f10k2012_mobilebits.htm

Pursuant to the Merger Agreement, each share of common stock of Pringo issued and outstanding immediately prior to the effective time, was converted into the right to receive a number of shares of our common stock such that immediately after the Merger, Pringo’s stockholders, and the holders of Pringo’s outstanding options and warrants, owned fifty percent (50%) of our then outstanding shares of common stock on a fully diluted basis (as if all of Pringo’s and Parent’s options and warrants were exercised), and our stockholders, and holders of our outstanding options and warrants, owned fifty percent (50%) of its then outstanding shares of our common stock on a fully diluted basis (as if all of Pringo’s and our options and warrants were exercised). At the closing of the Pringo Merger on December 6, 2011, Pringo’s stockholders immediately prior to the Pringo Merger were issued 29,453,544 shares of common stock of Parent.

Pringo is a Delaware “C” Corporation headquartered in Los Angeles, California. Established in 2006, Pringo offers software products that combine enterprise-class portals, content management systems, social collaboration features, extensive API and extension capabilities and user management tools in various open-source packages. Pringo distinguishes itself from other products of the same class in the market in four distinct areas: Pringo products are offered in an open-architecture format; available in 23 languages; Pringo products are easily integrated and easily deployed by enterprises; and Pringo offers over 400 customizable features.

On September 28, 2012, the Company completed a share exchange with Aixum Tec AG, a Liechtenstein Company (“Aixum”), pursuant to a Stock Exchange Agreement (the “Stock Exchange Agreement”), dated May 21, 2012 (the “Stock Exchange”). As a result of the Stock Exchange Aixum is a wholly-owned subsidiary of MobileBits.

Pursuant to the Stock Exchange Agreement, at the closing of the Stock Exchange each seller (a “seller”, and collectively, the “Sellers”) sold to the Company its shares of Aixum (the “Transferred Shares”). In consideration for the Transferred Shares, the Company issued to each Seller such seller’s pro rata portion of a number of shares of the Common Stock, par value $0.001 per share, of the Company, equal to (A) 6,666,667 minus (B) the sum of (i) the Liability Shares (as defined in the Stock Exchange Agreement), if any, plus (ii) the Cost Shares (as defined in the Stock Exchange Agreement), if any. On the Closing Date, MobileBits issued an aggregate of 5,803,061 of its Common Stock to the Sellers.

During the year we successfully integrated the Pringo Connect and SAMY4ME platforms and transitioned the Company from enterprise license and services sales and support to subscription based business model. In addition we launched the newly branded SAMY product.

Over the next twelve months, we intend to continue growing our business by expanding the availability and distribution of the SAMY network into other markets and regions. We also plan to offer SAMY under license to certain qualified re-sellers.

MB currently anticipates the implementation of its business plan will require additional investment capital. The Company hopes to raise up to $10 million in equity financing in 2013. If we are successful in raising the necessary funds, we will use those funds to grow our consumer network and to acquire new customers through increased advertising, sales, and marketing product fulfillment, to fund product development providing additional product functionality, to provide working capital for strategic acquisitions and for other corporate purposes.

RESULTS OF OPERATIONS

Fiscal Year Ended October 31, 2012 Compared to Fiscal Year Ended October 31, 2011

Revenues

Our revenues from our operations for the fiscal year ended October 31, 2012 were $781,151 compared to $0 for the fiscal year ended October 31, 2011, when we were considered a development stage Company. We started to generate revenues from enterprise licenses and services after we acquired Pringo. Our revenues come from the existing and new Pringo contracts as well as SAMY merchant fees. For the twelve months ended October 31, 2012, license fees, professional service fees, hosting fees and SAMY merchant fees totaled $384,597, $348,284, $19,700 and $28,570, respectively.

Cost of Revenues

Our cost of revenues was $245,261 for the fiscal year ended October 31, 2012 compared to $0 for the fiscal year ended October 31, 2011. Cost of revenues is incurred on the revenues generated primarily from Pringo contracts. For the twelve months ended October 31, 2012, costs associated with professional service fees were $233,957 and costs for hosting fees were $11,304.

General and Administrative Expenses

Our total general and administration expenses were $10,974,661 for the fiscal year ended October 31, 2012 compared to $2,529,634 for the fiscal year ended October 31, 2011. The increase of $8,445,027 is primarily attributable to an increase of $7,246,227 in non-cash stock compensation expense; $414,900 in increased professional fees; $225,511 in bad debt expense in 2012; $181,400 in higher salary costs associated with the employees retained from the Pringo and Aixum acquisitions as well as new hires; $141,300 in higher office related expenses in 2012; $97,400 in higher marketing expenses and $93,700 in increased travel expenses.

Amortization and Depreciation

Amortization and depreciation was $958,167 for the fiscal year ended October 31, 2012 compared to $4,484 for the fiscal year ended October 31, 2011. The increase is due to the amortization of intangible assets acquired in the Pringo Merger and the Aixum share exchange as well as the amortization of software and development costs capitalized during the period.

Lawsuit Settlement

For the fiscal year ended October 31, 2012, the Company realized a gain on lawsuit settlement with Birlasoft, Inc, in the amount of $88,801.

Unrealized loss on foreign currency exchange

For the fiscal year ended October 31, 2012, the Company incurred $3,059 in unrealized losses on foreign currency exchange.

Interest Expense, net

Net interest expense was $216,595 for the fiscal year ended October 31, 2012 compared to $0 for the fiscal year ended October 31, 2011. In connection with the conversion of a note payable into the Company’s common stock, $200,872 representing the value in excess of the note payable’s principal was recorded as interest expense.

Liquidity and Capital Resources

As of October 31, 2012, we had $122,428 available in cash as compared to $1,330,166 as of October 31, 2011. The decrease in cash is primarily due to losses from operations, the additional expenditures associated with the Pringo Merger, increased costs of software development and licenses, and movements in working capital. The Company had a working capital deficit of $1,205,609 at October 31, 2012 compared to positive working capital of $1,105,991 at October 31, 2011. The Company has an accumulated deficit at October 31, 2012 of $16,171,696. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on the successful execution of management's plans, which include the expectation of raising debt or equity based capital, with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with related parties to sustain the Company’s existence.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

In response to these factors, management has taken the following actions:

●

seek additional funding from private placements and/or public offerings,

●

seek additional third party debt and/or equity financing; and

●

continue the implementation of the business plan including the distribution of the SAMY application in additional regions.

The use of proceeds from our unregistered common share sales that occurred for the fiscal years ending October 31, 2012 and 2011 were primarily used for salaries, product development, merger costs, consulting fees, office expenses, travel costs, offering expenses, professional fees, advertising/marketing, and working capital.

We are currently seeking funding for our plan of operations. We intend to seek funding up to $10,000,000 in order to continue our marketing plan, continue building our customer/merchant base and expand into new markets. To achieve our goals, a large portion of the funds raised will be invested in advertising/ marketing our product and an increase in headcount to support our expansion plans. Our success is contingent upon having enough capital to build enough customers to support the business. We expect to raise additional funds within the next 6-8 months. A private placement is the most likely scenario for the Company to achieve success in raising additional funds for its operations.

Cash used in operating activities

Cash used in operating activities for the years ended October 31, 2012 and 2011 were $2,144,599 and $2,075,638, respectively. The increase in 2012 was due to our increased business activities, which resulted in higher cash outflows in operations.

Cash used in investing activities

Cash used in investing activities for the years ended October 31, 2012 and 2011 were $487,771 and $0, respectively. The increase in 2012 is due to money spent on software development and license costs as well as property and equipment.

Cash flow from financing activities

Cash provided by financing activities for the years ended October 31, 2012 and 2011 were $1,429,511 and $3,341,509, respectively. The majority of cash provided by financing activities for both years resulted from our private placements of common stock for cash.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to smaller reporting companies.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

MobileBits Holdings Corporation

Consolidated Financial Statements

As of and for the Years Ended October 31, 2012 and 2011

CONTENTS

	Page(s)
Consolidated Financial Statements:

Consolidated Balance Sheets – As of October 31, 2012 and 2011		23

Consolidated Statements of Operations and Comprehensive Loss - For the Years Ended October 31, 2012 and 2011		24

Consolidated Statement of Changes in Stockholders’ Equity - For the Years Ended October 31, 2012 and 2011		25

Consolidated Statements of Cash Flows - For the Years Ended October 31, 2012 and 2011		26

Notes to Consolidated Financial Statements		27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

MobileBits Holdings Corporation

Los Angeles, California

We have audited the accompanying consolidated balance sheets of MobileBits Holdings Corporation (the “Company”) as of October 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform each audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of October 31, 2012 and 2011 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, has a working capital deficit and has not completed its efforts to establish a stable recurring source of revenues sufficient to cover its operating costs for the next twelve months. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ GBH CPAs, PC

GBH CPAs, PC

www.gbhcpas.com

Houston, Texas

February 13, 2013

MobileBits Holdings Corporation

Consolidated Balance Sheets

	October 31,			October 31,
	2012			2011
ASSETS
Current assets:
Cash	$	122,428		$	1,330,166
Investment in marketable securities		222			-
Accounts receivable, net of allowance for doubtful accounts		95,058			-
Prepaid expenses and other current assets		62,761			44,455
Total current assets		280,469			1,374,621

Property and equipment, net of accumulated depreciation		40,758			10,674
Software development costs, net of accumulated amortization		159,733			-
Intangible assets, net of accumulated amortization		6,020,641			-
Goodwill		16,107,034			-

TOTAL ASSETS	$	22,608,635		$	1,385,295

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	669,975		$	70,749
Accounts payable and accrued expenses – related parties		630,878			197,881
Stock payable		122,000			-
Note payable– related parties		54,325			-
Deferred revenues		8,900			-
Total current liabilities		1,486,078			268,630

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares
authorized; none issued and outstanding		-			-
Common stock, $0.001 par value; 250,000,000 shares authorized; 65,182,188 and 29,051,616 shares issued and
outstanding, respectively		65,182			29,052
Additional paid-in capital		37,233,950			5,731,518
Accumulated deficit		(16,171,696	)		(4,643,905	)
Accumulated other comprehensive loss		(4,879	)		-
Total stockholders' equity		21,122,557			1,116,665

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	22,608,635		$	1,385,295

See accompanying summary of accounting policies and notes to consolidated financial statements.

MobileBits Holdings Corporation

Consolidated Statements of Operations and Comprehensive Loss

	For the Year Ended October 31,
	2012			2011

REVENUES	$	781,151		$	-
COST OF REVENUES		245,261			-

GROSS PROFIT		535,890			-

OPERATING EXPENSES:
General and administrative		10,974,661			2,529,634
Depreciation and amortization expense		958,167			4,484
Total operating expenses		11,932,828			2,534,118

LOSS FROM OPERATIONS		(11,396,938	)		(2,534,118	)

OTHER INCOME (EXPENSE)
Gain on lawsuit settlement		88,801			-
Unrealized foreign currency exchange loss		(3,059	)		-
Interest expense, net		(216,595	)		-

NET LOSS		(11,527,791	)		(2,534,118	)

OTHER COMPREHENSIVE LOSS
Foreign currency translation loss		(4,879	)		-
TOTAL COMPREHENSIVE LOSS	$	(11,532,670	)	$	-

Net loss per common share - basic and diluted	$	(0.23	)	$	(0.10	)

Weighted average number of common shares outstanding during the period - basic and diluted		49,072,904			25,983,364

See accompanying summary of accounting policies and notes to consolidated financial statements.

