U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q

Form 10-Q

Mark One

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the ~~quarterly period ended December 31, 2017~~

quarterly period ended June 30, 2018

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

For the transition period from ______ to _______

Commission File No. 333-181747

MOBETIZE CORP.

(Exact name of registrant as specified in its charter)

Nevada

(State or Other Jurisdiction of Incorporation or Organization)

7299	99-0373704
(Primary Standard Industrial Classification Number)	(IRS Employer Identification Number)

1150-510 Burrard Street, Vancouver, British Columbia V6C 3A8

(Address of principal executive offices)

Issuer’s telephone number: (778) 588-5563

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒

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

~~Yes~~At ☒September No27, ☐2018, the number of shares outstanding of the registrant’s common stock, $0.001 par value was 11,285,255, the number of shares outstanding of registrant’s Series A preferred stock, $0.001 par value was 0, and the number of shares outstanding of registrants Series B preferred stock, $0.001 par value was 7,797,262.

At February 9, 2018, the number of shares outstanding of the registrant’s common stock, $0.001 par value was 234,541, 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 14,282,976.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
PART I FINANCIAL INFORMATION
ITEM 1	Financial Statements	3
ITEM 1 Financial Statements	3
	Consolidated Balance Sheets	4
Condensed Consolidated Balance Sheets	4
	Consolidated Statements of Loss and Comprehensive Loss	5
Condensed Consolidated Statements of Loss and Comprehensive Loss	5
	Consolidated Statements of Cash Flows	6
Condensed Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Notes to Condensed Consolidated Financial Statements	7
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	22
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk	25
ITEM 4	Controls and Procedures	22
ITEM 4 Controls and Procedures	26
PART II	OTHER INFORMATION
PART II OTHER INFORMATION	27
ITEM 1	Legal Proceedings	23
ITEM 1 Legal Proceedings	27
ITEM 1A	Risk Factors	24
ITEM 1A Risk Factors	28
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	24
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds	28
ITEM 3	Defaults Upon Senior Securities	24
ITEM 3 Defaults Upon Senior Securities	28
ITEM 4	Mine Safety Disclosures	24
ITEM 4 Mine Safety Disclosures	29
ITEM 5	Other Information	24
ITEM 5 Other Information	29
ITEM 6	Exhibits	24
ITEM 6 Exhibits	29
Signatures	30	25
Index to Exhibits	31	26

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

As used herein, the terms “Mobetize,” “we,” “our,” and “us” refer to Mobetize Corp., a Nevada corporation, and its predecessors and subsidiaries, unless otherwise indicated. In the opinion of management, the accompanying unaudited, consolidated financial statements included in this Form 10-Q reflect all adjustments necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

MOBETIZE CORP.

~~Consolidated~~Condensed Consolidated Balance Sheets

(Expressed in US dollars)

(Unaudited)

	DECEMBER 31, 2017			MARCH 31, 2017
	As at
	JUNE 30,			MARCH 31,
	2018			2018
ASSETS
Current Assets:
Cash	$	1650,~~798~~196		$	~~535~~11,~~438~~542
Accounts receivable		~~132~~66,~~175~~715			~~113~~40,~~140~~619
Prepaid expenses and deposits		5026,~~651~~374			4422,~~783~~070
Prepaid expenses and deposits – related party (Note 7(i) and (k))		—			15,639
Total Current Assets		143,285			74,231
Total Current Assets		199,624			709,000
Equipment, net (Note 4)		3,773			4,655
Intangible asset (Note 3)		—			111,644
Investment in joint venture (Note 3)		67,436			75,227
Equipment, net (Note 4)		5,596			7,629
TOTAL ASSETS	$	214,494		$	154,113
Investment in joint venture (Note 3)		82,942			—
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
TOTAL ASSETS	$	288,162		$	828,273
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities	$	~~182~~290,~~104~~309		$	~~108~~316,~~381~~593
Accounts payable and accrued liabilities - related party (Note 7)		477,592			320,391
Accounts payable and accrued liabilities - related party (Note 6)		593,577			547,509
Deposits due to customers		8,~~934~~585			~~980~~8,740
Promissory notes – related party (Note 7(g) and (j))		294,885			43,798
Promissory note (Note 5)		25,000			—
Convertible promissory notes (Note 6)		—			240,000
Promissory note – related party (Note 6)		473,684			294,400
TOTAL LIABILITIES	$	~~963~~1,~~515~~391,155		$	~~713~~1,~~550~~167,242
STOCKHOLDERS' (DEFICIENCY) EQUITY
STOCKHOLDERS’ DEFICIENCY
Common stock, $0.001 Par Value: 250,000,000 authorized and 234,541 common shares issued and outstanding (Note 8(a))	$	235		$	235
Common stock, $0.001 Par Value: 250,000,000 authorized and 234,541 common shares issued and outstanding (Note 7)	$	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 A, $0.001 Par Value: 10,000,000 authorized and 0 shares issued and outstanding (Note 7)		—			4,565
Preferred stock – Series B, $0.001 Par Value: 25,000,000 authorized and 14,282,976 (March 31, 2017 – 13,688,408) shares issued and outstanding (Note 8(c))		14,283			13,688
Preferred stock – Series B, $0.001 Par Value: 25,000,000 authorized and 18,847,976 (March 31, 2018 - 14,282,976) shares issued and outstanding (Note 7)		18,848			14,283
Warrants reserve		676,964			676,964
Options reserve		~~994~~1,~~434~~002,848			~~952~~999,~~828~~733
Additional paid-in capital		6,228,999			56,~~955~~228,~~025~~999
Accumulated other comprehensive loss		(2214,~~632~~226	)		~~(10~~-15,~~267~~007	)
Accumulated deficit		(89,~~572~~090,~~201~~328	)		(7-8,~~478~~922,~~315~~901	)
Total Stockholders' (Deficiency) Equity		(675,353	)		114,723
Total Stockholders' Deficiency		(1,176,660	)		-1,013,129
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY	$	288,162		$	828,273
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	214,495		$	154,113

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

MOBETIZE CORP.

~~Consolidated~~Condensed Consolidated Statements of Loss and Comprehensive Loss

(Expressed in US dollars)

(Unaudited)

	THREE MONTHS ENDED DECEMBER 31,						NINE MONTHS ENDED DECEMBER 31,
	THREE MONTHS ENDED
	2017			2016			2017			2016
	JUNE 30,
OPERATING REVENUES
	2018			2017
Revenues (Note 11)	$	152,342		$	149,138		$	333,861		$	365,386
OPERATING REVENUES
OPERATING EXPENSES
Revenues (Note 10)	$	88,756		$	115,730
Depreciation (Note 4)		761			777			2,416			2,377
OPERATING EXPENSES
General and administrative		91,353			12,775			296,952			216,435
Depreciation (Note 4)		803			771
General and administrative – related party (Note 7)		12,236			67,093			39,022			84,253
General and administrative		91,306			112,532
Investor relations and promotion		695			15,684			696			65,209
General and administrative – related party (Note 6)		19,066			9,741
Investor relations and promotion – related party (Note 7)		30,000			—			107,078			—
Investor relations and promotion – related party (Note 6)		10,000			17,078
Consulting fees		~~666~~7,250			~~529~~6,480			~~13,017~~			~~28,692~~
Management fees – related party (Note 7)		39,830			58,932			132,918			234,339
Management fees – related party (Note 6)		37,284			47,371
Professional fees		8621,~~017~~669			21136,~~015~~729			~~346,918~~			~~117,720~~
Research and development		8434,~~301~~475			74127,~~311~~440			~~339,673~~			~~266,086~~
Research and development - related party (Note 7)		39,967			38,977			115,782			97,027
Research and development - related party (Note 6)		26,539			32,374
Total Operating Expenses		~~385~~248,~~826~~392			~~290~~490,~~093~~516			~~1,394,472~~			~~1,112,138~~
LOSS BEFORE OTHER ITEMS		(~~233~~159,~~484~~636	)		(~~140~~374,~~955~~786	)		~~(1,060,611~~	)		~~(746,752~~	)
OTHER ITEMS
Loss on joint venture (Note 3)		(7,~~886~~791	)		—(2,740	)		~~(18,599~~	)		—
Loss on settlement of accounts payable (Note 8(c))		—			—			(14,676	)		—
Loss on settlement of accounts payable		—			(14,676	)
NET LOSS	$	(~~241~~167,~~370~~427	)	$	(~~140~~392,~~955~~202	)	$	~~(1,093,886~~	)	$	~~(746,752~~	)
NET LOSS PER SHARE
Basic and diluted	$	(10.0382	)	$	(01.6067	)	$	~~(4.66~~	)	$	~~(3.03~~	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic and diluted		~~234~~203,~~541~~900			234,~~502~~514			~~234,541~~			~~246,384~~
COMPREHENSIVE LOSS
Net loss	$	(~~241~~167,~~370~~427	)	$	(~~140~~392,~~955~~202	)	$	~~(1,093,886~~	)	$	~~(746,752~~	)
Other comprehensive loss:
Cumulative translation adjustment		~~(9,584~~781	)		1(5,~~184~~873	)		~~(12,365~~	)		~~964~~
Comprehensive loss	$	(~~250~~166,~~954~~646	)	$	(~~139~~398,~~771~~075	)	$	~~(1,106,251~~	)	$	~~(745,788~~	)

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

MOBETIZE CORP.

