Unassociated Document

The following is an abbreviated list of key competitors:

·	Key Ring (recently acquired by Gannett);

·	Where (recently acquired by eBay);

·	Shop Kick;

·	Foursquare;

·	Yelp Inc.;

Facebook;

Google;

eBay;

Groupon;

·	Living Social.

Intellectual Property

All MobileBits’ software and expertise created by the Company is proprietary, intellectual property. The Company anticipates certain processes and methodologies to be patentable. All trademarks, rights and copyrights are owned by MobileBits. Some components of SAMY are patent pending. MobileBits owns all the trademarks associated with SAMY, MobileBits and Pringo.

Properties

MobileBits’ principal office is located at 5901 N. Honore Ave., Suite 110, Sarasota, FL. The rent, on a month to month basis, is $5,275 per month and expires on March 1, 2014.

The Company maintains office space at 55 Stewart Street, Suite 117, Toronto, Canada. As of October 1, 2013 the Company entered into a 12 month lease at $4,000 per month.

Employees and Contract Workers

MobileBits currently has two officers managing its day to day operations related to business, accounting, legal, marketing, technology and investor relations. The Company has 11 full-time employees in addition to various contracted firms, supporting legal, investor relations and product development activities.

ITEM 1A.

RISK FACTORS

The following risk factors together with other information set forth in this Form 10-K, should be carefully considered by current and future investors in our securities. An investment in our securities involves substantial risks. If any of the following risks actually occur, our financial condition and our results of operations could be materially and adversely affected. Additional risks and uncertainties not presently known to us may also impair our business operations. In any such case, the trading price of our Common Stock could decline, and you could lose all, or a part, of your investment.

Risks Relating to Our Business

OUR LIMITED OPERATING HISTORY MAY NOT SERVE AS AN ADEQUATE BASIS TO JUDGE OUR FUTURE PROSPECTS AND RESULTS OF OPERATIONS.

We have a relatively limited operating history. Such limited operating history makes it difficult for investors to evaluate our business and future operating results. There can be no assurance that we will be able to obtain or sustain profitable operations or that we will even generate significant revenues. An investor in our securities must consider the risks, uncertainties, and difficulties frequently encountered by companies in new and rapidly evolving markets. The risks and difficulties we face include:

●	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.

WE MAY NOT BE ABLE TO ACHIEVE THE GROWTH THAT WE EXPECT TO REALIZE WITH THE DISTRIBUTION OF SAMY.

Though the Samy revenues in Switzerland have increased substantially since inception, we may not be able to generate revenues in the new countries or regions we intend to distribute the Samy product. We believe that our continued revenue growth will depend, among other factors, on our ability to:

●	acquire new customers and retain existing customers;

●	expand the number, variety and relevance of deals our merchants offer;

●	increase the awareness of our brand domestically and internationally;

●	provide a superior customer service experience for our customers and merchant partners;

●	respond to changes in consumer and merchant access to mobile devices; and

●	react to challenges from existing and new competitors.

OUR BUSINESS COULD SUFFER IF OUR MERCHANT PARTNERS DO NOT MEET THE NEEDS AND EXPECTATIONS OF OUR CUSTOMERS.

Our business depends on our merchant partners providing promotions or offerings that appeal to consumers. Our brand and reputation may be harmed by actions taken by merchant partners that are outside our control. Customer perceived deficiencies in the offerings of one or more of our merchant partners, particularly with respect to an issue affecting the quality of the content offered or the products or services sold, may be attributed by our consumer network users to us, thus damaging our reputation, brand value and potentially affecting our results of operations. In addition, negative publicity and customer sentiment generated as a result of fraudulent or deceptive conduct by our merchant partners could damage our reputation, reduce our ability to attract new customers or retain our current customers, and diminish the value of our brand.

THE DEVELOPMENT OF OUR PRODUCTS MAY BE SLOWER THAN PROJECTED.

The development of our new products and services and the implementation of new versions of our current products may take longer than expected. Any delay in product availability affects the company’s revenue forecasts.

OUR BUSINESS IS AFFECTED BY MANY CHANGING ECONOMIC AND OTHER CONDITIONS BEYOND OUR CONTROL.

The financial success of the Company’s operations may be sensitive to adverse changes in general economic conditions, such as inflation, unemployment, and the cost of borrowing. These changes could cause the cost of the Company’s products to rise faster than it can raise prices. The Company has no control over any of these changes.

WE MAY BE UNABLE TO RETAIN KEY MANAGEMENT PERSONNEL.

Our management and employees can terminate their employment at any time, and the loss of the services of one or more of our executive officers or other key employees could have a material adverse impact on our business. We may be unable to locate and secure and retain talented and qualified employees to implement our plan. If we are unable to attract and retain the necessary technical, sales and other personnel on a cost-effective basis, our business operations and financial performance could be adversely affected.

CURRENT GLOBAL ECONOMIC UNCERTAINTY COULD ADVERSELY AFFECT OUR BUSINESS AND ABILITY TO FINANCE OUR OPERATIONS.

Our operations and performance will depend on worldwide economic conditions, which continue to be uncertain. This could negatively impact consumer spending. Our merchant partners could reduce their willingness to support the Samy network or terminate their relationships with us. Furthermore, during challenging economic times, our merchant partners may face issues gaining timely access to sufficient credit, which could result in their unwillingness to continue with our service or impair their ability to make timely payments to us. As a consequence, we may experience decreased revenue, be required to increase our allowance for doubtful accounts and our days receivables outstanding would be negatively impacted. If we are unable to finance our operations on acceptable terms as a result of renewed tightening in the credit markets, we may experience increased costs or we may not be able to effectively manage our business. We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery. These and other economic factors could have a material adverse effect on our financial condition and operating results.

The current economic uncertainty could affect our ability to continue raising capital. The Company’s ability to implement its business plan is significantly dependent upon raising new capital or financing. If we cannot find adequate capital on reasonable terms, investors will face a significant risk of losing their investments in their entirety.

THE SEVERE GLOBAL ECONOMIC DOWNTURN HAS RESULTED IN VERY WEAK RISK INVESTMENT ENVIROMENT WHICH COULD HAVE A SIGNIFICANT NEGATIVE IMPACT ON US.

The world continues to face a slowed economic environment.

WE ARE HIGHLY DEPENDENT ON TECHNOLOGY.

Our business and our results of operations are highly dependent on technology. Our business faces many technology related risks, including, among others:

●	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.

●

We may be a party to lawsuits in the course of our business. Litigation can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of a particular lawsuit could have a material adverse effect on our business, operating results, or financial condition.

OUR ABILITY TO CONTINUE AS A GOING CONCERN IS UNCERTAIN.

We continue to incur operating losses and the costs associated with the continuing development of our products and growth expansion into new markets raises substantial doubt about our ability to continue as a going concern until such time as our revenues exceed our operating costs and capital expenditures on a consistent basis. This going concern uncertainty may make it difficult for us to raise additional debt or equity financing necessary to continue our business operations.

Risks Associated with Our Securities

OUR COMMON STOCK IS QUOTED ON THE OTC MARKETS WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE AND LIQUIDITY.

Our Common Stock is quoted on the OTC Markets. The OTC Markets is a significantly more limited market than the New York Stock Exchange or NASDAQ system. The quotation of our shares on the OTC Markets may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

THERE IS LIMITED LIQUIDITY ON THE OTC MARKETS.

When fewer shares of a security are being traded on the OTC Markets, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Due to lower trading volumes in shares of our Common Stock, there may be a lower likelihood of one’s orders for shares of our Common Stock being executed, and current prices may differ significantly from the price one was quoted at the time of one’s order entry.

