach of valuing the warrants using the binomial tree option pricing model taking into account the probability of the occurrence of the vesting condition and the mandatory exercise clause. The warrants were valued at $287,940 and the Company recognized the corresponding warrant expense over the first year of the agreement, of which $174,931 was recognized in 2012. The warrants expired before the vesting conditions related to certain performance targets were met, therefore the value of the warrants, previously recognized, was reversed by the Company in 2013.

Strategic Sales Partnership Warrants

	Number of Shares	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2011	–	–
Issued – Strategic sales partnership warrants	3,333,333	0.22
Outstanding, December 31, 2012	3,333,333	0.22
Expired	(3,333,333)	0.22
Outstanding, December 31, 2013 and June 30, 2014	–	–

- 123 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

12.

SUPPLEMENTAL DISCLOSURE REGARDING CASH FLOWS

	Six Months Ended June 30, 2014	Six Months Ended June 30, 2013
Cash paid during the period for interest	-	-
Cash paid during the period for income taxes	-	-
Transactions not involving cash:
FV of warrants issued as part of Transaction – derivative liability	-	387,313
FV of financing warrants – derivative liability	-	134,831
FV of financing warrants – derivative liability	26,509	-
FV of financing warrants – derivative liability	232,509	-

13.

FINANCIAL INSTRUMENTS

Fair value

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

The carrying value of accounts receivable, note receivable, HST receivable, due to related parties and accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments while cash and marketable securities are valued using a level 1 fair value measurement and the derivative liability is valued using a level 3 fair value measurement.

	June 30, 2014		December 31, 2013
	Carrying	Fair	Carrying	Fair
	Value	Value	Value	Value
Fair value through profit and loss – assets	$      311,040	$      311,040	$      213,178	$      213,178
Fair value through profit and loss – liabilities	(259,018)	(259,018)	(61,077)	(61,077)
Loans and receivables	504,851	504,851	350,965	350,965
Other financial liabilities	(444,494)	(444,494)	(323,664)	(323,664)
	$      112,379	$      112,379	$      179,402	$      179,402

- 124 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

13.

FINANCIAL INSTRUMENTS (cont’d…)

Financial risk factors

The Company’s risk exposures and the impact on the Company’s financial statements are summarized below.

Credit risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, note receivable and HST receivable. The Company places its cash with major financial institutions to limit risk from cash and cash equivalents. The maximum exposure to credit risk is equal to the fair value or carrying value of the related financial assets. The Company’s receivables consist of amounts due from customers, HST due from the Government of Canada, a note receivable and accrued interest due from an unrelated company.  Some customers send payment past normal trade terms and in cases where amounts become uncollectible the Company recognizes bad debt expense to write off the uncollectible amounts. At June 30, 2014, the Company had $212,118 (December 31, 2013 - $159,897) in amounts due from customers greater than 90 days and during fiscal 2013 recognized bad debt expense of $15,000 (fiscal 2012 - $12,000).

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company’s ability to continue as a going concern is dependent on the Company’s ability to receive continued financial support from its stakeholders and, ultimately, on the Company’s ability to generate continued profitable operations.  Management is of the opinion that sufficient working capital is available from its financings and will be obtained from operations to meet the Company's liabilities and commitments as they come due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates and commodity and equity prices. Such fluctuations may be significant.

a)

Interest rate risk

The Company is exposed to interest rate risk to the extent that the cash maintained at financial institutions is subject to a floating rate of interest. The interest rate risks on cash and on the Company’s obligations are not considered significant. A plus or minus 1% change in interest rates would affect profit or loss and comprehensive profit or loss by approximately $1,150.

b)

Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash and cash equivalents, accounts receivable, note receivable, HST receivable and accounts payable and accrued liabilities that are denominated in a foreign currency. As at June 30, 2014, the Company held material amounts of cash and cash equivalents in Canadian currency and considers foreign currency risk moderate. A plus or minus 1% change in foreign exchange rates would affect profit or loss and comprehensive profit or loss by approximately $734.

- 125 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

13.

FINANCIAL INSTRUMENTS (cont’d…)

c)

Foreign currency risk (cont’d…)

   The following table summarizes the Company’s exposure to the Canadian currency:

	June 30, 2014		December 31, 2013
Cash and cash equivalents	C$	127,145	C$	106,780
Accounts receivable		562		428
HST receivable		9,290		6,067
Accounts payable and accrued liabilities		(63,565)		(51,943)
Total	C$	73,432	C$	61,332

d)

Marketable securities price risk

The Company is exposed to marketable securities price risk to the extent that the marketable securities held by the Company are subject to volatile fluctuations in market price. The marketable securities price risk on marketable securities is considered significant. A plus or minus $0.10 change in share price would affect profit or loss and comprehensive profit or loss by approximately $200.

Further, the Company is exposed to fluctuations in the fair value of the derivative liability due to fluctuations in the market price of its own stock. Assuming that the other input variables of the Black-Scholes valuation model stay the same, a plus or minus 1% change in the market price of the Company’s stock would cause an increase in value of $3,757 and a decrease in value of $3,749.

14.

CAPITAL MANAGEMENT

The Company defines capital as all components of shareholders’ equity (deficiency). The Company has no debt obligations other than deferred revenue, due to related parties and accounts payable and accrued liabilities in the ordinary course of operations. The Board of Directors does not establish quantitative return on capital criteria for management due to the nature of the Company’s business. The Company does not pay dividends. The Company is not subject to any externally imposed capital requirements.

15.

QUALIFYING TRANSACTION

On March 1, 2012, the Company completed its Qualifying Transaction. The acquisition has been accounted for as a reverse takeover (“RTO”) whereby for accounting purposes Consumer Impulse is treated as the accounting parent company (legal subsidiary) and Snipp Interactive Inc. is treated as the accounting subsidiary (legal parent) in these consolidated financial statements. As Consumer Impulse is the deemed acquirer for accounting purposes, its assets, liabilities and operations since incorporation are included in these consolidated financial statements and the assets and liabilities of Snipp Interactive Inc. at March 1, 2012 and the results of its operations after March 1, 2012 are included in these consolidated financial statements.

- 126 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

15.

QUALIFYING TRANSACTION (cont’d…)

IFRS 2 applies to transactions where an entity grants equity instruments and cannot identify specifically some or all the goods or service received in return. Since the Company issued shares to Consumer Impulse with a value in excess of the assets received, IFRS 2 would indicate that the difference is recognized in comprehensive loss as a listing expense. The amount assigned to listing expense of $514,284 is the difference between the fair value of the consideration of $814,969 and the net identifiable assets of the accounting subsidiary of $304,492 acquired by the accounting parent and included in the consolidated statements of operations and comprehensive income (loss).

The fair value of the consideration is determined based on the percentage of ownership the legal parent’s shareholders have in the combined entity after the reverse takeover transaction. This represents the fair value of the shares that the accounting parent would have had to issue for the ratio of ownership interest in the combined entity to be the same, if the transaction had taken the legal form of Consumer Impulse acquiring 100% of the shares in Snipp Interactive Inc. The fair value of Snipp Interactive’s share capital before the reverse takeover was $2,030,600, which represents the $2,030,600 proceeds raised from the Financing. The percentage of ownership the legal parent’s shareholders had in the combined entity is 31.3% after the issue of 22,742,305 shares to Consumer Impulse shareholders and the issue of 400,000 finder’s fee shares.

The book value of the 6,188,688 warrants that were issued pursuant to the RTO was determined to be $404,796 using a relative fair value method based on the estimated fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, expected volatility of 125%, risk-free interest rate of 1.12% and an expected life of 5 years. The remaining value of the consideration less the relative fair value of the warrants, totalling $410,173, was allocated to the 23,142,305 shares common shares issued (22,742,305 Transaction shares and 400,000 finder’s fee shares).

The fair value of the consideration deemed to have been paid to Snipp Interactive Inc. was estimated as follows:

Estimated fair value of 22,742,305 shares, 400,000 finder’s fee shares and 6,188,688 warrants deemed issued by Consumer Impulse to Snipp Interactive Inc. (formerly Alya Ventures Ltd.)	$	814,969
Redemption value of 37,499,997 Series 1 preferred shares		3,807
Net assets of Snipp Interactive Inc. acquired (as indicated below)		(304,492)
Listing expense	$	514,284

The listing expense of $514,284 is a non-cash expense item that represents the excess fair value associated with the shares issued on Closing of the Qualifying Transaction over the fair value of the net assets acquired by the accounting acquirer (legal subsidiary). Prior to Closing the net asset value of the Company was $304,492 (C$299,904). As a condition to closing of the Transaction, the Company also completed a private placement financing for gross proceeds of $2,030,600 (C$2,000,000). (Note 11)

The fair value of the net assets of the Company prior to Closing was as follows:

Cash and cash equivalents	$	276,551
Receivables		31,220
Deposits		20,306
Accounts payable and accrued liabilities		(23,585)
	$	304,492

- 127 -

SNIPP INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars unless otherwise noted)

(Unaudited)

June 30, 2014

15.

QUALIFYING TRANSACTION (cont’d…)

The Company and Consumer Impulse structured the Transaction with the intention that it qualify as a “tax free reorganization” under §368(A)(1)(F) of the U.S. Tax Code, as a result of the Company being converted into a “domestic corporation” for the purposes of §368(a)(1)(F) of the U.S. Tax Code by virtue of the Consumer Impulse shareholders controlling 80% or more of the vote or value of the Company upon Closing. In order to qualify as a “tax free reorganization”, and as part of the Transaction, the Company issued to Consumer Impulse shareholders 37,499,997 Series 1 Preferred Shares so that such shareholders controlled at least 80% of the Company’s vote at Closing as defined under the U.S. Tax Code, and immediately following such time, the Company redeemed all of the Preferred Shares for $0.0001 per Preferred Share.

16.

SUBSEQUENT EVENTS

On July 15, 2014, the Company announced the closing of an oversubscribed non-brokered private placement financing (the “Financing”) with insider participation. The Financing was comprised of 10.4 million units (“Units”) at a price of Cdn.$0.15 per Unit for gross proceeds of Cdn.$1,560,000. Each Unit consists of one common share (“Share”) and one share purchase warrant (“Warrant”), with each Warrant entitling the holder to purchase one Share at an exercise price of Usd.$0.20 for a period of three years from the date of distribution. The Company paid finder's fees of $118,800 in cash and issued 792,000 finder’s options (“Finder’s Options”) in connection with this Financing. Each Finder’s Option entitles the holder to purchase one Unit (“Finder’s Unit”) at an exercise price of Cdn.$0.15 for a period of three years from the date of distribution. Each Finder’s Unit will consist of one Share and one Warrant, with each Warrant entitling the holder to purchase one Share at an exercise price of Usd.$0.20 for a period of three years from the date of distribution. The Shares issued in the Financing and the Shares to be issued pursuant to the exercise of the Warrants are all subject to a hold period expiring on November 15, 2014.

- 128 -

Signature Page

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Snipp Interactive Inc.

Registrant

Dated: October 17, 2014	Signed:  /s/ “Atul Sabharwal”
	Atul Sabharwal President and CEO

- 129 -

EX-1.1

	Number: BC0871921
BRITISH COLUMBIA The Best Place on Earth

CERTIFICATE

OF

INCORPORATION

BUSINESS CORPORATIONS ACT

I Hereby Certify that ALYA VENTURES LTD. was incorporated under the Business Corporations Act on January 21, 2010 at 08:36 PM Pacific Time.

	Issued under my hand at Victoria, British Columbia On January 21, 2010
	RON TOWNSHEND Registrar of Companies Province of British Columbia Canada

EX-1.2

	Number: BC0871921
BRITISH COLUMBIA The Best Place on Earth

CERTIFICATE

OF

CHANGE OF NAME

BUSINESS CORPORATIONS ACT

I Hereby Certify that ALYA VENTURES LTD. changed its name to SNIPP INTERACTIVE INC. on March 1, 2012 at 10:01 AM Pacific Time.

•	Issued under my hand at Victoria, British Columbia On March 1, 2012
	RON TOWNSHEND Registrar of Companies Province of British Columbia Canada

EX-1.3

BRITISH
COLUMBIA The Best Place on Earth BC Registry Services Mailing Address: PO BOX 9431 Stn Prov Govt. Victoria BC V8W 9V3 www.corporateonline.gov.bc.ca Location: 2nd Floor - 940 Blanshard St. Victoria BC 250 356-8626

CERTIFIED COPY

Of a Document filed with the Province of

British Columbia Registrar of Companies

Notice of Articles
BUSINESS CORPORATIONS ACT	RON TOWNSHEND March 5, 2012

This Notice of Articles was issued by the Registrar on: March 5, 2012 03:10 PM Pacific Time

Incorporation Number:

      BC0871921

Recognition Date and Time: Incorporated on January 21, 2010 08:36 PM Pacific Time

Name of Company:

SNIPP INTERACTIVE INC.

REGISTERED OFFICE INFORMATION

Mailing Address:

Delivery Address:

SUITE 1700, PARK PLACE

SUITE 1700, PARK PLACE

666 BURRARD STREET

666 BURRARD STREET

VANCOUVER BC V6C 2X8

VANCOUVER BC V6C 2X8

CANADA

CANADA

RECORDS OFFICE INFORMATION

Mailing Address:

Delivery Address:

SUITE 1700, PARK PLACE

SUITE 1700, PARK PLACE

666 BURRARD STREET

666 BURRARD STREET

VANCOUVER BC V6C 2X8

VANCOUVER BC V6C 2X8

CANADA

CANADA

DIRECTOR INFORMATION

Last Name, First Name, Middle Name:

Cousins, Bruce

Mailing Address:

Delivery Address:

888-700 W. GEORGIA ST.

888 – 700 W. GEORGIA ST.

VANCOUVER BC V7Y 1G5

VANCOUVER BC V7Y 1G5

CANADA

CANADA

Last Name, First Name, Middle Name:

Bhavnani, Ritesh

Mailing Address:

Delivery Address:

6708 TULIP HILL TERRACE

6708 TULIP HILL TERRACE

BETHESDA MD 20816

BETHESDA MD 20816

UNITED STATES

UNITED STATES

Last Name, First Name, Middle Name:

Swanson, Conrad

Mailing Address:

Delivery Address:

888-700 W. GEORGIA ST.

888 – 700 W. GEORGIA ST.

VANCOUVER BC V7Y 1G5

VANCOUVER BC V7Y 1G5

CANADA

CANADA

Last Name, First Name, Middle Name:

Sabharwal, Atul

Mailing Address:

Delivery Address:

6708 TULIP HILL TERRACE

6708 TULIP HILL TERRACE

BETHESDA MD 20816

BETHESDA MD 20816

UNITED STATES

UNITED STATES

RESOLUTION DATES:

Date(s) of Resolution(s) or Court Order(s) attaching or altering Special Rights and Restrictions attached to a class or a series of shares:

February 24, 2012

AUTHORIZED SHARE STRUCTURE
	1.	No Maximum	Common Shares	Without Par Value
				With Special Rights or Restrictions attached

ARTICLES

1.	Interpretation		1
	1.1	Definitions	1
	1.2	Business Corporations Act and Interpretation Act Definitions Applicable	1
2.	Shares and Share Certificates		1
	2.1	Authorized Share Structure	1
	2.2	Form of Share Certificate	1
	2.3	Shareholder Entitled to Certificate or Acknowledgement	1
	2.4	Delivery by Mail	2
	2.5	Replacement of Worn out or Defaced  Certificate or Acknowledgement	2
	2.6	Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgement	2
	2.7	Splitting Share Certificates	2
	2.8	Certificate Fee	2
	2.9	Recognition of Trusts	2
3.	Issue of Shares		3
	3.1	Directors Authorized	3
	3.2	Commissions and Discounts	3
	3.3	Brokerage	3
	3.4	Conditions of Issue	3
	3.5	Share Purchase Warrants and Rights	3
4.	Share Registers		4
	4.1	Central Securities Register	4
	4.2	Closing Register	4
5.	Share Transfers		4
	5.1	Registering Transfers	4
	5.2	Form of Instrument of Transfer	4
	5.3	Transferor Remains Shareholder	4
	5.4	Signing of Instrument of Transfer	4
	5.5	Enquiry as to Title Not Required	5
	5.6	Transfer Fee	5
	5.7	Definitions	5
	5.8	Consent Required for Transfer of Shares or Designated Securities	5
6.	Transmission of Shares
	6.1	Legal Personal Representative Recognized on Death	6
	6.2	Rights of Legal Personal Representative	6
7.	Acquisition of Shares		6
	7.1	Company Authorized to Acquire Shares	6
	7.2	Acquisition When Insolvent	6
	7.3	Sale and Voting of Acquired Shares	6
8.	Borrowing Powers		6
9.	Alterations		7
	9.1	Alteration of Authorized Share Structure	7
	9.2	Special Rights and Restrictions	7
	9.3	Change of Name	7
	9.4	Other Alterations	8
10.	Meetings of Shareholders		8
	10.1	Annual General Meetings	8
	10.2	Location of Meetings of Shareholders	8
	10.3	Resolution Instead of Annual General Meeting	8
	10.4	Calling of Meetings of Shareholders	8
	10.5	Notice of Meetings of Shareholders	8
	10.6	Record Date for Notice	8
	10.7	Record Date for Voting	9
	10.8	Failure to Give Notice and Waiver of Notice	9
	10.9	Notice of Special Business at Meetings of Shareholders	9
11.	Proceedings at Meetings of Shareholders		9
	11.1	Special Business	9
	11.2	Special Majority	10
	11.3	Quorum	10
	11.4	One Shareholder May Constitute Quorum	10
	11.5	Other Persons May Attend	10
	11.6	Requirement of Quorum	10
	11.7	Lack of Quorum	10
	11.8	Lack of Quorum at Succeeding Meeting	11
	11.9	Chair	11
	11.10	Selection of Alternate Chair	11
	11.11	Adjournments	11
	11.12	Notice of Adjourned Meeting	11
	11.13	Decision of Show of Hands or Poll	11
	11.14	Declaration of Result	11
	11.15	Motion Need Not be Seconded	12
	11.16	Casting Vote	12
	11.17	Manner of Taking Poll	12
	11.18	Demand for Poll on Adjournment	12
	11.19	Chair Must Resolve Dispute	12
	11.20	Casting of Votes	12
	11.21	Demand for Poll	12
	11.22	Demand for Poll Not to Prevent Continuance of Meeting	12
	11.23	Retention of Ballots and Proxies	12
12.	Votes of Shareholders		13
	12.1	Number of Votes by Shareholder or by Shares	13
	12.2	Votes of Persons in Representative Capacity	13
	12.3	Votes by Joint Holders	13
	12.4	Legal Personal Representatives as Joint Shareholders	13
	12.5	Representative of a Corporate Shareholder	13
	12.6	Proxy Provisions Do Not Apply to All Companies	14
	12.7	Appointment of Proxy Holders	14
	12.8	Alternate Proxy Holders	14
	12.9	When Proxy Holder Need Not Be Shareholder	14
	12.10	Deposit of Proxy	14
	12.11	Validity of Proxy Vote	15
	12.12	Form of Proxy	15
	12.13	Revocation of Proxy	15
	12.14	Revocation of Proxy Must be Signed	16
	12.15	Production of Evidence of Authority to Vote	16
13.	Directors		16
	13.1	First Directors, Number of Directors	16
	13.2	Change in Numbers of Directors	16
	13.3	Directors’ Acts Valid Despite Vacancy	16
	13.4	Qualifications of Directors	17
	13.5	Remuneration of Directors	17
	13.6	Reimbursement of Expenses of Directors	17
	13.7	Special Remuneration for Directors	17
	13.8	Gratuity, Pension or Allowance on Retirement of Director	17
14.	Election and Removal of Directors		17
	14.1	Election at Annual General Meeting	17
	14.2	Consent to be a Director	17
	14.3	Failure to Elect or Appoint Directors	18
	14.4	Places of Retiring Directors Not Filled	18
	14.5	Directors May Fill Casual Vacancies	18
	14.6	Remaining Directors’ Power to Act	18
	14.7	Shareholders May Fill Vacancies	18
	14.8	Additional Directors	19
	14.9	Ceasing to be a Director	19
	14.10	Removal of Director by Shareholders	19
	14.11	Removal of Director by Directors	19
15.	Alternate Directors		19
	15.1	Appointment of Alternate Director	19
	15.2	Notice of Meetings	20
	15.3	Alternate for More Than One Director Attending Meetings	20
	15.4	Consent Resolutions	20
	15.5	Alternate Director Not an Agent	20
	15.6	Revocation of Appointment of Alternate Director	20
	15.7	Ceasing to be an Alternate Director	20
	15.8	Remuneration and Expenses of Alternate Director	20
16.	Powers and Duties of Directors		21
	16.1	Powers of Management	21
	16.2	Appointment of Attorney of Company	21
	16.3	Setting Remuneration of the Auditor	21
17.	Disclosure of Interest of Directors		21
	17.1	Obligation to Account for Profits	21
	17.2	Restrictions on Voting by Reason of Interest	21
	17.3	Interested Director Counted in Quorum	21
	17.4	Disclosure of Conflict of Interest or Property	22
	17.5	Director Holding Other Office in the Company	22
	17.6	No Disqualification	22
	17.7	Professional Services by Director or Officer	22
	17.8	Director or Officer in Other Corporation	22
18.	Procedures of Directors		22
	18.1	Meetings of Directors	22
	18.2	Voting at Meetings	22
	18.3	Chair of Meetings	23
	18.4	Meetings by Telephone or Other Communications Medium	23
	18.5	Calling of Meetings	23
	18.6	Notice of Meetings	23
	18.7	When Notice Not Required	23
	18.8	Meeting Valid Despite Failure to Give Notice	23
	18.9	Waiver of Notice of Meetings	24
	18.10	Quorum	24
	18.11	Validity of Acts Where Appointment Defective	24
	18.12	Consent Resolutions in Writing	24
19.	Executive and Other Committees		24
	19.1	Appointment and Powers of Executive Committee	24
	19.2	Appointment and Powers of Other Committees	25
	19.3	Obligations of Committees	25
	19.4	Powers of Board	25
	19.5	Committee Meetings	25
20.	Officers		26
	20.1	Directors May Appoint Officers	26
	20.2	Functions, Duties and Powers and Officers	26
	20.3	Qualifications	26
	20.4	Remuneration and Terms of Appointment	26
21.	Indemnification		26
	21.1	Definitions	26
	21.2	Mandatory Indemnification of Directors and Former Directors	27
	21.3	Indemnification of Other Persons	27
	21.4	Non-Compliance with Business Corporations Act	27
	21.5	Company May Purchase Insurance	27
22.	Dividends		27
	22.1	Payment of Dividends Subject to Special Rights	27
	22.2	Declaration of Dividends	27
	22.3	No Notice Required	27
	22.4	Record Date	28
	22.5	Manner of Paying Dividend	28
	22.6	Settlement of Difficulties	28
	22.7	Where Dividend Payable	28
	22.8	Dividends to be Paid in Accordance with Number of Shares	28
	22.9	Receipt by Joint Shareholders	28
	22.10	Dividend Bears No Interest	28
	22.11	Fractional Dividends	28
	22.12	Payment of Dividends	28
	22.13	Capitalization of Surplus	29
23.	Documents, Records and Reports		29
	23.1	Recording of Financial Afairs	29
	23.2	Inspection of Accounting Records	29
24.	Notices		29
	24.1	Method of Giving Notice	29
	24.2	Deemed Receipt of Mailing	29
	24.3	Certificate of Sending	30
	24.4	Notice to Joint Shareholders	30
	24.5	Notice to Trustees	30
25.	Seal		30
	25.1	Who May Attest Seal	30
	25.2	Sealing Copies	31
	25.3	Mechanical Reproduction of Seal	31
26.	SPECIAL RIGHTS AND RESTRICTIONS		31
	26.1	Special Rights and Restrictions Attaching to Common Shares	31
	26.2	Special Rights and Restrictions Attaching to Preferred Shares	32

1.

INTERPRETATION

1.1

Definitions

In these Articles, unless the context otherwise requires:

(a)

"board of directors", "directors" and "board" mean the directors or sole director of the Company for the time being;

(b)

"Business Corporations Act" means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(c)

"Interpretation Act" means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(d)

"legal personal representative" means the personal or other legal representative of the shareholder;

(e)

"registered address" of a shareholder means the shareholder's address as recorded in the central securities register; and

(f)

"seal" means the seal of the Company, if any.

1.2

Business Corporations Act and Interpretation Act Definitions Applicable

The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

2.

SHARES AND SHARE CERTIFICATES

2.1

Authorized Share Structure

The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.

2.2

Form of Share Certificate

Each share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act.

2.3

Shareholder Entitled to Certificate or Acknowledgment

Each shareholder is entitled, without charge, to:

(a)

one share certificate representing the shares of each class or series of shares registered in the shareholder's name; or

(b)

a non-transferable written acknowledgment of the shareholder's right to obtain such a share certificate;

provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate and delivery of a share certificate for a share to one of several joint shareholders or to one of the shareholders' duly authorized agents will be sufficient delivery to all.

2.4

Delivery by Mail

Any share certificate or non-transferable written acknowledgment of a shareholder's right to obtain a share certificate may be sent to the shareholder by mail at the shareholder's registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

2.5

Replacement of Worn Out or Defaced Certificate or Acknowledgement

If the directors are satisfied that a share certificate or a non-transferable written acknowledgment of the shareholder's right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as they think fit:

(a)

order the share certificate or acknowledgment, as the case may be, to be cancelled; and

(b)

issue a replacement share certificate or acknowledgment, as the case may be.

2.6

Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment

If a share certificate or a non-transferable written acknowledgment of a shareholder's right to obtain a share certificate is lost, stolen or destroyed, a replacement share certificate or acknowledgment, as the case may be, must be issued to the person entitled to that share certificate or acknowledgment, as the case may be, if the directors receive:

(a)

proof satisfactory to them that the share certificate or acknowledgment is lost, stolen or destroyed; and

(b)

any indemnity the directors consider adequate.

2.7

Splitting Share Certificates

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder's name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

2.8

Certificate Fee

There must be paid to the Company, in relation to the issue of any share certificate under Articles 2.5, 2.6 or 2.7, the amount if any, determined by the directors, which must not exceed the amount prescribed under the Business Corporations Act.

2.9

Recognition of Trusts

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

3.

ISSUE OF SHARES

3.1

Directors Authorized

Subject to the Business Corporations Act and the rights of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

3.2

Commissions and Discounts

The Company may at any time, pay a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

3.3

Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

3.4

Conditions of Issue

Except as provided for by the Business Corporations Act, no share may be issued until it is fully paid. A share is fully paid when:

(a)

consideration is provided to the Company for the issue of the share by one or more of the following:

(i)

past services performed for the Company;

(ii)

property;

(iii)

money; and

(b)

the value of the consideration received by the Company equals or exceeds the issue price set for the share under Article 3.1.

3.5

Share Purchase Warrants and Rights

Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

4.

SHARE REGISTERS

4.1

Central Securities Register

As required by and subject to the Business Corporations Act, the Company must maintain in British Columbia a central securities register. The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

4.2

Closing Register

The Company must not at any time close its central securities register.

5.

SHARE TRANSFERS

5.1

Registering Transfers

A transfer of a share of the Company must not be registered unless:

(a)

a duly signed instrument of transfer in respect of the share has been received by the Company;

(b)

if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate has been surrendered to the Company or if such certificate has been lost, stolen or destroyed, the documents required under Article 2.6 have been provided to the Company; and

(c)

if a non-transferable written acknowledgment of the shareholder's right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgment has been surrendered to the Company or if such acknowledgement has been lost, stolen or destroyed, the documents required under Article 2.6 have been provided to the Company.

5.2

Form of Instrument of Transfer

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company's share certificates or in any other form that may be approved by the directors from time to time.

5.3

Transferor Remains Shareholder

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

5.4

Signing of Instrument of Transfer

If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

(a)

in the name of the person named as transferee in that instrument of transfer; or

(b)

if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

5.5

Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

5.6

Transfer Fee

There must be paid to the Company, in relation to the registration of any transfer, the amount, if any, determined by the directors.

5.7

Definitions

In this Article 5:

(a)

"designated security" means:

(i)

a voting security of the Company;

(ii)

a security of the Company that is not a debt security and that carries a residual right to participate in the earnings of the Company or, on the liquidation or winding up of the Company, in its assets; or

(iii)

a security of the Company convertible, directly or indirectly, into a security described in paragraph 5.7(a)(i) and 5 .7(a)(ii);

(b)

"security" has the meaning assigned in the Securities Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(c)

"voting security" means a security of the Company that:

(i)

is not a debt security, and

(ii)

carries a voting right either under all circumstances or under some circumstances that have occurred and are continuing.

5.8

Consent Required for Transfer of Shares or Designated Securities

Notwithstanding any other provision of these Articles, while the Company is, or becomes, a company which is not a reporting issuer as defined in the Securities Act (British Columbia), no share or designated security may be sold, transferred or otherwise disposed of without the consent of the directors and the directors are not required to give any reason for refusing to consent to any such sale, transfer or other disposition.

6.

TRANSMISSION OF SHARES

6.1

Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder's interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

6.2

Rights of Legal Personal Representative

The legal personal representative has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

7.

ACQUISITION OF SHARES

7.1

Company Authorized to Acquire Shares

Subject to Article 7.2, the special rights and restrictions attached to the shares of any class or series and the Business Corporations Act, the Company may, if authorized by a resolution of the directors, purchase, redeem or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

7.2

Acquisition When Insolvent

The Company must not make a payment or provide any other consideration to purchase, redeem or otherwise acquire any of its shares if there are reasonable grounds for believing that:

(a)

the Company is insolvent; or

(b)

making the payment or providing the consideration would render the Company insolvent.

7.3

Sale and Voting of Acquired Shares

If the Company retains a share purchased, redeemed, or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

(a)

is not entitled to vote the share at a meeting of its shareholders;

(b)

must not pay a dividend in respect of the share; and

(c)

must not make any other distribution in respect of the share.

8.

BORROWING POWERS

The Company, if authorized by the directors, may:

(a)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(b)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

(c)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

(d)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

9.

ALTERATIONS

9.1

Alteration of Authorized Share Structure

Subject to Article 9.2 and the Business Corporations Act, the Company may by special resolution:

(a)

create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

(b)

increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;

(c)

subdivide or consolidate all or any of its unissued, or fully paid issued, shares;

(d)

if the Company is authorized to issue shares of a class of shares with par value:

(i)

decrease the par value of those shares; or

(ii0

if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

(e)

change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;

(f)

alter the identifying name of any of its shares; or

(g)

otherwise alter its shares or authorized share structure when required or permitted to do so by the Business Corporations Act.

9.2

Special Rights and Restrictions

Subject to the Business Corporations Act, the Company may by special resolution:

(a)

create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or

(b)

vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

9.3

Change of Name

The Company may by directors' resolution or by ordinary resolution, in each case as determined by the directors, authorize an alteration of its Notice of Articles in order to change its name and may, by directors' resolution or ordinary resolution, in each case as determined by the directors, adopt or change any translation of that name.

9.4

Other Alterations

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by special resolution alter these Articles.

10.

MEETINGS OF SHAREHOLDERS

10.1

Annual General Meetings

Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

10.2

Location of Meetings of Shareholders

The directors may, by directors' resolution, approve a location outside British Columbia for the holding of a meeting of shareholders of the Company.

10.3

Resolution Instead of Annual General Meeting

If all the shareholders who are entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.3, select as the Company's annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

10.4

Calling of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders.

10.5

Notice of Meetings of Shareholders

The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

(a)

while the Company is, or becomes, a public company, 21 days;

(b)

otherwise, 10 days.

10.6

Record Date for Notice

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

(a)

while the Company is, or becomes, a public company, 21 days;

(b)

otherwise, 10 days.

If no record date is set, the record date is 5 p.m. Pacific Standard Time on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.7

Record Date for Voting

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. If no record date is set, the record date is 5 p.m. Pacific Standard Time on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.8

Failure to Give Notice and Waiver of Notice

The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

10.9

Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

(a)

state the general nature of the special business; and

(b)

if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

(i)

at the Company's records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and

(ii)

during statutory business hours on any one or more specified days before the day set for the holding of the meeting.

11.

PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

11.1

Special Business

At a meeting of shareholders, the following business is special business:

(a)

at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(b)

at an annual general meeting, all business is special business except for the following:

(i)

business relating to the conduct of or voting at the meeting;

(ii)

consideration of any financial statements of the Company presented to the meeting;

(iii)

consideration of any reports of the directors or auditor;

(iv)

the setting or changing of the number of directors;

(v)

the election or appointment of directors;

(vi)

the appointment of an auditor;

(vii)

the setting of the remuneration of an auditor;

(viii)

business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution; and

(ix)

any other business which, under these Articles or the Business Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

11.2

Special Majority

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

11.3

Quorum

Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5%of the issued shares of the Company entitled to be voted at the meeting.

11.4

One Shareholder May Constitute Quorum

If the Company has only one shareholder:

(a)

the quorum is one person who is, or who represents by proxy, that shareholder, and

(b)

that shareholder, present in person or by proxy, may constitute the meeting.

11.5

Other Persons May Attend

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

11.6

Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present in person or by proxy at the commencement of the meeting, but such quorum need not be present throughout the meeting.

11.7

Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(a)

in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

(b)

in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

11.8

Lack of Quorum at Succeeding Meeting

If, at the meeting to which the meeting referred to in Article 11.7(b) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

11.9

Chair

The following individual is entitled to preside as chair at a meeting of shareholders:

(a)

the chair of the board, if any; or

(b)

if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any.

11.10

Selection of Alternate Chair

If, at any meeting of shareholders, there is no chair of the board or president present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present must choose one of their number to be chair of the meeting or if all the directors present decline to take the chair or fail to so choose or if no director is present, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

11.11

Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.12

Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.13

Decisions by Show of Hands or Poll

Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.14

Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

11.15

Motion Need Not be Seconded

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

11.16

Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.17

Manner of Taking Poll

Subject to Article 11.8, if a poll is duly demanded at a meeting of shareholders:

(a)

the poll must be taken:

(i)

at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

(ii)

in the manner, at the time and at the place that the chair of the meeting directs;

(b)

the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

(c)

the demand for the poll may be withdrawn by the person who demanded it.

11.18

Demand for Poll on Adjournment

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.19

Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is final and conclusive.

11.20

Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.21

Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.22

Demand for Poll Not to Prevent Continuance of Meeting

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

11.23

Retention of Ballots and Proxies

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

12.

VOTES OF SHAREHOLDERS

12.1

Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

(a)

on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

(b)

on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

12.2

Votes of Persons in Representative Capacity

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

12.3

Votes by Joint Holders

f there are joint shareholders registered in respect of any share:

(a)

any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

(b)

if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

12.4

Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders.

12.5

Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

(a)

for that purpose, the instrument appointing a representative must:

(i)

be received at the registered office of the Company or at any other place specified in the notice calling the meeting for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(ii)

be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting; and

(b)

if a representative is appointed under this Article 12.5:

(i)

the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

(ii)

the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.6

Proxy Provisions Do Not Apply to All Companies

Articles 12.7 to 12.15 do not apply to the Company if and for so long as it is:

(a)

a public company; or

(b)

a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply.

12.7

Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more (but not more than five) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

12.8

Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

12.9

When Proxy Holder Need Not Be Shareholder

A person must not be appointed as a proxy holder unless the person is a shareholder, although a person who is not a shareholder may be appointed as a proxy holder if:

(a)

the person appointing the proxy holder is a corporation or a representative of a corporation appointed under Article 12.5;

(b)

the Company has at the time of the meeting for which the proxy holder is to be appointed only one shareholder entitled to vote at the meeting; or

(c)

the shareholders present in person or by proxy at and entitled to vote at the meeting for which the proxy holder is to be appointed, by a resolution on which the proxy holder is not entitled to vote but in respect of which the proxy holder is to be counted in the quorum, permit the proxy holder to attend and vote at the meeting.

12.10

Deposit of Proxy

A proxy for a meeting of shareholders must:

(a)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(b)

unless the notice provides otherwise, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting.

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.11

Validity of Proxy Vote

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

(a)

at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(b)

by the chair of the meeting, before the vote is taken.

12.12

Form of Proxy

A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

(NAME OF COMPANY)
(the "Company")

The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if

given in respect of all shares registered in the name of the shareholder): ____________________

_______________________________

Signed [month, day, year]

______________________________

[Signature of shareholder]

_______________________________

[Name of shareholder—printed]

12.13

Revocation of Proxy

Subject to Article 12.14, every proxy may be revoked by an instrument in writing that is:

(a)

received at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(b)

provided, at the meeting, to the chair of the meeting.

12.14

Revocation of Proxy Must Be Signed

An instrument referred to in Article 12.13 must be signed as follows:

(a)

if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or his or her legal personal representative or trustee in bankruptcy;

(b)

if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under Article 12.5.

12.15

Production of Evidence of Authority to Vote

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

13.

DIRECTORS

13.1

First Directors; Number of Directors

The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Business Corporations Act. The number of directors, excluding additional directors appointed under Article 14.8, is set at:

(a)

subject to paragraphs 13.1(b) and (c), the number of directors that is equal to the number of the Company's first directors;

(b)

if the Company is, or becomes, a public company, the greater of three and the most recent set of:

(i)

the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given); and

(ii)

the number of directors set under Article 14.4.

(c)

if the Company is, or becomes, a company which is not a public company the most recent set of:

(i)

the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given); and

(ii)

the number of directors set under Article 14.4.

13.2

Change in Number of Directors

If the number of directors is set under Article 13.1(b)(i) or 13.1(c)(i):

(a)

the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors up to that number;

(b)

if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of directors up to that number contemporaneously with the setting of that number, then the directors may appoint, or the shareholders may elect or appoint, directors to fill those vacancies.

13.3

Directors' Acts Valid Despite Vacancy

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

13.4

Qualifications of Di rectors

A director is not required to hold a share of the Company as qualification for his or her office but must be qualified as required by the Business Corporations Act to become, act or continue to act as a director.

13.5

Remuneration of Directors

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director.

13.6

Reimbursement of Expenses of Directors

The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.

13.7

Special Remuneration for Directors

If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company's business, he or she may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that he or she may be entitled to receive.

13.8

Gratuity, Pension or Allowance on Retirement of Director

Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

14.

ELECTION AND REMOVAL OF DIRECTORS

14.1

Election at Annual General Meeting

At every annual general meeting and in every unanimous resolution contemplated by Article 10.3:

(a)

the shareholders entitled to vote at the annual general meeting for the election of directors must elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and

(b)

all the directors cease to hold office immediately before the election or appointment of directors under paragraph I4.1(a), but are eligible for re-election or re-appointment.

14.2

Consent to be a Director

No election, appointment or designation of an individual as a director is valid unless:

(a)

that individual consents to be a director in the manner provided for in the Business Corporations Act;

(b)

that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or

(c)

with respect to first directors, the designation is otherwise valid under the Business Corporations Act.

14.3

Failure to Elect or Appoint Directors

If:

(a)

the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by Article 10.3, on or before the date by which the annual general meeting is required to be held under the Business Corporations Act; or

(b)

the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by Article 10.3, to elect or appoint any directors;

then each director then in office continues to hold office until the earlier of:

(a)

the date on which his or her successor is elected or appointed; and

(b)

the date on which he or she otherwise ceases to hold office under the Business Corporations Act or these Articles.

14.4

Places of Retiring Directors Not Filled

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

14.5

Directors May Fill Casual Vacancies

Any casual vacancy occurring in the board of directors may be filled by the directors.

14.6

Remaining Directors' Power to Act

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business Corporations Act, for any other purpose.

14.7

Shareholders May Fill Vacancies

If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

14.8

Additional Directors

Notwithstanding Articles 13.1 and 13.2, between annual general meetings or unanimous resolutions contemplated by Article 10.3, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.8 must not at any time exceed:

(a)

one-third of the number of first directors, if, at the time of the appointments, one or more of the first directors have not yet completed their first term of office; or

(b)

in any other case, one-third of the number of the current directors who were elected or appointed as directors other than under this Article 14.8.

