Snipp 20-F Annual Report

December 31,

2015

December 31, 2014

December 31, 2013

Deferred tax assets:

Non-Capital Losses Carried Forward

Deferred tax liabilities:

Intangible Asset

Note Payable

$ 15,780

(100,185)

(15,595)

20-F 1 snipp201520fannualreport.htm SNIPP 20-F ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2015 Snipp 20-F Annual Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

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

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

For the fiscal year ended December 31, 2015

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

For the transition period from ____________ to __________

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

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

Snipp Interactive Inc.

(Exact name of Registrant as specified in its charter)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

1605 Connecticut Ave NW, Washington DC 20009

(Address of principal executive offices)

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

None

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

Common Shares, without par value

(Title of Class)

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

Indicate the number of outstanding shares of each of the Company’s classes of capital or common stock as of the close of the period covered by the annual report. 105,753,715 Common Shares

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

Yes ¨ No x

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

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

Yes x No ¨

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

Yes ¨ No ¨

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


Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x

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

U.S. GAAP ¨

International Financial Reporting Standards as issued

by the International Accounting Standards Board x

Other ¨

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

Item 17 ¨ Item 18 x

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

Yes ¨ No x N/A ¨

Page 2 of 125

Index to Exhibits on Page 94


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Snipp Interactive Inc.

Form 20-F Annual Report

Table of Contents


	PART I
		Page
Item 1.	Identity of Directors, Senior Management and Advisors	5
Item 2.	Offer Statistics and Expected Timetable	5
Item 3.	Key Information	5
Item 4.	Information on the Company	13
Item 5.	Operating and Financial Review and Prospects	34
Item 6.	Directors, Senior Management and Employees	51
Item 7.	Major Shareholders and Related Party Transactions	64
Item 8.	Financial Information	65
Item 9.	The Offer and Listing	66
Item 10.	Additional Information	70
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	89
Item 12.	Description of Other Securities Other Than Equity Securities	90

	PART II

Item 13.	Defaults, Dividend Arrearages and Delinquencies	90
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	90
Item 15.	Controls and Procedures	90
Item 16.	Reserved	92
Item 16A.	Audit Committee Financial Expert	92
Item 16B.	Code of Ethics	92
Item 16C.	Principal Accountant Fees and Services	92
Item 16D.	Exemptions from Listing Standards for Audit Committees	93
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers	93
Item 16F.	Change in Registrant’s Certifying Accountant	93
Item 16G.	Corporate Governance	93
Item 16H.	Mine Safety Disclosure	93

	PART III

Item 17.	Financial Statements	93
Item 18.	Financial Statements	93
Item 19.	Exhibits	94


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INTRODUCTION

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

BUSINESS OF SNIPP INTERACTVE INC.

Snipp Interactive is a technology company that develops and sells mobile-based promotions solutions and associated campaign services. These solutions consist of software applications combined with traditional purchase-related marketing promotions, such as contests and rebates, which allow advertising agencies, brands and media to engage and interact with their customers. Currently, Snipp provides the following main solution sets:

Purchase Promotions and Receipt Processing: The Company’s SnippCheck mobile receipt processing solution allows brands to execute customized purchase-based promotions. It supports any qualification criteria, and works across all retailers and all devices. The company also has made available API Licensing for clients to incorporate into their own Apps and/or web ecosystems.

Loyalty Programs: The Company’s white-label loyalty platform allows clients to deploy anything from simple punch-card programs to sophisticated, full-fledged points-based loyalty programs with rewards stores attached. In particular, the Company is focused on the emerging space of multi-channel brand loyalty programs, wherein the combination of its Receipt Processing engine and its enterprise loyalty platform allows it to target consumer packaged goods (CPGs) and other multichannel brands that have historically found it very difficult to do such programs.

Mobile Promotions and Contests: A turnkey contesting platform that provides a full range of mobile-based contests, from simple sweepstakes to instant win programs to tiered, multi-level games.

Reward Solutions: With the purchase of Hip Digital Media, the Company now has a robust digital rewards platform that can be used by clients either in conjunction with other Snipp solutions or in standalone programs. The Company is actively working towards expanding its portfolio of rewards and adding new reward categories.

Rebate Solutions: The Company’s “smarter rebates” solutions platform that allows end-customers to qualify for their rebates via mobile devices and receive their rebate checks electronically via a multitude of different options. Clients benefit via lower processing costs, increased transparency, better customer experiences and enhanced data capture.

Data Analytics: The Company provides clients with further analytics based on the data it collects from customers as part of the promotions and programs launched on its platform.

Snipp generates revenue by designing, constructing, implementing and managing these promotions marketing solutions for its customers. Snipp is headquartered in Washington, D.C. with operations in several cities in the United States and international operations in Canada, India and Ireland.


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FINANCIAL AND OTHER INFORMATION

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

FORWARD-LOOKING STATEMENTS

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

PART I

Item 1. Identity of Directors, Senior Management and Advisors

Not Applicable

Item 2. Offer Statistics and Expected Timetable

Not Applicable

Item 3. Key Information

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

SELECTED FINANCIAL DATA

The selected financial data of the Company for the fiscal year ended December 31, 2015, 2014, and 2013 were derived from the consolidated financial statements of the Company which have been audited by MNP LLP, Chartered Professional Accountants, as indicated in its audit report which is included elsewhere in Annual Report. The financial data for fiscal 2012 has been derived from the consolidated financial statements of the Company as audited by MNP LLP, and the financial data for fiscal 2011 has been derived from the financial statements audited by Davidson & Company LLP, Chartered Accountants, which are not included herein.

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


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

Table No. 1 is derived from the financial statements of the Company, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Under the merger agreement between Snipp and Consumer Impulse, Consumer Impulse is the purchaser and parent company for accounting purposes. Therefore, the financial information for the fiscal year 2011 ended December 31, are taken from the financial statements of Consumer Impulse.

Table No. 1

Selected Financial Data

IFRS

(US$ in 000, except per share data)


	Year Ended Dec. 31, 2015	Year Ended Dec. 31, 2014	Year Ended Dec. 31, 2013	Year Ended Dec. 31, 2012	Year Ended Dec. 31, 2011

Revenue	$11,890	$3,562	$870	$512	$379
Interest and Other Income	$65	($1,276)	$906	($635)	$0
Net Income (Loss)	($3,118)	($2,565)	$76	($2,238)	($16)
Total Comprehensive Loss	($3,936)	($2,638)	($45)	($2,260)	($16)
Basic and Diluted Loss Per Share	($0.03)	($0.04)	$0.00	($0.05)	($0.01)
Dividends Per Share	$0	$0	$0	$0	$0

Working Capital (Deficit)	$3,501	$884	$266	$716	($37)
Long-Term Debt	$0	$0	$0	$0	$0
Derivative Liability	($55)	($1,614)	($61)	($1,230)	$0
Shareholder’s Equity (Deficit)	$11,786	($369)	$434	($366)	($37)
Total Assets	$17,233	$2,506	$819	$1,117	$99

Weighted Avg. Shares	99,346	63,395	48,952	41,590	1,998
Shares outstanding at period end	105,754	69,928	52,453	48,053	1,998

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

Statement of Capitalization and Indebtedness

Not Applicable


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Risk Factors

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

Risks Related to Our Business

The Company has a limited operating history.

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

Problems Resulting from Rapid Growth

Snipp is pursuing its plan to market its platform throughout Canada, the United States and globally, and will require capital in order to meet these growth plans. There can be no assurances that proceeds from past Financings will enable the Company to meet these growth needs. The plan will place significant demands upon the Company, management, and resources. Besides attracting and maintaining qualified personnel, employees or contractors, the Company expects to require working capital and other financial resources to meet the needs of its planned growth. No assurance exists that the plans will be successful or that these items will be satisfactorily handled, and this may have material adverse consequence on the business of the Company.

The Company has limited marketing, sales and distribution experience.

The Company and its personnel have limited experience in the marketing and sales of the Company’s products and services. The Company has only recently assembled a direct sales force that requires substantial resources and management attention. The Company may not be successful in developing or maintaining its own marketing and sales force on a larger scale, which would have a negative effect on the Company’s operations and financial position.

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

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


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The Company has a significant number of competitors.

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

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

The promotions marketing industry is characterized by rapid technological growth and development. New developments in products, methods, technology or standards may negatively affect the development and sale of some or all of the products utilizing the Company’s products and technology, and may render them obsolete. New product development and/or modification is costly, requires significant research and development time and expense, and may not necessarily result in the successful commercialization of any new product. The Company must also adapt to changes in industry standards that will require modifications to existing products and applications, including the compatibility with communications networks and mobile operating systems. If the Company fails to invest sufficiently in research and product development, or is unsuccessful in its efforts to enhance, improve or modify its products, or to develop and introduce new products that incorporate new technologies that achieve market acceptance, it will have a negative effect on the Company’s operations and financial position.

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

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

Operations may be subject to changes in laws and regulations.

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


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The Company’s products face security risks.

The business of the Company faces certain security risks in several areas, including information technology, network and data. These risks include computer viruses, break-ins, cyber system attacks or other security problems which could lead to disruption or interruption of services to clients as well as misappropriation of proprietary or confidential information of the Company’s clients and consumer users. Any failure to adequately address these risks could have an adverse effect on the business and reputation of the Company and expose the Company to potential liability, which would have a negative effect on the Company’s operations and financial condition.

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

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

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

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


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

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

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

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


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Risks Relating to the Financing of the Company

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

The Company historically has reported operating losses and negative operating cash flow from operations. The Company has incurred net operating losses of $5,785,753 in fiscal 2015, $1,288,834 in fiscal 2014, and $830,879 in fiscal 2013, and has an accumulated deficit of $7,884,619 since inception as of December 31, 2015. The Company has paid no dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. The Company has historically relied upon the sale of common shares to help fund its operations and meet its obligations. Any future additional equity financing would cause dilution to current stockholders. If the Company does not have sufficient capital for its operations, management would be forced to reduce or discontinue its operational activities that would have a negative effect on the Company’s operations and financial condition.

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

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

Risks Relating to an Investment in the Securities of the Company

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

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

Certain officers and directors may have conflicts of interest.

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


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

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

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

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

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

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

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


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

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

Item 4. Information on the Company

Description of Business

Introduction

Snipp’s executive office is located at:

1605 Connecticut Ave NW,

Washington, D.C. 20009

Telephone: (888) 997-6477

Website: www.snipp.com

E-Mail: info@snipp.com

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

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

The Company's common shares trade on the TSX Venture Exchange under the symbol "SPN" and Over-the-Counter in the United States under the symbol “SNIPF”.

The authorized share capital of the Company consists of an unlimited number of common shares, and an unlimited number of preferred shares, issuable in series. As of December 31, 2015, the end of the most recent fiscal year, there were 105,753,715 common shares issued and outstanding, and no preferred shares issued and outstanding. As of April 28, 2016, there were 128,336,804 common shares and no preferred shares, issued and outstanding.

Corporate Background

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

The Company presently has seven wholly-owned subsidiaries.

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

Snipp Interactive Limited (formerly Swiss Post Solutions Ireland Limited), an Ireland Corporation;

Snipp Interactive (India) Private Limited, an India Corporation;

Snipp Interactive Limited, a UK Corporation;

Snipp Interactive AG, a Swiss Corporation;

Hip Digital, Inc., a Delaware Corporation; and

Hip Digitial Media Inc., a British Columbia, Canada Corporation.


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Currently, the Company develops and sells mobile-based promotions solutions and associated campaign services, primarily to publishers, advertising agencies and brands.

History and Development of the Business

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

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

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

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


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On November 18, 2011, the Company announced that it had entered into a definitive agreement with Consumer Impulse, Inc. (“Consumer Impulse”), a Delaware Corporation doing business as “Snipp”, to acquire a 100% interest in Consumer Impulse. Snipp is a provider of a full suite of mobile marketing services in the US and Canada to print publishers, advertising agencies, and corporations and consumer brands. Snipp generates its revenue from the design, construction, implementation and management of these mobile marketing services for customers. Under the agreement, the Company agreed to acquire Consumer Impulse through the issuance of 22,742,305 Alya common shares and 6,188,688 common stock warrants, with each warrant exercisable into one Alya share at a price of C$0.13 per share for a period of five years from closing. Concurrent with the transaction, the Company would close the private placement of 13,333,333 common stock units at a price of C$0.15 per unit for gross proceeds of C$2,000,000. Each Unit consists of one Share and one share purchase warrant entitling the holder to purchase one Share at an exercise price of C$0.22 per Share until March 1, 2013 and at an exercise price of C$0.27 until March 1, 2014. The transaction with Consumer Impulse is the Company’s “Qualifying Transaction” under TSX Venture Exchange rules and closed on March 1, 2012. For accounting purposes, the transaction was treated as a reverse takeover with Consumer Impulse as the acquirer and the Company’s financial statements reflecting Consumer Impulse’s history from its inception on March 30, 2007.

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

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

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

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

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

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


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

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

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

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

In 2014, the Company launched three new applications based on their existing platforms and technologies. SnippLoyalty is targeted for consumer brands which allows clients to award consumers for both purchase and non-purchase transactions. SnippRebates enables consumers to submit rebate forms and proof of purchases via mobile, e-mail or web uploads, track the status of their rebates, and receive funds electronically, all within 48 hours. SnippInsights is a data analytics program gathers data from its marketing programs and enables clients to better understand their customers and optimize their promotional programs.

In February 2015, the Company closed the acquisition of Swiss Post Solutions Ireland Ltd. (“Swiss Post Ireland”). Swiss Post Ireland has a Consumer Loyalty Management product which is a multicurrency, cloud-based platform which offers real-time benefits and rewards management, including an advanced analytics platform for both reporting and predicting consumer behavior.

At the annual general and special meeting of shareholders held on June 1, 2015, shareholders approved amendments to the Articles of the Corporation. The Board of Directors is considering the possible listing of the Company’s common shares on a United States stock exchange. The amendments provide the Board with the ability to make changes to the common shares as required to meet these requirements, and sets specific minimum quorum requirements for shareholders’ meetings.

In June 2015, the Company closed the acquisition of HIP Digital Media Inc. (“Hip”). Hip has a marketing platform that integrates digital content, including music, movies, apps, and e-books, into branded promotions.

In June 2015, the Company entered the UK market with the appointment of a UK Managing Director and launched its first program for a leading electronics retailer. In September, the Company incorporated a new subsidiary in Switzerland to provide services to clients in Central and Eastern Europe, including Germany and Switzerland.


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A new Board of Advisors was formed in October 2015. The purpose of the advisors is to provide the Company with strategic advice from members who are experts in their sector-specific fields, including marketing, advertising, and digital media.

In November 2015, the Company launched a new white-label loyalty app for brands and retailers to extend their loyalty offerings into mobile. The app is customizable and scalable to each client’s individual needs, including their specific brand.

In March 2016, the Company was selected by Google to Google’s Patent Starter Program. As part of the program, the Company has been awarded a US Patent for an improved, non-intrusive method for advertising to wireless subscribers. The Company also became a member of the License on Transfer (LOT) Network, which is an initiative to combat Patent Assertion Entities (“PAE) and which grants fellow participants a license for patents transferred or sold to a PAE.

The Company also announced a global cost savings and integration plan for 2016, which is designed to reduce costs by over US$2.5 million on an annualized basis. The plan will include a reduction of the Company’s global workforce by 20%, the consolidation of its three engineering teams into a single team under the direction of the Chief Technology Officer, and additional operational cost reductions to more closely align costs to its changing product sales mix.

Business Overview

The Company is a provider of mobile-based promotions software application and associated campaign services that allow brands to engage and interact with their customers. Snipp’s incentive marketing technology platform enables brands and retailers to drive customer engagement and purchase. The primary clients for the Company’s products are advertising agencies, corporate/consumer brands, including Fortune 500 companies, and third party companies that provide promotions marketing services.

Mobile marketing is a relatively new industry that has evolved with the advances in mobile telephone technology. The dramatically increased power and capabilities of smartphones has also increased the types of marketing and promotional materials that can be pushed to the consumer via the mobile gateway, as well as the ways in which consumers can submit information and communicate directly with brands, thereby giving rise to a host of new marketing mechanisms that can be effectively leveraged by brands. These mechanisms include targeted delivery of marketing materials to specific consumers, such as those that have already purchased a specific product, or are physically present in-store, for example. It also allows consumers to submit store receipts via their phones to prove purchase of a particular product.

Leveraging a consumer’s mobile device to validate purchase enables consumer brands to execute marketing programs like loyalty, rebates and promotions easily and cost effectively. Traditionally since consumer brands distribute their products through hundreds of different channels and thousands of different retailers, running programs tied to purchase required expensive “code-on-pack” or cumbersome “mail-in” alternatives. Further, the Company is in a privileged position as it has access to a vast amount of actual purchase data provided by customers participating in programs that can be leveraged to improve the efficacy of marketing programs.


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The Company’s mobile-based promotion solutions enable consumers to participate in promotions and campaigns in a manner that is easier and with greater transparency than traditional “mail-in” alternatives. The Company’s solutions also enable brands to create new types of incentive programs and unique qualification criteria that would not have been possible with traditional solutions.

Currently, Snipp provides the following main solution sets:

Mobile Promotions and Contests: A turnkey contesting platform that provides a full range of mobile-based contests, from simple sweepstakes to instant win programs to tiered, multi-level games.

Data Analytics: The Company provides clients with further analytics based on the data it collects from customers as part of the promotions and programs launched on its platform.

Principal Markets

Currently the Company’s principal markets are the United States and Canada, with the majority of the revenues from the United States. The Company has also expanded into other markets with sales offices in Ireland, the United Kingdom, Switzerland, the Middle East, and India which service both local clients and other international regions.

Competitive Position

The promotions market is large, but fairly fragmented with numerous specialties. The mobile segment is relatively new, and has grown rapidly with the deployment of more powerful mobile phone technology. There are few firms that provide a full range of promotions services, including the technology to enable specific campaigns through to the ancillary support services, including legal and rewards, and none of them have a significant share of the overall market.