~~Consolidated~~Condensed Consolidated Statements of Cash Flows

(Expressed in US dollars)

(Unaudited)

	NINE MONTHS ENDED DECEMBER 31,
	THREE MONTHS ENDED
	2017			2016
	JUNE 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1167,~~093,886~~427	)	$	(~~746~~392,~~752~~202	)
Items not affecting cash:
Amortization of intangible asset – research and development (Note 3)		10,103			—
Amortization of intangible asset – research and development		—			10,103
Depreciation		~~2,416~~803			~~2,377~~771
Interest accrued on accounts payable – related party		43,~~579~~858			21,~~859~~053
Loss on joint venture		187,~~599~~791			—2,740
Loss on settlement of accounts payable		~~14,676~~—			—14,676
Shares issued for services		—			61,200
Stock-based compensation (Note 9)		3,115			19,480
Stock-based compensation (Note 10)		41,606			167,033
Changes in non-cash working capital:
Accounts receivable		(1926,~~035~~096	)		~~(994~~13,623	)
Prepaid expenses and deposits		(54,~~868~~304	)		8(38,~~662~~559	)
Prepaid expenses and deposits – related party		~~15,639~~—			16,~~031~~909
Accounts payable and accrued liabilities		93(148,~~616~~323	)		908,~~987~~266
Accounts payable and accrued liabilities - related party		~~152~~164,~~622~~248			~~129~~10,~~912~~001
Deposits due to customers		7,954			(500	)
Net cash used in operating activities		(166,335	)		(343,139	)
Net cash used in operating activities		(756,979	)		(284,185	)
CASH FLOWS FROM FINANCING ACTIVITES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Promissory Note		25,000			—
Proceeds from shareholder loans, net of repayments		—			13,399
Proceeds from Promissory Note-related party		178,024			—
Proceeds from convertible promissory note, net of prepaid interest		—			65,000
Net cash provided by financing activities		203,024			—
Proceeds from promissory note		20,152			—
EFFECT OF EXCHANGE RATE CHANGES ON CASH		1,965			(5,580	)
Proceeds from promissory note, net of prepaid interest-related party		250,000			44,188
NET INCREASE (DECREASE) IN CASH		38,654			(348,719	)
Repayment of promissory note		(20,152	)		—
CASH - BEGINNING OF PERIOD		11,542			535,438
Net cash provided by financing activities		250,000			122,587
CASH - END OF PERIOD	$	50,196		$	186,719
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(11,661	)		739
NET DECREASE IN CASH		(518,640	)		(160,859	)
CASH - BEGINNING OF PERIOD		535,438			210,341
CASH - END OF PERIOD	$	16,798		$	49,482
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued upon conversion of convertible promissory note	$	240,000		$	—
Shares issued upon conversion of convertible debentures	$	—		$	40,000
Shares issued to settle accounts payable	$	~~34,568~~—		$	2734,~~500~~568
Shares issued to settle promissory note – related party	$	—		$	46,500
Transfer from intangible asset to investment in joint venture	$	—		$	101,541
Transfer from intangible asset to investment in joint venture	$	101,541		$	—
SUPPLEMENTAL DISCLOSURES:
Interest paid	$	—		$	~~13,703~~—
Income taxes paid	$	—		$	—

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

MOBETIZE CORP. Notes to Condensed Consolidated Financial Statements June 30, 2018 (Unaudited)

Notes to Consolidated Financial Statements

December 31, 2017

(Unaudited)

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

~~The~~On ~~Company’s~~July ~~unaudited~~11, ~~consolidated~~2017, ~~financial~~the ~~statements~~Company ~~are~~completed ~~prepared~~a inconsolidation ~~accordance~~of ~~with~~the ~~accounting~~issued ~~principles~~and ~~generally~~outstanding ~~accepted in~~common ~~the~~shares ~~United~~on ~~States.~~a ~~These~~one ~~unaudited~~for ~~consolidated~~one ~~financial~~hundred ~~statements~~(1/100) basis ~~include~~and a decrease in the ~~accounts~~number of its ~~wholly~~authorized ~~owned~~common ~~subsidiaries, Mobetize Canada Inc.,~~ and ~~Mobetize~~preferred ~~USA Inc~~shares. All ~~significant~~share ~~intercompany~~and ~~transactions~~per ~~and~~share ~~balances~~amounts have been ~~eliminated. The accompanying~~retroactively ~~quarterly~~restated ~~unaudited~~to ~~consolidated~~reflect ~~financial statements should be read in conjunction with~~ the ~~annual~~share ~~consolidated financial statements and accompanying notes filed with the U~~consolidation.~~S. Securities and Exchange Commission on Form 10-K for the fiscal year ended March 31, 2017.~~

In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the periods shown. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

On July 11, 2017, the Company completed a consolidation of its 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 ~~unaudited~~ consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to to realize assets and discharge liabilities in the normal course of business. As of ~~December~~June 3130, ~~2017~~2018, the Company has an accumulated deficit of $89,~~572~~090,~~201~~328, a history of net losses and a working capital deficiency of $~~763~~1,~~891~~247,870. These factors raise substantial ~~doubt~~ 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. Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-07, requiring certain changes to the presentation of the expenses related to post retirement benefits accounted for under Topic 715. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. 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.

MOBETIZE CORP. Notes to Condensed Consolidated Financial Statements June 30, 2018 (Unaudited)

~~Notes~~2. toBasis ~~Consolidated~~of ~~Financial Statements~~presentation

~~December~~The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries with all significant intercompany transactions eliminated. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial position, results of operations and cash flows for the interim periods have been made. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America (“US GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended March 31, ~~2017~~2018 and with our Annual Report on Form 10-K filed with the SEC on July 31, 2018. Operating results for the three-month period ended June 30, 2018 may not necessarily be indicative of the results for the year ending March 31, 2018.

~~(Unaudited)~~These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Mobetize Canada Inc., and Mobetize USA Inc. All significant intercompany accounts and transactions have been eliminated on consolidation.

InUse ~~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.estimates

~~In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.~~ The ~~new standard provides a five-step~~ ~~approach~~preparation toof beconsolidated ~~applied~~financial tostatements ~~all~~in ~~contracts~~conformity with ~~customers~~US ~~and~~GAAP ~~also~~ requires ~~expanded~~management ~~disclosures~~to ~~about~~make ~~revenue~~estimates ~~recognition. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods~~ and ~~is to be retrospectively~~assumptions ~~applied.~~that ~~Early~~affect ~~application~~the isreported ~~permitted~~amounts ~~only as~~ of ~~annual~~assets ~~reporting~~and ~~periods~~liabilities ~~beginning~~and ~~after~~disclosure ~~December 15, 2016, including interim reporting periods within that reporting period. The adoption~~ of ~~this~~contingent ~~standard~~assets isand ~~not~~liabilities ~~expected~~at tothe ~~have~~date ~~a significant impact on~~of the ~~Company’s~~consolidated ~~results of operations,~~ financial ~~condition,~~statements and ~~cash~~the ~~flows.~~reported ~~The~~amounts ~~adoption~~ of ~~this~~revenues ~~standard~~and isexpenses ~~expected~~during tothe ~~result in~~reporting ~~additional financial statement disclosures~~period.

3The 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 ~~Joint~~that ~~Venture~~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.

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 (related party) of the Company, 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., (see below) (“MPAY”). 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 nine months ended December 31, 2017, the Company recognized amortization of $10,103 on the license prior to the transfer to MPAY which amount has been included in research and development expense.

Effective May 29, 2017, the Company and CPT incorporated a joint venture company, MPAY. Upon incorporation of MPAY, the Company transferred the remaining carrying value (after accumulated amortization) of the license to the CPT IP of $101,541 to MPAY, which has been presented on the balance sheet as an investment in joint venture. During the nine months ended December 31, 2017, the Company recognized a loss on joint venture of $18,599, representing the Company’s 50% interest in the change in net assets of MPAY.

MOBETIZE CORP. Notes to Condensed Consolidated Financial Statements June 30, 2018 (Unaudited)

~~Notes~~2. toBasis ~~Consolidated~~of ~~Financial~~presentation- ~~Statements~~Continued

~~December~~Fair ~~31,~~value ~~2017~~of financial assets and liabilities

~~(Unaudited)~~The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

4The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value ~~Equipment~~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.

~~Equipment,~~Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net ~~consisted~~income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the ~~following:~~unrealized loss is recorded in income.

	December 31, 2017		March 31, 2017
Computer equipment	$	15,255	$	14,421
Furniture		1,242		1,174
Total		16,497		15,595
Less: accumulated amortization		10,901		7,966
Equipment, net	$	5,596	$	7,629

Financial instruments, including accounts receivable, accounts payable and accrued liabilities, accounts payable and accrued liabilities – related party, promissory note and promissory note – related party are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

~~During~~The following table presents information about the ~~three~~assets ~~months~~that ~~ended~~are ~~December~~measured 31at fair value on a recurring basis as at June 30, ~~2017~~2018 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair ~~equipment~~values ~~cost~~determined ~~increased~~by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by ~~$902~~Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and ~~accumulated~~yield ~~amortization~~curves. ~~was~~Fair values ~~impacted~~determined by ~~$519~~Level 3 inputs are unobservable data points for the asset or liability, and included situations where there asis alittle, ~~result~~if ofany, ~~foreign~~market ~~currency~~activity ~~translation~~for ~~adjustments.~~the asset:

5. Promissory Note

				Quoted Prices		Significant Other		Significant
		June 30,		in Active Markets		Observable Inputs		Unobservable Inputs
		2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	50,196	$	50,196	$	—	$	—
Total	$	50,196	$	50,196	$	—	$	—

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 is non-interest bearing, and matured on October 13, 2017. During the nine months ended December 31, 2017, the Company repaid the loan and paid a bridge loan fee of $1,942 (CDN$2,500) in consideration for the loan.

