UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q



xQuarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended: March 31, 2016



or



 ̈Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934



Commission File Number: ________________



VoIP-PAL.COM INC.

(Exact name of Registrant as specified in its
charter)





|Nevada                                                                 |  | 980184110                                      
|---------------------------------------------------------------------- |  | -----------------------------------------------
|(State or other jurisdiction of
        incorporation or organization) |  | (I.R.S. Employer
        Identification Number)
|                                                                      
|10900 NE 4th Street, Suite 2300
        Bellevue, WA, 98004           
|(Address of principal executive offices)                              



1-888-605-7780

(Registrant’s telephone number, including
area code)



Check whether the Registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.

YesxNo ̈



Indicate
by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YesxNo ̈



Indicate by check mark whether the Registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.   See definitions of “large accelerated
filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer ̈                       |  | Smaller reporting companyx
|------------------------ |  | ------------------ |  | -------------------------------------------- |  | --------------------------
|                         |  |                    |  | (Do not check if a smallerreporting company) |  |                           



Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈Nox



As of May 16, 2016,
there were 1,040,455,868 shares of Common Stock outstanding.



1







TABLE OF CONTENTS





|PART
    I—FINANCIAL INFORMATION
|--------------------------------
|                                
|Item 1.                         
|Item 2.                         
|Item 3.                         
|Item 4.                         
|                                
|PART
    II—OTHER INFORMATION   
|                                
|Item 1.                         
|Item 1A.                        
|Item 2.                         
|Item 3.                         
|Item 4.                         
|Item 5.                         
|Item 6.                         





2









PART I—FINANCIAL
INFORMATION



Item 1.	
Financial Statements.



INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited – prepared by management)

March 31, 2016

(Expressed in U.S. Dollars)

As at



|                                                                     |  | March 31, 2016 |             | Sept 30, 2015
|-------------------------------------------------------------------- |  | -------------- | ----------- | -------------
|                                                                     |  | (unaudited)    |             | (audited)    
|                                                                     |  |                |             |              
|ASSETS                                                               |  |                |             |              
|CURRENT                                                              |  |                |             |              
|Cash                                                                 |  | $              | 244,801     |              
|Subscriptions
    receivable                                         |  |                | 157,875     |              
|NON-CURRENT                                                          |  |                |             |              
|Intellectual
    VoIP communications patent properties, net (Note 5) |  |                | 1,302,948   |              
|TOTAL
    ASSETS                                                     |  | $              | 1,705,624   |              
|LIABILITIES                                                          |  |                |             |              
|CURRENT                                                              |  |                |             |              
|Accounts
    payable and accrued liabilities                         |  | $              | 61,426      |              
|TOTAL
    LIABILITIES                                                |  | $              | 61,426      |              
|STOCKHOLDERS’
    equity                                             |  |                |             |              
|SHARE
    CAPITAL (Note 9)                                           |  | $              | 917,090     |              
|ADDITIONAL
    PAID-IN CAPITAL (Note 9)                              |  |                | 29,377,687  |              
|shares
    to be issued(Note 9)                                      |  |                | 759,721     |              
|deficit(Note 9)                                                      |  |                | (29,410,300 | )            
|TOTAL
    STOCKHOLDERS’ EQUITY                                       |  | $              | 1,644,198   |              
|TOTAL
    LIABILITIES AND STOCKHOLDERS’ EQUITY                       |  | $              | 1,705,624   |              



Nature and Continuance of Operations (Note 1)

Contingent Liabilities (Note
10)



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





3







INTERIM CONSOLIDATED STATEMENTS OF LOSS AND
COMPREHENSIVE LOSS

For the Three and Six Months Ended March
31,

(Unaudited – prepared by management)

(Expressed in U.S. Dollars)



|                                                      |  | Three Months Ended March 31, 2016 |               | Three Months Ended March 31, 2015 |  | Six Months Ended March 31, 2016 |             | Six Months Ended March 31, 2015
|----------------------------------------------------- |  | --------------------------------- | ------------- | --------------------------------- |  | ------------------------------- | ----------- | -------------------------------
|                                                      |  |                                   |               |                                   |  |                                 |             |                                
|EXPENSES                                              |  |                                   |               |                                   |  |                                 |             |                                
|                                                      |  |                                   |               |                                   |  |                                 |             |                                
|Amortization (Note 5)                                 |  | $                                 | 25,186        |                                   |  |                                 | 27,718      |                                
|Officers and Directors Fees (Note 6)                  |  |                                   | 24,429        |                                   |  |                                 | 28,500      |                                
|Legal fees (Note 6)                                   |  |                                   | 216,678       |                                   |  |                                 | 97,071      |                                
|Office & general                                      |  |                                   | 28,522        |                                   |  |                                 | 20,252      |                                
|Patent application expense                            |  |                                   | 175,314       |                                   |  |                                 | —           |                                
|Professional fees & services (Note 6)                 |  |                                   | 65,957        |                                   |  |                                 | 13,749      |                                
|Acquisition expenses (Note 4)                         |  |                                   | —             |                                   |  |                                 | —           |                                
|                                                      |  |                                   |               |                                   |  |                                 |             |                                
|Total expenses                                        |  |                                   | 536,086       |                                   |  |                                 | 187,290     |                                
|                                                      |  |                                   |               |                                   |  |                                 |             |                                
|NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD        |  | $                                 | (536,086      | )                                 |  |                                 | (187,290    | )                              
|Basic and diluted loss per common share               |  | $                                 | (0.00         | )                                 |  |                                 | (0.00       | )                              
|                                                      |  |                                   |               |                                   |  |                                 |             |                                
|Weighted-average number of common shares outstanding: |  |                                   |               |                                   |  |                                 |             |                                
|                                                      |  |                                   |               |                                   |  |                                 |             |                                
|Basic and diluted                                     |  |                                   | 1,040,455,868 |                                   |  |                                 | 990,660,711 |                                