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The Company believes it is well-placed in the market for two primary reasons. First, through its own staff or through its network of partners, it is able to present clients with a “single point of contact” for all their promotions related activities. Second, the Company’s SnippCheck receipt processing program is relatively unique in the industry. While there are other firms that offer receipt processing services, the Company’s range of promotional campaigns built on top of SnippCheck, combined with the flexibility of the campaign services and experience provides the Company with advantages over other Companies in the mobile promotions market. The addition of its new applications to its existing suite of technologies has expanded the Company’s capabilities and range of offerings that allows the Company to provide a broader range of services to its clients.

Nature of the Business

Revenues are generated primarily from providing its mobile-based promotions platform and related services to agencies, brands and related parties. As part of its service the Company helps its clients conceptualize and execute the campaigns, and has the capability to bundle all of the required components of the for a specific campaign, including rules, creative, and rewards, as well as the technology to implement the campaign, and the data collection and analysis.

Although the promotions business is seasonal in nature, with many large campaigns traditionally constructed around holidays and certain seasons, the Company’s revenue growth has not been materially impacted to date. However, the Company anticipates that this seasonality may have an impact on revenues in the future.

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

SnippCheck – Receipt Processing and Purchase Validation

SnippCheck is a mobile receipt processing solution. Consumers can submit receipts to validate their purchases in exchange for coupons, rebates, expenses and loyalty programs, using just their phone. SnippCheck does not require consumers to download an app, or even have a smartphone as it is compatible with any camera-equipped mobile phone. SnippCheck can also be easily integrated into existing third party apps via its API if required.

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


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

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

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

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

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

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

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

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

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

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

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


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

Snipp also created a similar campaign for Henkel called the “Fuel Your Summer” promotion. Consumers that spent $25 on Henkel’s family of beauty care brands, including Dial, Tone, RightGuard and Dry Idea, received a $10 Shell gift card. Purchases could be made at any retailer, and could be made over multiple transactions. Snipp charged for actual rewards redeemed rather than anticipated, and provided daily reports that allowed Henkel to track participation and analyze spending behavior. The Company and Henkel followed up this campaign with the “Back to College” promotion in the Fall of 2015. Consumers who purchased $15 worth of participating Henkel products submitted a picture of their qualifying receipt by text, email of via web upload. All receipts were validated by SnippCheck and validated submissions received a $5 e-Gift Card.

SnippCheck can also validate eligible promotion participants by location or by age. Pernod Ricard launched a rebate program on the Snipp platform for Oak by Absolut vodka. Customers who purchase 750ml or 1 liter bottles from retailers in select states can submit a picture of their receipt by text or by web upload. SnippCheck validates the receipt for purchase eligibility as well as by age and state gate requirements in order to receive a $5 rebate by check or Paypal.

The rewards programs can offer other types of rewards than cash. Wrigley’s has launched a program on the Snipp platform for its Skittles candy to leverage their association with the upcoming Marvel Captain America movie. Consumers who purchase 2 eligible products can submit a picture of their receipt by text, email or web upload. After validation by SnippCheck, they will receive a $5 credit for Vudu video content.

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

SnippLoyalty – Enterprise Class Loyalty Solutions

Snipp’s loyalty platform was acquired through the Swiss Post Ireland purchase in February 2015. It is integrated with all other Snipp products to provide a seamless and uniquely configurable loyalty experience. Brands can create multiple types of loyalty programs, including;

Punchcard loyalty based on quantity, frequency or value, or more. Once a user reaches a certain number of purchases or dollar volume spent, they automatically receive a reward.

Points-based rewards stores. Clients can create tiered, points-based ongoing loyalty programs with multiple reward options.

Digital media reward stores.

Custom rewards stores


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Rewards can be earned in numerous ways, including:

Purchases

Media interactions, such as texting a keyword

Social media interactions, such as likes, tweets, follows, check-ins, posts, and sharing with other users

There are all kinds of different rewards options that can be earned, including:

Prepaid credit cards;

Digital coupons;

Digital media;

Physical rewards store and more

Programs are built with cross-device compatibility, including mobile, web or app based. Users can manage their accounts, check reward balances, view or redeem rewards, review their history, and more. Access is based on the user’s phone number and simple password created at registration. Utilizing the platform, clients can collect important customer data based on customer demographics and interactions and includes retargeting options to strengthen their relationship with their customers.

Klein Tools uses SnippLoyalty and receipt processing platform to incentivize and reward their customers through a nationwide loyalty program. Customers who purchase any Klein Tools product can submit their receipt via email, as an SMS, via web upload or by the specific Klein App. Each purchase earns them points based on the price of the products they purchase. These points can be redeemed online for various Klein offers. To redeem, they can associate their phone number or email with a registered Klein Tradesman Club account and earn points for that account. Klein renewed and expanded their use of SnippLoyalty in October 2015.

Kellogg’s is integrating SnippLoyalty into its Family Rewards Program to improve program efficiency. Instead of manual entry of on-pack codes, consumers can take a photo of their entire receipt or on the on-pack code and submit the picture online. SnippCheck will scan the receipt, identify all qualifying items and automatically credit the consumer’s loyalty account with the applicable points.

Estee Lauder wanted to drive sales as well as build loyalty with its existing customer base using their online Estee Lauder accounts. Customers who purchase Estee Lauder products at participating retailers text, email or upload a picture of their receipt in return for loyalty points in their online accounts to be used towards future purchases.

In 2015, Snipp also launched a “white-label” app as a companion to SnippLoyalty. This new app is designed for brands who want to extend their loyalty offerings to mobile, and are completely customizable for each clients’ needs. As a white-label product, the brand or store can rebrand the app with their own name and logos.


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SnippWin – Promotions and Contest Engine

SnippWin is the Company’s promotion platform. It allows clients to engage customers through the deployment of contests, mobile promotions and social media related interactions. Components include:

Instant Win: The product supports a full range of instant win contests, including mobile scratcher games, text-to-win and sophisticated tiered and combo programs.

Sweepstakes: The Company offers a complete suite of sweepstakes services, including legal, fulfillment, activation, marketing, and random winner selection.

Coupons: Coupons can be distributed to respondents through various avenues, including:

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

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

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

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

Sample Programs: Brands can use the platform to distribute samples to consumers who request them through a variety of the Company’s applications.

Photo Contests: The platform enables multiple kinds of photo contests through picture text messaging, email and social media.

Image Recognition: The platform’s image recognition technology allows for most any image to be included as a trigger for marketing promotions. Examples are a client’s logo, specific product packaging, or advertisement. Consumers can take a photo of the specific image and submit through their mobile phone, website, social media or email to participate.

Social Media: Numerous social media sites can be integrated into the client campaign.

Snipp offers comprehensive messaging solutions, including alerts, mobile video and picture text messaging, which can be integrated into any campaign. The Company also provides all the backoffice services, including activation, rewards, fulfilment and legal.

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


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

During the 2015 baseball season, Church & Dwight ran the “MLB Cover the Bases” promotion on the SnippCheck platform to leverage their sponsorship of Major League Baseball. Customers who purchased any qualifying Arm & Hammer or Oxiclean products from participating RiteAid stores submitted their qualifying receipt by text, email or web upload. Once SnippCheck validated the receipt, consumers are rewarded with bat swings based on the number of products they purchase for a chance to win one of hundreds of prizes. With each bat swing, consumers can win instant prizes or an e-gift card or code which is emailed to them with the redemption instructions. Consumers could also play without making a purchase by visiting the contest site, printing and mailing in the downloadable entry form. Once validated, a URL would be emailed to them to complete game play.

SnippRewards – Rewards and Incentive Platform

SnippRewards offers a wide variety of rewards and fulfillment options. These include:

Digital Rewards

Discount Coupons

Store Gift Cards

Pre-paid Credit Cards

Movie Tickets

Restaurant Vouchers

Travel Awards

Catalog and Physical Prizes

Checks via Postal Mail

Digital Media

Kingsford and Walmart used SnippRewards to incentivize buyers of charcoal grills at Walmart to use Kingsford charcoal. Customers who bought any charcoal grill at Walmart during the promotion period in Spring 2015 could snap a photo of their receipt and submit it to Snipp by text, email or via web upload to receive a coupon for a free bag of Kingsford Charcoal. SnippCheck was used to validate all purchase receipts and coupons were mailed out to qualifying recipients.


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Barilla utilized SnippRewards to award points to buyers of Barilla products. Consumers who purchased Barilla products could snap and send a picture of their receipt to earn points. Users were exposed to banner ads announcing the program with Barilla. On clicking, their unique user ID was sent to a Snipp upload page, where they could submit a picture of their qualifying purchase receipt. SnippCheck validated the purchase receipt, and consumers were awarded points.

With the acquisition of Hip Digital, the Company has significantly expanded its platform capabilities and rewards offerings. Hip’s proprietary platform blends technology and content. Hip has agreements with leading music labels, movie studios, mobile apps and ebook publishers and utilizes the content for both the promotion and as rewards.

Hip conducted a promotion for Budweiser to deliver digital music as a reward to their buyer’s club members. Hip worked with Budweiser and their agency partners to design and deliver a solution which would incentivize sales and increase membership in their “King Club” loyalty rewards club. Hip integrated its rewards platform web channel with the Budweiser King Club platform, which is accessible to legal age, new and existing King Club members. With each purchase of Budweiser, members received a five credit pin code valid for over four million music tracks for all four Major Music Labels, plus Independent Music Labels. The promotion drove a significant increase in membership for Budweiser’s King Club and saw repeat purchase behavior of two or more cases, and engagement rates two times the brand’s industry benchmark.

SnippRebates - Rebate Solutions

SnippRebates is a convenient, cost-effective alternative to traditional rebate programs.

Users can submit their receipts by picture text messaging, email or web-upload. With SnippRebates they no longer need to buy stamps and send in their receipts by postal mail. User submissions are processed using SnippCheck with built-in fraud detection. Users are able to view the status of their rebate submission at any time and are notified of the outcome. SnippRebates supports multiple different qualification criteria including purchases over time, dollar spend thresholds, cross purchases and multiple purchase requirements. Clients, or their customers, can choose their own rewards delivery mechanisms, including pre-paid credit or gift cards, Paypal or Google Wallet, digital coupons, or traditional checks in the mail. Clients also receive demographic and purchase data for all their programs

Snipp2U – Messaging and Response

Snipp2U provides numerous and customizable methods to communicate with customers. These methods include:

SMS (Short Message Service): Snipp is provisioned with all major carriers and most Tier 2 Carriers covering greater than 98% of the US cellphone population.

MMS (Multimedia Messaging Service): Offers both inbound and outbound MMS capabilities with all four major carriers.

Mobile Media: Snipp offers all forms of mobile media, including video, audio and images, either via streaming or MMS.

Mobile Alerts: Clients can send rich media mobile messages to customers.


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Audio Callbacks: Customers can text to receive a phone call with a pre-recorded audio message.

Coupons: Customers can receive mobile coupons, either coupon codes via text or scannable coupons via MMS. Coupon codes can be one size fits all or personalized per user.

Geo-Location and Geo-Fencing: Messages can be targeted by location. Customers receive messages either when they enter or leave pre-specified geographical areas.

Custom QR Codes, Digimarc and Other Responses: Other response mechanisms are available, including QR codes, Digimarc watermarks and Audio fingerprints.

Snipp2U is pre-integrated with other Snipp solutions and provides reporting and analytics data.

Pinnacle Vodka ran a promotion offering its customers free cocktail recipes on the Snipp platform. Customers could text their favorite flavor from 45 different Pinnacle Vodka flavors to receive a free recipe for a mixed drink Once they texted in the flavor they were asked to send in their date of birth and state of residence. Each text message was age gated and state gated by Snipp and the consumer received a text message with an exciting cocktail recipe related to the keyword they sent in.

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

Colgate Optic White toothpaste launched a text based program using Snipp’s platform to leverage their partnership with Jana Kramer for the Country Music Association Awards. Consumers who texted in a keyword received a link to http://opticwhitemusicfest.com. Post registration they gain one entry into the sweepstakes to win a trip to the 2016 CMA Music Festival

SnippSites - Mobile Websites and Apps Builder

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

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

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

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

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

Image Galleries: Customizable image galleries and slideshows

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


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

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

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

Maps and Geolocation: Automated map and directions components.

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

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

SnippAR – Augmented Reality

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

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


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Examples of uses of SnippAR include:

360 degree tours

Training and Education

Store and location finders

Print-to-mobile activations

Interactive city tours and maps

Virtual home visits

Virtual Gaming

Product Catalog activations

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

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

SnippIR – Image Recognition Platform

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

Product Packaging

Logos

Wine Labels

Ad Pages

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

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


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Current and Anticipated Activities

The promotions marketing industry is a large industry and will continue to represent a key focus area for the Company. Management also believes its solutions are increasingly positioning it to capture additional share in the global advertising market. The purchase level data that it is collecting through its loyalty, receipt and rebate solutions allows the Company to help brands better plan their overall advertising budgets.

The Company aims to scale its business in the client segments in which it has successfully operated to date by focusing on further productizing and improving its suite of promotions solutions, and offering those solutions to customers directly. There are four main focus areas for the Company going forward: purchase-based promotions, loyalty programs, rebates and data analytics, as these can be leveraged by clients to further optimize their media and promotions spend. It will also actively develop indirect sales channels through partnerships in select industry verticals and regions in North America and internationally. Finally, the Company plans to take an active part in shaping the dynamic promotions industry and to enhance its technology offering and market position through various forms of strategic partnering and merger & acquisition activity as there are certain opportunities arising for the Company to make strategic acquisitions.

Management believes the Company is in a strong position to increase its penetration of the promotions marketing industry not only in the United States but also globally. In addition to the continued development of the Company’s promotion platform and its components, the Company is launching three new solutions lines in loyalty for multichannel brands, rebates and data analytics. The Company is also receiving repeat business from large global brands and is being approached directly by an increasing number of Fortune 500 brands for its solutions.

Management believes that the Company is well poised for rapid growth for a variety of reasons:

Continued product innovation in the existing platform

The launch of new solutions lines including Enterprise Loyalty for Brands, the newly expanded Rewards Platform, Smarter Rebates and Data Analytics

Multiplier effect of the current organic business model

Effect of recruiting a sales force and attendance at additional industry events

Global deployments with and without regional partners

Increasing requests for long term licensing and services contract revenue

Higher acceptance and adoption of the company’s solutions by marketing professionals

Opportunities to merge and/or acquire complimentary companies

Continued Product Innovation to the Existing Platform

The Company has developed components within its platform that span the marketing funnel. In particular, the Company is seeing significant traction with SnippCheck, its mobile receipt processing solution. SnippCheck is a unique product offering in that it was one of the pioneers in the space of receipt processing and purchase validation. Today, SnippCheck is the market leader for receipt-based purchase validation promotion programs, having powered several hundred programs for leading Fortune 500 brands and world-class agencies and partners.


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The solution is highly customizable, flexible and extensible and can easily be tailored to meet each client’s unique program needs. Significant promotions activity is tied to purchase, and SnippCheck enables brands to validate consumer purchases for various promotions. Prior to SnippCheck, brands looking to do programs tied to purchase were limited to either code-on-pack solutions, mail-in programs or integrating directly into retailer point-of-sale systems, all of which are cumbersome, expensive, and with their own shortcomings. SnippCheck also serves as an effective engine around which to continue to add promotions-related features and functionality requested by clients. The Company plans to continually build on these components that allow for a closed-loop, single-platform solution for marketers across the path to purchase. The Company has solutions for each component of this path and will continue to launch pieces to further enhance the platform’s capabilities:

Activate: Solutions that enable brands to drive awareness and increase engagement with their customers in store, at home or online:

SnippWin

Contests & sweepstakes

Sampling programs

Mobile Alerts

Mobile coupons

Validate: Solutions that validate consumer actions, both purchase and non-purchase related:

SnippCheck

Mobile receipt processing

Purchase promotions

Mobile coupons

SnippIR

Image recognition

Loyalty

Punchcard programs

Popup programs

Enterprise loyalty programs for brands

Enterprise loyalty programs for retailers and services companies

SnippRebates

Digital/mobile rebate programs

Incentivize: Rewards platform with a variety of different rewards options that clients can choose and use in their programs

SnippRewards

Variety of different pre-configured rewards options

Physical and digital rewards delivery options

Fulfillment

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


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The Launch of New Solutions Lines

Management defined and launched new solutions lines based on the existing platform and suite of technologies within the Company over the course of the last year. Management believes that each of these new solutions lines will create significant new revenue opportunities for the Company in the future.

SnippLoyalty: In exploring spaces adjacent to its current set of offerings, Management identified enterprise loyalty as a key new area for expansion. Management believes there is significant scope to combine its SnippCheck receipt processing solution with an enterprise loyalty platform to create a unique loyalty platform targeted specifically towards consumer brands. Previously, consumer brands were limited in their ability to launch loyalty programs for much the same reasons that they found doing purchase programs difficult: validating purchase. By combining SnippCheck with an enterprise loyalty platform and extending the solution, brands would be able to have a comprehensive, holistic loyalty solution that would enable them to reward customers for both purchase and non-purchase interactions. Furthermore, the Company would be able to target this solution towards its existing set of customers who were already engaged with the Company for promotions programs, thereby generating evergreen programs with significantly higher ticket sizes. Towards that end, the Company spent time finalizing the acquisition of Swiss Post Solutions Ireland Limited, a loyalty management subsidiary of Post CH Ltd. This acquisition closed in February 2015. With the acquisition and the creation of the new SnippLoyalty solution, Management believes the Company is well-positioned to offer consumer brands in developed markets a unique product offering that meets a key need. Furthermore, SnippLoyalty can also be effectively targeted at retailers and services companies across the globe who are also looking for enterprise level loyalty programs for their customers. The Company has already seen considerable sales success in this space, with both extensions from existing clients and new clients signed on to the platform. More significantly, a majority of the current sales pipeline is for loyalty-related programs.

SnippRewards: With the acquisition of Hip Digital Media, which closed in the second quarter of fiscal 2015, the Company’s reward platform has been significantly strengthened and enhanced. Hip Digital Media had been a market leader in the distribution of digital content incentives for multichannel brand marketing programs. Hip Digital Media had a full-fledged suite of rewards options available to clients, which in addition to digital content included retailer gift cards, movie tickets, magazine subscriptions and many more. The Company plans to leverage the Hip Digital Media rewards platform as the base on which it continues to build and expand its incentives and rewards offerings. Furthermore, the Company plans to tightly integrate the rewards platform with its SnippCheck and SnippLoyalty platforms, thereby strengthening those product offerings and creating a more comprehensive overall solution.


