U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended ~~November 30~~February 28, ~~2016~~2017

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______ to _______

YAPPN CORP.

(Exact name of small business issuer as specified in its charter)

Delaware		000-55082		27-3848069
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1001 Avenue of the Americas, 11th Floor

New York, NY 10018

(Address of principal executive offices) (Zip code)

888-859-4441

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.0001 par value per share

(Title of Class)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 90 days. Yes ☒ 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 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, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 40,322,314 shares outstanding of registrant’s common stock, par value $0.0001 per share, as of ~~January~~April 1713, 2017.

Transitional Small Business Disclosure Format Yes ☐ No ☒

TABLE OF CONTENTS

PART I
Item 1.	Financial Statements	1
	Interim Condensed Consolidated Balance Sheets as of November 30, 2016 (unaudited) and May 31, 2016	2
	Interim Condensed Consolidated Balance Sheets as of February 28, 2017 (unaudited) and May 31, 2016	2
	Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended November 30, 2016 and 2015 (unaudited)	3
	Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended February 28, 2017 and February 29, 2016 (unaudited)	3
	Interim Condensed Consolidated Statement of Stockholders’ Deficit for the six months ended November 30, 2016 (unaudited) and year ended May 31, 2016	4
	Interim Condensed Consolidated Statement of Stockholders’ Deficit for the nine months ended February 28, 2017 (unaudited) and year ended May 31, 2016	4
	Interim Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2016 and 2015 (unaudited)	5
	Interim Condensed Consolidated Statements of Cash Flows for the nine months ended February 28, 2017 and February 29, 2016 (unaudited)	5
	Notes to Interim Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
SIGNATURES		35

PART I

Item 1.

Interim Condensed Consolidated Financial Statements and Notes to Interim Condensed Consolidated Financial Statements

General

The accompanying reviewed interim condensed consolidated financial statements are unaudited and have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Company's annual report on Form 10-K for the year ended May 31, 2016. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and ~~six~~nine months ended ~~November~~February 3028, 2017 ~~2016~~ are not necessarily indicative of the results that can be expected for the year ending May 31, 2017.

All references to “dollars”, “$” or “US$” are to United States dollars and all references to “CAD$” are to Canadian dollars. United States dollar equivalents of Canadian dollar figures are based on the exchange rate as reported by the Bank of Canada on the applicable date.

YAPPN CORP.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	Note	As of ~~November~~February 3028, ~~2016~~2017			(audited) As of May 31, 2016
Assets
Current assets:
Cash		$	~~441~~138,~~363~~951		$	448,575
Accounts receivable	3		23,~~250~~619			29,244
Note receivable	3		-			1,123,289
Prepaid expenses			~~124~~92,~~166~~427			113,262
Total current assets			~~567~~234,~~779~~997			1,714,370
Equipment, net			1411,~~411~~248			14,632
Intangible assets	4		43,~~159~~902,~~420~~687			4,676,221
Total Assets		$	4,~~741~~148,~~610~~932		$	6,405,223
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable		$	~~407~~401,~~193~~496		$	533,030
Accrued expenses			~~282~~210,~~339~~635			430,754
Short term accrued interest			~~328~~155,~~267~~437			409,280
Accrued development and related expenses - related party	12		-			16,654
Short term loans	5		~~151~~89,~~679~~462			284,451
Convertible promissory notes and debentures	7		~~910~~355,000			2,454,824
Total current liabilities			21,~~079~~212,~~478~~030			4,128,993
Other liabilities:
Long term accrued interest			~~980~~1,~~382~~200,406			577,231
Long term loan	8		1,000,000			-
Long term loans	8		1,326,348			-
Long term secured debentures	6		4,550,388			4,550,388
Convertible secured debentures	8		~~595~~504,~~265~~214			375,279
Total Liabilities			98,~~205~~793,~~513~~386			9,631,891
Stockholders' Deficit
Preferred stock, par value $.0001 per share, 50,000,000 shares authorized: Series 'A' Convertible, 10,000,000 shares authorized; nil shares issued and outstanding	10		-			-
Common stock, par value $.0001 per share, 400,000,000 shares authorized 40,322,314 issued and outstanding (May 31, 2016 – 30,081,163)	9		16,124			15,100
Common stock, par value $.0001 per share, 18,988,318 shares subscribed not issued (May 31, 2016 – 20,308,890)	9		2,639,071			3,068,945
Additional paid-in capital			1819,~~850~~186,~~335~~011			15,353,712
Deficit			(2526,~~969~~485,~~433~~660	)		(21,664,425	)
Total Stockholders' Deficit			(4,~~463~~644,~~903~~454	)		(3,226,668	)
Total Liabilities And Stockholders' Deficit		$	4,~~741~~148,~~610~~932		$	6,405,223

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

YAPPN CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

LOSS (Unaudited)

		Three Months Ended November 30,						Six Months Ended November 30,
		Three Months Ended February 28/29						Nine Months Ended February 28/29
	Note	~~2016~~2017			~~2015~~2016			~~2016~~2017			~~2015~~2016
Revenues	3	$	~~106~~65,~~998~~130		$	52101,~~222~~537		$	~~207~~272,~~066~~196		$	~~810~~911,~~381~~918
Cost of revenue			4442,~~874~~343			89,~~464~~134			5193,~~417~~760			~~136~~146,~~935~~068
Gross profit			6222,~~124~~787			4392,~~758~~403			~~155~~178,~~649~~436			~~673~~765,~~446~~850
Operating expenses:
Marketing			63,~~972~~251			~~103~~26,~~463~~152			1720,~~345~~596			~~206~~224,~~248~~900
Research and development expenses	12		~~166~~183,~~368~~396			96109,~~782~~203			~~286~~469,~~572~~967			~~191~~301,~~852~~168
General and administrative expenses	12		~~400~~357,~~834~~671			~~414~~497,~~728~~826			~~801~~1,~~349~~159,021			~~766~~1,~~861~~272,484
Professional fees			2346,~~024~~724			68241,~~454~~025			~~108~~155,~~758~~482			~~160~~401,~~023~~048
Consulting			6272,~~583~~438			~~101~~92,~~075~~590			~~112~~184,~~308~~747			~~203~~295,~~075~~665
Depreciation			13,~~407~~341			~~107~~102			25,~~432~~773			~~198~~300
Amortization	4		265,~~101~~880			~~219~~263,~~950~~940			~~531~~797,~~750~~630			~~219~~483,~~950~~890
Stock based compensation	11		335,675			~~300~~64,~~875~~772			~~809~~1,~~663~~145,338			~~413~~478,~~517~~289
Total operating expenses			1,~~261~~268,~~964~~376			1,~~305~~295,~~434~~610			23,~~670~~938,~~177~~554			23,~~161~~457,~~724~~744
Loss from operations			(1,~~199~~245,~~840~~589	)		(1,~~261~~203,~~676~~207	)		(23,~~514~~760,~~528~~118	)		(12,~~488~~691,~~278~~894	)
Other expense/(income):
Interest expense			~~235~~272,~~239~~402			~~194~~268,~~402~~222			~~522~~794,~~291~~693			~~348~~616,~~387~~609
Financing expense on issuance of convertible notes and common stock			-			~~542,760~~-			-			632,250
Change in fair value of derivative liabilities and convertible notes			123,928			(38,698	)		296,188			(840,337	)
Change in fair value of convertible debentures and notes			108,950			289,881			405,137			(550,456	)
Prepayment fees on variable notes			-			99,558			-			276,790
Prepayment fees on variable conversion rate notes			-			29,350			-			306,140
Miscellaneous expense/(income)			(58,~~562~~376	)		(411,~~039~~077	)		312,~~712~~087			(1627,~~357~~843	)
Impairment of note receivable	3		968,289			-			968,289			-
Gain on debt settlement	3		(1,119,089	)		-			(1,119,089	)		-
Total other expense/(income)			1,321,894			793,983			1,790,480			400,733
Impairment of note receivable	3		-			-			968,289			-
Net loss before taxes			(2,521,734	)		(2,055,659	)		(4,305,008	)		(1,889,011	)
Total other expense/(income)			(729,361	)		576,376			1,061,117			976,700
Net loss before taxes			(516,228	)		(1,779,583	)		(4,821,235	)		(3,668,594	)
Provision for income taxes			-			-			-			-
Net loss and comprehensive loss		$	(2516,~~521,734~~228	)	$	(21,~~055~~779,~~659~~583	)	$	(4,~~305~~821,~~008~~235	)	$	(13,~~889~~668,~~011~~594	)
Net loss per weighted-average shares of common stock – basic and diluted		$	(0.0601	)	$	(0.1107	)	$	(0.1213	)	$	(0.1219	)
Weighted-average number of shares of common stock issued and outstanding – basic and diluted			3940,~~771~~322,~~247~~314			1826,~~005~~433,~~455~~163			3537,~~471~~070,~~612~~744			1519,~~707~~269,~~479~~659

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

YAPPN CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)

For the ~~six~~nine months ended ~~November 30~~February 28, ~~2016~~2017 and year ended May 31, 2016

	Common										Additional
	Shares Outstanding		Amount		Subscribed Shares			Subscribed Amounts			Paid-in Capital			Accumulated Deficit			Total
Balance – May 31, 2015		13,422,814		13,423		99,344			124,567			7,981,579			(14,762,852	)		(6,643,283	)
Stock-based compensation		-		-		-			-			1,164,887			-			1,164,887
Stock issued on exercise of warrants		11,667		12		-			-			(12	)		-			-
Issuance of common stock for purchase technology		12,998,682		1,300		-			-			1,805,308			-			1,806,608
Stock to be issued for purchase of technology		-		-		18,988,318			2,639,071			-			-			2,639,071
Issuance of warrants classified as equity		-		-		-			-			1,279,846			-			1,279,846
Warrants associated with a secured convertible debenture		-		-		-			-			1,700,052			-			1,700,052
Common stock associated with common stock and warrants financing		3,648,000		365		-			-			568,561			-			568,926
Warrants associated with common stock and warrant financing		-		-		-			-			343,074			-			343,074
Stock to be issued on conversion of debt		-		-		1,221,228			305,307			-			-			305,307
Beneficial conversion feature		-		-		-			-			510,417			-			510,417
Net loss for the year ended May 31, 2016		-		-		-			-			-			(6,901,573	)		(6,901,573	)
Balance – May 31, 2016		30,081,163		15,100		20,308,890			3,068,945			15,353,712			(21,664,425	)		(3,226,668	)
Stock-based compensation		-		-		-			-			~~759~~1,~~663~~095,339			-			~~759~~1,~~663~~095,339
Issuance of warrants classified as equity		-		-		-			-			77,966			-			77,966
Common stock associated with Common stock and Warrants financing		1,780,000		178		-			-			253,456			-			253,634
Common stock associated with common stock and warrants financing		1,780,000		178		-			-			253,456			-			253,634
Warrants associated with Common stock and Warrants financing		-		-		-			-			191,366			-			191,366
Warrants associated with common stock and warrants financing		-		-		-			-			191,366			-			191,366
Stock issued on conversion of debt		8,227,822		823		-			-			2,064,007			-			2,064,830
Stock to be issued for debenture conversion		-		-		(1,221,228	)		(305,307	)		-			-			(305,307	)
Stock to be issued under prior obligation		113,329		11		(99,344	)		(124,567	)		120,177			-			(4,379	)
Stock issued to settle prior obligation		120,000		12		-			-			29,988			-			30,000
Net loss for the six months ended November 30, 2016		-		-		-			-			-			(4,305,008	)		(4,305,008	)
Net loss for the nine months ended February 28, 2017		-		-		-			-			-			(4,821,235	)		(4,821,235	)
Balance – November 30, 2016		40,322,314		16,124		18,988,318			2,639,071			18,850,335			(25,969,433	)		(4,463,903	)
Balance – February 28, 2017		40,322,314		16,124		18,988,318			2,639,071			19,186,011			(26,485,660	)		(4,644,454	)

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

YAPPN CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the six months ended November 30,
	For the nine months ended February 28/29
	2016			2015
	2017			2016
Cash Flows From Operating Activities:
Net and comprehensive loss	$	(4,~~305~~821,~~008~~235	)	$	(13,~~889~~668,~~011~~594	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation		25,~~432~~773			~~198~~300
Amortization		~~531~~797,~~750~~630			~~219~~483,~~950~~890
Stock based compensation		~~809~~1,~~663~~145,338			~~413~~478,~~517~~289
Change in fair value of derivative liabilities and convertible notes		296,188			(840,337	)
Change in fair value of convertible debentures and notes		405,137			(550,456	)
Financing expense on issuance of convertible promissory notes, and common stock		-			632,250
Impairment of note receivable		968,289			-
Unrealized foreign exchange and vendor settlements		10,860			-
Gain on debt settlement		(1,119,089	)		-
Unrealized foreign exchange and vendor settlements		12,373			-
Changes in operating assets and liabilities:
Accounts receivable		2625,~~994~~625			12,520
Note receivable		155,000			-
Prepaid expenses		~~(10~~20,~~904~~835	)		(8159,~~416~~541	)
Accounts payable and accrued liabilities		~~279~~549,~~110~~085			~~554~~830,~~948~~406
Accrued development and related expenses - related party		(16,654	)		(~~375~~401,~~068~~979	)
Deferred revenue		-			(12,500	)
Net Cash Used in Operating Activities		(1,~~252~~871,~~280~~893	)		(12,~~364~~255,~~949~~415	)
Cash Flows From Investing Activities:
Expenditures on patents		(1424,~~949~~096	)		(715,~~504~~927	)
Capital expenditures		(2,211	)		(~~402~~377	)
Net Cash Used in Investing Activities		(1726,~~160~~307	)		(716,~~906~~304	)
Cash Flows From Financing Activities:
Proceeds from convertible promissory notes and debentures		-			90,750
Proceeds from line of credit, net		-			(1,~~055~~092,~~541~~025	)
Proceeds from secured debentures		-			2,~~080~~096,~~694~~653
Repayments of short term loans		(32,772	)		(153,778	)
Proceeds from secured convertible debentures		-			2,040,000
Proceeds from short term loans		-			1,201,000
Repayments of short term loans		(32,772	)		(151,791	)
Proceeds from long term loans		1,000,000			-
Proceeds from short term loans		-			168,823
Repayment of convertible promissory notes and debentures		-			(716,056	)
Proceeds from long term loans		1,326,348			-
Repayment of convertible promissory notes and debentures		-			(883,564	)
Proceeds from common stock private placement		295,000			-
Net Cash Provided by Financing Activities		1,~~262~~588,~~228~~576			12,~~447~~268,~~069~~846
Net (decrease)/increase in cash		(7,212	)		74,214
Net decrease in cash		(309,624	)		(2,873	)
Cash, beginning of period		448,575			19,496
Cash, end of period	$	~~441~~138,~~363~~951		$	9316,~~710~~623
Supplemental Disclosure of Cash Flow Information
Non Cash Investing and Financing Activities Information:
Common stock issued on exercise of warrants	$	-		$	37,100
Conversion of short term loan	$	100,000		$	-
Conversion of short term loan and line of credit into secured debentures	$	-		$	419,305
Common stock issued for acquisition of technology	$	-		$	1,806,608
Common stock to be issued for acquisition of technology	$	-		$	2,639,071
Common stock issued for prior S1 obligation	$	124,567		$	-
Common stock issued for prior obligation	$	124,567		$	-
Private placement of units in settlement of payables	$	50,000		$	-
Common stock issued for conversion of debt	$	2,064,830		$	-
Cash paid for interest during the six month period	$	12,500		$	67,808
Cash paid for interest during the nine month period	$	15,000		$	67,941

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

YAPPN CORP.

Notes to Interim Condensed Consolidated Financial Statements

~~November~~February 3028, ~~2016~~2017

(Unaudited)

All references to “dollars”, “$” or “US$” are to United States dollars and all references to “Canadian” are to Canadian dollars. United States dollar equivalents of Canadian dollar figures are based on the exchange rate as reported by the Bank of Canada on the applicable date.

1. Summary of Significant Accounting Policies

Basis of Presentation and Organization

Yappn Corp., formerly “Plesk Corp.”, (the “Company”) was incorporated under the laws of the State of Delaware on November 3, 2010. The business plan of the Company is to provide effective unique and proprietary tools and services that create dynamic solutions that enhance a brand’s messaging, media, e-commerce and support platforms. The Company has offices in the United States and Canada. In March 2013, the Company acquired a concept and technology license from Intertainment Media Inc., a Canadian company, in exchange for 7,000,000 shares of common stock of the Company. As a result of this exchange, Intertainment Media Inc. acquired, at that time, a seventy percent (70%) ownership of the Company. On September 15, 2015, the Company closed the acquisition of Ortsbo Inc.’s (a subsidiary of Intertainment Media Inc.) intellectual property. As a result of the acquisition, Intertainment Media Inc.’s ownership was reduced to 37% (currently 28.35%). The accompanying interim condensed consolidated financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.

Unaudited Interim Condensed Consolidated Financial Statements

The interim condensed consolidated financial statements of the Company as of ~~November~~February 3028, ~~2016~~2017, and for the three and ~~six~~nine month periods ended ~~November~~February 3028, ~~2016~~2017 and ~~2015~~February 29, 2016 respectively, are unaudited. However, in the opinion of management, the interim condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments necessary to present fairly the Company’s financial position as of ~~November 30~~February 28, ~~2016~~2017 and ~~2015~~February 29, 2016 respectively, and the results of its operations and its cash flows for the ~~six~~nine month period ended ~~November~~February 3028, ~~2016~~ 2017 and ~~2015~~February 29, 2016 respectively. These results are not necessarily indicative of the results expected for the fiscal year ending May 31, 2017. The accompanying interim condensed consolidated financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited consolidated financial statements as of May 31, 2016 filed with the Securities and Exchange Commission, for additional information including significant accounting policies.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 which was amended in August 2015 by Update No 2015-14: Revenue from Contracts with Customers. The standard outlines a five-step model for revenue recognition with the core principle being that a company should recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Companies can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. Under the modified approach, financial statements will be prepared for the year of adoption using the new standard but prior periods presented will not be adjusted. Instead, companies will recognize a cumulative catch-up adjustment to the opening balance of retained earnings. This new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company has not yet made a determination as to the method of application (full retrospective or modified retrospective). It is too early to assess whether the impact of the adoption of this new guidance will have a material impact on the Company's results of operations or financial position.

On August 27, 2014 the FASB issued a new financial accounting standard on going concern, Update 2014-15, “Presentation of Financial Statements – Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The standard provides guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern. The amendments in this update apply to all companies. They become effective in the annual period ending after December 15, 2016, with early application permitted. The Company is currently evaluating the impact of this accounting standard.

In November 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity.” The ASU clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivatives feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years beginning after December 15, 2015 and interim periods beginning after December 15, 2016. The Company has determined there is no material impact to the accounting treatment of its hybrid financial instruments based on this new standard.

6 There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

~~2. Going Concern~~6

~~The accompanying interim condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern~~2. ~~The Company has experienced negative cash flows from operations since inception and has incurred a deficit of~~ ~~$25,969,433~~Going ~~through November 30, 2016.~~Concern

AsThe ofaccompanying ~~November~~interim ~~30,~~condensed ~~2016,~~consolidated ~~the~~financial ~~Company~~statements ~~had~~have abeen ~~working~~prepared ~~capital~~assuming ~~deficit~~that ~~of $1,511,699. During~~ the ~~six~~Company ~~months~~will ~~ended~~continue ~~November 30, 2016,~~as ~~net~~a ~~cash~~going ~~used in operating activities was $1,252,280~~concern. The Company ~~expects~~has toexperienced ~~have~~negative ~~similar~~ cash ~~needs~~flows ~~for~~from ~~the~~operations ~~next~~since ~~twelve~~inception ~~months. At~~and ~~the~~has ~~present~~incurred ~~time,~~a ~~the~~deficit ~~Company~~of $26,485,660 ~~does~~through ~~not~~February ~~have~~28, ~~sufficient funds to fund operations over the next twelve months~~2017.

~~Implementation~~As of ~~the~~February ~~Company~~28, business plan will require additional debt or equity financing and there can be no assurance that additional financing can be obtained on acceptable terms. The Company has realized limited revenues to cover its operating costs. As such2017, the Company ~~has~~had ~~incurred~~a anworking ~~operating~~capital ~~loss~~deficit ~~since~~of ~~inception~~$977,033. ~~This~~During ~~and~~the ~~other~~nine ~~factors~~months ~~raise~~ended ~~substantial~~February ~~doubt~~28, ~~about its~~2017, net ~~ability~~cash toused ~~continue~~in asoperating aactivities ~~going~~was ~~concern~~$1,871,893. The Company’s ~~continuation~~expects ~~as a going concern is dependent on its ability~~ to ~~meet its~~ ~~obligations,~~have tosimilar ~~obtain~~cash ~~additional~~needs ~~financing~~for asthe ~~may~~next betwelve ~~required, and ultimately to attain profitability~~months. ~~The~~At ~~interim~~the ~~consolidated~~present ~~financial~~time, ~~statements~~the doCompany does not ~~include~~have ~~any~~sufficient ~~adjustments~~funds ~~that~~to ~~might~~fund ~~result~~operations ~~from~~over the ~~outcome~~next oftwelve ~~this uncertainty~~months.

~~Management~~Implementation ~~plans~~of tothe ~~meet~~Company ~~its~~business ~~operating~~plan ~~cash~~will ~~flow~~require ~~requirements~~additional ~~from~~debt or equity financing ~~activities~~and ~~until~~there ~~the~~can ~~future~~be ~~operating~~no ~~activities~~assurance ~~become~~that ~~sufficient~~additional tofinancing ~~support~~can ~~the~~be ~~business~~obtained on acceptable terms. The Company has realized limited revenues to ~~enable~~cover its operating costs. As such, the Company has incurred an operating loss since inception. This and other factors raise substantial doubt about its ability to continue as a going concern. The Company’s ~~continues~~continuation toas ~~work~~a going concern is dependent on ~~generating~~its ~~operating~~ability to ~~cash~~meet ~~flows~~its ~~from~~obligations, ~~the~~to ~~commercialization~~obtain ofadditional ~~its~~financing ~~business~~as may be required, and ultimately to attain profitability. ~~Until~~The ~~those~~interim condensed ~~cash~~consolidated ~~flows~~financial ~~are~~statements ~~sufficient~~do ~~the~~not ~~Company~~include ~~will~~any ~~pursue~~adjustments ~~other~~that ~~financing when~~might ~~deemed~~result ~~necessary~~from the outcome of this uncertainty.

~~The~~Management ~~Company~~plans isto ~~pursuing~~meet aits ~~number~~operating ofcash ~~different~~flow requirements from financing ~~opportunities~~activities inuntil ~~order~~the future operating activities become sufficient to ~~execute~~support ~~its~~the business ~~plan.~~to ~~These~~enable ~~include,~~the ~~short term~~Company ~~debt~~to ~~arrangements,~~continue ~~convertible~~as ~~debt~~a ~~arrangements,~~going ~~common~~concern. ~~share~~The ~~equity~~Company ~~financings,~~continues ~~either~~to ~~through~~work aon ~~private~~generating ~~placement~~operating cash orflows ~~through~~ from the ~~public~~commercialization ~~markets.~~of ~~During~~its ~~the~~business. ~~six~~Until ~~months~~those ~~ended~~cash ~~November~~flows ~~30,~~are ~~2016,~~sufficient the Company ~~raised~~will ~~$1,262,228~~pursue ~~through~~other ~~various financial instruments,~~financing ~~net~~when ofdeemed ~~repayments~~necessary.

~~There~~The ~~can~~Company beis nopursuing ~~assurance~~a ~~that~~number ~~the raising~~ of ~~future~~different ~~equity~~financing oropportunities ~~debt~~in ~~will~~order beto ~~successful~~execute orits ~~that~~business ~~the~~plan. ~~Company’s~~These ~~anticipated~~include, ~~financing~~short ~~will~~term bedebt ~~available~~arrangements, inconvertible ~~the~~debt ~~future~~arrangements, atcommon ~~terms~~share ~~satisfactory~~equity tofinancings, ~~the~~either ~~Company.~~through ~~Failure~~a toprivate ~~achieve~~placement ~~the~~or ~~equity and financing at satisfactory~~through ~~terms~~the ~~and~~public ~~amounts~~markets. ~~could~~During ~~have~~the anine ~~materially~~months ~~adverse~~ended ~~effect~~February on28, 2017, the Company’s, ~~ability~~through ~~to continue as~~ a ~~going~~private ~~concern.~~placement Ifpursuant ~~the Company~~to ~~cannot~~Regulation ~~successfully~~S ~~raise~~of ~~additional~~the ~~capital~~Securities ~~and~~Act ~~implement~~of ~~its~~1933, ~~strategic~~raised ~~development plan~~$1,588,576 ~~its~~through ~~liquidity,~~various financial ~~condition~~instruments, ~~and~~net ~~business~~of ~~prospects will be materially and adversely affected, and the Company may have to cease operations~~repayments.

3.There ~~Concentration~~can be no assurance that the raising of ~~Credit~~future ~~Risk~~equity or debt will be successful or that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and ~~Note~~financing ~~Receivable~~at satisfactory terms and amounts could have a materially adverse effect on the Company’s ability to continue as a going concern. If the Company cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected, and the Company may have to cease operations.

~~All of the Company’s revenues are attributed to a small number of customers~~3. ~~One former customer now comprises 0% of the revenue recorded for the six months~~ ~~ended~~Concentration ~~November 30, 2016 and had comprised 93%~~ of ~~the~~Credit ~~revenue~~Risk ~~for the six months ended November 30, 2015. Intelligent Content Enterprises (“ICE”) comprises 33%~~ and ~~43%~~Note of revenue recorded for the three and six months ended November 30, 2016. Due to the long period without payment, the Company has determined the revenue recognition criteria starting at the beginning of the Company’s second quarter of fiscal 2016 for Digital Widget Factory (Belize) (“DWF”) was not met and further revenues in fiscal 2017 will not be recorded until reasonable assurance over collectability has been established.Receivable

~~Effective February 29, 2016, DWF~~All ~~sold~~of the ~~technology platform, partially developed by Yappn, in conjunction with DWF~~Company’s ~~principals,~~revenues toare ~~ICE~~attributed into ~~exchange~~a ~~for common~~small ~~shares~~number of ~~ICE~~customers. AsTwo ~~part~~customers ofcomprised ~~the~~91% ~~transaction, DWF received ownership~~ and ~~rights~~55% ~~to 24 million common shares~~ of ~~ICE~~the ~~for a large~~Company’s ~~minority~~revenue ~~shareholder~~for ~~position of ICE (~~the ~~ICE~~three ~~Transaction”).~~and ~~During~~nine ~~the~~month ~~fourth~~periods ~~quarter~~ended ofFebruary ~~fiscal 2016~~28, ~~the~~2017. ~~Company~~Our ~~executed a~~former ~~promissory~~largest ~~note~~customer ~~from~~comprises ~~DWF,~~0% ~~for the outstanding value~~ of the ~~billings of $2,125,000. The promissory note is secured by DWF’s~~revenue ~~ICE~~recorded ~~stock~~for ~~holdings in~~ the ~~amount~~nine ofmonths ~~2,250,000~~ended ~~restricted~~February ~~common shares~~28, ~~which~~2017 atand ~~the~~had ~~market~~comprised ~~value~~89% atof the ~~time~~revenue offor ~~execution significantly exceeded~~ the ~~value~~nine ofmonths ~~the~~ended ~~promissory~~February ~~note~~29, 2016. ~~The~~Intelligent ~~note~~Content ~~receivable~~Enterprises ~~includes~~(“ICE”) ~~monthly~~comprises ~~payments~~0% and 33% of ~~differing~~revenue ~~amounts~~recorded ~~with~~for the ~~final~~three ~~payment scheduled~~and bynine ~~November~~months ended 30February 28, ~~2016~~2017. ~~The~~Due ~~note~~to ~~receivable~~the islong ~~past~~period ~~due~~without onpayment, ~~contractual~~the ~~principal~~Company ~~payments~~determined bythe ~~$1,870,000~~revenue asrecognition atcriteria ~~November~~starting ~~30,~~at ~~2016.~~the ~~Additionally,~~beginning of the Company’s ~~received~~second ~~stock~~quarter ~~options for the purchase~~ of ~~shares~~fiscal of2016 ~~common~~for ~~stock~~Digital ofWidget ~~ICE~~Factory ~~from~~(Belize) (“DWF”) was not met.

~~The~~Effective February ~~Company~~29, ~~has~~2016, ~~not~~Digital ~~received~~Widget ~~any~~Factory ~~payments from~~(Belize) (“DWF”) ~~during~~sold the ~~second~~technology ~~quarter~~platform, ~~and~~partially ~~the~~developed ~~secured~~by ~~note~~Yappn, ~~final~~in conjunction ~~payment~~with ~~date~~DWF’s ~~was~~principals, ~~contracted~~ to beICE ~~fully~~in ~~paid~~exchange byfor ~~November~~common ~~30,~~shares ~~2016~~of ICE. ~~While~~ ~~management~~As ~~continues~~part toof ~~work~~the ~~with~~transaction, DWF received onownership aand ~~resolution,~~rights ~~current~~to ~~conditions~~24 ~~result~~million incommon shares of ICE for a ~~much~~large ~~greater~~minority ~~uncertainty~~shareholder ~~around~~position ~~collection~~ of ICE (the ~~note~~“ICE ~~receivable~~Transaction”). During the ~~second~~fourth quarter of fiscal ~~2017~~2016, asthe Company executed a promissory note from DWF for the outstanding value of the billings of $2,125,000. The promissory note was secured by DWF’s ICE stock holdings in the amount of 2,250,000 restricted common shares, which at the market value at the time of execution significantly exceeded the value of the promissory note. The note receivable included monthly payments of differing amounts with the final payment scheduled by November 30, 2016. Additionally, ~~management~~the ~~has~~Company ~~recorded~~received astock ~~full~~options ~~impairment on~~for the ~~remaining~~purchase ~~$968,289~~of shares ~~recorded~~of incommon ~~its~~stock ~~financial~~of ~~statements~~ICE from DWF which expired on November 30, 2016.

7The Company has not received any payments from DWF during the second and third quarter of fiscal 2017, and the secured note final payment date was contracted to be fully paid by November 30, 2016. During the second quarter of fiscal 2017, as at November 30, 2016, management recorded a full impairment on the remaining $968,289 recorded in its financial statements. $1,870,000 in principal remained outstanding against the note receivable.

4In early 2017, a dispute arose between ICE and DWF over the terms in the asset purchase agreement. The parties agreed to unwind the original transaction. DWF regained ~~Intangible~~title ~~Assets~~to the assets developed by Yappn and DWF in addition to the additional enhancements while under ICE’s control. ICE’s publicly traded stock was cease traded by the regulators (although subsequently resumed trading) and the original security of ICE shares between DWF and ICE securing the DWF note receivable was, at that time, unmarketable.

On ~~September~~February 1528, ~~2015~~2017, ~~the~~management reached ~~Company~~a ~~finalized its~~resolution ~~purchase~~with ofDWF ~~intellectual~~stakeholders. ~~property~~Yappn ~~assets~~agreed ofto ~~Ortsbo,~~reduce ~~Inc.~~its ~~(“Ortsbo”)~~stake ~~pursuant~~in the DWF assets to an$800,000 ~~Asset~~which ~~Purchase~~will ~~Agreement~~be ~~executed~~in ~~and~~the ~~closed~~form onof ~~July~~a ~~15,~~new ~~2015.~~investment ~~With~~in ~~this~~DWF ~~closing,~~with the ~~Company~~specific ~~had~~terms ~~an obligation~~ to ~~issue~~be ~~31,987,000~~determined. ~~shares~~This ofreduced ~~common~~position ~~stock~~in ofDWF’s ~~Yappn~~assets is toin ~~Ortsbo~~exchange orfor ~~its~~DWF ~~designees.~~stakeholders ~~During~~forgiving ~~the~~all ~~second~~unsecured ~~quarter~~debentures, ofsecured ~~fiscal~~debenture, ~~2016~~term debt, ~~from~~and ~~the~~related ~~share~~interest ~~issuance~~that were obligations ~~from~~of ~~the~~Yappn. ~~purchase~~More of specifically, the ~~Ortsbo~~Company ~~intellectual~~settled ~~property assets~~$305,000 ~~12,998,682~~of ~~shares~~unsecured ~~were~~convertible ~~issued~~debentures ~~comprising~~and 8accrued interest of $91,~~312,500~~408 towith ~~Ortsbo~~Series A and ~~4,686,182~~B tocommon ~~the~~stock ~~former debt~~purchase warrants repriced to $0.25 and ~~minority~~an ~~shareholders~~extension of ~~Ortsbo,~~one ~~which~~year ~~were~~to maturity ~~valued~~of atboth ~~$1,806,608~~warrants ~~leaving~~(Note 187),~~988~~ $250,~~318~~000 ~~shares~~of tounsecured beconvertible ~~issued~~debentures ~~which~~and ~~remain~~accrued ~~outstanding~~interest of $43,613 with Series asD atwarrants ~~November~~repriced ~~30,~~to ~~2016~~$0.25 and ~~are~~an ~~reserved~~extension ~~but~~of ~~not~~one ~~issued~~year ~~pending~~to ~~instructions~~maturity ~~from~~of the ~~recipients.~~warrants ~~Yappn~~(Note ~~also~~7), ~~assumed~~ $~~975~~65,~~388~~228 of unsecured term ~~debt~~loans asand ~~part~~related interest of ~~the~~$16,512 ~~transaction.~~(Note ~~This~~5), ~~assumed~~and ~~debt~~$200,000 ~~was~~of ~~immediately~~secured ~~subscribed~~convertible asdebentures ~~part~~and ofaccrued ~~the~~interest ~~secured~~of $20,000 ~~debenture~~issued into ~~Yappn~~a consultant (Note 68). ~~The~~ ~~fair~~In ~~value~~addition ~~for~~to the ~~agreed~~above, ~~upon~~the ~~consideration~~Company ~~for~~has ~~the~~negotiated ~~acquisition~~its ofrelease ~~intellectual~~from ~~property~~various ~~from~~past consulting ~~Ortsbo~~obligations. ~~was~~The ~~$16~~Series A,~~968,888,~~ ~~however~~B, ~~due~~ toand ~~the~~D common ~~control~~stock ofpurchase ~~Ortsbo~~warrants ~~and~~were ~~the~~repriced ~~Company,~~to ~~the~~$0.25 ~~value~~from of$1.00, ~~the~~$2.00, ~~intangible~~and $2.20 ~~assets~~respectively ~~acquired~~and ~~from~~extended ~~Ortsbo~~an ~~was~~additional ~~recorded~~one atyear ~~the carrying~~to ~~value~~expire in ~~the~~2020. ~~financial~~Subsequent ~~records~~to February 28, 2017 undertakings for the repricing of ~~Ortsbo.~~the ~~This~~warrants ~~value~~were ~~was~~approved ~~$5,421,067~~formally onby ~~September~~the ~~15,~~Board ~~2015~~of Directors (Note 13).