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



4







INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three and Six Months Ended March
31,

(Unaudited – prepared by management)

(Expressed in U.S. Dollars)



|                                            |  | Three Months Ended |          | Six Months Ended
|------------------------------------------- |  | ------------------ | -------- | ----------------
|                                            |  | March 31           |          | March 31        
|                                            |  | 2016               |          | 2015            
|Cash Flows from Operating Activities        |  |                    |          |                 
|Net loss                                    |  | $                  | (536,086 | )               
|Add items not affecting cash:               |  |                    |          |                 
|Shares issued for services                  |  |                    | —        |                 
|Amortization                                |  |                    | 25,186   |                 
|Acquisition expenses                        |  |                    | —        |                 
|                                            |  |                    |          |                 
|Changes in non-cash working capital:        |  |                    |          |                 
|Accounts payable                            |  |                    | 39,710   |                 
|Subscriptions receivable                    |  |                    | (157,875 | )               
|Cash Flows from Operations                  |  |                    | (629,065 | )               
|                                            |  |                    |          |                 
|Cash Flows from Investing Activities        |  |                    |          |                 
|Intellectual VoIP properties                |  |                    | —        |                 
|Cash Flows Used In Investing Activities     |  |                    | —        |                 
|                                            |  |                    |          |                 
|Cash Flows from Financing Activities        |  |                    |          |                 
|Common shares                               |  |                    | 7,858    |                 
|Contributed surplus                         |  |                    | 385,018  |                 
|Shares to be Issued                         |  |                    | —        |                 
|Cash Flows Provided by Financing Activities |  |                    | 392,876  |                 
|                                            |  |                    |          |                 
|Increase (decrease) in cash                 |  |                    | (236,189 | )               
|                                            |  |                    |          |                 
|Cash, beginning of the period               |  |                    | 480,990  |                 
|                                            |  |                    |          |                 
|Cash, end of the period                     |  | $                  | 244,801  |                 



Supplemental cash flow information (Note 7)



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



5







INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY (DEFICIENCY)

(Unaudited – prepared by management)

(Expressed in U.S. dollars)





|                                                      |  | Common Shares |               | Shares to be
                                               Issued |  | Additional |         |         |  |        
|----------------------------------------------------- |  | ------------- | ------------- | ------------------------------------------------------------------ |  | ---------- | ------- | ------- |  | -------
|                                                      |  |               |               |                                                                    |  |            |         | Paid-in |  |        
|                                                      |  | Number        |               | Par Value                                                          |  | Value      |         | Capital |  | Deficit
|September 30, 2014                                    |  |               | 986,500.570   |                                                                    |  | $          | 863,134 |         |  | $      
|Common shares issued for debt conversion              |  |               | 3,842,000     |                                                                    |  |            | 3,842   |         |  |        
|Common shares issued for services                     |  |               | 318,141       |                                                                    |  |            | 318     |         |  |        
|Net loss for the period                               |  |               | —             |                                                                    |  |            | —       |         |  |        
|Balance at March 31, 2015                             |  |               | 990,660,711   |                                                                    |  | $          | 867,294 |         |  | $      
|Common shares issued for debt conversion              |  |               | 22,188,930    |                                                                    |  |            | 22,189  |         |  |        
|Common shares issued for services                     |  |               | 6,808,727     |                                                                    |  |            | 6,809   |         |  |        
|Shares to be issued for Anti-dilution Clause (Note 4) |  |               | —             |                                                                    |  |            | —       |         |  |        
|Net loss for the period                               |  |               | —             |                                                                    |  |            | —       |         |  |        
|Balance at September 30, 2015                         |  |               | 1,019,658,368 |                                                                    |  | $          | 896,292 |         |  | $      
|Common shares issued for debt conversion              |  |               | 9,697,500     |                                                                    |  |            | 9,698   |         |  |        
|Common shares issued for services                     |  |               | 1,100,000     |                                                                    |  |            | 1,100   |         |  |        
|Shares to be issued for Anti-dilution Clause (Note 4) |  |               | 10,000,000    |                                                                    |  |            | 10,000  |         |  |        
|Net loss for the period                               |  |               | —             |                                                                    |  |            | —       |         |  |        
|Balance at March 31, 2016                             |  |               | 1,040,455,868 |                                                                    |  | $          | 917,090 |         |  | $      