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SnippRebates: Towards the end of 2014, the Company launched SnippRebates to target the growing $8bn rebate industry. SnippRebates is designed to reduce costs for manufacturers while providing consumers with a better experience. The Company launched a consumer rebate program in 2014 as well as a trade-based rebate program and expects to continue to build this segment of the product portfolio in the future. The rebate industry is growing every year but is still very traditional, relying on labor-intensive processes involving paper, form filling, manual data entry, telephone support, postage and issuing checks. SnippRebates automates either parts of the process or the entire operation. Over $8 billion is issued back to American households each year through rebate programs with over 50 percent of the population participating in consumer rebate programs. At the core of SnippRebates is Snipp’s leading purchase validation platform, SnippCheck. While manufacturers have total flexibility on how to configure their rebate program, SnippCheck enables consumers to submit rebate forms and proof of purchase via mobile, email or web uploads, track the status of their rebates, and receive funds electronically, all within 48 hours.

SnippInsights Data Analytics: Through its marketing programs the Company continues to accumulate a vast amount of data about consumers, gaining insights into their demographics, purchase habits, shopping basket data as well as sources of entry into promotions. Because this information is extremely valuable to brands, the company is productizing the data to create analytics solutions to enable brands to better understand customers, behaviors and trends. Furthermore, by tagging the entry mechanism by which a consumer enters a particular promotion, the Company has unique insight into which awareness building channels are most effective for a particular client for a particular program. As a result, we can work with each client to better optimize their promotion spend across those channels.

SnippMedia: There is a need for brands to be able to focus their media spend to drive purchase. Snipp expects to launch a promotions-focused media network with its partners to assist brands to optimize their targeting to enable purchase.

Multiplier Effect of the Company’s Current Organic Business Model

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

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


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

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

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

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

To date, a majority of the Company’s revenue continues to be as a result of clients calling the Company based on the reputation of the work done and the relevance of the solutions it has launched over the past two years. The Company’s management is frequently quoted in industry journals and called upon to provide opinions on the effectiveness of various tactics. The Company has undertaken very little outbound marketing and has spent relatively sparely on industry conferences and forums. Management believes that the opportunity to generate business by continuing to build a direct sales force is significant, particularly now that it has a core set of campaigns under its belt. Additionally, as we continue to create new solutions lines that are more finely targeted at specific customer segments and verticals we have the ability to recruit experienced salespersons with deep expertise and customer contacts in those specific areas, thereby improving on the effectiveness of the sales process.

Global deployments (with and without regional partners)

Previously the Company had attracted partners in Mexico and Brazil and had its own presence in the Middle East. Management believes that this trend will continue. While the path to monetization is longer with overseas partners, Management believes that a significant opportunity exists in these areas and other parts of the world. With the purchase of Swiss Post Solutions Ireland, the company has a beachhead in Europe and has recruited sales staff in the United Kingdom and is working with partners in the region. Furthermore, our client agencies and brands themselves are oftentimes introducing us to their overseas colleagues with an eye towards launching campaigns in different regions.


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Increasing requests for long term licensing and services contract revenue

Management has been able to sign long term agreements and MSAs with several key clients (agencies and brands) who were looking to license components of the Snipp platform or lock-in pricing for multiple sets of programs. Management continues to be engaged in such new conversations with multiple agencies and large promotions companies and believes significant opportunities continue to exist to consummate such licensing & service deals with these companies over the course of 2015 and beyond. Opportunity also exists to sign deals with international companies outside of the US market, an area the company is only just embarking on exploiting sales opportunities.

Higher acceptance and adoption of its solutions by marketing professionals

Given the large number of clients that have tested programs and signed deals with the company across industry segments, the tactics and mechanics that Snipp uses to activate, validate and incentivize customers is becoming more mainstream. Consequently, the Company believes that its early-adopter clients are increasingly giving way to more traditional clients who would be willing to work with Snipp to help close the loop between advertising and tracking purchases.

Opportunities to merge and/or acquire complimentary companies in its space

The Company is uniquely poised to execute a roll-up strategy in the promotion marketing space especially due to the increasing strength of its balance sheet. This segment of the advertising industry is inherently fragmented and poised for an aggregator to consolidate players. The Company successfully closed two such acquisitions in the first half of 2015. Both acquisitions were financially accretive while also strengthening the Company’s product portfolio and sales operations and have been successfully integrated into the company. The Company is actively looking to do additional such complementary transactions where it strategically fits with the Company’s growth strategy.

Based on sustaining continuous annualized growth since the public offering and executing against a successful acquisition strategy, management believes the business is in a strong position today and is poised to continue its growth into 2016.

Item 5. Operating and Financial Review and Prospects

Overview

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

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


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Results of Operations

The Company generates its revenues from providing promotions services to its clients, who are primarily advertising agencies, brands and publishers/media. Revenue is derived from the following avenues:

Campaign Fees: Most clients are charged on a per campaign basis for each campaign they conduct with the Company that utilizes the Company’s technology and services.

License Fees: The Company licenses its promotions platform and related support services to certain clients for use in multiple campaigns. The Company charges a monthly or annual fee for a specified number of campaigns. Alternately, they can commit to a minimum number of campaigns during a specified period for a pre-set fee.

Project Management Fees: For longer-term projects, the Company typically charges a monthly project management fee that covers the costs of monitoring, hosting and minor changes to the campaign as requested by clients

Pay-Per-Use Fees: For promotions based on receipt processing, the campaign fee typically includes a specified number of receipts to be processed for the duration of the campaign. Additional receipts over the pre-specified limit are charged as bundles. Occasionally, some clients request only a pay-per-receipt processed fee for their campaigns.

Reward Acquisition Fees: The Company will often arrange for the rewards to be provided to consumers for promotional campaigns and generates revenues through the sale of these rewards to its clients.

Year Ended December 31, 2015 vs. Year Ended December 31, 2014

During the year ended December 31, 2015, the Company completed the acquisition of Swiss Post Digital Solutions Ireland Limited and Hip Digital Media Inc., which greatly expanded the Company’s product offerings and global presence, and opened several international offices to service clients in new regions.

Revenue for the year ended December 31, 2015 was $11,890,231, an increase of $8,328,186, or 234%, from revenues of $3,562,045 for the year ended December 31, 2014.


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Expenses for the current year rose to $17,675,984 from $4,850,879. Significant changes in expenses occurred in salaries and compensation, which rose to $7,450,658 from $1,573,933 as the Company added additional employees through hiring and the opening of new offices globally and through its acquisitions of Swiss Post Digital and Hip Digital. General and administrative costs rose to $1,175,954 from $143,945 which is consistent with the larger size of the Company in fiscal 2015. Outsourced software development declined to $119,588 from $170,020 as the Company has hired additional internal software developers which has decreased the need for outsourced development. Campaign infrastructure increased to $5,367,648 from $2,431,221, which are costs associated with maintaining the Company’s short code for mobile messaging services, cellular network usage and third party campaign components required to support client services and are consistent with the higher level of sales. Professional fees rose to $508,698 from $98,433, and travel expenses rose to $571,477 from $113,049, as the Company incurred one-time costs related to the review and completion of the acquisitions of Swiss Post Ireland and Hip Digital during the year. Marketing and investor relations increased to $230,056 from $40,595. Bad debt expense rose to $103,903 from $42,582. Amortization of intangibles increased to $237,312 from $71,519 and depreciation of equipment rose to $21,405 from $5,643. Stock-based Compensation increased to $1,889,285 from $159,939. This expense related to stock options granted to directors, officers and employees and represents the non-cash vested portion of these stock option grants.

Net operating loss was $5,785,753 for the year ended December 31, 2015 compared to $1,288,834 for the year ended December 31, 2014. Accretion expense related to the acquisition of Swiss Post Ireland was $190,000 during the current year. Interest income rose to $64,720 from $6,453 due to higher levels of cash and cash equivalents held in guaranteed investment certificates during the current year. Foreign exchange loss was $32,596 compared to $Nil in 2014 due to unfavorable exchange rate changes in the current year. Change in fair value of derivative liability was a loss of $153,298 compared to a loss of $1,282,485 in the year ended December 31, 2014. This gain or loss is related to common share purchase warrants which are fixed in Canadian dollars while the functional currency of the Company is US dollars. The value of such warrants vary from period to period using the Black-Scholes pricing model and the change in exchange rates.

Change in fair value of acquisition consideration payable in equity was $2,978,926. This amount is non-cash and is from the acquisition performance shares issuable for the acquisition of Hip Digital. The change is due to the Company’s fluctuating share price at each quarter end and its effect on the value of the performance shares to be issued. The cumulative translation adjustments of a loss of $818,409 in fiscal 2015 and a loss of $73,350 in fiscal 2014 relate to changes in exchange rates.

Comprehensive loss for the year ended December 31, 2015 $3,936,410, or $0.03 per share, compared to comprehensive loss of $2,638,216, or $0.04 per share, for the year ended December 31, 2014.

Year Ended December 31, 2014 vs. Year Ended December 31, 2013

During the year ended December 31, 2014, the Company introduced several new products to its existing technology suite, including SnippLoyalty, SnippRebates, and SnippInsights. The Company also added additional personnel in several areas, including sales, to support its growth and new products.

Revenue for the year ended December 31, 2014 was $3,562,045, an increase of $2,691,625, or 309%, from revenues of $870,420 for the year ended December 31, 2014. The increase in revenue was a result of several factors, including the acquisition of new customers, additional sales to existing customers, and the launch of several new products.


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Expenses for the current year rose to $4,850,879 from $1,701,299. Significant changes in expenses occurred in salaries and compensation, which rose to $1,573,933 from $1,098,609 as the Company added additional employees to support the new products and added in-house sales people. General and administrative costs rose to $143,945 from $84,407 incurred in the prior year, and software development increased to $170,020 from $101,679, which is consistent with the higher levels of sales. Campaign infrastructure increased to $2,431,221 from $119,986. These costs are associated with maintaining the Company’s short code for mobile messaging services, cellular network usage and third party campaign components required to support client services and are consistent with the higher level of sales.

Professional fees, which are for legal and accounting services, rose to $98,433 from $41,086, and Travel expenses rose to $113,049 from 67,675. The increases were due to the Company evaluating possible acquisitions during 2014, including Swiss Post Solutions Ireland Limited, which closed subsequent to the end of the fiscal year. Marketing and Investor Relations declined to $40,595 from $70,169. Amortization rose to $71,519 from $42,821 and Depreciation rose to $5,643 from $4,908 due to amortization of a higher level of intangible assets and depreciation of equipment. Stock-based Compensation declined to $159,939 from $229,890. This expense related to stock options granted to directors, officers and employees and fell due to fewer options granted in the current year compared to fiscal 2013. For fiscal 2014, the Company recorded strategic sales partnership compensation of $Nil compared to expense of $174,931 in the year ended December 31, 2013. This compensation is a non-cash expense to reflect the valuation of warrants issued in connection with a strategic sales partnership agreement.

Net Operating loss was $1,288,834 for the year ended December 31, 2014, compared to $830,879 for the previous year. Interest income rose slightly to $6,453 from $3,054 due to higher levels of cash and cash equivalents held in guaranteed investment certificates during the current year. Foreign exchange gain was $Nil compared to a gain of $106,961. Change in fair value of derivative was a loss of $1,282,485 compared to a gain of $796,461 in the year ended December 31, 2013. This gain or loss is related to common share purchase warrants which are fixed in Canadian dollars while the functional currency of the Company is US dollars. The value of such warrants vary from period to period using the Black-Scholes pricing model and the change in exchange rates. The cumulative translation adjustments of a loss of $73,350 in fiscal 2014 and a loss of $120,686 in fiscal 2013 relate to changes in exchange rates.

Comprehensive loss for the year ended December 31, 2014 was $2,638,216, or $0.04 per share, compared to comprehensive loss of $45,089, or $0.00 per share, for the year ended December 31, 2013.

Liquidity and Capital Resources

The Company’s working capital position at December 31, 2015 was $3,500,888, including cash and cash equivalents of $4,696,617.

For fiscal 2016, the Company estimates it will require cash for operations of $12,000,000. The majority of these cash needs are expected to come from operating revenues. For the remainder, the Company will require additional financing. In April 2016, the Company announced a non-brokered private placement financing of up to C$7,000,000 to be comprised of up to 23,333,334 common shares at a price of C$0.30 per share. The first, second, and third tranches of shares totaling 22,323,334 common shares for gross proceeds of C$6,697,000 have closed. No commissions or finder’s fees were paid in connection with the placements of shares. The Company intends to use the proceeds from the financing for product development, sales and marketing, and for general working capital.


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In March 2016, the Company announced a global cost savings and strategic integration plan. The plan is designed to reduce costs by over $2.5 million on an annualized basis which will more closely align costs to the changing product sales mix.

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

Table No. 2

Common Share Issuances


Fiscal Period	Type of Share Issuance	Number of Common Shares Issued (Cancelled)	Price *	Number of Preferred Shares Issued (Cancelled)	Price	Gross Proceeds or Deemed Value

Fiscal Year 2011	No Issuances

Fiscal Year 2012	Elimination of Consumer Impulse Common and Preferred Shares	(1,998,020)	-	(700,000)	-	-
	Alya Shares acquired by Snipp	10,550,000	-			US$814,969
	Transaction shares issued by Alya	23,142,305	-	37,499,997		US$3,807
	Redemption of Preferred Shares	-	-	(37,499,997)		(US$3,807)
		13,333,333	C$0.15			US$2,030,600
	Exercise of Stock Options	422,000	C$0.10			US$44,566
	Exercise of Agent’s Options	605,000	C$0.10			US$59,891

Fiscal Year 2013	Private Placement	2,000,000	C$0.10			US$192,520
	Private Placement	2,400,000	C$0.10			US$225,216

Fiscal Year 2014	Private Placement	6,350,000	C$0.10			US$573,469
	Private Placement	10,400,000	C$0.15			C$1,560,000
	Exercise of Stock Options	100,000	C$0.10			C$10,000
	Exercise of Warrants	625,000	various			US$227,628

Fiscal Year 2015	Private Placement	22,322,727	C$0.55			C$12,277,500
	Corporate Finance Advisory Fee	661,591	-			-
	Exercise of Stock Options	524,500	various			US$47,046
	Exercise of Warrants	7,697,800	various			US$1,191,816
	Hip Digital acquisition shares	3,921,679	C$0.68			C$2,666,742
	Hip Digital employee shares	697,780	C$0.425			C$296,557

Fiscal Year 2016	Private Placement	22,323,334	C$0.30			C$6,697,000
to April 28, 2016	Exercise of Warrants	158,000	C$0.15			C$23,700
	Exercise of Stock Options	100,000	C$0.185			C$18,500
	Hip Digital acquisition shares	1,755	C$0.68			C$1,193
* The Company’s private placements of common share units have been denominated in Canadian dollars. Proceeds from the share issuances are denominated in United States dollars as the Company’s functional currency.


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Year Ended December 31, 2015

At the close of the fiscal year ended December 31, 2015, the Company’s working capital was $3,500,888 compared to working capital of $884,409 as of December 31, 2014.

Operating Activities used cash of $5,256,229, which included the net loss for the year of $3,118,001. Adjustments for items not involving cash included amortization of intangibles of $237,312, depreciation of equipment of $21,405, stock-based compensation of $1,889,285, a change in fair value of derivative liability related to the value of stock purchase warrants of $153,298, accretion expense related to the acquisition of Swiss Post Ireland of $190,000, and change in fair value of acquisition consideration payable in equity related to the acquisition of Hip Digital of ($2,978,926).

Changes in non-cash working capital included an increase in accounts receivable of $1,187,108, an increase in deposits and prepaid expenses of $32,519, a decrease in deferred revenue of $1,557,743, an increase in accounts payable and accrued liabilities of $969,291, and an increase in due to related parties of $157,477.

Investing Activities used cash of $1,060,189. Additions to equipment used cash of $115,122, additions to intangible assets used cash of $1,038,248, net cash acquired on business acquisition of Swiss Post Ireland used cash of $261,296, and net cash acquired on business acquisition of Hip Digital Media provided cash of $354,477.

Financing Activities provided cash of $10,090,813. Proceeds from the issuance of common shares provided cash of $9,782,712, share issuance costs used cash of $930,761, proceeds from warrants exercised provided cash of $1,191,816, and proceeds from options exercised provided cash of $47,046.

The effect of exchange rate changes was a decrease of $607,235 during the year. Cash and cash equivalents totaled $4,696,617 as of December 31, 2015 compared to cash and cash equivalents of $1,529,457 as of December 31, 2014, an increase of $3,167,160.

During the year the Company issued a total of 35,826,077 common shares consisting of the following:

22,322,727 common shares units were issued pursuant to a bought deal private placement financing at a price of C$0.55 per unit for gross proceeds of C$12,277,500. Each unit consisted of one common share and one half of a share purchase warrant, with each whole warrant exercisable into one common share at a price of US$0.63 until February 4, 2017. The expiry date of the warrants may be accelerated at the option of the Company if the closing trading price of the shares is equal to or greater than C$1.20 for a period of 20 consecutive trading days. The underwriters of the placement received cash commission of C$982,200 and 1,785,818 broker warrants on the same terms as the warrants issued with the units, and an additional 661,591 units were issued to an underwriter.

3,921,679 common shares were issued for the acquisition of Hip Digital at a deemed value of C$2,666,742;

697,780 common shares were issued to Hip Digital employees at a deemed value of C$296,557;

7,697,800 common shares were issued pursuant to the exercise of stock purchase warrants for proceeds of $1,191,816;

524,500 common shares were issued pursuant to the exercise of stock options for proceeds of $47,046


	- 39 -

Year Ended December 31, 2014

At the close of the fiscal year ended December 31, 2014, the Company's working capital was $884,409 compared to working capital of $265,766 as of December 31, 2013.

Operating Activities used cash of $347,512, which included the net loss for the year of $2,564,866. Adjustments for items not involving cash included amortization of intangibles of $71,519, depreciation of equipment of $5,643, stock-based compensation of $159,939, and decrease in fair value of derivative liability related to the value of stock purchase warrants of $1,282,485.

