MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
2.
Summary of Significant Accounting Policies - continued
w)
Recent Accounting Pronouncements
In
May 2014,
the
FASB
issued
ASU
No.
2014-09,
Revenue
from
Contracts
with
Customers
.
The
new standard
provides a
five-step
approach
to be
applied to
all contracts
with
customers and also
requires
expanded
disclosures
about
revenue
recognition.
The
ASU
is
effective
for
annual
reporting
periods beginning after December 15,
2017, including interim periods and is to be
retrospectively
applied.
Early application
is
permitted
only as
of
annual
reporting periods
beginning after
December
15,
2016,
including
interim
reporting
periods
within
that
reporting
period.
The
Company
is
currently
evaluating
this
guidance
and
the
impact
it
will
have
on
its
consolidated
financial
statements.
In November 2015, an ASU was issued to simplify
the presentation of deferred income taxes. The
amendments in this ASU require that deferred tax liabilities and assets be classified as non-current
on the balance sheet
as
compared
to the
current
requirements
to
separate deferred tax
liabilities and
assets
into
current
and
non-current
amounts.
This
ASU
is
effective
for
annual
periods
beginning
after
December
15,
2016,
including
interim
periods within
those
annual
periods.
Earlier
application
is permitted. This ASU may be applied either prospectively
to all deferred tax
liabilities and assets
or retrospectively
to all periods presented. The Company
is currently
evaluating this guidance and
the impact it will have on its consolidated financial statements.
In
February 2016,
Topic
842,
Leases
was
issued
to
replace
the
leases
requirements
in
Topic
840,
Leases
.
The
main
difference
between
previous
GAAP
and
Topic
842
is
the
recognition
of
lease
assets
and lease liabilities by lessees
for those leases
classified as operating leases under previous
GAAP. A lessee should
recognize in
the balance sheet
a liability
to make lease
payments
(the lease
liability) and
a
right-of-use
asset
representing
its
right
to
use
the underlying asset
for
the
lease
term.
For
leases
with
a
term
of
12
months
or
less,
a
lessee
is
permitted
to
make
an
accounting
policy
election
by
class
of
underlying
asset
not
to
recognize
lease
assets
and
lease
liabilities.
If
a
lessee
makes
this
election,
it
should
recognize
lease
expense
for
such
leases
generally on
a
straight-line
basis
over
the
lease
term.
The
accounting
applied
by
a
lessor
is
largely
unchanged
from
that
applied
under
previous
GAAP.
Topic
842
will
be
effective
for
annual
reporting
periods
beginning
after
December
15,
2018,
including
interim
periods
within
those
annual
periods
and
is
to
be
retrospectively
applied. Earlier application
is
permitted. The Company
is currently
evaluating this
guidance and the impact it will have on its consolidated financial statements.
In March 2016,
the
FASB
issued
ASU
2016-09,
Compensation
Stock
Compensation
(Topic
718):
Improvements
to
Employee
Share-Based
Payment
Accounting
,
to
reduce
complexity
in
the
accounting
for
employee
share-based
payment
transactions.
One
of
the
simplifications
relates
to
forfeitures
of
awards.
Under
current
GAAP,
an
entity
estimates
the
number
of
awards
for
which
the requisite service
period is expected to
be
rendered and base the accruals
of compensation cost
on
the estimated
number
of
awards
that
will
vest.
This
ASU
permits an
entity to make
an
entity-
wide accounting
policy
election
either to estimate the number of forfeitures
expected to occur or to
account
for
forfeitures
in
compensation
cost
when
they
occur.
This
ASU
is
effective
for
annual
periods beginning
after December 15, 2016, including interim
periods within those
annual periods.
Earlier application
is
permitted.
The
Company
is
currently
evaluating this guidance
and
the
impact
it will have on its consolidated financial statements.
F-15
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
2.
Summary of Significant Accounting Policies - continued
w)
Recent Accounting Pronouncements - continued
In August
2014,
the
FASB issued
ASU No.
2014-15,
Disclosure
of
Uncertainties about
an
Entitys
Ability
to
Continue
as
a
Going
Concern
(ASU
2014-15),
which
amends
Accounting
Standards
Codification
(ASC)
Subtopic
205-40
to
provide
guidance
about
managements
responsibility
to
evaluate whether there is substantial doubt about an entitys ability to continue as a going concern
and
to
provide
related
disclosures.
Specifically,
the
amendments
(1)
provide
a
definition
of
the
term
substantial
doubt,
(2)
require
an
evaluation
every
reporting
period,
(3)
provide
principles
for
considering
the
mitigating
effect
of
managements
plans,
(4)
require
certain
disclosures
when
substantial
doubt
is
alleviated
as
a
result
of
consideration
of
managements
plans,
(5)
require
an
express statement and other disclosures when substantial doubt is not alleviated and (6) require an
assessment
for
a period of one
year
after the
date that financial statements are
issued. ASU
2014-
15 is effective for fiscal years ending after December 15, 2016, and for annual periods and interim
periods
thereafter.
The
Company
does
not
expect
this
standard
to
have
a
material
impact
on
its
consolidated financial statements and disclosures.
a)
Reclassifications
Certain comparative figures have been reclassified to conform to the current year's
presentation.
3.
Intangible Asset
On
January
12,
2017,
the
Company
entered
into
a
Gateway
License
Agreement
and
Joint
Venture
Agreement
(Joint
Venture)
with
CPT
Secure,
Inc.
(CPT),
a
company controlled
by a
shareholder
of
the
Company
to further
develop
certain
payment
processing
technology
(CPT IP)
on
a 50/50 basis.
Additionally,
the
Company and CPT
have
agreed to jointly form
a Joint Venture company (JV
Co)
registered
in
British
Columbia.
In
connection
with
the
Joint
Venture,
the
Company
issued
500,000
Series B
Preferred
Shares with
a
fair
value of
$125,000
to CPT
in consideration
for
the license
to the
CPT
IP
which
will
be
contributed
to
the
JV
Co.