MobileBits Holdings Corporation

Consolidated Statement of Changes in Stockholders’ Equity

For the Years Ended October 31, 2012 and 2011

	Common Stock						Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount			Capital		Deficit			Income			Equity
Balances - October 31, 2010		21,559,041		$	21,559		$	1,487,618	$	(2,109,787	)	$	-		$	(600,610	)
Proceeds from the sale of common stock ($0.50/share), net		7,492,575			7,493			3,381,267		-			-			3,388,760
Amortization of fair value of stock options/warrants		-			-			862,633		-			-			862,633
Net loss		-			-			-		(2,534,118	)		-			(2,534,118	)
Balances - October 31, 2011		29,051,616			29,052			5,731,518		(4,643,905	)		-			1,116,665
Common shares and options issued in the Pringo acquisition		29,453,544			29,454			18,715,067		-			-			18,744,521
Cancellation of shares		(3,000,000	)		(3,000	)		3,000		-			-			-
Common shares issued for exercise of warrants		610,319			610			304,550		-			-			305,160
Common shares issued for accounts payable		494,627			494			93,485		-			-			93,979
Proceeds from the sale of common stock ($0.50/share), net		2,769,021			2,769			1,381,742		-			-			1,384,511
Common shares issued in the Aixum acquisition		5,803,061			5,803			2,895,728		-			-			2,901,531
Amortization of fair value of stock options/warrants		-			-			8,108,860		-			-			8,108,860
Net loss		-			-			-		(11,527,791	)		-			(11,527,791	)
Foreign currency translation loss		-			-			-		-			(4,879	)		(4,879	)
Balances - October 31, 2012		65,182,188		$	65,182		$	37,233,950	$	(16,171,696	)	$	(4,879	)	$	21,122,557

See accompanying summary of accounting policies and notes to consolidated financial statements.

MobileBits Holdings Corporation

Consolidated Statements of Cash Flows

	For the Year Ended
	October 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,527,791	)	$	(2,534,118	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Bad debt expense		225,511			-
Stock-based compensation		8,108,860			862,633
Depreciation and amortization expense		958,167			4,484
Gain on lawsuit settlement		(88,801	)		-
Common shares issued for interest expense		200,872			-
Changes in operating assets and liabilities:
Increase in accounts receivable		(175,014	)		-
(Increase) decrease in prepaid expenses and other current assets		31,166			(43,355	)
Increase (decrease) in accounts payable and accrued expenses		64,141			(179,348	)
Increase (decrease) in accounts payable and accrued expenses – related parties		49,390			(185,934	)
Increase (decrease) in deferred revenues		8,900			-
Net cash used in operating activities		(2,144,599	)		(2,075,638	)

CASH FLOWS FROM INVESTING ACTIVITIES
Software development costs incurred		(208,107	)		-
Payments made prior to Pringo and Aixum acquisitions, net of cash acquired		(255,464	)		-
Purchases of property and equipment		(24,200	)		-
Net cash used in investing activities		(487,771	)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on notes payable		(57,000	)		-
Proceeds from sale of common stock, net of offering costs		1,506,511			3,575,288
Commissions paid to a related party on common stock sales		(20,000	)		(233,779	)
Net cash provided by financing activities		1,429,511			3,341,509

Effect of exchange rate changes on cash		(4,879	)		-

Net increase (decrease) in cash		(1,207,738	)		1,265,871
Cash at beginning of period		1,330,166			64,295
Cash at end of period	$	122,428		$	1,330,166

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest	$	7,077		$	-
Income tax		-			-

NON-CASH INVESTING AND FINANCING ACTIVITIES
Common shares issued for accrued interest	$	23,288		$	-
Common shares issued for accounts payable		93,979			-
Common shares issued for stock payable		-			171,000
Common shares issued for notes payable		81,000			-
Commissions accrued on common stock sales - related party		-			163,849
Cancellation of shares – related party		3,000			-
Fair value of common shares and options issued to acquire Pringo Inc.		18,744,521
Fair value of common shares issued to acquire Aixum Tec AG		2,901,531			-

See accompanying summary of accounting policies and notes to consolidated financial statements.

MobileBits Holdings Corporation

Notes to Consolidated Financial Statements

NOTE 1 – ORGANIZATION AND HISTORY

MobileBits Holdings Corporation, formerly Bellmore Corporation (“BC”) was incorporated in the State of Nevada on July 22, 2008. On January 25, 2010, BC changed its name to MobileBits Holdings Corporation (the “Company”, “MobileBits” or “MB”).

MobileBits Corporation (“MBC”) was incorporated in Florida on March 2009. The business was founded with the intention of providing a platform that connected marketers to consumers around meaningful content available on mobile devices.

The Company entered into a Share Exchange Agreement, dated March 12, 2010 (the “ Share Exchange Agreement”) between MBC and the shareholders of MBC (the “MBC Shareholders”) pursuant to which MB acquired MBC, an early stage software development firm targeting its software at the mobile search market.

The transaction closed on March 12, 2010 and MB acquired 100% of the outstanding shares of common stock of MBC (the “MBC Stock”) from the MBC Shareholders. In exchange for MBC common stock and $275,000, MB issued 18,752,377 shares of its common stock to the MBC Shareholders, which represented approximately 87.9% of MB’s issued and outstanding common stock. Upon closing, MBC became a 100% wholly-owned subsidiary of the Company.

Pringo Acquisition

On December 6, 2011, through MB Pringo Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub”), MobileBits completed a merger with Pringo, Inc. a Delaware corporation (“Pringo”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated June 23, 2011 (the “Pringo Merger”). As a result of the Merger, Merger Sub merged with and into Pringo, with Pringo surviving the Merger as the Company’s wholly owned subsidiary.

Pringo is a Delaware “C” Corporation headquartered in Los Angeles, California. Established in 2006, Pringo offers software products that combine multi-lingual enterprise-class portals, content management systems, social collaboration features, and user management tools in open-source development packages. Pringo distinguishes itself from other products in the market in four distinct areas: Pringo products are offered in an open-architecture format; available in 23 languages; Pringo products are easily integrated and deployed by enterprises; and Pringo offers over 400 customizable features.

Aixum Acquisition

Aixum owns the rights to the propriety network solution known as SAMY℠4ME which provides a cloud-based software platform making it simple for any business to create their own mobile advertising campaigns and publish to a targeted subscribed mobile audience delivered to smartphones. SAMY4℠ME distinguishes itself by providing a mobile application for consumers and a cloud based campaign manager software for merchants to send coupons and synchronize loyalty card information.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.

Significant estimates made by the Company in 2012 and 2011 included: 1) 100% valuation allowance for deferred taxes due to the Company’s continuing and expected future losses; 2) inputs used in its option-pricing model to calculate the Company share-based compensation arrangements; 3) allowance estimated for doubtful accounts; 4) assumptions used in the valuation models to calculate the fair values of assets acquired and liabilities assumed under acquisitions; and 5) assumptions used in the projections and discounted cash flows analysis to assess the goodwill impairment.

Principles of Consolidation

The consolidated financial statements include the Company’s accounts and those of the Company’s wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated.

Reclassifications

Certain amounts for prior periods have been reclassified to conform to the current period presentation.

Cash and Cash Equivalents

We consider short term, highly liquid investments that have an original maturity of three months or less to be cash equivalents. The Company maintains its cash balances in two financial institutions. The balances are insured by the Federal Deposit Insurance Corporation (“FDIC”). At October 31, 2012 and 2011, the Company had cash balances of $122,428, and $1,330,166, respectively, all of which was insured.

Investment in Marketable Securities

The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Debt securities for which the Company does not have the intent or ability to hold to maturity are classified as available for sale. Held-to-maturity securities are recorded as either short term or long term on the Balance Sheet, based on contractual maturity date and are stated at amortized cost. Marketable securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings. Debt and marketable equity securities not classified as held to maturity or as trading, are classified as available for sale, and are carried at fair market value, with the unrealized gains and losses, net of tax, included in the determination of comprehensive income and reported in shareholders’ equity.

The fair value of substantially all securities is determined by quoted market prices. The estimated fair value of securities for which there are no quoted market prices is based on similar types of securities that are traded in the market.

Accounts Receivable and Allowance for Bad Debt

The allowance for doubtful accounts is based on the Company’s past experience and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowance for doubtful accounts is determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At October 31, 2012 and 2011, the allowance for doubtful accounts totaled $225,511 and $0, respectively. For the year ended October 31, 2012 and 2011, the Company recorded bad debt expense of $225,511 and $0.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the related assets using the straight-line method for financial reporting purposes.

Expenditures for normal repairs and maintenance are charged to expense as incurred. Significant renewals and improvements are capitalized. The cost and related accumulated depreciation of assets retired or otherwise disposed of are eliminated from the accounts, and any resulting gain or loss is recognized in the year of disposal.

Long-Lived Assets

We review our long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.

Software Development Costs

Costs of software developed internally for licensing to third parties are expensed until the technological feasibility of the software product has been established. Thereafter, software development costs incurred through the general release of the software products are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Capitalized software development costs are amortized on a straight-line basis over the products’ respective estimated economic lives, which are typically three years. The amortization of capitalized software development costs, including any amounts accelerated for products that are not expected to generate sufficient future revenue to realize their carrying values, is included in cost of license revenue in the consolidated statements of operations.

Intangible Assets

Intangible assets consist of expenditures for a domain name, the value of trade name, customer relationships, and software, which was initially recorded at the fair value on the acquisition date of Aixum and Pringo. The domain name has an estimated indefinite life, is not subject to amortization, but is reviewed annually for impairment. The identifiable intangibles are amortized over their useful lives of 3 to 10 years and are reviewed annually for impairment.

Goodwill

Costs of investments in excess of the underlying fair value of net assets at the date of acquisition are recorded as goodwill and assessed annually for impairment. The carrying amount of goodwill is not amortized, but we perform an annual assessment of goodwill for impairment by first comparing the book value of net assets to the fair value of the reporting units. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

●	Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

●

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

●	Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Income Taxes

The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest and penalties associated with income taxes are included in selling, general and administrative expense.

The Company has adopted ASC Topic 740 “Accounting for Uncertainty in Income Taxes” which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. As of October 31, 2012 and 2011, the Company had not recorded any tax benefits from uncertain tax positions.

Revenue Recognition

License revenue consists principally of revenue earned under software license agreements. License revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method.” VSOE of fair value for maintenance and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified future products and maintenance, is recognized ratably over the term of the subscription period.

Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty fees are generally recognized upon reports of new licenses issued. Revenue on sales to resellers is recognized when evidence of an end user arrangement exists and recorded net of related costs to the resellers.