Changes in non-cash working capital included an increase in accounts receivable of $178,532, an increase in deposits, prepaid expenses and other assets of $61,590, an increase in deferred revenue of $548,200, an increase in accounts payable and accrued liabilities of $198,588, and an increase in due to related parties of $191,102.

Investing Activities used cash of $208,506. Additions to equipment used cash of $8,201, and additions to intangible assets used cash of $200,305.

Financing Activities provided cash of $1,945,779. Proceeds from the issuance of common shares provided cash of $2,006,330, share issuance costs used cash of $159,424, proceeds from warrants exercised provided cash of $89,559, and proceeds from options exercised provided cash of $9,314.

The effect of exchange rate changes was a decrease of $73,350 during the year. Cash and cash equivalents totaled $1,529,457 as of December 31, 2014, compared to cash and cash equivalents of $213,046 as of December 31, 2013, an increase of $1,316,411.

During the year the Company completed two private placements of its common shares. Under the first, 6,350,000 common share units were sold at a price of C$0.10 per unit for gross proceeds of US$573,469 (C$650,000) which was the second tranche of a non-brokered private placement. Each unit consisted of one common share and one-half of a common share purchase warrant, with each full warrant exercisable into one common share at a price of C$0.15 until January 24, 2016. The Company paid finder’s fees of $36,124 (C$40,000) and filing fees of $4,214 in conjunction with the placement. Under the second private placement, 10,400,000 common share units were sold at a price of C$0.15 per unit for gross proceeds of $1,450,020 (C$1,560,000). Each unit consisted of one common share and one common share purchase warrant, with each warrant entitling the holder to purchase one common share at an exercise price of $0.20 until July 24, 2017. The Company paid finder’s fees of $110,425 (C$118,800) and filing fees of $8,661 (C$9,318) in cash and issued 792,000 finder’s options valued at $80,264. Each finder’s option entitles the holder to purchase one unit at an exercise price of C$0.15 until July 14, 2017, with each unit consisting of one common share and one common share purchase warrant exercisable at a price of $0.20 until July 14, 2017.

The Company also issued 100,000 common shares pursuant to the exercise of stock options for proceeds of $9,314 and issued 625,000 common shares pursuant to the exercise of share purchase warrants for proceeds of $227,628.


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Fiscal Year Ended December 31, 2013

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

Operating Activities used cash of $655,556, which included the net income for the year of $75,597. Adjustments for items not involving cash included amortization of intangibles of $42,821, depreciation of equipment of $4,908, Stock-based compensation for the grant of stock options of $229,890, reversal of previously expensed Strategic sales partnership compensation of $174,931, and decrease in fair value of derivative liability related to the value of stock purchase warrants of $796,461.

Changes in non-cash working capital included an increase in accounts receivable of $143,327, a decrease in deposits, prepaid expenses and other assets of $34,804, a decrease in deferred revenue of $60,326, a decrease in accounts payable and accrued liabilities of $22,457, and an increase in due to related parties of $153,926.

Investing Activities used cash of $78,260. Decrease in note receivable provided cash of $50,255, and additions to intangible assets used cash of $128,515.

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

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

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

Significant Accounting Policies

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


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

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

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned legal subsidiaries Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), which was incorporated in Delaware, USA, Snipp Interactive (India) Private Limited, which was incorporated in India, Snipp Interactive Limited (formerly Swiss Post Solutions Ireland Limited), which was incorporated in Ireland, Snipp Interactive Limited, which was incorporated in the United Kingdom, Snipp Interactive AG, which was incorporated in Switzerland, Hip Digital, Inc., which was incorporated in Delaware, USA and Hip Digital Media Inc., which was incorporated in British Columbia, Canada. All material inter-company balances and transactions have been eliminated.

Equipment

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


Office equipment	3-5 years	Straight-line
Computer equipment	3-5 years	Straight-line

Intangible assets

Intangible assets are recorded at cost when internally generated assets and at fair value when acquired during a business acquisition. Intangible assets are amortized over their estimated useful lives as follows:


Software platform	5 years	Straight-line
Acquired intellectual property	5 years	Straight-line
Acquired customer relationships	5 years	Straight-line

Software platform

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


	- 42 -

•

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

•

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

•

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

•

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

•

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

•

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

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

Acquired intellectual property

The Company acquired intellectual property from the acquisition of Swiss Post Solutions Ireland Limited. The acquired intellectual property is a customer loyalty management platform which is a multi-currency, multi-lingual, cloud-based platform which offers real-time benefits and rewards. This acquired intellectual property is being amortized over the estimated useful life of 5 years.

Acquired customer relationships

The Company acquired customer relationships from the acquisition of Swiss Post Solutions Ireland Limited. The acquired customer relationships represent the customer base and corresponding contracts that have been generating revenue for the acquired business in prior and current fiscal periods. The value of these acquired customer relationships is being amortized over the estimated useful life of 5 years.

Use of estimates

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

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

ii)

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

iii)

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


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iv)

The estimates used in determining the fair value for the Derivative Liability, which is composed of valuations of Financing warrants, utilizes estimates made by management in determining the appropriate input variables in the Black-Scholes valuation model.

The carrying value of goodwill and intangibles acquired from acquisitions and estimates on any applicable impairment.

vi)

The purchase price allocation corresponding to completed acquisitions and the related contingent considerations.

Revenue recognition

The Company provides a full suite of promotions-related marketing services in the US, Canada and internationally, and generates revenue by designing, constructing, implementing and managing these promotions marketing services for its customers. Revenue is recognized in the period in which the services are rendered to the customer and collection is reasonably assured. Development fees are recorded as revenue when the set-up is complete, or on a percentage of completion basis for long-term developments. Monthly maintenance and loyalty catalyst services are recorded as revenue in the month which services are provided. Cash received in advance of services performed is recorded as deferred revenue.

Arrangements with multiple deliverables

Many of the Company’s arrangements with customers include multiple items such as campaign development and campaign management which are delivered at varying times. In these cases, the Company treats the delivered items as separate units of accounting if they have value to the customer on a stand-alone basis and, where the arrangement includes a general right of return relative to the delivered item, delivery or performance of undelivered items is considered probable and substantially in the Company’s control. The Company allocates the total arrangement consideration to all deliverables using its best estimate of their relative fair value, since vendor-specific objective or third-party evidence of the selling price is generally unavailable. It then recognizes revenue on the different deliverables in accordance with the policies set out above.


	- 44 -

Income taxes

Income tax expense consists of current and deferred tax expense. Current and deferred taxes are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income. Current tax is recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years. Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable earnings. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled based on tax rates and laws that have been enacted or substantively enacted by the end of the reporting period. The effect of a change in the enacted or substantively enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to which the adjustment relates. Deferred tax assets are recognized to the extent future recovery is probable. At each reporting period end, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Foreign currencies

IFRS requires that the functional currency of each entity in the consolidated group be determined separately and that each entity’s financial results and position should be measured using the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian Dollar, the functional currency of its wholly owned legal subsidiaries are:

Snipp Interactive Inc. (formerly Consumer Impulse, Inc.), - U.S. Dollar;

Snipp Interactive (India) Private Limited, - Indian Rupee;

Snipp Interactive Limited (formerly Swiss Post Solutions Ireland Limited), - European Euro;

Snipp Interactive Limited (United Kingdom), - British Pound;

Snipp Interactive AG, - Swiss Franc;

Hip Digital, Inc. (USA), - U.S. Dollar; and

Hip Digital Media Inc. (Canada), - Canadian Dollar.

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


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Financial instruments

Financial assets

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

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

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

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

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

Financial liabilities

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

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

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

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


	- 46 -

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

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

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

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

Warrants

The Company generally has two types of warrants: Transaction Warrants, which were issued as a result of the Company’s Qualifying Transaction on March 1, 2012; and, Financing Warrants, which are issued as a result of the various private placements completed by the Company.

When such warrants have an exercise price denominated in a different currency than the functional currency of the Company, these warrants are recorded at their fair value as a derivative liability and classified as fair value through profit or loss. Specifically, if the exercise price of a Financing Warrant is denominated in Canadian dollars the warrants recorded at their fair value and are classified as a derivative liability with the residual amount of the proceeds being allocated to the common shares. For Transaction Warrants that do not qualify as a derivative, the fair value of the warrants are separated on the statements of changes in equity (deficiency). For Financing Warrants that do not qualify as a derivative, the fair value of the warrants are not separated within the statements of changes in equity (deficiency).

The Company has also issued Finder’s Unit Options and Broker Unit Options which have been issued as a result of past financings. A unit option when exercised results in the issuance of a common share and a warrant entitling the holder to purchase an additional common share. The fair value of issued Finder’s Unit Options and Broker Unit Options are recorded as contributed surplus with a charge to common shares as a cost of financing.

Impairment

Financial assets

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

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


	- 47 -

Non-financial assets

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

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

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU to which goodwill relates. Where the recoverable amount of the CGU, including goodwill, is less than its carrying value, an impairment loss is recognized. Impairment losses related to goodwill cannot be reversed in future periods.

Loss per share

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

Share-based payments

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

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


	- 48 -

Recent accounting pronouncements

IFRS 9 was issued in November 2009 and subsequently amended as part of an ongoing project to replace IAS 39 Financial instruments: Recognition and measurement. The standard introduces new requirements for classifying and measuring financial assets and liabilities. The effective date of IFRS 9 is January 1, 2018. The Company intends to adopt the standard on its effective date and has not yet evaluated the impact on the consolidated financial statements.

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers ("IFRS 15"). IFRS 15 is effective for periods beginning on or after January 1, 2018 and is to be applied retrospectively. IFRS 15 clarifies the principles for recognizing revenue from contracts with customers. IFRS 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (i.e. service revenue and contract modifications) and improve guidance for multiple-element arrangements. Management is in the process of determining the extent of the impact of adoption of IFRS 15 and the possibility of early adoption.

IFRS 16, “Leases”, will be effective for annual periods beginning on or after January 1, 2019. The most significant change introduced by IFRS 16 is a single lessee accounting model, bringing leases on balance sheet for lessees. Management anticipates that this standard will be adopted in the Company's consolidated financial statements for the year beginning January 1, 2019 and has not yet considered the potential impact of the adoption of IFRS 16.

Research and Development

The Company performs Research and Development in relation to its technology products. During the last 3 fiscal years, the Company capitalized $1,038,248, $200,305, and $128,515 corresponding to internal development of its software platform.

The Company protects its Intellectual Property through trade secrets and copyrights, and currently has one patent. US Patent No. 6,157,814 was assigned to the Company by Google in March 2016 as the Company joined Google’s Patent Starter Program. This patent relates to an improved, non-intrusive method for advertising to wireless subscribers and was first issued on December 5, 2000.

Trend Information

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

Off-Balance Sheet Arrangements

The Company has no other Off-Balance Sheet Arrangements.


	- 49 -

Tabular Disclosure of Contractual Obligations

Table No. 3

Contractual Obligations

As of December 31, 2015


	Payments due by period

	Total	less than 1 year	1 – 3 years	3 – 5 Years	more than 5 years

Long-Term Debt Obligations	None	None	None	None	None
Capital Lease Obligations	None	None	None	None	None
Operating Lease Obligations *	$529,574	$259,671	$269,903	None	None
Purchase Obligations	None	None	None	None	None
Other Long-Term Liabilities	None	None	None	None	None
* The Operating Lease Obligations are for office leases in the US, Canada and Ireland. The US dollar equivalent has been calculated based on the closing New York Federal Reserve exchange rate of C$1.39/ US Dollar and 1.09 Euros/US Dollar on December 31, 2015.

The Company has an additional payment due under its acquisition agreement for Swiss Post Ireland. The amount is based upon the revenue for Swiss Post Ireland in fiscal 2015. The maximum payment due will be 841,700 Swiss Francs if 2015 revenue reaches or exceeds 1,195,000 Euros. Actual 2015 revenue was EUR 1,201,554.

Under the acquisition agreement for Hip Digital, the Company agreed to issue to Hip Digital shareholders up to a maximum 6,737,610 additional common shares of Snipp (the “Performance Shares”) subject to Hip Digital meeting certain financial targets during the period beginning on June 10, 2015 and ending on March 31, 2016 (the “Performance Period”). If Hip Digital’s revenue during the Performance Period is below the financial targets as indicated in the Merger Agreement, the amount of Performance Shares issuable will be adjusted proportionately downwards. Further, Snipp, Hip Digital and an advisor of Hip Digital entered into a settlement agreement that provides for the issuance of 456,066 common shares of Snipp to the Advisor in satisfaction of $300,000 owing from Hip Digital to the Advisor. The issuance of these 456,066 shares is also tied to the same financial targets as the Performance Shares and may also be adjusted proportionately downwards. In addition, in order to reward and incentivize certain key employees and service providers of Hip Digital, the Company may issue up to 1,938,279 common shares of Snipp, subject to the terms of a bonus grant agreement. 697,780 of these shares have been issued in 2015. The Performance Shares and shares to be issued to the Advisor are re-valued using the Company’s closing share price at each reporting period end with fluctuations in share price resulting in adjustments to the acquisition consideration payable in equity.

Safe Harbor

Not Applicable


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Item 6. Directors, Senior Management and Employees

Table No. 4 lists as of March 31, 2016 the names of the Directors of the Company. The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company. Ritesh Bhavnani, Atul Sabharwal, and Michael Dillion are residents of the United States, and Michael Cannata, Susan Doniz, Conrad Swanson and Ram Ramkumar are residents of Canada. Each director was re-elected at the Annual General Meeting held on June 1, 2015 except for Michael Cannata, who was named to the Board in October 2015, and Susan Doniz, who was named to the Board in February 2016. Both directors will stand for election for the first time at the next Annual General Meeting.

Table No. 4

Directors


Name	Age	Date First Elected/Appointed
Ritesh Bhavnani	40	March 1, 2012
Atul Sabharwal	40	March 1, 2012
Michael Cannata (1) (2) (3)	63	October 15, 2015
Michael Dillon (2)	55	April 10, 2014
Susan Doniz (1)	46	February 9, 2016
Ram Ramkumar (1) (2) (3)	64	November 6, 2014
Conrad Swanson (1) (2) (3)	67	January 21, 2010

(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Special Committee.

Table No. 5 lists, as of March 31, 2016, the names of the Executive Officers of the Company. The Executive Officers serve at the pleasure of the Board of Directors. All Executive Officers are residents of the United States with the exception of Jaisun Garcha, who is a resident of Canada, and Frank Sweeney, who is a resident of Ireland.

Table No. 5

Executive Officers


Name	Position	Age	Date of Appointment
Atul Sabharwal	Chief Executive Officer	40	March 1, 2012
Ritesh Bhavnani	President	40	March 1, 2012
Baris Karodogan	Chief Operating Officer	43	August 7, 2015
Jaisun Garcha	Chief Financial Officer	35	February 3, 2013
Frank Sweeney	Chief Technology Officer	49	February 11, 2016
Wilson (Andy) Bell	Executive Vice President	53	March 1, 2012
John Fauller	Executive Vice President	37	May 22, 2012
David Hargreaves	Chief Client Officer	47	November 6, 2014
Rahoul Roy	Chief Legal Officer	41	October 19, 2015


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Atul Sabharwal serves as Chief Executive Officer and a Director. He was one of the founders of Snipp and has over 18 years' experience in the telecommunications and digital media/mobile space industry. From 2006 to 2012, he served as the Executive Director of the ACME Group, a large telecommunications and energy infrastructure company with interests in South Asia and Africa. Between 2009 and 2011 he served as a board member of eSolar Inc., a Pasadena, CA-based company that is backed by Idealab, Google.org, General Electric Inc., Oak Investment Partners and the Quercus Trust. Mr. Sabharwal stepped down as a director after a successful investment by General Electric Inc. in the company. Mr. Sabharwal also is the founder of the Finalysis Group, a consulting company focused on helping growth businesses with a South Asian component. Between 2005 and 2007 he founded and ran a successful venture that provided remote services such as call center management and lead generation to corporate clients. His earlier roles also include positions at AOL, IBM Business Services (previously PWC Consulting), the Boston Consulting Group and Star TV, a subsidiary of News Corporation. Mr. Sabharwal has a Bachelor of Science degree in Economics (Hons. First Class) from St. Xaviers College, Calcutta, India and a Master of Business Administration degree from the Australian Graduate School of Management, Sydney, Australia and the Wharton School, University of Pennsylvania. Mr. Sabharwal spends 100% of his time on the Company’s affairs.

Ritesh Bhavnani serves as President of the Company and as a Director. He is one of the founders of Snipp and is a 13-year veteran of the digital media/mobile space industry. Mr. Bhavnani founded Snipp in March 2007 and has been working at the Company full-time since May 2010. From 2005 to May 2010, Mr. Bhavnani was employed at McKinsey & Company in its Media, Technology and Telecommunications practices, where he advised Fortune 500 companies, including large media conglomerates and cable providers, on issues related to digital convergence, strategy and online growth. In April 2000, Mr. Bhavnani founded Unsurface Inc., a consumer-facing digital media distribution service that was funded and whose assets were eventually acquired by Sony Music Corporation. From 2001 to 2003, Mr. Bhavnani was the General Manager at Precicompo Pvt Ltd. in India, an automobile component manufacturing business. Mr. Bhavnani has a Bachelor of Science degree from Stanford University, and a Master of Business Administration degree (with distinction) from INSEAD in France and Singapore. Mr. Bhavnani spends 100% of his time on the Company’s affairs.

Baris Karodogan serves as Chief Operating Officer of the Company. He joined Snipp in June 2015 and has been CEO of Hip Digital Media since 2008. Prior to joining Hip, he was a venture capitalist for ten years at U.S. Venture Partners, a leading Silicon Valley based venture capital firm, and at Fuse Capital. As a VC, Baris invested in a wide variety of industries including digital media, telecommunications and semiconductors. His recent board seats/investments included Hip Digital Media, Like.com (acquired by Google), SpectraLinear (acquired by SiLabs), Minerva Networks, Redline Communications and Aspendos Communications (acquired by Beceem Communications). Before becoming a venture capitalist, Baris worked in both engineering and marketing at 3Com/U.S. Robotics, where he developed software for the company’s networking and cable modem products and resulted in a number of U.S. patents. Baris holds an MBA from Stanford University Graduate School of Business, where he was an Arjay Miller Scholar, and an MS in Electrical Engineering from Stanford University. Mr. Karodogan spends 100% of his time on the Company’s affairs


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Jaisun Garcha serves as Snipp’s Chief Financial Officer. He has over 10 years of experience in the financial accounting industry and is experienced in managing all aspects of public company financial and management reporting, forecasting and analysis, corporate governance and risk management. He holds an MBA from Laurentian University and a Bachelor of Science degree, with a double major in computer science and general biology, as well as a Diploma in Accounting from the University of British Columbia. He is a Chartered Professional Accountant (CPA, CGA) and is a member of the Chartered Professional Accountants of British Columbia. Mr. Garcha spends 100% of his time on the Company’s affairs.