OUR COMMON STOCK IS THINLY TRADED, SO YOU MAY BE UNABLE TO SELL AT OR NEAR ASKING PRICES OR AT ALL IF YOU NEED TO SELL YOUR SHARES TO RAISE MONEY OR OTHERWISE DESIRE TO LIQUIDATE YOUR SHARES.

Currently, our Common Stock is quoted in the OTC Markets and the trading volume we will develop may be limited by the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in OTC Markets stocks and certain major brokerage firms restrict their brokers from recommending OTC Markets stocks because they are considered speculative, volatile and thinly traded. The OTC Markets is an inter-dealer market much less regulated than the major exchanges and our Common Stock is subject to abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for our Common Stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there.

The trading volume of our Common Stock has been and may continue to be limited and sporadic. As a result of such trading activity, the quoted price for our Common Stock on the OTC Bulletin Board may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of our Common Stock or to obtain accurate quotations as to the market value of our Common Stock and as a result, the market value of our Common Stock likely would decline.

RESALE OF OUR SECURITIES IS SUBJECT TO SIGNIFICANT RESTRICTIONS.

Any of our securities that are sold are under exemptions from registration under applicable federal and state securities laws, as none of our securities have been registered under the Securities Act or any state securities laws. Until our securities have been registered, they may not be transferred or resold except in a transaction exempt from or not subject to the registration requirements of the Securities Act and applicable state securities laws. The SEC has broad discretion to determine whether any registration statement will be declared effective and may delay or deny the effectiveness of any registration statement filed by us for a variety of reasons. In the event that the effectiveness of any registration statement relating to resale of the shares of our securities is delayed or denied, or the registration statement, once effective, becomes unavailable for use by selling security holders, the transferability of the shares of Common Stock may be restricted and the value of such securities could be materially adversely affected.

OUR COMMON STOCK IS SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR OPERATIONS.

The market price of our Common Stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our Common Stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our Common Stock.

OUR COMMON STOCK ARE CLASSIFIED AS A “PENNY STOCK” AS THAT TERM IS GENERALLY DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, TO MEAN EQUITY SECURITIES WITH A PRICE OF LESS THAN $5.00. OUR COMMON STOCK WILL BE SUBJECT TO RULES THAT IMPOSE SALES PRACTICE AND DISCLOSURE REQUIREMENTS ON BROKER-DEALERS WHO ENGAGE IN CERTAIN TRANSACTIONS INVOLVING A PENNY STOCK.

We will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our Common Stock, which in all likelihood would make it difficult for our stockholders to sell their securities.

Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our Common Stock.

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

● the basis on which the broker or dealer made the suitability determination, and

● that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR DETECT FRAUD. INVESTORS COULD LOSE CONFIDENCE IN OUR FINANCIAL REPORTING AND THIS MAY DECREASE THE TRADING PRICE OF OUR COMMON STOCK.

We must maintain effective internal controls to provide reliable financial reports and detect fraud. We have been assessing our internal controls to identify areas that need improvement. Failure to maintain an effective system of internal controls could harm our operating results and cause investors to lose confidence in our reported financial information. Any such loss of confidence would have a negative effect on the trading price of our Common Stock.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

We are not required to provide this information as we are a smaller reporting company.

ITEM 2.

PROPERTIES

As the result of the Pringo Merger, the Company moved its principal office to 11835 W. Olympic Boulevard, Suite 855 Los Angeles, California until the lease expired as of March 31, 2013. 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 Company now maintains its principal office in Sarasota, Florida located at 5901 N. Honore Ave, Suite 110. On March 1, 2012, the Company entered into a twelve-month lease for $3,875 per month. On March 1, 2013, the Company entered into a twelve-month lease for $5,275 per month.

As a result of the Aixum Merger, the Company had an 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. The lease expired in June 2013.

On September 1, 2013, the Company signed a twelve-month lease for office space at 55 Stewart St. Suite 117, Toronto, Canada M5V 2V8. Monthly rent is $4,000.

ITEM 3.

LEGAL PROCEEDINGS

Majid Abai v. MobileBits Holding Corporation

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 alleged 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.

On April 22, 2013 the Company executed a final settlement agreement with Majid Abai that dismissed the above action, released the Company from all claims and obligated the Company to pay Mr. Abai $25,964. Of this amount, $5,964 was paid on April 24, 2013 and the remaining $20,000 is payable on the earlier of receipt of the $200,000 owed the Company on an existing investment agreement or $5,000 on first of each month beginning on June 1, 2013 with a final payment due on September 1, 2013. Beginning May, 7, 2013, interest accrued on the unpaid balance at 10% per annum until the amount owed is paid in full. As of October 31, 2013 the outstanding amount owed is $350 of accrued interest.

Majid Abai and the Abai Group, Inc v. MobileBits Holding Corporation

On November 5, 2013 Majid Abai and the Abai Group, Inc. “the Plaintiffs”, served the Company with a summons and a complaint alleging claims for breach of his employment agreements. Plaintiffs seek to recover the sum of approximately $225,689 plus attorney fees, cost and prejudgment interest. On December 5, 2013, the Company filed a motion to dismiss the complaint. The hearing of the demurrer is scheduled for July 24, 2014.

LOPAR, LLC; Michael Zeto and David Rippetoe v. Mobilebits Holding Corporation

On, September 30, 2013, LOPAR, LLC (“LOPAR”), Michael Zeto (“Zeto”) and David Rippetoe (“Rippetoe”) (collectively the “Proximus Plaintiffs”) filed an action with the Superior court of Fulton County, Georgia (the “Georgia Court”), C.A. File No. 2013-CV-237131 (the “Civil Action”).

On December 5, 2013 and upon prior motion of the Proximus Plaintiffs, the Georgia Court in the Civil Action entered a Default Judgment against the Company: (i) directing it and its officers, agents, directors and all others acting in concert and participation with the Company to take all steps necessary to issue and effectuate the delivery of the following shares of the Company’s common stock within fourteen days from the date of entry of the Default Judgment: (a) 13,878,307 shares to LOPAR; (b) 3,064,805 shares to Zeto; and (c) 2,402,568 to Rippetoe; (ii) granting Plaintiffs jointly and severally, a monetary judgment of $44,470 in reasonable attorney's fees and expenses; and (iii) casting the costs of the Civil Action on the Company. The Company has filed motions opposing the Default Judgment in the Superior Court and has also filed a Notice of Appeal on the Default Judgment to the Georgia Court of Appeals. The Company believes the outcome of this lawsuit is still unpredictable.

Aixum Tec AG bankruptcy filing

On December 17, 2013, Aixum filed for bankruptcy in Liechtenstein. Creditors have until February 10, 2014 to make a payment of 15,000 CHF to file their claim with the court and have a receiver appointed to distribute any remaining net assets. As of February 6, 2014, we are awaiting a final decision from the court.

Other than the proceedings, above, there are no pending material legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is currently quoted on the OTC Markets under the symbol MBIT.OB. There has been limited trading in our common stock.

Holders

As of January 31, 2014, we had 350 shareholders of our common stock.

Dividend Policy

The Company has never paid or declared any dividend on its Common Stock and does not anticipate paying cash dividends in the foreseeable future. Holders of common stock are entitled to receive such dividends as the board of directors may from time to time declare out of funds legally available for the payment of dividends. The Company does not anticipate paying any dividends on its common stock in the foreseeable future.

Purchases of Treasury Stock

The Company did not repurchase any of its shares during the fiscal year covered by this report.