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



6







NOTES TO THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited – prepared by management)

March 31, 2016

(Expressed
in U.S. Dollars)









NOTE 1.	NATURE AND CONTINUANCE OF OPERATIONS



VOIP PAL.com, Inc. (the “Company”)
was incorporated in the state of Nevada in September 1997 as All American Casting International, Inc. The Company’s registered
office is located at 10900 NE 4th Street, Suite 2300, Bellevue, Washington in the United States of America.



Since March 2004, the Company has been developing
technology and patents related to VoIP related processes. All business activities prior to March 2004 have been abandoned and written
off to deficit.



In December 2013, the Company completed the
acquisition of Digifonica (International) Limited (“Digifonica”), a private company incorporated on September 7, 2004
in Gibraltar.



These consolidated financial statements have
been prepared on the basis of a going concern, which contemplates the realization of assets and discharge of liabilities in the
normal course of business. The Company is in various stages of product development and continues to incur losses and, at March
31, 2016, had an accumulated deficit of $29,410,300 (September 30, 2015 - $28,162,038). The ability of the Company to continue
operations as a going concern is dependent upon raising additional working capital, settling outstanding debts and generating profitable
operations. These material uncertainties may cast significant doubt about the Company’s ability to continue as a going concern.
Should the going concern assumption not continue to be appropriate, further adjustments to carrying values of assets and liabilities
may be required. There can be no assurance that capital will be available as necessary to meet these continued developments and
operating costs or, if the capital is available, that it will be on the terms acceptable to the Company. The issuances of additional
stock by the Company may result in a significant dilution in the equity interests of its current shareholders. Obtaining commercial
loans, assuming those loans would be available, will increase the Company’s liabilities and future cash commitments. If the
Company is unable to obtain financing in the amounts and on terms deemed acceptable, its business and future success may be adversely
affected.



NOTE 2.	BASIS OF PRESENTATION



The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).



NOTE 3.	SIGNIFICANT ACCOUNTING POLICIES



Principles of Consolidation

These consolidated financial statements have
been prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiary Digifonica. All intercompany
transactions and balances have been eliminated. As at March 31, 2016, Digifonica had no activities.



Use of Estimates

The preparation of these consolidated financial
statements required management to make estimates and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from these estimates. Where estimates have been used financial results as determined by actual events could differ
from those estimates.



Cash

Cash consists of cash on hand and monies
held in checking and savings accounts. The Company had $244,801 and $773,275 in cash on March 31, 2016 and September 30, 2015,
respectively.



7







Intangible Assets

Intangible assets, consisting of Intellectual
VoIP communication patent properties are recorded at cost and amortized over the assets estimated life on a straight line basis.
Management considers factors such as remaining life of the patents, technological usefulness and other factors in estimating the
life of the assets.



The carrying value of intangible assets are
reviewed for impairment by management of the Company at least annually or upon the occurrence of an event which may indicate that
the carrying amount may be less than its fair value. If impaired, the Company will write-down such impairment. In addition, the
useful life of the intangible assets will be evaluated by management at least annually or upon the occurrence of an event which
may indicate that the useful life may have changed.



Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurement, defines
fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction
between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.
The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability,
not on assumptions specific to the entity.



The Company classifies financial assets and
liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending
on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for
those arising from certain related party transactions which are accounted for at the transferor’s carrying amount or exchange
amount.



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



U.S. GAAP establishes a framework for measuring
fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is
defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable
inputs. The standard describes the following fair value hierarchy based on three levels of inputs, of which the first two are considered
observable and the last unobservable, that may be used to measure fair value:



Level 1: Quoted prices in active markets for
identical assets and liabilities.



Level 2: Inputs other than Level 1 that are
observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full
term of the assets or liabilities.



Level 3: Unobservable inputs that are supported
by little or no market activity and that are significant to the fair value of the assets or liabilities.



The fair value of cash is classified as Level
1 at March 31, 2016 and September 30, 2015.



The Company classifies its financial instruments
as follows: Cash is classified as held for trading, and is measured at fair value. Accounts payable and accrued expenses are classified
as other financial liabilities, and have a fair value approximating their carrying value, due to their short-term nature.



Income Taxes

Deferred income taxes have been provided for
temporary differences between financial statement and income tax reporting under the asset and liability method, using expected
tax rates and laws that are expected to be in effect when the differences are expected to reverse. A valuation allowance is provided
when realization is not considered more likely than not.