6. Convertible Promissory Notes

Date of issuance		Principal December 31, 2017		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 common 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 (j)).

MOBETIZE CORP. Notes to Condensed Consolidated Financial Statements June 30, 2018 (Unaudited)

~~Notes~~2. toBasis ~~Consolidated~~of ~~Financial~~presentation- ~~Statements~~Continued

~~December~~Recent ~~31,~~Accounting ~~2017~~Pronouncements

In February 2016, Financial Accounting Standards Board (~~Unaudited~~FASB) issued Topic 842, Leases 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 November 2016, the FASB issued Accounting Standards Updates (2ASU) ~~January~~2016-18, 27requiring that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of- period total cash amounts shown on the statement of cash flows. Consequently, any transfers between cash and restricted cash are not presented as a separate line item in the operating, investing or financing sections of the cash flow statement. The amendments were effective for public business entities for fiscal years beginning after December 15, 2017, ~~Issuance~~and interim periods within those fiscal years. The adoption of ASU 2016-18 ~~$125,000~~has ~~(converted):~~had only a limited impact on the presentation of the statement of cash flows.

•In June ~~Issued~~2016, ~~net~~the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of ~~$15~~Credit Losses on Financial Instruments,~~000~~ requiring certain changes to the recognition and measurement as well as disclosure of ~~prepaid~~incurred ~~interest~~and expected credit losses. The standard will become effective for the Company beginning January 1, ~~based~~2020. The Company is assessing the impact adoption of this standard will have on anits ~~interest~~consolidated ~~rate~~results of ~~12%~~operations, ~~per~~financial ~~annum~~condition, cash flows, and financial statement disclosures.

•In July Of2017, the ~~$125~~FASB issued ASU 2017-11,~~000~~ ~~Convertible~~requiring ~~Promissory~~certain ~~Notes~~changes to the presentation and disclosures of changes to liability or equity classification of financial instruments. The amendments are effective for public business entities for fiscal years beginning after December 15, ~~$50~~2018,~~000~~ and interim periods within those fiscal years. The Company is ~~owed~~assessing tothe aimpact ~~Director~~adoption of this standard will have on its consolidated results of ~~the~~operations, ~~Company~~financial ~~(Note~~condition, ~~7(j))~~cash flows, and financial statement disclosures.

• The Conversion Feature enabled the holder to convert any portion of their outstanding Convertible Promissory Note principal balance into common 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.

(3) 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(j)).

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

MOBETIZE CORP. Notes to Condensed Consolidated Financial Statements June 30, 2018 (Unaudited)

~~Notes~~3. Joint ~~to Consolidated Financial Statements~~Venture

~~December~~On 31January 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. The Company issued 500,000 Series B Preferred Shares with a fair value of $125,000 to CPT for a license to use the CPT IP. The license has a term of two years that 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 three months ended June 30, 2018, the Company recognized amortization of $10,103 prior to the transfer of the license, which amount has been included in research and development expense.

On May 29, 2017, the Company and CPT incorporated a joint venture company, MPAY Gateway Services Inc. (~~Unaudited~~“MPAY”). The Company subsequently transferred the remaining carrying value of the license in the amount of $101,541 to MPAY, which has been presented on the balance sheet as an investment in joint venture. During the three months ended June 30, 2018, the Company recognized a loss on joint venture of $7,791 (2017 - $2,740), representing the Company’s 50% interest in the loss of MPAY.

74. ~~Related Party Transactions~~ Equipment

	Nine months ended December 31,
Transactions with related parties	2017		2016
(a) Transactions incurred with the CEO or companies controlled by the CEO:
Management fees	$	92,269	$	91,039
Management fees – Stock-based compensation		613		25,340
Research and development		115,782		97,027
General and administrative		20,684		11,843
	$	229,348	$	225,249
(b) Transactions incurred with the former CFO’s or a company controlled by a former CFO:
Management fees	$	—	$	7,110
General and administrative		—		69,410
	$	—	$	76,520
(c) Transactions incurred with the Chairman of the Company
Management fees (1)	$	9,000	$	30,000
Management fees – Stock-based compensation		22,168		57,750
	$	31,168	$	87,750
(d) Transactions incurred with a Director of the Company
Management fees – Stock-based compensation	$	8,868	$	23,100
General and administrative – Interest on convertible promissory note		18,338		3,000
	$	27,206	$	26,100
(e) Transactions incurred with a shareholder of the Company
Investor relations and promotion	$	107,078	$	—
	$	107,078	$	—
Related party balances, as at		December 31, 2017		March 31, 2017
(f) Amounts owed to the former CFO (existing shareholder):
Accounts payable and accrued liabilities	$	20,080	$	18,346
(g) Amounts owed to companies controlled by the CEO:
Accounts payable and accrued liabilities	$	374,229		275,687
Promissory note – June 2, 2017(2)		25,000		25,000
Promissory note – July 11, 2017(3)		19,885		18,798
	$	418,184	$	319,485
(h) Amounts owed to the Chairman of the Company (accounts payable)	$	18,000	$	9,000
(i) Amounts prepaid to a company controlled by the CEO
Prepaid interest on promissory notes	$	—	$	2,461
(j) Amounts owed to a Director of the Company
Accounts payable and accrued liabilities	$	1,122	$	—
Convertible promissory note November 21, 2017 (Note 6(1)))		—		20,000
Convertible promissory note January 27, 2018 (Note 6(2)))		—		50,000
Convertible promissory note 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		—
	$	251,122	$	145,000
(k) Amounts prepaid to a Director of the Company
Prepaid interest on convertible promissory notes	$	—	$	13,178
(l) Amounts owed to a shareholder of the Company
Accounts payable and accrued liabilities	$	64,091	$	17,358

Equipment, net consisted of the following:

	June 30, 2018		March 31, 2018
Computer equipment	$	14,856	$	14,884
Furniture		1,209		1,211
Total		16,065		16,095
Less: accumulated amortization		12,292		11,440
Equipment, net	$	3,773	$	4,655

During the three months ended June 30, 2018, equipment cost decreased by $30, and accumulated amortization increased by $49 as a result of foreign currency translation adjustments.

5. Promissory Notes

On June 26, 2018, the Company issued an unsecured Promissory Note to one of its shareholders in the amount of $25,000, which bears interest at 12% per annum that matures on June 25, 2019.

MOBETIZE CORP. Notes to Condensed Consolidated Financial Statements June 30, 2018 (Unaudited)

~~Notes~~6. toRelated ~~Consolidated~~Party ~~Financial Statements~~Transactions

December 31, 2017

	Three months ended June 30,
Transactions with related parties	2018		2017
(a) Transactions incurred with the CEO or companies controlled by CEO:
Management fees	$	31,169	$	30,517
Management fees – Stock-based compensation		—		613
Research and development		26,539		32,374
General and administrative		9,839		5,224
	$	67,547	$	68,728
(b) Transactions incurred with the Chairman of the Company
Management fees (1)	$	3,000	$	3,000
Management fees – Stock-based compensation		2,225		9,458
	$	5,225	$	12,458
(c) Transactions incurred with a Director of the Company
Management fees – Stock-based compensation	$	890	$	3,783
General and administrative – Interest on convertible promissory note		—		4,517
General and administrative – Interest on promissory note		9,227
	$	10,117	$	8,300
(d) Transactions incurred with a shareholder of the Company
Investor relations and promotion	$	10,000	$	17,078
	$	10,000	$	17,078
Related party balances, as at		June 30, 2018		March 31, 2018
(e) Amounts owed to companies controlled by the CEO:
Accounts payable and accrued liabilities	$	464,270		421,351
Promissory note – June 2, 2017(2)		25,000		25,000
Promissory note –July 11, 2017(3)		19,012		19,400
Promissory note – April 10, 2018(4)		39,672		—
Promissory note – May 29, 2018(5)		5,000		—
Promissory note – June 21, 2018(6)		10,000		—
	$	562,954	$	465,751
(f) Amounts owed to the Chairman of the Company	$	12,000	$	9,000

(g) Amounts owed to a Director of the Company
Accounts payable and accrued liabilities	$	7,977	$	8,622
Promissory note – September 17, 2017(7)		100,000		100,000
Promissory note – November 7, 2017(7)		50,000		50,000
Promissory note – December 5, 2017(7)		100,000		100,000
Promissory note – April 11, 2018(7)		50,000		—
Promissory note – May 29, 2018(8)		25,000		—
Promissory note – June 21, 2018(9)		25,000		—
Promissory note – June 26, 2018(10)		25,000		—
	$	382,977	$	258,622
(h) Amounts owed to a shareholder of the Company
Accounts payable and accrued liabilities	$	109,330	$	88,001

(~~Unaudited~~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 monthly rate of $1,000 for a period of two years ending on June 30, 2018. Effective April 1, 2017, the Chairman agreed to waive the accrued fees.

(12) OnThe ~~July~~unsecured 1promissory note maturing on June 2, ~~2016~~2017, ~~the~~was ~~Company~~issued ~~entered~~with ~~into~~a antwelve-month ~~agreement~~term, ~~with~~comprises ~~the~~$25,000 ~~Company’s~~principal, ~~Chairman~~and ~~whereby~~bears heinterest ~~would~~at ~~provide~~12% ~~services~~per toannum. ~~the~~The ~~Company~~principal atbalance aincluded ~~monthly~~prepaid ~~rate~~interest of $13,000. ~~for~~The aamount ~~period~~due is currently in default and an extension of ~~two~~the ~~years~~term ~~ending~~is onexpected ~~June~~to ~~30,~~be ~~2018~~renegotiated.

