U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Mark One
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2016
[ ] 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)
8105 Birch Bay Square St, Suite 205, Blaine WA 98230
(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 [X ] No[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, or a smaller reporting company.
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
At August 12, 2016, the number of shares outstanding of the registrant’s common stock, $0.001 par
value was 23,330,233, the number of shares outstanding of registrant’s Series A preferred stock, $0.001
par value was 4,565,000, and the number of shares outstanding of registrants Series B preferred stock,
$0.001 par value was 11,570,648.
TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
Item1.
Financial Statements:
3
Consolidated Balance Sheets
3
Consolidated Statements of Operations
4
Consolidated statements of Stockholders’ Equity
5
Consolidated Statements of
Cash Flows
6
Notes
to Consolidated Financial Statements
7
Item 2
.
Management's Discussion and Analysis of Financial Condition and Results of
23
Operations
Item 3
.
Quantitative and Qualitative Disclosures about Market Risk
28
Item 4
.
Controls and Procedures
28
PART II-OTHER INFORMATION
Item 1
.
Legal Proceedings and Risk Factors
29
Item 2
.
Unregistered Sales of Equity Securities and Use of Proceeds
29
Item 3.
Defaults Upon Senior Securities
29
Item 4.
Mine Safety Disclosures
29
Item 5
.
Other Information
29
Item 6
.
Exhibits
31
Signatures
30
2
MOBETIZE, CORP.
Consolidated
Balance
Sheets
June 30, 2016
(Unaudited)
US $
JUNE 30,
MARCH 31,
2016
2016
ASSETS
Current Assets:
Cash
$
19,075
$
210,341
Accounts receivable
72,215
43,729
Prepaid expenses and deposits
52,391
59,516
Prepaid expenses and deposits – related party (Note 4d)
6,508
5,241
Total Current Assets
150,189
318,827
Property and equipment, net (Note 3)
10,995
11,828
TOTAL ASSETS
$
161,184
$
330,655
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities
$
189,269
$
138,956
Accounts payable and accrued liabilities - related party (Note 4d)
124,357
75,749
Deposits due to customers
1,480
1,480
Promissory note – related party (Note 4d)
75,000
50,000
Convertible debenture (Note 5f)
275,000
275,000
Total Current Liabilities
665,106
541,185
Shareholder loans (Notes 4d&e)
59,073
47,476
TOTAL LIABILITIES
$
724,179
$
588,661
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 Par Value: 525,000,000 authorized and 23,330,233
common shares issued and outstanding, respectively
(Note 5)
$
23,330
$
28,751
Preferred stock – Class A, $0.001 Par Value: 250,000,000 authorized and
4,565,000 preferred shares issues and outstanding (Note 5d)
4,565
4,565
Preferred stock – Class B, $0.001 Par Value: 250,000,000 authorized and
5,420,648 preferred shares issues and outstanding (Note 5e)
5,421
-
Share subscriptions payable
30,000
-
Share purchase warrants (Note 6)
676,964
676,964
Share options (Note 7)
830,382
757,524
Additional paid-in capital
4,608,487
4,608,487
Accumulated other comprehensive loss
(9,394)
(9,236)
Accumulated deficit
(6,732,750)
(6,325,061)
Total Stockholders' Deficiency
(562,995)
(258,006)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
$
161,184
$
330,655
The accompanying notes are an integral part of these consolidated financial statements
.
3
MOBETIZE CORP.
Consolidated Statements of
Operations
and Comprehensive Loss
For the three months ended June 30, 2016 and 2015
(Unaudited)
US$
THREE MONTHS ENDED
JUNE 30,
2016
2015
OPERATING REVENUES
Revenues
$
75,618
$
3,335
OPERATING EXPENSES
Depreciation
805
776
General and administrative
86,878
64,800
General and administrative - related party (Note
4a&c)
2,683
1,434
Investor relations and promotion
34,515
-
Listing fees
4,052
12,235
Management salaries and consulting fees
21,000
110,366
Management salaries and consulting fees - related
party
(Note 4a)
37,210
30,000
Professional fees
84,703
27,267
Research and development
102,582
111,566
Research and development - related party (Note 4a)
27,154
631
Sales and marketing
8,867
3,925
Stock based compensation expense (Note 7)
72,858
-
Total operating expenses
483,307
363,000
NET LOSS
$
(407,689)
$
(359,665)
NET LOSS PER SHARE
Basic
$
(0.02)
$
(0.01)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic
27,070,480
30,226,095
COMPREHENSIVE LOSS
Net loss
$
(407,689)
$
(359,665)
Other comprehensive loss:
Foreign currency translation adjustment
(158)
1,599
Comprehensive loss:
$
(407,847)
$
(358,066)
The accompanying notes are an integral part of these consolidated financial statements
.
4
MOBETIZE CORP.
Consolidated Statements of Stockholders’
Equity
For the three months ended June 30, 2016 and the year ended March 31, 2016
(Unaudited)
Preferred Shares –
Preferred Shares –
Common Shares
Class A
Class B
Warrants
Accumulated
Additional
Share
Options
and
Other
Total
Paid-In
Subscriptions other Reserves
Accumulated
Comprehensive
Shareholder’s
Number
Value
Number
Value
Number
Value
Capital
Payable
(Note 8)
Deficit
Loss
Equity
Balance - March 31, 2015
30,185,505
$
30,186
-
$
-
$
-
-
4,030,880
$
14,303
$
423,408
$
(4,255,516)
$
(2,326)
$
240,935
Stock payable for consultancy
services received (Note 5a)
-
-
-
-
-
-
-
18,181
-
-
-
18,181
Sale of 161,481 shares at
$0.50/share
(Notes 5b)
161,481
161
-
-
-
-
65,022
-
15,556
-
-
80,739
Sales of 2,724,688 shares at
$0.25/share, net of $12,122
financing fee (Note 5b)
2,724,668
2,725
-
-
-
-
403,850
-
262,470
-
-
669,045
Valuation of financing warrants on
sale of shares (Notes 6d)
-
-
-
-
-
-
-
-
3,372
-
-
3,372
Exercise of warrants in the period
(Note 6a)
189,500
189
-
-
-
-
94,561
-
-
-
-
94,750
Warrants issued on exercise of
expiring warrants (Note 6a)
-
-
-
-
-
-
(18,255)
-
18,255
-
-
-
Share options issued in the period
(Note 8)
-
-
-
-
-
-
-
-
711,427
-
-
711,427
Conversion of common to
preferred shares
(Note 5d)
(4,565,000)
(4,565)
4,565,000
4,565
-
-
-
-
-
-
-
Shares issued for services
(Note
5a)
54,727
55
-
-
-
-
32,429
(32,484)
-
-
-
-
Net loss for the year
-
-
-
-
-
-
-
-
-
(2,069,545)
-
(2,069,545)
Comprehensive loss for the year
-
-
-
-
-
-
-
-
-
-
(6,910)
(6,910)
Balance – March 31, 2016
28,750,881
$
28,751
4,565,000
$
4,565
$
-
$
-
$
4,608,487
$
-
$
1,434,488
$
(6,325,061)
$
(9,236)
$
(258,006)
Stock payable for consultancy
services received (Note 5a)
-
-
-
-
-
-
-
30,000
-
-
-
30,000
Conversion of common to
preferred shares (Note 5e)
(5,420,648)
(5,421)
-
-
5,420,648
5,421
-
-
-
-
-
-
Share option expense in the period
(Note 8)
-
-
-
-
-
-
-
-
72,858
-
-
72,858
Net Loss for the year
(407,689)
(407,689)
Comprehensive loss
(158)
(158)
Balance – June 30, 2016
23,330,233
$
23,330
4,565,000
$
4,565
$
5,240,648
$
5,421
$
4,608,487
$
30,000
$
1,507,346
$
(6,732,750)
$
(9,394)
$
(562,995)
The accompanying notes are an integral part of these consolidated financial statements
.
5
MOBETIZE CORP.