Intangible Assets	Technology			Pending Patents			Issued Patents			Total
Balance on Acquisition - September 15, 2015	$	5,278,773		$	142,294		$	-		$	5,421,067
Additions		-			21,522			-			21,522
Amortization		(747,830	)		-			-			(747,830	)
Disposal		-			(18,538	)		-			(18,538	)
Balance, May 31, 2016	$	4,530,943		$	145,278		$	-		$	4,676,221
Additions		-			14,949			-			14,949
Reclassification		-			(23,250	)		23,250			-
Amortization		(527,880	)		-			(3,870	)		(531,750	)
Balance, November 30, 2016	$	4,003,063		$	136,977		$	19,380		$	4,159,420

5.Due to the uncertainty of ultimate collectability, ~~Short~~the ~~Term~~Company ~~Loans~~will not record any value for the $800,000 investment in DWF until cash collection is reasonably assured, or a liquid market with quoted market prices exist to allow realization from a sale of the investment.

~~The Company has a past due term loan originated on April 1, 2014 with an interest rate of 1% per month~~4. ~~The Company repaid $15,483~~ ~~(Canadian~~Intangible ~~$20,000) during the first quarter of fiscal 2017. As at November 30, 2016, the loan had a value of $88,476 ($118,815 Canadian).~~Assets

~~The~~On September 15, 2015, the Company ~~has~~finalized aits ~~past~~purchase ~~due~~of ~~term~~intellectual ~~loan~~property ~~originated~~assets of Ortsbo, Inc. (“Ortsbo”) pursuant to an Asset Purchase Agreement executed and closed on ~~January~~July 715, ~~2014~~2015. ~~with~~With this closing, the Company had an ~~interest~~obligation to ~~rate~~issue 31,987,000 shares of 1%common ~~per~~stock ~~month~~of Yappn to Ortsbo or its designees. ~~The~~During ~~Company~~the ~~repaid~~second ~~$13~~quarter of fiscal 2016,~~899~~ from ~~(Canadian~~the ~~$18~~share issuance obligations from the purchase of the Ortsbo intellectual property assets,~~125)~~ ~~during~~12,998,682 shares were issued comprising 8,312,500 to Ortsbo and 4,686,182 to the ~~first~~former ~~quarter~~debt and minority shareholders of ~~fiscal~~Ortsbo, ~~2017.~~which Aswere valued at ~~November~~$1,806,608 30leaving 18,988,318 ~~2016~~shares to be issued which remain outstanding as at February 28, 2017 and are reserved but not issued pending instructions from the ~~loan~~recipients. ~~had~~Yappn aalso assumed $975,388 of debt as part of the transaction. This assumed debt was immediately subscribed as part of the secured debenture in Yappn (Note 6). The fair value for the agreed upon consideration for the acquisition of intellectual property from Ortsbo was $6316,~~203~~968,888, (however, due to the common control of Ortsbo and the Company, the value of the intangible assets acquired from Ortsbo was recorded at the carrying value in the financial records of Ortsbo. This value was $845,~~875~~421,067 on ~~Canadian)~~September 15, 2015.

During the fourth quarter of fiscal 2016, the Company received $100,000 from a director as an intended subscription in anticipation of a third closing of a private placement of units consisting of one common stock at $0.25 per share and one common stock purchase warrant with an exercise price of $0.25 per share. The Company completed this closing on August 31, 2016 and the loan was applied against the private placement (Note 9).

Intangible Assets	Technology			Pending Patents			Issued Patents			Total
Balance on Acquisition - September 15, 2015	$	5,278,773		$	142,294		$	-		$	5,421,067
Additions		-			21,522			-			21,522
Amortization		(747,830	)		-			-			(747,830	)
Disposal		-			(18,538	)		-			(18,538	)
Balance, May 31, 2016	$	4,530,943		$	145,278		$	-		$	4,676,221
Additions		-			24,096			-			24,096
Reclassification		-			(43,253	)		43,253			-
Amortization		(791,820	)		-			(5,810	)		(797,630	)
Balance, February 28, 2017	$	3,739,123		$	126,121		$	37,443		$	3,902,687

~~The~~5. ~~following is a summary of~~ Short Term Loans:

Principal amounts	April 1, 2014 Term Loan			January 7, 2014 Term Loan			Other Loans			Total
Fair value at May 31, 2015	$	152,545		$	82,817		$	556,566		$	791,928
Borrowing during the first quarter		-			-			328,265			328,265
Borrowing during the second quarter		-			-			1,201,000			1,201,000
Borrowing during the third quarter		-			-			170,468			170,468
Borrowing during the fourth quarter		-			-			100,000			100,000
Fair value adjustments		(9,446	)		(4,251	)		(19,726	)		(33,423	)
Conversions		-			-			(1,832,768	)		(1,832,768	)
Repayments		(37,214	)		-			(403,805	)		(441,019	)
Fair value at May 31, 2016	$	105,885		$	78,566		$	100,000		$	284,451
Fair value adjustments		(1,926	)		(1,464	)		-			(3,390	)
Conversions		-			-			(100,000	)		(100,000	)
Repayments		(15,483	)		(13,899	)		-			(29,382	)
Fair value at November 30, 2016	$	88,476		$	63,203		$	-		$	151,679

The Company has a past due term loan originated on April 1, 2014 with an interest rate of 1% per month. The Company repaid $15,483 (Canadian $20,000) during the first quarter of fiscal 2017. As at February 28, 2017, the loan had a value of $89,462 ($118,815 Canadian).

8The Company had a past due term loan originated on January 7, 2014 with an interest rate of 1% per month. The Company repaid $13,899 (Canadian $18,125) during the first quarter of fiscal 2017. During the third quarter, the balance of the loan was settled with the debt holder as part of the DWF settlement (Note 3), leaving a value of $nil as at February 28, 2017.

6During the fourth quarter of fiscal 2016, the Company received $100,000 from a director as an intended subscription in anticipation of a third closing of a private placement of units consisting of one common stock at $0.25 per share and one common stock purchase ~~Non-Convertible~~warrant ~~Secured~~with ~~Debentures~~an exercise price of $0.25 per share. The Company completed this closing on August 31, 2016 and the loan was applied against the private placement (Note 9).

~~Yappn closed the first tranche of secured debentures (secured by general security of the Company’s assets) in the amount of $4.5 million.~~ The ~~secured debentures carry~~ anfollowing ~~annual~~is ~~interest rate of 12% payable at maturity. Maturity was initially the earlier of the date proceeds are available from~~ a ~~public~~summary ~~offering or December 31, 2015. During the third quarter~~ of ~~fiscal~~Short ~~2016,~~Term the holders of the Secured Debentures (the “Holders”) agreed to extend the maturity date of the Secured Debentures from December 31, 2015 to July 15, 2020, and were provided with the right to amend the Secured Debenture such that a Holder shall have the right to require the Company to satisfy the outstanding obligations underlying the Secured Debenture; provided, however, that at least two thirds (66.67%) of the Holders of the principal amount of the Secured Debentures consent to a put of their Secured Debentures to the Company. The secured debentures balance as at November 30, 2016, was $4,550,388 (Note 12). Interest expense for the three and six month period ended November 30, 2016 was $136,512 and $273,023 respectively ($130,378 and $194,183 for the three and six months ended November 30, 2015).Loans:

7. Unsecured Convertible Promissory Notes and Debentures

Principal amounts	April 1, 2014 Term Loan			January 7, 2014 Term Loan			Other Loans			Total
Fair value at May 31, 2015	$	152,545		$	82,817		$	556,566		$	791,928
Borrowing during the first quarter		-			-			328,265			328,265
Borrowing during the second quarter		-			-			1,201,000			1,201,000
Borrowing during the third quarter		-			-			170,468			170,468
Borrowing during the fourth quarter		-			-			100,000			100,000
Fair value adjustments		(9,446	)		(4,251	)		(19,726	)		(33,423	)
Conversions		-			-			(1,832,768	)		(1,832,768	)
Repayments		(37,214	)		-			(403,805	)		(441,019	)
Fair value at May 31, 2016	$	105,885		$	78,566		$	100,000		$	284,451
Fair value adjustments		(940	)		(760	)		-			(1,700	)
Conversions		-			-			(100,000	)		(100,000	)
Repayments		(15,483	)		(13,899	)		-			(29,382	)
Settlement		-			(63,907	)		-			(63,907	)
Fair value at February 28, 2017	$	89,462		$	-		$	-		$	89,462

~~The following is a summary of the unsecured convertible promissory notes and debentures as of November 30, 2016:~~8

Principal amounts:	Convertible Promissory Notes and Debentures		Conversions			Total Outstanding Principal
Total Borrowings
Borrowing on January 29, 2014	$	395,000	$	(260,000	)	$	135,000
Borrowing on February 27, 2014		305,000		-			305,000
Borrowing on April 1, 2014		469,000		(299,000	)		170,000
Borrowing on April 23, 2014		50,000		(50,000	)		-
Borrowing on May 31, 2014		1,000,000		(1,000,000	)		-
Borrowing on June 27, 2014		250,000		-			250,000
Borrowing on September 2, 2014		125,000		(125,000	)		-
Borrowing on October 6, 2014		50,000		(50,000	)		-
Borrowing on October 27, 2014		50,000		-			50,000
Total	$	2,694,000	$	1,784,000		$	910,000
Balance at May 31, 2015						$	1,945,833
Fair Value adjustment							768,991
Conversions							(260,000	)
Balance at May 31, 2016						$	2,454,824
Fair Value adjustment							(20,824	)
Conversions							(1,524,000	)
Balance at November 30, 2016						$	910,000

6. Non-Convertible Secured Debentures

9Yappn closed the first tranche of secured debentures (secured by general security of the Company’s assets) in the amount of $4,550,388. The secured debentures carry an annual interest rate of 12% payable at maturity. Maturity was initially the earlier of the date proceeds are available from a public offering or December 31, 2015. During the third quarter of fiscal 2016, the holders of the Secured Debentures (the “Holders”) agreed to extend the maturity date of the Secured Debentures from December 31, 2015 to July 15, 2020, and were provided with the right to amend the Secured Debenture such that a Holder shall have the right to require the Company to satisfy the outstanding obligations underlying the Secured Debenture; provided, however, that at least two thirds (66.67%) of the Holders of the principal amount of secured debentures consent to a put of their Secured Debentures to the Company. The secured debentures balance as at February 28, 2017, was $4,550,388 (Note 12). Interest expense for the three and nine month period ended February 28, 2017 was $136,512 and $409,535 respectively ($136,512 and $330,695 for the three and nine months ended February 29, 2016).

~~Convertible~~7. ~~Debentures~~Unsecured ~~with~~Convertible ~~Series~~Promissory ANotes and ~~B Warrants~~Debentures

~~On January 29, 2014, February 27,~~The ~~2014,~~following ~~and~~is ~~April~~a 1,summary ~~2014,~~of the ~~Company issued 395, 305, and 469 Units for $395,000, $305,000, and $469,000 respectively. The Units consist of (i) one~~ unsecured 6% convertible promissory ~~note,~~notes $100 par value, convertible into shares of the Company’s common stock; (ii) a common stock purchase warrant entitling the holder thereof to purchase 1,000 shares of common stock (individually Series A Warrant) at an exercise price of $1.50; and, ~~(iii)~~debentures aas ~~common stock purchase warrant entitling the holder thereof to purchase 1,000 shares~~ of ~~common~~February ~~stock (individually Series B Warrant) at an exercise price of $2.00 (Note 10). The purchase price for each Unit was $1~~28,~~000~~ ~~and resulted in a funding total of $1,069,000 in cash and the retirement of $100,000 debt obligation to a private investor.~~2017:

The notes matured 24 months from the issuance date and have an interest rate of 6% per annum payable in arrears on the earlier of a default date or the maturity date. The notes may be converted at any time after the original issuance date at the election of their holders to convert all or part of the outstanding and unpaid principal amount and accrued interest at a conversion price of $1.00 per share. Any amount of principal or interest which is not paid when due, shall bear interest at the rate of 16% per annum from the date it is due. Both the Series A and Series B warrants have a five year life.

Principal amounts:	Convertible Promissory Notes and Debentures		Conversions			Settlement			Total Outstanding Principal
Total Borrowings
Borrowing on January 29, 2014	$	395,000	$	(260,000	)		-		$	135,000
Borrowing on February 27, 2014		305,000		-			(305,000	)		-
Borrowing on April 1, 2014		469,000		(299,000	)		-			170,000
Borrowing on April 23, 2014		50,000		(50,000	)		-			-
Borrowing on May 31, 2014		1,000,000		(1,000,000	)		-			-
Borrowing on June 27, 2014		250,000		-			(250,000	)		-
Borrowing on September 2, 2014		125,000		(125,000	)		-			-
Borrowing on October 6, 2014		50,000		(50,000	)		-			-
Borrowing on October 27, 2014		50,000		-			-			50,000
Total	$	2,694,000	$	(1,784,000	)	$	(555,000	)	$	355,000

Balance at May 31, 2015									$	1,945,833
Fair value adjustment										768,991
Conversions										(260,000	)
Balance at May 31, 2016									$	2,454,824
Fair value adjustment										(20,824	)
Conversions										(1,524,000	)
Settlement										(555,000	)
Balance at February 28, 2017									$	355,000

The convertible debentures due on January 29, February 27, 2016, and April 1, 2016 respectively were not repaid or converted into common shares of the Company by the maturity dates. Management is diligently working with the debenture holders on either extension terms or conversion into common shares as the Company does not currently have the ability to repay these debtholders in cash. In fiscal 2016, $260,000 in principal value of debenture holders took the offer for additional investment and repricing of both warrants. During the six month period ended November 30, 2016, $299,000 in principal value of debenture holders exercised conversion rights but only the Series A warrants were repriced (Notes 9 and 10). The holders of $299,000 in principal converted have the right to an additional issuance of shares if the Company closes a financing below $0.25 per common share for a six month period to a floor of $0.20 per common share. In addition, on September 21, 2016, a debenture holder with a principal value of $100,000 agreed to extend the outstanding debenture to May 31, 2017 with no penalty interest from default date to May 31, 2017 in exchange for both Series A and B warrants repriced to $0.35. The Company accounted for the extension as a debt modification as opposed to a debt extinguishment. Interest expense for the three and six month period ended November 30, 2016 was $20,420 and $64,181 respectively ($17,487 and $35,166 for the three and six months ended November 30, 2015).

Convertible Debentures with Series CA orand ~~Series~~B D Warrants

~~During~~On January ~~late~~29, ~~fiscal~~ 2014, ~~and~~February ~~early fiscal~~27, ~~2015~~2014, ~~the Company authorized~~ and ~~issued~~April 1,~~050~~ ~~Units~~2014, ~~for~~the ~~$1,050,000~~Company toissued ~~private~~395, ~~investors~~305, and ~~475~~469 Units for $~~475~~395,000 ~~to seven independent accredited investors respectively. The 475 Units were issued in exchange for $300~~,~~000~~ ~~in cash and release of~~ $90305,~~777 (then Canadian $100,~~000~~) in the loan originated on January 7~~, ~~2014~~ and $50469,000 ~~in settlement of trade payables~~respectively. The Units consist of (i) one unsecured 6% convertible ~~debenture~~promissory note, $100 par value, convertible into shares of the Company’s common stock; at(ii) a ~~conversion~~common stock purchase warrant entitling the holder thereof to purchase 1,000 shares of common stock (individually “Series A Warrant”) at an exercise price of $1.50 ~~per share~~; and, (iiiii) a common stock purchase warrant ~~entitling~~ entitling the holder thereof to purchase ~~700~~1,000 shares of common stock (individually “Series CB Warrant”) ~~and~~at ~~316,666~~an ~~shares~~exercise price of $2.00 ~~common stock~~ (~~Series D~~Note ~~Warrant~~10). atThe a purchase price offor each Unit was $~~2.20~~1,000 ~~per~~and ~~share~~resulted ~~that~~in ~~expires~~a funding total of $1,069,000 in 5cash ~~years~~and ~~(Note~~the ~~10)~~retirement of $100,000 debt obligation to a private investor.

The notes ~~debentures~~matured ~~mature~~ 24 months from the issuance date and have an interest rate of 6% ~~(with certain other penalties on overdue interest when debt is past due)~~ per annum payable in arrears on the earlier of a default date or the maturity date. The ~~debentures~~notes may be converted at any time after the original issuance date at the election of their holders, ~~who~~to ~~may~~ convert all or part of the outstanding and unpaid principal amount and accrued interest at a conversion price of $1.5000 per share. ~~The~~Any ~~common~~amount ~~stock~~of principal or interest which is not paid when due, shall bear interest at the rate of 16% per ~~purchase~~annum ~~warrants~~from ~~may~~the bedate ~~exercised~~it inis ~~whole~~due. orBoth inthe ~~part~~Series A and Series B warrants have a five year life.

~~During~~The ~~the~~convertible ~~six~~debentures ~~month~~due ~~period~~on January ~~ended~~29, ~~November 30~~2016, February 27, 2016, $and April 1,~~225~~ 2016 respectively were not repaid or converted into common shares of the Company by the maturity dates. Management previously made offers to the remaining debenture holders with either extension terms or conversion into common shares as the Company does not currently have the ability to repay these debtholders in cash. In fiscal 2016, $260,000 in principal value of debenture holders ~~converted~~took ~~their~~the ~~outstanding~~offer ~~debentures~~for ~~and~~additional ~~accrued~~investment ~~interest~~and ~~into~~repricing ~~common~~of ~~stock~~both ofwarrants. During the ~~Company~~nine asmonth ~~well~~period asended ~~received~~February ~~amendments~~28, 2017, $299,000 in principal value of debenture holders converted to ~~their~~common ~~warrants~~stock ~~price~~at a rate of $0.25 per share but only the Series A Warrants were repriced (Notes 9 and 10). The holders of $1299,~~225,~~000 in principal converted have the right to an additional issuance of shares if the Company closes a financing below $0.25 per common share for a six month period to a floor of $0.20 per common share. ~~All~~In ~~remaining~~addition, ~~term~~on September 21, 2016, a debenture holder with a principal value of $100,000 agreed to extend the outstanding debenture to May 31, 2017 with no penalty interest from default date to May 31, 2017 in exchange for both Series A and ~~conditions~~B ~~are~~Warrants repriced to $0.35. The Company accounted for the ~~same~~extension as ~~before~~a debt modification as opposed to a debt extinguishment. ~~Interest~~On February 28, 2017, a debenture holder with $305,000 in principal forgave their debenture and accrued interest in exchange for amending terms for Series A and B Warrants to $0.25 from $1.50 and $2.00 each respectively as well as an extension of one year to the terms of the warrants in conjunction with the settlement of DWF (Note 3 and Note 13). Interest expense for the three and ~~six~~nine month period ended ~~November~~February 3028, ~~2016~~2017 was $~~960~~24,348 and $2988,~~838~~601 respectively ($2221,~~812~~009 and $4556,~~875~~175 for the three and ~~six~~nine months ended ~~November~~February 3029, ~~2015~~2016).

8. Convertible Debentures ~~Secured~~with ~~Debentures~~Series ~~and~~C ~~Long-term~~or ~~Loan~~Series D Warrants

OnDuring late ~~December~~fiscal 302014, and early fiscal 2015, the Company ~~completed a~~authorized ~~secured~~and ~~debenture~~issued ~~(secured~~1,050 byUnits ~~general~~for ~~security~~$1,050,000 ofto ~~the~~private ~~Company’s~~investors, ~~assets)~~ and 475 ~~warrant~~Units ~~financing~~for of $2475,~~040,~~000 (to seven independent accredited investors respectively. The 475 Units were issued in exchange for $1300,~~075,~~000 ~~from~~in ~~directors~~cash and release of ~~the~~$90,777 ~~Company~~(then Canadian $100,000) ~~through~~in the ~~offering~~loan oforiginated ~~units~~on byJanuary ~~way~~7, of2014 ~~private~~and ~~placement~~$50,000 ~~with~~in ~~each~~settlement ~~unit~~of trade ~~consisting~~payables. The Units consist of (i) aone 12unsecured 6% ~~secured~~ convertible debenture, ~~with~~$100 apar ~~maturity~~value, ~~date~~convertible ofinto ~~five~~shares ~~years~~of ~~from~~the Company’s ~~issuance~~common ~~convertible~~stock at a conversion price of $01.2550 per ~~common~~share; ~~stock~~ and (ii) ~~ten~~ ~~(10)~~a ~~five year~~ common ~~share~~stock purchase ~~warrants,~~warrant ~~vesting~~entitling inthe holder ~~1/3~~thereof ~~increments~~to ~~with~~purchase ~~1/3 vested in one year~~700,000 ~~1/3~~shares toof becommon ~~vested~~stock ~~in two~~(“Series ~~years~~C Warrant”) and ~~1/3~~316,666 toshares beof ~~vested~~common instock ~~three~~(“Series ~~years~~D ~~and~~Warrant”) at ~~having~~a anpurchase ~~exercise~~ price of $02.0120 per share ~~(Note~~that ~~10).~~expires ~~The~~in ~~units~~5 ~~were~~years ~~sold~~(Note ~~at $1~~10).~~00 per unit.~~

10The debentures mature 24 months from the issuance date and have an interest rate of 6% (with certain other penalties on overdue interest when debt is past due) per annum payable in arrears on the earlier of a default date or the maturity date. The debentures may be converted at any time after the original issuance date at the election of their holders, who may convert all or part of the outstanding and unpaid principal amount and accrued interest at a conversion price of $1.50 per share. The common stock purchase warrants may be exercised in whole or in part.

~~Values were~~During ~~allocated~~the ~~for~~nine ~~this~~month ~~private~~period ~~placement~~ended ~~between~~February 28, ~~the debt~~2017, ~~equity warrants~~$1,225,000 ~~and~~in ~~the~~principal ~~beneficial~~value ~~conversion~~of ~~feature.~~debenture ~~The~~holders ~~valuation approach~~converted ~~involved~~their ~~determining~~outstanding adebentures ~~fair value for the debt~~ and ~~warrants~~accrued ~~and~~interest ~~then~~into common ~~using~~stock of the ~~relative~~Company ~~fair~~as ~~value~~well ~~method~~as toreceived ~~allocate value~~amendments to ~~these~~their ~~components.~~warrants ~~Based~~price onof ~~relative~~$0.25 ~~fair~~(Notes ~~values,~~9 ~~the~~and ~~present~~10). ~~value~~The ~~method~~holders ~~was used to determine the fair values~~ of the ~~debt~~$1,225,000 ~~and~~in ~~the~~principal ~~binomial~~converted ~~tree~~have ~~option~~the ~~pricing~~right ~~model was used~~ to ~~determine~~an ~~the~~additional ~~fair~~issuance ~~value~~ of ~~the~~shares ~~warrants.~~if ~~The value of~~ the ~~interest and~~Company ~~principal~~closes ~~payments of the debentures resulted in~~ a ~~value~~financing ofbelow $~~459,020~~0.25 per ~~for~~common ~~the~~share ~~debentures~~for ~~and~~a ~~the~~six ~~binomial~~month ~~model~~period ~~resulted~~to in a ~~value~~floor ~~for~~of ~~warrants for~~ $~~1,580,980~~0.20 ~~The~~per ~~assumptions~~common ~~used~~share. ~~for~~All ~~the~~remaining ~~binomial~~term ~~model~~and conditions are: ~~Volatility~~unchanged. On ~~177%~~February 28, ~~expected~~2017, ~~life~~two ofdebenture ~~five~~holders ~~years~~with $250, ~~risk~~000 ~~free~~in ~~interest~~principal ~~rate~~forgave oftheir ~~1.80%,~~debentures and ~~dividend~~accrued ~~rate~~interest ofin ~~0%.~~exchange for ~~Additionally,~~amending ~~this~~terms ~~convertible~~for ~~secured~~Series ~~debenture~~D ~~instrument~~warrants ~~includes a~~to ~~beneficial~~$0.25 ~~conversion~~from ~~feature~~$2.20 as ~~the~~well ~~effective~~as ~~conversion~~an ~~price~~extension isof ~~less~~one ~~than~~year to the ~~Company’s~~terms ~~market price~~ of ~~common~~the ~~stock~~warrants onin ~~the~~conjunction ~~commitment~~with ~~date.~~settlement ~~The~~of ~~value~~DWF of(Note ~~this~~3). ~~beneficial~~Interest ~~conversion~~expense ~~feature~~for isthe ~~$459,020.~~three ~~The~~and ~~resulting~~nine ~~fair~~month ~~value~~period ofended ~~the~~February ~~debt~~28, is2017 was $~~nil~~6, ~~with~~237 and $141,~~580,980~~104 ~~allocated~~respectively ~~to equity warrants~~ (~~Note~~$22,812 ~~10)~~ and $~~459~~68,~~020~~688 tofor the ~~beneficial~~three ~~conversion~~and ~~feature,~~nine ~~both~~months ~~which~~ended ~~are~~February ~~recorded as~~29, ~~components of additional paid in capital~~2016).

On8. ~~May~~Convertible 1,Secured ~~2016,~~Debentures ~~the Company closed a secured debenture~~ and ~~warrant financing through conversion of a short~~ Long-term loan of $170,468 from a director of the Company (secured by general security of the Company’s assets) that was otherwise payable on demand in cash. The offering of units was by way of private placement, with each unit consisting of (i) a 12% secured convertible debenture with a maturity date of five years from issuance convertible at $0.25 per common stock and (ii) ten (10) five year common share purchase warrants, vesting in 1/3 increments with 1/3 vested immediately, 1/3 to be vested in one year and 1/3 to be vested in two years and having an exercise price of $0.01 per share (Note 10). The units were sold at $1.00 per unit.Loan

~~Values were~~On ~~allocated~~December ~~for~~30, ~~this private placement between debt~~2015, ~~equity~~the ~~warrants,~~Company ~~and~~completed a ~~the~~secured ~~beneficial~~debenture ~~conversion~~(secured ~~feature~~by ~~similar~~general tosecurity of the ~~secured~~ ~~debenture~~Company’s assets) and warrant financing of $2,040,000 ~~closed~~($1,075,000 from indirectors ~~the third quarter~~ of ~~fiscal~~the ~~2016~~Company) (~~see~~Note ~~above~~12). ~~The~~through ~~value of~~ the ~~interest~~ ~~and~~offering ~~principal payments~~ of ~~the~~units ~~debentures~~by ~~resulted~~way ~~in a value~~ of ~~$51~~private placement,~~396~~ ~~for~~with ~~the~~each ~~debentures~~unit ~~and~~consisting ~~the binomial model resulted~~of in(i) a ~~value~~12% ~~for~~secured ~~warrants~~convertible ~~for~~debenture ~~$119,072.~~with ~~The~~a ~~assumptions~~maturity ~~used~~date ~~for the binomial model are: Volatility 180%, expected life~~ of five years, ~~risk~~from ~~free~~issuance ~~interest~~convertible ~~rate~~at ~~of 1~~$0.~~28%,~~25 ~~and~~per ~~dividend~~common ~~rate~~stock and of(ii) ~~0%.~~ten ~~Additionally,~~(10) ~~this~~five ~~convertible~~year ~~secured~~common ~~debenture~~share ~~instrument includes~~purchase awarrants, ~~beneficial~~vesting ~~conversion~~in ~~feature~~1/3 asincrements ~~the~~with ~~effective~~1/3 ~~conversion~~vested ~~price~~in isone ~~less~~year, ~~than~~1/3 ~~the~~to ~~Company’s~~be ~~market price of common~~vested ~~stock~~in ontwo ~~the~~years ~~commitment~~and ~~date.~~1/3 ~~The~~to ~~value~~be ofvested ~~this~~in ~~beneficial~~three ~~conversion~~years ~~feature~~and ishaving ~~$51,396.~~an ~~The~~exercise ~~resulting~~price ~~fair value~~ of ~~the debt is~~ $~~nil,~~0.01 ~~with~~per ~~$119,072~~share ~~allocated to equity warrants~~ (Note 10). ~~and~~The ~~$51,396~~units towere ~~the beneficial conversion feature, both which are~~sold ~~recorded~~at as$1.00 ~~components~~per ~~of additional paid in capital~~unit.

The difference between the fair value and face value of the debentures is to be accreted up to face value over the term to maturity using the effective interest method. The carrying value of the debenture liability as at November 30, 2016 is $375,379 for the December 30, 2015 closing and $19,886 for the May 1, 2016 closing.10

Values were allocated for this private placement between the debt, equity warrants, and the beneficial conversion feature. The valuation ~~following~~approach ~~table~~involved ~~summarizes~~determining a fair value for the debt and warrants and then using the relative fair value method to allocate value to these components. Based on relative fair values, the present value method was used to determine the fair values of the debt ~~components~~and the binomial tree option pricing model was used to determine the fair value of the warrants. The value of the interest and principal payments of the debentures resulted in a value of $459,020 for the debentures and the binomial model resulted in a value for warrants for $1,580,980. The assumptions used for the binomial model are: Volatility 177%, expected life of five years, risk free interest rate of 1.80%, and dividend rate of 0%. Additionally, this convertible secured ~~debentures~~debenture instrument includes a beneficial conversion feature as the effective conversion price is less than the Company’s market price of common stock on the commitment date. The value of this beneficial conversion feature is $459,020. ~~including~~The resulting fair value of the debt, ~~warrants~~is $nil, with $1,580,980 allocated to equity warrants (Note 10) and $459,020 to the beneficial conversion feature, both which are recorded as components of additional paid in capital.

Accounting allocation of initial proceeds:	December 30, 2015			May 1, 2016			Total
Gross proceeds	$	2,040,000		$	170,468		$	2,210,468
Fair value of the convertible secured debt		-			-			-
Fair value of equity warrants (Note 10)		(1,580,980	)		(119,072	)		(1,700,052	)
Beneficial conversion feature		(459,020	)		(51,396	)		(510,416	)
Change in fair value (from commitment date)		170,932			4,347			175,279
Convertible secured debenture at fair value at May 31, 2016	$	170,932		$	4,347		$	175,279
Change in fair value		204,447			15,539			219,986
Convertible secured debenture at fair value at November 30, 2016	$	375,379		$	19,886		$	395,265

On May 1, 2016, the Company closed a secured debenture and warrant financing through conversion of a short term loan of $170,468 from a director of the Company (secured by general security of the Company’s assets) that was otherwise payable on demand in cash. The offering of units was by way of private placement, with each unit consisting of (i) a 12% secured convertible debenture with a maturity date of five years from issuance convertible at $0.25 per common stock and (ii) ten (10) five year common share purchase warrants, vesting in 1/3 increments with 1/3 vested immediately, 1/3 to be vested in one year and 1/3 to be vested in two years and having an exercise price of $0.01 per share (Note 10). The units were sold at $1.00 per unit.

OnValues ~~May~~were 1allocated for this private placement between debt, ~~2016~~equity warrants, and the ~~Company~~beneficial ~~completed~~conversion afeature similar to the secured debenture and warrant financing ~~with~~of a$2,040,000 ~~consultant~~closed in ~~settlement~~the third quarter of ~~$200,000~~fiscal in2016 ~~obligations~~(see ~~with~~above). The value of the ~~similar~~interest ~~terms~~and asprincipal payments of the ~~above~~debentures ~~private~~resulted ~~placement~~in ~~with~~a novalue ~~warrant~~of ~~financing~~$51,396 ~~through~~for the ~~offering~~debentures ofand ~~units~~the bybinomial ~~way~~model ofresulted in ~~private~~a ~~placement~~value for warrants for $119,072. The assumptions used for the binomial model are: Volatility 180%, expected life of five ~~with~~years, ~~each~~risk ~~unit~~free ~~consisting~~interest rate of ~~(i)~~1.28%, aand 12dividend rate of 0%. ~~secured~~Additionally, this convertible secured debenture ~~with~~instrument includes a ~~maturity~~beneficial ~~date~~conversion offeature ~~five~~as ~~years~~the ~~from~~effective ~~issuance~~conversion ~~convertible~~price is less than the Company’s market price of common atstock $0on the commitment date.25 ~~per~~The ~~common~~value of this beneficial conversion feature is $51,396. The resulting fair value of the debt is $~~200~~nil,~~000~~ ~~debenture~~with ~~was~~$119,072 ~~accounted~~allocated ~~for~~to equity warrants (Note 10) and $51,396 to the beneficial conversion feature, both which are recorded as acomponents ~~single~~of ~~debt~~additional ~~instrument~~paid in capital.

~~Interest~~The difference ~~expense~~between ~~for~~ the ~~three~~fair value and ~~six~~face value of the debentures is to be accreted up to face value over the term to maturity ~~month~~using ~~period~~the ~~ended~~effective ~~November~~interest ~~30,~~method. ~~2016~~The ~~was~~carrying ~~$72,314~~value ~~and~~of ~~$144~~the debenture liability as at February 28,~~628~~ ~~respectively~~2017 (is $~~nil~~475,926 for the December ~~three~~30, 2015 closing and ~~six~~$28,288 ~~months~~for ~~ended~~the ~~November~~May 301, ~~2015)~~ 2016 closing.

~~During the second quarter of fiscal~~The ~~2017,~~following ~~Company~~table ~~received~~summarizes athe ~~subscription~~fair ~~for~~values ~~$1.0~~of ~~million in bridge financing. The Company expects to close this in~~ the ~~third~~components ~~quarter~~ of ~~fiscal 2017. The financing is expected to have~~ the ~~same~~convertible ~~terms as the~~ secured ~~debenture~~debentures, ~~above.~~including ~~This~~the ~~loan~~debt, ~~is classified as a long~~warrants, ~~term~~and ~~loan until~~ the ~~closing~~beneficial ~~date~~conversion feature.

9. Common Stock

Accounting allocation of initial proceeds:	December 30, 2015			May 1, 2016			Total
Gross proceeds	$	2,040,000		$	170,468		$	2,210,468
Fair value of the convertible secured debt		-			-			-
Fair value of equity warrants (Note 10)		(1,580,980	)		(119,072	)		(1,700,052	)
Beneficial conversion feature		(459,020	)		(51,396	)		(510,416	)
Change in fair value (from commitment date)		170,932			4,347			175,279
Convertible secured debenture at fair value at May 31, 2016	$	170,932		$	4,347		$	175,279
Change in fair value		304,994			23,941			328,935
Convertible secured debenture at fair value at February 28, 2017	$	475,926		$	28,288		$	504,214

On May ~~August 31~~1, ~~2015~~2016, the Company ~~issued 11,667~~completed ~~shares~~a ofsecured ~~common~~debenture ~~stock~~financing with a consultant in settlement of $200,000 in obligations with similar terms as the ~~form~~above private placement with no warrant financing, through the offering of aunits ~~cashless~~by ~~exercise~~way ~~common~~of ~~stock~~private ~~purchase~~placement, with ~~warrants~~each unit consisting of (i) a 12% secured convertible debenture with a ~~previous~~maturity ~~allocation~~date toof ~~equity~~five years from issuance convertible ofat $370.25 per common. The $200,~~100~~000 indebenture ~~full~~was ~~settlement~~accounted offor ~~warrants~~as ~~issued~~a tosingle debt instrument. On February 28, 2017, Company reached an agreement with the consultant (as a ~~variable~~DWF ~~note~~stakeholder) ~~holder~~to ~~that~~settle ~~was~~the ~~extinguished~~outstanding debenture and accrued interest in ~~fiscal~~exchange ~~2016~~for Yappn’s revised position in DWF (Note 3).