~~(2) 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 included prepaid interest of $3,000.~~

~~(3)~~MOBETIZE ~~The~~CORP. ~~promissory~~Notes ~~note~~to ~~maturing~~Condensed onConsolidated ~~July~~Financial ~~11,~~Statements ~~2017,~~June ~~was issued with a twelve-month term~~30, ~~comprises~~2018 ~~$19,885~~ (~~CAD $25,000~~Unaudited) ~~principal, and bears interest at 12% per annum. The principal balance included prepaid interest of $2,386 (CAD $3,000).~~

~~(4) The promissory note maturing on March 17, 2018, was issued with a~~ 6~~-month~~. Related ~~term,~~Party ~~comprises~~Transactions ~~$100,000~~– ~~principal, and bears interest at 12% per annum.~~Continued

(53) The unsecured promissory note maturing on ~~November~~July 711, ~~2018~~2017, was issued with a 12twelve-month term, comprises $5019,400 (CAD $25,000) principal, and bears interest at 12% per annum. The principal balance included prepaid interest of $2,328 (CAD $3,000). The amount due is currently in default and an extension of the term is expected to be renegotiated.

(64) The unsecured promissory note maturing on ~~December~~April 59, ~~2018~~2019, was issued with a 12twelve-month term, comprises $~~100~~38,024 (50,000 CAD) principal, and bears interest at 12% per annum.

~~8. Common~~(5) ~~Stock~~The unsecured promissory note maturing on May 28, 2019, was issued with a twelve-month term, comprises $5,000 principal, and ~~Preferred~~bears ~~Stock~~interest at 12% per annum.

(6)

The unsecured promissory note maturing on June 20, 2019, was issued with a twelve-month term, comprises $10,000 principal, and bears interest at 12% per annum.

(7)

The unsecured promissory notes dated September 17, 2017, November 7, 2017, December 5, 2017, and April 11, 2018, respectively were consolidated by agreement on April 11, 2018, in a new note in the amount of $300,000 that retires and replaces the aforesaid prior notes. The unsecured promissory note matures on April 10,2019, and bears interest at 12% per annum.

(8)

The unsecured promissory note maturing on May 28, 2019, was issued with a twelve-month term comprises $25,000 in principal and bears 12% per annum.

(9)

The unsecured promissory note maturing on June 20, 2019, was issued with a twelve-month term comprises $25,000 in principal and bears 12% per annum.

(10)

The unsecured promissory note maturing on June 25, 2019, was issued with a twelve-month term comprises $25,000 in principal and bears 12% per annum.

	MOBETIZE CORP.
	Notes to Condensed Consolidated Financial Statements
	June 30, 2018
	(Unaudited)

7. Common Stock and Preferred Stock

a) Issuance of Common Stock:

• 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.

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 ~~its~~the ~~authorized~~ preferred ~~shares~~stock ~~(see below)~~ 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 of $0.001 per share to 75,000,000 with a par value of $0.001 per share. There were no changes in the number of designated or outstanding Series A Preferred Shares or Series B Preferred Shares.

•

On June 4, 2018, the Company’s Chief Executive Officer and Chief Financial officer, the sole holder of shares 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.

c) Authorization and Issuance of Series B Preferred Shares:

• ~~The~~ ~~Company~~During ~~has~~the year ended March 31, 2017, the Company designated 25,000,000 shares of ~~its~~the authorized preferred ~~shares~~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~~had ~~Series~~a Brestriction ~~Preferred~~on ~~Share~~any ~~holder~~Series ~~does~~B ~~not~~Preferred ~~have~~shareholder ~~the~~electing ~~right~~ to convert Series B Preferred Shares into shares of common stock for a period of two years from the date of ~~issue~~designation. The time restriction has since passed so all Series B Preferred shareholders can convert their Series B Preferred Shares at any time into shares of common stock.

• On ~~April~~June 214, ~~2017~~2018, the ~~Company~~number ~~issued~~of ~~160,000~~ Series B Preferred Shares ~~pursuant~~increased toby ~~the~~4,565,000 on conversion of ~~$40~~4,565,000 inSeries ~~convertible~~A ~~promissory notes~~Preferred atShares ainto ~~conversion~~Series ~~price~~B ofPreferred $0Shares.25 ~~per~~The ~~share~~Series ~~(Note~~A ~~6(1))~~Preferred Shares used in the conversion were concurrently cancelled.

• 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~~MOBETIZE ~~May 29, 2017, the Company issued 15,000 Series B Preferred Shares with a fair value of $1~~CORP.00 ~~per~~Notes ~~share~~ to aCondensed ~~vendor~~Consolidated ~~pursuant to~~Financial ~~the~~Statements ~~settlement~~June ~~of $15~~30,~~000~~ in2018 ~~accounts payable.~~(Unaudited)

•8. OnShare ~~August~~Purchase ~~3, 2017, the Company issued 400,000 Series B Preferred Shares pursuant to the conversion of $200,000 in convertible promissory notes at a conversion price of $0.50 per share (Note 6(2) and 6(3)).~~Warrants

MOBETIZE CORP.

Notes to Consolidated Financial Statements

December 31, 2017

(Unaudited)

9. Share Purchase Warrants

The following table summarizes the continuity of share purchase warrants:

	Number of warrants	~~Number of warrants~~		Weighted average exercise price $		~~Weighted average exercise price $~~
Balance, March 31, 2017 and December 31, 2017			26,364				104
Balance, March 31, 2018		26,364			60
Expired		(6,944	)		100
Balance, June 30, 2018		19,420			105

As at ~~December~~June 3130, ~~2017~~2018, the following share purchase warrants were outstanding:

Number of warrants outstanding		Exercise price $	~~Exercise price $~~		Expiry date	~~Expiry date~~
	6,944			100		June 24, 2018
	3,866		125		December 10, 2018
	3,866			125		December 10, 2018
	15,554		100		September 1, 2018
	15,554			100		September 1, 2018
	19,420
	26,364

109. Stock Options

The Company has adopted a Stock Option Plan (“Stock Option Plan”) which permits the Company to issue stock options for up to 330,000~~,000~~ (post consolidation) 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:

	Number of stock options	~~Number of stock options~~		Weighted average exercise price $		~~Weighted average exercise price $~~
Balance, March 31, 2016			23,812				60
Balance outstanding, March 31, 2018, and June 30, 2018		20,200			60
Expired			(2,885	)			60
Exercisable, June 30, 2018		19,765			60
Cancelled			(727	)			60
Outstanding, March 31, 2017 and December 31, 2017			20,200				60
Exercisable, December 31, 2017			18,575				60

13As at June 30, 2018, the following share purchase options were outstanding:

MOBETIZE CORP.

Number of options outstanding

Number of options vested

Exercise
price

Expiry date

20,200

19,675

September 30, 2020

~~Notes~~During tothe ~~Consolidated~~period ~~Financial~~ended ~~Statements~~June 30, 2018, $3,115 (2017–$19,480) 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 June 30, 2018, and March 31, 2018.

December 31, 2017

(Unaudited)

As at December 31, 2017, the following share purchase options were outstanding:

Number of options outstanding

Number of options vested

Exercise price $

Expiry date

20,200

18,575

September 30, 2020

During the nine months ended December 31, 2017, $41,606 (2016 - $167,033) in stock-based compensation expense was recorded and allocated amongst general and administrative, consulting fees, management fees (related party), and research and development expenses. The intrinsic value of the options was $nil at December 31, 2017, and March 31, 2017.

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 nine months ended December 31, 2017, the Company had revenues from five customers (2016 –five customers) with 56% (2016 – 56%) of revenues generated from the Company’s largest customer. At December 31, 2017, the Company’s accounts receivable is concentrated and due from four customers (March 31, 2017 – five customers) with 84% (March 31, 2017 – 61%) of accounts receivable due from the Company’s largest customer.

12. Commitments and Claims

a) The Company has an obligation under a rental lease for its office. As of December 31, 2017, the remaining term of the lease is 15 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 (“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, 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 date has been set for June 11, 2018.

MOBETIZE CORP.

Notes to Consolidated Financial Statements

December 31, 2017

(Unaudited)

c) 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 three present directors as defendants. Fowler asserts claims against the Company for unpaid expenses, and breach of contract. 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. No further steps in this action have been taken, and no trial date has been set.

d) 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. On June 23, 2017, the Company filed a Motion to Dismiss, or in the Alternative, Application for Preliminary Injunction to either dismiss or enjoin the Complaint. On October 31, 2017, the court held a hearing on the Motion. The court stayed the Washoe County action pending resolution of the British Columbia action. No trial date has been set.

e) 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 October 8, 2018.

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 nine months ended December 31, 2017, the Company generated revenue of $177,138 (CDN$228,094) in Canada and $156,723 in the USA. The costs incurred to generate this revenue are expensed as research and development. At December 31, 2017, the Company’s long-lived assets are located in Canada.

14. Subsequent Events

The Company evaluated its December 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.

	MOBETIZE CORP.
	Notes to Condensed Consolidated Financial Statements
	June 30, 2018
	(Unaudited)

10. Concentration of Risk

Revenues are currently generated through licensing, professional services, and payment processing provided to our existing customers. During the three months ended June 30, 2018, the Company had revenues from five customers (2017 – five customers) with 57.4% (2017 – 55%) of revenues generated from the Company’s largest customer. At June 30, 2018, the Company’s accounts receivable is concentrated and due from three customers (March 31, 2018 – four customers) with 43% (March 31, 2018 – 43%) of accounts receivable due from the Company’s largest customer.