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under Article 14.1(a), but is eligible for re-election or re-appointment.

14.9

Ceasing to be a Director

A director ceases to be a director when:

(a)

the term of office of the director expires;

(b)

the director dies;

(c)

the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or

(d)

the director is removed from office pursuant to Articles 14.10 or 14.11.

14.10

Removal of Director by Shareholders

The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

14.11

Removal of Director by Directors

The directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

15.

ALTERNATE DIRECTORS

15.1

Appointment of Alternate Director

Any director (an "appointor") may by notice in writing received by the Company appoint any person (an "appointee") who is qualified to act as a director to be his or her alternate to act in his or her place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to his or her appointor within a reasonable time after the notice of appointment is received by the Company.

15.2

Notice of Meetings

Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which his or her appointor is a member and to attend and vote as a director at any such meetings at which his or her appointor is not present.

15.3

Alternate for More Than One Director Attending Meetings

A person may be appointed as an alternate director by more than one director, and an alternate director:

(a)

will be counted in determining the quorum for a meeting of directors once for each of his or her appointors and, in the case of an appointee who is also a director, once more in that capacity;

(b)

has a separate vote at a meeting of directors for each of his or her appointors and, in the case of an appointee who is also a director, an additional vote in that capacity;

(c)

will be counted in determining the quorum for a meeting of a committee of directors once for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, once more in that capacity;

(d)

has a separate vote at a meeting of a committee of directors for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, an additional vote in that capacity.

15.4

Consent Resolutions

Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her appointor any resolutions to be consented to in writing.

15.5

Alternate Director Not an Agent

Every alternate director is deemed not to be the agent of his or her appointor.

15.6

Revocation of Appointment of Alternate Director

An appointor may at any time, by notice in writing received by the Company, revoke the appointment of an alternate director appointed by him or her.

15.7

Ceasing to be an Alternate Director

The appointment of an alternate director ceases when:

(a)

his or her appointor ceases to be a director and is not promptly re-elected or re-appointed;

(b)

the alternate director dies;

(c)

the alternate director resigns as an alternate director by notice in writing provided to the Company or a lawyer for the Company;

(d)

the alternate director ceases to be qualified to act as a director; or

(e)

his or her appointor revokes the appointment of the alternate director.

15.8

Remuneration and Expenses of Alternate Director

The Company may reimburse an alternate director for the reasonable expenses that would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.

16.

POWERS AND DUTIES OF DIRECTORS

16.1

Powers of Management

The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company.

16.2

Appointment of Attorney of Company

The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

16.3

Setting Remuneration of the Auditor

The directors, or if the directors delegate this responsibility to an audit committee of the directors, the audit committee, may from time to time determine the remuneration to be paid by the Company to the auditor, in such manner and upon such terms and conditions, as the directors or the audit committee, in their absolute discretion, may determine.

17.

DISCLOSURE OF INTEREST OF DIRECTORS

17.1

Obligation to Account for Profits

A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act.

17.2

Restrictions on Voting by Reason of Interest

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors' resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

17.3

Interested Director Counted in Quorum

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

17.4

Disclosure of Conflict of Interest or Property

A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act.

17.5

Director Holding Other Office in the Company

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

17.6

No Disqualification

No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

17.7

Professional Services by Director or Officer

Subject to the Business Corporations Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

17.8

Director or Officer in Other Corporations

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.

18.

PROCEEDINGS OF DIRECTORS

18.1

Meetings of Directors

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

18.2

Voting at Meetings

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.

18.3

Chair of Meetings

The following individual is entitled to preside as chair at a meeting of directors:

(a)

the chair of the board, if any;

(b)

in the absence of the chair of the board, the president, if any, if the president is a director; or

(c)

any other director chosen by the directors if:

(i)

neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes after the time set for holding the meeting;

(ii)

neither the chair of the board nor the president, if a director, is willing to chair the meeting; or

(iii)

the chair of the board and the president, if a director, have advised the secretary, if any, or any other director, that they will not be present at the meeting.

18.4

Meetings by Telephone or Other Communications Medium

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who participates in a meeting in a manner contemplated by this Article 18.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner.

18.5

Calling of Meetings

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

18.6

Notice of Meetings

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 18.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors and the alternate directors by any method set out in Article 24.1 or orally or by telephone.

18.7

When Notice Not Required

It is not necessary to give notice of a meeting of the directors to a director or an alternate director if:

(a)

the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or

(b)

the director or alternate director, as the case may be, has waived notice of the meeting. 18.8 Meeting Valid Despite Failure to Give Notice

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director or alternate director, does not invalidate any proceedings at that meeting.

18.9

Waiver of Notice of Meetings

Any director or alternate director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company, to his or her alternate director, and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director or alternate director.

18.10

Quorum

The quorum necessary for the transaction of the business of the directors may be set by resolution of the directors and, if not so set, is deemed to be a majority of the directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

18.11

Validity of Acts Where Appointment Defective

Subject to the Business Corporations Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

18.12

Consent Resolutions in Writing

A resolution of the directors or of any committee of the directors consented to in writing by all of the directors entitled to vote on it, whether by signed document, fax, email or any other method of transmitting legibly recorded messages, is as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors duly called and held. Such resolution may be in two or more counterparts which together are deemed to constitute one resolution in writing. A resolution passed in that manner is effective on the date stated in the resolution or on the latest date stated on any counterpart. A resolution of the directors or of any committee of the directors passed in accordance with this Article 18.12 is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

19.

EXECUTIVE AND OTHER COMMITTEES

19.1

Appointment and Powers of Executive Committee

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors' powers, except:

(a)

the power to fill vacancies in the board of directors;

(b)

the power to remove a director;

(c)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

(d)

such other powers, if any, as may be set out in the resolution or any subsequent directors' resolution.

19.2

Appointment and Powers of Other Committees

The directors may, by resolution:

(a)

appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;

(b)

delegate to a committee appointed under paragraph 19.2(a) any of the directors' powers, except:

(i)

the power to fill vacancies in the board of directors;

(ii)

the power to remove a director;

(iii)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

(iv)

the power to appoint or remove officers appointed by the directors; and

(c)

make any delegation referred to in paragraph 19.2(b) subject to the conditions set out in the resolution or any subsequent directors' resolution.

19.3

Obligations of Committees

Any committee appointed under Articles 19.1 or 19.2, in the exercise of the powers delegated to it, must:

(a)

conform to any rules that may from time to time be imposed on it by the directors; and

(b)

report every act or thing done in exercise of those powers at such times as the directors may require.

19.4

Powers of Board

The directors may, at any time, with respect to a committee appointed under Articles 19.1 or 19.2:

(a)

revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;

(b)

terminate the appointment of, or change the membership of, the committee; and

(c)

fill vacancies in the committee.

19.5

Committee Meetings

Subject to Article 19.3(a) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 19.1 or 19.2:

(a)

the committee may meet and adjourn as it thinks proper;

(b)

the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;

(c)

a majority of the members of the committee constitutes a quorum of the committee; and

(d)

questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.

20.

OFFICERS

20.1

Directors May Appoint Officers

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

20.2

Functions, Duties and Powers of Officers

The directors may, for each officer:

(a)

determine the functions and duties of the officer;

(b)

entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and

(c)

revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.

20.3

Qualifications

No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as the managing director must be a director. Any other officer need not be a director.

20.4

Remuneration and Terms of Appointment

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors think fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.

21.

INDEMNIFICATION

21.1

Definitions

In this Article 21:

(a)

"eligible penalty" means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;

(b)

"eligible proceeding" means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which a director, former director or alternate director of the Company (an "eligible party") or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director or alternate director of the Company:

(i)

is or may be joined as a party; or

(ii)

is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding; and

(c)

"expenses" has the meaning set out in the Business Corporations Act.

21.2

Mandatory Indemnification of Directors and Former Directors

Subject to the Business Corporations Act, the Company must indemnify a director, former director or alternate director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and alternate director is deemed to have contracted with the Company on the terms of the indemnity contained in this Article 21.2.

21.3

Indemnification of Other Persons

Subject to any restrictions in the Business Corporations Act, the Company may indemnify any person.

21.4

Non-Compliance with Business Corporations Act

The failure of a director, alternate director or officer of the Company to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which he or she is entitled under this Part.

21.5

Company May Purchase Insurance

The Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives) who:

(a)

is or was a director, alternate director, officer, employee or agent of the Company;

(b)

is or was a director, alternate director, officer, employee or agent of a corporation at a time when the corporation is or was an affiliate of the Company;

(c)

at the request of the Company, is or was a director, alternate director, officer, employee or agent of a corporation or of a partnership, trust, joint venture or other unincorporated entity;

(d)

at the request of the Company, holds or held a position equivalent to that of a director, alternate director or officer of a partnership, trust, joint venture or other unincorporated entity;

against any liability incurred by him or her as such director, alternate director, officer, employee or agent or person who holds or held such equivalent position.

22.

DIVIDENDS

22.1

Payment of Dividends Subject to Special Rights

The provisions of this Article 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

22.2

Declaration of Dividends

Subject to the Business Corporations Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

22.3

No Notice Required

The directors need not give notice to any shareholder of any declaration under Article 22.2.

22.4

Record Date

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5 p.m. Pacific Standard Time on the date on which the directors pass the resolution declaring the dividend.

22.5

Manner of Paying Dividend

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

22.6

Settlement of Difficulties

If any difficulty arises in regard to a distribution under Article 22.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

(a)

set the value for distribution of specific assets;

(b)

determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and

(c)

vest any such specific assets in trustees for the persons entitled to the dividend.

22.7

When Dividend Payable

Any dividend may be made payable on such date as is fixed by the directors.

22.8

Dividends to be Paid in Accordance with Number of Shares

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

22.9

Receipt by Joint Shareholders

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

22.10

Dividend Bears No Interest

No dividend bears interest against the Company.

22.11

Fractional Dividends

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

22.12

Payment of Dividends

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the address of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

22.13

Capitalization of Surplus

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the surplus or any part of the surplus.

23.

DOCUMENTS, RECORDS AND REPORTS

23.1

Recording of Financial Affairs

The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Business Corporations Act.

23.2

Inspection of Accounting Records

Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

24.

NOTICES

24.1

Method of Giving Notice

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person may be sent by any one of the following methods:

(a)

mail addressed to the person at the applicable address for that person as follows:

(i)

for a record mailed to a shareholder, the shareholder's registered address;

(ii)

for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class;

(iii)

in any other case, the mailing address of the intended recipient;

(b)

delivery at the applicable address for that person as follows, addressed to the person:

(i)

for a record delivered to a shareholder, the shareholder's registered address;

(ii)

for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class;

(iii)

in any other case, the delivery address of the intended recipient;

(c)

sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;

(d)

sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class; and

(e)

physical delivery to the intended recipient.

24.2

Deemed Receipt of Mailing

A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 24.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

24.3

Certificate of Sending

A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required by Article 24.1, prepaid and mailed or otherwise sent as permitted by Article 24.1 is conclusive evidence of that fact.

24.4

Notice to Joint Shareholders

A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share.

24.5

Notice to Trustees

A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

(a)

mailing the record, addressed to them:

(i)

by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and

(ii)

at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or

(b)

if an address referred to in paragraph 24.5(a)(ii) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.

25.

SEAL

25.1

Who May Attest Seal

Except as provided in Articles 25.2 and 25.3, the Company's seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

(a)

any two directors;

(b)

any officer, together with any director;

(c)

if the Company only has one director, that director; or

(d)

any one or more directors or officers or persons as may be determined by the directors.

25.2

Sealing Copies

For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite Article 25.1, the impression of the seal may be attested by the signature of any director or officer.

25.3

Mechanical Reproduction of Seal

The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and the chair of the board or any senior officer together with the secretary, treasurer, secretary-treasurer, an assistant secretary, an assistant treasurer or an assistant secretary-treasurer may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

26.

SPECIAL RIGHTS AND RESTRICTIONS

26.1

Special Rights and Restrictions Attaching to Common Shares

(a)

The Common shares, as a class, shall confer on the holders thereof and shall be subject to the following special rights and restrictions:

(i)

Voting. The holders of the Common shares shall be entitled to receive notice of and to attend all meetings of the shareholders of the Company and shall have one vote for each Common share held at all meetings of the shareholders of the Company, except meetings at which only holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series.

(ii)

Dividends. Subject to the prior rights of the holders of the Preferred shares and any other shares ranking senior to the Common shares with respect to priority in the payment of dividends, the holders of Common shares shall be entitled to receive dividends and the Company shall pay dividends thereon, as and when declared by the directors of the Company out of moneys properly applicable to the payment of dividends, in such amount and in such form as the directors of the Company may from time to time determine and all dividends which the directors of the Company may declare on the Common shares shall be declared and paid in equal amounts per share on all Common shares at the time outstanding.

(iii)

Participation on Liquidation. In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of assets of the Company among its shareholders for the purpose of winding-up its affairs or upon a reduction of capital, the holders of the Common shares shall, subject to the prior rights of the holders of the Preferred shares and any other shares ranking senior to the Common shares with respect to priority in the distribution of assets upon liquidation, dissolution, winding-up or any other distribution of assets for the purpose of winding-up or a reduction of capital, be entitled to share equally, share for share, in the remaining assets and property of the Company.

26.2

Special Rights and Restrictions Attaching to Preferred Shares

(a)

The Preferred shares, as a class, shall confer on the holders thereof and shall be subject to the following special rights and restrictions:

(i)

One or More Series. The directors may issue Preferred shares in one or more series.

(ii)

Creation or Deletion of Series. The directors may alter by resolution the Notice of Articles and/or the Articles of the Company to fix or change the number of shares in, and to determine or alter the designation and special rights and restrictions attaching to the shares of each series of Preferred shares, including, but without in any way limiting or restricting the generality of the foregoing, the following:

aa)

Voting. The directors may confer on the holders of any series of Preferred shares the right to notice of or to be present or to vote, either in person or by proxy, at any general meeting of the shareholders of the Company other than a separate meeting of the holders of the Preferred shares, or of the holders of shares of a series of the Preferred shares, as the case may be;

ab)

Dividends. The directors may create, define or attach to any series of Preferred shares the rate or amount of dividends (whether cumulative, non-cumulative or partially cumulative), the dates, places and currencies of payment thereof and may allow the directors to declare dividends with respect to the Common shares only or with respect to any series of Preferred shares only or with respect to any combination of two or more such classes or series of classes;

(iii)

If Series Entitled to Cumulative Dividend. Where the Preferred shares or one or more series of Preferred shares are entitled to cumulative dividends, and where cumulative dividends in respect of the Preferred shares or a series of Preferred shares are not paid in full, the shares of all series of Preferred shares entitled to cumulative dividends shall participate rateably in respect of accumulated dividends in accordance with the amounts that would be payable on those shares if all the accumulated dividends were paid in full.

(iv)

All Series of Preferred Shares Participate Rateably on Winding-Up. Where amounts payable on a winding-up are not paid in full or on the occurrence of any other event where the holders of the shares of all series of Preferred shares are entitled to a return of capital but are not paid in full, the shares of all series of Preferred shares shall participate rateably in a return of capital in respect of Preferred shares in accordance with the amounts that would be payable on the return of capital if all amounts so payable were paid in full.

(v)

No Priority. No special rights or restrictions attached to a series of Preferred shares shall confer on the series priority over another series of Preferred shares then outstanding respecting:

aa)

dividends, or

ab)

a return of capital:

(A)

on winding-up, or

(B)

on the occurrence of another event that would result in the holders of all series of Preferred shares being entitled to a return of capital.

(vi)

Special Rights and Restrictions of Issued Series. A directors' resolution pursuant to paragraph 26.2 (a)(ii) above must be passed before the issue of shares of the series to which the resolution relates, and after the issue of shares of that series the number of shares in, the designation of, and the special rights and restrictions attached to that series may be added to, altered, varied or abrogated only in accordance with the British Columbia Business Corporations Act.

(vii)

Priority on Liquidation. Except as provided herein, in the event of the liquidation, dissolution or winding-up of the Company or any distribution of its assets for the purpose of winding-up its affairs, after the payment of dividends declared but unpaid, the holders of the Preferred shares shall be entitled pari passu to be paid such amount as the special rights and restrictions attaching to such shares shall provide, or in the absence of any express provision with respect thereto, the amount of capital paid up in respect thereof per share for each Preferred share held by them, out of the assets of the Company in preference to and with priority over any payment or distribution of any capital asset or monies among the holders of any Common shares or any other shares ranking junior to the preferred shares in respect of priority or the distribution of assets upon liquidation, dissolution or winding-up or any other distribution of assets for the purpose of winding-up or a reduction of capital, of the Company.

(viii)

The foregoing provisions of these Articles shall apply to all Preferred shares except as expressly provided in the special rights and restrictions which the directors may create, define or attach to any series of Preferred shares.

EX-1.4

ALYA VENTURES LTD.
("Alya")

THE FOLLOWING IS AN EXTRACT OF DIRECTORS' RESOLUTIONS OF ALYA CONSENTED TO IN WRITING ON FEBRUARY 24, 2012 AND EFFECTIVE AS OF FEBRUARY 24, 2012.

RESOLVED THAT:

1.

There be created and attached to the Series 1 Preferred Shares the special rights and restrictions set out in Schedule "A" hereto.

2.

The Articles of Alya be altered by adding as Part 26.3 the special rights and restrictions set out in Schedule "A" hereto.

3.

A Notice of Alteration to Notice of Articles to reflect the creation of new Series 1 Preferred Shares be filed.

4.

The above alteration to the Articles of Alya will not be effective until the Notice of Articles of Alya is altered to reflect the alteration to the Articles.

5.

Alya appoints Stikeman Elliott LLP to act as its agent for filing the Notice of Alteration to a Notice of Articles as set out above.

SCHEDULE "A"

"26.3 Special Rights and Restrictions Attaching to Series 1 Preferred Shares

(a)

The Series 1 Preferred Shares, as a class, shall confer on the holders thereof and shall be subject to the following special rights and restrictions:

(1)

Voting. The holders of the Series 1 Preferred Shares shall be entitled to receive notice of and to attend all meetings of the shareholders of the Company and shall have one vote for each Series 1 Preferred Share held at all meetings of the shareholders of the Company, except meetings at which only holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series.

(ii)

No Dividends. No dividend shall be declared or paid at any time on the Series 1 Preferred Shares.

(iii)

Non-Participating. In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of the Series 1 Preferred Shares are not entitled to receive any return on capital or proceeds from the liquidation, dissolution or winding-up of the Company.

(iv)

Redemption. The Company may, at its option, redeem all or from time to time any part of the outstanding Series 1 Preferred Shares on payment to the holders thereof, for each share to be redeemed, of the redemption price per share. Before redeeming any Series 1 Preferred Shares the Company shall obtain a waiver of notice or mail to each person who, at the date of such mailing, is a registered holder of shares to be redeemed, notice of the intention of the Company to redeem such shares held by such registered holder; where notice is required, such notice shall be mailed by ordinary prepaid post addressed to the last address of such holder as it appears on the records of the Company or, in the event of the address of any such holder not appearing on the records of the Company, then to the last known address of such holder, at least ten (10) days before the date specified for redemption; such notice shall set out the date on which redemption is to take place and, if part only of the shares held by the person to whom it is addressed is to be redeemed, the number thereof so to be redeemed; on or after the date so specified for redemption the Company shall pay or cause to be paid to or to the order of the registered holder of the Series 1 Preferred Shares to be redeemed the redemption price on presentation and surrender of the certificates for the shares so called for redemption at such place or places as may be specified in such notice, and the certificates for such shares shall thereupon be cancelled and the shares represented thereby shall thereupon be redeemed. In case a part only of the outstanding Series 1 Preferred Shares is at any time to be redeemed, the shares to be redeemed shall be selected, at the option of the directors, either by lot or in such manner as nearly as may be pro rata (disregarding fractions) according to the number of Series 1 Preferred Shares held by each holder. In case a part only of the Series 1 Preferred Shares represented by any certificate shall be redeemed, a new certificate for the balance shall be issued at the expense of the Company. From and after the date specified for redemption in such notice, the holders of the Series 1 Preferred Shares called for redemption shall be entitled to interest at the rate of 6% per annum calculated on a monthly basis, until payment is made. On or before the date specified for redemption the Company shall have the right to deposit the redemption price of the Series 1 Preferred Shares called for redemption, in a special account with any chartered bank or trust company in Canada named in the notice of redemption, such redemption price to be paid to or to the order of the respective holders of such shares called for redemption upon presentation and surrender of the certificates representing the same and, upon such deposit being made, the shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the several holders thereof, after such deposit, shall be limited to receiving, out of the monies so deposited, without interest, the redemption price, applicable to their respective shares against presentation and surrender of the certificates representing such shares.

(v)

Redemption Price. The price at which the Company may redeem the whole or any part of the Series 1 Preferred Shares outstanding shall be the sum of 1/100th of $0.01 for each Series 1 Preferred Share.

(vi)

Cancellation of Series 1 Preferred Shares. Series 1 Preferred Shares redeemed by the Company shall be cancelled and may not be reissued."

EX-4.1

CROSS MARKETING AGREEMENT

THIS CROSS MARKETING AGREEMENT (the “Agreement”) is entered into as of this 9th day of November, 2012 between eWinery Solutions (the “Company"), NXT-Wine Mobile LLC (“NXT”)and Consumer Impulse, Inc., ("PARTNER").  Whereas, the Company desires to have PARTNER provide services to the Company’s clients, and the Company desires to facilitate the sale of PARTNER’s services to the Company’s clients.  Now, therefore, in consideration of the covenants and agreements hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows:

1.  Duties and Responsibilities.  PARTNER will provide, as requested, consulting, email marketing and related customer acquisition services to all of the Company’s clients who contract directly with PARTNER for services, and which clients PARTNER and Company mutually agree are clients to whom PARTNER may provide such services (such clients, the “Clients”).  Attached to this Agreement as Exhibit A and incorporated herein by reference is a description of the contemplated PARTNER  and NXT services.  PARTNER’s service charges for these activities are and will be set at PARTNER’s sole discretion.  The Company agrees to make best efforts to actively market PARTNER to the Company’s Clients in many ways, including but not limited to face to face promotion; direct mailing; and being featured on the Company’s website. The PARTNER product offerings will be integrated, if mutually agreed to by PARTNER and Company, into the Company’s software administration panel for ease of use by the Company’s clients.

2.  Compensation.  The Company will receive a referral fee and/or other compensation according to the REFERRAL FEE SCHEDULE as a result of the Company’s efforts to market PARTNER’s services to the Clients.  The parties agree that compensation pursuant to this Agreement shall be determined and owed solely on a cash received basis.  Regardless of when services to a Client are rendered to or contracted for, compensation shall not be owed under this Agreement until PARTNER receives valid payment from the Client.  The Company shall not be entitled to any revenue from Clients accounted for or received prior to the date of the signing of this Agreement.  PARTNER shall pay compensation owed under this Agreement on a monthly basis on the 5^th of each month.

3.  Termination of the Agreement.  This Agreement will continue for an initial term of two years, and shall be renewed annually thereafter unless either party gives notice of cancellation at least 60 days prior to the anniversary date of the renewal.  

4. Confidentiality.

(a) The parties acknowledge that as a result of this Agreement: (i) they will have access to and knowledge of confidential information of each other including but not limited to private financial information and client contact and preference information that was not previously known to the parties and is not generally known to the public or to competitors(the "Confidential Information"); (ii) the direct and indirect disclosure of any such Confidential Information to existing or potential competitors of either or both of the parties would place the party in question at a competitive disadvantage and would do damage, monetary or otherwise, to the business; and (iii) the engaging by a party in any of the activities prohibited by this Section may constitute improper appropriation and/or use of such information and trade secrets.  The parties expressly acknowledge the trade secret status of the Confidential Information and that the Confidential Information constitutes a protectable business interest.  Accordingly, the Company, PARTNER and NXT agree as follows:

(i)

During the term of this Agreement and at all times thereafter, the parties shall not, without written permission, directly or indirectly, whether individually, as a director, stockholder, owner, partner, employee, principal or agent of any business, or in any other capacity, make known, disclose, furnish, make available or utilize any of the Confidential Information, other than in the proper performance of the duties contemplated herein; and

(ii)

The parties agree to return all Confidential Information, including all photocopies, extracts and summaries thereof, and any such information stored electronically on tapes, computer disks or in any other manner upon the termination of this Agreement for any reason.

(b) The parties acknowledge that a material breach or threatened breach of any of the provisions contained in this Section will cause the non-breaching party irreparable injury.  The parties therefore agree that the non-breaching party shall be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining the party in question from any such violation or threatened violations.

(c) The parties acknowledge and agree that due to the uniqueness of the contemplated services and confidential nature of the information exchanged, the covenants set forth in this Agreement are reasonable and necessary for the protection of the business and goodwill of the parties.  For purposes of this Section, the Company shall be construed to include its respective subsidiaries and affiliates. The provisions set forth in this Section shall survive and remain in full force and effect after the expiration or termination of this Agreement for any reason.

(d) For the purposes of this Agreement, Confidential Information shall not include information that (i) at the time of disclosure is, or thereafter becomes, generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Agreement by the recipient or any of its representatives; (ii) at the time of disclosure is, or thereafter becomes, available to the recipient on a non-confidential basis from a third-party source, provided that such third party is not and was not prohibited from disclosing such Confidential Information to the recipient by any contractual obligation; (iii) was known by or in the possession of the recipient, as established by documentary evidence, prior to being disclosed by or on behalf of the disclosing party pursuant to this Agreement; or (iv) was or is independently developed by the recipient, as established by documentary evidence, without reference to or use of, in whole or in part, any of the disclosing party's Confidential Information.

5.  Scope of Relationship.  PARTNER and NXT are independent entities and are not a partner or co-venturer of the Company.  The manner in which PARTNER’s services are rendered shall be within PARTNER’s sole control and discretion.  PARTNER is free to solicit business of any nature from any third party including existing clients of the Company.  PARTNER is not authorized to obligate the Company in any manner without the prior express written or verbal authorization from an officer of the Company.

6. Exclusivity.  PARTNER agrees not to cross market comparable email and customer acquisition programs which include integration services with other wine industry ecommerce software companies without the written permission of the Company, during the term of this agreement.  The Company hereby permits PARTNER to cross market comparable email and customer acquisition programs which include integration services with NXT. The Company agrees not to offer or implement, or partner with, any other third party service providers that compete with PARTNER in providing email or customer acquisition programs during the term of this Agreement, without the written permission of PARTNER, unless specifically requested and contracted for by the Company’s clients.

7.  Accounting.  The parties agree to provide a quarterly accounting detailing all aspects of how payment owed pursuant to this Agreement was determined.  A party may obtain an additional accounting at any time on 15 day written notice.

8. Indemnification.  The Company agrees to indemnify and hold PARTNER harmless for, from and against any and all losses, claims, damages, liabilities or actions related to or arising out of the engagement hereunder (except to the extent such loss, claim, damage, liability or action arises as a result of the gross negligence or willful misconduct of PARTNER).

9.  Entire Agreement.  This Agreement sets forth the entire agreement between the parties with respect to their subject matter and merge and supersede all prior discussions, agreements and understandings of every kind and nature between them and neither party shall be bound by any term or condition other than as expressly set forth or provided for in this Agreement.  This Agreement may not be changed or modified except by an agreement in writing, signed by the parties hereto.

10.  Waiver.  The failure of either party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same.  Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default.

11.  Severability.  In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby.  Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.

12.  Notices.  Any notice given hereunder shall be in writing and shall be deemed to have been given when delivered by messenger or courier service (against appropriate receipt), or mailed by registered or certified mail (return receipt requested), addressed as follows:

If to the Company:	COO, eWinery Solutions	If to:  PARTNER:  CEO, Consumer Impulse, Inc
	1700 Soscol Ave, Suite 3	1203 19th St NW, Suite 300
	Napa, California 94558	Washington, DC 20036

or at such other address as shall be indicated to either party in a writing served in compliance with this Section.  

13.  Successors.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by PARTNER and the Company.  Should the Company or PARTNER have a change in ownership the agreement will remain in force for non-competitor purchasers.

14. Governing Law and Venue.  This Agreement shall be governed by and construed in accordance with the laws of California, without regard to its conflict of law rules.  The parties agree that this Agreement was executed in Napa County and is to be performed within Napa County.  As such, any action brought regarding this Agreement may and must be brought in Napa County Superior Court or the Northern District of California.

15. Attorneys' Fees. In the event of any dispute with respect to this Agreement that results in a legal proceeding including but not limited to actions before the Department of Labor, private mediation, private or compulsory arbitration, or suits filed in state or federal court, the substantially prevailing party shall be entitled to recover its reasonable attorneys’ fees and costs incurred.

16. Descriptive Headings.  The paragraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

17. Counterparts.  This Agreement may be executed in one or more counterparts, which, together, shall constitute one and the same agreement.

18. Authority.  Each of the parties hereby represents that it has the authority to enter into this Agreement and understands each of the terms of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

EXHIBIT A

[Service Description]

NXT:

·

Account management of Clients

·

Interface with PARTNER on campaign set up and campaign management

·

Consulting on wine programs

·

Email marketing to all Clients

·

Personal telephone, email, and in person solicitations to targeted accounts.

PARTNER:

·

Campaign Fulfillment

·

Campaign Management

·

Reporting to Company on campaign performance

·

Billing

·

Revenue Share distribution

REFERRAL FEE SCHEDULE

During the Term, the Company and NXT shall be eligible to earn Fees based on the Revenue received and recognized by PARTNER from Clients as follows:

Revenue received and recognized by PARTNER	PARTNER	Company	NXT
$0- $10,000	70%	15%	15%
$10,001 onwards	50%	25%	25%

The amount of “Revenue” forming the basis for fees are revenues from the sale of PARTNER services to a Client, net of any discounts, rebates charge-backs and other credits, as recognized in PARTNER external financial reporting according to US GAAP or the International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

For NXT to be eligible to earn any Fees, NXT must be actively managing the Client.

EX-4.2

PRIVILEGED AND CONFIDENTIAL
EXECUTION VERSION

CONSUMER IMPULSE, INC

CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") is made as of October 31, 2011 , by and between Consumer Impulse Inc., a Delaware corporation (the "Company"), and Finalysis Group LLC ("Consultant").

WHEREAS:

A.

On considering the eligibility and experience of the Consultant, the Company makes this offer to the Consultant for entering into a consulting relationship on the terms and subject to the conditions hereinafter contained; and

B.

The Company and the Consultant are desirous of recording, in writing, the terms and conditions of the consulting relationship of the Consultant with the Company.

NOW FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, AND INTENDING TO BE LEGALLY BOUND, THE PARTIES AGREE AS FOLLOWS AS FOLLOWS:

1.

Consulting Relationship. During the term of this Agreement, Consultant will provide consulting services to the Company as described on Exhibit A hereto (the "Services"). Notwithstanding anything to the contrary contained in this Agreement, the Parties specifically acknowledge and agree that this Agreement only governs the provision of the Services by the Consultant to the Company, and in the event that the Company wants the Consultant to provide any services other than the Services, the Parties shall execute an amendment to this Agreement which amendment shall include a description of any additional services as well as any fees payable to the Consultant relating to such additional services. Consultant shall use Consultant's good faith efforts to perform the Services such that the results are satisfactory to the Company. Capitalized terms used in this Agreement but not defined herein shall have the same meaning as assigned to them under the employment agreement executed between Alya Ventures Limited, the Company and Mr. Erik Hallstrom dated September 29, 20111 (the "Erik Hallstrom Employment Agreement").

2.

Fees. As consideration for the Services to be provided by Consultant and other obligations, the Company shall pay to Consultant the amounts specified in Exhibit B hereto at the times specified therein (the "Fees").

3.

Expenses. Apart from, and in addition to the Fees, Company shall reimburse Consultant for all out-of-pocket expenses incurred by the Consultant in providing the Services.

4.

Key Employee. The Parties agree that the services of Mr. Atul Sabharwal is essential to the satisfactory performance by Consultant of the scope of Services called for in this Agreement. The Parties further agree that if such individual leaves the employ of Consultant during the term of this Agreement for any reason, and if substitute individuals acceptable to Company are not available to continue the work within ten (to) business days thereof, Company shall have the right to terminate this Agreement pursuant to Section 5(a) hereof.

5.

Term and Termination. Consultant shall serve as a consultant to the Company for a period commencing on the CEO Appointment Condition Date (as defined in the Erik Hallstrom Employment Agreement) and continuing for three (3) years thereafter; unless terminated earlier in accordance with the provisions of this Agreement (the "Term").

(a)

Termination by the Company. The Company may only terminate this Agreement for "Good Cause", which shall be limited to any of the following occurrences; (2) Fraud, embezzlement, or similar act of dishonesty, on the part of the Consultant or any Assistant; or (3) An uncured material breach of this Agreement by the Consultant after written notice. In the event of such termination, Consultant shall be paid for any portion of the Services that have been performed prior to the termination.

(b)

Termination by the Consultant. The Consultant may terminate this Agreement at any time upon ten (1o) business days' written notice. In the event of such termination, Consultant shall be paid for any portion of the Services that have been performed prior to the termination.

(c)

Consequences of Termination. Within thirty (30) business days of termination of this Agreement for any reason, Consultant shall submit to Company an itemized invoice for any Fees or expenses previously accrued under this Agreement. Company, upon payment of accrued amounts so invoiced, shall have no further liability or obligation to Consultant whatsoever for any further fees, expenses, or other payment.

6.

Employment Agreement. Notwithstanding anything to the contrary contained in this Agreement: (a) at any time during the Term, and at the Consultant's sole discretion, which discretion the Consultant shall exercise by way of a written notice to the Company; or (b) upon the expiration of the Term ; the Company shall (or shall cause its parent company to), within ten (10) business days of the events specified in (a), or (b) above, execute an employment agreement (the "Employment Agreement") with Mr. Atul Sabharwal (the "Executive"): (i) employing the Executive as a "C-level" executive of the Company; (ii) paying the Executive an annual remuneration of a minimum of USD 150,000; (iii) providing the Executive with a severance payment of a minimum of USD 75,000 in the event of: (x) a termination by the Company of the Employment Agreement without Good Cause, or a termination by the Executive of the Employment Agreement for Good Reason ("Good Cause", and "Good Reason" shall have the meanings assigned to them under the Erik Hallstrom Employment Agreement); and (iv) containing other terms and conditions customary for an employment agreement with a "C-Level" executive (including, without limitation, terms relating to the grant of options, restricted stock and other benefits). For abundant caution it is hereby clarified that upon execution of the Employment Agreement, this Agreement shall immediately terminate.

7.

Independent Contractor. During the Term, Consultant's and any Assistant's relationship with the Company will be that of an independent contractor and not that of an employee.

8.

Method of Provision of Services. Consultant shall be solely responsible for determining the method, details and means of performing the Services. Consultant may, at Consultant's own expense, employ or engage the services of such employees, subcontractors, partners or agents, as Consultant deems necessary to perform the Services (collectively, the "Assistants"). The Assistants are not and shall not be employees of the Company, and Consultant shall be wholly responsible for the professional performance of the Services by the Assistants such that the results are satisfactory to the Company. Consultant shall expressly advise the Assistants of the terms of this Agreement, and shall require each Assistant to execute and deliver to the Company a Confidential Information and Invention Assignment Agreement substantially in the form attached to this Agreement as Exhibit D hereto (the "Confidentiality Agreement").

(a)

No Authority to Bind Company. Consultant acknowledges and agrees that Consultant and its Assistants have no authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company.

(b)

No Benefits. Key Employee of Consultant Consultant acknowledges and agrees that Consultant and its Assistants shall not will be eligible for any Company employee benefits to the extent that Consultant does not provide such benefit to Key Employee. All costs of providing benefits will be borne by the Company. and, to the extent Consultant otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement, Consultant (on behalf of itself and its employees) hereby expressly declines to participate in such Company employee benefits.

(c)

Withholding.

Consultant shall have full responsibility for applicable withholding taxes for all compensation paid to Consultant or its Assistants under this Agreement, and for compliance with all applicable labor and employment requirements with respect to Consultant's self-employment, sole proprietorship or other form of business organization, and with respect to the Assistants, including state worker's compensation insurance coverage requirements a.

9.

Supervision of Consultant's Services. All of the services to be performed by Consultant, including but not limited to the Services, will be as agreed between Consultant and the Board of Directors.

10.

Miscellaneous.

(a)

Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the Consultant.

(b)

Sole Agreement. This Agreement, including the Exhibits hereto, constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.

(c)

Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by email or fax (upon customary confirmation of receipt), or forty-eight (48) hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party's address or fax number as set forth on the signature page or as subsequently modified by written notice.

(d)

Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without giving effect to the principles of conflict of laws.

(e)

Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) , (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(f)

Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(g)

Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

-Signature Page Follows-

The Parties have executed this Agreement as of the date first written above.

THE COMPANY:

CONSUMER IMPULSE, INC

EXHIBIT A

DESCRIPTION OF CONSULTING SERVICES

	Description of Services	Schedule/Deadline
1.	Introduction of industry contacts and business opportunities pertaining to Consumer Impulse's business	Ongoing
2.	Assist in building management team of Consumer Impulse	Ongoing
3.	Mentoring management team in dealing with current and future customers	Ongoing
4.	Advice and assist in training sales team	End of Year 1
5.	Advice and assist in training operations team	End of Year 1
6.	Advice and assist technical team in building functionality and enhancing platform features	Ongoing
7.	Providing strategic advice on business direction and growth of business	Ongoing
8.	Assisting financial team in managing investor queries	Ongoing
9.	Negotiating on behalf of Company	Ongoing
10.	Analyzing and assessing new markets, acquisition opportunities and other strategic endeavors	Ongoing
11.	Taking a Board Seat	Ongoing

EXHIBIT B

COMPENSATION

For Services rendered by Consultant under this Agreement for a period of three (3) years from the CEO Appointment Condition Date, the Company shall pay Consultant an Annual total amount of $150,000 (One Hundred and Fifty Thousand Dollars), payable in equal monthly installments (of $12,500), or in such other installments as may be agreed to in writing by the Parties.

EXHIBIT D

CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT

(See Attached)

Consumer Impulse, Inc.

CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT

Consultant Name: Atul Sabharwal (the "Consultant")

Effective Date: October 31st, 2011

As a condition of the Consultant becoming retained (or the Consultant's consulting relationship being continued) by Consumer Impulse Inc., a Delaware corporation, or any of its current or future subsidiaries, affiliates, successors or assigns (collectively, the "Company"), and in consideration of the Consultant's consulting relationship with the Company and Consultant's receipt of the compensation now and hereafter paid to the Consultant by the Company, the Consultant agrees to the following:

1.

Relationship. This Agreement will apply to the Consultant's consulting relationship with the Company. If that relationship ends and the Company, within a year thereafter, either employs the Consultant or re-engages the Consultant as a consultant, the Consultant agrees that this Agreement will also apply to such later employment or consulting relationship, unless the Company and the Consultant otherwise agrees in writing. Any such employment or consulting relationship between the Company and the Consultant, whether commenced prior to, upon or after the date of this Agreement, is referred to herein as the "Relationship."

2.

Duties. Consultant will perform for the Company such duties as may be required pursuant to the Consultant's Consulting Agreement with the Company referenced above (the "Consulting Agreement").

3.

Confidential Information.

3.1

Protection of Information. The Consultant agrees, at all times during the term of the Relationship and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company to the extent necessary to perform the Consultant's obligations to the Company under the Relationship, and not to disclose to any person, firm, corporation or other entity, without written authorization from the Company in each instance, any Confidential Information (as defined below) that the Consultant obtains, accesses or creates during the term of the Relationship, whether or not during working hours, until such Confidential Information becomes publicly and widely known and made generally available through no wrongful act of the Consultant or of others who were under confidentiality obligations as to the item or items involved. The Consultant further agrees not to make copies of such Confidential Information except as authorized by the Company.

3.2

Confidential Information.