OnInterest expense ~~September~~for ~~15, 2015,~~ the ~~Company closed~~three ~~an agreement with Ortsbo to acquire all of its intellectual property assets. The purchased assets include US Patent No. 8,983,850 B2, US Patent No. 8,917,631 B2, US Patent No. 9,053,097 B2,~~ and ~~other~~nine ~~intellectual~~month ~~property~~period ~~including~~ended ~~Ecommerce~~February ~~and Customer Care know-how for a total purchase price of $16~~28,~~968,888,~~ ~~which~~2017 was ~~paid by the assumption of~~ $~~975~~72,~~388~~314 ~~in debt~~ and ~~the issuance of~~ $15216,~~993,500~~942 ~~worth~~respectively ~~of Yappn restricted common shares~~ (~~32 Million shares at~~ $~~0.50 per share)~~56,495 ~~however, due to the common control of Ortsbo~~ and ~~the Company, the value of the intangible assets acquired from Ortsbo was recorded at the carrying value in the financial records of Ortsbo. This value was~~ $571,~~421,067 on September 15, 2015. During the second quarter, 12,998,682 shares~~321 ~~were~~for ~~issued at a value of $1,806,609 with obligations incurred to issue~~ the ~~remaining~~three ~~18,988,318~~and ~~shares~~nine ~~when~~months ~~signed~~ended ~~registration forms~~February ~~are all obtained by the Company. As at the filing date~~29, ~~the 18,988,318 shares at a value of $2,639,071 remain reserved but not issued (Note 4~~2016) ~~and subject to issuance based on the instructions from the recipients~~.

11During the second and third quarter of fiscal 2017, Company received a subscription for $1,326,348 in bridge financing (Note 12). This loan is classified as a long term loan until the closing date, as additional participation is expected although not guaranteed.

~~On April 18, 2016, the Company issued 1,008,000 shares of common stock for $252,000 cash received against the first tranche of a private placement of units, at a purchase price of $0~~9.~~25 per unit, consisting of one common stock at $0.25 per share and one common~~ ~~stock~~Common ~~purchase~~Stock warrant with an exercise price of $0.25 per share. These warrants will vest in increments of thirds with the first 1/3 being vested on April 17, 2017, second increment of 1/3 on April 17, 2018, and last 1/3 on April 17, 2019. The Company completed a relative fair value calculation to allocate the proceeds between common stock and warrants for $157,046 and $94,854 respectively. The assumptions used for valuation were: Volatility 180%, expected life of five years, risk free interest rate of 1.24%, and dividend rate of 0%.

On ~~May~~August 1731, ~~2016~~2015, the Company issued 211,~~640,000~~667 shares of common stock ~~for~~in ~~$660,000 cash received against~~ the ~~second~~form ~~tranche~~ of a ~~private placement~~cashless ofexercise ~~units, at a purchase price of $0.25 per unit, consisting of one~~ common stock ~~at $0.25 per share and one common stock~~ purchase ~~warrant~~ warrants with ana ~~exercise~~previous ~~price~~allocation ofto ~~$0.25~~equity ~~per share (Note 10). 1,200,000~~ of ~~the shares from the second tranche for~~ $~~300~~37,~~000 were~~100 ~~issued~~in tofull ~~two~~settlement ~~members~~ of ~~the board of directors (Note 12). These~~ warrants ~~will~~issued ~~vest~~to ~~in increments of thirds with the first 1/3 being vested on May 16, 2017, second increment of 1/3 on May 16, 2018, and last 1/3 on May 16, 2019. The Company completed~~ a ~~relative~~variable ~~fair~~note ~~value~~holder ~~calculation~~that towas ~~allocate the proceeds between common stock and warrants for $411,515 and $248,221 respectively.~~extinguished ~~The~~in ~~assumptions~~fiscal ~~used for valuation were: Volatility 179%, expected life of five years, risk free interest rate of 1~~2016.~~29%, and dividend rate of 0%.~~

On September ~~June~~15, 132015, ~~2016~~the Company closed an agreement with Ortsbo to acquire all of its intellectual property assets. The purchased assets include US Patent No. 8,983,850 ~~principal~~B2, US Patent No. 8,917,631 B2, US Patent No. 9,053,097 B2, and other intellectual property ~~interest~~including ~~totaling~~Ecommerce and Customer Care know-how for a total purchase price of $~~305~~16,~~307~~968,888, which was ~~converted~~paid ~~into~~by 1the assumption of $975,~~221~~388 in debt and the issuance of $15,~~228~~993,500 worth of Yappn restricted common shares as(32 ~~part~~Million shares at $0.50 per share), however, due to the common control of Ortsbo and the ~~conversion~~Company, the value of ~~convertible~~the ~~debt~~intangible asassets ~~described~~acquired from Ortsbo was recorded at the carrying value in ~~Note~~the 7financial records of Ortsbo. ~~The~~This ~~common~~value was $5,421,067 on September 15, 2015. During the second quarter, 12,998,682 shares were issued at a value of $1,806,609 with obligations incurred to beissue ~~issued~~the ~~were~~remaining ~~recorded~~18,988,318 asshares anwhen signed ~~obligation~~registration asforms are all obtained by the Company. As at ~~May~~the 17filing date, ~~2016~~the 18,988,318 ~~however~~shares ~~the~~at ~~issuance~~a ~~did~~value ~~not~~of ~~occur~~$2,639,071 ~~until~~remain ~~June~~reserved ~~13,~~but ~~2016~~not issued (Note 4) and subject to issuance based on the instructions from the recipients.

On August 31, 2016, the Company issued 1,000,000 shares of common stock for $200,000 cash received and settlement of $50,000 in prior obligations against the third tranche of a private placement of units, at a purchase price of $0.25 per unit, consisting of one common stock at $0.25 per share and one common stock purchase warrant with an exercise price of $0.25 per share (Note 10). All of the shares from the third tranche were issued to four members of the board of directors (Note 12). These warrants will vest in increments of thirds with the first 1/3 being vested on August 31, 2017, second increment of 1/3 on August 31, 2018, and last 1/3 on August 31, 2019. The Company completed a relative fair value calculation to allocate the proceeds between common stock and warrants for $141,307 and $108,693 respectively. The assumptions used for valuation were: Volatility 191%, expected life of five years, risk free interest rate of 1.19%, and dividend rate of 0%. 11

On April ~~August 31~~18, 2016, ~~principal and~~the ~~interest~~Company ~~totaling~~issued $1,~~489~~008,~~057~~000 ~~was~~shares ~~converted~~of ~~into~~common 5stock for $252,~~956~~000 cash received against the first tranche of a private placement of units,~~226~~ at a purchase price of $0.25 per unit, consisting of one common ~~shares~~stock asat ~~part~~$0.25 per share and one common stock purchase warrant with an exercise price of $0.25 per share. These warrants will vest in increments of thirds with the ~~conversion~~first 1/3 being vested on April 17, 2017, second increment of ~~convertible~~1/3 ~~debt~~on asApril 17, 2018, and last 1/3 on April 17, 2019. The Company completed ~~described~~a inrelative ~~Note~~fair 7value calculation to allocate the proceeds between common stock and warrants for $157,046 and $94,854 respectively. The assumptions used for valuation were: Volatility 180%, expected life of five years, risk free interest rate of 1.24%, and dividend rate of 0%.

On May ~~September 23~~17, 2016, the Company issued ~~780~~2,640,000 shares of common stock for $~~195~~660,000 cash received against the ~~fourth~~second tranche of a private placement of units, at a purchase price of $0.25 per unit, ~~each unit~~ consisting of one ~~share of~~ common stock at $0.25 per share and one common stock purchase warrant with an exercise price of $0.25 per share (Note 10). 801,200,000 of the shares from the ~~fourth~~ second tranche for $20300,000 were issued to atwo ~~member~~members of the ~~advisory~~ board of directors (Note 12). These ~~common stock purchase~~ warrants will vest in increments of thirds with the first 1/3 being vested on ~~September~~May 2316, 2017, second increment of 1/3 on ~~September~~May 2316, 2018, and last 1/3 on ~~September~~May 2316, 2019. The Company completed a relative fair value calculation to allocate the proceeds between common stock and warrants for $~~112~~411,~~327~~515 and $82248,~~673~~221 respectively. The assumptions used for valuation were: Volatility ~~200~~ 179%, expected life of five years, risk free interest rate of 1.1629%, and dividend rate of 0%.

On June ~~September 23~~13, 2016, principal and interest totaling $~~262~~305,~~592~~307 was converted into 1,~~050~~221,~~368~~228 of common shares as part of the conversion of convertible debt as described in Note 7. The common shares to be issued were recorded as an obligation as at May 17, 2016, however the issuance did not occur until June 13, 2016.

On August ~~September 30~~31, 2016, the Company issued ~~120~~1,000,000 shares of common stock asfor $200,000 cash received and settlement ~~against~~of $50,000 in prior obligations ~~accounts~~against ~~payables~~the third tranche of a private placement of units, at a purchase price of $0.25 per unit, consisting of one common stock at $0.25 per share and one common stock purchase warrant with an exercise price of $0.25 per share (Note 10). All of the shares from the third tranche were issued to four members of the board of directors (Note 12). These warrants will vest in increments of thirds with the first 1/3 being vested on August 31, 2017, second increment of 1/3 on August 31, 2018, and last 1/3 on August 31, 2019. The Company completed a relative fair value ofcalculation to allocate the proceeds between common stock and warrants for $30141,~~000~~307 and $108,693 respectively. The assumptions used for valuation were: Volatility 191%, expected life of five years, risk free interest rate of 1.19%, and dividend rate of 0%.

On August ~~November 15~~31, 2016, ~~the~~principal ~~Company issued~~and ~~88,844~~interest ~~shares~~totaling of$1,489,057 ~~common~~was ~~stock~~converted ininto ~~association~~5,956,226 ~~with the timing~~ of ~~filing~~common ~~its~~shares ~~Registration Statement~~ as part of the ~~contractual~~conversion ~~rights~~ of ~~certain~~convertible ~~existing~~debt ~~convertible~~as ~~debenture~~described ~~holders~~in Note 7.

~~Registration~~On ~~Statement~~September 23, 2016, the Company issued 780,000 shares of common stock for $195,000 cash received against the fourth tranche of a private placement of units, at a purchase price of $0.25 per unit, each unit consisting of one share of common stock at $0.25 per share and one common stock purchase warrant with an exercise price of $0.25 per share (Note 10). 80,000 of the shares from the fourth tranche for $20,000 were issued to a member of the advisory board (Note 12). These common stock purchase warrants will vest in increments of thirds with the first 1/3 being vested on September 23, 2017, second increment of 1/3 on September 23, 2018, and last 1/3 on September 23, 2019. The Company completed a relative fair value calculation to allocate the proceeds between common stock and warrants for $112,327 and $82,673 respectively. The assumptions used for valuation were: Volatility 200%, expected life of five years, risk free interest rate of 1.16%, and dividend rate of 0%.

~~The~~On ~~Company~~September ~~filed~~23, a2016 ~~Registration~~principal ~~Statement on Form S-1 (File No. 333-199569) (the “Registration Statement”) with the Securities~~ and ~~Exchange~~interest ~~Commission~~totaling ~~(the “SEC”) for up to 7~~$262,592~~,667~~ ~~shares~~was ofconverted ~~Yappn~~into Corp.’s $0.0001 par value per share common stock (the "Common Stock") issuable to certain selling stockholders upon conversion of promissory notes and/or warrants currently held by those selling stockholders, specifically (i) 1,~~844~~050,~~000~~368 ~~shares~~ of ~~Common Stock~~common ~~issuable to them upon exercise of promissory notes and (ii) 4,588,000~~ shares ofas ~~Common~~part ~~Stock issuable to them upon exercise~~ of ~~warrants. The warrants have an exercise price varying from $0.25 to $2.20 per share (subject to adjustment). The Registration Statement covering~~ the ~~above noted shares was declared effective under the Securities Act~~ conversion of ~~1933~~convertible ondebt ~~November~~as ~~17,~~described ~~2014. On October 5, 2015, the Company filed a continuing registration statement~~ in ~~part~~Note ~~to update to this S-1 filing, and subsequently filed an amendment to this filing~~7. ~~This registration statement was withdrawn and a new registration statement filed.~~

On ~~October~~ 3September 30, 2016, the Company ~~filed~~issued ~~a request to withdraw is previously filed Registration Statement on Form S-1 (File No. 333-207292)~~120,000 with the Securities and Exchange Commission (the “SEC”). On October 3, 2016 the Company filed a new Registration Statement on Form S-1 (File No. 333-213947) (the “Registration Statement”) with the Securities and Exchange Commission for up to 14,840,964 shares of ~~Yappn Corp.’s $0.0001 par value per share~~ common stock ~~(the "Common~~as ~~Stock")~~settlement ~~issuable~~against toprior ~~certain~~accounts ~~selling~~payables ~~stockholders~~with ~~that~~a ~~are issued and outstanding and upon conversion of~~fair ~~promissory~~value ~~notes, related past due accrued interest and penalties and/or warrants currently held by those selling stockholders, specifically (i) 8,227,821 shares~~ of ~~Common Stock issued and outstanding (ii) 907~~$30,200 shares of Common Stock issuable to them upon exercise of promissory notes (iii) 273,272 shares of Common Stock issuable underlying past due accrued interest and penalties and (iv) 5,432,671 shares of Common Stock issuable to them upon exercise of common stock purchase warrants000. ~~The common stock purchase warrants have an exercise price varying from $0.25 to $2.20 per share (subject to adjustment). The Registration Statement has not yet been declared effective.~~

12On November 15, 2016, the Company issued 88,844 shares of common stock in association with the timing of filing its Registration Statement as part of the contractual rights of certain existing convertible debenture holders.

~~10.~~Registration ~~Preferred Stock and Warrants~~Statement

~~Series~~On October 3, 2016, the Company filed a Registration AStatement ~~Preferred~~on Form S-1 (File No. 333-213947) (the “Registration Statement”) with the Securities and Exchange Commission for up to 14,840,964 shares of our Company’s $0.0001 par value per share common stock (the "Common Stock") issuable to certain selling stockholders that are issued and outstanding upon conversion of promissory notes, related past due accrued interest and penalties and/or warrants currently held by those selling stockholders, specifically (i) 8,227,821 shares of Common Stock issued and outstanding (ii) 907,200 shares of Common Stock issuable to them upon exercise of promissory notes (iii) 273,272 shares of Common Stock issuable underlying past due accrued interest and penalties and (iv) 5,432,671 shares of Common Stock issuable to them upon exercise of common stock purchase warrants. The common stock purchase warrants have an exercise price varying from $0.25 to $2.20 per share (subject to adjustment). The Registration Statement covering the above noted shares was declared effective under the Securities Act of 1933 on January 24, 2017.

~~The Company has an authorized limit of 50,000,000 shares of preferred stock, par value $0.0001 with none issued and outstanding as at November 30, 2016 and May 31, 2016.~~12

10. Preferred Stock and Warrants

~~The~~Series ~~following~~A isPreferred ~~a summary of common stock purchase warrants issued, exercised and expired through November 30, 2016:~~Stock

	Shares Issuable Under Warrants			Equity Value		Exercise Price		Expiration
Issued on March 28, 2013		401,000			917,087	$	1.00		March 28, 2018
Issued on May 31, 2013		370,000			543,530	$	0.54		May 31, 2018
Issued on June 7, 2013		165,000			211,365	$	0.54		June 7, 2018
Issued on November 15, 2013		12,000			3,744	$	1.00		November 15, 2018
Issued Series A warrants on January 29, 2014		135,000			135,989	$	1.00		January 29, 2019
Issued Series A warrants on January 29, 2014 - Repriced		260,000			268,770	$	0.25		January 29, 2019
Issued Series B warrants on January 29, 2014		135,000			-	$	2.00		January 29, 2019
Issued Series B warrants on January 29, 2014 - Repriced		260,000			9,022	$	0.25		January 29, 2019
Issued Series A warrants on February 27, 2014		305,000			224,135	$	1.00		February 27, 2019
Issued Series B warrants on February 27, 2014		305,000			-	$	2.00		February 27, 2019
Issued Series A warrants on April 1, 2014		294,000			147,294	$	1.00		April 1, 2019
Issued Series A warrants on April 1, 2014 - Repriced		175,000			93,660	$	0.25		April 1, 2019
Issued Series B warrants on April 1, 2014		469,000			-	$	2.00		April 1, 2019
Issued to Lender – Line of Credit		800,000			1,495,200	$	1.00		April 7, 2019
Issued Series C warrants on April 23, 2014		33,333			9,395	$	2.20		April 23, 2019
Issued Series C warrants on May 30, 2014 - Repriced		666,667			214,212	$	0.25		May 30, 2019
Issued Series D warrants on June 27, 2014		166,667			-	$	2.20		June 27, 2019
Issued Series D warrants on September 2, 2014 - Repriced		83,333			41,593	$	0.25		September 2, 2019
Issued Series D warrants on October 6, 2014		33,333			15,567	$	2.20		October 6, 2019
Issued Series D warrants on October 27, 2014		33,333			15,667	$	2.20		October 27, 2019
Issued warrants – consultants		330,000			165,330	$	1.50		May 30, 2019
Issued warrants on February 4, 2015 Typenex Co-Investments, LLC		70,000			-	$	1.00		February 4, 2020
Issued warrants – consultant on May 31, 2015		5,000			990	$	1.00		May 31, 2017
Issued warrants – consultant on May 31, 2015		15,000			2,970	$	1.50		May 31, 2017
Issued warrants to advisory board on September 28, 2015		300,000			233,490	$	0.25		August 31, 2020
Issued to Lender – Line of Credit on November 5, 2015		1,700,000			519,520	$	1.00		April 7, 2019
Issued warrants to consultant on November 5, 2015		100,000			23,240	$	1.00		October 16, 2017
Issued warrants on December 30, 2015		20,400,000			1,580,980	$	0.01		December 29, 2020
Issued warrants to advisory board on March 21, 2016		1,750,000			94,691	$	0.25		March 21, 2021
Issued warrants to consultant on May 1, 2016		4,000,000			721,200	$	0.25		May 1, 2021
Issued warrants on May 1, 2016		1,704,680			119,072	$	0.01		May 1, 2021
Issued warrants for private placement on April 18, 2016		1,008,000			94,854	$	0.25		April 18, 2021
Issued warrants for private placement on May 17, 2016		2,640,000			248,221	$	0.25		May 17, 2021
Exercised Warrants Typenex Co-Investments, LLC		(70,000	)		-	$	1.00		-
Total – as of May 31, 2016		39,055,346			8,150,788
Issued warrants to consultant on July 6, 2016		90,000			22,500	$	0.25		July 6, 2018
Issued warrants to advisory board member on August 25, 2016		250,000			559	$	0.25		August 25, 2021
Issued warrants for private placement on August 31, 2016		1,000,000			108,693	$	0.25		August 31, 2021
Issued warrants for private placement on September 23, 2016		780,000			82,673	$	0.25		September 23, 2021
Issued warrants to consultant on November 10, 2016		100,000			8,440	$	0.25		November 10, 2020
Total – as of November 30, 2016		41,275,346			8,373,653

The Company has an authorized limit of 50,000,000 shares of preferred stock, par value $0.0001 with none issued and outstanding as at February 28, 2017 and May 31, 2016.

As at November 30, 2016, vested and exercisable common stock purchase warrants have a weighted average price of approximately $0.86 (May 31, 2016 - $0.87) and have a weighted-average remaining contractual term of 0.6 years (May 31, 2016 – 0.71 years). It is expected the 32,299,347 unvested warrants will ultimately vest. The unvested warrants have a weighted average exercise price of $0.09 (May 31, 2016 - $0.07) per share and a weighted average remaining term of 3.30 years (May 31, 2016 – 3.62 years).Warrants

~~Warrants vesting terms and repricing~~The ~~related~~following tois ~~Convertible~~a ~~debentures,~~summary ~~Secured~~of ~~Converted~~common ~~Debentures,~~stock ~~and~~purchase ~~Common Stock Private Placement are described in Notes 7, 8, and Note 9. All~~ warrants ~~not described in other notes to the interim condensed consolidated financial statements vested immediately upon issuance. Warrants~~ issued, toexercised ~~consultants in fiscal 2016~~ and toexpired ~~the~~through ~~advisory~~February ~~board~~28, ~~are described below.~~2017:

	Shares Issuable Under Warrants			Equity Value		Exercise Price		Expiration
Issued on March 28, 2013		401,000			917,087	$	1.00	March 28, 2018
Issued on May 31, 2013		370,000			543,530	$	0.54	May 31, 2018
Issued on June 7, 2013		165,000			211,365	$	0.54	June 7, 2018
Issued on November 15, 2013		12,000			3,744	$	1.00	November 15, 2018
Issued Series A warrants on January 29, 2014		135,000			135,989	$	1.00	January 29, 2019
Issued Series A warrants on January 29, 2014 - Repriced		260,000			268,770	$	0.25	January 29, 2019
Issued Series B warrants on January 29, 2014		135,000			-	$	2.00	January 29, 2019
Issued Series B warrants on January 29, 2014 - Repriced		260,000			9,022	$	0.25	January 29, 2019
Issued Series A warrants on February 27, 2014		305,000			224,135	$	1.00	February 27, 2019
Issued Series B warrants on February 27, 2014		305,000			-	$	2.00	February 27, 2019
Issued Series A warrants on April 1, 2014		70,000			147,294	$	1.00	April 1, 2019
Issued Series A warrants on April 1, 2014 - Repriced		299,000			97,442	$	0.25	April 1, 2019
Issued Series A warrants on April 1, 2014 - Repriced		100,000			2,490	$	0.35	April 1, 2019
Issued Series B warrants on April 1, 2014		369,000			-	$	2.00	April 1, 2019
Issued Series B warrants on April 1, 2014 - Repriced		100,000			3,140	$	0.35	April 1, 2019
Issued to Lender – Line of Credit		800,000			1,495,200	$	1.00	April 7, 2019
Issued Series C warrants on April 23, 2014 - Repriced		33,333			10,642	$	0.25	April 23, 2019
Issued Series C warrants on May 30, 2014 - Repriced		666,667			214,212	$	0.25	May 30, 2019
Issued Series D warrants on June 27, 2014		166,667			-	$	2.20	June 27, 2019
Issued Series D warrants on September 2, 2014 - Repriced		83,333			41,593	$	0.25	September 2, 2019
Issued Series D warrants on October 6, 2014 - Repriced		33,333			16,607	$	0.25	October 6, 2019
Issued Series D warrants on October 27, 2014		33,333			15,667	$	2.20	October 27, 2019
Issued warrants – consultants		330,000			165,330	$	1.50	May 30, 2019
Issued warrants on February 4, 2015 Typenex Co-Investments, LLC		70,000			-	$	1.00	February 4, 2020
Issued warrants – consultant on May 31, 2015		5,000			990	$	1.00	May 31, 2017
Issued warrants – consultant on May 31, 2015		15,000			2,970	$	1.50	May 31, 2017
Issued warrants to advisory board on September 28, 2015 - Repriced		300,000			233,490	$	0.25	August 31, 2020
Issued to Lender – Line of Credit on November 5, 2015		1,700,000			519,520	$	1.00	April 7, 2019
Issued warrants to consultant on November 5, 2015		100,000			23,240	$	1.00	October 16, 2017
Issued warrants on December 30, 2015		20,400,000			1,580,980	$	0.01	December 29, 2020
Issued warrants to advisory board on March 21, 2016		1,750,000			94,691	$	0.25	March 21, 2021
Issued warrants to consultant on May 1, 2016		4,000,000			721,200	$	0.25	May 1, 2021
Issued warrants on May 1, 2016		1,704,680			119,072	$	0.01	May 1, 2021
Issued warrants for private placement on April 18, 2016		1,008,000			94,854	$	0.25	April 18, 2021
Issued warrants for private placement on May 17, 2016		2,640,000			248,221	$	0.25	May 17, 2021
Exercised Warrants Typenex Co-Investments, LLC		(70,000	)		-	$	1.00	-
Total – as of May 31, 2016		39,055,346			8,162,487
Issued warrants to consultant on July 6, 2016		90,000			22,500	$	0.25	July 6, 2018
Issued warrants to advisory board member on August 25, 2016		250,000			559	$	0.25	August 25, 2021
Issued warrants for private placement on August 31, 2016		1,000,000			108,693	$	0.25	August 31, 2021
Issued warrants for private placement on September 23, 2016		780,000			82,673	$	0.25	September 23, 2021
Issued warrants to consultant on November 10, 2016		100,000			8,440	$	0.25	November 10, 2020

Total – as of February 28, 2017		41,275,346			8,385,352

~~The~~As at ~~Company~~February ~~issued~~28, ~~300~~2017,~~000~~ vested and exercisable common stock purchase warrants onhave ~~September~~a ~~28,~~weighted ~~2015~~average toprice ~~new~~of ~~advisors~~approximately in$0.47 (May ~~advance~~31, of2016 ~~their~~- ~~appointment~~$0.87) toand ~~the~~have ~~Board~~a ofweighted-average ~~Directors~~remaining atcontractual anterm ~~exercise price~~ of $1.0014 ~~with~~years ~~expiry~~(May of31, ~~five~~2016 ~~years~~– ~~from~~0.71 ~~September~~years). It 1,is ~~2015.~~expected ~~These~~the ~~were~~25,499,347 ~~expensed~~unvested aswarrants ~~stock~~will ~~based~~ultimately ~~compensation~~vest. The unvested warrants ~~exercise~~ ~~price~~have ~~was~~a ~~repriced~~weighted onaverage ~~March~~exercise ~~21,~~price of ~~2016 to~~ $0.2511 ~~and~~(May a31, ~~nominal~~2016 ~~expense~~- ~~was recorded~~$0.07) ~~The~~per ~~assumptions~~share ~~used for initial~~ and ~~repricing~~ ~~valuation~~a ~~are:~~weighted ~~Volatility~~average ~~178-180%,~~remaining ~~expected~~term ~~life~~ of ~~five~~2.48 years, ~~risk~~(May ~~free~~31, ~~interest~~2016 ~~rate~~– ~~of 1~~3.~~38%-1.42%,~~62 ~~and dividend rate of 0%~~years).

The Company issued 1,700,000 common stock purchase warrants to the line of credit holder included in financing expense in contemplation of taking a pari passu security position and allowing Winterberry to act as collateral agent for the secured debenture financing. These warrants were issued November 5, 2015 have an exercise price of $1.00 with expiry date of April 7, 2019. The assumptions used for valuation were: Volatility 178%, expected life of five years, risk free interest rate of 1.65%, and dividend rate of 0%.13

~~The~~Warrants vesting ~~Company~~terms ~~issued~~and ~~common~~repricing ~~stock~~related ~~purchase warrants~~ to aConvertible ~~consultant~~Debentures, inSecured ~~the~~Converted ~~amount~~Debentures, ofand ~~100,000~~Common ~~included~~Stock inPrivate Placement ~~financing~~are ~~expense~~described onin ~~November~~Notes 57, ~~2015~~8, atand anNote ~~exercise price of $1~~9.~~00 with~~ ~~expiry~~All ~~date~~warrants ofnot ~~October~~described ~~16,~~in ~~2017.~~other ~~The~~notes ~~assumptions~~to ~~used~~the ~~for~~interim ~~valuation~~condensed consolidated ~~were:~~financial ~~Volatility~~statements ~~178%,~~vested ~~expected~~immediately ~~life~~upon ofissuance. ~~approximately two~~Warrants ~~years,~~issued ~~risk~~to ~~free~~consultants ~~interest~~and ~~rate~~the ofadvisory ~~0.85%,~~board ~~and~~in fiscal ~~dividend~~2016 is ~~rate~~described ~~of 0%~~below.

The Company issued 1300,~~750,~~000 common stock purchase warrants on ~~March~~September 2128, ~~2016~~2015 to new advisors in advance of their appointment to the ~~advisory~~Board ~~board~~of Directors at an exercise price of $01.2500 with expiry ~~date~~ of ~~March~~five 21years from September 1, ~~2021~~ 2015. These were expensed as stock based compensation. ~~These~~The warrants ~~will~~exercise ~~vest~~price inwas ~~increments~~repriced ~~of 1/3 with the first 1/3 being vested~~ on March 21, ~~2017,~~2016 ~~second~~to ~~increment~~$0.25 ~~of 1/3 on March 21, 2018,~~ and ~~last~~a ~~1/3~~nominal onexpense ~~March~~was ~~21, 2019~~recorded. The assumptions used for initial and repricing valuation ~~were~~ are: Volatility 178-180%, expected life of five years, risk free interest rate of 1.38%-1.42%, and dividend rate of 0%.

~~On May 1, 2016 the~~ The Company issued 41,~~000~~700,000 common stock purchase warrants to anthe ~~entity,~~line ~~Imagination~~of 7credit ~~Ventures,~~holder ~~LLC~~included ~~controlled~~in byfinancing expense in contemplation of taking a pari passu security position and allowing Winterberry to act as collateral agent for the ~~former~~secured ~~CEO~~debenture atfinancing. These warrants were issued November 5, 2015 have an exercise price of $01.~~25 included~~00 ~~in consulting expense~~ with an expiry date of ~~May~~April 17, ~~2021~~2019. The assumptions used for valuation were: Volatility ~~180~~178%, expected life of five years, risk free interest rate of 1.2865%, and dividend rate of 0%.

The Company issued ~~250,000~~ common stock purchase warrants ~~on August 25, 2016~~ to a ~~new~~consultant ~~advisory~~in ~~board~~the ~~member~~amount ~~at an exercise price~~ of ~~$0.25~~100,000 ~~with~~included ~~expiry~~in ~~date~~financing ofexpense ~~August~~on ~~25,~~November ~~2021.~~5, ~~These~~2015 ~~were~~at ~~expensed~~an asexercise ~~stock~~price ~~based compensation. These warrants will vest in increments~~ of $1/3.00 with ~~the~~expiry ~~first~~date ~~1/3 being vested on August 25, 2017, second increment~~ of ~~1/3~~October ~~on August 25~~16, ~~2018, and last 1/3 on August 25, 2019~~2017. The assumptions used for valuation were: Volatility ~~191~~ 178%, expected life of ~~five~~approximately two years, risk free interest rate of 10.1385%, and dividend rate of 0%.

The Company issued 1,750,000 common stock purchase warrants toon aMarch ~~consultant in the amount of 100~~21,~~000~~ ~~included~~2016 into ~~consulting~~new ~~expense~~the onadvisory ~~November~~board ~~10, 2016~~ at an exercise price of $0.25 with expiry date of ~~November~~March 1021, ~~2020~~2021. These were expensed as stock based compensation. These warrants will vest in increments of 1/3 with the first 1/3 being vested on March 21, 2017, second increment of 1/3 on March 21, 2018, and last 1/3 on March 21, 2019. The assumptions used for valuation were: Volatility ~~215~~180%, expected life of ~~approximately four~~five years, risk free interest rate of 1.1738%, and dividend rate of 0%.

11On May 1, 2016 the Company issued 4,000,000 common stock purchase warrants to an entity, Imagination 7 Ventures, LLC controlled by the former CEO at an exercise price of $0.25 included in consulting expense with an expiry of May 1, 2021. These warrants will ~~Employee~~vest ~~Benefit~~in increments of 1/3 with the first 1/3 being vested on May 1, 2016, second increment of 1/3 on April 30, 2017, and ~~Incentive~~last 1/3 ~~Plans~~on April 30, 2018. The assumptions used for valuation were: Volatility 180%, expected life of five years, risk free interest rate of 1.28%, and dividend rate of 0%.

OnThe Company ~~August~~issued 14250,000 ~~2014~~common stock purchase warrants on August 25, ~~the~~2016 ~~Board~~to ofa ~~Directors approved~~new ~~the~~advisory ~~adoption~~board member at an exercise price of $0.25 ~~the~~with ~~2014~~expiry ~~Stock~~date ~~Option~~of ~~Plan~~August 25, ~~which~~2021. ~~was~~These ~~ratified~~were byexpensed as stock based compensation. These warrants will vest in increments of 1/3 with the ~~shareholders~~first 1/3 being vested on ~~December~~August 2225, ~~2014.~~2017, Onsecond increment of 1/3 on August 2125, ~~2015~~ 2018, ~~the~~and ~~Company~~last ~~amended~~1/3 ~~its~~on ~~2014~~August 25, ~~Stock~~2019. ~~Option~~The ~~Plan~~assumptions toused ~~increase~~for ~~the~~valuation ~~number~~were: Volatility 191%, expected life of ~~shares~~five ~~reserved~~years, ~~pursuant~~risk tofree ~~the~~interest ~~2014~~rate ~~Stock~~of ~~Option~~1.13%, ~~Plan~~and todividend ~~25,000,000~~rate of 0%.

The ~~following~~Company ~~table~~issued ~~outlines~~common stock purchase warrants to a consultant in the ~~options~~amount ~~granted~~of ~~and~~100,000 ~~related~~included ~~disclosures~~in consulting expense on November 10, 2016 at an exercise price of $0.25 with expiry date of November 10, 2020. The assumptions used for valuation were: Volatility 215%, expected life of approximately four years, risk free interest rate of 1.17%, and dividend rate of 0%.

	Stock Options			Weighted- Average Exercise Price
Outstanding at May 31, 2015		1,804,500		$	1.00
Granted in fiscal 2016		8,775,000			0.25
Exercised		-			-
Cancelled, forfeited or expired		(189,500	)		1.00
Outstanding at May 31, 2016		10,390,000		$	0.28
Granted in fiscal 2017		3,200,000			0.25
Exercised		-			-
Cancelled, forfeited or expired		(385,000	)		1.00
Outstanding at November 30, 2016		13,205,000		$	0.25
Options exercisable at November 30, 2016		4,069,167		$	0.25
Fair value of options vested as at November 30, 2016	$	1,826,217		$	-

11. Employee Benefit and Incentive Plans

AsOn atAugust ~~November 30~~14, ~~2016~~2014, ~~vested~~the ~~and~~Board ~~exercisable~~of ~~options~~Directors doapproved ~~not~~the ~~have~~adoption ~~any intrinsic value and have a weighted-average remaining contractual term~~ of ~~4.0~~the ~~years.~~2014 ItStock isOption ~~expected the 9~~Plan,~~135,833~~ ~~unvested~~which ~~options~~was ~~will~~ratified ~~ultimately~~by ~~vest.~~the ~~These options have a weighted average exercise~~shareholders ~~price~~on ofDecember ~~$0.25~~22, ~~per share and a weighted average remaining term of 4~~2014.40 ~~years.~~On ~~The~~August ~~aggregate~~21, ~~intrinsic value of options represents the total pre-tax intrinsic value~~2015, the ~~difference~~Company ~~between~~amended ~~our~~its ~~closing~~2014 ~~stock~~Stock ~~price~~Option asPlan atto ~~November~~increase ~~30,~~the ~~2016~~number ~~and~~of ~~the~~shares ~~option’s~~reserved ~~exercise~~pursuant ~~price,~~to ~~for all options that are in~~ the ~~money.~~2014 ~~This~~Stock ~~value~~Option ~~was~~Plan ~~$nil~~to ~~as at November 30~~25, ~~2016~~000,000.