11. Commitments and Contingencies

The Company has an obligation under a rental lease for its operating office. As of June 30, 2018, the remaining term of the lease is 3 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. 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 date has been set for January 30, 2019. The Company believes that the claims detailed in the Citation are without merit. However, the outcome of this proceeding cannot be reasonably determined at this time.

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. He also asserts that his shareholdings in the Company have been diluted due to certain actions of its directors, 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 putting up a vigorous defense. Further, the Company has advanced counterclaims against Fowler, including a claim that that while an officer and director of the Company, 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. No further steps in this action have been taken, and no trial date has been set. The Company 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.

	MOBETIZE CORP.
	Notes to Condensed Consolidated Financial Statements
	June 30, 2018
	(Unaudited)

11. Commitments and Contingencies – 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 directors as defendants. The Washoe County action concerns substantially the same facts and seeks substantially the same relief as Fowler’s British Columbia action. 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 did not grant injunctive relief but determined to stay the Washoe County action pending resolution of the British Columbia action. No trial date has been set. The Company believes that the claims detailed in the Complaint are without merit. However, the outcome of this litigation cannot be reasonably determined at this time.

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 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, the Court denied Fields’ application for injunctive relief but did not rule on the question of Fields’ alleged damages. On August 4, 2017, Fields filed 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 on January 9, 2018 denied the Motion. A trial date of January 2, 2019, was formalized by the Court. On July 30, 2018, a mandatory settlement conference was convened by the Court. On August 20, 2018, the parties to this action entered into a Settlement Agreement. Mobetize, its directors and Fields filed a dismissal of the proceedings with the Court on September 18, 2018.

12. Segment Information

The Company has a single operating segment that provides 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 three months ended June 30, 2018, the Company generated revenue of $51,139 (CDN$66,022) (2017 -$62,523 (CDN$84,082)) in Canada and $37,617 (2017 - $53,207) in the USA. The costs incurred to generate this revenue are expensed as research and development. At June 30, 2018, and 2017, the Company’s long-lived assets are located in Canada.

	MOBETIZE CORP.
	Notes to Condensed Consolidated Financial Statements
	June 30, 2018
	(Unaudited)

13. Subsequent Events

On July 30, 2018, a mandatory settlement conference was convened by the Court for the respective parties to consider anew their interests in the litigation associated with the legal proceedings filed by Carey Fields against the Company and its directors. On August 20, 2018, the parties to this action entered into a Settlement Agreement and on September 18, 2018, filed a dismissal of the proceedings with the Court.

On August 14, 2018, the Company and Digital Power Lending (“DPL”) signed a Letter of Intent (“LOI”) for the purposes of realizing funding from DPL along with the expectation that the Company licenses its smartLoan, digital lending application to DPL. The LOI commits DPL to purchasing 675,000 Company Units for an aggregate investment of $500,000 in three tranches receivable on the realization of certain milestones. Each Unit will be comprised of one share of Series B Preferred Shares and a ½ purchase warrant, each full purchase warrant entitling the holder to purchase an additional share of the Company’s Series B Preferred Shares for $1.75 per share until August 31, 2021. The purchase warrants will vest once all three investment tranches are complete. The parties to the LOI intend to amend the investment commitment to replace Series B Preferred Shares with common shares.

On August 28, 2018, the Company amended its Designation of Series B Preferred Stock dated May 20, 2016, as amended on May 31, 2016 (“Series B Amendment) to excise a restriction from the designation that limited the number of Series B Preferred shares that could be converted to common stock by any given holder to no more than 4.99% of the outstanding shares of common stock following such conversion. The Series B Amendment was approved unanimously by the board of directors on August 22, 2018 and by those stockholders holding a majority of the voting shares of Series B Preferred, voting as a single class, on August 23, 2018.

On August 29, 2018, each member of the Company’s board of directors along with related entities elected to convert their shares of Series B Preferred stock into shares of common stock authorizing the cancellation of 11,050,714 Series B Preferred shares in exchange for the issuance of 11,050,714 shares of common stock.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly 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 report. Our fiscal year end is March 31. All information presented herein is based on the three ~~and nine~~ -month periods ended ~~December 31~~June 30, ~~2017~~2018 and ~~December~~June 3130, ~~2016~~2017.

DISCUSSION AND ANALYSIS

Mobetize is ana ~~emerging~~business ~~Fintech~~to business (~~mobile~~B2B) ~~delivery~~financial oftechnology ~~banking~~company ~~and other financial services~~(FinTech). ~~company~~FinTech ~~that digitizes~~is ~~bricks~~an ~~and~~umbrella ~~mortar~~term ~~financial~~for ~~services~~describing todisruptive technologies ~~enable~~involved in the ~~convergence~~provision of ~~global telecom and~~ financial services ~~providers~~that ~~through~~are ~~its~~transforming ~~Global~~the ~~Mobile~~way ~~B2B~~money ~~Fintech~~is ~~and~~managed ~~Financial~~affecting asalmost aevery financial ~~Service Marketplace (“Hub”)~~activity. ~~This~~ ~~Hub~~Under ~~provides~~this ~~among~~umbrella ~~other~~Mobetize ~~things,~~provides amodern ~~mobile~~frictionless ~~financial services (“MFS”)~~ white -label ~~technology~~digital ~~platform,~~banking ~~that~~applications ~~includes~~focused anon ~~individual~~payment ~~MFS~~and ~~application~~lending ~~program~~solutions ~~interface~~for ~~(“API”)~~financial ~~consumption~~institutions, ~~protocol~~money ~~that~~service ~~supports services such as personal loan applications~~businesses, ~~prepaid air-time~~ and ~~data~~telecommunications ~~top~~organizations ~~ups,~~(Customers). Mobetize ~~international~~calls ~~money~~these ~~transfers,~~solutions ~~P2P transfers~~smartProducts, ~~Visa™/MasterCard™ programs~~through ~~and~~which ~~bill~~Customers ~~payments~~are onable ~~personal~~to ~~computers~~seamlessly ~~and~~integrate ~~mobile~~their ~~devices~~existing ~~(“Services”). The Hub seamlessly integrates with~~programs ~~our~~to ~~customers who can then~~ offer our services to their ~~own~~subscribers ~~customers~~or members (Users).

Mobetize accelerates innovation, broadens revenue opportunities, reduces operational costs and enhances regulatory compliance for its Customers. Our approach to FinTech is challenges the conventional model of how financial services are delivered and consumed. Our next-generation banking solutions (Services) are offered through financial institutions or other digital participants.

Users can access our Services through multiple access points including:

1. Desktop Applications

2. Mobile Web Applications

3. Native Applications for Apple iOS Devices and Android Devices

REVENUE MODEL

Our business model is designed to generate revenue from:

1) Transactional processing fees based on the volume of activity

2) Revenue share based fees for financial services

3) Recurring platform fees for licensing Services

4) Recurring fees for service level agreements

5) Consulting and professional services fees

6) Customization, integration, and deployment fees

Existing revenue is influenced by the growing global consumption of mobile financial services 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 can 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 merger and acquisition strategies to grow the business

•

Continuing to develop innovative FinTech solutions for the digital economy

Recent Business Developments

~~FICANEX~~Tata Communications – On ~~September~~August 1128, ~~2017~~2018, weTATA ~~entered~~Communications ~~into~~(America) aInc. ~~Master~~(“Tata”) ~~Services~~placed ~~Agreement~~a ~~with~~new ~~FICANEX~~service ~~Technology~~order ~~Limited~~to ~~Partnership~~Mobetize ~~(“FICANEX”)~~USA toInc. ~~co-develop~~for new software module development and ~~market~~support. ~~innovative~~New ~~financial~~software ~~services~~features ~~solutions~~include ~~(the~~module ~~“FICANEX~~development, product ~~Agreement”)~~code training and support services extension. ~~The~~On ~~initial~~February ~~solution~~1, is2017, ~~focused~~we onsecured ~~providing~~a ~~mobile~~Software ~~international~~Application ~~money~~License, ~~remittance~~Customization Development and Service Level Agreement with Tata to govern the global deployment of our services for its customers. ~~FICANEX~~We ~~will~~agreed ~~adopt certain~~to ~~services~~a ~~and~~five-year strategic ~~technologies~~partnership from ~~the~~which ~~Hub~~we expect to ~~position~~generate ~~itself~~revenue asfrom aservice ~~Fintech~~level ~~banking~~support ~~services~~fees ~~accelerator~~and tothe ~~over~~sharing ~~170~~of ~~member~~transactional ~~financial~~income. ~~institution~~We ~~across~~also ~~Canada.~~expect ~~The~~to ~~FICANEX~~advance ~~Agreement~~our ~~has~~technology aalliance ~~three-year~~to ~~term~~accelerate ~~and~~FinTech ~~automatically~~revenue ~~renews~~sharing ~~for~~opportunities, ~~one~~and ~~additional~~FinTech ~~three-year~~product ~~term~~innovation.