Professional services revenue consists primarily of revenue received for assisting with the customization and implementation of our software, on-site support, and other consulting services. Many customers who license our software also enter into separate professional services arrangements with us. We always account for professional services separately from license revenue as professional services are considered essential to the functionality of the software based on the nature of our software products. Substantially all of our professional services arrangements that are billed on a time and materials basis are recognized as the services are performed. Contracts with fixed or not-to-exceed fees are recognized on a percentage-of-completion. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. VSOE of fair value of consulting services is based upon stand-alone sales of those services. Payments received in advance of consulting services performed are deferred and recognized when the related services are performed. Work performed and expenses incurred in advance of invoicing are recorded as unbilled receivables. These amounts are billed in the subsequent month.

Maintenance revenue consists of fees for providing software updates on a when and if available basis and technical support for software products (“post-contract customer support” or “PCS”). Maintenance revenue is recognized ratably over the term of the agreement.

Hosting revenues are recognized in the month services are delivered.

Payments received in advance of services performed are deferred. Allowances for estimated future returns and discounts are provided for upon recognition of revenue.

Subscription revenue is generated from businesses that pay MobileBits a subscriber fee for each SAMY mobile subscriber. Each mobile subscription generates a monthly fee beginning when a mobile customer subscribes to a specific branded storefront within the SAMY application. Subscription fees are charged for the length of time a SAMY shopper remains subscribed to branded storefront. Each SAMY shopper can subscribe to more than one branded storefronts within the SAMY application. Average revenue per user is determined by multiplying the subscription fee by the number of individual storefronts a SAMY shopper subscribes to.

Cost of License, Maintenance, and Hosting Revenues

Cost of license revenue is primarily comprised of the license-based royalties to third parties and production and distribution costs for initial product licenses.

Cost of maintenance revenue is primarily comprised of the costs associated with the customer support personnel that provide maintenance, enhancement and support services to our customers.

Hosting fees are directly related to each client’s hosting requirements and charged by a third party service provider.

The amortization of capitalized software development costs for internally developed products, the amortization of acquired technology for products acquired through business combinations are considered as the periodic operating expense.

Sales Commissions

We pay commissions, including sales bonuses, to our direct sales force related to revenue transactions under sales compensation plans established annually. We defer the portion of commissions that are direct and incremental costs of the license and maintenance revenue arrangements and recognize them as selling and marketing expenses in the statements of operations over the terms of the related customer contracts in proportion to the recognition of the associated revenue. The commission payments are typically paid in full in the month or quarter following execution of the customer contracts.

Share-Based Payments

The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model and common shares based on the last applicable market price of the Company’s common stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period. Excess tax benefits, if any, are recognized as an addition to paid-in capital.

Earnings (Loss) per Share

Basic earnings per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. EPS excludes all potential dilutive shares of common stock if their effect is anti-dilutive. As of October 31, 2012 and 2011, there were 24,929,475 units and 3,404,015 units of stock options outstanding, respectively.

Foreign Currency Translation

The functional currency of Aixum is the Swiss Franc (“CHF”). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.

For financial reporting purposes, the financial statements of Aixum are translated into the Company’s reporting currency, United States Dollars (“USD”). Asset and liability accounts are translated using the closing exchange rate in effect at the balance sheet date, equity account and dividend are translated using historical exchange rates and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.

Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholder’s equity.

Subsequent Events

The Company has evaluated all transactions occurring between the end of its fiscal year, October 31, 2012, through the date of issuance of the consolidated financial statements for subsequent event disclosure consideration.

Recent Accounting Pronouncements

The Company does not expect that any recently issued accounting pronouncements will have a significant impact on the results of operations, financial position, or cash flows of the Company.

NOTE 3 – GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company has suffered recurring losses from operations. The Company has a net loss of $11,527,791, a working capital deficit of $1,205,609 and net cash used in operations of $2,144,599 for the year ended October 31, 2012; and an accumulated deficit of $16,171,696 at October 31, 2012. In addition, the Company has not completed its efforts to establish a stable recurring source of revenues sufficient to cover its operating costs for the next twelve months. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on the successful execution of management's plans, which include the expectation of raising debt or equity based capital, with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to issue additional equity and incur additional liabilities with related parties to sustain the Company’s existence although no commitments for funding have been made and no assurance can be made that such commitments will be available.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In response to these factors, the management intends to take on the following actions:

●	seek additional funding from private placement and public offerings,
●	seek additional funding from third party debt financings; and
●	continue the implementation of the business plan, which may include merging or acquiring with an operating entity.

NOTE 4 – ACQUISITIONS

Acquisition of Pringo, Inc.

On December 6, 2011, the Company completed a merger with Pringo, Inc. Pursuant to the Merger Agreement, each share of common stock of Pringo issued and outstanding immediately prior to the effective time, was converted into the right to receive a number of shares of common stock of the Company such that immediately after the Merger, Pringo’s stockholders, and the holders of Pringo’s outstanding options and warrants, own fifty percent (50%) of the Company's then outstanding shares of common stock on a fully diluted basis (as if all of Pringo’s and the Company’s options and warrants were exercised), and the Company’s stockholders, and holders of the Company’s outstanding options and warrants, own fifty percent (50%) of its then outstanding shares of the Company's common stock on a fully diluted basis (as if all of Pringo’s and the Company’s options and warrants were exercised). These shares were valued at their grant date value of $14,726,772. At the closing of the Pringo Merger, Pringo’s stockholders immediately prior to the Pringo Merger were issued 29,453,544 shares of common stock of the Company. The Company determined that the Pringo options converted into MobileBits options as of the acquisition date should have been considered in determining the final purchase price. The fair value of these converted options at the acquisition date was approximately $4,018,000. The Company has also made adjustment to eliminate $242,000 in acquired software development costs after its initial allocation of purchase price. As a result, the originally recorded goodwill increased from $11,304,000 to $15,564,000; stock compensation expense included in general and administrative expense was reduced by approximately $4,018,000.

All shares of Pringo common stock outstanding immediately prior to the Pringo Merger are no longer outstanding and were automatically cancelled and retired, and each certificate previously representing any such shares now represents the right to receive a certificate representing the shares of the Company common stock into which such Pringo common stock was converted into the Pringo Merger. All the issued and outstanding options to purchase common stock of Pringo prior to the Pringo Merger were vested and converted into options to purchase the Company’s common stock.

Under the acquisition method of accounting, the total estimated purchase price is allocated to Pringo’s tangible and intangible assets and liabilities based on their estimated fair values at the date of the completion of the acquisition (December 6, 2011).

The following table summarizes the final allocation of the purchase price:

Current assets	$	185,875
Property and equipment		17,140
Domain name		20,100
Intangible assets		3,780,000
Current liabilities		(631,963	)
Long-term liabilities		(191,000	)
Goodwill		15,564,369
Purchase price	$	18,744,521

Goodwill and intangible assets:

The purchase price and costs associated with the acquisition exceeded the net assets acquired by $19,344,369 on December 6, 2011, of which $3,780,000 was allocated to acquire technology and other intangible assets, such as customer relationships, and the remaining $15,564,369 was assigned to goodwill.

Acquisition of Aixum Tec AG

Prior to the acquisition, the Company executed a promissory note between Aixum and MobileBits dated March 7, 2012 providing for MobileBits to lend up to 110,000 CHF (approximately $114,800) at 5% interest rate payable on September 13, 2012. On June 19, 2012, the Company entered an amendment to increase the principal amount to 180,000 CHF (approximately $183,929). As of October 31, 2012, 170,000 CHF (approximately $181,991) had been advanced to Aixum by MobileBits. These amounts have been eliminated in consolidation.

The following table summarizes the preliminary allocation of the purchase price:

Current assets	$	65,000
Property and equipment		9,000
Intangible assets		3,110,000
Current liabilities		(514,000	)
Goodwill		543,000
Purchase price	$	3,213,000

Assets acquired and liabilities assumed are recognized based on an estimate of their fair value as of the acquisition date. The estimated fair values were determined based on management’s best estimates at the time of this filing. Estimates and assumptions are subject to change upon management’s review of the final amounts. Any deferred taxes or deferred tax liabilities will be recognized upon the completion of these valuations, if applicable. This final evaluation of net assets acquired is expected to be completed as soon as a final accounting is performed but no later than one year from the acquisition date. Any future changes in the value of the net assets acquired will be offset by a corresponding change in goodwill.

Goodwill and intangible assets:

The purchase price and costs associated with the acquisition in excess of the net liabilities assumed was $3,653,000 on September 28, 2012, of which $3,110,000 was allocated to acquire technology and other intangible assets such as customer relationships and the remaining $543,000 was assigned to goodwill.

Unaudited Pro Forma Results of Operations

The following table reflects the unaudited consolidated pro forma results of operations of the Company as if the Pringo and Aixum acquisition had occurred as of November 1, 2011 and 2010.

	For the Year Ended
	October 31,
	2012			2011
Revenues	$	1,039,000		$	1,068,000
Net loss		(13,735,000	)		(5,970,000	)

NOTE 5 – PROPERTY AND EQUIPMENT

The following is a summary of property and equipment the Company had at October 31, 2012 and 2011:

	Estimated		October 31,			October 31,
	Useful Lives		2012			2011
Furniture and fixtures		5	$	8,249		$	-
Equipment		5		34,064			-
Website and database		3		26,602			19,079
Subtotal				68,915			19,079
Less: accumulated depreciation				(28,157	)		(8,405	)
Property and equipment, net			$	40,758		$	10,674

For the years ended October 31, 2012 and 2011, the Company recognized depreciation expense of $20,334 and $4,484, respectively.

NOTE 6 – SOFTWARE DEVELOPMENT COSTS

The following is a summary of the Company’s software development costs at October 31, 2012 and 2011:

	October 31,			October 31,
	2012			2011
Software development costs incurred	$	208,107		$	-
Less: accumulated amortization		(48,374	)		-
Software development costs, net	$	159,733		$	-

For the years ended October 31, 2012 and 2011, total amortization expense was $48,374 and $0, respectively.

NOTE 7 – INTANGIBLE ASSETS

The following is a summary of the Company’s intangible assets at October 31, 2012 and 2011:

	Estimated Useful Lives		October 31, 2012			October 31, 2011
Domain name		Indefinite	$	20,100		$	-
Developed technology – software		3		3,780,000			-
Customer relationships		5		1,700,000			-
Trade name		10		1,410,000			-
Subtotal				6,910,100			-
Less: accumulated amortization				(889,459	)		-
Intangible assets, net			$	6,020,641		$	-

For the years ended October 31, 2012 and 2011, the Company recognized amortization expense of $889,459 and $0, respectively.

NOTE 8 – NOTES PAYABLE – RELATED PARTY

The Company assumed a related party promissory note in the amount of $110,000 in the Pringo Merger, accruing interest at 10% per annum. On February 1, 2012, the note was extended through June 30, 2012 with the full balance of the $110,000 to be repaid by June 30, 2012. The balance on the note as of October 31, 2012 was $53,000. The parties are in the process of negotiating new payment terms.

In addition, on December 22, 2011 the Company converted an $81,000 related party note payable and accrued interest of $23,288 by issuing 610,319 shares of common stock valued at $305,160. The value in excess of the principal in the amount of $200,872 was recorded as additional interest expense. . The Company is currently contesting the original terms of the common stock conversion.

