10-K 1 f10k_063015.htm FORM 10-K f10k_063015.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
 
Mark One
 
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended March 31, 2015
 
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______ to _______
 
Commission File No. 333-181747
 
MOBETIZE CORP.
(Exact name of registrant as specified in its charter)
 
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
 
7299
(Primary Standard Industrial Classification Number)
99-0373704
 (IRS Employer Identification Number)
 
8150 Birch Bay Square Street, Suite 205, Blaine WA 98230
(Address of principal executive offices)
 
Issuer’s telephone number: (206) 347-4515
 
Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]   No [    ]
 
Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
 
Large accelerated filer
  
Accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
 
The aggregate market value of the shares of common stock outstanding other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for the registrant's common stock on March 31, 2015 was $5,874,333.
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:  As at March 31, 2015, there were 30,185,505 shares of the issuer's $0.001 par value common stock issued and outstanding
 
 
 

 
TABLE OF CONTENTS
 
 
 
 
2

 
Item 1.    Business
 
FORWARD LOOKING STATEMENTS
 
This annual report contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
 
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our audited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars (US$) and all references to "common shares" refer to the common shares in our capital stock.
 
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Mobetize Corp., unless otherwise indicated.
 
Corporate Background
 
We were incorporated in the State of Nevada on February 23, 2012. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. Our administrative office is located at 8150 Birch Bay Square Street, Suite 205, Blaine WA 98230. Our fiscal year end is March 31.
 
Our original business was to provide service to international students who want to study in Canada. We did not generate any revenues and our principal business activities consisted of creating a business plan and entering into a Referral Agreement dated May 7, 2012 with Novy Mir, Ltd., an independent contractor who was to refer international students to us.
 
Our business plan was to help international students enroll in appropriate universities, institutes, colleges or schools in Canada. We also had planned to help students obtain student visas and find accommodations in the cities of study. Our service was to start from preliminary consultation and would end when the client is enrolled to the program, entered to the destination country, and accommodated at desired place.
 
 
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Unfortunately, we were not able to raise sufficient capital to fund our business development and consequently our management began considering alternative strategies, such as business combinations or acquisitions to create value for our shareholders.
 
On July 9, 2013, we entered into an asset purchase agreement with Mobetize Inc. (“Priveco”) (formerly Telupay Inc.), a privately held Nevada corporation. Pursuant to the terms of the agreement, we agreed to acquire substantially all the assets of Priveco in exchange for the issuance by our company of 22,003,000 shares of our common stock to Priveco.
 
In accordance with board approval, we filed a Certificate of Change dated August 8, 2013 with the Nevada Secretary of State to give effect to a forward split of our authorized, issued and outstanding shares of common stock on a 7 new for 1 old basis, such that our authorized capital will be increased from 75,000,000 to 525,000,000 shares of common stock and, correspondingly, our issued and outstanding shares of common stock was increased from 3,290,000 to 23,030,000 common shares, all with a par value of $0.001.
 
Further, effective August 13, 2013, in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), our company changed its name from “Slavia, Corp.” to “Mobetize Corp.”.  The name change and forward split became effective with the Over-the-Counter Bulletin Board at the opening of trading on August 14, 2013 under the symbol SAVID”.  On October 1, 2013 our stock symbol changed from “SAVID” to “MPAY” to better reflect the new name of our company.
 
In connection with the asset purchase and sale agreement, our President, Mr. Fowler agreed to return for cancellation 18,400,000 shares of our common stock on September 4, 2013. Concurrently, we closed the asset purchase and sale by issuing the required 22,003,000 common shares to Priveco.
 
On September 16, 2013, our company issued 315,000 common shares as compensation for an on-going consulting agreement with our company.
 
On October 7, 2013 our company issued 1,050,000 shares in a private placement at $0.50 per share for gross funds of $525,000. $52,500 of financing fees were charged on this transaction.
 
On December 15, 2013 our company issued 15,000 common shares for prepaid marketing services with a fair value of $19,500. As of March 31, 2015 the full amount of these services have been amortized.
 
On December 31, 2013 our company issued 1,200 common shares in payment of consultancy services received with a fair market value of $1,500.
 
On March 14, 2014 our company issued 200,000 common shares at a conversion price of $0.20 a share upon conversion of the outstanding notes payable to equity.
 
On March 26, 2014 our company entered in to a debt for equity settlement agreement with the President of our company. Under the terms of this agreement, our company settled debts of $112,500 owed to the President of our company in return for the issuance of 150,000 common shares. This transaction was valued at the prevailing market price of $1.35 per share, so our company incurred an interest charge of $90,000 as a result of this transaction.
 
On April 4, 2014 our company issued 1,334 common shares in settlement of a supplier liability valued at $1,800.
 
On June 25, 2014 the Company closed a private placement under which it sold 1,122,831 investment units for proceeds of $783,623, net of financing fees of $58,500 paid in cash. Each investment unit consisted of one common share of the Company’s stock and one half-warrant. The warrants are exercisable at $1.00 per share and were initially valid for two years from the date of issue. 133,000 financing warrants were issued on the same terms as those in the investment units. The financing warrants were valued at $80,752 using the Black Scholes method, which included the dividend yield of nil, risk-free interest rate of 0.47%, expected volatility of 111.0%, and expected term of 4 years. The full value of financing warrants was expensed to stock based compensation.

 
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On March 17, 2015, the term of both the financing and investment unit warrants was extended from 2 to 4 years. No additional compensation expense relating to the 133,000 financing warrants was recorded as a result of the term extension.

On August 18, 2014 the Company entered into agreement with a supplier to provide consultancy services in exchange for shares. During the twelve months period ending March 31, 2015 the value of services received was $10,500 resulting in 8,537 shares issued to the supplier.

On September 8, 2014 the Company issued 9,990 common shares in exchange for services in the amount of $12,087.

On December 11, 2014 the Company closed a private placement under which it sold 490,000 investment units for proceeds of $490,000. Each investment unit consisted of one common share of the Company’s stock and one half-warrant. The warrants are exercisable at $1.25 per share and were initially valid for three years from the date of issue. No financing fees were payable in cash associated with this private placement. 60,000 financing warrants were issued on the same terms as those in the investment units. The financing warrants were valued at $33,448 using the Black Scholes method, which included the dividend yield of nil, risk-free interest rate of 1.10%, expected volatility of 96.4%, and expected term of 3 years. The full value of financing warrants was expensed to stock based compensation.

On March 17, 2015, the term of both the financing and investment unit warrants was extended from 3 to 4 years. No additional compensation expense relating to the 60,000 financing warrants was recorded as a result of the term extension.

On December 15, 2014, the Company entered into agreement with an Advisor to provide advisory board services in exchange for shares. During the twelve months period ending March 31, 2015 the value of services received was $11,303. At March 31, 2015, $11,303 in share subscriptions payable was due for advisory board services.

On March 4, 2015, the Company issued 25,280 shares at a conversion price of $0.20 per share to convert interest payable on notes payable to equity.

On March 17, 2015, the Company repriced 490,000 investment units from December 11, 2014 private placement from $1.00 per unit to $0.75 per unit resulting in additional 163,333 investment units issued to the private placement shareholders. Each investment unit consisted of one common share of the Company’s stock and one half-warrant. The warrants are exercisable at $1.25 per share and are valid for four years from the date of issue.

At March 31, 2015, the Company owed $3,000 in share subscriptions payable for consulting services provided.
 
 
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Business Overview
 
Our original business was to provide service to international students who want to study in Canada. We did not generate any revenues and our principal business activities consisted of creating a business plan.  Our business plan was to help international students enrol in appropriate universities, institutes, colleges or schools in Canada. We also had planned to help students obtain student visas and find accommodations in the cities of study. Our service was to start from preliminary consultation and would end when the client is enrolled to the program, entered to the destination country, and accommodated at desired place.
 
Unfortunately, we were not able to raise sufficient capital to fund our business development and consequently our management began considering alternative strategies, such as business combinations or acquisitions to create value for our shareholders.
 
As such, we purchased all or substantially all of the business assets of Mobetize Inc. on September 4, 2013 and our new business offers us to become a leading online and mobile commerce platform provider for telecom operators, payment service providers, and banks. Initially, we are focussed on providing solutions to telcos in North America that allow them to quickly and easily offer a full suite of Mobile Financial Services (“MFS”) to their customers. Our unique ‘freemium’ business model removes the cost barriers for telcos to adopt MFS and positions us at the leading edge of this exciting market development. Our integrated platform is an innovative product tailored to implement bill management, payments, airtime recharge, domestic money transfers, international remittances, and various other Mobile Financial Services technologies all on a mobile device.
 
Telecom Products and Solutions:

Adoption of the smart phone has created an unprecedented increase in the use of the mobile devices for financial transactions.  This paradigm is changing the way people receive financial services across the globe. MFS are part of a long-term strategy for telecom operators worldwide to enhance their relationship with their subscribers and increase Average Revenue Per User (“ARPU”). For telcos with predominantly prepaid customer bases, we assist them in significantly increasing their enterprise value, as we effectively convert pre-paid subscribers in to post-paid subscribers. We have commenced operations with our first products designed and ready for sale and/or implementation.

smartWallet:

Our smartWallet solution is provided via mobile web and web OS Apple and Android app to the desktop, iPad, or mobile phone of our users.

The smartWallet is the core of our mobile financial services offerings and allows users to load funds in to their mobile wallet and access global services such as prepaid top-ups for themselves or for gifts for family members, Person 2 Person money transfers, international money transfer remittances, bill payments and bill management, with other financial services being added.

Users can load funds in to their smartWallet from their bank account (ACH or real time ACH), via credit or prepaid debit card, by electronic remote check deposit, and cash load at Green Dot affiliated locations across the US.

smartWallet can be integrated with a billing system to allow to offer a mobile ‘my account’ as part of a mobile wallet with rich features including:

 
·
Registration - Sign in and sign up process capabilities based on current systems.
 
·
User Account Settings - Allows the user to update their information, edit/add and save different payment methods while changing password and saving account numbers to favorites for fast access.
 
·
View Balance - Subscribers are able to track their balances by viewing their real-time balance.
 
·
Add and Save Services -Create, save, and edit a list of Favorites for easy and fast access to all transactions.
 
·
Favorites - Create, save, and edit a list of Favorite contacts, remittances, airtime transactions and more for convenience and accessibility.
 
·
Stored Payment Methods - Safely store and edit a list of preferred method of payments to load the smartWallet and increase convenience and accessibility including credit cards, debit cards, and ACH.
 
 
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smartRemit:

A fully integrated mobile platform dedicated to providing the most convenient, efficient, scalable, and inexpensive global money transfer solution for your subscriber.

It allows customers to send funds person to person via multiple convenient ways; bank account deposits, pick-up at agent location, and home delivery. Users can send funds in one currency and have the beneficiary receive in another. Cash delivery options include:

 
·
Cash to cash
 
·
Cash to account
 
·
Door service
 
·
Mobile transfers
 
smartRemit is accessed via the smartWallet and provides users with 24/7 mobile money transfer remittance capabilities via the mobile web to initially 39 countries worldwide, with 50,000+ agent locations. We anticipate this reach to grow during the remainder of 2015 with money transfer capability to 150 countries with 170,000 payout agents and delivery to any bank accounts in over 600 Banks worldwide.

smartCharge:

smartCharge enables real time prepaid mobile top-ups to any mobile phone and recharge transfers to over 250 partner mobile network operators in 90 countries, reaching 3.6 billion prepaid users. Subscribers can offer top-ups as a gift to any mobile phone globally.


smartBill:

smartBill allows users to pay bills to approximately 14,000 companies within the US, including utilities, mobile phone providers and other. A full list of the billers currently supported via smartBill is available on request or via the smartWallet application.

smartTel:

Through the integration with a billing system, users can access their ‘my account’ features through the Mobetize smartTel application.

smartCard:

Now with our agreement with DCR Strategies users are able to request (during sign-up or at any time via the Mobetize app) a prepaid MasterCard or Visa card, which is linked to their smartWallet. Users can move any cleared funds from their smartWallet on to the MasterCard, allowing them to make purchases both online and in retail locations, plus withdraw cash from ATMs and Green Dot affiliated locations across the US that includes Walmart, CVS, RiteAid, Walgreens, and 7 Eleven Stores.