~~CPT~~Digital ~~Joint~~Power ~~Venture~~Lending, –LLC - On ~~May~~August 2914, ~~2017~~2018, ~~MPAY Gateway Services Inc. was formed in connection with a Joint Venture Agreement between~~ Mobetize and ~~CPT~~Digital ~~Secure~~Power ~~Inc.~~Lending (“~~CPT~~DPL”) ~~dated~~signed ~~January~~a ~~12,~~non-binding ~~2017,~~letter of tointent ~~develop~~for ~~payment processing~~the ~~technology~~purposes ~~(the~~of ~~“Joint~~realizing ~~Venture~~funding ~~Agreement”).~~from ~~The~~DPL ~~Joint~~along ~~Venture~~with ~~Agreement~~the ~~required~~expectation that Mobetize tolicenses ~~issue~~its ~~500~~smartLoan,~~000~~ digital ~~shares~~lending ofapplication ~~Series~~to BDPL. ~~Preferred~~We toalso ~~CPT~~expect into ~~consideration~~partner ~~for~~with ~~the~~DPL ~~license~~in oflicensing ~~CPT~~and ~~technology~~hosting toour ~~the~~smartLoan ~~joint~~product ~~venture.~~under ~~The~~the ~~license~~DPL ~~has a~~brand. ~~two-year~~DPL ~~term~~will ~~that can~~ be ~~automatically~~responsible ~~renewed~~ for ~~successive~~system-setup-fees, ~~two~~and ~~year~~is ~~periods~~expected ~~unless~~to ~~either~~enter ~~party~~into ~~elects~~service ~~not~~level tosupport ~~renew~~and notransaction ~~later~~fees sharing ~~than~~agreements 60with ~~days prior to expiration~~us.

~~Tata~~FICANEX ~~Communications~~ – On ~~February~~September 111, 2017, ~~dated effective December 15, 2016,~~ we entered into a ~~Software~~Master ~~Application~~Services ~~License, Customization Development and Service Level~~ Agreement with ~~Tata~~FICANEX ~~Communications~~Technology ~~(America)~~Limited ~~Inc.~~Partnership (“~~Tata~~FICANEX”) to ~~govern~~co-develop ~~the global~~and ~~deployment~~market ofinnovative ~~our~~financial ~~Services~~services ~~for~~solutions ~~its customers through our Hub~~ (~~the~~ “~~Tata~~FICANEX Agreement”). The ~~parties~~initial ~~agreed~~solution tois focused aon ~~five-year~~providing ~~strategic~~mobile ~~partnership~~international ~~from~~money ~~which~~remittance weservices. ~~expect~~FICANEX towill ~~generate~~adopt ~~revenue~~certain ~~from~~of ~~service~~our ~~level~~Services ~~support~~to ~~fees~~position ~~and~~itself ~~the~~as a ~~sharing~~FinTech ~~of transactional~~banking ~~income;~~services ~~advance~~accelerator ~~our~~to ~~technology~~over ~~alliance~~170+ tomember ~~accelerate~~financial ~~new~~institution ~~Fintech~~across ~~revenue~~Canada. ~~sharing~~The ~~opportunities;~~FICANEX ~~and~~Agreement ~~focus~~has ~~our~~a ~~partnership~~three-year onterm ~~Fintech~~and ~~product~~automatically ~~innovation~~renews for one additional three-year term.

16Mobetize is in the final stages of completing user acceptance testing with financial institutions that intend to go live with our smartRemit solution in partnership with FICANEX. Once user acceptance testing is completed the next phase of the process is to commence production acceptance testing. We expect to go live with these four financial institutions in the last quarter of the 2018 calendar year.

GFMPAY ~~Financial~~Joint ~~Group~~Venture – On ~~September~~May 2729, ~~2016~~2017, ~~effective~~MPAY ~~September~~Gateway ~~20,~~Services ~~2016,~~Inc. wewas ~~entered~~formed ~~into~~as a ~~Software~~joint ~~Application~~venture ~~License, Customization~~in ~~Development~~connection ~~and~~with ~~Service~~a ~~Level~~joint venture ~~Agreement~~between ~~(the~~Mobetize ~~“GF~~and ~~Financial~~CPT ~~Agreement”)~~Secure ~~with~~Inc. ~~GF Financial Group~~ (“GFCPT”) to ~~partner~~dated inJanuary ~~offering~~12, a2017. ~~mobile~~The ~~personal~~joint ~~lending~~venture ~~facility~~is ~~with~~intended ~~omni-channel~~to ~~capabilities~~develop payment toprocessing ~~its~~technology ~~customers~~and ~~built~~provide ona ~~our~~license ~~Fintech platform.~~to GFuse ~~customers~~CPT ~~will~~technology. beThe ~~able~~license tohas ~~apply~~a ~~for~~two-year ~~and~~term bethat ~~approved~~can be renewed for ~~personal~~successive ~~loans~~two-year ~~initiated~~periods ~~from~~unless ~~their~~either ~~mobile~~party ~~devices.~~elects Anot ~~roll out~~to ofrenew the ~~application~~license ~~was~~no ~~successfully~~later ~~implemented~~than in60 ~~the~~days ~~second~~prior ~~quarter~~to ~~of 2017~~expiration.

RESULTS OF OPERATIONS

US $

~~US $~~

Three Months Ended

~~Nine Months Ended~~

December 31,

June 30,

2017

2016

2017

2016

2018

2017

Revenues

~~152~~88,~~342~~756

~~149~~115,~~138~~730

~~333,861~~

~~365,386~~

Operating Expenses

~~385~~248,~~826~~392

~~290~~490,~~093~~516

~~1,394,472~~

~~1,112,138~~

Net Loss

(~~241~~167,~~370~~427

)

(~~140~~392,~~955~~202

)

~~(1,093,886~~

)

~~(746,752~~

)

Revenues

~~Mobetize~~For ~~generated $152,342 of revenue in~~ the three months ended ~~December~~June 3130, ~~2017~~2018, ~~compared to revenues of $149,138 during the same period in 2016, an increase of 2%.~~ Mobetize generated ~~$333,861~~revenue of ~~revenue in the nine months ended December 31~~$88, ~~2017~~756, as compared to revenues of $~~365~~115,~~386~~730 during the same period in ~~2016~~2017, a decrease of 923%. Revenues in ~~the~~both three ~~and nine~~ -month periods were generated from consulting, contract development work, licensing services, providing professional services, and payment processing for our ~~customers~~Customers. The ~~increase~~decrease in revenues over the comparative three month periods can be attributed to andecreases ~~increase~~ in contract development revenue ~~and~~, professional service and consulting activity in the current three -month ~~periods~~period over the corresponding prior ~~periods~~period. ~~The decrease in revenues over the comparative nine month periods can be attributed to a decrease in consulting revenue.~~

We expect that revenues will increase in future periods as Mobetize anticipates additional contract development revenue, professional service activity, licensing revenue, and its first transactional revenues in the ~~first~~last ~~half~~quarter of ~~the calendar year~~ 2018.

Operating Expenses

Operating expenses for the three ~~and nine~~ -month periods ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017 are outlined in the following table:

	US $						US $
	2018			2017
	Three Months Ended						Nine Months Ended
Depreciation		803			771
	December 31,						December 31,
General and administrative		91,306			112,532
	2017			2016			2017			2016
General and administrative – related party		19,066			9,741
Depreciation		761			777			2,416			2,377
Investor relations and promotion –related party		10,000			17,078
General and administrative		91,353			12,775			296,952			216,435
Consulting fees		7,250			6,480
General and administrative – related party		12,236			67,093			39,022			84,253
Management fees – related party		37,284			47,371
Investor relations and promotion		695			15,684			696			65,209
Professional fees		21,669			136,729
Investor relations and promotion –related party		30,000			—			107,078			—
Research and development		34,475			127,440
Consulting fees		666			529			13,017			28,692
Research and development – related party		26,539			32,374
Management fees – related party		39,830			58,932			132,918			234,339
Total Operating Expenses		248,392			490,516
Professional fees		86,017			21,015			346,918			117,720
Loss Before Other Items		(159,636	)		(374,786	)
Research and development		84,301			74,311			339,673			266,086
Research and development – related party		39,967			38,977			115,782			97,027
Total Operating Expenses		385,826			290,093			1,394,472			1,112,138
NET LOSS		(241,370	)		(140,955	)		(1,093,886	)		(746,752	)

17For the three months ended June 30, 2018, operating expenses were $248,392 as compared to $490,516 for the three months ended June 30, 2017, a decrease of 49%. The decreases in operating expenses for the current three-month period can be primarily attributed to the decrease in professional fees and research and development expenses. The decrease in professional fees and research and development costs in the can be attributed to a fall in the costs associated with ongoing litigation that have in turn caused us to curtail our research and development budget.

~~For~~We ~~the~~expect ~~three~~that ~~months ended December 31, 2017,~~ operating expenses ~~were~~will ~~$385,826 compared with $290,093 for the three months ended December 31, 2016, an~~ increase ofover ~~33%.~~future For the nine months ended December 31, 2017, operating expenses were $1,394,472 compared with $1,112,118 for the nine months ended December 31, 2016, an increase of 25%. The increases in operating expenses for the current three and nine month periods ~~can~~as beMobetize ~~attributed~~focuses toon ~~increases~~joint ~~in investor relations fees, general and administrative fees, professional fees,~~ research and development ~~expenses. The increase in professional fees and research and development costs in the current three and~~activities, ~~nine~~enhances ~~month~~its ~~periods~~product ~~can~~pipeline, ~~be attributed to ongoing litigation~~ and ~~increases~~grows inits ~~the~~revenue ~~research and development budget~~model. The increase in general and administrative fees in the current three and nine month periods can be attributed to a restructuring of management and changes in corporate responsibilities over the prior comparable three and nine month periods.

We expect that operating expenses will increase over future periods as Mobetize expands focuses on joint research and development activities, enhances its product pipeline, and grows its revenue model.