The Consultant understands that "Confidential Information" means information and physical material not generally known or available outside the Company and information and physical material entrusted to the Company in confidence by third parties. Confidential Information includes, without limitation: (i) Company Inventions (as defined below); (ii) technical data, trade secrets, know-how, research, product or service ideas or plans, software codes and designs, developments, inventions, laboratory notebooks, processes, formulas, techniques, biological materials, mask works, engineering designs and drawings, hardware configuration information, lists of, or information relating to, employees and consultants of the Company (including, but not limited to, the names, contact information, jobs, compensation, and expertise of such employees and consultants), lists of, or information relating to, suppliers and customers (including, but not limited to, customers of the Company on whom Consultant called or with whom Consultant becathe Consultant acquainted during the Relationship), price lists, pricing methodologies, cost data, market share data, marketing plans, licenses, contract information, business plans, financial forecasts, historical financial data, budgets or other business information disclosed to the Consultant by the Company either directly or indirectly, whether in writing, electronically, orally, or by observation.

3.3

Third Party Information. The agreements in this Section 3 are intended to be for the benefit of the Company and any third party that has entrusted information or physical material to the Company in confidence.

3.4

Other Rights. This Agreement is intended to supplement, and not to supersede, any rights the Company may have in law or equity with respect to the protection of trade secrets or confidential or proprietary information.

4.

Ownership of Inventions.

4.1

Inventions Retained and Licensed. Consultant has attached hereto, as Exhibit A, a complete list describing with particularity all Inventions (as defined below) that, as of the Effective Date, belong solely to the Consultant or belong to the Consultant jointly with others, and that relate in any way to any of the Company's proposed businesses, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, Consultant represent that there are no such Inventions at the time of signing this Agreement.

4.2

Use or Incorporation of Inventions. If in the course of the Relationship, the Consultant uses or incorporates into a product, process or machine any Invention not covered by Section 4.4 of this Agreement in which Consultant has an interest, the Consultant will promptly so inform the Company.

4.3

Inventions.

Consultant understand that "Inventions" means discoveries, developments, concepts, designs, ideas, know how, improvements, inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. Consultant understand this includes, but is not limited to, any new product, machine, article of manufacture, biological material, method, procedure, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design or configuration of any kind, or any improvement thereon. Consultant understand that "Company Inventions" means any and all Inventions that Consultant may solely or jointly author, discover, develop, conceive, or reduce to practice during the period of the Relationship, except as otherwise provided in Section 4.7 below.

4.4

Assignment of Company Inventions. Consultant agrees that Consultant will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all the Consultant's right, title and interest throughout the world in and to any and all Company Inventions. Consultant hereby waive and irrevocably quitclaim to the Company or its designee any and all claims, of any nature whatsoever, that Consultant now have or may hereafter have for infringement of any and all Company Inventions.

4.5

Maintenance of Records. Consultant agrees to keep and maintain adequate and current written records of all Company Inventions made by the Consultant (solely or jointly with others) during the term of the Relationship. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, laboratory notebooks, or any other format. The records will be available to and remain the sole property of the Company at all times. Consultant agrees not to remove such records from the Company's place of business except as expressly permitted by Company policy which may, from time to time, be revised at the sole election of the Company for the purpose of furthering the Company's business. Consultant agrees to deliver all such records (including any copies thereof) to the Company at the time of termination of the Relationship as provided for in Sections 5 and 6.

4.6

Patent and Copyright Rights. Consultant agrees to assist the Company, or its designee, at the Company's expense, in every proper way to secure the Company's, or its designee's, rights in the Company Inventions and any copyrights, patents, trademarks, mask work rights, moral rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company or its designee of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which the Company or its designee shall deem necessary in order to apply for, obtain, maintain and transfer such rights, or if not transferable, waive such rights, and in order to assign and convey to the Company or its designee, and any successors, assigns and nominees the sole and exclusive right, title and interest in and to such Company Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. Consultant further agrees that the Consultant's obligation to execute or cause to be executed, when it is in the Consultant's power to do so, any such instrument or papers shall continue during and at all times after the end of the Relationship and until the expiration of the last such intellectual property right to expire in any country of the world. Consultant hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as the Consultant's agent and attorney-in-fact, to act for and in the Consultant's behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters of patents, copyright, mask work and other registrations related to such Company Inventions. This power of attorney is coupled with an interest and shall not be affected by the Consultant's subsequent incapacity.

4.7

Exception to Assignments. Consultant understand that the Company Inventions will not include, and the provisions of this Agreement requiring assignment of inventions to the Company do not apply to, any invention for which no trade secret information of the Company was used and which was developed entirely on the Consultant's own time, unless (a) the invention relates (i) directly to the business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the Consultant for the Company.

5.

Company Property; Returning Company Documents. Consultant acknowledges and agrees that the Consultant has no expectation of privacy with respect to the Company's telecommunications, networking or information processing systems (including, without limitation, files, e-mail messages, and voice messages) and that the Consultant's activity and any files or messages on or using any of those systems may be monitored at any time without notice. Consultant further agrees that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by the Company personnel at any time with or without notice. Consultant agrees that, at the time of termination of the Relationship, Consultant will deliver to the Company (and will not keep in the Consultant's possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any of the aforementioned items developed by the Consultant pursuant to the Relationship or otherwise belonging to the Company, its successors or assigns.

6.

Notice to Third Parties. Consultant understand and agree that the Company may, with or without prior notice to the Consultant and during or after the term of the Relationship, notify third parties of the Consultant's agreements and obligations under this Agreement.

7.

Solicitation of Employees, Consultants and Other Parties. As described above, the Consultant acknowledges and agrees that the Company's Confidential Information includes information relating to the Company's employees, consultants, customers and others, and that Consultant will not use or disclose such Confidential Information except as authorized by the Company. Consultant further agrees as follows:

7.1.

Employees, Consultants. The Consultant agrees that during the term

of the Relationship, for any reason, whether with or without cause, Consultant shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company's employees or consultants to terminate their relationship with the Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for myself or for any other person or entity.

7.2.

Other Parties. Consultant agrees that during the term of the Relationship, for any reason, whether with or without cause, Consultant shall not use any Confidential Information of the Company to negatively influence any of the Company's clients or customers from purchasing Company products or services or to solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company.

8.

No Change to Duration of Relationship. Consultant understands and acknowledges that this Agreement does not alter, amend or expand upon any rights Consultant may have to continue in the consulting relationship with, or in the duration of the Consultant's consulting relationship with, the Company under any existing agreements between the Company and me, including without limitation the Consulting Agreement, or under applicable law.

9.

Representations and Covenants.

9.1

Facilitation of Agreement. Consultant agrees to execute promptly, both during and after the end of the Relationship, any proper oath, and to verify any proper document, required to carry out the terms of this Agreement, upon the Company's written request to do so.

9.2.

No Conflicts.

Consultant represents that the Consultant's performance of all the terms of this Agreement does not and will not breach any agreement Consultant has entered into, or will enter into, with any third party, including without limitation any agreement to keep in confidence proprietary information or materials acquired by the Consultant in confidence or in trust prior to or during the Relationship. Consultant will not disclose to the Company or use any inventions, confidential or non-public proprietary information or material belonging to any previous client, employer or any other party. Consultant will not induce the Company to use any inventions, confidential or non-public proprietary information, or material belonging to any previous client, employer or any other party. Consultant acknowledges and agrees that the Consultant has listed on Exhibit A all agreements (e.g., non-competition agreements, non-solicitation of customers agreements, non-solicitation of employees agreements, confidentiality agreements, inventions agreements, etc.), if any, with a current or former client, employer, or any other person or entity, that may restrict the Consultant's ability to perform services for the Company or the Consultant's ability to recruit or engage customers or service providers on behalf of the Company, or otherwise relate to or restrict the Consultant's ability to perform the Consultant's duties for the Company or any obligation Consultant may have to the Company. Consultant agrees not to enter into any written or oral agreement that conflicts with the provisions of this Agreement.

9.3

Voluntary Execution. The Consultant certifies and acknowledges that the Consultant has carefully read all of the provisions of this Agreement, that the Consultant understands and has voluntarily accepted such provisions, and that the Consultant will fully and faithfully comply with such provisions.

10.

General Provisions.

10.1.

Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of [California], without giving effect to the principles of conflict of laws.

10.2.

Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and the Consultant relating to its subject matter and merges all prior discussions between us. No amendment to this Agreement will be effective unless in writing signed by both parties to this Agreement. The Company shall not be deemed hereby to have waived any rights or remedies it may have in law or equity, nor to have given any authorizations or waived any of its rights under this Agreement, unless, and only to the extent, it does so by a specific writing signed by a duly authorized officer of the Company, it being understood that, even if Consultant am an officer of the Company, Consultant will not have authority to give any such authorizations or waivers for the Company under this Agreement without specific approval by the Board of Directors. Any subsequent change or changes in the Consultant's duties, obligations, rights or compensation will not affect the validity or scope of this Agreement.

10.3.

Severability. If one or more of the provisions in this Agreement are deemed void or unenforceable to any extent in any context, such provisions shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected. In the event that any court or government agency of competent jurisdiction determines that, notwithstanding the terms of the Consulting Agreement specifying the Consultant's Relationship with the Company as that of an independent contractor, the Consultant's provision of services to the Company is not as an independent contractor but instead as an employee under the applicable laws, then solely to the extent that such determination is applicable, references in this Agreement to the Relationship between the Consultant and the Company shall be interpreted to include an employment relationship, and this Agreement shall not be invalid and unenforceable but shall be read to the fullest extent as may be valid and enforceable under the applicable laws to carry out the intent and purpose of the Agreement.

10.4.

Successors and Assigns. This Agreement will be binding upon the Consultant's heirs, executors, administrators and other legal representatives, and the Consultant's successors and assigns, and will be for the benefit of the Company, its successors, and its assigns.

10.5.

Remedies. Consultant acknowledges and agrees that violation of this Agreement by the Consultant may cause the Company irreparable harm, and therefore agree that the Company will be entitled to seek extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions and permanent injunctions without the necessity of posting a bond or other security, in addition to and without prejudice to any other rights or remedies that the Company may have for a breach of this Agreement.

10.6.

Advice of Counsel. CONSULTANT ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, CONSULTANT HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND CONSULTANT HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

The parties have executed this Agreement on the respective dates set forth below, to be effective as of the Effective Date first above written.

The Company:

CONSUMER IMPULSE INC.

EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
EXCLUDED UNDER SECTION 4(a)

Title
Date Identifying Number or Brief Description

__   No inventions, improvements, or original works of authorship

__   Additional sheets attached

Signature of Consultant: ________________________________

Print Name of Consultant: ______________________________

Date: _______________________________________________

EX-4.3

PRIVILEGED AND CONFIDENTIAL
EXECUTION VERSION

CONSUMER IMPULSE, INC

CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") is made as of October 31, 2011 , by and between Consumer Impulse Inc, a Delaware corporation (the "Company"), and Ritesh Bhavnani ("Consultant").

WHEREAS:

A.

On considering the eligibility and experience of the Consultant, the Company makes this offer to the Consultant for entering into a consulting relationship on the terms and subject to the conditions hereinafter contained; and

B.

The Company and the Consultant are desirous of recording, in writing, the terms and conditions of the consulting relationship of the Consultant with the Company.

NOW FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, AND INTENDING TO BE LEGALLY BOUND, THE PARTIES AGREE AS FOLLOWS AS FOLLOWS:

1.

Consulting Relationship. During the term of this Agreement, Consultant will provide consulting services to the Company as described on Exhibit A hereto (the "Services"). Notwithstanding anything to the contrary contained in this Agreement, the Parties specifically acknowledge and agree that this Agreement only governs the provision of the Services by the Consultant to the Company, and in the event that the Company wants the Consultant to provide any services other than the Services, the Parties shall execute an amendment to this Agreement which amendment shall include a description of any additional services as well as any fees payable to the Consultant relating to such additional services. Consultant shall use Consultant's good faith efforts to perform the Services such that the results are satisfactory to the Company. Capitalized terms used in this Agreement but not defined herein shall have the same meaning as assigned to them under the employment agreement executed between Alya Ventures Limited, the Company and Mr. Erik Hallstrom dated September 29, 20111 (the "Erik Hallstrom Employment Agreement").

2.

Fees. As consideration for the Services to be provided by Consultant and other obligations, the Company shall pay to Consultant the amounts specified in Exhibit B hereto at the times specified therein (the "Fees").

3.

Expenses. Apart from, and in addition to the Fees, Company shall reimburse Consultant for all out-of-pocket expenses incurred by the Consultant in providing the Services.

4.

Term and Termination. Consultant shall serve as a consultant to the Company for a period commencing on the CEO Appointment Condition Date (as defined in the Erik Hallstrom Employment Agreement) and continuing for three (3) years thereafter; unless terminated earlier in accordance with the provisions of this Agreement (the "Term").

(a)

Termination by the Company. The Company may only terminate this Agreement for "Good Cause", which shall be limited to any of the following occurrences; (2) Fraud, embezzlement, or similar act of dishonesty, on the part of the Consultant or any Assistant; or (3) An uncured material breach of this Agreement by the Consultant after written notice. In the event of such termination, Consultant shall be paid for any portion of the Services that have been performed prior to the termination.

(b)

Termination by the Consultant. The Consultant may terminate this Agreement at any time upon ten (10) business days' written notice. In the event of such termination, Consultant shall be paid for any portion of the Services that have been performed prior to the termination.

(c)

Consequences of Termination. Within thirty (30) business days of termination of this Agreement for any reason, Consultant shall submit to Company an itemized invoice for any Fees or expenses previously accrued under this Agreement. Company, upon payment of accrued amounts so invoiced, shall have no further liability or obligation to Consultant whatsoever for any further fees, expenses, or other payment.

5.

Employment Agreement. Notwithstanding anything to the contrary contained in this Agreement: (a) at any time during the Term, and at the Consultant's sole discretion, which discretion the Consultant shall exercise by way of a written notice to the Company; or (b) upon the expiration of the Term ; the Company shall (or shall cause its parent company to), within ten (10) business days of the events specified in (a), or (b) above, execute an employment agreement (the "Employment Agreement") with Mr. Atul Sabharwal (the "Executive"): (i) employing the Executive as a "C-level" executive of the Company; (ii) paying the Executive an annual remuneration of a minimum of USD 150,000; (iii) providing the Executive with a severance payment of a minimum of USD 75,000 in the event of: (x) a termination by the Company of the Employment Agreement without Good Cause, or a termination by the Executive of the Employment Agreement for Good Reason ("Good Cause", and "Good Reason" shall have the meanings assigned to them under the Erik Hallstrom Employment Agreement); and (iv) containing other terms and conditions customary for an employment agreement with a "C-Level" executive (including, without limitation, terms relating to the grant of options, restricted stock and other benefits). For abundant caution it is hereby clarified that upon execution of the Employment Agreement, this Agreement shall immediately terminate.

6.

Independent Contractor. During the Term, Consultant's and any Assistant's relationship with the Company will be that of an independent contractor and not that of an employee.

7.

Method of Provision of Services. Consultant shall be solely responsible for determining the method, details and means of performing the Services. Consultant may, at Consultant's own expense, employ or engage the services of such employees, subcontractors, partners or agents, as Consultant deems necessary to perform the Services (collectively, the "Assistants"). The Assistants are not and shall not be employees of the Company, and Consultant shall be wholly responsible for the professional performance of the Services by the Assistants such that the results are satisfactory to the Company. Consultant shall expressly advise the Assistants of the terms of this Agreement, and shall require each Assistant to execute and deliver to the Company a Confidential Information and Invention Assignment Agreement substantially in the form attached to this Agreement as Exhibit D hereto (the "Confidentiality Agreement").

(a)

No Authority to Bind Company. Consultant acknowledges and agrees that Consultant and its Assistants have no authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company.

(b)

No Benefits. Key Employee of Consultant Consultant acknowledges and agrees that Consultant and its Assistants shall not will be eligible for any Company employee benefits to the extent that Consultant does not provide such benefit to Key Employee. All costs of providing benefits will be borne by the Company. and, to the extent Consultant otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement, Consultant (on behalf of itself and its employees) hereby expressly declines to participate in such Company employee benefits.

(c)

Withholding.

Consultant shall have full responsibility for applicable
withholding taxes for all compensation paid to Consultant or its Assistants under this Agreement, and for compliance with all applicable labor and employment requirements with respect to Consultant's self-employment, sole proprietorship or other form of business organization, and with respect to the Assistants, including state worker's compensation insurance coverage requirements a.

8.

Supervision of Consultant's Services. All of the services to be performed by Consultant, including but not limited to the Services, will be as agreed between Consultant and the Board of Directors.

9.

Miscellaneous.

(a)

Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the Consultant.

(b)

Sole Agreement. This Agreement, including the Exhibits hereto, constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.

(c)

Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by email or fax (upon customary confirmation of receipt), or forty-eight (48) hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party's address or fax number as set forth on the signature page or as subsequently modified by written notice.

(d)

Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without giving effect to the principles of conflict of laws.

(e)

Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) , (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(f)

Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(g)

Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

-Signature Page Follows-

The Parties have executed this Agreement as of the date first written above.

THE COMPANY:

CONSUMER IMPULSE, INC

EXHIBIT A

DESCRIPTION OF CONSULTING SERVICES

	Description of Services	Schedule/Deadline
1.	Introduction of industry contacts and business opportunities pertaining to Consumer Impulse's business	Ongoing
2.	Assist in building management team of Consumer Impulse	Ongoing
3.	Mentoring management team in dealing with current and future customers	Ongoing
4.	Advice and assist in training sales team	End of Year 1
5.	Advice and assist in training operations team	End of Year 1
6.	Advice and assist technical team in building functionality and enhancing platform features	Ongoing
7.	Providing strategic advice on business direction and growth of business	Ongoing
8.	Assisting financial team in managing investor queries	Ongoing
9.	Negotiating on behalf of Company	Ongoing
10.	Analyzing and assessing new markets, acquisition opportunities and other strategic endeavors	Ongoing
11.	Taking a Board Seat	Ongoing

EXHIBIT B

COMPENSATION

For Services rendered by Consultant under this Agreement for a period of three (3) years from the CEO Appointment Condition Date, the Company shall pay Consultant an Annual total amount of $150,000 (One Hundred and Fifty Thousand Dollars), payable in equal monthly installments (of $12,500), or in such other installments as may be agreed to in writing by the Parties.

EXHIBIT D

CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT

(See Attached)

Consumer Impulse, Inc.

CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT

Consultant Name: Ritesh Bhavnani (the "Consultant")

Effective Date: October 31st, 2011

As a condition of the Consultant becoming retained (or the Consultant's consulting relationship being continued) by Consumer Impulse Inc., a Delaware corporation, or any of its current or future subsidiaries, affiliates, successors or assigns (collectively, the "Company"), and in consideration of the Consultant's consulting relationship with the Company and Consultant's receipt of the compensation now and hereafter paid to the Consultant by the Company, the Consultant agrees to the following:

1.

Relationship. This Agreement will apply to the Consultant's consulting relationship with the Company. If that relationship ends and the Company, within a year thereafter, either employs the Consultant or re-engages the Consultant as a consultant, the Consultant agrees that this Agreement will also apply to such later employment or consulting relationship, unless the Company and the Consultant otherwise agrees in writing. Any such employment or consulting relationship between the Company and the Consultant, whether commenced prior to, upon or after the date of this Agreement, is referred to herein as the "Relationship."

2.

Duties. Consultant will perform for the Company such duties as may be required pursuant to the Consultant's Consulting Agreement with the Company referenced above (the "Consulting Agreement").

3.

Confidential Information.

3.1.

Protection of Information. The Consultant agrees, at all times during the term of the Relationship and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company to the extent necessary to perform the Consultant's obligations to the Company under the Relationship, and not to disclose to any person, firm, corporation or other entity, without written authorization from the Company in each instance, any Confidential Information (as defined below) that the Consultant obtains, accesses or creates during the term of the Relationship, whether or not during working hours, until such Confidential Information becomes publicly and widely known and made generally available through no wrongful act of the Consultant or of others who were under confidentiality obligations as to the item or items involved. The Consultant further agrees not to make copies of such Confidential Information except as authorized by the Company.

3.2

Confidential Information.

The Consultant understands that "Confidential Information" means information and physical material not generally known or available outside the Company and information and physical material entrusted to the Company in confidence by third parties. Confidential Information includes, without limitation: (i) Company Inventions (as defined below); (ii) technical data, trade secrets, know-how, research, product or service ideas or plans, software codes and designs, developments, inventions, laboratory notebooks, processes, formulas, techniques, biological materials, mask works, engineering designs and drawings, hardware configuration information, lists of, or information relating to, employees and consultants of the Company (including, but not limited to, the names, contact information, jobs, compensation, and expertise of such employees and consultants), lists of, or information relating to, suppliers and customers (including, but not limited to, customers of the Company on whom Consultant called or with whom Consultant becathe Consultant acquainted during the Relationship), price lists, pricing methodologies, cost data, market share data, marketing plans, licenses, contract information, business plans, financial forecasts, historical financial data, budgets or other business information disclosed to the Consultant by the Company either directly or indirectly, whether in writing, electronically, orally, or by observation.

3.3

Third Party Information. The agreements in this Section 3 are intended to be for the benefit of the Company and any third party that has entrusted information or physical material to the Company in confidence.

3.4

Other Rights. This Agreement is intended to supplement, and not to supersede, any rights the Company may have in law or equity with respect to the protection of trade secrets or confidential or proprietary information.

4.

Ownership of Inventions.

4.1

Inventions Retained and Licensed. Consultant has attached hereto, as Exhibit A, a complete list describing with particularity all Inventions (as defined below) that, as of the Effective Date, belong solely to the Consultant or belong to the Consultant jointly with others, and that relate in any way to any of the Company's proposed businesses, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, Consultant represent that there are no such Inventions at the time of signing this Agreement.

4.2

Use or Incorporation of Inventions. If in the course of the Relationship, the Consultant uses or incorporates into a product, process or machine any Invention not covered by Section 4.4 of this Agreement in which Consultant has an interest, the Consultant will promptly so inform the Company.

4.3

Inventions.

Consultant understand that "Inventions" means discoveries, developments, concepts, designs, ideas, know how, improvements, inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. Consultant understand this includes, but is not limited to, any new product, machine, article of manufacture, biological material, method, procedure, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design or configuration of any kind, or any improvement thereon. Consultant understand that "Company Inventions" means any and all Inventions that Consultant may solely or jointly author, discover, develop, conceive, or reduce to practice during the period of the Relationship, except as otherwise provided in Section 4.7 below.

4.4

Assignment of Company Inventions. Consultant agrees that Consultant will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all the Consultant's right, title and interest throughout the world in and to any and all Company Inventions. Consultant hereby waive and irrevocably quitclaim to the Company or its designee any and all claims, of any nature whatsoever, that Consultant now have or may hereafter have for infringement of any and all Company Inventions.

4.5

Maintenance of Records. Consultant agrees to keep and maintain adequate and current written records of all Company Inventions made by the Consultant (solely or jointly with others) during the term of the Relationship. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, laboratory notebooks, or anyother format. The records will be available to and remain the sole property of the Company at all times. Consultant agrees not to remove such records from the Company's place of business except as expressly permitted by Company policy which may, from time to time, be revised at the sole election of the Company for the purpose of furthering the Company's business. Consultant agrees to deliver all such records (including any copies thereof) to the Company at the time of termination of the Relationship as provided for in Sections 5 and 6.

4.6

Patent and Copyright Rights. Consultant agrees to assist the Company, or its designee, at the Company's expense, in every proper way to secure the Company's, or its designee's, rights in the Company Inventions and any copyrights, patents, trademarks, mask work rights, moral rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company or its designee of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which the Company or its designee shall deem necessary in order to apply for, obtain, maintain and transfer such rights, or if not transferable, waive such rights, and in order to assign and convey to the Company or its designee, and any successors, assigns and nominees the sole and exclusive right, title and interest in and to such Company Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. Consultant further agrees that the Consultant's obligation to execute or cause to be executed, when it is in the Consultant's power to do so, any such instrument or papers shall continue during and at all times after the end of the Relationship and until the expiration of the last such intellectual property right to expire in any country of the world. Consultant hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as the Consultant's agent and attorney-in-fact, to act for and in the Consultant's behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters of patents, copyright, mask work and other registrations related to such Company Inventions. This power of attorney is coupled with an interest and shall not be affected by the Consultant's subsequent incapacity.

4.7

Exception to Assignments. Consultant understand that the Company Inventions will not include, and the provisions of this Agreement requiring assignment of inventions to the Company do not apply to, any invention for which no trade secret information of the Company was used and which was developed entirely on the Consultant's own time, unless (a) the invention relates (i) directly to the business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the Consultant for the Company.

5.

Company Property; Returning Company Documents. Consultant acknowledges and agrees that the Consultant has no expectation of privacy with respect to the Company's telecommunications, networking or information processing systems (including, without limitation, files, e-mail messages, and voice messages) and that the Consultant's activity and any files or messages on or using any of those systems may be monitored at any time without notice. Consultant further agrees that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by the Company personnel at any time with or without notice. Consultant agrees that, at the time of termination of the Relationship, Consultant will deliver to the Company (and will not keep in the Consultant's possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any of the aforementioned items developed by the Consultant pursuant to the Relationship or otherwise belonging to the Company, its successors or assigns.

6.

Notice to Third Parties. Consultant understand and agree that the Company may, with or without prior notice to the Consultant and during or after the term of the Relationship, notify third parties of the Consultant's agreements and obligations under this Agreement.

7.

Solicitation of Employees, Consultants and Other Parties. As described above, the Consultant acknowledges and agrees that the Company's Confidential Information includes information relating to the Company's employees, consultants, customers and others, and that Consultant will not use or disclose such Confidential Information except as authorized by the Company. Consultant further agrees as follows:

7.1

Employees, Consultants. The Consultant agrees that during the term

of the Relationship, for any reason, whether with or without cause, Consultant shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company's employees or consultants to terminate their relationship with the Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for myself or for any other person or entity.

7.2.

Other Parties. Consultant agrees that during the term of the Relationship, for any reason, whether with or without cause, Consultant shall not use any Confidential Information of the Company to negatively influence any of the Company's clients or customers from purchasing Company products or services or to solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company.

8.

No Change to Duration of Relationship. Consultant understands and acknowledges that this Agreement does not alter, amend or expand upon any rights Consultant may have to continue in the consulting relationship with, or in the duration of the Consultant's consulting relationship with, the Company under any existing agreements between the Company and me, including without limitation the Consulting Agreement, or under applicable law.

9.

Representations and Covenants.

9.1.

Facilitation of Agreement. Consultant agrees to execute promptly, both during and after the end of the Relationship, any proper oath, and to verify any proper document, required to carry out the terms of this Agreement, upon the Company's written request to do so.

9.2.

No Conflicts.

Consultant represents that the Consultant's performance of all the terms of this Agreement does not and will not breach any agreement Consultant has entered into, or will enter into, with any third party, including without limitation any agreement to keep in confidence proprietary information or materials acquired by the Consultant in confidence or in trust prior to or during the Relationship. Consultant will not disclose to the Company or use any inventions, confidential or non-public proprietary information or material belonging to any previous client, employer or any other party. Consultant will not induce the Company to use any inventions, confidential or non-public proprietary information, or material belonging to any previous client, employer or any other party. Consultant acknowledges and agrees that the Consultant has listed on Exhibit A all agreements (e.g., non-competition agreements, non-solicitation of customers agreements, non-solicitation of employees agreements, confidentiality agreements, inventions agreements, etc.), if any, with a current or former client, employer, or any other person or entity, that may restrict the Consultant's ability to perform services for the Company or the Consultant's ability to recruit or engage customers or service providers on behalf of the Company, or otherwise relate to or restrict the Consultant's ability to perform the Consultant's duties for the Company or any obligation Consultant may have to the Company. Consultant agrees not to enter into any written or oral agreement that conflicts with the provisions of this Agreement.

9.3.

Voluntary Execution. The Consultant certifies and acknowledges that the Consultant has carefully read all of the provisions of this Agreement, that the Consultant understands and has voluntarily accepted such provisions, and that the Consultant will fully and faithfully comply with such provisions.

10.

General Provisions.

10.1.

Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of [California], without giving effect to the principles of conflict of laws.

10.2.

Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and the Consultant relating to its subject matter and merges all prior discussions between us. No amendment to this Agreement will be effective unless in writing signed by both parties to this Agreement. The Company shall not be deemed hereby to have waived any rights or remedies it may have in law or equity, nor to have given any authorizations or waived any of its rights under this Agreement, unless, and only to the extent, it does so by a specific writing signed by a duly authorized officer of the Company, it being understood that, even if Consultant am an officer of the Company, Consultant will not have authority to give any such authorizations or waivers for the Company under this Agreement without specific approval by the Board of Directors. Any subsequent change or changes in the Consultant's duties, obligations, rights or compensation will not affect the validity or scope of this Agreement.

10.3.

Severability. If one or more of the provisions in this Agreement are deemed void or unenforceable to any extent in any context, such provisions shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected. In the event that any court or government agency of competent jurisdiction determines that, notwithstanding the terms of the Consulting Agreement specifying the Consultant's Relationship with the Company as that of an independent contractor, the Consultant's provision of services to the Company is not as an independent contractor but instead as an employee under the applicable laws, then solely to the extent that such determination is applicable, references in this Agreement to the Relationship between the Consultant and the Company shall be interpreted to include an employment relationship, and this Agreement shall not be invalid and unenforceable but shall be read to the fullest extent as may be valid and enforceable under the applicable laws to carry out the intent and purpose of the Agreement.

10.4.

Successors and Assigns. This Agreement will be binding upon the Consultant's heirs, executors, administrators and other legal representatives, and the Consultant's successors and assigns, and will be for the benefit of the Company, its successors, and its assigns.

10.5.

Remedies. Consultant acknowledges and agrees that violation of this Agreement by the Consultant may cause the Company irreparable harm, and therefore agree that the Company will be entitled to seek extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions and permanent injunctions without the necessity of posting a bond or other security, in addition to and without prejudice to any other rights or remedies that the Company may have for a breach of this Agreement.

10.6.

Advice of Counsel. CONSULTANT ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, CONSULTANT HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND CONSULTANT HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

The parties have executed this Agreement on the respective dates set forth below, to be effective as of the Effective Date first above written.

The Company:

CONSUMER IMPULSE, INC.

EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
EXCLUDED UNDER SECTION 4(a)

Title
Date Identifying Number or Brief Description

__   No inventions, improvements, or original works of authorship

__   Additional sheets attached

Signature of Consultant: ________________________________

Print Name of Consultant: ______________________________

Date: _______________________________________________

EX-4.4

SNIPP

2000 FLORIDA AVENUE NW (SUITE 230)

WASHINGTON, DC 20009

16 May, 2012

John D. Fauller

1942 North Warren Avenue

Milwaukee, WI 53202

Dear John:

Consumer Impulse Inc, (the “Company”), a wholly owned subsidiary of Snipp Interactive Inc., is pleased to offer you the full-time exempt position of Chief Operating Officer (COO), reporting to the Company’s Chief Executive Officer, with an anticipated start date on or before July 1, 2012.

Your primary duties will include overseeing the company’s technology & product management, product development and service delivery operations, and those other duties periodically described to you, and consistent with that of a COO in an early-stage services company. You will also be a member of the company’s senior management team. You shall devote your full working time, attention and best efforts to fulfill your duties and to further the business and interests of the Company. You will primarily be working out of your home, and as requested by the Company from time to time, out of the Company's Washington DC office or other locations in the United States that the Company may establish.

As a full-time, salaried employee you will receive an annual salary of US$ 115,000, payable on the Company’s regular payroll dates, and subject to tax and other withholdings as required by law. Such salary may be adjusted from time to time in accordance with normal business practice and at the sole discretion of the Company.

In addition, you are eligible for an annual incentive bonus, equivalent to up to 30% of your then-current annual base salary (pro-rated for the first year based on your actual start date), based upon successful achievement of performance objectives as established by the Company in its sole discretion, and based upon your being a full-time employee of the Company at the time of payment of such bonus. These objectives shall be discussed and agreed upon once you have started employment with the company and can be renegotiated each year.

Subject to the Company’s Board of Directors approval, and the approval of the TSX Venture Exchange, after 6 months of your continuous employment with the Company, you may be eligible to participate in a plan for equity based compensation which the Company (or its parent company) anticipates to implement in the future. All grants under such future plan are subject to the Company’s sole discretion and shall be subject to all terms, vesting schedules and other provisions set forth in the equity based compensation plan and related agreements.

During your employment, you will be entitled to the benefits generally made available to regular, full-time salaried employees of the Company including health, dental and visual insurance as well as a 401(k) program, as and when such benefits are generally made available to regular, full-time salaried employees. The company plans to provide full time employees 8 paid holidays for the calendar year 2012. You are also eligible for a maximum of 10 paid vacation days per calendar year, based upon a monthly accrual, to be taken at such times as may be approved by the Company.

The Company will reimburse you for reasonable and pre-approved business expenses incurred solely in the performance of your official duties, provided that you provide the Company with documentation of such expenses as is required by the Internal Revenue Service and in accordance with the Company’s policies. The Company will also loan you a Company laptop for use in performance with your duties, which laptop, along with all other property of the Company must be returned to the Company as and when requested by the Company.

Your employment with the Company is for no specified period and constitutes "at-will" employment in that it can be terminated with or without cause, and with or without notice, at anytime, at the option of either the Company or yourself, except as otherwise provided by law. The terms of this offer letter, therefore, do not and are not intended to create either an express and/or implied contract of employment with the Company. Similarly, nothing in this letter shall be construed as an agreement, either express or implied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company.

This letter, along with the agreement relating to Confidential Information and Invention Assignment Agreement, a copy of which is attached, set forth the terms of your employment with the Company and supersede any prior representations or agreements whether written or oral.

You represent that you are not bound by any employment contract, restrictive covenant or other restriction preventing you from entering into employment with or carrying out your responsibilities for the Company, or which is in any way inconsistent with the terms of this letter. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity pertaining to or in any way related to your work with the Company without the written consent of the Company. Further, while you render Services to the company, you will not, nor will you assist any person or entity in, competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.

You agree to provide to the Company, within three days of your hire date, documentation of your eligibility to work in the United States, as required by the Immigration Reform and Control Act of 1986. You may need to obtain a work visa in order to be eligible to work in the United States. If that is the case, your employment with the Company will be conditioned upon your obtaining a work visa in a timely manner as determined by the Company. This offer of employment is also contingent on satisfactory reference checks by the Company.

If you agree with and accept the terms of this offer of employment, please sign below and return this letter to me. If not accepted, this offer shall expire on May 17, 2012, but please contact us if you need more time to make a decision. We are pleased to have you join the Snipp team, and we look forward to our success together.

Very truly yours,

Consumer Impulse, Inc.

ATTACHMENT A

CONSUMER IMPULSE, INC.

CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT

Employee Name: John D. Fauller

Effective Date: May 16, 2012 ____________________

As a condition of my becoming employed (or my employment being continued) by Consumer Impulse, Inc., a Delaware corporation, or any of its current or future subsidiaries, affiliates, successors or assigns (collectively, the “Company”), and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by the Company, I agree to the following:

1.

Relationship. This Agreement will apply to my employment relationship with the Company. If that relationship ends and the Company, within a year thereafter, either reemploys me or engages me as a consultant, I agree that this Agreement will also apply to such later employment or consulting relationship, unless the Company and I otherwise agree in writing. Any such employment or consulting relationship between the Company and me, whether commenced prior to, upon or after the date of this Agreement, is referred to herein as the “Relationship.”

2.

Duties. I will perform for the Company such duties as may be designated by the Company from time to time or that are otherwise within the scope of the Relationship and not contrary to instructions from the Company. During the Relationship, I will devote my entire best business efforts to the interests of the Company and will not engage in other employment or in any activities detrimental to the best interests of the Company without the prior written consent of the Company.

3.

Confidential Information.

(a)

Protection of Information. I agree, at all times during the term of the Relationship and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company to the extent necessary to perform my obligations to the Company under the Relationship, and not to disclose to any person, firm, corporation or other entity, without written authorization from the Company in each instance, any Confidential Information (as defined below) that I obtain, access or create during the term of the Relationship, whether or not during working hours, until such Confidential Information becomes publicly and widely known and made generally available through no wrongful act of mine or of others who were under confidentiality obligations as to the item or items involved. I further agree not to make copies of such Confidential Information except as authorized by the Company.

(b)

Confidential Information. I understand that “Confidential Information” means information and physical material not generally known or available outside the Company and information and physical material entrusted to the Company in confidence by third parties. Confidential Information includes, without limitation: (i) Company Inventions (as defined below); (ii) technical data, trade secrets, know-how, research, product or service ideas or plans, software codes and designs, developments, inventions, laboratory notebooks, processes, formulas, techniques, biological materials, mask works, engineering designs and drawings, hardware configuration information, lists of, or information relating to, employees and consultants of the Company (including, but not limited to, the names, contact information, jobs, compensation, and expertise of such employees and consultants), lists of, or information relating to, suppliers and customers (including, but not limited to, customers of the Company on whom I called or with whom I became acquainted during the Relationship), price lists, pricing methodologies, cost data, market share data, marketing plans, licenses, contract information, business plans, financial forecasts, historical financial data, budgets or other business information disclosed to me by the Company either directly or indirectly, whether in writing, electronically, orally, or by observation.

(c)

Third Party Information. My agreements in this Section 3 are intended to be for the benefit of the Company and any third party that has entrusted information or physical material to the Company in confidence.

(d)

Other Rights. This Agreement is intended to supplement, and not to supersede, any rights the Company may have in law or equity with respect to the protection of trade secrets or confidential or proprietary information.

4.

Ownership of Inventions.

(a)

Inventions Retained and Licensed. I have attached hereto, as Exhibit A, a complete list describing with particularity all Inventions (as defined below) that, as of the Effective Date, belong solely to me or belong to me jointly with others, and that relate in any way to any of the Company’s proposed businesses, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, I represent that there are no such Inventions at the time of signing this Agreement.

(b)

Use or Incorporation of Inventions. If in the course of the Relationship, I use or incorporate into a product, process or machine any Invention not covered by Section 4(d) of this Agreement in which I have an interest, I will promptly so inform the Company. Whether or not I give such notice, I hereby irrevocably grant to the Company a nonexclusive, fully paid-up, royalty-free, assumable, perpetual, worldwide license, with right to transfer and to sublicense, to practice and exploit such Invention and to make, have made, copy, modify, make derivative works of, use, sell, import, and otherwise distribute under all applicable intellectual properties without restriction of any kind.

(c)

Inventions.

I understand that “Inventions” means discoveries, developments, concepts, designs, ideas, know how, improvements, inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. I understand this includes, but is not limited to, any new product, machine, article of manufacture, biological material, method, procedure, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design or configuration of any kind, or any improvement thereon. I understand that “Company Inventions” means any and all Inventions that I may solely or jointly author, discover, develop, conceive, or reduce to practice during the period of the Relationship, except as otherwise provided under applicable State law.

(d)

Assignment of Company Inventions. I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all my right, title and interest throughout the world in and to any and all Company Inventions. I further acknowledge that all Company Inventions that are made by me (solely or jointly with others) within the scope of and during the period of the Relationship are “works made for hire” (to the greatest extent permitted by applicable law) and are compensated by my salary. I hereby waive and irrevocably quitclaim to the Company or its designee any and all claims, of any nature whatsoever, that I now have or may hereafter have for infringement of any and all Company Inventions.

(e)

Maintenance of Records. I agree to keep and maintain adequate and current written records of all Company Inventions made by me (solely or jointly with others) during the term of the Relationship. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, laboratory notebooks, or any other format. The records will be available to and remain the sole property of the Company at all times. I agree not to remove such records from the Company’s place of business except as expressly permitted by Company policy which may, from time to time, be revised at the sole election of the Company for the purpose of furthering the Company’s business. I agree to deliver all such records (including any copies thereof) to the Company at the time of termination of the Relationship as provided for in Sections 5 and 6.