The
license
to
the
CPT
IP
has
a
term
to
January
11,
2019,
and can
be
automatically renewed
for successive two
year
periods unless either party elects not
to renew 60 days prior to expiration. During the year ended March 31, 2017, the Company recognized
amortization of $13,356 on
the license, which has been
included
in research
and development
expense.
JV Co was incorporated subsequent to March 31, 2017 (Note 14)
4.
Property and Equipment
Equipment, net consisted of the following:
March 31, 2017
March 31, 2016
Computer equipment
$
14,421 $
14,787
Furniture
1,174
1,204
Total
15,595
15,991
Less: accumulated amortization
7,966
4,163
Equipment, net
$
7,629 $
11,828
During
the
year
ended
March
31,
2017,
equipment
cost
decreased
by
$241
(2016
-
$1,778),
and
accumulated
amortization
was
impacted
by
$155
(2016
-
$21),
as
a
result
of
foreign
currency
translation
adjustments.
F-16
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
5.
Convertible Debentures
Principal
Principal
March 31,
March 31,
Date of issuance
2017
2016
Interest
Maturity
March 2016
(1)
$
-
$
275,000
12% per annum
March, 2017
July 25, 2016
(2)
$
-
$
-
12% per annum
July 25, 2017
November 21, 2016
(3)
$
40,000
$
-
6% per annum
November 21, 2017
January 27, 2017
(4)
$
125,000
$
-
12% per annum
January 27, 2018
January 30, 2017
(5)
$
75,000
$
-
12% per annum
January 30, 2018
$
240,000
$
275,000
(1)
March, 2016 Issuance - $275,000:
Issued net of $30,000 of prepaid
interest, noting
that $3,000 of prepaid
interest was paid by
the
Company to one convertible debenture holder during the year ended March 31, 2017.
The
conversion
feature
was
exercisable
at
the
option
of
the holder
(Conversion
Feature).
The
Conversion Feature enabled the holder to convert any portion of their outstanding Convertible
Debenture principal balance into common shares at
a variable and discounted conversion price
(Conversion Price - see below) after 180 days from issue date, but no later than the maturity
date.
The
Conversion
Feature
was
subsequently
amended
to
permit
conversion
into
shares
of
the
Companys
Series
B
Preferred
Shares
at
$0.50
per
share
rather
than
into
shares
of
common
stock.
The
Conversion
Feature
represented
an
embedded
contingent
redemption
feature
and
was
accounted for as a derivative. The fair value of the contingent redemption feature was
immaterial and therefore not recognized at inception, and at March 31, 2016.
On
January 20,
2017,
the Company issued
550,000
Series B
Preferred
Shares
pursuant
to
the
conversion
of
$275,000
of
the
convertible
debenture
in
accordance
with
the
modified
conversion terms which were agreed to on that date.
(2)
July 25, 2016 Issuance - $25,000:
Issued net of $3,000 of prepaid interest, based on an interest rate of 12% per annum.
The
conversion
feature
was
exercisable
at
the
option
of
the holder
(Conversion
Feature).
The
Conversion Feature enabled the holder to convert any portion of their outstanding Convertible
Debenture principal balance into common shares at
a variable and discounted conversion price
after 180 days from issue date, but no later than the maturity date.
The
Conversion
Feature
was
subsequently
amended
to
permit
conversion
into
shares
of
the
Companys
Series
B
Preferred
Shares
at
$0.50
per
share
rather
than
into
shares
of
common
stock.
The
Conversion
Feature
represented
an
embedded
contingent
redemption
feature
and
was
accounted for as a derivative. The fair value of the contingent redemption feature was
immaterial and therefore not recognized at inception.
On
January
20,
2017,
the
Company
issued
50,000
Series
B
Preferred
Shares
pursuant
to
the
conversion
of
$25,000
of
the
convertible
debenture
in
accordance
with
the
modified
conversion
terms which were agreed to on that date.
F-17
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
5.
Convertible Debentures continued
(3)
November 21, 2016 Issuance- $40,000:
Issued net of $2,400 of prepaid interest
,
based on an interest rate of 12% per annum.
Of
the $40,000 Convertible Debentures,
$20,000 is
owed
to a
director
of the Company (Note
6(j)).
The
conversion
feature
is
exercisable
at the option
of
the
holder (Conversion Feature).
The
Conversion Feature enables the holder to convert any portion of their outstanding Convertible
Debenture principal balance into Series B Preferred Shares at $0.25 per share on or after May
20, 2017, but no later than the maturity date.
The Company has evaluated whether separate financial instruments with the same terms as the
conversion
features
above
would
meet
the
characteristics
of
a
derivative
instrument
as
described in paragraphs ASC
815-15-25. The terms of the contracts do not
permit net
settlement, as the shares delivered upon conversion are not readily convertible to cash. As the
conversion features would not
meet the characteristics of a derivative instrument as described
in
paragraphs
ASC
815-15-25,
the
conversion
features
are
not
required
to
be
separated
from
the
host
instrument
and
accounted
for
separately.
As
a
result,
at
March
31,
2017,
the
conversion
feature would not meet derivative classification.
(4)
January 27, 2017 Issuance - $125,000:
Issued net of $15,000 of prepaid interest,
based on an interest rate of 12% per annum.
The
conversion
feature
is
exercisable
at the option
of
the
holder (Conversion Feature).
The
Conversion Feature enables the holder to convert any portion of their outstanding Convertible
Debenture principal
balance
into
Series B Preferred Shares at
$0.50 per
share on or after July
26, 2017, but no later than the maturity date.
The Company has evaluated whether separate financial instruments with the same terms as the
conversion
features
above
would
meet
the
characteristics
of
a
derivative
instrument
as
described in paragraphs ASC
815-15-25. The terms of the contracts do not
permit net
settlement, as the shares delivered upon conversion are not readily convertible to cash. As the
conversion features would not
meet the characteristics of a derivative instrument as described
in
paragraphs
ASC
815-15-25,
the
conversion
features
are
not
required
to
be
separated
from
the
host
instrument
and
accounted
for
separately.
