UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For~~ for the fiscal year ended March 31, ~~2017~~2018.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to .

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

For the transition period from

Commission file number: 000-28731

MOBETIZE CORP.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 99-0373704 (I.R.S. Employer Identification No.)

991150-~~0373704~~510 Burrard Street, Vancouver, British Columbia V6C 3A8

(~~State~~Address of orprincipal ~~other~~executive ~~jurisdiction of~~offices)

Issuer’s telephone number: (~~I.R.S.~~778) ~~Employer~~588-5563

~~incorporation~~Securities registered orunder ~~organization~~Section 12(b) of the Act: None.

~~Identification~~Securities registered ~~No.~~under Section 12(g) of the Act: none. Common Stock Par Value $0.001

8105 Birch Bay Square Street, Suite 205, Blaine, Washington 98230

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (778) 588-5563

Securities registered under Section 12(b) of the Act: none.

Securities registered under Section 12(g) of the Act: none.

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

Yes o ☐ No þ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o ☐ No þ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~Exchange~~Yes ☒ ~~Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such~~No ☐

~~reports)~~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 (2§ 232.405 of this chapter) ~~has~~during ~~been~~the preceding ~~subject~~12 tomonths (or for such ~~filing~~shorter ~~requirements~~period ~~for~~that the ~~past~~registrant 90was ~~days.~~required ~~Yes~~to ~~þNo~~submit oand post such files).

~~Indicate~~Yes ☒ ~~by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every~~No ☐

~~Interactive~~Indicate by ~~Data~~check ~~File~~mark ~~required~~if todisclosure beof ~~submitted~~delinquent ~~and~~filers ~~posted~~ pursuant to ~~Rule~~Item 405 of Regulation S-TK (§ ~~232~~229.405 of this chapter) ~~during~~is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the ~~preceding~~registrant 12is ~~months~~a (large accelerated filer, an accelerated filer, a non-accelerated filer, or ~~for~~a ~~such~~smaller reporting ~~shorter~~company, ~~period~~or ~~that~~emerging growth company. See the ~~registrant~~definitions ~~was~~of ~~required~~“large toaccelerated ~~submit~~filer,” “accelerated filer” and ~~post~~“smaller ~~such~~reporting ~~files)~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Yes~~Large ~~þNo~~accelerated ofiler ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐

~~Indicate~~If an emerging growth company, indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~elected ~~pursuant~~not to ~~Item~~us ~~405~~the ofextended ~~Regulation~~transition ~~S-K~~period (§for complying ~~229.405~~with ofany ~~this~~new ~~chapter~~or revised financial accounting standards provided pursuant to Section 13(a) isof ~~not~~the Exchange Act. ☐

~~contained herein, and will not be contained, to~~ Indicate by check mark whether the ~~best of~~ registrant~~’s knowledge,~~ is a shell company (as defined in ~~definitive proxy or information statements~~ Rule 12b-2 of the Act).

~~incorporated~~Yes by☐ No ~~reference in Part III of this Form 10-K or any amendment to this Form 10-K. o~~☒

The aggregate market value of the registrant’s common stock, $0.001 par value held by non-affiliates (132,231) was approximately $223,470 based on the based on the average closing bid and ask prices ($1.69) for the common stock on July 27, 2018.

~~Indicate~~At July by27, ~~check~~2018, ~~mark whether~~the number of shares outstanding of the registrant’s iscommon astock, ~~large~~$0.001 ~~accelerated~~par ~~filer~~value was 234,541, anthe ~~accelerated filer~~number of shares outstanding of registrant’s Series A preferred stock, a$0.001 ~~non-accelerated~~par ~~filer~~value was 0, orand ~~a smaller~~the number of shares outstanding of registrant’s Series B preferred stock, $0.001 par value was 18,847,976.

reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule

12b-2 of the Exchange Act. Smaller reporting company þ



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

The aggregate market value of the registrant’s common stock, $0.001 par value held by non-affiliates (13,219,233) was

approximately $317,261 based on the average closing bid and ask prices ($0.024) for the common stock on July 6, 2017.

At July 6, 2017, the number of shares outstanding of the registrant’s common stock, $0.001 par value was 23,450,233, the number

of shares outstanding of registrant’s Series A preferred stock, $0.001 par value was 4,565,000, and the number of shares outstanding

of registrants Series B preferred stock, $0.001 par value was 13,848,408.

TABLE OF CONTENTS

PART I

PART I	BUSINESS OVERVIEW

ITEM 1	Business	3
ITEM 1A	Risk Factors	16
ITEM 1B	Unresolved Staff Comments	16
ITEM 2	Properties	16
ITEM 3	Legal Proceedings	17
ITEM 4	Mine Safety Disclosures	18

PART II	FINANCIAL AND MARKET INFORMATION

ITEM 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
ITEM 6	Selected Financial Data	21
ITEM 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
ITEM 7A	Quantitative and Qualitative Disclosures About Market Risk	27
ITEM 8	Financial Statements and Supplementary Data	27
ITEM 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
ITEM 9A	Controls and Procedures	28
ITEM 9B	Other Information	30

PART III	RELATED PARTIES AND GOVERNANCE

ITEM 10	Directors, Executive Officers and Corporate Governance	31
ITEM 11	Executive Compensation	34
ITEM 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
ITEM 13	Certain Relationships and Related Transactions, and Director Independence	37
ITEM 14	Principal Accounting Fees and Services	38

PART IV	EXHIBITS

ITEM 15	Exhibits, Financial Statement Schedules	39
ITEM 16	Form 10-K Summary	39

	Signatures	40

~~BUSINESS OVERVIEW~~2

~~ITEM~~PART I 1- BUSINESS OVERVIEW

ITEM 1. Business

As used herein the terms “Mobetize,” “we,” “our,” “us,” refer to Mobetize Corp., and our predecessors, unless the context indicates otherwise.

BACKGROUND

We were incorporated in the State of Nevada on February 23, 2012, as Slavia Corp. in order to assist international students enroll in accredited universities, institutes, colleges or schools in Canada. Since we were not able to raise sufficient capital to fund development in this business segment, management determined to consider alternative strategies to create value for our shareholders.

On July 9, 2013, we entered into an Asset Purchase and Sale Agreement with Mobetize Inc., a Nevada corporation, which caused us to acquire substantially all of the assets and none of the liabilities of Mobetize Inc. in exchange for shares of our common stock. The assets conveyed included a license agreement between Mobetize, Inc., Paysafe Group PLC (formerly Optimal Payments PLC) and Rentmoola Payment Systems Inc. We changed our name to “Mobetize Corp.” effective August 13, 2013, in connection with this transaction. Mobetize offers services in the United States through our Nevada subsidiary Mobetize USA Inc. and to clients outside the United States through our Canadian subsidiary Mobetize Canada Inc.

Mobetize’s principal office is located at #1150 – 510 Burrard St. Vancouver, British Columbia, V6C 3A8. Our registered statutory office is located at Nevada Agency and Transfer Company 50 West Liberty Street, Suite 880, Reno, Nevada 89501.

Mobetize trades on the OTCQB, an electronic trading platform owned by OTC Markets Group, Inc. under the symbol “MPAY”.

BUSINESS

Mobetize is a mobile business to business (B2B) financial technology company (FinTech). FinTech is an umbrella term for describing disruptive technologies involved in the provision of financial services that are transforming the way money is managed affecting almost every financial activity. Under this umbrella Mobetize provides digitized payments and lending solutions to financial institutions (FIs), money service businesses (MSBs), and telecommunications (Telecoms) organizations (Telecoms) (collectively Customers), through its global B2B FinTech and financial services marketplace (Hub). The Hub provides a range of mobile financial solutions (MFS) which include white label technology platforms that support customer-specific products through application program interfaces (APIs) to provide the Services. Mobetize calls these solutions smartProducts, through which Customers are able to seamlessly integrate their existing programs to offer our Services to their subscribers or members (Users).

Mobetize is challenging the conventional model of how financial services are delivered and consumed with our solutions for next-generation banking offered through FIs or other digital participants (Services).

Users access the Services from the Hub through multiple access points including:

1. Desktop Applications

2. Mobile Web Applications

3. Native Applications for Apple iOS Devices and Android Devices

~~ITEM 1A~~REVENUE MODEL

~~Risk~~The HUB ~~Factors~~is designed to generate revenue from:

Transactional processing fees based on the volume of activity

Revenue share based fees for financial services delivered through the Hub

Recurring platform fees for licensing the Hub

Recurring fees for service level agreements

Consulting and professional services fees

Customization, integration, and deployment fees

Existing revenue is influenced by the growing global consumption of MFS and its adoption by Users who rely on their mobile devices as an access point to complete financial transactions. Future revenue will also be affected by our ability to innovate new technology processes and systems that our Customers offer to their Users. Our strategy is to drive growth by:

•

Leveraging existing contracts to increase Customer and User adoption

•

Enhancing business development efforts to expand sales globally

•

Evaluating M&A strategies to grow the business

•

Continuing to develop innovative Fintech solutions for the digital economy

FINTECH AND THE DIGITAL ECONOMY

The backbone of the digital economy is hyperconnectivity, which refers to the growing interconnectedness of people, organisations, and machines as the result of the Internet, mobile technology and the internet of things (IoT).

The digital economy is taking shape and undermining conventional notions about how businesses are structured, how firms interact, and how consumers obtain services, information, and goods.

A report published by Statista Research and Analysis titled Digital Economy Compass 2018 states:

•

Global FinTech transactions were valued at US$3.5 trillion in 2017 and are expected to reach US$8 trillion by 2022, following a projected annual growth rate of 18%. While China and the U.S. lead the FinTech market with transaction values of over US$1 trillion, Europe lags behind.

•

Digital payments contributed 80% to the worldwide FinTech transaction value in 2017, and are by far the largest component in the FinTech segment. The move to digital payments is an evolutionary step towards access to additional financial services that may one day replace the ubiquitous payment methods of today.

•

Alternative lending is currently the second biggest FinTech segment, accounting for US$381 billion in global transaction value. Borrowing money from an online community instead of going to a bank (or family members) is gaining popularity especially in growing economies, where traditional bank loans are more difficult to secure. The peer-to-peer lending sector in China has exploded in recent years to US$325billion in transaction value and is forecast to grow even further, at an astonishing rate of 24% per year through 2022.

•

Alternative financing is currently the smallest FinTech segment with a global transaction value of US$15 billion in 2017, with an average annual growth rate of 33% forecast through 2022, as entrepreneurs and small business owners begin to recognize its benefits.

FINTECH ECOSYSTEM

Globally FinTech “ecosystems” have stimulated technological innovation, made financial markets more efficient, and improved the overall customer experience. These ecosystems include traditional Telecoms and FIs that are faced with competition from technology giants such as Apple (ApplePay™) and Google (GooglePay™) who have proven their capacity to compete in the delivery of MFS. To remain competitive, Telecoms and FIs are constantly seeking to adapt to the digital age relying on a broad set of solutions from pure channel adaptation to radical changes in business models.

The World Fintech Reports of 2018 published by Capgemini, LinkedIn and Efma states:

•

FinTechs, innovating with emerging technologies are revitalizing the customer journey through financial services. Competition and rising customer expectations are driving the demand for convenience and personalization. FinTech firms are leveraging customer data to drive personalized offerings, and providing fast, 24/7, online services that can be accessed from any device.

•

Users of financial services have greater trust in traditional firms versus FinTechs. The future success of Fintechs must look to aligning with customer goals, maintaining trust, and delivering digital, agile, and efficient processes.

•

Unburdened by legacy systems and old-school culture, FinTechs have leveraged new technologies to rapidly respond to customer demands.

•

Traditional FIs are adopting many of the service enhancements offered to Users by Fintechs while retaining strengths including risk management, infrastructure, regulatory expertise, customer trust, access to capital, and more. Both traditional and FinTechs stand to gain from a symbiotic, collaborative relationship.

•

The future of financial services is in the hands of both FinTechs and traditional firms that can complement each other’s strengths to meet customer needs while redefining the journey.

MOBILE BANKING AND PAYMENTS\

New forecasts from leading FinTech analysts, Juniper Research, estimates that over 2 billion users will access retail banking services via smartphones, tablets, PCs and smartwatches in 2018, up 10% year over year.

New research, detailed in Retail Banking: Digital Transformation & Disruptor Opportunities 2018-2022, found that accelerated adoption of FinTech Services in key emerging markets such as India and China means that mobile banking users now represent 50% of the global banked population. Juniper expects that the number of global mobile banking users will overtake online users in 2018, 2 years earlier than previously anticipated.

During 2018, mobile payments will generate $930 billon dollars worldwide and in excess of one trillion in 2019, according to TrendForce and NFCWorld. The adoption of mobile payments, encourages users to have a more positive image of a fully mobile banking system. In the United States, half of the adult population that owns a smartphone is already a mobile banking user.

In China, a recent analysis conducted by Forrester concluded that "the most successful banks share a similar and iterative focus on mobile banking. All have built strong relationships between their digital business strategy and technology management teams, creating systems, applications or platforms that are "more successful with clients and which have made banks more profitable."

According to the Forrester report Disrupting Finance: Digital Banks, a new wave of digital banks have embraced mobile and social technologies to create differentiation, using digital platforms to offer simple, convenient customer experiences with relevant guidance and advice.

The rapid adoption of smartphones has made the enhanced mobile banking experience a means by which to extend the engagement with existing customers.

MOBILE DEVICES AND FINTECH

Statista Research and Analysis reported that in 2017, that more than 3.5 billion people were connected to the internet thanks to mobile devices. Telcoms are uniquely positioned to be the leading providers of MFS to their customers by leveraging their own billing platforms. The fact that basic financial services can be done without a banking relationship further strengthens the opportunity for Telecoms.

MONEY REMITTANCE AND AIR TIME TOP UP

Juniper Research also found that international remittances, including airtime top ups via mobile phones, will exceed $25 billion by 2018, up 67% from an estimated $15 billion in 2015. The research found a significant upsurge in international remittance activity in the past 2 years with a number of cross-border mobile remittance services being deployed. For example, PayPal-owned Xoom announced in April 2016 that it will expand its services to thirteen new recipient countries. It found that international mobile money transfers are forecast to grow in frequency in all regions as users become more accustomed to using the service. Higher value transactions are also forecast, going forward.

The research also found that while international cash remittance growth has slowed, transaction volumes have surged in the airtime top-up market, where service providers are not required to obtain money licenses. The simplicity of airtime and the need to facilitate basic person to person (P2P) money flow means that these services still represent the initial deployments in many markets. Even though the international airtime transfer segment maintains very high commission rates when compared to international remittances, Juniper forecasts that the total number of mobile international airtime top up transactions will approach half a billion for the first time in 2018.

TECHNOLOGY SOLUTIONS AND MOBETIZE SMARTPRODUCTS

Solution: The Mobetize Hub

The Hub provides a single integration point with account processing platforms and other enterprise systems, that offers reliable integration between required solutions, and the enterprise solutions that already active.

Mobetize helps FIs, MSBs and Telecoms bridge complex financial services with automation and mobility. We do this by providing a range of omni-channel products that replace costly processes with rapidly deployable applications. We call those applications smartProducts, and our Customers deploy what they need, when they need it. Our smartProducts deliver mobile solutions with speed and flexibility that continually accommodate new products. Mobetize is working with its Customers to commercialize the following smartProducts:

smartRemit:

smartRemit is a proprietary payments solution that enables international money transfer capabilities globally via our international money transfer partners that supports multi-language web services. Spanish language being the first non-English language offered. smartRemit is a fully integrated mobile platform dedicated to providing convenient, efficient, scalable, and inexpensive global money transfer solutions for senders and recipients of cross-border money transfers using a mobile device. Users can initiate international money transfers from Canada and United States through a fully integrated omni-channel product that provides secure, compliant, and simple mobile money transfer capabilities with payment channels in over 165 countries at more than 175,000 payout locations.

Mobetize markets smartRemit as a P2P solution to FIs, MSBs, and Telecom Customers that want to offer to their clients a facility for the cross-border movement of money. smartRemit is a collaboration-ready solution that enables FIs to acquire new clients, secure market share, and, in some instances, provide new and enhanced services to existing account holders. Users can send funds cross-border via multiple payout channels such as, direct bank account deposits, pick-up at agent location, and home delivery. Users can also send funds in one currency and have the beneficiary receive in another. Delivery options include:

•

Cash to cash

•

Cash to account

•

Door service

•

Mobile transfers

The smartRemit platform facilitates KYC and can authorize funds from Users FIs in real-time. New FIs can on-board this product as part of a multi-tenanted platform that includes multi-lingual branded user-applications. FIs can also offer their own retail market pricing. smartRemit and is now available to 175+ FIs in Canada.

smartLoan:

smartLoan is a proprietary digitized lending product that allows borrowers to apply for secured and unsecured loans ranging from $500 up to $35,000 to refinance credit card debt, student loans, weddings, or household projects. Our lending solution is configurable, scalable and able to implement dynamic algorithms in a cloud-based environment that enables FIs to quickly launch their own online lending products and controls. smartLoan is built on the core of our Hub. FIs can instantly meet Know Your Client (KYC) and Anti Money Laundering (AML) compliance in addition to computing complex algorithms for auto-adjudication of the personal bank lending process. Our lending solution can be initiated from any tablet, PC or mobile device.

smartLoan functionality is a fully compliant process that includes a wide range of data gathering that covers both traditional and non-traditional sources for fraud detection and credit profiling to produce a multi-variant scoring model. Based on our standard multi-tenanted architecture, the product can be quickly white-labeled and new FIs on-board in weeks.

Key benefits for FI’s include:

•

An omni-channel and simple user experience for fast loan decisions and funding

•

Digitized back-office processes and interoperability

•

Ability to lead innovation with configurable KYC and heuristic adjudication rules

•

Facial biometrics for ID Verification for non-face to face KYC

•

Social biometrics and advanced data analytics to assess authenticity and potential fraud

•

Configurable workflow of applications

•

Easy white-labeling configurability for branding and rapid launch

•

Opportunity to leverage new lending business models

•

Ability to respond to and address security and regulatory requirements

We offer the smartLoan solution to direct and platform lenders in North America who are interested in growth within the online lending space.

smartCharge and Mobile Money Platform (MMP)

smartCharge is a payments solution that enables real time prepaid mobile top-ups for any mobile phone and recharge transfers to over 350 mobile network operators in 90 countries, reaching 3.6 billion prepaid users. Users can send air-time top-ups to any prepaid mobile phone globally. The service is available for consumption as a web application or as an API model.

MMP allows customers to transact data top-up credits to pre-paid mobile phone customers worldwide. MMP supports both air time and data to be purchased for pre-paid phones. The platform is a secure API gateway employing OAuth2 connections (industry standard protocol). Supporting multiple purchasing currencies, the platform can be leveraged by customers to provide bulk redemption of loyalty points or any other real or virtual currency to purchase products. Products may be top-ups, direct-to-carrier or over-the-top (“OTT”) services consumed in addition to carrier data allowance. Built on a multi-tenanted model, the platform can rapidly on-board additional customers and carriers with minimal expense.

smartBill

smartBill is a payments solution that can be implemented to simplify bill payments to vendors. This module can be used by Customers who wish to provide an easy to use bill payment solution for their clients.

smartCard

smartCard is our white label Visa/MasterCard program that allows Users to request (during sign-up or at any time via the Mobetize app) a prepaid MasterCard™ or Visa™ card, which is linked to their smartWallet. Users are able to move cleared funds from their smartWallet on to their Visa™ card or MasterCard™, allowing them to make purchases both online and in retail locations, plus withdraw cash from ATMs. Users are able to track the balance, see recent transactions on their accounts via the smartWallet, and transfer money back into the smartWallet. The smartCard has the same white-label branding as the smartWallet for a seamless User experience.

smartWallet:

smartWallet is a solution provided via mobile web, web OS Apple and Android app to the desktop, iPad, or mobile phone. The smartWallet acts as a stored value account which allows Users to load funds into a mobile wallet to access global mobile financial services such as prepaid top-ups for themselves or family members, P2P money transfers, international money transfer remittances, bill payments and bill management.

The smartWallet can be integrated with an existing billing system to enable a mobile ‘my account’ as part of a mobile wallet with features including:

•

Registration sign in and sign up

•

Account settings that allow the User to update their information, edit/add and save different payment methods while changing password or saving account numbers to favorites.

•

Users are able to track their balances by viewing their real-time balance.

•

Add and save services that create, save, and edit a list of favorites for access to all transactions.

•

Create, save, and edit a list of favorite contacts, remittances, airtime transactions and more.

•

Safely store and edit preferred payment methods that include credit and, debit cards or ACH.

•

smartWallet can be activated for Users who are MSB compliant.

Customer Relationship Management (“CRM”) and Reporting Tool:

Mobetize provides Customers with a CRM and data analytics reporting system for all transactions processed through the Hub. The reporting system can be configured so that different levels within a Customer’s team can see and access different levels of information. The reporting tool provides real time data, at different levels of detail, that allows Customers to track User metrics as:

•

Transactions $ values

•

Transaction volume-by type of transaction

•

Number of registered users

•

Number of active users

•

Geographic splits

•

Other key performance Indicators

The web based CRM reporting tool also provides Customers access to User key data for support services:

•

User information (name, address, etc.)

•

User transaction history

•

User wallet balance

This data is a key driver for User support services.

Latest Technology and Product Developments

SMARTMORTGAGE

Mobetize has started the development of smartMortgage, an innovative product designed that will be licensed to FIs who will then be able to offer a simplified, fully digital mortgage application process for their clients. smartMortgage is being designed to solve a number of key issues challenging lenders and consumers today, including the customer experience, asset quality and risk, regulatory compliance, efficiency and cost containment. Our solution will enable first time home buyers and refinancing home owners to verify assets, employment and income with a simple omni-channel user experience.

We also expect to offer smartMortgage through an API that will integrate with any User Experience Platform (UXP) such as Backbase or Temenos edgeConnect.

smartMortgage will provide financial institutions with:

•

An omni-channel and simplified user experience to speed up mortgage decisions and funding

•

Digitized back office processes and interoperability

•

Rapid launch of configurable and adjudication rules

•

Leverage of automated insurance and appraisal processes

•

Effective capability to address security and regulatory requirements

•

Automated back office legal processes

Mobetize is presently in discussions with potential customers for beta deployment of smartMortgage.

smartremit

Mobetize has updated smartRemit with native applications for iOS and Android in furtherance of its bank channel strategy. Integral to this development was an enhancement of our existing platform that facilitated our ability to connect to the second largest ATM network in Canada. The significant network to network effect from connecting our remittance network to a banking network means that we can effectively scale transactional volumes. Our methodology can be replicated and scaled globally.

We expect to launch smartRemit in the last fiscal quarter of 2018.

SMARTCHARGE AND MMP

Mobetize has completed an upgrade to MMP. The existing platform can now provision mobile phones to access thousands of wireless hot -spots in countries around the world. The update will allow these hotspots through MMP as a new product type, in addition to existing Air Time and Data product types.

Tata Communications (America) Inc. (Tata) has recently implemented MMP with one of its clients FoneWorx Holdings Limited (FoneWorx) based in South Africa. FoneWorx provides infotainment, switching, and business services in addition to interactive voice response, short message service, fax, email and data storage services. FoneWorx provides infotainment services to fast moving consumer goods brands and also provides stand-alone solutions for Fax2Email and PC2Fax.

THE HUB

The Hub will continue to be developed as a FinTech marketplace that offers stand-alone Services, REST API services for our FinTech products, and solutions that allow Customers with existing technologies, such as virtual wallets, to include our Services in their systems.

RECENT BUSINESS DEVELOPMENTS

mission statement and WEBSITE

Mobetize has updated its Mission Statement to clearly represent the evolution of its goals and the direction of its business. Our mission is “[t]o be a leader in the global FinTech marketplace by collaborating with financial institutions and telecoms to bridge complex financial services with automation and mobility”. Our corporate website has also been updated along with its social media links.

NAI INTERACTIVE LTD

On April 28, 2018, Mobetize attended the Global Chinese Financial Forum (GCFF) organized by NAI Interactive Ltd, in Richmond British Columbia, Canada. The Global Chinese Financial Forum (GCFF) is a series of bi-lingual financial functions in both North America and China. Established in 2000, GCFF’s mandate is to provide a world-class platform connecting Chinese and North American financial markets.

On May 24, 2018, NAI hosted a luncheon for us, at which we presented and participated in a question and answer session with over 100 pre-qualified Chinese potential investors and business owners who were interested in introducing our smartProducts to the Chinese market. Mobetize learned that it is well positioned to take advantage of China’s “One Belt and One Road” effort to create the world’s largest economic platform. Mobetize continues to communicate with potential investors introduced by NAI.

MONEY TRANSMITTERS

Mobetize continues to explore additional remittance corridors and payout channels to expand our partnerships with large licensed processors of international cross-border payments.

AWARDS and FINTECH CONFERENCES

Mobetize was recently nominated for a FinTech Award by Celero Solutions. Celero has a long history and extensive experience in the financial services sector as is the only Canadian company included in the 2017 IDC Top 100 FinTech Rankings Celero provides full-service, end-to-end IT, that meets the unique needs of credit unions and financial institutions. The FinTech Innovator Award is sponsored by Microsoft.

Celero has selected seven FinTech finalists who will compete in a pitch battle on the main stage for the 2018 FinTech Innovator Award at the 2018 Celero FinTech Conference being held from September 25th -28th, 2018. Each FinTech will have seven minutes to pitch its innovative digital solution for credit unions with pioneering ideas that can enhance member experience or help credit unions improve efficiency.

FICANEX and CANADIAN FINANCIAL INSTITUTIONS

Over the past six months Mobetize has been in the process of negotiating the terms of an International Money Remittance Service Agreement with Ficanex Technology Limited Partnership (“FICANEX”). The parties intend to reach a final agreement in the current fiscal quarter.

On September 11, 2017, we entered into a Master Services Agreement with FICANEX to co-develop and market innovative financial services solutions (“FICANEX Agreement”). The initial solution is focused on providing mobile international money remittance services. FICANEX will adopt certain services and technologies from the Hub to position itself as a FinTech banking services accelerator to over 174 member financial institution across Canada. The FICANEX Agreement has a three-year term and automatically renews for one additional three-year term.

On September 20, 2016, we entered into a Software Application License, Customization Development and Service Level Agreement with G&F Financial Group to partner in offering a mobile personal lending facility with omni-channel capabilities to its customers built on our FinTech platform. GF Financial customers will be able to apply for and be approved for personal loans initiated from their mobile devices. A roll out of the application was successfully implemented in the second quarter of 2017.

TELECOMMUNICATION COMPANIES

On February 1, 2017, dated effective December 15, 2016, we entered into a Software Application License, Customization Development and Service Level Agreement with Tata to govern the global deployment of our Services for its customers through our Hub. The parties agreed to a five-year strategic partnership from which we expect to generate revenue from service level support fees and the sharing of transactional income; advance our technology alliance to accelerate new FinTech revenue sharing opportunities; and focus our partnership on FinTech product innovation.

Tata has implemented our smartCharge/ MMP within their network.

Competition

The global FinTech industry is highly competitive. We compete against businesses in varied industries, many of which are larger than we are, have a dominant and secure position in other industries, or offer other goods and services to consumers and merchants which we do not offer. We compete against all forms of FinTech service providers, including credit and debit cards providers, automated clearing house and bank transfers providers, other online payment services providers, mobile payments providers, and offline payment methods, including cash and check.

We compete primarily on the basis of the following:

•

ability to attract, retain, and engage Customers and their Users

•

ability to show that Customers will achieve incremental sales by using our Hub

•

security of transactions and the ability for Customers to integrate our Hub products and services

•

fee structure

•

ability to develop Services across multiple customer channels, including telecom and Fintech service providers

•

customer service

•

brand recognition

•

website, mobile platform and application onboarding, ease-of-use, and accessibility

•

system reliability and data security

•

ease and quality of integration into third-party mobile applications and operating systems

•

quality of developer tools such as our Hub programming interfaces

Mobetize seeks to become a leader in the global FinTech market place by focusing on its core expertise in cross-border payments and digital lending. We collaborate with FIs and Telecoms to bridge complex financial services with automation and mobility. Our open FinTech architecture for payments, money transfer, and loan origination positions us to potentially disrupt the current money services infrastructure.

DISRUPTION AND COMPETITIVE ADVANTAGES

Disruption is coming from large players who already significantly impact consumer expectations. FIs, FI Aggregators and MSBs are challenged by these incremental disruptions especially from GAFA, BAT and other emerging challengers.

~~ITEM~~Mobetize has 1Bcreated collaboration-ready solutions to enable FIs, FI Aggregators, MSBs and Telecoms to improve responsiveness, acquire new customers, secure market share, and in some instances, provide new and enhanced services to their account holders. Today, disrupters such as GAFA and BAT are setting the tone for consumer expectations across multiple industries. Some have made incursions into the FIs space, with Amazon, Alibaba and Baidu as primary examples. Mobetize helps traditional players counter those threats from disruption.

~~Unresolved~~Mobetize has ~~Staff~~developed ~~Comments~~a unique business and partnership mode to simplify mobile financial services. Our ability to Leverage key business relationships gives us a competitive advantage over other market participants:

13• FIs, FI Aggregators, MSB’s and Telecoms are the basis for revenue share partnerships that operate as channels for us to acquire Customers and maximize transactional volumes. Partnerships can white label Hub Services or integrate via an API consumption model to market our smartProducts to Users.

~~ITEM~~• 2Strategic financial services partners who typically offer bricks and mortar style financial services and products are eager to adopt our Services. We can digitize regulatory compliance and service fulfillment while introducing their digitized products to our channel partners.

~~Properties~~Process

Mobetize co-develops innovation in a step-by-step manner, focused on the strategic goals of its Customers.

The collaborative approach includes:

•

gathering information from Customers and identifying pain points

•

consulting with Customers to devise and execute innovative plans that take into account weaknesses and strengths

•

assisting with the education and training of our Customer’s management and employees to ensure effective roll out of Services

•

defining the correct engagement model, whether investor, acquirer, partner or accelerator

•

reviewing and creating data models on a regular basis to access the reactions and expectations of Users.

Advantages

Customer Acquisition: Mobetize is scalable and cost effective for most potential Customers.

Lower Customer Costs: Mobetize offers the fiscal advantages of digital distribution over physical distribution.

Advanced Analytics: Mobetize generates data for advanced analytics which provides Customers with significant advantages, including the ability to redesign products and focus on the development of contextual offers based on a better understanding of User needs.

Leveraging Existing Infrastructure: Mobetize engages with the existing ecosystems of Telecom and financial service providers by leveraging off the technology that is already in place.

~~ITEM~~Patents, Trademarks, 3Licenses, Franchises, Concessions, Royalty Agreements, and Labor Contracts

~~Legal~~Mobetize has ~~Proceedings~~no patents, registered trademarks, licenses, franchises, concessions, royalty agreements or labor contracts other than as detailed in this report. However, we do assert common law trademark rights for the following names in the field of mobile commerce:

14• smartWallet

~~ITEM~~• 4smartRemit

~~Mine~~• ~~Safety Disclosures~~smartCharge

•

smartBill

•

smartCard

•

smartLoan

•

smartMortgage

Common law trademark rights are enforceable in provincial courts in Canada, and may be asserted against those who appropriate, dilute, or damage the goodwill of our business by using the same or similar trade names or trademarks. Unlike statutory trademark rights, which are acquired by registration and provide nation-wide protection, common law trademark rights are acquired automatically and provide protection only in the jurisdiction where a business uses a name or logo in commerce. We intend to rely on common law trademark protection until such time as we deem it economical for our business to register our trade names or trademarks.