Frank Sweeney serves as Snipp’s Chief Technology Officer. He joined the Company as Managing Director for Ireland. He has over 20 years of experience in the loyalty and payments industry leading implementation solutions across a diverse range of clients including large banks, national utilities and major retailers around Europe. Prior to joining Snipp, Frank was founder and IT Director of 20-20insights, a leading company in the field of Loyalty, Payments and Business Intelligence which was purchased by Swisspost in 2011. More recently Frank was CTO for Swisspost Solutions Loyalty Division. Frank holds a BSc (Hons) in Software engineering from Cork Institute Technology. Mr. Sweeney spends 100% of his time on the Company’s affairs.

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

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

David Hargreaves serves as Chief Client Officer. He has over 20 years of experience in the marketing services industry, working for many well-known brands such as Virgin, Apple, Google and Facebook. Prior to joining the Company, Mr. Hargreaves was a partner at BrandGarage, where he helped large consumer brands drive marketing innovation by connecting them with the latest technology innovations. Mr. Hargreaves was also chief executive officer and co-founder of Beyond, a digital agency owned by U.K. firm Next Fifteen Communications Group PLC. In just over three years as CEO at Beyond, Mr. Hargreaves grew the company from zero to 85 people, expanded into offices in London and New York, and achieved revenues of approximately $10-million. Mr. Hargreaves has an MA from Oxford University. Mr. Hargreaves spends 100% of his time on the Company’s affairs.


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Rahoul Roy serves as Chief Legal Officer and Executive Vice President, Corporate Development. He has over 15 years of experience practicing law in both the United States and India, and, prior to joining the Company, was running his own corporate law practice in New York with an international clientele of serial entrepreneurs and multinational corporations. Being dually qualified in both jurisdictions, he advised and assisted clients on various commercial transactions, including venture capital and private equity investments; mergers and acquisitions; the licensing, developing and procuring of technology and content; joint ventures and other strategic alliances; and domestic and international outsourcing arrangements. Before establishing his own practice, Rahoul was a Special Counsel to Brown Rudnick LLP, where he chaired the firm’s India Practice, and a Partner of Poovayya & Co., an Indian law firm. Rahoul obtained his BA. LLB., (Hons) from the National Law School of India, and his LL.M., with Distinction, from the Georgetown University Law Center where he was also on the Dean’s List and an International Institute of Economic Law Fellow. Mr. Roy spends 100% of his time on the Company’s affairs.

Michael Dillon serves as a Director of the Company. Mr. Dillon is a seasoned shopper marketing professional with almost twenty years of experience in shopper marketing and retail-related promotion. He is currently Executive Director of Brand Activations & Shopper Marketing at Colangelo and was recently featured in Shopper Marketing's "Who's Who in Shopper Marketing Agencies". Prior to Colangelo, Mr. Dillon was Vice President of Shopper Marketing at Catalina Marketing. Mr. Dillon also formerly worked at PepsiCo where he served as Vice President, Brand Activation, Marketing. Mr. Dillon holds a Bachelor of Arts from the University of Georgia and an MBA from the University of Rochester's William E. Simon School of Business. Mr. Dillon spends 10% of his time on the Company’s affairs.

Susan Doniz serves as a Director of the Company. Ms. Doniz is a former executive at Procter & Gamble and Aimia, and is currently assisting CEOs work on Digital Transformation. She is a corporate board director of Liquor stores and also serves as a Director of Cymax, a large home furnishing emarketplace. Previously Ms. Doniz was the Global Chief Information Officer for Aimia Inc., a world leader in loyalty rewards management and an executive at Procter & Gamble. She also serves on several non-profit boards, including Chair of Development at the Ontario Science Centre and the Center for Digital Transformation at the University of California at Irvine. She graduated from University of Toronto, Engineering, and studied graduate courses in Europe (Netherlands) and Executive Learning at Harvard. She also holds an ICD.D designation from the Institute of Corporate Directors. Ms. Doniz spends 10% of her time on the Company’s affairs.

Michael Cannata serves as a Director of the Company. Mr. Cannata is a business strategist and serial entrepreneur with seven start-ups to his credit and senior management experience across a vast array of industries. Mr. Cannata has deep expertise in the field of intellectual property and has been elected to the IAM Strategy 300 list of World Leading IP Experts every year since the inception of the program in 2009. Mr. Cannata is currently Partner and Co-founder at Patent Monetization Inc. (PMI), one of the first specialist patent brokerage firms in North America. Mr. Cannata also founded Brokercom Inc. a financial services web-based software company and served as its President & CEO. Mr. Cannata also had a highly successful turn at Cybermation Inc., a systems management mainframe software company. He has both private and public company board experience including Selient Inc. a TSX Venture-listed corporation that provided loan origination software for the credit union market and Momentum Inc. a TSX listed company that provided managed data center services. Mr. Cannata has an undergraduate degree in business from York University, is the named inventor on two US patents and is a Charter Member of TiE. Mr. Cannata spends 10% of his time on the Company’s affairs.


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Ram Ramkumar serves as a Director of the Company. Mr. Ramkumar has had a 25-plus-year career as a successful business entrepreneur and has held numerous senior management and board level positions at several different publicly listed companies. He was chief financial officer, vice-president, operations, and general manager at Reff Inc., a manufacturer of high-end furniture. Subsequently, he was chief executive officer of Inscape Corp., where he oversaw the growth of the company from $20-million to $170-million in annual revenues. The company was recognized as one of the 50 best managed companies in Canada during this period. Mr. Ramkumar is also a principal shareholder and chairman of Process Research Ortech and ASL Print FX, a provider of high-end promotional print solutions to CPG companies. He is also a former member of the board of Toronto Rehabilitation Institute, and was a charter member of TiE, a not-for-profit organization that aims to foster entrepreneurial activity. He has previously served on the boards of several publicly listed corporations, including Angoss Software Corp., a provider of business analytics solutions to customers which was traded on the TSX, Cedara Software, a provider of medical imaging software which was traded on the TSX and NASDAQ, and Merge Healthcare, which was traded on the NASDAQ. Mr. Ramkumar spends 10% of his time on the Company’s affairs.

Conrad Swanson serves as a Director of the Company. He has 19 years' experience as a director of several publicly traded natural resource companies. Mr. Swanson is the former President and a current director of International Samuel Exploration Corp. since April 1996, the director of Gold Reach Resources Ltd. since October 2003, and was a director of Nanika Resources Inc. from May 2008 until December 2009, all of which are mineral exploration and development companies listed on the TSX Venture Exchange. Mr. Swanson has also previously served as a director of Independent Nickel Corp. and of New World Resource Corp., two TSX Venture Exchange listed companies. Mr. Swanson holds a BC in electronics from Vancouver College. Mr. Swanson spends 10% of his time on the Company’s affairs.

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

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

COMPENSATION

Beginning in fiscal 2015, the Company began compensating directors with cash compensation for their services in their capacity as directors, or for committee participation. There are no specific terms for payment for services, as cash payments are determined by the Compensation Committee each quarter based upon the amount of work performed by the individual directors. There are no director’s service contracts providing for benefits upon termination of their position as a Director.


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To assist the Company in compensating, attracting, retaining and motivating personnel, including Directors, the Company grants incentive stock options under a formal Stock Option Plan which was first approved by shareholders at the Annual General and Special Meeting of shareholders held on October 5, 2012. An updated Stock Option Plan was approved by a vote of the shareholders at the Annual and Special Meeting of Shareholders held on June 1, 2015.

Table No. 6 sets forth the compensation paid to the Company’s executive officers and members of its administrative body during the last three fiscal years.

Table No. 6

Summary Compensation Table


Name	Fiscal Year	Salary		Options Granted	Other Compensation		Total Compensation

Atul Sabharwal Chief Executive Officer and Director (1)	2015 2014 2013	$	116,667 N/A N/A	- 250,000 300,000	$	284,474 300,000 200,000	$	401,141 300,000 200,000

Ritesh Bhavnani President and Director (2)	2015 2014 2013	$	200,000 150,000 89,800	- 250,000 300,000	$	210,031 155,855 114,259	$	410,031 305,855 204,059

Baris Karodogan (3) Chief Operating Officer	2015	$	161,960	1,000,000	$	128,362	$	290,323

Jaisun Garcha Chief Financial Officer (4)	2015 2014 2013	$	N/A N/A N/A	- 125,000 150,000	$	164,287 47,599 36,125	$	164.287 47,599 36,125

Wilson (Andy) Bell Executive Vice President (5)	2015 2014 2013	$	180,000 130,000 130,000	- 250,000 300,000	$	31,999 59,168 6,959	$	211,999 189,168 136,959

John Fauller Executive Vice President (6)	2015 2014 2013	$	130,000 115,000 115,000	- 100,000 400,000	$	16,579 28,614 8,030	$	146,579 143,614 123,030

David Hargreaves Chief Client Officer (7)	2015 2014	$	166,667 22,917	- 750,000	$	50,202 Nil	$	216,869 22,917

Rahoul Roy Chief Legal Officer (8)	2015	$	33,333	400,000	$	8,166	$	41,499


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Name		Fiscal Year	Salary		Options Granted	Other Compensation		Total Compensation

Michael Cannata Director (9)		2015	$	N/A	200,000	$	9,000	$	9,000

Michael Dillon Director (10)		2015 2014	$	N/A N/A	50,000 200,000	$	95,000 Nil	$	95,000 Nil

Ram Ramkumar Director (11)		2015 2014	$	N/A N/A	50,000 200,000	$	34,500 Nil	$	34,500 Nil

Conrad Swanson, Director (12)		2015 2014 2013		N/A N/A N/A	50,000 50,000 Nil	$	34,500 Nil Nil	$	34,500 Nil Nil

Jim Santora Former Director (13)		2014 2013		N/A N/A	Nil Nil		Nil Nil		Nil Nil

Anthony Durkacz, Former Chief Financial Officer and former Director (14)		2013		N/A	100,000	$	3,968	$	3,968

(1)	“Other Compensation” for Atul Sabharwal including $83,333 (fiscal 2014 - $150,000; fiscal 2013 - $150,000) for consulting fees for his services as CEO; $200,000 (2014 - $150,000; 2013 - $50,000) as an annual bonus; and $1,141 (2014 - $Nil; 2013 - $Nil) for medical insurance.
(2)	“Other Compensation” for Ritesh Bhavnani includes $200,000 (2014 - $150,000; 2013 - $50,000) as an annual bonus; $10,031 (2014 - $5,855 2013 - $4,059) for medical insurance; and $Nil (2014 - $Nil; 2013 - $60,200) for consulting fees for services provided in addition to his services as an officer and former Chairman.
(3)	“Other Compensation” for Baris Karodogan includes annual bonus of $10,000 and $5,470 for medical insurance. It also includes $112,892 which is the value of Snipp common shares received pursuant to the acquisition of Hip Digital.
(4)	"Other Compensation" for Jaisun Garcha include $99,287 (2014 - $32,599; 2013 - $36,125) for consulting fees and $65,000 (2014 - $15,000; 2013 - $Nil) for annual bonus for his services as CFO. These amounts were paid to 681315 B.C., a private company owned by Jaisun Garcha.
(5)	“Other Compensation” for Wilson Bell includes $20,000 (2014 - $50,000; 2013 - $Nil) as an annual bonus and $11,999 (2014 - $9,168; 2013 - $6,959) for medical insurance.
(6)	"Other Compensation" for John Fauller includes $10,000 (2014 - $25,000) as an annual bonus and $6,579 (2014 - $3,614; 2013 - $8,030) for medical insurance.
(7)	"Other Compensation" for David Hargreaves includes $50,000 (2014 - $Nil) as an annual bonus and $202 (2014 - $Nil) for medical insurance.
(8)	"Other Compensation" for Rahoul Roy includes $5,000 as an annual bonus and $3,166 for medical insurance.
(9)	“Other Compensation” for Michael Cannata includes directors’ fees of $9,000.
(10)	“Other Compensation” for Michael Dillon includes $29,000 for directors’ fees and $66,000 for consulting fees for services provided in addition to his service as a director.
(11)	“Other Compensation” for Ram Ramkumar includes directors’ fees of $34,500 (2014 - $Nil).
(12)	“Other Compensation” for Conrad Swanson includes directors’ fees of $34,500 (2014 - $Nil; 2013 - $Nil).
(13)	Mr. Santora resigned from the Board of Directors in November 2014. He was named to the Company’s advisory board upon his resignation from the Board.
(14)	Other Compensation" for Anthony Durkacz is for consulting fees for his services as CFO. These fees were paid Fortius Research & Trading Corp., a private company owed by Anthony Durkacz.

No funds were set aside or accrued by the Company during Fiscal 2015 to provide pension, retirement or similar benefits for Directors or Executive Officers.


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Written Management Agreements

As of March 31, 2016, the Company has written agreements in effect with seven of executive officers.

Atul Sabharwal

Under an Employment Agreement between the Company and Atul Sabharwal dated June 1, 2015, Atul Sabhawal (the “Executive”) agrees to serve as Chief Executive Officer for an annual base salary of $200,000. In addition, he is eligible to receive an annual bonus of up to 100% of his base salary as determined by the Compensation Committee. The Compensation Committee will also review the base salary on an annual basis and may increase the annual base salary upon such review. The review will not decrease the base salary unless the decrease is applicable to substantially all senior executives but totaling no more than 20% in the aggregate. Employment is “at will” and may be terminated by either party, and the executive will not be entitled to receive any additional compensation or benefits other than what has accrued and is unpaid except in the case of a change of control. Upon a change in control, if the Executive is terminated by the Company for reasons other than for cause, disability or the Executive’s death, or if the Executive terminates his employment for good reason, the Executive shall receive a payment equal to 1 times his annual base salary if he approved of the change of control, or if he officially objected to the change of control, he will receive a payment equal to 2 times his base salary. He will also receive a payment equal to his incentive bonus in effect immediately prior to the change of control date. The agreement remains in effect until terminated by either party in accordance with the provisions of the agreement.

Ritesh Bhavnani

Under an Employment Agreement between the Company and Ritesh Bhavanai dated June 1, 2015, Ritesh Bhavanai (the “Executive”) agrees to serve as President for an annual base salary of $200,000. In addition, he is eligible to receive an annual bonus of up to 100% of his base salary as determined by the Compensation Committee. The Compensation Committee will also review the base salary on an annual basis and may increase the annual base salary upon such review. The review will not decrease the base salary unless the decrease is applicable to substantially all senior executives but totaling no more than 20% in the aggregate. Employment is “at will” and may be terminated by either party, and the executive will not be entitled to receive any additional compensation or benefits other than what has accrued and is unpaid except in the case of a change of control. Upon a change in control, if the Executive is terminated by the Company for reasons other than for cause, disability or the Executive’s death, or if the Executive terminates his employment for good reason, the Executive shall receive a payment equal to 1 times his annual base salary if he approved of the change of control, or if he officially objected to the change of control, he will receive a payment equal to 2 times his base salary. He will also receive a payment equal to his incentive bonus in effect immediately prior to the change of control date. The agreement remains in effect until terminated by either party in accordance with the provisions of the agreement.


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Baris Karadogan

Under an agreement between Hip Digital and Baris Karadogan (the “Executive”) originally dated January 1, 2011 and as amended on June 2, 2011, the Executive agrees to serve as the CEO of Hip Digital for an annual base salary of $250,000. The Executive will also be eligible for a bonus as determined by the Board of Directors. The Executive has the right to terminate the agreement upon 60 days’ notice. The Company may terminate the agreement upon 30 days’ notice or immediately for cause. If the Executive is terminated for any other reason than cause, then the Executive and Company shall enter into a consulting agreement under which the Executive will provide 5 hours of consulting work per month at an hourly rate of $50 per hour for a period which will end on December 31, 2016. If the Executive is terminated within 6 months of a change of control for any reason other than for cause, disability, or death, the Executive shall be entitled to severance paid for 4 months at the current rate of base salary, and a pro-rated payment of the Executive’s targeted bonus for the year to be paid over 6 months. The agreement originally had a term of 1 calendar year, but two months prior to the end of the agreement term, the parties shall begin a discussion regarding an extension or renewal of the agreement. If either party wishes not to renew or extend the agreement, they shall deliver the other party notice no later than one month prior to the end of the agreement term.

David Hargreaves

Under an agreement between the Company and David Hargreaves (the “Executive”) dated November 4, 2014, the Executive agrees to serve as Chief Customer Satisfaction Officer for a base salary of $150,000 annually. Such salary will be reviewed at regular intervals, and may be increased at the sole discretion of the Company. The Executive’s performance will also be reviewed by the Compensation Committee to determine if the performance warrants a bonus payment. Employment is “at will” and may be terminated by either party at any time and for any reason, with or without cause.

John Fauller

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

Wilson Bell

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


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Rahoul Roy

Under an employment agreement between the Company and Rahoul Roy (the “Executive”) dated October 19, 2015, the Executive agrees to serve as Chief Legal Officer and Executive Vice President Corporate Development at a starting base salary of $200,000 per year. The Compensation Committee will review the base salary on an annual basis and may increase the annual base salary upon such review. The review will not decrease the base salary unless the decrease is applicable to substantially all senior executives but totaling no more than 20% in the aggregate. The Executive is also eligible to receive a cash bonus as determined by the Compensation Committee. Employment is “at will” and can be terminated by either the Executive or Company at any time and for any reason, with or without cause, by providing at least 4 weeks prior written notice.