NOTE 9 – RELATED PARTY TRANSACTIONS

As of October 31, 2012, the Company had outstanding payables to related parties of the Company in the amount of $630,878. $227,154 was owed to The Abai Group, Inc. for the services performed and $110,173 for accrued severance benefits; $164,380 was owed to Walter Kostiuk primarily for commissions on sale of the Company’s common stock and unpaid salary and $129,171 was owed to Andrew Marshall for unpaid salary and expenses. During the year ended October 31, 2012, the Company paid Walter Kostiuk $20,000 primarily related to salary owed.

As of October 31, 2011, the Company had amounts payable to Mr. Kostiuk of $192,881.

As of December 2, 2011, the Company executed a new employment agreement with Walter Kostiuk. This new agreement commenced on December 7, 2011 and continues through December 31, 2014. As of December 31, 2014 and on each anniversary of that date (the “Renewal Date’), this Agreement shall automatically be extended for an additional one year term, unless either party gives the other written notice of non-renewal at least 60 days prior to any such Renewal Date. The annual starting salary is $210,000 increasing as follows:

To $260,000 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $3,000,000 since June 24, 2011 at a per share price of no less than $0.51.

To $310,000 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $6,000,000 since June 24, 2011 at a per share price of no less than $0.51.

To $400,000 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $10,000,000 since June 24, 2011 at a per share price of no less than $0.51.

Annual salary increases by a minimum of 5% annually.

During the employment term, Mr. Kostiuk shall be eligible to participate in the Company’s bonus and other incentive compensation plans and programs (if any) for the Company’s executives at a level commensurate with this position. Such bonuses shall be determined by the Compensation Committee as formed by the Board of Directors of the Company.

Additionally, upon approval of the Board of Directors of the Company by unanimous written consent or at a duly called board meeting (“Board Approval”), Mr. Kostiuk shall receive a cash bonus of $25,000 for each quarter that the Company maintains a Market Capitalization (as defined below) of over $50 million for more than 60 days within the quarter and/or the quarterly revenue quotas (as established by the Board of Directors of the Company) are exceeded by 25% or more. This amount will increase to $50,000 per quarter should the Company’s Market Capitalization increase to $100 million and/or the quarterly revenue quotas are exceeded by 50% or more; and to $75,000 per quarter should the Market Capitalization reach $250 million and/or the quarterly revenue quotas are exceeded by 75% or more; and to $100,000 per quarter should the Market Capitalization reach $500 million and/or the quarterly revenue quotas are exceeded by 100% or more. Market Capitalization shall mean the aggregate worldwide market value of Company’s common stock, calculated by multiplying the closing stock price as listed on the OTC Markets or other stock exchange (such as NASDAQ or NYSE) times the number of issued and outstanding shares.

On December 2, 2011, the Company issued to Mr. Kostiuk an option to purchase 3,000,000 shares of the Company’s common stock at an exercise price equal to 100% of the fair market value of the Company’s common stock on such date. Such options shall vest upon the earlier to occur of the closing of an M&A Transaction (as defined below) or an initial public offering of the Company’s common stock on a major US or international stock exchange, in each case that values the Company at $100,000,000 or more (the “Transaction Value”). If the Transaction Value is $100,000,000 or more, but less than $250,000,000, the option shall vest as to 1,000,000 shares and shall immediately lapse as to the remaining 2,000,000 shares; if the Transaction Value is $250,000,000 or more, but less than $500,000,000, the option shall vest as to 2,000,000 shares and shall immediately lapse as to the remaining 1,000,000 shares; if the Transaction Value is $500,000,000 or more, the option shall vest as to all 3,000,000 shares.

On December 2, 2011, Mr. Kostiuk was also granted options, with a term of seven years and an exercise price of the fair market value of the shares on the commencement date, to purchase 6,750,000 shares of common stock of the Company that will vest over a period of 36 months, 187,500 shares per month.

Mr. Kostiuk is entitled to an automobile benefit starting 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $10,000,000 since June 24, 2011. At that time, Mr. Kostiuk will receive up to $1,000 automobile benefit per month.

During the employment term, the Mr. Kostiuk is eligible to participate in the Company’s bonus and other incentive compensation plans and programs (if any) for the Company’s executives at a level commensurate with this position. Such bonuses shall be determined by the Compensation Committee as formed by the Board of Directors of the Company.

The Company has expensed $192,500 in wages and $1,500 in automobile expense in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2012.

In connection with the Pringo Merger, 3,000,000 shares owned by Walter Kostiuk were cancelled after the issuance of 29,453,544 shares issued to Pringo, Inc. shareholders.

Previously, the Company converted Mr. Kostiuk’s contractor agreement to an employment agreement on May 1, 2010. Under the previous agreement, the agreement which commenced on May 1, 2010 and continued through April 30, 2015; provided, however, that beginning on March 1, 2015 and on each March 1 of every term (each a “5 Year Renewal Date”) thereafter, a 5 year term of this agreement shall automatically be extended for one additional 5 year term, unless either party gives the other written notice of non-renewal at least 90 days prior to any such renewal date. Kostiuk will have an annual base salary of $240,000, in the event the net profits are less than $375,000; $340,000 in the event the net profits are less than $750,000 and more than $375,000 per quarter; $450,000 in the event the net profits are less than $1,200,000 and more than $750,000 per quarter; $650,000 in the event the net profits are less than $2,500,000 and more than $1,200,000 per quarter; and $700,000 plus eight (8%) of the annual net profits, from all sources, before depreciation, amortization and taxes greater than $10,000,000 to be paid within thirty days of receipt of the audited financial statements.

Mr. Kostiuk also participates in the Company’s bonus and other incentive compensation plans and programs, Milestone and Achievement Compensation Plans, receives an automobile allowance in the amount of $1,500 per month and was issued stock options, effective as of May 1, 2010, that consist of the right to purchase 1,000,000 shares of the Company’s common stock. The right to purchase such stock is nontransferable and shall vest in equal thirds on each one year anniversary of the grant date over a three year period commencing on the May 1, 2010.The options shall have a term of ten years and the exercise price of the options is $1.00 per common share. The options had a fair value of $989,376, of which $329,792 and $329,792 was expensed during the years ended October 31, 2012 and 2011, respectively. The remaining unamortized balance of $164,896 will be expensed over the next 6 months.

Under the employment agreement with the Company, Mr. Kostiuk is entitled to compensation of 10% of all funds raised. The Company incurred offering costs in the amount of $357,528 payable to Mr. Kostiuk for the year ended October 31, 2011 and recorded the offering costs as a reduction to additional paid-in capital. As of October 31, 2011, $163,849 of the $357,528 remained unpaid and recorded as accounts payable and accrued expenses – related parties. Total cash payments for offering costs during the year ended October 31, 2011 were $233,779 of which $40,100 was for offering costs accrued as of October 31, 2010 and the remaining $193,679 was for offering costs incurred during the year ended October 31, 2011. The costs are calculated as commissions for 10% of all funds raised via stock sales for the year ended October 31, 2011.

The Company has expensed $240,000 in wages and $18,000 in automobile expense in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2011.

On April 1, 2009, the Company entered into a marketing and consulting agreement with Andrea Kostiuk (“Ms. Kostiuk”). The agreement is renewable annually and was renewed on April 1, 2010. Under the terms of the agreement, Ms. Kostiuk will be paid $7,000 per month and is entitled to receive an annual bonus of $36,000 for meeting corporate objectives as determined by the Company.

As of May 1, 2011, the Company converted its consulting agreement with Ms. Kostiuk to an employment agreement. In conjunction with the agreement, Ms. Kostiuk was issued options that consist of the right to purchase 250,000 shares of the Company’s common stock. The right to purchase such stock is nontransferable and vests in equal thirds on each one year anniversary of the grant date over a three year period commencing on the May 1, 2011. The options shall have a term of 10 years and the exercise price of the options is $0.51 per common share. The options had a fair value of $254,601, of which $42,434 and $14,145 was expensed during the year ended October 31, 2011 and 2012, respectively. The option was valued using the Black-Scholes option-pricing model and the following parameters: (1) 3.31% risk-free discount rate, (2) expected volatility of 190.11%, (3) $0 expected dividends, (4) an expected term of 10 years based on term of the option, and (5) a stock price on the measurement date of $1.02.

On June 14, 2011, the Company issued options that consist of the right to purchase 250,000 shares of the Company’s common stock to Ms. Kostiuk for her services to the Company. The right to purchase such stock is nontransferable and vests in equal thirds with the first third vested on June 14, 2011, the second third on November 1, 2011, and the third on November 1, 2012. The options shall have a term of 5.39 years and the exercise price of the options is $0.51 per common share. The options had a fair value of $242,942, of which $66,257 and $95,704 was expensed during the year ended October 31, 2011 and 2012, respectively. The option was valued using the Black-Scholes option-pricing model and the following parameters: (1) 1.70% risk-free discount rate, (2) expected volatility of 215.68%, (3) $0 expected dividends, (4) an expected term of 5.39 years based on term of the option, and (5) a stock price on the measurement date of $0.98.

As of October 31, 2012 and 2011, the Company had a payable in the amount of $0 and $5,000, respectively, due to Ms. Kostiuk.

Ms. Kostiuk resigned in February 2012 and subsequently forfeited the stock option grants.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

As the result of the Pringo Merger, the Company moved its principal office to 11835 W. Olympic Boulevard, Suite 855 Los Angeles, California. The rent for this location was $3,128 per month through February 2012. After March 2012, the rent increased to $3,378 per month. The lease expires as of March 31, 2013.

The Company is also maintaining an office in Sarasota, Florida located at 5901 N. Honere Ave. The rent for three months was $1,175 per month for the period January 1, 2011 through March 31, 2011. On April 1, 2011, the Company expanded its space and renewed its lease for a twelve-month period for $1,192 per month. On March 1, 2012, the Company entered into a twelve-month lease for $3,875 per month.

As a result of the Aixum share exchange, the Company maintains office at Landstrasse 123, 9495 Triesen, Liechtenstein. In June of 2010, Aixum signed a new three year lease agreement with its landlord with rent of $2,319 per month for the first 12 months, $2,967 per month for the second 12 months, and $3,566 per month for the last 12 months of the lease.

Birlasoft, Inc., v. Pringo Networks LLC

On or about September 21, 2009, Birlasoft, Inc. filed a civil action in Superior Court of New Jersey, Middlesex County seeking damages in relation to Pringo Networks, LLC’s, the Company’s predecessor, alleged breach of contract. The claims asserted by Birlasoft, Inc. were disputed and after an initial attempt to settle the case, the Company did not respond to the lawsuit, which resulted in a default judgment in the amount of approximately $59,000 in 2010. On March 21, 2012, the lawsuit was settled in the amount of $22,000 for all amounts due including the previously accrued judgment of $59,000 and accounts payable of $44,817 resulting in a gain of $81,817. The $22,000 is to be paid with an initial amount of $4,000 being paid within five (5) days after the execution of the settlement and $2,000 payments on the first business day of each month, for nine (9) months, starting on April 1, 2012. The outstanding balance on the settlement was $2,000 as of October 31, 2012 and this amount was accrued by the Company.