We have not registered for the protection of any rights under trademark, patent, or copyright in any jurisdiction.

Government Regulation

Government regulation impacts key aspects of our business. We are subject to regulations that affect the payments industry in the markets we operate.

Payments Regulation. Various laws and regulations govern the payments industry in the United States and globally. Our partner in the United States holds a license to operate as a money transmitter (or its equivalent), which, among other things, relieve us from reporting requirements, bonding requirements, limitations on the investment of customer funds and inspection by state regulatory agencies.

Outside the United States, the laws and regulations applicable to the payments industry in any given jurisdiction are specific to that jurisdiction.

Banking Agency Supervision. Based on our relationships with FIs in the United States, we are subject to indirect regulation and examination by financial regulators.

Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau (“CFPB”) has significant authority to regulate consumer financial products in the United States, including consumer credit, deposit, payment, and similar products. The CFPB and other similar regulatory agencies in other jurisdictions may have broad consumer protection mandates that could result in the promulgation and interpretation of rules and regulations that may affect our business.

~~PART~~Anti-Money Laundering IIand Counter Terrorist Financing. Mobetize is not subject to anti-money laundering (AML) laws and regulations in the United States or in other jurisdictions around the world. We are further not subject to laws designed to prevent the use of financial systems to facilitate terrorist activities. Nevertheless, we do intend to implement a comprehensive AML program designed to prevent our Hub from being used to facilitate money laundering, terrorist financing, and other illicit activities.

~~FINANCIAL~~The mobile ~~AND~~commerce ~~MARKET~~industry ~~INFORMATION~~is also subject to requirements, codes and standards imposed by various insurance, approval, listing, and standards organizations. Depending upon the type of product and the requirements of applicable local governmental jurisdiction, adherence to requirements, codes and standards of such organizations is mandatory in some instances and voluntary in others.

~~ITEM~~Research and 5Development

~~Market~~We spent ~~for~~$581,186 ~~Registrant's~~and ~~Common~~$485,544 ~~Equity~~on research and development activities during the years ended March 31, ~~Related~~2018 ~~Stockholder~~and ~~Matters~~2017, respectively. Our efforts in research and development focused on new products and the enhancement of existing smartProducts.

~~Issuer~~Mobetize completed ~~Purchases~~the development of ~~Equity~~smartRemit ~~Securities~~Native Applications for both Android and iOS. Part of this development was to improve our existing platform to connect to the second largest ATM network in Canada. Our approach enables us to have a single integration of smarRemit into the payment network of 175+ FIs. The network to network effect from connecting our remittance network to a banking network is an effective way to scale transactional volumes. Our approach and methodology can be replicated and scaled globally.

Mobetize also enhanced its existing smartLoan digital lending platform to process digital mortgages as a unique solution for FIs to provide instant conditional mortgage approvals.

Employees

Mobetize had five employees at March 31, 2018. Our employees include financial services experts, telecommunication specialists, engineers and administrative personnel. We outsource a portion of our research and development efforts to third parties and engage contractors, attorneys, and accountants to assist in the conduct of our business.

ITEM 1A. Risk Factors

Not required of smaller reporting companies.

ITEM 1B. Unresolved Staff Comments

Not required of smaller reporting companies.

ITEM 2. Properties

Mobetize’s principal executive office is located at 1150-510 Burrard Street, Vancouver, British Columbia V6C 3A8. Our telephone number is (778) 588-5563. We pay rent of $4,900 per month for the use of this space. We also Our also maintain executive office space in the United States is located at 8150 Birch Bay Square Street, Suite 205, Blaine, Washington 98230. Our telephone number is (778) 588-5563. We pay rent of approximately $30 per month for the use of this space.

We believe that we have sufficient office space for the foreseeable future.

ITEM 3. 6Legal Proceedings

~~Selected Financial Data~~Stephen Fowler

Mobetize received a Citation and Notice of Assessment dated October 14, 2016 (Citation), pursuant to which Stephen J. Fowler (Fowler), a former director and chief financial officer of Mobetize, had initiated a complaint with the State of Washington Department of Labor and Industries for amounts allegedly due to him for unpaid wages. The Citation declared that Fowler is owed $45,000 in wages in addition to an assessed interest of $3,368.74, and a penalty of $4,500. On November 8, 2016, Mobetize entered an appeal alleging that the calculation of amounts due to Fowler was incorrect and that Fowler had improperly obtained shares of its common stock which it intends to recover. Mobetize received a response from the Department of Labor and Industries dated November 18, 2016, in which it was advised that Fowler’s claim had been transferred to the Office of the Attorney General and that a hearing on the matter would be held by the Office of Administrative Hearings. A hearing date for this matter has been set for January 30, 2019, in Seattle, Washington. Mobetize believes that Fowler’s claims detailed in the Citation are without merit. However, the outcome of this proceeding cannot be reasonably determined at this time.

Mobetize received a Notice of Civil Claim dated April 26, 2017, (Notice), filed in British Columbia Supreme Court by Fowler naming Mobetize and its directors as defendants. Fowler asserts claims against Mobetize for unpaid expenses, and breach of contract. He also asserts that his shareholdings in Mobetize have been diluted due to certain actions of its current directors, making claims including breach of contract, breach of fiduciary duty, misrepresentation and conspiracy. On June 23, 2017, Mobetize filed its response to Fowler’s claims and submitted its own claims. Mobetize’s claims include a claim that Fowler improperly issued shares to himself, is responsible for fraudulent or negligent misrepresentation, breach of fiduciary duty, negligence and unjust enrichment. Document discovery is in process. No further steps in this action have been taken, and no trial date has been set. Mobetize believes that Fowler’s claims detailed in the Notice are without merit. However, the outcome of this litigation cannot be reasonably determined at this time.

Mobetize received a Complaint dated May 12, 2017, (Fowler Complaint), filed in the Second Judicial District Court of the State of Nevada by Fowler naming Mobetize and its directors as defendants. The Nevada action concerns substantially the same facts and the same relief as the Notice. Mobetize has taken the position that the filing of duplicative actions in two different jurisdictions constitutes an abuse of process and that British Columbia is the appropriate jurisdiction in which Fowler’s claims ought to be heard, and that the Nevada action ought to be dismissed or stayed for these same reasons. On June 23, 2017, Mobetize filed a Motion to Dismiss or in the alternative, an Application for Preliminary Injunction to either dismiss or stay the Fowler Complaint. A hearing was held and Mobetize’s Motion to Dismiss was denied. The court did however determine to stay the action pending resolution of the action in British Columbia. No further steps in this action, have taken place and no trial date has been set. Mobetize believes that the claims detailed in the Fowler Complaint are without merit. However, the outcome of this litigation cannot be reasonably determined at this time.

Cary Fields

Mobetize received a Complaint dated May 3, 2017, (Fields Complaint), filed in the Eighth Judicial District Court of the State of Nevada (Clark County) by Cary Fields (“Fields”) naming Mobetize and its directors as defendants, to obtain a preliminary injunction to enjoin a consolidation of Mobetize’s common stock, and seek damages for breach of fiduciary duty, conversion, and unjust enrichment. On May 18, 2017, after due consideration, the court denied Fields’ application for injunctive relief. The court did not rule on the question of Fields’ alleged damages. On August 4, 2017, Mobetize and its directors received an Amended Complaint seeking damages for breach of fiduciary duty, conversion, and unjust enrichment. On November 17, 2017, Mobetize filed Defendants’ Motion for Judgment on the Pleadings. The court held hearings on the Motion on December 19, 2017, and on January 9, 2018, ultimately denied the Motion. Fields claims damages of $3,660,242 plus legal expenses. Document discovery and the taking of depositions is not yet complete. A mandatory settlement conference is to be convened on July 30, 2018, and a trial date is set for January 2, 2019. Mobetize believes that the claims detailed in the Fields Complaint are without merit. However, the outcome of this litigation cannot be reasonably determined at this time.

ITEM 4. Mine Safety Disclosures

Not applicable.

~~ITEM~~PART II 7– FINANCIAL AND MARKET INFORMATION

~~Management’s~~ ~~Discussion~~ITEM ~~and~~5. ~~Analysis~~Market offor ~~Financial~~Registrant's ~~Condition~~Common Equity, Related Stockholder Matters and ~~Results~~Issuer Purchases of Equity Securities

~~Operations~~Mobetize common stock is quoted on the OTCQB, a service maintained by OTC Link under the symbol “MPAY.” Trading in the common stock over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. The prices provided below reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not necessarily reflect actual transactions. On July 11, 2017, Mobetize effected a consolidation of its common stock on a 1 for 100 basis. The high and low bid prices for the common stock for each quarter of the years ended March 31, 2018 and 2017, are adjusted for the consolidation throughout the respective periods:

*Year*	*Quarter Ended*	*High*	*Low*
2018	March 31	3.00	3.00
	December 31	3.00	3.00
	September 30	3.50	3.50
	June 30	2.85	2.85
2017	March 31	9.00	7.00
	December 31	8.00	8.00
	September 30	10.00	10.00
	June 30	12.00	12.00

The following is a summary of the material terms of our capital stock outstanding securities. This summary is subject to and qualified by our articles of incorporation, as amended and bylaws.

Common Stock

As of March 31, 2018, there were 142 shareholders of record holding 234,541 shares of fully paid and non-assessable common stock of the 250,000,000 shares of common stock, par value $0.001, authorized. The Board of Directors believes that the number of beneficial owners is greater than the number of record holders because a portion of our outstanding common stock is held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There is no redemption or sinking fund provision applicable to the common stock.

Preferred Stock

As of March 31, 2018, there were 75,000,000 shares of preferred stock, par value $0.001, authorized.

Preferred Stock – Series A

As of March 31, 2018, there was one shareholder of record holding 4,565,000 shares of fully paid and non-assessable shares of Series A Preferred stock of the 10,000,000 shares of Series A Preferred stock, par value $0.001 designated.

On June 4, 2018, all outstanding shares of Series A Preferred were exchanged for Series B Preferred stock.

~~ITEM~~Preferred Stock 7A– Series B

~~Quantitative~~As of March 31, 2018, there were 56 shareholders of record holding 14,282,976 shares of fully paid and ~~Qualitative~~non-assessable ~~Disclosures~~shares ~~About~~of ~~Market~~Series B ~~Risk~~Preferred stock of the 25,000,000 shares of Series B Preferred stock par value $0.001 designated.

On June 4, 2018, the number of Series B preferred stock increased by 4,565,000 on the exchange Series A Preferred for Series B Preferred causing the number of outstanding Series B Preferred to increase to 18,874,476.

Stock Options

Mobetize has adopted a Stock Option Plan (Stock Option Plan) which permits it to issue stock options for up to 30,000 common shares (post July 11, 2017, consolidation) to directors, officers, employees and consultants of Mobetize with a maximum term of 5 years, an exercise prices equal to the minimum fair market value per common share on the date of grant, and a vesting schedule determined by the Board of Directors at the time of granting the options.

As of March 31, 2018, Mobetize had 20,200 stock options outstanding, of which 19,150 were exercisable as follows:

Number of options outstanding

Number of options vested

Exercise
price

Expiry date

20,200

19,150

September 30, 2020

We do not have in effect any other compensation plans under which our equity securities are authorized for issuance.

Warrants

As of March 31, 2018, we had 26,364 share purchase warrants convertible into shares of our common stock as follows.

Number of warrants outstanding		Exercise price $		Expiry date
	6,944		100	June 24, 2018
	3,866		125	December 10, 2018
	15,554		100	September 1, 2018
	26,364

On June 24, 2018, 6,944 share purchase warrants convertible into shares expired.

Dividends

We have not declared any cash dividends since inception and do not anticipate paying any dividends in the near future. The payment of dividends on our common stock is within the discretion of the Board of Directors subject to earnings, capital requirements, financial condition, and other relevant factors including those contractual restrictions related to certain debt obligations and those limitations generally imposed by applicable state law.

Transfer Agent and Registrar

Our transfer agent is VStock Transfer, LLC located at 18 Lafayette Place, Woodmere, New York, 11598. VStock Transfer’s telephone number is (212) 818-8436 and its facsimile number (646) 536-3179.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6. Selected Financial Data

Not required of smaller reporting companies.

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this current report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this current report. Our fiscal year end is March 31.

Discussion and Analysis

Mobetize’s business model for the coming year is to complete the qualification of products under development and to increase sales of our existing products. Meanwhile, we will continue internal research and development efforts and collaborate with development partners to ensure the continuity of our product pipeline. We are maintaining our focus on providing services in the areas of payments, money transfer, and loan origination for FIs, MSBs and Telecoms. Our business development strategy is prone to significant risks and uncertainties certain of which can have an immediate impact on its efforts to realize positive net cash flow and deter future prospects of growth. Historically, Mobetize has not been able to generate sufficient cash flow from operations to sustain operations and fund necessary operating expenses. Therefore, there can be no assurance that revenue alone will provide sufficient cash flows to sustain operations.

Mobetize’s financial condition, results of operations and the carrying value of its technology depends on its ability to develop, market and sell innovative products and Services to FinTech Customers. Smaller technology companies in the FinTech segment of the market face a stiff competitive barrier to market entry erected by larger competitors that are generally better funded and accepted for product innovation. Despite recent successes in realizing revenue, Mobetize must continue to innovate and attract new customers in order to grow its Fintech market presence. Whether Mobetize will be successful in commercializing its products and Services in the manner embedded in our business model is yet to be proven.

Mobetize has no agreements in place to obtain funds through bank loans, lines of credit or any other sources. Our inability to realize financing to supplement anticipated revenue to maintain operations and grow our business would materially restrict business operations. Financing may not be available upon acceptable terms, or at all. Should we be successful in securing future financing new issuances of equity or convertible debt would dilute our current shareholders and may include have rights, preferences or privileges senior to our issued common or preferred stock.

Our auditors have issued a going concern opinion on the financial statements for the year ended March 31, 2018, which indicates that the continuation of Mobetize as a going concern is dependent on continued financial support from its management and its ability to obtain necessary debt or equity financing, increase revenue, and generate profitable operations.

RESULTS OF OPERATIONS

During the twelve months ended March 31, 2018, Mobetize (i) continued to develop its FinTech products and Services; (ii) entered into certain development and commercialization agreements; (iii) acquired certain technology; (iv) secured debt and equity financing; and (v) satisfied continuous public disclosure requirements.

Operating Revenues, Operating Expenses and Net Loss

Our operating revenues, expenses and the resultant net losses are described below:

	US $ Year Ended March 31,
		2018			2017
Operating Revenues	$	438,281		$	467,417
Operating Expenses		(1,841,877	)		(1,463,291	)
Net Loss		(1,444,586	)		(1,153,254	)
Comprehensive Loss		(1,449,326	)		(1,154,285	)

Revenue

Mobetize realized $438,281 in revenue over the twelve months ended March 31, 2018, as compared to revenue of $467,417 over the twelve months ended March 31, 2017, a decrease of 6%. The decrease in revenues in the current period can be primarily attributed to a decrease in consulting and development services provided by us to existing Customers. We expect revenue to increase over the next twelve months as we expect to add transactional and licensing revenue from the deployment of our smartProducts in fiscal 2019.

Operating Expenses

Our operating expenses for the twelve-month periods ended March 31, 2018 and 2017 are described below:

	US $
	Year Ended
	March 31,
	2018		2017
Depreciation (Note 4)	$	3,236	$	3,958
General and administrative		403,441		286,013
General and administrative – related party (Note 7)		54,782		100,096
Investor relations and promotion		698		62,584
Investor relations and promotion- related party (Note 7(e))		137,087		20,000
Consulting fees		18,703		66,192
Management fees – related party (Note 7)		160,653		287,073
Professional fees		482,100		151,831
Research and development		431,658		373,074
Research and development – related party (Note 7(a))		149,528		112,470
Total Operating Expenses		1,841,877		1,463,291

Mobetize realized $1,841,877 in operating expenses over the twelve months ended March 31, 2018, as compared to operating expenses of $1,463,291 for the twelve months ended March 31, 2017, an increase of 26%. This increase in operating expenses in the current period can be primarily attributed to an increase in general and administrative fees, professional fees due to ongoing legal challenges, investor relations and research and development, offset by a decrease in general and administrative fees, investor relations, consulting, and management fees accrued to related parties. We expect that operating expenses will continue to grow as we expect to realize increases in general and administrative expenses, research and development and marketing over the next twelve months.

Net Loss

Mobetize recorded a net loss of $1,444,586 over the twelve months ended March 31, 2018, as compared to a net loss of $1,153,254 for the twelve months ended March 31, 2017, an increase of 25%. The increase in net loss in the current period can be primarily attributed to the 41% increase in general and administrative expenses, the 585% increase in investor relations expenses to a related party, the 218% increase in professional fees the greatest portion of which were dedicated to ongoing legal challenges and a 6% decrease in revenue. Despite our projection that operating expenses will increase over the next twelve months we expect that net losses will decrease over the same period as revenue is first realized from transaction and licensing fees.

Income Tax Expense

As of March 31, 2018, Mobetize has net operating loss (NOL) carry forwards of approximately $1,407,000. Should substantial changes in our ownership occur there would be an annual limitation of the amount of NOL carry forward which could be utilized. The ultimate realization of these carry forwards is due, in part, on the tax law in effect at the time and future events, which cannot be determined.

Liquidity and Capital Resources

Since inception Mobetize has experienced changes in liquidity, capital resources, and stockholders’ equity.

	US $
	March 31, 2018			March 31, 2017
Current Assets		74,231			709,000
Total Assets		154,113			828,273
Current/Total Liabilities		1,167,242			713,550
Working Capital		(1,093,011	)		(4,550	)

Mobetize had a negative working capital of $1,093,011 as of March 31, 2018, and has funded its cash needs since inception with revenues generated from operations, debt instruments and private equity placements. Existing working capital and anticipated cash flow are not expected to be sufficient to fund operations over the next twelve months.

Total current assets as of March 31, 2018, were $74,231 which consisted of cash, accounts receivable and prepaid expenses. Total assets were $154,113 which consisted of current assets, equipment and our investment in the Joint Venture. Current and total liabilities were $1,167,242 which consisted of accounts payable and accrued liabilities, deposits due to customers, accounts payable and accrued liabilities to a related party, deposits due to customers, and a related party promissory note.

Total stockholders’ deficit as of March 31, 2018, was ($1,013,129).

Cash Flows

Our cash flows are described below:

	US $
	Year Ended
	March 31,
	2018			2017
Cash flows used in Operating Activities		(769,494	)		(482,911	)
Cash flows used in Investing Activities		—			—
Cash flows provided by Financing Activities		250,000			809,188

Cash Used in Operating Activities

Net cash used in operating activities for the twelve months ended March 31, 2018, was $769,496 as compared to net cash used in operating activities of $482,911 for the twelve-month ended March 31, 2017. The change in net cash used in operating activities in the current period can be attributed to the net loss for the period and a number of items that are book expense items which do not affect the total amount used in operating activities relative to actual cash used including amortization of an intangible asset, loss on Joint Venture, depreciation expense, accrued interest on shareholder loans, promissory notes and a loss on settlement of accounts payable. Balance sheet accounts that actually affect cash, but are not income statement related items, that are added or deducted to arrive at net cash used in operating activities, include accounts receivable, prepaid expenses and deposits, accounts payable and accrual of liabilities, and deposits due to Customers. Mobetize expects to continue to use net cash in operating activities in future periods until such time as net losses transition to net income.

Cash Used in Investing Activities

Net cash used in investing activities for the twelve months ended March 31, 2018, was nil as compared to net cash used in investing activities for the twelve months ended March 31, 2017, of nil. Mobetize expects to use net cash flow in investing activities in future periods as it grows its business model.

Cash Provided by Financing Activities

Net cash provided by financing activities for the twelve months ended March 31, 2018, was $250,000 as compared to net cash provided by financing activities for the twelve months ended March 31, 2017, of $809,188. The change in net cash provided by financing activities in the current period can be attributed to a decrease in proceeds from the sale of Series B preferred stock to $nil during the twelve months ended March 31, 2018 as compared to $500,000 for the twelve months ended March 31, 2017. Mobetize expects to continue to rely on cash provided by financing activities as its business will require additional funding to meet forecast capital requirements to develop its product line and market its products.

We expect that working capital requirements will continue to be funded through a combination of revenue and issuances of securities as either debt or equity. Net cash provided by financing activities is expected to increase in line with the anticipated growth of our business.

Existing working capital, advances from directors, credit extended by directors and debt or equity placements combined, with anticipated revenue are expected to be adequate to fund operations over the next twelve months though we have no commitments for such working capital. Historically, we have financed operations through private placements of equity and advances or loans from directors. Increases in operating expenses and capital expenditures are expected going forward related to developmental expenses and marketing expenses. We intend to finance these expenses with further issuances of debt or equity securities while remaining cognizant that additional capital to meet long-term operating requirements. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have secured no such arrangements the prospect exists that we will be unsuccessful in raising additional capital which failure would have a severe negative impact on our ability to continue operations. Further, issuances of equity or convertible debt will result in dilution to our current shareholders and could have rights, preferences or privileges senior to our outstanding common and preferred stock. If sufficient capital is not available to us, we will not be able to take realize our business model, which failure would materially limit or cause our business to fail.

We have no lines of credit or other bank financing arrangements.

We do not intend to pay cash dividends in the foreseeable future.

Our commitments for future capital expenditures were not material at year end.

We have no defined benefit plan or contractual commitment with any of its officers or directors, except those entered into in the ordinary course in respect to employment or services agreements.

We have no current plans for the purchase or sale of any plant or equipment.

We have no current plans to make any changes in the number of employees.

~~ITEM~~Off Balance 8Sheet Arrangements

~~Financial~~As of ~~Statements~~March 31, 2018, Mobetize has no significant 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 is material to stockholders.

25GOING CONCERN

~~ITEM~~The independent 9auditors' report accompanying our March 31, 2018, financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. As of March 31, 2018, Mobetize had an accumulated deficit of $8,922,901. The continuation of Mobetize as a going concern is dependent upon continued financial support from its management, its ability to market commercially viable products, its ability to offer innovative Services, obtain necessary debt or equity financing to realize its business model, and ultimately to generate profitable operations. Whether Mobetize can accomplish these objectives raises substantial doubt regarding Mobetize’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Mobetize be unable to continue as a going concern.

~~Changes~~CRITITCAL ACCOUNTING ~~in and Disagreements With Accountants on Accounting and Financial~~POLICIES

~~Disclosure~~Our significant accounting policies are summarized in Note 2 to our financial statements. While the selection and application of any accounting policy may involve some level of subjective judgments and estimates, we believe the following accounting policies are the most critical to our financial statements, potentially involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing conditions.

Revenue Recognition

Mobetize recognizes revenue from payment processing, licensing, and provision of consulting services. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.

Stock-Based Compensation

Mobetize records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. Mobetize uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by Mobetize’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to Mobetize’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of loss and comprehensive loss over the requisite service period. Options granted to consultants are valued at the fair value of the equity instruments issued, or the fair value of the services received, whichever is more reliably measureable.

~~ITEM~~Embedded Conversion 9AFeatures

~~Controls~~Mobetize evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and ~~Procedures~~Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20, Debt with Conversion and Other Options for consideration of any beneficial conversion feature.

26Derivative Financial Instruments

~~ITEM~~Mobetize does 9Bnot use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Mobetize evaluates all of it financial instruments, including convertible debentures, stock purchase warrants, and stock options to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

~~Other~~For derivative ~~Information~~financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income (loss). For option-based simple derivative financial instruments, Mobetize uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, Mobetize records a Beneficial Conversion Feature and related debt discount (BCF). When Mobetize records a BCF the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid-in capital) and amortized to interest expense over the life of the debt.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

Not required of smaller reporting companies.

ITEM 8. Financial Statements and Supplementary Data

Our audited financial statements and notes thereto for the years ended March 31, 2018 and 2017 are attached hereto as F-1 through F-27.

MOBETIZE CORP.

Consolidated Financial Statements

March 31, 2018

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Loss and Comprehensive Loss.	F-3
Consolidated Statements of Stockholders’ Equity (Deficiency)	F-4
Consolidated Statements of Cash Flows	F-5
Notes to the Consolidated Financial Statements	F-6

F-1

Davidson & Company llp ____________________chartered Professional Accountants _________________

Report of Independent Registered Public Accounting Firm

To the Shareholders and Directors of

Mobetize Corp.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Mobetize Corp. (the “Company”), as of March 31, 2018 and 2017, and the related consolidated statements of loss and comprehensive loss, changes in stockholders’ equity (deficiency), and cash flows for the years ended March 31, 2018 and 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Mobetize Corp. as of March 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended March 31, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2017.

		“DAVIDSON & COMPANY LLP”

		/s/ DAVIDSON & COMPANY
		Charted Professional Accounts
Vancouver, Canada
July 26, 2018

1200 -609 Granville Street, P.O. Box 10372, Pacific Center, Vancouver, B.C. Canada V7Y 1G6

Telephone (604) 687-0947 Davidson-co.com

F-1

MOBETIZE CORP.

Consolidated Balance Sheets

(Expressed in US dollars)

	MARCH 31, 2018			MARCH 31, 2017
ASSETS
Current Assets:
Cash	$	11,542		$	535,438
Accounts receivable		40,619			113,140
Prepaid expenses and deposits		22,070			44,783
Prepaid expenses and deposits – related party (Note 7)		—			15,639
Total Current Assets		74,231			709,000

Intangible asset (Note 3)		—			111,644
Equipment, net (Note 4)		4,655			7,629
Investment in joint venture (Note 3)		75,227			—
TOTAL ASSETS	$	154,113		$	828,273

LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY

LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities	$	316,593		$	108,381
Accounts payable and accrued liabilities - related party (Note 7)		547,509			320,391
Deposits due to customers		8,740			980
Promissory note – related party (Note 7)		294,400			43,798
Convertible promissory notes (Note 6)		—			240,000
TOTAL LIABILITIES	$	1,167,242		$	713,550

STOCKHOLDERS' (DEFICIENCY) EQUITY
Common stock, $0.001 Par Value: 250,000,000 authorized and 234,541 common shares issued and outstanding (Note 8(a))	$	235		$	235
Preferred stock, $0.001 Par Value: 75,000,000 authorized
Preferred stock – Series A, $0.001 Par Value: 10,000,000 authorized and 4,565,000 shares issued and outstanding (Note 8(b))		4,565			4,565
Preferred stock – Series B, $0.001 Par Value: 25,000,000 authorized and 14,282,976 (2017 – 13,688,408) shares issued and outstanding (Note 8(c))		14,283			13,688
Warrants reserve		676,964			676,964
Options reserve		999,733			952,828
Additional paid-in capital		6,228,999			5,955,025
Accumulated other comprehensive loss		(15,007	)		(10,267	)
Accumulated deficit		(8,922,901	)		(7,478,315	)
Total Stockholders' (Deficiency) Equity		(1,013,129	)		114,723
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY	$	154,113		$	828,273

The accompanying notes are an integral part of these consolidated financial statements

F-2

MOBETIZE CORP.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in US dollars)

	YEAR ENDED MARCH 31,
	2018			2017
OPERATING REVENUES
Revenues (Note 11)	$	438,281		$	467,417

OPERATING EXPENSES
Depreciation (Note 4)		3,236			3,958
General and administrative		403,441			286,013
General and administrative – related party (Note 7)		54,782			100,096
Investor relations and promotion		698			62,584
Investor relations and promotion – related party (Note 7(e))		137,078			20,000
Consulting fees		18,703			66,192
Management fees – related party (Note 7)		160,653			287,073
Professional fees		482,100			151,831
Research and development		431,658			373,074
Research and development - related party (Note 7(a))		149,528			112,470
Total Operating Expenses		1,841,877			1,463,291

LOSS BEFORE OTHER ITEMS		(1,403,596	)		(995,874	)

OTHER ITEMS
Loss on joint venture (Note 3)		(26,314	)		—
Loss on settlement of accounts payable (Note 8(c))		(14,676	)		(157,380	)

NET LOSS	$	(1,444,586	)	$	(1,153,254	)

NET LOSS PER SHARE
Basic and diluted	$	(6.16	)	$	(4.74	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic and diluted		234,541			243,454

COMPREHENSIVE LOSS
Net loss	$	(1,444,586	)	$	(1,153,254	)
Other comprehensive loss:
Cumulative translation adjustment		(4,740	)		(1,031	)
Comprehensive loss	$	(1,449,326	)	$	(1,154,285	)

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

F-3

MOBETIZE CORP.

Consolidated Statements of Stockholders’ Equity (Deficiency)

For the Years Ended March 31, 2017, and 2018

(Expressed in US dollars)

	Common Stock						Preferred Stock Class A				Preferred Stock Class B
	Number			Value			Number		Value		Number		Value		Additional Paid-In Capital			Warrants and Options Reserves		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholder’s Equity (Deficiency)
Balance – March 31, 2016		287,548		$	288			4,565,000	$	4,565		—	$	—	$	4,636,950		$	1,434,488	$	(6,325,061	)	$	(9,236	)	$	(258,006	)
Conversion of common to preferred shares		(54,207	)		(54	)		—		—		5,420,648		5,421		(5,367	)		—		—			—			—
Shares issued for cash		—			—			—		—		500,000		500		499,500			—		—			—			500,000
Shares issued for intangible asset		—			—			—		—		500,000		500		124,500			—		—			—			125,000
Shares issued for services		1,200			1			—		—		50,000		50		44,649			—		—			—			44,700
Shares issued to settle accounts payable		—			—			—		—		1,967,760		1,967		313,543			—		—			—			315,510
Shares issued to settle promissory note		—			—			—		—		4,650,000		4,650		41,850			—		—			—			46,500
Shares issued upon conversion of convertible notes		—			—			—		—		600,000		600		299,400			—		—			—			300,000
Stock-based compensation		—			—			—		—		—		—		—			195,304		—			—			195,304
Net loss for the year		—			—			—		—		—		—		—			—		(1,153,254	)		—			(1,153,254	)
Comprehensive loss for the year		—			—			—		—		—		—		—			—		—			(1,031	)		(1,031	)
Balance – March 31, 2017		234,541		$	235			4,565,000	$	4,565		13,688,408	$	13,688	$	5,955,025		$	1,629,792	$	(7,478,315	)	$	(10,267	)	$	114,723
Shares issued to settle accounts payable		—			—			—		—		34,568		35		34,534			—		—			—			34,569
Shares issued upon conversion of convertible notes		—			—			—		—		560,000		560		239,440			—		—			—			240,000
Stock-based compensation		—			—			—		—		—		—		—			46,905		—			—			46,905
Net loss for the year		—			—			—		—		—		—		—			—		(1,444,586	)		—			(1,444,586	)
Comprehensive loss for the year		—			—			—		—		—		—		—			—		—			(4,740	)		(4,740	)
Balance – March 31, 2018		234,541		$	235			4,565,000	$	4,565		14,282,976	$	14,283	$	6,228,999		$	1,676,697	$	(8,922,901	)	$	(15,007	)	$	(1,013,129	)

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

F-4

MOBETIZE CORP.