14The following table outlines the options granted and related disclosures:

As at November 30, 2016, there is $1,800,919 of unearned stock based compensation cost related to stock options granted that have not yet vested (9,135,833 options). This cost is expected to be recognized over a remaining weighted average vesting period of 1.4 years.

	Stock Options			Weighted- Average Exercise Price
Outstanding at May 31, 2015		1,804,500		$	1.00
Granted in fiscal 2016		8,775,000			0.25
Exercised		-			-
Cancelled, forfeited or expired		(189,500	)		1.00
Outstanding at May 31, 2016		10,390,000		$	0.28
Granted in fiscal 2017		3,200,000			0.25
Exercised		-			-
Cancelled, forfeited or expired		(385,000	)		1.00
Outstanding at February 28, 2017		13,205,000		$	0.25
Options exercisable at February 28, 2017		4,069,167		$	0.25
Fair value of options vested as at February 28, 2017	$	1,826,217		$	-

~~710,000~~As at ~~and~~February ~~520~~28,~~000~~ of2017, ~~the~~vested ~~stock~~and exercisable options ~~granted on~~do ~~August~~not ~~14,~~have ~~2014~~any intrinsic value and ~~March~~have 2,a ~~2015~~weighted-average ~~respectively~~remaining ~~vest~~contractual term 1/of 3.77 ~~immediately,~~years. ~~1/3~~It ~~after~~is ~~one~~expected ~~year~~the ~~and~~9,135,833 ~~1/3~~unvested ~~after~~options ~~two~~will ~~years~~ultimately vest. ~~The~~These ~~remaining~~ options have ~~immediate~~a ~~vesting~~weighted ~~terms~~average exercise orprice ~~have~~of ~~been~~$0.25 ~~cancelled~~per orshare ~~expired.~~and ~~8,750,000~~a ~~and~~weighted ~~3,200,000~~average remaining term of ~~the~~4.15 ~~stock~~years. ~~options~~The ~~granted~~aggregate onintrinsic value of options ~~March~~represents ~~21,~~the ~~2016~~total ~~and~~pre-tax ~~August~~intrinsic 25value, ~~2016~~the ~~respectively~~difference ~~vest~~between ~~1/4~~our ~~immediately,~~closing ~~1/4~~stock ~~after~~price ~~one~~as ~~year~~at February 28, ~~1/4~~2017 ~~after~~and ~~two~~the ~~years~~option’s exercise price, ~~and~~for ~~1/4~~all ~~after~~options ~~three years.~~that ~~The~~are ~~remaining~~in ~~25,000~~the ~~options~~money. ~~issued~~This onvalue ~~March~~was ~~21,~~$nil ~~2016~~as ~~have~~at ~~immediate~~February ~~vesting~~28, ~~terms~~2017.

~~The estimated fair value of options granted is measured using the binomial model using the following assumptions:~~14

	Fiscal 2015			Fiscal 2016			Fiscal 2017
Total number of shares issued under options		1,804,500			8,775,000			3,200,000
Stock price	$	0.60-1.00		$	0.20		$	0.20
Exercise price	$	1.00		$	0.25		$	0.25
Time to expiration – days (2 year options)		730			NA			NA
Time to expiration – days (5 year options)		1,826			1,826			1,826
Risk free interest rate (2 year options)		.42-.66	%		NA	%		NA	%
Risk free interest rate (5 year options)		1.57-1.58	%		1.38	%		1.13	%
Forfeiture rate (all options)		0	%		0	%		0	%
Estimated volatility (all options)		150	%		180	%		191	%
Weighted-average fair value of options granted		0.50-0.90			0.25			0.25
Dividend		-			-			-

As at February 28, 2017, there is $1,800,919 of unearned stock based compensation cost related to stock options granted that have not yet vested (9,135,833 options). This cost is expected to be recognized over a remaining weighted average vesting period of 1.15 years.

~~The~~710,000 ~~assumptions~~and ~~used~~520,000 inof the stock ~~based~~options ~~compensation~~granted ~~binomial~~on ~~models~~August ~~are~~14, ~~consistent~~2014 ~~with~~and ~~the~~March ~~methodology~~2, ~~used~~2015 inrespectively ~~valuing~~vest ~~the~~1/3 ~~Company’s other~~immediately, ~~derivatives~~1/3 ~~debt~~after one year and ~~warrant~~1/3 ~~financings.~~after ~~Due~~two toyears. aThe ~~lack~~remaining options ~~exercising~~have ofimmediate ~~history,~~vesting ~~the~~terms ~~Company~~or ~~has~~have ~~assumed~~been ~~the~~cancelled ~~expected~~or expired. 8,750,000 ~~life~~and 3,200,000 of the stock options isgranted ~~the~~on ~~contractual~~March ~~life~~21, of2016 ~~the~~and August 25, 2016 respectively vest 1/4 immediately, 1/4 after one year, 1/4 after two years, and 1/4 after three years. The remaining 25,000 options issued on March 21, 2016 have immediate vesting terms.

~~12.~~The ~~Related~~estimated ~~Party~~fair ~~Balances~~value ~~and~~of ~~Transactions~~options granted is measured using the binomial model using the following assumptions:

Services provided by Intertainment Media, Inc. personnel in the prior fiscal year were invoiced on a per hour basis at a market rate per hour as determined by the type of activity and the skill set provided. Costs incurred by Intertainment Media, Inc. on behalf of the Company for third party purchases are invoiced at cost. There were no services provided by Intertainment Media, Inc. to Yappn for the three and six month period ended November 30, 2016.

	Fiscal 2015			Fiscal 2016			Fiscal 2017
Total number of shares issued under options		1,804,500			8,775,000			3,200,000
Stock price	$	0.60-1.00		$	0.20		$	0.20
Exercise price	$	1.00		$	0.25		$	0.25
Time to expiration – days (2 year options)		730			NA			NA
Time to expiration – days (5 year options)		1,826			1,826			1,826
Risk free interest rate (2 year options)		.42-.66	%		NA	%		NA	%
Risk free interest rate (5 year options)		1.57-1.58	%		1.38	%		1.13	%
Forfeiture rate (all options)		0	%		0	%		0	%
Estimated volatility (all options)		150	%		180	%		191	%
Weighted-average fair value of options granted		0.50-0.90			0.25			0.25
Dividend		-			-			-

OnThe ~~September~~assumptions ~~15,~~used ~~2015,~~in the ~~Company closed~~stock ~~an agreement with Ortsbo to acquire all of its intellectual property assets. The purchased assets include US Patent~~based ~~No.~~compensation ~~8,983,850~~binomial ~~B2,~~models USare ~~Patent~~consistent ~~No.~~with ~~8,917,631~~the ~~B2,~~methodology USused ~~Patent~~in ~~No.~~valuing ~~9,053,097~~the ~~B2,~~Company’s ~~and~~ other ~~intellectual~~derivatives ~~property~~from ~~including Ecommerce~~debt and ~~Customer~~warrant ~~Care know how~~financings. ~~With~~Due ~~this closing, the Company had an obligation~~ to ~~issue~~a ~~31,987,000~~lack ~~shares~~ of ~~common~~history ~~stock~~regarding ~~of Yappn. During~~ the ~~fiscal~~exercise ~~year 2016, 12,998,682 shares were issued comprising~~ of 8options,~~312,500~~ ~~to Ortsbo and 4,686,182 to~~ the ~~former~~ ~~debt~~Company ~~and~~has minority shareholders of Ortsbo, which were valued at $1,806,608, leaving 18,988,318 shares (currently reserved for issuance) to be issued at November 30, 2016 comprising 17,687,500 to Winterberry and 1,300,818 to a former holder of Ortsbo stock. As of the filing date, these aforementioned shares remain to be issued and are subject to instructions from the recipients. Yappn also assumed ~~$975,388 of debt as part of~~ the ~~transaction.~~expected ~~This~~life ~~assumed debt was immediately subscribed as part~~ of ~~the secured debenture in Yappn (Note 8). The fair value for the agreed upon consideration~~ ~~for~~ the ~~acquisition~~options ofis ~~Intellectual property from Ortsbo was $16,968,888. This transaction was completed on September 15, 2015. Due to~~ the ~~common~~contractual ~~control~~life of ~~Ortsbo Inc. and Yappn Corp at~~ the ~~time of the acquisition, the value of the Intangible assets acquired from Ortsbo was recorded at the carrying value in the financial records of Ortsbo~~options. ~~This value was $5,421,067 on September 15, 2015 (Note 4).~~

~~For the year ended May 31, 2016, related party fees incurred and paid for general development and managerial services performed by Intertainment Media, Inc~~12. ~~and its subsidiary~~ ~~totaled~~Related ~~$146,982.~~Party ~~$92,589~~Balances ~~is related to managerial services~~ and ~~$54,393~~Transactions ~~related to development. As of May 31, 2016, the related party liability balance totaled $16,654. As at November 30, 2016, there is no obligation to Intertainment Media, Inc.~~

~~Directors~~Services provided ~~subscribed~~by ~~for $1~~Intertainment Media,~~783,526~~ ofInc. ~~$4,550,388~~personnel ~~from~~in the ~~secured~~prior ~~debenture~~fiscal ~~that~~year ~~closed~~were ininvoiced ~~September~~on ~~2015~~a atper ~~which~~hour ~~time~~basis ~~they~~at ~~were~~a ~~not~~market ~~directors (Note~~rate ~~6).~~per ~~Significant~~hour ~~investments~~as ~~made~~determined by ~~directors~~the ~~include~~type ~~Luis~~of ~~Vasquez-Senties~~activity (aand ~~current~~the ~~member~~skill ofset ~~the~~provided. ~~Board~~Costs ~~of Directors)~~incurred ~~subscribed~~by ~~for~~Intertainment ~~$500~~Media,~~000~~ ~~from~~Inc. on behalf of the ~~secured~~Company ~~debenture~~for ~~offering~~third ~~that~~party ~~closed~~purchases inare ~~September~~invoiced ~~2015,~~at ~~David~~cost. ~~Berry~~There (awere ~~current~~no services provided by Intertainment Media, ~~member~~Inc. ofto Yappn for the ~~Board~~three ofand ~~Directors)~~nine ~~subscribed~~month ~~for~~period ~~$733,526~~ended ~~from~~February ~~the~~28, ~~secured~~2017. ~~debenture~~For ~~offering~~the ~~that~~year ~~closed~~ended inMay ~~September~~31, ~~2015~~2016, related party fees incurred and ~~Winterberry~~paid ~~Investments~~for general development and managerial services performed by Intertainment Media, Inc. ~~(an~~and ~~entity~~its subsidiary ~~controlled~~totaled by$146,982. ~~David~~$92,589 ~~Berry~~is related to managerial services and $54,393 arelated ~~current~~to ~~member~~development. As of May 31, 2016, the ~~Board~~related ofparty ~~Directors)~~liability ~~subscribed for~~balance totaled $~~500~~16,~~000~~654. ~~from~~As ~~the~~at ~~secured~~February ~~debenture~~28, ~~offering~~2017, ~~that~~there ~~closed~~is inno ~~September~~obligation ~~2015~~to Intertainment Media, Inc.

~~Directors~~On September ~~also~~15, ~~subscribed~~2015, ~~for~~the Company closed an agreement with Ortsbo to acquire all of its intellectual property assets. The purchased $1assets include US Patent No. 8,~~075~~983,~~000~~850 ofB2, US Patent No. 8,917,631 B2, US Patent No. 9,053,097 B2, and other intellectual property including Ecommerce and Customer Care know how. With this closing, the $2Company had an obligation to issue 31,~~040~~987,000 ~~convertible~~shares ~~secured~~of common ~~debentures~~stock ~~issued~~of onYappn. ~~December~~During 30the fiscal year 2016, ~~2015~~12,998,682 ~~(Note~~shares were issued comprising of 8).,312,500 ~~Significant~~to ~~investments~~Ortsbo and 4,686,182 ~~made~~to bythe ~~directors~~former ~~include~~debt ~~Luis~~and ~~Vasquez-Senties~~minority shareholders of Ortsbo, which were valued at $1,806,608, leaving 18,988,318 shares (currently reserved for issuance) to be issued at February 28, 2017 comprising 17,687,500 to Winterberry and 1,300,818 to a ~~current~~former ~~member~~holder of Ortsbo stock. As of the ~~Board~~filing ofdate, ~~Directors)~~these ~~subscribed~~aforementioned ~~for~~shares remain to be issued and are subject to instructions from the recipients. Yappn also assumed $~~500~~975,~~000~~388 ~~from~~of debt as part of the transaction. This assumed debt was immediately subscribed as part of the secured debenture ~~offering~~in ~~that~~Yappn ~~closed~~(Note in6). ~~December~~The ~~2015,~~fair ~~David~~value ~~Berry~~for (athe ~~current~~agreed ~~member~~upon ofconsideration for the ~~Board~~acquisition of ~~Directors)~~Intellectual property ~~through~~from ~~a related~~Ortsbo ~~entity~~was in$16,968,888. ~~which~~This hetransaction ~~does~~was ~~not~~completed on September 15, 2015. Due to the common control ~~subscribed~~of ~~for~~Ortsbo Inc. ~~$500~~and Yappn Corp at the time of the acquisition,~~000~~ ~~from~~the value of the ~~secured~~Intangible ~~debenture~~assets ~~offering~~acquired ~~that~~from ~~closed~~Ortsbo inwas recorded at the ~~December~~carrying value in the financial records of Ortsbo. This value was $5,421,067 on September 15, 2015 (Note 4).

~~David~~Directors subscribed ~~Berry~~for $1,783,526 of $4,550,388 from the secured debenture private placement that closed in September 2015 at which time they were not directors (Note 6). Significant investments made by directors include Luis Vasquez-Senties (a current member of the Board of Directors) ~~through~~ asubscribed ~~related~~for ~~entity~~$500,000 infrom ~~which~~the hesecured ~~does~~debenture ~~not~~offering ~~control~~that ~~advanced~~closed ~~$170~~in September 2015,~~468~~ David toBerry ~~the~~(a ~~Company~~current onmember anof ~~anticipated second~~the ~~closing~~Board of ~~the~~Directors) ~~same~~subscribed ~~convertible~~for $733,526 from the secured debenture ~~financing~~offering that closed onin ~~December~~September 302015, ~~2015~~and ~~(Note~~Winterberry 8)Investments Inc. ~~This~~(an ~~$170~~entity controlled by David Berry,~~468~~ ~~closing~~a current member of the ~~occurred~~Board onof ~~May 1~~Directors) subscribed for $500,000 ~~2016~~from the secured debenture offering that closed in September 2015.

~~The~~Directors also ~~Company~~subscribed ~~issued~~for ~~300~~$1,075,000 ~~common~~of ~~stock purchase~~the ~~warrants~~$2,040,000 convertible secured debentures issued on ~~September~~December 2830, 2015 to(Note ~~advisors~~8). ~~prior~~Significant investments tomade ~~their~~by ~~appointment~~directors asinclude ~~members~~Luis Vasquez-Senties (a current member of the Board of Directors) atsubscribed anfor ~~exercise~~$500,000 ~~price~~from ofthe ~~$1.00~~secured ~~with~~debenture ~~expiry~~offering ofthat ~~five~~closed ~~years~~in ~~from~~December ~~September 1~~2015, ~~2015.~~David ~~These~~Berry ~~were~~(a ~~expensed~~current asmember ~~stock~~of ~~based~~the ~~compensation.~~Board ~~These~~of ~~warrants~~Directors) through ~~were~~a ~~repriced~~related toentity ~~$0.25~~which onhe ~~March~~does 21not control subscribed for $500,000 ~~2016~~from ~~and~~the ~~are~~secured ~~valued~~debenture atoffering ~~$233,490~~that closed in December 2015.

~~The~~David Berry ~~Company~~(a ~~issued~~current ~~1,750,000~~member ~~common stock~~of ~~purchase~~the ~~warrants~~Board onof ~~March~~Directors) ~~21,~~through ~~2016~~a torelated ~~members~~entity ofin ~~the~~which ~~Company’s~~he ~~Advisory~~does ~~Board~~not atcontrol advanced $170,468 to the Company on an ~~exercise~~anticipated ~~price~~second closing of ~~$0.25~~the ~~with~~same ~~expiry date~~convertible ofsecured ~~March~~debenture 21financing closed on December 30, ~~2021~~2015 (Note 8). ~~These~~This ~~were~~$170,468 ~~expensed~~closing asoccurred ~~stock~~on ~~based~~May 1, ~~compensation~~2016.

The Company issued ~~250~~300,000 common stock purchase warrants on ~~August~~September 2528, ~~2016~~2015 to aadvisors ~~recently~~prior ~~appointed~~to ~~Advisory~~their appointment as members of the Board ~~member~~of Directors at an exercise price of $01.2500 with expiry ~~date~~ of ~~August~~five 25years from September 1, ~~2021~~2015. These were expensed as stock based compensation. These warrants were repriced to $0.25 on March 21, 2016 and are valued at $233,490.

OnThe Company ~~May~~issued 1, ~~2016~~750,000 ~~the~~common ~~Company~~stock ~~completed secured~~purchase ~~debenture~~warrants ~~financing~~on ~~with~~March ~~a consultant~~21, ~~whose~~2016 ~~principal~~to ismembers ~~the former CEO~~ of the Company,’s ~~for~~Advisory ~~$200,000~~Board with no warrant financing, through the offering of units by way of private placement, with each unit consisting of a 12% secured convertible debenture with a maturity date of five years from issuance convertible at ~~$0.25 per common. This closing was a conversion of $200,000 in~~ ~~consulting expense. The Company also issued 4,000,000 common stock purchase warrants at~~ an exercise price of $0.25 ~~included in consulting expense~~ with an expiry date of ~~May~~March 121, 2021. ~~Consultant~~These was also granted a $100,000 signing bonus payable in cash. All obligations prior to May 1, 2016 due directly or indirectly to the former CEO of Yappn including $294,906 in cash obligations as an employee and $18,200 as a consultant, have been forgiven. All obligations being forgiven were ~~recorded~~expensed as ~~general~~stock ~~and~~based ~~administrative expenses within fiscal 2016 and were reversed out from general and administrative expenses~~compensation.

~~1,200,000 of the shares from the 2nd~~The ~~tranche~~Company ofissued 250,000 common stock ~~private~~purchase ~~placement~~warrants aton ~~$0.~~August 25, ~~per~~2016 ~~unit~~to ~~totaling~~a ~~$300,000~~recently inappointed ~~cash~~Advisory ~~proceeds~~Board ~~were~~member ~~issued~~at toan ~~members of~~exercise ~~the~~price ~~Board~~ of ~~Directors~~$0.25 ~~Significant~~with ~~investments~~expiry ~~made~~date ~~by Directors include Luis Vasquez-Senties (a current member~~ of ~~the~~August ~~Board of~~25, ~~Directors)~~2021. ~~who~~These ~~advanced~~were ~~$200,000~~expensed toas ~~the~~stock ~~Company~~based ~~(Note 9)~~compensation.

On May 1,~~000~~ 2016,~~000~~ of the ~~shares~~Company ~~from~~completed secured debenture financing with a consultant, whose principal is the ~~3rd~~former ~~tranche~~CEO of ~~common~~the Company, ~~stock~~for $200,000 with no warrant financing, through the offering of units by way of private placement, with each unit consisting of a 12% secured convertible debenture with a maturity date of five years from issuance convertible at $0.25 per ~~unit~~common. ~~totaling~~This closing was a conversion of $~~250~~200,000 in ~~cash~~consulting ~~proceeds~~expense. ~~and~~The ~~compensation~~Company ~~for~~also ~~consulting~~issued ~~work~~4,000,000 ~~were~~common ~~issued to~~stock ~~members~~purchase ofwarrants ~~the~~at ~~board~~an exercise price of ~~directors~~$0.25 ~~Significant~~included ~~investments~~in ~~made~~consulting byexpense ~~Directors~~with ~~include~~an ~~Winterberry~~expiry ~~Investments~~of ~~Inc~~May 1, 2021. ~~(an~~Consultant ~~entity~~was also granted a $100,000 signing bonus ~~controlled~~payable byin ~~David~~cash. ~~Berry~~All obligations prior to May 1, a2016 ~~current~~due ~~member~~directly ofor indirectly to the ~~Board~~former CEO of ~~Directors)~~Yappn ~~who~~including ~~advanced~~$294,906 in cash obligations as an employee and $~~100~~18,~~000~~200 toas ~~the~~a ~~Company~~consultant, ~~(Note~~have 9)been forgiven. All obligations being forgiven were recorded as general and administrative expenses within fiscal 2016 and were reversed out from general and administrative expenses.

801,200,000 of the shares from the ~~4th~~2nd tranche of common stock private placement at $0.25 per unit totaling $~~195~~300,000 in cash proceeds were issued to members of the Board of Directors. Significant investments made by Directors include Luis Vasquez-Senties (a current member of the ~~advisory~~Board ~~board~~of Directors) who advanced $200,000 to the Company (Note 9).

~~On March 21~~1, ~~2016~~000, ~~the Board~~ 000 of ~~Directors passed a resolution for a contingent common stock award in line with~~ the ~~metrics~~shares ~~used~~from in the ~~CEO’s~~3rd ~~targets~~tranche ~~for additional bonus compensation. The award would see the members~~ of ~~the Board of Directors as well as the Advisory Board receive~~ common ~~shares~~stock ~~for~~private ~~the~~placement ~~Company~~at ~~reaching revenue milestones~~$0.25 ~~Per~~per ~~the~~unit ~~resolution,~~totaling ~~500~~$250,000 ~~common~~in ~~shares for~~cash ~~each member of the Board of Directors~~ proceeds and ~~250,000~~compensation for ~~each~~consulting ~~Advisory~~work ~~Board~~were ~~member would be~~ issued ~~when~~to ~~the~~members ~~following milestones are met: (i) $3.5 million in new revenue generated and realized within 12 months~~ of the ~~start~~board ~~date~~ of ~~the~~directors. ~~CEO~~Significant ~~which~~investments ~~was~~made ~~February~~by Directors ~~22,~~include ~~2016~~Winterberry ~~and~~Investments ~~minimum~~Inc. ~~of 5 new recurring revenue contracts being signed within 12 months of the start date; or~~ (~~ii)~~an $5entity ~~million of~~controlled ~~new~~by ~~revenue~~David ~~generated~~Berry, ~~and~~a ~~realized~~current ~~within~~member ~~24 months~~ of the ~~start~~Board ~~date and minimum~~ of 5Directors) ~~new~~who ~~recurring revenue contracts being~~advanced ~~signed~~$100,000 ~~within~~to ~~12 months of~~ the ~~start~~Company ~~date~~(Note 9).

On80,000 ~~August~~of ~~25,~~the ~~2016~~shares afrom ~~recently~~the ~~appointed~~4th ~~Advisory~~tranche ~~Board~~of ~~member~~common ~~received~~stock ~~the~~private ~~same~~placement ~~contingent~~at ~~common~~$0.25 ~~stock~~per ~~award~~unit oftotaling ~~250~~$195,000 ~~common~~in ~~shares~~cash proceeds aswere ~~described~~issued ~~above~~to ~~for~~a ~~the~~member ~~March~~of ~~21,~~the ~~2016~~advisory ~~award~~board to(Note ~~Advisory Board members~~9).

~~During~~On March 21, 2016, the ~~second~~Board ~~quarter~~of Directors passed a resolution for a contingent common stock award in line with the metrics used in the CEO’s targets for additional bonus compensation. The award would see the members of ~~fiscal~~the ~~2017~~Board of Directors as well as the Advisory Board receive common shares for the Company reaching revenue milestones. Per the resolution, 500,000 common shares ~~two~~for ~~directors~~each ~~provided~~member aof ~~total~~the Board of $1Directors and 250,000 for each Advisory Board member would be issued when the following milestones are met: (i) $3.5 million in new revenue generated and realized within 12 months of the start date of the CEO which was February 22,~~000~~ as2016 anand ~~advance~~minimum toof 5 new recurring revenue contracts being signed within 12 months of the ~~Company~~start ~~that~~date; ~~will~~or be(ii) ~~part~~$5 million of anew ~~longer~~revenue ~~term~~generated ~~financing~~and ~~with~~realized ~~terms~~within 24 months of the start date and minimum of 5 new recurring revenue contracts being ~~remaining~~signed towithin be12 ~~finalized~~months of the start date. As of February 22, 2017, milestone in (i) was not met.

16On August 25, 2016 a recently appointed Advisory Board member received the same contingent common stock award of 250,000 common shares as described above for the March 21, 2016 award to Advisory Board members.

~~ITEM~~During the second and third quarter of fiscal 2.2017, ~~MANAGEMENT’S~~three ~~DISCUSSION~~directors ~~AND~~provided ~~ANALYSIS~~an OFaggregate ~~FINANCIAL~~total ~~CONDITION~~of ~~AND~~$1,326,348 ~~RESULTS~~as OFan ~~OPERATIONS~~advance to the Company that will be part of a longer term financing that has not yet closed.

~~Unless otherwise indicated, references in this Quarterly Report on Form 10-Q to “we,” “Yappn,” “us,” and “our” are to Yappn Corp~~13.~~, unless the context requires otherwise. The following discussion and analysis by our~~ ~~management~~Subsequent of our financial condition and results of operations should be read in conjunction with our unaudited Interim Condensed consolidated financial statements and the accompanying related notes included in this quarterly report and our audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended May 31, 2016 filed with the Securities and Exchange Commission. events

~~Forward~~Subsequent ~~Looking~~to ~~Statements~~the quarter end, a director advanced $250,000 as an advance to the Company that will be part of a longer term financing that has not yet closed.

~~The~~On ~~discussion~~March ~~contained in this Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933~~14, ~~as amended~~2017, or the ~~Securities~~Company ~~Act,~~finalized ~~and~~warrant ~~Section 21E~~amendments offor ~~the~~previous ~~United~~debenture ~~States~~holders ~~Securities~~as ~~Exchange~~part ~~Act~~ of ~~1934, as amended, or~~ the ~~Exchange~~settlement ~~Act.~~with ~~Any statements about our expectations,~~DWF ~~beliefs,~~stakeholders ~~plans,~~(Note ~~objectives, assumptions or future events or performance are not historical facts and may be forward-looking~~3). ~~These statements~~The ~~are~~Series ~~often~~A, ~~but not always~~B, made through the use of words or phrases like “anticipate,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “target,” “expects,” “management believes,” “we believe,” “we intend,” “we may,” “we will,” “we should,” “we seek,” “we plan,” the negative of those terms, and ~~similar~~D ~~words~~warrants orexercise ~~phrases. We~~price ~~base~~for these forward-looking statements on our expectations, assumptions, estimates and projections about our business and the industry in which we operate as of the date of this Quarterly Report. These forward-looking statements are subject to a number of risks and uncertainties that cannot be predicted, quantified or controlled and that could cause actual results to differ materially from those ~~set~~holders ~~forth~~was ~~in,~~repriced ~~contemplated by, or underlying the forward-looking statements. Statements in this Quarterly Report describe factors, among others, that could contribute~~ to ~~or cause these differences~~$0.25 ~~Actual results may vary materially~~ from ~~those anticipated, estimated, projected or expected should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect~~$1. ~~Because the factors discussed in this Quarterly Report could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf~~00, ~~you should not place undue~~ ~~reliance on any such forward-looking statement~~$2. ~~New factors emerge from time to time~~00, and ~~it is not possible for us to predict which will arise~~$2.20 Inrespectively ~~addition,~~and ~~we cannot assess~~ the ~~impact~~maturity ofdate ~~each~~was ~~factor~~extended onan ~~our~~additional ~~business~~one oryear ~~the extent~~ to ~~which~~now ~~any~~expire ~~factor, or combination of factors, may cause actual results to differ materially from those contained~~ in ~~any forward-looking statement~~2020. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available after the date of this Quarterly Report or the date of documents incorporated by reference herein that include forward-looking statements.

Management’s Discussion and Analysis of Results of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our financial statements included herein. Further, this quarterly report on Form 10-Q should be read in conjunction with our Financial Statements and Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2016, filed with the Securities and Exchange Commission on August 18, 2016. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K.16

~~Business~~ITEM ~~History~~2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

WeUnless ~~were~~otherwise ~~originally~~indicated, ~~incorporated~~references ~~under~~in ~~the~~this ~~laws~~Quarterly ofReport ~~the State of Delaware~~ on ~~November~~Form 3,10-Q ~~2010 with an initial business plan~~ to ~~import consumer electronics~~“we,” ~~home appliances and plastic housewares. In March 2013~~“Yappn,” ~~we filed an amended~~ “us,” and ~~restated certificate of incorporation to change~~ “our” ~~name~~are to ~~“YAPPN~~Yappn Corp.”, ~~and~~unless ~~increase~~the ~~our~~context ~~authorized~~requires ~~capital~~otherwise. ~~stock~~The tofollowing ~~200,000,000~~discussion ~~shares~~and ofanalysis ~~common~~by ~~stock,~~our ~~par~~management ~~value~~of ~~$0.0001~~our ~~per~~financial ~~share~~condition and ~~50,000,000~~results ~~shares~~ of ~~preferred~~operations ~~stock,~~should ~~par~~be ~~value~~read ~~$0.0001 per share. Further,~~ in ~~March~~conjunction ~~2013,~~with our ~~Board~~ ofunaudited ~~Directors~~Interim ~~declared~~Condensed consolidated afinancial ~~stock~~statements ~~dividend,~~and ~~whereby~~the anaccompanying ~~additional~~related 14notes ~~shares~~included ofin ~~our~~this ~~common~~quarterly ~~stock~~report ~~was~~and ~~issued~~our ~~for~~audited ~~each~~financial statements ~~one~~and ~~share of~~related ~~common~~notes ~~stock~~and ~~outstanding~~Management’s toDiscussion ~~each~~and ~~holder~~Analysis of ~~record~~Financial onCondition ~~March~~and ~~25,~~Results ~~2013.~~of ~~All~~Operations ~~per share information~~ included in ~~this~~our ~~report~~Annual ~~reflect~~Report ~~the~~on ~~effect of~~Form ~~such~~10-K ~~stock~~for ~~dividend.~~the Onyear ~~December~~ended ~~22,~~May ~~2014~~31, ~~our~~2016 ~~shareholders~~filed ~~approved~~with the ~~increase~~Securities ~~of authorized~~ and ~~issued~~Exchange ~~shares of common stock to 400,000,000 shares of common stock~~Commission.

~~On March 28, 2013,~~Forward weLooking purchased a prospective social media platform and related group of assets known as Yappn (“Yappn”) from Intertainment Media, Inc. (“IMI”), a corporation organized under the laws of Canada, for 7,000,000 shares of our common stock, pursuant to an asset purchase agreement (the “Purchase Agreement” and the transaction, the “Asset Purchase”) by and among IMI, us, and our newly formed wholly owned subsidiary, Yappn Acquisition Sub., Inc., a Delaware corporation (“Yappn Sub”). Mr. David Lucatch, our prior Chief Executive Officer was the Chief Executive Officer of IMI at that time. IMI, as a result of this transaction had a controlling interest in our company. Included in the purchased assets is a services agreement (the “Services Agreement”) dated March 21, 2013 by and among IMI and its wholly owned subsidiaries Ortsbo, Inc., a corporation organized under the laws of Canada (“Ortsbo Canada”), and Ortsbo USA, Inc., a Delaware corporation (“Ortsbo USA” and, collectively with Ortsbo Canada, “Ortsbo”). Ortsbo is the owner of certain multi-language real time translation intellectual property that we believe is a significant component of the Yappn business opportunity. On July 6, 2015, we entered into a definitive agreement to acquire all of the intellectual property assets of Ortsbo (see below).Statements

OnThe discussion ~~July~~contained 15in this Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933, ~~2015~~as amended, or the Securities Act, and Section ~~after~~21E of the ~~approval~~United States Securities Exchange Act of 1934, as amended, or the ~~Board~~Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of ~~Directors~~words or phrases like “anticipate,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “target,” “expects,” “management believes,” “we believe,” “we intend,” “we may,” “we will,” “we should,” “we seek,” “we plan,” the negative of ~~each~~those ~~company~~terms, ~~Intertainment~~and ~~Media~~similar words or phrases. We base these forward-looking statements on our expectations, assumptions, estimates and projections about our ~~company~~business ~~entered~~and ~~into~~the industry in which we operate as of the date of this Quarterly Report. These forward-looking statements are subject to a ~~definitive~~number of ~~agreement~~risks and uncertainties that cannot be predicted, quantified or controlled and that could cause actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this Quarterly Report describe factors, among others, that could contribute to ~~acquire~~or ~~all~~cause these differences. Actual results may vary materially from those anticipated, estimated, projected or expected should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect. Because the ~~intellectual~~factors ~~property~~discussed ~~assets~~in this Quarterly Report could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf, you should not place undue reliance on any such forward-looking statement. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of ~~Ortsbo~~each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available after the date of this Quarterly Report or the date of documents incorporated by reference herein that include forward-looking statements.

The ~~purchased~~ ~~assets~~discussion ~~include~~and USanalysis ~~Patent~~of ~~No.~~the ~~8,983,850~~Company’s ~~B2,~~financial UScondition ~~Patent~~and ~~No.~~results ~~8,917,631~~of ~~B2,~~operations USis ~~Patent~~based ~~No.~~upon its ~~9,053,097~~financial B2statements, ~~and~~which ~~other~~have ~~intellectual property~~been ~~including~~prepared ~~Ecommerce~~in ~~and~~accordance ~~Customer~~with ~~Care~~generally ~~know-how~~accepted ~~for~~accounting aprinciples ~~total~~generally ~~purchase~~accepted in ~~price~~the ofUnited ~~approximately~~States ~~$17~~(or ~~Million,~~“GAAP”). ~~which~~The ~~was~~preparation ~~paid by~~of ~~the~~those ~~assumption~~financial ofstatements ~~approximately~~requires $1us ~~Million~~to inmake ~~debt~~estimates and judgments that affect the ~~obligation~~reported toamount ~~issue~~of ~~$16~~assets ~~Million~~and ~~worth~~liabilities at the date of ~~our~~its ~~restricted~~financial ~~common~~statements. ~~shares~~Actual results may ~~(32~~differ ~~Million~~from ~~shares~~these atestimates ~~$0.50~~under ~~per~~different ~~share)~~assumptions or conditions.

17Management’s Discussion and Analysis of Results of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our financial statements included herein. Further, this quarterly report on Form 10-Q should be read in conjunction with our Financial Statements and Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2016, filed with the Securities and Exchange Commission on August 18, 2016. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K.

~~Intertainment~~Business Media received Toronto Stock Venture Exchange final approval on September 14, 2015 to proceed with the transaction. On September 15, 2015, the acquisition of Ortsbo Intellectual property by our company was closed.History

~~Our~~We ~~principal~~were ~~executive~~originally ~~offices~~incorporated ~~are~~under ~~located~~the atlaws ~~1001~~of ~~Avenue~~the State of ~~the~~Delaware ~~Americas~~on November 3, ~~11th~~2010 ~~Floor~~with an initial business plan to import consumer electronics, ~~New~~home ~~York~~appliances and plastic housewares. In March 2013, NYwe ~~10018~~filed an amended and restated certificate of incorporation to change our ~~telephone~~name ~~number~~to “YAPPN Corp.” and increase our authorized capital stock to 200,000,000 shares of common stock, ispar ~~(888)~~value ~~859-4441~~$0.0001 ~~Our~~per ~~website~~share isand ~~http://www~~50,000,000 shares of preferred stock, par value $0.~~yappn~~0001 per share.~~com~~ ~~(Our~~Further, ~~website~~in isMarch ~~expressly~~2013, ~~not~~our Board ~~incorporated~~of ~~into~~Directors declared a stock dividend, whereby an additional 14 shares of our common stock was issued for each one share of common stock outstanding to each holder of record on March 25, 2013. All per share information in this ~~filing)~~report reflect the effect of such stock dividend. On December 22, 2014, our shareholders approved the increase of authorized and issued shares of common stock to 400,000,000 shares of common stock.