Board Practices

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

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

The Board of Directors currently consists of seven directors: Ram Ramkumar (Chairman), Ritesh Bhavnani (President), Atul Sabharwal (CEO), Michael Cannata, Michael Dillon, Susan Doniz, and Conrad Swanson. A majority of the Company’s directors are classified as “Independent”. Bhavnani and Sabharwal are Company employees, and Dillon performs consulting work for the Company. Cannata, Doniz, Ramkumar and Swanson are independent. The Board has determined that the current size and constitution of the Board is appropriate for the Corporation’s current stage of development.

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

The Board facilitates the exercise of independent supervision over management through these various meetings.

At present, the Board has two formal committees of the Audit Committee and Compensation Committee. The composition of the Board is such that the independent directors have significant experience in business affairs and, as a result, are able to provide significant and valuable independent supervision over management.


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

Nomination of Directors

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

Compensation

Compensation matters are delegated by the Board to the Compensation Committee. The Corporation may grant stock options to directors of the Corporation in consideration for their services provided to the Corporation.

Assessment of Effectiveness

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

Audit Committee

The Company's Audit Committee operates under a written charter which is reviewed by the Board of Directors on an annual basis. A copy of the current Audit Committee Charter was included in the Company’s Management Information Circular dated April 27, 2015 which has been filed as an exhibit to the Company’s Form 6-K filed on May 11, 2015.

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

Composition

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

Role

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


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

Composition

The current Audit Committee members are Ram Ramkumar (Chair), Conrad Swanson, Michael Cannata and Susan Doniz. All the current members are “independent”. Each member is financially literate. The Committee met 4 times in 2015.

Compensation Committee

The Board has a Compensation Committee which is tasked with reviewing the compensation and establishing compensation policies for the Company’s executives. The Committee also designs compensation packages to attract, retain and motivate quality employees while not exceeding market rates. The recommendations committee are reached primarily by comparing the remuneration paid by the Company with publically available information on remuneration paid by other reporting issuers that the Compensation Committee feels are comparable issuers within the same business of the Corporation.

The current Compensation Committee members are Conrad Swanson (Chair), Ram Ramkumar, Michael Cannata, and Michael Dillion. Conrad Swanson, Ram Ramkumar, and Michael Cannata are considered to be “independent”. All members of the Compensation Committee are experienced in the oversight of executive and operational management teams as a result of their experience with various private and public sector businesses. The Committee met 3 times in 2015.

Special Committee

During 2015, the Board of Directors began considering and reviewing potential business combinations, mergers, and acquisitions. The Board established a Special Committee of independent directors to properly oversee and supervise any detailed negotiations, and implementation of any proposed combinations.

The current members of the Special Committee are Ram Ramkumar, Conrad Swanson, and Michael Cannata. The Committee met 2 times in 2015.

Staffing

As of March 31, 2016, the Company has 112 employees and 9 executive officers (December 31, 2014 – 24 employees and 5 executive officers). These employees include 48 in Engineering (3 in the United States, 16 in Canada, 10 in India, and 18 in Ireland); 11 in Marketing (8 in Canada and 3 in India); 27 in Operations (13 in the United States, 4 in Canada, 4 in India, and 6 in Ireland); 20 in Sales (9 in the United States, 5 in Canada, 1 in Ireland, 3 in the UK, and 2 in Switzerland) and 6 in finance and administration (3 in the United States and 3 in India). The Company also engages consultants on an as needed basis.

The Company currently has its primary offices in Washington, D.C., Dallas, Milwaukee, Vancouver, Toronto, Cork, Ireland, and Mumbai, India.


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Share Ownership

Table No. 7 lists, as of April 22, 2016, Directors and Executive Officers who beneficially own the Registrant's voting securities and the amount of the Registrant's voting securities owned by the Directors and Executive Officers as a group.

Table No. 7

Shareholdings of Directors and Executive Officers


Title of Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Common	Atul Sabharwal (1)	9,540,405	7.56%
Common	Ritesh Bhavnani (2)	9,690,906	7.68%
Common	Baris Karodogan (3)	333,723	0.27%
Common	Jaisun Garcha (4)	2,402,667	1.94%
Common	Wilson (Andy) Bell (5)	3,855,048	3.10%
Common	John Fauller (6)	933,333	0.75%
Common	David Hargreaves (7)	583,333	0.47%
Common	Rahoul Roy (8)	1,579,882	1.28%
Common	Frank Sweeney (9)	333,334	0.27%
Common	Michael Cannata (10)	Nil	-
Common	Michael Dillon (11)	216,667	0.18%
Common	Susan Doniz (12)	Nil	-
Common	Ram Ramkumar (13)	716,667	0.58%
Common	Conrad Swanson (14)	844,334	0.68%

	Total Directors/Officers	31,030,299	23.19%


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(1)	Of these shares, 2,422,891 represent currently exercisable warrants and 383,333 represent currently exercisable stock options. An additional 666,667 stock options have been granted but have not yet vested.
(2)	Of these shares, 2,422,891 represent currently exercisable warrants and 383,333 represent currently exercisable stock options. An additional 666,667 stock options have been granted but have not yet vested.
(3)	Of these shares, 333,333 represent currently exercisable stock options. An additional 766,667 stock options have been granted but not yet vested.
(4)	Of these shares, 400,000 represent currently exercisable warrants and 191,667 represent currently exercisable stock options. An additional 183,333 options have been granted but have not yet vested. 200,000 of the common shares are owned by 681315 B.C., a private company owned by Jaisun Garcha.
(5)	Of these shares, 742,642 represent currently exercisable warrants and 383,333 represent currently exercisable stock options. An additional 266,667 stock options have been granted but have not yet vested.
(6)	Of these shares, 933,333 represent currently exercisable stock options. An additional 166,667 stock options have been granted, but not yet vested.
(7)	Of these shares, 583,333 represent currently exercisable share purchase options. An additional 366,667 stock options have been granted, but not yet vested.
(8)	Of these shares, 309,434 represent currently exercisable warrants and 133,333 represent currently exercisable share purchase options. An additional 366,667 stock options have been granted, but not yet vested.
(9)	Of these shares, 333,334 represent currently exercisable stock options. An additional 366,666 stock options have been granted but not yet vested.
(10)	200,000 options have been granted but not yet vested.
(11)	Of these shares, 216,667 represent currently exercisable stock options. An additional 33,333 stock options have been granted but not yet vested.
(12)	200,000 options have been granted but not yet vested.
(13)	Of these shares, 216,667 represent currently exercisable stock options. An additional 33,333 stock options have been granted but not yet vested.
(14)	Of these shares, 33,334 represent currently exercisable stock options. An additional 66,666 stock options have been granted but not yet vested.

Based upon 123,413,470 common shares outstanding as of April 22, 2016, share purchase warrants and stock options held by each beneficial holder exercisable within sixty days as detailed in Table No. 11, “Stock Options Outstanding” below.

Item 7. Major Shareholders and Related Party Transactions

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

On April 22, 2016, the shareholders' list for the Company's common shares showed 50 registered shareholders, including depositories, and 123,413,470 common shares issued and outstanding. Of the total registered non-depository shareholders, 19 are resident in Canada holding 102,311,671 common shares, or 83% of the total issued and outstanding; 24 are resident in the United States holding 20,376,432 common shares, or 16% of the total issued and outstanding; and 6 are resident in other countries holding 725,367 common shares, or 1% of the total issued and outstanding.

The Company is aware of three persons/companies who beneficially own 5% or more of the Registrant's voting securities. Table No. 8 lists as of April 22, 2016, persons and/or companies holding 5% or more beneficial interest in the Company's outstanding common stock


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Table No. 8

5% or Greater Shareholders


Title of Class		Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Common		Lark Investments Inc. (1)	22,333,954	18.00%
Common		Atul Sabharwal (2)	9,540,405	7.56%
Common		Ritesh Bhavnani (3)	9,690,906	7.68%

(1)	Of these shares, 681,818 represent currently exercisable warrants.
(2)	Of these shares, 2,422,891 represent currently exercisable warrants and 383,333 represent currently exercisable stock options. An additional 666,667 stock options have been granted but have not yet vested.
(3)	Of these shares, 2,422,891 represent currently exercisable warrants and 383,333 represent currently exercisable stock options. An additional 666,667 stock options have been granted but have not yet vested.

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

RELATED PARTY TRANSACTIONS

As of December 31, 2015, the Company owed a total of $557,055 (2014 - $399,578; 2013 - $208,476) to Officers and Directors which represent unpaid salaries and compensation and unpaid expenses. The amounts are non-interest bearing, unsecured, and have no specified terms of repayment.

Item 8. Financial Information

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

Current Legal Proceedings

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

Dividends

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


	- 65 -

Item 9. Offer and Listing of Securities

As of December 31, 2015, the end of the Company's most recent fiscal year, the authorized capital of the Company consisted of an unlimited number of Common Shares without par value, and an unlimited number of Preferred Shares without par value. There were 105,753,715 Common Shares and no Preferred Shares issued and outstanding as of December 31, 2015, and 128,336,804 Common Shares and no Preferred Shares issued and outstanding as of April 28, 2016.

NATURE OF TRADING MARKET

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

Table No. 9 lists the volume of trading and high, low and closing sale prices on the TSX Venture Exchange for the Company's common shares for:

each of the last six months ending March 31, 2016;

each of the last twelve fiscal quarters ending the three months ended March 31, 2016; and

each of the last five fiscal years ending December 31, 2015.

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


	- 66 -

Table No. 9

TSX Venture Exchange

Common Shares Trading Activity


	- Sales-
	Canadian Dollars
Period	High	Low	Close

March 2016	$ 0.36	$ 0.27	$ 0.32
February 2016	0.41	0.26	0.29
January 2016	0.45	0.33	0.36
December 2015	0.61	0.43	0.45
November 2015	0.62	0.41	0.62
October 2015	0.61	0.43	0.45

Three Months Ended March 31, 2016	$ 0.32	$ 0.29	$ 0.32
Three Months Ended December 31, 2015	0.45	0.45	0.45
Three Months Ended September 30, 2014	0.38	0.15	0.31
Three Months Ended June 30, 2015	0.19	0.14	0.17

Three Months Ended March 31, 2015	$ 0.72	$ 0.68	$ 0.69
Three Months Ended December 31, 2014	0.63	0.09	0.61
Three Months Ended September 30, 2014	0.38	0.15	0.31
Three Months Ended June 30, 2014	0.19	0.14	0.17

Three Months Ended March 31, 2014	$ 0.22	$ 0.09	$ 0.13
Three Months Ended December 31, 2013	0.13	0.08	0.13
Three Months Ended September 30, 2013	0.11	0.07	0.11
Three Months Ended June 30, 2013	0.12	0.06	0.09


Fiscal Year Ended December 31, 2015	$ 0.45	$ 0.45	$ 0.45
Fiscal Year Ended December 31, 2014	0.63	0.09	0.61
Fiscal Year Ended December 31, 2013	0.13	0.05	0.13
Fiscal Year Ended December 31, 2012	0.24	0.08	0.12
Fiscal Year Ended December 31, 2011	0.15	0.10	0.10

The Company's common shares also trade Over-the-counter in the United States on OTC Link (formerly Pink Sheets) under the symbol “SNIPF”. The shares began to trade on OTC Link on February 19, 2016.

Table No. 9a lists the volume of trading and high, low and closing sale prices on OTC Link for the Company's common shares since inception of trading.


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Table No. 9a

OTC Link Over-the-counter

Common Shares Trading Activity


	- Sales-
	United States Dollars
Period	High	Low	Close

March 2016	$ 0.26	$ 0.20	$ 0.24
February 2016	0.24	0.20	0.21

Table No. 10 lists, as of March 31, 2016, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.

Table No. 10

Share Purchase Warrants Outstanding


Number of Share Purchase Warrants Outstanding	Exercise Price/share	Expiration Date

6,188,688	$0.13	March 1, 2017
7,727,800	$0.20	July 24, 2017
11,492,158	$0.63	February 4, 2017
TOTAL 25,408,646

Table No. 10a lists, as of March 31, 2016, Finder’s Options outstanding, the exercise price, and the expiration date of the options.

Table No. 10a

Finder’s Options Outstanding


Number of Finder’s Options Outstanding	Exercise Price/Unit	Expiration Date

25,200	C$0.15*	July 14, 2017

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

Table No. 10b lists, as of March 31, 2016, Broker Unit Options outstanding, the exercise price, and the expiration date of the option.


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Table No. 10b

Broker Unit Options Outstanding


Number of Broker Unit Options Outstanding	Exercise Price/Unit	Expiration Date

1,785,818	C$0.55*	February 4, 2017

* The Broker Unit Options were issued pursuant to the private placement of common share units completed on February 4, 2015. Each Broker Unit Option entitles the holder to purchase one Broker Unit at an exercise price of C$0.55 until February 4, 2017. Each Broker Unit will consist of one common share and one common share purchase warrant, with each warrant entitling the holder to purchase one common share at an exercise price of $0.63 until February 4, 2017.

American Depository Receipts. Not applicable.

Other Securities to be Registered. Not applicable

The TSX Venture Exchange

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

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

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

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

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

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


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

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

Item 10. Additional Information

Share Capital

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

During January 1, 2016 through April 28, 2016, the Company has issued 22,583,089 common shares:

The Company closed the first, second and third tranches of a non-brokered private placement financing consisting of 22,323,334 common shares issued at a price of C$0.30 per share for proceeds of C$6,697,000.

158,000 common shares were issued pursuant to the exercise of warrants at a price of C$0.15 per share for proceeds of C$23,700.

100,000 common shares were issued pursuant to the exercise of stock options at a price of C$0.185 per share for proceeds of C$18,500.

1,755 common shares were issued as part of the Hip Digital acquisition shares at a deemed price of C$0.68 per share for a deemed value of C$1,193.

During Fiscal 2015, the Company has issued 35,826,077 common shares:

The Company closed a bought deal private placement financing consisting of 22,322,727 common share units at a price of C$0.55 per unit for gross proceeds of C$12,277,500. Each unit consists of one common share and one half of a share purchase warrant, with each whole warrant exercisable into one common share at a price of US$0.63 until February 4, 2017. The expiry date of the warrants may be accelerated at the option of the Company if the closing trading price of the common shares is equal to or greater than C$1.20 for a period of 20 consecutive trading days. In addition to cash commission of 8% of the gross proceeds of the offering, the underwriters were issued an aggregate of 1,785,818 broker options which entitles the holder to acquire units on the same terms as the units in the underwritten offering, and 661,591 units were issued as a corporate finance advisory fee.

3,921,679 common shares were issued pursuant to the acquisition of Hip Digital at a deemed value of $2,903,640.

697,780 common shares were issued to Hip Digital employees at a deemed value of $224,997.


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524,000 common shares were issued pursuant to the exercise of stock options for proceeds of $58,093.

7,697,800 common shares were issued pursuant to the exercise of common share purchase warrants for proceeds of $1,191,816.

During Fiscal 2014 ended December 31, 2014, the Company issued 17,475,000 common shares:

6,350,000 common share units were issued pursuant to the second tranche of a private placement. Each common share unit was issued at a price of C$0.10 for gross proceeds of $573,469 (C$635,000). Each unit consisted of one common share and one-half of a common stock purchase warrant, with each full warrant exercisable into a common share at a price of C$0.15 until January 24, 2016.

10,400,000 common share units were issued pursuant to a non-brokered private placement. Each common share unit was issued at a price of C$0.15 per unit for gross proceeds of $1,450,020 (C$1,560,000). Each unit consisted of on common share and one common share purchase warrant, with each warrant exercisable into one common share at a price of $0.20 until July 24, 2017. The Company paid finder’s fees of $110,425 (C$119,086) and filing fees of $8,661 (C$9,318) in cash and issued 792,000 finder’s options. Each finder’s option allows the holder to purchase one unit at C$0.15 until July 14, 2017. Each finder’s unit will consist of one common share and one common share purchase warrant, with each warrant convertible into one common share at an exercise price of $0.20 until July 24, 2017.

100,000 common shares were issued pursuant to the exercise of stock options for proceeds of $9,314.

625,000 common shares were issued pursuant to the exercise of warrants for proceeds of $227,628.

During Fiscal 2013 ended December 31, 2013, the Company issued a total of 4,400,000 common shares:

2,000,000 common shares were issued in a private placement at a price of C$0.10 per share for gross proceeds of $192,520 (C$200,000).

2,400,000 common share units were issued at a price of C$0.10 per unit for gross proceeds of $225,216 (C$240,000) as the first tranche of a non-brokered private placement. Each unit consisted of one common share and one-half of a common share purchase warrant, with each full warrant exercisable into one common share at a price of C$0.15 until December 6, 2015.

Shares Issued for Assets Other Than Cash

During fiscal 2016 through April 28, 2016, the Company issued 1,755 common shares as acquisition shares at a deemed price of C$0.39 pursuant to the Hip Digital acquisition agreement.


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During fiscal 2015, the Company issued 3,921,679 common shares and issued 697,780 common shares to Hip Digital employees pursuant to the Hip Digital acquisition agreement. The Company also issued 661,591 common stock units as a corporate advisory fee pursuant to a bought deal private placement, with each unit consisting of one common share and one half of a share purchase warrant.

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

Other than the transactions listed above, the Company has issued no shares for assets other than cash during the last 5 fiscal years.

Shares Held By Company

-No Disclosure Necessary-

ESCROW SHARES

The Company previously had common shares in escrow subject to two separate escrow agreements, the “IPO Escrow Agreement” and the “Merger Escrow Agreement”. The final common shares were released from escrow under both agreements were released from escrow on March 5, 2015. As of March 31, 2015, the Company has no common shares remaining in escrow.

Stock Options

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

The Company has a “Fixed” Stock Option Plan (the "Plan") which is required to be approved by shareholders annually. The Plan was originally approved by shareholders at the Annual and Special Meeting of shareholders held on October 5, 2012 and was continued by a vote of the shareholders at the Annual and Special Meeting held on June 1, 2015.

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


	- 72 -

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

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

A copy of the Company’s current Stock Option Plan as approved by shareholders at the Annual General Meeting held on June 1, 2015 has been included as an exhibit to the Company’s Form 6-K filed on May 11, 2015.

The names and titles of the Directors/Executive Officers of the Registrant to whom outstanding stock options have been granted and the numbers of common shares subject to such options are set forth in Table No. 11 as of March 31, 2016, as well as the number of options granted to Directors and all employees as a group.