 
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Users can track the balance and see recent transactions via the Mobetize smartWallet and can easily move money back to the smartWallet via the Mobetize App. The smartCard MasterCard has the same white-label branding as the smartWallet for a seamless user experience.

CRM and Reporting Tool:

Mobetize also provides an online access to its CRM and reporting system.

The reporting system can be configured so that different levels within a customer’s team can see and access different levels of information, through user access rights and logons. The reporting tool provides real time data, at different levels of detail, allowing to track such metrics as:

 
·
Transactions $ values
 
·
Transaction volume-by type of transaction
 
·
Number of registered users
 
·
Number of active users
 
·
Geographic splits
 
·
Other KPIs as defined
 
The web based CRM tool allows staff to provide Tier 1 customer support for the smartWallet solutions. Through this web-tool the staff can access and update customer data such as:
 
 
·
User information (name, address, etc.)
 
·
User transaction history
 
·
User wallet balance
 
·
Issue refunds of balances in wallet
 
Latest Developments and Customers:

On September 3, 2014, we were selected by DCR Strategies Inc. – TruCash to be the core mobile wallet and mobile financial services (MFS) provider, which has been fully integrated to the TruCash prepaid card mobile application.

We have extended our existing partnership with DCR to offer Mobetize mobile financial services and products to the many millions of existing DCR prepaid card users in North America.

On September 8, 2014 we entered into an agreement with Impact Telecom, a global provider of voice, messaging, and data services, to offer the Mobetize mobile wallet platform to deliver international money transfer, mobile airtime top-up, and bill payments to Impact Telecom’s extensive customer base in the United States and Canada.

U.S. and Canada currently remit over $100 billion annually, and most of that money is transferred utilizing traditional storefront methods. The Mobetize mobile wallet platform improves reach, convenience, and low cost to customers by digitizing these financial transactions via mobile devices.

We accelerate the migration of traditional e-commerce to mobile payment. Our smart solutions platform provides telecommunications operators and payment gateways unparalleled mobile functionality in bill management, payments, recharge, domestic money transfers, international remittances, point-of-sale functionality, and numerous other related technologies.

Our wallet platform—designed to enable telecommunications operators to increase customer retention, maximize average revenue per user, and minimize churn—provides the market’s smoothest and most cost-effective transition of existing e-commerce to mobile.

 
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We have now completed the production version of Mobile Web application 1.0.  This consists of smartCard, Paypal, bank ACH and credit card processing as cash-in options.  Cash-out options include smartCharge, smartBill, smartcard card-to-card transfers, and smartCard for ATM withdrawals and POS purchases. The CRM, reporting, and incident management tools have also been completed.

We will be releasing version 2.0 of our platform on July 15, 2015.  This release will cover smartRemit, additional reporting tools, and multi-language support. Subsequent release anticipated to take place in August 2015 will include desktop application while native applications for iOS and Android will be released in the fall of 2015.

On December 22, 2014 Mr. Kenneth F Douglas joined Mobetize Corp. as a strategic advisor to assist the Company's expansion of mobile financial services, partnerships, and M&A in North America and Europe.

Mr. Douglas is currently a Senior VP Business and Partnership Development in SEQR USA, Inc. He is responsible for building the US operations for SEQR USA, Inc., (www.seqr.com) a subsidiary of Seamless Distribution AB (www.seamless.se) based in Stockholm Sweden, a global mobile payment company providing prepaid top-up and mobile payments in 30 countries with over 3.1 billion transactions annually.

Mr. Douglas speaks regularly as an Industry Leader for Pacific Crest Securities MOSAIC group as an SME (Subject Matter Expert) for the payment industry, payments, emerging/alternative payments, mobile payments and technology.

Previously, Mr. Douglas served as Executive VP Partnerships and Alliances at Zipmark, Executive VP Partnerships and Alliances at Adility (acquired by inComm), Executive VP of Social Gaming and Commerce at Twitpay (acquired by Acculynk), and VP and General Manager of Merchant Services at Revolution Money (acquired by American Express) where he was responsible for building the RevolutionCard Network(TM) with over 700,000 accepting merchants and 300,000 card holders/members.

Currently, Mr. Douglas sits on the Advisory Board for a number of fintech companies in multiple stages of growth -- ShelfBucks, ShopMyNeighborhood(TM), EyeBuyTV, OrderIt, RedCritter, BRANDedTray, and Zipmark.

On March 26, 2015, Cost Master Communications, a global call center solutions provider to the telecom industry selected us for its global Payroll Card Solution. This solution is now available for immediate roll out to Cost Master and their employees. This is an extension of the existing program that Mobetize recently launched with Visa and Mastercard branded Prepaid Cards, Debit Cards, Loyalty Products, Payroll and Government Solutions.

On April 20, 2015, CostMaster Communications successfully completed its first payroll using the Mobetize Global Payroll Card Solution. This solution is now deployed by CostMaster to their employees. Our Payroll Card Solution is available for other employers in North America and Canada that have similar needs to CostMaster or have significant underbanked employees that require the Payroll card to access online and ATM services that are combined with Mobetize mobile wallet. Employees can quickly monitor their transactions and use additional financial services, like bill payment, prepaid airtime recharge, domestic and international money transfer conveniently via their mobile device.

On April 29, 2015, we entered into an agreement with TruConnect, who is one of the nation's fastest growing providers of no-contract wireless voice, text and data service, allowing hundreds of thousands of TruConnect's customers to utilize alternative financial services (AFS) via their mobile devices.

TruConnect customers can now use the TruConnect branded app from Mobetize with their capable mobile devices and fund their accounts at no charge with direct deposit paychecks, government checks or any other type of checks. Customers can also fund their accounts using PayPal, bank ACH or credit/debit cards. Customers can pay bills, add airtime and transfer money directly from their mobile devices and smart phones on a "freemium" basis combined with a prepaid MasterCard. In addition, Mobetize will be supplying all TruConnect independent agents with a mobile solution to have earned commissions directly deposited to each agents TruConnect smartWallet. TruConnect customers are set to go live on July 15, 2015.

According to FDIC there are nearly 70 million adults in the US paying on average service and NSF fees of $70 per month for alternative and banked financial services. With Mobetize connecting users to these financial services digitally, not only do the users save time with the mobile convenience but importantly users can reduce their current monthly retail financial fees by over 75%.

 
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We now enable mobile and telecom operators to offer an alternative low cost money remittance service. Mobetize has completed its contracts, technology integrations, and compliance globally to incorporate the international remittance solutions and our networks with other financial services to be offered by existing and new telecom distribution partners. This offering is a key driver for our telecom operator partners to launch mobile money solutions and mobile wallets for their millions of current subscribers.

We simplify the digital money transfer process for telecom customers in the US and Canada who regularly send money to their family members in places like Mexico, Philippines, and India. Telecom subscribers can now easily transfer funds securely via proven Money Remittance networks that operate in 150 countries, using 170,000 agent locations and connections with more than 600 banks to deliver funds.

Our vision is to be the go-to solution for telecom operators for mobile money services via its unique financial services aggregation platform. Unlike most Money Transmitter Operators and financial service providers, the Mobetize team has a unique mix of telecom billing, payments and financial services experts. Mobetize allows its telecom operators to brand the service and pick and choose the financial services they want to offer to their customer base. The mobile money solution can be launched to customers through (APIs) application program interface, or as a stand-alone system.

The remittance market is an enormous business within Financial Services. The World Bank estimates that by 2016 over $700 Billion will be sent overseas by family and friends and about $100 Billion is now sent just from the U.S. and Canada annually. The core focus of Mobetize has been to ensure it has the technology, compliance and geographic footprint to enable the cash payout capabilities needed. Mobetize is now well positioned to offer their network to the telecom operators and messaging apps like Facebook (Whatsapp), Skype and others who are uniquely positioned to participate in leveraging this lucrative and disruptive technology model.
 
 
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Markets and Market Penetration
 
Market Size
 
According to the World Bank, with 215 million people living outside their country of origin, migrants would form the 5th largest country.  Additionally, the global mobile transaction market is expected to be $617 billion with 448 million users by 2016.
 
With smartCharge, we can potentially reach the 3.6 billion prepaid mobile phone users of the 250 partner mobile network operators in 90 countries, which would include 70-100% coverage in emerging countries, 50 billion air-time top ups transacted annually, and $20 billion in commission fees (estimated total market $100b). Marketing and engagement integrate sms messaging alerts and create mobile campaigns and promotions to increase revenues and conversions.
 
Our potential smartRemit partner network is spread across 150 countries with over 170,000 agent locations.
 
Within the USA, according to the 2011 FDIC National Survey, 20.1% of households were deemed underserved or not served by the current banking infrastructure and we believe that these individuals would be an ideal target market for the Mobetize smartWallet.
 
Further, Priveco entered into a partnership agreement with Alligato and Optimal Payments PLC (“Optimal”) on August 11, 2011.  Pursuant to this partnership agreement, Optimal has been provided with a license of Priveco’s online and mobile commerce platform provider for payment service providers and banks.  As part of the asset and purchase agreement that closed on September 4, 2013, all title, interests and rights of Priveco under the partnership agreement were assigned to us.
 
Optimal Payments is a global provider of online and mobile payment processing services to thousands of merchants and millions of consumers, who move billions of US dollars per year securely in and through over 200 countries and territories with over 100 types of payment and multi-currency options. Optimal is publicly traded company (LSE: OPAY) with approximately 350 employees and maintains offices and data centres in both North America and the UK. Optimal’s payments solution was chosen by Espacejeux.com to provide online payments processing, fraud and risk management services for its online gaming activities.  Espacejeux.com is run by Société d’exploitation des loteries et courses du Québec (“Loto-Québec”).
 
In early 2012 and in connection with the partnership agreement that was assigned to us, Optimal introduced our mobile-enabled payments solution to enable Loto Québec’s customers to play – and pay – while on the move. Our mobile-enabled payment solution allows Loto Québec’s users to top up their accounts via a mobile device.
 
There is a large market for our remittance product and the market has only grown.  Remittances are playing an increasingly large role in the economies of many countries, and we plan to focus our activities in the markets which present the largest opportunities.
 
Statistics on the global remittance market by country:
 
Top 10 Send Countries US Billion Dollars:                Top 10 Receiving Countries US Billion Dollars:
 
 
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Market Segments and Competitive Landscape
 
We are subject to all the typical global remittance market barriers to entry which include:
 
 
Infrastructure;
 
Regulations;
 
Licenses;
 
Security;
 
Liquidity of the agents;
 
Multi-currency settlement; and
 
Cash in & cash out networks.
 
Security and compliance are first and foremost. The customers are ensured the safe handling of cardholder information at every step of the way. What makes our technology a highly reliable and secure platform is that it is supported by the PCI Data Security Standard. The PCI Security Standards Council offers this comprehensive standard to ensure the highest security during card data process. The context includes prevention, detection, and appropriate reaction to security incidents.
 