Majid Abai v. MobileBits

Majid Abai, the former CEO of MobileBits Holdings Corporation, MobileBits Corporation and Pringo, Inc. (collectively the “MobileBits Companies”), entered into a written agreement which Mr. Abai alleges requires the MobileBits Companies to pay him severance compensation, reimburse certain of his expenses and furnish other consideration totaling $141,199 which includes $7,450 the Company is contesting. On or about October 3, 2012 Mr. Abai filed action against the MobileBits Companies in the Superior Court of the State of California, West District, alleging that the MobileBits companies breached this agreement. Mr. Abai seeks damages and/or restitution. As of October 31, 2012, $23,577 has been paid against the amounts owed and $110,072 was unpaid and accrued. The Company is currently negotiating with Mr. Abai to resolve this issue.

NOTE 11 – INCOME TAXES

Reconciliation between actual tax expense (benefit) and income taxes computed by applying the U.S. federal income tax rate and state income tax rate to income from continuing operations before income taxes are as follows:

	October 31, 2012			October 31, 2011
Computed at U.S. Statutory Rates (34%)	$	(3,919,449	)	$	(447,855	)
Permanent differences		2,761,579			295,045
Temporary differences		87,552			-
Changes in valuation allowance		1,070,318			152,810
Total	$	-		$	-

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities are presented below:

	October 31, 2012			October 31, 2011
Deferred tax assets	$	1,937,270		$	866,952
Less: valuation allowance		(1,937,270	)		(866,952	)
Net deferred tax assets	$	-		$	-

At October 31, 2012, the Company had a net operating loss carry-forwards for federal and state income tax purposes of approximately $5,697,854 which will begin to expire, if unused, beginning in 2029. The valuation allowance increased approximately $1,070,318 and $152,810 for the years ended October 31, 2012 and 2011, respectively.

The above estimates are based upon management's decisions concerning certain elections which could change the relationship between net income and taxable income. Management decisions are made annually and could cause the estimates to vary significantly.

NOTE 12 – STOCKHOLDERS’ EQUITY

During the year ended October 31, 2011, the Company received net proceeds of $3,217,760 from various investors for the sale of 7,150,575 shares of its common stock. The Company issued 342,000 shares of common stock from stock payable valued at $171,000 for funds that were received in the year ended October 31, 2010. In accordance with Mr. Kostiuk’s employment agreement, the Company incurred $357,528 of offering costs due to Mr. Kostiuk for 10% of all funds raised via stock sales from November 1, 2010 through October 31, 2011. The $357,528 was recorded as offering costs and as a reduction to additional paid in capital. As of October 31, 2011 and 2012, there was a balance due of $163,849 and $143,849, respectively, payable to Mr. Kostiuk for commissions earned.

On December 6, 2011, the Company issued 29,453,544 shares of common stock valued at $0.50 per share to Pringo shareholders in connection with the Pringo Merger. In connection with the Pringo Merger, Walter Kostiuk, returned 3,000,000 shares for cancellation.

On December 22, 2011, the Company issued 610,319 shares of common stock for a note payable in the amount of $81,000. The value of the shares in excess of the principal $200,872 was recorded as interest expense.

In March 2012, the Company issued 494,627 shares of common stock to a vendor in payment of a $93,979 accounts payable.

On September 28, 2012, the Company issued 5,803,061 shares of common stock valued at $0.50 per share to Aixum shareholders in connection with the Aixum share exchange.

During the year ended October 31, 2012, the Company received net proceeds of $1,506,511 from the sale of 3,013,021 shares of its common stock. As of October 31, 2012, 2,769,021 shares of the stock had been issued and 244,000 shares have not been issued. The $122,000 in funds received for the stock not issued has been recorded as a stock payable on the balance sheet as of October 31, 2012.

NOTE 13 – STOCK OPTION AND WARRANT ACTIVITIES

Stock Option Activities

From time to time, the Company issues options to its employees for their services.

In fiscal year 2012, the Company issued 8,220,470 options with a fair value of $4,094,363 to Pringo employees in connection with the Pringo Merger. All Pringo’s options were fully vested on the date of the Pringo Merger. Also in fiscal year 2012, the Company issued 2,650,000 options with a fair value of $1,318,132 to current and new MobileBits employees, 28,350,000 options with a fair value of $14,104,526 to officers, and 100,000 options with a fair value of $49,756 to an employee who left the Company during fiscal year 2012.

The options granted in the fiscal year ended October 31, 2012 were valued using the Black-Scholes option-pricing model and the following parameters: (1) 0.866% to 2.80% risk-free discount rate, (2) expected volatility of 198.59% to 213.09%, (3) $0 expected dividends, and (4) an expected term of 5 to 15 years for each grant based on term of option.

In fiscal year 2011, the Company issued 1,775,000 options with a fair value of $3,901,534 to its employees.

The options granted in the fiscal year ended October 31, 2011 were valued using the Black-Scholes option-pricing model and the following parameters: (1) 1.40% to 3.31% risk-free discount rate, (2) expected volatility of 190.11% to 215.68%, (3) $0 expected dividends, and (4) an expected term of 5 to 10 years for each grant based on term of option.

Warrant Activities

On August 21 2012, the Company issued 300,000 warrants with a fair value of $145,818 to a business partner who resells the Company’s product in Russia. The warrants were valued using the Black-Scholes option-pricing model and the following parameters: (1) 0.80% risk-free discount rate, (2) expected volatility of 207.63%, (3) $0 expected dividends, and (4) an expected term of 5 years based on term of warrant.

On June 28, 2011, the Company issued 420,681 warrants with a fair value of $421,279 to an advisor. The warrants were valued using the Black-Scholes option-pricing model and the following parameters: (1) 1.62% risk-free discount rate, (2) expected volatility of 204.53%, (3) $0 expected dividends, and (4) an expected term of 5 years based on term of warrant.

The following is a summary of stock option and warrant activities for the two years ended October 31, 2012:

	Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding, October 31, 2010		1,416,667		$	0.85	$	8.21		1,979,167
Granted		2,195,681			1.71		-		-
Exercised		-			-		-		-
Forfeited		(208,333	)		0.50		-		-
Expired		-			-		-		-
Outstanding, October 31, 2011		3,404,015			1.43		6.75		8,751,380
Granted		39,620,470			0.46		-		-
Exercised		(494,627)			0.19		-		-
Forfeited		(17,600,383	)		0.39		-		-
Expired		-			-		-		-
Outstanding October 31, 2012		24,929,475			0.45		6.12		12,647,130
Exercisable, October 31, 2012		10,762,808			0.43		-		-

The Company recorded option and warrant expense of $8,108,860 and $862,633 for the options and warrants vested during the years ended October 31, 2012 and 2011, respectively.

The following is a summary of outstanding stock options and warrants at October 31, 2012:

Number of Common Stock Equivalents Options/Warrants	Expiration Date	Remaining Contracted Life (Years)		Exercise Price	Weighted Average Remaining Contracted Life (Years)
208,335	01/21/2015	2.22	$	0.50	0.0186
420,681	06/27/2016	3.66	$	0.75	0.0617
62,499	10/31/2016	4.00	$	0.50	0.0100
250,000	11/01/2016	4.01	$	0.51	0.0402
300,000	04/17/2017	4.46	$	0.51	0.0537
300,000	08/21/2017	4.81	$	1.00	0.0579
3,250,170	05/31/2018	5.58	$	0.19	0.7280
1,000,000	08/15/2018	5.79	$	0.51	0.2323
25,000	09/05/2018	5.85	$	0.51	0.0059
187,790	09/20/2018	5.89	$	0.19	0.0444
250,000	10/31/2018	6.00	$	0.51	0.0602
100,000	11/13/2018	6.04	$	0.51	0.0242
11,750,000	12/01/2018	6.09	$	0.50	2.8692
1,000,000	12/05/2018	6.10	$	0.51	0.2446
125,000	01/01/2019	6.17	$	0.51	0.0310
50,000	02/12/2019	6.29	$	0.51	0.0126
3,000,000	04/30/2019	6.50	$	0.51	0.7820
25,000	07/01/2019	6.67	$	0.51	0.0067
75,000	08/31/2019	6.84	$	0.51	0.0206
1,250,000	09/30/2019	6.92	$	0.51	0.3469
1,000,000	04/30/2020	7.50	$	1.00	0.3009
300,000	12/05/2026	14.10	$	0.51	0.1697
24,929,475					6.1213

All options and warrants issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at October 31, 2012 and 2011 was $5,762,442 and $4,235,866, respectively.

NOTE 14 – SUBSEQUENT EVENTS

Sales of Common Stock

During the period from November 1, 2012 to January 31, 2013, the Company sold 1,554,000 shares of common stock for total cash proceeds of $777,000. During the period from November 1, 2012 to January 31, 2013, the Company issued 244,000 common shares for cash proceeds of $122,000 received in the prior period. The $122,000 of cash proceeds were included in stock payable as of October 31, 2012.

Exclusive Referral Agreement

On December 4, 2012, MobileBits signed a 10 year Exclusive Referral Agreement (“Referral Agreement”) with MRL Trade S.r.l. (“MRL”). The Referral Agreement provides MRL the exclusive right to receive 50% of the gross revenues generated from the SAMY software in the territory of Italy. MobileBits is responsible for the setup and development of the SAMY mobile application, merchant web-application to support the Italian market, including language conversion, training, documentation, marketing materials, SAMY website and the sales/support teams.

Share Purchase Agreement

On December 4, 2012, MRL signed a Share Purchase Agreement (“Agreement”) to purchase 2,200,000 shares of MobileBits common stock at $0.50 per share for a total investment of $1,100,000. The initial payment of $550,000 is to be made within 10 days from receipt of the signed Agreement which was December 24, 2012 and the remaining $550,000 is to be made within 60 days of the initial payment. As of January 31, 2013, $550,000 has been received.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.

CONTROLS AND PROCEDURES.

Disclosure controls and procedures.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management's Annual Report on Internal Control Over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of October 31, 2012. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our chief executive officer and chief financial officer have determined and concluded that, as of October 31, 2012, the Company’s internal control over financial reporting was not effective.

Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include lack of segregation of duties and a lack of adequate documentation of our system of internal control.

To address these weaknesses, management hired a full time Chief Financial Officer who is familiar with the Public Company reporting rules and has established an Audit Committee. Due to the Company’s small number of employees the lack of segregation of duties continues to exist. The Company during 2012 has begun the process of documenting the system of internal control.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in internal control over financial reporting.

There were no changes that occurred during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

None

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

Each director of our Company serves for a term of one year or until the successor is elected at the Company’s annual shareholders’ meeting and is qualified, subject to removal by the Company’s shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified.

Set forth below is the name, age and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years of our directors and executive officers.