(f)

Patent and Copyright Rights. I agree to assist the Company, or its designee, at its expense, in every proper way to secure the Company’s, or its designee’s, rights in the Company Inventions and any copyrights, patents, trademarks, mask work rights, moral rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company or its designee of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which the Company or its designee shall deem necessary in order to apply for, obtain, maintain and transfer such rights, or if not transferable, waive such rights, and in order to assign and convey to the Company or its designee, and any successors, assigns and nominees the sole and exclusive right, title and interest in and to such Company Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue during and at all times after the end of the Relationship and until the expiration of the last such intellectual property right to expire in any country of the world. I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters of patents, copyright, mask work and other registrations related to such Company Inventions. This power of attorney is coupled with an interest and shall not be affected by my subsequent incapacity.

5.

Company Property; Returning Company Documents. I acknowledge and agree that I have no expectation of privacy with respect to the Company’s telecommunications, networking or information processing systems (including, without limitation, files, e-mail messages, and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. I further agree that any property situated on the Company’s premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. I agree that, at the time of termination of the Relationship, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any of the aforementioned items developed by me pursuant to the Relationship or otherwise belonging to the Company, its successors or assigns.

6.

Termination Certification. In the event of the termination of the Relationship, I agree to sign and deliver the “Termination Certification” attached hereto as Exhibit B; however, my failure to sign and deliver the Termination Certification shall in no way diminish my continuing obligations under this Agreement.

7.

Notice to Third Parties. I understand and agree that the Company may, with or without prior notice to me and during or after the term of the Relationship, notify third parties of my agreements and obligations under this Agreement.

8.

Solicitation of Employees, Consultants and Other Parties. As described above, I acknowledge and agree that the Company's Confidential Information includes information relating to the Company's employees, consultants, customers and others, and that I will not use or disclose such Confidential Information except as authorized by the Company. I further agree as follows:

(a)

Employees, Consultants. I agree that during the term of the Relationship, and for a period of twelve (12) months immediately following the termination of the Relationship for any reason, whether with or without cause, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for myself or for any other person or entity.

(b)

Other Parties. I agree that during the term of the Relationship, and for a period of twelve (12) months immediately following the termination of the Relationship for any reason, whether with or without cause, I shall not use any Confidential Information of the Company to negatively influence any of the Company’s clients or customers from purchasing Company products or services or to solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company.

9.

At-Will Relationship. I understand and acknowledge that, except as may be otherwise explicitly provided in a separate written agreement between the Company and me, my Relationship with the Company is and shall continue to be at-will, as defined under applicable law, meaning that either I or the Company may terminate the Relationship at any time for any reason or no reason, without further obligation or liability, other than those provisions of this Agreement that explicitly survive the termination of the Relationship.

10.

Representations and Covenants.

(a)

Facilitation of Agreement. I agree to execute promptly, both during and after the end of the Relationship, any proper oath, and to verify any proper document, required to carry out the terms of this Agreement, upon the Company’s written request to do so.

(b)

No Conflicts. I represent that my performance of all the terms of this Agreement does not and will not breach any agreement I have entered into, or will enter into, with any third party, including without limitation any agreement to keep in confidence proprietary information or materials acquired by me in confidence or in trust prior to or during the Relationship. I will not disclose to the Company or use any inventions, confidential or non­public proprietary information or material belonging to any previous client, employer or any other party. I will not induce the Company to use any inventions, confidential or non-public proprietary information, or material belonging to any previous client, employer or any other party. I acknowledge and agree that I have listed on Exhibit A all agreements (e.g., non-competition agreements, non-solicitation of customers agreements, non-solicitation of employees agreements, confidentiality agreements, inventions agreements, etc.), if any, with a current or former client, employer, or any other person or entity, that may restrict my ability to accept employment with the Company or my ability to recruit or engage customers or service providers on behalf of the Company, or otherwise relate to or restrict my ability to perform my duties for the Company or any obligation I may have to the Company. I agree not to enter into any written or oral agreement that conflicts with the provisions of this Agreement.

(c)

Voluntary Execution. I certify and acknowledge that I have carefully read all of the provisions of this Agreement, that I understand and have voluntarily accepted such provisions, and that I will fully and faithfully comply with such provisions.

11.

General Provisions.

(a)

Governing Law.

The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware, without giving effect to the principles of conflict of laws.

(b)

Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and me relating to its subject matter and merges all prior discussions between us. No amendment to this Agreement will be effective unless in writing signed by both parties to this Agreement. The Company shall not be deemed hereby to have waived any rights or remedies it may have in law or equity, nor to have given any authorizations or waived any of its rights under this Agreement, unless, and only to the extent, it does so by a specific writing signed by a duly authorized officer of the Company, it being understood that, even if I am an officer of the Company, I will not have authority to give any such authorizations or waivers for the Company under this Agreement without specific approval by the Board of Directors. Any subsequent change or changes in my duties, obligations, rights or compensation will not affect the validity or scope of this Agreement.

(c)

Severability. If one or more of the provisions in this Agreement are deemed void or unenforceable to any extent in any context, such provisions shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected.

(d)

Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives, and my successors and assigns, and will be for the benefit of the Company, its successors, and its assigns.

(e)

Remedies. I acknowledge and agree that violation of this Agreement by me may cause the Company irreparable harm, and therefore agree that the Company will be entitled to seek extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions and permanent injunctions without the necessity of posting a bond or other security (or, where such a bond or security is required, I agree that a $1,000 bond will be adequate), in addition to and without prejudice to any other rights or remedies that the Company may have for a breach of this Agreement.

(f)

Advice of Counsel. I ACKNOWLEDGE THAT, IN EXECUTING THIS AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

[Signature Page Follows]

The parties have executed this Agreement on the respective dates set forth below, to be effective as of the Effective Date first above written.

EXHIBIT A

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP

EXCLUDED UNDER SECTION 4(a)

Title	Date	Identifying Number or Brief Description
Online Print Estimating System	October, 2009	Method of estimating print online and application in generating print sales for off-the-street and corporate clients.

__  No inventions, improvements, or original works of authorship

__  Additional sheets attached

EXHIBIT B

TERMINATION CERTIFICATION

This is to certify that I do not have in my possession, nor have I failed to return, any devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, flow charts, materials, equipment, other documents or property, or copies or reproductions of any aforementioned items belonging to Consumer Impulse, Inc., a Delaware corporation, its subsidiaries, affiliates, successors or assigns (collectively, the “Company”).

I further certify that I have complied with all the terms of the Company’s Confidential Information and Invention Assignment Agreement signed by me, including the reporting of any Inventions (as defined therein), conceived or made by me (solely or jointly with others) covered by that agreement.

I further agree that, in compliance with the Confidential Information and Invention Assignment Agreement, I will preserve as confidential all trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, designs, formulas, developmental or experimental work, computer programs, data bases, other original works of authorship, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its employees, clients, consultants or licensees.

I further agree that for twelve (12) months from the date of this Certification, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for myself or for any other person or entity.

Further, I agree that for twelve (12) months from the date of this Certification, I shall not use any Confidential Information of the Company to negatively influence any of the Company’s clients or customers from purchasing Company products or services or to solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company.

Date:  ______________________________

EMPLOYEE:

_______________________________

JOHN D. FAULLER

_______________________________

(Signature)

EX-4.5

EXECUTION VERSION

WILSON A. BELL EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is made as of October 31, 2011 (the "Effective Date") by and between Consumer Impulse Inc., a Delaware corporation (the "Company") and Wilson A. Bell, an individual who resides at 9085 Worman Drive, King George, VA 22485 (the "Executive").

In consideration of their mutual promises and obligations and intending to be legally bound, the Company and the Executive agree as follows:

1.

Definitions.

Capitalized terms used in this Agreement but not defined herein shall have the same meaning as assigned to them under the employment agreement executed between Alya Ventures Limited, the Company and Mr. Erik Hallstrom dated September 29, 20111 (the "Erik Hallstrom Employment Agreement").

2.

Introduction.

The Company desires to hire the Executive in the position of Chief Technology Officer of the Company, upon the terms and conditions set forth herein. The Executive desires to accept such employment upon the terms and conditions set forth herein, including, without limitation, the non-disclosure and the non-competition covenants contained in this Agreement.

3.

Employment.

The Company hereby employs the Executive as Chief Technology Officer of the Company, reporting to the board of directors of the Company with duties and responsibilities associated with and related to such position and is otherwise directed by the board of directors of the Company (the "Board of Directors"). The Executive will be based in Virginia, USA

4.

Employment at Will.

The employment of the Executive by the Company shall be "at will," meaning that either the Executive or the Company shall be entitled to terminate the Employment at any time and for any reason, with or without Cause. This Agreement shall constitute the full and complete agreement between the Executive and the Company on the "at-will" nature of the Employment, which may only be changed in an express written agreement signed by the Executive and the Company. Upon the termination of the Employment, the Executive shall only be entitled to the compensation and benefits earned and the reimbursements described in this Agreement for the period preceding the effective date of the termination

5.

Term of Employment.

This Agreement shall commence on the CEO Appointment Date and continue in full force and effect thereafter unless terminated earlier in accordance with the provisions of this Agreement (the "Term"). In the event that the CEO Appointment Date does not occur by the Deadline, then this Agreement shall immediately terminate.

6.

Compensation and Benefits.

(a)

Base Salary. During the Term, the Company shall pay to the Executive a base salary in an amount that annualizes to $130,000 (the "Base Salary"), which will be payable, in equal periodic installments according to the Company's customary payroll practices, but no less frequently than monthly. The Base Salary will be reviewed by the Board of Directors annually, and any change in Base Salary shall be made by, and at the sole discretion and approval of, the Board of Directors. Executive will also be entitled to a targeted bonus package of upto 25% of the base salary at the boards discretion.

(b)

Benefits. During the term, at the Company's expense, the Executive shall be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, incentive compensation plans, and other benefit plans, as may be from time to time in effect for executives of the Company generally.

7.

Business Expenses. The Company shall pay or reimburse the Executive for all reasonable business expenses incurred or paid by the Executive in the performance of his duties; provided, that the Executive furnishes to the Company documentation of such expenses as is required by the Internal Revenue Service, as well as such other documentation as the Company may reasonably request, and in accordance with the Company's policies.

8.

Protection of Confidential Information and Intellectual Property. The Executive acknowledges that the Company is engaged in a continuous program of research, development and production in connection with its business, present and future, and hereby agrees to be subject to the terms and conditions of the Company's form of Proprietary Information and Nondisclosure Agreement, a copy of which is attached hereto as Exhibit A.

9.

Noncompetition.

(a)

During the course of Executive's employment by the Company and for a period of one year after the date of termination (collectively, the "Noncompetition Period"), for any reason or no reason, directly or indirectly, whether with or without good cause, the Executive shall not, whether as owner, partner, shareholder, director, consultant, agent, employee, guarantor, surety or otherwise, or through any person, consult with or in any way aid or assist any competitor of the Company or any subsidiary or affiliate thereof now or hereafter existing (referred to collectively as the "Affiliates") or engage or attempt to engage in any employment, consulting or other activity, which activity competes, directly or indirectly, with the business of the Company or any Affiliate anywhere in the world. For purposes of this Agreement, the term "employment" shall include the employment of the Executive as an employee, consultant, agent, independent contractor or otherwise. The Executive acknowledges that the Executive's participation in the conduct of any such business alone or with any person other than the Company will materially impair the business and prospects of the Company.

(b)

In addition to and without limiting the foregoing, during the term of the Noncompetition Period, the Executive shall not attempt to or assist any other person in attempting to do, or do any of the following: (i) encourage any customer, client, supplier or other business relationship of the Company or any Affiliate to terminate or alter such relationship, whether contractual or otherwise, to the disadvantage of the Company or any Affiliate, as the case may be (ii) encourage any prospective customer or supplier not to enter into a business relationship with the Company or any Affiliate; (iii) impair or attempt to impair any relationship, contractual or otherwise, written or oral, between the Company or any Affiliate and any customer, supplier or other business relationship of the Company or any Affiliate or; (iv) sell or offer to sell or assist in or in connection with the sale to any customer or prospective customer of the Company or any Affiliate any products of the type sold or rendered by the Company or any Affiliate.

(c)

In addition to and without limiting the foregoing, during the term of the Noncompetition Period, the Executive will not either directly or indirectly solicit, pursue or call upon or take away, either for himself or for the benefit of any other person or entity, any of the customers of the Company or any Affiliate upon whom the Executive called or with whom the Executive became acquainted during the Executive's employment or affiliation with the Company.

(d)

Nothing in this Agreement shall preclude the Executive from making passive investments of not more than 1% of a class of securities of any business enterprise registered under the United States Securities Exchange Act of 1934.

10.

Return of Property.  On the termination of the Executive's employment for whatever reason, the Executive will be required to return without delay to the Company all its property of every nature and description including but not limited to personal computers, software, manuals, identity cards and all other items belonging to or issued by or on behalf of the Company in the course of or in connection with the Executive's work.

11.

Non-Hire. The Executive shall not from the date of this Agreement through the end of the Noncompetition Period directly or indirectly solicit, hire or cause to be hired, or attempt to, or assist any other person in soliciting, hiring or causing to be hired for employment any person employed by the Company during the six month period prior to the Executive leaving the Company.

12.

Representations and Warranties by the Executive. The Executive represents and warrants to the Company that employment with the Company and performance of the Executive's duties and obligations under this Agreement will not violate any agreement to which the Executive is or may be bound.

13.

Miscellaneous.

(a)

Entire Agreement. This Agreement constitutes the entire agreement and undertaking of the parties hereto with respect to the subject matter hereof and supercedes all prior agreements and undertakings, both written and oral.

(b)

Severability. In the event that any court having jurisdiction or TSX-V having proper authority shall determine that any covenant or other provision contained in this Agreement shall be unreasonable or unenforceable in any respect, then such covenant or other provision shall be deemed limited to the extent that such court or TSX-V deems it reasonable and enforceable, and as so limited shall remain in full force and effect. In the event that such court or TSX-V shall deem any covenant or provision wholly unenforceable, the remaining covenants and provisions of this Agreement shall nevertheless remain in full force and effect.

(c)

Assignment. This Agreement is personal to Executive and, without the prior written consent of the Company, shall not be assignable by Executive. The Company shall have the right to assign this Agreement to its successors and assigns, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns.

(d)

Notice. Any notice or other communication in connection with this Agreement shall be deemed to be delivered if in writing and if (a) delivered to the address(es) below, or (b) one business day after deposit with a nationally recognized over-night delivery service (receipt and next day delivery requested), in each case the appropriate address is set forth below (or to such other addresses as the party may designate by notice to the other parties);

If to the Company:

Consumer Impulse, Inc.
5241 42nd ST NW,

Washington DC 20015
Attn: Mr. Atul Sabharwal.

With a copy to

Rahoul Roy PLLC
301 West 118th Street
# PH1D

New York, NY 10026
Phone: (646)5465841
Attn: Rahoul Roy, Esq.

If to the Executive, to:

Wilson A. Bell

9085 Worman Drive

King George

VA 22485

Notice of changes in address shall comply with these notice provisions.

(e)

Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the state of Delaware, without giving effect to the conflicts of law principles thereof. Each of the parties further agrees that process may be served upon it by overnight courier or by certified mail, return receipt requested, and consents to the exercise of jurisdiction over it and its properties with respect to any action, suit, or proceeding arising out of or in connection with this Agreement in Delaware.

(f)

Compliance. The failure of any party hereto to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such terms, covenants or conditions, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such power or right at any other time or times.

(g)

Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(h)

Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

(i)

Absence of Duress. Executive acknowledges that the Executive has been afforded sufficient time to understand the terms and effects of this Agreement, and that the agreements and obligations herein are made voluntarily, knowingly and without duress, and that neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement.

(j)

Amendments. This Agreement may not be amended except by a writing signed by the party against whom enforcement is sought.

-Signature Page Continues-

IN WITNESS WHEREOF, the Executive and the Company's duly authorized representatives have caused this Agreement to be executed under seal as of the day and year first above written.

Consumer Impulse, Inc.

EXECUTIVE:

WILSON A. BELL

PROPRIETARY INFORMATION & NONDISCLOSURE AGREEMENT

AGREEMENT entered into between Consumer Impulse Inc., a Delaware corporation (the "Company") and Wilson A. Bell an individual who resides at 9085 Worman Drive, King George, VA 22485 (herein referred to as "me", "I" or the "Employee").

WHEREAS, the Employee on this day has been employed as an employee, officer or director of the Company, pursuant to an employment agreement executed between the Employee and the Company; and

WHEREAS, in such capacity the Employee will have access to confidential and proprietary information about the Company, its products and its clients, all of which are of great value to the Company and which are not generally known but are confidential; and

WHEREAS, it is a condition to the Employee's employment by the Company that the Employee enter into this Agreement;

NOW, THEREFORE, in consideration of the Company's employment of the Employee, and as a condition thereof, it is hereby agreed by and between the parties as follows:

1.

Definitions. For the purposes of this Agreement the terms set forth below shall have the following meanings:

1.1

Confidential Information. That private, secret, or confidential information of the Company, whether or not in writing, of whatever kind or nature disclosed to me or known by me, (whether or not invented, discovered or developed by me) as a consequence of or through my employment with the Company, regardless of the form or media on which such information is disclosed or stored, some or all of which property may be protected by statute, common law, or contract, and including all information of any third party whose confidential information the Company is under a legal obligation to protect. Such Confidential Information shall include information relating to the design, manufacture, application, know-how, research and development relating to the Company's products and services, sources of supply and material, operating and other cost data, lists of present, past or prospective customers, customer proposals, price lists and data relating to pricing of the Company's products or services, any of which information is not generally known in the industry, and shall specifically include all information contained in manuals, memoranda, formulae, plans, drawings and designs, specifications, supply sources, and records of the Company including without limitation that which is marked or otherwise identified by the Company (or third party whose confidential information the Company is under a legal obligation to protect) as Confidential Information. Confidential Information shall not include any information that (i) is generally known to the public, (ii) is independently developed by me without access or reference to other Confidential Information, (iii) was lawfully obtained from a third party without any obligation of confidentiality, (iv) was known to me prior to employment with Company, as can be shown by contemporaneous documentation, or (v) was later published or generally disclosed by the Company.

1.2

Concepts and Ideas. Those concepts and ideas known to me relating to the Company's present and prospective activities and products.

1.3

Inventions. Those discoveries, improvements, and developments, whether or not patentable, relating to the Company's present and prospective activities and products, which such activities and products (with the exception of my prior inventions, as defined below) are known to me by virtue of my employment with the Company, as well as any improvements, discoveries, methods, developments, software, and works of authorship, whether patentable or not, which are created, made, conceived or reduced to practice by me or under my direction or jointly with others during my employment by the Company, whether or not during normal working hours or on the premises of the Company. The term invention as used herein shall include trade secrets and other Confidential Information and shall not be limited to the meaning of "invention" under the United States patent laws or equivalent laws of any country.

1.4

Make. When used in relation to Inventions, make shall include any one or any combination of (i) conception, (ii) actual or constructive reduction to practice, or (iii) development of an Invention and is without regard to whether I am a sole or joint inventor.

1.5

Patents. Any document representing a government granted right to exclude others from making, using, selling, or importing an invention, including any provisional, non-provisional, short-term, design, plant, industrial design, petty, or utility patent applications, or letters patents issued thereupon, including any divisions, continuations, continuations in part, extensions, or reissues thereof, according to the U.S. patent laws or equivalent laws of any country, and any international conventions and treaties in respect of inventions in foreign countries.

2.

Ownership of Inventions. All Inventions, or any modifications thereof, which are at any time conceived or reduced to practice by me, acting alone or in conjunction with others, during and in connection with my employment by the Company, and all Concepts and Ideas held by me on the date of this Agreement shall be the property of the Company, free of any restrictions of any kind on my part in respect thereof. All inventions or modifications made by me within one year after the termination of such employment which are based on or substantially related to any Confidential Information shall be the property of the Company, free of any restrictions of any kind on my part in respect thereof. During the one year immediately following the end of my employment with the Company, I will promptly and completely disclose in writing to the Company all Inventions which relate either to my work assignment at the Company or the Company's Confidential Information for the purpose of determining the Company's rights in each such Invention,

3.

Assignment of Inventions and Copyrights.

3.1

Records. I will keep complete and current written records of all Inventions I make during the period of time I am employed by the Company and will promptly make full disclosure of any such Inventions and Concepts and Ideas to the Company.

3.2

Assignments. I agree to assign and do hereby assign to the Company all my right, title and interest in and to all Inventions, Concepts and Ideas and all related Patents, copyrights, copyright applications, and mask works. I hereby waive all claims or benefits of any moral rights in any creative work done for the Company.

3.3

Further Assurances. I will, at the Company's cost and expense, promptly execute formal applications for Patents and any related declarations and assignment documents, and also do all other acts and things (including, among others, the execution and delivery of instruments of further assurance or confirmation, making myself available for interviewers, depositions and testimony relating to such Inventions) deemed by the Company to be necessary or desirable at any time or times, in order to effect the full assignment to the Company of my entire worldwide rights and title to such Inventions and Concepts and Ideas, without, during the term of this Agreement, further compensation beyond my agreed compensation. I further understand that the absence of a request by the Company for information, or for the making of an oath, or for the execution of any document, shall in no way be construed to constitute a waiver of the Company's rights under this Agreement.

3.4

Power of Attorney. I further agree that if the Company is unable, after

reasonable effort, to secure my signature on any such papers, any executive officer of the Company shall be entitled to execute any such papers as my agent and my attorney-in-fact, and I hereby irrevocably designate and appoint each executive officer of the Company as my agent and attorney-in-fact to execute any such papers on my behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Inventions, Concepts and Ideas, under the foregoing conditions.

4.

Excluded Prior Inventions. I have no obligation to assign to the Company commercial rights, including patent rights, if any, which I hold on the date of this Agreement, to inventions made before such date. On Schedule A below, I have identified (without disclosing trade secrets or other confidential information) every such invention which I have made, singly or jointly, before my employment by the Company and in which I have a personal ownership interest and which is not the subject matter of an issued patent or a printed publication at the time I sign this Agreement.

5.

Excluded Unrelated Works. My obligations to assign ownership of inventions shall not apply to developments which do not relate to the present or planned business or research and development of the Company and which are made and conceived by me outside normal working hours, not on the Company's premises and not using the Company's personnel, contractors, tools, devices, equipment, reference materials, or Confidential Information. To the extent this Agreement shall be construed in accordance with the laws of any jurisdiction which precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, the obligations herein shall be interpreted not to apply to any invention which a court rules and/or the Company agrees falls within such classes.

6.

Confidentiality Obligations.

6.1

Nondisclosure. I will never, directly or indirectly, use the Company's

Confidential Information except as authorized by the Company and only in the furtherance of the Company business; nor will I disclose, publish, or disseminate the Company's Confidential Information to anyone who is not an officer, director, employee, attorney or authorized agent of the Company without the prior written consent of the Company; nor will I file any Patent application relating to any Invention I make during the period of time I am employed by the Company without the prior written approval of the Company's legal counsel. I will execute any reasonable agreements further relating to the protection of the Company's Confidential Information or the Confidential Information of any third party whose Confidential Information the Company is under a legal obligation to protect.

6.2

Return of Copies. I acknowledge that all Confidential Information is and shall remain the property of the Company, or any third party whose confidential information the Company is under a legal obligation to protect, as relevant. All documents, records, and tangible things that embody or contain the Company's Confidential Information are the Company's exclusive property. I have access to them solely for performing the duties of my employment by the Company. I will protect the confidentiality of their content and I will return all of them and all copies, facsimiles and specimens of them and any other tangible forms of the Company's Confidential Information in my possession, custody or control to the Company as may be requested by the Company at any time.

7.

Other Rules. The Company has a right to make and enforce any other reasonable rules and regulations not contrary to this Agreement that will also govern my employment. I acknowledge that this agreement does not constitute a contract of employment and does not imply that the Company will continue my employment for any period of time. I agree that any change or changes in my duties, salary or compensation after the signing of this Agreement shall not affect the validity or scope of this Agreement.

8.

Survival of Obligations. My duties under this Agreement shall survive termination of my employment with the Company. I acknowledge that a remedy at law for any breach or threatened breach by me of the provisions of this Agreement may be inadequate and I therefore agree that the Company, in addition to such other remedies which may be available, shall be entitled to obtain specific performance and other injunctive relief in case of any such breach or threatened breach.

9.

Past Obligations. I hereby represent that, except as herein or earlier disclosed in writing to the Company, I am not bound by the terms of any previous agreement with another party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of my employment with the Company or to refrain from competing, directly or indirectly, with the business of such other party. I further represents that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data I acquired in confidence or in trust prior to my employment with the Company, and I will not disclose to the Company or induce the Company to use any confidential or proprietary information or in material belonging to any previous employer or others.

10.

Notice to Future Employers. For the period of 24 months immediately following the end of my employment by the Company, I will inform each new employer, prior to accepting employment, of the existence of this Agreement and provide that new employer with a copy of it.

11.

Miscellaneous.

11.1

Entire Agreement. This Agreement constitutes the entire agreement and undertaking of the parties hereto with respect to the subject matter hereof and supercedes all prior agreements and undertakings, both written and oral.

11.2

Severability.   In the event that any court having jurisdiction shall determine that any covenant or other provision contained in this Agreement shall be unreasonable or unenforceable in any respect, then such covenant or other provision shall be deemed limited to the extent that such court deems it reasonable and enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any covenant or provision wholly unenforceable, the remaining covenants and provisions of this Agreement shall nevertheless remain in full force and effect.

11.3

Assignment. This Agreement will be binding upon my heirs, executors and administrators and will inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any other corporation or entity that acquires (whether by purchase, merger, consolidation or otherwise) all or substantially all of the business and/or assets of the Company. I consent to be bound by the provisions of this Agreement for the benefit of the Company or any subsidiary or affiliate thereof to whose employ I may be transferred without the necessity that this Agreement be re-signed.

11.4

Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of Delaware, without giving effect to the conflicts of law principles thereof. Each of the parties further agrees that process may be served upon it by overnight courier or by certified mail, return receipt requested, and consents to the exercise of jurisdiction over it and its properties with respect to any action, suit, or proceeding arising out of or in connection with this Agreement.

11.5

Compliance. The failure of any party hereto to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such terms, covenants or conditions, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such power or right at any other time or times.

11.6

Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

11.7

Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

11.8

Absence of Duress. I acknowledges that I have been afforded sufficient time to understand the terms and effects of this Agreement, and that the agreements and obligations herein are made voluntarily, knowingly and without duress, and that neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement.

11.9

Amendments. This Agreement may not be amended, supplemented, cancelled or discharged except by written instrument executed by both parties hereto.

IN WITNESS WHEREOF, the Employee and the Company's duly authorized representative have caused this Agreement to be executed under seal as of the 31st day of October, 2011.

SCHEDULE A

INVENTIONS I MADE BEFORE THE TERM OF MY EMPLOYMENT BY THE COMPANY IN WHICH I HAVE AN OWNERSHIP INTEREST WHICH ARE NOT THE SUBJECT MATTER OF ISSUED PATENTS OR PRINTED PUBLICATIONS:

(If there are none, please enter the word "NONE"; Attach additional pages as necessary)

EX-15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form 20-F of our report dated October 17, 2014 relating to the consolidated financial statements of Snipp Interactive Inc. for the years ended December 31, 2013 and 2012 and to the reference to our firm under the heading “Statement by Experts” in this Registration Statement on Form 20-F.

Signed:

/S/ “MNP LLP”

Toronto, Ontario

October 17, 2014

EX-15.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form 20F of our report dated April 26, 2012, relating to the consolidated financial statements which comprise the consolidated statements of operations and comprehensive loss and cash flows for the year ended December 31, 2011 of Snipp Interactive Inc., which are part of this Registration Statement.

We also consent to the reference to us under the caption “Experts” in the Prospectus.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
October 17, 2014

EX-15.3

SNIPP INTERACTIVE INC.

INCENTIVE STOCK OPTION PLAN

PART 1

INTERPRETATION

1.1

Definitions. In this Plan the following words and phrases shall have the following meanings, namely:

(a)

"Black-out period" means any period established under a disclosure, insider trading or similar policy of the Company during which Officers, Directors and Employees may not exercise options;

(b)

"Board" means the board of directors of the Company and includes any committee of directors appointed by the directors as contemplated by Section 3.1 hereof;

(c)

"Company" means Snipp Interactive Inc.;

(d)

"Consultant" means, in relation to the Company, an individual or Consultant Company, other than an Employee or Director of the Company, that:

(i)

is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an affiliate of the Company, other than services provided in relation to a distribution of securities;

(ii)

provides the services under a written contract between the Company or the affiliate, and the individual or the Consultant Company;

(iii)

in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an affiliate of the Company; and

(iv)

has a relationship with the Company or an affiliate of the Company that enables the individual to be knowledgeable about the business and affairs of the Company.

(e)

"Consultant Company" means for an individual consultant, a company or partnership of which the individual is an employee, shareholder or partner;

(f)

"Director" means any director of the Company or of any of its subsidiaries;

(g)

"Eligible Person" means bona fide Employees, Consultants, Officers or Directors, or corporations employing or wholly owned by such Employees, Consultants, Officers or Directors;

(h)

"Employee" means any individual in the employment of the Company or any of its subsidiaries or of a company providing management or administrative services to the Company;

(i)

"Exchange" means the TSX Venture Exchange and any other stock exchange on which the Shares are listed for trading;

(j)

"Exchange Policy" means the policies, bylaws, rules and regulations of the Exchange governing the granting of options by the Company, as amended from time to time;

(k)

"Expiry Date" means not later than 10 years from the date of grant of the option;

(l)

"Insider" has the meaning ascribed thereto in the Securities Act (British Columbia);

(m)

"Investor Relations Activities" means any activities, by or on behalf of the Company or a shareholder of the Company, that promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:

(i)

the dissemination of information provided, or records prepared, in the ordinary course of business of the Company

(A)

to promote the sale of products or services of the Company, or

(B)

to raise public awareness of the Company, that cannot reasonably be considered to promote the purchase or sale of securities of the Company;

(ii)

activities or communications necessary to comply with the requirements of

(A)

applicable Securities Laws,

(B)

Exchange requirements or the by-laws, rules or other regulatory instruments of any other self-regulatory body or exchange having jurisdiction over the Company;

(iii)

communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

(A)

the communication is only through the newspaper, magazine or publication, and

(B)

the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

(iv)

activities or communications that may be otherwise specified by the Exchange;

(n)

"Joint Actor" means a person acting "jointly or in concert with" another person as that phrase is interpreted in applicable securities laws;

(o)

"Optionee" or "Optionees" means the recipient of an incentive stock option under this Plan;

(p)

"Officer" means any senior officer of the Company or of any of its subsidiaries as defined in the Securities Act (British Columbia);

(q)

"Plan" means this incentive stock option plan as from time to time amended;

(r)

"Securities Act" means the Securities Act, R.S.B.C. 1996, c.418, as amended, from time to time;

(s)

"Securities Laws" means the act, policies, bylaws, rules and regulations of the securities commissions governing the granting of options by the Company, as amended from time to time;

(t)

"Shares" means the common shares without par value of the Company.

1.2

Governing Law. The validity and construction of the Plan shall be governed by and construed in accordance with the laws of the Province of British Columbia, and the federal laws of Canada applicable therein.

1.3

Gender. Throughout this Plan, words importing the masculine gender shall be interpreted as including the female gender.

PART 2

PURPOSE OF PLAN

2.1

Purpose. The purpose of this Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified executives, Employees and Consultants, to incent such individuals to contribute toward the long term goals of the Company, and to encourage such individuals to acquire Shares as long term investments.

PART 3

GRANTING OF OPTIONS

3.1

Administration. This Plan shall be administered by the Board or, if the Board so elects, by a committee (which may consist of only one person) appointed by the Board from its members.

3.2

Committee's Recommendations. The Board may accept all or any part of recommendations of the committee or may refer all or any part thereof back to the committee for further consideration and recommendation.

3.3

Board Authority. Subject to the limitations of the Plan, the Board shall have the authority to:

(a)

grant options to purchase Shares to Eligible Persons;

(b)

determine the terms, limitations, restrictions and conditions respecting such grants;

(c)

interpret the Plan and adopt, amend and rescind such administrative guidelines and other rules and regulations relating to the Plan as it shall from time to time deem advisable; and

(d)

make all other determinations and take all other actions in connection with the implementation and administration of the Plan including without limitation for the purpose of ensuring compliance with Section 7.1 hereof as it may deem necessary or advisable.

3.4

Grant of Option. A resolution of the Board shall specify the number of Shares that should be placed under option to each Eligible Person; the exercise price to be paid for such Shares upon the exercise of each such option; any applicable hold period; and the period, including any applicable vesting periods required by Exchange Policy or by the Board, during which such option may be exercised.

3.5

Written Agreement. Every option granted under this Plan shall be evidenced by a written agreement substantially in the form attached hereto as Schedule "A", containing such terms and conditions as are required by Exchange Policy and Securities Laws, between the Company and the Optionee and, where not expressly set out in the agreement, the provisions of such agreement shall conform to and be governed by this Plan. In the event of any inconsistency between the terms of the agreement and the Plan, the terms of the Plan shall govern.

PART 4

RESERVE OF SHARES FOR OPTIONS

4.1

Sufficient Authorized Shares to be Reserved. Whenever the Notice of Articles of the Company limit the number of authorized Shares, a sufficient number of Shares shall be reserved by the Board to satisfy the exercise of options granted under this Plan. Shares that were the subject of options that have lapsed or terminated shall thereupon no longer be in reserve and may once again be subject to an option granted under this Plan.

4.2

Maximum Number of Shares Reserved. Unless authorized by shareholders of the Company, this Plan, together with all of the Company's other previously established or proposed stock options, stock option plans, employee stock purchase plans or any other compensation or incentive mechanisms involving the issuance or potential issuance of Shares, shall not result, at any time, in the number of Shares reserved for issuance pursuant to stock options exceeding 9,610,527 Shares, being 20% of the Company's issued and outstanding Shares as at the date of shareholder approval of this Plan.

4.3

Limits with Respect to Individuals. The aggregate number of Shares that may be reserved for issuance to any one individual in a 12 month period pursuant to the Plan shall not exceed 5% of the issued and outstanding Shares of the Company determined at the time of the grant of the option, unless the Company has obtained disinterested shareholder approval.

4.4

Limits with Respect to Consultants. The number of options granted to any one Consultant in a 12 month period under the Plan shall not exceed 2% of the issued and outstanding Shares at the time of the grant of the option.

4.5

Limits with Respect to Investor Relations Activities. The aggregate number of options granted to any person conducting Investor Relations Activities in any 12 month period shall not exceed 2% of the issued and outstanding Shares at the time of the grant of the option.

PART 5

CONDITIONS GOVERNING THE GRANTING AND EXERCISING OF OPTIONS

5.1

Exercise Price. Subject to Exchange Policy and Section 5.2 hereof, the exercise price of an option may not be less than the closing market price during the trading day immediately preceding the date of the grant of the option, less any applicable discount allowed by the Exchange.

5.2

Exercise Price if Distribution. If the options are granted within 90 days of a public distribution by prospectus, then the minimum exercise price shall be the greater of Section 5.1 and the per share price paid by the public investors for Shares acquired under the public distribution. The 90 day period will commence on the date a final receipt is issued for the prospectus.

5.3

Expiry Date. Each option shall, unless sooner terminated, expire on a date to be determined by the Board which will not be later than the Expiry Date, but provided that if an option expires during a Black-out period, then the option shall remain exercisable until the period ending up to two trading days after the end of such Black-out period, notwithstanding the natural expiry of its term, except that in no event may such exercise occur more than ten years after the initial grant date of the option.

5.4

Different Exercise Periods, Prices and Number. The Board may, in its absolute discretion, upon granting an option under this Plan and subject to the provisions of Section 6.3 hereof, specify a particular time period or periods following the date of granting the option during which the Optionee may exercise his option to purchase Shares and may designate the exercise price and the number of Shares in respect of which such Optionee may exercise his option during each such time period.

5.5

Termination of Employment. If a Director, Officer, Consultant or Employee ceases to be so engaged by the Company for any reason other than death, such Director, Officer, Consultant or Employee shall have the right to exercise any vested option not exercised prior to such termination within a period of 90 calendar days after the date of termination, or such shorter period as may be set out in the Optionee’s Option Agreement.

5.6

Termination of Investor Relations Activities. If an Optionee who is engaged in Investor Relations Activities ceases to be so engaged by the Company, such Optionee shall have the right to exercise any vested option not exercised prior to such termination within a period of 30 calendar days after the date of termination, or such shorter period as may be set out in the Optionee’s option agreement.

5.7

Death of Optionee. If an Optionee dies prior to the expiry of his option, his heirs or administrators may within one year from the date of the Optionee's death exercise that portion of an option granted to the Optionee under the Plan which remains vested and outstanding, except that in the event the expiration of the option is earlier than one year after the date of death, with the consent of the Exchange, the options shall be exercisable for one year after the date of death of the Optionee.

5.8

Assignment. No option granted under the Plan or any right thereunder or in respect thereof shall be transferable or assignable otherwise than by provided for in Section 5.7.

5.9

Notice. Options shall be exercised only in accordance with the terms and conditions of the agreements under which they are respectively granted and shall be exercisable only by notice in writing to the Company substantially in the form set out in Schedule "B" hereto.

5.10

Payment. Options may be exercised in whole or in part at any time prior to their lapse or termination. Shares purchased by an Optionee on exercise of an option shall be paid for in full in cash at the time of their purchase.

5.11

 Options to Employees or Consultants. In the case of options granted to Employees or Consultants, the Optionee must be a bona-fide Employee or Consultant, as the case may be, of the Company or its subsidiary.

5.12

Optionees Performing Investor Relations Activities. Options issued to Consultants performing Investor Relations Activities must vest in stages over 12 months with no more than 1/4 of the options vesting in any three month period.

5.13

 Withholding Tax.

(a)

The Company may withhold from any amount payable to an Optionee, either under this Plan or otherwise, such amounts as are required by law to be withheld or deducted as a consequence of his or her exercise of options or other participation in this Plan ("Withholding Obligations"). The Company will have the right, in its discretion, to satisfy any Withholding Obligations by:

(i)

selling or causing to be sold, on behalf of any Optionee, such number of Shares issued to the Optionee on the exercise of options as is sufficient to fund the Withholding Obligations;

(ii)

retaining the amount necessary to satisfy the Withholding Obligations from any amount which would otherwise be delivered, provided or paid to the Optionee by the Company, whether under this Plan or otherwise;

(iii)

requiring the Optionee, as a condition of exercise under Section 5.12(a) to: (i) remit the amount of any such Withholding Obligations to the Company in advance; (ii) reimburse the Company for any such Withholding Obligations; or (iii) cause a broker who sells Shares acquired by the Optionee on behalf of the Optionee to withhold from the proceeds realized from such sale the amount required to satisfy any such Withholding Obligations and to remit such amount directly to the Company; and/or

(iv)

making such other arrangements as the Company may reasonably require.

(b)

The sale of Shares by the Company, or by a broker engaged by the Company (the "Broker"), under clause (a) above will be made on the exchange on which the Shares are then listed for trading. The Optionee consents to such sale and grants to the Company an irrevocable power of attorney to effect the sale of such Shares on his or her behalf and acknowledges and agrees that: (i) the number of Shares sold shall, at a minimum, be sufficient to fund with Withholding Obligations net of all selling costs, which costs are the responsibility of the Optionee and which the Optionee hereby authorizes to be deducted from the proceeds of such sale; (ii) in effecting the sale of any such Shares, the Company or the Broker will exercise its sole judgement as to the timing and the manner of sale and will not be obligated to seek or obtain a minimum price; and (iii) neither the Company nor the Broker will be liable for any loss arising out of any sale of such Shares including any loss relating to the pricing, manner or timing of such sales or any delay in transferring any Shares to an Optionee or otherwise. The Optionee further acknowledges that the sale price of Shares will fluctuate with the market price of the Company's Shares and no assurance can be given that any particular price will be received upon any sale.

PART 6

CHANGES IN OPTIONS

6.1

Share Consolidation or Subdivision. In the event that the Shares are at any time subdivided or consolidated, the number of Shares reserved for option and the price payable for any Shares that are then subject to option shall be adjusted accordingly.