The Company’s policy is to classify income
tax assessments, if any, for interest expense and for penalties in general and administrative expenses. The Company’s income
tax returns are subject to examination by the IRS and corresponding states, generally for three years after they are filed.



8







Loss per Common Share

Basic loss per share is calculated using the
weighted-average number of common shares outstanding during each period. Diluted income per share includes potentially dilutive
securities such as outstanding options and warrants outstanding during each period. To calculate diluted loss per share the Company
uses the treasury stock method and the If-converted method.



For the period ended March 31, 2016 and September
30, 2015 there were no potentially dilutive securities included in the calculation of weighted-average common shares outstanding.



Derivatives

We account for derivatives pursuant to ASC
815, Accounting for Derivative Instruments and Hedging Activities. All derivative instruments are recognized in the consolidated
financial statements and measured at fair value regardless of the purpose or intent for holding them. We record our interest rate
and foreign currency swaps at fair value based on discounted cash flow analysis and for warrants and other option type instruments
based on option pricing models. The changes in fair value of these instruments are recorded in income or expense.



Stock based compensation

The Company recognizes compensation expense
for all stock-based payments made to employees, directors and others based on the estimated fair values of its common stock on
the date of issuance.



The Company determines the fair value of the
share-based compensation payments granted as either the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured
using the stock price and other measurement assumptions as of the earlier of either the date at which a commitment for performance
to earn the equity instrument is reached or the date the performance is complete.



The Company recognizes compensation expense
for stock awards with service conditions on a straight-line basis over the requisite service period, which is included in operations.



Concentrations of Credit Risk

The Company maintains cash at financial institutions,
which at times, may be in excess of insured limits. The Company has not experienced any losses to date as a result of this policy
and, in assessing its risk, the Companies’ policy is to maintain cash only with reputable financial institutions.  One
of the operating accounts had a cash value of $244,801 as of March 31, 2016 which did not exceed the Federal Deposit Insurance
Corporation insurance limit of $250,000.



Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update(ASU) No. 2014-10, “Development Stage Entities (Topic 915):
Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic
810, Consolidation”. This ASU does the following, among other things: a) eliminates the requirement to present inception-to-date
information on the statements of income, cash flows, and shareholders' equity, b) eliminates the need to label the financial statements
as those of a development stage entity, c) eliminates the need to disclose a description of the development stage activities in
which the entity is engaged, and d) amends FASB ASC 275, “Risks and Uncertainties”, to clarify that information on
risks and uncertainties for entities that have not commenced planned principal operations is required. The amendments in ASU No.
2014-10 related to the elimination of Topic 915 disclosures and the additional disclosure for Topic 275 are effective for public
companies for annual and interim reporting periods beginning after December 15, 2014. Early adoption is permitted. The Company
has evaluated this ASU and adopted it beginning with the period ended September 30, 2015.



In August 2014, the FASB issued ASU No. 2014-15
"Presentation of Financial Statements-Going Concern." The provisions of ASU No.2014-15 require management to assess an
entity’s liability to continue as a going concern by incorporating and expanding upon certain principles that are currently
in U.S. audit standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require evaluation
of every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s
plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s
plans, (5) require an express statement and other disclosures when substantial doubt in not alleviated, and (6) require an assessment
for a period of one year after the date that the financial statements are issued (or available to be issued).  The amendments
in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.
The Company is currently assessing the impact of ASU No. 2014-15 on the Company’s consolidated financial statements.



Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
interim consolidated financial statements.



9







NOTE 4.	INVESTMENT IN DIGIFONICA (INTERNATIONAL)
LIMITED



The Company acquired Digifonica in December
2013. Pursuant to the terms in the Share Purchase Agreement (the “SPA”) the Company acquired 100% of Digifonica for
cash and common shares of the Company from the Seller (the “Seller”). The SPA included an Anti-Dilution Clause (the
“Anti-dilution Clause”) that requires the Company to maintain the Sellers percentage ownership of the Company at 40%
by issuing the Seller a proportionate number of common shares of any future issuance of the Company’s common shares.



The assets acquired through the acquisition
were VoIP related patented technology. This patented technology includes patents for Lawful Intercept, routing, billing, rating
mobile gateway, advanced interoperability solutions, intercepting voice over IP communications, and uninterrupted transmission
of internet protocol transmissions during endpoint changes.



Shares issued pursuant to the Anti-dilution
Clause are recorded as a share issuance cost within the Additional Paid-in Capital account. As at September 30, 2015, the Company
accrued 18,839,786 common shares to be issued at $0.05 per share, valued at $941,989 to the Seller of Digifonica pursuant to the
Anti-dilution Clause.