We also fully support OWASP, an international open community dedicated to maintaining the safety and security of software and applications.  Our systems are “bank-grade” utilizing recent industry encryption technologies.
 
Intellectual Property
 
We assert common law trademark rights for the following names in the field of mobile commerce:
 
 
·
smartBill;
 
·
smartRemit;
 
·
smartCharge;
 
·
smartWallet;
 
·
mPOS;
 
·
mPay; and
 
·
mWallet.
 
Common law trademark rights are enforceable in provincial courts in Canada, and may be asserted against those who appropriate, dilute or damage the goodwill of our business by using the same or similar trade-names or trademarks. Unlike statutory trademark rights, which are acquired by registration and provide nation-wide protection, common law trademark rights are acquired automatically and provide protection only in the jurisdiction where a business uses a name or logo in commerce. We intend to rely on common law trademark protection until such time as we deem it economical for our business to register our trade-names or trademarks.
 
 
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We have not registered for the protection of any rights under trademark, patent, or copyright in any jurisdiction.
 
Our logo:
Our internet site is located at www.mobetize.com.
 
Government Regulation
 
Our operations are subject to numerous federal, state and local laws and regulations in the United States and Canada in areas such as consumer protection, government contracts, trade, environmental protection, labor and employment, tax, licensing and others. For example, in the U.S., most states have consumer protection laws and regulations directed specifically toward our industry. In certain jurisdictions, we may have to obtain licenses or permits in order to comply with standards governing consumer protection.
 
The mobile commerce industry is also subject to requirements, codes and standards imposed by various insurance, approval and listing and standards organizations. Depending upon the type of commerce product and requirements of the applicable local governmental jurisdiction, adherence to the requirements, codes and standards of such organizations is mandatory in some instances and voluntary in others.
 
Amount Spent on Research and Development During the Last Two Fiscal Years
 
Our company has spent $327,057 and $267,209 on research and development activities during the years ended March 31, 2015 and 2014 respectively. This work has been to build and enhance the Mobetize core platform which will allow us to offer smartWallet services to telcos as well as other services as previously outlined.
 
Employees and Employment Agreements
 
Other than our independent contractors and directors, we now have 7 full time employees as of March 31, 2015.
 
Enforceability of Civil Liabilities Against Foreign Persons
 
It may be difficult to bring and enforce suits against our management in the United States, as they are citizens of Canada. Our company, however, is incorporated in the State of Nevada. Cash and our material contracts are our only assets.
 
Item 1A.                 Risk Factors
 
An investment in our common stock involves a high degree of risk.  If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
 
If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
 
 
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RISKS RELATED TO OUR BUSINESS
 
The statements contained in or incorporated into this annual report on Form 10-K that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements.  If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
 
We have a limited operating history with significant losses and expect losses to continue for the foreseeable future.
 
We have yet to establish any history of profitable operations and, as of March 31, 2015 we have an accumulated deficit of $4,255,516. We have not yet generated significant recurring revenues and may not do so in the near future.  Our profitability will require the successful commercialization and sales of our products and planned products. We may not be able to successfully achieve any of these requirements or ever become profitable.
 
There is doubt about our ability to continue as a going concern due to recurring losses from operations, accumulated deficit and insufficient cash resources to meet our business objectives, all of which means that we may not be able to continue operations.
 
Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with the financial statements for the year ended March 31, 2015 with respect to our ability to continue as a going concern. As discussed in Note 1 to the financial statements attached in section 8, we have generated operating losses since inception, and our cash resources may be insufficient to meet planned business objectives, which together raises doubt about our ability to continue as a going concern.
 
Our inability to complete our future research and development and engineering projects in a timely manner could have a material adverse effect of our results of operations, financial condition and cash flows.
 
If our research and development projects are not completed in a timely fashion we could experience:
 
 
·
substantial additional cost to obtain a marketable product;
 
·
additional competition resulting from competitors in the surveillance and facial recognition market; and
 
·
delay in obtaining future inflow of cash from financing or partnership activities.
 
We could face intense competition, which could result in lower revenues and higher research and development expenditures and could adversely affect our results of operations.
 
Unless we keep pace with changing technologies, we could lose existing customers and fail to win new customers. In order to compete effectively in providing mobile commerce solutions for telecom operators and payment service providers, we must continually design, develop and market new and enhanced technologies. Our future success will depend, in part, upon our ability to address the changing and sophisticated needs of the marketplace.  Mobile commerce solution technologies have not achieved widespread commercial acceptance and our strategy of expanding our mobile commerce solution business could adversely affect our business operations and financial condition.
 
The market for our solutions is still developing and if the industry adopts test criteria that are different from our internal test criteria our competitive position would be negatively affected.  Our plan to pursue sales in international markets may be limited by risks related to conditions in such markets.
 
 
14

 
Significant parts of our company’s business plan are dependent on business relationships with various parties
 
We rely on several key suppliers to provide the underlying transactional completion and compliance infrastructure necessary for us to offer our products for sale in the market. If these suppliers were to cease providing services to us, we would be forced to seek alternative options which could delay or prohibit our execution of our current business plan.
 
We also expect to rely in part upon distribution partners to sell and install our products, and we may be adversely affected if those parties do not actively promote their products or pursue installations that use our software.  Further, if our software is not timely delivered or does not perform as promised, we could experience increased costs, lower margins, liquidated damage payment obligations and reputational harm.
 
We are governed by three people, Stephen Fowler, Malek Ladki and Ajay Hans, which may lead to faulty corporate governance.
 
We have only three people, Stephen Fowler, Malek Ladki and Ajay Hans, serving as Directors who make all the decisions regarding corporate governance and they also have full control over matters that require Board of Directors approval.  This includes their respective (executive) compensations, accounting overview, related party transactions and so on. This may introduce conflicts of interest and prevent the segregation of executive duties from those that require Board of Directors approval. This may lead to ineffective disclosure and accounting controls.  Noncompliance with laws and regulations may result in fines and penalties. They will have the ability to take any action as they review themselves and approve them.  They will exercise control over all matters requiring shareholder approval including significant corporate transactions. We have been implementing various corporate governance measures and controls, however, we have not adopted any independent committees.  Presently Malek Ladki is the only independent Director on the Board.
 
Stephen Fowler and Ajay Hans are also Executive Officers of our company and as such, between themselves they also control the executive functions of our company.
 
We must attract and maintain key personnel or our business will fail.
 
Success depends on the acquisition of key personnel.  We will have to compete with other companies both within and outside the mobile commerce solutions industry to recruit and retain competent employees.  If we cannot maintain qualified employees to meet the needs of our anticipated growth, this could have a material adverse effect on our business and financial condition.
 
We may not be able to secure additional financing to meet our future capital needs due to changes in general economic conditions.
 
We anticipate requiring significant capital to fulfill our contractual obligations (as noted in the audited financial statements), continue development of our planned products to meet market evolution, and execute our business plan, generally.  We may use capital more rapidly than currently anticipated and incur higher operating expenses than currently expected, and we may be required to depend on external financing to satisfy our operating and capital needs.  We may need new or additional financing in the future to conduct our operations or expand our business. Any sustained weakness in the general economic conditions and/or financial markets in the United States or globally could adversely affect our ability to raise capital on favourable terms or at all. From time to time we have relied, and may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and for general corporate purposes. We may be unable to secure debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding. If we do raise funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders would be reduced, and the securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common stock which would result in dilution to our existing stockholders.  If we raise additional funds by issuing debt, we may be subject to debt covenants, which could place limitations on our operations including our ability to declare and pay dividends. Our inability to raise additional funds on a timely basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial condition and results of operations.
 
 
15

 
Our business and operating results could be harmed if we fail to manage our growth or change.
 
Our business may experience periods of rapid change and/or growth that could place significant demands on our personnel and financial resources. To manage possible growth and change, we must continue to try to locate skilled professionals and adequate funds in a timely manner.
 
We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.
 
We have not achieved revenues and have limited significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. We have a limited operating history and must be considered in the development stage. Our success is in part dependent on the successful research and development of our planned products, which cannot be guaranteed. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to complete the research and development of our products and operate on a profitable basis. We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.
 
We are affected by certain law and governmental regulations which could affect international distribution of our products.
 
The digital contents and services that are the actual object of in mobile commerce are regulated by regionally valid legislation, including electronic commerce legislation, privacy protection, and regulations concerning harmful and criminal contents. All these are factors that make the mobile commerce market fragmented.
 
In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (the “FTC”). These activities include the use of commercial e-mails, online advertising and consumer privacy.  Using its authority under Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers’ personal information. As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.
 
Internationally there is the International Consumer Protection and Enforcement Network (“ICPEN”), which was formed in 1991 from an informal network of government customer fair trade organisations. The purpose was stated as being to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding. From this came E-consumer, as an initiative of ICPEN since April 2001. www.econsumer.gov is a portal to report complaints about online and related transactions with foreign companies.
 
There is also Asia Pacific Economic Cooperation (“APEC”) that was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC has an Electronic Commerce Steering Group as well as working on common privacy regulations throughout the APEC region.
 
In addition, future government regulations concerning mobile commerce solutions and payment service issues could have an adverse effect on market acceptance or cause time delays or additional costs to meet requirements.
 
If we are not able to adequately protect our intellectual property, then we may not be able to compete effectively and we may not be profitable.
 
Our commercial success may depend, in part, on obtaining and maintaining patent protection, trade secret protection and regulatory protection of our technologies and product candidates as well as successfully defending third-party challenges to such technologies and candidates. We will be able to protect our technologies and product candidates from use by third parties only to the extent that valid and enforceable patents, trade secrets or regulatory protection cover them and we have exclusive rights to use them. The ability of our licensors, collaborators and suppliers to maintain their patent rights against third-party challenges to their validity, scope or enforceability will also play an important role in determining our future.
 
 
16

 
The copyright and patent positions of software and technology related companies can be highly uncertain and involve complex legal and factual questions that include unresolved principles and issues. No consistent policy regarding the breadth of claims allowed regarding such companies’ patents has emerged to date in the United States, and the patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. Accordingly, we cannot predict with any certainty the range of claims that may be allowed or enforced concerning our patents.
 
We may also rely on trade secrets to protect our technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we seek to protect confidential information, in part, through confidentiality agreements with our consultants and scientific and other advisors, they may unintentionally or wilfully disclose our information to competitors. Enforcing a claim against a third party related to the illegal acquisition and use of trade secrets can be expensive and time consuming, and the outcome is often unpredictable. If we are not able to maintain patent or trade secret protection on our technologies and product candidates, then we may not be able to exclude competitors from developing or marketing competing products, and we may not be able to operate profitability.
 
If we are the subject of an intellectual property infringement claim, the cost of participating in any litigation could cause us to go out of business.
 
There has been, and we believe that there will continue to be, significant litigation and demands for licenses in our industry regarding patent and other intellectual property rights. Although we anticipate having a valid defense to any allegation that our current products, production methods and other activities infringe the valid and enforceable intellectual property rights of any third parties, we cannot be certain that a third party will not challenge our position in the future. Other parties may own patent rights that we might infringe with our products or other activities, and our competitors or other patent holders may assert that our products and the methods we employ are covered by their patents. These parties could bring claims against us that would cause us to incur substantial litigation expenses and, if successful, may require us to pay substantial damages. Some of our potential competitors may be better able to sustain the costs of complex patent litigation, and depending on the circumstances, we could be forced to stop or delay our research, development, manufacturing or sales activities. Any of these costs could cause us to go out of business.
 