Consolidated Statements of Cash Flows

(Expressed in US dollars)

	YEAR ENDED MARCH 31,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,444,586	)	$	(1,153,254	)
Items not affecting cash:
Amortization of intangible asset – research and development (Note 3)		10,103			13,356
Depreciation		3,236			3,958
Interest accrued on shareholder loans and promissory notes – related party		17,462			2,035
Loss on joint venture		26,314			—
Loss on settlement of accounts payable		14,676			157,380
Shares issued for services		—			44,700
Stock-based compensation (Note 10)		46,905			195,304
Changes in non-cash working capital:
Accounts receivable		72,521			(69,411	)
Prepaid expenses and deposits		22,713			8,894
Prepaid expenses and deposits – related party		15,639			(8,059	)
Accounts payable and accrued liabilities		228,105			103,555
Accounts payable and accrued liabilities - related party		209,656			219,131
Deposits due to customers		7,760			(500	)
Net cash used in operating activities		(769,496	)		(482,911	)

CASH FLOWS FROM FINANCING ACTIVITES
Proceeds from sale of preferred stock		—			500,000
Proceeds from convertible promissory note, net of prepaid interest		—			265,000
Proceeds from promissory note (Note 5)		20,152			—
Proceeds from promissory note, net of prepaid interest-related party		250,000			44,188
Repayment of promissory note (Note 5)		(20,152	)		—
Net cash provided by financing activities		250,000			809,188

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(4,400	)		(1,180	)

NET (DECREASE) INCREASE IN CASH		(523,896	)		325,097
CASH - BEGINNING OF YEAR		535,438			210,341
CASH - END OF YEAR	$	11,542		$	535,438

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued upon conversion of convertible promissory note	$	240,000		$	300,000
Shares issued for intangible asset	$	—		$	125,000
Shares issued to settle accounts payable	$	34,569		$	351,510
Shares issued to settle promissory note – related party	$	—		$	46,500
Transfer from intangible asset to investment in joint venture	$	101,541		$	—

SUPPLEMENTAL DISCLOSURES:
Interest paid	$	—		$	37,703
Income taxes paid	$	—		$	—

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

F-5

1. Nature of Operations and Continuance of Business

Mobetize Corp. (“Company”) was incorporated in the state of Nevada on February 23, 2012, as Slavia, Corp. On August 13, 2013, its name changed to “Mobetize Corp.” The Company provides Fintech solutions and services to enable and support the convergence of global telecom and financial services providers (“Customers”) through its Global Mobile B2B Fintech and Financial Services Marketplace (“Hub”). The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to optimize the Company’s existing technology.

On July 11, 2017, the Company completed a consolidation of the issued and outstanding common shares on a one for one hundred (1/100) basis and a decrease in the number of its authorized common and preferred shares. All share and per share amounts have been retroactively restated to reflect the share consolidation.

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize assets and discharge liabilities in the normal course of business. As of March 31, 2018, the Company has an accumulated deficit of $8,922,901, a history of net losses and a working capital deficiency of $1,093,011. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon continuing financial support from management, increasing sales, securing debt or equity financing, cutting operating costs, launching viable products, and realizing profitable operations. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

a) Basis of Presentation

These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) which include the accounts of Mobetize Canada Inc., and Mobetize USA Inc., both of which are wholly-owned subsidiaries of the Company. The consolidated financial statements are expressed in U.S. dollars. All significant intercompany transactions and balances have been eliminated.

F-6

2. Summary of Significant Accounting Policies - continued

b) Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable, revenue recognition, useful life of long-lived assets, fair value of stock-based compensation, embedded derivative liabilities and beneficial conversion features of convertible debentures, fair values of shares issued for non-cash consideration, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c) Cash

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of March 31, 2018, and 2017, the Company had no cash equivalents.

d) Accounts Receivable and Allowance for Doubtful Accounts

Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable primarily includes trade receivables from customers. The Company provides an allowance for its accounts receivable for estimated losses that may result from its customers’ inability to pay. At March 31, 2018, the Company had accounts receivable of $40,619 (2017 - $113,140) and has not recognized an allowance for doubtful accounts.

e) Prepaid Expenses and Deposits

The Company pays for some services in advance and recognizes these expenses as prepaid at the balance sheet date. If certain prepaid expenses extend beyond one-year, those are classified as non-current assets.

f) Revenue Recognition

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

F-7

2. Summary of Significant Accounting Policies – continued

g) Equipment

Equipment is accounted for at cost less accumulated depreciation and includes computer equipment and office furniture. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are five years.

h) Intangible Asset

Intangible asset consisted of a license with a definite life of two years and was stated at cost less amortization. The asset is reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques.

i) Joint Venture

Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors including, among others, representation on the Investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee company’s accounts are not reflected within the Company’s Consolidated Balance Sheets and Statements of Loss and Comprehensive Loss; however, the Company’s share of the earnings or losses of the Investee company is reflected as a single line item in the Consolidated Statements of Loss and Comprehensive Loss. The Company’s carrying value in an equity method Investee company is also reflected as a single line item on the Company’s Consolidated Balance Sheets.

When the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

j) Long-lived Assets

In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

F-8

2. Summary of Significant Accounting Policies - continued

k) Research and Development Costs

The Company incurs research and development costs during the course of its operations and in the provision of revenue generating professional services. The costs are expensed except in cases where development costs meet certain identifiable criteria for capitalization. Capitalized development costs are amortized over the life of the related asset. Costs incurred after the launch of a product or service are expensed as incurred.

l) Stock-Based Compensation

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

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables.

These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in income (loss) over the requisite service period.

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

m) Income Taxes

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

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

F-9

2. Summary of Significant Accounting Policies - continued

n) Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share, which requires presentation of basic and diluted loss per share (“LPS”) on the face of the statements of loss and comprehensive loss. Basic LPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted LPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted LPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted LPS excludes all dilutive potential shares if their effect is anti-dilutive. Due to the continued losses in the Company, all convertible instruments, stock options, and warrants are considered anti-dilutive. Consequently, as of March 31, 2018, the Company has nil (2017 – nil) potentially dilutive shares.

o) Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements.

p) Advertising Costs

Advertising costs are expensed as incurred and are included in general and administrative expense in the accompanying financial statements. The Company incurred $18,098 and $9,565 in advertising costs for the years ended March 31, 2018 and 2017, respectively.

F-10

2. Summary of Significant Accounting Policies - continued

q) Financial Instruments/Fair Value

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

Level 1

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

Level 2

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

Level 3

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

Financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, accounts payable and accrued liabilities – related party, deposits due to customers, promissory note – related party, and convertible promissory notes. Pursuant to ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets.

Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor’s carrying amount or exchange amount.

The recorded values of all other financial instruments approximate their current fair values because of their nature and respective short-term maturity dates and current market rates for similar instruments. The Company is exposed to credit risk through its cash and accounts receivable, but mitigates this risk by keeping deposits at major financial institutions and advancing credit only to bona fide creditworthy entities. The maximum amount of credit risk is equal to the carrying amount of these instruments.

F-11

2. Summary of Significant Accounting Policies – continued

r) Embedded Conversion Features

The Company evaluates embedded conversion features within convertible promissory notes under ASC 815, Derivatives and Hedging, to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in income (loss). If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20, Debt with Conversion and Other Options, for consideration of any beneficial conversion feature.

s) Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including convertible debentures, stock purchase warrants and stock options, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income (loss). For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

t) Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a Beneficial Conversion Feature (the "BCF") and related debt discount.

When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid-in capital) and amortized to interest expense over the life of the debt.

u) Debt Issue Costs and Debt Discount

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

F-12

2. Summary of Significant Accounting Policies - continued

v) Foreign Currency

The functional and reporting currency of the Company and its subsidiary, Mobetize USA Inc., is the United States Dollar (“U.S. Dollars”). The functional currency of the Company’s international subsidiary, Mobetize Canada Inc., is the Canadian dollar. The Company translates the consolidated financial statements of this subsidiary to U.S. dollars in accordance with ASC 740, Foreign Currency Translation Matters, using period-end rates of exchange for assets and liabilities, and average rates for the annual period are derived from daily spot rates for revenues and expenses.

Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity (deficiency). The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

w) Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

F-13

2. Summary of Significant Accounting Policies - continued

x) Recent Accounting Standards

In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The standard will be effective for us in the first quarter of our fiscal year 2020, although early adoption is permitted (but no sooner than the adoption of Topic 606). We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

On November 22, 2017, the FASB issued “ASU 2017-14 — Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606)”. This update amends SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403, which bring existing guidance into conformity with Topic 606, Revenue from Contracts with Customers. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company´s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15 related to the statement of cash flows. This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017, and early adoption is permitted. The Company has made a preliminary evaluation and expects no material impact to arise from the adoption of this standard on April 1, 2018.

In February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. Earlier application is permitted. The adoption of this standard is not expected to have a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods and is to be retrospectively applied. The adoption of this standard is not expected to have a significant impact on the Company’s results of operations, financial condition, and cash flows. The adoption of this standard is expected to result in additional financial statement disclosures

F-14

3. Joint Venture

On January 12, 2017, the Company entered into a Gateway License Agreement and Joint Venture Agreement (“Joint Venture”) with CPT Secure, Inc. (“CPT”), a company controlled by a shareholder of the Company (related party), to further develop certain payment processing technology (“CPT IP”) on a 50/50 basis. In connection with the Joint Venture, the Company issued 500,000 Series B Preferred Shares with a fair value of $125,000 on January 12, 2017, to CPT in consideration for the license to the CPT IP which was contributed to MPAY Gateway Services Inc. (“MPAY”) on May 29, 2017. The license to the CPT IP has a term to January 11, 2019, and can be automatically renewed for successive two-year periods unless either party elects not to renew 60 days prior to expiration. The license fee of $125,000 is being amortized over the initial term of the license. During the year ended March 31, 2018, the Company recognized amortization of $10,103 (2017 - $13,356) on the license prior to the transfer, which has been included in research and development expense.

Effective May 29, 2017, the Company and CPT incorporated a joint venture company, MPAY. The Company accounts for its interest in MPAY using the equity method of accounting. Upon incorporation of MPAY, the Company transferred the remaining carrying value of the license to the CPT IP of $101,541 (after accumulated amortization of $23,459) to MPAY, which was recognized on the balance sheet as an investment in joint venture. MPAY is an inactive company. The results of operations and financial position of MPAY include sales of $nil, net loss of $52,628, current assets of $69, non-current assets of $49,144, current liabilities of $300, and equity of $48,913. During the year ended March 31, 2018, the Company recognized a loss on joint venture of $26,314 (2017 - $nil), representing the Company’s 50% interest in the loss (being the change in net assets) of MPAY. As at March 31, 2018, the remaining carrying value of the Company’s investment in joint venture was $75,227.

4. Equipment

Equipment, net consisted of the following:

	March 31, 2018		March 31, 2017
Computer equipment	$	14,884	$	14,421
Furniture		1,211		1,174
Total		16,095		15,595
Less: accumulated amortization		11,440		7,966
Equipment, net	$	4,655	$	7,629

During the year ended March 31, 2018, equipment cost increased by $500 (2017 – decreased by $241), and accumulated amortization was impacted by $238 (2017 - $155), as a result of foreign currency translation adjustments.

5. Promissory Note

On September 13, 2017, the Company entered into a Bridge Loan Promissory Note with a third party, whereby the Company received proceeds of $20,152 (CDN$25,000), which was non-interest bearing, unsecured, and matured on October 13, 2017. During the year ended March 31, 2018, the Company repaid the loan and paid a bridge loan fee of $1,942 (CDN$2,500) in consideration for the loan.

F-15

6. Convertible Promissory Notes

Date of issuance	Principal March 31, 2018		Principal March 31, 2017		Interest		Maturity
November 21, 2016⁽¹⁾	$	—		40,000		6% per annum		November 21, 2017
January 27, 2017⁽²⁾	$	—		125,000		12% per annum		January 27, 2018
January 30, 2017⁽³⁾	$	—		75,000		12% per annum		January 30, 2018
	$	—	$	240,000

⁽¹⁾ November 21, 2016 Issuance - $40,000 (converted):

•

Issued net of $2,400 of prepaid interest, based on an interest rate of 6% per annum.

•

The conversion feature was exercisable at the option of the holder (the “Conversion Feature”). The Conversion Feature enabled the holder to convert any portion of their outstanding convertible promissory note principal balance into Series B Preferred Shares at $0.25 per share on or after May 20, 2017, but no later than the maturity date.

•

The Company evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, it was determined that no beneficial conversion feature existed on the commitment date.

•

On April 21, 2017, the Company issued 160,000 Series B Preferred Shares pursuant to the conversion of $40,000 of the convertible promissory notes. $20,000 of this issuance was owed to a Director of the Company (Note 7(i)).

⁽¹⁾ January 27, 2017 Issuance - $125,000 (converted):

•

Issued net of $15,000 of prepaid interest, based on an interest rate of 12% per annum.

•

Of the $125,000 Convertible Promissory Notes, $50,000 was owed to a Director of the Company (Note 7(i)).

•

The Conversion Feature enables the holder to convert any portion of their outstanding convertible promissory notes principal balance into Series B Preferred Shares at $0.50 per share on or after July 26, 2017, but no later than the maturity date.

•

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, it was determined that no beneficial conversion feature existed on the commitment date.

•

On August 3, 2017, the Company issued 250,000 Series B Preferred Shares pursuant to the conversion of $125,000 of the convertible promissory notes.

F-16

6. Convertible Promissory Notes – continued

⁽²⁾ January 30, 2017 Issuance - $75,000 (converted):

•

Issued net of $9,000 of prepaid interest, based on an interest rate of 12% per annum.

•

The $75,000 Convertible Promissory Note is owed to a Director of the Company (Note 7(i)).

•

On August 3, 2017, the Company issued 150,000 Series B Preferred Shares pursuant to the conversion of $75,000 of the convertible promissory notes.

⁽³⁾ Conversions – For the Year Ended March 31, 2017

•

March, 2016 Issuance - $275,000: Issued net of $30,000 of prepaid interest, noting that $3,000 of prepaid interest was paid by the Company to one convertible debenture holder during the year ended March 31, 2017. On January 20, 2017, the Company issued 550,000 Series B Preferred Shares pursuant to the conversion of $275,000 of the convertible debenture in accordance with the modified conversion terms which were agreed to on that date.

•

July 25, 2016 Issuance - $25,000: Issued net of $3,000 of prepaid interest, based on an interest rate of 12% per annum. On January 20, 2017, the Company issued 50,000 Series B Preferred Shares pursuant to the conversion of $25,000 of the convertible debenture in accordance with the modified conversion terms which were agreed to on that date.

F-17

7. Related Party Transactions

	Year ended March 31,
Transactions with related parties	2018		2017
(a) Transactions incurred with the CEO or companies controlled by the CEO:
Management fees	$	123,776	$	121,370
Management fees – Stock-based compensation		613		27,971
Research and development		149,528		112,470
General and administrative		28,944		19,004
Conversion of promissory note (Note 8(c))		—		46,500
	$	302,861	$	327,315
(b) Transactions incurred with the former CFO(s) or a company controlled by a former CFO:
Management fees	$	—	$	7,110
General and administrative		—		69,231
	$	—	$	76,341
(c) Transactions incurred with the Chairman of the Company
Management fees ⁽¹⁾	$	—	$	33,000
Management fees – Stock-based compensation		25,903		69,730
	$	25,903	$	102,730
(d) Transactions incurred with a Director of the Company
Management fees – Stock-based compensation	$	10,361	$	27,892
General and administrative – Interest on promissory notes		12,660		—
General and administrative – Interest on convertible promissory note		13,178		11,861
	$	36,199	$	39,753
(e) Transactions incurred with a shareholder of the Company
Investor relations and promotion	$	137,078	$	20,000
Acquisition of intangible asset (Note 3)		—		125,000
	$	137,078	$	145,000

Related party balances, as at	March 31, 2018		March 31, 2017
(f) Amounts owed to companies controlled by the CEO:
Accounts payable and accrued liabilities	$	421,351		275,687
Promissory note – June 2, 2017⁽²⁾		25,000		25,000
Promissory note – July 11, 2017⁽³⁾		19,400		18,798
	$	465,751	$	319,485

(g) Amounts owed to the Chairman of the Company	$	9,000	$	9,000

(h) Amounts prepaid to a company controlled by the CEO
Prepaid interest on promissory notes	$	—	$	2,461

(i) Amounts owed to a Director of the Company
Accounts payable and accrued liabilities	$	8,622	$	—
Convertible promissory note – matures November 21, 2017 (Note 6⁽¹⁾))		—		20,000
Convertible promissory note – matures January 27, 2018 (Note 6⁽²⁾))		—		50,000
Convertible promissory note – matures January 30, 2018 (Note 6⁽³⁾))		—		75,000
Promissory note – September 17, 2017⁽⁴⁾		100,000		—
Promissory note – November 7, 2017⁽⁵⁾		50,000		—
Promissory note – December 5, 2017⁽⁶⁾		100,000		—
	$	258,622	$	145,000

(j) Amounts prepaid to a Director of the Company
Prepaid interest on convertible promissory notes	$	—	$	13,178

(k) Amounts owed to a shareholder of the Company
Accounts payable and accrued liabilities	$	88,001	$	17,358

F-18

7. Related Party Transactions – continued

⁽¹⁾

On July 1, 2016, the Company entered into an agreement with the Company’s Chairman whereby he would provide services to the Company at a daily rate of $1,000 for a period of two years ending on June 30, 2018. Effective April 1, 2017, the Company’s Chairman agreed to waive the accrued fees.

⁽²⁾

The promissory note maturing on June 2, 2017, is unsecured and was issued with a twelve-month term, comprises $25,000 principal, and bears interest at 12% per annum. The principal balance included prepaid interest of $3,000. The promissory note is currently overdue, and the parties are renegotiated timing of repayment.

⁽³⁾

The promissory note maturing on July 11, 2017, is unsecured and was issued with a twelve-month term, comprises $19,400 (2017 - $18,798) (CAD $25,000) principal, and bears interest at 12% per annum. The principal balance included prepaid interest of $2,328 (2017 - $2,256) (CAD $3,000). The promissory note is currently overdue, and the parties are renegotiating timing of repayment.

⁽⁴⁾

The promissory note maturing on March 17, 2018, was issued with a 6-month term, comprises $100,000 principal, which is unsecured and bears interest at 12% per annum.

⁽⁵⁾

The promissory note maturing on November 7, 2018, was issued with a 12-month term, comprises $50,000 principal, which is unsecured and bears interest at 12% per annum.

⁽⁶⁾

The promissory note maturing on December 5, 2018, was issued with a 12-month term, comprises $100,000 principal, which is unsecured and bears interest at 12% per annum.

8. Common Stock and Preferred Stock

a) Issuance of Common Stock:

For the Year Ended March 31, 2017

•

On August 1, 2016, the Company issued 120,000 shares of common stock at $0.06 per share totaling $7,200 as bonus shares to the former CFO of the Company, recorded with general and administrative – related party expenses.

For the Year Ended March 31, 2018

•

On July 11, 2017, the Company completed a consolidation of the issued and outstanding common shares on a one for one hundred (1/100) basis, and amended the Company’s Articles of Incorporation to decrease the number of authorized shares of common stock from 525,000,000 shares with a par value $0.001 per share to 250,000,000 shares with a par value of $0.001 per share. All share and per share amounts have been retroactively restated to reflect the share consolidation.

F-19

8. Common Stock and Preferred Stock - continued

b) Authorization and Issuance of Series A Preferred Shares:

•

The Company is authorized to issue 250,000,000 shares of preferred stock with a par value of $0.001 per share and has designated 10,000,000 of the preferred stock as Series A Preferred Shares (“Series A Preferred Shares”). The Series A Preferred Shares have the same rights and privileges as the common stock, with the exception that the Series A Preferred Share holder has 10 votes per Series A Preferred Share versus one vote per share of common stock and does not have the right to sell the shares for a period of two years from the date of issue.

•

Effective April 7, 2017, the Company amended its Articles of Incorporation to decrease the number of authorized preferred shares from 250,000,000 shares with a par value $0.001 per share to 75,000,000 with a par value $0.001 per share. There were no changes in the number of designated or outstanding Series A Preferred Shares or Series B Preferred Shares.

c) Authorization and Issuance of Series B Preferred Shares:

•

During the year ended March 31, 2017, the Company designated 25,000,000 shares of the authorized preferred stock as Series B Preferred Shares (“Series B Preferred Shares”). The Series B Preferred Shares have the same rights and privileges as the common stock, with the exception that the Series B Preferred Shares have an anti-dilution provision and the Series B Preferred Share holder does not have the right to convert Series B Preferred Shares into shares of common stock for a period of two years from the date of issue.

For the Year Ended March 31, 2017

•

On June 2, 2016, the Company converted 4,081,481 shares of common stock held by a company controlled by the CEO into 4,081,481 Series B Preferred Shares, 300,000 shares of common stock held by the Company’s Chairman and Director into 300,000 Series B Preferred Shares, and 1,039,167 shares of common stock held by the Company’s Director into 1,039,167 Series B Preferred Shares.

•

On July 15, 2016, the Company issued 200,000 Series B Preferred Shares with a fair value of $0.15 per share to settle $30,000 in services payable.

•

On July 15, 2016, the Company issued 1,300,000 Series B Preferred Shares with a fair value of $0.15 per share to a company controlled by a Chairman of the Company to settle $24,000 in services payable. The excess fair value of $171,000 is recorded within additional paid-in capital.

•

On July 15, 2016, the Company issued 4,650,000 Series B Preferred Shares with a fair value of $0.15 per share to a company controlled by the Company’s CEO to settle $46,500 in an outstanding promissory note, which included a principal of $50,000 less prepaid interest of $3,500. The excess fair value of $651,000 is recorded within additional paid-in capital.

•

On December 1, 2016, the Company issued 275,000 Series B Preferred Shares with a fair value of $0.25 per share to a consultant of the Company to settle $27,500 in amounts owing for services provided, resulting in a loss on settlement of debt of $141,250.

•

On January 12, 2017, the Company issued 500,000 Series B Preferred Shares with a fair value of $0.25 per share to acquire a license from CPT Secure, Inc. (Note 3).

•

On January 20, 2017, the Company issued 600,000 Series B Preferred Shares pursuant to the modification and immediate conversion of $300,000 of convertible debentures.

•

On February 23, 2017, the Company issued 25,000 Series B Preferred Shares with a fair value of $0.50 per share as incentive shares upon signing of an advisory services agreement, recorded within consulting fees.

F-20

8. Common Stock and Preferred Stock – continued

For the Year Ended March 31, 2017 - continued

•

On March 13, 2017, the Company issued 50,000 Series B Preferred Shares with a fair value of $1.00 per share to a vendor pursuant to the settlement of $12,500 in accounts payable, resulting in a loss on settlement of debt of $25,000.

•

On March 14, 2017, the Company issued 25,000 Series B Preferred Shares with a fair value of $1.00 per share as incentive shares upon signing of an advisory services agreement, recorded within consulting fees.

•

On March 16, 2017, pursuant to an agreement signed on March 9, 2017, the Company issued 500,000 Series B Preferred Shares at $1.00 for gross proceeds of $500,000.

•

On March 30, 2017, the Company issued 127,760 Series B Preferred Shares with a fair value of $1.00 per share to a vendor pursuant to the settlement of $31,940 in accounts payable, resulting in a loss on settlement of debt of $95,820.

•

On March 31, 2017, the Company issued 15,000 Series B Preferred Shares with a fair value of $1.00 per share to a vendor pursuant to the settlement of $32,190 in accounts payable, resulting in a gain on settlement of debt of $17,190.

For the Year Ended March 31, 2018

•

On April 21, 2017, the Company issued 160,000 Series B Preferred Shares pursuant to the conversion of $40,000 in convertible debentures at a conversion price of $0.25 per share (Note 6⁽¹⁾).

•

On April 27, 2017, the Company issued 19,568 Series B Preferred Shares with a fair value of $1.00 per share to a consultant of the Company to settle $4,892 in amounts owing for services provided, resulting in a loss on settlement of debt of $14,676.

•

On May 29, 2017, the Company issued 15,000 Series B Preferred Shares with a fair value of $1.00 per share to a vendor pursuant to the settlement of $15,000 in accounts payable.

•

On August 3, 2017, the Company issued 400,000 Series B Preferred Shares pursuant to the conversion of $200,000 in convertible debentures at a conversion price of $0.50 per share (Note 6⁽²⁾ and 6⁽³⁾).

F-21

9. Share Purchase Warrants

The following table summarizes the continuity of share purchase warrants:

		Number of warrants				Weighted average exercise price $
Balance, March 31, 2016, 2017 and 2018			26,364				104

As at March 31, 2018, the following share purchase warrants were outstanding:

Number of warrants outstanding		Exercise price $		Expiry date
	6,944		100	June 24, 2018*
	3,866		125	December 10, 2018
	15,554		100	September 1, 2018
	26,364

* Expired subsequently

10. Stock Options

The Company has adopted a Stock Option Plan (“Stock Option Plan”) which permits the Company to issue stock options for up to 30,000 common shares (post consolidation on July 11, 2017) of the Company to directors, officers, employees and consultants of the Company with a maximum term of 5 years, exercise prices equal to the minimum fair market value per common share on the date of grant, and a vesting schedule determined by the Board of Directors at the time of granting the options.

The following table summarizes the continuity of stock options:

	Number of stock options			Weighted average exercise price $
Balance, March 31, 2016		23,812			60
Expired		(2,885	)		60
Cancelled		(727	)		60
Outstanding, March 31, 2017 and 2018		20,200			60
Exercisable, March 31, 2018		19,150			60

As at March 31, 2018, the following stock options were outstanding:

Number of options outstanding

Number of options vested

Exercise
price

Expiry date

20,200

19,150

September 30, 2020

During the year ended March 31, 2018, $46,905 (2017 - $195,304) in stock-based compensation expense was recorded and allocated amongst general and administrative, consulting fees, management fees, and research and development expenses. The intrinsic value of the options was $nil at March 31, 2018, and 2017.

F-22

11. Concentration of Risk

Revenues are currently generated through licensing, professional services, and payment processing services provided by Mobetize to our existing customers. During the year ended March 31, 2018, the Company had revenues from six customers (2017 –five customers) with 54% (2017 – 56%) of revenues generated from the Company’s largest customer. At March 31, 2018, the Company’s accounts receivable is concentrated and due from four customers (2017 – five customers) with 43% (2017 – 61%) of accounts receivable due from the Company’s largest customer.

12. Commitments and Contingencies

The Company has an obligation under a rental lease for its operating office. As of March 31, 2018, the remaining term of the lease is 9 months with monthly payments of $4,995. The Company’s lease includes a renewal option.

The Company received a Citation and Notice of Assessment dated October 14, 2016 (Citation), that Stephen J. Fowler (Fowler), a former director and chief financial officer, had initiated a complaint with the State of Washington Department of Labor and Industries for amounts allegedly due to him for unpaid wages. The Citation declared that Fowler is owed $45,000 in wages in addition to an assessed interest of $3,368, and a penalty of $4,500 ($20,535 (2017 - $18,346)) accrued net of advances receivable due from Fowler)). On November 8, 2016, the Company entered an appeal alleging that the calculation of amounts due to Fowler) was incorrect and that Fowler had improperly obtained shares of its common stock which it intends to recover. The Company received a response from the Department of Labor and Industries dated November 18, 2016, in which it was advised that Fowler’s claim had been transferred to the Office of the Attorney General and that a hearing on the matter would be held by the Office of Administrative Hearings. A hearing has been scheduled on January 30, 2019. The Company believes that the claim is without merit and intends to vigorously defend its position. The ultimate outcome of this litigation cannot presently be determined. However, in management’s opinion, the likelihood of a material adverse outcome is remote.

The Company received a Notice of Civil Claim dated April 26, 2017, filed in British Columbia Supreme Court by Fowler, naming the Company and its directors as defendants. Fowler asserts claims against the Company for unpaid expenses of approximately $6,000, and breach of contract for unspecified general and punitive damages and legal costs associated with this action. He also asserts that his shareholdings in the Company have been diluted due to certain actions of its current director, making claims including breach of contract, breach of fiduciary duty, misrepresentation and conspiracy. The Company and its directors believe that Fowler’s claims are without merit and are intent on vigorously defending against this action. Further, the Company has advanced counterclaims against Fowler, including a claim that that while Fowler was an officer and director of the Company, that he caused it to issue shares to himself to which he was not entitled. The Company’s counterclaims also assert claims against Fowler of fraudulent or negligent misrepresentation, breach of fiduciary duty, negligence and unjust enrichment. On June 23, 2017, the Company filed its response to Fowler’s claims and its own counterclaims against Fowler and exchanged document discovery in November 2017 and March 2018. No further steps in this action have been taken, and no trial date has been set. In management’s opinion, the likelihood of a material adverse outcome is remote. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the financial statements.

F-23

12. Commitments - continued

The Company received a Complaint dated May 12, 2017, filed in the Second Judicial District Court of the State of Nevada (Washoe County) by Fowler naming the Company and its three present directors as defendants. The Washoe County action concerns substantially the same facts and seeks substantially the same relief as Fowler’s British Columbia action (Note 12(b)). On June 23, 2017, the Company filed a Motion to Dismiss, or in the alternative an Application for a Preliminary Injunction to either dismiss or enjoin the Complaint. On October 31, 2017, the court held a hearing on the Motion which was denied. The court did however stay the Washoe County action pending resolution of the British Columbia action. No trial date has been set. The Company’s exposure and assessment of the outcome of this claim are described in Note 12 (b) above.

The Company received a Complaint dated May 3, 2017, filed in the Eighth Judicial District Court of the State of Nevada (Clark County) by Cary Fields (Fields) naming the Company and its three present directors as defendants, to obtain a preliminary injunction to enjoin a consolidation of the Company’s common stock, and seek damages for breach of fiduciary duty, conversion, and unjust enrichment. On May 18, 2017, after due consideration, the court denied Fields’ application for injunctive relief. The court did not rule on the question of Fields’ alleged damages. On August 4, 2017, the Company and its three directors received an Amended Complaint seeking damages for breach of fiduciary duty, conversion, and unjust enrichment. On November 17, 2017, the Company filed Defendants’ Motion for Judgment on the Pleadings. The court held hearings on the Motion on December 19, 2017 and January 9, 2018 and denied the Motion. A trial date has been set for January 2, 2019. The suit seeks damages totaling $3,660,242 plus legal expenses. The Company intends to vigorously defend its position. The ultimate outcome of this litigation cannot presently be determined and management feels that a reasonable estimate of loss cannot be made at this time, nor is it probable that a loss will occur. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the financial statements.

13. Segment Information

The Company has a single operating segment being the provision of Fintech Solutions and Services to businesses located in Canada and the United States of America (“USA”). Revenues are generated in Canada and the USA while all assets are located in Canada. During the year ended March 31, 2018, the Company generated revenue of $249,100 (CDN$319,276) (2017 - $197,226 (CDN$258,862) in Canada and $189,181 (2017 - $270,191) in the USA. The costs incurred to generate this revenue are expensed as research and development. At March 31, 2018, and 2017, the Company’s long-lived assets are located in Canada.

F-24

14. Income Taxes

During the year ended March 31, 2018, the Company incurred federal operating non-capital losses (“non-capital loss”) of approximately $1,377,000 (2017 – $750,000). As at March 31, 2018, the Company’s cumulative losses totaled $6,118,000 (2017 - $4,708,000).