ITEM 6.

SELECTED FINANCIAL DATA.

Not applicable.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management’s Discussion and Analysis or of Financial Condition and Results of Operations (“MD&A”) section of this Report discusses our results of operations, liquidity and financial condition, and certain factors that may affect our future results. You should read this MD&A in conjunction with our financial statements and accompanying notes included in this Report.

Plan of Operation

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” or “MB). Today, MobileBits is a globally focused direct mobile marketing and loyalty software supplier. The Company offers businesses a mobile marketing and loyalty network called Samy that enables merchants, retailers or brands to connect with consumers in their local area through their mobile devices. The solution provides businesses a complete set of cloud based tools to connect with, create and manage mobile campaigns, deals, offers, loyalty, social media, commerce and rewards to a subscribed consumer through a mobile application called Samy. To consumers, Samy provides a single “Mobile Mall” application and experience where a shopper can quickly and easily view and be alerted of special offers, purchase products or services, earn rewards, obtain local information and seamlessly integrate their loyalty cards with their mobile devices.

Samy extends the same optimal shopping experience of a mall or shopping center into a digital, 'Mobile Mall'. Samy provides consumers with a single application to connect with any number of their favorite stores, view offers, receive and store coupons, receive promotions and earn rewards. Mobile consumers collect and gather their favorite restaurants, stores, retailers, deals, loyalty programs and more right on their smartphone; resulting in a personalized shopping experience.

MobileBits began development of its product in 2009 in the area of mobile content delivery with the goal to create a platform connecting consumers and marketers around relevant information on mobile devices. On December 6, 2011, we merged with Pringo Inc., through Merger Sub, completed a merger with Pringo, Inc., pursuant to the Merger Agreement and Plan of Merger (the “Merger Agreement”) dated June 23, 2011. Pringo, Inc. based in Los Angeles California brought the Company a full development platform called Pringo Connect, in development since 2006, as well as a new product development team. Pringo's business focus was licensing software and selling professional services to enterprises looking to create a socially integrated website.

On September 28, 2012, the Company completed a share exchange with Aixum Tec AG, operating in Switzerland, pursuant to the Stock Exchange Agreement, dated May 21, 2012. Aixum Tec AG, a European based organization focused on a merchant and consumer application platform called SAMY4ME which provided an easy to use software interface for both businesses and consumers connecting around loyalty card integration and offers.

In 2012, MobileBits completed the integration of Pringo Connect and the SAMY4ME platforms, re-branding the name to Samy and re-focused the Company to offer businesses a mobile direct marketing network focusing on delivering a network that provides similar perceived value to today's shopping centers and malls.

Samy now provides a complete set of cloud based tools to connect with, create and manage mobile campaigns, deals, offers, loyalty and rewards to a subscribed mobile consumer. To businesses, Samy provides a single self-serve mobile marketing & loyalty platform that enables businesses to create, design and publish their offers, coupons, promotions, loyalty cards and gift cards to a mobile storefront. To consumers, Samy provides a single “Mobile Mall” application and experience where a shopper can quickly and easily view branded storefronts and be alerted of special offers, purchase products or services, earn rewards, obtain local information and seamlessly integrate their loyalty cards with their mobile devices.

For larger deployments MobileBits offers the Pringo Connect platform under the brand Samy Enterprise.

Summary of Acquisition Transactions

The Company entered into a Share Exchange Agreement, dated March 12, 2010 between MB, MBC and 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 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. Concurrently, pursuant to the terms of the Share Exchange Agreement, Walter Kostiuk, the principal shareholder of the Company, cancelled a total of 14,000,000 shares of common stock. Upon Closing, MBC became a 100% wholly-owned subsidiary of the Company. The $275,000 was recorded as merger costs as a component of general and administrative expense. Since the Merger was between entities under common control, the Merger was accounted for similar to a pooling of interests whereby the assets and liabilities of MBC were recorded at historical cost. On March 16, 2010, concurrently with the merger, our Board of Directors authorized a 7-for-1 forward split of our common stock, par value $0.001 per share, in the form of a stock dividend which was paid on the same date, to holders of record on that date. All share and per share numbers have been adjusted to give effect to the stock split unless otherwise stated. On October 13, 2011, we amended our Articles of Incorporation in the State of Nevada to increase the maximum number of shares of stock that we are authorized to have outstanding at any time to two hundred fifty million (250,000,000) shares of par value $0.001 common stock.

On December 6, 2011, we, through Merger Sub, Inc completed a merger with Pringo, Inc. pursuant to aMerger 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 our wholly owned subsidiary.

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, pursuant to a Stock Exchange Agreement, dated May 21, 2012. 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.

On May 2, 2013, the Company and Proximus formed a Delaware limited liability company named MBPM, LLC. Pursuant to the operating agreement entered between the parties, the Company initially has a 51% ownership interest in MBPM, and Proximus has a 49% ownership in MBPM. In connection with the formation of MBPM, the Company contributed certain goodwill and management services to MBPM and Proximus contributed all of its assets to the joint venture. On May 2, 2013, the Company entered into Equity Exchange Agreements with the members of Proximus, pursuant to which the members of Proximus agreed to within a two year period to exchange their membership units in Proximus for shares of the Company’s common stock, valued up to $3,000,000, pursuant to the terms and conditions of the Equity Exchange Agreement.

On, September 30, 2013, LOPAR, LLC (“LOPAR”), Mechael Zeto (“Zeto”) and David Reppetoe (“Rippetoe”) (collectively the “Proximus Plantiffs”. Owner of Proximus Mobility) filed an action with the Superior court of Fulton County, Georgia (the “Georgia Court”, C.A. File No. 2013-CV-237131 (the “Civil Action”).

On December 5, 2013 and upon prior motion of the Plaintiffs, the Court in the Civil Action entered a Default Judgment against the Company: (i) directing it and its officers, agents, directors and all others acting in concert and participation with the Company to take all steps necessary to issue and effectuate the delivery of the following shares of Mobile bits stock within fourteen days from the date of entry of the Default Judgment: (a) 13,878,307 shares to LOPAR; (b) 3,064,805 shares to Zeto; and (c) 2,402,568 to Rippetoe; (ii) granting Plaintiffs jointly and severally, a monetary judgment of $44,470 in reasonable attorney's fees and expenses; and (iii) casting the costs of the Civil Action on the Company. The Company has filed motions opposing the Default Judgment in the Superior Court and has also filed a Notice of Appeal on the Default Judgment to the Georgia Court of Appeals. The Company believes the outcome of this lawsuit is still unpredictable.

On May 7, 2013, the Company purchased JDN Development Company Inc.’s 50 % membership interest in Value Text LLC for 250,000 warrants to purchase the Company’s common stock at an exercise price of $0.50 per share of which 205,000 warrants were issued to JDN Development Company Inc. and 45,000 warrants were issued to the J Cohn Marketing Group, a Company that JDN Development Company Inc. owed money to. The remaining 50% interest in ValuText was acquired by the Company in connection with the acquisition of Proximus.

During fiscal year 2013 we continued to license Samy in Switzerland and commenced operations in the Canada and the United States. In addition, we also licensed the Samy franchise in the Ukraine, Russia and the Middle East.