~~Our~~On ~~Business~~March 28, 2013, we purchased a prospective social media platform and related group of assets known as Yappn (“Yappn”) from Intertainment Media, Inc. (“IMI”), a corporation organized under the laws of Canada, for 7,000,000 shares of our common stock, pursuant to an asset purchase agreement (the “Purchase Agreement” and the transaction, the “Asset Purchase”) by and among IMI, us, and our newly formed wholly owned subsidiary, Yappn Acquisition Sub., Inc., a Delaware corporation (“Yappn Sub”). Mr. David Lucatch, our prior Chief Executive Officer was the Chief Executive Officer of IMI at that time. IMI, as a result of this transaction had a controlling interest in our company. Included in the purchased assets is a services agreement (the “Services Agreement”) dated March 21, 2013 by and among IMI and its wholly owned subsidiaries Ortsbo, Inc., a corporation organized under the laws of Canada (“Ortsbo Canada”), and Ortsbo USA, Inc., a Delaware corporation (“Ortsbo USA” and, collectively with Ortsbo Canada, “Ortsbo”). On July 6, 2015, we entered into a definitive agreement to acquire all of the intellectual property assets of Ortsbo (see below).

~~Yappn~~On ~~delivers~~July ~~real-time~~15, ~~language~~2015, ~~translation~~after ~~products~~the ~~which~~approval ~~enable~~of ~~vendors~~the ~~and~~Board ~~consumers~~of toDirectors ~~communicate~~of ~~freely~~each ~~with~~company, ~~one~~Intertainment ~~another,~~Media ~~each~~and our company entered into ina ~~their~~definitive ~~own~~agreement ~~preferred~~to ~~languages.~~acquire ~~The~~all ~~result~~of isthe ~~increased~~intellectual ~~business~~property ~~and~~assets ~~customer~~of ~~satisfaction~~Ortsbo.

~~Being~~The ~~able~~purchased toassets ~~conduct~~include ~~business~~US inPatent ~~multiple languages is essential~~No. As8,983,850 ~~per~~B2, ~~Common~~US ~~Sense~~Patent ~~Advisory~~No. (a8,917,631 ~~research~~B2, ~~company~~US ~~specializing~~Patent ~~in the~~No. ~~areas of translation~~9, ~~localization~~053,097 ~~interpreting~~B2, ~~internationalization,~~and ~~globalization,~~other ~~marketing, international strategy,~~intellectual ~~market~~property ~~intelligence,~~including ~~web~~Ecommerce ~~content,~~ and ~~procurement),~~Customer ~~Global~~Care ~~eCommerce~~know-how ~~sales~~for ~~continue~~a tototal ~~increase~~purchase atprice aof ~~rate~~approximately of$17 15Million, ~~percent~~which ~~per~~was ~~year~~paid ~~and~~by ~~more~~the ~~than~~assumption 72of ~~percent~~approximately of$1 ~~consumers~~Million ~~say~~in ~~they~~debt ~~are~~and ~~more~~the ~~likely~~obligation to ~~purchase~~issue ~~online~~$16 ifMillion ~~the~~worth ~~experience~~of isour inrestricted ~~their~~common ~~preferred~~shares (32 ~~language~~Million shares at $0.50 per share).

Breaking down language barriers creates business opportunities and promotes efficiency and effectiveness within organizations. While internet challenges have largely been solved, resolving language barriers remains a costly issue for every company wishing to access global markets.17

~~Through~~Intertainment ~~its~~Media ~~proprietary~~received ~~innovative~~Toronto ~~language~~Stock ~~solutions,~~Venture weExchange ~~believe~~final ~~Yappn~~approval ~~has~~on ~~altered~~September ~~the~~14, ~~translation~~2015 ~~paradigm by offering a completely customizable set of tools~~ to ~~engage~~proceed ~~consumers~~with inthe ~~up to 67 languages~~transaction. ~~Yappn’s~~On ~~technology~~September 15, ~~gives people~~2015, ~~brands and organizations~~ the ~~power~~acquisition toof beOrtsbo ~~social,~~Intellectual ~~conduct~~property ~~commerce~~by ~~and~~our ~~communicate~~company ~~freely~~was ~~without a language barrier~~closed.

~~Generic~~Our ~~machine~~principal ~~translation,~~executive ~~which~~offices ~~can~~are belocated ~~found~~at ~~from~~1001 ~~providers~~Avenue ~~like~~of ~~Google~~the ~~TranslateTM~~Americas, or11th ~~Microsoft BingTM~~Floor, ~~employ a~~New ~~“word-for-word” approach. Unfortunately~~York, ~~the~~NY ~~translated~~10018 ~~result~~and ~~does~~our ~~not~~telephone ~~always reflect the essence of the original~~number ~~text~~is ~~and~~(888) ~~may~~859-4441. ~~not~~Our ~~make~~website ~~sense~~is http://www.yappn.com ~~Context~~ (~~cultural,~~Our ~~political~~website ~~and~~is ~~ethnic),~~expressly ~~syntax and meaning are simply~~ not ~~captured~~incorporated ~~through~~into ~~generic machine~~this ~~translation methods~~filing).

~~Yappn~~Our provides far more than simple word-for-word translation. Yappn translates the words as well as the context and syntax, thereby ensuring that what is written in one language is translated into another in an accurate, meaningful and relevant way. This capability is Yappn’s key differentiator.Business

Yappn ~~has~~delivers ~~the ability to detect the online or mobile user’s preferred language and translates the communication into the user’s language in~~ real-time. ~~Yappn~~language ~~provides~~translation ~~very~~products ~~“high~~which ~~fidelity”~~enable vendors and ~~accurate~~consumers ~~translation,~~to ~~without~~communicate ~~the~~freely ~~necessity~~with ofone ~~direct human translation or intervention~~another, ~~with~~each in antheir ~~added~~own ~~option~~preferred tolanguages. ~~customize~~The ~~translation~~result ~~settings,~~is ~~making~~increased ~~the~~business ~~results simple, elegant~~ and ~~cost~~customer ~~effective~~satisfaction.

~~Yappn~~Being ~~offers~~able ~~products~~to ~~for~~conduct ~~eCommerce,~~business ~~customer~~in ~~care,~~multiple ~~enhanced~~languages ~~messaging~~is ~~collaboration~~essential. As per Common Sense Advisory (~~such~~a asresearch ~~intranets~~company specializing in the areas of translation, ~~gaming~~localization, orinterpreting, ~~social~~internationalization, ~~platforms)~~globalization, ~~online~~ marketing, international strategy, market intelligence, web content, and ~~custom~~procurement), ~~translation~~Global ~~solutions~~eCommerce sales continue to increase at a ~~variety~~rate of ~~verticals~~15 ~~including~~percent ~~entertainment,~~per ~~retail~~ year and ~~marketing~~more than 72 percent of consumers say they are more likely to purchase online if the experience is in their preferred language.

~~Continued~~Breaking ~~expansion~~down oflanguage ~~our~~barriers creates business ~~rollout~~opportunities ~~will likely require additional debt or equity financing~~ and ~~there~~promotes ~~can~~efficiency ~~be no assurance that additional financing can be obtained on acceptable terms. We are in the early stage of commercialization,~~ and ~~management~~effectiveness ~~believes~~within ~~that we have insufficient revenues to cover our operating costs~~organizations. AsWhile ~~such, we have incurred an operating loss since inception. This and~~internet ~~other~~challenges factors raise substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to meet our obligations, to obtain additional financing as may be required, and ultimately to attain profitability. Our independent auditors have ~~included~~largely anbeen ~~explanatory paragraph~~solved, inresolving ~~their~~language ~~audit~~barriers ~~report~~remains ona ~~our~~costly ~~financial~~issue ~~statements~~ for ~~the~~every ~~fiscal~~company ~~year~~wishing ~~ended May 31, 2016 regarding concerns about our ability~~ to ~~continue~~access ~~as a going concern. Footnote 2 to the~~global ~~Notes to this Form 10-Q Report also discusses concerns about our ability to continue as a going concern~~markets. ~~Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~

~~Our~~Through ~~Strategy~~its proprietary innovative language solutions, we believe Yappn has altered the translation paradigm by offering a completely customizable set of tools to engage consumers in up to 67 languages. Yappn’s technology gives people, brands and organizations the power to be social, conduct commerce and communicate freely without a language barrier.

~~Our~~Generic ~~management~~machine ~~believes~~translation, ~~that~~which ~~Yappn~~can ~~approaches~~be ~~the~~found ~~challenge~~from ofproviders ~~real-time~~like ~~language~~Google ~~translation~~TranslateTM inor anMicrosoft ~~entirely~~BingTM, ~~unique~~employ a ~~way~~“word-for-word” approach. ~~The~~Unfortunately, the translated result is ~~enhanced~~does ~~translations~~not ~~based~~always onreflect the ~~context~~essence of the ~~content~~original text orand ~~discussion~~may not make sense. Context (cultural, ~~thereby~~political ~~significantly~~and ~~improving~~ethnic), ~~the~~syntax and meaning are simply not captured through generic machine translation ~~result~~methods.

ToYappn ~~accomplish~~provides ~~this,~~far ~~Yappn~~more ~~leverages~~than ~~the~~simple ~~power~~word-for-word ~~of multiple generic machine~~ translation. ~~(MT)~~Yappn ~~providers,~~translates ~~recognizing~~the ~~that~~words ~~many~~as ofwell ~~these commodity~~as ~~services~~the ~~specialize~~context and ~~produce~~syntax, ~~substantially better results in some languages over others. This aggregated generic~~thereby ~~machine~~ensuring ~~translation~~that what is ~~then~~written ~~passed through Yappn’s proprietary algorithms and enhancement processes which,~~ in ~~turn,~~one ~~provide the optimal translation for the~~ language ~~requested.~~is ~~Yappn~~translated ~~then~~into ~~applies yet~~ another ~~overlay~~in ofan ~~refinement~~accurate, ~~through~~meaningful ~~‘lexicons’. Lexicons are essentially custom dictionaries designed to improve the translation by contextualizing the result~~ and ~~making it~~ relevant to ~~the specific commercial requirement~~way. ~~Lexicons~~This ~~can~~capability is beYappn’s ~~industry~~key ~~or brand specific or both~~differentiator.

AnYappn ~~illustrative~~has ~~example~~the ~~of how Yappn’s lexicons work is reflected in its~~ ability to ~~distinguish~~detect ~~between~~the aonline ~~car~~or ~~transmission versus~~mobile auser’s ~~radio~~preferred ~~transmission.~~language ~~Similarly,~~and translates the ~~system~~communication ~~understands~~into ~~that~~ the ~~word~~user’s language ~~“travel” means something different~~ in ~~basketball~~ ~~than~~real-time. itYappn ~~does~~provides ~~when~~very ~~planning~~“high afidelity” ~~trip.~~and ~~Companies~~accurate ~~use~~translation, ~~various~~without ~~words~~the innecessity ~~unique~~of ~~ways~~direct human ~~and~~translation ~~Yappn’s~~or ~~lexicons continuously evolve~~intervention, ~~improve~~with ~~and~~an ~~store~~added ~~these~~option ~~subtle~~to ~~nuances~~customize ~~and~~translation ~~then~~settings, ~~apply~~making ~~them to~~ the ~~final~~results ~~output~~simple, ~~to provide an enhanced~~ elegant and ~~more~~cost ~~optimal translation~~effective.

18Yappn offers products for eCommerce, customer care, enhanced messaging collaboration (such as intranets, gaming or social platforms), online marketing and custom translation solutions to a variety of verticals including entertainment, retail and marketing.

~~Yappn~~Continued isexpansion ~~not~~of aour ~~generic~~business ~~machine~~rollout ~~translation~~will ~~provider~~likely ~~but~~require anadditional ~~enhancement~~debt toor ~~create~~equity ~~better~~financing and there can be no assurance that additional financing can be obtained on acceptable terms. We are in the early stage of commercialization, ~~customized~~and ~~results~~management believes that we have insufficient revenues to cover our operating costs. ~~Additionally~~As such, ~~Yappn~~we ishave incurred an operating loss since inception. This and ~~not~~other afactors ~~Language~~raise ~~Service~~substantial ~~Provider~~doubt ~~(LSP)~~about ~~simply~~our ~~returning~~ability to continue as a ~~document~~going inconcern. ~~another~~Our ~~language;~~continuation ~~instead~~as ~~Yappn~~a ~~provides~~going ~~tools~~concern is dependent on our ability to meet our obligations, to obtain additional financing as may be required, and ~~solutions~~ ultimately to ~~better~~attain profitability. ~~utilize~~Our ~~translation~~independent auditors have included an explanatory paragraph, in their audit report on our financial statements for the ~~course~~fiscal year ended May 31, 2016 regarding concerns about our ability to continue as a going concern. Footnote 2 to the Notes to this Form 10-Q Report also discusses concerns about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of ~~business~~this uncertainty.

~~Yappn’s~~Our tools and solutions are built with industry leading technology and hosted on the Microsoft Azure® cloud-based platform which provides Yappn with global reach, dependable presence, and dynamic scalability.Strategy

ToOur bemanagement ~~certain~~believes that ~~translation is highly accurate,~~ Yappn’s ~~services~~approaches ~~team initially works with~~ the ~~customer~~challenge ~~to develop an appropriate database~~ of ~~lexicon~~real-time ~~additions~~language ~~which~~translation ~~can~~in bean ~~further~~entirely ~~improved~~unique ~~after deployment using Yappn’s professional services or custom tools~~way. The ~~lexicon~~result is ~~can be~~ enhanced ontranslations anbased on~~-going~~ ~~basis~~the bycontext of the ~~customer’s~~content ~~staff~~or ~~as-needed~~discussion, ~~when~~thereby ~~additions~~significantly ~~and~~improving ~~revisions~~the ~~are required~~translation result.

~~Yappn~~To ~~can~~accomplish ~~enable~~this, anYappn ~~auto~~leverages ~~update~~the ~~feature~~power of multiple generic machine translation (MT) providers, recognizing that ~~can~~many beof ~~used~~these commodity onservices ~~demand~~specialize orand asproduce asubstantially ~~persistent~~better ~~connection~~results ~~that~~in ~~senses~~some ~~updates~~languages toover ~~the~~others. ~~translation~~This aggregated generic ~~source~~machine ~~then~~translation ~~has~~is ~~each~~then ~~addition~~passed ~~either~~through ~~automatically~~Yappn’s ~~changed~~proprietary oralgorithms ~~optionally~~and ~~human~~enhancement ~~verified~~processes ~~for~~which, ~~fidelity~~in turn, ~~followed~~provide the byoptimal antranslation ~~update~~for to the ~~customer’s~~language ~~lexicon~~requested. ~~For~~Yappn ~~example,~~then ~~when~~applies ayet ~~product~~another ~~description~~overlay isof ~~updated;~~refinement ~~the~~through ~~machine~~‘lexicons’. Lexicons are essentially custom dictionaries designed to improve the translation ~~will~~by ~~instantly~~contextualizing ~~display~~ the ~~change~~result inand making it relevant to the ~~store~~specific commercial requirement. Lexicons can be industry or brand specific or both.

~~The~~An illustrative example of how Yappn’s ~~application~~lexicons ~~suite~~work is ~~designed~~reflected in its ability to ~~provide~~distinguish between a ~~competitive~~car ~~advantage~~transmission versus toa ~~commercial~~radio ~~enterprises~~transmission. ~~and~~Similarly, ~~power~~the ~~social~~system ~~users~~understands tothat ~~communicate~~the word “travel” means something different in ~~more~~basketball ~~effectively~~than ~~without~~it does when planning a ~~language~~trip. ~~barrier~~Companies use various words in unique ways and Yappn’s lexicons continuously evolve, ~~fostering~~improve and ~~driving~~store athese ~~competitive~~subtle ~~edge~~nuances inand athen ~~global~~apply ~~marketplace~~them to the final output to provide an enhanced and more optimal translation.

~~Offering an “a la carte” menu of tools to engage consumers, Yappn helps clients improve their customer’s experiences and therefore increase customer satisfaction.~~ 18

~~eCommerce~~Yappn ~~Platform~~is ~~Integration:~~not ~~Dynamic~~a generic machine translation ~~encompassing~~provider ~~the~~but ~~entire~~an ~~eCommerce~~enhancement ~~experience~~to create better, ~~from~~customized ~~online~~results. ~~marketing~~Additionally, toYappn ~~sales~~is not a Language Service Provider (LSP) simply returning a document in another language; instead Yappn provides tools and solutions ~~customer~~to ~~care~~better utilize translation in the course of business.

●Yappn’s tools ~~eCommerce~~and ~~website~~solutions ●are ~~Vendor~~built ~~input~~with ~~manager~~industry ●leading ~~Chat~~technology ●and ~~Multilingual~~hosted ~~search~~on the Microsoft Azure® cloud-based platform which provides Yappn with global reach, dependable presence, and dynamic scalability.

~~Customer~~To ~~Care:~~be ~~Real-time~~certain that translation is highly accurate, Yappn’s services team initially works with the customer to develop an appropriate database of ~~chat~~lexicon additions which can be further improved after deployment using Yappn’s professional services or custom tools. The lexicon can be enhanced on an on-~~based~~going basis by the customer’s ~~care~~staff as-needed when additions and revisions are required.

●Yappn can ~~Customer~~enable ~~care~~an ~~integration~~auto ●update ~~Custom~~feature ~~help~~that ~~solutions~~can be used on demand or as a persistent connection that senses updates to the translation source then has each addition either automatically changed or optionally human verified for fidelity, followed by an update to the customer’s lexicon. For example, when a product description is updated; the machine translation will instantly display the change in the store.

~~Enhanced~~The ~~Messaging:~~Yappn ~~Real-time~~application ~~translation~~suite ~~support~~is ~~for~~designed ~~messaging~~to ~~platforms~~provide a competitive advantage to commercial enterprises and power social users to communicate more effectively without a language barrier, fostering and driving a competitive edge in a global marketplace.

●Offering an ~~Intranet~~“a ●la ~~Social~~carte” ~~sharing~~menu &of ~~messaging~~tools ●to ~~Business~~engage ~~sharing~~consumers, &Yappn ~~messaging~~helps ●clients ~~Gaming~~improve ~~sharing~~their &customer’s ~~messaging~~experiences and therefore increase customer satisfaction.

~~Marketing:~~eCommerce ~~Online~~Platform ~~marketing~~Integration: Dynamic translation encompassing the entire eCommerce experience, ~~engagement~~from online marketing to sales and customer ~~socialization~~care

● ~~Social~~eCommerce ~~Wall~~website ● ~~Global~~Vendor ~~tweets~~input manager ● ~~Twitter~~Chat ~~chats~~ ● Multilingual ~~live captioning & flash social events~~search

~~Custom~~Customer ~~Translation Solutions~~Care: ~~Solutions~~Real-time ~~for~~translation ~~unique~~of ~~translation~~chat-based ~~requirements~~customer care

● ~~Dynamic~~Customer ~~website~~care ~~translations~~integration ● ~~Software~~Custom ~~localization~~help ~~● Video closed captioning ● Virtual trade shows~~solutions

19Enhanced Messaging: Real-time translation support for messaging platforms

~~eCommerce Platform~~● ~~Integration~~Intranet ● Social sharing & messaging ● Business sharing & messaging ● Gaming sharing & messaging

~~Yappn’s~~Marketing: ~~technology~~Online is, we contend, a game changing solution, providing a set of stand-alone commercial tools for brands to easily implement cost effective globalization solutions that support the entire sales cycle, inclusive of the eCommerce website, shopping cart checkout, marketing, ~~sales~~engagement and ~~support. No longer is a company constrained to whom they can sell to because of language.~~socialization

~~The Yappn~~● ~~eCommerce~~Social ~~experience~~Wall is● ~~more~~Global ~~than~~tweets a● ~~simple~~Twitter ~~translation~~chats of● aMultilingual ~~store.~~live ~~eCommerce~~captioning ~~applications~~& ~~exist~~flash ~~today~~social to translate a copy of a store to another language. However, creating a separate instance of a store in another language is problematic as it can cause several business issues that are difficult to rectify, for example, inventory reconciliation and amalgamated sales reporting would be left to the vendor to handle manually. The Yappn solution of enabling a single store that is presented in the customer’s language of choice is a better business solution as we believe it will negate these issues.events

~~Yappn~~Custom ~~has~~Translation ~~made~~Solutions: ~~the~~Solutions ~~integration~~for ofunique these services into a store quite simple. Yappn uses standardized web technologies to connect a secondary database of the translations of the text, metadata and keywords on the site. The benefit of the database connection is the ability to call accompanying data such as imagery, (e.g. replacing an English ad with a Spanish ad) and the ability to manage translation ~~without~~ coding expertise. This integration also allows Yappn to access the text components of a secure third party checkout screen, thereby reducing cart abandonment, which, we contend, is unique to Yappn’s services.requirements

~~Security and~~● ~~privacy~~Dynamic iswebsite ~~maintained~~translations ~~via~~● aSoftware ~~variety~~localization of● ~~solutions~~Video ~~such~~closed ascaptioning ~~SSL~~● ~~encryption~~Virtual ~~and~~trade ~~the exception of customer/user identification and private information from machine translation services.~~shows

~~Customer Care Platform Integration~~ 19

~~Yappn~~eCommerce ~~Customer~~Platform ~~Care allows customers to chat in their language of choice, while our clients can staff their customer care operations in their language of choice.~~Integration

~~Chat~~Our technology is, ~~quickly~~we ~~becoming~~contend, ~~the~~a ~~preferred~~game ~~means~~changing solution, providing a set of stand-alone commercial tools for ~~companies~~brands to ~~communicate~~easily ~~with~~implement cost ~~their~~effective ~~customers.~~globalization ~~Chat~~solutions isthat ~~replacing~~support ~~voice~~the ~~and~~entire ~~e-mail providing~~sales acycle, ~~window~~inclusive of ~~opportunity~~the ~~for~~eCommerce ~~companies~~website, toshopping ~~better~~cart checkout, ~~serve~~marketing, ~~their~~sales ~~customers~~ and support. No longer is a company constrained to dowhom sothey ~~more~~can ~~cost~~sell ~~effectively~~to because of language.

~~Using~~The Yappn’s ~~multilingual~~eCommerce experience is more than a simple translation ~~API~~of ina ~~conjunction~~store. ~~with~~eCommerce ~~the~~applications ~~client’s~~exist ~~existing~~today ~~chat~~to ~~portal~~translate a copy of a store to another language. However, creating a ~~Customer~~separate ~~Service~~instance ~~Representative (CSR)~~of a store in another language is problematic as it can cause ~~converse~~several ~~with~~business ~~customers~~issues that are difficult to rectify, for example, inventory reconciliation and amalgamated sales reporting would be left to the vendor to handle manually. The Yappn solution of enabling a single store that is presented in the customer’s language of choice ~~with~~is ~~Yappn’s~~a ~~technology~~better ~~bridging~~business ~~the~~solution ~~language gap~~as ~~between~~we ~~the~~believe ~~two~~it ~~individuals~~will negate these issues.

~~This~~We ~~allows~~have made the ~~CSR~~integration of these services into a store quite simple. We use standardized web technologies to ~~think~~connect ~~and~~a secondary ~~type~~database inof ~~their~~the ~~native~~translations ~~language~~of ~~thereby~~the ~~providing~~text, ~~better~~metadata and ~~more~~keywords ~~accurate~~on ~~service~~the ~~while~~site. ~~reducing~~The ~~customer~~benefit of the database connection ~~care~~is ~~costs~~the ability to call accompanying data such as imagery, (e.g. ~~Employing~~replacing ~~multilingual~~an ~~CSR~~English ~~staff~~ad iswith ~~expensive~~a Spanish ad) and ~~unnecessary~~the ~~with~~ability to manage translation without coding expertise. This integration also allows Yappn to access the ~~use~~text components of ~~Yappn’s~~a ~~customer~~secure third ~~care~~party ~~solution~~checkout screen, thereby reducing cart abandonment, which, we contend, is unique to our services.

~~Enhanced~~Security ~~Messaging~~and ~~Platform~~privacy ~~Integration~~is maintained via a variety of solutions such as SSL encryption and the exception of customer/user identification and private information from machine translation services.

~~Yappn’s~~Customer ~~proprietary~~Care ~~and~~Platform ~~easily~~Integration integrated Enhanced Messaging Solution allows for real time communication between languages in a myriad of platforms for social, business and gaming messaging. The translation is contextualized to provide superior translation results.

~~Much~~Yappn ofCustomer ~~the~~Care ~~communication~~allows ~~that~~customers ~~transpires~~to onchat ~~messaging platforms is conducted~~ in atheir ~~single~~ language. ~~This~~of ischoice, ~~not~~while ~~always~~our byclients ~~choice~~can ~~but instead,~~staff istheir ~~driven~~customer bycare ~~the~~operations in ~~limitations~~their language of ~~the platforms themselves~~choice.

~~Companies~~Chat ~~that~~is ~~communicate~~quickly ~~internally~~becoming ~~but~~the ~~have~~preferred ~~staff,~~means ~~partners~~for ~~and~~companies ~~customers~~to communicate with ~~different~~their ~~languages~~customers. ~~can~~Chat ~~communicate~~is ~~more~~replacing ~~effectively~~voice ~~when~~and e-mail ~~the~~providing ~~barrier~~a window of ~~language~~opportunity isfor ~~removed~~companies to better serve their customers and to do so more cost effectively.

Using the Yappn system’s ~~technology~~ ~~can~~multilingual ~~securely~~translation ~~integrate~~API ~~into~~in conjunction with the client’s existing chat ~~platforms~~portal, ~~through~~ a Customer ~~simple~~Service ~~API~~Representative ~~connection~~(CSR) tocan ~~Yappn’s~~converse ~~Microsoft~~with ~~Azure® cloud~~customers ~~platform,~~in ~~reducing~~the ~~existing~~customer’s ~~workflow~~language ~~disruptions~~of ~~which~~choice ~~would~~with Yappn’s ~~require~~technology ~~changes~~bridging tothe alanguage ~~client~~gap ~~work~~between ~~environment~~the two individuals.

20This allows the CSR to think and type in their native language thereby providing better and more accurate service while reducing customer care costs. Employing multilingual CSR staff is expensive and unnecessary with the use of Yappn’s customer care solution.

~~Marketing~~Enhanced Messaging Platform Integration

~~Yappn~~Our ~~has~~proprietary ~~created~~and ~~several~~easily ~~tools~~integrated toEnhanced ~~support~~Messaging ~~online~~Solution ~~marketing~~allows ~~customized~~ for real time communication between languages in a ~~global~~myriad of ~~audience~~platforms for social, business and gaming messaging. The translation is contextualized to provide superior translation results.

~~Social~~Much ~~Wall:~~of ~~a fully branded and customized page, which includes~~ the ~~aggregation~~communication ofthat atranspires ~~company’s~~on ~~major~~messaging ~~social~~platforms ~~media~~is ~~accounts~~conducted ~~and #hashtags automatically displayed~~ in ~~any~~a ofsingle ~~the 67 languages~~language. This ~~allows~~is ~~followers~~not toalways ~~interact~~by ~~with~~choice ~~all their social media accounts,~~but ~~in their language and on the company’s website~~instead, ~~giving~~is ~~the~~driven ~~company~~by ~~back control of its marketing initiatives. Essentially, a company can present a variety of social media sources on a single page in~~ the ~~language~~limitations of ~~a customer’s choice, regardless of~~ the ~~original~~platforms ~~language the social media content was written in~~themselves.

~~Multilingual~~Companies ~~Chat:~~that ~~provides~~communicate ~~companies,~~internally ~~brands~~but have staff, ~~organizations~~partners and ~~consumers~~customers with ~~the~~different ~~ability~~languages tocan ~~have~~communicate ~~topical~~more ~~discussions~~effectively ~~in almost any language.~~when ~~Each user sees~~ the ~~chat~~barrier ~~experience~~of ~~in their preferred~~ language ~~and~~is ~~communicates to others in that language, allowing every user to have a native experience in their individual language~~removed. ~~The chat can be embedded to facilitate commenting on blogs, special event discussions with brand ambassadors or as a standalone program, providing a place to discuss the company’s brand.~~

~~Live~~Our ~~and~~management ~~Global~~contends ~~Events:~~that ~~a tool to promote a company’s brand which embeds~~ our ~~interface~~technology ~~directly~~can ~~onto~~securely ~~the~~integrate ~~company’s~~into ~~website where~~existing ~~the~~chat ~~company~~platforms ~~can~~through ~~direct their consumers to attend~~ a ~~live~~simple ~~Q&A~~API ~~while promoting the company’s brand on social media.~~connection ~~The technology allows the company~~ to ~~filter~~our ~~and~~Microsoft ~~reply~~Azure® tocloud ~~questions posted on Twitter™ and display them in an easy to read format on the company website~~platform, ~~creating~~reducing aexisting ~~captive~~workflow ~~audience~~disruptions towhich ~~market~~would ~~to.~~require ~~Yappn’s~~changes ~~easy-~~to~~-use backend even allows the company~~ ~~to reply to the attendees in their native language while automatically displaying the entire event in~~ a ~~user’s~~client ~~individual language~~work ~~automatically~~environment.

Video Captioning: If video promotion is an element of a company’s marketing strategy, allowing a global audience to watch and understand these videos is a natural complement. Yappn’s translation system provides simple and accurate video sub-titling in up to 67 languages, on a live or pre-recorded video, without disruption to the company’s current broadcast process.20

~~Custom~~Marketing ~~Translation~~Platform ~~Solutions~~Integration

~~Yappn~~ isWe ahave ~~consistent~~created ~~agile~~several ~~developer of~~ tools ~~and solutions~~ to ~~address~~support ~~the three important elements of conducting business:~~ online marketing, ~~sales~~customized ~~and~~for ~~customer care. We are, however, keenly aware that technologies and trends are evolving almost as fast as we are. For this reason, Yappn publishes its technology via~~ a ~~secured~~global ~~API to enable today’s entrepreneurs to enhance their innovations with language capabilities~~audience. This secure credential-enabled connection is available in a SaaS or by way of pay per use models and can be tested in sandbox environments. Each installation comes with full support from our development teams.

~~Digital~~Social ~~Widget~~Wall: ~~Factory~~a fully branded and customized page, which includes the aggregation of a company’s major social media accounts and #hashtags automatically displayed in any of the 67 languages. This allows followers to interact with all their social media accounts, in their language and on the company’s website, giving the company back control of its marketing initiatives. Essentially, a company can present a variety of social media sources on a single page in the language of a customer’s choice, regardless of the original language the social media content was written in.

InMultilingual ~~November~~Chat: ~~2014~~provides companies, ~~Yappn~~brands, ~~executed~~organizations aand ~~three-year~~consumers ~~Master~~with ~~Services~~the ~~Agreement~~ability ~~(MSA)~~to ~~and~~have ~~Statement~~topical ofdiscussions ~~Work~~in ~~(SOW)~~almost ~~with~~any ~~Digital~~language. Each ~~Widget~~user ~~Factory (Belize)~~sees ~~(“DWF”)~~the tochat ~~develop~~experience ~~and~~in ~~manage~~their apreferred ~~minimum~~language ofand ~~200~~communicates ~~multilingual~~to ~~Ecommerce~~others ~~sites~~in ~~which~~that ~~will~~language, ~~include~~allowing ~~multilingual~~every user ~~online~~to ~~marketing~~have ~~through~~a ~~traditional~~native ~~online~~experience ~~services~~in ~~and~~their ~~social~~individual ~~engagement~~language. ~~Contract~~The ~~terms~~chat ~~allowed~~can ~~for~~be ~~pre-paid~~embedded ~~fees~~to infacilitate ~~association with~~commenting ~~the~~on ~~project~~blogs, ofspecial event adiscussions ~~minimum~~with ofbrand ~~$700,000~~ambassadors ~~plus~~or ~~ongoing~~as ~~professional~~a ~~fees~~standalone inprogram, ~~addition~~providing toa ~~40%~~place ~~net~~to ~~profit~~discuss on the ~~program~~company’s ~~for the term duration~~brand.

~~The~~Live and Global ~~Content~~Events: ~~Market~~a istool anto ~~ever~~promote ~~growing~~a ~~market,~~company’s ~~with~~brand ~~Ipsos~~which ~~Market~~embeds ~~Research~~our ~~stating~~interface ~~that~~directly 7onto ~~out~~the ofcompany’s 10website where ~~online~~the ~~consumers~~company incan 24direct ~~countries have~~their ~~indicated~~consumers ~~that~~to inattend a ~~month~~live ~~they~~Q&A ~~share~~while ~~some~~promoting ~~type~~the ofcompany’s ~~content~~brand on social media. The ~~sites,~~technology ~~including~~allows ~~pictures~~the ascompany ~~well~~to asfilter ~~articles~~and reply to questions posted on Twitter™ and ~~something~~ ~~recommended,~~display ~~such~~them asin aan ~~product,~~easy ~~service,~~to ~~movie~~read format oron ~~book.~~the ~~Emarketer.com~~company ~~also~~website, ~~points~~creating ~~out~~a ~~that~~captive ~~global~~audience adto ~~spending~~market ~~was~~to. ~~estimated at~~Yappn’s ~~nearly~~easy-to-use ~~$600~~backend ~~billion~~even ~~worldwide~~allows inthe ~~2015~~company to ~~with~~reply to the ~~increase~~attendees in ~~digital~~their ~~and~~native ~~mobile~~language ~~platforms~~while ~~being~~automatically displaying the ~~key~~entire ~~growth~~event in ada ~~spending~~user’s individual language automatically.

~~Yappn,~~Video ~~through~~Captioning: ~~the~~If ~~program~~video ~~execution,~~promotion ~~intended~~is toan ~~provide~~element ~~multilingual~~of ~~online~~a company’s marketing ~~through~~strategy, ~~traditional~~allowing ~~online~~a ~~services~~global ~~and~~audience ~~social engagement with its proprietary patented technology~~ to ~~DWF.~~watch ~~Yappn~~and understand ~~would~~these dovideos sois bya ~~scheduling~~natural ~~and~~complement. ~~supporting DWF~~Yappn’s ~~revenue programs~~translation ~~related~~system toprovides ~~direct~~simple and ~~network~~accurate ~~online~~video ~~advertising, schedule and support DWF’s affiliate and Ecommerce partnerships~~sub-titling ~~and~~in ~~also~~up ~~support DWF users~~ to ~~customize~~67 ~~their content experience~~languages, ~~submit~~on ~~original~~a ~~content~~live ~~and~~or ~~provides~~pre-recorded ~~tools~~video, towithout ~~incent~~disruption ~~sharing of content and encourage users~~ to ~~build~~ the ~~membership~~company’s ~~base~~current broadcast process.