As
a
result,
at
March
31,
2017,
the
conversion
feature would not meet derivative classification.
F-18
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
5.
Convertible Debentures continued
(5)
January 30, 2017 Issuance - $75,000:
Issued net of $9,000 of prepaid interest, based on an interest rate of 12% per annum.
The $75,000 Convertible Debentures is owed to a Director of the Company (Note 6(j)).
The
conversion
feature
is
exercisable
at the option
of
the
holder (Conversion Feature).
The
Conversion Feature enables the holder to convert any portion of their outstanding Convertible
Debenture
principal
balance
into
Series B
Preferred
shares
at
$0.50
per
share
on or
after
July
29, 2017, but no later than the maturity date.
The Company has evaluated whether separate financial instruments with the same terms as the
conversion
features
above
would
meet
the
characteristics
of
a
derivative
instrument
as
described in paragraphs ASC
815-15-25. The terms of the contracts do not
permit net
settlement, as the shares delivered upon conversion are not readily convertible to cash. As the
conversion features would not
meet the characteristics of a derivative instrument as described
in
paragraphs
ASC
815-15-25,
the
conversion
features
are
not
required
to
be
separated
from
the
host
instrument
and
accounted
for
separately.
As
a
result,
at
March
31,
2017,
the
conversion
feature would not meet derivative classification.
F-19
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
6.
Related Party Transactions
Year ended March 31,
Transactions with related parties
2017
2016
(a)
Transactions incurred with the CEO or companies controlled by the
CEO:
Management fees
$
121,370 $
120,000
Management fees Stock-based compensation
27,971
112,054
Research and development
112,470
74,227
General and administrative
19,004
1,533
Conversion of promissory note
(1)
46,500
-
Advances applied to private placement
(2)
-
40,741
$
327,315 $
348,555
(b)
Transactions incurred with the former CFOs or a company
controlled by a former CFO:
Management fees
$
7,110 $
-
Management fees Stock-based compensation
-
76,346
General and administrative
69,231
1,380
General and administrative Stock-based compensation
-
16,073
Advances applied to private placement
(2)
-
137,000
$
76,341 $
230,799
(c)
Transactions incurred with the Chairman of the Company
Management fees
(3)
$
33,000 $
-
Management fees Stock-based compensation
69,730
202,656
$
102,730 $
202,656
(d)
Transactions incurred with a Director of the Company
Management fees Stock-based compensation
$
27,892 $
56,953
General and administrative Interest on convertible debenture
11,861
-
$
39,753 $
56,953
(e)
Transactions incurred with a shareholder of the Company
Investor relations and promotion
$
20,000 $
-
Acquisition of intangible asset (Note 3)
125,000
-
$
145,000 $
-
(f) Amounts owed to the former CFO:
Accounts payable and accrued liabilities
(4)
$
18,346
$
5,943
(g)
Amounts owed to companies controlled by the CEO:
Accounts payable and accrued liabilities
(4)
$
275,687
117,282
Promissory note June 2, 2017
(5)
25,000
-
Promissory note July 11, 2017
(6)
18,798
-
Promissory note February 14, 2017
(7)
-
50,000
$
319,485
$
167,282
(h)
Amounts owed to the Chairman of the Company
(4)
$
9,000
$
-
(i)
Amounts prepaid to a company controlled by the CEO
Prepaid interest on promissory notes
$
2,461
$
5,241
(j) Amounts owed to a Director of the Company
Convertible debenture matures March 21, 2017 (Note 5
(1)
)
$
-
$
50,000
Convertible debenture matures July 21, 2017 (Note 5
(2)
))
-
-
Convertible debenture matures November 21, 2017 (Note 5
(3)
))
20,000
-
Convertible debenture matures January 30, 2018 (Note 5
(5)
))
75,000
-
$
95,000
$
50,000
(k)
Amounts prepaid to a Director of the Company
Prepaid interest on convertible debentures
$
13,178
$
5,839
(l)
Amounts owed to a shareholder of the Company
Accounts payable and accrued liabilities
(4)
$
17,358
$
-
F-20
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
6.
Related Party Transactions continued
(1)
The promissory
note was comprised of $50,000 principal, offset by
$3,500 of prepaid interest. The
promissory
note
was
converted
into
4,650,000
Series
B
preferred
shares
of
the
Company
(Note
7(c)).
(2)
The
advances
from
the
CEO
and
former
CFO were
later
used
as
a
subscription
to
a
private
placement which included subscriptions by the CEO, former CFO and direct family members.
(3)
On July 15, 2016 the Chairman was compensated $24,000. On July 1, 2016, the Company entered
into
an
agreement
with
the
Companys
Chairman
where
the
Chairman
would
provide
services
to
the Company at a monthly rate of $1,000 for a period of two years ending on June 30, 2018.
(4)
Included in
accounts payable to
the former CFO and amounts owed to
companies
controlled
by
the
CEO at March 31, 2017, is $36,000 (2016 - $36,000) and $40,000 (2016 - $40,000), respectively,
in accrued wages
which bear interest at prime plus
1.5%. At March 31, 2017, the Company owed
accrued
interest
on
the
accrued
wages
of
$3,210
(2016
-
$1,380)
and
$3,567
(2016
-
$1,533),
respectively. At March 31, 2017, accounts payable to the former CFO is offset by $35,074 (2016 -
$31,437) due from
the former CFO
for advances. All
other accounts
payable and
accrued
liabilities
due
to
the
former
CFO
and
companies
controlled
by
the
CEO
of
$14,210
(2016
-
$nil)
and
$232,120
(2016 - $75,749), respectively, are unsecured and due on demand.
(5)
The
promissory note
maturing
on
June
2,
2017,
was
issued
with
a
twelve-month
term,
comprises
$25,000
principal,
and
bears
interest
at
12%
per
annum.