Consolidated Statements of
Cash
Flow
For the three months ended June 30, 2016 and 2015
(Unaudited)
US$
THREE MONTHS ENDED
JUNE 30,
2016
2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(407,689)
$
(359,665)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation expense
805
776
Shares issued for services
30,000
6,630
Interest accrued on shareholder loans
950
-
Amounts due to related parties
10,647
-
Share based compensation
72,858
-
Changes in assets and liabilities
Accounts receivable
(28,486)
(3,431)
Accounts receivable – related party
-
14,687
Prepaid expenses and deposits
7,125
17,335
Prepaid expenses and deposits – related party
(1,267)
-
Accounts payables and accrued liabilities
50,313
42,218
Accounts payable - related party
48,608
(51,231)
Net cash used in operating activities
(216,136)
(332,681)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment
-
(1,742)
Net cash used in investing activities
-
(1,742)
CASH FLOWS FROM FINANCING ACTIVITES
Proceeds from sale of common stock
-
92,250
Proceeds from related party
25,000
81,106
Net cash provided by financing activities
25,000
173,356
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(130)
1,377
NET DECREASE IN CASH
(191,266)
(159,690)
CASH - BEGINNING OF PERIOD
210,341
312,899
CASH - END OF PERIOD
$
19,075
$
153,209
CASH PAID DURING THE PERIOD FOR:
Interest expense
$
-
$
-
Tax expense
$
-
$
-
The accompanying notes are an integral part of these consolidated financial statements.
6
MOBETIZE CORP.
Notes
to the Consolidated Financial Statements
June 30, 2016
(Unaudited)
1.
Nature of Operations and Continuance of Business
Mobetize,
Corp.
(the
“Company”)
was
incorporated
in
the
state
of
Nevada
on
February
23,
2012,
under the name Slavia, Corp.
Mobetize
Corp.
is
an
emerging
Fintech
Company
which
provides
Fintech
solutions
and
services
to
enable and support the convergence of global telecom and financial services providers (“Customers”).
This
is
achieved
through
the
Company’s
Global
Mobile
B2B
Fintech
and
Financial
Services
Marketplace (“Hub”). Mobetize is focused on selling Fintech solutions
and services to global telecom
and financial services providers.
The
Company’s activities
are
subject
to
significant
risks
and
uncertainties,
including
the
need
to
secure
additional
funding
to
operationalize
the
Company’s
current
technology
before
another
company develops competitive products.
Going Concern
These
consolidated
financial
statements
have
been
prepared
on
a
going
concern
basis,
which
implies
that the Company will continue to realize its assets and discharge its liabilities in the normal course of
business.
As
of
June
30,
2016,
the
Company
has
an
accumulated
deficit
of
$6,732,750,
a
history
of
net
losses
and
cash
used
in
operating
activities,
and
working
capital
deficiency
of
$514,917.
These
factors
raise
substantial
doubt
regarding
the
Company’s
ability
to
continue
as
a
going
concern.
The
continuation
of
the
Company
as
a
going
concern
is
dependent
upon
the
continued
financial
support
from
its
management,
generating
higher
sales
in
the
upcoming
quarterly
periods
according
to
the
budget, management’s ability to obtain the necessary debt or equity financing, cutting operating costs,
launching
viable
products,
and
generating
profitable
operations
overall
from
the
Company’s
future
operations. These financial statements do not include any adjustments to the recoverability and
classification of recorded asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
The
interim
consolidated
financial
statements
of
the
Company have
been
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
(“US
GAAP”)
which
include
the
accounts
of
Mobetize
Canada
Inc.
and
Mobetize
USA
Inc.,
both
of
which
are
wholly-owned
subsidiaries
of the Company.
The consolidated
financial
statements
are expressed in U.S.
dollars.
All
significant
intercompany
transactions
and
balances
have
been
eliminated.
The
Company’s
fiscal year end is March 31.
b)
Use of Estimates
The
preparation
of
financial
statements
in
conformity
with
US
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
and
disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
7
The Company regularly evaluates estimates and assumptions related to the collectability of
accounts
receivable,
valuation
of
intangible
assets,
revenue
recognition,
fair
value
of
stock-based
compensation,
and deferred income tax asset valuation allowances. The Company bases its
estimates
and
assumptions
on
current
facts,
historical
experience
and
various
other
factors
that
it
believes to be reasonable
under the circumstances,
the results of which
form the basis
for making
judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses
that
are
not
readily
apparent
from
other
sources.
The
actual
results
experienced
by
the
Company
may differ materially and adversely from the Company’s estimates. To the extent there are
material
differences
between
the
estimates
and
the
actual
results,
future
results
of
operations
will
be affected.
c)
Financial Statements
These
consolidated
financial
statements
have
been
prepared
in
the
opinion
of
management
to
reflect
all
adjustments,
which
include
only
normal
recurring
adjustments,
necessary
to
present
fairly
the
Company’s financial position, results of
operations
and
cash flows for
the periods
shown.
The
results
of
operations
for
such
periods
are
not
necessarily
indicative
of
the
results
expected for a full year or for any future period.
d)
Cash
The
Company considers all
highly liquid instruments
with
maturity of
three
months
or
less
at
the
time of issuance to be cash equivalents. As of June 30, 2016 and 2015, the Company had
no cash
equivalents.
e)
Accounts Receivable
The
Company
evaluates
the
collectability
of
accounts
receivable
based
on
the
age
of
receivable
balances
and
customer
credit-worthiness.
If
the
Company
determines
that
financial
conditions
of
its customers
have
deteriorated,
an allowance
for doubtful
accounts
may be
made
or the
accounts
receivable written off if all collection attempts have failed.
f) Prepaid Expenses
The
Company pays
for
some
services
in
advance
and
recognizes
these
expenses as
prepaid
at
the
balance
sheet
date.
If
certain
prepaid
expenses
extend
beyond
one-year,
those
are
classified
as
non-current assets.
g)
Revenue Recognition
The
Company
recognizes
revenue
from
licensing
and
professional
fees.
Revenue
will
be
recognized only when
the price is fixed and determinable, persuasive evidence of an arrangement
exists, the service has been provided, and collectability is reasonably assured.
h)
Property and Equipment
Property
and equipment is accounted for at cost less accumulated depreciation and includes
computer equipment and office furniture. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets, which are five years.
i) Research and Development Costs
The
Company
incurs
research
and
development
costs
during
the
course
of
its
operations.
The
costs
are
expensed
except
in
cases
where
development
costs
meet
certain
identifiable
criteria
for
capitalization. Capitalized development costs are
amortized over the life of the related
commercial production.
8
j) Stock-Based Compensation
The
Company
records
stock-based
compensation
in
accordance
with
ASC
718,
Compensation
–
Stock
Compensation,
which
requires
the
measurement
and
recognition
of
compensation
expense
based on estimated fair values for all share-based awards made to employees and directors,
including stock options.
ASC
718 requires companies to estimate the
fair
value of share-based awards on the date of grant
using
an
option-pricing
model.
The
Company uses
the
Black-Scholes
option-pricing
model
as
its
method of determining fair value. This model is affected by the Company’s
stock price
as well as
assumptions regarding a number of subjective variables.
These
subjective
variables
include,
but
are
not
limited
to
the
Company’s
expected
stock
price
volatility
over
the
term
of
the
awards,
and
actual
and
projected
employee
stock
option
exercise
behaviors.
The
value
of
the
portion
of
the
award
that
is
ultimately expected
to
vest
is
recognized
as
an
expense
in
the
consolidated
statement
of
comprehensive
loss
over
the
requisite
service
period.
Options
granted to consultants are
valued at
the fair
value of
the equity instruments issued,
or
the
fair value of the services received, whichever is more reliably measureable.
k)
Income Taxes
Deferred
income
taxes
are
determined
using
the
liability
method
for
the
temporary
differences
between the financial reporting basis and income tax basis of the Company’s assets and liabilities.
Deferred
income
taxes
are
measured
based
on
the
tax
rates
expected
to
be
in
effect
when
the
temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities
are
recognized
based
on
anticipated
future
tax
consequences
attributable
to
differences
between
financial statement carrying amounts of assets and liabilities and their respective tax bases.
The
Company’s policy
is
to
recognize
penalties and
interest, if
any, related
to
uncertain
tax
positions as general and administrative expense.
l) Basic and Diluted Net Income (Loss) per Share
The
Company
computes
net
income
(loss)
per
share
in
accordance
with
ASC
260,
Earnings
per
Share. ASC
260 requires
presentation of basic and diluted earnings
per share
(“EPS”)
on the face
of the income statement. Basic EPS is computed by dividing net loss available to common
shareholders
and
preferred
shareholders
(numerator)
by
the
weighted
average
number
of
shares
outstanding
(denominator)
during
the
period.
Diluted
EPS
gives
effect
to
all
dilutive
potential
common
shares
outstanding
during
the
period
using
the
treasury
stock
method
and
convertible
preferred stock
using
the if-converted
method.
In
computing
diluted EPS,
the
average
stock
price
for
the
period
is
used
in
determining
the
number
of
shares
assumed
to
be
purchased
from
the
exercise
of
stock
options
or
warrants.
Diluted
EPS
excludes
all
dilutive
potential
shares
if
their
effect
is
anti-dilutive.
Due
to
the
continued
losses
in
the
Company,
all
convertible
instruments,
stock
options,
and
warrants
are
considered
anti-dilutive.