We could lose our competitive advantages if we are not able to protect any proprietary technology and intellectual property rights against infringement, and any related litigation could be time-consuming and costly.
 
Our success and ability to compete depends to a significant degree on our proprietary technology and processes incorporated in our products. We have not taken any legally enforceable action to protect our proprietary technology and processes and are treating our algorithms, crucial to the development of our business, as trade secrets. If any of our competitor’s copies or otherwise gains access to our proprietary technology or develops similar technologies independently, we would not be able to compete as effectively.
 
We also consider our trademarks invaluable to our ability to continue to develop and maintain the goodwill and recognition associated with our brand. We have not registered various trademarks in the United States. Any other measures that we may take to protect our intellectual property rights, which presently are based upon a combination of copyright, trade secret and trademark laws, may not be adequate to prevent their unauthorized use.
 
Further, the laws of foreign countries may provide inadequate protection of such intellectual property rights. We may need to bring legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, could result in substantial costs and diversions of resources. In addition, notwithstanding any rights we have secured in our intellectual property, other persons may bring claims against us that we have infringed on their intellectual property rights, including claims based upon the content we license from third parties or claims that our intellectual property right interests are not valid. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill associated with our service marks or require us to make changes to our website or other of our technologies.
 
 
17

 
If we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained.
 
As we proceed with the commercialization of our products and software technology, we expect to experience significant and rapid growth in the scope and complexity of our business. We will need to add staff to market our services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition.
 
Our services may become obsolete and unmarketable if we are unable to respond adequately to rapidly changing technology and customer demands.
 
Our industry is characterized by rapid changes in technology and customer demands. As a result, our products and software may quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, our products and software must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products and software or enhanced versions of existing products. Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new products and software may not be favourably received.
 
Risks Relating to Ownership of Our Securities
 
Our stock price may be volatile, which may result in losses to our shareholders.
 
The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the Over-the-counter Bulletin Board quotation system in which shares of our common stock are listed, have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control:
 
 
·
variations in our operating results;
 
·
changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;
 
·
changes in operating and stock price performance of other companies in our industry;
 
·
additions or departures of key personnel; and
 
·
future sales of our common stock.
 
Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.  
 
 
18

 
Our common shares may become thinly traded and you may be unable to sell at or near ask prices, or at all.
 
Our common stock has only recently been approved for trading on the OTCQB.  As such, we cannot predict the extent to which an active public market for trading our common stock will be sustained. Although the trading volume of our common shares increased significantly recently, it has historically been sporadically or “thinly-traded,” meaning that the number of persons interested in purchasing our common shares at or near bid prices at certain given time may be relatively small or non-existent. Only very recently, beginning on October 8, 2013 have there been any trades in our common stock on the OTCQB.
 
This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stockbrokers, institutional investors and others in the investment community who generate or influence sales volume.  Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
 
The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.
 
Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and mark-ups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behaviour of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
 
We do not anticipate paying any cash dividends to our common shareholders.
 
We presently do not anticipate that we will pay dividends on any of our common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any common stock dividends will be within the discretion of our Board of Directors. We presently intend to retain all earnings after paying the interest for the preferred stock, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends for common stock in the foreseeable future.
 
If we are listed on the Over-the-Counter Market QB quotation system, our common stock is subject to “penny stock” rules, which could negatively impact our liquidity and our shareholders’ ability to sell their shares.
 
Our common stock is currently quoted on the Over-the-counter Markets QB marketplace. We must comply with numerous NASDAQ Marketplace rules in order to maintain the listing of our common stock on the OTCQB. There can be no assurance that we can continue to meet the requirements to maintain the quotation on the OTCQB listing of our common stock. If we are unable to maintain our listing on the OTCQB, the market liquidity of our common stock may be severely limited.
 
 
19

 
Volatility in our common share price may subject us to securities litigation.
 
The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
 
An elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
 
Our Articles of Incorporation contains a specific provision that indemnifies the liability of our directors and officers for monetary damages to our company and shareholders .We are prepared to give such indemnification to our directors and officers to the fullest extent provided for by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders. 
 
Our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.
 
Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.
 
Our business incurs increased costs and compliance risks as a result of being a public company.
 
As a public company, we incur significant legal, accounting, and other expenses that Priveco did not incur as a private company prior to the private placement financing and asset purchase and sale.
 
We incur costs associated with our public company reporting requirements. We also incur costs associated with corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act of 2002, as well as the rules implemented by the SEC and FINRA.  These rules and regulations, in particular Section 404 of the Sarbanes-Oxley Act of 2002, significantly increase our legal and financial compliance costs and make some activities more time-consuming and costly. Like many smaller public companies, we face significant impact from required compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies to evaluate the effectiveness of internal control over financial reporting. The SEC has adopted rules implementing Section 404 for public companies as well as disclosure requirements. Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet reporting obligations or result in management being required to give a qualified assessment of our internal controls over financial reporting. Any such result could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.
 
 
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These rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers.
 
We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
 
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.
 
Because we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company” our financial statements may not be comparable to companies that comply with public company effective dates.
 
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.  This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.  As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.  Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.  Because our financial statements may not be comparable to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our common stock.
 
Item 1B.                 Unresolved Staff Comments
 
As a "smaller reporting company", we are not required to provide the information required by this Item.
 
Item 2.                    Properties
 
Our principal executive office is located at 8150 Birch Bay Square Street, Suite 205, Blaine WA 98230. Our telephone number is (206) 347-4515. We pay rent of approximately $30 per month for the use of this space.
 
 
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Our principal operating office is located at 1150-510 Burrard Street, Vancouver, BC V6C 3A8. Our telephone number is (778) 588-5563. We pay rent of $4,900 for the use of this space.
 
Item 3.                    Legal Proceedings
 
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
 
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
 
Our common stock is not traded on any exchange. Our common stock is quoted on the OTCQB under the trading symbol MPAY”. OTC Markets securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Markets securities transactions are conducted through a telephone and computer network connecting dealers. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
 
The following quotations, obtained from Yahoo Finance, reflect the high and low bids for our common shares based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The first trade of our shares was on October 8, 2013.
 
OTC MARKETS QB1)
Quarter Ended
High
Low
March 31, 2015
$0.98
$0.51
December 31, 2014
$1.30
$0.83
September 30, 2014
$1.34
$1.05
June 30, 2014
$1.35
$1.05
March 31, 2014
$1.50
$1.15
December 31, 2013
$1.85
$1.00
September 30, 2013
n/a
n/a
 
(1)  
Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, markdown or commission, and may not represent actual transactions.
 
As March 31, 2015, we have 50 shareholders of record. As of such date, 30,185,505 shares of our common stock were issued and outstanding.
 
Our transfer agent is Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760; telephone number 727-289-0010; facsimile number 727-289-0069
 
 
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Dividends
 
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock.
 
Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities
 
On June 25, 2014 our company closed a private placement under which it sold 1,122,831 investment units for gross proceeds of approximately $842,123. Each investment unit consisted of one common share of our company’s stock and one half-warrant. The warrants are exercisable at $1.00 per share and are valid for four years from the date of issue. $58,500 financing fees were paid in cash associated with this private placement and 133,000 financing warrants were issued on the same terms as those in the investment units. US resident subscribers in this placement fall under category 2, 3 and 8 exemptions. Canadian resident subscribers to this placement fall under category 1 (j) and (k) exemptions.
 
On December 11, 2014 the Company closed a private placement under which it sold 490,000 investment units for proceeds of $490,000. Each investment unit consisted of one common share of our company’s stock and one half-warrant. The warrants are exercisable at $1.25 per share and are valid for four years from issue. No financing fees were paid in cash associated with this private placement. 60,000 financing warrants were issued on the same terms as those in the investment units. US resident subscribers in this placement fall under category 2, 3 and 8 exemptions. Canadian resident subscribers to this placement fall under category 1 (j) and (k) exemptions.
 
Equity Compensation Plans
 
On January 27, 2014, our directors approved the adoption of our 2014 Stock Option Plan which permits our company to grant up to 3,000,000 options to acquire shares of common stock, to directors, officers, employees, and consultants of our company. We do not have in effect any other compensation plans under which our equity securities are authorized for issuance.
 
Awards under our 2014 Stock Option Plan will vest as determined by our board of directors and as established in stock option agreements to be entered into between our company and each participant receiving an award.
 
Convertible Securities
 
As of March 31, 2015, we have 57,291 stock options outstanding. The stock options have an exercise price of $1.25 per share, were issued in September 1, 2014 and will expire on August 31, 2017.
 
As of March 31, 2015 we have 1,581,084 share purchase warrants outstanding. 500,000 share purchase warrants were issued on September 3, 2013 with an exercise price of $0.50 per share and expire on September 2, 2015. 694,414 share purchase warrants were issued on June 25, 2014 with an exercise price of $1.00 per share and expire on June 24, 2018. 305,000 share purchase warrants were issued on December 11, 2014 with an exercise price of $1.25 and expire on December 10, 2018. 81,670 share purchase warrants were issued on March 17, 2015 with an exercise price of $1.25 and expire on December 10, 2018.
 
The share purchase warrants have exercise price of $0.50 per share for the shares were issued in September 03, 2013, $1.00 per share for the shares that were issued in June 25, 2014 and $1.25 per share for the shares that were issued in December 11, 2014 and the expire dates are September 3, 2015, June 25, 2018 and December 11, 2018 accordingly.
 
 
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Compliance with Section 16(A) of the Securities Exchange Act of 1934
 
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.
 
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended March 31, 2015, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with.
 
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 
There were no shares of common stock or other securities issued to or purchased by our company or affiliated purchasers during the year ended March 31, 2015.
 
Item 6.                    Selected Financial Data
 
As a smaller reporting company we are not required to provide this information.
 
Item 7.                    Management's Discussion and Analysis of Financial Condition and Results of Operations
 
PRELIMINARY NOTE REGARDING FORWARD LOOKING STATEMENTS
 
The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-K (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the predictions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
 
We are considered a development stage company.  Our auditors have issued a going concern opinion on the financial statements for the year ended March 31, 2015.
 
 
24

 
RESULTS OF OPERATION
 
Operating Revenues, Operating Expenses and Net Loss
 
   
US$
Year Ended
March 31,
 
     
2015
     
2014
 
Revenues
 
$
101,835
   
$
196,567
 
Operating Expenses
   
1,607,330
     
2,403,686
 
Net Loss from Operations
   
(1,505,495
)
   
(2,207,119
)
Net Income/(Loss)
   
(3,009,018
)
   
(1,049,899
)
 
Our company generated $101,835 of revenue in the year ended March 31, 2015 compared to revenues of $196,567 during the same period in 2014. Revenues were generated through m-commerce services provided in line with the contracts acquired by Mobetize from Alligato Inc. and revenues generated through consulting services provided to Alligato Inc. as well as an independent customer. Our company expects to generate further revenue in the next 12 months as Mobile Money services are deployed.
 