	- 73 -

Table No. 11

Stock Options Outstanding


Name	Number of Options	Number of Options Currently Vested	CDN$ Exercise Price	Expiration Date

Atul Sabharwal, CEO and Director	100,000 200,000 250,000 500,000	100,000 200,000 83,333 Nil	$ 0.10 0.12 0.55 0.38	February 25, 2018 December 18, 2018 December 29, 2019 February 11, 2021

Ritesh Bhavnani, President and Director	100,000 200,000 250,000 500,000	100,000 200,000 83,333 Nil	$ 0.10 0.12 0.55 0.38	February 25, 2018 December 18, 2018 December 29, 2019 February 11, 2021

Baris Karodogan, Chief Operating Officer	1,000,000 100,000	Nil Nil	$ 0.64 0.38	June 14, 2020 February 11, 2021

Jaisun Garcha, Chief Financial Officer	50,000 100,000 125,000 100,000	50,000 100,000 41,667 Nil	$ 0.10 0.12 0.55 0.38	February 25, 2018 December 18, 2018 December 29, 2019 February 11, 2021


John Fauller, Executive Vice President	500,000 200,000 200,000 100,000 100,000	500,000 200,000 200,000 33,333 Nil	$ 0.19 0.10 0.12 0.55 0.38	August 27, 2017 February 25, 2018 December 18, 2018 December 29, 2019 February 11, 2021

David Hargreaves, Chief Client Officer	500,000 250,000 200,000	333,334 83,333 Nil	$ 0.34 0.55 0.38	November 6, 2019 December 29, 2019 February 11, 2021

Rahoul Roy, Chief Legal Officer	400,000 100,000	133,333 Nil	$ 0.40 0.38	October 19, 2020 February 11, 2021

Frank Sweeney, Chief Technology Officer	500,000 200,000	333,334 Nil	$ 0.68 0.38	February 9, 2020 February 11, 2021

Michael Cannata, Director	200,000	Nil	$0.465	October 15, 2020


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Name	Number of Options	Number of Options Currently Vested	CDN$ Exercise Price	Expiration Date

Michael Dillon, Director	200,000 50,000	200,000 Nil	$0.105 0.68	April 10, 2019 June 8 2020

Susan Doniz, Director	200,000	Nil	$ 0.38	February 11, 2021

Ram Ramkumar, Director	200,000 50,000	200,000 Nil	$ 0.34 0.68	November 6, 2019 June 8 2020

Conrad Swanson, Director	50,000 50,000	16,667 Nil	$ 0.55 0.68	December 29, 2019 June 8 2020

Employees/Consultants/ Former Officers/Directors	280,000 100,000 100,000 100,000 350,000 100,000 50,000 100,000 175,000 566,666 250,000 720,000 341,666 3,096,000 465,000 190,000 200,000 120,000 120,000 1,204,080 490,000	280,000 100,000 100,000 100,000 350,000 100,000 50,000 50,000 75,000 188,889 83,333 240,000 113,889 Nil Nil Nil 50,000 Nil Nil Nil Nil	$0.19 0.10 0.10 0.10 0.12 0.10 0.185 0.25 0.33 0.55 0.65 0.68 0.65 0.41 0.41 0.41 0.44 0.45 0.42 0.38 0.38	August 27, 2017 February 15, 2018 February 25, 2018 July 15, 2018 December 18, 2018 April 20, 2019 August 11, 2019 September 10, 2019 November 26, 2019 December 29, 2019 January 27, 2020 February 9, 2020 March 26, 2020 July 9, 2020 August 13, 2020 September 15, 2020 October 5, 2020 October 22, 2020 November 10, 2020 February 9, 2021 February 12, 2021

Total Officers and Directors	8,475,000	3,575,000

Total Employees/Consultants/ Former Officers/Directors	9,118,412	1,918,611

Total	17,593,412	5,493,611

Resolutions/Authorization/Approvals

-No Disclosure Necessary-


	- 75 -

Memorandum and Articles of Association

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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


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The Company may by directors’ resolution, unless an alteration of the Company’s Notice of Articles would be required, in which case by ordinary resolution:

create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;

subdivide or consolidate all or any of its unissued, or fully paid issued, shares;

if the Company is authorized to issue shares of a class of shares with par value:

(i)

decrease the par value of those shares; or

(ii)

if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;

alter the identifying name of any of its shares; or

otherwise alter its shares or authorized share structure when required or permitted to do so by the Business Corporations Act,

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

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

Subject to special rights and restrictions attached to any lass or series of shares, the quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 33 1/3% of the issued shares of the Company entitled to be voted at the meeting. The majority required for the passage of a special resolution or a special separate resolution shall be 2/3 of the votes cast on the resolution.


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There are no limitations upon the rights to own securities.

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

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

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

Material Contracts

Cross-Marketing Agreement between e-Winery Solutions, NXT-Wine Mobile LLC and the Company dated November 9, 2012. Under the agreement, the Company will provide mobile marketing services to e-Winery customers. The initial term of the agreement is for two years, and shall be renewed annually thereafter unless either party gives notice of cancellation at least 60 days prior to the anniversary date of the renewal. A copy of this agreement has been filed as an exhibit to the Company’s Form 20-F Registration Statement.

Consulting agreement between the Company and Finalysis Group LLC (Atul Sabharwal) dated October 31, 2011. Under the agreement, Atul Sabhawal will provide consulting services to the Company as a “C” level executive of the Company for a period of three years. Compensation will be a minimum of $150,000 annually, and consultant will be entitled to a severance payment of $75,000 if the consultant is terminated by the Company without “Good Cause” and or by the consultant for “Good Reason”. A copy of this agreement has been filed as an exhibit to the Company’s Form 20-F Registration Statement.

Consulting agreement between the Company and Ritesh Bhavnani dated October 31, 2011. Under the agreement, Ritesh Bhavnani will provide consulting services to the Company as the Chairman of the Company for a period of three years. Compensation will be a minimum of $150,000 annually, and consultant will be entitled to a severance payment of $75,000 if the consultant is terminated by the Company without “Good Cause” and or by the consultant for “Good Reason”. A copy of this agreement has been filed as an exhibit to the Company’s Form 20-F Registration Statement.

Employment Agreement between the Company and John Fauller dated May 16, 2012. Under the agreement, Mr. Fauller agrees to act as Chief Operating Officer of the Company at an annual salary of $115,000 per year. The annual salary is subject to adjustment at the Company’s discretion. The employee is also eligible for an annual incentive bonus of up to 30% of his base salary. The agreement is for no specified period and constitutes “at-will” employment. A copy of this agreement has been filed as an exhibit to the Company’s Form 20-F Registration Statement.

Employment Agreement between the Company and Wilson A. Bell dated October 31, 2011. Under the agreement, Mr. Bell agrees to act as Chief Technology Officer of the Company at an annual salary of $130,000 per year. The annual salary is subject to adjustment at the discretion of the Company’s Board of Directors. The employee is also eligible for an annual incentive bonus of up to 25% of his base salary. The agreement is for no specified period and constitutes “at-will” employment. During the course of Mr. Bell’s employment and for a period of one year after the termination of his employment, he is subject to a “non-competition period”. A copy of this agreement has been filed as an exhibit to the Company’s Form 20-F Registration Statement.


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Employment Agreement between the Company and Atul Sabharwal dated June 1, 2015. Under the agreement, Mr. Sabhawal agrees to serve as Chief Executive Officer for an annual base salary of $200,000. The annual salary is subject to adjustment at the discretion of the Company’s Board of Directors. The employee is also eligible for an annual incentive bonus of up to 100% of his base salary. Employment is “at will” and may be terminated by either party. Upon a change in control, if the Executive is terminated by the Company for reasons other than for cause, disability or the Executive’s death, or if the Executive terminates his employment for good reason, the Executive shall receive a payment equal to 1 times his annual base salary if he approved of the change of control, or if he officially objected to the change of control, he will receive a payment equal to 2 times his base salary. He will also receive a payment equal to his incentive bonus in effect immediately prior to the change of control date. The agreement remains in effect until terminated by either party in accordance with the provisions of the agreement. A copy of this agreement has been filed as an exhibit to this Form 20-F Annual Report.

Employment Agreement between the Company and Ritesh Bhavnani dated June 1, 2015. Under the agreement, Mr. Bhavnani agrees to serve as President for an annual base salary of $200,000. The annual salary is subject to adjustment at the discretion of the Company’s Board of Directors. The employee is also eligible for an annual incentive bonus of up to 100% of his base salary. Employment is “at will” and may be terminated by either party. Upon a change in control, if the Executive is terminated by the Company for reasons other than for cause, disability or the Executive’s death, or if the Executive terminates his employment for good reason, the Executive shall receive a payment equal to 1 times his annual base salary if he approved of the change of control, or if he officially objected to the change of control, he will receive a payment equal to 2 times his base salary. He will also receive a payment equal to his incentive bonus in effect immediately prior to the change of control date. The agreement remains in effect until terminated by either party in accordance with the provisions of the agreement. A copy of this agreement has been filed as an exhibit to this Form 20-F Annual Report.

Employment agreement between Hip Digital and Baris Karadogan originally dated January 1, 2011 and as amended on June 2, 2011. Under the agreement, Mr. Karadogan agrees to serve as the CEO of Hip Digital for an annual base salary of $250,000. He will also be eligible for a bonus as determined by the Board of Directors. Mr. Karadogan has the right to terminate the agreement upon 60 days’ notice. The Company may terminate the agreement upon 30 days’ notice or immediately for cause. If he is terminated for any other reason than cause, then Mr. Karadogan and the Company shall enter into a consulting agreement under which the Executive will provide 5 hours of consulting work per month at an hourly rate of $50 per hour for a period which will end on December 31, 2016. If the Executive is terminated within 6 months of a change of control for any reason other than for cause, disability, or death, the Executive shall be entitled to severance paid for 4 months at the current rate of base salary, and a pro-rated payment of the Executive’s targeted bonus for the year to be paid over 6 months. The agreement originally had a term of 1 calendar year, but two months prior to the end of the agreement term, the parties shall begin a discussion regarding an extension or renewal of the agreement. If either party wishes not to renew or extend the agreement, they shall deliver the other party notice no later than one month prior to the end of the agreement term. A copy of this agreement and the amendment have been filed as an exhibit to this Form 20-F Annual Report.


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Employment agreement between the Company and David Hargreaves dated November 4, 2014. Mr. Hargreaves agrees to serve as Chief Customer Satisfaction Officer for a base salary of $150,000 annually. Such salary will be reviewed at regular intervals, and may be increased at the sole discretion of the Company. The Executive’s performance will also be reviewed by the Compensation Committee to determine if the performance warrants a bonus payment. Employment is “at will” and may be terminated by either party at any time and for any reason, with or without cause. A copy of the agreement has been filed as an exhibit to this Form 20-F Annual Report.

Employment agreement between the Company and Rahoul Roy dated October 19, 2015. Mr. Roy agrees to serve as Chief Legal Officer and Executive Vice President Corporate Development at a starting base salary of $200,000 per year. The Compensation Committee will review the base salary on an annual basis and may increase the annual base salary upon such review. The Executive is also eligible to receive a cash bonus as determined by the Compensation Committee. Employment is “at will” and can be terminated by either the Executive or Company at any time and for any reason, with or without cause, by providing at least 4 weeks’ prior written notice. A copy of the agreement has been filed as an exhibit to this Form 20-F Annual Report.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

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

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

TAXATION

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

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


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

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

CANADIAN INCOME TAX CONSEQUENCES

Disposition of Common Stock

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

Dividends

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

Disposition of Common Shares

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

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


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

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

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

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

U.S. Holders

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

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


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Distribution on Common Shares of the Company

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

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

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

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

Foreign Tax Credit

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


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

Disposition of Common Shares of the Company

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

Other Considerations

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


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Foreign Personal Holding Company

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

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

Foreign Investment Company

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

Passive Foreign Investment Company

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

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


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A U.S. shareholder who elects to treat the PFIC as a Qualified Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be required to currently include in his income, for any taxable year in which the corporation qualifies as a PFIC, his pro-rata share of the corporation's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder, and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in which (or with which) the corporation’s taxable year ends, regardless of whether such amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to generally treat any gain realized on the disposition of his common shares (or deemed to be realized on the pledge of his common shares) as capital gain; treat his share of the corporation's net capital gain, if any, as long-term capital gain instead of ordinary income, and either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the corporation's annual realized net capital gain and ordinary earnings. The procedure a U.S. Holder must comply with in making a timely QEF election will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which the corporation is a PFIC. If the U.S. shareholder makes a QEF election in such first year, then the U.S. shareholder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files a tax return for such first year. If, however, the corporation qualified as a PFIC in a prior year during the U.S. shareholder’s holding period, then the U.S. shareholder may make a retroactive QEF election, provided he has preserved his right to do so under the protective statement regime or he obtains IRS permission.

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

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

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


	- 87 -

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

Controlled Foreign Corporation

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

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

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

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


	- 88 -

Statement by Experts

The Company’s auditors for the financial statements for its fiscal years ended December 31, 2015, 2014, and 2013 was MNP LLP, Chartered Professional Accountants. The audit report is included with the related financial statements.

Documents on Display

All documents incorporated in this 20-F Annual Report may be viewed at the Company’s head office located at 1605 Connecticut Ave NW, Washington DC 20009.

Item 11. Disclosures about Market Risk

The Company is subject to certain kinds of Market Risk.

Interest Rate Risk

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

Foreign Currency Risk

The Company is exposed to foreign currency risk on fluctuations related to cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and amounts due to Swiss Post that are denominated in a foreign currency. As at December 31, 2015, the Company held material amounts of cash and cash equivalents in Canadian currency and considers foreign currency risk high. A plus or minus 1% change in foreign exchange rates would affect profit or loss and comprehensive profit or loss by approximately $50,000. The Company is also exposed to foreign currency risk due to amounts within its subsidiaries that are denominated in other currencies such as the European Euro, British Pound, Swiss Franc, and Indian Rupee. However, since the amounts denominated in these foreign currencies is relatively low, changes in foreign exchange rates in these currencies are considered immaterial.

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


	December 31, 2015	December 31, 2014

Cash and cash equivalents	C$ 5,388,431	C$ 983,952
Accounts receivable	200,293	5,099
Deposits, prepaid expenses and other assets	106,078	19,752
Accounts payable and accrued liabilities	(771,052)	(46,561)

Total	C$ 4,923,750	C$ 962,242


	- 89 -

Item 12. Description of Other Securities

Not Applicable

Part II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not Applicable

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

Not Applicable

Item 15. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to the Company, including its consolidated subsidiaries, is made known to senior management, including Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended) as of December 31, 2015. The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of December 31, 2015, were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the Chief Executive Office and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) to provide reasonable assurance that the financial information prepared by the Company for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with IFRS as issued by IASB. The Board of Directors is responsible for ensuring that management fulfills its responsibilities. The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements. Management reviewed the results of their assessment with the Company’s Audit Committee.


	- 90 -

Because of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect all possible misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

To evaluate the effectiveness of the Company’s internal control over financial reporting, Management has used the Internal Control - Integrated Framework (2013), which is a suitable, recognized control framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has assessed the effectiveness of the Company’s internal control over financial reporting and concluded that such internal control over financial reporting is effective as of December 31, 2015.

Limitations on the Effectiveness of Controls

The Company's management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Attestation Report of the Registered Accounting Firm.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Form 20-F Annual Report.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


	- 91 -

Item 16. Reserved

Item 16A. Audit Committee Financial Expert

The Company does not have an “audit committee financial expert” serving on its audit committee. The Company’s Audit Committee consists of four independent directors, all of whom are both financially literate and very knowledgeable about the Company’s affairs. Because the Company’s structure and operations are straightforward, the Company does not find it necessary at the current time to augment its Board with a financial expert.

Item 16B. Code of Ethics

The Company has not adopted a formal written code of ethics. Directors and officers of the Company are subject securities laws whereby they are required to act honestly, in good faith and in the best interests of the Company. The Board of Directors monitors on an ongoing basis the activities of management to ensure that the highest standard of ethical conduct is maintained. However, as the Company is growing in size, the Board anticipates that it will evaluate the implementation of a formal Code of Business Conduct and Ethics.

Item 16C. Principal Accountant Fees and Services

The Audit Committee is directly responsible for the appointment, compensation and oversight of auditors; the audit committee has in place procedures for receiving complaints and concerns about accounting and auditing matters; and has the authority and the funding to engage independent counsel and other outside advisors.

In accordance with the requirements of the US Sarbanes-Oxley Act of 2002 and rules issued by the Securities and Exchange Commission, the Company’s Audit Committee Charter includes a procedure for the review and pre-approval of any services performed by the Company's auditor, including audit services, audit related services, tax services and other services. The procedure requires that all proposed engagements of the auditor for audit and permitted non-audit services are submitted to the finance and audit committee for approval prior to the beginning of any such services.

Fees, including reimbursements for expenses, for professional services rendered by MNP LLP are included in Table No. 12:


Table No. 12 Principal Account Fees and Services

Type of Service	Fiscal Year 2015	Fiscal Year 2014

Audit Fees	$ 40,904	$ 32,695
Audit Related Fees	13,176	Nil
Tax Fees	2,969	3,339
All Other Fees	Nil	19,998
Total	$ 57,049	$ 56,032


	- 92 -

Item 16D. Exemptions from Listing Standards for Audit Committees

Not Applicable

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

Not Applicable

Item 16F. Change in Registrant’s Certifying Accountant

Not Applicable

Item 16G. Corporate Governance

Not Applicable

Item 16H. Mine Safety Disclosure

Not Applicable

Part III

Item 17. Financial Statements

Not applicable

Item 18. Financial Statements

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

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


	- 93 -

Item 19. Exhibits

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

Audited Financial Statements

Report of Independent Registered Public Accounting Firm of MNP LLP, Chartered Professional Accountants, dated April 28, 2016.

Statements of Financial Position at December 31, 2015 and 2014.

Statements of Operations and Comprehensive Loss for the years ended December 31, 2015, 2014 and 2013.

Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013.

Statements of Changes in Equity for the years ended December 31, 2015, 2014 and 2013.