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 2014. 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, 2013 Compared to Fiscal Year Ended October 31, 2012

Revenues

Our revenues from our operations for the fiscal year ended October 31, 2013 were $1,843,944 compared to $781,151 for the fiscal year ended October 31, 2012. We started to generate revenues from enterprise licenses and services after we acquired Pringo. Our revenues from the licensing of the Samy franchise in foreign territories increased $863,369 primarily from the licensing the franchise for the Middle East territories. The increase in Samy subscription revenues was primarily due to the fact that the Company operated in Switzerland for twelve months in 2013 compared with only one month in 2012, as Aixum Tec AG was acquired on September 28, 2012. In addition, in 2013 the Company began earning subscription revenues in the United States and Canada. Pringo contract revenues decreased $176,767 due to fewer customers in fiscal year 2013 compared with fiscal year 2012.

Cost of Revenues

Our cost of revenues was $139,632 for the fiscal year ended October 31, 2013 compared to $245,261 for the fiscal year ended October 31, 2012. For the twelve months ended October 31, 2013 and October 31, 2012, costs associated with professional service fees related to Pringo contracts were $55,025 and $233,957, respectively. The $178,932 decrease is attributable to fewer Pringo customers requiring professional services in 2013. The costs of hosting services for the year ended October 31, 2013 were $84,607 compared with $11,304 for the year ended October 31, 2012. The $73,303 increase is primarily attributable to the cost of hosting the expanding Samy network.

General and Administrative Expenses

Our total general and administration expenses were $5,377,429 for the fiscal year ended October 31, 2013 compared to $10,974,661 for the fiscal year ended October 31, 2012. The decrease of $5,597,232 is primarily attributable to a decrease of $5,542,819 in non-cash stock compensation expense; $161,000 in lower salary expenses due primarily to a reduced staff level; $141,000 decrease in professional fees; lower bad debt expense of $106,000; offset by a $216,000 increase in marketing expenses and a $105,000 increase in contracted services.

Goodwill Impairment

In 2013, the Company recorded a $15,564,369 impairment of goodwill related to the Pringo acquisition as a result of the Company modifying the original business plan and integrating the Pringo platform into the Samy business. There was no goodwill impairment in 2012.

Amortization and Depreciation

Amortization and depreciation was $2,158,679 for the fiscal year ended October 31, 2013 compared to $958,167 for the fiscal year ended October 31, 2012. The increase is due to increased amortization of intangible assets acquired in the Pringo Merger and the Aixum share exchange, amortization of intangible assets acquired in the ValuTex and MBPM acquisitions in 2013 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 gain or loss on foreign currency exchange

For the fiscal year ended October 31, 2013, the Company had unrealized foreign gains of $22,319 compared with $3,059 in unrealized losses in 2012.

Interest Income/Expense, net

Net interest income was $10,517 for the fiscal year ended October 31, 2013 compared to net interest expense of $216,595 for the fiscal year ended October 31, 2012. In 2013, the interest income relates to the amortization of the discount on the Middle East franchise fee receivable. In 2012, the conversion of a note payable into the Company’s common stock of $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, 2013, we had a negative cash balance of $11,863 (reflected in accounts payable) compared to a cash balance of $122,428 as of October 31, 2012. 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 $5,086,439 at October 31, 2013 compared to a working capital deficit of $1,205,609 at October 31, 2012. The Company has an accumulated deficit at October 31, 2013 of $37,535,025 and $1,800,310 of cash used in operations during the twelve months ended October 31, 2013. 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 to increase operating profits, 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, 2013 and 2012 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, 2013 and 2012 were $1,800,310 and $2,144,599, respectively. The decrease in 2013 was due to lower operating expenses and an increase in revenues, which resulted in lower cash outflows in operations.

Cash used in investing activities

Cash used in investing activities for the years ended October 31, 2013 and 2012 were $500,163 and $487,771, respectively. The increase in 2013 is due to money spent on software development and property and equipment.

Cash flow from financing activities

Cash provided by financing activities for the years ended October 31, 2013 and 2012 were $2,169,933 and $1,429,511, 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.

We are not required to provide the information required by this Item because we are a smaller reporting company.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

MobileBits Holdings Corporation

Consolidated Financial Statements

As of and for the Years Ended October 31, 2013 and 2012

CONTENTS

	Page(s)
Consolidated Financial Statements:

Consolidated Balance Sheets – As of October 31, 2013 and 2012		23

Consolidated Statements of Operations and Comprehensive Loss - For the Years Ended October 31, 2013 and 2012		24

Consolidated Statement of Changes in Stockholders’ Equity - For the Years Ended October 31, 2013 and 2012		25

Consolidated Statements of Cash Flows - For the Years Ended October 31, 2013 and 2012		26

Notes to Consolidated Financial Statements		27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

MobileBits Holdings Corporation

Sarasota, Florida

We have audited the accompanying consolidated balance sheets of MobileBits Holdings Corporation (the “Company”) as of October 31, 2013 and 2012, 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, 2013 and 2012 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 7, 2014

MobileBits Holdings Corporation

Consolidated Balance Sheets

	October 31,			October 31,
	2013			2012
ASSETS
Current assets:
Cash	$	-		$	122,428
Investment in marketable securities		-			222
Accounts receivable, net of allowance for doubtful accounts and discounts		608,850			95,058
Prepaid expenses and other current assets		44,507			62,761
Total current assets		653,357			280,469

Property and equipment, net of accumulated depreciation		41,419			40,758
Software development costs, net of accumulated amortization		476,112			159,733
Accounts receivable non-current, net of discounts		287,985			-
Intangible assets, net of accumulated amortization		6,277,586			6,020,641
Goodwill		1,383,193			16,107,034

TOTAL ASSETS	$	9,119,652		$	22,608,635


Current liabilities:
Accounts payable and accrued expenses	$	743,027		$	669,975
Accounts payable and accrued expenses – related parties		616,498			630,878
Stock payable		4,309,000			122,000
Note payable– related parties		65,758			54,325
Deferred revenues		5,513			8,900
Total current liabilities		5,739,796			1,486,078

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; 74,406,709 and 65,182,188 shares issued and
outstanding, respectively		74,407			65,182
Additional paid-in capital		40,845,162			37,233,950
Accumulated deficit		(37,535,025	)		(16,171,696	)
Accumulated other comprehensive loss		(4,688	)		(4,879	)
Total stockholders' equity		3,379,856			21,122,557

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	9,119,652		$	22,608,635

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,
	2013			2012

REVENUES
Franchise license revenue	$	1,063,369		$	200,000
Samy subscription revenue		404,761			28,570
Pringo contract revenue		375,814			552,581
Total revenues		1,843,944			781,151

COST OF REVENUES		139,632			245,261

GROSS PROFIT		1,704,312			535,890

OPERATING EXPENSES:
General and administrative		5,377,429			10,974,661
Impairment of goodwill		15,564,369			-
Depreciation and amortization		2,158,679			958,167
Total operating expenses		23,100,477			11,932,828

LOSS FROM OPERATIONS		(21,396,165	)		(11,396,938	)

OTHER INCOME (EXPENSE)
Gain on lawsuit settlement		-			88,801
Unrealized foreign currency exchange gain (loss)		22,319			(3,059	)
Interest income (expense), net		10,517			(216,595	)

NET LOSS		(21,363,329	)		(11,527,791	)

OTHER COMPREHENSIVE LOSS
Foreign currency translation gain (loss)		191			(4,879	)
TOTAL COMPREHENSIVE LOSS	$	(21,363,138	)	$	(11,532,670	)

Net loss per common share - basic and diluted	$	(0.31	)	$	(0.23	)

Weighted average number of common shares outstanding during the period - basic and diluted		68,688,422			49,072,904

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, 2013 and 2012

	Common Stock						Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount			Capital		Deficit			Income			Equity
Balances - October 31, 2012		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