The
principal
balance
includes
prepaid
interest of $3,000.
(6)
The promissory note maturing on July 11, 2017,
was issued with a twelve-month term, comprises
$18,798
(CAD
$25,000)
principal,
and
bears
interest
at
12%
per
annum.
The
principal
balance
includes prepaid interest of $2,256 (CAD $3,000).
(7)
The
promissory
note maturing
on
February
14, 2017, was
issued
with
a
twelve-month term,
comprised $50,000
principal, and bore interest
at 12% per annum. The principal balance included
prepaid interest
of $6,000. This
promissory note
was
converted into
4,650,000 Series B
preferred
shares of the Company (Note 7 (c)).
F-21
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
7.
Common Stock and Preferred Stock
a)
Issuance of Common Stock:
For the Year-ended March 31, 2016
§
On June 10, 2015, the Company issued 184,500 shares of common stock at $0.50 per share for
proceeds of $92,250 upon the exercise of warrants.
§
On August 15, 2015, the Company issued 5,000 shares of common stock at $0.50 per share for
proceeds of $2,500 upon the exercise of warrants.
§
On September 1, 2015, the Company closed a private placement under which it sold 2,724,668
units
for
$0.25
per
unit
for
gross
proceeds
of
$681,167,
which
were
exclusively
offered
to
subscribers of previous $0.75 private placements. Each unit consists of one share of the
Companys
common
stock
and
one
half-warrant.
The
1,362,332
warrants
are
exercisable
at
$1.00
per
share,
are
valid
for
three
years
from
the
date
of
issue,
and
have
a
fair
value
of
$262,470.
$8,750
cash
financing
fees
and
17,500
financing
warrants
with
a
fair
value
of
$3,372
were
incurred with this private placement.
§
On
September
1,
2015,
the
Company
closed
a
private
placement
under
which
it
sold
161,481
units
for
$0.50
per
unit
for
gross
proceeds
of
$80,739.
Each
unit
consists
of
one
share
of
the
Companys
common stock and one
half-warrant, and have
a fair value of $15,566. The
80,740
warrants
are
exercisable
at
$1.00
per
share,
are
valid
for
three
years
from
the
date
of
issue.
Neither financing fees nor financing warrants were payable with this private placement.
§
On
February
4,
2016,
the
Company
converted
4,565,000
shares
of
common
stock
held
by
the
CEO of the Company into 4,565,000 Series A Preferred Shares.
§
On March 31, 2016, the Company
issued 54,727 shares of common stock at $0.001 per share to
settle
$32,484
of
services
payable
in
shares
of
common
stock,
of which
$14,303 was
included
in share subscriptions receivable at March 31, 2015.
For the Year-ended March 31, 2017
§
On
August
1,
2016,
the
Company
issued
120,000
shares
of
common
stock
at
$0.06
per
share
totaling
$7,200
as
bonus
shares
to
the
former
CFO
of
the
Company,
recorded
as
general
and
administrative related party expenses.
b)
Authorization and Issuance of Series A Preferred Shares:
For the Year-ended March 31, 2016
§
During
the
year
ended
March
31,
2016,
the
Company
authorized
the
issuance
of
250,000,000
shares of preferred stock with a par value of $0.001 per share and designated 10,000,000 of the
preferred stock as Series
A preferred shares (Series A Preferred Shares). The Series A
Preferred
Shares
have
the
same
rights
and
privileges
as
the
common
stock,
with
the
exception
that
the
Series
A
Preferred
Share
holder
has
10
votes
per
Series
A
Preferred
Share
versus
one
vote per share of
common stock
and does
not
have the right to
sell
the shares for a
period of two
years from the date of issue.
F-22
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
7.
Common Stock and Preferred Stock continued
c)
Authorization and Issuance of Series B Preferred Shares:
For the Year-ended March 31, 2017
§
During
the
year
ended
March
31,
2017,
the
Company
designated
25,000,000
shares
of
the
authorized
preferred
stock
as
Series
B
preferred
shares
(Series
B
Preferred
Shares).
The
Series
B Preferred
Shares have the
same rights and privileges
as the
common
stock, with
the exception
that
the
Series
B
Preferred
Shares
have
an
anti-dilution
provision
and
the
Series
B
Preferred
Share
holder
does
not
have
the
right
to
convert
Series
B Preferred
Shares
into
shares
of
common
stock for a period of two years from the date of issue.
§
On
June
2, 2016, the
Company
converted 4,081,481shares of
common
stock held
by
a company
controlled
by
the
CEO
into
4,081,481
Series
B
Preferred
Shares,
300,000
shares
of
common
stock
held
by
the
Companys
Chairman
and
Director
into
300,000
Series
B
Preferred
Shares,
and
1,039,167
shares
of
common
stock
held
by the
Companys
Director
into
1,039,167
Series
B Preferred Shares.
§
On
July 15,
2016,
the
Company
issued
200,000
Series
B
Preferred
Shares
with
a
fair
value
of
$0.15 per share to settle $30,000 in services payable.
§
On July 15, 2016, the Company issued 1,300,000 Series B Preferred Shares with a fair value of
$0.15
per
share
to
a
company
controlled
by
a
Chairman
of
the
Company
to
settle
$24,000
in
services payable. The
excess fair value of $171,000
is
recorded within
additional paid-in capital
§
On July 15, 2016, the Company issued 4,650,000 Series B Preferred Shares with a fair value of
$0.15
per
share to
a
company controlled
by the
Companys
CEO to
settle
$46,500
(Note 6(a))
in
an
outstanding
promissory
note,
which
included
a
principal
of
$50,000
less
prepaid
interest
of $3,500. The excess fair value of $651,000 is recorded within additional paid-in capital.
§
On December 1, 2016, the Company issued 275,000 Series B Preferred Shares with a fair value
of
$0.25
per
share
to
a
consultant
of
the
Company
to
settle
$27,500
in
amounts
owing
for
services provided, resulting in a loss on settlement of debt of $141,250.