Name	Age	Position	Director Since
Majid Abai	47	Former Chief Executive Officer, Director	December 2011
Walter Kostiuk	46	President, Chief Strategy Officer, Director (Chairman)	March 2009
Andrew Marshall	50	Chief Operating Officer
James Burk	60	Chief Financial Officer
Matthew Mountain	39	Director	December 2011
Ian Lambert	67	Director	December 2011
Greg Goldberg	50	Director	April 2012
Glenda Glover	50	Director	April 2012

Majid Abai

Majid Abai has been our Chief Executive Officer and Director since December 2011 and resigned on August 1, 2012. From January 2008 to December 2011, Mr. Abai was the Chief Executive Officer of Pringo, Inc., where he was instrumental in expansion of the company’s product line, revenues and client base. From August 2007 to December 2007, Mr. Abai was the Chief Executive officer of The Abai Group, a management and technical consulting firm in Los Angeles, CA. From November 1995 to August 2006, Mr. Abai was the founder and Chief Executive Officer of Seena Technologies Corporation, an organization focused on Data and Knowledge Management and Enterprise Architecture.

Qualifications: For the past two decades, Mr. Abai has founded, led, merged and spearheaded structural reform to enhance the profitability and competiveness of technology-based organizations which have catered to Fortune 2000 organizations, small to Medium-sized enterprises, and government offices. Prior to taking the lead role at MobileBits, Majid was the CEO of Pringo Inc.

Walter Kostiuk

Mr. Kostiuk has been our President, Chief Strategy Officer and Chairman of the Board of Director since December 2011. From January 2010 to November 2011, Mr. Kostiuk served as our Chief Executive Officer and sole Director. From March 2009 to January 2010, Mr. Kostiuk served as Chief Executive Officer and sole Director of MobileBits Corporation, our wholly-owned subsidiary. From 2007 to 2008, Mr. Kostiuk held an executive leadership role at Expert System SpA, where he was directly responsible for the mobile enterprise search strategy and business. From 2005 to 2007, Mr. Kostiuk was the Vice President of Global Business Development at AskMeNow, a provider of a human-based mobile question & answer search solutions. From 1999 to 2005 Mr. Kostiuk held an senior leadership position at Research In Motion, makers of the BlackBerry smartphones.

Qualifications: Mr. Kostiuk brings 17 years of experience in the wireless, web and mobile applications industries; participating in both high growth and early-stage technology companies. He has founded both venture capital & investment banker backed companies as well as participated in very high growth mobile technology companies.

Andrew Marshall

Andrew Marshall has been Chief Operating Officer since September 2012. Mr. Marshall has 20 years’ experience spanning corporate operations and project management in the IT industry. Mr. Marshall was the CEO of Aixum Tec AG overseeing all aspects of corporate and business development, research and development, investor relations and international growth strategies since October 2009. Mr. Marshall‘s responsibilities also included the successful deployment of “SAMY4ME“, a leading mobile loyalty and voucher network currently ranked the most used consumer mobile shopping and loyalty application for the Apple iPhone in Switzerland and Liechtenstein

Prior to 2009 Andrew held senior roles at Examino AG, ConVision AG and Construction Data Group where he was responsible for IT projects, services and business process management projects for customers such as Credit Suisse, Swisscom Telecommunications, Roche Pharmaceuticals and Hewlett Packard IPG. Mr. Marshall holds a MBA from the University of Fribourg in Switzerland.

James Burk

James Burk has been Chief Financial Officer since May 2012. Mr. Burk has held high-level finance positions within various public and private organizations and industries for the past 33 years. Most recently, Mr. Burk served as Chief Financial Officer of Nero AG, a global consumer software company, from May 2010 through March 2012. He was responsible for the finance, accounting, legal, treasury, planning and forecasting functions. Prior to that, Mr. Burk served as Chief Financial Officer for Youbet.com, an online gaming company, from July 2007 through March 31, 2009, where he was responsible for finance, accounting, treasury, planning and forecasting, human resources and facilities as well as compliance with financial reporting requirements of the Securities and Exchange Commission (the “SEC”). Prior to joining Youbet, Mr. Burk served as Chief Financial Officer of Palace Entertainment Holdings, Inc., an operator of water parks and family entertainment centers, where he managed finance, treasury, information systems, business development analysis, planning and forecasting, as well as compliance with financial reporting requirements of the SEC.

He is a Certified Public Accountant (currently inactive). Mr. Burk started he career at PricewaterhouseCoopers and earned his degree in Business Administration from the University of Southern California.

Qualifications: Mr. Burk brings extensive experience as a CFO with both public and private companies as well as a recently working for software and internet companies.

Ian Lambert

Mr. Lambert has been our director and a member of the audit committee since December 2011. Mr. Lambert's broad exposure to a wide range of business activities includes experience in oil & gas development, marketing, manufacturing, data processing operations and software development, and precious metals and mineral exploration and development. His current and recent positions include: CEO/President/Director, Trade Winds Ventures Inc., (mineral exploration) April 1990 to December 2011; Director, North Sea Energy Inc., (oil and gas production), Sept. 2007 to present; Director, Sunorca Development Corp. (energy, oil & gas projects) December, 2000 to present; Director, Strategic Mining Corp., (mineral exploration) March 2010 to December 2012; Advisory Board/Director, MobileBits Corp. (wireless mobile technology) November, 2009 to present. Prior to becoming an Officer and Director of public companies, he served several years each as Manager, Systems Consulting for Deloitte Haskins & Sells Associates, Manager Systems Development for Cominco Ltd. and MacMillan Bloedel Ltd., and Systems Analyst, Mobil Oil Canada.

Qualifications: Mr. Lambert has over forty years of experience in the management and financing of public companies and had over twenty one years with Trade Winds Ventures Inc. (TWD). He holds a Bachelor of Commerce degree in quantitative analysis and computer science from the University of Saskatchewan. His strengths are in the areas of corporate structuring and strategic planning, regulatory compliance with both the SEC and Canadian regulatory authorities, public financing arrangements and investor and institutional marketing activities. He recently led a transaction to sell Trade Winds Ventures to Detour Gold Corporation, valued at $84 million. Trade Winds Ventures is a TSX Venture Top 50 Company. He is an active Director and Chair of the Audit Committee for North Sea Energy Inc. (NUK), a publicly traded North Sea oil producer.

Matthew Mountain

Dr. Matthew Mountain has been a member of the board since December 2011. Dr. Mountain is a graduate of the National University of Health Sciences where he received a B.S. degree in Human Biology and a Doctor of Chiropractic. Since 2001, Dr. Mountain served as owner, operator and Clinical Director of Mountain Medical Center in Florida. Mountain Medical Center specializes in vascular surgery, diagnostic imaging, interventional pain management and gastroenterology.

Qualifications: Dr. Mountain founded and leads an early incubator fund organized with a mandate to enable Florida technology companies with seed funding to grow their business. His investment group provided seed funding for MobileBits in 2009.

Greg Goldberg

Greg Goldberg has been a member of the board since April 2012. Mr. Goldberg has been an officer and member of PCPM GP, LLC and a manager and member of Professional Traders Management, LLC since 2003. Mr. Goldberg was a Principal at Ocean View Capital LLC where he managed a long/short equity fund from 1998 to 2003. From 1994 to 1998, Mr. Goldberg was a Managing Director at Prudential Investments where he was the lead portfolio manager for growth equity products, including mutual funds, variable annuities and general accounts totaling two billion US dollar. Mr. Goldberg received his Bachelor of Science degree in Business Administration and Marketing/Finance from Marist College in 1984.

Qualifications: Mr. Goldberg’s has 20 years of experience in financial industry qualifies him to serve as a member of the Board and would bring contributions to the Company’s financial management function.

Glenda Glover

Glenda Glover has been a member of the board and chair of the audit committee since April 2012. Dr. Glover became President of Tennessee State University in Nashville, Tennessee on January 2, 2013. Prior to that, she served as the Dean of the College of Business at Jackson State University in Jackson, Mississippi. She has been on the board of directors of First Guaranty Bancshares since 2011 and has served as the chair of the audit committee. She has served as the Chairman of the Board of Commissioners of the Jackson (Mississippi) Airport Authority since 2002. She is regarded as one of the nation's experts on corporate governance. She is a highly sought motivational speaker and political strategist. Dr. Glover is a Certified Public Accountant. She received her Bachelor of Science degree from Tennessee State University, her Master of Business Administration from Clark Atlanta University, and her Doctor of Philosophy from George Washington University. Dr. Glover also completed the Doctor of Jurisprudence at Georgetown University, and is member of the Maryland bar.

Qualifications: Dr. Glover’s extensive qualifications as a Certified Public Accountant, an attorney, a high-level finance administrator and educator qualify her to serve as a member of the Board and would bring improvement to the Company’s corporate governance.

Code of Ethics

The Company adopted a Code of Ethics policy in December 2012.

Audit Committee Financial Expert

The Board of Directors has established an audit committee and has an audit committee financial expert.

Committees and Procedures

(1) The registrant has standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size.

(2) The view of the board of directors is that it is appropriate for the registrant not to have such a committee because its directors participate in the consideration of director nominees and the Company and its board is so small.

(3) Some members of the Board who act as the nominating committee are not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to Section 6(a) of the Act (15 U.S.C. 78f(a).

(4) The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders.

(5) The basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company.

(6) The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations.

(7) There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background.

(8) The nominating committee’s process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities (referred to as “reporting persons”), to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other MobileBits equity securities. Reporting persons are required by Commission regulations to furnish us with copies of all Section 16(a) forms they file. We believe, based solely on our review of the copies of such forms and other written representations to us, that during the fiscal year ended October 31, 2012, all reporting persons have complied with all applicable Section 16(a) filing requirements.

ITEM 11.

EXECUTIVE COMPENSATION

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officer during the years ended October 31, 2012, and 2011 in all capacities for the accounts of our executive, including the Chief Executive Officer (CEO), Chief Operating Officer and Chief Financial Officer (CFO):

SUMMARY COMPENSATION TABLES
	Annual Compensation
Name and Principal Position	Year	Salary ($)		Bonus ($)		Compensation ($)

Walter Kostiuk	2012	$	192,500			$	1,500
Walter Kostiuk	2011	$	240,000		-	$	18,000

Majid Abai	2012	$	271,689
Majid Abai	2011

Andrew Marshall	2012	$	15,833
Andrew Marshall	2011

James Burk	2012	$	95,000
James Burk	2011					$	-0-

Chief Executive Officer and Chief Financial Officer as of October 31, 2011. Mr. Kostiuk resigned from his position as CEO on the closing of the Merger which took place on December 6, 2011 and was reinstated as CEO upon the resignation of Mr. Abai on August 1, 2012. Mr. Kostiuk resigned from his position as CFO upon the hiring of Mr. Burk on May 1, 2012.

Mr. Abai resigned as CEO on August 1, 2012. Salary includes severance benefits of $115,173 and earned vacation paid on termination of $18,577.

Mr. Marshall was appointed COO on October 1, 2012.

Mr. Burk was hired as CFO on May 1, 2012.

LONG-TERM COMPENSATION TABLE

		Long-Term Compensation
Name and Principal Position	Year	Awards Restricted Award(s)($)		Stock Securities Underlying Options/ SARs(#)		Payouts LTIP Payouts ($)		All Other Compensation ($)
Walter Kostiuk*	2012		-0-	$	2,849,483		-0-		-0-
Walter Kostiuk*	2011		-0-	$	329,792		-0-		-0-

Majid Abai	2012		-0-	$			-0-		-0-
Majid Abai	2011		-0-		-0-		-0-		-0-

Andrew Marshall	2012		-0-	$	17,258		-0-		-0-
Andrew Marshall	2011		-0-				-0-		-0-

James Burk	2012		-0-	$	82,788		-0-		-0-
James Burk	2011		-0-				-0-		-0-

The unvested options of Walter Kostiuk, Andrew Marshall and James Burk are 2,497,483, 607,468 and 662,212 respectively.