Common shares issued for services rendered		89,472			90			22,278		-			-			22,368
Proceeds from the sale of common stock ($0.11/share), net		9,135,049			9,135			962,365		-			-			971,500
Fair value of stock options issued in connection with the acquisition of ValuText LLC		-			-			60,528		-			-			60,528
Amortization of fair value of stock options/warrants		-			-			2,566,041		-			-			2,566,041
Net loss		-			-			-		(21,363,329	)		-			(21,363,329	)
Foreign currency translation gain		-			-			-		-			191			191
Balances - October 31, 2013		74,406,709		$	74,407		$	40,845,162	$	(37,535,025	)	$	(4,688	)	$	3,379,856

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,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(21,363,329	)	$	(11,527,791	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		119,242			225,511
Gain on lawsuit settlement		-			(88,801	)
Common shares issued for interest expense		-			200,872
Write-off of marketable securities		222			-
Loss on disposal of property and equipment		1,897			-
Stock-based compensation		2,566,041			8,108,860
Depreciation and amortization		2,158,679			958,167
Impairment of goodwill		15,564,369			-
Unrealized gain on foreign currency exchange		(22,319	)		-
Changes in operating assets and liabilities:
Increase in accounts receivable		(921,019	)		(175,014	)
Decrease in prepaid expenses and other current assets		18,254			31,166
Increase in accounts payable and accrued expenses		95,420			64,141
Increase (decrease) in accounts payable and accrued expenses – related parties		(14,380	)		49,390
Increase (decrease) in deferred revenues		(3,387	)		8,900
Net cash used in operating activities		(1,800,310	)		(2,144,599	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(30,713	)		(24,200	)
Software development costs incurred		(469,450	)		(208,107	)
Payments made prior to Pringo and Aixum acquisitions, net of cash acquired		-			(255,464	)
Net cash used in investing activities		(500,163	)		(487,771	)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in notes payable		11,433			(57,000	)
Proceeds from sale of common stock, net of offering costs		2,158,500			1,506,511
Commissions paid to a related party on sale of common stock		-			(20,000	)
Net cash provided by financing activities		2,169,933			1,429,511

Effect of exchange rate changes on cash		8,112			(4,879	)

Net decrease in cash		(122,428	)		(1,207,738	)
Cash at beginning of year		122,428			1,330,166
Cash at end of year	$	-		$	122,428

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest	$	2,863		$	7,077
Income tax		-			-

NON-CASH INVESTING AND FINANCING ACTIVITIES
Common shares issued for accrued interest	$	-		$	23,288
Common shares issued for accounts payable		22,368			93,979
Common shares issued for stock payable		122,000			-
Common shares issued for notes payable		-			81,000
Cancellation of shares – related party		-			3,000
Fair value of warrants issued to acquire ValuText LLC		60,528			-
Fair value of stock payable recorded to acquire MBPM from Proximus Mobility		3,000,000			-
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 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

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.

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.

Acquisition of MBPM from Proximus Mobility, LLC

On May 2, 2013, the Company and Proximus Mobility, LLC (“Proximus”) formed a Delaware limited liability company named MBPM, LLC (“MBPM”). Pursuant to the operating agreement entered between the parties, the Company initially has a 51% ownership interest in MBPM, and Proximus has a 49% ownership in MBPM. In connection with the formation of MBPM, the Company contributed certain goodwill and management services to MBPM and Proximus contributed all of its assets to the joint venture. On May 2, 2013, the Company entered into Equity Exchange Agreements with the members of Proximus, pursuant to which the members of Proximus agreed to within a two year period to exchange their membership units in Proximus for shares of the Company’s common stock, valued up to $3,000,000, pursuant to the terms and conditions of the Equity Exchange Agreement. See Footnote 17 for a discussion of the default judgment in connection with this transaction.

Proximus Mobility is a location-based proximity marketing software company that provides turnkey, end-to-end hyperlocal geofenced marketing solutions to retailers, hotels, casinos, venues, advertising agencies and small to medium sized businesses.

ValuText LLC Acquisition

On May 7, 2013, the Company purchased JDN Development Company Inc.’s 50 % membership interest in Value Text LLC (“ValuText”) for 250,000 warrants to purchase the Company’s common stock at an exercise price of $0.50 per share of which 205,000 warrants were issued to JDN Development Company Inc. and 45,000 warrants were issued to the J Cohn Marketing Group, a Company that JDN Development Company Inc. owed money to. The remaining 50% interest in ValuText was acquired by the Company in connection with the acquisition of Proximus.

ValuText is a location-based, mobile marketing service specifically designed to drive sales and productivity at the company's prime commercial assets.

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 2013 and 2012 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, 2013, the Company had a negative cash balance of $11,863 which has been reclassified to accounts payable. At October 31, 2012, the Company had cash balance of $122,428 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.

The $222 value of the Company’s investment in marketable securities was written-off as of October 31, 2013.

Accounts Receivable and Allowance for Bad Debt

Accounts receivable are determined during the period based upon invoices and credits issued and reduced by cash collections. Amounts not due within a one year period are recorded as account receivable non-current, net of any discount. As of October 31, 2013, accounts receivable non-current was $287,985, net of a discount of $45,349.

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, 2013 and 2012, the allowance for doubtful accounts totaled $119,194 and $225,511, respectively. For the years ended October 31, 2013 and 2012, the Company recorded bad debt expense of $119,242 and $225,511, respectively.

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.

The Company evaluates the fair value of its single reporting unit utilizing up to three valuation methods: market capitalization, income approach and market approach. Revenue and expense forecasts used in the evaluation of goodwill were based on trends of historical performance and management’s estimate of future performance. The Company’s annual assessment of goodwill as of October 31, 2013 concluded that the value of Pringo’s remaining goodwill balance of $15,564,369 was impaired. This charge reflects the impact of the continuing decline in the Company’s common stock price as well as an evaluation of the present value of Pringo’s future net cash flows. The Company was not required to record a goodwill impairment charge as a result of the 2012 review.

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, 2013 and 2012, 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 or reseller agreements to license the use of SAMY in foreign countries. 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.

Samy provides digital loyalty and marketing solutions that drives engagement between brick and mortar stores and consumers. Samy delivers consumer engagement on a Cost-Per-Acquisition (CPA) basis with the tools to create, manage and measure mobile commerce through its proprietary mobile CRM software.

MobileBits generates revenue on a CPA basis. Samy CPA is defined as a user (depending on what category of ad they view) who subscribes to a branded mobile store within the Samy network, then selects an ad and clicks on an offer or coupon to learn more providing the user the ability to immediately purchase the offer in-store, in-app or save for later use.

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 Common 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, 2013 and 2012, there were 24,579,475 units and 24,929,475 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, 2013, 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 $21,363,329, a working capital deficit of $5,086,439 and net cash used in operations of $1,800,310 for the year ended October 31, 2013, and an accumulated deficit of $37,535,025 at October 31, 2013. 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 to increase operating profit, including the distribution of the Samy application in additional regions.

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. As of October 31, 2013, the Company performed its annual goodwill impairment assessment and concluded that the goodwill balance of $15,564,569 was impaired and recorded the impairment of goodwill due to the Company’s decision to modify the original Pringo business plan and integrate the Pringo platform into the Samy business.

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 upon acquisition.

The following table summarizes the final 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

The above assets acquired and liabilities assumed are recognized based on an estimate of their fair value as of the acquisition date.

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.