Our operating expenses for the twelve month periods ended March 31, 2015 and 2014 are outlined in the table below:
 
   
US$
Year Ended
March 31,
 
     
2015
     
2014
 
Advertising and promotion
 
$
185,137
   
$
81,229
 
Advertising – Related Party
   
-
     
14,386
 
Consulting
   
438,193
     
190,069
 
Consulting – Related Party
   
229,641
     
-
 
General and administrative
   
333,339
 
   
123,243
 
G&A – Related Party
   
5,527
     
50,028
 
Management fees – Related Party
   
222,382
     
174,267
 
Professional fees
   
95,695
     
132,228
 
Research and development
   
97,416
 
   
14,800
 
Impairment Loss
   
-
     
1,623,436
 
Total
   
1,607,330
     
2,403,686
 
 
For the year ended March 31, 2015 operating costs were $1,607,330 compared with $2,403,686 for year ended March 31, 2014. Excluding the one off impairment loss incurred in fiscal year ended 2014, operating costs for the year ended March 31, 2015 were $1,607,330 compared with $780,250 in the prior year. This increase was primarily attributed to increases in advertising and promotion costs of $103,908, consulting fees of $248,124, general and administrative costs of $210,096 and research and development fees of $82,616. Related party transactions for both consulting and management fees have increased $229,641 and 48,115 accordingly in fiscal year ended 2015 as well.
 
During the year ended March 31, 2015, the company recorded a net loss of $3,009,018 compared with net loss of $1,049,899 for the year ended March 31, 2014. During the year ended March 31, 2015 the company recorded interest income of $nil (2014 - $9,777), gain on conversion of notes receivable of $nil (2014 - $1,241,000), unrealized loss on investment of $1,241,100 (2014 - $nil), loss on sale of investment of $262,423 (2014 - $nil), and interest expense of $nil (2014 - $93,657).
 
 
25

 
Liquidity and Capital Resources
 
   
US $
 
   
March 31, 2015
   
March 31, 2014
 
Current Assets
  $ 390,544     $ 274,582  
Current Liabilities
    110,110       134,018  
Working Capital
    280,434       140,564  
 
As at March 31, 2015, our company’s cash balance was $312,899 and total assets were $404,150, compared to cash balance of $90,507 and total assets of $1,908,631 as at March 31, 2014. The increase in the cash balance was due to equity funding raised during June and December 2014 private placements. The decrease in total assets was primarily attributed to the revaluation and full liquidation of equity investment in Telupay International Inc. as of March 31, 2015.
 
As at March 31, 2015, our company had total liabilities of $163,215 compared with total liabilities of $134,018 as at March 31, 2014. The increase in total liabilities is attributed to an increase in accounts payable and accrued liabilities of $18,218, as well as an increase in accounts payable and accrued liabilities – related party of $10,979.
 
As at March 31, 2015, our company had working capital of $280,434 compared with working capital of $140,564 as at March 31, 2014. The increase in the working capital is mostly attributed to the increase in cash of $115,962.
 
Cash Flows
 
   
US$
Year Ended
March 31,
 
     
2015
     
2014
 
Cash flows used in Operating Activities
 
$
(1,164,772
)
 
$
(495,268
)
Cash flows provided by (used in) Investing Activities
   
115,867
     
(177,027
)
Cash flows provided by Financing Activities
   
1,273,623
     
752,753
 
Effect of exchange rate changes on cash
   
(2,326
)
   
-
 
Net Increase in Cash During Period
   
222,392
     
90,507
 
 
Cash flows from Operating Activities
 
During the year ended March 31, 2015, our company used $1,164,772 of cash for operating activities compared to $495,268 of cash used for operating activities during the year ended March 31, 2014.  The increase in the use of cash for operating activities was attributed to the fact that our company incurred more in general and administrative costs for day-to-day activities, consulting and professional fees, as well as research and development expenses.
 
Cash flows from Investing Activities
 
During the year ended March 31, 2015, our company generated $115,867 of cash from investing activities compared to cash of $177,027 used in the year ended March 31, 2014.  The difference is due to $130,526 cash inflows generated from sale of our investment in Telupay International Inc. partially offset by the cash outflows of $14,659 relating to purchase of computer equipment and office furniture.
 
 
26

 
Cash flows from Financing Activities
 
During the year ended March 31, 2015, our company generated $1,273,623 of cash from financing activities compared to $752,753 of cash during the year ended March 31, 2014. The increase is due to our company raising more equity funds in the current year compared to the prior year.
 
Subsequent Developments
 
Subsequent to March 31, 2015 there were 184,500 warrants exercised at $0.50 per warrant share for total cash proceeds of $92,250.

Also, subsequent to March 31, 2015, $40,760 and $35,545 was loaned to the Company by the Chief Executive Officer and Chief Financial Officer respectively.

There were no other subsequent events.
 
PLAN OF OPERATION AND FUNDING
 
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. We expect working capital requirements to increase in line with the growth of our business.
 
We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and advances from directors. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for the above purposes will have a severe negative impact on our ability to remain a viable company. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
As of the date of this Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
 
GOING CONCERN
 
The independent auditors' report accompanying our March 31, 2015 financial statements contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.
 
There is significant doubt about our ability to continue as a going concern.
 
 
27

 
These financial statements included in this Annual Report for March 31, 2015 have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities in the normal course of business. As of March 31, 2015, our company has an accumulated deficit of $4,255,516. The continuation of our company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from our company’s future operations. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.
 
CRITICAL ACCOUNTING POLICIES
 
Our significant accounting policies are summarized in note 2 to our financial statements. While the selection and application of any accounting policy may involve some level of subjective judgments and estimates, we believe the following accounting policies are the most critical to our financial statements, potentially involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing conditions:
 
Use of Estimates

The preparation of financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable, valuation of intangible assets, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Financial Statements

These financial statements have been prepared in the opinion of management to reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

Revenue Recognition

The Company recognizes revenue from licensing and professional fees. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.

Investments

The Company classifies its equity investment in third parties as held for investment and recognizes the fair market value of these assets. As these investments are in public companies, the Company used the market value at March 31, 2015 and March 31, 2014 as a representation of fair market value.
 
 
28

 
Research and Development Costs

The Company incurs research and development costs during the course of its operations. The costs are expensed except in cases where development costs meet certain identifiable criteria for capitalization. Capitalized development costs are amortized over the life of the related commercial production.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviours. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of consolidated comprehensive loss over the requisite service period.

Options granted to consultants are valued at the fair value of the equity instruments issued, or the fair value of the services received, whichever is more reliably measureable.

Income Taxes

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return.  Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

The Company’s policy is to recognize penalties and interest, if any, related to uncertain tax positions as general and administrative expense.

Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2015, the Company has 1,638,375 (2014 –505,500) potentially dilutive shares.

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of March 31, 2015 the Company has accumulated other comprehensive loss of $2,326 (2014 – nil), which is due to the translation of the Company subsidiary’s financial statements to US dollars.

Financial Instruments/Concentrations

Financial instruments consist principally of cash, accounts receivable, accounts payable, and due to related parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates and current market rates for similar instruments. The Company is exposed to credit risk through its cash and accounts receivable, but mitigates this risk by keeping deposits at major financial institutions and advancing credit only to bona fide creditworthy entities. The maximum amount of credit risk is equal to the carrying amount.

 
29

 
Fair Value Measurement

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, and amounts due to related parties.  Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Foreign Currency

The functional and reporting currency of the Company and its subsidiary, Mobetize USA Inc. is the United States Dollar. The functional currency of the Company’s international subsidiary, Mobetize Canada Inc., is the local currency, which is Canadian dollar. The Company translates the financial statements of this subsidiary to U.S. dollars in accordance with ASC 740, Foreign Currency Translation Matters using month-end rates of exchange for assets and liabilities, and average rates for the annual period are derived from daily spot rates for revenues and expenses. Translation gains and losses are recorded in accumulated other comprehensive income as a component of stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Recent Accounting Pronouncements

In June 2014, ASU guidance was issued to resolve the diversity of practice relating to the accounting for stock based performance awards that the performance target could be achieved after the employee completes the required service period. The update is effective prospectively or retrospectively for annual reporting periods beginning December 15, 2015. The adoption of the pronouncement did not have a material effect on the Company’s consolidated financial statements.

 
30

 
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. Accordingly, we have elected to adopt ADU No. 2014-10.

In May 2014, ASU guidance was issued related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods and is to be retrospectively applied. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.
 
Recently Issued Accounting Pronouncements
 
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
 
Item 7A.                 Quantitative and Qualitative Disclosures About Market Risk
 
As a smaller reporting company we are not required to provide this information.
 
Item 8.                    Financial Statements and Supplementary Data
 
See following pages.
 
 
31

 
 
Report of Independent Registered
Public Accounting Firm
  Grant Thornton LLP
Suite 1600, Grant Thornton Place
333 Seymour Street
Vancouver, BC
V6B 0A4
   
T (604) 687-2711
F (604) 685-6569
www.GrantThornton.ca
To the Board of Directors and Stockholders of
Mobetize Corp.
 
We have audited the accompanying consolidated balance sheet of Mobetize Corp. (a Nevada corporation) and subsidiaries (collectively, the “Company”) as of March 31, 2015 and the related consolidated statements of loss and comprehensive loss, changes in stockholders’ equity, and cash flows for the year 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 audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
 
32

 
 
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mobetize Corp. and subsidiaries as of March 31, 2015 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a history of operating losses, along with other matters as set forth in Note 1 under Nature of Operations and Continuance of Business, that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 under Nature of Operations and Continuance of Business. The consolidated financial statements do not include any adjustments that might results from the outcome of this uncertainty.
 
   
Vancouver, Canada
June 29, 2015
 
 
33

 
MOBETIZE CORP.
Consolidated Balance Sheets
For the years ended March 31, 2015 and 2014
 
ASSETS
 
   
US $
 
   
MARCH 31,
2015
   
MARCH 31,
2014
 
Current Assets:
               
Cash
 
$
312,899
   
$
90,507
 
Accounts receivable
   
6,534
     
78,973
 
Accounts receivable – related party (Note 6)
   
14,687
     
-
 
Prepaid expenses and deposits
   
56,424
     
105,102
 
Total Current Assets
   
390,544
     
274,582
 
                 
Property and equipment (Note 4)
   
13,606
     
-
 
Investment (Note 5)
   
-
     
1,634,049
 
TOTAL ASSETS
 
$
404,150
   
$
1,908,631
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
LIABILITIES
               
Current Liabilities:
               
Accounts payable and accrued liabilities
 
$
37,300
   
$
19,082
 
Accounts payable and accrued liabilities - related party (Note 6)
   
72,810
     
61,831
 
Due to related party (Note 6)
   
-
     
53,105
 
Total Current Liabilities
   
110,110
     
134,018
 
                 
Due to related party (Note 6)
   
53,105
     
-
 
TOTAL LIABILITIES
 
$
163,215
   
$
134,018
 
                 
Commitments and Contingencies (Note 13)                
                 
STOCKHOLDERS' EQUITY
               
Common stock, $0.001 Par Value: 525,000,000 authorized and 30,185,505 and 28,364,200 common shares issued and outstanding, respectively (Note 7)
   
30,186
     
28,364
 
Share subscriptions payable
   
14,303
     
-
 
Additional paid-in capital
   
4,454,288
     
2,992,747
 
Accumulated other comprehensive loss (Note 5)
   
(2,326
)
   
-
 
Accumulated deficit
   
(4,255,516
)
   
(1,246,498
)
Total Stockholders' Equity
   
240,935
     
1,774,613
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
404,150
   
$
1,908,631
 
 
Subsequent Events (Note 12)
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
34

 
MOBETIZE CORP.
Consolidated Statements of Loss and Comprehensive Loss
 
   
US$
YEAR ENDED
MARCH 31,
 
   
2015
   
2014
    2013  
OPERATING REVENUES
                     
Revenues
  $ 88,442     $ 196,567     $ -  
Revenues-related party
    13,393       -       -  
Total Revenue
    101,835       196,567       -  
                         
