Mobetize (MPAY) 10-Q 15 Dec 16 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	6 Months Ended
	Sep. 30, 2016	Dec. 14, 2016	Sep. 30, 2015
Document and Entity Information:
Entity Registrant Name	MOBETIZE, CORP.
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Trading Symbol	mpay
Amendment Flag	false
Entity Central Index Key	1,546,679
Current Fiscal Year End Date	--03-31
Entity Common Stock, Shares Outstanding		23,450,233
Entity Public Float			$ 0
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

MOBETIZE CONSOLIDATED BALANCE S

MOBETIZE CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2016 AND MARCH 31 2016 - USD ($)	Sep. 30, 2016	Mar. 31, 2016
ASSETS
Cash	$ 1,949	$ 210,341
Accounts receivable	96,758	43,729
Prepaid expenses and deposits	52,242	59,516
Prepaid expenses and deposits related party (Note 4d)	3,800	5,241
Total Current Assets	154,749	318,827
Assets, Noncurrent
Property and equipment, net (Note 3)	10,114	11,828
Assets, Noncurrent	10,114	11,828
TOTAL ASSETS	164,863	330,655
LIABILITIES
Accounts payable and accrued liabilities	218,871	138,956
Accounts payable and accrued liabilities - related party (Note 4d)	169,841	75,749
Deposits due to customers	980	1,480
Promissory note due to Related Parties (Note 4d), Current	44,060	50,000
Convertible debenture (Note 5f)	300,000	275,000
Total Current Liabilities	733,752	541,185
Liabilities, Noncurrent
Due to Related Parties, Noncurrent (Note 5)	59,995	47,476
Liabilities, Noncurrent	59,995	47,476
TOTAL LIABILITIES	793,747	588,661
STOCKHOLDERS' EQUITY
Common stock, $0.001 Par Value: 525,000,000 authorized and 33,261,154 and 30,185,505 common shares issued and outstanding, respectively (Note 5)	23,450	28,751
Preferred stock, Class A, $0.001 Par Value: 250,000,000 authorized and 4,565,000 preferred shares issued 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 issued and outstanding (Note 5e)	11,571
Warrants (Note 6)	676,964	676,964
Share options (Note 7)	884,963	757,524
Additional paid-in capital	4,709,917	4,608,487
Accumulated other comprehensive loss	(9,456)	(9,236)
Accumulated deficit	(6,930,858)	(6,325,061)
Total Stockholders' Equity	(628,884)	(258,006)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 164,863	$ 330,655

MOBETIZE CORP, STATEMENTS OF OP

MOBETIZE CORP, STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30TH 2016 AND 2015 - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
OPERATING REVENUES
Revenues	$ 140,630	$ 3,742	$ 216,248	$ 7,077
Revenues	140,630	3,742	216,248	7,077
OPERATING EXPENSES
Depreciation	795	655	1,600	1,431
Director Compensation	27,000		27,000
General and administrative	86,529	67,880	175,056	112,422
General and administrative - related party (Note 4a&c)	4,277	1,722	6,960	3,156
Investor relations and promotion	15,010	7,155	49,525	7,155
Listing fees	5,302	8,956	9,354	21,191
Management salaries and consulting fees	16,080	63,479	51,790	173,845
Management salaries and consulting fees related party (Note4a)	15,000	30,000	37,500	60,000
Professional fees	12,002	10,743	96,705	38,010
Research and development	64,015	125,050	166,597	236,616
Research and development related party	30,896	12,205	58,050	12,836
Sales and marketing	51	29,578	7,269	53,761
Sales and marketing Related Party	7,200		7,200
Stock based compensation expense (Note 7)	54,581		127,439
Total Operating Expenses	338,738	357,423	822,045	720,423
Investment Income, Nonoperating
NET LOSS	(198,108)	(353,681)	(605,797)	(713,346)
COMPREHENSIVE LOSS
Foreign exchange gain	(62)	(6,499)	(220)	(5,040)
Comprehensive Income (Loss), Net of Tax, Including Foreign Currency Translation	$ (198,170)	$ (360,180)	$ (606,017)	$ (718,386)
NET LOSS PER SHARE
Basic (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.02)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic (in shares)	23,408,233	31,324,934	23,369,833	30,761,084