Net Losses

For the three months ended ~~December~~June 3130, ~~2017~~2018, net loss was $~~241~~167,~~370~~427 as compared to ~~net loss of~~ $~~140~~392,~~955~~202 for the three months ended ~~December 31,~~June ~~2016~~30, ~~an increase of 71%. For the nine months ended December 31,~~ 2017, ~~net losses were $1,093,886 compared to net losses of~~ ~~$746,752~~a ~~for~~decrease ~~the nine months ended December 31, 2016, an increase~~ of 4757%. The ~~increase~~decrease in net losses for the current three ~~and nine~~ -month ~~periods~~period can be primarily attributed to the ~~increase~~decrease in operating expenses over the prior comparable three ~~and nine~~ -month ~~periods~~period.

We believe that net losses will continue to diminish over future periods as revenue is expected to grow the effect of operating efficiencies on our business are carefully monitored to ensure the most cost effective realization of our business plan.21

We believe that net losses will continue to decrease over future periods as revenue is expected to grow while management renews its commitment to operating efficiencies to deliver the most cost-effective expansion of our business model.

Liquidity and Capital Resources

	US $
	December 31, 2017		March 31, 2017
	June 30, 2018		March 31, 2018
Current Assets	$	~~199~~143,~~624~~285	$	~~709~~74,~~000~~231
Total Assets		~~288~~214,~~162~~494		~~828~~154,~~273~~113
Current Liabilities		~~963~~1,~~515~~391.155		~~713~~1,~~550~~167,242
Total Liabilities		~~963~~1,~~515~~391,155		~~713~~1,~~550~~167,242
Working Capital Deficiency		~~763~~1,~~891~~247,870		41,~~550~~093,011

Mobetize had a working capital deficit of $~~763~~1,~~891~~247,870 as of ~~December~~June 3130, ~~2017~~2018, and has funded its cash needs since inception with revenues ~~generated~~ generated from operations, related party advances, debt instruments and private equity placements. Existing working capital and ~~anticipated~~ anticipated cash flow ~~are~~is not expected to be sufficient to fund operations over the next twelve months. Mobetize has to seek additional debt or equity funding to maintain operations.

~~Total~~Current ~~current~~ assets as of ~~December~~June 3130, ~~2017~~2018, were $~~199~~143,~~624~~285 which consisted of $1650,~~798~~196 in cash, $~~132~~66,~~175~~715 in accounts receivable, and $5026,~~651~~ 374 in prepaid expenses and deposits. Total assets ~~were $288,162 which~~ consisted of current assets, equipment ~~of $5,596~~ and an investment in athe MPAY joint venture of $8267,~~942~~436.

~~Total~~Current ~~current~~ liabilities as of ~~December~~June 3130, ~~2017~~2018, were $~~963~~1,~~515~~391,155 which consisted of accounts payable and accrued liabilities, ofrelated ~~$182,104,~~ accounts payable and accrued liabilities ~~– related party $477~~,~~592,~~ deposits due to customers, ofpromissory ~~$8,934,~~notes and promissory notes due to related parties ~~of $294,885~~. Total liabilities were $~~963~~1,~~515~~391,155 which consisted entirely of current liabilities. ~~Stockholders’ deficit as of December 31, 2017, was $675,353.~~

18Stockholders’ deficit as of June 30, 2018, was $1,176,660.

Cash Flows

	US $
	nine months ended
	three months ended
	December 31, 2017			December 31, 2016
	June 30, 2018			June 30, 2017
Cash flows used in Operating Activities	$	(~~756~~166,~~979~~255	)	$	(~~284~~343,~~185~~139	)
Cash flows used in Investing Activities		—			—
Cash flows provided by Financing Activities		~~250~~203,~~000~~024			~~122,857~~—
Effect of exchange rate changes on cash		~~(11~~1,~~661~~886	)		~~739~~(5,580	)
Net Decrease in Cash During Period		(518,640	)		(160,589	)
Net Increase (Decrease) in Cash During Period		38,564			(348,719	)

Cash flows used in Operating Activities

During the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018, Mobetize used net cash of $~~756~~166,~~979~~255 in operating activities as compared to $~~284~~343,~~185~~139 of net cash used in operating activities during the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017. The change in cash used in operating activities over the comparative periods, is primarily attributed to ~~increased~~payments ~~cash-based~~towards ~~operating~~accounts ~~expenses~~payable and ~~fluctuations~~the inoutstanding ~~working~~accounts ~~capital~~owed ~~items~~to related parties.

~~The~~Mobetize ~~increases~~expects into ~~net~~continue ~~cash used for the current three and nine month periods is primarily attributable~~ to anuse ~~increase~~net ~~in accounts receivable, and increased~~ cash~~-based~~ ~~expenditures~~flow ~~including~~in ~~general~~operating ~~and~~activities ~~administrative,~~until ~~investor~~such ~~relations,~~time ~~professional~~as ~~fees,~~losses ~~and~~decrease ~~research~~ and ~~development~~revenues increase.

~~Mobetize expects to continue to use cash flow in operating activities until such time as losses transition to profit on the expectation that revenues will increase.~~22

Cash flows used in Investing Activities

During the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018, and ~~December~~June 3130, ~~2016~~2017, Mobetize used $nil in investing activities.

Mobetize expects to use cash flow in investing activities in future periods as it will require additional investment in equipment and research and development to ~~grow~~expand its business ~~model~~.

Cash flows provided by Financing Activities

During the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018, Mobetize realized $~~250~~203,~~000~~024 in proceeds provided by financing activities compared to $~~122,857~~nil in proceeds provided by financing activities during the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017. The proceeds provided by financing ~~activities~~ activities in the current ~~nine~~ three-month period were realized in connection with related and non-related promissory ~~and convertible promissory~~ notes. The proceeds provided by financing activities in the prior nine month period were realized in connection with a shareholder loan, a convertible promissory note and promissory notes from related parties, offset by the repayment of a promissory note provided by a related party.

Mobetize expects to realize cash flow from financing activities in future periods until such time as it can increase revenue to the point at which it can maintain operations and fund business growth.

Financing

We have financed operations to date from the proceeds of private placements of common stock, the exercise of warrants, the issuance of convertible promissory notes, and advances from directors and shareholders. Our business ~~plan~~ does anticipate increases in ~~operating~~ operating expenses and capital expenditures over the next twelve months in relation to: (i) product development; (ii) research and development to enhance existing products and create new ones; (iii) marketing expenses; and (iv) ongoing ~~litigation~~professional fees. We expect ~~that~~ that our working capital requirements will be funded over this period by a combination of revenue, shareholder debt or equity ~~private~~ private placements of our securities and if necessary, shareholder loans. Despite our expectation, we have no agreements to obtain ~~funds~~ funds through bank loans, lines of credit or any other sources. Our only expectation is that DPL will complete the financing described below, which completion can in no way be assured. Since we have no financing committed, our inability to realize financing ~~to maintain operations and grow our business~~ would materially restrict our ~~business~~ operations.

~~Mobetize~~On ~~has~~August ~~adopted a stock option plan pursuant to which it can grant up to 3~~14,~~000,000~~ ~~options to purchase shares of its common stock to employees~~2018, ~~directors,~~Mobetize ~~officers,~~signed ~~consultants~~a ornon-binding ~~advisors~~letter ~~on the terms and conditions set forth therein. As~~ of ~~December~~intent ~~31, 2017, 20,200 options~~ with anDPL ~~exercise~~pursuant ~~price~~to ofwhich ~~$60.00~~DPL ~~had~~will ~~been~~invest ~~granted~~$500,000 ~~17,720~~into ~~of which have vested~~Mobetize. ~~Except for the 2015 Stock Option~~ ~~Plan,~~The weletter ~~have~~of nointent ~~other~~also ~~defined~~anticipates ~~benefit~~DPL’s ~~plan~~use ~~with any~~ of our ~~officers or directors~~Services.

Mobetize has adopted a stock option plan pursuant to which it can grant up to 30,000 (post consolidation) options to purchase shares of its common stock to employees, directors, officers, consultants or advisors on the terms and conditions set forth therein. As of June 30, 2018, 20,000 options with an exercise price of $60 remain outstanding, 19,765 of which have vested.

Mobetize has no lines of credit or other bank financing arrangements in place.

Mobetize has no commitments for future capital expenditures that are material.

Mobetize has no current plans for the purchase or sale of any plant or equipment.

Mobetize has no current plans to make any changes in the number of employees.

Mobetize does not expect to pay cash dividends in the foreseeable future.

OFF-BALANCE SHEET ARRANGEMENTS

As of ~~December~~June 3130, ~~2017~~2018, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, ~~capital~~ capital expenditures or capital resources that are material to investors.

GOING CONCERN

The independent auditors' report accompanying our March 31, ~~2017~~2018, financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. As of June 30, 2018, Mobetize had an accumulated deficit of $9,090,328, a history of net losses and cash used in operating activities, and a working capital deficiency of $1,247,870. These factors raise substantial doubt regarding Mobetize’s ability to continue as a going concern. Mobetize’s ability to continue as a going concern is dependent on continued financial support from management, increasing revenue, realizing additional debt or equity financing, decreasing operating costs and producing commercially viable products. Nonetheless, these consolidated financial statements 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.

These consolidated financial statements 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 December 31, 2017, Mobetize had an accumulated deficit of $8,572,201, a history of net losses and cash used in operating activities, and a working capital deficiency of $763,891. These factors raise substantial doubt regarding Mobetize’s ability to continue as a going concern. The continuation of Mobetize as a going concern is dependent upon continued financial support from management, increasing revenue, procuring additional debt or equity financing as necessary, decreasing operating costs, realizing commercially viable products, and generating a profit.

CRITICAL ACCOUNTING POLICIES

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

Mobetize recognizes revenue from payment processing, licensing, and 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.

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 statements 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 measurable.

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 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.