OPERATING EXPENSES
                       
Advertising and promotion
    185,137       81,229       -  
Advertising –related party
    -       14,386       -  
Consulting
    438,193       190,069       -  
Consulting –related party
    229,641       -       -  
General and administrative
    333,339       123,243       33,896  
General and administrative – related party
    5,527       50,028       -  
Management fees - related party
    222,382       174,267       126,100  
Professional fees
    95,695       132,228       44,951  
Research and development
    97,416       14,800       -  
Impairment Loss
    -       1,623,436       -  
Total Operating Expenses
    1,607,330       2,403,686       204,947  
                         
NET LOSS FROM OPERATIONS
    (1,505,495 )     (2,207,119 )     (204,947 )
                         
OTHER INCOME/(EXPENSE)
                       
Interest income
    -       9,777       9,748  
Gain on conversion of notes receivable
    -       1,241,100       -  
Loss on sale of investment (Note 5)
    (1,503,523 )     -       (1,400 )
Interest expense
    -       (93,657 )     -  
Total other income /(expense)
    (1,503,523 )     1,157,220       8,348  
                         
NET LOSS
  $ (3,009,018 )   $ (1,049,899 )   $ (196,599 )
NET LOSS PER SHARE
                       
Basic and diluted
  $ (0.10 )   $ (0.04 )   $ -  
                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                       
Basic and diluted
     29,997,256        24,271,360        17,030,000  
                         
COMPREHENSIVE LOSS
                       
Net income (loss)
  $ (3,009,018 )   $ (1,049,899 )   $ (196,599 )
Other comprehensive loss:
                       
Cumulative translation adjustment
    (2,326 )     -       -  
Comprehensive income(loss)
  $ (3,011,344 )   $ (1,049,899 )   $ (196,599 )
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
35

 
MOBETIZE CORP.
Consolidated Statements of Stockholders Equity
For the years ended March 31, 2015, 2014, and 2013
   
Common Shares
   
Additional
Paid-In
Capital
   
Warrants
   
Share
Subscriptions
Payable
   
Accumulated
Deficit
   
Accumulated
Other
Comprehensive
Loss
   
Total Stockholders’ Equity
 
   
Number
   
Value
                                     
Balance - March 31, 2012
    11,500,000       11,500       -       -       -       (13,708     -       (2,208 )
Acquisition of notes receivable
    3,638,000       3,638       361,286       -       -       -       -       364,924  
Settlement of management fees
    665,000       665       65,835       -       -       -       -       66,500  
Acquisition of license
    1,200,000       1,200       28,800       -       -       -       -       30,000  
Net loss for the year
    -       -       -       -       -       (182,891 )     -       (182,891 )
                                                                 
Balance - March 31, 2013
    17,003,000       17,003       455,921       -       -       (196,599     -       276,325  
                                                                 
Acquisition of IP
    4,000,000       4,000       1,396,000       -       -       -       -       1,400,000  
Sale of 1,000,000 shares at $0.25/share
    796,000       796       198,204       -       -       -       -       199,000  
Debt Settlement
    84,000       84       20,916       -       -       -       -       21,000  
RTO with Mobetize Corp.
    4,630,000       4,630       (4,630     -       -       -       -       -  
Sale of 1,050,000 shares at $0.50/share, net of finder fees $52,500
    1,050,000       1,050       471,450       -       -       -               472,500  
Conversion of notes payable
    200,000       200       39,800       -       -       -       -       40,000  
Debt/Equity Conversion
    150,000       150       202,350       -       -       -       -       202,500  
Shares issued for consultancy services received
    451,200       451       208,049       -       -       -       -       208,500  
Share Options issued for consultancy services received
    -       -       4,687       -       -       -       -       4,687  
Net loss for the year
    -       -       -       -       -       (1,049,899 )     -       (1,049,899 )
                                                                 
Balance - March 31, 2014
    28,364,200     $ 28,364     $ 2,992,747     $ -     $ -     $ (1,246,498 )   $ -       1,774,613  
 
 
 
36

 
MOBETIZE CORP.
Consolidated Statements of Stockholders Equity-continued
For the years ended March 31, 2015, 2014, and 2013
 
   
Common Shares
   
Additional Paid-In Capital
   
Warrants
   
Share
Subscriptions
Payable
   
Accumulated
Deficit
   
Accumulated
Other
Comprehensive
Loss
   
Total Stockholders’ Equity
 
   
Number
   
Value
                                     
                                                 
Shares issued for consultancy services (Note 7a)
    19,861       20       24,367       -       -       -       -       24,387  
Sale of 1,122,831 shares at $0.75/share net of $58,500 financing fees (Note 7b)
    1,122,831       1,123      
631,841
     
150,659
      -       -       -       783,623  
Sale of 490,000 shares at $1.00/share (Note 7c)
    490,000       490      
377,058
     
112,452
      -       -       -       490,000  
Shares issued due to repricing of December 2014 private placement from $1.00/share to $0.75/share (Note 7c)
    163,333       163       (163 )     -       -       -       -       -  
Valuation of financing warrants (Notes 7b and 7c)
    -       -       114,200       -       -       -       -       114,200  
Valuation of options issued for consultancy services received
    -       -       46,097       -       -       -       -       46,097  
Stock payable for consultancy services received (Note 7d)
    -       -       -       -       14,303       -       -       14,303  
Conversion of interest payable
    25,280       26       5,030       -       -       -       -       5,056  
Net loss for the year
    -       -       -       -       -       (3,009,018 )     -       (3,009,018 )
Other comprehensive loss
    -       -       -       -       -       -       (2,326 )     (2,326 )
                                                                 
Balance - March 31, 2015
    30,185,505     $ 30,186     $
4,191,177
    $
263,111
    $ 14,303     $ (4,255,516 )   $ (2,326 )   $ 240,935  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
37

 
MOBETIZE CORP.
Consolidated Statements of Cash Flow
 
     
US$
YEAR ENDED
MARCH 31,
 
     
2015
     
2014
     
2013
 
CASH FLOWS FROM OPERATING ACTIVITIES
                       
Net loss
  $ (3,009,018 )   $ (1,049,899   $ (182,891 )
                         
Adjustments to reconcile net loss to net cash provided by operating activities:
                       
Amortization expense
    1,052       -       -  
Loss on sale of investment
   
1,503,523
      -       -  
Shares issued for services
    289,771       108,085       66,500  
Gain on conversion of notes receivable
    -       (1,241,100     -  
Loss on impairment of software IP and licenses
    -       1,623,436       -  
Interest receivable
    -       (9,777     (9,748 )
Interest settled in shares
    5,056       90,000       -  
Changes in assets and liabilities
                       
Accounts receivable
    72,439       (78,973     -  
Accounts receivable-related party
    (14,687 )     -       -  
Prepaid expenses and deposits
    (42,105 )     -       -  
Accounts payable and accrued expenses
    18,218       16,629       2,092  
Accounts payable and accrued expenses - related party
    10,979       46,331       -  
Net cash used in operating activities
    (1,164,772 )     (495,268     (124,047 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Purchase of property and equipment
    (14,659 )     -       -  
Software development costs
    -       (177,027     (9,895 )
Proceeds from sale of investment
    130,526       -       -  
Net cash provided by (used in) investing activities
    115,867       (177,027     (9,895 )
                         
CASH FLOWS FROM FINANCING ACTIVITES
                       
Proceeds from common stock issued and issuable
    1,273,623       671,500       -  
Proceeds from issuance of convertible debentures
    -       -       40,000  
Proceeds from related party
    -       135,597       103,991  
Repayments to related party
    -       (54,344     -  
Net cash provided by financing activities
    1,273,623       752,753       143,991  
                         
Effect of exchange rate changes on cash
    (2,326 )     -       -  
NET INCREASE IN CASH
    222,392       80,458       10,049  
CASH - BEGINNING OF PERIOD
    90,507       10,049       -  
CASH - END OF PERIOD
  $ 312,899     $ 90,507     $ 10,049  
                         
CASH PAID DURING THE PERIOD FOR:
                       
Interest expense
  $ -     $ -     -  
Tax expense
  $ -     $ -     -  
                         
SUPPLEMENTAL NONCASH INFORMATION:
                       
Shares issued for acquisition of software licence
  $ -     $ 1,400,000     30,000  
Shares issued for services
  $
289,771
    $
108,085
    $
66,500
 
Shares issued to settle debt
  $ 5,056     $ 133,500     -  
Non cash increase in prepaid expenses
  $ -     $ 187,500     -  
Shares issued for acquisition of notes receivable
  $ -     $ -     317,720  
Share options issues to settle debt
  $ -     $ 4,686     -  
Non cash acquisition of shares held for investment
  $ -     $ 1,634,049     -  
 
 
38

 
MOBETIZE CORP.
 Notes to the Conslidated Financial Statements
March 31, 2015, 2014, and 2013

 
1.      Nature of Operations and Continuance of Business

Mobetize, Corp. (the “Company”) was incorporated in the state of Nevada on February 23, 2012 under the name Slavia, Corp. The Company is a development stage company that plans to offer mobile banking technologies and service.

On September 4, 2013, the Company entered into a purchase and sale agreement with Mobetize, Inc. (“Mobetize”), a private corporation formed under the state of Nevada on March 14, 2012.  Under the terms of the agreement, the Company acquired the net assets of Mobetize in exchange for 22,003,000 common shares of the Company.  After the close of the share exchange agreement, there were 26,633,000 common shares outstanding and the former shareholders of Mobetize controlled approximately 84% of the total issued and outstanding common shares of the Company including 500,000 common shares held by the President and Director of Mobetize, which were acquired in a private transaction prior to the share exchange agreement.

Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of March 31, 2015, the Company has an accumulated deficit of $(4,255,516) and a history of net losses and cash used in operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.      Summary of Significant Accounting Policies

 
a)
Basis of Presentation
 
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company is a development stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s fiscal year end is March 31.

 
b)
Use of Estimates

The preparation of financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable, valuation of intangible assets, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
 
 
39

 
 
c)
Financial Statements
 
These financial statements have been prepared in the opinion of management to reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

 
d)
Cash

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
 
 
e)
Accounts Receivable
 
The Company evaluates the collectability of accounts receivable based on the age of receivable balances and customer credit-worthiness. If the Company determines that financial conditions of its customers have deteriorated, an allowance for doubtful accounts may be made or the accounts receivable written off if all collection attempts have failed.

 
f)
Prepaid Expenses
 
The Company pays for some services in advance and recognizes these expenses as prepaid at the balance sheet date. Prepaid expenses are carried at fair value which is deemed to be the gross value of the pre-payment due to the short-term maturity of these payments. If certain prepaid expenses extend beyond one-year, those are classified as non-current assets.

 
g)
Revenue Recognition
 
The Company recognizes revenue from licensing and professional fees. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.

 
h)
Investments

The Company classifies its equity investment in third parties as held for investment and recognizes the fair market value of these assets. As these investments are in public companies, the Company used the market value at March 31, 2015 and March 31, 2014 as a representation of fair market value.

 
i)
Property and Equipment

Property and equipment is accounted for at cost less accumulated amortization and includes computer equipment and office furniture. Amortization is computed using the straight-line method over the estimated useful lives of the assets, which are five years.
 
 
 
j)
Research and Development Costs

The Company incurs research and development costs during the course of its operations. The costs are expensed except in cases where development costs meet certain identifiable criteria for capitalization. Capitalized development costs are amortized over the life of the related commercial production.

 
k)
Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

 
40

 
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviours. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of consolidated comprehensive loss over the requisite service period.