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended March 31, 2018, and 2017, is summarized as follows:

	2018 $			2017$
Loss before income taxes		(1,444,586	)		(1,153,254	)
Income tax recovery at statutory rates		(390,000	)		(300,000	)
Permanent differences		14,000			137,000
Temporary differences		321,000			211,000
Change in statutory, foreign tax, foreign exchange rates and other		55,000			(48,000	)
Income tax expenses		—			—

The valuation allowance for deferred tax assets as of March 31, 2018, and 2017, was $1,406,000 and $1,479,000, respectively, which will begin to expire in 2033. The decrease in the valuation allowance is attributable to a decrease in the federal corporate tax rate which impacted the non-capital loss carryforwards. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of March 31, 2018, and 2017, and maintained a full valuation allowance.

The unrecognized deferred tax assets include tax losses and difference between the carrying amount and tax basis of the following items:

	2018 $			2017$
Deferred tax assets:
Non-capital losses available for future periods		1,404,000			1,478,000
Property and equipment		2,000			1,000
Valuation allowance		(1,406,000	)		(1,479,000	)
Deferred income taxes recovered		—			—

F-25

14. Income Taxes - continued

The Company has non-capital losses available to offset future taxable income as follows:

Year of expiry	Canada $		USA $
2033		—		353,000
2034		—		554,000
2035		316,000		1,439,000
2036		689,000		639,000
2037		478,000		272,000
2038		639,000		739,000
		2,122,000		3,996,000

F-26

15. Subsequent Events

On April 10, 2018, the Company entered into a Loan Consolidation Agreement (the “Agreement”) with a Director of the Company, whereby $250,000 of previously issued promissory notes owing to the Director of the Company along with an additional $50,000 of funding was consolidated into a new $300,000 promissory note. The promissory note bears interest at 12% per annum and matures on April 10, 2019.

On May 23, 2018, the Company terminated a Strategic Business Development Service Agreement, which had a fee of $15,000 per month and a term of December 1, 2017, to December 1, 2018. In connection with the termination, the Company is obligated to pay the consultant $105,000, which represents the monthly fees that would have been paid for the remaining term of the agreement.

On June 1, 2018, the Board of Directors of the Company approved the Second Amended Certificate of Designation of Preferred Stock of the Company’s Series A Preferred Stock (the “Second Amended Certificate of Designation”) that amends and replaces in its entirety the Certificate of Amendment of Preferred Stock of the Company’s Series A Preferred Stock dated May 20, 2016. The Second Amended Certificate of Designation was filed with the Nevada Secretary of State on June 4, 2018.T

The Second Amended Certificate of Designation designates 10,000,000 of the Company’s authorized preferred shares as Series A Preferred Stock. The Series A Preferred Stock can be converted into shares of common stock of the Company or shares of Series B Preferred Stock of the Company on a one-for-one basis on or after the 2^nd anniversary of the designation of the Series A Preferred Stock or on an earlier date if converted in connection with a reorganization, reclassification, consolidation, merger or sale. The Series A Preferred Stock have the same rights and privileges as the common stock, with the exception that the Series A Preferred Stock holder has 10 votes per Series A Preferred Stock versus one vote per share of common stock. The Second Amended Certificate of Designation may not be altered in any way except with the consent of the holder of Series A Preferred Stock. The Company may not redeem for value existing shares of Common Stock or any additional series of preferred stock if such redemption does not include outstanding shares of Series A. The Company may not issue a new series of capital stock ranking pari pasu or with a preference over the voting rights fixed for the Series A Preferred Stock.

On June 4, 2018, the Company’s Chief Executive Officer and Chief Financial Officer, the sole holder of Series A Preferred Stock, elected to convert all 4,565,000 outstanding shares of Series A Preferred Stock to Series B Preferred Stock, in accordance with the terms and conditions of the Second Amended Certificate of Designation.

Subsequent to the year ended March 31, 2018, the Company received a total of $165,000 pursuant to the issuance of promissory notes to companies controlled by the CEO of the Company, a Director of the Company and a third-party lender.

F-27

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

ITEM 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Based on that evaluation, Mobetize’s management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and such information was not accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Management's Report on Internal Control over Financial Reporting

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

•

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

•

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

•

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

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

~~PART~~Mobetize’s management ~~III~~conducted an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting.

~~RELATED~~A material ~~PARTIES~~weakness ~~AND~~is ~~GOVERNANCE~~a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify material weaknesses, management concluded its internal control over financial reporting to be ineffective.

~~ITEM~~The matters 10involving internal control over financial reporting that our management considered to be material weaknesses were:

1. Lack of a functioning audit committee due to the number of independent members on our Board of Directors, ~~Executive~~which ~~Officers~~weakness ~~and~~could ~~Corporate~~result ~~Governance~~in ineffective oversight in the monitoring of required internal controls and procedures;

Failure to maintain the segregation of the duties of chief executive officer and chief financial officer, which failure could result in inadequate implementation and review of financial reporting control procedures.

The aforementioned material weaknesses were identified by our Chief Executive Officer and Chief Financial Officer in connection with his review of our financial statements as of March 31, 2018.

We do not believe the material weaknesses described above caused any material misstatement of our financial condition and results of operations for the year ended March 31, 2018. However, the lack of sufficient independent directors has caused us to delay the formation of an audit committee and the resignation of our former chief financial officer, has caused us to combine the duties of chief executive officer and chief financial officer on an interim basis. Should we fail to remedy these weaknesses, such, failures could result in a material misstatement in our financial statements in future periods.

Mobetize intends to remedy its material weaknesses as follows:

When in a financial position to do so, we intend to appoint a second and third independent member to our Board of Directors who would be tasked with lending an independent voice to the responsibilities incumbent an audit committee. Our Board of Directors has adopted an audit charter and expects to move forward with forming an audit committee as soon as practicable.

We intend bifurcate the position of chief executive officer and chief financial officer into two separate positions as soon as is practicable.

We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

~~ITEM~~This annual 11report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.

~~Executive~~Changes in ~~Compensation~~Internal Controls Over Financial Reporting

During the quarter ended March 31, 2018, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B. Other Information

None.

PART III – RELATED PARTIES AND GOVERNANCE

ITEM 10. Directors, Executive Officers and Corporate Governance

The following individuals serve as the directors and executive officers of Mobetize as of the date of this annual report.

Name	Positions Held	Age	Date Elected or Appointed
Ajay Hans	Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director	45	July 09, 2014
Malek Ladki	Director & Chairman	53	July 09, 2014
Donald Duberstein	Director	67	September 14, 2015

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of Mobetize, indicating the person's principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Ajay Hans – Chief Executive Officer and Director

Business Experience

Mr. Hans has over 15 years of technology new venture development and financial experience in the development, marketing and implementation of complex billing and payment related software technologies dedicated for MNO’s and MVNO’s. Mr. Hans has served as CEO & COO of Dyneget; VP Operations OAN Services Canada – OAN pioneered telecom billing and clearing solutions across North America processing $500 million annually in LEC Billing transactions (ie. a form of billing for internet-based or other usually electronic services where the user is charged through his account with the local telephone company (also known as the Local Exchange Carrier), rather than directly from the provider of the service). Additionally, he is actively involved in speaking engagements for Pacific Crest Securities.

Mr. Hans oversees our strategic vision and tactical execution. He has held senior executive positions with leading telecom software technology companies where he successfully implemented solutions for brands including SaskTel, Sprint, and AT&T.

Officer and Director Responsibilities and Qualifications

Mr. Hans is responsible for the overall management of Mobetize and is involved in many of its day-to-day operations, including technology development, finance, and overall business strategy.

Mr. Hans holds a Bachelor’s Degree in Business Management, Economics, and Marketing from British Columbia Institute of Technology and has completed an Executive Management Program at Simon Fraser University as well as the Executive Managerial Success Program from Harvard Business School.

Other Public Company Directorships in the Last Five Years

None.

Malek Ladki – Director & Chairman

Business Experience

Dr. Ladki is a highly experienced TMT executive with over 25 years of experience of starting, growing and exiting businesses internationally, running global telecoms infrastructure projects and holding a variety of senior management roles with network operators, and FTSE100 software vendors. Dr. Ladki has also held several board-level roles with multinational telecoms infrastructure solutions and suppliers. He has founded and successfully exited three highly innovative Telecoms and IT products/solutions businesses while helped launch a number of 1st tier telecoms in Europe and the United States. His technical expertise spans several disciplines in Telecoms, IT, Software and Hardware development and he holds three patents in network optimization. His vast experience in leading hyper-growth startups, growing emerging technologies and restructuring business is an asset to Mobetize.

Director Responsibilities and Qualifications

Dr. Ladki also serves as the Chairman of the Board of Directors.

Dr. Ladki graduated with a Bachelor of Electronics Engineering in 1987 and went on to study for a Doctorate in Engineering and earned his PhD in the telecommunications from the University of Liverpool in 1990.

Other Public Company Directorships in the Last Five Years

None.

Donald Duberstein – Director

Business Experience

Mr. Duberstein is an experienced entrepreneur, portfolio manager, and active investor. Apart from owning and managing an extensive portfolio of residential and commercial properties across the United States over the past 38 years, Mr. Duberstein has co-founded and chaired a cosmeceutical skin care company and has been actively involved in a number of private and public companies.

Officer and Director Responsibilities and Qualifications

Mr. Duberstein graduated from the University of Pennsylvania Phi Beta Kappa, Magna Cum Laude in 1973 and NYU Law School in 1976. He is also a member of the New York and Florida Bars in 1977.

Other Public Company Directorships in the Last Five Years

None.

Family Relationships

There are no family relationships between or among the directors or executive officers.

~~ITEM~~Involvement in 12Certain Legal Proceedings

~~Security~~During the ~~Ownership~~past ten years there are no events that occurred related to an involvement in legal proceedings that are material to an evaluation of ~~Certain~~the ~~Beneficial~~ability ~~Owners~~or ~~and~~integrity ~~Management~~of ~~and~~Mobetize’s ~~Related~~directors, or persons nominated to become directors or executive officers.

~~Stockholder~~Term of ~~Matters~~Office

Our directors were appointed for a one (1) year term to hold office until the next annual meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers were appointed by our Board of Directors and will hold office until the expiration of their employment contracts or removal by the board.

No other persons are expected to make any significant contributions to Mobetize’s executive decisions who are not executive officers or directors of Mobetize.

Compliance with Section 16(A) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.

Based solely on our review of the copies of such forms received by us, or representations from certain reporting persons, we believe that during fiscal year ended March 31, 2018, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complete.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees.

Committees of the Board

All proceedings of our Board of Directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the corporate laws of the state of Nevada and the bylaws of Mobetize, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

We had not formed an audit committee as of March 31, 2018, though we have adopted an audit charter and have determined to form an audit committee when two independent directors can be appointed to such committee Mobetize’s Board of Directors has not established a compensation committee.

Mobetize’s Bylaws define the procedure requirements for shareholders to submit recommendations or nominations for directors. A shareholder who wishes to communicate with our board of directors may also do so by directing a written request addressed to our president, at the address appearing on the first page of this annual report.

Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that it has one member that would qualify as independent for the purposes of serving on an audit committee but may not qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.

We believe that the members of our Board of Directors, who may additionally serve on our audit committee in fulfilling that function, are collectively capable of analyzing and evaluating financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome.

ITEM 11. Executive Compensation

Summary

The following table provides summary information for the years ended March 31, 2018 and 2017 concerning cash and non-cash compensation paid or accrued by Mobetize to or on behalf of (i) the Chief Executive Officer and the Chief Financial Officer and (ii) any other employee to receive compensation in excess of $100,000:

SUMMARY COMPENSATION TABLE
Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non- Equity Incentive Plan Compensation ($)	Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total
Ajay Hans, Chief Executive Officer Chief	2018	63,776	Nil	Nil	613	Nil	Nil	$	238,472	$	302,861
Financial Officer and Director⁽¹⁾	2017	53,870	Nil	Nil	140,638	Nil	Nil	$	133,421	$	327,315

(1)

Ajay Hans was appointed to as Chief Executive Officer and as a Director of Mobetize on September 4, 2013 and as the Chief Financial Officer on February 1, 2017.

Chief Executive Officer, Chief Financial Officer

Our Chief Executive Officer and Chief Financial Officer serves pursuant to a consulting agreement dated effective July 1, 2014, that entitles him to a management fee of $10,000 per month and eligibility to receive stock options. The agreement remains in effect unless terminated by either party thereto. The compensation package is deemed appropriate and was approved by our Board of Directors.

~~ITEM~~For the 13year ended March 31, 2018, $302,861 was paid to or accrued for our Chief Executive Officer or companies controlled by him of which $63,776 was salary, $60,000 was accrued as a management services fee to 0853574 BC Ltd a company controlled by the CEO, $22,790 was paid as a consulting fee to Alligato Inc. a company controlled by the CEO, $149,528 was also accrued to Alligato Inc. for research and development work, $6,154 was accrued as interest on loans to companies controlled by the CEO and $613 was expensed as non-cash stock based compensation.. For the year ended March 31, 2017, $67,500 was paid in service management fees and $140,638 was expensed as non-cash stock based compensation.

~~Certain~~Stock Option ~~Relationships~~Plan and ~~Related Transactions, and Director Independence~~Grant

Our Board of Directors adopted and approved the 2015 Mobetize Stock Option Plan (“Plan”) on August 7, 2015, which provides for the granting and issuance of up to 30,000 shares of our common stock (post consolidation on July 11, 2017). Mobetize has 20,200 stock options outstanding from the Plan at a $60 exercise price per share for five years to our named officers and directors of which 19,150 have vested. At March 31, 2018, the Plan had 9,800 options available for future grant.

Our board of directors administers the Plan however, they may delegate this authority to a committee formed to perform the administrative function of the Plan. The board of directors or a committee of the board has the authority to construe and interpret provisions of the Plan as well as to determine the terms of an award. Our board of directors may amend or modify the Plan at any time. However, no amendment or modification shall adversely affect the rights and obligations with respect to outstanding awards unless the holder consents to that amendment or modification.

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

Compensation of Directors

The following table provides summary information for the year ended March 31, 2018, concerning cash and non-cash compensation paid or accrued by Mobetize to or on behalf of its non-executive directors.

Director Summary Compensation Table
Name	Fees earned or paid in cash ($)	Stock awards ($)	Option Awards ($)	Non-equity incentive plan compensation ($)	Nonqualified deferred compensation ($)	All other compensation ($)	Total ($)
Dr. Malek Ladki	—	—	25,903	—	—	—	25,903
Donald Duberstein	—	—	10,361	—	—	25,833	36,199

Outstanding Equity Awards at Fiscal Year End

No equity awards were outstanding as of the year ended March 31, 2018.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee there.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth the total number of shares owned beneficially by each of our directors, named executive officers, individually and as a group, and the present owners of 5% or more of our total outstanding shares of Common Stock, Series A Preferred shares and Series B Preferred shares. Mobetize has 234,541 common shares, nil Series A Preferred shares and 18,847,976 Series B Preferred shares issued and outstanding as of July 27, 2018.

	Common Shares				Series A Preferred Shares				Series B Preferred Shares
Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)	Percentage of Class			Amount and Nature of Beneficial Ownership (1)		Percentage of Class		Amount and Nature of Beneficial Ownership (1)			Percentage of Class
Ajay Hans 1018 Cornwall Street New Westminster British Columbia V3M 1S2	Direct and Indirect		0	%		—		—		10,031,547	(2)		53	%
Donald Duberstein 49 Bristol Drive Boynton Beach Florida 33436	Direct and Indirect		0	%		—		—		2,399,167	(3)		13	%
Malek Ladki 2584 Brickland Drive Ottawa Ontario K4C 1	Direct		0	%		—		—		1,600,000			9	%
Directors and Executive Officers as a Group	Direct and Indirect		0	%		—		—		14,030,714			74	%
5%+ Shareholders
Stephen Fowler 51 Bay View Drive Point Roberts Washington 98281	102,310(4) Direct and Indirect		44	%		—		—		—			—
Bacarrat Overseas Limited Pasea Estate Road Town Tortola, British Virgin Islands	14,253 (5) Direct		6	%		—		—		—			—

(1)

Beneficial Ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership and sole voting power and with respect to the shares of our Common Stock or Preferred Stock, as applicable.

(2)

Ajay Hans holds 4,565,000 shares of Series B Preferred personally, 2,254,269 shares of Series B Preferred through 085374 BC Ltd. and 3,212,278 shares of Series B Preferred through Alligato Inc. Mr. Hans is the beneficial owner of 085374 BC Ltd and Alligato Inc.

(3)

Don Duberstein directly holds 2,399,167 shares of Series B Preferred personally and indirectly holds 20,000 shares of Series B Preferred as the principal of The Duberstein Corporation.

(4)

Stephen Fowler directly holds 68,510 shares of common personally and indirectly holds 33,800 shares of common comprised of 750 shares as the principal of Forte Finance, LLC, 26,050 as the principal of Forte Finance Limited, in addition to directing 1,600 shares held in trust for his family members and 5,400 shares held by his wife.

(5)

Beneficial ownership of Bacarrat Overseas Limited is not known to management.

ITEM 1413. Certain Relationships and Related Transactions, and Director Independence

~~Principal~~Neither our ~~Accounting~~directors ~~Fees~~or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and ~~Services~~in−laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed transaction which, in either case, has or will materially affect us except as follows:

On April 21, 2017, Mobetize issued 80,000 Series B Preferred shares to Don Duberstein pursuant to the conversion of $25,000 in convertible promissory notes at a conversion price of $0.25 per share.

On August 3, 2017, Mobetize issued 150,000 Series B Preferred shares to Don Duberstein pursuant to the conversion of $75,000 in convertible promissory notes at a conversion price of $0.50 per share.

On September 17, 2017, Mobetize issued Don Duberstein a $100,000 promissory note with a 6-month term, which is unsecured and bears interest at 12% per annum

On November 7, 2017, Mobetize issued a $50,000 promissory note to Don Duberstein with a 12-month term, which is unsecured and bears interest at 12% per annum.

On December 5, 2017, Mobetize issued Don Duberstein a $100,000 promissory note with a 12-month term, which is unsecured and bears interest at 12% per annum

On April 10, 2018, Mobetize entered into a Loan Consolidation Agreement with Don Duberstein whereby $250,000 of previously issued promissory notes owing to Mr. Duberstein along with an additional $50,000 in connection with an additional loan was consolidated into a new $300,000 promissory note. The promissory note bears interest at 12% per annum and matures on April 10, 2019.

Director Independence

Mobetize is quoted on the OTCQB inter-dealer quotation system, which does not have director independence requirements. However, for purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15), which states that a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Accordingly, as of March 31, 2018, we consider one of our director’s independent.

~~PART~~ IVITEM 14. Principal Accounting Fees and Services

~~EXHIBITS~~The aggregate fees billed for the most recently completed fiscal years ended March 31, 2018 and 2017 for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

ITEM 15

	Davidson & Company Years Ended
		March 31, 2018 $	March 31, 2017 $
Audit Fees		30,000	35,000
Audit Related Fees		22,500	15,000
Tax Fees		—	—
All Other Fees		—	—
Total		52,500	50,000

~~Exhibits,~~Audit Committee ~~Financial Statement Schedules~~Pre-Approval

We do not have a standing audit committee. All services provided to us by Davidson & Company, as detailed above, were pre-approved by our Board of Directors. Davidson & Company performed all work with permanent full-time employees.

Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services. Tax fees are related to the federal and state income tax returns for Mobetize. Other Fees are for the review of transaction valuation and other transaction related events.

~~Signatures~~PART IV - EXHIBITS

ITEM 15. Exhibits, Financial Statement Schedules

(a) Consolidated Financial Statements

The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages F-1 through F-27, and are included as part of this Form 10-K:

Financial Statements of the Company for the years ended March 31, 2018 and 2017:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Loss and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity (Deficiency)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(b) Exhibits

The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 41 of this Form 10-K, and are incorporated herein by this reference.

(c) Financial Statement Schedules

We are not filing any financial statement schedules as part of this Form 10-K because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.

ITEM 16. FORM 10-K SUMMARY

None.

2SIGNATURES

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

~~ITEM 1~~MOBETIZE CORP.

Business

By:	/s/ Ajay Hans
	Ajay Hans, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer

Date:	July 27, 2018

AsPursuant to ~~used~~the ~~herein~~requirements of the ~~terms~~Securities ~~“Mobetize,”~~Exchange ~~“we,”~~Act ~~“our,”~~of ~~“us~~1934,” ~~refer~~this toreport ~~Mobetize~~has ~~Corp.,~~been signed below by the following persons on behalf of the registrant and ~~our~~in the capacities and on the dates indicated.

~~predecessors~~By: /s/ Malek Ladki Malek Ladki Director Date: July 27, ~~unless~~2018 ~~the~~By: ~~context~~/s/ ~~indicates~~Ajay ~~otherwise.~~Hans Ajay Hans Director Date: July 27, 2018 By: /s/ Donald Duberstein Donald Duberstein Director Date: July 27, 2018

~~BACKGROUND~~40

WeINDEX TO ~~were incorporated in the State of Nevada on February 23, 2012, as Slavia Corp. in order to assist~~EXHIBITS

~~international students enroll in accredited universities, institutes, colleges or schools in Canada~~Exhibit No. Exhibit ~~Since~~Description we

~~were~~3.1* ~~not~~Articles ~~able~~of toIncorporation, ~~raise~~incorporated ~~sufficient~~hereto ~~capital~~by reference to ~~fund~~the ~~development~~Form inS-1, ~~this~~filed ~~business~~with ~~segment~~the Commission on May 30, ~~management~~2012.

~~determined~~3.1.1* toCertificate ~~consider~~of ~~alternative~~Amendment ~~strategies~~dated August 8, 2013 incorporated by reference to ~~create~~the ~~value~~Form ~~for~~8-K ~~our~~filed ~~shareholders~~with the Commission on August 15, 2013.

On3.1.2* ~~July~~Certificate 9of Designation Series A Preferred dated February 4, ~~2013~~2016, weincorporated ~~entered~~by ~~into~~reference anto ~~Asset~~the ~~Purchase~~Form ~~and~~8-K ~~Sale~~filed ~~Agreement~~ with ~~Mobetize~~the ~~Inc.,~~Commission aon ~~Nevada~~February 11, 2016.

~~corporation,~~3.1.3* ~~which~~Certificate ~~caused~~of usAmended toDesignation ~~acquire~~Series ~~substantially~~A ~~all~~Preferred ofdated May 20, 2016, incorporated by reference to the ~~assets~~Form ~~and~~8-K ~~none~~filed ofwith the ~~liabilities~~Commission ofon June 3, 2016.

~~Mobetize Inc~~3.1.4* inSecond ~~exchange~~Amended ~~for~~Certificate ~~shares~~ of ~~our~~Designation ~~common~~Series ~~stock.~~A ~~The~~Preferred ~~assets~~dated ~~conveyed~~June ~~included~~4, a2018, ~~license~~incorporated by reference to the Form 8-K filed

~~agreement~~3.1.5* ~~between~~Certificate ~~Mobetize~~of Designation Series B Preferred dated filed on May 23, ~~Inc.~~2016, ~~Paysafe~~incorporated ~~Group~~by ~~PLC~~reference ~~(formerly~~to ~~Optimal~~the ~~Payments~~Form ~~PLC)~~8-K ~~and~~filed with the Commission on June 3, 2016.

~~Rentmoola~~3.1.6* ~~Payment~~Certificate ~~Systems~~of ~~Inc.~~Amended WeDesignation ~~changed~~Series ~~our~~B ~~name~~Preferred filed on May 31, 2016, incorporated by reference to ~~“Mobetize~~the ~~Corp.”~~Form ~~effective~~8-K ~~August~~filed ~~13,~~with ~~2013~~the Commission on June 3, 2016.

in3.2* ~~connection~~Bylaws, incorporated by reference to the Form S-1, filed with ~~this~~the ~~transaction~~Commission on May 30, 2012.

We3.2.1* ~~offer~~Amended ~~services~~Bylaws, inincorporated ~~the~~by ~~United~~reference ~~States~~to ~~through~~the ~~our~~Form ~~Nevada~~8-K ~~subsidiary~~filed ~~Mobetize~~with ~~USA~~the ~~Inc.~~Commission ~~and~~on toFebruary ~~clients~~11, 2016.

~~outside~~10.1* Management Services Agreement between Mobetize and Alligato, Inc. dated June 1, 2013, incorporated by reference to the ~~United~~Form ~~States~~8-K ~~through~~filed ~~our~~with ~~Canadian~~the ~~subsidiary~~Commission ~~Mobetize~~on ~~Canada~~September ~~Inc~~16, 2013.

A10.2* ~~business~~Management ~~office~~Services ~~for~~Agreement between Mobetize ~~USA~~and is053574 ~~located~~BC atLtd. ~~8105~~dated ~~Birch~~June ~~Bay~~1, ~~Road~~2013, ~~Suite~~incorporated ~~205,~~hereto ~~Blaine~~by ~~Washington~~reference to the Form 8-K filed with the Commission on September 16, 2013.

~~98230~~10.3* Consulting Agreement between Mobetize and aStephen ~~business~~Fowler ~~office~~dated ~~for~~July ~~Mobetize~~15, ~~Canada~~2013, isincorporated ~~located~~hereto atby ~~#1150~~reference –to ~~510~~the ~~Burrard~~Form ~~St.~~8KA ~~Vancouver~~filed with the Commission on October 28, 2013.

~~British~~10.4* ~~Columbia~~Assignment of Debt Agreement between Mobetize and Stephen Fowler dated April 4, ~~V6C~~2012, ~~3A8.~~incorporated ~~Our~~by ~~registered~~reference ~~statutory~~to ~~office~~the isForm ~~located~~8-K/A atfiled ~~Nevada~~with ~~Agency~~the ~~and~~Commission ~~Transfer~~on November 22, 2013.

~~Company~~10.5* 50License ~~West~~Assignment ~~Liberty~~Agreement ~~Street~~between Telepay, ~~Suite~~Inc. ~~880~~and Baccarat Overseas Ltd. dated August 21, ~~Reno~~2012, ~~Nevada~~incorporated ~~89501~~by reference to the Form 8-K filed with the Commission on September 16, 2013.

10.6* Consulting agreement between Mobetize ~~trades~~and onTanuki ~~the~~Business ~~OTCQB~~Consulting, anInc. ~~electronic~~dated ~~trading~~September ~~platform~~23, ~~owned~~2013, incorporated by ~~OTC~~reference ~~Markets~~to ~~Group~~the Form 8-K filed with the Commission on October 1, ~~Inc~~2013. ~~under~~

10.7* Consulting agreement between Mobetize and Institutional Marketing Services, Inc. dated November 13, 2013, incorporated by reference to the ~~symbol~~Form ~~“MPAY”~~8-K filed with the Commission on March 18, 2014.

~~BUSINESS~~10.8* Form of Subscription Agreement with the Subscribers dated June 25, 2014, incorporated by reference to the Form 10-K filed with the Commission on June 30, 2014.

~~Mobetize~~10.9* isManagement anConsulting ~~emerging~~Agreement ~~technology~~between Mobetize Corp. and ~~services~~Ajay ~~company~~Hans ~~which~~dated ~~provides~~July ~~Fintech~~1, ~~services~~2014, ~~that~~incorporated ~~enable~~by reference to the Form 10-K/A filed with the Commission on July 13, 2016.

~~the convergence of global telecom and financial services providers (“Customers”) through its Global~~41

~~Mobile~~10.10* ~~B2B~~Software ~~Fintech~~Application License, Customization Development and Service Level Agreement dated September 20, 2016, between Mobetize and GF Financial ~~Services~~Group ~~Marketplace~~incorporated by reference to the Form 10-Q filed with the Commission on February 2, 2017, (~~“Hub”~~certain commercial terms of this exhibit have been omitted pursuant to a grant of confidential treatment).

~~Fintech~~10.11* —Joint ~~financial~~Venture ~~technology~~Agreement —dated isJanuary an17, ~~umbrella~~2017 ~~term~~between ~~describing~~Mobetize ~~disruptive~~and ~~technologies~~CPT ~~involved~~Secure inInc. incorporated by reference to the Form 10-Q filed with the Commission on February 2, 2017.

~~provision~~10.12* ofSoftware ~~financial~~Application ~~services~~License, Customization Development and Service Level Agreement dated February 1, 2017, effective December 15, 2016, between Mobeitze USA Inc. ~~Fintech~~and isTata ~~transforming~~Communications (America) Inc. incorporated by reference to the ~~way~~Form ~~money~~8-K isfiled ~~managed~~with ~~and~~the ~~affects~~Commission ~~almost~~on February 6, 2017 (certain commercial terms of this exhibit have been omitted pursuant to a grant of confidential treatment).

~~every~~10.13 ~~financial~~Consulting ~~activity~~Agreement dated July 1, 2017 between Mobetize Corp and CPT Secure Inc.

~~Our~~14* ~~Hub~~Code ~~provides~~of aBusiness ~~range~~Conduct and Ethics adopted by Mobetize Corp.’s Board of ~~mobile~~Directors ~~financial~~on ~~services~~July ~~(“MFS”)~~26, ~~which~~2016, ~~include~~incorporated ~~white~~by ~~label~~reference ~~technology~~to the Form 10-Q filed with the Commission on August 12, 2016.

~~platforms~~21* ~~that~~Subsidiaries ~~support~~incorporated ~~customer~~by ~~specific~~reference ~~MFS~~to ~~application~~the ~~program~~Form ~~interface~~10-K/A ~~(“API”)~~filed ~~consumption~~with the Commission on July 13, 2016.

~~protocols~~31 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to ~~enable~~Rule ~~services~~13a-14 ~~such~~of the Exchange Act as ~~prepaid~~adopted ~~air-time~~pursuant ~~and~~to ~~data~~Section ~~top~~302 ~~ups,~~of ~~mobile~~the ~~lending~~Sarbanes-Oxley Act of 2002, ~~international~~attached.

~~money~~32. ~~transfers,~~Certification ~~person~~of the Chief Executive Officer and Chief Financial Officer pursuant to ~~person~~18 ~~(“P2P”)~~U.S.C. ~~transfers,~~Section ~~Visa™/MasterCard™~~1350 ~~usage~~as ~~and~~adopted ~~bill~~pursuant ~~payments~~to onSection 906 of the Sarbanes-Oxley Act of 2002, attached.

either personal computers or mobile devices (“Services”). The Hub seamlessly integrates with Mobetize

	99*	2015 Mobetize Stock Option Plan dated August 10, 2015, incorporated by reference to the Form 8-K filed with the Commission on August 11, 2015.
	101.INS	XBRL Instance Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase^†
	101.LAB	XBRL Taxonomy Extension Label Linkbase^†
	101.DEF	XBRL Taxonomy Extension Definition Linkbase^†
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase^†
	101.SCH	XBRL Taxonomy Extension Schema Linkbase^†

~~Customers,~~* ~~who~~Incorporated asby areference ~~result are able~~ to ~~offer~~previous ~~Services~~filings toof ~~their~~the ~~subscribers or members (“Users”)~~Company.

~~Users~~† ~~access~~Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the ~~Services~~Securities ~~from~~Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the ~~Hub~~Securities ~~through~~and ~~multiple~~Exchange ~~access~~Act ~~points~~of ~~including:~~1934, and otherwise is not subject to liability under these sections.