§
On January 12, 2017, the Company issued
500,000 Series B
Preferred Shares with a fair value
of $0.25 per share to acquire a license from CPT Secure, Inc. (Note 3).
§
On
January
20,
2017,
the
Company
issued
600,000
Series
B
Preferred
Shares
pursuant
to
the
modification and immediate conversion of $300,000 of convertible debentures (Note 5).
§
On February 23,
2017,
the Company issued 25,000 Series B
Preferred Shares with a fair value
of $0.50 per share as incentive shares upon signing of
an advisory
services agreement, recorded
within consulting fees.
§
On March 13, 2017, the Company issued 50,000 Series B Preferred Shares with a fair
value of
$1.00 per share to a vendor pursuant to the settlement of $12,500 in accounts payable, resulting
in a loss on settlement of debt of $25,000.
§
On March 14, 2017, the Company issued 25,000 Series B Preferred Shares with a fair
value of
$1.00
per
share
as
incentive
shares
upon
signing
of
an
advisory
services
agreement
recorded
within consulting fees.
§
On
March
16,
2017,
pursuant
to
an
agreement
signed
on
March
9,
2017
the
Company
issued
500,000 Series B Preferred Shares at $1.00 for gross proceeds of $500,000.
F-23
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
7.
Common Stock and Preferred Stock continued
c)
Authorization and Issuance of Series B Preferred Shares - continued:
§
On March 30, 2017, the
Company
issued 127,760 Series B Preferred Shares with a fair value of
$1.00 per share to a vendor pursuant to the settlement of $31,940 in accounts payable, resulting
in a loss on settlement of debt of $95,820.
§
On March 31, 2017, the Company issued 15,000
Series B Preferred Shares
with a fair value of
$1.00 per share to a vendor pursuant to the settlement of $32,190 in accounts payable, resulting
in a gain on settlement of debt of $17,190.
8.
Share Purchase Warrants
The following table summarizes the continuity of share purchase warrants:
Weighted
average exercise
Number of
price
warrants
$
Balance, March 31, 2015
1,581,084
0.90
Issued
1,555,322
1.00
Exercised
(189,500)
0.50
Expired
(310,500)
0.50
Balance, March 31, 2016 and 2017
2,636,406
1.04
On
July
15,
2015,
94,750
warrants
were
issued
with
an
exercise
price
of
$1.00
and
a
three
year
term
ending September
1,
2018 to
holders of the
September 3,
2013,
warrants
who
had exercised a total
of
189,500 warrants during the six months ended September 30, 2015, prior to the expiry
date of
September
2,
2015.
These
warrant
holders
each
received
a
half
warrant
for
each
full
warrant
they
exercised. These warrants were valued at $18,255 using the Black Scholes method criteria as below.
Each of the warrant issuances above were valued using the Black Scholes method, which included the
dividend yield as nil, risk-free interest rate of 1.07%, expected volatility
of 70.42%, and expected term
of 3 years.
As at March 31, 2017, the following share purchase warrants were outstanding:
Number of warrants
Exercise price
outstanding
$
Expiry date
694,414
1.00
June 24, 2018
386,670
1.25
December 10, 2018
1,555,322
1.00
September 1, 2018
2,636,406
F-24
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
9.
Stock Options
The Company has adopted a Stock Option Plan (Stock Option Plan) which permits the Company to
issue
stock
options
for
up
to
3,000,000
common
shares
of
the
Company
to
directors,
officers,
employees
and
consultants
of
the
Company
with a
maximum
term
of
5
years,
exercise
prices
equal
to
the
minimum
fair
market
value
per
common
share
on
the
date
of
grant,
and
a
vesting
schedule
determined
by
the
Board of Directors at the time of granting the options.
The following table summarizes the continuity of stock options:
Weighted
average exercise
Number of
price
stock options
$
Balance, March 31, 2015
57,291
1.25
Issued
2,630,000
0.60
Expired
(36,000)
0.65
Cancelled
(270,029)
0.74
Balance, March 31, 2016
2,381,262
0.60
Expired
(288,539)
0.60
Cancelled
(72,723)
0.60
Outstanding, March 31, 2017
2,020,000
0.60
Exercisable, March 31, 2017
1,563,000
0.60
As at March 31, 2017, the following share purchase options were outstanding:
Exercise
Number of options
Number of options
price
outstanding
vested
$
Expiry date
2,020,000
1,563,000
0.60
September 30, 2020
The
options are
measured using
the
Black
Scholes method,
which
included
a
dividend yield
of
nil,
risk-
free
interest
rate
of
0.68%,
expected
volatility
of
76.7%,
expected
term
of
5
years
and
weighted
average
grant
date fair value of $0.40 per share. Volatility
is based on the historical volatility
of the Companys
common stock.
During
the
year
ended
March
31,
2017,
$195,304
(2016
-
$711,427)
in
stock-based
compensation
expense was recorded and allocated amongst general and administrative, consulting fees, management
fees, and research and development expenses. The intrinsic value of the options was $nil at March 31,
2017, and 2016.
10.
Concentration of Risk
Revenues
are
currently
generated
through
licensing,
professional
services,
and
payment
processing
services
provided
by Mobetize
to
our
existing customers.
During the
year
ended March
31,
2017,
the
Company had revenues from five customers (2016 revenues from five customers) with 56% (2016
75%)
of revenues generated from
the
Companys largest customer.
At
March
31, 2017, the
Companys
accounts
receivable
is
concentrated
and
due
from
five
customers
(2016
three
customers)
with
61%
(2016 69%) of accounts receivable due from the Companys largest customer.
F-25
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
11.
Contingencies and Commitment
a)
The Company has an obligation under a rental
lease for its operating office. As of March 31, 2017,
the
remaining
term
of
the
lease
is
21
months
with
monthly
payments
of
$4,995.
The
Companys
lease includes a renewal option.
b)
The Company received a Citation and Notice of Assessment dated October 14, 2016, that Stephen
J.