6.2

Stock Dividend. In the event that the Shares are at any time changed as a result of the declaration of a stock dividend thereon, the number of Shares reserved for option and the price payable for any Shares that are then subject to option may be adjusted by the Board to such extent as it deems proper in its absolute discretion.

6.3

Effect of a Take-Over Bid. If a bona fide offer to purchase Shares (an "Offer") is made to the Optionee or to shareholders of the Company generally or to a class of shareholders which includes the Optionee, which Offer, if accepted in whole or in part, would result in the offeror becoming a control person of the Company, within the meaning of subsection 1(1) of the Securities Act (British Columbia), the Company shall, upon receipt of notice of the Offer, notify each Optionee of full particulars of the Offer, whereupon all Shares subject to such option ("Option Shares") will become vested and the option may be exercised in whole or in part by the Optionee so as to permit the Optionee to tender the Option Shares received upon such exercise, pursuant to the Offer. However, if:

(a)

the Offer is not completed within the time specified therein including any extensions thereof; or

(b)

all of the Option Shares tendered by the Optionee pursuant to the Offer are not taken up or paid for by the offeror in respect thereof, then the Option Shares received upon such exercise, or in the case of clause (b) above, the Option Shares that are not taken up and paid for, may be returned by the Optionee to the Company and reinstated as authorized but unissued Shares and with respect to such returned Option Shares, the option shall be reinstated as if it had not been exercised and the terms upon which such Option Shares were to become vested pursuant to Sections 5.4 and 5.5 shall be reinstated. If any Option Shares are returned to the Company under this Section 6.3, the Company shall immediately refund the exercise price to the Optionee for such Option Shares.

6.4

Acceleration of Expiry Date. If at any time when an option granted under the Plan remains unexercised with respect to any unissued Option Shares, an Offer is made by an offeror, the Directors may, upon notifying each Optionee of full particulars of the Offer, declare all Option Shares issuable upon the exercise of options granted under the Plan, vested, and declare that the Expiry Date for the exercise of all unexercised options granted under the Plan is accelerated so that all options will either be exercised or will expire prior to the date upon which Shares must be tendered pursuant to the Offer.

6.5

Effect of a Change of Control. If a Change of Control (as defined below) occurs, all Option Shares subject to each outstanding option will become vested, whereupon such option may be exercised in whole or in part by the Optionee. "Change of Control" means the acquisition by any person or by any person and a Joint Actor, whether directly or indirectly, of voting securities of the Company, which, when added to all other voting securities of the Company at the time held by such person or by such person and a Joint Actor, totals for the first time not less than fifty percent (50%) of the outstanding voting securities of the Company or the votes attached to those securities are sufficient, if exercised, to elect a majority of the Board of the Company.

PART 7

SECURITIES LAWS AND EXCHANGE POLICIES

7.1

Exchange's Rules and Policies Apply. This Plan and the granting and exercise of any options hereunder are also subject to such other terms and conditions as are set out from time to time in the Securities Laws and Exchange Policies and such rules and policies shall be deemed to be incorporated into and become a part of this Plan. In the event of an inconsistency between the provisions of such rules and policies and of this Plan, the provisions of such rules and policies shall govern. In the event that the Company’s listing changes from one tier to another tier on the Exchange or the Company’s Shares are listed on a new stock exchange, the granting of options shall be governed by the rules and policies of such new tier or new stock exchange and unless inconsistent with the terms of this Plan, the Company shall be able to grant options pursuant to the rules and policies of such new tier or new stock exchange without requiring shareholder approval.

PART 8

AMENDMENT OF PLAN

8.1

Board May Amend. The Board may, by resolution, amend or terminate this Plan, but no such amendment or termination shall, except with the written consent of the Optionees concerned, affect the terms and conditions of options previously granted under this Plan which have not then been exercised or terminated.

8.2

Exchange Approval. Any amendment to this Plan or options granted pursuant to this Plan shall not become effective until such Exchange and shareholder approval as is required by Exchange Policy and Securities Laws has been received

8.3

Disinterested Shareholder Approval. The Company must obtain disinterested Shareholder approval of stock options if a stock option plan, together with all of the Company’s previously established and outstanding stock option plans or grants, could result at any time in:

(a)

the number of shares reserved for issuance under stock options granted to insiders exceeding 10% of the issued Shares;

(b)

the grant to Insiders, within a 12 month period, of a number of options exceeding 10% of the issued Shares; or

(c)

the issuance to any one Optionee, within a 12 month period, of a number of Shares exceeding 5% of the issued Shares.

8.4

Amendment to Insider's Options. Any amendment to options held by Insiders of the Company at the time of the amendment, which results in a reduction in the exercise price of the options, is conditional upon the obtaining of disinterested shareholder approval to that amendment.

PART 9

EFFECT OF PLAN ON OTHER COMPENSATION OPTIONS

9.1

Other Options Not Affected. This Plan is in addition to any other existing stock options granted prior to and outstanding as at the date of the Plan and shall not in any way affect the policies or decisions of the Board in relation to the remuneration of Directors, Officers, Consultants and Employees.

PART 10

OPTIONEE'S RIGHTS AS A SHAREHOLDER

10.1

No Rights Until Option Exercised. An Optionee shall be entitled to the rights pertaining to share ownership, such as to dividends, only with respect to Shares that have been fully paid for and issued to the Optionee upon exercise of an option.

PART 11

EFFECTIVE DATE OF PLAN

11.1

Effective Date. The Plan shall become effective upon the later of the date of acceptance for filing of the Plan by the Exchange or the approval of the Plan by the shareholders of the Company, however, options may be granted under the Plan prior to the receipt of approval by shareholders and acceptance from the Exchange. Optionees must not exercise their options until specific approval from the shareholders of the Company is obtained.

SCHEDULE "A"

SNIPP INTERACTIVE INC.

INCENTIVE STOCK OPTION AGREEMENT

INCENTIVE STOCK OPTION AGREEMENT dated ____________, 201___ between Snipp Interactive Inc. (the "Company") and __________________ (the "Optionee").

WHEREAS

A.

The Company has adopted the plan (the "Plan") to provide the Company with a share-related mechanism to attract, retain and motivate qualified Executives, Employees and Consultants, to incent such individuals to contribute toward the long term goals of the Company, and to encourage such individuals to acquire common shares without par value in the capital of the Company ("Shares") as long term investments; and

B.

pursuant to the Plan, the Company has agreed to issue options ("Options") under the Plan to the Optionee.

In consideration of the foregoing and the mutual agreements contained herein (the receipt and adequacy of which are acknowledged), the parties agree as follows:

1.

Grant of Options. Pursuant to the Plan, the Company hereby grants to the Optionee who accepts _____________________ Options to acquire the Shares at an exercise price of $___________ per Share upon the following terms and conditions.

2.

Vesting. The Options will vest ______________________.

3.

Expiry. The Options will expire __ months after the date of the grant of the Options.

4.

Termination of Employment. If the Optionee is a Director, Officer, Consultant or Employee (as defined in the Plan) and ceases to be so engaged by the Company for any reason other than death, the Optionee shall have the right to exercise any vested Option not exercised prior to such termination within a period of 90 calendar days after the date of termination, or such shorter period as may be set out in this Agreement.

5.

Termination of Investor Relations Activities. If the Optionee is engaged in Investor Relations Activities and ceases to be so engaged by the Company, the Optionee shall have the right to exercise any vested Option not exercised prior to such termination within a period of 30 calendar days after the date of termination, or such shorter period as may be set out in this Agreement.

6.

Death of Optionee. If the Optionee dies prior to the expiry of his Option, his heirs or administrators may within one year from the date of the Optionee's death exercise that portion of an option granted to the Optionee under the Plan which remains vested and outstanding.

7.

Assignment. No option granted under the Plan or any right thereunder or in respect thereof shall be transferable or assignable otherwise than by provided for in Section 6.

8.

Notice. Options shall be exercised only in accordance with the terms and conditions of the agreements under which they are respectively granted and shall be exercisable only by notice in writing to the Company substantially in the form set out in Schedule "B" of the Plan.

9.

Payment. Options may be exercised in whole or in part at any time prior to their lapse or termination. Shares purchased by the Optionee on exercise of an Option shall be paid for in full in cash at the time of their purchase.

10.

Share Consolidation or Subdivision. In the event that the Shares of the Company are at any time subdivided or consolidated, the number of Shares reserved for option and the price payable for any Shares that are then subject to option shall be adjusted accordingly.

11.

Stock Dividend. In the event that the Shares of the Company are at any time changed as a result of the declaration of a stock dividend thereon, the number of Shares reserved for option and the price payable for any Shares that are then subject to option may be adjusted by the Board of Directors to such extent as it deems proper in its absolute discretion.

12.

Effect of a Take-Over Bid. If a bona fide offer to purchase Shares (an "Offer") is made to the Optionee or to shareholders of the Company generally or to a class of shareholders which includes the Optionee, which Offer, if accepted in whole or in part, would result in the offeror becoming a control person of the Company, within the meaning of subsection 1(1) of the Securities Act (British Columbia), the Company shall, upon receipt of notice of the Offer, notify each Optionee of full particulars of the Offer, whereupon all Shares subject to such option ("Option Shares") will become vested and the option may be exercised in whole or in part by the Optionee so as to permit the Optionee to tender the Option Shares received upon such exercise, pursuant to the Offer. However, if:

(a)

the Offer is not completed within the time specified therein including any extensions thereof; or

(b)

all of the Option Shares tendered by the Optionee pursuant to the Offer are not taken up or paid for by the offeror in respect thereof,

then the Option Shares received upon such exercise, or in the case of clause (b) above, the Option Shares that are not taken up and paid for, may be returned by the Optionee to the Company and reinstated as authorized but unissued Shares and with respect to such returned Option Shares, the option shall be reinstated as if it had not been exercised and the terms upon which such Option Shares were to become vested pursuant to the Plan and this Agreement shall be reinstated. If any Option Shares are returned to the Company under this section, the Company shall immediately refund the exercise price to the Optionee for such Option Shares.

13.

Acceleration of Expiry Date. If at any time when Options remain unexercised with respect to any unissued Option Shares, an Offer is made by an offeror, the Directors may, upon notifying each Optionee of full particulars of the Offer, declare all Option Shares issuable upon the exercise of Options granted under the Plan, vested, and declare that the Expiry Date for the exercise of all unexercised Options is accelerated so that all Options will either be exercised or will expire prior to the date upon which Shares must be tendered pursuant to the Offer.

14.

Effect of a Change of Control. If a Change of Control (as defined below) occurs, all Option Shares subject to an outstanding Option will become vested, whereupon such Option may be exercised in whole or in part by the Optionee. "Change of Control" means the acquisition by any person or by any person and a Joint Actor, whether directly or indirectly, of voting securities of the Company, which, when added to all other voting securities of the Company at the time held by such person or by such person and a Joint Actor, totals for the first time not less than fifty percent (50%) of the outstanding voting securities of the Company or the votes attached to those securities are sufficient, if exercised, to elect a majority of the Board of the Company.

15.

Agreement Subject to Terms of Plan. The Optionee acknowledges that the terms and conditions of this Agreement are subject to the provisions of the Plan and Exchange Policy and Securities Laws as amended from time to time, which provisions are incorporated by reference into this Agreement. In the event of an inconsistency between the provisions of the Plan and this Agreement, the provisions of the Plan shall prevail. The Plan shall be available for review by the Optionee at the Company's records office.

IN WITNESS WHEREOF, the Company and Optionee have caused this Agreement to be duly executed. This Option is granted on the date first stated above.

SNIPP INTERACTIVE INC.

By:

___________________________________________

Authorized Signatory

<OPTIONEE>

_________________________________________________

Signature of Optionee

SCHEDULE "B"

EXERCISE NOTICE

SNIPP INTERACTIVE INC.

The undersigned Optionee hereby subscribes to __________________ common shares without par value in Snipp Interactive Inc. (the "Company") at a price of $_________ per share, pursuant to the provision of the Incentive Stock Option Agreement entered into  between the undersigned and the Company on _______________, 201____. The undersigned encloses cash/certified cheque/bank draft in the amount of $__________________ in full payment for the shares purchased herein.

Dated this ____ day of ______________, 201__.

___________________________________

Signature of Optionee

___________________________________

Name of Optionee

___________________________________

Address of Optionee

EX-15.4

SNIPP INTERACTIVE INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the Annual and Special Meeting (the “Meeting”) of Shareholders of Snipp Interactive Inc. (the “Corporation”) will be held at 6708 Tulip Hill Terrace, Bethesda, MD, USA, 20816, on Thursday, the 12^th day of December, 2013, at the hour of 11:00 a.m. (EST) for the following purposes:

1.

to receive the audited financial statements of the Corporation for the year ended December 31, 2012, together with the report of the auditors thereon, and the interim financial statements of the Corporation for the three month period ended September 30, 2013;

2.

to elect five (5) directors for the ensuing year;

3.

to appoint auditors of the Corporation for the ensuing year and authorize the directors to fix their remuneration;

4.

to consider, and if thought appropriate, to pass, with or without variation, an ordinary resolution (the text of which is disclosed in the accompanying management information circular of the Corporation dated November 12, 2013 (the “Circular”)) approving a new fixed number stock option plan for the Corporation, as more particularly described in the Circular;

5.

to transact such further or other business as may properly come before the said meeting or any adjournment or adjournments thereof.

A copy of the Circular, a form of proxy, and a return envelope accompany this Notice of Meeting. A copy of the audited financial statements of the Corporation for the year ended December 31, 2012, together with the report of the auditors thereon, and the interim financial statements of the Corporation for the three month period ended September 30, 2013, and accompanying management discussion and analysis, will be available for review at the Meeting and are available to the public on the SEDAR website at www.sedar.com.

The record date for the determination of shareholders entitled to receive notice of and to vote at the Meeting is November 12, 2013 (the “Record Date”). Shareholders of the Corporation whose names have been entered on the register of shareholders at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting.

A shareholder may attend the Meeting in person or may be represented by proxy. Shareholders who are unable to attend the Meeting or any adjournment thereof in person are requested to date, sign and return the accompanying form of proxy for use at the Meeting or any adjournment thereof. To be effective, the enclosed proxy must be mailed so as to reach or be deposited with Computershare Investor Services Inc., 100 University Avenue, 9th floor, Toronto, Ontario, M5J 2Y1, or if by facsimile at (888) 453-0330, not later than forty-eight (48) hours (excluding Saturdays, Sundays and holidays) prior to the time set for the Meeting or any adjournment thereof.

The instrument appointing a proxy must be in writing and must be executed by the shareholder or his or her attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal by an officer or attorney thereof duly authorized.

The individuals named in the enclosed form of proxy are directors and/or officers of the Corporation. Each shareholder has the right to appoint a proxyholder other than such individuals, who need not be a shareholder, to attend and to act for such shareholder and on such shareholder’s behalf at the Meeting. To exercise such right, the names of the nominees of management should be crossed out and the name of the shareholder’s appointee should be legibly printed in the blank space provided.

DATED this 12^th day of November, 2013.

BY ORDER OF THE BOARD

(signed) “Atul Sabharwal”
Chief Executive Officer

SNIPP INTERACTIVE INC.
6708 Tulip Hill Terrace
Bethesda, MD
20816

INFORMATION CIRCULAR

(as at November 12, 2013 unless otherwise specified)

SOLICITATION OF PROXIES

This Information Circular is furnished in connection with the solicitation of proxies by the management of SNIPP INTERACTIVE INC. (the “Corporation”) for use at the Annual and Special Meeting of Shareholders of the Corporation (and any adjournment thereof) (the “Meeting”) to be held on Thursday, December 12, 2013 at the time and place and for the purposes set forth in the accompanying Notice of Meeting. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the regular employees of the Corporation at nominal cost, or by outside parties. All costs of solicitation by management will be borne by the Corporation.

The contents and the sending of this Information Circular have been approved by the Directors of the Corporation.

APPOINTMENT AND REVOCATION OF PROXIES

The individuals named in the accompanying form of proxy are officers of the Corporation. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by COMPUTERSHARE INVESTOR SERVICES INC. of 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1 not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time for holding the Meeting or any adjournment thereof or to the Chairman of the Meeting on the day of the Meeting, prior to the commencement of the Meeting.

A shareholder who has given a proxy may revoke it by an instrument in writing executed by the shareholder or by his or her attorney authorized in writing or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivered to the registered office of the Corporation at 6708 Tulip Hill Terrace, Bethesda, MD, 20816, at any time up to and including the last business day preceding the day of the Meeting, or if adjourned, any reconvening thereof, or to the Chairman of the Meeting on the day of the Meeting, prior to the commencement of the Meeting or, if adjourned, any reconvening thereof or in any other manner provided by law. A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation.

ADVICE TO BENEFICIAL SHAREHOLDERS

Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Shareholders who do not hold their shares in their own name (referred to herein as "Beneficial Shareholders") are advised that only proxies from shareholders of record can be recognized and voted at the Meeting. Beneficial Shareholders who complete and return an instrument of proxy must indicate thereon the person (usually a brokerage house) who holds their shares as a registered shareholder. Every intermediary (broker) has its own mailing procedure, and provides its own return instructions, which should be carefully followed. The instrument of proxy supplied to Beneficial Shareholders is identical to that provided to registered shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder.

If common shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be registered in such shareholder's name on the records of the Corporation. Such shares will more likely be registered under the name of the shareholder's broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities, which company acts as nominee and custodian for many Canadian brokerage firms). Common shares held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers/nominees are prohibited from voting shares for their clients. The directors and officers of the Corporation do not know for whose benefit the common shares registered in the name of CDS & Co. are held.

In accordance with National Instrument 54-101 of the Canadian Securities Administrators, the Corporation has distributed copies of the Notice of Meeting, this Information Circular and the proxy to the clearing agencies and intermediaries for onward distribution to non-registered shareholders. Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of shareholders' meetings unless the Beneficial Shareholders have waived the right to receive Meeting materials. Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Meeting. Often the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided by the Corporation to the registered shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder should a non-registered shareholder receiving such a form wish to vote at the Meeting, the non-registered shareholder should strike out the names of the management proxyholders named in the form and insert the non-registered shareholder's name in the blank provided. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge"). Broadridge typically applies a special sticker to the proxy forms, mails those forms to the Beneficial Shareholders and asks Beneficial Shareholders to return the proxy forms to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Meeting. A Beneficial Shareholder receiving a proxy with a Broadridge sticker on it cannot use that proxy to vote common shares directly at the Meeting - the proxy must be returned to Broadridge well in advance of the Meeting in order to have the common shares voted. All references to shareholders in this Information Circular and the accompanying form of proxy and Notice of Meeting are to shareholders of record unless specifically stated otherwise.

VOTING OF PROXIES

IN THE ABSENCE OF ANY DIRECTION IN THE FORM OF PROXY, IT IS INTENDED IF MANAGEMENT’S PROXYHOLDERS ARE SELECTED THAT SUCH SHARES WILL BE VOTED IN FAVOUR OF THE MOTIONS PROPOSED TO BE MADE AT THE MEETING AS STATED UNDER THE HEADINGS IN THIS INFORMATION CIRCULAR.

The shares represented by proxies will, on any poll where a choice with respect to any matter to be acted upon has been specified in the form of proxy, be voted in accordance with the specification made.

SUCH SHARES WILL ON A POLL BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED OR WHERE BOTH CHOICES HAVE BEEN SPECIFIED BY THE SHAREHOLDER.

The enclosed form of proxy when properly completed and delivered and not revoked confers discretionary authority upon the person appointed proxy thereunder to vote with respect to amendments or variations of matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting. In the event that amendments or variations to matters identified in the Notice of Meeting are properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated in the enclosed form of proxy to vote in accordance with their best judgement on such matters or business. At the time of the printing of this Information Circular, the management of the Corporation knows of no such amendment, variation or other matter which may be presented to the Meeting.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

Other than as disclosed elsewhere in this Information Circular, none of the directors or executive officers of the Corporation, no proposed nominee for election as a director of the Corporation, none of the persons who have been directors or executive officers of the Corporation since the commencement of the Corporation's last completed financial year and no associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

Authorized Capital:

unlimited common shares without par value

Issued and Outstanding:

50,052,638 common shares without par value⁽¹⁾

(1)

As at November 12, 2013.

Only shareholders of record at the close of business on November 12, 2013, (the “Record Date”) who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and subject to the provisions described above shall be entitled to vote or to have their shares voted at the Meeting.

On a show of hands, every individual who is present as a shareholder or as a representative of one or more corporate shareholders, or who is holding a proxy on behalf of a shareholder who is not present at the Meeting, will have one vote, and on a poll every shareholder present in person or represented by a proxy and every person who is a representative of one or more corporate shareholders, will have one vote for each common share registered in his or her name on the list of shareholders, which is available for inspection during normal business hours at Computershare Trust Company of Canada and will be available at the Meeting.

To the knowledge of the directors and senior officers of the Corporation as at the date hereof, based on information provided on the System for Disclosure by Insiders (SEDI) and on information filed by third parties on the System for Electronic Document Analysis and Retrieval (SEDAR), no person or corporation beneficially owned, directly or indirectly, or exercised control or discretion over, voting securities of the Corporation carrying more than 10% of the voting rights attached to any class of voting securities of the Corporation, other than the following:

Name	Number of Common Shares Owned or Directed or Controlled or Directed	Percentage of Common Shares
Atul Sabharwal, CEO	8,903,682	17.79%
Ritesh Bhavnani, Chairman	8,903,682	17.79%

As of the date of this Information Circular, the directors and executive officers of the Corporation, as a group, beneficially owned, or controlled or directed, directly or indirectly, approximately 23,332,420 common shares, representing approximately 46.62% of the outstanding common shares.

PARTICULARS OF MATTERS TO BE ACTED ON AT THE MEETING

The Meeting has been called for shareholders to consider and, if thought appropriate, to pass resolutions in relation to each of the following matters:

1.

FINANCIAL STATEMENTS

The shareholders will receive and consider the audited financial statements of the Corporation for the year ended December 31, 2012, together with the report of the auditors thereon, and the interim financial statements of the Corporation for the three month period ended September 30, 2013.

2.

FIXING THE NUMBER OF DIRECTORS TO BE ELECTED

The board of directors of the Corporation presently consists of five directors, each of whom management propose to nominate for re-election at the Meeting until the next annual meeting.

At the Meeting, shareholders will be asked to pass an ordinary resolution fixing the number of directors to be elected at the Meeting at five.

Unless otherwise instructed, the persons named in the enclosed proxy or voting instruction form intend to vote such proxy or voting instruction form in favour of fixing the number of directors to be elected at the Meeting at five. To be adopted, this resolution is required to be passed by the affirmative vote of a majority of the votes cast at the Meeting.

3.

ELECTION OF DIRECTORS

The Board presently consists of five directors. The term of office of each of the present directors expires at the Meeting. The persons named below will be presented for election at the Meeting as management’s nominees and the persons named in the accompanying form of proxy intend to vote for the election of these nominees. Management does not contemplate that any of these nominees will be unable to serve as a director. Each director elected will hold office until the next annual general meeting of the Corporation or until his or her successor is elected or appointed, unless his or her office is earlier vacated in accordance with the provisions of the BCBCA or the Articles of the Corporation. However, if a nominee should be unable to so serve for any reason prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee in their discretion. Unless authority to do so is withheld, common shares represented by proxies in favour of management representatives will be voted FOR the election of all of the nominees whose names are set forth below.

The following table states the name of each person proposed to be nominated by management for election as a director, the province or state and country of residence , all offices of the Corporation now held by him, his principal occupation, business or employment for the five preceding years, the period of time for which he has been a director of the Corporation, and the number of common shares of the Corporation beneficially owned by him, directly or indirectly, or over which he exercises control or direction, as at the Record Date.

Name, Position and Province and Country of Residence	Principal Occupation Within Five Preceding Years	Served as Director Since	Number of Common Shares(1)
Conrad Swanson(2) British Columbia, Canada Director	President and director of International Samuel Exploration Corp. since April 1996 and Chairman and director of Gold 2003.	January 21, 2010	800,000
Atul Sabharwal Maryland, USA President, Chief Executive Officer (“CEO”) and Director	CEO of the Corporation. Previously Executive Director of Acme Group from 2006 to 2011.	March 1, 2012	8,903,682
Ritesh Bhavnani(2) Maryland, USA Chairman, Director	Full time consultant/employee to the Corporation (May 2010 to present). Previously Engagement Manager at McKinsey and Company (2005 to 2010).	March 1, 2012	8,903,682
Jim Santora(2) New York, USA Director	Executive Vice President of BBDO Advertising Agency (1992 to present).	June 1, 2012	nil
Anthony Durkacz Ontario, Canada Director	President of Capital Ideas Investor Relations (February 2013 to present). President of Fortius Research & Trading (2001 to present).	February 3, 2013	795,983

(1)

The information as to securities over which control or direction is exercised, not being within the knowledge of the Corporation, was provided by the respective candidates.

(2)

Denotes member of Audit Committee.

Orders, Penalties and Bankruptcies

To the Corporations knowledge, no proposed director of the Corporation is, as at the date of this Information Circular, other than as disclosed below, or was within 10 years before the date of this Information Circular, a director, chief executive officer or chief financial officer of any corporation (including the Corporation), that:

(a)

was subject to an order that was issued while the director was acting in the capacity as director, chief executive officer or chief financial officer; or

(b)

was subject to an order that was issued after the director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;

No proposed director or executive officer of the Corporation:

(a)

is, as at the date of this Information Circular, or has been within the 10 years before the date of this Information Circular, a director or executive officer of any corporation (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(b)

has, within 10 years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

For the purposes of the above section, the term “order” means:

(a)

a cease trade order;

(b)

an order similar to a cease trade order;

(c)

an order that denied the relevant company access to any exemption under securities legislation, or

(d)

that was in effect for a period of more than 30 consecutive days.

No proposed director of the Corporation has been subject to:

(a)

any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b)

any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for a proposed director.

During the 10 years preceding the date of this Information Circular, no proposed director has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that person.

4.

APPOINTMENT OF AUDITORS

The persons named in the accompanying proxy intend to vote for the appointment of MNP LLP, as the auditor of the Corporation to hold office until the next annual general meeting of shareholders of the Corporation and to authorize the directors to fix their remuneration. Common shares represented by proxies in favour of the management representatives will be voted FOR of such resolution, unless a shareholder has specified in their proxy that their common shares are to be withheld from voting on such resolution.

5.

APPROVAL OF NEW STOCK OPTION PLAN

On October 5, 2012, the shareholders approved and the Board adopted the existing fixed number stock option plan (the “2012 Option Plan”) of the Corporation, which provides that the Board may from time to time, in its discretion, and in accordance with the requirements of the Exchange, grant to directors, officers and employees of, and technical consultants to, the Corporation, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 20% of the Corporation’s issued shares as of October 5, 2012.

The Corporation intends to implement a new fixed number stock option plan (the “2013 Option Plan”) at its next shareholders’ meeting reserving a specified number of shares, up to a maximum of 20% of the Corporation’s issued shares as at the date of shareholder approval.

Accordingly, at the Meeting, shareholders will be asked to pass a resolution approving the 2013 Option Plan, the text of which is attached hereto as Schedule “A”. At the Meeting, shareholders are being asked to consider and, if thought advisable, approve an ordinary resolution in the following form:

“BE IT RESOLVED THAT:

(1)

the stock option plan of the Corporation, substantially in the form attached as Schedule “A” to the Information Circular of the Corporation dated November 12, 2013, be and the same is hereby ratified, confirmed and approved;

(2)

any director or officer be and is hereby authorized to amend the stock option plan of the Corporation should such amendments be required by applicable regulatory authorities including, but not limited to, the TSX Venture Exchange; and

(3)

any one director or officer of the Corporation be and is hereby authorized and directed to do all such things and to execute and deliver all documents and instruments as may be necessary or desirable to carry out the terms of this resolution.”

Unless otherwise instructed, the persons named in the enclosed proxy or voting instruction form intend to vote such proxy or voting instruction form in favour of the approval of the 2013 Option Plan. The directors of the Corporation recommend that shareholders vote in favour of the approval of the 2013 Option Plan. To be adopted, this resolution is required to be passed by the affirmative vote of a majority of the votes cast at the Meeting.

OTHER MATTERS

Management of the Corporation knows of no matter to come before the Meeting other than those referred to in the Notice of Meeting accompanying this Information Circular. However, if any other matter properly comes before the Meeting, it is the intention of the persons named in the form of proxy accompanying this Information Circular to vote on the same in accordance with their best judgement.

AUDIT COMMITTEE

Pursuant to section 224 of the BCBCA, the Corporation is required to have an audit committee composed of not less than three directors of the Corporation, a majority of whom are not officers or employees of the Corporation or any of its affiliates.

The Corporation must also, pursuant to the provisions of National Instrument 52-110 Audit Committees (“NI 52-110”), provide the following information regarding its audit committee (the “Audit Committee”) to its shareholders in this Information Circular.

Audit Committee Charter

The Corporation has a written charter (the “Audit Committee Charter”) which sets out the duties and responsibilities of the Audit Committee. The text of the Audit Committee Charter is attached as Schedule “B”.

Composition of the Audit Committee

The Audit Committee is comprised of three (3) directors, Conrad Swanson, Ritesh Bhavnani and Jim Santora. Each member of the audit committee is financially literate, as such term is defined in NI 52-110, and two of the members, Conrad Swanson and Jim Santora, are independent, as such term is defined in the BCBCA and NI 52-110.

Relevant Education and Experience

Conrad Swanson

Mr. Swanson has 18 years’ experience as a director of several publicly traded natural resource companies. Mr. Swanson has been the President and a director of International Samuel Exploration Corp. since April 1996, the Chairman and a director of Gold Reach Resources Ltd. since October 2003, and was a director of Nanika Resources Inc. from May 2008 until December 2009, all of which are mineral exploration and development companies listed on the Exchange. Mr. Swanson has also previously served as a director of Independent Nickel Corp. and of New World Resource Corp., two Exchange listed companies.

Ritesh Bhavnani

Mr. Bhavnani is a founder of Snipp. Prior to Snipp, Mr. Bhavnani was an Engagement Manager in McKinsey's Media and Technology practice in New York. While there, he worked on several engagements with old and new media companies. Previously, Mr. Bhavnani also was the General Manager at Precicompo, an automotive manufacturing business in India and before that had co-founded a digital media technology startup called Unsurface, which was funded by Sony and was eventually folded into the Sony Style Music Store. Mr. Bhavnani has a BS in Computer Science from Stanford University and a MBA with Distinction from INSEAD.

Jim Santora

Mr. Santora is currently Executive Vice President, Senior Account Director at BBDO, a leading worldwide advertising agency with headquarters in New York City. Mr. Santora has guided integrated brand communications strategies for clients in numerous industries ranging from soft drinks, fast foods, athletic wear, consumer products and technology. Mr. Santora helped launch the IT campaign for eBay that won multiple awards, including the 2007 Gold Effie, a pre-eminent marketing award formally given by the American Marketing Association. Prior to joining BBDO, Mr. Santora held positions at advertising agencies including Angotti, Thomas Hedge, Inc. where he worked as an account executive and McCann Erikson NY, where he worked as a media planner. Mr. Santora also was a key account sales representative at Helene Curtis Industries, Inc., (now Unilever) a former cosmetic and beauty parlour products firm. Mr. Santora holds a Bachelor of Arts degree with a major in communications from the University of New Hampshire.

As a result of their respective business experience, each member of the Audit Committee (i) has an understanding of the accounting principles used by the Corporation to prepare its financial statements, (ii) has the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves, (iii) has experience in analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to that that can reasonably be expected to be raised by the Corporation’s financial statements, and (iv) has an understanding of internal controls and procedures for financial reporting.

Audit Committee Oversight

At no time since January 1, 2012, the commencement of the Corporation’s most recently completed financial year, was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.

Reliance on Certain Exemptions

At no time during the Corporation’s most recently completed financial year, has the Corporation relied on the exemption in Section 2.4 of NI 52-110 (De Minimis Non-audit Services), or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110.

The Corporation is relying on the exemption in Section 6.1 of NI-52-110 from the requirements of Part 3 (Composition of the Audit Committee) and Part 5 (Reporting Obligations).

Pre-Approval Policies and Procedures

The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services.

External Auditor Service Fees (By Category)

The aggregate fees billed by the Corporation’s external auditors for the Corporation’s financial years ended December 31, 2012 and December 31, 2011 for audit fees are as follows:

Financial Period Ending	Audit Fees	Audit Related Fees(1)	Tax Fees(2)	All Other Fees(3)
December 31, 2012	$30,900	Nil	Nil	Nil
December 31, 2011	$34,205(4) $20,400	$9,340	Nil	$8,000

(1)

Fees charged for assurance and related services reasonably related to the performance of an audit, and not included under “Audit Fees”.

(2)

Fees charged for tax compliance, tax advice and tax planning services.

(3)

Fees for services other than disclosed in any other column.

(4)These amounts have been converted from US$ based at the exchange rate of C$0.9863 per US$1.00, being the noon exchange rate quoted by the Bank of Canada on September 4, 2013.

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

The following disclosure regarding corporate governance matters is provided pursuant to National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”), National Policy 58-201 – Corporate Governance Guidelines and in accordance with Form 58-101F2. The following describes the Corporation’s approach to corporate governance.

Board of Directors

The Board currently consists of five directors: Ritesh Bhavnani (Chairman), Atul Sabharwal (President and CEO), Anthony Durkacz, Conrad Swanson and Jim Santora.

Messrs. Swanson and Santora are independent directors as defined in NI 58-101 and NI 52-110. Messrs. Bhavnani, Sabharwal and Durkacz are, or have been in the previous three years, executive officers of the Corporation and are deemed to be not independent of the Corporation.

The operations of the Corporation do not support a large board of directors, and the Board has determined that the current size and constitution of the Board is appropriate for the Corporation’s current stage of development.

The Board meets for formal board meetings periodically on an ad hoc basis during the year to review and discuss the Corporation’s business activities and to consider and, if thought fit, to approve matters presented to the Board for approval, and to provide guidance to management. In addition, management informally provides updates to the Board at least once per quarter between formal Board meetings. In general, management consults with the Board when deemed appropriate to keep the Board informed regarding the Corporation’s affairs.

The Board facilitates the exercise of independent supervision over management through these various meetings. At present, the Board does not have any formal committees, other than the Audit Committee. The composition of the Board is such that the independent directors have significant experience in business affairs and, as a result, are able to provide significant and valuable independent supervision over management.

In the event of a conflict of interest at a meeting of the Board, the conflicted director will in accordance with corporate law and in accordance with his fiduciary obligations as a director of the Corporation, disclose the nature and extent of his interest to the meeting and abstain from voting on or against the approval of such participation.

Directorships

The following directors of the Corporation are also directors of other reporting issuers as set out below:

Name of Director	Position	Name of Reporting Issuer
Conrad Swanson	President, CEO and Director	International Samuel Exploration Corp.
	Chairman, CEO and Director	Gold Reach Resources Ltd.

Orientation and Continuing Education

At present, the Corporation does not provide a formal orientation and education program for new directors. Prior to joining the Board, potential Board members are encouraged to meet with management and inform themselves regarding management and the Corporation’s affairs. After joining the Board, management and the Chairman of the Board provide orientation both at the outset and on an ongoing basis. The Corporation currently has no specific policy regarding continuing education for directors. Requests for education are encouraged and dealt with on an ad hoc basis.

Ethical Business Conduct

The primary step taken by the Corporation to encourage and promote a culture of ethical business conduct is to conduct appropriate due diligence on proposed directors, and ensure that proposed directors exhibit the highest ethical standards. The Board does not currently have a written code of ethics. The Board monitors the ethical conduct of the Corporation and ensures that it complies with applicable legal and regulatory requirements, such as those of relevant securities commissions and stock exchanges. The Board has found that the fiduciary duties placed on individual directors by the Corporation’s governing corporate legislation on the individual director’s participation in decisions of the Board in which the director has an interest, have been sufficient to ensure that the Board operates independently of management and in the best interests of the Corporation. When discussing potential transactions and agreements where a director has an interest, that director will be expected to disclose that interest to the Board and if necessary the Board may ask that director not to participate in the ensuing discussion and/or voting on that particular transaction and/or agreement.

Nomination of Directors

Once a decision has been made to add or replace a director, the task of identifying new candidates falls on the Board and management. Proposals are put forth by the Board and management and considered and discussed. If a candidate looks promising, the Board and management will conduct due diligence on the candidate and if the results are satisfactory, the candidate is invited to join the Board.

Compensation

The Board does not have a compensation committee. At the Corporation’s current stage of development, the Corporation considers that the functions of such a committee can be served by the Board as a whole. The Corporation may grant stock options to directors of the Corporation in consideration for their services provided to the Corporation.

Other Board Committees

The Corporation does not have any standing committees, other than the Audit Committee.

Assessments

At present, the Board does not have a formal process for assessing the effectiveness of the Board, its committees and individual directors. These matters are dealt with on a case by case basis at the Board level.

STATEMENT OF EXECUTIVE COMPENSATION

Named Executive Officers

Set out below are particulars of compensation paid to the following persons (the "Named Executive Officers"):

(a)

the Corporation’s CEO;

(b)

the Corporation’s CFO;

(c)

each of the Corporation’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000, as determined in accordance with subsection 1.3(6) of Form 51-102F6 Statement of Executive Compensation, for that financial year; and

(d)

each individual who would be a Named Executive Officer under paragraph (c) but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of that financial year.

During the financial year ended December 31, 2012, the Corporation had six Named Executive Officers, being Atul Sabharwal (President and CEO), Erik Hallstrom (former CEO), Ritesh Bhavnani (Chairman and former CEO), Anthony Durkacz (CFO), John Fauller (COO) and Wilson Bell (CTO).

Compensation Discussion & Analysis

The Corporation was a “Capital Pool Company” or “CPC” as defined in Policy 2.4 of the Exchange and, did not conduct any active business operations until March 1, 2012 which was the Qualifying Transaction closing date. Accordingly, the information provided in this section relates to Consumer Impulse, Inc., the private company that completed a reverse-take-over of Snipp Interactive Inc. (formerly Alya Ventures Ltd.), for the periods prior to March 1, 2012.

The directors and officers of the Corporation, including the Named Executive Officers, may be granted from time to time, incentive share options in accordance with the policies of the Exchange. Given the Corporation’s size the Corporation has not appointed a compensation committee or formalized any guidelines with respect to compensation. The Board intends to appoint such a committee and adopt such guidelines after the Meeting. The Corporation currently relies solely on board discussion without any formal objectives, criteria and analysis to determine the number of incentive share options, and the terms and conditions of such options, to be granted to the directors and officers of the Corporation, including the Named Executive Officers, in accordance with the policies of the Exchange.