Consequently,
as
of
June
30,
2016,
the
Company has nil (2015 – nil) potentially dilutive shares.
m)
Comprehensive Loss
ASC
220,
Comprehensive
Income
,
establishes
standards
for
the
reporting
and
display
of
comprehensive loss and its components in the financial statements.
9
n)
Financial Instruments / Concentration
Financial
instruments
consist
principally of
cash,
accounts
receivable,
accounts
payable,
deposits
due to customers, promissory note, shareholder loans, and due to related parties. Pursuant to ASC
820,
Fair
Value
Measurements
and
Disclosures
and
ASC
825,
Financial
Instruments
the
fair
value
of
cash
is
determined
based
on
“Level
1”
inputs,
which
consist
of
quoted
prices
in
active
markets for identical assets.
The recorded values of all other financial instruments approximate their current fair values
because
of
their
nature
and
respective
relatively short
maturity dates
and
current
market
rates
for
similar instruments. The Company is
exposed
to credit
risk through
its
cash
and
accounts
receivable,
but
mitigates
this
risk
by
keeping
deposits
at
major
financial
institutions
and
advancing
credit
only
to
bona
fide
creditworthy
entities.
The
maximum
amount
of
credit
risk
is
equal to the carrying amount.
o)
Financial Instruments
Pursuant
to
ASC
820,
Fair
Value
Measurements and Disclosures
,
an entity is
required
to
maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring
fair
value.
ASC
820
establishes
a
fair
value
hierarchy
based
on
the
level
of
independent,
objective
evidence
surrounding
the
inputs
used
to
measure
fair
value.
A
financial
instrument’s
categorization
within the
fair
value hierarchy is
based
upon the lowest level
of input
that
is
significant
to
the
fair
value
measurement.
ASC
820
prioritizes
the
inputs
into
three
levels
that may be used to measure fair value:
Level 1
Level
1
applies
to
assets
or
liabilities
for
which
there
are
quoted
prices
in
active
markets
for
identical assets or liabilities.
Level 2
Level
2
applies
to
assets
or
liabilities
for
which
there
are
inputs
other
than
quoted
prices
that
are
observable
for
the
asset
or
liability
such
as
quoted
prices
for
similar
assets
or
liabilities
in
active
markets;
quoted
prices
for
identical
assets
or
liabilities
in
markets
with
insufficient
volume
or
infrequent
transactions
(less
active
markets);
or
model-derived
valuations
in
which
significant
inputs
are
observable
or
can
be
derived
principally
from,
or
corroborated
by,
observable
market
data.
Level 3
Level
3
applies
to
assets
or
liabilities
for
which
there
are
unobservable
inputs
to
the
valuation
methodology that are significant to the measurement of the fair value of the assets or liabilities.
The
Company’s
financial
instruments
consist
principally
of
cash,
amounts
receivable,
accounts
payable
and
accrued
liabilities,
and
amounts
due
to
related
parties.
Pursuant
to
ASC
820,
the
fair
value
of
our
cash
is
determined
based
on
“Level
1”
inputs,
which
consist
of
quoted
prices
in
active markets for identical assets. We believe that the recorded values of all of our other
financial
instruments
approximate
their
current
fair
values
because
of
their
nature
and
respective
maturity dates or durations.
10
p)
Embedded Conversion Features
The
Company
evaluates
embedded
conversion
features
within
convertible
debt
under
ASC
815
Derivatives
and
Hedging
to
determine
whether
the
embedded
conversion
feature(s)
should
be
bifurcated from the host instrument and accounted for as a derivative at fair value with changes in
fair
value
recorded
in
earnings.
If
the
conversion
feature
does
not
require
derivative
treatment
under
ASC
815, the
instrument
is evaluated under
ASC
470-20,
Debt
with Conversion
and Other
Options
for consideration of any beneficial conversion feature.
q)
Derivative Financial Instruments
The
Company
does
not
use
derivative
instruments
to
hedge
exposures
to
cash
flow,
market,
or
foreign
currency
risks.
The
Company
evaluates
all
of
it
financial
instruments,
including
stock
purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives.
For
derivative
financial
instruments
that
are
accounted
for
as
liabilities,
the
derivative
instrument
is
initially
recorded
at
its
fair
value
and
is
then
re-valued
at
each
reporting
date,
with
changes
in
the fair value reported as charges or credits to income. For option-based simple derivative
financial
instruments,
the
Company
uses
the
Black-Scholes
option-pricing
model
to
value
the
derivative
instruments
at
inception
and
subsequent
valuation
dates.
The
classification
of
derivative
instruments,
including
whether
such
instruments
should
be
recorded
as
liabilities
or
as
equity, is re-assessed at the end of each reporting period.
r) Beneficial Conversion Feature
For conventional convertible debt where the rate of conversion is below market value, the
Company records a Beneficial Conversion Feature (the "BCF") and related debt discount.
When
the
Company
records
a
BCF,
the
intrinsic
value
method
of
the
BCF
is
recorded
as
a
debt
discount
against
the
face
amount
of
the
respective
debt
instrument
(offset
to
additional
paid
in
capital)
and
amortized to
interest
expense
over the
life
of
the
debt.
The Company has
determined
that there is no BCF with its convertible debt.
s) Debt Issue Costs and Debt Discount
The
Company may record
debt
issue costs
and/or
debt
discounts
in connection
with raising
funds
through
the
issuance
of
debt.
These
costs
may
be
paid
in
the
form
of
cash,
or
equity
(such
as
warrants).
These
costs
are
amortized
to
interest
expense
over
the
life
of
the
debt.
If
a
conversion
of
the
underlying
debt
occurs,
a
proportionate
share
of
the
unamortized
amounts
is
immediately
expensed.
11
t) Derivative Financial Instruments
The
Company
does
not
use
derivative
instruments
to
hedge
exposures
to
cash
flow,
market,
or
foreign
currency
risks.
The
Company
evaluates
all
of
it
financial
instruments,
including
stock
purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives.
For
derivative
financial
instruments
that
are
accounted
for
as
liabilities,
the
derivative
instrument
is
initially
recorded
at
its
fair
value
and
is
then
re-valued
at
each
reporting
date,
with
changes
in
the fair value reported as charges or credits to income. For option-based simple derivative
financial
instruments,
the
Company
uses
the
Black-Scholes
option-pricing
model
to
value
the
derivative
instruments
at
inception
and
subsequent
valuation
dates.
The
classification
of
derivative
instruments,
including
whether
such
instruments
should
be
recorded
as
liabilities
or
as
equity, is re-assessed at the end of each reporting period.
u)
Beneficial Conversion Feature
For conventional convertible debt where the rate of conversion is below market value, the
Company records a Beneficial Conversion Feature (the "BCF") and related debt discount.
When
the
Company
records
a
BCF,
the
intrinsic
value
method
of
the
BCF
is
recorded
as
a
debt
discount
against
the
face
amount
of
the
respective
debt
instrument
(offset
to
additional
paid
in
capital)
and
amortized to
interest
expense
over the
life
of
the
debt.
The Company has
determined
that there is no BCF with its convertible debt.
v)
Debt Issue Costs and Debt Discount
The
Company may record
debt
issue costs
and/or
debt
discounts
in connection
with raising
funds
through
the
issuance
of
debt.
These
costs
may
be
paid
in
the
form
of
cash,
or
equity
(such
as
warrants).
These
costs
are
amortized
to
interest
expense
over
the
life
of
the
debt.
If
a
conversion
of
the
underlying
debt
occurs,
a
proportionate
share
of
the
unamortized
amounts
is
immediately
expensed.
w)
Foreign Currency
The
functional
and
reporting
currency
of
the
Company
and
its
subsidiary,
Mobetize
USA
Inc.
is
the
United
States
Dollar. The
functional
currency
of the
Company’s
international subsidiary,
Mobetize
Canada
Inc.,
is
the
local
currency,
which
is
Canadian
dollar.
The
Company
translates
the
financial
statements
of
this
subsidiary
to
U.S.
dollars
in
accordance
with
ASC
740,
Foreign
Currency
Translation
Matters
using
month-end
rates
of
exchange
for
assets
and
liabilities,
and
average rates for the annual period are derived from daily spot rates for revenues and expenses.
Translation gains and losses are recorded in accumulated other comprehensive income as a
component of
stockholders’ equity. The
Company
has not, to the date of these
consolidated
financial
statements,
entered
into
derivative
instruments
to
offset
the
impact
of
foreign
currency
fluctuations.