During the six months ended March 31, 2016
the Company issued 10,000,000 common shares at $0.05 per share, valued at $500,000 and had accrued 8,839,786 common shares at $0.05
per share, valued at $441,989 to the seller of Digifonica pursuant to the Anti-dilution Clause.



NOTE 5.	INTANGIBLE ASSETS



The Company acquired certain patents and technology
from Digifonica in December 2013 (See Note 4). These assets have been recorded in the financial statements as intangible assets.
These assets are being amortized over twelve (12) years on a straight line basis.



A summary of intangible assets as of March 31, 2016 and September
30, 2015 is as follows:



|                                       |  | March 31, 2016 |           | September 30, 2015
|-------------------------------------- |  | -------------- | --------- | ------------------
|VoIP Intellectual property and patents |  | $              | 1,582,426 |                   
|Accumulated amortization               |  |                | (279,478  | )                 
|Net book value                         |  | $              | 1,302,948 |                   



There were no disposals of any intangible assets in the years presented.



There was a non-cash acquisition expense of
$500,000 related to the issuance of additional shares to the seller of Digifonica (See Note 4).



NOTE 6.	RELATED PARTY TRANSACTIONS



During the six months ended March 31, 2016
the Company incurred $13,958 (2015 - $46,528) in legal fees paid to a Director in his capacity as legal counsel. Of this amount,
$5,000 was paid by the issuance of shares for services.



During the six months ended March 31, 2016
the Company paid $50,000 (2015 – Nil) for professional fees and services, issuing 1,000,000 Common shares in the capital
stock of the Company to an officer of the Company.



Included in Shares to be issued as at March
31, 2016 is $650,000 (2015 - $nil) for unpaid Officers and Directors fees and $90,000 (2015 - $nil) for professional fees &
services paid to a director for consulting services provided.



NOTE 7.	SUPPLEMENTAL CASH FLOW INFORMATION



During the six months ended March 31, 2016
and 2015, the Company paid $nil income taxes and $nil in interest.



NOTE 8.	CONVERTIBLE DEBENTURES



The Company routinely issues convertible debentures
with no interest rates that are due on demand. The convertible debentures are convertible at fixed conversion rates. See note 9
for details of common shares issued during the year from the conversion of convertible debentures.



10







NOTE 9.	SHARE CAPITAL



Capital Stock Authorized:



1,101,000,000 common voting
shares with a par value of $0.001 each

1,000,000 convertible preferred
shares with a par value of $0.01 each



During the year ended September 30, 2015, the
Company issued 26,030,930 common shares valued between $0.05 - $0.08 per common share to convert $1,293,183 of convertible debentures.



During the year ended September 30, 2015, the
Company issued 7,126,868 common shares valued between $0.05 - $0.06 per common share for services received.



During the three months ended December 31,
2015, the Company issued 10,000,000 common shares at $0.05 per common share to the seller of Digifonica pursuant to the Anti-dilution
Clause.



During the three months ended December 31,
2015 the Company issued 1,840,000 common shares valued between $0.05 - $0.06 per common share to convert $1,800,000 of convertible
debentures.



During the three months ended December 31,
2015, the Company issued 1,100,000 common shares valued at $0.05 per common share for services received.



During the three months ended March 31, 2016,
the Company issued 7,857,500 common shares valued at $0.05 per common share to convert $392,875 of convertible debentures. As at
March 31, 2016 the Company has $759,721 to be settled through shares-to-be-issued at $0.05 per common share for services received
during the year ended September 30, 2015.



NOTE 10.	CONTINGENT LIABILITIES



The Company is party to three pending litigation cases as follows:





|i)   | Locksmith
    Financial Corporation, Inc. et al. v Voip-Pal.com Inc. (Case No A-15-717491-C) filed in Clark County District Court (the “State
    Case”)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | On
    March 24, 2014, the Company resolved to freeze 95,832,000 common shares that were issued to a company controlled by a former
    director (the “defendant”) in fiscal 2013 and accounted for at a cost of $1,443,000.  The Company resolved
    to freeze the common shares as the Company believes that the shares were issued as settlement of a line of credit that the
    Company believes to have been legally unsupported. The defendant alleges that the freeze and the Company’s actions constituted
    fraud and a breach of securities laws.  The Company denies any wrongdoing. Currently the State Case is entering
    the discovery phase of litigation and the outcome is undeterminable.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|ii)  | Voip-Pal.com
    Inc. v Richard Kipping, et al (Case No. 2:15-cv-01258-JAD-VCF) filed in United States District Court (the “Federal Case”)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | On
    July 2, 2015, the Company filed a case against a former director, a shareholder and the company controlled by a former director.  The
    Company alleges that the common shares issued in the State Case and an additional 7,200,000 common shares were fraudulently
    obtained and that the shares have been unlawfully transferred to other entities.  The proceedings in the Federal
    Case have been stayed pending a final determination of the issues in the State Case.  The outcome of the case is
    undeterminable.                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|iii) | Voip-Pal.com
    Inc. v Apple, Inc. (Case No. 2:16-CV-00260) & Verizon Wireless Services, LLC, Verizon Communications Inc., AT&T Corp
    (Case No. 2:16-VC-00271)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | In
    February, 2016, the Company filed claims totaling $7 Billion in patent infringement lawsuits in the United States District
    Court, District of Nevada against several major telephone and media-related companies.  The Company followed the
    filings by initiating discussions with the defendants in each suit.                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | Subsequent
    to the period, on May 9, 2016 these lawsuits were officially served to the three defendant companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             