MOBETIZE CORP CONSOLIDATED STAT

MOBETIZE CORP CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS APRIL 1ST TO SEPTEMBER 30TH 2016 AND 2015 - USD ($)	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (605,797)	$ (713,346)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	1,600	1,431
Shares issued for services	61,200	6,630
Interest accrued on shareholder loans	1,900
Shares based payments	46,500
Interest settled in shares	127,439
Changes in assets and liabilities
Accounts receivable	(53,029)	2,454
Accounts receivable - related party		14,687
Prepaid expenses	10,273	16,480
Increase (Decrease) in Prepaid Expense and Other Assets	6,740
Accounts payables and accrued liabilities	79,915	33,573
Accounts payable - related party	94,092	26,736
Increase (Decrease) in Customer Advances and Deposits	(500)
Increase (Decrease) in Mortgage Loans Held-for-sale	10,619
Increase (Decrease) in Other Operating Liabilities	(50,000)
Net cash used in operating activities	(269,048)	(611,355)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment		(1,606)
Net cash used in investing activities		(1,606)
CASH FLOWS FROM FINANCING ACTIVITES
Proceeds from sale of common stock and warrant exercise, net of financing costs		619,667
Proceeds from sale of common stock and warrant exercise, net of financing costs - related party		228,240
Repayments, net of proceeds from related party	38,761
Proceeds from Issuance of Common Stock	22,000
Repayment of Notes Receivable from Related Parties		(53,105)
Net cash provided by financing activities	60,761	794,802
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(105)	(4,262)
NET INCREASE IN CASH	(208,392)	177,579
CASH - BEGINNING OF PERIOD	210,341	312,899
CASH - END OF PERIOD	1,949	490,478
CASH PAID DURING THE PERIOD FOR:
Interest expense, net of interest income	$ 22,490	$ 1,025

1. Nature of Operations and Con

1. Nature of Operations and Continuance of Business	6 Months Ended
	Sep. 30, 2016
Notes
1. Nature of Operations and Continuance of Business	1. Nature of Operations and Continuance of Business Mobetize Corp. (the “Company”) was incorporated in the state of Nevada on February 23, 2012, as Slavia, Corp. The Company’s name changed to “Mobetize Corp on August 13, 2013. The Company provides Fintech solutions and services to enable and support the convergence of global telecom and financial services providers (“Customers”) through its Global Mobile B2B Fintech and Financial Services Marketplace (“Hub”). The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to optimize the Company’s existing technology before another company develops competitive products. Going Concern These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize assets and discharge liabilities in the normal course of business. As of September 30, 2016, the Company has an accumulated deficit of $6,930,858, a history of net losses and a working capital deficiency of $579,003. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon continuing financial support from management, increasing sales, securing debt or equity financing, cutting operating costs, launching viable products, and realizing profitable operations. These 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 Accou

2. Summary of Significant Accounting Policies	6 Months Ended
	Sep. 30, 2016
Notes
2. Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies a) Basis of Presentation These unaudited financial statements are those of the Company and its wholly owned subsidiaries, Mobetize Canada Inc., and Mobetize USA Inc. In the opinion of management, the accompanying Consolidated Financial Statements of the Company contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of September 30, 2016 and March 31, 2016 and its results of operations and cash flows for the three and six month periods ended September 30, 2016 and September 30, 2015 in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Operating results for the three and six month periods ended September 30, 2016 are not necessarily indicative of the results that may be experienced for the fiscal year ending March 31, 2017. 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. The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable, 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. «A3HWJD2M|Level=2|Label=Cash|Tag=us-gaap:CashAndCashEquivalentsPolicyTextBlock» 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 September 30, 2016, and March 31, 2016, 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 and deposits The Company pays for some services in advance and recognizes these expenses as prepaid at the balance sheet date. If certain prepaid expenses extend beyond one-year, those are classified as non-current assets. g) Revenue Recognition The Company recognizes revenue from payment processing, licensing and the provision of professional services. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured. 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. «A1HSJZTL» j) Stock-Based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, 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 operations 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 potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted 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 September 30, 2016, the Company has nil (March 31, 2016 – nil) potentially dilutive shares. m) Comprehensive Loss ASC 220, Comprehensive Income n) o) Financial Instruments/Fair Value Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, deposits due to customers, promissory note, shareholder loans, and convertible debentures. Pursuant to ASC 820, Fair Value Measurements and Disclosures Financial Instruments 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 of these instruments. p) Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and Hedging Debt with Conversion and Other Options 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 its financial instruments, including stock purchase warrants and stock options, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income (loss). For option-based simple derivative financial instruments, 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 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.