12
x)
Recently Adopted Accounting Standards
In June 2014, ASU guidance was issued to resolve the diversity of practice relating to the
accounting
for
stock
based
performance
awards
that
the
performance
target
could
be
achieved
after the employee
completes the required service period. The update is effective prospectively or
retrospectively
for
annual
reporting
periods
beginning
after
December
15,
2015.
The
Company
adopted
this
ASU
on
April
1,
2016
prospectively. The
adoption
of
this
ASU
does
not
have
a
material effect on the Company’s consolidated financial statements.
In
January 2015,
an
ASU
was
issued
to
simplify the
income
statement
presentation
requirements
in
Subtopic
225-20
by
eliminating
the
concept
of
extraordinary
items. Extraordinary
items
are
events
and
transactions
that
are
distinguished
by
their
unusual
nature
and
by
the
infrequency
of
their occurrence. Eliminating
the extraordinary
classification simplifies
income statement
presentation
by
altogether
removing
the
concept
of
extraordinary
items
from
consideration.
This
ASU is effective for annual periods beginning after December 15, 2015, including interim periods
within those annual periods. An entity may apply this ASU prospectively or retrospectively to all
prior
periods
presented
in
the
financial
statements.
Early
adoption
is
permitted. The
Company
adopted
this
ASU
on
April
1,
2016
prospectively. The
adoption
of
this
ASU
does
not
have
a
material effect on the Company’s consolidated financial statements.
y)
Recent Accounting Pronouncements
In
May
2014,
ASU
guidance
was
issued
related
to
revenue
from
contracts
with
customers.
The
new standard
provides a
five-step
approach
to be
applied to
all contracts
with
customers and also
requires
expanded
disclosures
about
revenue
recognition.
The
ASU
is
effective
for
annual
reporting
periods
beginning
after
December
15, 2017,
including
interim
periods
and
is
to
be
retrospectively
applied.
Early
application
is
permitted
only
as
of
annual
reporting
periods
beginning
after
December
15,
2016,
including
interim
reporting
periods
within
that
reporting
period.
The
Company
is
currently
evaluating
this
guidance
and
the
impact
it
will
have
on
its
consolidated financial statements.
In
November
2015,
an
ASU
was
issued
to
simplify
the
presentation
of
deferred
income
taxes.
The
amendments
in
this
ASU
require
that
deferred
tax
liabilities
and
assets
be
classified
as
non-
current
in
a
classified
balance
sheet
as
compared
to
the
current
requirements
to
separate
deferred
tax
liabilities
and
assets
into
current
and
non-current
amounts.
This
ASU
is
effective
for
annual
periods
beginning
after
December
15,
2016,
including
interim
periods
within
those
annual
periods.
Earlier
application
is
permitted. This
ASU
may
be
applied
either
prospectively
to
all
deferred
tax
liabilities
and
assets
or
retrospectively
to
all
periods
presented.
The
Company
is
currently evaluating this guidance and the impact it will have on its consolidated financial
statements.
13
In
February 2016,
Topic
842,
Leases
was
issued
to
replace
the
leases
requirements
in
Topic
840,
Leases.
The
main
difference
between
previous
GAAP
and
Topic
842
is
the
recognition
of
lease
assets
and lease liabilities by lessees
for those leases
classified as operating leases under previous
GAAP.
A
lessee
should
recognize
in
the
balance
sheet
a
liability
to
make
lease
payments
(the
lease
liability)
and
a
right-of-use
asset
representing
its
right
to
use
the
underlying
asset
for
the
lease term. For leases with a term of 12 months or less, a lessee is permitted to make an
accounting
policy
election
by
class
of
underlying
asset
not
to
recognize
lease
assets
and
lease
liabilities. If a lessee makes this election, it should recognize lease expense for such leases
generally
on
a
straight-line
basis
over
the
lease
term.
The
accounting
applied
by
a
lessor
is
largely
unchanged
from
that
applied
under
previous
GAAP.
Topic
842
will
be
effective
for
annual
reporting
periods
beginning
after
December
15,
2018,
including
interim
periods
within
those
annual
periods
and
is
to
be
retrospectively
applied. Earlier
application
is
permitted. The
Company
is
currently
evaluating
this
guidance
and
the
impact
it
will
have
on
its
consolidated
financial statements.
In
March
2016,
an
ASU
was
issued
to
reduce
complexity
in
the
accounting
for
employee
share-
based
payment
transactions. One
of
the
simplifications
relates
to
forfeitures
of
awards. Under
current GAAP,
an entity estimates the
number
of
awards
for
which
the
requisite
service
period
is
expected
to
be
rendered
and
base
the
accruals
of
compensation
cost
on
the
estimated
number
of
awards
that
will
vest.
This
ASU
permits
an
entity
to
make
an
entity-wide
accounting
policy
election either to estimate the number of forfeitures expected to occur or to account for forfeitures
in
compensation
cost
when
they occur.
This
ASU
is
effective
for
annual
periods
beginning
after
December
15,
2016, including
interim
periods
within
those
annual
periods.
Earlier
application is
permitted.
The
Company
is
currently
evaluating
this
guidance
and
the
impact
it
will
have
on
its
consolidated financial statements.
3. Property and Equipment
Property and equipment, net consisted of the following:
June 30,
March 31,
2016
2016
Computer equipment
$ 14,743
$ 14,787
Furniture
1,200
1,204
Total
15,943
15,991
Less: Accumulated amortization
4,948
4,163
Property and equipment, net
$ 10,995
$ 11,828
During the three months ended June 30, 2016, property and equipment decreased by $35 as a result of
foreign currency translation adjustments.
14
4.
Related Party Transactions
a)
During
the
three
month
period
ended
June
30,
2016,
the
Company
incurred
$22,500
(2015
-
$30,000)
of
management
fees,
$27,154
(2015
-
$631)
of
development
and
engineering
fees,
and
$2,233
(2015
-
$1,434)
of
general
and
administrative
expenses
to
companies
controlled
by
the
Chief Executive Officer (“CEO”) of the Company.
b)
During the three month period ended June 30, 2016, the Company received an advance of
$25,000 (2015 - $nil) from a company controlled by the CEO.
c)
During the
three
month
period
ended
June
30,
2016,
the
Company incurred
$450
(2015
-
$nil)
of
general
and
administrative
expenses
to
the
former Chief
Financial
Officer
(“Former
CFO),
also a
significant shareholder of the Company.
d)
As at June 30, 2016, the Company owes to companies controlled by the CEO $42,033 (March 31,
2016
-
$41,533)
in
shareholder
loans,
$52,500
(March
31,
2016
-
$30,000)
in
management
fees,
$71,857
(March
31, 2016
-
$45,749)
in
amounts
payable for
services
received
and
expenses
incurred
by
the
Company,
and
$68,492
(March
31,
2016
-
$44,759)
in
two
promissory
notes
(described
below)
which
comprise
$75,000
(March
31,
2016
-
$50,000)
principal
less
$6,508
(March 31,
2016
- $5,241) in
prepaid interest.
The
first
promissory note
has a
twelve
month term
with $50,000 (March 31, 2016 - $50,000) principal due on maturity (February 14, 2017) and 12%
annual
interest
rate
with
$6,000
(March
31,
2016
-
$6,000)
interest
prepaid
to
the
holder.
The
second
promissory note
has
a
twelve
month
term
with
$25,000
(March
31,
2016
-
$nil)
principal
due
on
maturity (June
2,
2017)
and
12%
annual
interest
rate
with
$3,000
(March
31,
2016
-
$nil)
interest prepaid to the holder.
e)
As
at
June
30,
2016,
the
Company
has
recorded
an
obligation
of
$17,040
(March
31,
2016
-
$5,943)
to
the
Former
CFO
or
a
company
controlled
by
the
Former
CFO
in
shareholder
loan.
Amount owed to the Former CFO is unsecured and due on demand.
15
5.
Common Stock and Preferred Stock
a)
Shares for Services:
During
the
three
month
period
ended
June
30,
2016
and
the
twelve
month
period
ended
March
31, 2016,
the Company entered into
various consulting
and advisory agreements with
consultants
and
advisors
to
provide
services
in
exchange
for
shares
and/or
cash,
as
applicable.
Shares
issued
for
services
have
been
valued
at
the
service
value
amount
and
exchanged
to
common
shares
based on either the quoted
closing price
of
the Company’s
common
stock on
the date
of
settlement,
or
where
issuance
is
delayed,
at
the
average
market
price
of
the
Company’s
stock
for
the respective period of service, as applicable.