Summary Compensation Table

The following table is a summary of compensation paid to the Named Executive Officers during the last three financial years ended December 31, 2012, December 31, 2011 and December 31, 2010:

Summary Compensation Table

Name and Principal Position	Period Ended	Salary (US$)(1)	Share based awards (US$)	Option based awards (US$)(2)	Non-equity incentive plan compensation (US$)		Pension Value	All other compen- sation (US$)	Total compen- sation (US$)
					Annual incentive plans	Long-term incentive plans
Ritesh Bhavnani Chairman and former CEO(4)	Dec 31, 2012	148,726	Nil	Nil	Nil	Nil	Nil	Nil	148,726
	Dec 31, 2011	65,000	Nil	Nil	Nil	Nil	Nil	Nil	65,000
	Dec 31, 2010	86,667	Nil	Nil	Nil	Nil	Nil	Nil	86,667
Atul Sabharwal CEO(6)	Dec 31, 2012	174,935	Nil	Nil	Nil	Nil	Nil	Nil	174,935
	Dec 31, 2011	25,000	Nil	Nil	Nil	Nil	Nil	Nil	25,000
	Dec 31, 2010	40,000	Nil	Nil	Nil	Nil	Nil	Nil	40,000
Erik Hallstrom Former CEO(5)	Dec 31, 2012	222,048	Nil	72,171	Nil	Nil	Nil	Nil	294,219
	Dec 31, 2011	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
	Dec 31, 2010	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil

Name and Principal Position	Period Ended	Salary (US$)(1)	Share based awards (US$)	Option based awards (US$)(2)	Non-equity incentive plan compensation (US$)		Pension Value	All other compen- sation (US$)	Total compen- sation (US$)
					Annual incentive plans	Long-term incentive plans
Anthony Durkacz CFO(3)	Dec 31, 2012	83,463	Nil	Nil	Nil	Nil	Nil	Nil	83,463
	Dec 31, 2011	6,320	Nil	Nil	Nil	Nil	Nil	Nil	6,320
	Dec 31, 2010	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
John Fauller COO	Dec 31, 2012	57,500	Nil	14,274	Nil	Nil	Nil	Nil	71,774
	Dec 31, 2011	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
	Dec 31, 2010	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Wilson Bell CTO	Dec 31, 2012	129,333	Nil	Nil	Nil	Nil	Nil	Nil	129,333
	Dec 31, 2011	77,000	Nil	Nil	Nil	Nil	Nil	Nil	77,000
	Dec 31, 2010	87,385	Nil	Nil	Nil	Nil	Nil	Nil	87,385

Notes:

(1)  Salary includes payments that may have been made as consulting fees.

(2)  These amounts reflect the Corporation’s accounting fair values as determined by using the Black-Scholes Option Pricing Model using the following assumptions: a risk-free interest rate of 1.15% – 1.31%, an expected life of 0.82 – 4.90 years, an expected volatility of 125% and an expected dividend yield of 0.00%. Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the stock. Changes in these assumptions can materially affect the fair value estimate and therefore the existing models do not necessarily provide a single reliable measure of the fair value of the Company’s stock option grants.

(3)  Payments were made to Fortius Research & Trading Corp., a company wholly-owned by Anthony Durkacz.

(4)  On March 1, 2012 Ritesh Bhavnani ceased to be CEO and Erik Hallstrom became CEO.

(5)  On July 30, 2012 Erik Hallstrom ceased to be CEO.

(6)  On August 3, 2012 Atul Sabharwal became CEO.

Option Grants to Named Executive Officers during the most Recently Completed Financial Year

The following option grants were made to Named Executive Officers during the financial year ended December 31, 2012:

	Option-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date
Erik Hallstrom	982,175	$0.15	Jul. 30, 2013
John Fauller	500,000	$0.19	Aug. 27, 2017

Share-based awards, option based awards and non-equity incentive plan compensation

The following table sets out the outstanding share options held by the Named Executive Officers as at December 31, 2012:

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the- money options (1) ($)	Number of shares or units of share that have not vested (#)	Market or payout value of share- based awards that have not vested ($)
Erik Hallstrom	982,175	$0.15	Jul. 30, 2013	Nil	N/A	N/A
John Fauller	500,000	$0.19	Aug. 27, 2017	Nil	N/A	N/A

(1)

The value of unexercised “in-the-money options” at the end of the financial year is the difference between the option

exercise price and the market value of the underlying shares on the Exchange on December 31, 2012, namely, $0.125.

Long-Term Incentive Plans and Awards

The Corporation currently has no long-term incentive plans. The Corporation did not grant any such awards to the Named Executive Officers during the financial year ended December 31, 2012.

Stock Appreciation Rights and Restricted Shares

No stock appreciation rights or restricted shares were granted to the Named Executive Officers during the financial year ended December 31, 2012.

Pension Plan Benefits

The Corporation does not provide retirement benefits for directors or executive officers.

Termination of Employment, Change in Responsibilities and Employment Contracts

The Corporation has written employment contracts with its Named Executive Officers. The two founders of the corporation, Atul Sabharwal and Ritesh Bhavnani, have severance clauses in their employment contracts such that each is required to be paid severance of $75,000 in the event of termination of employment by the Corporation without good cause or termination by the executive for good reason. The former CEO, Erik Hallstrom, was paid severance of $50,000 on resignation. All other Named Executive Officers do not have any remuneration clauses related to termination of employment.

Director Compensation

No compensation in the form of cash was paid to directors in their capacity as directors of the Corporation or its subsidiaries, in their capacity as members of the Board or of a committee of the board of directors of its subsidiaries, or as consultants or experts, during the Corporation’s most recently completed financial year ended December 31, 2012.

Option Grants to Directors during the most Recently Completed Financial Year

The following incentive share options were granted to the directors, other than the directors who are also Named Executive Officers, during the Corporation’s most recently completed financial year ended December 31, 2012:

	Option-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date
Jim Santora	225,000	$0.19	Aug. 27, 2017

Share-based awards, option based awards and non-equity incentive plan compensation

The following table sets out the outstanding share options held by the directors, other than the Named Executive Officers as at December 31, 2012:

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the- money options (1) ($)	Number of shares or units of share that have not vested (#)	Market or payout value of share- based awards that have not vested ($)
Conrad Swanson	211,000	$0.10	Aug. 25, 2015	5,275	N/A	N/A
Jim Santora	225,000	$0.19	Aug. 27, 2017	Nil	N/A	N/A

(1)

The value of unexercised “in-the-money options” at the end of the financial year is the difference between the option exercise price and the market value of the underlying shares on the Exchange on December 31, 2011, namely, $0.125.

Incentive Plan awards – value vested or earned during the year

The following table sets out the value of all outstanding Option-based awards held by Named Executive Officers and Directors as at the financial year end, December 31, 2012.

Name	Option-based Awards – Value vested during the year ($)(1)
Erik Hallstrom, former CEO	Nil
John Fauller, COO	Nil
Jim Santora, Director	Nil

(1)

Represents the aggregate dollar value that would have been realized if the options had been exercised on the vesting date – that is, the difference between the market price of the underlying shares and the option exercise price on the vesting date.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Equity Compensation Plan Information

The following table provides information regarding the number of securities authorized for issuance under the 2012 Option Plan as at December 31, 2012:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders	8,537,863	$0.14	1,072,664(1)

(1)

Based on the total number of common shares of the Corporation authorized for issuance pursuant to options granted, being 20% of the issued and outstanding common shares of the Corporation as at October 5, 2012.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Since the date of incorporation of the Corporation on January 21, 2010, no current or former director, executive officer or employee of the Corporation, or of any of its subsidiaries, has been indebted to the Corporation or to any of its subsidiaries, nor has any of these individuals been indebted to another entity which indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Other than as set forth in this Information Circular and other than transactions carried out in the ordinary course of business of the Corporation or any of its subsidiaries, no director or senior officer of the Corporation, management nominee for election as a director of the Corporation, shareholder beneficially owning shares carrying more than 10% of the voting rights attached to the shares of the Corporation nor an associate or affiliate of any of the foregoing persons has since the commencement of the Corporation’s most recently completed financial year any material interest, direct or indirect, in any transactions which materially affected or would materially affect the Corporation or any of its subsidiaries.

MANAGEMENT CONTRACTS

The management functions of the Corporation or any subsidiary of the Corporation are not, to any substantial degree, performed by a person other than the directors or senior officers of the Corporation. The services of the Corporation’s CFO Anthony Durkacz are done through his wholly owned company Fortius Research & Trading Corp.

REGISTRAR AND TRANSFER AGENT

Computershare Trust Company of Canada, at its offices in Vancouver, British Columbia, is the registrar and transfer agent for the Common Shares.

ADDITIONAL INFORMATION

Additional information relating to the Corporation is available on SEDAR at www.sedar.com. Shareholders may contact the Corporation at 6708 Tulip Hill Terrace, Bethesda, Maryland, USA, 20816 or call the Corporation at (416) 720-4360 or email to investors@snipp.com to request copies of the Corporation’s financial statements and management discussion and analysis.

Financial information for the Corporation is provided in the Corporation’s financial statements and management discussion and analysis which is available on SEDAR at www.sedar.com.

DATED at Vancouver, British Columbia, this 12th day of November, 2013.

BY ORDER OF THE BOARD OF DIRECTORS

“Atul Sabharwal” (signed)

Atul Sabharwal

Chief Executive Officer and Director

Schedule “A”

See attached.

SNIPP INTERACTIVE INC.

INCENTIVE STOCK OPTION PLAN

PART 1

INTERPRETATION

1.1

Definitions. In this Plan the following words and phrases shall have the following meanings, namely:

(a)

"Black-out period" means any period established under a disclosure, insider trading or similar policy of the Company during which Officers, Directors and Employees may not exercise options;

(b)

"Board" means the board of directors of the Company and includes any committee of directors appointed by the directors as contemplated by Section 3.1 hereof;

(c)

"Company" means Snipp Interactive Inc.;

(d)

"Consultant" means, in relation to the Company, an individual or Consultant Company, other than an Employee or Director of the Company, that:

(i)

is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an affiliate of the Company, other than services provided in relation to a distribution of securities;

(ii)

provides the services under a written contract between the Company or the affiliate, and the individual or the Consultant Company;

(iii)

in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an affiliate of the Company; and

(iv)

has a relationship with the Company or an affiliate of the Company that enables the individual to be knowledgeable about the business and affairs of the Company.

(e)

"Consultant Company" means for an individual consultant, a company or partnership of which the individual is an employee, shareholder or partner;

(f)

"Director" means any director of the Company or of any of its subsidiaries;

(g)

"Eligible Person" means bona fide Employees, Consultants, Officers or Directors, or corporations employing or wholly owned by such Employees, Consultants, Officers or Directors;

(h)

"Employee" means any individual in the employment of the Company or any of its subsidiaries or of a company providing management or administrative services to the Company;

(i)

"Exchange" means the TSX Venture Exchange and any other stock exchange on which the Shares are listed for trading;

(j)

"Exchange Policy" means the policies, bylaws, rules and regulations of the Exchange governing the granting of options by the Company, as amended from time to time;

(k)

"Expiry Date" means not later than 10 years from the date of grant of the option;

(l)

"Insider" has the meaning ascribed thereto in the Securities Act (British Columbia);

(m)

"Investor Relations Activities" means any activities, by or on behalf of the Company or a shareholder of the Company, that promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:

(i)

the dissemination of information provided, or records prepared, in the ordinary course of business of the Company

(A)

to promote the sale of products or services of the Company, or

(B)

to raise public awareness of the Company,

that cannot reasonably be considered to promote the purchase or sale of securities of the Company;

(ii)

activities or communications necessary to comply with the requirements of

(A)

applicable Securities Laws,

(B)

Exchange requirements or the by-laws, rules or other regulatory instruments of any other self-regulatory body or exchange having jurisdiction over the Company;

(iii)

communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

(A)

the communication is only through the newspaper, magazine or publication, and

(B)

the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

(iv)

activities or communications that may be otherwise specified by the

Exchange;

(n)

"Joint Actor" means a person acting "jointly or in concert with" another person as that phrase is interpreted in applicable securities laws;

(o)

"Optionee" or "Optionees" means the recipient of an incentive stock option under this Plan;

(p)

"Officer" means any senior officer of the Company or of any of its subsidiaries as defined in the Securities Act (British Columbia);

(q)

"Plan" means this incentive stock option plan as from time to time amended;

(r)

"Securities Act" means the Securities Act, R.S.B.C. 1996, c.418, as amended, from time to time;

(s)

"Securities Laws" means the act, policies, bylaws, rules and regulations of the securities commissions governing the granting of options by the Company, as amended from time to time;

(t)

"Shares" means the common shares without par value of the Company.

1.2

Governing Law. The validity and construction of the Plan shall be governed by and construed in accordance with the laws of the Province of British Columbia, and the federal laws of Canada applicable therein.

1.3

Gender. Throughout this Plan, words importing the masculine gender shall be interpreted as including the female gender.

PART 2

PURPOSE OF PLAN

2.1

Purpose. The purpose of this Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified executives, Employees and Consultants, to incent such individuals to contribute toward the long term goals of the Company, and to encourage such individuals to acquire Shares as long term investments.

PART 3

GRANTING OF OPTIONS

3.1

Administration. This Plan shall be administered by the Board or, if the Board so elects, by a committee (which may consist of only one person) appointed by the Board from its members.

3.2

Committee's Recommendations. The Board may accept all or any part of recommendations of the committee or may refer all or any part thereof back to the committee for further consideration and recommendation.

3.3

Board Authority. Subject to the limitations of the Plan, the Board shall have the authority to:

(a)

grant options to purchase Shares to Eligible Persons;

(b)

determine the terms, limitations, restrictions and conditions respecting such grants;

(c)

interpret the Plan and adopt, amend and rescind such administrative guidelines and other rules and regulations relating to the Plan as it shall from time to time deem advisable; and

(d)

make all other determinations and take all other actions in connection with the implementation and administration of the Plan including without limitation for the purpose of ensuring compliance with Section 7.1 hereof as it may deem necessary or advisable.

3.4

Grant of Option. A resolution of the Board shall specify the number of Shares that should be placed under option to each Eligible Person; the exercise price to be paid for such Shares upon the exercise of each such option; any applicable hold period; and the period, including any applicable vesting periods required by Exchange Policy or by the Board, during which such option may be exercised.

3.5

Written Agreement. Every option granted under this Plan shall be evidenced by a written agreement substantially in the form attached hereto as Schedule "A", containing such terms and conditions as are required by Exchange Policy and Securities Laws, between the Company and the Optionee and, where not expressly set out in the agreement, the provisions of such agreement shall conform to and be governed by this Plan. In the event of any inconsistency between the terms of the agreement and the Plan, the terms of the Plan shall govern.

PART 4

RESERVE OF SHARES FOR OPTIONS

4.1

Sufficient Authorized Shares to be Reserved. Whenever the Notice of Articles of the Company limit the number of authorized Shares, a sufficient number of Shares shall be reserved by the Board to satisfy the exercise of options granted under this Plan. Shares that were the subject of options that have lapsed or terminated shall thereupon no longer be in reserve and may once again be subject to an option granted under this Plan.

4.2

Maximum Number of Shares Reserved. Unless authorized by shareholders of the Company, this Plan, together with all of the Company's other previously established or proposed stock options, stock option plans, employee stock purchase plans or any other compensation or incentive mechanisms involving the issuance or potential issuance of Shares, shall not result, at any time, in the number of Shares reserved for issuance pursuant to stock options exceeding 10,010,527 Shares, being 20% of the Company's issued and outstanding Shares as at the date of shareholder approval of this Plan.

4.3

Limits with Respect to Individuals. The aggregate number of Shares that may be reserved for issuance to any one individual in a 12 month period pursuant to the Plan shall not exceed 5% of the issued and outstanding Shares of the Company determined at the time of the grant of the option, unless the Company has obtained disinterested shareholder approval.

4.4

Limits with Respect to Consultants. The number of options granted to any one Consultant in a 12 month period under the Plan shall not exceed 2% of the issued and outstanding Shares at the time of the grant of the option.

4.5

Limits with Respect to Investor Relations Activities. The aggregate number of options granted to any person conducting Investor Relations Activities in any 12 month period shall not exceed 2% of the issued and outstanding Shares at the time of the grant of the option.

PART 5

CONDITIONS GOVERNING THE GRANTING AND EXERCISING OF OPTIONS

5.1

Exercise Price. Subject to Exchange Policy and Section 5.2 hereof, the exercise price of an option may not be less than the closing market price during the trading day immediately preceding the date of the grant of the option, less any applicable discount allowed by the Exchange.

5.2

Exercise Price if Distribution. If the options are granted within 90 days of a public distribution by prospectus, then the minimum exercise price shall be the greater of Section 5.1 and the per share price paid by the public investors for Shares acquired under the public distribution. The 90 day period will commence on the date a final receipt is issued for the prospectus.

5.3

Expiry Date. Each option shall, unless sooner terminated, expire on a date to be determined by the Board which will not be later than the Expiry Date, but provided that if an option expires during a Black-out period, then the option shall remain exercisable until the period ending up to two trading days after the end of such Black-out period, notwithstanding the natural expiry of its term, except that in no event may such exercise occur more than ten years after the initial grant date of the option.

5.4

Different Exercise Periods, Prices and Number. The Board may, in its absolute discretion, upon granting an option under this Plan and subject to the provisions of Section 6.3 hereof, specify a particular time period or periods following the date of granting the option during which the Optionee may exercise his option to purchase Shares and may designate the exercise price and the number of Shares in respect of which such Optionee may exercise his option during each such time period.

5.5

Termination of Employment. If a Director, Officer, Consultant or Employee ceases to be so engaged by the Company for any reason other than death, such Director, Officer, Consultant or Employee shall have the right to exercise any vested option not exercised prior to such termination within a period of 90 calendar days after the date of termination, or such shorter period as may be set out in the Optionee’s Option Agreement.

5.6

Termination of Investor Relations Activities. If an Optionee who is engaged in Investor Relations Activities ceases to be so engaged by the Company, such Optionee shall have the right to exercise any vested option not exercised prior to such termination within a period of 30 calendar days after the date of termination, or such shorter period as may be set out in the Optionee’s option agreement.

5.7

Death of Optionee. If an Optionee dies prior to the expiry of his option, his heirs or administrators may within one year from the date of the Optionee's death exercise that portion of an option granted to the Optionee under the Plan which remains vested and outstanding, except that in the event the expiration of the option is earlier than one year after the date of death, with the consent of the Exchange, the options shall be exercisable for one year after the date of death of the Optionee.

5.8

Assignment. No option granted under the Plan or any right thereunder or in respect thereof shall be transferable or assignable otherwise than by provided for in Section 5.7.

5.9

Notice. Options shall be exercised only in accordance with the terms and conditions of the agreements under which they are respectively granted and shall be exercisable only by notice in writing to the Company substantially in the form set out in Schedule "B" hereto.

5.10

Payment. Options may be exercised in whole or in part at any time prior to their lapse or termination. Shares purchased by an Optionee on exercise of an option shall be paid for in full in cash at the time of their purchase.

5.11

Options to Employees or Consultants. In the case of options granted to Employees or Consultants, the Optionee must be a bona-fide Employee or Consultant, as the case may be, of the Company or its subsidiary.

5.12

Optionees Performing Investor Relations Activities. Options issued to Consultants performing Investor Relations Activities must vest in stages over 12 months with no more than 1/4 of the options vesting in any three month period.

5.13

Withholding Tax.

(a)

The Company may withhold from any amount payable to an Optionee, either under this Plan or otherwise, such amounts as are required by law to be withheld or deducted as a consequence of his or her exercise of options or other participation in this Plan ("Withholding Obligations"). The Company will have the right, in its discretion, to satisfy any Withholding Obligations by:

(i)

selling or causing to be sold, on behalf of any Optionee, such number of Shares issued to the Optionee on the exercise of options as is sufficient to fund the Withholding Obligations;

(ii)

retaining the amount necessary to satisfy the Withholding Obligations from any amount which would otherwise be delivered, provided or paid to the Optionee by the Company, whether under this Plan or otherwise;

(iii)

requiring the Optionee, as a condition of exercise under Section 5.12(a) to: (i) remit the amount of any such Withholding Obligations to the Company in advance; (ii) reimburse the Company for any such Withholding Obligations; or (iii) cause a broker who sells Shares acquired by the Optionee on behalf of the Optionee to withhold from the proceeds realized from such sale the amount required to satisfy any such Withholding Obligations and to remit such amount directly to the Company; and/or

(iv)

making such other arrangements as the Company may reasonably require.

(b)

The sale of Shares by the Company, or by a broker engaged by the Company (the "Broker"), under clause (a) above will be made on the exchange on which the Shares are then listed for trading. The Optionee consents to such sale and grants to the Company an irrevocable power of attorney to effect the sale of such Shares on his or her behalf and acknowledges and agrees that: (i) the number of Shares sold shall, at a minimum, be sufficient to fund with Withholding Obligations net of all selling costs, which costs are the responsibility of the Optionee and which the Optionee hereby authorizes to be deducted from the proceeds of such sale; (ii) in effecting the sale of any such Shares, the Company or the Broker will exercise its sole judgement as to the timing and the manner of sale and will not be obligated to seek or obtain a minimum price; and (iii) neither the Company nor the Broker will be liable for any loss arising out of any sale of such Shares including any loss relating to the pricing, manner or timing of such sales or any delay in transferring any Shares to an Optionee or otherwise. The Optionee further acknowledges that the sale price of Shares will fluctuate with the market price of the Company's Shares and no assurance can be given that any particular price will be received upon any sale.

PART 6

CHANGES IN OPTIONS

6.1

Share Consolidation or Subdivision. In the event that the Shares are at any time subdivided or consolidated, the number of Shares reserved for option and the price payable for any Shares that are then subject to option shall be adjusted accordingly.

6.2

Stock Dividend. In the event that the Shares are at any time changed as a result of the declaration of a stock dividend thereon, the number of Shares reserved for option and the price payable for any Shares that are then subject to option may be adjusted by the Board to such extent as it deems proper in its absolute discretion.

6.3

Effect of a Take-Over Bid. If a bona fide offer to purchase Shares (an "Offer") is made to the Optionee or to shareholders of the Company generally or to a class of shareholders which includes the Optionee, which Offer, if accepted in whole or in part, would result in the offeror becoming a control person of the Company, within the meaning of subsection 1(1) of the Securities Act (British Columbia), the Company shall, upon receipt of notice of the Offer, notify each Optionee of full particulars of the Offer, whereupon all Shares subject to such option ("Option Shares") will become vested and the option may be exercised in whole or in part by the Optionee so as to permit the Optionee to tender the Option Shares received upon such exercise, pursuant to the Offer. However, if:

(a)

the Offer is not completed within the time specified therein including any extensions thereof; or

(b)

all of the Option Shares tendered by the Optionee pursuant to the Offer are not taken up or paid for by the offeror in respect thereof,

then the Option Shares received upon such exercise, or in the case of clause (b) above, the Option Shares that are not taken up and paid for, may be returned by the Optionee to the Company and reinstated as authorized but unissued Shares and with respect to such returned Option Shares, the option shall be reinstated as if it had not been exercised and the terms upon which such Option Shares were to become vested pursuant to Sections 5.4 and 5.5 shall be reinstated. If any Option Shares are returned to the Company under this Section 6.3, the Company shall immediately refund the exercise price to the Optionee for such Option Shares.

6.4

Acceleration of Expiry Date. If at any time when an option granted under the Plan remains unexercised with respect to any unissued Option Shares, an Offer is made by an offeror, the Directors may, upon notifying each Optionee of full particulars of the Offer, declare all Option Shares issuable upon the exercise of options granted under the Plan, vested, and declare that the Expiry Date for the exercise of all unexercised options granted under the Plan is accelerated so that all options will either be exercised or will expire prior to the date upon which Shares must be tendered pursuant to the Offer.

6.5

Effect of a Change of Control. If a Change of Control (as defined below) occurs, all Option Shares subject to each outstanding option will become vested, whereupon such option may be exercised in whole or in part by the Optionee. "Change of Control" means the acquisition by any person or by any person and a Joint Actor, whether directly or indirectly, of voting securities of the Company, which, when added to all other voting securities of the Company at the time held by such person or by such person and a Joint Actor, totals for the first time not less than fifty percent (50%) of the outstanding voting securities of the Company or the votes attached to those securities are sufficient, if exercised, to elect a majority of the Board of the Company.

PART 7

SECURITIES LAWS AND EXCHANGE POLICIES

7.1

Exchange's Rules and Policies Apply. This Plan and the granting and exercise of any options hereunder are also subject to such other terms and conditions as are set out from time to time in the Securities Laws and Exchange Policies and such rules and policies shall be deemed to be incorporated into and become a part of this Plan. In the event of an inconsistency between the provisions of such rules and policies and of this Plan, the provisions of such rules and policies shall govern. In the event that the Company’s listing changes from one tier to another tier on the Exchange or the Company’s Shares are listed on a new stock exchange, the granting of options shall be governed by the rules and policies of such new tier or new stock exchange and unless inconsistent with the terms of this Plan, the Company shall be able to grant options pursuant to the rules and policies of such new tier or new stock exchange without requiring shareholder approval.

PART 8

AMENDMENT OF PLAN

8.1

Board May Amend. The Board may, by resolution, amend or terminate this Plan, but no such amendment or termination shall, except with the written consent of the Optionees concerned, affect the terms and conditions of options previously granted under this Plan which have not then been exercised or terminated.

8.2

Exchange Approval. Any amendment to this Plan or options granted pursuant to this Plan shall not become effective until such Exchange and shareholder approval as is required by Exchange Policy and Securities Laws has been received

8.3

Disinterested Shareholder Approval. The Company must obtain disinterested Shareholder approval of stock options if a stock option plan, together with all of the Company’s previously established and outstanding stock option plans or grants, could result at any time in:

(a)

the number of shares reserved for issuance under stock options granted to Insiders exceeding 10% of the issued Shares;

(b)

the grant to Insiders, within a 12 month period, of a number of options exceeding 10% of the issued Shares; or

 (c)

the issuance to any one Optionee, within a 12 month period, of a number of Shares exceeding 5% of the issued Shares.

8.4

Amendment to Insider's Options. Any amendment to options held by Insiders of the Company at the time of the amendment, which results in a reduction in the exercise price of the options, is conditional upon the obtaining of disinterested shareholder approval to that amendment.

PART 9

EFFECT OF PLAN ON OTHER COMPENSATION OPTIONS

9.1

Other Options Not Affected. This Plan is in addition to any other existing stock options granted prior to and outstanding as at the date of the Plan and shall not in any way affect the policies or decisions of the Board in relation to the remuneration of Directors, Officers, Consultants and Employees.

PART 10

OPTIONEE'S RIGHTS AS A SHAREHOLDER

10.1

No Rights Until Option Exercised. An Optionee shall be entitled to the rights pertaining to share ownership, such as to dividends, only with respect to Shares that have been fully paid for and issued to the Optionee upon exercise of an option.

PART 11

EFFECTIVE DATE OF PLAN

11.1

Effective Date. The Plan shall become effective upon the later of the date of acceptance for filing of the Plan by the Exchange or the approval of the Plan by the shareholders of the Company, however, options may be granted under the Plan prior to the receipt of approval by shareholders and acceptance from the Exchange. Optionees must not exercise their options until specific approval from the shareholders of the Company is obtained.

SCHEDULE "A"

SNIPP INTERACTIVE INC.

INCENTIVE STOCK OPTION AGREEMENT

INCENTIVE STOCK OPTION AGREEMENT dated ___________, 201___ between Snipp Interactive Inc. (the "Company") and ___________________(the "Optionee").

WHEREAS

A.

The Company has adopted the plan (the "Plan") to provide the Company with a share-related mechanism to attract, retain and motivate qualified Executives, Employees and Consultants, to incent such individuals to contribute toward the long term goals of the Company, and to encourage such individuals to acquire common shares without par value in the capital of the Company ("Shares") as long term investments; and

B.

pursuant to the Plan, the Company has agreed to issue options ("Options") under the Plan to the Optionee.

In consideration of the foregoing and the mutual agreements contained herein (the receipt and adequacy of which are acknowledged), the parties agree as follows:

1.

Grant of Options. Pursuant to the Plan, the Company hereby grants to the Optionee who accepts ____________ Options to acquire the Shares at an exercise price of $________ per Share upon the following terms and conditions.

2.

Vesting. The Options will vest ________________________.

3.

Expiry. The Options will expire ___ months after the date of the grant of the Options.

4.

Termination of Employment. If the Optionee is a Director, Officer, Consultant or Employee (as defined in the Plan) and ceases to be so engaged by the Company for any reason other than death, the Optionee shall have the right to exercise any vested Option not exercised prior to such termination within a period of 90 calendar days after the date of termination, or such shorter period as may be set out in this Agreement.

5.

Termination of Investor Relations Activities. If the Optionee is engaged in Investor Relations Activities and ceases to be so engaged by the Company, the Optionee shall have the right to exercise any vested Option not exercised prior to such termination within a period of 30 calendar days after the date of termination, or such shorter period as may be set out in this Agreement.

6.

Death of Optionee. If the Optionee dies prior to the expiry of his Option, his heirs or administrators may within one year from the date of the Optionee's death exercise that portion of an option granted to the Optionee under the Plan which remains vested and outstanding.

7.

Assignment. No option granted under the Plan or any right thereunder or in respect thereof shall be transferable or assignable otherwise than by provided for in Section 6.

8.

Notice. Options shall be exercised only in accordance with the terms and conditions of the agreements under which they are respectively granted and shall be exercisable only by notice in writing to the Company substantially in the form set out in Schedule "B" of the Plan.

9.

Payment. Options may be exercised in whole or in part at any time prior to their lapse or termination. Shares purchased by the Optionee on exercise of an Option shall be paid for in full in cash at the time of their purchase.

10.

Share Consolidation or Subdivision. In the event that the Shares of the Company are at any time subdivided or consolidated, the number of Shares reserved for option and the price payable for any Shares that are then subject to option shall be adjusted accordingly.

11.

Stock Dividend. In the event that the Shares of the Company are at any time changed as a result of the declaration of a stock dividend thereon, the number of Shares reserved for option and the price payable for any Shares that are then subject to option may be adjusted by the Board of Directors to such extent as it deems proper in its absolute discretion.

12.

Effect of a Take-Over Bid. If a bona fide offer to purchase Shares (an "Offer") is made to the Optionee or to shareholders of the Company generally or to a class of shareholders which includes the Optionee, which Offer, if accepted in whole or in part, would result in the offeror becoming a control person of the Company, within the meaning of subsection 1(1) of the Securities Act (British Columbia), the Company shall, upon receipt of notice of the Offer, notify each Optionee of full particulars of the Offer, whereupon all Shares subject to such option ("Option Shares") will become vested and the option may be exercised in whole or in part by the Optionee so as to permit the Optionee to tender the Option Shares received upon such exercise, pursuant to the Offer. However, if:

(a)

the Offer is not completed within the time specified therein including any extensions thereof; or

(b)

all of the Option Shares tendered by the Optionee pursuant to the Offer are not taken up or paid for by the offeror in respect thereof,

then the Option Shares received upon such exercise, or in the case of clause (b) above, the Option Shares that are not taken up and paid for, may be returned by the Optionee to the Company and reinstated as authorized but unissued Shares and with respect to such returned Option Shares, the option shall be reinstated as if it had not been exercised and the terms upon which such Option Shares were to become vested pursuant to the Plan and this Agreement shall be reinstated. If any Option Shares are returned to the Company under this section, the Company shall immediately refund the exercise price to the Optionee for such Option Shares.

13.

Acceleration of Expiry Date. If at any time when Options remain unexercised with respect to any unissued Option Shares, an Offer is made by an offeror, the Directors may, upon notifying each Optionee of full particulars of the Offer, declare all Option Shares issuable upon the exercise of Options granted under the Plan, vested, and declare that the Expiry Date for the exercise of all unexercised Options is accelerated so that all Options will either be exercised or will expire prior to the date upon which Shares must be tendered pursuant to the Offer.

14.

Effect of a Change of Control. If a Change of Control (as defined below) occurs, all Option Shares subject to an outstanding Option will become vested, whereupon such Option may be exercised in whole or in part by the Optionee. "Change of Control" means the acquisition by any person or by any person and a Joint Actor, whether directly or indirectly, of voting securities of the Company, which, when added to all other voting securities of the Company at the time held by such person or by such person and a Joint Actor, totals for the first time not less than fifty percent (50%) of the outstanding voting securities of the Company or the votes attached to those securities are sufficient, if exercised, to elect a majority of the Board of the Company.

15.

Agreement Subject to Terms of Plan. The Optionee acknowledges that the terms and conditions of this Agreement are subject to the provisions of the Plan and Exchange Policy and Securities Laws as amended from time to time, which provisions are incorporated by reference into this Agreement. In the event of an inconsistency between the provisions of the Plan and this Agreement, the provisions of the Plan shall prevail. The Plan shall be available for review by the Optionee at the Company's records office.

IN WITNESS WHEREOF, the Company and Optionee have caused this Agreement to be duly executed. This Option is granted on the date first stated above.

SNIPP INTERACTIVE INC.

By:

__________________________________

Authorized Signatory

<OPTIONEE>

_________________________________________

Signature of Optionee

SCHEDULE "B"

EXERCISE NOTICE

SNIPP INTERACTIVE INC.

The undersigned Optionee hereby subscribes to ______________________ common shares without par value in Snipp Interactive Inc. (the "Company") at a price of $_______ per share, pursuant to the provision of the Incentive Stock Option Agreement entered into between the undersigned and the Company on ________, 201__________. The undersigned encloses cash/certified cheque/bank draft in the amount of $_____________in full payment for the shares purchased herein.

Dated this ____ day of , 201 __.

____________________________________

Signature of Optionee

___________________________________

Name of Optionee

___________________________________

Address of Optionee

Schedule “B”

SNIPP INTERACTIVE INC.
(the “Corporation”)

AUDIT COMMITTEE CHARTER

(Adopted by the Board of Directors on June 19, 2011)

A.

PURPOSE

The overall purpose of the Audit Committee (the "Committee") is to ensure that the Corporation's management has designed and implemented an effective system of internal financial controls, to review and report on the integrity of the consolidated financial statements and related financial disclosure of the Corporation and to review the Corporation's compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and disclosure of financial information.

B.

COMPOSITION, PROCEDURES AND ORGANIZATION

1.

The Committee shall consist of at least three members of the board of directors (the "Board").

2.

The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the committee for the ensuing year. The board may at any time remove or replace any member of the committee and may fill any vacancy in the committee.

3.

Unless the Board shall have appointed a chair of the Committee, the members of the Committee shall elect a chair and a secretary from among their number.

4.

The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other.

5.

The Committee shall have access to such officers and employees of the corporation and to the Corporation's external auditors, and to such information respecting the Corporation, as it considers to be necessary or advisable in order to perform its duties and responsibilities.

6.

Meetings of the committee shall be conducted as follows:

(a)

the Committee shall meet at least four times annually at such times and at such locations as may be requested by the chair of the Committee. The external auditors or any member of the Committee may request a meeting of the Committee;

(b)

the external auditors shall receive notice of and have the right to attend all meetings of the Committee; and

(c)

management representatives may be invited to attend all meetings except private sessions with the external auditors.

7.

The internal auditors and the external auditors shall have a direct line of communication to the Committee through its chair and may bypass management if deemed necessary. The Committee, through its chair, may contact directly any employee in the Corporation as it deems necessary, and any employee may bring before the Committee any matter involving questionable, illegal or improper financial practices or transactions.

C.

ROLES AND RESPONSIBILITIES

1.

The overall duties and responsibilities of the Committee shall be as follows:

(a)

to assist the Board in the discharge of its responsibilities relating to the Corporation's accounting principles, reporting practices and internal controls and its approval of the Corporation's annual and quarterly consolidated financial statements and related financial disclosure;

(b)

to establish and maintain a direct line of communication with the Corporation's internal and external auditors and assess their performance;

(c)

to ensure that the management of the Corporation has designed, implemented and is maintaining an effective system of internal financial controls; and

(d)

to report regularly to the Board on the fulfilment of its duties and responsibilities.

2.

The duties and responsibilities of the Committee as they relate to the external auditors shall be as follows:

(a)

to recommend to the Board a firm of external auditors to be engaged by the Corporation, and to verify the independence of such external auditors;

(b)

to review and approve the fee, scope and timing of the audit and other related services rendered by the external auditors;

(c)

to review the audit plan of the external auditors prior to the commencement of the audit;

(d)

to review with the external auditors, upon completion of their audit:

(i)

contents of their report;

(ii)

scope and quality of the audit work performed;

(iii)

adequacy of the Corporation's financial and auditing personnel;

(iv)

co-operation received from the Corporation's personnel during the audit;

(v)

internal resources used;

(vi)

significant transactions outside of the normal business of the Corporation;

(vii)

significant proposed adjustments and recommendations for improving internal accounting controls, accounting principles or management systems; and

(viii)

the non-audit services provided by the external auditors;

(e)

to discuss with the external auditors the quality and not just the acceptability of the Corporation's accounting principles; and

(f)

to implement structures and procedures to ensure that the Committee meets the external auditors on a regular basis in the absence of management.

3.

The duties and responsibilities of the Committee as they relate to the Corporation's internal auditors are to:

(a)

periodically review the internal audit function with respect to the organization, staffing and effectiveness of the internal audit department;

(b)

review and approve the internal audit plan; and

(c)

review significant internal audit findings and recommendations, and management's response thereto.

4.

The duties and responsibilities of the Committee as they relate to the internal control procedures of the Corporation are to:

(a)

review the appropriateness and effectiveness of the Corporation's policies and business practices which impact on the financial integrity of the Corporation, including those relating to internal auditing, insurance, accounting, information services and systems and financial controls, management reporting and risk management;

(b)

review compliance under the Corporation's business conduct and ethics policies and to periodically review these policies and recommend to the Board changes which the Committee may deem appropriate;

(c)

review any unresolved issues between management and the external auditors that could affect the financial reporting or internal controls of the Corporation; and

(d)

periodically review the Corporation's financial and auditing procedures and the extent to which recommendations made by the internal audit staff or by the external auditors have been implemented.

5.

The Committee is also charged with the responsibility to:

(a)

review the Corporation's quarterly statements of earnings, including the impact of unusual items and changes in accounting principles and estimates and report to the Board with respect thereto;

(b)

review and approve the financial sections of:

(i)

the annual report to shareholders;

(ii)

the annual information form;

(iii)

annual and interim MD&A;

(iv)

prospectuses;

(v)

news releases discussing financial results of the Corporation; and

(vi)

other public reports of a financial nature requiring approval by the Board, and report to the Board with respect thereto;

(c)

review regulatory filings and decisions as they relate to the Corporation's consolidated financial statements;

(d)

review the appropriateness of the policies and procedures used in the preparation of the Corporation's consolidated financial statements and other required disclosure documents, and consider recommendations for any material change to such policies;

(e)

review and report on the integrity of the Corporation's consolidated financial statements;

(f)

review the minutes of any audit committee meeting of subsidiary companies;

(g)

review with management, the external auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments that could have a material effect upon the financial position or operating results of the Corporation and the manner in which such matters have been disclosed in the consolidated financial statements;

(h)

review the Corporation's compliance with regulatory and statutory requirements as they relate to financial statements, tax matters and disclosure of financial information;

(i)

develop a calendar of activities to be undertaken by the Committee for each ensuing year and to submit the calendar in the appropriate format to the Board following each annual general meeting of shareholders; and

(j)

evaluate, annually, the adequacy of this Charter and recommend any proposed changes to the Board.

EX-15.5

SNIPP INTERACTIVE INC.
	8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com

Security Class

Holder Account Number

Form of Proxy - Annual General and Special Meeting to be held on December 12, 2013

This Form of Proxy is solicited by and on behalf of Management.

Notes to proxy

1. Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse).

2. If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be required to provide documentation evidencing your power to sign this proxy.

3. This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy.

4. If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder.

5. The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management.

6. The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly.

7. This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the meeting or any adjournment or postponement thereof.

8. This proxy should be read in conjunction with the accompanying documentation provided by Management.

Proxies submitted must be received by 11:00 AM (Eastern Standard Time) on Tuesday, December 10, 2013.

VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!

If you vote by telephone or the Internet, DO NOT mail back this proxy.

Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual.

Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this proxy. Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy.

To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below.

CONTROL NUMBER

Appointment of Proxyholder I/We, being holder(s) of Snipp Interactive Inc. hereby appoint: Atul Sabharwal, or failing him, Ritesh Bhavnani, or failing him, Anthony Durkacz, or failing him, Jaisun Garcha,

OR
Print the name of the person you are appointing if this person is someone other than the Chairman of the Meeting.

as my/our proxyholder with full power of substitution and to attend, act and to vote for and on behalf of the shareholder in accordance with the following direction (or if no directions have been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual General and Special Meeting of shareholders of Snipp Interactive Inc. to be held at 6708 Tulip Hill Terrace, Bethesda, MD, USA 20816, on Thursday, December 12, 2013 at 11:00 AM (Eastern Standard Time) and at any adjournment or postponement thereof.

VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES.

EX-15.6

FORM 2F

CPC ESCROW AGREEMENT

THIS AGREEMENT is made as of the 15^th day of July, 2010

AMONG:

ALYA VENTURES LTD.