NOTE 11.	SEGMENTED INFORMATION



The Company operates in one reportable segment
being the acquisition and development of VoIP-related intellectual property including patents and technology. All intangible assets
are located in the United States of America.





11







Item 2. 	 Management’s
Discussion and Analysis of Financial Condition and Results of Operations





Management’s
Discussion and Analysis of Financial Condition and Results of Operations



The following management's discussion and analysis (MD&A) should be read in conjunction with our interim consolidated
financial statements for the quarterly period ended March 31, 2016 and notes thereto.



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION



This MD&A for the three months ending March
31, 2016 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amending,
and Section 21E of the Securities Exchange Act of 1934, as amending. Forward-looking statements may be identified by the use
of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”,
“anticipate”, “predict”, “probable”, “possible”, “should”, “continue”,
or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following
information have been compiled by our management on the basis of assumptions made by management and are considered by management
to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.



The assumptions used for purposes of the forward-looking
statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible
changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the
exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or
projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance
can be given that any of the assumptions relating to the forward-looking statements specified in the following information are
accurate, and we assume no obligation to update any such forward-looking statements



CORPORATE
HISTORY, OVERVIEW AND PRINCIPAL BUSINESS



VOIP-PAL.com Inc. (“Voip-Pal”,
the ”Company”)was incorporated in the state of Nevada in September
1997 as All American Casting International, Inc. and changed its name to VOIP MDI.com in 2004 and subsequently to Voip-Pal.Com
Inc. in 2006. Since March 2004, the Company has been in the development stage of becoming a VoIP re-seller, a provider of a proprietary
transactional billing platform tailored to the points and air mile business, and a provider of anti-virus applications for smartphones.
All business activities prior to March 2004 have been abandoned and written off to deficit.



In December 2013, the Company completed the
acquisition of Digifonica (International) Limited, a private company incorporated on September 7, 2004 in Gibraltar.



Voip-Palisa technical
leader in thebroadband Voice-over-Internet
Protocol
(“VoIP”)
market with the ownership and continuingdevelopment of a portfolio of leading-edge VoIP Patents.
Voip-Pal’s primary products are VoIP-related patented technology. The Company has spent several years testing and developing
this technology. The Company is currently seeking to monetize the patents through a corporate transaction, an asset sale, or licensure
of its products.



Voip-Pal’s intellectual property value
is derived from ten issued USPTO patents. Voip-Pal inventions described in these patents provide the means to integrate VoIP services
with any of the legacy telecommunications systems to create a seamless service using either legacy telephone numbers or IP addresses,
and enhance the performance and value of VoIP implementations worldwide.



Voice over IP (Internet Protocol), or VoIP,
has been and continues to be a green field for innovation that has spawned numerous inventions, greatly benefitting consumers large
and small across the globe. VoIP is used in many places and by every modern telephony system vendor, network supplier, and retail
and wholesale carrier.



12







Results of Operations



The Company’s operating costs consist
of expenses incurred to monetizing, selling and licensing its VoIP patents. Other operating costs include expenses for legal, accounting
and other professional fees, financing costs, and other general and administrative expenses.



Comparison of the Three Months and Six Month
Ending March 31, 2016 and 2015



|                                    |  | Three months ending March 31 |          | Increase/ |  |           
|----------------------------------- |  | ---------------------------- | -------- | --------- |  | ----------
|                                    |  | 2016                         |          | 2015      |  | (Decrease)
|Revenue                             |  | $                            | —        |           |  | $         
|Cost of Revenue                     |  |                              | —        |           |  |           
|Gross Margin                        |  |                              | —        |           |  |           
|General and administrative expenses |  |                              | (510,900 | )         |  |           
|Amortization of intangible assets   |  |                              | (25,186  | )         |  |           
|Write-down acquisition costs        |  |                              | —        |           |  |           
|Net loss                            |  | $                            | (536,086 | )         |  | $         





|                                    |  | Six months ending March 31 |            | Increase/ |  |           
|----------------------------------- |  | -------------------------- | ---------- | --------- |  | ----------
|                                    |  | 2016                       |            | 2015      |  | (Decrease)
|Revenue                             |  | $                          | —          |           |  | $         
|Cost of Revenue                     |  |                            | —          |           |  |           
|Gross Margin                        |  |                            | —          |           |  |           
|General and administrative expenses |  |                            | (697,891   | )         |  |           
|Amortization of intangible assets   |  |                            | (50,372    | )         |  |           
|Write-down acquisition costs        |  |                            | (500,000   | )         |  |           
|Net loss                            |  | $                          | (1,248,263 | )         |  | $         





REVENUES, COST OF REVENUES AND GROSS MARGIN



The Company had no revenues, cost of revenues
or gross margin for the three and six month periods ending March 31, 2016 and 2015.