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 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, 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required of smaller reporting companies.

ITEM 4. 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 that 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.

Changes in Internal Controls ~~over~~Over Financial Reporting

During the quarter ended ~~December~~June 3130, ~~2017~~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.

2226

PART II. – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Stephen Fowler

Mobetize received a Citation and Notice of Assessment dated October 14, 2016 (“Citation”), ~~that~~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, 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 ~~June~~30, 112019, ~~2018~~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 ~~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, of approximately $6,000, and breach of contract. He also asserts that his shareholdings in Mobetize have been diluted due to certain actions of its current ~~director~~ directors, making claims including breach of contract, breach of fiduciary duty, misrepresentation and conspiracy. On June 23, 2017, Mobetize ~~and~~filed its ~~directors~~response ~~believe~~to ~~that~~ Fowler’s claims ~~are without merit~~ and ~~are~~submitted ~~intent~~its onown ~~vigorously defending against this action~~claims. ~~Further,~~ Mobetize’s ~~has~~claims ~~advanced~~include ~~counterclaims against Fowler, including~~ a claim that ~~that while~~ Fowler ~~was~~improperly anissued ~~officer and director of Mobetize, that he caused it to issue~~ shares to himself, tois ~~which~~responsible hefor ~~was not entitled. Mobetize’s counterclaims also assert claims against Fowler of~~ fraudulent or negligent misrepresentation, breach of fiduciary duty, negligence and unjust enrichment. OnDocument ~~June~~discovery ~~23,~~is ~~2017,~~at ~~Mobetize~~a ~~filed its response to Fowler’s claims and its own counterclaims against Fowler~~standstill. 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 ~~(Washoe County)~~ by Fowler naming Mobetize and its ~~three present~~ directors as defendants. The ~~Washoe~~Nevada ~~County~~ action concerns substantially the same ~~facts~~ facts and ~~seeks substantially~~ 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 ~~British~~claims ~~Columbia~~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~~alternative, an Application for Preliminary Injunction to either dismiss or ~~enjoin~~stay the Fowler Complaint. ~~On October~~ ~~31,~~A ~~2017,~~hearing ~~the~~was ~~court~~ held aand ~~hearing~~Mobetize’s onMotion ~~the~~to ~~Motion~~Dismiss was denied. The ~~court~~Court ~~stayed~~did ~~the~~however ~~Washoe~~determine ~~County~~to stay the action pending resolution of the action in British ~~Columbia~~ ~~action~~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 ~~three present~~ directors as defendants, to obtain a preliminary ~~injunction~~ 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~~Court denied Fields’ application for injunctive relief. ~~The~~but ~~court~~ did not rule on the question of Fields’ alleged damages. On August 4, 2017, ~~Mobetize~~Fields ~~and~~filed ~~its three directors received~~ an Amended Complaint seeking damages for breach of fiduciary duty, conversion, and unjust enrichment. On November 17, 2017, ~~Mobetize~~ the Company filed Defendants’ Motion for Judgment on the Pleadings. The ~~court~~Court held hearings on the Motion on December 19, 2017 and on January 9, 2018 ~~and~~ denied the Motion. A ~~trial~~mandatory settlement ~~date~~conference ~~has~~was ~~been~~convened ~~set~~by ~~for~~the ~~October~~Court 8on July 30, 2018. On August 20, 2018, the parties to this action entered into Settlement Agreement. Mobetize, its directors and Fields filed a dismissal of the proceedings with the Court on September 18, 2018.

Item 1A. Risk Factors

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On ~~August~~June 314, ~~2017~~2018, ~~our~~Mobetize ~~Board of Directors~~ authorized the issuance of ~~400~~4,565,000 shares of Series B Preferred ~~stock~~to ~~valued~~Ajay atHans, ~~$0.50~~our Chief Executive Officer, Chief Financial Officer and a ~~share~~director, toin ~~certain~~exchange ~~individuals~~for 4,565,000 ~~earned~~shares inof ~~connection~~Series ~~with~~A ~~conversion~~Preferred pursuant to the Second Amended Certificate of ~~promissory~~Designation ~~notes~~of Preferred Stock Series A Preferred dated June 4, 2018, in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended~~, as follows:~~.

Name	Shares		Consideration		Value		Exemption
Alan Rothschild		50,000	$	25,000	$	0.50		Section 4(2)
David Duberstein		100,000	$	50,000	$	0.50		Section 4(2)
William Duberstein		100,000	$	50,000	$	0.50		Section 4(2)
Donald Duberstein		150,000	$	75,000	$	0.50		Section 4(2)

On August 29, 2018, Mobetize authorized the issuance of shares of common stock to certain individuals and related entities, in exchange for an aggregate number of 11,050,714 shares of Series B Preferred pursuant to the Amended Certificate of Designation Series B dated August 28, 2018, in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as follows:

Mobetize complied with the exemption requirements of Section 4(2) of the Securities Act based on the following factors: (1) the issuances were isolated private transactions that did not involve a public offering; (2) the offerees had access to the kind of information which registration would disclose; and (3) the offerees were financially sophisticated.

Name

Shares of Series B

Shares of

Common Stock

Consideration

Exemption

Ajay Hans

1,565,000

Exchange

Section 4(a)(2)

Alligato, Inc.

3,212,278

Exchange

Section 4(a)(2)

0853574 BC Ltd.

2,254,269

Exchange

Section 4(a)(2)

Donald Duberstein

2,399,167

Exchange

Section 4(a)(2)

The Duberstein Organization

20,000

Exchange

Section 4(a)(2)

Malek Ladki

1,600,000

Exchange

Section 4(a)(2)

Mobetize complied with the exemption requirements of Section 4(a)(2) of the Securities Act based on the following factors: (1) the issuances were isolated private transactions that did not involve a public offering; (2) the offerees had access to the kind of information which registration would disclose; (3) the offerees serve as officers and directors of Mobetize; and (3) the offerees are financially sophisticated.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None~~On August 28, 2018, Mobetize amended its Designation of Series B Preferred Stock dated May 20, 2016, as amended on May 31, 2016, with an Amended Certificate of Designation of Preferred Stock of Mobetize Corp. Series B Preferred (“Series B Amendment). The Series B Amendment excised a restriction from the designation that limited the number of Series B Preferred shares that could be converted to common stock by any given holder to no more than 4.99% of the outstanding shares of common stock following such conversion.

The Series B Amendment was approved unanimously by the board of directors on August 22, 2018. On August 23, 2018, those stockholders holding a majority of the voting shares of Series B Preferred Stock, voting as a single class, approved the Series B Amendment. Notice of the Series B Amendment is to be posted to each holder of Series B Preferred stock.

The foregone description of the Series B Amendment is qualified in its entirety by reference to the full text of that document attached hereto.

ITEM 6. EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 2631 of this Form 10-Q, and are incorporated herein by this reference.

2429

SIGNATURES

Pursuant to the requirements 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. DATE
MOBETIZE CORP.	DATE
/s/ Ajay Hans	September 27, 2018	~~February 9, 2018~~
By: Ajay Hans
Its: Chief Executive Officer and Chief Financial Officer

2530

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 dated 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 dated 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 dated May 20, 2016, incorporated by reference to the Form 8-K filed with the Commission on June 3, 2016.
3.1.4*	Second Amended Certificate of Designation Series A Preferred dated June 4, 2018, incorporated by reference to the Form 8-K filed
3.1.5*	Certificate of Designation Series B Preferred dated filed on May 23, 2016, incorporated by reference to the Form 8-K filed with the Commission on June 3, 2016.
3.1.6*	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.
3.1.7	Certificate of Amended Designation Series B Preferred filed on August 28, 2018, attached
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).
10.13*	Consulting Agreement dated July 1, 2017 between Mobetize Corp and CPT Secure Inc.
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 incorporated by reference to the Form 10-K/A filed with the Commission on July 13, 2016.
31	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 Definition Linkbase†
101.CAL	XBRL Taxonomy Extension Calculation Linkbase†
101.SCH	XBRL Taxonomy Extension Schema Linkbase†

~~3.1.1~~* ~~Certificate~~Incorporated ~~of Amendment filed on August 8, 2013 incorporated~~ by reference to ~~the~~previous ~~Form~~filings ~~8-K~~of ~~filed with~~ the ~~Commission on August 15, 2013~~Company.

3.1.2*† ~~Certificate~~Pursuant to Rule 406T of ~~Designation~~Regulation ~~Series~~S-T, Athese ~~Preferred~~interactive data files are deemed “furnished” and not “filed” onor ~~February~~part 4,of ~~2016,~~a ~~incorporated~~registration bystatement ~~reference~~or toprospectus for purposes of Section 11 or 12 of the ~~Form~~Securities ~~8-K~~Act of 1933, or deemed “furnished” and not “filed” ~~with~~for purposes of Section 18 of the ~~Commission~~Securities onand ~~February~~Exchange 11Act of 1934, ~~2016~~and otherwise is not subject to liability under these sections.

~~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.~~31

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 Hugo Cuevas-Mohr dated October 1, 2013, incorporated by reference to the Form 8-K filed with the Commission on March 18, 2014.

10.8* 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.

10.9* 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.

10.10* 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.

10.11* Software Application License, Customization Development and Service Level Agreement dated September 20, 2016, between Mobetize and GF Financial Group (certain commercial terms have been omitted in connection with the Commission’s grant of confidential treatment).

10.12* 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 15, 2017.

10.13* 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 8-K filed with the Commission on February 6, 2017 (certain commercial terms have been omitted in connection with the Commission’s 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 on July 13, 2016

31 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 Mobetize.

† 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.

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