(the Issuer)

AND:

COMPUTERSHARE INVESTOR SERVICES INC.

(the Escrow Agent)

AND:

EACH OF THE UNDERSIGNED SECURITYHOLDERS OF THE ISSUER (a Securityholder or you)

(collectively, the Parties)

This Agreement is being entered into by the Parties under Exchange Policy 2.4 - Capital Pool Companies (the Policy) in connection with a listing of a Capital Pool Company on the TSX Venture Exchange (the Exchange).

For good and valuable consideration, the Parties agree as follows:

PART 1

ESCROW

1.1

Appointment of Escrow Agent

The Issuer and the Securityholders appoint the Escrow Agent to act as escrow agent under this Agreement. The Escrow Agent accepts the appointment.

1.2

Deposit of Escrow Securities in Escrow

(1)

You are depositing the securities (escrow securities) listed opposite your name in Schedule “A” with the Escrow Agent to be held in escrow under this Agreement. You will immediately deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of these securities which you have or which you may later receive.

(2)

If you receive any shares of the Issuer upon exercise of a stock option granted by the Issuer prior to Completion of the Qualifying Transaction, (option securities) you will deposit them with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those option securities. When this Agreement refers to escrow securities, it includes option securities.

(3)

If you receive any other securities (additional escrow securities):

(a)

as a dividend or other distribution on escrow securities;

(b)

on the exercise of a right of purchase, conversion or exchange attaching to escrow securities, including securities received on conversion of special warrants;

(c)

on a subdivision, or compulsory or automatic conversion or exchange of escrow securities; or

(d)

from a successor issuer in a business combination, if Part 7 of this Agreement applies,

you will deposit them in escrow with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those additional escrow securities. When this Agreement refers to escrow securities, it includes additional escrow securities.

(4)

You will immediately deliver to the Escrow Agent any replacement share certificates or other evidence of option securities or additional escrow securities issued to you.

1.3

Direction to Escrow Agent

The Issuer and the Securityholders direct the Escrow Agent to hold the escrow securities in escrow until they are released from escrow under this Agreement.

PART 2

RELEASE OF ESCROW SECURITIES

2.1

Release Provisions

The provisions of Schedule B(1) – CPC Escrow Securities are incorporated into and form part of this Agreement.

2.2

Release Provisions for Option Securities

The Escrow Agent will release any option securities upon receiving notice from the Exchange that the Issuer has completed a Qualifying Transaction.

2.3

Additional escrow securities

If you acquire additional escrow securities in connection with the transaction to which this agreement relates, those securities will be added to the securities already in escrow, to increase the number of remaining escrow securities. After that, all of the escrow securities will be released in accordance with the applicable release schedule.

2.4

Delivery of Share Certificates for Escrow Securities

The Escrow Agent will send to each Securityholder any share certificates or other evidence of that Securityholder’s escrow securities in the possession of the Escrow Agent released from escrow as soon as reasonably practicable after the release.

2.5

Replacement Certificates

If, on the date a Securityholder’s escrow securities are to be released, the Escrow Agent holds a share certificate or other evidence representing more escrow securities than are to be released, the Escrow Agent will deliver the share certificate or other evidence to the Issuer or its transfer agent and request replacement share certificates or other evidence. The Issuer will cause replacement share certificates or other evidence to be prepared and delivered to the Escrow Agent. After the Escrow Agent receives the replacement share certificates or other evidence, the Escrow Agent will send to the Securityholder or at the Securityholder’s direction, the replacement share certificate or other evidence of the escrow securities released. The Escrow Agent and Issuer will act as soon as reasonably practicable.

2.6

Release upon Death

(1)

If a Securityholder dies, the Securityholder’s escrow securities will be released from escrow. The Escrow Agent will deliver any share certificates or other evidence of the escrow securities in the possession of the Escrow Agent to the Securityholder’s legal representative provided that:

(a)

the legal representative of the deceased Securityholder provides written notice to the Exchange of the intent to release the escrow securities as at a specified date which is at least 10 business days and not more than 30 business days prior to the proposed release; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to delivery the Escrow Agent must receive:

(a)

a certified copy of the death certificate; and

(b)

any evidence of the legal representative’s status that the Escrow Agent may reasonably require.

2.7

Exchange Discretion to Terminate

If the Escrow Agent receives a request from the Exchange to halt or terminate the release of escrow securities from escrow, then the Escrow Agent will comply with that request, and will not release any escrow securities from escrow until it receives the written consent of the Exchange.

2.8

Discretionary Applications

The Exchange may consent to the release from escrow of escrow securities in other circumstances and on terms and on conditions it deems appropriate. Escrow securities may be released from escrow provided that the Escrow Agent receives written notice from the Exchange.

PART 3

EARLY RELEASE ON CHANGE OF ISSUER STATUS

3.1

Early Release – Graduation to Tier 1

(1)

When a CPC or Resulting Issuer becomes a Tier 1 Issuer, the release schedule for its escrow securities changes.

(2)

If the Issuer reasonably believes that it meets the Minimum Listing Requirements of a Tier 1 Issuer as described in Policy 2.1 – Minimum Listing Requirements, the Issuer may make application to the Exchange to be listed as a Tier 1 Issuer. The Issuer must also concurrently provide notice to the Escrow Agent that it is making such an application.

(3)

If the graduation to Tier 1 is accepted by the Exchange, the Exchange will issue an Exchange Bulletin confirming final acceptance for listing of the Issuer on Tier 1. Upon issuance of this Bulletin the Issuer must immediately:

(a)

issue a news release disclosing:

(i)

that it has been accepted for graduation to Tier 1; and

(ii)

the number of escrow securities to be released and the dates of release under the new schedule; and

(b)

provide the news release, together with a copy of the Exchange Bulletin, to the Escrow Agent.

(4)

Upon completion of the steps in section 3.1(3) above, the Issuer’s release schedule B(1) will be replaced with release schedule B(2).

(5)

Within 10 days of the Exchange Bulletin confirming the Issuer’s listing on Tier 1, the Escrow Agent must release any escrow securities from escrow which under the new release schedule would have been releasable at a date prior to the Exchange Bulletin.

PART 4

CANCELLATION OF ESCROWED SECURITIES

4.1

Delisting of the CPC

If the Issuer fails to complete a Qualifying Transaction, as defined in the applicable Exchange Policy, within 24 months following the date of listing of the Issuer and the Exchange issues an Exchange Bulletin that the Issuer will be delisted, the Issuer must immediately notify the Escrow Agent.

4.2

Cancellation of Certain Escrow Securities Held by Related Parties of the CPC

(1)

If the Issuer is delisted prior to Completion of a Qualifying Transaction,

(a)

the Escrow Agent will deliver a notice to the Issuer, including any certificates possessed by the Escrow Agent which evidence the escrow securities held by Related Parties to the CPC which were purchased prior to the IPO of the CPC at a discount to the IPO price (the Discount Seed Shares); and

(b)

the Issuer and the Escrow Agent must take such action as is necessary to cancel the Discount Seed Shares pursuant to the Policy.

(2)

For the purposes of cancellation of Discount Seed Shares, each Securityholder irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

4.3

Cancellation of Other Escrow Securities

(1)

Any escrow securities which have not been released from escrow under this Agreement as at 4:30 p.m. (Vancouver time) or 5:30 p.m. (Calgary time) on the date which is the 10^th anniversary of the date of delisting from the Exchange must immediately be cancelled. The Escrow Agent must deliver a notice to the Issuer, including any certificates possessed by the Escrow Agent which evidence the escrowed securities. The Issuer and Escrow Agent must take all actions as may be necessary to expeditiously effect cancellation.

(2)

For the purposes of cancellation of escrow securities under this Agreement, each Securityholder hereby irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

PART 5.

DEALING WITH ESCROW SECURITIES

5.1

Restriction on Transfer

Unless it is expressly permitted in this Agreement, you will not sell, transfer, assign, mortgage, enter into a derivative transaction concerning, or otherwise deal in any way with your escrow securities or any related share certificates or other evidence of the escrow securities. If a Securityholder is a private company controlled by one or more Principals of the Issuer, the Securityholder may not participate in a transaction that results in a change of its control or a change in the economic exposure of the Principals to the risks of holding escrow securities.

5.2

Pledge, Mortgage or Charge as Collateral for a Loan

Subject to Exchange Acceptance, you may pledge, mortgage or charge your escrow securities to a financial institution as collateral for a loan, provided that no escrow securities or any share certificates or other evidence of escrow securities will be transferred or delivered by the Escrow Agent to the financial institution for this purpose. The loan agreement must provide that the escrow securities will remain in escrow if the lender realizes on the escrow securities to satisfy the loan.

5.3

Voting of Escrow Securities

Although you may exercise voting rights attached to your escrow securities, you may not, while your securities are held in escrow, exercise voting rights attached to any securities (whether in escrow or not) in support of one or more arrangements that would result in the repayment of capital being made on the escrow securities prior to a winding up of the Issuer.

5.4

Dividends on Escrow Securities

You may receive a dividend or other distribution on your escrow securities, and elect the manner of payment from the standard options offered by the Issuer. If the Escrow Agent receives a dividend or other distribution on your escrow securities, other than additional escrow securities, the Escrow Agent will pay the dividend or other distribution to you on receipt.

5.5

Exercise of Other Rights Attaching to Escrow Securities

You may exercise your rights to exchange or convert your escrow securities in accordance with this Agreement.

PART 6

PERMITTED TRANSFERS WITHIN ESCROW

6.1

Transfer to Directors and Senior Officers

(1)

You may transfer escrow securities within escrow to existing or, upon their appointment, incoming directors or senior officers of the Issuer or any of its material operating subsidiaries, if the Issuer’s board of directors has approved the transfer and provided that:

(a)

you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

a certified copy of the resolution of the board of directors of the Issuer approving the transfer;

(b)

a certificate signed by a director or officer of the Issuer authorized to sign, stating that the transfer is to a director or senior officer of the Issuer or a material operating subsidiary and that any required acceptance from the Exchange on which the Issuer is listed has been received;

(c)

an acknowledgment in the form of Form 5E signed by the transferee; and

(d)

a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

(3)

A transfer within escrow is a trade within the meaning of securities legislation and may require an exemption or discretionary order.

6.2

Transfer to Other Principals

(1)

You may transfer escrow securities within escrow:

(a)

to a person or company that before the proposed transfer holds more than 20% of the voting rights attached to the Issuer’s outstanding securities; or

(b)

to a person or company that after the proposed transfer

(i)

will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities, and

(ii)

has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries,

provided that:

(a)

you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

a certificate signed by a director or officer of the Issuer authorized to sign, stating that:

(i)

the transfer is to a person or company that the officer believes, after reasonable investigation, holds more than 20% of the voting rights attached to the Issuer’s outstanding securities before the proposed transfer; or

(ii)

the transfer is to a person or company that:

(A)

the officer believes, after reasonable investigation, will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities; and

(B)

has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries

after the proposed transfer; and

(iii)

any required approval from the Exchange has been received;

(b)

an acknowledgment in the form of Form 5E signed by the transferee; and

(c)

a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

6.3

Transfer upon Bankruptcy

(1)

You may transfer escrow securities within escrow to a trustee in bankruptcy or another person or company entitled to escrow securities on bankruptcy provided that

(a)

you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer, the Escrow Agent must receive:

(a)

a certified copy of either

(i)

the assignment in bankruptcy filed with the Superintendent of Bankruptcy, or

(ii)

the receiving order adjudging the Securityholder bankrupt;

(b)

a certified copy of a certificate of appointment of the trustee in bankruptcy;

(c)

a transfer power of attorney, duly completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(d)

an acknowledgment in the form of Form 5E signed by

(i)

the trustee in bankruptcy or

(ii)

on direction from the trustee, with evidence of that direction attached to the acknowledgment form, another person or company legally entitled to the escrow securities.

6.4

Transfer Upon Realization of Pledged, Mortgaged or Charged Escrow Securities

(1)

You may transfer within escrow to a financial institution provided that:

(a)

you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

a statutory declaration of an officer of the financial institution that the financial institution is legally entitled to the escrow securities;

(b)

evidence that the Exchange has accepted the pledge, mortgage or charge of escrow securities to the financial institution;

(c)

a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent;

and

(d)

an acknowledgement in the form of Form 5E signed by the financial institution.

6.5

Transfer to Certain Plans and Funds

(1)

You may transfer escrow securities within escrow to or between a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or other similar registered plan or fund with a trustee, where the beneficiaries of the plan or fund are limited to you and your spouse, children and parents provided that:

(a)

you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

evidence from the trustee of the transferee plan or fund, or the trustee’s agent, stating that, to the best of the trustee’s knowledge, the annuitant of the RRSP or RRIF or the beneficiaries of the other registered plan or fund do not include any person or company other than you and your spouse, children and parents;

(b)

a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(c)

an acknowledgement in the form of Form 5E signed by the trustee of the plan or fund.

6.6

Effect of Transfer Within Escrow

After the transfer of escrow securities within escrow, the escrow securities will remain in escrow and released from escrow under this Agreement as if no transfer has occurred, on the same terms that applied before the transfer. The Escrow Agent will not deliver any share certificates or other evidence of escrow securities to the transferees under this Part 6.

6.7

Discretionary Applications

The Exchange may consent to the transfer within escrow of escrow securities in other circumstances and on such terms and conditions as it deems appropriate.

PART 7

BUSINESS COMBINATIONS

7.1

Business Combinations

This Part applies to the following (business combinations):

(a)

a formal take-over bid for all outstanding equity securities of the Issuer, which, if successful, would result in a change of control of the Issuer

(b)

a formal issuer bid for all outstanding equity securities of the Issuer

(c)

a statutory arrangement

(d)

an amalgamation

(e)

a merger

(f)

a reorganization that has an effect similar to an amalgamation or merger

7.2

Delivery to Escrow Agent

You may tender your escrow securities to a person or company in a business combination. At least five business days prior to the date the escrow securities must be tendered under the business combination, you must deliver to the Escrow Agent:

(a)

a written direction signed by you that directs the Escrow Agent to deliver to the depositary under the business combination any share certificates or other evidence of the escrow securities, and a completed and executed cover letter or similar document and, where required, transfer power of attorney completed and executed for transfer in accordance with the requirements of the Issuer’s depository, and any other documentation specified or provided by you and required to be delivered to the depositary under the business combination;

(b)

written consent of the Exchange; and

(c)

any other information concerning the business combination as the Escrow Agent may reasonably require.

7.3

Delivery to Depositary

As soon as reasonably practicable, and in any event no later than three business days after the Escrow Agent receives the documents and information required under section 7.2, the Escrow Agent will deliver to the depositary, in accordance with the direction, any share certificates or other evidence of the escrow securities and a letter addressed to the depositary that

(a)

identifies the escrow securities that are being tendered;

(b)

states that the escrow securities are held in escrow;

(c)

states that the escrow securities are delivered only for the purposes of the business combination and that they will be released from escrow only after the Escrow Agent receives the information described in section 7.4;

(d)

if any share certificates or other evidence of the escrow securities have been delivered to the depositary, requires the depositary to return to the Escrow Agent, as soon as practicable, the share certificates or other evidence of escrow securities that are not released from escrow into the business combination; and

(e)

where applicable, requires the depositary to deliver or cause to be delivered to the Escrow Agent, as soon as practicable, share certificates or other evidence of additional escrow securities that you acquire under the business combination.

7.4

Release of Escrow Securities to Depositary

(1)

The Escrow Agent will release from escrow the tendered escrow securities provided that:

(a)

you or the Issuer make application under the applicable Exchange Policy of the intent to release the tendered securities on a date at least 10 business days and not more than 30 business days prior to the date of the proposed release date; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date;

(c)

the Escrow Agent receives a declaration signed by the depositary or, if the direction identifies the depositary as acting on behalf of another person or company in respect of the business combination, by that other person or company, that

(i)

the terms and conditions of the business combination have been met or waived; and

(ii)

the escrow securities have either been taken up and paid for or are subject to an unconditional obligation to be taken up and paid for under the business combination.

7.5

Escrow of New Securities

If you receive securities (new securities) of another issuer (successor issuer) in exchange for your escrow securities, the new securities will be subject to escrow in substitution for the tendered escrow securities.

7.6

Release from Escrow of New Securities

(1)

The Escrow Agent will send to a Securityholder share certificates or other evidence of the Securityholder’s new securities as soon as reasonably practicable after the Escrow Agent receives:

(a)

a certificate from the successor issuer signed by a director or officer of the successor issuer authorized to sign

(i)

stating that it is a successor issuer to the Issuer as a result of a business combination;

(ii)

containing a list of the securityholders whose new securities are subject to escrow under section 7.5;

(iii)

containing a list of the securityholders whose new securities are not subject to escrow under section 7.5; and

(b)

written confirmation from the Exchange that it has accepted the list of Securityholders whose new securities are not subject to escrow under section 7.5; and

(2)

If your new securities are subject to escrow, unless subsection (3) applies, the Escrow Agent will hold your new securities in escrow on the same terms and conditions, including release dates, as applied to the escrow securities that you exchanged.

(3)

If the Issuer is a Tier 2 Issuer, and the successor issuer is a Tier 1 Issuer, the release provisions relating to graduation will apply.

PART 8

RESIGNATION OF ESCROW AGENT

8.1

Resignation of Escrow Agent

(1)

If the Escrow Agent wishes to resign as escrow agent, the Escrow Agent will give written notice to the Issuer and the Exchange.

(2)

If the Issuer wishes to terminate the Escrow Agent as escrow agent, the Issuer will give written notice to the Escrow Agent and the Exchange.

(3)

If the Escrow Agent resigns or is terminated, the Issuer will be responsible for ensuring that the Escrow Agent is replaced not later than the resignation or termination date by another escrow agent that is acceptable to the Exchange and that has accepted such appointment, which appointment will be binding on the Issuer and the Securityholders.

(4)

The resignation or termination of the Escrow Agent will be effective, and the Escrow Agent will cease to be bound by this Agreement, on the date that is 60 days after the date of receipt of the notices referred to above by the Escrow Agent or Issuer, as applicable, or on such other date as the Escrow Agent and the Issuer may agree upon (the “resignation or termination date”), provided that the resignation or termination date will not be less than 10 business days before a release date.

(5)

If the Issuer has not appointed a successor escrow agent within 60 days of the resignation or termination date, the Escrow Agent will apply, at the Issuer’s expense, to a court of competent jurisdiction for the appointment of a successor escrow agent, and the duties and responsibilities of the Escrow Agent will cease immediately upon such appointment.

(6)

On any new appointment under this section, the successor Escrow Agent will be vested with the same powers, rights, duties and obligations as if it had been originally named herein as Escrow Agent, without any further assurance, conveyance, act or deed. The predecessor Escrow Agent, upon receipt of payment for any outstanding account for its services and expenses then unpaid, will transfer, deliver and pay over to the successor Escrow Agent, who will be entitled to receive, all securities, records or other property on deposit with the predecessor Escrow Agent in relation to this Agreement and the predecessor Escrow Agent will thereupon be discharged as Escrow Agent.

(7)

If any changes are made to Part 9 of this Agreement as a result of the appointment of the successor Escrow Agent, those changes must not be inconsistent with the Policy and the terms of this Agreement and the Issuer to this Agreement will file a copy of the new Agreement with the securities regulators with jurisdiction over this Agreement and the escrow securities.

PART 9

OTHER CONTRACTUAL ARRANGEMENTS

9.1

Escrow Agent Not a Trustee

The Escrow Agent accepts duties and responsibilities under this Agreement, and the escrow securities and any share certificates or other evidence of these securities, solely as a custodian, bailee and agent. No trust is intended to be, or is or will be, created hereby and the Escrow Agent shall owe no duties hereunder as a trustee.

9.2

Escrow Agent Not Responsible for Genuineness

The Escrow Agent will not be responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any escrow security deposited with it.

9.3

Escrow Agent Not Responsible for Furnished Information

The Escrow Agent will have no responsibility for seeking, obtaining, compiling, preparing or determining the accuracy of any information or document, including the representative capacity in which a party

purports to act, that the Escrow Agent receives as a condition to a release from escrow or a transfer of escrow securities within escrow under this Agreement.

9.4

Escrow Agent Not Responsible after Release

The Escrow Agent will have no responsibility for escrow securities that it has released to a Securityholder or at a Securityholder’s direction according to this Agreement.

9.5

Indemnification of Escrow Agent

The Issuer and each Securityholder hereby jointly and severally agree to indemnify and hold harmless the Escrow Agent, its affiliates, and their current and former directors, officers, employees and agents from and against any and all claims, demands, losses, penalties, costs, expenses, fees and liabilities, including, without limitation, legal fees and expenses, directly or indirectly arising out of, in connection with, or in respect of, this Agreement, except where same result directly and principally from gross negligence, wilful misconduct or bad faith on the part of the Escrow Agent. This indemnity survives the release of the escrow securities, the resignation or termination of the Escrow Agreement and the termination of this Agreement.

9.6

Additional Provisions

The Escrow Agent will be protected in acting and relying reasonably upon any notice, direction, instruction, order, certificate, confirmation, request, waiver, consent, receipt, statutory declaration or other paper or document (collectively referred to as “Documents”) furnished to it and purportedly signed by any officer or person required to or entitled to execute and deliver to the Escrow Agent any such Document in connection with this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth or accuracy of any information therein contained, which it in good faith believes to be genuine.

(1)

The Escrow Agent will not be bound by any notice of a claim or demand with respect thereto, or any waiver, modification, amendment, termination or rescission of this Agreement unless received by it in writing, and signed by the other Parties and approved by the securities regulators with jurisdiction as set out in section 10.6, and, if the duties or indemnification of the Escrow Agent in this Agreement are affected, unless it has given its prior written consent.

(2)

The Escrow Agent may consult with or retain such legal counsel and advisors as it may reasonably require for the purpose of discharging its duties or determining its rights under this Agreement and may rely and act upon the advice of such counsel or advisor. The Escrow Agent will give written notice to the Issuer as soon as practicable that it has retained legal counsel or other advisors. The Issuer will pay or reimburse the Escrow Agent for any reasonable fees, expenses and disbursements of such counsel or advisors.

(3)

In the event of any disagreement arising under the terms of this Agreement, the Escrow Agent will be entitled, at its option, to refuse to comply with any and all demands whatsoever until the dispute is settled either by a written agreement among the Parties or by a court of competent jurisdiction.

(4)

The Escrow Agent will have no duties or responsibilities except as expressly provided in this Agreement and will have no duty or responsibility under the Policy or arising under any other agreement, including any agreement referred to in this Agreement, to which the Escrow Agent is not a party.

(5)

The Escrow Agent will have the right not to act and will not be liable for refusing to act unless it has received clear and reasonable documentation that complies with the terms of this Agreement. Such documentation must not require the exercise of any discretion or independent judgment.

(6)

The Escrow Agent is authorized to cancel any share certificate delivered to it and hold such Securityholder’s escrow securities in electronic, or uncertificated form only, pending release of such securities from escrow.

(7)

The Escrow Agent will have no responsibility with respect to any escrow securities in respect of which no share certificate or other evidence or electronic or uncertificated form of these securities has been delivered to it, or otherwise received by it.

(8)

Any entity resulting from the merger, amalgamation or continuation of Computershare or succeeding to all or substantially all of its transfer agency business (by sale of such business or otherwise), shall thereupon automatically become the Escrow Agent hereunder without further act or formality. This Agreement shall endure to the benefit of and be binding upon the parties hereto and their successors and assigns.

9.7

Limitation of Liability of Escrow Agent

The Escrow Agent will not be liable to any of the Parties hereunder for any action taken or omitted to be taken by it under or in connection with this Agreement, except for losses directly, principally and immediately caused by its bad faith, wilful misconduct or gross negligence. Under no circumstances will the Escrow Agent be liable for any special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages hereunder, including any loss of profits, whether foreseeable or unforeseeable. Notwithstanding the foregoing or any other provision of this Agreement, in no event will the collective liability of the Escrow Agent under or in connection with this Agreement to any one or more Parties, except for losses directly caused by its bad faith or willful misconduct, exceed the amount of its annual fees under this Agreement or the amount of three thousand dollars ($3,000.00), whichever amount shall be greater.

9.8

Remuneration of Escrow Agent

The Issuer will pay the Escrow Agent reasonable remuneration for its services under this Agreement, which fees are subject to revision from time to time on 30 days' written notice. The Issuer will reimburse the Escrow Agent for its expenses and disbursements. Any amount due under this section and unpaid 30 days after request for such payment, will bear interest from the expiration of such period at a rate per annum equal to the then current rate charged by the Escrow Agent, payable on demand.

PART 10

INDEMNIFICATION OF THE EXCHANGE

10.1

Indemnification

(1)

The Issuer and each Securityholder jointly and severally:

(a)

release, indemnify and save harmless the Exchange from all costs (including legal cost, expenses and disbursements), charges, claims, demands, damages, liabilities, losses and expenses incurred by the Exchange;

(b)

agree not to make or bring a claim or demand, or commence any action, against the Exchange; and

(c)

agree to indemnify and save harmless the Exchange from all costs (including legal costs) and damages that the Exchange incurs or is required by law to pay as a result of any person’s claim, demand or action,

arising from any and every act or omission committed or omitted by the Exchange, in connection with this Agreement, even if said act or omission was negligent, or constituted a breach of the terms of this Agreement.

(2)

This indemnity survives the release of the escrow securities and the termination of this Agreement.

PART 11

NOTICES

11.1

Notice to Escrow Agent

Documents will be considered to have been delivered to the Escrow Agent on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Computershare Investor Services Inc.

3rd Floor, 510 Burrard St

Vancouver, British Columbia V6C 3B9

Attention: Manager, Client Services

Fax: (604) 661-9401

11.2

Notice to Issuer

Documents will be considered to have been delivered to the Issuer on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand during normal business hours or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Alya Ventures Ltd.

888 – 700 West Georgia Street

Vancouver, British Columbia V7Y 1G5

Attention: President

Fax: (604) 646-2054

11.3

Deliveries to Securityholders

Documents will be considered to have been delivered to a Securityholder on the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the address on the Issuer’s share register.

Any share certificates or other evidence of a Securityholder’s escrow securities will be sent to the Securityholder’s address on the Issuer’s share register unless the Securityholder has advised the Escrow Agent in writing otherwise at least ten business days before the escrow securities are released from escrow. The Issuer will provide the Escrow Agent with each securityholder’s address as listed on the Issuer’s share register.

11.4

Change of Address

(1)

The Escrow Agent may change its address for delivery by delivering notice of the change of address to the Issuer and to each Securityholder.

(2)

The Issuer may change its address for delivery by delivering notice of the change of address to the Escrow Agent and to each Securityholder.

(3)

A Securityholder may change that Securityholder’s address for delivery by delivering notice of the change of address to the Issuer and to the Escrow Agent.

11.5

Postal Interruption

A party to this Agreement will not mail a Document if the party is aware of an actual or impending disruption of postal service.

PART 12

GENERAL

12.1

Interpretation – holding securities

Unless the context otherwise requires, all capitalized terms that are not otherwise defined in this Agreement, shall have the meanings as defined in Policy 1.1 - Interpretation or in Policy 5.4 - Escrow, Vendor Consideration and Resale Restrictions.

When this Agreement refers to securities that a Securityholder “holds”, it means that the Securityholder has direct or indirect beneficial ownership of or control or direction over the securities.

12.2

Enforcement by Third Parties

The Issuer enters this Agreement both on its own behalf and as trustee for the Exchange and the Securityholders of the Issuer, and this Agreement may be enforced by either the Exchange, or the Securityholders of the Issuer, or both.

12.3

Termination, Amendment, and Waiver of Agreement

(1)

Subject to subsection 12.3(3), this Agreement shall only terminate:

(a)

with respect to all the Parties:

(i)

as specifically provided in this Agreement;

(ii)

subject to section 12.3(2), upon the agreement of all Parties; or

(iii)

when the escrow securities of all Securityholders have been released from escrow pursuant to this Agreement; and

(b)

with respect to a Party:

(i)

as specifically provided in this Agreement; or

(ii)

if the Party is a Securityholder, when all of the Securityholder’s escrow securities have been released from escrow pursuant to this Agreement.

(2)

An agreement to terminate this Agreement pursuant to section 12.3(1)(a)(ii) shall not be effective unless and until the agreement to terminate

(a)

is evidenced by a memorandum in writing signed by all Parties;

(b)

if the Issuer is listed on the Exchange, the termination of this Agreement has been consented to in writing by the Exchange; and

(c)

has been approved by a majority vote of securityholders of the Issuer excluding in each case, Securityholders.

(3)

Notwithstanding any other provision in this Agreement, the obligations set forth in section 10.1 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

(4)

No amendment or waiver of this Agreement or any part of this Agreement shall be effective unless the amendment or waiver:

(a)

is evidenced by a memorandum in writing signed by all Parties;

(b)

if the Issuer is listed on the Exchange, the amendment or waiver of this Agreement has been approved in writing by the Exchange; and

(c)

has been approved by a majority vote of securityholders of the Issuer excluding in each case, Securityholders.

(5)

No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether similar or not), nor shall any waiver constitute a continuing waiver, unless expressly provided.

12.4

Severance of Illegal Provision

Any provision or part of a provision of this Agreement determined by a court of competent jurisdiction to be invalid, illegal or unenforceable shall be deemed stricken to the extent necessary to eliminate any invalidity, illegality or unenforceability, and the rest of the Agreement and all other provisions and parts thereof shall remain in full force and effect and be binding upon the parties hereto as though the said illegal and/or unenforceable provision or part thereof had never been included in this Agreement.

12.5

Further Assurances

The Parties will execute and deliver any further documents and perform any further acts reasonably requested by any of the Parties to this Agreement which are necessary to carry out the intent of this Agreement.

12.6

Time

Time is of the essence of this Agreement.

12.7

Consent of Exchange to Amendment

The Exchange must approve any amendment to this Agreement if the Issuer is listed on the Exchange at the time of the proposed amendment.

12.8

Additional Escrow Requirements

A Canadian exchange may impose escrow terms or conditions in addition to those set out in this Agreement.

12.9

Governing Laws

The laws of British Columbia and the applicable laws of Canada will govern this Agreement.

12.10

Counterparts

The Parties may execute this Agreement by fax and in counterparts, each of which will be considered an original and all of which will be one agreement.

12.11

Singular and Plural

Wherever a singular expression is used in this Agreement, that expression is considered as including the plural or the body corporate where required by the context.

12.12

Language

This Agreement has been drawn up in the English language at the request of all parties. Cet acte a été rédigé en anglais à la demande de toutes les parties.

12.13

Benefit and Binding Effect

This Agreement will benefit and bind the Parties and their heirs, executors, administrators, successors and permitted assigns and all persons claiming through them as if they had been a Party to this Agreement.

12.14

Entire Agreement

This is the entire agreement among the Parties concerning the subject matter set out in this Agreement and supersedes any and all prior understandings and agreements.

12.15

Successor to Escrow Agent

Any corporation with which the Escrow Agent may be amalgamated, merged or consolidated, or any corporation succeeding to the business of the Escrow Agent will be the successor of the Escrow Agent under this Agreement without any further act on its part or on the part or any of the Parties, provided that the successor is recognized by the Exchange.

The Parties have executed and delivered this Agreement as of the date set out above.

COMPUTERSHARE INVESTOR SERVICES INC.

“Christian Carvacho”

Authorized signatory

“Peter Franchi”

Authorized signatory

ALYA VENTURES LTD.

“Conrad Swanson”

Authorized signatory

“Noordin S.K. Nanji”

Authorized signatory

Signed, sealed and delivered by

)

Conrad Swanson in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

CONRAD SWANSON

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Noordin S.K. Nanji in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

NOORDIN S.K. NANJI

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Amin Somani in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

AMIN SOMANI

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Jaisun Garcha in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

JAISUN GARCHA

)

)

)

)

)

Occupation

)

681315 B.C. LTD.
“Signed”

Authorized signatory

CANACCORD FINANCIAL LTD. ITF JOSEPH GIUFFRE A/C XXXXX
“Signed”

Authorized signatory

Signed, sealed and delivered by

)

Fadia Rahal in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

FADIA RAHAL

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Bashir Hirjee in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

BASHIR HIRJEE

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Altaf Nazerali in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

ALTAF NAZERALI

)

)

)

)

)

Occupation

)

0845916 B.C. LTD.
“Signed”

Authorized signatory

UNION SECURITIES LTD. ITF J. PAUL MANSON A/C XXXXX
“Signed”

Authorized signatory

Signed, sealed and delivered by

)

Steve Engh in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

STEVE ENGH

)

)

)

)

)

Occupation

)

UNION SECURITIES LTD. ITF Li Zhu
“Signed”

Authorized signatory

Signed, sealed and delivered by

)

Alnoor Versi in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed”
)

Address

)

ALNOOR VERSI

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Shenul Dhalla in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed” )

Address

)

SHENUL DHALLA

)

)

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Sam Hirji in the presence of:

)

)

“Witnessed”

)

)

Name

)

)

“Signed” )

Address

)

SAM HIRJI

)

)

)

)

)

Occupation

)

Schedule “A” to Escrow Agreement

Securityholder

Name:

Conrad Swanson

Signature:

“Signed”

Address for Notice:

792 Seymour Blvd., North Vancouver, BC V7J 2J6

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	550,000	N/A

Securityholder

Name:

Noordin S.K. Nanji

Signature:

“Signed”

Address for Notice:

2587 Kings Avenue, West Vancouver, BC V7V 2C7

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	500,000	N/A

Securityholder

Name:

Amin Somani

Signature:

“Signed”

Address for Notice:

Suite 545, 1489 Marine Drive, West Vancouver, BC V7T 1B8

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	1,000,000	N/A

Securityholder

Name:

Jaisun Garcha

Signature:

“Signed”

Address for Notice:

14873 80B Avenue, Surrey, BC V3S 7H4

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	200,000	N/A

Securityholder

Name:

681315 B.C. Ltd.

Per:

“Signed”

Authorized Signatory

Address for Notice:

14873 80B Avenue, Surrey, BC V3S 7H4

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	300,000	N/A

Securityholder

Name:

Canaccord Financial Ltd. ITF Joseph Giuffre A/C XXXXX

Per:

“Signed”

Authorized Signatory

Address for Notice:

Suite 2200, 609 Granville Street, Vancouver, BC V7Y 1H2

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	150,000	N/A

Securityholder

Name:

Fadia Rahal

Signature:

“Signed”

Address for Notice:

6410 Charing Crt, Burnaby, BC V5E 3Y3

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	200,000	N/A

Securityholder

Name:

Bashir Hirjee

Signature:

“Signed”

Address for Notice:

5751 Minoru Blvd., Richmond, B.C. V6X 2B1

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	100,000	N/A

Securityholder

Name:

Altaf Nazerali

Signature:

“Signed”  

Address for Notice:

145 – 925 West Georgia Street, Vancouver, BC V6C 3L2

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	600,000	N/A

Securityholder

Name:

0845916 B.C. Ltd.

Per:

“Signed”

Authorized Signatory

Address for Notice:

33718 Best Avenue, Mission, B.C. V2V 6Z9

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	100,000	N/A

Securityholder

Name:

Union Securities Ltd. ITF J. Paul Manson Account XXXXX

Per:

“Signed”

Authorized Signatory

Address for Notice:

Suite 900, 700 West Georgia Street, Vancouver, BC V7Y 1H4

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	100,000	N/A

Securityholder

Name:

Steve Engh

Signature:

“Signed”

Address for Notice:

3988 W. 32 Avenue, Vancouver, BC V6S 1Z3

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	100,000	N/A

Securityholder

Name:

Union Securities Ltd. ITF Li Zhu

Per:

“Signed”

Authorized Signatory

Address for Notice:

Suite 900, 700 West Georgia Street, Vancouver, BC V7Y 1H4

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	100,000	N/A

Securityholder

Name:

Alnoor Versi

Signature:

“Signed”

Address for Notice:

#305 – 918 Cooperage Way, Vancouver, BC V6B 0A7

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	100,000	N/A

Securityholder

Name:

Shenul Dhalla

Signature:

“Signed”

Address for Notice:

1149 Connaught Drive, Vancouver, BC V6H 2G9

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	200,000	N/A

Securityholder

Name:

Sam Hirji

Signature:

“Signed”

Address for Notice:

3rd Floor, 830 West Pender Street, Vancouver, BC V6C 1J8

Securities:

Class or description	Number	Certificate(s) (if applicable)
COMMON	200,000	N/A

SCHEDULE B(1) – CPC ESCROW SECURITIES
RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	10%
Insert date 6 months following Final Exchange Bulletin]	15%
Insert date 12 months following Final Exchange Bulletin]	15%
Insert date 18 months following Final Exchange Bulletin]	15%
Insert date 24 months following Final Exchange Bulletin]	15%
Insert date 30 months following Final Exchange Bulletin]	15%
Insert date 36 months following Final Exchange Bulletin]	15%
TOTAL	100%

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, the release schedule outlined above results in the escrow securities being released in equal tranches of 15% after completion of the release on the date of the Final Exchange Bulletin.

SCHEDULE B(2) – TIER 1 ISSUER - ESCROW SECURITIES
RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	25%
[Insert date 6 months following Final Exchange Bulletin]	25%
[Insert date 12 months following Final Exchange Bulletin]	25%
[Insert date 18 months following Final Exchange Bulletin]	25%
TOTAL	100%

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, then the release schedule outlined above results in the escrow securities being released in equal tranches of 25%.

SCHEDULE B(3)

UNDERTAKING OF HOLDING COMPANY

TO:

THE TSX VENTURE EXCHANGE

681315 B.C. Ltd. (the "Securityholder") has subscribed for and agreed to purchase, as principal, 300,000 Common Shares of Alya Ventures Ltd. (the "Escrowed Securities"). The Escrowed Securities will be held in escrow as detailed in the escrow agreement entered into between Alya Ventures Ltd. (the “Issuer”), Computershare Investor Services Inc. (the “Escrow Agent”) and the Securityholder (the “Escrow Agreement”).

The undersigned undertakes that, to the extent reasonably possible, it will not permit or authorize its securities to be issued or transferred, nor will it otherwise authorize any transaction involving any of its securities that could reasonably result in a change of its control without the prior consent of the TSX Venture Exchange, as long as the Issuer remains listed on the Exchange.

DATED this 15^th day of July, 2010

681315 B.C. Ltd.

(Name of Securityholder - please print)

“Signed”

(Authorized Signature)

President and Director

(Official Capacity - please print)

Jaisun Garcha

(Please print here name of individual whose signature appears above)

The Securityholder is directly controlled by the undersigned who undertakes that, to the extent reasonably possible, he will not permit or authorize securities of the Securityholder to be issued or transferred, nor otherwise carry out any transaction that could reasonably result in a change of control of the Securityholder without the prior consent of the TSX Venture Exchange, as long as the Issuer remains listed on the Exchange.

DATED this 15^th day of July, 2010

“Signed”

(Signature)

Jaisun Garcha

(Name of Controlling Securityholder – please print)

(Signature)

(Name of Controlling Securityholder – please print)

SCHEDULE B(3)

UNDERTAKING OF HOLDING COMPANY

TO:

THE TSX VENTURE EXCHANGE

0845916 B.C. Ltd. (the "Securityholder") has subscribed for and agreed to purchase, as principal, 100,000 Common Shares of Alya Ventures Ltd. (the "Escrowed Securities"). The Escrowed Securities will be held in escrow as detailed in the escrow agreement entered into between Alya Ventures Ltd. (the “Issuer”), Computershare Investor Services Inc. (the “Escrow Agent”) and the Securityholder (the “Escrow Agreement”).

The undersigned undertakes that, to the extent reasonably possible, it will not permit or authorize its securities to be issued or transferred, nor will it otherwise authorize any transaction involving any of its securities that could reasonably result in a change of its control without the prior consent of the TSX Venture Exchange, as long as the Issuer remains listed on the Exchange.