Acquisition of MBPM from Proximus Mobility, LLC

The following table summarizes the allocation of the purchase price:

Intangible assets	$	2,175,600
Goodwill		824,400
Purchase price	$	3,000,000

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:

Assets acquired and liabilities assumed are currently valued at zero based on an estimate of their fair value as of the acquisition date. The purchase price and costs associated with the acquisition was $3,000,000 on May 2, 2013, of which $2,175,600 was allocated to customer relationships and the remaining $824,400 was assigned to goodwill.

ValuText LLC Acquisition

The following table summarizes the allocation of the purchase price:

Intangible assets	$	44,735
Goodwill		15,793
Purchase price	$	60,528

Goodwill and intangible assets:

Assets acquired and liabilities assumed are currently valued at zero based on an estimate of their fair value as of the acquisition date. The purchase price and costs associated with the acquisition was $60,528 on May 7, 2013, of which $44,735 was allocated to customer relationships and the remaining $15,793 was assigned to goodwill.

NOTE 5 – PROPERTY AND EQUIPMENT

The following is a summary of property and equipment the Company had at October 31, 2013 and 2012:

	Estimated		October 31,			October 31,
	Useful Lives		2013			2012
Furniture and fixtures		5	$	8,481		$	8,249
Equipment		5		22,090			34,064
Website and database		3-5		56,602			26,602
Effect of exchange rate changes				(536	)		-
Subtotal				86,637			68,915
Less: accumulated depreciation				(45,218	)		(28,157	)
Property and equipment, net			$	41,419		$	40,758

For the years ended October 31, 2013 and 2012, the Company recognized depreciation expense of $27,619 and $20,334, respectively.

NOTE 6 – SOFTWARE DEVELOPMENT COSTS

The following is a summary of the Company’s software development costs at October 31, 2013 and 2012:

	October 31,			October 31,
	2013			2012
Software development costs incurred	$	677,557		$	208,107
Effect of exchange rate changes		14,934			-
Subtotal		692,491			208,107
Less: accumulated amortization		(216,379	)		(48,374	)
Software development costs, net	$	476,112		$	159,733

For the years ended October 31, 2013 and 2012, total amortization expense was $168,005 and $48,374, respectively.

NOTE 7 – INTANGIBLE ASSETS

The following is a summary of the Company’s intangible assets at October 31, 2013 and 2012:

	Estimated Useful Lives	October 31, 2013			October 31, 2012
Domain name	Indefinite	$	20,100		$	20,100
Developed technology – software	3		3,780,000			3,780,000
Customer relationships	5		3,920,000			1,700,000
Trade name	10		1,410,000			1,410,000
Subtotal			9,130,100			6,910,100
Less: accumulated amortization			(2,852,514	)		(889,459	)
Intangible assets, net		$	6,277,586		$	6,020,641

For the years ended October 31, 2013 and 2012, the Company recognized amortization expense of $1,963,055 and $889,459, 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 principal and accrued interest on the note as of October 31, 2013 and 2012 was $65,758 and $54,325, respectively. The note is currently in default. 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, 2013, the Company had outstanding payables to related parties of the Company in the amount of $616,498. $228,000 was owed to The Abai Group, Inc. for the services performed and $350 was owed to Majid Abai for accrued interest; $164,380 was owed to Walter Kostiuk primarily for commissions on sale of the Company’s common stock and unpaid salary and $223,768 was owed to Andrew Marshall for unpaid salary and expenses. During the year ended October 31, 2013, the Company paid Walter Kostiuk $25,000 related to a Market Capitalization Bonus pursuant to his employment agreement. In January 2013, the Company engaged Andrea Kostiuk, wife of Walter Kostiuk, as an independent contractor to provide marketing support services. The contract provides for her to receive $2,240 per month which was increased to $2,800 as of September 1, 2013. For the year ended October 31, 2013, her fees totaled $21,280 and there were no unpaid fees as of October 31, 2013.

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 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. Mr. Kostiuk and the Company have not yet implemented the minimum salary increase.

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 (“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 $160,217 and $12,527 in wages and healthcare benefits, respectively, in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2013.

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 $164,896 and $329,792 was expensed during the years ended October 31, 2013 and 2012, respectively. The options have been fully amortized as of October 31, 2013.

The Company has expensed $192,500 in wages and $10,536 in automobile expense and health care benefits in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2012.

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 was expensed during the year ended October 31, 2012. The options were forfeited as of October 31, 2012 related to Ms. Kostiuk’s termination. 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 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 $95,704 was expensed during the year ended October 31, 2012. The options were forfeited as of October 31, 2012 related to Ms. Kostiuk’s termination. 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.

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 expired as of March 31, 2013.

As a result of the Aixum Merger, the Company had an 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. The lease expired in June 2013.

On September 1, 2013, the Company signed a twelve month lease for office space at 55 Stewart St. Suite 117, Toronto, Canada M5V 2V8. Monthly rent is $4,000.

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 $0 and $2,000 as of October 31, 2013 and 2012, respectively and the amount owed at October 31, 2012 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 alleged 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 an action against the MobileBits Companies in the Superior Court of the State of California, West District, alleging that the MobileBits Companies breached this agreement.

On April 22, 2013 the Company executed a final settlement agreement with Majid Abai that dismissed the above action, released the Company from all claims and obligated the Company to pay Mr. Abai $25,964. Of this amount, $5,964 was paid on April 24, 2013 and the remaining $20,000 is payable on the earlier of receipt of the $200,000 owed the Company on an existing investment agreement or $5,000 on the first of each month beginning on June 1, 2013 with a final payment due on September 1, 2013. Beginning May, 7, 2013 interest accrued on the unpaid balance at 10% per annum until the amount owed is paid in full. As of October 31, 2013, the outstanding amount owed is $350 of accrued interest.

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, 2013			October 31, 2012
Computed at U.S. Statutory Rates (34%)	$	(7,263,532	)	$	(3,919,449	)
Permanent differences		6,836,436			2,761,579
Temporary differences		287,978			87,552
Changes in valuation allowance		139,118			1,070,318
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, 2013			October 31, 2012
Deferred tax assets	$	2,076,419		$	1,937,270
Less: valuation allowance		(2,076,419	)		(1,937,270	)
Net deferred tax assets	$	-		$	-

At October 31, 2013, the Company had a net operating loss carry-forwards for federal and state income tax purposes of approximately $6,107,115 and $5,697,854, respectively, which will begin to expire, if unused, beginning in 2029. The valuation allowance increased approximately $139,118 and $1,070,318 for the years ended October 31, 2013 and 2012, 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 – STOCK PAYABLE

As of October 31, 2013, stock payable of $4,309,000 consisted of the following:

$3,000,000 related to the acquisition of Proximus:

In connection with the acquisition of Proximus Mobility, LLC, there is a current disagreement over the number of shares to be issued for the $3,000,000 purchase of the underlying assets. The Company believes that the total shares to be issued is 12,000,000 of which 6,000,000 is based on reaching certain milestones outlined in the agreement. No shares have been issued and the full $3,000,000 has been recorded as stock payable as of October 31, 2013.

$1,309,000 related to proceeds received from sale of Company’s common stock as follows:

●

MRL Trade S.r.l. (“MRL”) signed a Share Purchase Agreement (“Agreement”) on December 4, 2012 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 was to be made within 10 days from receipt of the signed Agreement which was December 24, 2012 and the remaining $550,000 was to be made within 60 days of the initial payment but the share certificates had not been issued as of October 31, 2013. As of October 31, 2013, $960,000 has been received. As of January 28, 2014, the final $140,000 owed was received.