Fowler
(Fowler),
a
former
director
and
chief
financial
officer,
had
initiated a
complaint
with
the State of Washington Department of Labor and Industries for amounts allegedly due to him for
unpaid
wages
of
$45,000
in
wages
in
addition
to
assessed
interest
of
$3,368,
and
a
penalty
of
$4,500.
An
appeal
presented
by
the
Company
alleged
that
the
calculation
of
amounts
due
to
Fowler
was
incorrect
and
that
he
had
improperly
obtained
shares
of
its
common
stock.
A
hearing
before
the
Office
of
Administrative
Hearings
has
not
been
set.
See
Note
6
(f)
for
amounts
recorded
as
owed to Fowler.
The Company received a Notice of
Civil Claim
dated April 26, 2017, filed in the British Columbia
Supreme
Court
by
Fowler,
naming
the
Company
and
its
three
present
directors
as
defendants.
Fowler
asserts
claims
against
Mobetize
for
unpaid
expenses,
and
breach
of
contract.
He
also
asserts
claims
breach
of
contract,
breach
of
fiduciary duty,
misrepresentation
and conspiracy.
The
Company
has
advanced
its
own
counterclaims
against
Fowler,
including
fraudulent
or
negligent
misrepresentation, breach of fiduciary duty,
negligence and unjust enrichment. On June 23, 2017,
Mobetize filed its response to Fowlers
claims
and its own
counterclaims against Fowler. No trial
date has been set.
The
Company
received
a
Complaint
dated
May
12,
2017,
filed
in
the
Second
Judicial
District
Court
of the State of Nevada, by Fowler naming the Company and its three present directors as
defendants.
The
Nevada
action
concerns
substantially
the
same
facts
and
seeks
substantially
the
same
relief
as
Fowlers
British
Columbia
action.
On
June
23,
2017,
Mobetize
filed
a
Motion
to
Dismiss or in the
alternative, an Application for
Preliminary
Injunction
to
either dismiss
or
stay
the
Complaint. No trial date has been set.
c)
The
Company
received
a
Complaint
dated
May
3, 2017, filed
in
Eight
Judicial
District
Court
of
the
State
of
Nevada
by Cary Fields (Fields)
naming the Company and
its
three
present
directors
as
defendants, to obtain a preliminary
injunction to enjoin
a consolidation of the
Companys common
stock,
and seek damages for
breach of fiduciary duty,
conversion and unjust enrichment. On May
18, 2017, after due consideration, the court denied Fields application and determined not to grant a
temporary injunction. The court did not rule on the question of alleged damages to Fields. No trial
date has been set.
12.
Segment Information
The
Company
has
a
single
operating
segments
located
in
Canada
and
the
United
States
of
America
(USA).
Revenues
are
generated
in
Canada
and
the
USA
while
all
assets
are
located
in
Canada.
During
the
year
ended
March
31,
2017,
the
Company
generated
revenue
of
$197,226
(CDN$258,862)
in
Canada and $270,191 in the USA. The costs incurred to generate this revenue is expensed as research
and development.
At March 31, 2017, the total assets held in Canada were $194,475 (2016 - $49,552),
and in the USA were $633,798 (2016 - $281,103).
F-26
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
13.
Income Taxes
At March 31, 2017, the Company had no deferred tax assets.
During
the
year
ended
March
31,
2017,
the
Company
incurred
a
federal
operating
non-capital
losses
(non-capital loss) of approximately $750,000 (2016 - $1,305,000). As at March 31, 2017, the
Companys cumulative losses totaled $4,708,000 (2016 - $3,957,000).
The
non-capital
loss
amounting to
$750,000
(2016
-
$1,305,000)
was
comprised
of
$273,000
(2016
-
$639,000)
occurring
within
the
State
of
Washington,
USA,
and
$477,000
(2016
-
$666,000)
of
the
losses occurring within the Province of British Columbia, Canada. The Companys net loss of
$1,153,254
is
comprised
of
losses
occurring
in
the
USA
of
$669,714,
and
$483,540
occurring
in
Canada.
A reconciliation of the Companys effective tax
rate
as
a percentage of
income
before
taxes and federal
statutory rate for the years ended March 31, 2017, and 2016, is summarized as follows:
2017
2016
$
$
Loss before income taxes
(1,153,254)
(2,069,545)
Income tax recovery at statutory rates
(300,000)
(662,000)
Permanent differences
137,000
257,000
Temporary differences
211,000
520,000
Change in statutory, foreign tax, foreign exchange rates and other
(48,000)
(115,000)
Income tax expenses
The
valuation
allowance
for
deferred
tax
assets
as
of March
31,
2017,
and
2016,
was
$1,479,000
and
$1,323,000, respectively,
which will begin to expire in 2033. In assessing the recovery of the deferred
tax
assets,
management
considers
whether
it
is
more
likely
than
not
that
some
portion
or
all
of
the
deferred
tax
assets
will
be
realized.
The
ultimate
realization
of
deferred
tax
assets
is
dependent
upon
the
generation
of
future
taxable
income
in
the
periods
in
which
those
temporary
differences
become
deductible.
Management
considers
the
scheduled
reversals
of
future
deferred
tax
assets,
projected
future
taxable
income,
and
tax
planning
strategies
in
making
this
assessment. As
a
result, management
determined
it
was
more
likely
than
not
the
deferred
tax
assets
would
not
be
realized
as
of
March
31,
2017, and 2016, and maintained a full valuation allowance.
The
unrecognized
deferred
tax
assets
include
tax
losses
and
difference
between
the
carrying
amount
and tax basis of the following items.
2017
2016
$
$
Deferred tax assets:
Non-capital losses available for future periods
1,478,000
1,323,000
Property and equipment
1,000
Valuation allowance
(1,479,000)
(1,323,000)
Deferred income taxes recovered
F-27
MOBETIZE CORP.
Notes to Consolidated Financial Statements
March 31, 2017 and 2016
(Expressed in US dollars)
13.