342

1. Desktop Applications

2. Mobile Web Applications

3. Native Applications for Apple iOS Devices and Android Devices

REVENUE MODEL

The HUB can generate revenue from:

Transactional processing fees based on volume of activity

Revenue share based fees for financial services delivered through the Hub

Recurring platform fees for licensing the Hub

Recurring fees for service level agreements

Consulting and professional services fees

Customization, integration, and deployment fees

Existing revenue is influenced by the growing global consumption of MFS and its adoption by Users who

rely on their mobile devices as an access point to complete financial transactions. Future revenue will also

be affected by our ability to innovate new technology processes and systems that our Customers want to

offer to their Users. Our strategy is to drive growth by:

•

Leveraging our existing contracts to increase Customer and User adoption

•

Enhancing business development efforts to expand sales globally

•

Evaluating M&A strategies to grow inorganically

•

Continuing to bring innovative Fintech solutions and technology as first-to-market.

FINTECH ECOSYSTEM

Globally Fintech “ecosystems” have stimulated technological innovation, made financial markets more

efficient, and improved the overall customer experience. These ecosystems — include traditional telecom

and financial service providers that are faced with competition from technology giants such as Apple and

Google who have proven their capacity to compete in the delivery of MFS To remain competitive,

telecoms and financial service providers are constantly seeking to adapt to the digital age relying on a

broad set of solutions, from pure channel adaptation to radical changes in business models.

The World Fintech Report 2017 published by Capgemini, LinkedIn and Efma states:

· The Fintech space is ripe in large part due to traditional firms leaving a gap of unmet needs

· Consumers are embracing Fintech providers, with 50.2% globally saying they already do business with at least one non-traditional firm for banking, insurance, payments or investment management.

· VC funding in Fintech has increased exponentially over the last few years with worldwide investment reaching close to $25 billion in 2015.

· By country, consumers turn the most to Fintech firms in China and India (both above 75%)

· Tech-savvy customers are using Fintech twice as much as non-tech-savvy customers (67.3% versus 33.6%) and mobile has emerged as the second-most important channel (after the computer) for interacting with financial services firms.

· Within ten years, an estimated two billion people will have had their first banking experience on a smart phone. – almost as much as the number who are conventionally banking today

· More than three-fourths (76.7%) of executives agree that Fintech’s provide partnership opportunities



Mobile Banking and Fintech

A report published by the Federal Reserve Board titled Consumers and Mobile Financial Services

2016 found that the adoption of mobile financial services continues to increase in the United States. A

majority of consumers using these services cite convenience or acquiring a smartphone as their reason for

adoption. Forty-three percent (43%) of all mobile phone owners and fifty-three percent (53%) of

smartphone owners with a bank account had used mobile banking in the 12 months prior to the survey, up

from thirty-nine percent (39%) in 2014 and thirty-three percent (33%) in 2013.

In a report published by the Economist Intelligence Unit titled The Disruption of Banking

http://fintechnews.ch/fintech/banks-vs-fintech-fintegration-smartest-move-says-new-survey/2043/

(December 10, 2015) over 100 senior bankers were interviewed to ascertain the likely landscape for the

retail banking industry over the next five years. When bankers were asked how Fintech might disrupt the

banking industry, more than ninety percent (90%) of the bankers believed that Fintech firms will have a

significant impact on the future landscape of banking, with more than a third believing that Fintech will

win an equal share or even dominate the market.

As of February 2015, bank spending on new technologies in North America was projected by Juniper

Research to reach $17 billion dollars in 2015 and increase to $19.9 billion dollars in 2017.

The online statistics Internet portal Statista reported that the value of investment in financial technology

ventures on a global scale amounted to approximately $3 billion dollars in 2013 and was projected to

grow to around $8 billion dollars in 2018.

According to Juniper Research (July 2013), 800 million people would use mobile banking services in

2014, which number is expected to increase to 1.75 billion (32 percent of the global adult population) by

2019.

Smartphone sales and Telecoms

Over a third of the world’s population is projected to own a smartphone by the end of 2017, up from 21.6

percent (21.6%) in 2014. Western Europe is due to become the largest regional market as almost 65

percent (65%) of its total population is forecast to own a smartphone by 2017, over twice the figure in

2012. Within North America, around 64 percent (64%) of the population will own a smartphone in 2017,

an increase of 13 percent (13%) on the figure from 2014. The smallest regional market for smartphones is

the Middle East and Africa, where smartphone penetration is expected to be 13.6 percent (13.6%) by

2017.

Telcoms are uniquely positioned to be the leading providers of mobile financial services to their

customers by leveraging their billing platforms. The fact that basic financial services can be done without

a banking relationship further strengthens the opportunity for telecoms.

Money Remittance

The World Bank reported that remittances to developing countries were expected to grow at about 3.3

percent in 2017 to $444 billion and estimated that in 2014 $131 billion dollars was sent from the United

States by residents and immigrant workers to their family members in their respective countries. The

United States is the largest market for these money transfer services accounting for over 22% of all global

money transfers.

TECHNOLOGY SOLUTIONS AND PRODUCTS

The Mobetize Global Mobile B2B Fintech and Financial Services Marketplace/Hub offers the following:

smartWallet:

Our smartWallet solution is provided via mobile web and web OS Apple and Android app to the desktop,

iPad, or mobile phone.

The smartWallet allows Users to load funds into their mobile wallet and access global mobile financial

services such as prepaid top-ups for themselves or for gifts for family members, P2P money transfers,

international money transfer remittances, bill payments and bill management.

Users can load funds into their smartWallet from their bank account (ACH or real time ACH), via credit

or prepaid debit card, and PayPal.

The smartWallet can be integrated with an existing billing system to enable a mobile ‘my account’ as part

of a mobile wallet with features including:

•

Registration - sign in and sign up

•

User Account Settings - Allows the User to update their information, edit/add and save different

payment methods while changing password and saving account numbers to favorites for fast

access.

•

View Balance - Users are able to track their balances by viewing their real-time balance.

•

Add and Save Services -Create, save, and edit a list of favorites for easy and fast access to all

transactions.

•

Favorites - Create, save, and edit a list of favorite contacts, remittances, airtime transactions and

more for convenience and accessibility.

•

Stored Payment Methods - Safely store and edit a list of preferred method of payments to load the

smartWallet to increase convenience and accessibility including credit cards, debit cards, ACH.

•

smartWallet is activated for customers who are Money Service Business (“MSB”) compliant.

smartRemit:

A fully integrated mobile platform dedicated to providing convenient, efficient, scalable, and inexpensive

global money transfer solutions for Customers and Users.

smartRemit enables Users to send funds cross-border via multiple payout channels such as, direct bank

account deposits, pick-up at agent location, and home delivery. Users can send funds in one currency and

have the beneficiary receive in another. Cash delivery options include:

•

Cash to cash

•

Cash to account

•

Door service

•

Mobile transfers

smartRemit is accessed outside the smartWallet to ensure full Money Transfer Licensing compliance.

smartRemit provides Users with 24/7 mobile money transfer remittance capabilities.

smartCharge:

smartCharge enables real time prepaid mobile top-ups to any mobile phone and recharge transfers to over

350 mobile network operators in 90 countries, reaching 3.6 billion prepaid users. Users can send air-time

top-ups to any prepaid mobile phone globally.

smartBill:

smartBill is supported by our MSB licensed billing partner and allows Users to pay bills at approximately

14,000 companies within the United States, including utilities, cable companies, and mobile phone

providers.

smartCard:

smartCard is our white label Visa/MasterCard program that allows users to request (during sign-up or at

any time via the Mobetize app) a prepaid MasterCard™ or Visa™ card, which is linked to their

smartWallet. Users are able to move any cleared funds from their smartWallet on to their Visa™ card or

MasterCard™, allowing them to make purchases both online and in retail locations, plus withdraw cash

from ATMs.

Users are able to track the balance and see recent transactions via the Mobetize smartWallet and can

easily move money back to the smartWallet. The smartCard has the same white-label branding as the

smartWallet for a seamless User experience.

smartLoan:

SmartLoan is a proprietary digitized lending product that allows borrowers to apply for secured and

unsecured loans ranging from $500 up to $35,000 to refinance credit card debt, student loans, weddings,

or household projects.

This lending solution is configurable, scalable and able to implement dynamic algorithms in a cloud-

based environment that enables Financial Institutions (FI’s) to quickly launch their own online lending

products and controls.

This innovative software solution, built on the core Mobetize HUB, enables FI’s to instantly meet Know

Your Client (KYC) and Anti Money Laundering (AML) compliance in addition to computing complex

algorithms for auto-adjudication of the personal bank lending process initiated from any tablet, PC or

mobile device.

Key benefits for FI’s include:

• An omnichannel and simple user experience for fast loan decisions and funding

• Digitized back-office processes and interoperability

• Ability to lead innovation with configurable KYC and heuristic adjudication rules

• Configurable workflow of applications

• Easy white-labeling configurability for branding and rapid launch

• Opportunity to leverage new lending business models

• Ability to respond to and address security and regulatory requirements

The smartLoan solution is offered by Mobetize to direct and platform lenders in North America who are

interested in growth within the online lending space.

Customer Relationship Management (“CRM”) and Reporting Tool:

Mobetize provides Customers an online CRM and data analytics reporting system for all transactions

processed through the Hub.

The reporting system can be configured so that different levels within a customer’s team can see and

access different levels of information. The reporting tool provides real time data, at different levels of

detail, allowing Customers to track User metrics as:

•

Transactions $ values

•

Transaction volume-by type of transaction

•

Number of registered users

•

Number of active users

•

Geographic splits

•

Other key performance Indicators

The web based CRM reporting tool also provides Customer’s access to User data such as:

•

User information (name, address, etc.)

•

User transaction history

•

User wallet balance

This data is a key driver for User support services.

LATEST TECHNOLOGY AND PRODUCT DEVELOPMENTS

We are currently in the process of adapting our Hub to facilitate multiple Fintech services as part of our

banking channel strategy. Version 3.0 will be able to facilitate mobile money remittances offered

seamlessly by engaged FI’s. The platform will facilitate KYC of the sender and authorize funds from the

user’s FI bank account in real-time. Version 3.0 will offer native apps for both Android and iPhone. New

FI’s can be rapidly on-board as part of the multi-tenanted platform, and in addition to a multi-lingual

branded user-application, each FI can offer their own retail market pricing. The product will form part of

an extended banking platform available initially to 174 FI’s in Canada.

Between September 2016, and May 2017, we built and launched the smartLoan product. smartLoan

allows FI’s to offer consumer on-line loan applications and adjudications. Functionality is a fully

compliant process that includes on-line KYC based on a wide range of data gathering that covers both

traditional and non-traditional sources for fraud detection and credit profiling that produces a multi-

variant scoring model. Based on our standard multi-tenanted architecture, the product can be quickly

white-labeled and new FI’s on-board in weeks.

Over the same period, as part of our telecom channel strategy, we developed and launched the Mobile

Money Platform (MMP). MMP is a secure API gateway employing OAuth2 connections (industry

standard protocol) that allows business customers to transact data top-up credits to pre-paid mobile phone

customers worldwide. These may be top-ups direct-to-carrier or over-the-top (“OTT”) services consumed

in addition to carrier data allowance. Again, built on a multi-tenanted model, the platform can rapidly on-

board additional customers with minimal overhead.

During March 2016, we completed the development of Version 2.1, which incorporates a new registration

system. The system includes text message verification and allows faster password recovery as well as

faster completion of the registration process on a mobile device.

We completed the development of Version 2.0 in October of 2015, for rollout to our Customers. Version

2.0 includes the most significant component and key differentiator of our offerings to date by enabling

international money transfer capabilities globally via our international money transfer partners. Version

2.0 also supports multi-language web services, with the Spanish language being the first non-English

language offered. Existing customers equipped with Version 2.0 can initiate international money transfers

from the United States via a network of nearly 200,000 payout agent locations, and instruct bank transfers

to over six hundred banks worldwide.

During April 2015, we completed the production version of Mobile Web application 1.0. This suite of

products includes smartCard, Paypal, bank ACH, and credit card processing as cash-in options and

smartCharge, smartBill, person-to-person transfers, and smartCard for ATM withdrawals and POS

purchases as cash-out options. The CRM, reporting, and incident management tools are active in addition

to a desktop version and Representation State Transfer (“REST”) API with all of the above features

The Hub will continue to be developed as a Fintech marketplace that offers stand alone Services, REST

API services for our financial technology products, and solutions that allow clients with existing

technologies, such as virtual wallets, to be able to include our Services in their systems. Development of

native applications for iOS and Android have commenced.

RECENT BUSINESS DEVELOPMENTS

On May 29, 2017, MPAY Gateway Services Inc. was formed in connection with a Joint Venture

Agreement with CPT Secure Inc. dated January 12, 2017, to develop payment processing technology and

agreed to issue 500,000 Series B Preferred Shares to CPT in consideration for the license of CPT

technology to the joint venture. The license has a two-year term that can be automatically renewed for

successive two year periods unless either party elects not to renew 60 days prior to expiration.

On February 1, 2017, dated effective December 15, 2016, we entered into a Software Application

License, Customization Development and Service Level Agreement with Tata Communications

(America) Inc. to govern the global deployment of our Services for its customers through our Hub. The

parties agreed to a five-year strategic partnership from which we expect to generate revenue from service

level support fees and the sharing of transactional income; advance our technology alliance to accelerate

new Fintech revenue sharing opportunities; and focus our partnership on Fintech product innovation.

On September 27, 2016, effective September 20, 2016, we entered into a Software Application License,

Customization Development and Service Level Agreement with GF Financial Group to partner in

offering a mobile personal lending facility with omni-channel capabilities to its customers built on our

Fintech platform. GF Financial customers will be able to apply for and be approved for personal loans

initiated from their mobile devices. A roll out of the application was successfully implemented in the

second quarter of 2017.

On November 3, 2015, Mobetize formed a strategic partnership with Global Service Solutions, Inc.

(“Global Service”) to deliver a mobile money and financial services platform under its new brand

Gotawallet™. Global Service, through its Got Prepaid™ brand, provides distribution, through a nation-

wide channel of large distributors and retailers, to over one million end-users in the United States with

over fifty different prepaid cellular products. The products include a combination of hard card, real time

replenishments, and e-pin formats. The Got Prepaid™ brand is highly regarded within the prepaid

segment of the market for its ability to provide quality customer service and technical support. Got

Prepaid™ provides recharge capabilities for wireless AT&T, Verizon, T Mobile, H20, Red Pocket and

many other telecom providers. The project to deliver a mobile financial services platform was completed

in the second quarter of 2016.

On October 15, 2015, Mobetize signed a consulting services agreement with Tata Communications

(America) Inc., (“Tata”), to license Mobetize solutions as Tata’s core mobile money platform. The parties

are working to create a global business to business channel strategy to develop a financial technology

services hub for telecom companies, enterprise and alternative financial service providers that Tata

already supports globally in its telecom network.

On October 7, 2015, Mobetize announced that it had formed a strategic partnership to deliver mobile

wallet and financial services to customers of Pure Minutes, Ltd. (“PML”). PML is a leading provider of

prepaid international calling services and mobile phone payment services for domestic and international

mobile carriers with an addressable customer base of over 1.1 million in the United States. In June 2016,

PML completed a white label application of the Mobetize smartWallet under the brand Digibux. The

online portal www.mydigibux.com has also been completed.

On August 10, 2015, Mobetize showcased Version 2.0 at the Prepaid Expo in Las Vegas, Nevada, a

product suite that incorporates the full mobile money product solution that can be white-labeled by any

telecom operator. The suite consists of a mobile wallet with key financial services offerings that include

global money transfer capabilities, US bill payments, global gifting of prepaid air-time top ups and paid

Visa™/MasterCard™ programs for telecom operators. Mobetize allows its telecom operators to pick and

choose the financial services they want to deliver branded for their respective customers, which can be

launched through APIs, or as a stand-alone system.

Mobetize was selected from over 100 technology companies to speak and present at the 2015 Innovation

Showcase Event on May 29, 2015, held by the Telecom Council of Silicon Valley in Sunnyvale,

California. Mobetize showcased its Hub to decision level executives with some of largest telecom

companies in the world. The meetings resulted in numerous NDA’s and discussions that remain ongoing

with several large global telecoms.

COMPETITION

The global Fintech industry is highly competitive. We compete against businesses in varied industries,

many of which are larger than we are, have a dominant and secure position in other industries, or offer

other goods and services to consumers and merchants which we do not offer. We compete against all

forms of Fintech service providers, including credit and debit cards providers, automated clearing house

and bank transfers providers, other online payment services providers, mobile payments providers, and

offline payment methods, including cash and check.

We compete primarily on the basis of the following:

•

ability to attract, retain, and engage Customers and their Users

•

ability to show that Customers will achieve incremental sales by using our Hub

•

security of transactions and the ability for Customers to integrate our Hub products and services

•

fee structure

•

ability to develop Services across multiple customer channels, including telecom and Fintech

service providers

•

Customer service

•

brand recognition

•

website, mobile platform and application onboarding, ease-of-use, and accessibility

•

system reliability and data security

•

ease and quality of integration into third-party mobile applications and operating systems

•

quality of developer tools such as our Hub programming interfaces

Mobetize seeks to differentiate itself from other industry participants. The vision of the Mobetize is to

develop an open marketplace of Fintech services and partnerships based on our Hub. Our open Fintech

architecture for telecoms and financial institutions uniquely positions us to potentially disrupt the current

money services infrastructure.

COMPETITIVE ADVANTAGES

Mobetize has developed a unique business and partnership model to simplify and orchestrate mobile

financial services. There are two key business relationships which give us a competitive advantage:

· Telecoms and Financial Institutions – These are revenue share business partnerships that are our channels to acquire Customers and maximize transactional volumes. These partnerships can white label the Hub or integrate via the API consumption model to market the various MFS products to Users.

· Financial Partners – These are our strategic financial services partners who traditionally have bricks and mortar style financial services and products. We can digitize their regulatory compliance and service fulfillment.

Process

Mobetize co-develops innovation in a step-by-step manner, focused on the strategic goals of its

Customers.

The collaborative approach includes:



· gathering information from Customers and identifying pain points

· consulting with a Customer to devise and execute an innovation plan taking into account weaknesses and strengths.

· assisting with the education and training of Customer management and employees to insure they are well informed of the benefits the innovation and how it can accrue to them to insure an effective roll out.

· defining the correct engagement model, whether investor, acquirer, partner or accelerator

· regularly reviewing and creating data models to access user reactions and expectations to further the innovation plan.

Advantages

Customer Acquisition: Mobetize is scalable and cost effective to a significant number of

Customers.

Lower Customer Costs: Mobetize provides the economic advantages of digital distribution over

physical distribution.

Advanced Analytics: Mobetize generates data for advanced analytics which provides Customers

with significant advantages, including the ability to redesign products and to focus on the development of

contextual offers based on a better understanding of User needs.

Leveraging Existing Infrastructure: Mobetize engages with the existing ecosystem of telecom

and financial service providers by leveraging of the technology that currently exists.

PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY

AGREEMENTS, AND LABOR CONTRACTS

Mobetize has no patents, registered trademarks, licenses, franchises, concessions, royalty agreements or

labor contracts other than as detailed in this report. However, we do assert common law trademark rights

for the following names in the field of mobile commerce:

· smartWallet

· smartRemit

· smartCharge

· smartCard

· smartLoan



Common law trademark rights are enforceable in provincial courts in Canada, and may be asserted

against those who appropriate, dilute, or damage the goodwill of our business by using the same or

similar trade names or trademarks. Unlike statutory trademark rights, which are acquired by registration

and provide nation-wide protection, common law trademark rights are acquired automatically and provide

protection only in the jurisdiction where a business uses a name or logo in commerce. We intend to rely

on common law trademark protection until such time as we deem it economical for our business to

We have not registered for the protection of any rights under trademark, patent, or copyright in any

jurisdiction.

GOVERNMENT REGULATION

Government regulation impacts key aspects of our business. We are subject to regulations that affect the

payments industry in the markets we operate.

Payments Regulation. Various laws and regulations govern the payments industry in the United States

and globally. In the United States, our partners hold licenses to operate as a money transmitter (or its

equivalent), which, among other things, relieve us from reporting requirements, bonding requirements,

limitations on the investment of customer funds and inspection by state regulatory agencies.

Outside the United States, the laws and regulations applicable to the payments industry in any given

jurisdiction are subject to interpretation and change.

Banking Agency Supervision. Based on our relationships with financial institutions in the United States,

we are subject to indirect regulation and examination by these financial institutions’ regulators.

Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau (“CFPB”) has

significant authority to regulate consumer financial products in the United States, including consumer

credit, deposit, payment, and similar products. The CFPB and other similar regulatory agencies in other

jurisdictions may have broad consumer protection mandates that could result in the promulgation and

interpretation of rules and regulations that may affect our business.

Anti-Money Laundering and Counter Terrorist Financing. Mobetize is not subject to anti-money

laundering (“AML”) laws and regulations in the United States and other jurisdictions outside of the

United States, as well as laws designed to prevent the use of the financial systems to facilitate terrorist

activities. Regardless of the nature of our business, we do intend to implement a comprehensive AML

program designed to prevent our Hub from being used to facilitate money laundering, terrorist financing,

and other illicit activities.

The mobile commerce industry is also subject to requirements, codes and standards imposed by various

insurance, approval, listing, and standards organizations. Depending upon the type of commerce product

and requirements of the applicable local governmental jurisdiction, adherence to requirements, codes and

standards of such organizations is mandatory in some instances and voluntary in others.

RESEARCH AND DEVELOPMENT

We spent $485,544 and $660,959 on research and development activities during the years ended March

31, 2017 and 2016 respectively. This work has focused on building and enhancing the Hub.

EMPLOYEES

Mobetize had five employees at March 31, 2017. Management uses consultants, attorneys, and

accountants to assist in the conduct of our business as deemed necessary.

ITEM 1A.

Risk Factors

Not required of smaller reporting companies.

ITEM 1B.

Unresolved Staff Comments

Not required of smaller reporting companies.

ITEM 2.

Properties

Our principal executive office is located at 8150 Birch Bay Square Street, Suite 205, Blaine, Washington

98230. Our telephone number is (778) 588-5563. We pay rent of approximately $30 per month for the use

of this space.

Our principal operating office is located at 1150-510 Burrard Street, Vancouver, British Columbia V6C

3A8. Our telephone number is (778) 588-5563. We pay rent of $4,900 per month for the use of this space.

We believe that we have sufficient office space for the foreseeable future.

ITEM 3.

Legal Proceedings

Stephen Fowler

Mobetize received a Citation and Notice of Assessment dated October 14, 2016 (“Citation”), that Stephen

J. Fowler (“Fowler”), a former director and chief financial officer, had initiated a complaint with the State

of Washington Department of Labor and Industries for amounts allegedly due to him for unpaid wages.

The Citation declared that Fowler is owed $45,000 in wages in addition to an assessed interest of

$3,368.74, and a penalty of $4,500. On November 8, 2016, Mobetize entered an appeal alleging that the

calculation of amounts due to Fowler was incorrect and that Fowler had improperly obtained shares of its

common stock which it intends to recover. Mobetize received a response from the Department of Labor

and Industries dated November 18, 2016, in which it was advised that Fowler’s claim had been

transferred to the Office of the Attorney General and that a hearing on the matter would be held by the

Office of Administrative Hearings. A hearing date has not been set.

Mobetize received a Notice of Civil Claim dated April 26, 2017, filed in British Columbia Supreme Court

by a former director and chief financial officer, Fowler, naming Mobetize and its three present directors

as defendants. Fowler asserts claims against Mobetize for unpaid expenses, and breach of contract. He

also asserts that his shareholdings in Mobetize have been diluted due to certain actions of its current

director, making claims including breach of contract, breach of fiduciary duty, misrepresentation and

conspiracy. Mobetize and its directors believe that Fowler’s claims are without merit and are intent on

vigorously defending against this action. Further, Mobetize has advanced counterclaims against Fowler,

including a claim that that while Fowler was an officer and director of Mobetize, that he caused it to issue

shares to himself to which he was not entitled. Mobetize’s counterclaims also assert claims against

Fowler of fraudulent or negligent misrepresentation, breach of fiduciary duty, negligence and unjust

enrichment. On June 23, 2017, Mobetize filed its response to Fowler’s claims and its own counterclaims

against Fowler. No further steps in this action have been taken, and no trial date has been set.

Mobetize received a Complaint dated May 12, 2017, filed in the Second Judicial District Court of the

State of Nevada, by Fowler naming Mobetize and its three present directors as defendants. The Nevada

action concerns substantially the same facts and seeks substantially the same relief as Fowler’s British

Columbia action. Mobetize takes the position that the filing of duplicative actions in the two

jurisdictions constitutes an abuse of process, that British Columbia is the appropriate jurisdiction in which

the plaintiff’s claims ought to be heard, and that the Nevada action ought to be dismissed or stayed for

these reasons. On June 23, 2017, Mobetize filed a Motion to Dismiss or in the alternative, an Application

for Preliminary Injunction to either dismiss or stay the Complaint. No steps in this action, have taken

place and no trial date has been set.

Cary Fields

Mobetize received a Complaint dated May 3, 2017, filed in the Eighth Judicial District Court of the State

of Nevada by Cary Fields (“Fields”) naming Mobetize and its three present directors as defendants, to

obtain a preliminary injunction to enjoin a consolidation of Mobetize’s common stock, and seek damages

for breach of fiduciary duty, conversion and unjust enrichment. Mobetize and its directors believe that

Fields’ claims are without merit and are intent on vigorously defending against this action. On May 18,

2017, after due consideration, the court denied Fields application and determined not to grant a temporary

injunction. The court did not rule on the question of alleged damages to Fields. A formal order from the

court as to the denial of a preliminary injunction remains pending as does any resolution of the other

allegations in the Complaint.

ITEM 4.

Mine Safety Disclosures

Not applicable.

PART II – FINANCIAL AND MARKET INFORMATION

ITEM 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

Mobetize common stock is quoted on the OTCQB, a service maintained by OTC Link under the symbol

“MPAY.” Trading in the common stock over-the-counter market has been limited and sporadic and the

quotations set forth below are not necessarily indicative of actual market conditions. These prices reflect

inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect

actual transactions. The high and low bid prices for the common stock for each quarter of the years ended

March 31, 2017 and 2016 are as follows:

Year

Quarter Ended

High

Low

2017

March 31

$0.09

$0.07

December 31

$0.08

September 30

$0.10

June 30

$0.12

2016

March 31

$0.29

December 31

$0.30

September 30

$0.65

$0.64

June 30

$0.73

$0.70

The following is a summary of the material terms of our capital stock outstanding securities. This

summary is subject to and qualified by our articles of incorporation and bylaws.

Common Stock

As of March 31, 2017, there were 57 shareholders of record holding 23,450,233 shares of fully paid and

non-assessable common stock of the 525,000,000 shares of common stock, par value $0.001, authorized.

The Board of Directors believes that the number of beneficial owners is greater than the number of record

holders because a portion of our outstanding common stock is held in broker “street names” for the

benefit of individual investors. The holders of the common stock are entitled to one vote for each share

held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no

preemptive rights and no right to convert their common stock into any other securities. There are no

redemption or sinking fund provisions applicable to the common stock.

Preferred Stock – Series A

As of March 31, 2017, there was one shareholder of record holding 4,565,000 shares of fully paid and

non-assessable shares of Series A preferred stock of the 10,000,000 shares of Series A preferred stock,

par value $0.001, authorized.

Preferred Stock – Series B

As of March 31, 2017, there were 47 shareholders of record holding 13,688,408 shares of fully paid and

non-assessable shares of Series B preferred stock of the 25,000,000 shares of Series B preferred stock par

value $0.001, authorized.

Convertible Debentures

As of March 31, 2017, we had convertible debt securities convertible into shares of our Series B Preferred

stock for an aggregate principal amount of $240,000. The convertible debentures have 12 month terms at

12% and 6% annual interest rates that paid the holders 12 months of prepaid interest on issuance, with the

conversion feature exercisable at the option of the holder. The conversion feature enables the holder to

convert any portion of their outstanding convertible debenture into Series B Preferred stock 180 days

from the issue date, but no later than the maturity date as follows:

Convertible Debentures

Issue Date

Exercise Price

Expiration Date

$75,000

01/30/2017

$0.50

01/30/2018

$50,000

01/27/2017

$0.50

01/27/2018

$50,000

01/27/2017

$0.50

01/27/2018

$25,000

01/27/2017

$0.50

01/27/2018

$20,000

11/21/2016

$0.25

11/21/2017

$20,000

11/21/2016

$0.25

11/21/2017

Stock Options

As of March 31, 2017, we had 2,020,000 stock options outstanding, of which 1,563,000 are exercisable

each stock option with five year terms, to directors, employees, advisors, and consultants, pursuant to the

2015 Stock Option Plan, entitle the optionee to purchase shares of our common stock at an exercise price

of $0.60 that either vest on grant or over time based on tenure with Mobetize.

We do not have in effect any other compensation plans under which our equity securities are authorized

for issuance.

Promissory Note

As of March 31, 2017, we had two promissory notes outstanding in the aggregate amount of $43,798.

Warrants

As of March 31, 2017, we had 2,636,406 share purchase warrants convertible into shares of our common

stock as follows.

Share Purchase Warrants

Issue Date

Exercise Price

Expiration Date

694,414

6/25/2014

$1.00

06/24/2018

305,000

12/11/2014

$1.25

12/10/2018

81,670

03/17/2015

$1.25

12/10/2018

94,750

07/15/2015

$1.00

09/01/2018

1,460,572

08/31/2015

$1.00

09/01/2018

Dividends

We have not declared any cash dividends since inception and do not anticipate paying any dividends in

the near future. The payment of dividends on our common stock is within the discretion of the Board of

Directors subject to earnings, capital requirements, financial condition, and other relevant factors

including those contractual restrictions related to certain debt obligations and those limitations generally

imposed by applicable state law.

Transfer Agent and Registrar

Our transfer agent is VStock Transfer, LLC located at 18 Lafayette Place, Woodmere, New York, 11598

having a telephone number at (212) 818-8436 and a facsimile number at (646) 536-3179

Recent Sales of Unregistered Securities

On January 27, 2017, our Board of Directors authorized the issuance of four convertible debentures

convertible into shares of our Series B Preferred stock for an aggregate amount of $200,000 gross less

$24,000 in prepaid interest for 12 month terms convertible into shares of Series B Preferred stock at a

price of $0.50 per share 180 days from the issue date but no later than the maturity date. The offering was

conducted pursuant to the exemptions from registration provided by Section 4(2) and Regulation D of the

Securities Act of 1933, as amended (“Securities Act”) to the following persons:

Name

Issue Date

Consideration

Exemption

William Duberstein

01/27/2017

$50,000

Section 4(2)/Reg D

David Duberstein

01/27/2017

$50,000

Section 4(2)/Reg D

Donald Duberstein

01/30/2017

$75,000

Section 4(2)/Reg D

Alan Rothschild

01/27/2017

$25,000

Section 4(2)/Reg D

On November 21, 2016, our Board of Directors authorized the issuance of two convertible debentures

convertible into shares of our Series B Preferred stock for an aggregate amount of $40,000 gross less

$37,600 in prepaid interest for 12 month terms convertible into shares of Series B Preferred stock at a

price of $0.25 per share 180 days from the issue date but no later than the maturity date. The offering was

conducted pursuant to the exemptions from registration provided by Section 4(2) and Regulation D of the

Securities Act of 1933, as amended (“Securities Act”) to the following persons:

Name

Issue Date

Consideration

Exemption

Donald Duberstein

11/21/2016

$20,000

Section 4(2)/Reg D

Alan Rothschild

11/21/2016

$20,000

Section 4(2)/Reg D

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6.