Option/ SAR Exercises

None of our directors or executive officers exercised any stock options or stock appreciation rights during the fiscal year ended October 31, 2012. Mr. Walter Kostiuk holds 10,750,000 unexercised stock options held as of such date.

Long-Term Incentive Plan Awards

The Company has no long-term incentive plans.

Compensation of Directors

Director Agreements with Majid Abai and Walter Kostiuk (employee directors)

On December 7, 2011, Walter Kostiuk entered into a Director Agreement with the Company, and its two wholly-owned subsidiaries, Pringo and MobileBits Corporation. Pursuant to the Director Agreement Mr. Kostiuk agreed to act as a director of the Company, and its subsidiaries Pringo and MobileBits Corporation. The term of the agreement is for one year, and is subject to renewal upon re-election by a majority of the shareholders of the Company and its two subsidiaries. Pursuant to the Director Agreements, the Company agreed to indemnify Mr. Kostiuk to the fullest extent that would be permitted by law or by the organizational documents of the Company for certain liabilities arising by reason of his directorship with the Company, excluding liabilities resulted from fraud, gross negligence or willful misconduct of Mr. Kostiuk. Mr. Kostiuk is also subject to a non-disclosure covenant and a non-solicitation covenant.

Our employee director (Mr. Kostiuk) is not compensated for being a director.

Director Agreements with Matthew Mountain, Ian Lambert, Glenda Glover and Greg Goldberg (non-employee directors)

On December 7, 2011 Matthew Mountain and Ian Lambert each entered into a Director Agreement with the Company, and its two wholly-owned subsidiaries, Pringo and MobileBits Corporation. Pursuant to the Director Agreements of our non-employee directors agreed to act as directors of the Company, and its subsidiaries Pringo and MobileBits Corporation. The term of the agreement is for one year, and is subject to renewal upon re-election by a majority of the shareholders of the Company and its two subsidiaries. Pursuant to the Director Agreements, the Company agreed to indemnify Mr. Mountain and Mr. Lambert to the fullest extent that would be permitted by law or by the organizational documents of the Company for certain liabilities arising by reason of his directorship with the Company, excluding liabilities resulted from fraud, gross negligence or willful misconduct of such director. Mr. Mountain and Mr. Lambert are also subject to a non-disclosure covenant and a non-solicitation covenant..

Pursuant to the Director Agreements, Mr. Mountain, and Mr. Lambert is each entitled to receive an option to purchase a total of 150,000 shares of common stock of the Company at an exercise price of $0.51 per share for the Director’s services rendered hereunder for all three entities, subject to the vesting schedule provided in the Director Agreements. Each of the three directors is also entitled to receive $300 for each Board meeting he attended in person and $150 for each Board meeting he remotely attended. During the directorship term, the Company shall reimburse the directors for all reasonable out-of-pocket expenses incurred by the directors in attending any in-person meetings, provided that the director complies with the generally applicable policies, practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses.

On April 18, 2012 Glenda Glover and Greg Goldberg each entered into a Director Agreement with the Company, and its two wholly-owned subsidiaries, Pringo and MobileBits Corporation. Pursuant to the Director Agreements of our non-employee directors agreed to act as directors of the Company, and its subsidiaries Pringo and MobileBits Corporation. The term of the agreement is for one year, and is subject to renewal upon re-election by a majority of the shareholders of the Company and its two subsidiaries. Pursuant to the Director Agreements, the Company agreed to indemnify Ms. Glover and Mr. Goldberg to the fullest extent that would be permitted by law or by the organizational documents of the Company for certain liabilities arising by reason of his directorship with the Company, excluding liabilities resulted from fraud, gross negligence or willful misconduct of such director. Ms. Glover and Mr. Goldberg are also subject to a non-disclosure covenant and a non-solicitation covenant.

Pursuant to the Director Agreements, Ms. Glover and Mr. Goldberg is each entitled to receive an option to purchase a total of 150,000 shares of common stock of the Company at an exercise price of $0.51 per share for the Director’s services rendered hereunder for all three entities, subject to the vesting schedule provided in the Director Agreements. Each of the four directors is also entitled to receive $300 for each Board meeting he attended in person and $150 for each Board meeting he remotely attended. During the directorship term, the Company shall reimburse the directors for all reasonable out-of-pocket expenses incurred by the directors in attending any in-person meetings, provided that the director complies with the generally applicable policies, practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses.

Employment Contracts

Employment Agreement with Walter Kostiuk

On December 2, 2011, the Company and Walter Kostiuk entered into an Employment Agreement to employ Mr. Kostiuk as the Company’s President and Chief Strategy Officer. The initial term of employment under this agreement is until December 31, 2014, and automatically extends for periods of one year unless terminated during such renewal period by either party. Pursuant to the employment agreement, Mr. Kostiuk is entitled to the following compensation and benefits:

●

A base salary at an annual rate of $210,000, which will be increased in the following event:

e) increase to $260,000 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $3,000,000 since June 24, 2011 at a per share price of no less than $0.51;

f) increase to $310,000 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $6,000,000 since June 24, 2011 at a per share price of no less than $0.51;

g) increase to $400,000 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $10,000,000 since June 24, 2011 at a per share price of no less than $0.51; and

h) increase by a minimum of 5% annually.

●	During the employment term, the Mr. Kostiuk is eligible to participate in the Company’s bonus and other incentive compensation plans and programs (if any) for the Company’s executives at a level commensurate with this position. Such bonuses shall be determined by the Compensation Committee as formed by the Board of Directors of the Company.

●	In addition, upon the approval of the board Mr. Kostiuk is eligible to receive a quarterly incentive bonus of $25,000 if the Company maintains a Market Capitalization (as defined below) of over $50 million for more than 60 days within the quarter and/or the quarterly revenue quotas (as established by the Board of Directors of the Company) are exceeded by 25% or more. This amount will increase to $50,000 per quarter should the Company’s Market Capitalization increase to $100 million and/or the quarterly revenue quotas are exceeded by 50% or more; and to $75,000 per quarter should the Market Capitalization reach $250 million and/or the quarterly revenue quotas are exceeded by 75% or more; and to $100,000 per quarter should the Market Capitalization reach $500 million and/or the quarterly revenue quotas are exceeded by 100% or more. Market Capitalization shall mean the aggregate worldwide market value of the Company’s common stock, calculated by multiplying the closing stock price as listed on the OTC Markets or other stock exchange (such as NASDAQ or NYSE) times the number of issued and outstanding shares.

●	On the commencement date of employment, the Company issued to Mr. Kostiuk an option to purchase 3,000,000 shares of our common stock at an exercise price equal to 100% of the fair market value of the Company’s common stock on such date. Such options shall vest upon the earlier to occur of the closing of an M&A Transaction (as defined in the agreement) or an initial public offering of the Company’s common stock on a major US or international stock exchange, in each case that values the Company at $100,000,000 or more (the “Transaction Value”). If the Transaction Value is $100,000,000 or more, but less than $250,000,000, the option shall vest as to 1,000,000 shares and shall immediately lapse as to the remaining 2,000,000 shares; if the Transaction Value is $250,000,000 or more, but less than $500,000,000, the option shall vest as to 2,000,000 shares and shall immediately lapse as to the remaining 1,000,000 shares; if the Transaction Value is $500,000,000 or more, the option shall vest as to all 3,000,000 shares. These options have a term of seven years.

●	On the commencement date Mr. Kostiuk was granted options, with a term of seven years and an exercise price of the fair market value of the shares on the commencement date, to purchase 6,750,000 shares of common stock of the Company that will vest over a period of 36 months, 187,500 shares per month.

●	an automobile benefit starting 30 days after the closing of an offering or offerings to investors of equity securities of the Company with a combined aggregate value of at least $10,000,000 since June 24, 2011. At that time, Mr. Kostiuk will receive up to $1,000 automobile benefit per month.

●	Eligibility to participate in the Company’s benefits plans that are generally provided for executive employees.

Upon certain termination events and a change in control of the Company, Mr. Kostiuk is entitled to certain payments from the Company as described in the employment agreement. Pursuant to the employment agreement, the Company will also indemnify Mr. Kostiuk to the fullest extent that would be permitted by law or by the organizational documents of the Company for certain liabilities arising by reason of his employment by the Company, excluding liabilities resulted from fraud, gross negligence or willful misconduct of Mr. Kostiuk. Pursuant to the employment agreement, Mr. Kostiuk is also subject to a confidentiality / ownership rights covenant, a non-compete covenant, and a non-solicitation covenant.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

A. The following table lists, as of January 31, 2013, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 65,854,188 shares of our common stock issued and outstanding as of January 31, 2013. Unless otherwise indicated, the address of each person listed is c/o MobileBits Holdings Corporation, 11835 W. Olympic Boulevard, Suite 855, Los Angles, and California 90064.

Title of Class	Name, Address Of Beneficial Owner And Position(1)	Shares Of Common Stock		Percent Of Class(2)
Common	Walter Kostiuk, Chief Financial Officer, Director		16,666,664		25.3	%
Common	Farid Moradi (3)(4)		12,470,159		18.9	%
Common	Harvard Young, Chief Technology Officer (4)		8,077,309		12.3	%
Common	Nouriel Yazdinian (4)(5)		6,381,978		9.7	%
Common	Majid Abai, Chief Executive Officer, Director (4)		685,667		1.0	%
Common	Andrew Marshall		414,641		0.6	%
Common	James Burk		200,000		0.3	%
Common	Ian Lambert		41,667		0.1	%
	All directors and officers as a group (4 persons) (4)		25,400,281		38.6	%

(1)	Unless otherwise indicated, each person named in the above-described table has the sole voting and investment power with respect to his shares of the Common Stock beneficially owned.

(2)

Unless otherwise provided, the calculation of percentage ownership is based on 65,854,188 shares of our common stock issued and outstanding as of January 31, 2013, any shares of the Common Stock which are not outstanding as of such date but are subject to options, warrants, or rights of conversion exercisable within 60 days of February 5, 2011 shall be deemed to be outstanding for the purpose of computing percentage ownership of outstanding shares of the Common Stock by such person but shall not be deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

(3)	Resigned from his position as Vice-Chairman of the Board on December 28, 2011; and includes 1,883,701 shares owned by FMT Investments LLC, of which Mr. Moradi is the principal equity owner, and 376,740 options owned by FMT Investments LLC, which are currently exercisable.

(4)

Includes shares issuable pursuant to options that are currently exercisable (or may become exercisable on or before April 5, 2012) as follows: Mr. Moradi, 376,740; Mr. Young, 2,072,071; Mr. Yazdinian, 376,740; Mr. Abai, 3,630,661; Mr. Lambert, 41,667; and for all directors and executive officers as a group, 26,101,968.