3. Property and Equipment

3. Property and Equipment	6 Months Ended
	Sep. 30, 2016
Notes
3. Property and Equipment	3. Property and Equipment Property and equipment, net consisted of the following: September 30, 2016 March 31, 2016 Computer equipment $ 14,623 $ 14,787 Furniture 1,190 1,204 Total 15,813 15,991 Less: accumulated amortization 5,699 4,163 Property and equipment, net $ 10,114 $ 11,828 During the six months ended September 30, 2016, property and equipment decreased by $178 as a result of foreign currency translation adjustments.

4. Related Party Transactions

4. Related Party Transactions	6 Months Ended
	Sep. 30, 2016
Notes
4. Related Party Transactions	4. Related Party Transactions For the three and six months ended September 30, Three months ended Six months ended 2016 2015 2016 2015 (a) Transactions incurred with the CEO or companies controlled by the CEO: Management salaries and fees $ 15,000 $ 30,000 $ 37,500 $ 60,000 Research and development 30,896 12,205 58,050 12,386 General and administration expenses 3,827 336 6,060 1,663 Issuance of promissory notes (1) 19,060 - 44,230 - Prepaid interest on promissory notes - - 5,314 - Shareholder loans – applied to private placement (2) - 40,741 - - Conversion of promissory note (3) - - 46,500 - $ 68,783 $ 83,282 $ 197,654 $ 74,049 (b) Transactions incurred with the former CFO or a company controlled by the former CFO: General and administration expenses -interest expense $ 450 $ 1,386 $ 900 $ 1,493 Advances – applied to private placement (4) - 110,000 - 137,500 $ 450 $ 111,386 $ 900 $ 138,993 (c) Warrant exercises Former CFO (5) $ - $ - $ - $ 25,000 (1) (2) (3) (4) (5) (d) Amounts owed to companies controlled by the former CFO: September 30, 2016 March 31, 2016 Shareholder loan (6) $ 17,462 $ 5,943 (e) Amounts owed to companies controlled by the CEO: Shareholder loans $ 42,533 $ 41,533 Management fees 67,500 30,000 Amounts payable - for services received and expenses incurred 102,341 45,749 Promissory note – June 2, 2017 (7) 25,000 - Promissory note – July 11, 2017 (8) 19,060 - Promissory note – February 14, 2017 (9) - 50,000 $ 256,434 $ 167,282 (6) (7) (8) (9) (f) Amounts prepaid to a company controlled by the CEO September 30, 2016 March 31, 2016 Prepaid interest on promissory notes $ 3,800 $ 5,241 Three months ended September 30, 2016 Six months ended September 30, 2016 (g) Transactions incurred with the Chairman of the Company 2016 2015 2016 2015 Director Compensation (10) $ 27,000 - $ 27,000 - (h) Transactions incurred with the Director of the Company Issuance of Convertible Note (11) $ 25,000 - $ 25,000 - (10) a) Refer to Note 5 (f) for details of this convertible debenture.

5. Common Stock and Preferred S

5. Common Stock and Preferred Stock	6 Months Ended
	Sep. 30, 2016
Notes
5. Common Stock and Preferred Stock	5. Common Stock and Preferred Stock a) Common Shares Issued for Services: During the six month period ended September 30, 2016, and the twelve month period ended March 31, 2016, the Company entered into various consulting, advisory, and employment agreements with consultants, advisors, and employees to provide services in exchange for shares and/or cash, as applicable. Shares issued for services or as a sign in stock compensation, 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 six month period ended September 30, 2016, the Company settled $7,200 (twelve month period ended March 31, 2016 - $32,484) in shares for services through the issuance of 120,000 common shares (twelve month period ended March 31, 2016 - 54,727) at $0.001 per share, resulting in $7,080 (twelve month period ended March 31, 2016 - $32,429) being recorded to additional paid-in capital. b) Private Placements: During the six month period ended September 30, 2016, and the twelve month period ended March 31, 2016, the Company conducted nil and four private placements of investment units respectively comprising common shares and warrants, as follows: § § § c) Issuance of Common Shares on Exercise of Warrants, Options, and Settlement of Amounts: § § 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 (Note 4(a)). As at September 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 six months ended September 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. On July 15, 2016, the Company issued 200,000 Series B Preferred Shares at a fair value of $0.15 per share to settle $30,000 in services payable. $200 was recorded to Series B Preferred Shares and $29,800 was recorded to additional paid-in capital. 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. $1,300 was recorded to Series B Preferred Shares and $22,700 was recorded to additional paid-in capital. This transaction is considered a capital transaction, as such, the excess fair value of the Series B Preferred Shares issued has a $nil effect on additional paid-in capital. On July 15, 2016, the Company issued 4,650,000 Series B Preferred Shares at a fair value of $0.15 per share to a company controlled by the Company’s CEO, to settle $46,500 in an outstanding promissory note, which included a principal of $50,000 less prepaid interest of $2,500. $4,650 was recorded to Series B Preferred Shares and $41,850 was recorded to additional paid-in capital. This transaction is considered a capital transaction, as such, the excess fair value of the Series B Preferred Shares issued has a $nil effect on additional paid-in capital. As at September 30, 2016, 11,570,648 (March 31, 2016 – nil) Series B Preferred Shares were issued and outstanding. f) Convertible Debenture: In March 2016, the Company issued convertible debentures 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 during the period ended September 30, 2016. 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 September 30, 2016. On July 25, 2016, the Company issued a Convertible Debenture for gross proceeds of $25,000, net of $3,000 of prepaid interest (Note 4e). The Convertible Debenture 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. 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 and at September 30, 2016.