Selected Financial Data

Not required of smaller reporting companies.

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of

Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other

parts of this current report contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”

“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future

performance and our actual results may differ significantly from the results discussed in the forward-

looking statements. Factors that might cause such differences include but are not limited to those

discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future

Results and Financial Condition below. The following discussion should be read in conjunction with our

financial statements and notes thereto included in this current report. Our fiscal year end is March 31.

DISCUSSION AND ANALYSIS

Mobetize’s business model for the coming year is to complete the qualification of products under

development, and to increase sales of our existing products. Meanwhile, we will continue internal

research and development efforts and collaborate with development partners to ensure the continuity of

our product pipeline as we maintain our focus on the convergence of telecom and financial services.

Our business development strategy is prone to significant risks and uncertainties certain of which can

have an immediate impact on its efforts to realize positive net cash flow and deter future prospects of

growth. Historically Mobetize has not been able to generate sufficient cash flow from operations to

sustain operations and fund necessary operating expenses. Therefore, there can be no assurance that

anticipated revenue will provide sufficient cash flows to sustain operations.

Mobetize’s financial condition, results of operations and the carrying value of its technology depends on

its ability to develop, market and sell innovative products and Services to Fintech Customers. Smaller

technology companies in the Fintech segment of the market face a stiff competitive barrier to market

entry erected by larger competitors that are generally better funded and accepted for product innovation.

Despite recent successes in realizing revenue, Mobetize needs to continue to innovate and attract new

customers in order to grow its Fintech market presence. Whether Mobetize will be successful in

commercializing its products and Services in the manner embedded in our business model can in no way

be assured.

Despite our expectation, we have no agreements to obtain funds through bank loans, lines of credit or any

other sources. Since we have no financing committed, our inability to realize financing to maintain

operations and grow our business would materially restrict our business operations. Financing may not be

available upon acceptable terms, or at all. Should we be successful in securing future financing new

issuances of equity or convertible debt would dilute our current shareholders and might have rights,

preferences or privileges senior to our common or preferred stock. If financing is not available to us,

such severe limitation might cause us to consider a consolidation of existing common equity or a

going private transaction as a means to attract financing and maintain our business.

Our auditors have issued a going concern opinion on the financial statements for the year ended March

31, 2017. The continuation of Mobetize as a going concern is dependent upon continued financial support

from its management, and its ability to obtain necessary debt or equity financing, increase revenue, and

generate profitable operations

RESULTS OF OPERATIONS

During the twelve months ended March 31, 2017, Mobetize (i) continued to develop its Fintech

technology products and Services; (ii) entered into development and commercialization agreements with

corporate partners; (iii) acquired certain technology; (iv) secured debt and equity financing; and (ii)

satisfied continuous public disclosure requirements.

Operating Revenues, Operating Expenses and Net Loss

Our operating revenues, expenses and the resultant net losses are described below:

US $

Year Ended

March 31,

2017

2016

Operating Revenues

467,417

125,934

Operating Expenses

(1,463,291)

(2,195,479)

Net Loss

(1,153,254)

(2,069,545)

Comprehensive Loss

(1,154,285)

(2,069,545)

Revenue

Mobetize realized $467,417 in revenue over the twelve months ended March 31, 2017, as compared to

revenue of $125,934 over the twelve months ended March 31, 2016, an increase of 271%. The increase in

revenues in the current period can be primarily attributed to growth in licensing, consulting and

development services provided by Mobetize to existing Customers. We expect revenue to continue to

increase over the next twelve months as we expect to add payment processing revenue from the

deployment of our Hub.

Operating Expenses

Our operating expenses for the twelve month periods ended March 31, 2017 and 2016 are described below:

US $

Year Ended

March 31,

2017

2016

Depreciation

3,958 $

3,107

General and administrative

286,013

491,010

General and administrative – related party

100,096

18,986

Investor relations and promotion

62,584

31,881

Investor relations and promotion- related party

20,000

Consulting fees

66,192

349,283

Management fees – related party

287,073

568,009

Professional fees

151,831

72,244

Research and development

373,074

586,732

Research and development – related party

112,470

74,227

Total Operating Expenses

1,463,291

2,195,479

Mobetize realized $1,463,291 in operating expenses over the twelve months ended March 31, 2017, as

compared to operating expenses of $2,195,479 for the twelve months ended March 31, 2016, a decrease

of 33%. This decrease in operating expenses in the current period can be primarily attributed to the

decrease in general and administrative fees, consulting fees, management fees, and research and

development, offset by an increase in investor relations and promotion, and professional fees expenses

due to ongoing professional fees associated with legal challenges. We expect that operating expenses will

continue to increase as our growth model will require increases in general and administrative expenses,

research and development and marketing over the next twelve months.

Net Loss

Mobetize recorded a net loss of $1,153,254 over the twelve months ended March 31, 2017, as compared

to a net loss of $2,069,545 for the twelve months ended March 31, 2016, a decrease of 44%. The decrease

in net loss in the current period can be primarily attributed to the decrease in operating expenses and

increase in revenue. We expect that net losses will continue to decrease over the next twelve months as

revenue is first realized from payment processing, even though we anticipate increases in operating

expenses.

Income Tax Expense

As of March 31, 2017, Mobetize has net operating loss (NOL) carry forwards of approximately

$1,838,000. Should substantial changes in our ownership occur there would be an annual limitation of the

amount of NOL carry forward which could be utilized. The ultimate realization of these carry forwards is

due, in part, on the tax law in effect at the time and future events, which cannot be determined.

Liquidity and Capital Resources

Since inception Mobetize has experienced changes in liquidity, capital resources, and stockholders’

equity.

US $

March 31, 2017

March 31, 2016

Current Assets

709,000

318,827

Current Liabilities

713,550

541,185

Working Capital

(4,550)

(222,358)

Mobetize had negative working capital of $4,550 as of March 31, 2017 and has funded its cash needs

since inception with revenues generated from operations, debt instruments and private equity placements.

Existing working capital and anticipated cash flow are not expected to be sufficient to fund operations

over the next twelve months.

Total current assets as of March 31, 2017, were $709,000 which consisted of cash, accounts receivable,

prepaid expenses and prepaid expenses to a related party. Total assets were $828,273 which consisted of

current assets, intangible asset and equipment. Total and current liabilities were $713,550 which consisted

of accounts payable, accounts payable to a related party, deposits due to Customers, a related party

promissory note, and convertible debentures.

Total stockholders’ equity as of March 31, 2017, was $114,723.

Cash Flows

Our cash flows are described below:

US $

Year Ended

March 31,

2017

2016

Cash flows used in Operating Activities

(482,911)

(1,254,120)

Cash flows used in Investing Activities

(1,659)

Cash flows provided by Financing Activities

809,188

1,159,802

Cash Used in Operating Activities

Net cash used in operating activities for the twelve months ended March 31, 2017, was $482,911 as

compared to net cash used in operating activities of $1,254,120 for the twelve month ended March 31,

2016. The change in net cash used in operating activities in the current period can be attributed to losses

on settlement of accounts payable to a related party and a number of items that are book expense items

which do not affect the total amount relative to actual cash used including stock based compensation,

shares issued for services, amortization of an intangible asset and depreciation expense. Balance sheet

accounts that actually affect cash, but are not income statement related items, that are added or deducted

to arrive at net cash used in operating activities, include accounts receivable, prepaid expenses and

accounts payable. Mobetize expects to continue to use net cash in operating activities in future periods

until such time net losses transition to net income.

Cash Used in Investing Activities

Net cash used in investing activities for the twelve months ended March 31, 2017, was $nil as compared

to net cash used in investing activities for the twelve months ended March 31, 2016, of $1,659. Mobetize

expects to use net cash flow in investing activities in future periods as it grows its business model.

Cash Provided by Financing Activities

Net cash provided by financing activities for the twelve months ended March 31, 2017, was $809,188 as

compared to net cash provided by financing activities for the twelve months ended March 31, 2016, of

$1,159,802. The change in net cash provided by financing activities in the current period can be attributed

to proceeds from the sale of Series B preferred stock, a promissory note from a related party and the

issuance of convertible debentures. Mobetize expects to continue to rely on cash provided by financing

activities as its business will require additional funding to meet forecast capital requirements to develop

its product line and expand its commercial reach.

We expect that working capital requirements will continue to be funded through a combination of existing

funds and further issuances of securities as either debt or equity are expected to increase in line with the

growth of our business.

Existing working capital, advances from directors, credit extended by directors and debt or equity

placement combined, with anticipated revenue are expected to be adequate to fund operations over the

next twelve months though we have no commitments for such working capital. Historically, we have

financed operations through private placements of equity and advances or loans from directors. Increases

in operating expenses and capital expenditures are expected going forward related to: (i) developmental

expenses; and (ii) marketing expenses. We intend to finance these expenses with further issuances of debt

or equity securities while remaining cognizant that additional capital to meet long-term operating

requirements. We currently have no agreements, arrangements or understandings with any person to

obtain funds through bank loans, lines of credit or any other sources. Since we have secured no such

arrangements the prospect exists that we will be unsuccessful in raising additional capital which failure

would have a severe negative impact on our ability to continue operations. Further, issuances of equity or

convertible debt will result in dilution to our current shareholders and could have rights, preferences or

privileges senior to our common stock. If sufficient capital is not available to us, we will not be able to

take realize our business model, which failure would materially limit or cause our business to fail.

We have no lines of credit or other bank financing arrangements.

We do not intend to pay cash dividends in the foreseeable future.

Our commitments for future capital expenditures were not material at year end.

We have no defined benefit plan or contractual commitment with any of its officers or directors, except

those entered into in the ordinary course in respect to employment or services agreements.

We have no current plans for the purchase or sale of any plant or equipment.

We have no current plans to make any changes in the number of employees.

Off Balance Sheet Arrangements

As of March 31, 2017, Mobetize has no significant 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 is

material to stockholders.

GOING CONCERN

The independent auditors' report accompanying our March 31, 2017, financial statements contains an

explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

These financial statements included in this annual report for March 31, 2017, have been prepared on a

going concern basis, which implies that Mobetize will continue to realize its assets and discharge its

liabilities in the normal course of business. As of March 31, 2017, Mobetize had an accumulated deficit of

$7,478,315. The continuation of Mobetize as a going concern is dependent upon the continued financial

support from its management, its ability to develop commercially viable products, its ability to offer

innovative Services, obtain the necessary debt or equity financing to realize its business model, and

ultimately generate profitable operations. Whether Mobetize can accomplish these objectives raises

substantial doubt regarding Mobetize’s ability to continue as a going concern. These financial statements

do not include any adjustments to the recoverability and classification of recorded asset amounts and

classification of liabilities that might be necessary should Mobetize be unable to continue as a going

concern.

CRITITCAL ACCOUNTING POLICIES

Our significant accounting policies are summarized in Note 2 to our financial statements. While the

selection and application of any accounting policy may involve some level of subjective judgments and

estimates, we believe the following accounting policies are the most critical to our financial statements,

potentially involve the most subjective judgments in their selection and application, and are the most

susceptible to uncertainties and changing conditions.

Revenue Recognition

Mobetize recognizes revenue from payment processing, licensing, and provision of consulting services.

Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an

arrangement exists, the service has been provided, and collectability is reasonably assured.

Stock-Based Compensation

Mobetize records stock-based compensation in accordance with ASC 718, Compensation – Stock

Compensation, which requires the measurement and recognition of compensation expense based on

estimated fair values for all share-based awards made to employees and directors, including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using

an option-pricing model. Mobetize uses the Black-Scholes option-pricing model as its method of

determining fair value. This model is affected by Mobetize’s stock price as well as assumptions regarding

a number of subjective variables. These subjective variables include, but are not limited to Mobetize’s

expected stock price volatility over the term of the awards, and actual and projected employee stock

option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is

recognized as an expense in the statement of consolidated comprehensive loss over the requisite service

period. Options granted to consultants are valued at the fair value of the equity instruments issued, or the

fair value of the services received, whichever is more reliably measureable.

Embedded Conversion Features

Mobetize evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and

Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host

instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings.

If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated

under ASC 470-20, Debt with Conversion and Other Options for consideration of any beneficial conversion

feature.

Derivative Financial Instruments

Mobetize does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency

risks. Mobetize evaluates all of it financial instruments, including stock purchase warrants, to determine if

such instruments are derivatives or contain features that qualify as embedded derivatives.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially

recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported

as charges or credits to income. For option-based simple derivative financial instruments, Mobetize uses

the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent

valuation dates. The classification of derivative instruments, including whether such instruments should be

recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, Mobetize records a

Beneficial Conversion Feature and related debt discount.

ITEM 7A.

Quantitative and Qualitative Disclosures about Market Risk

Not required of smaller reporting companies.

ITEM 8.

Financial Statements and Supplementary Data

Our audited financial statements and notes thereto for the years ended March 31, 2017 and 2016 are

attached hereto as F-1 through F-28.

MOBETIZE CORP.

Consolidated Financial Statements

March 31, 2017

Index

Table of Contents .................................................................................................................................F-1

Report of Independent Registered Public Accounting Firm........................................................................F-2

Report of Independent Registered Public Accounting Firm........................................................................F-3

Consolidated Statements of Loss and Comprehensive Loss.......................................................................F-4

Consolidated Statements of Stockholders’ Equity (Deficiency) .................................................................F-5

Consolidated Statements of Cash Flows.................................................................................................F-6

Notes to the Consolidated Financial Statements ......................................................................................F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of

Mobetize Corp.

We have audited the accompanying consolidated financial statements of Mobetize Corp. (the “Company”),

which comprise the consolidated balance sheet as of March 31, 2017, and the related consolidated

statements of loss and comprehensive loss, changes in stockholders’ equity (deficiency), and cash flows for

the year ended March 31, 2017. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial

statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight

Board (United States). Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant

estimates made by management, as well as evaluating the overall consolidated financial statement

presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,

the financial position of Mobetize Corp. as of March 31, 2017, and the results of its operations and its cash flows for the year ended March 31, 2017 in conformity with accounting principles generally accepted in

the United States of America.

The accompanying consolidated financial statements have been prepared assuming that Mobetize Corp.

will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, Mobetize

Corp. has suffered recurring losses from operations and has a net capital deficiency. These matters, along with the other matters set forth in Note 1, indicate the existence of material uncertainties that raises

substantial doubt about its ability to continue as a going concern. Management's plans in regard to these

matters are also described in Note 1. The consolidated financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

“DAVIDSON & COMPANY LLP”

Vancouver, Canada

Chartered Professional Accountants

June 29, 2017

F-2

Report of Independent Registered

Public Accounting Firm

Grant Thornton LLP

T (604) 687-2711

Suite 1600, Grant Thornton Place

F (604) 685-6569

333 Seymour Street

www.GrantThornton.ca

Vancouver, BC

V6B 0A4

To the Board of Directors and Stockholders of

Mobetize Corp.

We have audited the accompanying consolidated balance sheets of Mobetize Corp. (a Nevada corporation)

and subsidiaries (collectively, the “Company”) as of March 31, 2016 and March 31, 2015, and the related

consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash

flows for each of the two years in the period ended March 31, 2016. These financial statements are the

responsibility of the Company’s management. Our responsibility is to express an opinion on these financial

statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight

Board (United States). Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. We were not engaged

to perform an audit of the Company’s internal control over financial reporting. Our audits included

consideration of internal control over financial reporting as a basis for designing audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit

also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements, assessing the accounting principles used and significant estimates made by management, as

well as evaluating the overall financial statement presentation. We believe that our audits provide a

reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,

the financial position of Mobetize Corp. and subsidiaries as of March 31, 2016 and March 31, 2015, and

the results of their operations and their cash flows for each of the two years in the period ended March 31,

2016, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will

continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company

has a history of operating losses. These conditions, along with other matters as set forth in Note 1, raise

substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in

regard to these matters are also described in Note 1. The consolidated financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

Vancouver, Canada

/s/ Grant Thornton LLP

July 11, 2016

Chartered Professional Accountants

F-3

MOBETIZE CORP.

Consolidated Balance Sheets

(Expressed in US dollars)

As at

MARCH 31,

2017

2016

ASSETS

Current Assets:

Cash

$ 535,438

210,341

Accounts receivable (Note 2(d))

113,140

43,729

Prepaid expenses and deposits

44,783

53,677

Prepaid expenses and deposits – related party (Note 6)

15,639

11,080

Total Current Assets

709,000

318,827

Intangible asset (Note 3)

111,644

Equipment, net (Note 4)

7,629

11,828

TOTAL ASSETS

$ 828,273

330,655

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

LIABILITIES

Current Liabilities:

Accounts payable and accrued liabilities

$ 108,381

138,956

Accounts payable and accrued liabilities - related party (Note 6)

320,391

75,749

Deposits due to customers

980

1,480

Promissory note – related party (Note 6(g))

43,798

50,000

Convertible debentures (Note 5 and 6(j))

240,000

275,000

Total Current Liabilities

713,550

541,185

Accounts payable and accrued liabilities – related party (Note 6)

47,476

TOTAL LIABILITIES

$ 713,550

588,661

STOCKHOLDERS' EQUITY (DEFICIENCY)

Common stock, $0.001 Par Value: 525,000,000 authorized and

23,450,233 (2016 - 28,750,881) common shares issued and outstanding,

respectively (Note 7(a))

23,450

28,751

Preferred stock – Series A, $0.001 Par Value: 10,000,000 authorized and

4,565,000 shares issues and outstanding (Note 7(b))

4,565

Preferred stock – Series B, $0.001 Par Value: 25,000,000 authorized and

13,688,408 (2016 – nil) shares issues and outstanding (Note 7(c))

13,688

Warrants reserve

676,964

Options reserve

952,828

757,524

Additional paid-in capital

5,931,810

4,608,487

Accumulated other comprehensive loss

(10,267)

(9,236)

Accumulated deficit

(7,478,315)

(6,325,061)

Total Stockholders' Equity (Deficiency)

114,723

(258,006)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

(DEFICIENCY)

$ 828,273

330,655

The accompanying notes are an integral part of these consolidated financial statements

F-4

MOBETIZE CORP.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in US dollars)

US $

YEAR ENDED

MARCH 31,

2017

2016

OPERATING REVENUES

Revenues

467,417 $

125,934

OPERATING EXPENSES

Depreciation

3,958

3,107

General and administrative

286,013

491,010

General and administrative – related party (Note 6)

100,096

18,986

Investor relations and promotion

62,584

31,881

Investor relations and promotion – related party (Note 6)

20,000

Consulting fees

66,192

349,283

Management fees – related party (Note 6)

287,073

568,009

Professional fees

151,831

72,244

Research and development

373,074

586,732

Research and development - related party (Note 6)

112,470

74,227

Total Operating Expenses

1,463,291

2,195,479

(995,874) $ (2,069,545)

OTHER ITEMS

Loss on settlement of accounts payable (Note 7(c))

(157,380)

NET LOSS

(1,153,254) $ (2,069,545)

NET LOSS PER SHARE

Basic and diluted

(0.05) $

(0.07)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic and diluted

24,345,413

31,810,036

COMPREHENSIVE LOSS

Net loss

(1,153,254) $ (2,069,545)

Other comprehensive loss:

Cumulative translation adjustment

(1,031)

(6,910)

Comprehensive loss

(1,154,285) $ (2,076,455)

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

F-5

MOBETIZE CORP.

Consolidated Statements of Stockholders’ Equity (Deficiency)

For the Years Ended March 31, 2016, and 2017

(Expressed in US dollars)

Common

Preferred Stock

Accumulated

Stocks

Class A

Class B

Additional

Warrants and

Other

Total

Paid-In

Subscriptions

Options

Accumulated

Comprehensive

Shareholder’s

Number

Value

Number

Value

Number

Value

Capital

Payable

Reserves

Deficit

Loss

Equity

Balance - March 31, 2015

30,185,505 $

30,186

- $

- $ 4,030,880 $

14,303 $

423,408 $

(4,255,516) $

(2,326) $

240,935

Conversion of common to preferred

(4,565,000)

(4,565)

4,565,000

4,565

Units issued for cash

2,886,149

2,886

480,994

278,026

761,906

Share issue costs

(12,122)

Valuation of financing warrants on sale

of units

3,372

Exercise of warrants

189,500

189

94,561

94,750

Warrants issued on exercise of expiring

warrants

(18,255)

18,255

Shares issued for services

54,727

32,429

(14,303)

18,181

Stock-based compensation

711,427

Net loss for the year

(2,069,545)

Comprehensive loss for the year

(6,910)

Balance – March 31, 2016

28,750,881 $

28,751

4,565,000 $

4,565

- $

- $ 4,608,487 $

- $

1,434,488 $

(6,325,061) $

(9,236) $

(258,006)

Conversion of common to preferred

(5,420,648)

(5,421)

5,420,648

5,421

Shares issued for cash

500,000

500

499,500

500,000

Shares issued for intangible asset

500,000

500

124,500

125,000

Shares issued for services

120,000

120

50,000

44,530

44,700

Shares issued to settle accounts payable

1,967,760

1,967

313,543

315,510

Shares issued to settle promissory note

4,650,000

4,650

41,850

46,500

Shares issued upon conversion of

convertible debt

600,000

600

299,400

300,000

Stock-based compensation

195,304

Net loss for the year

(1,153,254,)

(1,153,254)

Comprehensive loss for the year

(1,031)

Balance – March 31, 2017

23,450,233 $

23,450

4,565,000 $

4,565

13,688,408 $

13,688 $ 5,931,810 $

- $

1,629,792 $

(7,478,315) $

(10,267) $

114,723

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

F-6

MOBETIZE CORP.

Consolidated Statements of Cash Flows

(Expressed in US dollars)

YEAR ENDED

MARCH 31,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

(1,153,254)

(2,069,545)

Items not affecting cash :

Amortization of intangible asset

13,356

Depreciation expense

3,958

3,107

Interest accrued on accounts payable – related party

2,035

2,913

Loss on settlement of accounts payable

157,380

Settlement of shareholder loans adjusted to wages

(31,437)

Shares issued for services

44,700

18,181

Stock-based compensation

195,304

711,427

Changes in non-cash working capital:

Accounts receivable

(69,411)

(37,195)

Accounts receivable – related party

14,687

Prepaid expenses and deposits

8,894

26,908

Prepaid expenses and deposits – related party

(8,059)

759

Accounts payable and accrued liabilities

103,555

133,136

Accounts payable - related party

219,131

(27,061)

Deposits due to customers

(500)

Net cash used in operating activities

(482,911)

(1,254,120)

CASH FLOWS USED IN INVESTING ACTIVITIES

Purchase of computer equipment

(1,659)

Net cash used in investing activities

(1,659)

CASH FLOWS FROM FINANCING ACTIVITES

Proceeds from sale of common stock and warrant exercise, net of

financing costs

619,667

Proceeds from sale of common stock and warrant exercise, net of

financing costs - related party

228,240

Proceeds from sale of preferred stock

500,000

Proceeds from related party promissory note, net of prepaid interest

44,188

44,000

Proceeds from convertible debenture, net of prepaid interest

265,000

245,000

Proceeds from shareholder loans, net of repayments

22,895

Net cash provided by financing activities

809,188

1,159,802

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(1,180)

(6,581)

NET INCREASE (DECREASE) IN CASH

325,097

(102,558)

CASH - BEGINNING OF YEAR

210,341

312,899

CASH - END OF YEAR

535,438

210,341

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Shares issued upon conversion of convertible debentures

300,000

Shares issued for intangible asset

125,000

Shares issued to settle accounts payable

351,510

Shares issued to settle promissory note – related party

46,500

Shares issued for services – subscriptions payable

14,303

SUPPLEMENTAL DISCLOSURES:

Interest paid

37,703

-36,000

Income taxes paid

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

F-7

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

1. Nature of Operations and Continuance of Business

Mobetize Corp. (the “Company”) was incorporated in the state of Nevada on February 23, 2012, as

Slavia, Corp. The Company’s name changed to “Mobetize Corp.” on August 13, 2013. The Company

provides Fintech solutions and services to enable and support the convergence of global telecom and

financial services providers (“Customers”) through its Global Mobile B2B Fintech and Financial

Services Marketplace (“Hub”) in Canada and the USA. The Company’s activities are subject to

significant risks and uncertainties, including the need to secure additional funding to optimize the

Company’s existing technology before another company develops competitive products.

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies

that the Company will continue to realize assets and discharge liabilities in the normal course of

business. As of March 31, 2017, the Company has an accumulated deficit of $7,478,315, a history of

net losses and a working capital deficiency of $4,550. These factors raise substantial doubt regarding

the Company’s ability to continue as a going concern. The continuation of the Company as a going

concern is dependent upon continuing financial support from management, increasing sales, securing

debt or equity financing, cutting operating costs, launching viable products, and realizing profitable

operations. These consolidated financial statements do not include any adjustments to the recoverability

and classification of recorded asset amounts and classification of liabilities that might be necessary

should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

a) Basis of Presentation

These consolidated financial statements of the Company have been prepared in accordance with

accounting principles generally accepted in the United States (“US GAAP”) which include the

accounts of Mobetize Canada Inc., and Mobetize USA Inc., both of which are wholly-owned

subsidiaries of the Company. The consolidated financial statements are expressed in U.S. dollars.

All significant intercompany transactions and balances have been eliminated. The Company’s

fiscal year-end is March 31.

b) Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires

management to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial

statements and the reported amounts of revenues and expenses during the reporting period.

The Company regularly evaluates estimates and assumptions related to the collectability of

accounts receivable, revenue recognition, fair value of stock-based compensation, fair values of

embedded derivative liabilities of convertible debentures, fair values of shares issued for non-cash

consideration, and deferred income tax asset valuation allowances. The Company bases its

estimates and assumptions on current facts, historical experience and various other factors that it

believes to be reasonable under the circumstances, the results of which form the basis for making

judgments about the carrying values of assets and liabilities and the accrual of costs and expenses

that are not readily apparent from other sources. The actual results experienced by the Company

may differ materially and adversely from the Company’s estimates. To the extent there are material

differences between the estimates and the actual results, future results of operations will be affected.

F-8

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

c) Cash

The Company considers all highly liquid instruments with maturity of three months or less at the

time of issuance to be cash equivalents. As of March 31, 2017, and 2016, the Company had no cash

equivalents.

d) Accounts Receivable and Allowance for Doubtful Accounts

Trade and other accounts receivable are reported at face value less any provisions for uncollectible

accounts considered necessary. Accounts receivable primarily includes trade receivables from

customers. The Company provides an allowance for its accounts receivable for estimated losses

that may result from its customers’ inability to pay. At March 31, 2017, the Company had accounts

receivable of $113,140 (2016 - $43,729) and has not recognized an allowance for doubtful

accounts.

e) Prepaid Expenses and Deposits

The Company pays for some services in advance and recognizes these expenses as prepaid at the

balance sheet date. If certain prepaid expenses extend beyond one-year, those are classified as non-

current assets.

f) Revenue Recognition

The Company recognizes revenue from payment processing, licensing and the provision of

professional services. Revenue will be recognized only when the price is fixed and determinable,

persuasive evidence of an arrangement exists, the service has been provided, and collectability is

reasonably assured.

g) Equipment

Equipment is accounted for at cost less accumulated depreciation and includes computer equipment

and office furniture. Depreciation is computed using the straight-line method over the estimated

useful lives of the assets, which are five years.

h) Intangible Asset

Intangible asset consists of a license with a definite life of two years and is stated at cost less

amortization. The asset is reviewed for impairment or obsolescence when events or changes in

circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible

assets are written down to fair value based on discounted cash flows or other valuation techniques.

F-9

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

i) Long-lived Assets

In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets

or asset groups for recoverability when events or changes in circumstances indicate that their

carrying amount may not be recoverable. Circumstances which could trigger a review include, but

are not limited to: significant decreases in the market price of the asset; significant adverse changes

in the business climate or legal factors; accumulation of costs significantly in excess of the amount

originally expected for the acquisition or construction of the asset; current period cash flow or

operating losses combined with a history of losses or a forecast of continuing losses associated with

the use of the asset; and current expectation that the asset will more likely than not be sold or

disposed significantly before the end of its estimated useful life. Recoverability is assessed based

on the carrying amount of the asset and its fair value, which is generally determined based on the

sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the

asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the

carrying amount is not recoverable and exceeds fair value.

j) Research and Development Costs

The Company incurs research and development costs during the course of its operations and in the

provision of revenue generating professional services. The costs are expensed except in cases where

development costs meet certain identifiable criteria for capitalization. Capitalized development

costs are amortized over the life of the related commercial production.

k) Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation –

Stock Compensation, which requires the measurement and recognition of compensation expense

based on estimated fair values for all share-based awards made to employees and directors,

including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant

using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its

method of determining fair value. This model is affected by the Company’s stock price as well as

assumptions regarding a number of subjective variables.

These subjective variables include, but are not limited to the Company’s expected stock price

volatility over the term of the awards, and actual and projected employee stock option exercise

behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as

an expense in income (loss) over the requisite service period.

Options granted to consultants are valued at the fair value of the equity instruments issued, or the

fair value of the services received, whichever is more reliably measureable.

F-10

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

l) Income Taxes

Deferred income taxes are determined using the liability method for the temporary differences

between the financial reporting basis and income tax basis of the Company’s assets and liabilities.

Deferred income taxes are measured based on the tax rates expected to be in effect when the

temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities

are recognized based on anticipated future tax consequences attributable to differences between

financial statement carrying amounts of assets and liabilities and their respective tax bases.

The Company’s policy is to recognize penalties and interest, if any, related to uncertain tax

positions as general and administrative expense.

m) Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share, which

requires presentation of basic and diluted loss per share (“LPS”) on the face of the income

statement. Basic LPS is computed by dividing net loss available to common shareholders and

preferred shareholders (numerator) by the weighted average number of shares outstanding

(denominator) during the period. Diluted LPS gives effect to all potentially dilutive common shares

outstanding during the period using the treasury stock method and convertible preferred stock using

the if-converted method. In computing diluted LPS, the average stock price for the period is used

in determining the number of shares assumed to be purchased from the exercise of stock options or

warrants. Diluted LPS excludes all dilutive potential shares if their effect is anti-dilutive. Due to

the continued losses in the Company, all convertible instruments, stock options, and warrants are

considered anti-dilutive. Consequently, as of March 31, 2017, the Company has nil (2016 – nil)

potentially dilutive shares.

n) Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of

comprehensive loss and its components in the consolidated financial statements.

o) Advertising Costs

Advertising costs are expensed as incurred and are included in general and administrative expense

in the accompanying financial statements. The Company incurred $9,565 and $84,826 in

advertising costs for the years ended March 31, 2017 and 2016, respectively.