(5)	Based on a Form 3 filed by Mr. Yazdinian (8950 West Olympic Boulevard, Suite 126, Beverly Hills, CA 90211) on December 22, 2011.

B. Persons Sharing Ownership of Control of Shares

Except as set forth in footnote 3 above, there are no persons sharing ownership or control of shares.

C. Non-voting Securities and Principal Holders Thereof

The Company has not issued any non-voting securities.

D. Preferred Stock

The Company has 10,000,000 shares of $0.001 par value preferred stock authorized with $0.001 par value. No preferred shares have been issued.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

a. Transactions with Related Persons.

As of October 31, 2011, the Company had amounts payable to Mr. Kostiuk of $192,881.

Annual salary increases by a minimum of 5% annually.

The Company has expensed $192,500 in wages and $1,500 in automobile expense in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2012.

In connection with the Pringo Merger, 3,000,000 shares owned by Walter Kostiuk were cancelled after the issuance of 29,453,544 shares issued to Pringo, Inc. shareholders.

Previously, the Company converted Mr. Kostiuk’s' contractor agreement to an employment agreement on May 1, 2010. Under the previous agreement, the agreement which commenced on May 1, 2010 and continued through April 30, 2015; provided, however, that beginning on March 1, 2015 and on each March 1 of every term (each a “5 Year Renewal Date”) thereafter, a 5 year term of this agreement shall automatically be extended for one additional 5 year term, unless either party gives the other written notice of non-renewal at least 90 days prior to any such renewal date. Mr. Kostiuk will have an annual base salary of $240,000 in the event the net profits are less than $375,000; $340,000 in the event the net profits are less than $750,000 and more than $375,000 per quarter; $450,000 in the event the net profits are less than $1,200,000 and more than $750,000 per quarter; $650,000 in the event the net profits are less than $2,500,000 and more than $1,200,000 per quarter; and $700,000 plus eight (8%) of the annual net profits, from all sources, before depreciation, amortization and taxes greater than $10,000,000 to be paid within thirty days of receipt of the audited financial statements.

Mr. Kostiuk also participates in the Company’s bonus and other incentive compensation plans and programs, Milestone and Achievement Compensation Plans, receives an automobile allowance in the amount of $1,500 per month and was issued stock options, effective as of May 1, 2010, that consist of the right to purchase 1,000,000 shares of the Company’s common stock. The right to purchase such stock is nontransferable and shall vest in equal thirds on each one year anniversary of the grant date over a three year period commencing on the May 1, 2010. The options shall have a term of ten years and the exercise price of the options is $1.00 per common share. The options had a fair value of $989,376, of which $329,792 and $329,792 was expensed during the years ended October 31, 2012 and 2011, respectively. The remaining unamortized balance of $164,896 will be expensed over the next 6 months.

The Company has expensed $240,000 in wages and $18,000 in automobile expense in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2011.

As of October 31, 2012 and 2011, the Company had a payable in the amount of $0 and $5,000, respectively, due to Ms. Kostiuk.

Ms. Kostiuk resigned in February 2012 and subsequently forfeited the stock option grants.

The Officers and Directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

b. Parents of Issuer. The Company has no parents.

c. Promoters and Control Persons. The Company has not had a promoter at any time since inception.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed by our independent auditors, GBH CPAs, PC, for professional services rendered for the audit of our annual financial statements included for the years ended October 31, 2012 and 2011 were $102,687 and $116,908, respectively.

Audit-Related Fees

For the years ended October 31, 2012 and 2011, there were no fees billed for assurance and related services by our auditor relating to the performance of the audit of our financial statements which are not reported under the caption “Audit Fees” above.

Tax Fees

We do not use our auditors for tax compliance, tax advice and tax planning.

All Other Fees

None

The Board of Directors has considered the nature and amount of fees billed by our auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining GBH CPAs, PC’s independence.

Policy on pre-approval of audit and permissible non-audit services

Our Board of Directors unanimously approved 100% of the fees paid to the principal accountant for audit-related, tax and other fees. Our Board of Directors pre-approves all non-audit services to be performed by the auditor. The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

In reviewing any agreements incorporated by reference in this Form 10-K or filed with this 10-K, please remember that such agreements are included to provide information regarding their terms. They are not intended to be a source of financial, business or operational information about MobileBits or any of its subsidiaries or affiliates. The representations, warranties and covenants contained in these agreements are made solely for purposes of the agreements and are made as of specific dates; are solely for the benefit of the parties; may be subject to qualifications an limitations agreed upon by the parties in connection with negotiating the terms of the agreements, including being made for the purpose of allocating contractual risk between the parties instead of establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Investors and security holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of MobileBits or any of its subsidiaries or affiliates or, in connection with acquisition agreements, of the assets to be acquired. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the agreements. Accordingly, these representations and warranties alone may not describe the actual state of affairs as of the date they were made or at any other time.

(a)(1)		Financial Statements Contained in Item 8 hereof.

(a)(2)		None

(a)(3)		Exhibits

Number

Description

2.1	Agreement and Plan of Merger, June 23, 2011, by and among MobileBits Holdings Corporation, a Nevada corporation, MB Pringo Merger Sub, Inc., a Delaware corporation, and Pringo, Inc., a Delaware corporation, incorporated by reference to Exhibit 2.1 to Form 8-K filed on June 29, 2011.
2.2	Amendment No. 1 to Agreement and Plan of Merger, dated as of October 3, 2011, by and among MobileBits Holdings Corporation, a Nevada corporation , MB Pringo Merger Sub, Inc., a Delaware corporation , and Pringo, Inc., a Delaware corporation, incorporated by reference to Exhibit 2.1 to Form 8-K filed on October 7, 2011.
2.3	Amendment No. 2 to Agreement and Plan of Merger, dated as of December 6, 2011, by and among MobileBits Holdings Corporation, a Nevada corporation, MB Pringo Merger Sub, Inc., a Delaware corporation, and Pringo, Inc., a Delaware corporation, incorporated by reference to Exhibit 2.1 to Form 8-K filed on December 7, 2011.
2.4	Stock Exchange Agreement, dated as of May 21, 2012, by and among MobileBits Holdings Corporation, Aixum Tec AG, and each of the individuals who executed the agreement on the signature page thereto as a seller incorporated by reference to Exhibit 2.1 to Form 8-K filed on May 25, 2012.
3.1	Articles of Incorporation, incorporated by reference to Exhibit 3.1 to Form S-1 filed on December 11, 2008.
3.2	Certificate of Amendment to Articles of Incorporation, incorporated by reference to Exhibit 3.1 to Form 8-K filed on March 16, 2010.
3.2	Amended and restated Bylaws, incorporated by reference to Exhibit 3.2 to Form S-1 filed on December 11, 2008
10.1	Stock purchase agreement, dated as of December 12, 2009, by and among Bellmore Corporation, a Nevada corporation, Mark Gruberg, Bernard Gruberg, and Walter Kostiuk, incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 16, 2009.
10.2	Share Exchange Agreement, dated March 12, 2010, by and among MobileBits Holdings Corp., a Nevada corporation, MobileBits Corporation (“MBC”), a Florida corporation, and the shareholders of MBC, incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 16, 2010.
10.4	Share Purchase Agreement, dated September 17, 2010, by and between MobileBits Corporation, a Florida corporation and Global Commodities LTD, incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 6, 2010 .
10.5	Share Purchase Agreement, dated September 28 2010, by and between MobileBits Corporation, a Florida Corporation and Gaia Investments Limited, incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 6, 2010 .
10.6	Employment Agreement, dated December 2, 2011, by and between MobileBits Holdings Corporation, a Nevada corporation and Majid Abai, incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 7, 2011.
10.7	Employment Agreement, dated December 2, 2011, by and between MobileBits Holdings Corporation, a Nevada corporation and Walter Kostiuk, incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 7, 2011.
10.8	Director Agreement, dated December 7, 2011, by and between MobileBits Holdings Corporation, a Nevada corporation, Pringo, Inc., a Delaware company, MobileBits Corporation, a Florida corporation, and Majid Abai, incorporated by reference to Exhibit 10.3 to Form 8-K filed on December 7, 2011.
10.9	Director Agreement, dated December 7, 2011, by and between MobileBits Holdings Corporation, a Nevada corporation , Pringo, Inc., a Delaware company, MobileBits Corporation, a Florida corporation, and Walter Kostiuk, incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 7, 2011.
10.10	Director Agreement, dated December 7, 2011, by and between MobileBits Holdings Corporation, a Nevada corporation , Pringo, Inc., a Delaware company, MobileBits Corporation, a Florida corporation, and Matthew Mountain, incorporated by reference to Exhibit 10.6 to Form 8-K filed on December 7, 2011.
10.11	Director Agreement, dated December 7, 2011, by and between MobileBits Holdings Corporation, a Nevada corporation , Pringo, Inc., a Delaware company, MobileBits Corporation, a Florida corporation, and Ian Lambert, incorporated by reference to Exhibit 10.7 to Form 8-K filed on December 7, 2011.
21.1	Subsidiaries of the registrant. †
31.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
31.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
101	Interactive Data File (Form 10-K for the quarterly period ended October 31, 2012 (furnished in XBRL). †

† Filed herein.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MOBILEBITS HOLDINGS CORPORATION

Date: February 13, 2013	By:	/s/ Walter Kostiuk
		Walter Kostiuk, Chairman of the Board, President (Duly Authorized Officer and Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed as of February 13, 2013, by the following persons on behalf of the registrant in the capacities indicated:

Signature		Title

/s/ Walter Kostiuk		Chairman of the Board and President
Walter Kostiuk

/s/ Andrew Marshall		Chief Operating Officer
Andrew Marshall

/s/ James Burk		Chief Financial Officer
James Burk

/s/ Glenda Glover		Director
Glenda Glover

/s/ Ian Lambert		Director
Ian Lambert

/s/ Matthew Mountain		Director
Matthew Mountain

/s/ Greg Goldberg		Director
Greg Goldberg

Nevada		26-3033276
(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

PART 1
Item 1.	Business	2
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	15

PART II
Item 5.	Market for Registrant’s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements and Supplementary Data	21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	43
Item 9A.	Controls and Procedures	43
Item 9B.	Other Information	43

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	44
Item 11.	Executive Compensation	49
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
Item 13.	Certain Relationships and Related Transactions, and Director Independence	53
Item 14.	Principal Accountant Fees and Services	56

Part IV
Item 15.	Exhibits, Financial Statement Schedules	57
	Signatures	58

11835 W. Olympic Boulevard, Suite 855 Los Angeles, California		90064
(Address of principal executive offices)		(Zip Code)

●	MobileBits products could fail or its performance may not meet our or potential mobile end user expectations.

●	Revenues from contemplated distribution of SAMY in new markets and to achieve the broad adoption by both customers and merchants may take longer than expected or not be achieved impacting our ability to achieve meaningful revenue or meet our revenue projections.

●	Infringements of our intellectual property could adversely affect our ability to compete. Our patents applications may be rejected in hold or in part in the United States or in other jurisdictions around the world.
●	We may have to defend ourselves against claims of intellectual property infringement, which could be very expensive for us and harm our business and financial condition.