GENERAL AND ADMINISTRATIVE EXPENSES



General and administrative expenses for the
three months ending March 31, 2016 totaled $510,900 compared to $159,572 during the same period in 2015.  The increase
in general and administrative expenses of $351,328, or 220% more than the previous year, was primarily due to higher legal, website
development, and stock based compensation paid out by the Company during the period ended March 31, 2016.



General and administrative expenses for the
six months ending March 31, 2016 totaled $697,891 compared to $269,067 during the same period in 2015. The increase in general
and administrative expenses of $428,824 or 159% more than the previous year, was primarily due to higher legal and patent related
expenses paid out by the company during the period ended March 31, 2016.



AMORTIZATION OF INTANGIBLE ASSETS



Amortization of intellectual VoIP communications
patent properties for the three months ending March 31, 2016 totaled $25,186 compared to $27,718 during the same period in 2015.
The decrease in amortization expenses of $2,532, or -9% over the previous period was due to the full amortization reached on certain
intangible assets in the prior period.



Amortization of the intellectual VoIP communications
patent properties for the six months ending March 31, 2016 totaled $50,372 compared to $50,954 during the same period in 2015,
The decreased in amortization expenses of $582, or -1% over the previous period was due to the full amortization reached on certain
intangible assets in the prior period.



There was a $500,000 write-down of intangible
costs related to common shares issued to the Seller of Digifonica pursuant to the Anti-dilution Clause (see note 4) during the
six months ended March 31, 2016. There was no impairment or write-down of intangible assets by the Company for the same period
ended December 31, 2014.



13







The Company follows GAAP (FAS 142) and is amortizing
its intangibles over the remaining patent life of twelve (12) years. The Company evaluates its intangible assets annually and determines
if the fair market value is less than its historical cost. If the fair market value is less, then impairment expense is recorded
on the Company’s financial statements. The intangible assets on the financial statements of the Company relate primarily
to the Company’s acquisition of Digifonica (International) Limited.



INTEREST EXPENSE



The Company had no financing or interest costs
for the three or six month periods ending March 31, 2016 and 2015.



NET LOSS



The Company reported a net loss of $536,086
for the three months ended March 31, 2016 compared to a net loss of $187,290 for the same period in 2015.  The net loss
increase of $348,796, or 186% over the same period in 2015 was due primarily to an increase in legal and patent related expenses.



The Company reported a net loss of $1,248,263
for the six months ended March 31, 2016 compared to a net loss of $ 320,021 for the same period on 2015, The net loss increase
of $ 928,242, or 290%, over the same period In 2015 was due primarily to the write down of acquisition cost of $500,000.



LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2016, the Company had an accumulated deficit of $28,874,214 as compared to an accumulated deficit of $26,550,271
at March 31, 2015. As of March 31, 2016, the Company had a working capital surplus of $341,250 as compared to a working capital
surplus of $4,064 at March 31, 2015. The increase in the Company’s working capital surplus of $337,186 was primarily due
to the sale of common stock during the year ended September 30, 2015 which increased the Company’s cash account as of March
31, 2016.



Net cash used by operations for the three months
ending March 31, 2016 and 2015 was $629,065 and $122,072, respectively. The increase in net cash used for the three months ending
March 31, 2016 as compared to the three months ending March 31, 2015 was primarily due to an increase in legal and patent related
expenses and other general and administrative costs.



Net cash used by operations for the six months
ending March 31, 2016 and 2015 was $784,041 and $231,568, respectively. The increase in net cash used for the six months ending
March 31, 2016 as compared to the six months ending March 31, 2015 was primarily due to an increase in legal and patent related
expenses and other general and administrative costs.



Net cash used in investing activities for the
three months ending March 31, 2016 and 2015 was $(Nil) and $(Nil). Net cash provided in financing activities for the three months
ending March 31, 2016 and 2015 was $392,876 and $177,373, respectively. The increase in net cash provided by financing activities
of $215,502 was primarily due to an increase in shares issued for cash during the period ended March 31, 2015.



Net cash used in investing activities for the
six months ending March 31, 2016 and 2015 was $(143,309) and $(Nil). The increase in cash used in investing activities was due
to increased expenditures on patents for the period ended March 31, 2016. Net cash provided in financing activities for the six
months ending March 31, 2016 and 2015 was $396,876 and $214,188, respectively. The increase in net cash provided by financing activities
of $182,688 was primarily due to an increase in shares issued for cash during the period ended March 31, 2015.