F-11

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

p) Financial Instruments/Fair Value

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize

the use of observable inputs and minimize the use of unobservable inputs when measuring fair

value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective

evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization

within the fair value hierarchy is based upon the lowest level of input that is significant to the fair

value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure

fair value:

Level 1

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

identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are

observable for the asset or liability such as quoted prices for similar assets or liabilities in active

markets; quoted prices for identical assets or liabilities in markets with insufficient volume or

infrequent transactions (less active markets); or model-derived valuations in which significant

inputs are observable or can be derived principally from, or corroborated by, observable market

data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation

methodology that are significant to the measurement of the fair value of the assets or liabilities.

Financial instruments consist principally of cash, accounts receivable, accounts payable and

accrued liabilities, accounts payable and accrued liabilities – related party deposits due to

customers, promissory note, related party, and convertible debentures. Pursuant to ASC 820, Fair

Value Measurements and Disclosures, and ASC 825, Financial Instruments, the fair value of cash

is determined based on “Level 1” inputs, which consist of quoted prices in active markets for

identical assets.

Financial assets and financial liabilities are recognized at fair value on their initial recognition,

except for those arising from certain related party transactions which are accounted for at the

transferor’s carrying amount or exchange amount.

The recorded values of all other financial instruments approximate their current fair values because

of their nature and respective short-term maturity dates and current market rates for similar

instruments. The Company is exposed to credit risk through its cash and accounts receivable, but

mitigates this risk by keeping deposits at major financial institutions and advancing credit only to

bona fide creditworthy entities. The maximum amount of credit risk is equal to the carrying amount

of these instruments.

F-12

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

q) Embedded Conversion Features

The Company evaluates embedded conversion features within convertible debt under ASC 815,

Derivatives and Hedging, to determine whether the embedded conversion feature(s) should be

bifurcated from the host instrument and accounted for as a derivative at fair value with changes in

fair value recorded in income (loss). If the conversion feature does not require derivative treatment

under ASC 815, the instrument is evaluated under ASC 470-20, Debt with Conversion and Other

Options, for consideration of any beneficial conversion feature.

r) Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or

foreign currency risks. The Company evaluates all of its financial instruments, including

convertible debentures, stock purchase warrants and stock options, to determine if such instruments

are derivatives or contain features that qualify as embedded derivatives.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument

is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the

fair value reported as charges or credits to income (loss). For option-based simple derivative

financial instruments, the Company uses the Black-Scholes option-pricing model to value the

derivative instruments at inception and subsequent valuation dates. The classification of derivative

instruments, including whether such instruments should be recorded as liabilities or as equity, is

re-assessed at the end of each reporting period.

s) Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company

records a Beneficial Conversion Feature (the "BCF") and related debt discount.

When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount

against the face amount of the respective debt instrument (offset to additional paid-in capital) and

amortized to interest expense over the life of the debt.

t) Debt Issue Costs and Debt Discount

The Company may record debt issue costs and/or debt discounts in connection with raising funds

through the issuance of debt. These costs may be paid in the form of cash, or equity (such as

warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of

the underlying debt occurs, a proportionate share of the unamortized amounts is immediately

expensed.

F-13

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

u) Foreign Currency

The functional and reporting currency of the Company and its subsidiary, Mobetize USA Inc., is

the United States Dollar (“U.S. Dollars”). The functional currency of the Company’s international

subsidiary, Mobetize Canada Inc., is the Canadian dollar. The Company translates the consolidated

financial statements of this subsidiary to U.S. dollars in accordance with ASC 740, Foreign

Currency Translation Matters, using period-end rates of exchange for assets and liabilities, and

average rates for the annual period are derived from daily spot rates for revenues and expenses.

Translation gains and losses are recorded in accumulated other comprehensive loss as a component

of stockholders’ equity (deficiency). The Company has not, to the date of these consolidated

financial statements, entered into derivative instruments to offset the impact of foreign currency

fluctuations.

v) Recently Adopted Accounting Standards

In June 2014, Accounting Standards Update (“ASU”) guidance was issued to resolve the diversity

of practice relating to the accounting for stock based performance awards that the performance

target could be achieved after the employee completes the required service period. The update is

effective prospectively or retrospectively for annual reporting periods beginning after December

15, 2015. The Company adopted this ASU on April 1, 2016, prospectively. The adoption of this

ASU does not have a material effect on the Company’s consolidated financial statements.

In January 2015, an ASU was issued to simplify the income statement presentation requirements

in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are

events and transactions that are distinguished by their unusual nature and by the infrequency of

their occurrence. Eliminating the extraordinary classification simplifies income statement

presentation by altogether removing the concept of extraordinary items from consideration. This

ASU is effective for annual periods beginning after December 15, 2015, including interim periods

within those annual periods. An entity may apply this ASU prospectively or retrospectively to all

prior periods presented in the financial statements. Early adoption is permitted. The Company

adopted this ASU on April 1, 2016, prospectively. The adoption of this ASU does not have a

material effect on the Company’s consolidated financial statements.

F-14

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

w) Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The

new standard provides a five-step approach to be applied to all contracts with customers and also

requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting

periods beginning after December 15, 2017, including interim periods and is to be retrospectively

applied. Early application is permitted only as of annual reporting periods beginning after

December 15, 2016, including interim reporting periods within that reporting period. The Company

is currently evaluating this guidance and the impact it will have on its consolidated financial

statements.

In November 2015, an ASU was issued to simplify the presentation of deferred income taxes. The

amendments in this ASU require that deferred tax liabilities and assets be classified as non-current

on the balance sheet as compared to the current requirements to separate deferred tax liabilities and

assets into current and non-current amounts. This ASU is effective for annual periods beginning

after December 15, 2016, including interim periods within those annual periods. Earlier application

is permitted. This ASU may be applied either prospectively to all deferred tax liabilities and assets

or retrospectively to all periods presented. The Company is currently evaluating this guidance and

the impact it will have on its consolidated financial statements.

In February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840,

Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease

assets and lease liabilities by lessees for those leases classified as operating leases under previous

GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease

liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.

For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy

election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee

makes this election, it should recognize lease expense for such leases generally on a straight-line

basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied

under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after

December 15, 2018, including interim periods within those annual periods and is to be

retrospectively applied. Earlier application is permitted. The Company is currently evaluating this

guidance and the impact it will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718):

Improvements to Employee Share-Based Payment Accounting, to reduce complexity in the

accounting for employee share-based payment transactions. One of the simplifications relates to

forfeitures of awards. Under current GAAP, an entity estimates the number of awards for which

the requisite service period is expected to be rendered and base the accruals of compensation cost

on the estimated number of awards that will vest. This ASU permits an entity to make an entity-

wide accounting policy election either to estimate the number of forfeitures expected to occur or to

account for forfeitures in compensation cost when they occur. This ASU is effective for annual

periods beginning after December 15, 2016, including interim periods within those annual periods.

Earlier application is permitted. The Company is currently evaluating this guidance and the impact

it will have on its consolidated financial statements.

F-15

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

2. Summary of Significant Accounting Policies - continued

w) Recent Accounting Pronouncements - continued

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s

Ability to Continue as a Going Concern (ASU 2014-15), which amends Accounting Standards

Codification (ASC) Subtopic 205-40 to provide guidance about management’s responsibility to

evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern

and to provide related disclosures. Specifically, the amendments (1) provide a definition of the term

“substantial doubt,” (2) require an evaluation every reporting period, (3) provide principles for

considering the mitigating effect of management’s plans, (4) require certain disclosures when

substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an

express statement and other disclosures when substantial doubt is not alleviated and (6) require an

assessment for a period of one year after the date that financial statements are issued. ASU 2014-

15 is effective for fiscal years ending after December 15, 2016, and for annual periods and interim

periods thereafter. The Company does not expect this standard to have a material impact on its

consolidated financial statements and disclosures.

a) Reclassifications

Certain comparative figures have been reclassified to conform to the current year's presentation.

3. Intangible Asset

On January 12, 2017, the Company entered into a Gateway License Agreement and Joint Venture

Agreement (“Joint Venture”) with CPT Secure, Inc. (“CPT”), a company controlled by a shareholder

of the Company to further develop certain payment processing technology (“CPT IP”) on a 50/50 basis.

Additionally, the Company and CPT have agreed to jointly form a Joint Venture company (“JV Co”)

registered in British Columbia. In connection with the Joint Venture, the Company issued 500,000

Series B Preferred Shares with a fair value of $125,000 to CPT in consideration for the license to the

CPT IP which will be contributed to the JV Co. The license to the CPT IP has a term to January 11,

2019, and can be automatically renewed for successive two year periods unless either party elects not

to renew 60 days prior to expiration. During the year ended March 31, 2017, the Company recognized

amortization of $13,356 on the license, which has been included in research and development expense.

JV Co was incorporated subsequent to March 31, 2017 (Note 14)

4. Property and Equipment

Equipment, net consisted of the following:

March 31, 2017

March 31, 2016

Computer equipment

14,421 $

14,787

Furniture

1,174

1,204

Total

15,595

15,991

Less: accumulated amortization

7,966

4,163

Equipment, net

7,629 $

11,828

During the year ended March 31, 2017, equipment cost decreased by $241 (2016 - $1,778), and

accumulated amortization was impacted by $155 (2016 - $21), as a result of foreign currency translation

adjustments.

F-16

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

5. Convertible Debentures

Principal

March 31,

Date of issuance

2017

2016

Interest

Maturity

March 2016(1)

- $

275,000

12% per annum

March, 2017

July 25, 2016(2)

- $

12% per annum

July 25, 2017

November 21, 2016(3)

40,000 $

6% per annum November 21, 2017

January 27, 2017(4)

125,000 $

12% per annum

January 27, 2018

January 30, 2017(5)

75,000 $

12% per annum

January 30, 2018

240,000 $

275,000

(1) March, 2016 Issuance - $275,000:

 Issued net of $30,000 of prepaid interest, noting that $3,000 of prepaid interest was paid by the

Company to one convertible debenture holder during the year ended March 31, 2017.

 The conversion feature was exercisable at the option of the holder (“Conversion Feature”). The

Conversion Feature enabled the holder to convert any portion of their outstanding Convertible

Debenture principal balance into common shares at a variable and discounted conversion price

(“Conversion Price” - see below) after 180 days from issue date, but no later than the maturity

date.

 The Conversion Feature was subsequently amended to permit conversion into shares of the

Company’s Series B Preferred Shares at $0.50 per share rather than into shares of common

stock.

 The Conversion Feature represented an embedded contingent redemption feature and was

accounted for as a derivative. The fair value of the contingent redemption feature was

immaterial and therefore not recognized at inception, and at March 31, 2016.

 On January 20, 2017, the Company issued 550,000 Series B Preferred Shares pursuant to the

conversion of $275,000 of the convertible debenture in accordance with the modified

conversion terms which were agreed to on that date.

(2) July 25, 2016 Issuance - $25,000:

 Issued net of $3,000 of prepaid interest, based on an interest rate of 12% per annum.

 The conversion feature was exercisable at the option of the holder (“Conversion Feature”). The

Conversion Feature enabled the holder to convert any portion of their outstanding Convertible

Debenture principal balance into common shares at a variable and discounted conversion price

after 180 days from issue date, but no later than the maturity date.

 The Conversion Feature was subsequently amended to permit conversion into shares of the

Company’s Series B Preferred Shares at $0.50 per share rather than into shares of common

stock.

 The Conversion Feature represented an embedded contingent redemption feature and was

accounted for as a derivative. The fair value of the contingent redemption feature was

immaterial and therefore not recognized at inception.

 On January 20, 2017, the Company issued 50,000 Series B Preferred Shares pursuant to the

conversion of $25,000 of the convertible debenture in accordance with the modified conversion

terms which were agreed to on that date.

F-17

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

5. Convertible Debentures – continued

(3) November 21, 2016 Issuance- $40,000:

 Issued net of $2,400 of prepaid interest, based on an interest rate of 12% per annum.

 Of the $40,000 Convertible Debentures, $20,000 is owed to a director of the Company (Note

6(j)).

 The conversion feature is exercisable at the option of the holder (“Conversion Feature”). The

Conversion Feature enables the holder to convert any portion of their outstanding Convertible

Debenture principal balance into Series B Preferred Shares at $0.25 per share on or after May

20, 2017, but no later than the maturity date.

 The Company has evaluated whether separate financial instruments with the same terms as the

conversion features above would meet the characteristics of a derivative instrument as

described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net

settlement, as the shares delivered upon conversion are not readily convertible to cash. As the

conversion features would not meet the characteristics of a derivative instrument as described

in paragraphs ASC 815-15-25, the conversion features are not required to be separated from

the host instrument and accounted for separately. As a result, at March 31, 2017, the conversion

feature would not meet derivative classification.

(4) January 27, 2017 Issuance - $125,000:

 Issued net of $15,000 of prepaid interest, based on an interest rate of 12% per annum.

 The conversion feature is exercisable at the option of the holder (“Conversion Feature”). The

Conversion Feature enables the holder to convert any portion of their outstanding Convertible

Debenture principal balance into Series B Preferred Shares at $0.50 per share on or after July

26, 2017, but no later than the maturity date.

 The Company has evaluated whether separate financial instruments with the same terms as the

conversion features above would meet the characteristics of a derivative instrument as

described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net

settlement, as the shares delivered upon conversion are not readily convertible to cash. As the

conversion features would not meet the characteristics of a derivative instrument as described

in paragraphs ASC 815-15-25, the conversion features are not required to be separated from

the host instrument and accounted for separately. As a result, at March 31, 2017, the conversion

feature would not meet derivative classification.

F-18

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

5. Convertible Debentures – continued

(5) January 30, 2017 Issuance - $75,000:

 Issued net of $9,000 of prepaid interest, based on an interest rate of 12% per annum.

 The $75,000 Convertible Debentures is owed to a Director of the Company (Note 6(j)).

 The conversion feature is exercisable at the option of the holder (“Conversion Feature”). The

Conversion Feature enables the holder to convert any portion of their outstanding Convertible

Debenture principal balance into Series B Preferred shares at $0.50 per share on or after July

29, 2017, but no later than the maturity date.

 The Company has evaluated whether separate financial instruments with the same terms as the

conversion features above would meet the characteristics of a derivative instrument as

described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net

settlement, as the shares delivered upon conversion are not readily convertible to cash. As the

conversion features would not meet the characteristics of a derivative instrument as described

in paragraphs ASC 815-15-25, the conversion features are not required to be separated from

the host instrument and accounted for separately. As a result, at March 31, 2017, the conversion

feature would not meet derivative classification.

F-19

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

6. Related Party Transactions

Year ended March 31,

Transactions with related parties

2017

2016

(a) Transactions incurred with the CEO or companies controlled by the

CEO:

Management fees

121,370 $

120,000

Management fees – Stock-based compensation

27,971

112,054

Research and development

112,470

74,227

General and administrative

19,004

1,533

Conversion of promissory note(1)

46,500

Advances – applied to private placement(2)

40,741

327,315 $

348,555

(b) Transactions incurred with the former CFO’s or a company

controlled by a former CFO:

Management fees

7,110 $

Management fees – Stock-based compensation

76,346

General and administrative

69,231

1,380

General and administrative – Stock-based compensation

16,073

Advances – applied to private placement(2)

137,000

76,341 $

230,799

Management fees (3)

33,000 $

Management fees – Stock-based compensation

69,730

202,656

102,730 $

202,656

(d) Transactions incurred with a Director of the Company

Management fees – Stock-based compensation

27,892 $

56,953

General and administrative – Interest on convertible debenture

11,861

39,753 $

56,953

(e) Transactions incurred with a shareholder of the Company

Investor relations and promotion

20,000 $

Acquisition of intangible asset (Note 3)

125,000

145,000 $

(f) Amounts owed to the former CFO:

Accounts payable and accrued liabilities(4)

18,346

5,943

(g) Amounts owed to companies controlled by the CEO:

Accounts payable and accrued liabilities(4)

275,687

117,282

Promissory note – June 2, 2017(5)

25,000

Promissory note – July 11, 2017(6)

18,798

Promissory note – February 14, 2017(7)

50,000

319,485

167,282

(h) Amounts owed to the Chairman of the Company(4)

9,000

(i) Amounts prepaid to a company controlled by the CEO

Prepaid interest on promissory notes

2,461

5,241

(j) Amounts owed to a Director of the Company

Convertible debenture – matures March 21, 2017 (Note 5(1))

50,000

Convertible debenture – matures July 21, 2017 (Note 5(2)))

Convertible debenture – matures November 21, 2017 (Note 5(3)))

20,000

Convertible debenture – matures January 30, 2018 (Note 5(5)))

75,000

95,000

50,000

(k) Amounts prepaid to a Director of the Company

Prepaid interest on convertible debentures

13,178

5,839

(l) Amounts owed to a shareholder of the Company

Accounts payable and accrued liabilities(4)

17,358

F-20

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

6. Related Party Transactions – continued

(1) The promissory note was comprised of $50,000 principal, offset by $3,500 of prepaid interest. The

promissory note was converted into 4,650,000 Series B preferred shares of the Company (Note

7(c)).

(2) The advances from the CEO and former CFO were later used as a subscription to a private

placement which included subscriptions by the CEO, former CFO and direct family members.

(3) On July 15, 2016 the Chairman was compensated $24,000. On July 1, 2016, the Company entered

into an agreement with the Company’s Chairman where the Chairman would provide services to

the Company at a monthly rate of $1,000 for a period of two years ending on June 30, 2018.

(4) Included in accounts payable to the former CFO and amounts owed to companies controlled by the

CEO at March 31, 2017, is $36,000 (2016 - $36,000) and $40,000 (2016 - $40,000), respectively,

in accrued wages which bear interest at prime plus 1.5%. At March 31, 2017, the Company owed

accrued interest on the accrued wages of $3,210 (2016 - $1,380) and $3,567 (2016 - $1,533),

respectively. At March 31, 2017, accounts payable to the former CFO is offset by $35,074 (2016 -

$31,437) due from the former CFO for advances. All other accounts payable and accrued liabilities

due to the former CFO and companies controlled by the CEO of $14,210 (2016 - $nil) and $232,120

(2016 - $75,749), respectively, are unsecured and due on demand.

(5) The promissory note maturing on June 2, 2017, was issued with a twelve-month term, comprises

$25,000 principal, and bears interest at 12% per annum. The principal balance includes prepaid

interest of $3,000.

(6) The promissory note maturing on July 11, 2017, was issued with a twelve-month term, comprises

$18,798 (CAD $25,000) principal, and bears interest at 12% per annum. The principal balance

includes prepaid interest of $2,256 (CAD $3,000).

(7) The promissory note maturing on February 14, 2017, was issued with a twelve-month term,

comprised $50,000 principal, and bore interest at 12% per annum. The principal balance included

prepaid interest of $6,000. This promissory note was converted into 4,650,000 Series B preferred

shares of the Company (Note 7 (c)).

F-21

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

7. Common Stock and Preferred Stock

a) Issuance of Common Stock:

For the Year-ended March 31, 2016

§ On June 10, 2015, the Company issued 184,500 shares of common stock at $0.50 per share for

proceeds of $92,250 upon the exercise of warrants.

§ On August 15, 2015, the Company issued 5,000 shares of common stock at $0.50 per share for

proceeds of $2,500 upon the exercise of warrants.

§ On September 1, 2015, the Company closed a private placement under which it sold 2,724,668

units for $0.25 per unit for gross proceeds of $681,167, which were exclusively offered to

subscribers of previous $0.75 private placements. Each unit consists of one share of the

Company’s common stock and one half-warrant. The 1,362,332 warrants are exercisable at

$1.00 per share, are valid for three years from the date of issue, and have a fair value of $262,470.

$8,750 cash financing fees and 17,500 financing warrants with a fair value of $3,372 were

incurred with this private placement.

§ On September 1, 2015, the Company closed a private placement under which it sold 161,481

units for $0.50 per unit for gross proceeds of $80,739. Each unit consists of one share of the

Company’s common stock and one half-warrant, and have a fair value of $15,566. The 80,740

warrants are exercisable at $1.00 per share, are valid for three years from the date of issue.

Neither financing fees nor financing warrants were payable with this private placement.

§ On February 4, 2016, the Company converted 4,565,000 shares of common stock held by the

CEO of the Company into 4,565,000 Series A Preferred Shares.

§ On March 31, 2016, the Company issued 54,727 shares of common stock at $0.001 per share to

settle $32,484 of services payable in shares of common stock, of which $14,303 was included

in share subscriptions receivable at March 31, 2015.

For the Year-ended March 31, 2017

§ On August 1, 2016, the Company issued 120,000 shares of common stock at $0.06 per share

totaling $7,200 as bonus shares to the former CFO of the Company, recorded as general and

administrative related party expenses.

b) Authorization and Issuance of Series A Preferred Shares:

For the Year-ended March 31, 2016

§ During the year ended March 31, 2016, the Company authorized the issuance of 250,000,000

shares of preferred stock with a par value of $0.001 per share and designated 10,000,000 of the

preferred stock as Series A preferred shares (“Series A Preferred Shares”). The Series A

Preferred Shares have the same rights and privileges as the common stock, with the exception

that the Series A Preferred Share holder has 10 votes per Series A Preferred Share versus one

vote per share of common stock and does not have the right to sell the shares for a period of two

years from the date of issue.

F-22

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

7. Common Stock and Preferred Stock – continued

c) Authorization and Issuance of Series B Preferred Shares:

For the Year-ended March 31, 2017

§ During the year ended March 31, 2017, the Company designated 25,000,000 shares of the

authorized preferred stock as Series B preferred shares (“Series B Preferred Shares”). The Series

B Preferred Shares have the same rights and privileges as the common stock, with the exception

that the Series B Preferred Shares have an anti-dilution provision and the Series B Preferred

Share holder does not have the right to convert Series B Preferred Shares into shares of common

stock for a period of two years from the date of issue.

§ On June 2, 2016, the Company converted 4,081,481shares of common stock held by a company

controlled by the CEO into 4,081,481 Series B Preferred Shares, 300,000 shares of common

stock held by the Company’s Chairman and Director into 300,000 Series B Preferred Shares,

and 1,039,167 shares of common stock held by the Company’s Director into 1,039,167 Series

B Preferred Shares.

§ On July 15, 2016, the Company issued 200,000 Series B Preferred Shares with a fair value of

$0.15 per share to settle $30,000 in services payable.

§ On July 15, 2016, the Company issued 1,300,000 Series B Preferred Shares with a fair value of

$0.15 per share to a company controlled by a Chairman of the Company to settle $24,000 in

services payable. The excess fair value of $171,000 is recorded within additional paid-in capital

§ On July 15, 2016, the Company issued 4,650,000 Series B Preferred Shares with a fair value of

$0.15 per share to a company controlled by the Company’s CEO to settle $46,500 (Note 6(a))

in an outstanding promissory note, which included a principal of $50,000 less prepaid interest

of $3,500. The excess fair value of $651,000 is recorded within additional paid-in capital.

§ On December 1, 2016, the Company issued 275,000 Series B Preferred Shares with a fair value

of $0.25 per share to a consultant of the Company to settle $27,500 in amounts owing for

services provided, resulting in a loss on settlement of debt of $141,250.

§ On January 12, 2017, the Company issued 500,000 Series B Preferred Shares with a fair value

of $0.25 per share to acquire a license from CPT Secure, Inc. (Note 3).

§ On January 20, 2017, the Company issued 600,000 Series B Preferred Shares pursuant to the

modification and immediate conversion of $300,000 of convertible debentures (Note 5).

§ On February 23, 2017, the Company issued 25,000 Series B Preferred Shares with a fair value

of $0.50 per share as incentive shares upon signing of an advisory services agreement, recorded

within consulting fees.

§ On March 13, 2017, the Company issued 50,000 Series B Preferred Shares with a fair value of

$1.00 per share to a vendor pursuant to the settlement of $12,500 in accounts payable, resulting

in a loss on settlement of debt of $25,000.

§ On March 14, 2017, the Company issued 25,000 Series B Preferred Shares with a fair value of

$1.00 per share as incentive shares upon signing of an advisory services agreement recorded

within consulting fees.

§ On March 16, 2017, pursuant to an agreement signed on March 9, 2017 the Company issued

500,000 Series B Preferred Shares at $1.00 for gross proceeds of $500,000.

F-23

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

7. Common Stock and Preferred Stock – continued

c) Authorization and Issuance of Series B Preferred Shares - continued:

§ On March 30, 2017, the Company issued 127,760 Series B Preferred Shares with a fair value of

$1.00 per share to a vendor pursuant to the settlement of $31,940 in accounts payable, resulting

in a loss on settlement of debt of $95,820.

§ On March 31, 2017, the Company issued 15,000 Series B Preferred Shares with a fair value of

$1.00 per share to a vendor pursuant to the settlement of $32,190 in accounts payable, resulting

in a gain on settlement of debt of $17,190.

8. Share Purchase Warrants

The following table summarizes the continuity of share purchase warrants:

Weighted

average exercise

Number of

price

warrants

Balance, March 31, 2015

1,581,084

0.90

Issued

1,555,322

1.00

Exercised

(189,500)

0.50

Expired

(310,500)

0.50

Balance, March 31, 2016 and 2017

2,636,406

1.04

On July 15, 2015, 94,750 warrants were issued with an exercise price of $1.00 and a three year term

ending September 1, 2018 to holders of the September 3, 2013, warrants who had exercised a total of

189,500 warrants during the six months ended September 30, 2015, prior to the expiry date of

September 2, 2015. These warrant holders each received a half warrant for each full warrant they

exercised. These warrants were valued at $18,255 using the Black Scholes method criteria as below.

Each of the warrant issuances above were valued using the Black Scholes method, which included the

dividend yield as nil, risk-free interest rate of 1.07%, expected volatility of 70.42%, and expected term

of 3 years.

As at March 31, 2017, the following share purchase warrants were outstanding:

Number of warrants

Exercise price

outstanding

Expiry date

694,414

1.00

June 24, 2018

386,670

1.25

December 10, 2018

1,555,322

1.00

September 1, 2018

2,636,406

F-24

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

9. Stock Options

The Company has adopted a Stock Option Plan (“Stock Option Plan”) which permits the Company to

issue stock options for up to 3,000,000 common shares of the Company to directors, officers, employees

and consultants of the Company with a maximum term of 5 years, exercise prices equal to the minimum

fair market value per common share on the date of grant, and a vesting schedule determined by the

Board of Directors at the time of granting the options.

The following table summarizes the continuity of stock options:

Weighted

average exercise

Number of

price

stock options

Balance, March 31, 2015

57,291

1.25

Issued

2,630,000

0.60

Expired

(36,000)

0.65

Cancelled

(270,029)

0.74

Balance, March 31, 2016

2,381,262

0.60

Expired

(288,539)

0.60

Cancelled

(72,723)

0.60

Outstanding, March 31, 2017

2,020,000

0.60

Exercisable, March 31, 2017

1,563,000

0.60

As at March 31, 2017, the following share purchase options were outstanding:

Exercise

Number of options

price

outstanding

vested

Expiry date

2,020,000

1,563,000

0.60

September 30, 2020

The options are measured using the Black Scholes method, which included a dividend yield of nil, risk-

free interest rate of 0.68%, expected volatility of 76.7%, expected term of 5 years and weighted average

grant date fair value of $0.40 per share. Volatility is based on the historical volatility of the Company’s

common stock.

During the year ended March 31, 2017, $195,304 (2016 - $711,427) in stock-based compensation

expense was recorded and allocated amongst general and administrative, consulting fees, management

fees, and research and development expenses. The intrinsic value of the options was $nil at March 31,

2017, and 2016.

10. Concentration of Risk

Revenues are currently generated through licensing, professional services, and payment processing

services provided by Mobetize to our existing customers. During the year ended March 31, 2017, the

Company had revenues from five customers (2016 – revenues from five customers) with 56% (2016 –

75%) of revenues generated from the Company’s largest customer. At March 31, 2017, the Company’s

accounts receivable is concentrated and due from five customers (2016 – three customers) with 61%

(2016 – 69%) of accounts receivable due from the Company’s largest customer.

F-25

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

11. Contingencies and Commitment

a) The Company has an obligation under a rental lease for its operating office. As of March 31, 2017,

the remaining term of the lease is 21 months with monthly payments of $4,995. The Company’s

lease includes a renewal option.

b) The Company received a Citation and Notice of Assessment dated October 14, 2016, that Stephen

J. Fowler (“Fowler”), a former director and chief financial officer, had initiated a complaint with

the State of Washington Department of Labor and Industries for amounts allegedly due to him for

unpaid wages of $45,000 in wages in addition to assessed interest of $3,368, and a penalty of

$4,500. An appeal presented by the Company alleged that the calculation of amounts due to Fowler

was incorrect and that he had improperly obtained shares of its common stock. A hearing before

the Office of Administrative Hearings has not been set. See Note 6 (f) for amounts recorded as

owed to Fowler.

The Company received a Notice of Civil Claim dated April 26, 2017, filed in the British Columbia

Supreme Court by Fowler, naming the Company and its three present directors as defendants.

Fowler asserts claims against Mobetize for unpaid expenses, and breach of contract. He also asserts

claims breach of contract, breach of fiduciary duty, misrepresentation and conspiracy. The

Company has advanced its own counterclaims against Fowler, including fraudulent or negligent

misrepresentation, breach of fiduciary duty, negligence and unjust enrichment. On June 23, 2017,

Mobetize filed its response to Fowler’s claims and its own counterclaims against Fowler. No trial

date has been set.

The Company received a Complaint dated May 12, 2017, filed in the Second Judicial District Court

of the State of Nevada, by Fowler naming the Company and its three present directors as

defendants. The Nevada action concerns substantially the same facts and seeks substantially the

same relief as Fowler’s British Columbia action. On June 23, 2017, Mobetize filed a Motion to

Dismiss or in the alternative, an Application for Preliminary Injunction to either dismiss or stay the

Complaint. No trial date has been set.

c) The Company received a Complaint dated May 3, 2017, filed in Eight Judicial District Court of the

State of Nevada by Cary Fields (“Fields”) naming the Company and its three present directors as

defendants, to obtain a preliminary injunction to enjoin a consolidation of the Company’s common

stock, and seek damages for breach of fiduciary duty, conversion and unjust enrichment. On May

18, 2017, after due consideration, the court denied Fields application and determined not to grant a

temporary injunction. The court did not rule on the question of alleged damages to Fields. No trial

date has been set.

12. Segment Information

The Company has a single operating segments located in Canada and the United States of America

(“USA”). Revenues are generated in Canada and the USA while all assets are located in Canada. During

the year ended March 31, 2017, the Company generated revenue of $197,226 (CDN$258,862) in

Canada and $270,191 in the USA. The costs incurred to generate this revenue is expensed as research

and development. At March 31, 2017, the total assets held in Canada were $194,475 (2016 - $49,552),

and in the USA were $633,798 (2016 - $281,103).

F-26

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

13. Income Taxes

At March 31, 2017, the Company had no deferred tax assets.

During the year ended March 31, 2017, the Company incurred a federal operating non-capital losses

(“non-capital loss) of approximately $750,000 (2016 - $1,305,000). As at March 31, 2017, the

Company’s cumulative losses totaled $4,708,000 (2016 - $3,957,000).

The non-capital loss amounting to $750,000 (2016 - $1,305,000) was comprised of $273,000 (2016 -

$639,000) occurring within the State of Washington, USA, and $477,000 (2016 - $666,000) of the

losses occurring within the Province of British Columbia, Canada. The Company’s net loss of

$1,153,254 is comprised of losses occurring in the USA of $669,714, and $483,540 occurring in Canada.