21Custom Translation Solutions

~~Effective February~~Our 29company, ~~2016,~~we ~~DWF sold the technology platform~~believe, ~~partially~~is ~~developed~~a byconsistent ~~our~~agile ~~company,~~developer inof ~~conjunction~~tools ~~with~~and ~~DWF’s~~solutions ~~principals,~~ to ~~Intelligent~~ ~~Content~~address ~~Enterprises~~the ~~Inc.~~three ~~(“ICE”)~~important inelements ~~exchange for common shares~~ of ~~ICE (the “Transaction”).~~ Asconducting ~~part~~business: ofonline ~~the transaction~~marketing, ~~DWF~~sales ~~received ownership~~ and ~~rights~~customer ~~to twenty four million common shares of ICE for a large minority shareholder position of ICE~~care. ~~During~~We ~~the~~are, ~~fourth quarter of fiscal 2016~~however, ~~the~~keenly ~~Company~~aware ~~executed~~that atechnologies ~~promissory~~and ~~note from DWF for the~~trends ~~outstanding~~are ~~value~~evolving ofalmost ~~the~~as ~~billings~~fast ~~of $2,125,000 (of which $968,289 is recorded~~ as awe ~~note~~are. ~~receivable~~For atthis ~~August 31~~reason, ~~2016~~Yappn ~~and~~publishes ~~was previously~~its ~~recognized~~technology invia ~~revenue and~~ a ~~trade receivable). The promissory note is~~ secured byAPI ~~DWF~~to enable today’s ~~ICE~~entrepreneurs ~~stock~~to ~~holdings~~enhance ~~in the~~their ~~amount~~innovations ofwith ~~2,250,000~~language ~~restricted~~capabilities. ~~common~~This ~~shares,~~secure ~~which at the market value at the time of execution significantly exceeded the~~credential-enabled ~~value~~connection ofis ~~the~~available ~~promissory~~in ~~note.~~a ~~The~~SaaS ~~note~~or ~~receivable~~by ~~includes~~way ~~monthly payments~~ of ~~differing~~pay ~~amounts~~per ~~with~~use ~~the~~models ~~final~~and ~~payment~~can ~~scheduled by~~be ~~November~~tested ~~30,~~in ~~2016.~~sandbox ~~The note receivable is past due on contractual payments by $1,870,000 as at November 30, 2016~~environments. ~~Subsequently,~~Each ~~the~~installation ~~Transaction~~comes ~~was~~with ~~unwound~~full ~~and~~support ~~the~~from ~~shares~~our ~~are~~development ~~intended to be returned~~teams.

~~We have not~~The ~~received~~Services any payments from DWF during the second quarter, and the secured note last payment date was contracted to be fully paid by November 30, 2016. While management continues to work with DWF on a resolution there is much greater uncertainty around collection of the note receivable as a result of the unwinding of the Transaction as described above. As a result management has recorded full impairment on the remaining recorded amount previously recorded in its financial statements, of $968,289 and the related impairment expense during the three and six months ended November 30, 2016.Agreement

We acquired the rights to use the technology and management and development support services under the Services Agreement, dated March 21, 2013 and amended October 2013, between Intertainment Media, Inc. (“IMI”), and IMI’s wholly owned Ortsbo subsidiaries. Pursuant to the terms of the Services Agreement, Ortsbo made available to us its representational state transfer application programming interface (the “Ortsbo API”), which provides multi-language real-time translation as a cloud service. The Services Agreement also provides that Ortsbo makes its “Live and Global” product offering, which enables a cross language experience for a live, video streaming production, available to us as a service for marketing and promoting the Yappn product in the marketplace (the “Services”). The Services did not include the “chat” technology itself and we were solely responsible for creating, securing or otherwise building out our website and any mobile applications to include chat functionality, user forums, user feedback, and related functionality within which the Ortsbo API could be utilized to enable multi-language use. Under the initial agreement, no intellectual property owned by Ortsbo would be transferred to us except to the extent set forth in the Services Agreement as described in “Intellectual Property” set forth below.

WeIn ~~acquired~~October ~~the~~2013, ~~rights~~we toamended ~~use~~ the ~~technology and management and development support services under the~~ Services Agreement~~, dated March 21, 2013 and amended October 2013, between Intertainment Media, Inc~~. ~~(“IMI”),~~Under ~~and~~the ~~IMI’s~~terms ~~wholly~~of ~~owned~~the ~~Ortsbo subsidiaries.~~amendment ~~Pursuant~~ to the ~~terms of the~~ Services Agreement, ~~Ortsbo~~we ~~made~~had ~~available~~the tofirst right usof ~~its~~refusal ~~representational~~to ~~state~~purchase ~~transfer application programming interface (~~the “Ortsbo ~~API”),~~platform ~~which~~and ~~provides~~all ~~multi-language~~its ~~real-time~~assets ~~translation~~and asoperations for a ~~cloud service.~~period ~~The~~of ~~Services~~two ~~Agreement~~years; ~~also~~increasing ~~provides~~the ~~that~~use of Ortsbo's ~~makes~~technology ~~its~~for ~~“Live~~business ~~and~~to ~~Global”~~consumer ~~product~~social ~~offering,~~programs ~~which~~at ~~enables~~ a ~~cross~~purchase ~~language~~price ~~experience~~to ~~for~~be anegotiated ~~live,~~at ~~video~~the ~~streaming~~time ~~production,~~we ~~available~~exercise toour right. usWe ashad a ~~service~~right ~~for~~to ~~marketing~~purchase ~~and~~a ~~promoting~~copy of the ~~Yappn~~ ~~product~~source incode ~~the~~only ~~marketplace~~applicable ~~(the~~to ~~“Services”).~~Yappn ~~The~~programs ~~Services~~for ~~did~~$2,000,000 ~~not~~which ~~include~~may ~~the~~be ~~“chat” technology~~paid ~~itself~~in ~~and~~cash ~~we weresolely responsible for creating, securing~~ or ~~otherwise~~restricted ~~building~~shares ~~out~~of our ~~website~~common ~~and~~stock ~~any~~at ~~mobile~~a ~~applications to~~per ~~include~~share ~~chat~~price ~~functionality,~~of ~~user~~$1.50 ~~forums,~~per ~~user~~share. ~~feedback,~~As ~~and~~part ~~related~~of ~~functionality~~the ~~within~~agreement, ~~which~~we ~~the~~ issued Ortsbo ~~API~~166,667 ~~could~~shares beof ~~utilized to~~our ~~enable~~restricted ~~multi-language~~common ~~use~~stock. ~~Under~~On ~~the~~April ~~initial~~28, ~~agreement~~2014, nowe ~~intellectual~~exercised ~~property~~our ~~owned~~right byto ~~Ortsbo~~purchase ~~would~~a becopy ~~transferred~~of tothe ussource ~~except~~code tofor the ~~extent~~Ortsbo ~~set~~property ~~forth~~ in ~~the~~exchange ~~Services~~for ~~Agreement~~1,333,333 asshares ~~described~~of inrestricted ~~“Intellectual~~common ~~Property”~~stock ~~set~~for ~~forth~~a ~~below~~value of $2,000,000.

InOn ~~October~~July ~~2013~~6, 2015, we ~~amended~~entered ~~the~~into ~~Services~~a ~~Agreement.~~definitive ~~Under~~agreement ~~the terms of the amendment~~ to ~~the~~acquire ~~Services~~all ~~Agreement, we had the first right~~ of ~~refusal to purchase~~ the ~~Ortsbo~~intellectual ~~platform~~property ~~and all its~~ assets ~~and operations for a period~~ of ~~two~~Ortsbo ~~years;~~which ~~increasing the use~~closed ofon ~~Ortsbo's~~September ~~technology~~15, ~~for~~2015. ~~business~~The topurchased ~~consumer~~assets ~~social~~include ~~programs~~US atPatent aNo. ~~purchase~~8,983,850 ~~price~~B2, toUS bePatent ~~negotiated~~No. at8,917,631 ~~the~~B2, ~~time~~US wePatent ~~exercise~~No. ~~our~~9,053,097 ~~right.~~B2, Weand ~~had~~other aintellectual ~~right~~property toincluding ~~purchase~~Ecommerce aand ~~copy~~Customer ofCare ~~the~~know-how ~~source~~for ~~code~~a ~~only~~total ~~applicable~~purchase toprice ~~Yappn~~of ~~programs for~~ approximately $217 Million,~~000,000~~ which ~~may~~was be paid in ~~cash~~by orthe ~~restricted~~assumption ~~shares~~ of ~~our~~approximately ~~common stock at a per share price of~~ $1~~.50~~ ~~per~~Million ~~share.~~in Asdebt ~~part~~and of the ~~agreement,~~issuance weof ~~issued Ortsbo~~$16 ~~166,667~~Million ~~shares~~worth of our restricted common ~~stock.~~shares On(32 ~~April~~Million ~~28,~~shares ~~2014,~~at we$0.50 ~~exercised~~per ~~our~~share). ~~right~~Upon tothe ~~purchase~~completion ~~a copy~~ of the ~~source code~~transaction ~~for~~on ~~the~~September ~~Ortsbo property in exchange for 1~~15,~~333,333~~ ~~shares~~2015 the ofamended ~~restricted~~Services ~~common~~Agreement ~~stock~~was ~~for a value of $2,000,000~~terminated.

On July 6, 2015, we entered into a definitive agreement to acquire all of the intellectual property assets of Ortsbo which closed on September 15, 2015. The purchased assets include US Patent No. 8,983,850 B2, US Patent No. 8,917,631 B2, US Patent No. 9,053,097 B2, and other intellectual property including Ecommerce and Customer Care know-how for a total purchase price of approximately $17 Million, which was paid by the assumption of approximately $1 Million in debt and the issuance of $16 Million worth of our restricted common shares (32 Million shares at $0.50 per share). Upon the completion of the transaction on September 15, 2015 the amended Services Agreement was terminated. 21

22Competition

~~Competition~~Our business relating to and arising from the development of our assets is characterized by innovation, rapid change, patented, proprietary, and disruptive technologies. We may face significant competition, including from companies that provide translation and tools to facilitate the sharing of information that enable marketers to display advertising and that provide users with multilingual real-time translation of Ecommerce, events and proprietary social media and chat platforms. These may include:

~~Our business~~● ~~relating~~Companies tothat ~~and~~offer ~~arising~~full-featured ~~from~~products ~~the~~that ~~development~~provide a similar range of ~~our~~communications ~~assets~~and isrelated ~~characterized~~capabilities bythat ~~innovation,~~we ~~rapid~~provide. ~~change,~~● ~~patented, proprietary,~~Companies ~~and~~that ~~disruptive~~provide ~~technologies.~~web Weand ~~may~~mobile-based ~~face~~information ~~significant~~and ~~competition,~~entertainment ~~including~~products ~~from~~and ~~companies~~services that ~~provide translation~~are ~~and~~designed ~~tools~~ to ~~facilitate~~engage ~~the~~users. ~~sharing~~● ofCompanies ~~information~~ that ~~enable~~offer ~~marketers~~Ecommerce tosolutions ~~display~~with ~~advertising~~built in language support. ● Traditional and online businesses that offer corporate sponsorship opportunities and provide ~~users~~ ~~with~~media ~~multilingual~~for ~~real-time~~marketers ~~translation~~to ofreach ~~Ecommerce,~~their ~~events~~audiences and/or ~~proprietary~~develop ~~social~~tools ~~media~~ and ~~chat~~systems ~~platforms.~~for ~~These~~managing ~~may include:~~and optimizing advertising campaigns.

● Companies that offer full-featured products that provide a similar range of communications and related capabilities that we provide. ● Companies that provide web and mobile-based information and entertainment products and services that are designed to engage users. ● Companies that offer Ecommerce solutions with built Competitors, in ~~language~~some ~~support.~~cases, ●may ~~Traditional~~have ~~and~~access ~~online businesses that offer corporate sponsorship opportunities and provide media for marketers~~ to ~~reach~~significantly ~~their~~more ~~audiences~~resources ~~and/or~~than ~~develop tools and systems for managing and optimizing advertising campaigns~~Yappn.

~~Competitors~~We anticipate that we will compete to attract, engage, and retain clients and users, to attract and retain marketers, to attract inand ~~some~~retain ~~cases~~corporate sponsorship opportunities, and to attract and retain highly talented individuals, especially software engineers, designers, and product managers. As we introduce new features to the Yappn platform, as the platform evolves, or as other companies introduce new platforms and new features to their existing platforms, we may ~~have~~become ~~access~~subject to ~~significantly~~additional ~~more~~competition. ~~resources~~We ~~than~~believe that ~~Yappn~~our ability to quickly adapt to a changing marketplace, and our experienced management team, will enable us to compete effectively in the market.

WeIntellectual ~~anticipate~~Property that we will compete to attract, engage, and retain clients and users, to attract and retain marketers, to attract and retain corporate sponsorship opportunities, and to attract and retain highly talented individuals, especially software engineers, designers, and product managers. As we introduce new features to the Yappn platform, as the platform evolves, or as other companies introduce new platforms and new features to their existing platforms, we may become subject to additional competition. We believe that our ability to quickly adapt to a changing marketplace, and our experienced management team, will enable us to compete effectively in the market.

~~Intellectual~~We ~~Property~~own (i) the yappn.com domain name (which website is expressly not incorporated into this filing) and (ii) the Yappn name and all trademarks, service marks, trade dress and copyrights associated with the Yappn name, logo and graphic art. We may prepare several patent filings in the future. Upon payment of the applicable fees pursuant to the Services Agreement described above, we became the exclusive owner of copyright in the literary works or other works of authorship delivered by Ortsbo to us as part of the Services provided under the Services Agreement (the “Deliverables”). All such rights shall not be subject to rescission upon termination of the Services Agreement. Also as set forth in the Services Agreement, we shall grant to Ortsbo (i) a non-exclusive (subject to certain limitations) license to use the Deliverables for the sole purpose of developing its technology, (ii) a non-exclusive license to use, solely in connection with the provision of the Services, any intellectual property owned or developed by us or on our behalf and necessary to enable Ortsbo to provide the Services and (iii) a license to use intellectual property obtained by us from third parties and necessary to enable Ortsbo to provide the Services. All such licenses shall expire upon termination of the Services Agreement.

~~We own (i) the yappn.com~~On ~~domain~~April ~~name (which website is expressly not incorporated into this filing) and (ii) the Yappn name and all trademarks~~28, ~~service marks~~2014, trade dress and copyrights associated with the Yappn name, logo and graphic art. We may prepare several patent filings in the future. Upon payment of the applicable fees pursuant to the Services Agreement described above, we ~~became~~purchased ~~the~~a ~~exclusive~~copy ~~owner~~ of ~~copyright in~~ the ~~literary~~source ~~works~~code or other works of authorship delivered by Ortsbo to us as part of the Services provided under the Services Agreement (the “Deliverables”). All such rights shall not be subject to rescission upon termination of the Services Agreement. Also as set forth in the Services Agreement, we shall grant to Ortsbo (i) a non-exclusive (subject to certain limitations) license to use the Deliverables for the sole purpose of developing its technology, (ii) a non-exclusive license to use, solely in connection with the provision of the Services, any intellectual property owned or developed by us or on our behalf and necessary to enable Ortsbo ~~to provide the Services and (iii) a license to use intellectual~~ property ~~obtained by us from third parties~~ and ~~necessary~~all ~~to enable Ortsbo to provide~~ the ~~Services.~~rights ~~All~~associated ~~such~~with ~~licenses shall expire upon termination of the Services Agreement~~it.

On ~~April~~July 2816, ~~2014~~2015, we ~~purchased~~entered into a ~~copy~~definitive agreement to acquire all of the ~~source~~intellectual ~~code~~property ~~for~~assets ~~the~~of Ortsbo which closed on September 15, 2015. The purchased assets include US No. 8,983,850 B2, US Patent No. 8,917,631 B2, US Patent No. 9,053,097 B2, and other intellectual property including Ecommerce and ~~all~~Customer Care know-how (Proprietary lexicons and linguistic databases that integrate into our language services platform). Upon completion of the ~~rights~~transaction ~~associated~~on ~~with~~September it15, 2015 the amended Services Agreement was terminated.

OnWe ~~July~~continue ~~16,~~to ~~2015,~~engage wein ~~entered~~activities ~~into a definitive agreement~~ to ~~acquire~~maintain ~~all of the intellectual property assets of Ortsbo which closed on September 15, 2015. The purchased assets include US No. 8,983,850 B2, US Patent No. 8,917,631 B2, US Patent No. 9,053,097 B2,~~ and ~~other~~further ~~intellectual~~build ~~property~~differentiated ~~including~~technologies ~~Ecommerce and Customer Care know-how (Proprietary lexicons and linguistic databases~~ that ~~integrate~~increase ~~into~~ our ~~language~~intellectual ~~services platform)~~properties. ~~Upon completion of the transaction on September 15, 2015 the amended Services Agreement was terminated.~~

WeGovernment ~~continue~~Regulation ~~to engage in activities to maintain and further build differentiated technologies that increase our intellectual properties.~~

~~Government~~We ~~Regulation~~are subject to a number of U.S. federal and state, and foreign laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and being tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online payment services. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of user data. Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the United States. U.S. federal and state and foreign laws and regulations are constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly-evolving industry in which we operate. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies, and foreign governments concerning data protection which could affect us. For example, a revision to the 1995 European Union Data Protection Directive is currently being considered by legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance. We are also monitoring the consequences on our industry as a result of the new administration commencing January 20, 2017 including the legislation on the open Internet and the March 2017 repeal of broadband privacy rules.

~~We are subject to~~Legal aProceedings number of U.S. federal and state, and foreign laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and being tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online payment services. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of user data. Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the United States. U.S. federal and state and foreign laws and regulations are constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly-evolving industry in which we operate. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies, and foreign governments concerning data protection which could affect us. For example, a revision to the 1995 European Union Data Protection Directive is currently being considered by legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance. We are also monitoring the consequences on our industry as a result of the new administration commencing January 20, 2017.

~~Legal Proceedings~~ None.

~~None.~~22

23Registration Statement

On October 3, 2016, the Company filed a Registration Statement on Form S-1 (File No.333-213947) (the “Registration Statement”) with the Securities and Exchange Commission for up to 14,840,964 shares of our Company’s $0.0001 par value per share common stock (the "Common Stock") issuable to certain selling stockholders that are issued and outstanding upon conversion of promissory notes, related past due accrued interest and penalties and/or warrants currently held by those selling stockholders, specifically (i) 8,227,821 shares of Common Stock issued and outstanding (ii) 907,200 shares of Common Stock issuable to them upon exercise of promissory notes (iii) 273,272 shares of Common Stock issuable underlying past due accrued interest and penalties and (iv) 5,432,671 shares of Common Stock issuable to them upon exercise of common stock purchase warrants. The common stock purchase warrants have an exercise price varying from $0.25 to $2.20 per share (subject to adjustment). The Registration Statement covering the above noted shares was declared effective under the Securities Act of 1933 on January 24, 2017.

~~On October 3,~~RESULTS ~~2016,~~OF weOPERATIONS filed a request to withdraw our previously filed Registration Statement on Form S-1 (File No. 333-207292), with the Securities and Exchange Commission (the “SEC”). On October 3, 2016 the Company filed a new Registration Statement on Form S-1 (File No.333-213947) (the “Registration Statement”) with the Securities and Exchange Commission for up to 14,840,964 shares of our Company’s $0.0001 par value per share common stock (the "Common Stock") issuable to certain selling stockholders that are issued and outstanding upon conversion of promissory notes, related past due accrued interest and penalties and/or warrants currently held by those selling stockholders, specifically (i) 8,227,821 shares of Common Stock issued and outstanding (ii) 907,200 shares of Common Stock issuable to them upon exercise of promissory notes (iii) 273,272 shares of Common Stock issuable underlying past due accrued interest and penalties and (iv) 5,432,671 shares of Common Stock issuable to them upon exercise of common stock purchase warrants. The common stock purchase warrants have an exercise price varying from $0.25 to $2.20 per share (subject to adjustment). The Registration Statement has not yet been declared effective.

~~RESULTS~~Three OFmonths ~~OPERATIONS~~ended February 28, 2017

~~Three months ended November 30, 2016~~Revenues

~~Revenues~~We are in the process of the commercialization of our various product offerings. We had revenues of $65,130 and $101,537 for the three months ended February 28, 2017 and February 29, 2016, respectively. The majority of the revenue earned in the three months ended February 28, 2017 is from two customers and accounts for 91% of the total revenue. No revenue earned for the three months ended February 28, 2017 related to professional services provided for Intelligent Content Enterprises Inc. (“ICE”). Comparative period revenues resulted from the professional services related to the Digital Widget Factory (Belize) (“DWF”) program. The DWF assets were acquired by ICE effective February 29, 2016 and thus no further billings were made to DWF since that date. Billings as part of professional and language services for the program subsequent to February 29, 2016 were through ICE and as expected were lower than the average billings to DWF. Our management has focused on developing relationships with large commercial partners and influencers, which has delayed revenue realization from prospective customers in recent quarters.

~~We are in the~~Cost ~~process~~ of ~~the commercialization of our various product offerings. We had revenues of $106,998 and $52,222 for the three months ended November 30, 2016 and 2015, respectively. $35,000 of~~ revenue for the three months ended November 30, 2016 related to professional services provided for Intelligent Content Enterprises Inc. (“ICE”). $35,000 of revenue recognized from ICE is based on payments received against the outstanding billings. Comparative period revenues resulted from the professional services related to the Digital Widget Factory (Belize) (“DWF”) program. The DWF assets were acquired by ICE effective February 29, 2016 and thus no further billings were made to DWF since that date. Billings as part of professional and language services for the program subsequent to February 29, 2016 were through ICE and as expected have been lower than the average billings to DWF. Our management has focused on developing relationships with large commercial partners and influencers, which has delayed revenue realization from prospective customers in recent quarters.

~~Cost~~We incurred costs of ~~revenue~~revenues of $42,343 and $9,134, for the three months ended February 28, 2017 and February 29, 2016, respectively. These costs were directly attributable to the revenues generated in the applicable periods and vary due to different customer mix between the periods and resulted in a gross profit of $22,787 and $92,403, for the three months ended February 28, 2017 and February 29, 2016, respectively.

WeTotal ~~incurred~~operating costs of revenues of $44,874 and $8,464, for the three months ended November 30, 2016 and 2015, respectively. These costs were directly attributable to the revenues generated in the applicable periods and resulted in a gross profit of $62,124 and $43,758, for the three months ended November 30, 2016 and 2015, respectively.expenses

~~Total~~During the three months ended February 28, 2017 and February 29, 2016, total operating expenses were $1,268,376 and $1,295,610, respectively.

~~During~~For the three months ended ~~November~~February 3028, ~~2016~~2017, the operating expenses consisted of marketing expense of $3,251, research and ~~2015~~development expenses of $183,396, ~~total~~general and administrative expenses of $357,671, professional fees of $46,724, consulting fees of $72,438, depreciation of $3,341, amortization of $265,880, and stock based compensation of $335,675. For the comparable three months ended February 29, 2016 the operating expenses ~~were~~consisted of marketing expenses of $126,~~261~~152,~~963~~ research and development expenses of $1109,~~305~~203,~~434~~ general and administrative expenses of $497,826, ~~respectively~~professional fees of $241,025, consulting fees of $92,590, depreciation of $102, amortization of $263,940 and stock based compensation of $64,772.

~~For~~Marketing the three months ended November 30, 2016, the operating expenses consisted of marketing expense of $6,972, research and development expenses of $166,369, general and administrative expenses of $400,834, professional fees of $23,024, consulting fees of $62,583, depreciation of $1,407, amortization of $265,101, and stock based compensation of $335,675. For the comparable three months ended November 30, 2015 the operating expenses consisted of marketing expenses of $103,463, research and development expenses of $96,782, general and administrative expenses of $414,728, professional fees of $68,454, consulting fees of $101,075, depreciation of $107, amortization of $219,950 and stock based compensation of $300,875.Expenses

~~Marketing~~The ~~Expenses~~reduction in marketing expenses of $22,901 or 88% is due mainly to a realignment of spending by the company. In the three months period ending February 29, 2016 we incurred higher costs as a result of promoting the Yappn brand through consultants and various promotional expenses. In three months ending February 28, 2017, we substantially reduced the spending on consultants engaged in marketing activities and focused our efforts on operationalizing the current products based on more direct sales channels.

The reduction in marketing expenses of $96,491 or 93% is due mainly to a realignment of spending by the company. In the three months period ending November 30, 2015 we incurred higher costs as a result of promoting the Yappn brand through consultants and various promotional expenses. In three months ending November 30, 2016, we substantially reduced the spending on consultants engaged in marketing activities and focused our efforts on operationalizing the current products based on more direct sales channels.23

24Research and Development

Research and ~~Development~~development expenses increased by $74,193 or 28% in the three months ended February 28, 2017 over the three months ended February 29, 2016. The increase in the current three month period is due to expansion of the internal development team while also keeping third party consultants engaged. There were no research and development costs from Intertainment Media and Ortsbo in fiscal 2017. There were significant costs incurred in development of the various technologies supporting the business towards the commencement of commercialization. There will continue to be maintenance and ongoing development customization to ensure our technology solutions meet required standards for our current and prospective customers.

~~Research~~General and ~~development~~administrative expenses increased by $69,586 or 72% in the three months ended November 30, 2016 over the three months ended November 30, 2015. Our research and development costs in the comparative period are partially for fees to technology consultants from Intertainment Media and Ortsbo, with higher weighting on our own employees and arm’s length third party consultants. There were no research and development costs from Intertainment Media and Ortsbo in fiscal 2017. There were significant costs incurred in development of the various technologies supporting the business towards the commencement of commercialization. Many of these costs will not continue into the future, however there will continue to be maintenance and ongoing development customization to ensure our technology solutions meet required standards for our current and prospective customers.

General and administrative expenses decreased by $140,155 or 68% in the three months ended February 28, 2017 over the three months ended February 29, 2016. These costs generally include executive and office salaries, as well as general office expenses or costs. Salary costs have remained relatively consistent due to a combination of factors. The overall headcount has decreased but employee costs are higher due to the addition of executives in late fiscal 2016. Certain other costs have been reduced or eliminated such as billings from Intertainment Media under the services agreement and employee headcount in the US office. Billings from Intertainment Media ceased due to the acquisition of the Intellectual Property and assets from Ortsbo on September 15, 2015 and the subsequent cancellation of the Services Agreement. We anticipate that costs in fiscal 2017 will be relatively consistent period over period as we continue to work to develop a customer base and meet the needs of investors to finance our operation. Upon further significant increases in revenue, management will continue to hire qualified personnel, but the growth of this cost, we believe, will be far less than the impact to Net Loss.

~~General~~Professional and administrative expenses decreased by $13,894 or 3% in the three months ended November 30, 2016 over the three months ended November 30, 2015 including executive and office salaries, administrative services accounting and finance as well as general office expenses or costs. These costs have relatively remained consistent due to a combination of factors. The overall headcount has decreased but employee costs are higher due to the addition of two senior level executives between the periods. Certain other costs have been reduced or eliminated such as billings from Intertainment Media under the services agreement and employee headcount in the US office. Billings from Intertainment Media ceased due to the acquisition of the Intellectual Property and assets from Ortsbo on September 15, 2015 and the subsequent cancellation of the Services Agreement. We anticipate that costs in fiscal 2017 will be relatively consistent period over period as we continue to work to develop a customer base and meet the needs of investors to finance our operation. Upon further significant increases in revenue, management will continue to hire qualified personnel, but the growth of this cost, we believe, will be far less than the impact to Net Loss.fees

Professional fees decreased by $194,301 or 81% for the three months ended February 28, 2017 over the three months ended February 29, 2016 and includes audit and audit related services pertaining to the year-end audits, and legal fees related to both ongoing operational compliance for the business and for financing closings. Although audit related fees have generally stayed consistent, the comparative period had higher legal fees as a result of various financings that closed during fiscal 2016.

~~Professional~~Consulting fees decreased by $45,430 or 66% for the three months ended November 30, 2016 over the three months ended November 30, 2015 and includes audit and audit related services pertaining to the year-end audits, and legal fees related to both ongoing operational compliance for the business and for financing closings. Although audit related fees have generally stayed consistent, the comparative period had less audit expense due to timing of billing and the offsetting higher legal fees were a result of fees relating to various financings that closed during fiscal 2016.

Consulting fees decreased by $20,152 or 22% and are mainly due to a reduction in spending on consultants. In the comparative period, Company had five different consultants engaged whereas in the current three month period, Company has only three consultants engaged. This is expected to be consistent in the near term due to the Company’s overall realignment of spending.

~~Consulting~~Amortization fees went down by $38,492 or 38% and are mainly due to a significant reduction in spending on consultants. In the comparative period, Company had six different consultants engaged whereas in the current three month period, Company has only two consultants engaged. This is expected to be consistent in the near term due to the Company’s overall realignment of ~~spending.~~Intangible Assets

Amortization of ~~Intangible~~$265,880 ~~Assets~~relates almost entirely to Technology and Intellectual Property purchased during fiscal 2016 which we are amortizing over 5 years on a straight-line basis as well as a patent that was granted in late fiscal 2016. The difference of $1,940 or 1% increase over the comparative period is nominal and due to amortization of a patent issued late fiscal 2016. On September 15, 2015, we finalized our purchase of Intellectual property assets of Ortsbo pursuant to an Asset Purchase Agreement executed and closed on July 15, 2015.

~~Amortization~~Stock ofbased $265,101 relates entirely to Technology and Intellectual Property purchased during prior fiscal 2016 which we are amortizing over 5 years on a straight-line basis. The difference of $45,151 or 20% increase over the comparative period is due to the purchase taking place part way into the quarter in the prior fiscal year. On September 15, 2015, we finalized our purchase of Intellectual property assets of Ortsbo pursuant to an Asset Purchase Agreement executed and closed on July 15, 2015.compensation

Stock based compensation increased by $270,903 or 418%. This increase is due mainly to issuance of options to management and the Board of Directors, and warrants to the new advisory board in late fiscal 2016. Additional warrants were also issued to the board of directors and a new advisory board member in early fiscal 2017. Overall values ascribed will be different for each period based on the underlying assumptions used at the time of each grant. The stock options expense is determined using the binomial tree valuation method, which is an acceptable method under US GAAP.

Stock based compensation increased by $34,800 or 12%. This increase is due continued vesting of existing options that were granted in late fiscal 2016 and early fiscal 2017. Overall values ascribed will be different for each period based on the underlying assumptions used at the time of each grant. The stock options expense is determined using the acceptable binomial tree valuation method, which is an acceptable method under US GAAP.24

Total other income and expenses

Other (income)/expenses totaled $1(729,~~321,894~~361) and $~~793~~576,~~983~~376, for the three months ended ~~November~~February 3028, ~~2016~~2017 and ~~2015~~February 29, 2016, respectively. The change of $~~527~~1,~~911~~ 305,736 is ~~partly~~ due to interest expense, change in fair value of ~~derivative~~convertible ~~liabilities~~debentures and ~~convertible~~ notes, ~~prepayment~~impairment ~~fees~~of ~~on variable~~note ~~notes~~receivable, ~~impairment~~gain ofon ~~note~~debt ~~receivable~~settlement, and miscellaneous (income)/expense. During the three months ended ~~November~~February 3028, ~~2016~~2017, total other (income)/expense consisted of interest expense of $~~235~~272,~~239~~402, ~~financing expense on issuance of convertible promissory notes and common stock totaling $nil,~~ a loss resulting from the change in fair value of the ~~derivative liabilities and~~ convertible ~~notes~~ ofdebentures ~~$123,928,~~and ~~prepayment fees on convertible~~ notes ~~with floating strike prices~~ of $~~nil~~108,950, other miscellaneous ~~income~~expense of $(58,~~562)~~376, and ~~Impairment~~gain ofon ~~note~~debt ~~receivable~~settlement of $~~968~~(1,~~289~~119,089). During the three months ended ~~November~~February 3029, ~~2015~~2016, total other (income)/expense consisted of interest expense of $~~194~~268,~~402 and financing expenses on the issuance of convertible promissory notes and common stock totaling $542~~222,~~760,~~ a ~~gain~~loss resulting from the change in the fair value of the ~~derivative~~convertible ~~liabilities~~debentures and ~~convertible~~ notes of $~~(38~~289,~~698)~~881, prepayment fees on variable notes of $9929,~~558~~350, and miscellaneous other income of $(411,~~039~~077).

25Interest Expense

Interest ~~Expense~~expense increased by $4,180 or 2% for the three months ended February 28, 2017 over the three months ended February 29, 2016. The slight increase is mainly due to an increase in interest expense due to additional financings closed in fiscal 2016 which were offset by lower interest expense on previous convertible debentures that converted late fiscal 2016 and early fiscal 2017. We closed multiple secured debenture financings in fiscal 2016 totaling approximately $6.7 million, most of which was new debt for us at the time. Additionally, we incurred a higher penalty interest on convertible debentures from fiscal 2014 that reached maturity in late fiscal 2016 and early fiscal 2017.

~~Interest~~Change ~~expense increased by $40,837 or 21% for the three months ended November 30, 2016 over the three months ended November 30, 2015. The significant increase is mainly due to additional financings closed~~ in ~~fiscal~~fair ~~2016.~~value ~~We closed multiple secured debenture financings totaling approximately $6.7 million, most~~ of ~~which was new debt for us at the time. Additionally, we incurred a higher penalty interest on~~ convertible ~~debentures~~promissory ~~from~~notes ~~fiscal 2014 that reached maturity in late fiscal 2016~~ and ~~early~~ ~~fiscal~~convertible ~~2017.~~secured debentures

~~Financing~~Change ~~expense~~in onfair ~~issuance~~value of convertible ~~promissory~~debentures and notes expense was a loss resulting in decrease in the recognized loss by $180,931 in the three months ended February 28, 2017 over three months ended February 29, 2016 as the existing debt instruments continued to have fair value adjustments until they reached maturity in late fiscal 2016 and ~~common~~early ~~stock~~fiscal 2017, in addition to the new secured debentures that were issued during the prior fiscal year 2016. The loss from fair value adjustment largely relates to accretion fair value changes on various convertible debentures and notes.

~~Financing~~Payment ~~expense~~fees ~~decreased~~on ~~by $542,760 or 100% as we did not fund our company through~~ variable ~~rate~~conversion ~~notes~~priced or grant warrants relating to financing arrangements in fiscal 2017 whereas there were common stock purchase warrants granted to financiers in the comparative period ended November 30, 2015. The expense is a function of the underlying assumptions at the time of the grant. It is mainly driven by the strike price of the instrument and the stock price at the time of the grant. As this is a non-cash expense, based on financings and model outputs it is hard to estimate variability for this account.notes

~~Change~~Payment infees ~~fair~~on ~~value~~variable ofconversion ~~convertible~~priced promissory notes ~~and~~is ~~convertible~~significantly ~~secured~~lower ~~debentures~~by $29,350 or 100% in three months ended February 28, 2017 over three months ended February 29, 2016, as we repaid the variable conversion priced notes in the prior fiscal year. As of February 28, 2017, we do not have any further variable conversion priced promissory notes.