During
the
three
month
period
ended
June
30,
2016,
the
Company
incurred
$30,000
(twelve
month
period
ended
March
31,
2016
-
$18,181)
in
shares
for
services,
and
settled
$nil
(twelve
month
period
ended
March
31,
2016
-
$32,484)
of
services
into
common
shares
with
nil
(twelve
month period ended March 31, 2016 - 54,727) common shares issued at $0.001 per share and $nil
(twelve
month
period
ended
March
31,
2016
-
$32,429)
recorded
to
additional
paid-in
capital
as
follows:
§
On March
31,
2016, the
Company issued
54,727
shares
at
$0.001
per
share
with $32,429
recorded
to
additional
paid-in
capital
to
settle
$32,484
of
services
payable
in
common
shares.
§
As at June 30, 2016, $30,000 (March 31, 2016 - $nil) was
included in share subscriptions
payable for consulting services provided.
b)
Private Placements:
During
the
three
month
period
ended
June
30,
2016
and
the
twelve
month
period
ended
March
31,
2016,
the
Company
conducted
four
private
placements
of
investment
units
comprising
common shares and warrants, as follows:
§
On
September
1,
2015,
the
Company
closed
a
private
placement
under
which
it
sold
2,724,668 investment units for $0.25 per unit for gross proceeds of $681,167, which were
exclusively offered
to subscribers
of
previous
$0.75
private
placements. Each
investment
unit
consists
of
one
common
share
of
the
Company’s
stock
and
one
half-warrant.
The
1,362,332
warrants
are
exercisable
at
$1.00
per
share
and
are
valid
for
three
years
from
the
date
of
issue.
$8,750
cash
financing
fees
and
17,500
financing
warrants
with
a
value
of $3,372 are payable with this private placement.
§
On September 1, 2015, the Company closed a private placement under which it sold
161,481 investment units for $0.50 per unit for gross proceeds of $80,739. Each
investment unit consists of one common share of the Company’s stock and one half-
warrant. The 80,740 warrants are exercisable at $1.00 per share and are valid for three
years from the date of issue. Neither financing fees nor financing warrants were payable
with this private placement.
16
c)
Issuance of Shares on Exercise of Warrants, Options, and Settlement of Amounts:
§
On
June
10,
2015,
the
Company
issued
184,500
shares
at
a
price
of
$0.50
per
share
for
proceeds of
$92,250 upon the exercise of warrants.
$184
was recorded to common shares
at
the
par
value
of
$0.001
per
share
and
$92,066
was
recorded
to
additional
paid-in
capital.
§
On
August
15,
2015,
the
Company
issued
5,000
shares
at
a
price
of
$0.50
per
share
for
proceeds
of
$2,500
upon
the
exercise
of
warrants.
$5
was
recorded
to
common
shares
at
the par value of $0.001 per share and $2,495 was recorded to additional paid-in capital.
d)
Authorization and Issuance of Series A Preferred Shares:
During
the
year
ended
March
31,
2016,
the
Company
authorized
the
issuance
of
250,000,000
shares
of
preferred
stock
with
a
par
value
of
$0.001
per
share
and
designated
10,000,000
of
the
preferred stock as Series A preferred shares (“Series A Preferred Shares”). The Series A Preferred
Shares
have
the
same
rights
and
privileges
as
the
common
shares,
with
the
exception
that
the
Series
A
Preferred
Share
holder
has
10
votes
per
Series
A
Preferred
Share
versus
one
vote
per
common
share
and
does
not
have
the
right
to
sell
the
shares
for
a
period
of
2
years
from
the
date
of issue.
On
February 4,
2016,
the
Company converted
4,565,000
common
shares
held
by
the
CEO
of the
Company into 4,565,000 Series A Preferred Shares.
As
at
June
30,
2016
4,565,000
(March
31,
2016
-
4,565,000)
Series
A
Preferred
Shares
were
issued and outstanding.
e)
Authorization and Issuance of Series B Preferred Shares:
During
the
three
months
ended
June
30,
2016,
the
Company
designated
25,000,000
shares
of
the
authorized
preferred
stock
as
Series
B
preferred
shares
(“Series
B
Preferred
Shares”).
The
Series
B
Preferred Shares
have
the
same rights
and
privileges
as the
common
shares,
with the exception
that
the
Series
B
Preferred
Shares
have
an
anti-dilution
provision
and
the
Series
B
Preferred
Share holder does not have
the right to convert Series B Preferred Shares into common
shares
for
a period of 2 years from the date of issue.
On
June
2,
2016,
the
Company
converted
4,081,481
common
shares
held
by
a
company
controlled by the CEO into 4,081,481 Series B Preferred Shares, 300,000 common shares held by
the
Company’s
Chairman
and
Director
into
300,000
Series
B
Preferred
Shares,
and
1,039,167
common shares held by the Company’s Director into 1,039,167 Series B Preferred Shares.
As
at June 30, 2016,
5,420,648 (March 31,
2016
– nil)
Series B
Preferred Shares were
issued
and
outstanding.
17
f) Convertible Debenture:
In
March
2016,
the
Company
closed
a
convertible
debenture
financing
for
gross
proceeds
of
$275,000 (the “Convertible Debentures”), net of $30,000 of prepaid interest, noting that $3,000 of
prepaid
interest
was
paid
by
the
Company
to
one
Convertible
Debenture
holder
after
year
end.
The
Convertible
Debentures
have
a
12
month
term,
12%
annual
interest
rate,
pay
the
holder
12
months of prepaid interest on issuance,
and have
a
conversion feature
exercisable
at
the option of
the
holder
(the
“Conversion
Feature”). The Conversion
Feature
enables
the
holder
to
convert
any
portion
of
their
outstanding
Convertible
Debenture
principal
balance
into
common
shares
at
a
variable
and
discounted
conversion
price
(“Conversion
Price”
-
see
below)
after
180
days
from
issue
date,
but
no
later
than
the
maturity
date.
The
Conversion
Price
is
calculated
as
a
50%
discount
to the
average
of
the
three lowest
closing
market
prices
over
any ten
day trading period,
ending
one
day
prior
to
a
notice
of
conversion
provided
by
the
holder.
The
Conversion
Feature
represents
an
embedded
contingent
redemption
feature
and
is
accounted
for
as
a
derivative.
The
fair
value
of
the
contingent
redemption
feature
is
immaterial
and
therefore
not
recognized
at
inception, at March 31, 2016, and at June 30, 2016.
18
6.
Share Purchase Warrants
The following table summarizes the continuity of share purchase warrants:
Weighted average
Number of warrants
exercise price (US$)
Balance, March 31, 2015
1,581,084
0.90
Exercised, June 10, 2015
(184,500)
0.50
Exercised, August 15, 2015
(5,000)
0.50
Issued, July 15, 2015
94,750
1.00
Issued, September 1, 2015
1,460,572
1.00
Expired, September 2, 2015
(310,500)
0.50
Balance, March 31, 2016
2,636,406
1.04
Balance, June 30, 2016
2,636,406
1.04
a)
On
July
15,
2015,
94,750
warrants
were
issued
with
an
exercise
price
of
$1.00
and
a
three
year
term ending September 1, 2018 to holders of the September 3, 2013 warrants who had exercised a
total
of
189,500
warrants
during
the
six
months
ended
September
30,
2015
prior
to
the
expiry
date
of
September
2,
2015.
These
warrant
holders
each
received
a
half
warrant
for
each
full
warrant
they
exercised.
These
warrants
were
valued
at
$18,255
using
the
Black
Scholes
method
criteria as below.
b)
On
September
1,
2015,
1,362,332
warrants
were
issued
with
an
exercise
price
of
$1.00
and
a
three
year term ending September 1, 2018 to the parties
participating in the
$0.25 private
placement
for
common
shares
(“$0.25
PP”)
in
the
quarter.
Each
subscriber
to
the
private
placement
received
a
half
warrant
for
each
common
share
they
subscribed
for.
These
warrants
were valued at $262,470 using the Black Scholes method criteria as below.
c)
On
September
1,
2015,
80,740
warrants
were
issued
with
an
exercise
price
of
$1.00
and
a
three
year term ending September
1, 2018 to the parties participating in the $0.50 private
placement for
common
shares
(“$0.50
PP”)
in
the
quarter.
Each
subscriber
to
the
private
placement
received
a
half
warrant
for
each
common
share
they
subscribed
for.
These
warrants
were
valued
at
$15,566
using the Black Scholes method criteria as below.
d)
On September 1, 2015, 17,500 finder’s warrants were issued with an exercise price of $1.00 and a
three
year
term ending September
1, 2018 to an arms-length third
party assisting in the $0.25 PP.
These warrants were valued at $3,372 using the Black Scholes method criteria as below.
Each
of
the
warrant
issuances
above
were
valued
using
the
Black
Scholes
method,
which
included
the dividend yield as nil, risk-free interest rate of 1.07%, expected volatility of 70.42%, and expected
term of 3 years.