Options granted to consultants are valued at the fair value of the equity instruments issued, or the fair value of the services received, whichever is more reliably measureable.

 
l)
Income Taxes

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return.  Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

The Company’s policy is to recognize penalties and interest, if any, related to uncertain tax positions as general and administrative expense.

 
m)
Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2015, the Company has 1,638,375 (2014 –505,500) potentially dilutive shares.

 
n)
Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of March 31, 2015 the Company has accumulated other comprehensive loss of $2,326 (2014 – nil), which is due to the translation of the Company subsidiary’s financial statements to US dollars.

 
o)
Financial Instruments/Concentrations

Financial instruments consist principally of cash, accounts receivable, accounts payable, and due to related parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates and current market rates for similar instruments. The Company is exposed to credit risk through its cash and accounts receivable, but mitigates this risk by keeping deposits at major financial institutions and advancing credit only to bona fide creditworthy entities. The maximum amount of credit risk is equal to the carrying amount.

 
p)
Fair Value Measurement

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 
41

 
Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, and amounts due to related parties.  Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 
q)
Foreign Currency
 
The functional and reporting currency of the Company and its subsidiary, Mobetize USA Inc. is the United States Dollar. The functional currency of the Company’s international subsidiary, Mobetize Canada Inc., is the local currency, which is Canadian dollar. The Company translates the financial statements of this subsidiary to U.S. dollars in accordance with ASC 740, Foreign Currency Translation Matters using month-end rates of exchange for assets and liabilities, and average rates for the annual period are derived from daily spot rates for revenues and expenses. Translation gains and losses are recorded in accumulated other comprehensive income as a component of stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 
r)
Recent Accounting Pronouncements

In June 2014, ASU guidance was issued to resolve the diversity of practice relating to the accounting for stock based performance awards that the performance target could be achieved after the employee completes the required service period. The update is effective prospectively or retrospectively for annual reporting periods beginning December 15, 2015. The adoption of the pronouncement did not have a material effect on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. Accordingly, we have elected to adopt ADU No. 2014-10.

 
42

 
In May 2014, ASU guidance was issued related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods and is to be retrospectively applied. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

3.     Share Exchange Agreement between Mobetize Corp. and Mobetize Inc.

On September 4, 2013, the Company entered into a purchase and sale agreement with Mobetize Inc. and the shareholders of all of the issued and outstanding common shares of Mobetize Inc.

Pursuant to the agreement, the Company acquired the net assets of Mobetize Inc. in exchange for 22,003,000 common shares of the Company. Following the close of the share exchange agreement, there were 26,633,000 common shares outstanding, of which the former shareholders of Mobetize Inc. controlled approximately 22,503,000 common shares, or 84% of the total issued and outstanding common shares of the Company, resulting in a change of control. The 22,503,000 common shares held by former shareholders of Mobetize Inc. were comprised of 22,003,000 common shares from the share exchange agreement and 500,000 common shares held by the President and Director of Mobetize Inc., which were acquired in a private transaction prior to the share exchange agreement.

The transaction was accounted for as a reverse recapitalization transaction, as the Company qualified as a non-operating public shell company given the fact that the Company held nominal net monetary assets, consisting primarily of cash at the time of merger transaction. As Mobetize Inc. is deemed to be the purchaser for accounting purposes under recapitalization accounting, these financial statements are presented as a continuation of Mobetize Inc. The equity of Mobetize Inc. is presented as the equity of the combined company and the capital stock account of Mobetize Inc. is adjusted to reflect the part value of the outstanding and issued common stock of the legal acquirer (the Company) after giving effect to the number of shares issued in the purchase and sale agreement.  Shares retained by the Company are reflected as issuance as of the acquisition date for the historical amount of the net assets of the acquired entity, which in this case is zero.

4.      Property and Equipment

Property and equipment, net consisted of the following:
 
   
March 31, 2015
   
March 31, 2014
 
Computer equipment
  $ 13,428     $ -  
Furniture
    1,231       -  
Total
    14,659       -  
Less: Accumulated amortization
    1,053       -  
Property and equipment, net
  $ 13,606     $ -  
 
5.      Investment

On December 24, 2013 the Company completed a debt for equity swap transaction, through which it converted the notes receivable and accrued interest it held from Telupay International Inc. (“Telupay”) into 3,268,097 common shares in Telupay. As a result of this transaction, the Company owned approximately 2.02% of the outstanding share capital of Telupay.

 
43

 
The Company recognizes the holding of these shares as an investment available for sale and values it at the fair market value of the shares. As Telupay is a public company on the OTC market, the shares are valued at the market price. During the twelve month period ending March 31, 2015 the Company fully liquidated 3,268,097 common shares of Telupay for $130,527 in cash proceeds, realizing a loss on sale of investment of $1,503,523.

6.      Related Party Transactions

 
a)
During the period ended March 31, 2015, the Company incurred $114,382 (2014 - $105,000) of management fees and $nil (2014 - $1,500) of rent to the former President of the Company, currently serving as a Chief Financial Officer of the Company.

 
b)
During the period ended March 31, 2015, the Company incurred $148,458 (2014 - $267,209) of development & engineering fees, $nil (2014 - $14,386) of advertising expenses and $5,527 (2014 - $15,132) of general & administration expenses to a company controlled by the Chief Executive Officer of the Company.

 
c)
During the period ended March 31, 2015, the Company incurred $108,000 (2014 - $60,000) of management fees to a company controlled by the Chief Executive Officer of the Company.

 
d)
During the period ended March 31, 2015, the Company incurred $nil (2014 - $10,500) of management fees to a company controlled by a Director of the Company.

 
e)
As at March 31, 2015, the Company owes $53,105 (March 31, 2014-$53,105) for advances from related parties, $3,350 (March 31, 2014 - $nil) for reimbursement of general and administrative expenses, $32,882 for the accrual of management fees (March 31, 2014 - $59,787), and $nil for rent (March 31, 2014 - $26,250) to the former President of the Company, currently serving as the Chief Financial Officer of the Company.  The amounts owing are unsecured, non-interest bearing, and due on demand.

 
f)
As at March 31, 2015 the Company owes $26,577 (2014 - $22,899) to a company controlled by the Chief Executive Officer of the Company for development and general and administration expenses incurred but unpaid during the period.

 
g)
As at March 31, 2015 the Company owes $10,000 (2014 - $6,000) to a company controlled by the Chief Executive Officer of the Company for management fees incurred but unpaid during the period.

 
h)
As at March 31, 2015 the Company is owed $14,687 (March 31, 2014 - $nil) by the company controlled by the Chief Executive Officer of the Company for consulting services provided.

7.      Common Stock

 
a)
On April 4, 2014 the Company issued 1,334 common shares in exchange for services in the amount of $1,800 pursuant to the agreement entered into on October 1, 2013. The shares issued were valued at $1,800 based on the quoted closing price of the Company’s common stock on the date of settlement.

On September 8, 2014 the Company issued 1,240 common shares in exchange for services in the amount of $1,500 pursuant to the agreement entered into on October 1, 2013. The shares issued were valued at $1,500 based on the quoted closing price of the Company’s common stock on the date of settlement.

On September 8, 2014 the Company issued 8,750 common shares in exchange for services in the amount of $10,587 pursuant to the agreement entered into on November 13, 2013. The shares issued were valued at $10,587 based on the quoted closing price of the Company’s common stock on the date of settlement.

 
44

 
On August 18, 2014 the Company entered into agreement with a supplier to provide consultancy services in exchange for shares. During the twelve months period ending March 31, 2015 the value of services received was $10,500 resulting in 8,537 shares issued to the supplier.

 
b)
On June 25, 2014 the Company closed a private placement under which it sold 1,122,831 investment units for proceeds of $783,623, net of financing fees of $58,500 paid in cash. Each investment unit consisted of one common share of the Company’s stock and one half-warrant. The warrants are exercisable at $1.00 per share and were initially valid for two years from the date of issue. 133,000 financing warrants were issued on the same terms as those in the investment units. The financing warrants were valued at $80,752 using the Black Scholes method, which included the dividend yield of nil, risk-free interest rate of 0.47%, expected volatility of 111.0%, and expected term of 2 years. The full value of financing warrants was expensed to stock based compensation.

On March 17, 2015, the term of both the financing and investment unit warrants was extended from 2 to 4 years. No additional compensation expense relating to the 133,000 financing warrants was recorded as a result of the term extension

 
c)
On December 11, 2014 the Company closed a private placement under which it sold 490,000 investment units for proceeds of $490,000. Each investment unit consisted of one common share of the Company’s stock and one half-warrant. The warrants are exercisable at $1.25 per share and were initially valid for three years from the date of issue. No financing fees were payable in cash associated with this private placement. 60,000 financing warrants were issued on the same terms as those in the investment units. The financing warrants were valued at $33,448 using the Black Scholes method, which included the dividend yield of nil, risk-free interest rate of 1.10%, expected volatility of 96.4%, and expected term of 3 years. The full value of financing warrants was expensed to stock based compensation.

On March 17, 2015, the term of both the financing and investment unit warrants was extended from 3 to 4 years. No additional compensation expense relating to the 60,000 financing warrants was recorded as a result of the term extension.

On March 17, 2015, the Company repriced 490,000 investment units from December 11, 2014 private placement from $1.00 per unit to $0.75 per unit resulting in additional 163,333 investment units issued to the private placement shareholders. Each investment unit consisted of one common share of the Company’s stock and one half-warrant. The warrants are exercisable at $1.25 per share and are valid for four years from the date of issue.

 
d)
On December 15, 2014, the Company entered into agreement with an Advisor to provide advisory board services in exchange for shares. During the twelve months period ending March 31, 2015 the value of services received was $11,303. At March 31, 2015, $11,303 in share subscriptions payable was due for advisory board services.

At March 31, 2015, the Company owed $3,000 in share subscriptions payable for consulting services provided.

 
e)
On March 4, 2015, the Company issued 25,280 shares at a conversion price of $0.20 per share to convert interest payable on notes payable in the amount of $5,056 to equity.

 
f)
On August 1, 2013 the Company entered into agreement with a supplier to provide consultancy services in exchange for 315,000 prepaid shares valued at $0.50 per share. During the twelve months period ending March 31, 2014 the value of services received and expensed from prepaid stock compensation was $85,909.
 
 
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8.      Share Purchase Warrants

The following table summarizes the continuity of share purchase warrants:
 
   
Number of warrants
   
Weighted average exercise
price (US$)
 
Balance, March 31 2013
           
Issued, September 3, 2013
    500,000       0.50  
Balance, March 31, 2014
    500,000       0.50  
Issued, June 25, 2014
    694,414       1.00  
Balance, September 30, 2014
    1,194,414       0.79  
Issued, December 11, 2014
    305,000       1.25  
Balance, December 31, 2014
    1,499,414       0.88  
Issued, March 17, 2015
    81,670       1.25  
Balance, March 31, 2015
    1,581,084       0.90  
 
As at March 31, 2015, the following share purchase warrants were outstanding:
 
Number of warrants outstanding
   
Exercise
price (US$)
 
Expiry date
  500,000       0.50  
September 2, 2015
  694,414       1.00  
June 24, 2018
  386,670       1.25  
December 10, 2018
  1,581,084            
 
9.    Share Options

The following table summarizes the continuity of share purchase options:

   
Number of options
   
Weighted average exercise
price (US$)
 
Balance, March 31, 2013
           
Issued, November 30, 2013
    5,500       1.00  
Balance, March 31, 2014
    5,500       1.00  
Issued in Period
    250,000       1.25  
Balance, September 30, 2014
    255,500       1.24  
Issued in Period
    -       -  
Expired in Period
    (5,500 )     1.00  
Balance, December 31, 2014
    250,000       1.25  
Issued in Period
    -       -  
Cancelled in Period
    (192,709 )     1.25  
Balance, March 31, 2015
    57,291       1.25  
 
 
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As at March 31, 2015, the following share purchase options were outstanding:
 
Number of
options
outstanding
   
Exercise
price (US$)
 
Expiry date
  57,291       1.25  
August 31, 2017

On September 1, 2014 the Company issued 250,000 share options for consulting services with a three year term, expiring on August 31, 2017. The options vested monthly in equal installments and were valued at $201,150 using the Black Scholes method, which included the dividend yield or nil, risk-free interest rate of 0.99%, expected volatility of 111.0%, and expected term of 3 years. At March 31, 2015 192,709 options were cancelled as a result of the termination of consulting services while 57,291 options were vested and outstanding.