~~Change~~Miscellaneous ~~in fair value of derivative liabilities and convertible promissory notes~~ expense ~~was a loss resulting in incremental change in the recognized gain~~/loss by $162,626 in the three months ended November 30, 2016 over three months ended November 30, 2015 as the existing debt instruments continued to have fair value adjustments in addition to the new secured debentures that were issued during the prior fiscal year. The total fair value change is a gain in the comparative period due to the revaluations on the variable conversion priced notes and the underlying assumptions used to value them using the binomial tree valuation method which includes elapsed time, and market price decreases.(income)

~~Payment~~Miscellaneous ~~fees~~expense/(income) onwas ~~variable~~an expense of $8,376 for the three months ended February 28, 2017, compared to a gain of $(11,077) for the three months ended February 29, 2016 resulting in incremental change in the recognized gain/loss by $19,453. The expense/(income) is largely a function of foreign exchange expense/(income) and write-off of payables that Company is no longer required to pay either due to a settlement or management has concluded the obligations are barred by the statute of limitations. A small portion of the foreign exchange is a cash expense in bank spread for currency variance conversion ~~priced~~between ~~notes~~the US dollar and the Canadian dollar. The remaining foreign exchange expense/ (income) was incurred on changes in the foreign exchange rate and the foreign denominated liabilities.

Payment fees on variable conversion priced promissory notes is significantly lower by $99,588 or 100% in three months ended November 30, 2016 over three months ended November 30, 2015, as we repaid the variable conversion priced notes in the prior fiscal year. As of November 30, 2016, we do not have any further variable conversion priced promissory notes.25

~~Miscellaneous~~Gain ~~expense/(income)~~on debt settlement

~~Miscellaneous~~In ~~expense/(income)~~the three month ~~was~~period aending February 28, 2017, the gain on debt settlement of $51,~~562~~119,089 ~~for~~was ~~the~~related ~~three~~entirely ~~months~~to ~~ended~~settlement ~~November~~of 30various debt obligations of our company in conjunction with a settlement arrangement with DWF. On February 28, ~~2016~~2017, ~~compared~~management toreached a ~~gain~~go forward ofresolution ~~$4,039~~with ~~for~~DWF stakeholders. We agreed to reduce our stake in the ~~three~~DWF ~~months~~assets ~~ended~~to ~~November 30~~$800,000 ~~2015~~which ~~resulting~~will be in ~~incremental~~the ~~change~~form of a new investment in DWF with the ~~recognized~~specific ~~gain/loss~~terms byto ~~$1,523~~be determined. ~~The~~This ~~expense/(income)~~reduced isposition ~~largely~~in aDWF’s ~~function~~assets ofis ~~foreign~~ in exchange for ~~expense/(income)~~DWF stakeholders forgiving all unsecured debentures, secured debenture, term debt and ~~write-off~~related interest that were obligations of ~~payables~~our ~~that~~company. ~~Company~~More ~~does~~specifically, ~~not~~we ~~expect~~settled to$305,000 ~~pay~~of ~~either~~unsecured ~~due~~convertible todebentures aand ~~settlement~~accrued orinterest ~~management~~of $91,408 with ~~has~~Series ~~concluded~~A ~~the~~and ~~obligations~~B ~~are~~common ~~barred~~stock bypurchase ~~the~~warrants ~~statute~~repriced ofto ~~limitations~~$0.25 Aand ~~small~~an ~~portion~~extension of ~~the~~one ~~foreign~~year ~~exchange~~to ismaturity aof ~~cash~~both ~~expense~~warrants, $250,000 inof ~~bank~~unsecured ~~spread~~convertible ~~for~~debentures ~~currency~~and ~~variance~~accrued ~~conversion~~interest ~~between~~of ~~the~~$43,613 USwith ~~dollar~~Series D warrants repriced to $0.25 and an extension of one year to maturity of the ~~Canadian~~warrants, ~~dollar.~~$65,228 ~~The~~of ~~remaining~~unsecured ~~foreign~~term ~~exchange~~loans ~~expense/ (income)~~and ~~was~~related ~~incurred~~interest onof ~~changes~~$16,512, inand ~~the~~$200,000 ~~foreign~~of ~~exchange~~secured convertible ~~rate~~debentures and ~~the~~accrued ~~foreign~~interest ~~denominated~~of ~~liabilities~~$20,000 issued to a consultant.

~~For~~Net ~~the~~loss ~~three~~and ~~months~~comprehensive ended November 30, 2016, the gain from fair value adjustment largely relates to accretion fair value changes on various convertible notes. In the comparative period in 2015, there was a significant decline in the market price compared to those prices that were in effect at the time of the original issuance of these convertible instruments. The changes in market value of our common stock coupled with the other parameters used in the binomial lattice model for all instruments marked to market, resulted in an expense of $123,928 for the three months ended November 30, 2016 in contrast to a gain of $38,698 for the three months ended November 30, 2015, for a change of $162,626.loss

26During the three months ended February 28, 2017 and February 29, 2016, we had net loss and comprehensive loss of $516,228 and $1,779,583 respectively.

~~Impairment~~Nine ofmonths ~~note~~ended ~~receivable~~February 28, 2017

We have not received any payments from DWF during the second quarter of fiscal 2017 and the secured promissory note final payment date was contracted to be fully paid by November 30, 2016. While management continues to work with DWF on a resolution, the current conditions result in a much greater uncertainty around collection of the promissory note receivable. Management has recorded full impairment on the remaining recorded amount previously recorded in its financial statements, of $968,289 and $nil and the related impairment expense during the three months ended November 30, 2016 and 2015.Revenues

~~Net~~We ~~loss~~are in the process of the commercialization of our various product offerings. We had revenues of $272,196 and ~~comprehensive~~$911,918 ~~loss~~for the nine months ended February 28, 2017 and February 29, 2016, respectively. The majority of the revenue earned in the nine months ended February 28, 2017 is from three customers and accounts for 88% of the total revenue. $88,390 of revenue for the nine months ended February 28, 2017 related to professional services provided for Intelligent Content Enterprises Inc. (“ICE”). Comparative period revenues resulted from the professional services related to the Digital Widget Factory (Belize) (“DWF”) program. The DWF assets were acquired by ICE effective February 29, 2016 and thus no further billings were made to DWF since that date. Billings as part of professional and language services for the program subsequent to February 29, 2016 were through ICE, and were expected and have been lower than the average billings to DWF. Our management has focused on developing relationships with large commercial partners and influencers, which has delayed revenue realization from prospective customers in recent quarters.

~~During~~Cost ~~the three months ended November 30, 2016 and 2015, we had net loss and comprehensive loss~~ of ~~$2,521,734 and $2,055,659 respectively.~~revenue

~~Six~~We incurred costs of revenues of $93,760 and $146,068, for the nine months ended ~~November~~February 3028, 2017 and February 29, 2016, respectively and vary due to different client mix between the periods. These costs were directly attributable to the revenues generated in the applicable periods and resulted in a gross profit of $178,436 and $765,850, for the nine months ended February 28, 2017 and February 29, 2016, respectively.

~~Revenues~~Total operating expenses

~~We are in the~~During ~~process of~~ the ~~commercialization~~nine ~~of our various product offerings. We had revenues of $207,066 and $810,381 for the six~~ months ended ~~November~~February 3028, ~~2016~~2017 and 2015, respectively. $88,390 of revenue for the six months ended November 30, 2016 related to professional services provided for Intelligent Content Enterprises Inc. (“ICE”). $88,390 of revenue recognized from ICE is based on payments received against the outstanding billings. Comparative period revenues resulted from the professional services related to the Digital Widget Factory (Belize) (“DWF”) program. The DWF assets were acquired by ICE effective February 29, 2016, ~~and~~total ~~thus~~operating noexpenses ~~further billings~~ were ~~made to DWF since that date. Billings as part of professional and language services for the program subsequent to February 29~~$3, ~~2016 were through ICE~~938,554 and ~~were expected and have been lower than the average billings to DWF. Our management has focused on developing relationships with large commercial partners and influencers~~$3,457,744, ~~which has delayed revenue realization from prospective customers in recent quarters~~respectively.

~~Cost~~For the nine months ended February 28, 2017, the operating expenses consisted of ~~revenue~~marketing expense of $20,596, research and development expenses of $469,967, general and administrative expenses of $1,159,021, professional fees of $155,482, consulting fees of $184,747, depreciation of $5,773, amortization of $797,630, and stock based compensation of $1,145,338. For the comparable nine months ended February 29, 2016 the operating expenses consisted of marketing expenses of $224,900, research and development expenses of $301,168, general and administrative expenses of $1,272,484, professional fees of $401,048, consulting fees of $295,665, depreciation of $300, amortization of $483,890 and stock based compensation of $478,289.

WeMarketing incurred costs of revenues of $51,417 and $136,935, for the six months ended November 30, 2016 and 2015, respectively. These costs were directly attributable to the revenues generated in the applicable periods and resulted in a gross profit of $155,649 and $673,446, for the six months ended November 30, 2016 and 2015, respectively.Expenses

~~Total~~The ~~operating~~reduction in marketing expenses of $204,304 or 91% is due mainly to a realignment of spending by the company. In the nine months ending February 29, 2016 we incurred higher costs as a result of promoting the Yappn brand through consultants and various marketing and promotional initiatives. In the nine months ending February 28, 2017, we reduced the spending on consultants engaged in marketing activities and focused our efforts on operationalizing the current products based on more direct sales channels.

~~During the six months ended November 30, 2016 and 2015, total operating expenses were $2,670,176 and $2,161,724, respectively.~~26

~~For~~Research ~~the six months ended November 30, 2016, the operating expenses consisted of marketing expense of $17,345, research~~ and development expenses of $286,572, general and administrative expenses of $801,349, professional fees of $108,758, consulting fees of $112,308, depreciation of $2,432, amortization of $531,750, and stock based compensation of $809,663. For the comparable six months ended November 30, 2015 the operating expenses consisted of marketing expenses of $206,248, research and development expenses of $191,852, general and administrative expenses of $766,861, professional fees of $160,023, consulting fees of $203,075, depreciation of $198, amortization of $219,950 and stock based compensation of $413,517.Development

~~Marketing~~Research ~~Expenses~~and development expenses increased by $168,799 or 56% in the nine months ended February 28, 2017 over the nine months ended February 29, 2016. Our research and development costs in the comparative period are partially for fees to technology consultants from Intertainment Media and Ortsbo, with a much higher weighting on our own employees and arm’s length third party consultants. There were no research and development costs from Intertainment Media and Ortsbo in fiscal 2017. There were significant costs incurred in development of the various technologies supporting the business towards the commencement of commercialization. These included expanding the internal development team while also keeping third party consultants engaged. There will continue to be maintenance and ongoing development customization to ensure our technology solutions meet required standards for our current and prospective customers.

~~The~~General reduction in marketing expenses of $188,903 or 92% is due mainly to a realignment of spending by the company. In the six months period ending November 30, 2015 we incurred higher costs as a result of promoting the Yappn brand through consultants and ~~various promotional~~administrative expenses. In the six months ending November 30, 2016, we substantially reduced the spending on consultants engaged in marketing activities and focused our efforts on operationalizing the current products based on more direct sales channels.

27General and administrative expenses decreased by $113,463 or 9% in the nine months ended February 28, 2017 over the nine months ended February 29, 2016. These costs generally include executive and office salaries, as well as general office expenses or costs. Salary costs have relatively remained consistent due to a combination of factors. The overall headcount has decreased but employee costs are higher due to the addition of executives late in fiscal 2016. Certain other costs have been reduced or eliminated such as billings from Intertainment Media under the services agreement and employee headcount in the US office. Billings from Intertainment Media ceased due to the acquisition of the Intellectual Property and assets from Ortsbo on September 15, 2015 and the subsequent cancellation of the Services Agreement. We anticipate that costs in fiscal 2017 will be relatively consistent period over period as we continue to work to develop a customer base and meet the needs of investors to finance our operation. Upon further significant increases in revenue, management will continue to hire qualified personnel, but the growth of this cost, we believe, will be far less than the impact to Net Loss.

~~Research~~Professional ~~and Development~~fees

~~Research~~Professional ~~and~~fees ~~development~~decreased ~~expenses increased~~ by $94245,~~720~~566 or 4961% infor the ~~six~~nine months ended ~~November~~February 3028, ~~2016~~2017 over the ~~six~~nine months ended ~~November 30~~February 29, ~~2015.~~2016 ~~Our~~and includes ~~research~~audit and ~~development~~audit ~~costs~~related inservices ~~the~~pertaining ~~comparative period are partially for fees~~ to ~~technology~~the ~~consultants~~year-end ~~from Intertainment Media and Ortsbo~~audits, ~~with higher weighting on our own employees~~ and ~~arm’s~~legal ~~length~~fees ~~third~~related ~~party~~to ~~consultants.~~both ~~There~~ongoing ~~were no research~~operational ~~and~~compliance ~~development~~for ~~costs~~the ~~from~~business ~~Intertainment Media~~ and ~~Ortsbo~~for infinancing ~~fiscal 2017~~closings. ~~There~~Although ~~were~~audit ~~significant~~related ~~costs~~fees ~~incurred~~have ingenerally ~~development of~~stayed ~~the~~consistent, ~~various technologies supporting~~ the ~~business towards the commencement of commercialization. Many of these costs will not~~comparative ~~continue~~period ~~into~~had ~~the~~higher ~~future,~~legal ~~however~~fees ~~there~~as ~~will~~a ~~continue~~result toof ~~be maintenance and ongoing development customization to ensure~~ our ~~technology solutions~~various ~~meet~~financings ~~required~~that ~~standards~~closed ~~for~~during ~~our~~fiscal ~~current and prospective customers~~2016.

~~General~~Consulting ~~and administrative expenses~~ fees

~~General~~Consulting ~~and~~fees ~~administrative~~went ~~expenses~~down ~~increased~~ by $34110,~~488~~918 or 438% ~~in the six months ended November 30, 2016 over the six months ended November 30, 2015 including executive~~ and ~~office~~are ~~salaries, administrative services accounting and finance as well as general office expenses or costs. These costs have increased~~ mainly due to ~~employee~~a ~~related~~significant ~~expenses~~reduction ~~with~~in ~~the~~spending ~~hiring~~on ofconsultants. ~~senior~~In ~~management~~the ~~personnel in~~comparative ~~late~~period, ~~fiscal 2016 even though~~ the ~~overall~~Company ~~headcount~~had ~~has~~more ~~decreased.~~consultants ~~Certain~~engaged ~~other~~at ~~costs~~various ~~have~~times ~~been~~during ~~reduced or eliminated such as billings from Intertainment Media under~~ the ~~services~~prior ~~agreement~~period ~~and~~whereas ~~employee headcount~~ in the UScurrent ~~office. Billings from Intertainment~~nine ~~Media~~month ~~ceased due to the acquisition of the Intellectual Property and assets from Ortsbo on September 15~~period, ~~2015 and~~ the ~~subsequent cancellation~~Company ofhas had ~~the~~very ~~Services~~few ~~Agreement~~consultants engaged. WeThis ~~anticipate~~is ~~that~~expected ~~costs~~to ~~in fiscal 2017 will~~ be ~~relatively~~ consistent ~~period~~in ~~over period as we continue to work to develop a customer base and meet~~ the ~~needs~~near ofterm ~~investors~~due to ~~finance our operation. Upon further significant~~ ~~increases~~the inCompany’s ~~revenue,~~overall ~~management~~realignment ~~will continue to hire qualified personnel, but the growth~~ of ~~this cost, we believe, will be far less than the impact to Net Loss~~spending.

~~Professional~~Amortization ~~fees~~of Intangible Assets

~~Professional~~Amortization ~~fees~~of ~~decreased by~~ $51797,~~265~~630 orrelates ~~32%~~entirely ~~for~~to ~~the~~Technology ~~six~~and ~~months~~Intellectual ~~ended~~Property ~~November~~purchased ~~30,~~during fiscal 2016 ~~over~~which ~~the~~we ~~six~~are ~~months~~amortizing ~~ended~~over 5 ~~November~~years ~~30,~~on ~~2015~~a ~~and~~straight-line ~~includes audit~~basis ~~and~~as ~~audit~~well ~~related~~as ~~services~~a ~~pertaining~~patent tothat ~~the~~was ~~year-end~~granted ~~audits,~~in ~~and~~late ~~legal~~fiscal ~~fees~~2016. ~~related~~The todifference ~~both~~of ~~ongoing~~$313,740 ~~operational~~or ~~compliance~~65% increase ~~for~~over the ~~business~~comparative ~~and~~period ~~for~~is ~~financing~~due ~~closings.~~to ~~Although~~the ~~audit~~purchase ~~related~~taking ~~fees~~place ~~have~~beginning ~~generally~~of ~~stayed~~the ~~consistent,~~second quarter in the ~~comparative~~prior ~~period~~fiscal year. On September ~~had~~15, ~~higher~~2015, ~~legal~~we ~~fees~~finalized asour apurchase ~~result~~of Intellectual property assets of ~~our~~Ortsbo ~~various~~pursuant ~~financings~~to ~~that~~an Asset Purchase Agreement executed and closed ~~during~~on ~~fiscal~~July ~~2016~~15, 2015.

~~Consulting~~Stock ~~fees~~based compensation

~~Consulting~~Stock ~~fees~~based ~~went~~compensation ~~down~~increased by $90667,~~767~~049 or 45139%. ~~and~~This ~~are~~increase ~~mainly~~is due mainly to athe ~~significant~~issuance ~~reduction~~of inoptions ~~spending~~to onmanagement ~~consultants.~~and the InBoard ~~the~~of ~~comparative period~~Directors, ~~the~~and ~~Company~~warrants ~~had~~to ~~nine~~the ~~different~~new ~~consultants~~advisory ~~engaged~~board atin ~~least~~late atfiscal ~~some~~2016. ~~point~~Additional ~~whereas~~warrants inwere also issued to the ~~current~~Board ~~six~~of ~~month~~Directors ~~period, the~~and ~~Company~~a ~~has~~new ~~only~~advisory ~~had~~board ~~three~~member ~~consultants~~in ~~engaged~~early fiscal 2017. ~~This~~Overall isvalues ~~expected~~ascribed towill be ~~consistent~~different infor each period based on the ~~near~~underlying ~~term~~assumptions ~~due~~used toat the time of each grant. The stock options expense is determined using the ~~Company’s~~acceptable ~~overall~~binomial ~~realignment~~tree ofvaluation ~~spending~~method, which is an acceptable method under US GAAP.

~~Amortization~~Total ofother ~~Intangible~~income ~~Assets~~and expenses

~~Amortization~~Other expenses oftotaled $1,061,117 and $976,700, for the nine months ended February 28, 2017 and February 29, 2016, respectively. The change of $~~531~~84,~~750~~417 ~~relates~~is ~~entirely~~due to ~~Technology~~interest ~~and~~expense, ~~Intellectual~~financing ~~Property~~expense ~~purchased~~on ~~during~~issuance ~~fiscal~~of ~~2016~~convertible ~~which~~notes weand ~~are~~common ~~amortizing~~stock, ~~over~~change 5in ~~years~~fair onvalue aof ~~straight-line~~convertible ~~basis~~debentures asand ~~well~~notes, asprepayment afees ~~patent~~on ~~that~~variable ~~was~~notes, ~~granted~~miscellaneous in(income)/expense, ~~late~~gain ~~fiscal~~on ~~2016~~debt settlement, and impairment of note receivable. ~~The~~During ~~difference~~the nine months ended February 28, 2017, total other expense consisted of interest expense of $~~311~~794,~~800~~693, ora ~~142%%~~loss ~~increase over~~resulting from the ~~comparative~~change ~~period~~in isfair ~~due~~value toof the ~~purchase~~convertible ~~taking~~debentures ~~place~~and ~~beginning~~notes of ~~the~~$405,137, ~~second~~other ~~quarter~~miscellaneous expense inof ~~the~~$12,087, ~~prior~~gain ~~fiscal~~on ~~year~~debt settlement of $(1,119,089), and impairment of note receivable of $968,289. OnDuring ~~September~~the nine months 15ended February 29, ~~2015~~2016, wetotal ~~finalized~~other ~~our~~expense ~~purchase~~consisted of ~~Intellectual~~interest ~~property~~expense ~~assets~~of $616,609, financing expenses on the issuance of convertible ~~Ortsbo~~promissory ~~pursuant~~notes toand ancommon ~~Asset~~stock ~~Purchase~~totaling ~~Agreement~~$632,250, ~~executed~~a gain resulting from the change in the fair value of convertible debentures and ~~closed~~notes of $(550,456), prepayment fees on ~~July~~variable 15notes of $306,140, ~~2015~~and miscellaneous other income of $(27,843).

~~Stock based compensation~~27

~~Stock~~Interest based compensation increased by $396,146 or 96%. This increase is due to the issuances of certain awards in the six month period ended November 30, 2016, for issuance of stock options, issuance of warrants to a new advisory board member, as well as continued vesting of existing options. Overall values ascribed will be different for each period based on the underlying assumptions used at the time of each grant. The stock options expense is determined using the acceptable binomial tree valuation method, which is an acceptable method under US GAAP.Expense

~~Total~~Interest ~~other~~expense ~~income~~increased by $178,084 or 29% for the nine months ended February 28, 2017 over the nine months ended February 29, 2016. The significant increase is mainly a result of the additional financings closed in fiscal 2016 which were offset by lower interest expense on previous convertible debentures that converted late fiscal 2016 and ~~expenses~~early fiscal 2017. We closed multiple secured debenture financings in fiscal 2016 totaling approximately $6.7 million, most of which was new debt for us at the time. Additionally, we incurred a higher penalty interest on convertible debentures from fiscal 2014 that reached maturity in late fiscal 2016 and early fiscal 2017.

~~Other~~Financing ~~expenses totaled $1,790,480 and $400,733, for the six months ended November 30, 2016 and 2015, respectively. The change of $1,389,747 is primarily due to interest~~ expense, ~~change in fair value of derivative liabilities and convertible notes, change in fair value of derivative liabilities and convertible notes, prepayment fees~~ on variable notes, miscellaneous (income)/expense, and Impairment of note receivable. During the six months ended November 30, 2016, total other (income)/expense consisted of interest expense of $522,291, financing expense on issuance of convertible promissory notes and common stock totaling $nil, a loss resulting from the change in fair value of the derivative liabilities and convertible notes of $296,188, prepayment fees on convertible notes with floating strike prices of $nil, other miscellaneous expense of $3,712, and Impairment of note receivable of $968,289. During the six months ended November 30, 2015, total other (income)/expense consisted of interest expense of $348,387 and financing expenses on the issuance of convertible promissory notes and common stock totaling $632,250, a gain resulting from the change in the fair value of the derivative liabilities and convertible notes of $(840,337), prepayment fees on variable notes of $276,790, and miscellaneous other income of $(16,357).

28Financing expense decreased by $632,250 or 100% as common stock purchase warrants issued in the comparative period accounted for most of the expense. In addition we did not fund our company through variable rate promissory notes in fiscal 2017 whereas there was still a minor financing completed on a variable rate convertible promissory note in the nine month period ended February 29, 2016. The expense is a function of the underlying assumptions at the time of the grant and is mainly driven by the strike price of the instrument and the stock price at the time of the grant. As this is a non-cash expense, based on financings and model outputs it is hard to estimate variability for this account.

~~Interest~~During ~~Expense~~the nine months ended February 28, 2017, we raised $1,326,348 through private placement financing of common stock and warrants and other loans. During the nine months ended February 29, 2016, we raised $2,268,846, in net cash from short term notes payable, line of credit, convertible notes, secured notes, and debentures through normal channels.

~~Interest expense~~Change ~~increased by $173,904 or 50% for the six months ended November 30, 2016 over the six months ended November 30, 2015. The significant increase is mainly due to additional financings closed~~ in ~~fiscal~~fair ~~2016.~~value ~~Yappn closed multiple secured debenture financings totaling approximately $6.7 million, most~~ of ~~which~~convertible ~~was~~promissory ~~new~~notes ~~debt~~and ~~for us at that time. Additionally, Yappn incurred a higher penalty interest on~~ convertible ~~debentures~~secured ~~from fiscal 2014 that reached maturity in late fiscal 2016.~~debentures

~~Financing~~Change in fair value of convertible debentures and notes had an incremental change in the recognized gain/loss by $955,593 between the nine months ended February 28, 2017 and the nine months ended February 29, 2016. There was a $405,137 expense for the nine months ended February 28, 2017 since the existing unsecured debt instruments continued to have fair value adjustments until they reached maturity, in addition to the secured debentures that were issued during fiscal 2016. There was a $550,456 gain for the nine months ended February 29, 2016 due to the revaluations on ~~issuance~~the ofvariable ~~convertible~~conversion ~~promissory~~priced notes and ~~common~~the ~~stock~~underlying assumptions used to value them using the binomial tree valuation method which includes elapsed time, and market price fluctuations.

~~Financing~~For ~~expense~~the ~~decreased~~nine bymonths ~~$632,250~~ended orFebruary ~~100%~~28, as2017, wethe ~~did~~loss ~~not~~from ~~fund~~fair ~~our~~value ~~company~~adjustment ~~through~~largely ~~variables~~relates ~~rate~~to ~~promissory~~accretion ~~notes~~fair invalue ~~fiscal~~changes on ~~2017~~various ~~whereas~~convertible ~~there~~debentures ~~was~~and ~~still~~notes aand ~~minor~~repricing ~~financing~~of ~~completed~~various onwarrants. aIn ~~variable rate convertible promissory note in~~ the ~~six~~comparative ~~month~~ period ~~ended~~in ~~November 30~~2016, ~~2015~~there aswas ~~well~~a assignificant decline ~~common~~in ~~stock~~the ~~purchase~~market ~~warrants~~price ~~issued.~~compared ~~The~~to ~~expense~~those isprices athat ~~function~~were ofin ~~the~~effect ~~underlying assumptions~~ at the time of the ~~grant.~~original Itissuance isof ~~mainly~~these ~~driven~~convertible instruments. byThe ~~the~~changes ~~strike~~in ~~price~~market value of ~~the~~our ~~instrument~~common ~~and the~~ stock ~~price~~coupled atwith the ~~time~~ ofother parameters used in the ~~grant.~~binomial Aslattice ~~this~~model for isall ainstruments ~~non-cash~~marked ~~expense~~to market, ~~based~~resulted onin ~~financings~~an ~~and~~expense ~~model~~recorded ~~outputs~~for itfair isvalue ~~hard~~changes to ~~estimate~~the ~~variability for~~market ~~this~~price ~~account~~of variable convertible notes.

~~Change~~Payment infees ~~fair~~on ~~value~~variable ofconversion ~~convertible~~priced ~~promissory~~ notes ~~and convertible secured debentures~~

~~Change~~Payment infees ~~fair~~on ~~value~~variable ofconversion ~~derivative~~priced ~~liabilities and convertible~~ promissory notes ~~expense~~is ~~was~~significantly alower ~~loss resulting in incremental change in the recognized gain/loss~~ by $1306,~~136,525~~140 inor ~~the~~100% ~~six~~in nine months ended ~~November~~February 3028, 2017 ~~2016~~ over ~~six~~nine months ended ~~November~~February 3029, ~~2015~~2016 as ~~the existing~~we ~~debt~~repaid ~~instruments~~the ~~continued~~variable toconversion ~~have~~priced ~~fair~~promissory ~~value~~notes ~~adjustments~~ in ~~addition to~~ the ~~new secured debentures that were issued during the~~ prior fiscal year. ~~The~~We ~~total~~have ~~fair~~not ~~value~~had ~~change~~any isfurther ~~a gain in the comparative period due to the revaluations on the~~ variable conversion priced promissory notes ~~and~~outstanding ~~the~~during ~~underlying~~fiscal ~~assumptions used to value them using the binomial tree valuation method which includes elapsed time, and market price decreases~~2017.

For the six months ended November 30, 2016, the gain from fair value adjustment largely relates to accretion fair value changes on various convertible notes. In the comparative period in 2015, there was a significant decline in the market price compared to those prices that were in effect at the time of the original issuance of these convertible instruments. The changes in market value of our common stock coupled with the other parameters used in the binomial lattice model for all instruments marked to market, resulted in an expense of $296,188 for the six months ended November 30, 2016 in contrast to a gain of $840,337 for the six months ended November 30, 2015, for a change of $1,136,525.28

~~Payment~~Miscellaneous ~~fees on variable conversion priced notes~~expense/(income)

~~Payment~~Miscellaneous ~~fees~~expense/(income) onwas ~~variable~~an ~~conversion~~expense ~~priced~~of ~~promissory~~$12,087 ~~notes~~for isthe ~~significantly~~nine ~~lower~~months byended ~~$276~~February 28,~~790~~ or2017 ~~100%~~compared into ~~six~~a gain of $(27,843) for the nine months ended ~~November 30~~February 29, 2016 ~~over~~resulting ~~six~~in ~~months~~incremental ~~ended~~change ~~November~~in 30the recognized gain/loss by $39,930. ~~2015~~The asexpense/(income) is welargely ~~repaid~~a ~~the~~function ~~variable~~of ~~conversion~~foreign ~~priced~~exchange ~~promissory~~expense/(income) ~~notes~~and inwrite-off of payables that the ~~prior~~Company is no longer required to ~~fiscal~~pay ~~year~~either due to a settlement or management has concluded the obligations are barred by the statute of limitations. AsA small portion of ~~November~~the ~~30,~~foreign ~~2016,~~exchange weis doa ~~not~~cash ~~have~~expense ~~any~~in ~~further~~bank ~~variable~~spread for currency variance conversion ~~priced~~between ~~promissory~~the ~~notes~~US dollar and the Canadian dollar. The remaining foreign exchange expense/ (income) was incurred on changes in the foreign exchange rate and the foreign denominated liabilities.

~~Miscellaneous~~Gain ~~expense/(income)~~on debt settlement

~~Miscellaneous expense/(income)~~In ~~was~~the annine ~~expense~~month ofperiod $3ending February 28,~~712~~ ~~for~~2017, the ~~six~~gain ~~months~~on ~~ended~~debt ~~November~~settlement 30of $1,119,089 ~~2016~~was ~~compared~~related entirely to asettlement of ~~gain~~various debt obligations of ~~$16,357~~Yappn ~~for~~in ~~the~~conjunction ~~six~~with ~~months~~a ~~ended~~settlement ~~November 30~~arrangement with DWF. On February 28, ~~2015~~2017, ~~resulting~~management reached ina ~~incremental~~go ~~change~~forward resolution with DWF stakeholders. Yappn agreed to reduce its stake in the ~~recognized~~DWF ~~gain/loss~~assets byto $20800,~~069.~~000 ~~The~~which will ~~expense/(income)~~be isin ~~largely~~the form of a ~~function~~new ofinvestment in DWF with the specific terms to be determined. This reduced position in DWF’s ~~foreign~~assets is in exchange ~~expense/(income)~~for DWF stakeholders forgiving all unsecured debentures, secured debenture, term debt and ~~write-off~~related interest that were obligations of ~~payables~~Yappn. ~~that~~More specifically, the Company ~~does~~settled ~~not~~$305,000 ~~expect~~of tounsecured ~~pay~~convertible ~~either~~debentures and ~~due~~accrued interest of $91,408 with Series A and B common stock warrants repriced to a$0.25 ~~settlement~~and oran ~~management~~extension of one year to ~~has~~maturity ~~concluded~~of ~~the~~both ~~obligations~~warrants, ~~are~~$250,000 ~~barred~~of byunsecured ~~the~~convertible ~~statute~~debentures and accrued interest of ~~limitations~~$43,613 with Series D warrants repriced to $0.25 Aand ~~small~~an ~~portion~~extension of one year to maturity of the ~~foreign~~warrants, ~~exchange~~$65,228 isof aunsecured ~~cash~~term ~~expense~~loans and inrelated ~~bank~~interest ~~spread~~of ~~for~~$16,512, ~~currency~~and ~~variance~~$200,000 ~~conversion~~of ~~between~~secured ~~the~~convertible USdebentures ~~dollar~~ and ~~the~~accrued ~~Canadian~~interest ~~dollar.~~of ~~The~~$20,000 ~~remaining~~issued ~~foreign~~to ~~exchange expense/~~a ~~(income)~~consultant. ~~was~~In ~~incurred~~addition onto ~~changes~~the inabove, the ~~foreign~~Company ~~exchange~~has ~~rate~~negotiated ~~and~~its ~~the~~release ~~foreign~~from ~~denominated~~various ~~liabilities~~past consulting obligations.

~~During~~Impairment ~~the six months ended November 30, 2016, we raised $1,262,228 through private placement financing~~ of ~~common~~note stock and warrants. During the six months ended November 30, 2015, we raised $1,447,069, in net cash from short term notes payable, line of credit, convertible notes, secured notes and debentures through normal channels, and private placements of common stock and warrants. For accounting purposes, since certain financial instruments had convertible provisions they are treated as derivatives liabilities and are valued using a binomial lattice fair value model upon inception and where applicable adjusted accordingly to market at the close of the period. The financing expense associated with the capital raises and prior obligations were $nil and $632,250 for six months ended November 30, 2016 and November 30, 2015, respectively.receivable

~~Impairment~~We have not received any payments from DWF during the second quarter, and the secured note final payment date was contracted to be fully paid by November 30, 2016. While management continued to work with DWF on a resolution as at November 30, 2016, the current conditions resulted in a much greater uncertainty around collection of the note receivable as at November 30, 2016. Management recorded a full impairment of $968,289 which was the remaining recorded amount previously recorded in its financial statements. Impairment expense of $968,289 was recorded during the nine month period ended February 28, 2017, specifically on November 30, 2016.

~~We have not received~~Net ~~any~~loss ~~payments from DWF during the second quarter,~~ and ~~the~~comprehensive secured note final payment date was contracted to be fully paid by November 30, 2016. While management continues to work with DWF on a resolution, the current conditions result in a much greater uncertainty around collection of the note receivable. Management has recorded full impairment on the remaining recorded amount previously recorded in its financial statements, of $968,289 and $nil and the related impairment expense during the six months ended November 30, 2016 and 2015.loss

~~Net~~During the nine months ended February 28, 2017 and February 29, 2016, we had a net loss and comprehensive loss of $4,821,235 and $3,668,594 respectively.

~~During~~Liquidity ~~the six months ended November 30, 2016~~ and ~~2015,~~Capital ~~we had net loss and comprehensive loss of $4,305,008 and $1,889,011 respectively.~~Resources

~~Liquidity~~As ~~and~~of ~~Capital~~February ~~Resources~~28, 2017, we had a cash balance of $138,951, which is a decrease of $309,624 from the ending cash balance of $448,575 as of May 31, 2016. We do not have sufficient funds to fund our operations over the next twelve months. There can be no assurance that additional capital will be available to us. Since we have no other financial arrangements currently in effect, our inability to raise funds for the above purposes will have a severe negative impact on our ability to remain a viable going concern.