6. Share Purchase Warrants

6. Share Purchase Warrants	6 Months Ended
	Sep. 30, 2016
Notes
6. Share Purchase Warrants	6. Share Purchase Warrants The following table summarizes the continuity of share purchase warrants: Number of warrants Weighted average 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, September 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 $3,372 using the Black Scholes method criteria as below. Each of the warrant issuances above were valued using the Black Scholes method, which included the dividend yield as nil, risk-free interest rate of 1.07%, expected volatility of 70.42%, and expected term of 3 years. As at September 30, 2016, the following share purchase warrants were outstanding: Number of warrants outstanding Exercise price (US$) 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

7. Share Options

7. Share Options	6 Months Ended
	Sep. 30, 2016
Notes
7. Share Options	7. Share Options The following table summarizes the continuity of share purchase options: Number of options Weighted average exercise price (US$) Balance, March 31, 2015 57,291 1.25 Issued 2,630,000 0.60 Expired (36,000) 0.65 Cancelled (270,029) 0.74 Balance, March 31, 2016 2,381,262 0.60 Expired (69,729) 0.60 Cancelled (32,723) 0.60 Balance, September 30, 2016 2,278,810 0.60 As at September 30, 2016, the following share purchase options were outstanding: Number of options outstanding Number of options vested Exercise price (US$) Expiry date 2,278,810 1,542,810 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 with a maximum term of 5 years, and a vesting schedule determined by the Board of Directors at the time of granting the options. 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 a dividend yield of nil, risk-free interest rate of 0.68%, expected volatility of 76.7%, and expected term of 5 years. As at September 30, 2016, 1,542,810 of the granted options were vested, nil were exercised, 69,729 expired, and 32,723 of the unvested options were cancelled leaving 736,000 options unvested. During the three and six months ended September 30, 2016, $54,581 (2015 - $nil) and $127,439, respectively, in stock based compensation expense was recorded. The intrinsic value of the options was $nil at September 30, 2016 and March 31, 2016.

8. Reserves

8. Reserves	6 Months Ended
	Sep. 30, 2016
Notes
8. Reserves	8. Reserves The Company had the following Share Purchase Warrants and Share Options Reserve balances: Share Purchase Warrants (Note 6) Share Options (Note 7) Total Reserves Balance - March 31, 2015 $ 377,311 $ 46,097 $ 423,408 Sale of 161,481 shares at $0.50/share (Note 5b) 15,556 - 15,556 Sale of 2,724,688 shares at $0.25/share, net of $12,122 financing fee (Note 5b) 262,470 - 262,470 Valuation of financing warrants (Note 5b) 3,372 - 3,372 Warrants issued on exercise of expiring warrants (Note 6) 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 Stock based compensation - 127,439 127,439 Balance – September 30, 2016 $ 676,964 $ 884,963 $ 1,561,927

9. Concentration of Risk

9. Concentration of Risk	6 Months Ended
	Sep. 30, 2016
Notes
9. Concentration of Risk	9. Concentration of Risk During the three and six months ending September 30, 2016, revenues were $140,630 and $216,248, respectively, compared to revenues of $3,742 and $7,077, respectively, during the same period in 2015. Revenues are currently generated through licensing, professional services, and payment processing services provided by Mobetize to our existing Customers. During the three months ended September 30, 2016, the Company had revenues from five customers (2015 – revenues from two customers) with 66% (2015 – 67%) of revenues generated from the Company’s largest customer. During the six months ended September 30, 2016, the Company had revenues from five customers (2015 – revenues from three customers) with 70% (2015 – 72%) of revenues generated from the Company’s largest customer.