There were no options exercised since the date of issue. Stock based compensation expense recorded during the twelve month period ending March 31, 2015 was $46,097.

10.
Income Taxes
 
At March 31, 2015 the Company had no deferred tax assets.

At March 31, 2015, the Company had a federal operating loss in the amount of $3,009,018 for the year and cumulative losses of $4,255,516. Non-capital losses amounted to $2,214,972 with $1,869,338 of the losses occurring within the State of Washington, USA, and $345,634 of the losses occurring within the Province of British Columbia, Canada.  

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended March 31, 2015 and 2014 is summarized as follows:

   
US $
Year Ended March 31,
 
   
2015
   
2014
   
2013
 
Loss before income taxes
  $ 3,009,018     $ 1,049,899     $ 196,599  
Income tax recovery at statutory rates
    (992,976 )     (356,966 )     (66,844 )
Non-deductible expenses
    591,669       230,548       22,610  
Change in unrecognized deferred tax asset
    453,105       230,432       120,203  
Foreign exchange impact
    29,030       -       -  
Other
    (80,828 )     (104,015 )     (75,969 )
Income tax recovery
  $ -     $ -     $ -  

The valuation allowance for deferred tax assets as of March 31, 2015, 2014, and 2013 was $803,740, 350,635, and $120,203, respectively, which will begin to expire in 2033. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of March 31, 2015, 2014, and 2013 and maintained a full valuation allowance.
 
 
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The unrecognized deferred tax assets include tax losses and difference between the carrying amount and tax basis of the following items.

   
US $
Year Ended March 31,
 
   
2015
   
2014
   
2013
 
Deferred tax assets
                 
Losses available for deduction
  $ 725,440     $ 308,635     $ 120,203  
Share issuance costs carried forward
    78,300       42,000       -  
      803,740       350,635       120,203  
Unrecognized deferred tax assets
  $ (803,740 )   $ (350,635 )   $ (120,203 )
 
11. Concentration of Risk

During the twelve months period ended March 31, 2015, revenues generated were $101,836 compared to revenues of $196,567 during the same period in 2014. Revenues were generated through m-commerce services provided in line with the contracts acquired by Mobetize from Alligato Inc. and revenues generated through consulting services provided to Alligato Inc. as well as an independent customer.

During the twelve months ended March 31, 2015, 18.3% (2014 – 97.2%) of revenues were generated from Rentmoola, nil (2014 - 2.7%) from CPT Secure Inc., 13.5% (2014 – 0.1%) from NBX Merchant Services Inc., 55.1% (2014 – nil) from SurePay Payment Services Provider LLC, and 13.1% (2014 – nil) from Alligato Inc.

12. Subsequent Events

Subsequent to March 31, 2015, there were 184,500 warrants exercised at $0.50 per warrant share for total cash proceeds of $92,250.

Also, subsequent to March 31, 2015, $40,760 and $35,545 was loaned to the Company by the Chief Executive Officer and Chief Financial Officer respectively.

There were no other subsequent events.

13. Commitment and Contingencies

The Company has obligation under rental lease for its operating office. As of March 31, 2015, the remaining term of the lease is 18 months with monthly payments of $4,900. The Company's lease includes renewal option and requires to make rental payments due at the beginning of every month.

14. Segment Information

The company has currently one operating segment located in Canada. Therefore, there is a single reportable segment and operating unit structure. The Company’s chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.


 
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Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
 
There were no disagreements with our accountants related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and subsequent interim periods.
 
On September 3, 2013 we changed our independent registered public accounting firm from KLJ & Associates, LLP to De Joya Griffith LLC following our purchase of all or substantially all of the business assets of Mobetize Inc. This change was not as a result of any disagreement with KLG & Associates LLP.
 
On May 6, 2015 we changed our independent registered public accounting firm from De Joya Griffith LLC to Grant Thornton LLP. This change was not as a result of any disagreement with De Joya Griffith LLC.
 
Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer, President and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Management, with the participation of the President and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the President and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of the "material weaknesses" described below under "Management's report on internal control over financial reporting," which are in the process of being remediated as described below under "Management Plan to Remediate Material Weaknesses."

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our President and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

 
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

 
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 
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Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2015. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in 1992. Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of March 31, 2015.

A "material weakness" is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues and results, and other internal reviews and evaluations, management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following:
 
 
1.
lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

 
2.
insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;

Management Plan to Remediate Material Weaknesses

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
 
We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
 
 
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We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

Changes in Internal Controls over Financial Reporting
 
There have been no changes in our company’s internal control over financial reporting during the last yearly period covered by this report that have materially affected, or are reasonably likely to materially affect, our company's internal control over financial reporting.
 
Item 9B.    Other Information
 
On July 9, 2014, Stephen Fowler was appointed to Chief Financial Officer Position with our company. Pursuant to the agreement with our company on July 09, 2014, Mr. Fowler will provide us with advice regarding matters of our strategic plans, operations and finances.
 
On July 9, 2015, Ajay Hans was appointed to Chief Executive Officer Position with our company. Pursuant to the agreement assigned to us on July 9, 2014, Mr. Hans will serve as Principal Executive Officer of our company.
 
With Mr. Fowler resignation, we entered into a consulting agreement with Tanuki Business Consulting Inc. (the “Consultant”), whereby the Consultant agreed to provide services of Mr. Chris Convey as our Chief Financial Officer effective September 23, 2013 until March 30, 2014. As consideration for such consulting services, we have agreed to compensate the Consultant for its services at $80 per hour at a minimum of 37.5 hours per month.
 
On July 9, 2014, Chris Convey was appointed as Chief Operations Officer with our company, and he resigned from the position effective October 10, 2014.
 
On July 9, 2014, Malek Ladki was appointed as independent Director and Chairman of the Board.
 
PART III
 
Item 10.    Directors, Executive Officers and Corporate Governance
 
The following individuals serve as the directors and executive officers of our company as of the date of this annual report. All directors of our company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified. The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.
 
Name
Position Held
with our Company
Age
Date First Elected or Appointed
Ajay Hans
President & Chief Executive Officer
43
July 09, 2014
Stephen Fowler
Chief Financial Officer
63
July 09, 2014
Malek Ladki
Director & Chairman
50
July 09, 2014
 
 
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Business Experience
 
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person's principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out
 
Malek Ladki – Director & Chairman
 
Dr. Malek Ladki is a highly experienced TMT executive with over 21 years of experience of starting, growing and exiting businesses internationally, running global telecoms infrastructure projects and holding a variety of senior management roles with network operators, and FTSE100 software vendors. Malek has also held several board-level roles with multinational telecoms infrastructure solutions and suppliers. Malek has founded and successfully exited 3 highly innovative Telecoms and IT products/solutions businesses while helped launch a number of 1st tier telcos in Europe and the US.  His technical expertise spans several disciplines in Telecoms, IT, Software and Hardware development and he holds three patents in network optimization. His vast experience in leading hyper-growth startups, growing emerging technologies and restructuring business is an asset to Mobetize. Malek graduated with a Bachelor of Electronics Engineering in 1987 and went on to study for a Doctorate in Engineering and earned his PhD in the telecommunications from the University of Liverpool in 1990.
 
Stephen Fowler – Chief Financial Officer
 
Mr. Fowler is currently the president of our company and Priveco, lead innovators of mobile commerce, mobile payments and banking solutions for alternative financial companies, telecom operators, merchants and banks.  Priveco had mobile and online solutions for remittance, airtime recharge, payments and billing and Telupay has solutions for mobile banking.
 
Since 2006, he has also been the CEO of Forte Finance Limited.  Forte Finance Limited has engaged in corporate, strategic planning advice and consultation primarily to small cap companies by assisting them in raising capital from equity and in addition creating programs to increase shareholder value and share liquidity. These companies were headquartered in Canada, USA and the UK operating in the oil and gas, mineral exploration, clean-technology and high technology industries.
 
From February 2010 to September 2011, Mr. Fowler was the Co-Founder, Director and Corporate Advisor of Telupay PLC.  Telupay PLC developed and deployed a fully secure mobile banking and eCommerce payments solution provider for banks, telcos or remittance companies. Mr. Fowler earned his B.A. in Business Administration & Accounting in Brighton, Sussex, United Kingdom.
 
Further, Mr. Fowler has completed the Canadian Securities Course Investment Securities Exam and has taken the Branch Manager Exam in investment banking, Chartered Accounting course in accounting, law and tax, and the CPA accounting course.
 
Ajay Hans – President & Chief Executive Officer
 
Ajay Hans has over 15 years of technology new venture development and financial experience in the development, marketing and implementation of complex billing and payment related software technologies dedicated for MNO’s and MVNO’s.  Mr. Hans has served as CEO & COO of Dynegent; VP Operations OAN Services Canada – OAN pioneered telecom billing and clearing solutions across North America processing $500 million annually in LEC Billing transactions (ie. a form of billing for internet-based or other usually electronic services where the user is charged through his account with the local telephone company (also known as the Local Exchange Carrier), rather than directly from the provider of the service).  Additionally, he is actively involved in speaking engagements for Pacific Crest Securities.
 
 
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Mr. Hans oversees our strategic vision and tactical execution. He has held senior executive positions with leading telecom software technology companies where he successfully implemented solutions for brands including SaskTel, Sprint and AT&T.
 
Mr. Hans earned a Bachelor’s of Business degree from the British Columbia Institute of Technology and has completed an Executive Management Program at Simon Fraser University as well as the Executive Managerial Success Program from Harvard Business School.
 
Identification of Significant Employees
 
We had 7 employees as of March 31, 2015. Our Chief Financial Officer, Stephen Fowler, and our Chief Executive Officer, Ajay Hans, are both contracted/employed to the company under consulting/management agreements, which remain in force on the same terms as previously disclosed.
 
Conflicts of Interest
 
We believe that our Chief Executive Officer and our Chief Financial Officer may be subject to conflicts of interest. The conflicts of interest arise from them being related party and have business transactions involved. No policy has been implemented or will be implemented to address conflicts of interest.
 
Involvement in Certain Legal Proceedings
 
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
 
1.
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
 
2.
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;  
 
3.
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
 
4.
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
 
5.
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
 
6.
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
 
 
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Code of Ethics
 
We have not adopted a code of ethics that applies to our officers, directors and employees.  When we do adopt a code of ethics, we will disclose it in a Current Report on Form 8-K.
 
Committees of the Board
 
All proceedings of our board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the corporate laws of the state of Nevada and the bylaws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
 
Our audit committee consists of our entire board of directors.
 
Our company currently does not have nominating, compensation committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by our directors.
 
Our company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The directors believe that, given the early stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. Our directors assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
 
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our president, at the address appearing on the first page of this annual report.
 
Audit Committee and Audit Committee Financial Expert