As at June 30, 2016, the following share purchase warrants were outstanding:
Number of warrants
Exercise
outstanding
price (US$)
Expiry date
694,414
1.00
June 24, 2018
386,670
1.25
December 10, 2018
1,555,322
1.00
September 1, 2018
2,636,406
19
7. Share Options
The following table summarizes the continuity of share purchase options:
Weighted average
Number of options
exercise price (US$)
Balance, March 31, 2015
57,291
1.25
Issued in period
2,630,000
0.60
Expired in period
(36,000)
0.65
Cancelled in period
(270,029)
0.74
Balance, March 31, 2016
2,381,262
0.60
Expired in period
(40,129)
0.60
Cancelled in period
(30,400)
0.60
Balance, June 30, 2016
2,310,733
0.60
As at June 30, 2016, the following share purchase options were outstanding:
Number of options
Number of options
Exercise
outstanding
vested
price (US$)
Expiry date
2,310,733
1,417,233
0.60
September 30, 2020
On
August
10,
2015,
the
Company’s
directors
adopted
the
2015
Stock
Option
Plan
(“Stock
Option
Plan”)
which
permits
the
Company
to
issue
stock
options
for
up
to
3,000,000
common
shares
of
the
Company
to
directors,
officers,
employees
and
consultants
of
the
Company.
The
3,000,000
shares
allocation was approximately 10% of the issued and outstanding shares as of August 10, 2015.
On
October
1,
2015,
2,630,000
stock
options
from
the
Stock
Option
Plan
were
issued
to
directors,
employees,
advisors
and
consultants
for
the
exercise
of
up
to
2,630,000
common
shares
with
a
$0.60
exercise
price,
a
5
year
life,
and
vesting
terms
ranging
from
immediate
to
32
months
depending,
generally, on the tenure of staff.
The
vested
options
are
measured
using
the
Black
Scholes
method,
which
included
the
dividend
yield
of nil, risk-free interest rate of 0.68%, expected volatility of 76.7%, and expected term of 5 years. As
at
March
31,
2016,
1,294,262, of the granted options were
vested, nil were exercised, 36,000 expired,
and 212,738 of the unvested options were cancelled leaving 1,087,000 options unvested.
As at June 30, 2016, 1,417,233 of the granted options were vested, nil were exercised, 40,129
expired, and 30,400 of the unvested options were cancelled leaving 893,500 options unvested.
During
the
three
months
ended
June
30,
2016
$72,858
(2015
-
$nil)
in
stock
based
compensation
expense was recorded.
20
8.
Reserves
The Company had the following Share Purchase Warrants and Share Options in Reserves:
Share Purchase
Warrants
Share Options
Total
(Note 7)
(Note 7)
Reserves
Balance - March 31, 2015
$
377,311 $
46,097
$
423,408
Sale of 161,481 shares at
$0.50/share (Note 7c)
15,556
-
15,556
Sale of 2,724,688 shares at
$0.25/share, net of $12,122
financing fee (Note 7b)
262,470
-
262,470
Valuation of financing warrants
(Note 7d)
3,372
-
3,372
Warrants issued on exercise of
expiring warrants (Note 7a)
18,255
-
18,255
Share options issued in the period
-
711,427
711,427
Balance – March 31, 2016
$
676,964 $
757,524
$
1,434,488
Share option compensation
incurred in the period
-
72,858
72,858
Balance – June 30, 2016
$
676,964 $
830,382
$
1,507,346
9. Concentration of Risk
During the
three
months
period ending
June
30,
2016, revenues
generated
were
$75,618
compared
to
revenues of $3,335 during the same period in 2015. Revenues are generated through
consulting
services provided by Mobetize to existing customers, payment processing, and licensing.
During
the
three
months
ended
June
30,
2016
the
Company had
revenues
from
five
customers
(2015
–
revenues
from
two
customers)
with
77%
(2015
–
nil)
of
revenues
generated
from
the
Company’s
largest customer.
10. Commitment and Contingencies
The
Company has
an
obligation
under
a
rental lease
for
its
operating
office.
As
of
June
30,
2016,
the
remaining
term
of
the
lease
is
three
months
with
monthly payments
of
$4,900.
The
Company’s
lease
includes a renewal option.
11. Supplemental Cash Flow Disclosures
US$
Quarter ended June 30,
2016
2015
SUPPLEMENTAL NONCASH
INFORMATION:
Shares issued for services
30,000
6,630
21
12. Segment Information
The
Company
has
currently
one
operating
segment
located
in
Canada.
Therefore,
there
is
a
single
reportable segment and operating unit structure. The Company’s chief operating decision maker
reviews
financial
information
presented
on
a
consolidated
basis
for
purposes
of
allocating
resources
and evaluating financial performance.
13. Subsequent Events
Subsequent
to
June
30,
2016,
the
Company
continues
to
seek
recovery
of
578,733
common
shares
and 101,726 share purchase warrants issued as an overpayment to the Former CFO of the Company in
consulting services and settlement of expenses and liabilities.
On July 12,
2016,
the Company issued a CAD
$25,000,
equivalent to USD
$19,231,
promissory note
to
the
Company’s
CEO.
The
note has
a 12
month term,
12%
annual
interest
rate, and
pays
the
holder
12 months of prepaid interest on issuance.
On
July
15,
2016,
the
Company
entered
into
Consulting
Agreement
with
the
company
controlled
by
the
Company’s
Chairman
pursuant
to
which
a
monthly
compensation
of
$1,000
is
to
be
paid
by
the
Company for consulting services provided.
On July 15, 2016, the Company entered into a Debt Settlement Agreement with the company
controlled by the Company’s Chairman pursuant to which the Company agreed to settle an amount of
$24,000 for services rendered by the Chairman in exchange for 1,300,000 Series B Preferred Shares.
On July 15, 2016, the Company entered into a Debt Settlement Agreement with the company
controlled
by
the
Company’s
CEO
pursuant
to
which
the
Company
agreed
to
settle
an
amount
of
$46,500, which included a
principal of $50,000 less prepaid interest of $2,500,
in outstanding
promissory note in exchange for 4,650,000 Series B Preferred Shares.
On July 22,
2016,
the Company issued
a $25,000
convertible
note, net
of
$3,000
prepaid
interest
to
a
Director of the Company.
The note
has
a 12 month term, 12% annual interest rate, pays
the holder 12
months
of
prepaid
interest
on
issuance,
and
has
a
Conversion
Feature
exercisable
at
the
option
of
the
holder. The Conversion Feature enables the holder to convert any portion of their outstanding
Convertible Debenture principal balance into common shares at a variable and discounted Conversion
Price
after
180
days
from
issue
date,
but
no
later
than
the
maturity
date.
The
Conversion
Price
is
calculated as a 50% discount to the average of the three lowest closing market prices over any ten day
trading period, ending one day prior to a notice of conversion provided by the holder.
On
July
26,
2016,
the
Company
adopted
Audit
Committee
Charter,
Business
Code
of
Conduct
and
Ethics,
Insider
Trading
Policy,
appointed
the
Company’s
Chairman
and
Director
as
members
of
the
Audit
Committee,
and
appointed
the
Company’s
Chief
Financial
Officer
as
the
Corporation’s
Compliance Officer.
22
ITEM 2.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
PRELIMINARY NOTE REGARDING FORWARD LOOKING STATEMENTS
The following discussion should be read in conjunction with our financial statements, which are included
elsewhere in this Form 10-Q (“Report”). This Report contains forward-looking statements which relate to
future events or our future financial performance. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown risks, uncertainties,
and other factors that may cause our or our industry’s actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
In evaluating these statements, you should consider various factors which may cause our actual results to
differ materially from any forward-looking statements. Although we believe that the predictions reflected
in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. Therefore, actual results may differ materially and adversely from those
expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.
We are considered a development stage company. Our auditors have issued a going concern opinion on
the financial statements for the year ended March 31, 2016. The continuation of Mobetize as a going
concern is dependent upon the continued financial support from its management, and its ability to identify
future investment opportunities and obtain the necessary debt or equity financing, cutting operating costs,
launching a viable product, and generating profitable operations from our future operations.
Mobetize’s plan of operation for the coming year is to finalize Version 2.2 of our Fintech suite, complete
the development and qualification of products in our pipeline, and increase sales of our existing products.
Meanwhile, we will continue internal research and development efforts and collaborate with development
partners to ensure the continuity of our product pipeline focused on the convergence of telecom and
financial services.