Income Taxes - continued
The Company has non-capital losses available to offset future taxable income as follows:
Year of expiry
Canada
USA
$
$
2033
-
353,000
2034
-
554,000
2035
305,000
1,439,000
2036
666,000
639,000
2037
48,000
272,000
1,019,000
3,257,000
14.
Subsequent Events
The
Company
evaluated
its
March
31,
2017,
consolidated
financial
statements
for
subsequent
events
through the date the
consolidated
financial statements were
issued.
The Company is
not
aware
of
any
subsequent
events
which
would
require
recognition
or
disclosure
in
the
consolidated
financial
statements except as disclosed below.
a)
The Company continues to seek recovery of
578,733 common
shares and 101,726 share
purchase
warrants
issued
as
an
overpayment
to
Fowler,
the
Former
CFO
of
the
Company
for
consulting
services and settlement of expenses and liabilities (Note 11).
b)
On
April
7,
2017,
those
stockholders
with
a
majority
of
the
outstanding
approved
the
consolidation
of the Companys issued and outstanding common shares on a one for one hundred (1/100) basis,
amend
the
Companys
Articles
of
Incorporation
to
decrease
the
number
of
authorized
shares
of
common
stock
from
five
hundred
and
twenty-five
million
(525,000,000)
shares
par
value
$0.001
to two
hundred and fifty million (250,000,000) shares par value $0.001 and to amend the
Companys
Articles
to
decrease the
number of authorized
preferred shares
from two
hundred
and
fifty
million (250,000,000)
shares par value $0.001 to seventy-five million shares (75,000,000) par
value $0.001with no change
in the number of designated or
outstanding Series A preferred shares
or Series B preferred shares.
c)
On
May
29,
2017
MPAY
Gateway
Services
Inc.
was
incorporated
pursuant
to
the
terms
of
the
Joint
Venture
License
Agreement
and
Joint
Venture
Agreement
dated
January
12,
2017,
between
the
Company
and
CPT
Secure,
Inc.
(CPT),
to
further
develop
certain
payment
processing
technology
(CPT IP) on a 50/50 basis.
d)
On April 21, 2017, 160,000 Series B Preferred shares were issued.
F-28
ITEM 9.
Changes
in
and
Disagreements
with
Accountants
on
Accounting
and
Financial
Disclosure
Not applicable.
ITEM 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be
disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in rules and forms adopted by the Securities and Exchange
Commission (the Commission), and that such information is accumulated and communicated to
management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely
decisions regarding required disclosures.
Based on that evaluation, Mobetizes 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
Commissions rules and forms, and such information was not accumulated and communicated to
management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely
decisions regarding required disclosures.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange
Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief
Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP. Internal
control over financial reporting includes those policies and procedures that:
·
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
·
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and
·
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements
Due to its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.
26
Mobetizes management conducted an assessment of the effectiveness of our internal control over
financial reporting as of March 31, 2017, based on criteria established in
Internal Control Integrated
Framework (2013)
issued by the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission, which assessment identified material weaknesses in internal control over financial
reporting.
A material weakness is a control deficiency, or a combination of deficiencies in internal control over
financial reporting that creates a reasonable possibility that a material misstatement in annual or interim
financial statements will not be prevented or detected on a timely basis. Since the assessment of the
effectiveness of our internal control over financial reporting did identify material weaknesses,
management concluded its internal control over financial reporting to be ineffective.
The matters involving internal control over financial reporting that our management considered to be
material weaknesses were:
1.
Lack of a functioning audit committee due to the number of independent members on our Board
of Directors, which weakness could result in ineffective oversight in the monitoring of required
internal controls and procedures;
2.
Failure to maintain the segregation of the duties of chief executive officer and chief financial
officer, which failure could result in inadequate implementation and review of financial reporting
control procedures.
The aforementioned material weaknesses were identified by our Chief Executive Officer and Chief
Financial Officer in connection with his review of our financial statements as of March 31, 2017.
We do not believe the material weaknesses described above caused any material misstatement of our
financial condition and results of operations for the year ended March 31, 2017. However, the lack of
sufficient independent directors has caused us to delay the formation of an audit committee and the
resignation of our former chief financial officer, has caused us to combine the duties of chief executive
officer and chief financial officer on an interim basis. Should we fail to remedy these weaknesses, such,
failures could result in a material misstatement in our financial statements in future periods.
Mobetize intends to remedy its material weaknesses as follows:
When practical, we intend to appoint a second independent member to our Board of Directors who would
be tasked with lending an additional independent voice to the responsibilities incumbent an audit
committee with the financial expertise necessary for a fully functioning audit committee. Our Board of
Directors has adopted an audit charter and expects to move forward with forming an audit committee
when a second independent director becomes available.
We do intend bifurcate the position of chief executive officer and chief financial officer into two separate
positions as soon as is practicable.
We believe the remediation measures described above will remediate the material weaknesses we have
identified and strengthen our internal control over financial reporting. We are committed to continuing to
improve our internal control processes and will continue to diligently and vigorously review our financial
reporting controls and procedures. As we continue to evaluate and work to improve our internal control
over financial reporting, we may determine to take additional measures to address control deficiencies or
determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures
described above.
27
This annual report does not include an attestation report of our independent registered public accounting
firm regarding internal control over financial reporting. We were not required to have, nor have we,
engaged our independent registered public accounting firm to perform an audit of internal control over
financial reporting pursuant to the rules of the Commission that permit us to provide only managements
report in this annual report.
Changes in Internal Controls over Financial Reporting
During the quarter ended March 31, 2017, there has been no change in internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect our internal control over
financial reporting.
ITEM 9B.
Other Information
On April 7, 2017, certain stockholders holding a majority of the voting power determined by written
consent to consolidate Mobetizes common stock on a 1 for 100 basis and to amend its articles of
incorporation to decrease the number of authorized common stock and preferred stock. Mobetize has
since applied to FINRA to effect the consolidation and its application is being processed.