Notes to Financial Statements

(B) Index to Exhibits:

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

Certificate of Incorporation dated January 21, 2010. *

Certificate of Change of Name dated March 1, 2012. *

Articles and Bylaws dated January 21, 2010. *

Directors Resolutions dated February 24, 2012. *

Instruments defining the rights of holders of the securities being registered

-=See Exhibit Number 1=-

Voting Trust Agreements - N/A

Material Contracts

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

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

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

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

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

Employment Agreement between the Company and Atul Sabharwal dated June 1, 2015 ***

Employment Agreement between the Company and Ritesh Bhavnani dated June 1, 2015. ***


	- 94 -

Employment agreement between Hip Digital and Baris Karadogan dated January 1, 2011 and as amended on June 2, 2011. ***

Employment agreement between the Company and David Hargreaves dated November 4, 2014. ***

Employment agreement between the Company and Rahoul Roy dated October 19, 2015. ***

List of Foreign Patents - N/A

Calculation of earnings per share - N/A

Explanation of calculation of ratios - N/A

List of Subsidiaries

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

10.


	December 31, 2015		December 31, 2014

ASSETS

Current
Cash and cash equivalents (Note 3)	$ 4,696,617		$ 1,529,457
Accounts receivable, net of allowance for doubtful accounts of $161,457 (2014 - $57,582)	2,941,813		523,793
Deposits, prepaid expenses and other assets	316,867		92,713

	7,955,297		2,145,963

Equipment (Note 5)	121,959		18,756
Intangible assets (Note 6)	1,572,425		341,665
Goodwill (Note 10)	203,693		-
Unallocated Purchase Price – Hip Digital (Note 11)	7,379,436		-

	$ 17,232,810		$ 2,506,384

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)

Current
Accounts payable and accrued liabilities	$ 2,270,083		$ 313,776
Deferred revenue	891,765		548,200
Due to related parties (Note 7)	557,055		399,578
Due to Swiss Post (Note 10)	735,506		-

	4,454,409		1,261,554

Acquisition Consideration payable in equity	937,017		-
Derivative liability (Note 8)	55,000		1,613,526

	5,446,426		2,875,080

Shareholders’ equity (deficiency)
Common shares (Note 9)		16,972,290	3,510,527
Warrants (Note 9)		421,796	421,796
Contributed surplus		3,311,327	681,600
Deficit		(7,884,619)	(4,766,618)
Accumulated other comprehensive loss		(1,034,410)	(216,001)

	11,786,384		(368,696)

	$ 17,232,810		$ 2,506,384


	Year Ended December 31, 2015	Year Ended December 31, 2014	Year Ended December 31, 2013

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the year	$ (3,118,001)	$ (2,564,866)	$ 75,597
Items not involving cash:
Amortization of intangibles	237,312	71,519	42,821
Depreciation of equipment	21,405	5,643	4,908
Stock-based compensation	1,889,285	159,939	229,890
Strategic sales partnership compensation	-	-	(174,931)
Change in fair value of derivative liability	153,298	1,282,485	(796,461)
Accretion expense	190,000	-	-
Change in fair value of acquisition consideration
payable in equity	(2,978,926)	-	-
Changes in non-cash working capital items:
Accounts receivable	(1,187,108)	(178,532)	(143,327)
Deposits, prepaid expenses and other assets	(32,519)	(61,590)	34,804
Accounts payable and accrued liabilities	969,291	198,588	(22,457)
Deferred revenue	(1,557,743)	548,200	(60,326)
Due to related parties	157,477	191,102	153,926

Net cash flows used in operating activities	(5,256,229)	(347,512)	(655,556)

CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable	-	-	50,255
Additions to equipment	(115,122)	(8,201)	-
Additions to intangible assets	(1,038,248)	(200,305)	(128,515)
Net cash acquired on business acquisition of
Swiss Post Ireland	(261,296)	-	-
Net cash acquired on business acquisition of
Hip Digital Media	354,477	-	-

Net cash flows used in investing activities	(1,060,189)	(208,506)	(78,260)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common shares issued	9,782,712	2,006,330	417,736
Share issuance costs	(930,761)	(159,424)	(18,017)
Proceeds from warrants exercised	1,191,816	89,559	-
Proceeds from options exercised	47,046	9,314	-
Proceeds from share subscriptions	-	-	17,159

Net cash flows provided by financing activities	10,090,813	1,945,779	416,878

Effect of exchange rate changes on cash	(607,235)	(73,350)	(120,686)

Change in cash for the year	3,167,160	1,316,411	(437,624)

Cash and cash equivalents, beginning of year	1,529,457	213,046	650,670

Cash and cash equivalents, end of year	$ 4,696,617	$ 1,529,457	$ 213,046


	Common Shares	Amount	Shares Subscriptions	Warrants	Warrants - Strategic Sales Partnership	Contributed Surplus	Accumulated Other Comprehensive Loss	Deficit	Total Shareholders’ Equity (Deficiency)

Balance, December 31, 2012	48,052,638	$ 1,547,304	$ -	$ 112,357	$ 174,931	$ 99,150	$ (21,965)	$ (2,277,349)	$ (365,572)
Private placement shares issued	2,000,000	192,520	-	-	-	-	-	-	192,520
Private placement shares issued	2,400,000	225,216	-	-	-	-	-	-	225,216
Fair value of derivative liability
on 1,200,000 Financing warrants	-	(49,206)	-	-	-	-	-	-	(49,206)
Financing issuance costs	-	(18,017)	-	-	-	-	-	-	(18,017)
Share subscriptions	-	-	17,159	-	-	-	-	-	17,159
Stock-based compensation	-	-	-	-	-	229,890	-	-	229,890
Strategic sales partnership compensation	-	-	-	-	(174,931)	-	-	-	(174,931)
Fair value of amended transaction warrants	-	-	-	421,796	-	-	-	-	421,796
Cumulative translation adjustment	-	-	-	-	-	-	(120,686)	-	(120,686)
Net income for the year	-	-	-	-	-	-	-	75,597	75,597
				-
Balance, December 31, 2013	52,452,638	1,897,817	17,159	534,153	-	329,040	(142,651)	(2,201,752)	433,766
Share subscriptions	-	-	(17,159)	-	-	-	-	-	(17,159)
Private placement shares issued	6,350,000	573,469	-	-	-	-	-	-	573,469
Fair value of derivative liability
on 3,175,000 Financing warrants	-	(408,033)	-	-	-	-	-	-	(408,033)
Financing issuance costs	-	(40,338)	-	-	-	-	-	-	(40,338)
Warrants expired	-	-	-	(112,357)	-	112,357	-	-	-
Private placement shares issued	10,400,000	1,450,020	-	-	-	-	-	-	1,450,020
Financing issuance costs	-	(119,086)	-	-	-	-	-	-	(119,086)
Fair value of 792,000 finder’s unit options	-	(80,264)	-	-	-	80,264	-	-	-
Stock options exercised	100,000	9,314	-	-	-	-	-	-	9,314
Warrants exercised	625,000	227,628	-	-	-	-	-	-	227,628
Stock-based compensation	-	-	-	-	-	159,939	-	-	159,939
Cumulative translation adjustment	-	-	-	-	-	-	(73,350)	-	(73,350)
Net loss for the year	-	-	-	-	-	-	-	(2,564,866)	(2,564,866)

Balance, December 31, 2014	69,927,638	3,510,527	-	421,796	-	681,600	(216,001)	(4,766,618)	(368,696)
Private placement shares issued	22,322,727	9,782,712	-	-	-	-	-	-	9,782,712
Financing issuance costs	-	(930,761)	-	-	-	-	-	-	(930,761)
Fair value of broker unit options	-	(751,489)	-	-	-	751,489	-	-	-
Corporate advisory fee units	661,591	-	-	-	-	-	-	-	-
Stock options exercised	524,500	58,093	-	-	-	(11,047)	-	-	47,046
Warrants exercised	7,697,800	2,903,640	-	-	-	-	-	-	2,903,640
Hip Digital acquisition shares issued	3,921,679	2,174,571	-	-	-	-	-	-	2,174,571
Hip Digital employee shares issued	697,780	224,997	-	-	-	-	-	-	224,997
Stock-based compensation	-	-	-	-	-	1,889,285	-	-	1,889,285
Cumulative translation adjustment	-	-	-	-	-	-	(818,409)	-	(818,409)
Net loss for the year	-	-	-	-	-	-	-	(3,118,001)	(3,118,001)

Balance, December 31, 2015	105,753,715	$ 16,972,290	$ -	$ 421,796	$ -	$ 3,311,327	$ (1,034,410)	$ (7,884,619)	$ 11,786,384


	December 31, 2015	December 31, 2014

Cash on deposit	$ 4,696,617	$ 729,521
Cashable Guaranteed Investment Certificates	-	799,936

Total	$ 4,696,617	$ 1,529,457


	December 31, 2015	December 31, 2014

United States Ireland	$ 779,528 684,090	$ 359,918 -
International	230,766	503

Total	$ 1,694,384	$ 360,421


Approved and authorized by the Board of Directors on April 28, 2016.

“Atul Sabharwal”	Director	“Ritesh Bhavnani”	Director
Atul Sabharwal		Ritesh Bhavnani


December 31, 2015

	Opening cost balance	Additions	Additions from business acquisitions	Disposals	Closing cost balance	Opening accumulated depreciation	Depreciation during the year	Closing depreciation balance	Net book value

Office Equipment	$ 7,597	$ 3,222	$ -	$ -	$ 10,819	$ 4,250	$ 2,098	$ 6,348	$ 4,471
Computer Equipment	25,076	111,930	9,456	-	146,462	9,667	19,307	28,974	117,488

	$ 32,673	$ 115,152	$ 9,456	$ -	$ 157,281	$ 13,917	$ 21,405	$ 35,322	$ 121,959


December 31, 2014

	Opening cost balance	Additions	Additions from business acquisitions	Disposals	Closing cost balance	Opening accumulated depreciation	Depreciation during the year	Closing depreciation balance	Net book value

Office Equipment	$ 7,597	$ -	$ -	$ -	$ 7,597	$ 2,726	$ 1,524	$ 4,250	$ 3,347
Computer Equipment	16,875	8,201	-	-	25,076	5,548	4,119	9,667	15,409

	$ 24,472	$ 8,201	$ -	$ -	$ 32,673	$ 8,274	$ 5,643	$ 13,917	$ 18,756


		Financing warrants

Balance, December 31, 2013	$	61,077
Fair value of warrants issued		408,033
Change in fair value and warrant exercises		1,282,475
Value of exercised warrants		(138,059)
Balance, December 31, 2014		1,613,526
Fair value of warrants issued		-
Change in fair value and warrant exercises		153,298
Value of exercised warrants		(1,711,824)
Balance, December 31, 2015	$	55,000


	Financing warrants ⁽¹⁾		Financing warrants ⁽²⁾
Risk-free interest rate	0.48%	(2014 – 1.00%)	0.48	(2014 – 1.00%)
Expected life of warrants	0.07 years	(2014 - 1.07 years)	0.07 years	(2014 – 1.07 years)
Annualized volatility	125%	(2014 – 125%)	125%	(2014 – 125%)
Dividend rate	0.00%	(2014-0.00%)	0.00%	(2014-0.00%)


	Number of Options	Weighted Average Exercise Price
		C$
Outstanding, December 31, 2012	2,349,175	0.16

Cancelled	(197,500)	0.18
Expired	(982,175)	0.15
Granted	2,310,000	0.11
Outstanding, December 31, 2013	3,479,500	0.13

Exercised	(100,000)	0.10
Granted	3,825,000	0.42
Outstanding, December 31, 2014	7,204,500	0.29

Exercised	(524,500)	0.12
Cancelled	(505,000)	0.41
Granted	8,596,000	0.52
Outstanding, December 31, 2015	14,771,000	0.42


Number of Options Outstanding	Number of Options Exercisable	Exercise Price C$	Expiry Date
780,000	780,000	$0.19	August 27, 2017
100,000	100,000	$0.10	February 15, 2018
650,000	650,000	$0.10	February 25, 2018
100,000	100,000	$0.10	July 15, 2018
1,250,000	1,250,000	$0.12	December 18, 2018
200,000	200,000	$0.105	April 10, 2019
100,000	100,000	$0.10	April 20, 2019
50,000	50,000	$0.185	August 11, 2019
100,000	100,000	$0.185	August 11, 2019
100,000	75,000	$0.25	September 10, 2019
500,000	335,334	$0.34	November 6, 2019
200,000	200,000	$0.34	November 6, 2019
175,000	50,000	$0.33	November 26, 2019
1,975,000	658,333	$0.55	December 29, 2019
250,000	-	$0.65	January 27, 2020
1,220,000	167,667	$0.68	February 9, 2020
755,000	-	$0.65	March 26, 2020
150,000	-	$0.68	June 8, 2020
1,000,000	-	$0.64	June 14, 2020
3,221,000	100,000	$0.41	July 9, 2020
605,000	-	$0.41	August 13, 2020
210,000	-	$0.41	September 15, 2020
200,000	-	$0.44	October 5, 2020
200,000	-	$0.465	October 14, 2020
400,000	-	$0.46	October 19, 2020
140,000	-	$0.45	October 22, 2020
140,000	-	$0.42	November 10, 2020
14,771,000	4,916,334


	Equity Classification		Liability Classification
		Weighted Average		Weighted Average
	Number of Shares	Exercise Price	Number of Shares	Exercise Price

Outstanding, December 31, 2012	1,333,333	C$0.25	19,522,021	C$0.25

Reallocated - Transaction	6,188,688	$0.13	(6,188,688)	$0.13
Issued – Financing warrants	-	-	1,200,000	C$0.25

Outstanding, December 31, 2013	7,522,021	$0.15	14,533,333	C$0.25

Issued – Financing warrants	-	-	3,175,000	C$0.15
Expired – Brokers warrants	(1,333,333)	C$0.25
Expired – Financing warrants	-	-	(13,333,333)	C$0.25
Issued – Financing warrants	10,400,000	$0.20	-	-
Exercised – Financing warrants	(120,000)	$0.20	-	-
Exercised – Financing warrants	-	-	(505,000)	C$0.15

Outstanding, December 31, 2014	16,468,688	$0.19	3,870,000	C$0.15

Issued – Finder’s unit warrants	766,800	$0.20	-	-
Issued – Financing warrants	11,161,363	$0.63	-	-
Issued – Financing advisory warrants	330,795	$0.63	-	-
Exercised – Finder’s unit warrants	(439,000)	$0.20	-	-
Exercised – Financing warrants	(2,880,000)	$0.20	-	-
Exercised – Financing warrants	-	-	(3,612,000)	C$0.15

Outstanding, December 31, 2015	25,408,646	$0.37	258,000	C$0.15


Number of Common Shares Issuable	Weighted Average Exercise Price	Expiry Date
6,188,688	$0.13	March 1, 2017
258,000	C$0.15	January 24, 2016
7,400,000	$0.20	July 24, 2017
327,800	$0.20	July 24, 2017
11,161,363	$0.63	February 4, 2017
330,795	$0.63	February 4, 2017
25,666,646	$0.44


	2014	2013
Risk-free interest rate	1.00%	1.00%
Expected life of warrants	0.93 - 1.07 years	2.0 years
Annualized volatility	125%	125%
Dividend rate	0.00%	0.00%


	Number of Shares	Weighted Average Exercise Price
		C$

Outstanding, December 31, 2012 and December 31, 2013	-	-

Issued	792,000	0.15

Outstanding, December 31, 2014	792,000	0.15

Exercised	(766,800)	0.15

Outstanding, December 31, 2015	25,200	0.15


	Risk-free interest rate	1.42%
	Expected life of warrants	3.0 years
	Annualized volatility	125%
	Dividend rate	0.00%



Consideration Payable – February 5, 2015	$	629,771
Accretion expense		190,000
Foreign exchange fluctuation		(84,265)
Consideration Payable – December 31, 2015	$	$735,506




Cash	$	69,300
Receivables		276,443
Prepaid expenses		13,252
Computer equipment		1,465
Accounts payable and accrued liabilities		(104,065)
	$	256,395




Working capital	$	254,930
Computer equipment		1,465
Intellectual property		195,000
Customer relationships		235,000
Goodwill		203,693
	$	890,088


	Estimated purchase price based on initial cash payment of $100 and future share issuances	$ 6,090,497
	Net liabilities of Hip Digital assumed (as indicated below)	1,288,939
	Unallocated Purchase Price ⁽¹⁾	$ 7,379,436


Estimated purchase price June 10, 2015	$	6,090,497
Change in fair value of acquisition consideration payable in equity		(2,978,926)
Value of shares issued		(2,174,554)
Consideration Payable – December 31, 2015	$	$937,017


	December 31, 2015		December 31, 2014
	Carrying Value	Fair Value	Carrying Value	Fair Value
Fair value through profit and loss – assets	$ 4,696,617	$ 4,696,617	$ 1,529,457	$ 1,529,457
Fair value through profit and loss – liabilities	(992,017)	(992,017)	(1,613,526)	(1,613,526)
Loans and receivables	2,941,813	2,941,813	523,793	523,793
Other financial liabilities	(4,454,909)	(4,454,909)	(1,261,554)	(1,261,554)
	$ 2,191,504	$ 2,191,504	$ (821,830)	$ (821,830)


	Year ended December 31, 2015	Year ended December 31, 2014	Year ended December 31, 2013

Net (loss) income before income taxes	$ (3,118,001)	$ (2,564,866)	$ 75,597

Expected income tax recovery at statutory rates	(826,275)	872,050	(25,700)

Effect on income taxes of:
Difference in foreign tax rates	(151,180)	(81,650)	51,230
Tax rate changes and adjustments	108,820	128,650	36,910
Non-deductible expenses	(221,530)	(44,830)	(14,460)
Change in tax benefits not recognized	1,090,165	(874,220)	(47,980)
Recorded in the consolidated statements of operations and comprehensive loss	$ -	$ -	$ -


	Canada	US
2025	459,110	-
2026	1,824,300	-
2027	2,650,440	597,631
2028	234,990	3,095
2029	150,270	598,993
2030	165,400	41,908
2031	252,000	405,929
2032	579,580	1,075,941
2033	347,790	3,026,357
2034	1,073,790	1,752,017
2035	2,163,850	2,147,625