RESULTS OF OPERATION
Operating Revenues, Operating Expenses and Net Loss
US$
Three Months Ended
June 30,
2016
2015
Operating revenues
$
75,618
$
3,335
Operating expenses
483,307
363,000
Net loss from operations
(407,689)
(359,665)
Net loss
(407,689)
(359,665)
During the three month period ending June 30, 2016, revenues generated were $75,618 compared to
revenues of $3,335 during the same period in 2015. Revenues are currently generated through licensing,
consulting, and payment processing services provided by Mobetize to our existing Customers.
23
Our
operating
expenses
for
the
three
months
ended
June
30,
2016
and
2015
are
outlined
in
the
following
table:
US$
Three Months Ended
June 30,
2016
2015
Depreciation
$
805
$
776
General and administrative
86,878
64,800
General and administrative - related party
2,683
1,434
Investor relations and promotion
34,515
-
Listing fees
4,052
12,235
Management salaries and consulting fees
21,000
110,366
Management salaries and consulting fees - related
party
37,210
30,000
Professional fees
84,703
27,267
Research and development
102,582
111,566
Research and development - related party
27,154
631
Sales and marketing
8,867
3,925
Stock based compensation expense
72,858
-
Total
483,307
363,000
During
the
three
months
ended
June
30,
2016
operating
costs
were
$483,307
compared
with
$363,000
during
the
three
months
ended
June
30,
2015.
Compared
to
the
three
month
period
ended
June
30,
2015,
general
and
administrative
costs
increased
by
$23,327,
investor
relations
and
promotion
increased
by
$34,515,
professional
fees
increased
by
$57,436,
research
and
development
increased
by
$17,539,
and
stock based compensation expense increased by $72,858. The increases were offset by a $82,156 decrease
in management salaries and consulting fees.
During
the
three
months
ended
June
30,
2016,
the
Company
recorded
a
net
loss
of
$407,689
compared
with
a
net
loss
of $359,665
for
the three
months
ended June 30,
2015. The
$48,024
increase in net
loss
is
mostly due to a $72,858 increase in stock based compensation expense and a
$34,515 increase in investor
relations
and promotion expense, partially
offset by
a
$82,156
decrease
in management salaries and
consulting
fees
during
the
three
months
ended
June
30,
2016,
compared
to
the
three
months
ended
June
30, 2015.
Liquidity and Capital Resources
US $
June 30, 2016
March 31, 2016
Current assets
$
150,189
$
318,827
Current liabilities
665,106
541,185
Working capital deficiency
$
514,917 $
222,358
As
at
June
30,
2016,
our
company’s
cash
balance
was
$19,075
and total
assets
were
$196,270,
compared
to
cash
balance
of
$210,341
and
total
assets
of
$330,655
as
at
March
31,
2016.
The
decrease
in
the
cash
balance is attributed to the ongoing use of cash in operating activities.
As
at
June
30,
2016,
our
company
had
total
liabilities
of
$724,179
compared
with
total
liabilities
of
$588,661
as
at
March
31,
2016.
The
increase
in
total
liabilities
is
attributed
to
increases
in
accounts
payable and amounts due to related parties.
As
at
June
30,
2016,
our
company
had
working
capital
deficiency
of
$514,917
compared
with
working
capital
deficiency of $222,358
at
March 31,
2016
with the
increase
in working
capital
deficiency
attributed to the ongoing use of cash in operating activities.
24
Cash Flows
US$
Three Months Ended
June 30,
2016
2015
Cash flows used in operating activities
$
(216,136)
$
(332,681)
Cash flows used in investing activities
-
(1,742)
Cash flows provided by financing activities
25,000
173,356
Effect of Exchange rate changes on cash
(130)
1,377
Net Change in Cash During Period
$
(191,266)
$
(159,690)
Cash flow used in Operating Activities
During the three months ended June 30, 2016, our company used $216,136 of cash for operating activities
compared
to
$332,681
of cash
for
operating
activities during the
three
months
ended
June
30,
2015.
The
decrease
in
the
use
of
cash
for
operating
activities
is
mostly
due
to
increase
in
accounts
payable
and
amounts due to related parties.
Cash flow used in Investing Activities
During
the
three
months
ended
June
30,
2016
our
company
did
not
use
any
cash
in
investing
activities
compared
to
$1,742
cash
used
to
purchase
computer
equipment
during
the
three
months
ended
June
30,
2015.
Cash flow from Financing Activities
During the three months ended June
30,
2016,
our
company received $25,000 of proceeds
from financing
activities
in
return
for
the
issuance
of
promissory
note
to
the
Company’s
CEO.
During
the
three
months
ended
June
30,
2015,
our
company
received
$173,356
in
financing
proceeds,
which
consisted
of
the
exercise
of
warrant
shares
issued
in
September
2013
for
$92,250,
an
advance
of
$40,085
from
the
CEO,
and an advance of $41,021 from the Former CFO during the three months ended June 30, 2015.
SUBSEQUENT DEVELOPMENTS
Subsequent
to
June
30,
2016,
the
Company
continues
to
seek
recovery
of
578,733
common
shares
and
101,726 share purchase warrants issued as an overpayment to the Former CFO of the Company
in
consulting services and settlement of expenses and liabilities.
On
July
12,
2016,
the
Company
issued
a
CAD
$25,000,
equivalent
to
USD
$19,231,
promissory
note
to
the
Company’s
CEO.
The
note
has
a
12
month
term,
12%
annual
interest
rate,
and
pays
the
holder
12
months of prepaid interest on issuance.
On
July
15,
2016,
the
Company
entered
into
Consulting
Agreement
with
the
company
controlled
by
the
Company’s Chairman pursuant to which a monthly compensation of $1,000 is to be paid by the Company
for consulting services provided.
On
July
15,
2016,
the
Company
entered
into
a
Debt
Settlement
Agreement
with
the
company
controlled
by
the
Company’s
Chairman
pursuant
to
which
the
Company
agreed
to
settle
an
amount
of
$24,000
for
services rendered by the Chairman in exchange for 1,300,000 Series B Preferred Shares.
On July 15, 2016, the Company entered into a Debt Settlement Agreement with the company controlled
by the Company’s CEO pursuant to which the Company agreed to settle an amount of $46,500, which
included a principal of $50,000 less prepaid interest of $3,500, in outstanding promissory note in
exchange for 4,650,000 Series B Preferred Shares.
25
On July 22, 2016, the Company issued a $25,000 convertible note, net of $3,000 prepaid interest to a
Director of the Company. The note has a 12 month term, 12% annual interest rate, pays the holder 12
months of prepaid interest on issuance, and has a Conversion Feature exercisable at the option of the
holder. The Conversion Feature enables the holder to convert any portion of their outstanding Convertible
Debenture principal balance into common shares at a variable and discounted Conversion Price after 180
days from issue date, but no later than the maturity date. The Conversion Price is calculated as a 50%
discount to the average of the three lowest closing market prices over any ten day trading period, ending
one day prior to a notice of conversion provided by the holder.
On July 26, 2016, the Company adopted Audit Committee Charter, Business Code of Conduct and Ethics,
Insider Trading Policy, appointed the Company’s Chairman and Director as members of the Audit
Committee, and appointed the Company’s Chief Financial Officer as the Corporation’s Compliance
Officer.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of
increased sales during upcoming quarterly periods, our existing funds, further issuances of securities in
the form of debt or equity. Our working capital requirements are expected to increase in line with the
growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to
be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank
financing arrangements. Generally, we have financed operations to date through the proceeds of the
private placement of equity, advances from directors, and issuance of Promissory Notes as well as
Convertible Debentures. In connection with our business plan, management anticipates additional
increases in operating expenses and capital expenditures relating to: (i) developmental expenses
associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with
further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional
capital and generate revenues to meet long-term operating requirements. We currently have no
agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of
credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability
to raise funds for the above purposes will have a severe negative impact on our ability to remain a viable
company. Additional issuances of equity or convertible debt securities will result in dilution to our current
shareholders. Further, such securities might have rights, preferences or privileges senior to our common
stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are
not available or are not available on acceptable terms, we may not be able to take advantage of
prospective new business endeavors or opportunities, which could significantly and materially restrict our
business operations.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Report, we do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that are material to investors.
GOING CONCERN
The
independent
auditors'
report
accompanying
our
March
31,
2016
financial
statements
contained
an
explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.
26
These consolidated financial statements have been prepared on a going concern basis, which implies that
the Company will continue to realize its assets and discharge its liabilities in the normal course of
business. As of June 30, 2016, the Company has an accumulated deficit of $6,732,750, a history of net
losses and cash used in operating activities, and working capital deficiency of $514,917. These factors
raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation
of the Company as a going concern is dependent upon the continued financial support from its
management, generating higher sales in the upcoming quarterly periods according to the budget,
management’s ability to obtain the necessary debt or equity financing, cutting operating costs, launching a
viable product, and generating profitable operations overall from the Company’s future operations. These
financial statements do not include any adjustments to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should the Company be unable to
continue as a going concern.