DATED this 15^th day of July, 2010

0845916 B.C. Ltd.

(Name of Securityholder - please print)

“Signed”

(Authorized Signature)

Director

(Official Capacity - please print)

Tag Gill

(Please print here name of individual whose signature appears above)

The Securityholder is directly controlled by the undersigned who undertakes that, to the extent reasonably possible, he will not permit or authorize securities of the Securityholder to be issued or transferred, nor otherwise carry out any transaction that could reasonably result in a change of control of the Securityholder without the prior consent of the TSX Venture Exchange, as long as the Issuer remains listed on the Exchange.

DATED this 15^th day of July, 2010

“Signed”

(Signature)

Tag Gill

(Name of Controlling Securityholder – please print)

(Signature)

(Name of Controlling Securityholder – please print)

EX-15.7

FORM 5D

VALUE SECURITY ESCROW AGREEMENT

THIS AGREEMENT is made as of March 1, 2012

AMONG:

ALYA VENTURES LTD.

(the “Issuer”)

AND:

COMPUTERSHARE INVESTOR SERVICES INC.

(the “Escrow Agent”)

AND:

EACH OF THE UNDERSIGNED SECURITYHOLDERS OF THE ISSUER

(a “Securityholder” or “you”)

(collectively, the “Parties”)

This Agreement is being entered into by the Parties under Exchange Policy 5.4 - Escrow, Vendor Consideration and Resale Restrictions (the “Policy”) in connection with a Qualifying Transaction. The Issuer is a Tier 2 Issuer as described in Policy 2.1 - Initial Listing Requirements.

For good and valuable consideration, the Parties agree as follows:

PART 1

ESCROW

1.1

Appointment of Escrow Agent

The Issuer and the Securityholders appoint the Escrow Agent to act as escrow agent under this Agreement. The Escrow Agent accepts the appointment.

1.2

Deposit of Escrow Securities in Escrow

(1)

You are depositing the securities (escrow securities) listed opposite your name in Schedule “A” with the Escrow Agent to be held in escrow under this Agreement. You will immediately deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of these securities which you have or which you may later receive.

(2)

If you receive any other securities (additional escrow securities):

(a)

as a dividend or other distribution on escrow securities;

(b)

on the exercise of a right of purchase, conversion or exchange attaching to escrow securities, including securities received on conversion of special warrants;

(c)

on a subdivision, or compulsory or automatic conversion or exchange of escrow securities; or

(d)

from a successor issuer in a business combination, if Part 6 of this Agreement applies,

you will deposit them in escrow with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those additional escrow securities. When this Agreement refers to escrow securities, it includes additional escrow securities.

(3)

You will immediately deliver to the Escrow Agent any replacement share certificates or other evidence of additional escrow securities issued to you.

1.3

Direction to Escrow Agent

The Issuer and the Securityholders direct the Escrow Agent to hold the escrow securities in escrow until they are released from escrow under this Agreement.

PART 2

RELEASE OF ESCROW SECURITIES

2.1

Release Provisions

The provisions of Schedule B(2) - Value Security Escrow Agreement for Tier 2 Issuer, is incorporated into and forms part of this Agreement.

2.2

Additional escrow securities

If you acquire additional escrow securities in connection with the transaction to which this agreement relates, those securities will be added to the securities already in escrow, to increase the number of remaining escrow securities. After that, all of the escrow securities will be released in accordance with the applicable release schedule.

2.3

Additional Requirements for Tier 2 Surplus Escrow Securities

Where securities are subject to a Tier 2 Surplus Security Escrow Agreement (Schedule B(4)), the following additional conditions apply:

(1)

The escrow securities will be cancelled if the asset, property, business or interest therein in consideration of which the securities were issued, is lost, or abandoned, or the operations or development of such asset, property or business is discontinued.

(2)

The Escrow Agent will not release escrow securities from escrow under Schedule B(4) unless the Escrow Agent has received, within the 15 days prior to the release date, a certificate from the Issuer that:

(a)

is signed by two directors or officers of the Issuer;

(b)

is dated not more than 30 days prior to the release date;

(c)

states that the assets for which the escrow securities were issued (the “Assets”) were included as assets on the balance sheet of the Issuer in the most recent financial statements filed by the Issuer with the Exchange; and

(d)

states that the Issuer has no reasonable knowledge that the Assets will not be included as assets on the balance sheet of the Issuer in the next financial statements to be filed by the Issuer with the Exchange.

(3)

If, at any time during the term of this Agreement, the Escrow Agent is prohibited from releasing escrow securities on a release date specified Schedule B(4) as a result of section 2.3(2) above, then the Escrow Agent will not release any further escrow securities from escrow without the written consent of the Exchange.

(4)

If as a result of this section 2.3, the Escrow Agent does not release escrow securities from escrow for a period of five years, then:

(a)

the Escrow Agent will deliver a notice to the Issuer, and will include with the notice any certificates that the Escrow Agent holds which evidence the escrow securities; and

(b)

the Issuer and the Escrow Agent will take such action as is necessary to cancel the escrow securities.

(5)

For the purposes of cancellation of escrow securities under this section, each Securityholder irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

2.4

Delivery of Share Certificates for Escrow Securities

The Escrow Agent will send to each Securityholder any share certificates or other evidence of that Securityholder’s escrow securities in the possession of the Escrow Agent released from escrow as soon as reasonably practicable after the release.

2.5

Replacement Certificates

If, on the date a Securityholder’s escrow securities are to be released, the Escrow Agent holds a share certificate or other evidence representing more escrow securities than are to be released, the Escrow Agent will deliver the share certificate or other evidence to the Issuer or its transfer agent and request replacement share certificates or other evidence. The Issuer will cause replacement share certificates or other evidence to be prepared and delivered to the Escrow Agent. After the Escrow Agent receives the replacement share certificates or other evidence, the Escrow Agent will send to the Securityholder or at the Securityholder’s direction, the replacement share certificate or other evidence of the escrow securities released. The Escrow Agent and Issuer will act as soon as reasonably practicable.

2.6

Release upon Death

(1)

If a Securityholder dies, the Securityholder’s escrow securities will be released from escrow. The Escrow Agent will deliver any share certificates or other evidence of the escrow securities in the possession of the Escrow Agent to the Securityholder’s legal representative provided that:

(a)

the legal representative of the deceased Securityholder provides written notice to the Exchange of the intent to release the escrow securities as at a specified date which is at least 10 business days and not more than 30 business days prior to the proposed release; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to delivery the Escrow Agent must receive:

(a)

a certified copy of the death certificate; and

(b)

any evidence of the legal representative’s status that the Escrow Agent may reasonably require.

2.7

Exchange Discretion to Terminate

If the Escrow Agent receives a request from the Exchange to halt or terminate the release of escrow securities from escrow, then the Escrow Agent will comply with that request, and will not release any escrow securities from escrow until it receives the written consent of the Exchange.

2.8

Discretionary Applications

The Exchange may consent to the release from escrow of escrow securities in other circumstances and on terms and on conditions it deems appropriate. Securities may be released from escrow provided that the Escrow Agent receives written notice from the Exchange.

PART 3

EARLY RELEASE ON CHANGE OF ISSUER STATUS

3.1

Early Release – Graduation to Tier 1

(1)

When a Tier 2 Issuer becomes a Tier 1 Issuer, the release schedule for its escrow securities changes.

(2)

If the Issuer reasonably believes that it meets the Initial Listing Requirements of a Tier 1 Issuer as described in Policy 2.1 – Initial Listing Requirements, the Issuer may make application to the Exchange to be listed as a Tier 1 Issuer. The Issuer must also concurrently provide notice to the Escrow Agent that it is making such an application.

(3)

If the graduation to Tier 1 is accepted by the Exchange, the Exchange will issue an Exchange Bulletin confirming final acceptance for listing of the Issuer on Tier 1. Upon issuance of this Bulletin the Issuer must immediately:

(a)

issue a news release:

(i)

disclosing that it has been accepted for graduation to Tier 1; and

(ii)

disclosing the number of escrow securities to be released and the dates of release under the new schedule; and

(b)

provide the news release, together with a copy of the Exchange Bulletin, to the Escrow Agent.

(4)

Upon completion of the steps in section 3.1(3) above, the Issuer’s release schedule will be replaced as follows:

Applicable Schedule Pre-Graduation	Applicable Schedule Post-Graduation
Schedule B(2)	Schedule B(1)
Schedule B(4)	Schedule B(3)

 (5)

Within 10 days of the Exchange Bulletin confirming the Issuer’s listing on Tier 1, the Escrow Agent must release any escrow securities from escrow securities which under the new release schedule would have been releasable at a date prior to the Exchange Bulletin.

PART 4

DEALING WITH ESCROW SECURITIES

4.1

Restriction on Transfer, etc.

Unless it is expressly permitted in this Agreement, you will not sell, transfer, assign, mortgage, enter into a derivative transaction concerning, or otherwise deal in any way with your escrow securities or any related share certificates or other evidence of the escrow securities. If a Securityholder is a private company controlled by one or more Principals of the Issuer, the Securityholder may not participate in a transaction that results in a change of its control or a change in the economic exposure of the Principals to the risks of holding escrow securities.

4.2

Pledge, Mortgage or Charge as Collateral for a Loan

Subject to Exchange acceptance, you may pledge, mortgage or charge your escrow securities to a financial institution as collateral for a loan, provided that no escrow securities or any share certificates or other evidence of escrow securities will be transferred or delivered by the Escrow Agent to the financial institution for this purpose. The loan agreement must provide that the escrow securities will remain in escrow if the lender realizes on the escrow securities to satisfy the loan.

4.3

Voting of Escrow Securities

Although you may exercise voting rights attached to your escrow securities, you may not, while your securities are held in escrow, exercise voting rights attached to any securities (whether in escrow or not) in support of one or more arrangements that would result in the repayment of capital being made on the escrow securities prior to a winding up of the Issuer.

4.4

Dividends on Escrow Securities

You may receive a dividend or other distribution on your escrow securities, and elect the manner of payment from the standard options offered by the Issuer. If the Escrow Agent receives a dividend or other distribution on your escrow securities, other than additional escrow securities, the Escrow Agent will pay the dividend or other distribution to you on receipt.

4.5

Exercise of Other Rights Attaching to Escrow Securities

You may exercise your rights to exchange or convert your escrow securities in accordance with this agreement.

PART 5

PERMITTED TRANSFERS WITHIN ESCROW

5.1

Transfer to Directors and Senior Officers

(1)

You may transfer escrow securities within escrow to existing or, upon their appointment, incoming directors or senior officers of the Issuer or any of its material operating subsidiaries, if the Issuer’s board of directors has approved the transfer and provided that:

(a)

you make application to transfer under the Policy at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

a certified copy of the resolution of the board of directors of the Issuer approving the transfer;

(b)

a certificate signed by a director or officer of the Issuer authorized to sign, stating that the transfer is to a director or senior officer of the Issuer or a material operating subsidiary and that any required acceptance from the Exchange the Issuer is listed on has been received;

(c)

an acknowledgment in the form of Form 5E signed by the transferee; and

(d)

a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

5.2

Transfer to Other Principals

(1)

You may transfer escrow securities within escrow:

(a)

to a person or company that before the proposed transfer holds more than 20% of the voting rights attached to the Issuer’s outstanding securities; or

(b)

to a person or company that after the proposed transfer

(i)

will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities, and

(ii)

has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries,

provided that:

(c)

you make an application to transfer under the Policy at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(d)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

a certificate signed by a director or officer of the Issuer authorized to sign, stating that:

(i)

the transfer is to a person or company that the officer believes, after reasonable investigation, holds more than 20% of the voting rights attached to the Issuer’s outstanding securities before the proposed transfer; or

(ii)

the transfer is to a person or company that:

(A)

the officer believes, after reasonable investigation, will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities; and

(B)

has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries after the proposed transfer; and

(iii)

any required approval from the Exchange or any other exchange on which the Issuer is listed has been received;

(b)

an acknowledgment in the form of Form 5E signed by the transferee; and

(c)

a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

5.3

Transfer upon Bankruptcy

(1)

You may transfer escrow securities within escrow to a trustee in bankruptcy or another person or company entitled to escrow securities on bankruptcy provided that:

(a)

you make application to transfer under the Policy at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer, the Escrow Agent must receive:

(a)

a certified copy of either

(i)

the assignment in bankruptcy filed with the Superintendent of Bankruptcy, or

(ii)

the receiving order adjudging the Securityholder bankrupt;

(b)

a certified copy of a certificate of appointment of the trustee in bankruptcy;

(c)

a transfer power of attorney, duly completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(d)

an acknowledgment in the form of Form 5E signed by

(i)

the trustee in bankruptcy or

(ii)

on direction from the trustee, with evidence of that direction attached to the acknowledgement form, another person or company legally entitled to the escrow securities.

5.4

Transfer Upon Realization of Pledged, Mortgaged or Charged Escrow Securities

(1)

You may transfer escrow securities you have pledged, mortgaged or charged under section 4.2 to a financial institution as collateral for a loan within escrow to the lender on realization provided that:

(a)

you make application to transfer under the Policy at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

a statutory declaration of an officer of the financial institution that the financial institution is legally entitled to the escrow securities;

(b)

evidence that the Exchange has accepted the pledge, mortgage or charge of escrow securities to the financial institution;

(c)

a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(d)

an acknowledgement in the form of Form 5E signed by the financial institution.

5.5

Transfer to Certain Plans and Funds

(1)

You may transfer escrow securities within escrow to or between a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or other similar registered plan or fund with a trustee, where the beneficiaries of the plan or fund are limited to you and your spouse, children and parents provided that:

(a)

you make application to transfer under the Policy at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2)

Prior to the transfer the Escrow Agent must receive:

(a)

evidence from the trustee of the transferee plan or fund, or the trustee’s agent, stating that, to the best of the trustee’s knowledge, the annuitant of the RRSP or RRIF or the beneficiaries of the other registered plan or fund do not include any person or company other than you and your spouse, children and parents;

(b)

a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(c)

an acknowledgement in the form of Form 5E signed by the trustee of the plan or fund.

5.6

Effect of Transfer Within Escrow

After the transfer of escrow securities within escrow, the escrow securities will remain in escrow and released from escrow under this Agreement as if no transfer has occurred, on the same terms that applied before the transfer. The Escrow Agent will not deliver any share certificates or other evidence of the escrow securities to transferees under this Part 5.

5.7

Discretionary Applications

The Exchange may consent to the transfer within escrow of escrow securities in other circumstances and on such terms and conditions as it deems appropriate.

PART 6

BUSINESS COMBINATIONS

6.1

Business Combinations

This Part applies to the following (business combinations):

(a)

a formal take-over bid for all outstanding securities of the Issuer or which, if successful, would result in a change of control of the Issuer

(b)

a formal issuer bid for all outstanding equity securities of the Issuer

(c)

a statutory arrangement

(d)

an amalgamation

(e)

a merger

(f)

a reorganization that has an effect similar to an amalgamation or merger

6.2

Delivery to Escrow Agent

(1)

You may tender your escrow securities to a person or company in a business combination. At least five business days prior to the date the escrow securities must be tendered under the business combination, you must deliver to the Escrow Agent:

(a)

a written direction signed by you that directs the Escrow Agent to deliver to the depositary under the business combination any share certificates or other evidence of the escrow securities and a completed and executed cover letter or similar document and, where required, transfer power of attorney completed and executed for transfer in accordance with the requirements of the Issuer’s depository, and any other documentation specified or provided by you and required to be delivered to the depositary under the business combination;

(b)

written consent of the Exchange; and

(c)

any other information concerning the business combination as the Escrow Agent may reasonably require.

6.3

Delivery to Depositary

(1)

As soon as reasonably practicable, and in any event no later than three business days after the Escrow Agent receives the documents and information required under section 6.2, the Escrow Agent will deliver to the depositary, in accordance with the direction, any share certificates or other evidence of the escrow securities, and a letter addressed to the depositary that

(a)

identifies the escrow securities that are being tendered;

(b)

states that the escrow securities are held in escrow;

(c)

states that the escrow securities are delivered only for the purposes of the business combination and that they will be released from escrow only after the Escrow Agent receives the information described in section 6.4;

(d)

if any share certificates or other evidence of the escrow securities have been delivered to the depositary, requires the depositary to return to the Escrow Agent, as soon as practicable, the share certificates or other evidence of escrow securities that are not released from escrow into the business combination; and

(e)

where applicable, requires the depositary to deliver or cause to be delivered to the Escrow Agent, as soon as practicable, share certificates or other evidence of additional escrow securities that you acquire under the business combination.

6.4

Release of Escrow Securities to Depositary

(1)

The Escrow Agent will release from escrow the tendered escrow securities provided that:

(a)

you or the Issuer make application to release the tendered securities under the Policy on a date at least 10 business days and not more than 30 business days prior to the date of the proposed release date; and

(b)

the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date;

(c)

the Escrow Agent receives a declaration signed by the depositary or, if the direction identifies the depositary as acting on behalf of another person or company in respect of the business combination, by that other person or company, that

(i)

the terms and conditions of the business combination have been met or waived; and

(ii)

the escrow securities have either been taken up and paid for or are subject to an unconditional obligation to be taken up and paid for under the business combination.

6.5

Escrow of New Securities

(1)

If you receive securities (new securities) of another issuer (successor issuer) in exchange for your escrow securities, the new securities will be subject to escrow in substitution for the tendered escrow securities, unless, immediately after completion of the business combination,

(a)

the successor issuer is an exempt issuer as defined in the National Policy;

(b)

the escrow holder was subject to a Value Security Escrow Agreement and is not a Principal of the successor issuer; and

(c)

the escrow holder holds less than 1% of the voting rights attached to the successor issuer’s outstanding securities. (In calculating this percentage, include securities that may be issued to the escrow holder under outstanding convertible securities in both the escrow holder’s securities and the total securities outstanding.)

6.6

Release from Escrow of New Securities

(1)

The Escrow Agent will send to a Securityholder share certificates or other evidence of the Securityholder’s new securities as soon as reasonably practicable after the Escrow Agent receives:

(a)

a certificate from the successor issuer signed by a director or officer of the successor issuer authorized to sign

(i)

stating that it is a successor issuer to the Issuer as a result of a business combination;

(ii)

containing a list of the securityholders whose new securities are subject to escrow under section 6.5;

(iii)

containing a list of the securityholders whose new securities are not subject to escrow under section 6.5;

(b)

written confirmation from the Exchange that it has accepted the list of Securityholders whose new securities are not subject to escrow under section 6.5.

(2)

The escrow securities of the Securityholders, whose securities are not subject to escrow under section 6.5, will be released, and the Escrow Agent will send any share certificates or other evidence of the escrow securities in the possession of the Escrow Agent in accordance with section 2.4.

(3)

If your new securities are subject to escrow, unless subsection (4) applies, the Escrow Agent will hold your new securities in escrow on the same terms and conditions, including release dates, as applied to the escrow securities that you exchanged.

(4)

If the Issuer is a Tier 2 Issuer and the successor issuer is a Tier 1 Issuer, the release provisions in section 3.1(4) relating to graduation will apply.

PART 7

RESIGNATION OF ESCROW AGENT

7.1

Resignation of Escrow Agent

(1)

If the Escrow Agent wishes to resign as escrow agent, the Escrow Agent will give written notice to the Issuer and the Exchange.

(2)

If the Issuer wishes to terminate the Escrow Agent as escrow agent, the Issuer will give written notice to the Escrow Agent and the Exchange.

(3)

If the Escrow Agent resigns or is terminated, the Issuer will be responsible for ensuring that the Escrow Agent is replaced not later than the resignation or termination date by another escrow agent that is acceptable to the Exchange and that has accepted such appointment, which appointment will be binding on the Issuer and the Securityholders.

(4)

The resignation or termination of the Escrow Agent will be effective, and the Escrow Agent will cease to be bound by this Agreement, on the date that is 60 days after the date of receipt of the notices referred to above by the Escrow Agent or Issuer, as applicable, or on such other date as the Escrow Agent and the Issuer may agree upon (the “resignation or termination date”), provided that the resignation or termination date will not be less than 10 business days before a release date.

(5)

If the Issuer has not appointed a successor escrow agent within 60 days of the resignation or termination date, the Escrow Agent will apply, at the Issuer’s expense, to a court of competent jurisdiction for the appointment of a successor escrow agent, and the duties and responsibilities of the Escrow Agent will cease immediately upon such appointment.

(6)

On any new appointment under this section, the successor Escrow Agent will be vested with the same powers, rights, duties and obligations as if it had been originally named herein as Escrow Agent, without any further assurance, conveyance, act or deed. The predecessor Escrow Agent, upon receipt of payment for any outstanding account for its services and expenses then unpaid, will transfer, deliver and pay over to the successor Escrow Agent, who will be entitled to receive, all securities, records or other property on deposit with the predecessor Escrow Agent in relation to this Agreement and the predecessor Escrow Agent will thereupon be discharged as Escrow Agent.

(7)

If any changes are made to Part 8 of this Agreement as a result of the appointment of the successor Escrow Agent, those changes must not be inconsistent with the Policy and the terms of this Agreement and the Issuer to this Agreement will file a copy of the new Agreement with the Exchange.

PART 8

OTHER CONTRACTUAL ARRANGEMENTS

8.1

Escrow Agent Not a Trustee

The Escrow Agent accepts duties and responsibilities under this Agreement, and the escrow securities and any share certificates or other evidence of these securities, solely as a custodian, bailee and agent. No trust is intended to be, or is or will be, created hereby and the Escrow Agent shall owe no duties hereunder as a trustee.

8.2

Escrow Agent Not Responsible for Genuineness

The Escrow Agent will not be responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any escrow security deposited with it.

8.3

Escrow Agent Not Responsible for Furnished Information

The Escrow Agent will have no responsibility for seeking, obtaining, compiling, preparing or determining the accuracy of any information or document, including the representative capacity in which a party purports to act, that the Escrow Agent receives as a condition to a release from escrow or a transfer of escrow securities within escrow under this Agreement.

8.4

Escrow Agent Not Responsible after Release

The Escrow Agent will have no responsibility for escrow securities that it has released to a Securityholder or at a Securityholder’s direction according to this Agreement.

8.5

Indemnification of Escrow Agent

The Issuer and each Securityholder hereby jointly and severally agree to indemnify and hold harmless the Escrow Agent, its affiliates, and their current and former directors, officers, employees and agents from and against any and all claims, demands, losses, penalties, costs, expenses, fees and liabilities, including, without limitation, legal fees and expenses, directly or indirectly arising out of, in connection with, or in respect of, this Agreement, except where same result directly and principally from gross negligence, willful misconduct or bad faith on the part of the Escrow Agent. This indemnity survives the release of the escrow securities, the resignation or termination of the Escrow Agent and the termination of this Agreement.

8.6

Additional Provisions

(1)

The Escrow Agent will be protected in acting and relying reasonably upon any notice, direction, instruction, order, certificate, confirmation, request, waiver, consent, receipt, statutory declaration or other paper or document (collectively referred to as “Documents”) furnished to it and purportedly signed by any officer or person required to or entitled to execute and deliver to the Escrow Agent any such Document in connection with this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth or accuracy of any information therein contained, which it in good faith believes to be genuine.

(2)

The Escrow Agent will not be bound by any notice of a claim or demand with respect thereto, or any waiver, modification, amendment, termination or rescission of this Agreement unless received by it in writing, and signed by the other Parties and approved by the Exchange, and, if the duties or indemnification of the Escrow Agent in this Agreement are affected, unless it has given its prior written consent.

(3)

The Escrow Agent may consult with or retain such legal counsel and advisors as it may reasonably require for the purpose of discharging its duties or determining its rights under this Agreement and may rely and act upon the advice of such counsel or advisor. The Escrow Agent will give written notice to the Issuer as soon as practicable that it has retained legal counsel or other advisors. The Issuer will pay or reimburse the Escrow Agent for any reasonable fees, expenses and disbursements of such counsel or advisors.

(4)

In the event of any disagreement arising under the terms of this Agreement, the Escrow Agent will be entitled, at its option, to refuse to comply with any and all demands whatsoever until the dispute is settled either by a written agreement among the Parties or by a court of competent jurisdiction.

(5)

The Escrow Agent will have no duties or responsibilities except as expressly provided in this Agreement and will have no duty or responsibility under the Policy or arising under any other agreement, including any agreement referred to in this Agreement, to which the Escrow Agent is not a party.

(6)

The Escrow Agent will have the right not to act and will not be liable for refusing to act unless it has received clear and reasonable documentation that complies with the terms of this Agreement. Such documentation must not require the exercise of any discretion or independent judgment.

(7)

The Escrow Agent is authorized to cancel any share certificate delivered to it and hold such Securityholder’s escrow securities in electronic, or uncertificated form only, pending release of such securities from escrow.

(8)

The Escrow Agent will have no responsibility with respect to any escrow securities in respect of which no share certificate or other evidence or electronic or uncertificated form of these securities has been delivered to it, or otherwise received by it.

(9)

Any entity resulting from the merger, amalgamation or continuation of Computershare or succeeding to all or substantially all of its transfer agency business (by sale of such business or otherwise), shall thereupon automatically become the Escrow Agent hereunder without further act or formality. This Agreement shall endure to the benefit of and be binding upon the parties hereto and their successors and assigns.

8.7

Limitation of Liability of Escrow Agent

The Escrow Agent will not be liable to any of the Parties hereunder for any action taken or omitted to be taken by it under or in connection with this Agreement, except for losses directly, principally and immediately caused by its bad faith, wilful misconduct or gross negligence. Under no circumstances will the Escrow Agent be liable for any special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages hereunder, including any loss of profits, whether foreseeable or unforeseeable. Notwithstanding the foregoing or any other provision of this Agreement, in no event will the collective liability of the Escrow Agent under or in connection with this Agreement to any one or more Parties, except for losses directly caused by its bad faith or wilful misconduct, exceed the amount of its annual fees under this Agreement or the amount of three thousand dollars ($3,000.00), whichever amount shall be greater.

8.8

Remuneration of Escrow Agent

The Issuer will pay the Escrow Agent reasonable remuneration for its services under this Agreement, which fees are subject to revision from time to time on 30 days' written notice. The Issuer will reimburse the Escrow Agent for its expenses and disbursements. Any amount due under this section and unpaid 30 days after request for such payment, will bear interest from the expiration of such period at a rate per annum equal to the then current rate charged by the Escrow Agent, payable on demand.

PART 9

INDEMNIFICATION OF THE EXCHANGE

9.1

Indemnification

(1)

The Issuer and each Securityholder jointly and severally:

(a)

release, indemnify and save harmless the Exchange from all costs (including legal cost, expenses and disbursements), charges, claims, demands, damages, liabilities, losses and expenses incurred by the Exchange;

(b)

agree not to make or bring a claim or demand, or commence any action, against the Exchange; and

(c)

agree to indemnify and save harmless the Exchange from all costs (including legal costs) and damages that the Exchange incurs or is required by law to pay as a result of any person’s claim, demand or action,

arising from any and every act or omission committed or omitted by the Exchange, in connection with this Agreement, even if said act or omission was negligent, or constituted a breach of the terms of this Agreement.

(2)

This indemnity survives the release of the escrow securities and the termination of this Agreement.

PART 10

NOTICES

10.1

Notice to Escrow Agent

Documents will be considered to have been delivered to the Escrow Agent on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand during normal business hours or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Computershare Investor Services Inc.
3rd Floor, 510 Burrard Street

Vancouver, BC V6C 3B9

Attention: Manager, Client Services
Fax: (604) 661-9401

10.2

Notice to Issuer

Documents will be considered to have been delivered to the Issuer on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Alya Ventures Ltd.

888 – 700 West Georgia Street

Vancouver, BC V7Y 1G5

Attention: Chief Executive Officer

Fax: (604) 646-2054

10.3

Deliveries to Securityholders

Documents will be considered to have been delivered to a Securityholder on the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the address on the Issuer’s share register.

Any share certificates or other evidence of a Securityholder’s escrow securities will be sent to the Securityholder’s address on the Issuer’s share register unless the Securityholder has advised the Escrow Agent in writing otherwise at least ten business days before the escrow securities are released from escrow. The Issuer will provide the Escrow Agent with each Securityholder’s address as listed on the Issuer’s share register.

10.4

Change of Address

(1)

The Escrow Agent may change its address for delivery by delivering notice of the change of address to the Issuer and to each Securityholder.

(2)

The Issuer may change its address for delivery by delivering notice of the change of address to the Escrow Agent and to each Securityholder.

(3)

A Securityholder may change that Securityholder’s address for delivery by delivering notice of the change of address to the Issuer and to the Escrow Agent.

10.5

Postal Interruption

A party to this Agreement will not mail a Document if the party is aware of an actual or impending disruption of postal service.

PART 11

GENERAL

11.1

Interpretation – “holding securities”

Unless the context otherwise requires, all capitalized terms that are not otherwise defined in this Agreement, shall have the meanings as defined in Policy 1.1 - Interpretation or in Policy 5.4 - Escrow, Vendor Consideration and Resale Restrictions.

When this Agreement refers to securities that a Securityholder “holds”, it means that the Securityholder has direct or indirect beneficial ownership of or control or direction over the securities.

11.2

Enforcement by Third Parties

The Issuer enters this Agreement both on its own behalf and as trustee for the Exchange and the Securityholders of the Issuer, and this Agreement may be enforced by either the Exchange, or the Securityholders of the Issuer, or both.

11.3

Termination, Amendment, and Waiver of Agreement

(1)

Subject to subsection 11.3(3), this Agreement shall only terminate:

(a)

with respect to all the Parties:

(i)

as specifically provided in this Agreement;

(ii)

subject to subsection 11.3(2), upon the agreement of all Parties; or

(iii)

when the Securities of all Securityholders have been released from escrow pursuant to this Agreement; and

(b)

with respect to a Party:

(i)

as specifically provided in this Agreement; or

(ii)

if the Party is a Securityholder, when all of the Securityholder’s Securities have been released from escrow pursuant to this Agreement.

(2)

An agreement to terminate this Agreement pursuant to section 11.3(1)(a)(ii) shall not be effective unless and until the agreement to terminate

(a)

is evidenced by a memorandum in writing signed by all Parties;

(b)

if the Issuer is listed on the Exchange, the termination of this Agreement has been consented to in writing by the Exchange; and

(c)

has been approved by a majority vote of securityholders of the Issuer excluding in each case, Securityholders.

(3)

Notwithstanding any other provision in this Agreement, the obligations set forth in section 9.1 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

(4)

No amendment or waiver of this Agreement or any part of this Agreement shall be effective unless the amendment or waiver:

(a)

is evidenced by a memorandum in writing signed by all Parties;

(b)

if the Issuer is listed on the Exchange, the amendment or waiver of this Agreement has been approved in writing by the Exchange; and

(c)

has been approved by a majority vote of securityholders of the Issuer excluding in each case, Securityholders.

(5)

No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether similar or not), nor shall any waiver constitute a continuing waiver, unless expressly provided.

11.4

Severance of Illegal Provision

Any provision or part of a provision of this Agreement determined by a court of competent jurisdiction to be invalid, illegal or unenforceable shall be deemed stricken to the extent necessary to eliminate any invalidity, illegality or unenforceability, and the rest of the Agreement and all other provisions and parts thereof shall remain in full force and effect and be binding upon the parties hereto as though the said illegal and/or unenforceable provision or part thereof had never been included in this Agreement.

11.5

Further Assurances

The Parties will execute and deliver any further documents and perform any further acts reasonably requested by any of the Parties to this agreement which are necessary to carry out the intent of this Agreement.

11.6

Time

Time is of the essence of this Agreement.

11.7

Consent of Exchange to Amendment

The Exchange must approve any amendment to this Agreement if the Issuer is listed on the

Exchange at the time of the proposed amendment.

11.8

Additional Escrow Requirements

A Canadian exchange may impose escrow terms or conditions in addition to those set out in this Agreement.

11.9

Governing Laws

The laws of the Province of British Columbia and the applicable laws of Canada will govern this Agreement.

11.10

Counterparts

The Parties may execute this Agreement by fax and in counterparts, each of which will be considered an original and all of which will be one agreement.

11.11

Singular and Plural

Wherever a singular expression is used in this Agreement, that expression is considered as including the plural or the body corporate where required by the context.

11.12

Language

This Agreement has been drawn up in the English language at the request of all parties. Cet acte a été rédigé en anglais à la demande de toutes les parties.

11.13

Benefit and Binding Effect

This Agreement will benefit and bind the Parties and their heirs, executors, administrators, successors and permitted assigns and all persons claiming through them as if they had been a Party to this Agreement.

11.14

Entire Agreement

This is the entire agreement among the Parties concerning the subject matter set out in this Agreement and supersedes any and all prior understandings and agreements.

11.15

Successor to Escrow Agent

Any corporation with which the Escrow Agent may be amalgamated, merged or consolidated, or any corporation succeeding to the business of the Escrow Agent will be the successor of the Escrow Agent under this Agreement without any further act on its part or on the part or any of the Parties, provided that the successor is recognized by the Exchange.

The Parties have executed and delivered this Agreement as of the date set out above.

COMPUTERSHARE INVESTOR SERVICES INC.

“Authorized Signatory”
Authorized signatory

“Authorized Signatory”
Authorized signatory

ALYA VENTURES LTD.

“Bruce Cousins”
Authorized signatory

“Conrad Swanson”

Authorized signatory

Signed, sealed and delivered by

)

Erik Hallstrom in the presence of:

)

)

Name

)

)

)

“Erik Hallstrom”

Address

)

Erik Hallstrom

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Ritesh Bhavnani in the presence of:

)

)

Name

)

)

)

“Ritesh Bhavnani”

Address

)

Ritesh Bhavnani

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Atul Sabharwal in the presence of:

)

)

Name

)

)

)

“Atul Sabharwal”

Address

)

Atul Sabharwal

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Rahoul Roy in the presence of:

)

)

Name

)

)

)

“Rahoul Roy”

Address

)

Rahoul Roy

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Anthony Durkacz in the presence of:

)

)

Name

)

)

)

“Anthony Durkacz”

Address

)

Anthony Durkacz

)

)

)

Occupation

)

Signed, sealed and delivered by

)

Wilson A. Bell in the presence of:

)

)

Name

)

)

)

“Wilson A. Bell”

Address

)

Wilson A. Bell

)

)

)

Occupation

)

Signed, sealed and delivered by

)

David Colburn in the presence of:

)

)

Name

)

)

)

“Wilson A. Bell”

Address

)

David Colburn by his Attorney-in-

)

Fact, Wilson A. Bell

)

)

Occupation

)

Signed, sealed and delivered by

)

Walter Giancola in the presence of:

)

)

Name

)

)

)

“Wilson A. Bell”

Address

)

Walter Giancola, by his Attorney-

)

in-Fact, Wilson A. Bell

)

)

Occupation

)

Signed, sealed and delivered by

)

Jonathan Bell in the presence of:

)

)

Name

)

)

)

“Wilson A. Bell”

Address

)

Jonathan Bell, by his Attorney-in-

)

Fact, Wilson A. Bell

)

)

Occupation

)

Signed, sealed and delivered by

)

Waheed Nazerali in the presence of:

)

)

Name

)

)

)

“Waheed Nazerali”

Address

)

Waheed Nazerali

)

)

)

Occupation

)

Schedule “A” to Escrow Agreement

Securityholder

Name:

Erik Hallstrom

Signature:

“Erik Hallstrom”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)

Securityholder

Name:

Ritesh Bhavnani

Signature:

“Ritesh Bhavnani”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	8,903,682

Securityholder

Name:

Atul Sabharwal

Signature:

“Atul Sabharwal”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	8,903,682

Securityholder

Name:

Rahoul Roy

Signature:

“Rahoul Roy”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	1,137,115

Securityholder

Name:

Anthony Durkacz

Signature:

“Anthony Durkacz”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	795,983

Securityholder

Name:

Wilson A. Bell

Signature:

“Wilson A. Bell”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	2,729,073

Name:

David Colburn

Signature:

“David Colburn by his Attorney-in-Fact, Wilson A. Bell”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	208,624

Securityholder

Name:

Walter Giancola

Signature:

“Walter Giancola, by his Attorney-in-Fact, Wilson A. Bell”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	16,858

Securityholder

Name:

Jonathan Bell

Signature:

“Jonathan Bell, by his Attorney-in-Fact, Wilson A. Bell”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	47,288

Securityholder

Name:

Waheed Nazerali

Signature:

“Waheed Nazerali”

Address for Notice:

Securities:

Class and Type (i.e. Value Securities or Surplus Securities)	Number	Certificate(s) (if applicable)
Value (Common Shares)	400,000

SCHEDULE B(1) – TIER 1 VALUE SECURITY ESCROW AGREEMENT

RELEASE OF SECURITIES

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Exchange Bulletin]	25%
[Insert date 6 months following Exchange Bulletin]	25%
[Insert date 12 months following Exchange Bulletin]	25%
[Insert date 18 months following Exchange Bulletin]	25%
TOTAL	100%

*In the simplest case where there are no changes to the escrow securities initially deposited and no additional escrow securities, then the release schedule outlined above results in the escrow securities being released in equal tranches of 25%.

SCHEDULE B(2) – TIER 2 VALUE SECURITY ESCROW AGREEMENT

RELEASE OF SECURITIES

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Exchange Bulletin]	10%	2,314,231
[Insert date 6 months following Exchange Bulletin]	15%	3,471,346
[Insert date 12 months following Exchange Bulletin]	15%	3,471,346
[Insert date 18 months following Exchange Bulletin]	15%	3,471,346
[Insert date 24 months following Exchange Bulletin]	15%	3,471,346
[Insert date 30 months following Exchange Bulletin]	15%	3,471,345
[Insert date 36 months following Exchange Bulletin]	15%	3,471,345
TOTAL	100%	23,142,305

*In the simplest case where there are no changes to the escrow securities initially deposited and no additional escrow securities, the release schedule outlined above results in the escrow securities being released in equal tranches of 15% after completion of the release on the date of the Exchange Bulletin.

SCHEDULE B(3) – TIER 1 SURPLUS SECURITY ESCROW AGREEMENT

RELEASE OF SECURITIES

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Exchange Bulletin]	10%
[Insert date 6 months following Exchange Bulletin]	20%
[Insert date 12 months following Exchange Bulletin]	30%
[Insert date 18 months following Exchange Bulletin]	40%
TOTAL	100%

SCHEDULE B(4) – TIER 2 SURPLUS SECURITY ESCROW AGREEMENT

RELEASE OF SECURITIES

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Exchange Bulletin]	5%
[Insert date 6 months following Exchange Bulletin]	5%
[Insert date 12 months following Exchange Bulletin]	10%
[Insert date 18 months following Exchange Bulletin]	10%
[Insert date 24 months following Exchange Bulletin]	15%
[Insert date 30 months following Exchange Bulletin]	15%
[Insert date 36 months following Exchange Bulletin]	40%
TOTAL	100%

SCHEDULE B(5)

UNDERTAKING OF HOLDING COMPANY

TO:

THE TSX VENTURE EXCHANGE

·

(the "Securityholder") has subscribed for and agreed to purchase, as principal, • Common Shares of • (the "Escrowed Securities"). The Escrowed Securities will be held in escrow as detailed in the escrow agreement entered into between • (the “Issuer”), • and the Securityholder.

·

The undersigned Securityholder undertakes that, to the extent reasonably possible, it will not permit or authorize its securities to be issued or transferred, nor will it otherwise authorize any transaction involving any of its securities that could reasonably result in a change of its control without the prior consent of the TSX Venture Exchange, as long as any Escrowed Securities remain held or are required to be held in escrow.

DATED this • day of •.

(Name of Securityholder - please print)

(Authorized Signature)

(Official Capacity - please print)

(Please print here name of individual whose signature appears above)

The Securityholder is directly controlled by the undersigned who undertakes that, to the extent reasonably possible, he will not permit or authorize securities of the Securityholder to be issued or transferred, nor otherwise carry out any transaction that could reasonably result in a change of control of the Securityholder without the prior consent of the TSX Venture Exchange, as long as any Escrowed Securities remain held or are required to be held in escrow.

DATED this • day of •.

(Signature)

(Name of Controlling Securityholder – please print)

(Signature)

(Name of Controlling Securityholder – please print)