28
PART III RELATED PARTIES AND GOVERNANCE
ITEM 10.
Directors, Executive Officers and Corporate Governance
The following individuals serve as the directors and executive officers of Mobetize as of the date of this
annual report.
Name
Positions Held
Age
Date Elected or Appointed
Ajay Hans
Chief Executive Officer, Chief
Financial Officer, Principal
Accounting Officer and Director
4
3
July 09, 2014
Malek Ladki
Director & Chairman
5
0
July 09, 2014
Donald Duberstein
Director
6
3
September 14, 2015
Business Experience
The following is a brief account of the education and business experience during at least the past five
years of each director, executive officer and key employee of Mobetize, indicating the person's principal
occupation during that period, and the name and principal business of the organization in which such
occupation and employment were carried out.
Ajay Hans
Chief Executive Officer and Director
Business Experience
Mr. Hans has over 15 years of technology new venture development and financial experience in the
development, marketing and implementation of complex billing and payment related software
technologies dedicated for MNOs and MVNOs. Mr. Hans has served as CEO & COO of Dyneget; VP
Operations OAN Services Canada OAN pioneered telecom billing and clearing solutions across North
America processing $500 million annually in LEC Billing transactions (ie. a form of
billing f
or
internet-
based or other usually electronic services where the user is charged through his account with the local
telephone company
(also known as the
Local Exchange Carrier)
, rather than directly from the provider of
the service). Additionally, he is actively involved in speaking engagements for Pacific Crest Securities.
Mr. Hans oversees our strategic vision and tactical execution. He has held senior executive positions with
leading telecom software technology companies where he successfully implemented solutions for brands
including SaskTel, Sprint, and AT&T.
Officer and Director Responsibilities and Qualifications
Mr. Hans is responsible for the overall management of Mobetize and is involved in many of its day-to-
day operations, including technology development, finance, and overall business strategy.
Mr. Hans holds a Bachelors Degree in Business Management, Economics, and Marketing from British
Columbia Institute of Technology and has completed an Executive Management Program at Simon Fraser
University as well as the Executive Managerial Success Program from Harvard Business School.
Other Public Company Directorships in the Last Five Years
No.
29
Malek Ladki
Director & Chairman
Business Experience
Dr. Ladki is a highly experienced TMT executive with over 21 years of experience of starting, growing
and exiting businesses internationally, running global telecoms infrastructure projects and holding a
variety of senior management roles with network operators, and FTSE100 software vendors. Dr. Ladki
has also held several board-level roles with multinational telecoms infrastructure solutions and suppliers.
He has founded and successfully exited three highly innovative Telecoms and IT products/solutions
businesses while helped launch a number of 1st tier telecoms in Europe and the United States. His
technical expertise spans several disciplines in Telecoms, IT, Software and Hardware development and he
holds three patents in network optimization. His vast experience in leading hyper-growth startups,
growing emerging technologies and restructuring business is an asset to Mobetize.
Director Responsibilities and Qualifications
Dr. Ladki also serves as the Chairman of the Board of Directors.
Dr.
Ladki
graduated
with
a
Bachelor
of
Electronics
Engineering
in
1987
and
went
on
to
study
for
a
Doctorate in Engineering and earned his PhD in the telecommunications from the University of Liverpool
in 1990.
Other Public Company Directorships in the Last Five Years
None.
Donald Duberstein
Director
Business Experience
Mr. Duberstein is an experienced entrepreneur, portfolio manager, and active investor. Apart from
owning and managing an extensive portfolio of residential and commercial properties across the United
States over the past 38 years, Mr. Duberstein has co-founded and chaired a cosmeceutical skin care
company and has been actively involved in a number of private and public companies.
From 1995 through 1999 Mr. Duberstein was also on the Board of Directors of Selvac Corporation, a
public company.
Officer and Director Responsibilities and Qualifications
Mr. Duberstein graduated from the University of Pennsylvania Phi Beta Kappa, Magna Cum Laude in
1973 and NYU Law School in 1976. He is also a member of the New York and Florida Bars in 1977.
Other Public Company Directorships in the Last Five Years
None.
Family Relationships
There are no family relationships between or among the directors or executive officers.
30
Involvement in Certain Legal Proceedings
During the past ten years there are no events that occurred related to an involvement in legal proceedings
that are material to an evaluation of the ability or integrity of Mobetizes directors, or persons nominated
to become directors or executive officers.
Term of Office
Our directors were appointed for a one (1) year term to hold office until the next annual meeting of our
shareholders or until removed from office in accordance with our bylaws. Our officers were appointed by
our Board of Directors and will hold office until the expiration of their employment contracts or removal
by the board.
No other persons are expected to make any significant contributions to Mobetizes executive decisions
who are not executive officers or directors of Mobetize.
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires executive officers and
directors and persons who own more than 10% of a registered class of our equity securities to file with the
SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports
concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and
5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC
regulations to furnish us with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by us, or representations from certain
reporting persons, we believe that during fiscal year ended March 31, 2017, all filing requirements
applicable to our officers, directors and greater than 10% percent beneficial owners were complete.
Code of Ethics
We have not yet adopted a Code of Business Conduct and Ethics that applies to our officers, directors and
employees.
Committees of the Board
All proceedings of our Board of Directors were conducted by resolutions consented to in writing by all
the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to
in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to
the corporate laws of the state of Nevada and the bylaws of Mobetize, as valid and effective as if they had
been passed at a meeting of the directors duly called and held.
We had not formed an audit
committee as of
March 31, 2017, though we have adopted an audit charter and
have
determined
to
form
an
audit
committee
when
two
independent
directors
can
be
appointed
to
such
committee Mobetizes Board of Directors has not established a compensation committee.
Mobetizes Bylaws define the procedure requirements for shareholders to submit recommendations or
nominations for directors. A shareholder who wishes to communicate with our board of directors may
also do so by directing a written request addressed to our president, at the address appearing on the first
page of this annual report.
31