12. Segment Information

12. Segment Information	6 Months Ended
	Sep. 30, 2016
Notes
12. Segment Information	12. Segment Information The Company has currently 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. The Company’s chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

2. Summary of Significant Acc15

2. Summary of Significant Accounting Policies: Basis of Presentation (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Basis of Presentation	a) Basis of Presentation These unaudited financial statements are those of the Company and its wholly owned subsidiaries, Mobetize Canada Inc., and Mobetize USA Inc. In the opinion of management, the accompanying Consolidated Financial Statements of the Company contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of September 30, 2016 and March 31, 2016 and its results of operations and cash flows for the three and six month periods ended September 30, 2016 and September 30, 2015 in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Operating results for the three and six month periods ended September 30, 2016 are not necessarily indicative of the results that may be experienced for the fiscal year ending March 31, 2017.

2. Summary of Significant Acc16

2. Summary of Significant Accounting Policies: Use of Estimates (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Use of Estimates	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. The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable, 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.

2. Summary of Significant Acc17

2. Summary of Significant Accounting Policies: Accounts Receivable (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Accounts Receivable	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.

2. Summary of Significant Acc18

2. Summary of Significant Accounting Policies: Income Taxes (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Income Taxes	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.

2. Summary of Significant Acc19

2. Summary of Significant Accounting Policies: Basic and Diluted Net Income (loss) Per Share (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Basic and Diluted Net Income (loss) Per Share	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 potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted 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 September 30, 2016, the Company has nil (March 31, 2016 – nil) potentially dilutive shares.

2. Summary of Significant Acc20

2. Summary of Significant Accounting Policies: Debt Issue Costs and Debt Discount (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Debt Issue Costs and Debt Discount	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. .

2. Summary of Significant Acc21

2. Summary of Significant Accounting Policies: Foreign Currency (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Foreign Currency	t) Foreign Currency The functional and reporting currency of the Company and its subsidiary, Mobetize USA Inc., is the United States Dollar (“U.S. Dollars”). The functional currency of the Company’s international subsidiary, Mobetize Canada Inc., is the Canadian dollar. The Company translates the 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 (loss) 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.

5. Common Stock and Preferred22

5. Common Stock and Preferred Stock: Issuance of Shares On Exercise of Warrants, Options, and Settlement of Amounts (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Issuance of Shares On Exercise of Warrants, Options, and Settlement of Amounts:	c) Issuance of Common Shares on Exercise of Warrants, Options, and Settlement of Amounts: § § 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.

5. Common Stock and Preferred23

5. Common Stock and Preferred Stock: Authorization and Issuance of Series A Preferred Shares (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
Authorization and Issuance of Series A Preferred Shares:	§ 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 (Note 4(a)). As at September 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 six months ended September 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. On July 15, 2016, the Company issued 200,000 Series B Preferred Shares at a fair value of $0.15 per share to settle $30,000 in services payable. $200 was recorded to Series B Preferred Shares and $29,800 was recorded to additional paid-in capital. 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. $1,300 was recorded to Series B Preferred Shares and $22,700 was recorded to additional paid-in capital. This transaction is considered a capital transaction, as such, the excess fair value of the Series B Preferred Shares issued has a $nil effect on additional paid-in capital. On July 15, 2016, the Company issued 4,650,000 Series B Preferred Shares at a fair value of $0.15 per share to a company controlled by the Company’s CEO, to settle $46,500 in an outstanding promissory note, which included a principal of $50,000 less prepaid interest of $2,500. $4,650 was recorded to Series B Preferred Shares and $41,850 was recorded to additional paid-in capital. This transaction is considered a capital transaction, as such, the excess fair value of the Series B Preferred Shares issued has a $nil effect on additional paid-in capital. As at September 30, 2016, 11,570,648 (March 31, 2016 – nil) Series B Preferred Shares were issued and outstanding.

5. Common Stock and Preferred24

5. Common Stock and Preferred Stock: D) Convertible Debenture (Policies)	6 Months Ended
	Sep. 30, 2016
Policies
D) Convertible Debenture	f) Convertible Debenture: In March 2016, the Company issued convertible debentures 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 during the period ended September 30, 2016. 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 September 30, 2016. On July 25, 2016, the Company issued a Convertible Debenture for gross proceeds of $25,000, net of $3,000 of prepaid interest (Note 4e). The Convertible Debenture 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. 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 and at September 30, 2016.