●	Also, during the year ended October 31, 2013, the Company received $349,000 from private investors, for which the stock certificates had not been issued as of October 31, 2013.

During the year ended October 31, 2012, the Company received $122,000 from private investors, for which stock certificates were issued during the year ended October 31, 2013.

NOTE 13 – STOCKHOLDERS’ EQUITY

During the year ended October 31, 2013, the Company issued 9,135,049 shares of common stock for net proceeds of $971,500. The proceeds were received by the Company as of October 31, 2013. In connection with the share issuance, The Company issued warrants to purchase 700,000 shares of the Company’s common stock. $81,868 of the proceeds were allocated to the value of the warrant instruments and recorded as additional paid-in capital.

On May 7, 2013, the Company issued 250,000 warrants with a fair value of $60,528 in connection with the acquisition of ValuText LLC. The fair value was recorded as additional paid in capital.

On August 13, 2013, the Company issued 89,472 shares of common stock valued at $0.25 per share in exchange for outstanding amounts owed for services rendered.

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 issued 2,769,021 shares of stock for net proceeds of $1,384,511. The proceeds were received by the Company as of October 31, 2012.

NOTE 14 – STOCK OPTION AND WARRANT ACTIVITIES

Stock Option Activities

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

In fiscal year 2013 the Company issued 337,500 stock options to employees. These options vest in 3 years and are exercisable at $0.25 and $0.51 per share in 5 and 7 years. These options were valued at $134,769 on the grant date using the Black-Scholes model with the following assumptions: (1) 0.77% - 1.53% discount rates, (2) expected volatilities of 188.41% - 217.08%, (3) no expected dividends; and (4) an expected terms of 5 and 7 years.

In fiscal year 2013, the Company issued 1,000,000 options to directors with fair value $136,632. The directors’ options were fully vested at the date of the grant. These options were valued using the Black-Scholes option-pricing model and the following parameters: (1) 1.35% risk-free discount rate, (2) expected volatility of 201.81% (3) $0 expected dividends, and (4) an expected term of 5 years.

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.

Warrant Activities

The Company issued 1,800,000 warrants with an exercise price of $0.50 - $1.50 per share during the fiscal year ended October 31, 2013, of which 850,000 were issued to DDR Property Management LLC related to the Strategic Marketing Agreement dated May 7, 2013, 250,000 warrants issued in connection with the acquisition of ValuText LLC to JDN Development Company (205,000 warrants) and J Cohn Marketing Group Inc. (45,000 warrants) and 700,000 warrants to a private investor.

The warrants granted in the fiscal year ended October 31, 2013 were valued using the Black-Scholes option-pricing model and the following parameters: (1) 0.82% to 1.21% risk-free discount rate, (2) expected volatility of 191.24% to 198.72%, (3) $0 expected dividends, and (4) an expected term of 5 to 7 years for each grant based on term of the warrant.

On August 21 2012, the Company issued 300,000 warrants with a fair value of $145,818 and an exercise price of $1.00 per share 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, 2013:

	Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
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		-		-
Outstanding, October 31, 2012		24,929,475			0.45		6.12		12,947,130
Granted		3,137,500			0.59		-		-
Forfeited		(3,487,500	)		0.51		-		-
Outstanding October 31, 2013		24,579,475			0.30		7.77		-
Exercisable, October 31, 2013		18,144,538			0.44		-		-

The Company recorded option and warrant expense of $2,566,041 and $8,108,860 for the options and warrants vested during the years ended October 31, 2013 and 2012, respectively.

The following is a summary of outstanding stock options and warrants at October 31, 2013:

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	1.22	$	0.50	0.0104
420,681	06/27/2016	2.66	$	0.75	0.0455
62,499	10/31/2016	3.00	$	0.50	0.0076
250,000	11/01/2016	3.01	$	0.51	0.0306
300,000	04/17/2017	3.46	$	0.51	0.0423
300,000	08/21/2017	3.81	$	1.00	0.0465
200,000	01/06/2018	4.19	$	1.50	0.0341
200,000	02/28/2018	4.33	$	0.25	0.0352
500,000	05/02/2018	4.50	$	1.50	0.0916
3,325,170	05/31/2018	4.58	$	0.20	0.6201
25,000	09/05/2018	4.85	$	0.51	0.0049
187,790	09/20/2018	4.89	$	0.19	0.0374
1,000,000	10/16/2018	4.96	$	0.25	0.2019
250,000	10/31/2018	5.00	$	0.51	0.0509
11,750,000	12/01/2018	5.09	$	0.50	2.4321
125,000	01/01/2019	5.17	$	0.51	0.0263
3,000,000	04/30/2019	5.50	$	0.51	0.6711
25,000	07/01/2019	5.67	$	0.51	0.0058
1,000,000	04/30/2020	6.50	$	1.00	0.2645
25,000	05/05/2020	6.52	$	0.51	0.0066
1,100,000	05/06/2020	6.52	$	0.50	0.2917
25,000	05/31/2020	6.59	$	0.51	0.0067
300,000	12/05/2026	13.10	$	0.51	0.1599
24,579,475					5.1237

All options and warrants issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at October 31, 2013 and 2012 was $2,892,962 and $5,762,442, respectively.

NOTE 15 – NONMONETARY TRANSACTION

During the year ended October 31, 2013, the Company exchanged Samy subscription services for advertising. Barter transactions are recorded at the estimated fair value of the product or service received or the estimated fair value of the service surrendered, whichever is more readily determinable. The Company would otherwise have paid cash for such advertising. For the year ended October 31, 2013, revenues and advertising expenses of $413,121 recorded were related to the barter arrangements.

NOTE 16 – CONCENTRATION

A substantial portion of the Company revenues were related to three customers (76%) in fiscal year 2013 totaling $1,408,624 and two customers in 2012 totaling $418,000. As of October 31, 2013 and 2012, amounts due from these customers included in accounts receivable, both current and non- current was $829,541 and $0, respectively. The loss of one of these significant customers or the failure to attract new customers could have a material adverse effect on our business, results of operations and financial condition.

NOTE 17 – SUBSEQUENT EVENTS

Legal Proceedings

Majid Abai and the Abai Group, Inc v. MobileBits Holding Corporation

On November 5, 2013, Majid Abai and the Abai Group, Inc. “Plaintiffs” served the Company with a summons and a complaint alleging claims for breach of his employment agreements. Plaintiffs seek to recover the sum of approximately $225,689 plus attorney fees, cost and prejudgment interest. On December 5, 2013, the Company filed a motion to dismiss the complaint. The hearing of the demurrer is scheduled for July 24, 2014.

LOPAR, LLC; Michael Zeto and David Rippetoe v. Mobilebits Holding Corporation

On September 30, 2013, LOPAR, LLC (“LOPAR”), Michael Zeto (“Zeto”) and David Rippetoe (“Rippetoe”)(collectively the “Proximus Plaintiffs”) filed an action with the Superior court of Fulton County, Georgia (the “Georgia Court”), C.A. File No. 2013-CV-237131 (the “Civil Action”).

Aixum Tec AG bankruptcy filing

On December 17, 2013, Aixum filed for bankruptcy in Liechtenstein. Creditors have until February 10, 2014 to make a payment of 15,000 CHF (Approximately 16,690 USD) to file their claim with the court and have a receiver appointed to distribute any remaining net assets. As of February 6, 2014, we are awaiting a final decision from the court.

Sales of Common Stock

During the period from November 1, 2013 to February 6, 2014, the Company sold 9,951,000 shares of common stock for total cash proceeds of $690,400. These shares have not been issued as of January 31, 2014. The Company also issued 1,246,000 common shares for cash proceeds of $199,000 received in the prior period. The $184,000 of cash proceeds were included in stock payable as of October 31, 2013.