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal

statutory rate for the years ended March 31, 2017, and 2016, is summarized as follows:

2017

2016

Loss before income taxes

(1,153,254)

(2,069,545)

Income tax recovery at statutory rates

(300,000)

(662,000)

Permanent differences

137,000

257,000

Temporary differences

211,000

520,000

Change in statutory, foreign tax, foreign exchange rates and other

(48,000)

(115,000)

Income tax expenses

–

The valuation allowance for deferred tax assets as of March 31, 2017, and 2016, was $1,479,000 and

$1,323,000, respectively, which will begin to expire in 2033. In assessing the recovery of the deferred

tax assets, management considers whether it is more likely than not that some portion or all of the

deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon

the generation of future taxable income in the periods in which those temporary differences become

deductible. Management considers the scheduled reversals of future deferred tax assets, projected future

taxable income, and tax planning strategies in making this assessment. As a result, management

determined it was more likely than not the deferred tax assets would not be realized as of March 31,

2017, and 2016, and maintained a full valuation allowance.

The unrecognized deferred tax assets include tax losses and difference between the carrying amount

and tax basis of the following items.

2017

2016

Deferred tax assets:

Non-capital losses available for future periods

1,478,000

1,323,000

Property and equipment

1,000

–

Valuation allowance

(1,479,000)

(1,323,000)

Deferred income taxes recovered

–

F-27

MOBETIZE CORP.

Notes to Consolidated Financial Statements

March 31, 2017 and 2016

(Expressed in US dollars)

13. Income Taxes - continued

The Company has non-capital losses available to offset future taxable income as follows:

Year of expiry

Canada

USA

2033

353,000

2034

554,000

2035

305,000

1,439,000

2036

666,000

639,000

2037

48,000

272,000

1,019,000

3,257,000

14. Subsequent Events

The Company evaluated its March 31, 2017, consolidated financial statements for subsequent events

through the date the consolidated financial statements were issued. The Company is not aware of any

subsequent events which would require recognition or disclosure in the consolidated financial

statements except as disclosed below.

a) The Company continues to seek recovery of 578,733 common shares and 101,726 share purchase

warrants issued as an overpayment to Fowler, the Former CFO of the Company for consulting

services and settlement of expenses and liabilities (Note 11).

b) On April 7, 2017, those stockholders with a majority of the outstanding approved the consolidation

of the Company’s issued and outstanding common shares on a one for one hundred (1/100) basis,

amend the Company’s Articles of Incorporation to decrease the number of authorized shares of

common stock from five hundred and twenty-five million (525,000,000) shares par value $0.001

to two hundred and fifty million (250,000,000) shares par value $0.001 and to amend the

Company’s Articles to decrease the number of authorized preferred shares from two hundred and

fifty million (250,000,000) shares par value $0.001 to seventy-five million shares (75,000,000) par

value $0.001with no change in the number of designated or outstanding Series A preferred shares

or Series B preferred shares.

c) On May 29, 2017 MPAY Gateway Services Inc. was incorporated pursuant to the terms of the Joint

Venture License Agreement and Joint Venture Agreement dated January 12, 2017, between the

Company and CPT Secure, Inc. (“CPT”), to further develop certain payment processing technology

(“CPT IP”) on a 50/50 basis.

d) On April 21, 2017, 160,000 Series B Preferred shares were issued.

F-28

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial

Disclosure

Not applicable.

ITEM 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act

of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be

disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and

reported within the time periods specified in rules and forms adopted by the Securities and Exchange

Commission (the “Commission”), and that such information is accumulated and communicated to

management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely

decisions regarding required disclosures.

Based on that evaluation, Mobetize’s management concluded, as of the end of the period covered by this

report, that our disclosure controls and procedures were not effective in recording, processing,

summarizing, and reporting information required to be disclosed, within the time periods specified in the

Commission’s rules and forms, and such information was not accumulated and communicated to

management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely

decisions regarding required disclosures.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial

reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange

Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief

Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for external purposes in accordance with GAAP. Internal

control over financial reporting includes those policies and procedures that:

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

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

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

Due to its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk

that controls may become inadequate because of changes in conditions or that the degree of compliance

with the policies or procedures may deteriorate.

Mobetize’s management conducted an assessment of the effectiveness of our internal control over

financial reporting as of March 31, 2017, based on criteria established in Internal Control – Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway

Commission, which assessment identified material weaknesses in internal control over financial

reporting.

A material weakness is a control deficiency, or a combination of deficiencies in internal control over

financial reporting that creates a reasonable possibility that a material misstatement in annual or interim

financial statements will not be prevented or detected on a timely basis. Since the assessment of the

effectiveness of our internal control over financial reporting did identify material weaknesses,

management concluded its internal control over financial reporting to be ineffective.

The matters involving internal control over financial reporting that our management considered to be

material weaknesses were:

1. Lack of a functioning audit committee due to the number of independent members on our Board

of Directors, which weakness could result in ineffective oversight in the monitoring of required

internal controls and procedures;

2. Failure to maintain the segregation of the duties of chief executive officer and chief financial

officer, which failure could result in inadequate implementation and review of financial reporting

control procedures.

The aforementioned material weaknesses were identified by our Chief Executive Officer and Chief

Financial Officer in connection with his review of our financial statements as of March 31, 2017.

We do not believe the material weaknesses described above caused any material misstatement of our

financial condition and results of operations for the year ended March 31, 2017. However, the lack of

sufficient independent directors has caused us to delay the formation of an audit committee and the

resignation of our former chief financial officer, has caused us to combine the duties of chief executive

officer and chief financial officer on an interim basis. Should we fail to remedy these weaknesses, such,

failures could result in a material misstatement in our financial statements in future periods.

Mobetize intends to remedy its material weaknesses as follows:

When practical, we intend to appoint a second independent member to our Board of Directors who would

be tasked with lending an additional independent voice to the responsibilities incumbent an audit

committee with the financial expertise necessary for a fully functioning audit committee. Our Board of

Directors has adopted an audit charter and expects to move forward with forming an audit committee

when a second independent director becomes available.

We do intend bifurcate the position of chief executive officer and chief financial officer into two separate

positions as soon as is practicable.

We believe the remediation measures described above will remediate the material weaknesses we have

identified and strengthen our internal control over financial reporting. We are committed to continuing to

improve our internal control processes and will continue to diligently and vigorously review our financial

reporting controls and procedures. As we continue to evaluate and work to improve our internal control

over financial reporting, we may determine to take additional measures to address control deficiencies or

determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures

described above.

This annual report does not include an attestation report of our independent registered public accounting

firm regarding internal control over financial reporting. We were not required to have, nor have we,

engaged our independent registered public accounting firm to perform an audit of internal control over

financial reporting pursuant to the rules of the Commission that permit us to provide only management’s

report in this annual report.

Changes in Internal Controls over Financial Reporting

During the quarter ended March 31, 2017, there has been no change in internal control over financial

reporting that has materially affected, or is reasonably likely to materially affect our internal control over

financial reporting.

ITEM 9B.

Other Information

On April 7, 2017, certain stockholders holding a majority of the voting power determined by written

consent to consolidate Mobetize’s common stock on a 1 for 100 basis and to amend its articles of

incorporation to decrease the number of authorized common stock and preferred stock. Mobetize has

since applied to FINRA to effect the consolidation and its application is being processed.

PART III – RELATED PARTIES AND GOVERNANCE

ITEM 10.

Directors, Executive Officers and Corporate Governance

The following individuals serve as the directors and executive officers of Mobetize as of the date of this

annual report.

Name

Positions Held

Age

Date Elected or Appointed

Ajay Hans

Chief Executive Officer, Chief

Financial Officer, Principal

Accounting Officer and Director

July 09, 2014

Malek Ladki

Director & Chairman

July 09, 2014

Donald Duberstein Director

September 14, 2015

Business Experience

The following is a brief account of the education and business experience during at least the past five

years of each director, executive officer and key employee of Mobetize, indicating the person's principal

occupation during that period, and the name and principal business of the organization in which such

occupation and employment were carried out.

Ajay Hans – Chief Executive Officer and Director

Business Experience

Mr. Hans has over 15 years of technology new venture development and financial experience in the

development, marketing and implementation of complex billing and payment related software

technologies dedicated for MNO’s and MVNO’s. Mr. Hans has served as CEO & COO of Dyneget; VP

Operations OAN Services Canada – OAN pioneered telecom billing and clearing solutions across North

America processing $500 million annually in LEC Billing transactions (ie. a form of billing for internet-

based or other usually electronic services where the user is charged through his account with the local

telephone company (also known as the Local Exchange Carrier), rather than directly from the provider of

the service). Additionally, he is actively involved in speaking engagements for Pacific Crest Securities.

Mr. Hans oversees our strategic vision and tactical execution. He has held senior executive positions with

leading telecom software technology companies where he successfully implemented solutions for brands

including SaskTel, Sprint, and AT&T.

Officer and Director Responsibilities and Qualifications

Mr. Hans is responsible for the overall management of Mobetize and is involved in many of its day-to-

day operations, including technology development, finance, and overall business strategy.

Mr. Hans holds a Bachelor’s Degree in Business Management, Economics, and Marketing from British

Columbia Institute of Technology and has completed an Executive Management Program at Simon Fraser

University as well as the Executive Managerial Success Program from Harvard Business School.

Other Public Company Directorships in the Last Five Years

No.

Malek Ladki – Director & Chairman

Business Experience

Dr. Ladki is a highly experienced TMT executive with over 21 years of experience of starting, growing

and exiting businesses internationally, running global telecoms infrastructure projects and holding a

variety of senior management roles with network operators, and FTSE100 software vendors. Dr. Ladki

has also held several board-level roles with multinational telecoms infrastructure solutions and suppliers.

He has founded and successfully exited three highly innovative Telecoms and IT products/solutions

businesses while helped launch a number of 1st tier telecoms in Europe and the United States. His

technical expertise spans several disciplines in Telecoms, IT, Software and Hardware development and he

holds three patents in network optimization. His vast experience in leading hyper-growth startups,

growing emerging technologies and restructuring business is an asset to Mobetize.

Director Responsibilities and Qualifications

Dr. Ladki also serves as the Chairman of the Board of Directors.

Dr. Ladki graduated with a Bachelor of Electronics Engineering in 1987 and went on to study for a

Doctorate in Engineering and earned his PhD in the telecommunications from the University of Liverpool

in 1990.

Other Public Company Directorships in the Last Five Years

None.

Donald Duberstein – Director

Business Experience

Mr. Duberstein is an experienced entrepreneur, portfolio manager, and active investor. Apart from

owning and managing an extensive portfolio of residential and commercial properties across the United

States over the past 38 years, Mr. Duberstein has co-founded and chaired a cosmeceutical skin care

company and has been actively involved in a number of private and public companies.

From 1995 through 1999 Mr. Duberstein was also on the Board of Directors of Selvac Corporation, a

public company.

Officer and Director Responsibilities and Qualifications

Mr. Duberstein graduated from the University of Pennsylvania Phi Beta Kappa, Magna Cum Laude in

1973 and NYU Law School in 1976. He is also a member of the New York and Florida Bars in 1977.

Other Public Company Directorships in the Last Five Years

None.

Family Relationships

There are no family relationships between or among the directors or executive officers.

Involvement in Certain Legal Proceedings

During the past ten years there are no events that occurred related to an involvement in legal proceedings

that are material to an evaluation of the ability or integrity of Mobetize’s directors, or persons nominated

to become directors or executive officers.

Term of Office

Our directors were appointed for a one (1) year term to hold office until the next annual meeting of our

shareholders or until removed from office in accordance with our bylaws. Our officers were appointed by

our Board of Directors and will hold office until the expiration of their employment contracts or removal

by the board.

No other persons are expected to make any significant contributions to Mobetize’s executive decisions

who are not executive officers or directors of Mobetize.

Compliance with Section 16(A) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires executive officers and

directors and persons who own more than 10% of a registered class of our equity securities to file with the

SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports

concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and

5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC

regulations to furnish us with copies of all Section 16(a) reports they file.

Based solely on our review of the copies of such forms received by us, or representations from certain

reporting persons, we believe that during fiscal year ended March 31, 2017, all filing requirements

applicable to our officers, directors and greater than 10% percent beneficial owners were complete.

Code of Ethics

We have not yet adopted a Code of Business Conduct and Ethics that applies to our officers, directors and

employees.

Committees of the Board

All proceedings of our Board of Directors were conducted by resolutions consented to in writing by all

the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to

in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to

the corporate laws of the state of Nevada and the bylaws of Mobetize, as valid and effective as if they had

been passed at a meeting of the directors duly called and held.

We had not formed an audit committee as of March 31, 2017, though we have adopted an audit charter and

have determined to form an audit committee when two independent directors can be appointed to such

committee Mobetize’s Board of Directors has not established a compensation committee.

Mobetize’s Bylaws define the procedure requirements for shareholders to submit recommendations or

nominations for directors. A shareholder who wishes to communicate with our board of directors may

also do so by directing a written request addressed to our president, at the address appearing on the first

page of this annual report.

Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that it has one member that would qualify as independent for the

purposes of serving on an audit committee but may not qualifies as an "audit committee financial expert"

as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the term is used in Item

7(d)(3)(iv) of Schedule 14A under the Exchange Act.

We believe that the members of our Board of Directors, who may additionally serve on our audit

committee in fulfilling that function, are collectively capable of analyzing and evaluating financial

statements and understanding internal controls and procedures for financial reporting. We believe that

retaining an independent director who would qualify as an "audit committee financial expert" would be

overly costly and burdensome.

ITEM 11.

Executive Compensation

Summary

The following table provides summary information for the years ended March 31, 2017 and 2016

concerning cash and non-cash compensation paid or accrued by Mobetize to or on behalf of (i) the Chief

Executive Officer and the Chief Financial Officer and (ii) any other employee to receive compensation in

excess of $100,000:

SUMMARY COMPENSATION TABLE

Change in

Pension Value

Non-

and Non-

Equity

qualified

Name

Incentive

Deferred

and

Stock

Option

Plan

Compensation

All Other

Principal

Salary Bonus Awards Awards Compensation

Earnings

Compensation

Total

Position

Year

($)

Ajay Hans,

2017 53,870

Nil

140,024

Nil

133,421

327,315

Chief

2016

Nil

140,638

Nil

120,000

260,638

Executive

Nil

Officer Chief

Financial

Officer and

Director(2)

Stephen

2017

Nil

Fowler, Chief

Financial

2016 90,000

Nil

140,638

Nil

230,638

Officer, and

Director(1)

Elena

2017 76,341

Nil

76,341

Karamushko

Chief

2016 15,428

Nil

16,073

Nil

48,931

80,432

Financial

Officer(3)

(1) Stephen Fowler was appointed as an officer and director of Mobetize on July 12, 2013. Mr. Fowler resigned as

Chief Financial Officer and as a Director on February 4, 2016.

(2) Ajay Hans was appointed to as Chief Executive Officer and as a Director of Mobetize on September 4, 2013 and

as the Chief Financial Officer on February 1, 2017.

(3) Elena Karamushko was appointed as Chief Financial Officer and Principal Accounting Officer on February 4,

2016. Ms. Karamushko resigned as Chief Financial Officer on December 1, 2016.

Chief Executive Officer, Chief Financial Officer (Current)

Our Chief Executive Officer and Chief Financial Officer serves pursuant to a consulting agreement dated

effective July 1, 2014, that entitles him to a management fee of $10,000 per month and eligibility to

receive stock options. Prior to his current management services agreement, our Chief Executive Officer

and Chief Financial Officer served pursuant to a management services agreement in exchange for $6,000

per month. The current management services agreement is in effect unless terminated by Mobetize or the

executive officer. The compensation package is deemed appropriate for our Chief Executive Officer and

Chief Financial Officer and was approved by Mobetize’s Board of Directors.

For the year ended March 31, 2017, $327,315 was paid to or accrued for our Chief Executive Officer and

Chief Financial Officer or companies controlled by him of which $53,870 was salary, $67,500 paid as a

management services fee and $112,470 was paid to a related company for research and development

work. For the year ended March 31, 2016, $120,000 was paid in service management fees and $140,638

was due to the grant of stock options.

Chief Financial Officer (Former -Karamushko)

Our former Chief Financial Officer served pursuant to a management employment agreement dated

effective February 4, 2016, that entitled her to a salary of $10,417 CAD per month and eligibility to

receive 120,000 sign in stock options. Prior to the effective date of February 4, 2016, Ms. Karamushko

served pursuant to a management consulting agreement dated effective December 15, 2014, that entitled

her to a consulting fee of $8,000 CAD per month and eligibility to receive stock options.

Ms. Karamushko resigned as Chief Financial Officer effective December 1, 2016.

For the year ended March 31, 2017, $76,341was paid to or accrued for our former Chief Financial Officer

in salaries, consulting fees and incentive shares. For the year ended March 31, 2016, $80,432 was paid to

or accrued for our current Chief Financial Officer in salaries and consulting fees as well as due to the

grant of stock options.

Chief Financial Officer (Former-Fowler)

Our former Chief Financial Officer served pursuant to a management employment agreement dated

effective January 1, 2015, that entitled him to a salary of $9,000 per month and eligibility to receive stock

options. Prior to the effective date of the January 1, 2015 agreement, Mr. Fowler served pursuant to a

consulting agreement in exchange for $8,750 per month in consulting fees and an office allowance of

$250 per month. The compensation package was deemed appropriate for our Chief Financial Officer and

was approved by Mobetize’s Board of Directors.

Mr. Fowler resigned as Chief Financial Officer and as a director of Mobetize effective February 4, 2016.

For the year ended March 31, 2017, $18,346 was owed to our former Chief Financial Officer. For the year

ended March 31, 2016, $230,638 was paid to or accrued for our former Chief Financial Officer of which

$90,000 was salary and $140,638 was due to the grant of stock options.

Stock Option Plan and Grant

Our board of directors adopted and approved the 2015 Mobetize Stock Option Plan (“Plan”) on August

7, 2015, which provides for the granting and issuance of up to 3,000,000 million shares of our common

stock. Mobetize has 2,020,000 stock options outstanding from the Plan at a $0.60 exercise price per

share for five years to our named officers and directors of which 1,563,000 have vested. At March 31,

2017, the Plan had 980,000 options available for future grant.

Our board of directors administers the Plan, however, they may delegate this authority to a committee

formed to perform the administrative function of the Plan. The board of directors or a committee of the

board has the authority to construe and interpret provisions of the Plan as well as to determine the terms

of an award. Our board of directors may amend or modify the Plan at any time. However, no amendment

or modification shall adversely affect the rights and obligations with respect to outstanding awards unless

the holder consents to that amendment or modification.

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans that provide compensation intended to serve as incentive

for performance.

Compensation of Directors

The following table provides summary information for the year ended March 31, 2017, concerning cash

and non-cash compensation paid or accrued by Mobetize to or on behalf of its non-executive directors.

Director Summary Compensation Table

Name

Fees earned or

Stock

Option

Non-equity

Nonqualified

All other

Total

paid in cash

awards

Awards

incentive plan

deferred

compensation

($)

compensation

($)

Dr. Malek Ladki

272,386

Donald Duberstein

84,845

Outstanding Equity Awards at Fiscal Year End

No equity awards were outstanding as of the year ended March 31, 2017.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors

or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-

cash compensation is or may be paid to our directors or executive officers, except that stock options may

be granted at the discretion of the board of directors or a committee there.

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters

The following table sets forth the total number of shares owned beneficially by each of our directors, named

executive officers, individually and as a group, and the present owners of 5% or more of our total

outstanding shares of Common Stock, Series A Preferred Shares and Series B Preferred Shares. Mobetize

has 23,450,233 common shares, 4,565,000 Series A preferred shares and 13,848,408 Series B preferred

shares issued and outstanding as of July 6, 2017.

Common Shares

Series A Preferred Shares

Series B Preferred Shares

Name and Address

Amount and

Percentage

Amount and

Percentage

Amount and Percentage

of Beneficial Owner

Nature of

of Class

Nature of

of Class

Nature of

of Class

Beneficial

Ownership (1)

Ajay Hans

1018 Cornwall Street

New Westminster

4,565,000 (2)

7,862,278(2)

British Columbia

Direct and Indirect

Direct

100%

Indirect

61%

V3M 1S2

Donald Duberstein

49 Bristol Drive

Boynton Beach

Direct

1,189,167(3)

Florida 33436

Malek Ladki

59 Kilbarry Crescent

Ottawa

Direct

1,600,000(4)

12%

Ontario K1K 0H2

Directors and

Executive Officers as

a Group

Direct and Indirect

4,565,000

10,651,445

Direct

100%

Direct and Indirect

82%

5%+ Shareholders

Stephen Fowler

51 Bay View Drive

10,231,000 (5)

Point Roberts

Direct and Indirect

44%

Washington 98281

Bacarrat Overseas

Limited

Pasea Estate Road

1,425,280 (6)

Town Tortola, British

Direct

Virgin Islands

CPT Secure Inc.

325-3381 Cambie St.

855,000

Vancouver

Direct and Indirect

Direct

British Columbia

V5Z 2W6

(1)

Beneficial Ownership is determined in accordance with the rules of the Commission and generally includes voting or

investment power with respect to securities. Each of the beneficial owners listed above has direct ownership and sole

voting power and with respect to the shares of our Common Stock or Preferred Stock, as applicable.

(2)

Ajay Hans directly holds 4,565,000 shares of Series A Preferred and indirectly holds 3,212,278 shares of Series B

Preferred as the principal of Alligato Inc. and 4,650,000 shares of Series B Preferred as the principal of 085374 C Ltd.

(3)

Don Duberstein directly holds 1,169,167 shares of Series B Preferred and indirectly holds 20,000 shares of Series B

Preferred as the principal of The Duberstein Corporation.

(4)

Malek Ladki directly holds 300,000 shares of Series B Preferred and indirectly holds 1,300,000 shares of Series B

Preferred as the principal of Tactus Consulting, Inc.

(5)

Stephen Fowler directly holds 6,851,000 shares of common and indirectly holds 3,380,000 shares of common comprised

of 75,000 as the principal of Forte Finance, LLC, 2,605,000 as the principal of Forte Finance Limited, in addition to

directing 160,000 shares held in trust for his family members and 540,000 held by his wife.

(6)

Beneficial ownership of Bacarrat Overseas Limited is not known to management.

(7)

CPT Secure Inc. is owned and controlled by Francisco Kent Carasquero.

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

Neither our directors or executive officers, nor any proposed nominee for election as a director, nor any

person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights

attached to all of our outstanding shares, nor any members of the immediate family (including spouse,

parents, children, siblings, and in−laws) of any of the foregoing persons has any material interest, direct

or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed

transaction which, in either case, has or will materially affect us except as follows:

· Don Duberstein, a director of Mobetize purchased a series of convertible debentures from Mobetize in the aggregate amount of $120,000 during the twelve months ended March 31, 2017. The convertible debentures had a twelve-month term, bore interest at 12% and 6% and were convertible at the discretion of the holder into shares of Series B preferred shares. During the year ended March 31, 2017, Don Duberstein converted $75,000 of these convertible debentures at a conversion price of $0.50 per Series B preferred share.

· Ajay Hans, the chief executive officer and a director of Mobetize, converted 4,081,481 shares of common stock held by a company controlled by him into 4,081,481 shares of Series B Preferred stock during the twelve months ended March 31, 2017.

· Malek Ladki, a director and chairman of the Board of Directors of Mobetize converted 300,000 shares of common stock into 300,000 shares of Series B Preferred stock during the twelve months ended March 31, 2017

· Don Duberstein, a director of Mobetize converted 1,039,167 shares of common stock into 1,039,167 shares of Series B Preferred stock during the twelve months ended March 31, 2017.

· Malek Ladki, extinguished debt in the amount of $24,000 due to services rendered by a company owned and controlled by Mr. Ladki in exchange for 1,300,000 shares of Mobetize’s Series B Preferred stock.

Director Independence

Mobetize is quoted on the OTCQB inter-dealer quotation system, which does not have director

independence requirements. However, for purposes of determining director independence, we have

applied the definitions set out in NASDAQ Rule 4200(a)(15), which states that a director is not

considered to be independent if he or she is also an executive officer or employee of the corporation.

Accordingly, as of March 31, 2017, we consider one of our directors independent, who is not employed

by us.

ITEM 14.

Principal Accounting Fees and Services

The aggregate fees billed for the most recently completed fiscal years ended March 31, 2017 and 2016 for

professional services rendered by our principal accountants for the audit of our annual financial

statements and review of the financial statements included in our quarterly reports on Form 10-Q and

services that are normally provided by the accountant in connection with statutory and regulatory filings

or engagements for these fiscal periods were as follows:

Davidson & Company

Grant Thornton

Years Ended

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

Audit Fees

25,000

35,000

Audit Related Fees

15,000

6,600

Tax Fees

8,260

All Other Fees

Total

40,000

48,420

On November 28, 2016, Mobetize dismissed Grant Thornton LLP as its independent registered public

accounting firm and engaged Davidson & Company to provide those services formerly provided by Grant

Thornton LLP.

Audit fees consist of fees billed for professional services rendered for the audit of our financial statements

and review of the interim financial statements included in quarterly reports and services. Tax fees are

related to the federal and state income tax returns for Mobetize. Other Fees are for the review of

transaction valuation and other transaction related events.

Our Board of Directors pre-approves all services provided by our independent auditors. All of the above

services and fees were reviewed and approved by the Board of Directors either before or after the

respective services were rendered.

Our Board of Directors has considered the nature and amount of fees billed by our independent auditors

and believes that the provision of services for activities unrelated to the audit is compatible with

maintaining our independent auditors’ independence.

PART IV - EXHIBITS

ITEM 15.

Exhibits, Financial Statement Schedules

(a) Consolidated Financial Statements

The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages

F-1 through F-27, and are included as part of this Form 10-K:

Financial Statements of the Company for the years ended March 31, 2017 and 2016:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Loss and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity (Deficiency)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(b) Exhibits

The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on

page 40 of this Form 10-K, and are incorporated herein by this reference.

We are not filing any financial statement schedules as part of this Form 10-K because such schedules are

either not applicable or the required information is included in the financial statements or notes thereto.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MOBETIZE CORP.

By: /s/ Ajay Hans

Ajay Hans, Chief Executive Officer, Chief

Financial Officer, and Principal Accounting

Officer

Date: July 6, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Malek Ladki

Malek Ladki

Director

Date:July 6, 2017

By: /s/ Ajay Hans

Ajay Hans

Director

Date:July 6, 2017

By: /s/ Donald Duberstein

Donald Duberstein

Director

Date:July 6, 2017

INDEX TO EXHIBITS

Exhibit No. Exhibit Description

3.1*

Articles of Incorporation, incorporated hereto by reference to the Form S-1, filed with the Commission on May

30, 2012.

3.1.1*

Certificate of Amendment filed on August 8, 2013 incorporated by reference to the Form 8-K filed with the

Commission on August 15, 2013.

3.1.2*

Certificate of Designation Series A Preferred filed on February 4, 2016, incorporated by reference to the Form 8-

K filed with the Commission on February 11, 2016.

3.1.3*

Certificate of Amended Designation Series A Preferred filed on May 20, 2016, incorporated by reference to the

Form 8-K filed with the Commission on June 3, 2016.

3.1.4*

Certificate of Designation Series B Preferred filed on May 23, 2016, incorporated by reference to the Form 8-K

filed with the Commission on June 3, 2016.

3.1.5*

Certificate of Amended Designation Series B Preferred filed on May 31, 2016, incorporated by reference to the

Form 8-K filed with the Commission on June 3, 2016.

3.2*

Bylaws, incorporated by reference to the Form S-1, filed with the Commission on May 30, 2012.

3.2.1*

Amended Bylaws, incorporated by reference to the Form 8-K filed with the Commission on February 11, 2016.

10.1*

Management Services Agreement between Mobetize and Alligato, Inc. dated June 1, 2013, incorporated by

reference to the Form 8-K filed with the Commission on September 16, 2013.

10.2*

Management Services Agreement between Mobetize and 053574 BC Ltd. dated June 1, 2013, incorporated hereto

by reference to the Form 8-K filed with the Commission on September 16, 2013.

10.3*

Consulting Agreement between Mobetize and Stephen Fowler dated July 15, 2013, incorporated hereto by

reference to the Form 8KA filed with the Commission on October 28, 2013.

10.4*

Assignment of Debt Agreement between Mobetize and Stephen Fowler dated April 4, 2012, incorporated by

reference to the Form 8-K/A filed with the Commission on November 22, 2013.

10.5*

License Assignment Agreement between Telepay, Inc. and Baccarat Overseas Ltd. dated August 21, 2012,

incorporated by reference to the Form 8-K filed with the Commission on September 16, 2013.

10.6*

Consulting agreement between Mobetize and Tanuki Business Consulting, Inc. dated September 23, 2013,

incorporated by reference to the Form 8-K filed with the Commission on October 1, 2013.

10.7*

Consulting agreement between Mobetize and Institutional Marketing Services, Inc. dated November 13, 2013,

incorporated by reference to the Form 8-K filed with the Commission on March 18, 2014.

10.8*

Form of Subscription Agreement with the Subscribers dated June 25, 2014, incorporated by reference to the Form

10-K filed with the Commission on June 30, 2014.

10.9*

Management Consulting Agreement between Mobetize Corp. and Ajay Hans dated July 1, 2014, incorporated by

reference to the Form 10-K/A filed with the Commission on July 13, 2016.

10.10

Software Application License, Customization Development and Service Level Agreement dated September 20,

2016, between Mobetize and GF Financial Group incorporated by reference to the Form 10-Q filed with the

Commission on February 2, 2017, (certain commercial terms of this exhibit have been omitted pursuant to a grant

of confidential treatment).

10.11

Joint Venture Agreement dated January 17, 2017 between Mobetize and CPT Secure Inc. incorporated by

reference to the Form 10-Q filed with the Commission on February 2, 2017.

10.12*

Software Application License, Customization Development and Service Level Agreement dated February 1, 2017,

effective December 15, 2016, between Mobeitze USA Inc. and Tata Communications (America) Inc. incorporated

by reference to the Form 8-K filed with the Commission on February 6, 2017 (certain commercial terms of this

exhibit have been omitted pursuant to a grant of confidential treatment).).

14*

Code of Business Conduct and Ethics adopted by Mobetize Corp.’s Board of Directors on July 26, 2016,

incorporated by reference to the Form 10-Q filed with the Commission on August 12, 2016.

21*

Subsidiaries of Mobetize incorporated by reference to the Form 10-K/A filed with the Commission July 13, 2016

Consent of Grant Thornton LLP Independent Chartered Accountants.

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Exchange

Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, attached.

32.

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as

adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached.

99*

2015 Mobetize Stock Option Plan dated August 10, 2015, incorporated by reference to the Form 8-K filed with

the Commission on August 11, 2015.

101. INS XBRL Instance Document†

101. PRE XBRL Taxonomy Extension Presentation Linkbase†

101. LAB XBRL Taxonomy Extension Label Linkbase†

101. DEF XBRL Taxonomy Extension Label Linkbase†

101. CAL XBRL Taxonomy Extension Label Linkbase†

101. SCH XBRL Taxonomy Extension Schema†

* Incorporated by reference to previous filings of the Company.

† Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these section

Filing Compare · MOBETIZE, CORP.