AsTo offund ~~November~~our 30operations, ~~2016,~~ we ~~had~~raised ~~a cash balance of~~ $~~441~~1,~~363~~588,576 ~~which~~through isprivate aplacement ~~decrease~~financing of ~~$7,212~~common ~~from~~stock ~~the~~and ~~ending~~common ~~cash~~stock ~~balance~~purchase warrants ofas ~~$448,575~~ well as ofproceeds ~~May~~from ~~31,~~a ~~2016.~~long Weterm doloan ~~not~~expected ~~have~~to ~~sufficient~~be ~~funds~~subscribed to ~~fund~~a ~~our~~convertible ~~operations~~secured ~~over~~debenture in the ~~next twelve~~ nine months. ~~There~~ended ~~can~~February be28, no2017. ~~assurance that~~During ~~additional~~the ~~capital~~nine ~~will~~months beended ~~available~~February to29, ~~us.~~2016, ~~Since~~ we ~~have~~issued nosecured ~~other financial arrangements currently in effect~~debentures, ~~our inability~~convertible todebt ~~raise~~instruments, ~~funds~~and ~~for~~received ~~the~~short ~~above~~term ~~purposes~~loans ~~will~~for ~~have~~net acash ~~severe~~receipts ~~negative~~of ~~impact on our ability to remain a viable going concern~~$2,268,846.

To fund our operations, we raised $1,262,228 through private placement financing of common stock and warrants as well as proceeds from a long term loan expected to be subscribed to a convertible secured debenture in the six months ended November 30, 2016. During the six months ended November 30, 2015, we issued secured debentures, and convertible debt instruments for gross cash receipts of $1,447,069. 29

29We have used this financing for funding operations and replacing short term high cost debt instruments with lower cost longer term financial instruments where the economics made sense.

We ~~have~~estimate ~~used~~we ~~this~~will ~~financing~~need ~~for~~additional ~~funding~~capital ~~operations~~to cover our ongoing expenses and ~~replacing~~to ~~short~~successfully ~~term~~market ~~high~~our ~~cost~~product ~~debt~~offerings. ~~instruments~~This is ~~with~~only ~~lower~~an ~~cost~~estimate ~~longer~~and ~~term~~may change as we receive feedback from customers and have a better understanding of the demand for our ~~financial~~application ~~instruments~~and ~~where~~the ability to generate revenues from our new products. Both of these factors may change and we may not be able to raise the ~~economics~~necessary ~~made~~capital ~~sense~~and if we are able to, that it may not be at favorable rates.

WeOn ~~estimate~~July 15, 2015, we ~~will~~completed ~~need~~a ~~additional~~secured ~~capital~~debt tofinancing ~~cover~~of ~~our~~$4.5 ~~ongoing~~Million ~~expenses~~of ~~and~~12% toSecured ~~successfully~~Debentures. ~~market~~The ~~our~~Secured ~~product~~Debentures ~~offerings~~had an original maturity date of December 31, 2015. ~~This~~Subsequent to the end of the second quarter of fiscal 2016, the holders of the Secured isDebentures ~~only~~(the an“Holders”) ~~estimate~~agreed ~~and~~to ~~may~~extend ~~change~~the asmaturity wedate ~~receive~~of ~~feedback~~the Secured Debentures from ~~customers~~December 31, 2015 to July 15, 2020, and ~~have~~were provided with the right to amend the Secured Debenture such that a ~~better~~Holder ~~understanding~~shall ofhave the ~~demand~~right, ~~for~~at ~~our~~any ~~application~~time ~~and~~after the ~~ability~~earlier toof ~~generate~~(i) ~~revenues~~six ~~from~~(6) ~~our~~months ~~new~~from ~~products.~~the ~~Both~~date of ~~these~~first ~~factors~~issuance ~~may~~of ~~change~~any ~~and~~subsequent weDebentures; ~~may~~and ~~not~~(ii) beJune ~~able~~30, 2016, to ~~raise~~require us to satisfy the ~~necessary~~outstanding ~~capital~~obligations ~~and~~underlying ifthe weSecured ~~are~~Debenture; ~~able~~provided, tohowever, that itat ~~may~~least ~~not~~two bethirds (66.67%) atof ~~favorable~~the ~~rates~~Holders of the principal amount of the Secured Debentures consent to a put of their Secured Debentures to our company.

~~On July 15, 2015,~~We wereceived ~~completed~~$2.5 amillion ~~secured~~of ~~debt~~this financing ofin ~~$4.5~~the ~~Million~~form of ~~12%~~cash ~~Secured~~and ~~Debentures.~~cash ~~The~~commitments, ~~Secured~~including ~~Debentures~~conversion ~~had~~of anthe ~~original~~short ~~maturity~~term loans ~~date~~obtained ofon ~~December~~May 3111, 2015. ~~Subsequent~~and toJune ~~the~~19, ~~end~~2015. $2,000,000 of the ~~second~~$4.5 ~~quarter~~million offinancing ~~fiscal~~is ~~2016,~~conversion ~~the~~of ~~holders~~a portion of ~~the~~our ~~Secured~~existing debt ~~Debentures~~that (remained in the ~~“Holders”)~~ ~~agreed~~secured todebenture. ~~extend~~$925,000 ~~the~~was ~~maturity~~repaid ~~date~~out of the ~~Secured~~secured ~~Debentures~~debenture, ~~from~~in ~~December~~the ~~31,~~form ~~2015~~of tocash ~~July~~in ~~15,~~the ~~2020, and~~amount ~~were~~of ~~provided~~$465,000 with the ~~right~~remainder toin ~~amend~~ the ~~Secured~~form ~~Debenture~~of ~~such~~the ~~that~~release aof ~~Holder~~secured ~~shall~~deposit ~~have~~that ~~the~~was ~~right,~~applied atagainst ~~any~~accounts ~~time~~receivable. ~~after the earlier~~On ofSeptember ~~(i)~~15, ~~six~~2015, ~~(6)~~we ~~months~~closed ~~from~~ the ~~date~~acquisition of ~~first~~intellectual ~~issuance~~property offrom ~~any~~Ortsbo ~~subsequent~~and ~~Debentures;~~as ~~and~~part ~~(ii)~~of ~~June~~this 30closing, ~~2016,~~assumed todebt ~~require~~and non-controlling usequity tointerests ~~satisfy the~~from ~~outstanding~~Ortsbo ~~obligations~~in ~~underlying~~ the ~~Secured~~amount ~~Debenture;~~of ~~provided~~$975,388 ~~however,~~ that atwas ~~least~~immediately ~~two~~subscribed ~~thirds~~to ~~(66.67%)~~a ofsecond ~~the~~tranche ~~Holders~~ of secured ~~the~~debentures. ~~principal~~The ~~amount~~secured ofdebentures ~~the~~balance ~~Secured~~as ~~Debentures~~at ~~consent~~February to28, a2017, ~~put~~was ~~of their Secured Debentures to our company~~$4,550,388.

WeOn ~~received~~December ~~$2.5~~30, ~~million~~2015, ofwe ~~this~~completed ~~financing~~a insecured ~~the~~debenture ~~form~~and ofcommon ~~cash~~stock ~~and~~purchase ~~cash~~warrant ~~commitments,~~financing ~~including~~for ~~conversion~~$2,040,000 ofthrough the ~~short term loans~~offering ~~obtained~~of onunits ~~May~~by ~~11,~~way ~~2015~~of ~~and~~private ~~June 19~~placement, ~~2015.~~with ~~$2,000,000~~each unit consisting of ~~the~~(i) ~~$4.5~~a ~~million~~12% ~~financing~~secured isconvertible ~~conversion~~debenture ofwith a ~~portion~~maturity date of ~~our~~five ~~existing debt~~years ~~that~~from ~~remained~~issuance inand ~~the~~(ii) ~~secured~~ten ~~debenture.~~(10) ~~$925,000~~five ~~was~~year ~~repaid~~common ~~out~~share ofpurchase ~~the secured debenture~~warrants, vesting in ~~the~~1/3 ~~form~~increments ofand ~~cash~~having inan exercise ~~the~~price ~~amount~~ of $~~465,000~~0.01 ~~with~~per ~~the~~share. ~~remainder~~The inunits ~~the~~were ~~form~~sold ofat ~~the~~$1.00 ~~release~~per ofunit. ~~secured~~This ~~deposit~~closing ~~that~~includes ~~was~~conversion ~~applied~~of ~~against~~$1,201,000 ~~accounts~~in ~~receivable. On~~short ~~September~~term ~~15,~~loans ~~2015,~~advanced weduring ~~closed~~ the ~~acquisition~~quarter ofprior ~~intellectual~~to ~~property~~the ~~from~~closing ~~Ortsbo~~of ~~and~~this assecured ~~part~~debenture. ofOn ~~this~~May ~~closing~~1, ~~assumed~~2015 ~~debt~~we ~~and non-controlling~~closed ~~equity~~a ~~interests~~final ~~from~~tranche of ~~Ortsbo~~this infinancing ~~the~~for ~~amount~~$370,468 ofwhich includes $~~975~~170,~~388~~468 ~~that~~in ~~was~~cash ~~immediately~~and ~~subscribed~~$200,000 toin asettlement ~~second~~of ~~tranche~~a ~~of secured~~consultant ~~debentures~~obligation. The ~~secured~~$200,000 debenture ~~debentures~~did ~~balance~~not include the attached warrants as atthey ~~November~~were ~~30,~~waived ~~2016,~~by ~~was~~the ~~$4,550,388~~consultant.

~~On December 30,~~During ~~2015,~~the wenine ~~completed~~months aended ~~secured~~February ~~debenture~~28, ~~and~~2017, ~~common~~we ~~stock~~raised ~~purchase warrant financing for~~ $21,~~040~~588,~~000~~576 through ~~the~~various ~~offering~~financial ofinstruments, ~~units~~net of byrepayments. ~~way~~Subsequent ofto ~~private~~February ~~placement~~28, ~~with~~2017, ~~each~~we ~~unit~~raised ~~consisting~~$250,000 ofin ~~(i)~~cash aproceeds. ~~12%~~During ~~secured~~the ~~convertible~~nine ~~debenture~~months ~~with~~ended aFebruary ~~maturity date of five~~29, ~~years~~2016, ~~from~~we ~~issuance~~raised ~~and~~$90,750 ~~(ii)~~via ~~ten~~various ~~(10)~~convertible ~~five~~promissory ~~year~~notes ~~common~~and ~~share~~debentures, ~~purchase warrants~~$2,096,653 ~~vesting~~from insecured ~~1/3 increments and having an exercise~~debentures, ~~price of~~ $~~0.01~~2,040,000 ~~per~~from ~~share.~~secured ~~The~~convertible ~~units~~debentures, ~~were~~and ~~sold at~~ $~~1.00 per unit. This closing includes conversion of $1~~168,~~201,000~~823 infrom short term loans ~~advanced~~. ~~during~~We ~~the~~also ~~quarter~~repaid ~~prior~~$883,564 ~~to the closing~~ of ~~this~~various convertible ~~secured~~promissory ~~debenture.~~notes Onand ~~May~~debentures, $1,092,025 ~~2015~~of weline ~~closed a final tranche~~ of ~~this financing for $370~~credit,~~468~~ ~~which includes $170,468 in cash~~ and $~~200~~151,~~000~~791 ~~in settlement~~ of ashort ~~consultant~~term ~~obligation~~loans. ~~The $200,000 debenture did not include the attached warrants as they were waived by the consultant.~~

~~During the six months~~Going ~~ended~~Concern November 30, 2015, we raised $90,750 via various convertible promissory notes and debentures, $2,080,694 from secured debentures, and $1,201,000 from short term loans. We also repaid $716,056 of various convertible promissory notes and debentures, $1,055,541 of line of credit, and $153,778 of short term loans.Consideration

~~Going~~The ~~Concern~~accompanying ~~Consideration~~consolidated financial statements have been prepared assuming that we will continue as a going concern. We experienced negative cash flows from operations since inception and have incurred a deficit of $26,485,660 through February 28, 2017.

~~The~~As ~~accompanying~~of ~~consolidated~~February ~~financial~~28, ~~statements~~2017, ~~have~~we ~~been~~had ~~prepared~~a ~~assuming~~working ~~that~~capital wedeficit ~~will~~of ~~continue~~$977,033. asDuring athe ~~going~~nine ~~concern.~~months Weended ~~experienced negative~~February 28, 2017, net cash ~~flows~~used in ~~from~~operating ~~operations~~activities ~~since~~was ~~inception~~$1,871,893. ~~and~~Management expects to have ~~incurred~~similar acash ~~deficit~~needs offor ~~$25,969,433~~the ~~through~~next ~~November~~twelve 30months. At the present time, ~~2016~~we do not have sufficient funds to fund operations over the next twelve months.

AsImplementation of ~~November~~our ~~30,~~business ~~2016,~~plan wewill ~~had~~require aadditional ~~working~~debt ~~capital~~or ~~deficit~~equity offinancing ~~$1,511,699~~and there can be no assurance that additional financing can be obtained on acceptable terms. ~~During~~We ~~the~~have ~~six~~realized ~~months~~limited ~~ended~~revenues ~~November~~to ~~30,~~cover ~~2016~~our operating costs. As such, ~~net~~we ~~cash~~have incurred ~~used~~an in operating ~~activities~~loss ~~was~~since ~~$1,252,280~~inception. ~~Management~~This ~~expects~~and toother ~~have~~factors ~~similar~~raise ~~cash~~substantial ~~needs~~doubt ~~for~~about ~~the~~our ~~next~~ability ~~twelve~~to ~~months.~~continue Atas ~~the~~a going concern. ~~present~~Our ~~time~~continuation as a going concern is dependent on our ability to meet our obligations, weto doobtain ~~not~~additional ~~have~~financing ~~sufficient~~as ~~funds~~may be required and ultimately to ~~fund~~attain ~~operations~~profitability. ~~over~~Our consolidated financial statements do not include any adjustments that might result from the ~~next~~outcome ~~twelve~~of ~~months~~this uncertainty.

~~Implementation~~Management ofplans ~~our~~to ~~business~~meet ~~plan~~its ~~will~~operating ~~require~~cash ~~additional~~flow ~~debt~~requirements orfrom ~~equity~~ financing ~~and~~activities ~~there~~until ~~can~~the befuture nooperating ~~assurance~~activities ~~that~~become ~~additional financing~~sufficient ~~can~~to besupport ~~obtained~~the onbusiness ~~acceptable terms. We have realized limited revenues~~ to ~~cover~~enable ~~our~~us ~~operating costs. As such, we have incurred an operating loss since inception. This and other factors raise substantial doubt about our ability~~ to continue as a going concern. ~~Our~~ ~~continuation~~Management ascontinues ato ~~going~~work ~~concern is dependent~~ on ~~our~~generating ~~ability~~operating ~~to meet our obligations, to obtain additional financing as may~~cash beflows ~~required~~from ~~and~~the ~~ultimately~~commercialization toof ~~attain~~its ~~profitability~~business. ~~Our~~Until ~~consolidated~~those ~~financial~~cash ~~statements~~flows doare ~~not~~sufficient, ~~include~~we ~~any~~will ~~adjustments~~pursue ~~that might~~other ~~result~~financing ~~from~~when ~~the outcome of this uncertainty~~deemed necessary.

Management ~~plans~~is topursuing ~~meet~~a ~~its~~number ~~operating~~of ~~cash~~different ~~flow~~financing ~~requirements~~opportunities ~~from~~in ~~financing~~order ~~activities~~to ~~until~~execute ~~the~~our ~~future~~business ~~operating~~plan. ~~activities~~These ~~become~~include, ~~sufficient~~short term debt toarrangements, ~~support~~convertible ~~the~~debt ~~business~~arrangements, tocommon ~~enable~~share usequity tofinancings, ~~continue~~either asthrough a ~~going~~private ~~concern~~placement or through the public markets. ~~Management~~During ~~continues~~the tonine ~~work~~months onended ~~generating~~February ~~operating~~28, ~~cash flows~~2017, ~~from~~we ~~the~~raised ~~commercialization~~$1,588,576 ofthrough ~~its~~various ~~business.~~financial ~~Until~~instruments, ~~those~~net of ~~cash~~repayments. ~~flows~~Subsequent ~~are~~to ~~sufficient~~February 28, 2017, we ~~will~~raised ~~pursue~~$250,000 ~~other~~in ~~financing~~cash ~~when deemed necessary~~proceeds.

Management is pursuing a number of different financing opportunities in order to execute our business plan. These include, short term debt arrangements, convertible debt arrangements, common share equity financings, either through a private placement or through the public markets. During the six months ended November 30~~, 2016, we raised $1,262,228 through various financial instruments, net of repayments. Subsequent to the six months ended November 30, 2016, we raised $200,000 in cash proceeds.~~

30There can be no assurance that the raising of future equity or debt will be successful or that our anticipated financing will be available in the future, at terms satisfactory to us. Failure to achieve the equity and financing at satisfactory terms and amounts could have a materially adverse effect on our ability to continue as a going concern. If we cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected, and we may have to cease operations.

~~There~~Off-Balance ~~can~~Sheet be no assurance that the raising of future equity or debt will be successful or that our anticipated financing will be available in the future, at terms satisfactory to us. Failure to achieve the equity and financing at satisfactory terms and amounts could have a materially adverse effect on our ability to continue as a going concern. If we cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected, and we may have to cease operations.Arrangements

~~Off~~We do not have any off-~~Balance~~balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial ~~Sheet~~condition, ~~Arrangements~~changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

WeCritical doAccounting not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.Policies

~~Critical Accounting Policies~~None.

~~None~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~ITEM~~Not 3.required ~~QUANTITATIVE~~for ~~AND~~smaller ~~QUALITATIVE~~reporting ~~DISCLOSURES ABOUT MARKET RISK~~companies.

~~Not~~ITEM ~~required~~4. ~~for~~CONTROLS ~~smaller~~AND ~~reporting companies.~~PROCEDURES

~~ITEM~~Our 4management is responsible for establishing and maintaining a system of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports it files or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. ~~CONTROLS~~Our ~~AND~~disclosure ~~PROCEDURES~~controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports it files or submitted under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Because of inherent limitations, disclosure controls and procedures, as well as internal control over financial reporting, may not prevent or detect all inaccurate statements or omissions.

Our management, iswith ~~responsible~~the ~~for~~supervision ~~establishing~~ and ~~maintaining~~participation aof ~~system~~our ofChief ~~disclosure~~Executive ~~controls~~Officer and ~~procedures~~Chief ~~designed~~Financial toOfficer, ~~ensure~~evaluated ~~that~~the effectiveness ~~information~~of ~~required~~the todesign beand ~~disclosed~~operation byof usour indisclosure ~~the~~controls ~~reports~~and itprocedures ~~files~~(as ordefined ~~submitted~~in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, ~~as amended~~ (the “Exchange Act”),. isBased ~~recorded,~~upon ~~processed,~~that ~~summarized~~evaluation, ~~and~~our ~~reported~~Chief ~~within~~Executive ~~the~~Officer ~~time periods specified in the rules~~ and ~~forms~~Chief Financial ofOfficer ~~the~~concluded ~~SEC.~~that ~~Our~~our disclosure controls and procedures ~~include,~~as ~~without~~of ~~limitation~~May 31, ~~controls~~2016 ~~and~~were ~~procedures~~effective ~~designed~~such tothat ~~ensure~~the ~~that~~ information required to be disclosed by us in ~~the~~ reports itfiled ~~files or submitted~~ under the Securities Exchange Act of 1934 is ~~accumulated~~(i) recorded, processed, summarized and ~~communicated~~reported towithin ~~management,~~the ~~including~~time ~~the~~periods ~~principal~~specified ~~executive~~in ~~officer~~the SEC’s rules and ~~principal~~forms ~~financial~~and ~~officer,~~(ii) oraccumulated ~~persons~~and ~~performing~~communicated ~~similar~~to ~~functions, as~~our ~~appropriate,~~management to allow timely decisions regarding ~~required~~ disclosure. ~~Because~~A ofcontrols ~~inherent~~system ~~limitations,~~cannot ~~disclosure~~provide ~~controls and~~absolute ~~procedures~~assurance, ashowever, ~~well~~that asthe ~~internal~~objectives of ~~control~~the ~~over~~controls ~~financial~~system ~~reporting~~are met, ~~may~~and ~~not~~no ~~prevent~~evaluation orof ~~detect~~controls can provide absolute assurance that all ~~inaccurate~~control ~~statements~~issues orand ~~omissions~~instances of fraud, if any, within a company have been detected.

Our management, with the supervision and participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (~~as defined in Rule 13a-15(e~~b) ~~and 15d-15(e) under the Securities~~ ~~Exchange~~Changes ~~Act~~In ofInternal ~~1934~~Control ~~(the~~Over ~~“Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief~~ Financial ~~Officer~~ concluded that our disclosure controls and procedures as of May 31, 2016 were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 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 our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.Reporting

~~(b)~~During ~~Changes~~the Innine ~~Internal~~months ~~Control~~ended ~~Over~~February ~~Financial~~28, ~~Reporting~~2017, there were no changes in our internal controls over financial reporting that materially affected, or is reasonably likely to have a materially affect, on our internal control over financial reporting.

During the six months ended November 30, 2016, there were no changes in our internal controls over financial reporting that materially affected, or is reasonably likely to have a materially affect, on our internal control over financial reporting.31

31PART II

~~PART~~ITEM II1. LEGAL PROCEEDINGS

~~ITEM~~We 1are subject from time to time to litigation, claims and suits arising in the ordinary course of business. ~~LEGAL~~As ~~PROCEEDINGS~~of February 28, 2017, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our unaudited consolidated financial statements.

WeITEM ~~are subject from time to time to litigation, claims and suits arising in the ordinary course of business~~1A. AsRISK ~~of November 30, 2016, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our unaudited consolidated financial statements.~~FACTORS

~~ITEM~~Not ~~1A.~~required ~~RISK~~under ~~FACTORS~~Regulation S-K for “smaller reporting companies”.

~~Not~~ITEM ~~required~~2. ~~under~~UNREGISTERED ~~Regulation~~SALES ~~S-K~~OF ~~for~~EQUITY ~~“smaller~~SECURITIES ~~reporting~~AND ~~companies”.~~USE OF PROCEEDS

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~None

~~None~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~ITEM~~There 3.were ~~DEFAULTS~~no ~~UPON~~defaults ~~SENIOR~~upon ~~SECURITIES~~senior securities during the six month period ended November 30, 2016.

~~There~~ITEM ~~were~~4. noMINE ~~defaults~~SAFETY ~~upon senior securities during the six month period ended November 30, 2016.~~DISCLOSURES

~~ITEM~~Not 4Applicable. ~~MINE SAFETY DISCLOSURES~~

~~Not~~ITEM ~~Applicable~~5. OTHER INFORMATION

~~ITEM~~There 5.is ~~OTHER~~no ~~INFORMATION~~information with respect to which information is not otherwise called for by this form.

~~There~~WHERE isYOU noCAN ~~information~~FIND ~~with~~MORE ~~respect to which information is not otherwise called for by this form.~~INFORMATION

~~WHERE~~We ~~YOU~~file ~~CAN~~annual, ~~FIND~~quarterly ~~MORE~~and ~~INFORMATION~~current reports, proxy statements and other information with the Securities and Exchange Commission (the “Commission”). Our Commission filings are available to the public over the Internet at the Commission’s website at http://www.sec.gov. The public may also read and copy any document we file with the Commission at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 am to 3:00 pm. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. We maintain a website at http://www. yappn.com (which website is expressly not incorporated by reference into this filing). Information contained on our website is not part of this report on Form 10-Q.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “Commission”). Our Commission filings are available to the public over the Internet at the Commission’s website at http://www.sec.gov. The public may also read and copy any document we file with the Commission at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 am to 3:00 pm. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. We maintain a website at http://www. yappn.com (which website is expressly not incorporated by reference into this filing). Information contained on our website is not part of this report on Form 10-Q.32

32ITEM 6. EXHIBITS

~~ITEM~~Index 6.to ~~EXHIBITS~~Exhibits

Index to Exhibits

Exhibit No.		Description

2.1		Asset Purchase Agreement by and among Yappn Corp., Yappn Acquisition Sub., Inc. and Intertainment Media, Inc., dated March 28, 2013 (2)
2.2		Asset Purchase Agreement between the Company, Ortsbo Inc., Intertainment Media, Inc., and Winterberry Investments Inc. dated July 6, 2015 (17)
3.1		Amended and Restated Certificate of Incorporation filed on March 14, 2013. (1)
3.2		Amended and Restated Bylaws. (1)
3.3		Amended and Restated Certificate of Designation and Preferences of Series A Convertible Preferred Stock, filed with the Secretary of State of Delaware on May 31, 2013 (3)
3.4		Amended Certificate of Incorporation filed on December 31, 2014 (18)
3.5		Amended Certificate of Incorporation filed on September 9, 2015 (18)
4.1		Convertible Promissory Note (4)
4.2		Convertible Promissory Note Issued in Favor of JMJ Financial (6)
4.3		8% Convertible Note (7)
4.4		Form of 8% Convertible Note (8)
4.5		Form of 6% Convertible Promissory Note (9) (10) (12)
4.6		Form of Promissory Note (13)
4.7		Common Stock Purchase Warrant (13)
10.1		Lock-Up Agreement by and between Yappn Corp. and Intertainment Media, Inc. (2)
10.2		Form of Warrant (2)
10.3		Form of Subscription Agreement (2)
10.4		Form of Registration Rights Agreement (2)
10.5		Form of Note Purchase Agreement (2)
10.6		Form of Note (2)
10.7		Form of First Amendment to Note Purchase Agreement (2)
10.8		Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (2)
10.9		Stock Purchase Agreement (2)
10.10		2013 Equity Incentive Plan (2)
10.11		Bill of Sale dated March 28, 2013 (2)
10.12		Services Agreement by and between Ortsbo, Inc., Ortsbo USA, Inc. and Intertainment Media, Inc. dated March 21, 2013 (2)
10.13		Form of Indemnification Agreement (2)
10.14		Securities Purchase Agreement (4)
10.15		Amendment to Services Agreement (5)
10.16		Amendment Agreement to Convertible Promissory Note Issued in Favor of JMJ Financial (6)
10.17		Securities Purchase Agreement (7)
10.18		Securities Purchase Agreement between Yappn Corp. and GEL Properties LLC (8)
10.19		Securities Purchase Agreement between Yappn Corp. and LG Capital Funding LLC (8)
10.20		Form of Securities Purchase Agreement (9) (10) (12)
10.21		Form of Registration Rights Agreement (9) (10) (12)
10.22		Form of Series A Warrant (9) (10) (12)
10.23		Form of Series B Warrant (9) (10) (12)
10.24		Amendment Agreement to Convertible Promissory Note issued in favor of JMJ Financial (11)
10.25		Loan Agreement (13)
10.26		General Security Agreement between Yappn Corp. and Toronto Tree Top Holdings Ltd. (13)
10.27		General Security Agreement (Yappn Canada Inc.) (13)
10.28		General Security Agreement (Intertainment Media Inc.) (13)
10.29		Guaranty and Indemnity (Yappn Canada Inc.) (13)
10.30		Guaranty and Indemnity (Intertainment Media Inc.) (13)
10.31		Assignment of Monies and Debt Due Arrangement (13)
10.32		Employment Agreement between Yappn Corp. and Mr. David Lucatch dated June 1, 2014. (14)

Exhibit No.		Description
2.1		Asset Purchase Agreement by and among Yappn Corp., Yappn Acquisition Sub., Inc. and Intertainment Media, Inc., dated March 28, 2013 (2)
2.2		Asset Purchase Agreement between the Company, Ortsbo Inc., Intertainment Media, Inc., and Winterberry Investments Inc. dated July 6, 2015 (17)
3.1		Amended and Restated Certificate of Incorporation filed on March 14, 2013. (1)
3.2		Amended and Restated Bylaws. (1)
3.3		Amended and Restated Certificate of Designation and Preferences of Series A Convertible Preferred Stock, filed with the Secretary of State of Delaware on May 31, 2013 (3)
3.4		Amended Certificate of Incorporation filed on December 31, 2014 (18)
3.5		Amended Certificate of Incorporation filed on September 9, 2015 (18)
4.1		Convertible Promissory Note (4)
4.2		Convertible Promissory Note Issued in Favor of JMJ Financial (6)
4.3		8% Convertible Note (7)
4.4		Form of 8% Convertible Note (8)
4.5		Form of 6% Convertible Promissory Note (9) (10) (12)
4.6		Form of Promissory Note (13)
4.7		Common Stock Purchase Warrant (13)
10.1		Lock-Up Agreement by and between Yappn Corp. and Intertainment Media, Inc. (2)
10.2		Form of Warrant (2)
10.3		Form of Subscription Agreement (2)
10.4		Form of Registration Rights Agreement (2)
10.5		Form of Note Purchase Agreement (2)
10.6		Form of Note (2)
10.7		Form of First Amendment to Note Purchase Agreement (2)
10.8		Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (2)
10.9		Stock Purchase Agreement (2)
10.10		2013 Equity Incentive Plan (2)
10.11		Bill of Sale dated March 28, 2013 (2)
10.12		Services Agreement by and between Ortsbo, Inc., Ortsbo USA, Inc. and Intertainment Media, Inc. dated March 21, 2013 (2)
10.13		Form of Indemnification Agreement (2)
10.14		Securities Purchase Agreement (4)
10.15		Amendment to Services Agreement (5)
10.16		Amendment Agreement to Convertible Promissory Note Issued in Favor of JMJ Financial (6)
10.17		Securities Purchase Agreement (7)
10.18		Securities Purchase Agreement between Yappn Corp. and GEL Properties LLC (8)
10.19		Securities Purchase Agreement between Yappn Corp. and LG Capital Funding LLC (8)
10.20		Form of Securities Purchase Agreement (9) (10) (12)
10.21		Form of Registration Rights Agreement (9) (10) (12)
10.22		Form of Series A Warrant (9) (10) (12)
10.23		Form of Series B Warrant (9) (10) (12)

Exhibit No.		Description

10.33		Form of Series C Warrant (15)
10.34		Form of Series D Warrant (15)
10.35		Amendment to the Employment Agreement between Yappn Corp. and Mr. David Lucatch dated September 2, 2014. (16)
10.36		Form of Master Services Agreement between Yappn Corp. and Digital Widget Factory, dated November 6, 2014. (16)
10.37		Form of 12% Secured Debentures(17)
10.38		Form of Security Agreement, dated July 15, 2015 (17).
10.39		Form of 12% Secured Debenture (19)
10.40		Form of Common Stock Purchase Warrant (19)
14.1		Code of Ethics and Conduct (14)
31.1		Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer.*
31.2		Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer.*
32.1		Section 1350 Certifications of Principal Executive Officer *
32.2		Section 1350 Certifications of Principal Financial Officer *
101.INS		XBRL Instance Document *
101.SCH		XBRL Taxonomy Extension Schema Document *
101.CAL		XBRL Taxonomy Extension Calculation Linkbase *
101.DEF		XBRL Taxonomy Extension Definition Linkbase *
101.LAB		XBRL Taxonomy Extension Labels Linkbase *
101.PRE		XBRL Taxonomy Extension Presentation Linkbase *

Exhibit No.		Description
10.24		Amendment Agreement to Convertible Promissory Note issued in favor of JMJ Financial (11)
10.25		Loan Agreement (13)
10.26		General Security Agreement between Yappn Corp. and Toronto Tree Top Holdings Ltd. (13)
10.27		General Security Agreement (Yappn Canada Inc.) (13)
10.28		General Security Agreement (Intertainment Media Inc.) (13)
10.29		Guaranty and Indemnity (Yappn Canada Inc.) (13)
10.30		Guaranty and Indemnity (Intertainment Media Inc.) (13)
10.31		Assignment of Monies and Debt Due Arrangement (13)
10.32		Employment Agreement between Yappn Corp. and Mr. David Lucatch dated June 1, 2014. (14)
10.33		Form of Series C Warrant (15)
10.34		Form of Series D Warrant (15)
10.35		Amendment to the Employment Agreement between Yappn Corp. and Mr. David Lucatch dated September 2, 2014. (16)
10.36		Form of Master Services Agreement between Yappn Corp. and Digital Widget Factory, dated November 6, 2014. (16)
10.37		Form of 12% Secured Debentures(17)
10.38		Form of Security Agreement, dated July 15, 2015 (17).
10.39		Form of 12% Secured Debenture (19)
10.40		Form of Common Stock Purchase Warrant (19)
14.1		Code of Ethics and Conduct (14)
31.1		Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer.*
31.2		Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer.*
32.1		Section 1350 Certifications of Principal Executive Officer *
32.2		Section 1350 Certifications of Principal Financial Officer *
101.INS		XBRL Instance Document *
101.SCH		XBRL Taxonomy Extension Schema Document *
101.CAL		XBRL Taxonomy Extension Calculation Linkbase *
101.DEF		XBRL Taxonomy Extension Definition Linkbase *
101.LAB		XBRL Taxonomy Extension Labels Linkbase *
101.PRE		XBRL Taxonomy Extension Presentation Linkbase *

(1)	Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on March 18, 2013.

(12) Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on ~~March~~April 183, 2013.

(23) Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on ~~April~~June 3, 2013.

(34) Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on ~~June~~October 315, 2013.

(45) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 1529, 2013.

(56) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~October~~November 2921, 2013.

(67) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~November~~December 2118, 2013.

(78) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on December 1820, 2013.

(89) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~December~~January 2030, ~~2013~~2014.

(910) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~January~~February 3027, 2014.

(1011) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~February~~March 274, 2014.

(1112) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~March~~April 41, 2014.

(1213) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on April 111, 2014.

(1314) Incorporated by reference to the Company’s ~~Current~~Annual Report on Form 810-K, filed with the SEC on ~~April~~August 1129, 2014.

(1415) Incorporated by reference to the Company’s ~~Annual~~Registration ~~Report~~Statement on Form 10S-K,1 filed with the SEC on ~~August~~October 2924, 2014.

(1516) Incorporated by reference to the Company’s ~~Registration~~Quarterly ~~Statement~~Report on Form S10-1Q, filed with the SEC on ~~October~~January 2413, ~~2014~~2015.

(1617) Incorporated by reference to the Company’s ~~Quarterly~~Current Report on Form 108-QK, filed with the SEC on ~~January~~July 136, 2015.

(1718) Incorporated by reference to the Company’s ~~Current~~Quarterly Report on Form 810-KQ, filed with the SEC on ~~July~~October 615, 2015.

(1819) Incorporated by reference to the Company’s ~~Quarterly~~Current Report on Form 108-QK, filed with the SEC on ~~October~~January 156, ~~2015~~2016.

~~(19)~~* ~~Incorporated~~Filed ~~by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 6, 2016~~herewith.

* Filed herewith.34

34SIGNATURES

~~SIGNATURES~~In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 13th day of April 2017.

~~In accordance~~YAPPN ~~with~~CORP. ~~Section~~By: 13/s/ orEd ~~15(d)~~Karthaus ofEd ~~the~~Karthaus ~~Exchange~~Chief ~~Act,~~Executive ~~the~~Officer ~~registrant~~By: ~~caused~~/s/ ~~this~~Craig ~~report~~McCannell toCraig beMcCannell ~~signed~~Chief onFinancial ~~its~~Officer ~~behalf~~(Principal byFinancial ~~the undersigned, thereunto duly authorized on this 17th day of January 2017.~~Officer)

~~YAPPN CORP. By: /s/ Ed Karthaus Ed Kaurthaus Chief Executive Officer By: /s/ Craig McCannell Craig McCannell Chief Financial Officer (Principal Financial Officer)~~35

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