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, 2013. 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, 2013, 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 fiscal year 2013 has continued 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 Since

Walter Kostiuk	47	President, Chief Strategy Officer, Director (Chairman)	March 2009
James Burk	61	Chief Financial Officer	May 2012
Matthew Mountain	40	Director	December 2011
Ian Lambert	68	Director	December 2011
Greg Goldberg	51	Director	April 2012
Glenda Glover	51	Director	April 2012

Walter Kostiuk, President, Chief Strategy Officer, and Chairman of the Board of Directors

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 a 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.

James Burk, Chief Financial Officer

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 his 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, Director

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, Director

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, Director

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, Director

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

The registrant has standing Audit, Nominating and Compensation Committees of the Board of Directors. We have not formed a corporate governance committee as of the filing of this Annual Report. However, we intend to implement a comprehensive corporate governance program, including establishing a Corporate Governance Committee. The Company adopted a Code of Ethics policy in December 2012. In reviewing nominations, some members of the Board 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). We have 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. The Board considers candidates recommended by security holders, and by security holders in submitting such recommendations. There are no specific, minimum qualifications that the Board of Directors believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background. The Board’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 Board evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board.

The Compensation Committee, with three independent members, is responsible for the approval and implementation of the Company’s compensation plans and benefit programs.

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, 2013, 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, 2013 and 2012 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(1)	2013	$	160,217			$	12,527
Walter Kostiuk(1)	2012	$	192,500		-	$	10,536

Majid Abai(2)	2013	$
Majid Abai(2)	2012	$	271,689				7,211

Andrew Marshall(3)	2013	$	91,674
Andrew Marshall(3)	2012	$	15,833

James Burk(4)	2013	$	126,173			$	12,737
James Burk(4)	2012	$	95,000			$	2,003

(1)

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.

(2)	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.

(3)	Mr. Marshall was appointed COO on October 1, 2012 and resigned on May 15, 2013.

(4)	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(1)	2013		-0-	$	1,004,793		-0-		-0-
Walter Kostiuk(1)	2012		-0-	$	2,849,483		-0-		-0-

Majid Abai(2)	2012		-0-	$			-0-		-0-

Andrew Marshall(3)	2013		-0-	$	89,580		-0-		-0-
Andrew Marshall(3)	2012		-0-		17,258		-0-		-0-

James Burk(4)	2013		-0-	$	165,556		-0-		-0-
James Burk(4)	2012		-0-		82,788		-0-		-0-

(1)	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. Unvested options of Walter Kostiuk are 2,437,500.
(2)	Mr. Abai resigned as CEO on August 1, 2012.
(3)	Mr. Marshall was appointed COO on October 1, 2012 and resigned on May 15, 2013. As of October 31, 2013 his 1,250,000 of options were forfeited.
(4)	Mr. Burk was hired as CFO on May 1, 2012. Unvested options of James Burk are 1,000,000.

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, 2013. 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. 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. 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. In October 2013, the Board agreed to issue Mr. Mountain and Mr. Lambert 250,000 options of the Company’s common stock at an exercise price of $0.25, vested immediately, for their continuing service as board members. 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. 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. In October 2013, the Board agreed to issue Ms. Glover and Mr. Goldberg 250,000 options of the Company’s common stock at an exercise price of $0.25, vested immediately, for their continuing service as board members. 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:

a) 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;

b) 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;

c) 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

d) Increase by a minimum of 5% annually. Mr. Kostiuk and the Company have not yet implemented the minimum salary increase.

●	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 28, 2014, 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 75,652,709 shares of our common stock issued and outstanding as of January 28, 2014. Unless otherwise indicated, the address of each person listed is c/o MobileBits Holdings Corporation, 5901 N. Honore Ave, Suite 110, Sarasota, Florida 34243.

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		21,416,664		28.3	%
Common	Farid Moradi (3)(4)		12,470,159		16.5	%
Common	Harvard Young, Chief Technology Officer (4)		9,355,087		12.4	%
Common	Nouriel Yazdinian (4)(5)		5,483,808		7.2	%
Common	Greg Goldberg (6)		1,500,000		2.0	%
Common	James Burk		700,000		0.9	%
Common	Ian Lambert		591,667		0.8	%
Common	Glenda Glover		400,000		0.5	%
Common	Matthew Mountain		400,000		0.5	%
	All directors and officers as a group (4 persons) (4)		34,778,028		46.0	%

(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 75,652,709 shares of our common stock issued and outstanding as of January 31, 2014, 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, 2012 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.

(6)	Includes 1,100,000 shares of common stock owned by his wife Mary Goldberg.

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

Transactions with Related Persons.

As of October 31, 2013, the Company had outstanding payables to related parties of the Company in the amount of $616,499. $228,000 was owed to The Abai Group, Inc. for the services performed and Majid Abai $350 for accrued interest; $164,381 was owed to Walter Kostiuk primarily for commissions on sale of the Company’s common stock and unpaid salary and $223,768 was owed to Andrew Marshall for unpaid salary and expenses. During the year ended October 31, 2013, the Company paid Walter Kostiuk $25,000 related to a Market Capitalization Bonus pursuant to his employment agreement. In January 2013, the Company engaged Andrea Kostiuk, wife of Walter Kostiuk, as an independent contractor to provide marketing support services. The contract provides for her to receive $2,240 per month which was increased to $2,800 as of September 1, 2013. For the year ended October 31, 2013, her fees totaled $21,280 and there were no unpaid fees as of October 31, 2013.

Annual salary increases by a minimum of 5% annually. Mr. Kostiuk and the Company have not yet implemented the minimum salary increase.

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

The Company has expensed $160,217 in wages and paid $10,527 for health care benefits in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2013.

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 $192,500 in wages and $10,536 in automobile expense and health care benefits in connection with Mr. Kostiuk’s employment agreement for the year ended October 31, 2012.

In January 2013, the Company engaged Andrea Kostiuk, wife of Walter Kostiuk, as an independent contractor to provide marketing support services. The contract provides for her to receive $2,240 per month which was increased to $2,800 as of September 1, 2013. For the year ended October 31, 2013, her fees totaled $21,280 and there were no unpaid fees as of October 31, 2013.

Previously, 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.

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 $95,704 was expensed during the year ended October 31, 2012. The options were forfeited as of October 31, 2012 related to Ms. Kostiuk’s termination. 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.

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.

Parents of Issuer. The Company has no parents.

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

Director Independence

Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

·	the director is, or at any time during the past three years was, an employee of the company;

the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

·	a family member of the director is, or at any time during the past three years was, an executive officer of the company;

the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

We have 4 independent directors.

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, 2013 and 2012 were $88,700 and $102,687, respectively.

Audit-Related Fees

For the years ended October 31, 2013 and 2012, 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.
14.1		Code of Ethics
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, 2013 (furnished in XBRL). †

101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

† 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 7, 2014	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 7, 2014, 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/ 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.)

5901 N. Honore Ave. Suite 110 Sarasota, FL.		91214
(Address of principal executive offices)		(Zip Code)

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	45
Item 9A.	Controls and Procedures	45
Item 9B.	Other Information	45

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	46
Item 11.	Executive Compensation	51
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
Item 13.	Certain Relationships and Related Transactions, and Director Independence	55
Item 14.	Principal Accountant Fees and Services	58

Part IV
Item 15.	Exhibits, Financial Statement Schedules	59
	Signatures	60