CRITITCAL ACCOUNTING POLICIES
Our significant accounting policies are summarized in Note 2 to our financial statements. While the
selection and application of any accounting policy may involve some level of subjective judgments and
estimates, we believe the following accounting policies are the most critical to our financial statements,
potentially involve the most subjective judgments in their selection and application, and are the most
susceptible to uncertainties and changing conditions.
Mobetize recognizes revenue from payment processing, licensing, and provision of consulting services.
Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an
arrangement exists, the service has been provided, and collectability is reasonably assured.
Stock-Based Compensation
Mobetize records stock-based compensation in accordance with ASC 718,
Compensation – Stock
Compensation,
which requires the measurement and recognition of compensation expense based on
estimated fair values for all share-based awards made to employees and directors, including stock options.
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using
an option-pricing model. Mobetize uses the Black-Scholes option-pricing model as its method of
determining fair value. This model is affected by Mobetize’s stock price as well as assumptions regarding
a number of subjective variables. These subjective variables include, but are not limited to Mobetize’s
expected stock price volatility over the term of the awards, and actual and projected employee stock
option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is
recognized as an expense in the statement of consolidated comprehensive loss over the requisite service
period. Options granted to consultants are valued at the fair value of the equity instruments issued, or the
fair value of the services received, whichever is more reliably measureable.
Embedded Conversion Features
Mobetize
evaluates
embedded
conversion
features
within
convertible
debt
under
ASC
815
Derivatives
and Hedging
to determine whether the embedded conversion feature(s) should be bifurcated from the host
instrument
and
accounted
for
as
a
derivative
at
fair
value
with
changes
in
fair
value
recorded
in
earnings.
If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated
under
ASC
470-20,
Debt
with
Conversion
and
Other
Options
for
consideration
of
any
beneficial
conversion feature.
27
Derivative Financial Instruments
Mobetize does not use derivative instruments to hedge exposures to cash flow,
market, or foreign
currency
risks.
Mobetize
evaluates
all
of
it
financial
instruments,
including
stock
purchase
warrants,
to
determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is
initially
recorded
at
its
fair
value
and
is
then
re-valued
at
each
reporting
date,
with
changes
in
the
fair
value
reported
as
charges
or
credits
to
income.
For
option-based
simple
derivative
financial
instruments,
Mobetize
uses
the
Black-Scholes
option-pricing
model
to
value
the
derivative
instruments
at
inception
and subsequent valuation dates. The classification of derivative instruments, including whether such
instruments
should
be
recorded
as
liabilities
or
as
equity, is
re-assessed
at
the
end
of
each
reporting
period.
Beneficial Conversion Feature
For conventional convertible debt where the rate of conversion is below market value, Mobetize records a
Beneficial Conversion Feature (the "BCF") 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 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 Financial Reporting
During the quarter ended June 30, 2016, 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
28
PART II. OTHER INFORMATION
ITEM 1.
LEGAL
PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any governmental authority or any
other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or
affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal
proceedings. Management is not aware of any other legal proceedings pending or that have been
threatened against us or our properties.
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 June 2, 2016, our board of directors authorized the conversion of 5,420,648 common shares into
shares of Series B Preferred in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended
(“Securities Act”), the (i) Company is the same issuer of the common shares and the Series B Preferred
Stock, (ii) no additional consideration was given to offerees for the exchange, (iii) offerees are existing
security holders of the Company, and (iv) the Company did not pay any commission or remuneration for
the exchange. The offering was conducted pursuant to the exemptions from registration provided by
Section 4(2) and Regulation D of the Securities Act to the following persons:
Name
Consideration
Exchange Series B
Exemptions
Common Shares
Preferred Shares
Alligato, Inc.*
4,081,481
4,081,481
Section 4(2)/Reg D
Malek Ladki**
300,000
300,000
Section 4(2)/Reg D
Donald Duberstein**
1,039,167
1,039,167
Section 4(2)/Reg D
* Alligato, Inc. is a company owned and controlled by the Company’s CEO.
** Mr. Ladki and Mr. Duberstein
serve on the Company’s board of directors.
ITEM 3.
DEFAULTS
UPON SENIOR SECURITIES
None.
ITEM 4.
MINE
SAFETY DISCLOSURES
Not applicable.
ITEM 5.
OTHER
INFORMATION
None.
ITEM 6.
EXHIBITS
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on
page 31 of this Form 10-Q, and are incorporated herein by this reference.
29
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
/s/ Ajay Hans
August 12, 2016
By: Ajay Hans
Its: Chief Executive Officer
/s/ Elena Karamushko
August 12, 2016
By Elena Karamushko
Its: Chief Financial Officer and Principal Accounting Officer
30
INDEX TO EXHIBITS
Exhibit No. Exhibit Description
2.1
*
Purchase and Sale Agreement with Mobetize, Inc., dated July 9, 2013, incorporated by reference to our Form 10-
Q/A filed with the Commission on September 10, 2013.
3.1*
Articles of Incorporation, incorporated hereto by reference to the Form S-1, filed with the Commission on May
30, 2012.
3.1.1*
Certificate of Amendment filed on August 8, 2013 incorporated by reference to the Form 8-K filed with the
Commission on August 15, 2013.
3.1.2*
Certificate of Designation Series A Preferred filed on February 4, 2016, incorporated by reference to the Form 8-
K filed with the Commission on February 11, 2016.
3.1.3*
Certificate of Amended Designation Series A Preferred filed on May 20, 2016, incorporated by reference to the
Form
8-K filed with the
Commission on June 3, 2016.
3.1.4*
Certificate of Designation Series B Preferred filed on May 23, 2016, incorporated by reference to the Form 8-K
filed with the Commission on June 3, 2016.
3.1.5*
Certificate of Amended Designation Series B Preferred filed on May 31, 2016, incorporated by reference to the
Form
8-K filed with the
Commission on June 3, 2016.
3.2*
Bylaws, incorporated by reference to the Form S-1, filed with the Commission on May 30, 2012.
3.2.1*
Amended Bylaws, incorporated by reference to the Form 8-K filed with the Commission on February 11, 2016.
10.1*
Management Services Agreement between Mobetize and Alligato, Inc. dated June 1, 2013, incorporated by
reference to the Form 8-K filed with the
Commission on September 16, 2013.
10.2*
Management Services Agreement between Mobetize and 053574 BC Ltd. dated June
1, 2013, incorporated hereto
by reference to the Form 8-K filed with the Commission on September 16, 2013.
10.3*
Consulting Agreement between Mobetize and Stephen Fowler dated July 15, 2013, incorporated hereto by
reference to the Form 8KA filed with the Commission on October 28, 2013.
10.4*
Assignment of Debt Agreement between Mobetize and Stephen Fowler dated April 4, 2012, incorporated by
reference to the Form 8-K/A filed with the Commission on November 22, 2013.
10.5*
License Assignment Agreement between Telepay, Inc. and Baccarat Overseas Ltd. dated August 21, 2012,
incorporated by reference to the Form 8-K filed with the Commission on September 16, 2013.
10.6*
Consulting agreement between Mobetize and Tanuki Business Consulting, Inc. dated September 23, 2013,
incorporated by reference to the Form 8-K filed with the Commission on October 1, 2013.
10.7*
Consulting Agreement between Mobetize and 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*
Management Employment Agreement between Mobetize
Canada Inc. and Elena Karamushko dated February 4,
2016, incorporated by reference to the Form 10-K/A filed with the Commisson on July 13, 2016.
14
Code of Business Conduct and Ethics adopted by Mobetize Corp.’s Board of Directors on July 26, 2016
21*
Subsidiaries of Mobetize incorporated by reference to the Form 10-K/A filed with the Commission on July 13,
2016
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, attached.
31.2
Certification of the 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.
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, attached.
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, attached.
99*
2015 Mobetize Stock Option Plan dated August 10, 2015, incorporated by reference to the Form 8-K filed with
the Commission on August 11, 2015.
101. INS
XBRL Instance Document
†
101. PRE
XBRL Taxonomy Extension Presentation Linkbase
†
101. LAB
XBRL Taxonomy Extension Label Linkbase
†
101. DEF
XBRL Taxonomy Extension Label Linkbase
†
101. CAL
XBRL Taxonomy Extension Label Linkbase
†
101. SCH
XBRL Taxonomy Extension Schema
†
*
Incorporated by reference to previous filings of the Company.
†
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or
part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or
deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and
otherwise is not subject to liability under these section.
31