Liquidity



The Company primarily finances its operations
from cash received through the exercise of convertible loans from investors and through the payment of stock-based compensation.
The Company believes its resources are adequate to fund its operations for the next 12 months.



Off Balance Sheet Arrangements

There are no off balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.



Impact of Inflation

We believe that inflation has not had a material
impact on our results of operations for the three and six months ending March 31, 2016. We cannot assure you that future inflation
will not have an adverse impact on our operating results and financial condition.





14







Item 3.
	 Quantitative and Qualitative Disclosures About Market Risk.



As a smaller reporting company we are not required
to provide the information required by this Item.



Item 4.
	 Controls and Procedures.



Evaluation of Disclosure Controls and Procedures



Management conducted an evaluation of the effectiveness
of the Company's internal control over financial reporting as of March 31, 2016. In making this assessment, management used the
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission, or COSO. The COSO framework summarizes each of the components of a company's internal control system, including (i)
the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring.
In management's assessment of the effectiveness of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f))
as required by Exchange Act Rule 13a-15(c), our management concluded as of the end of the fiscal period covered by this Quarterly
Report on Form 10-Q that our internal control over financial reporting has not been effective. The company intends, prior to the
next fiscal year as the company's finances improve, to hire additional accounting staff and implement additional controls.



As defined by Auditing Standard No. 5, “An
Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence
Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board ("PCAOB"), a material
weakness is a deficiency or combination of deficiencies that results more than a remote likelihood that a material misstatement
of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above,
management identified the following control deficiencies that represent material weaknesses as of March 31, 2016:



|1) |  | Lack of segregation of duties. At this time, our resources
and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within
our internal control system. Management will periodically reevaluate this situation.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2) |  | Lack of an independent audit committee. Although the
Board of Directors serves an audit committee it is not comprised solely of independent directors. We may establish an audit committee
comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent
directors and to maintain such a committee.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3) |  | Insufficient number of independent directors. At the
present time, our Board of Directors does not consist of a majority of independent directors, a factor that is counter to corporate
governance practices as set forth by the rules of various stock exchanges.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our management determined that these deficiencies
constituted material weaknesses. Due to a lack of financial resources, we are not able to, and do not intend to, immediately take
any action to remediate these material weaknesses. We will not be able to do so until we acquire sufficient financing to do so.
We will implement further controls as circumstances, cash flow, and working capital permit. Notwithstanding the assessment that
our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial
statements fairly present our financial position, results of operations and cash flows for the years covered thereby in all material
respects.



Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under
the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer, to allow timely decisions regarding required disclosure.



Limitations on the Effectiveness of Internal
Controls



Our management does not expect that our disclosure
controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive
Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people,
or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may deteriorate.





15









Changes in Internal Control Over Financial Reporting



There have been no changes in our internal
controls over financial reporting during the quarter ended March 31, 2016 that have materially affected or are reasonably likely
to materially affect such controls.





PART II—OTHER INFORMATION



Item 1.
	 Legal Proceedings.



There have been no material developments during
the current quarter for our legal proceedings that were not disclosed in our registration statement on Form 10 filed on April 22,
2016. For a full disclosure of legal proceedings, please reference our Form 10 registration.



Item 1A.
	 Risk Factors.



As a smaller reporting company we are not required
to provide the information required by this Item.



Item 2.
	 Unregistered Sales of Equity Securities and Use of Proceeds.



The transactions described in this section
were exempt from securities registration as provided by Section 4(a)(2) of the Securities Act for transactions not involving a
public offering.



During the period ending March 31, 2016, the
Company issued 4,457,500 shares of common stock at the price of $0.05 per share to several individuals in debt conversions. During
the same period, the Company issued 3,000,000 shares to two individuals for services rendered.



Item 3.
	 Defaults Upon Senior Securities.



None.



Item 4.
	 Mine Safety Disclosures.



Not applicable.



Item 5.
Other Information.



None.



16







Item 6.
Exhibits.



|Exhibit Number |  | Description of Exhibits             |  |               
|-------------- |  | ----------------------------------- |  | --------------
|               |  |                                     |  |               
|31.1           |  | Rule 13a-14(a) Certification of CEO |  | Filed herewith
|31.2           |  | Rule 13a-14(a) Certification of CFO |  | Filed herewith
|32.1           |  | Section 1350 Certification          |  | Filed herewith



SIGNATURES



In accordance with the requirements of the
Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|DATED: May 16, 2016 | By:
    /s/ Emil Malak  
|------------------- | ------------------------
|                    | Emil Malak              
|                    | Chief Executive Officer 
|                    |                         
|DATED: May 16, 2016 | By:
    /s/ D. Barry Lee
|                    | D. Barry Lee            
|                    | Chief Financial Officer 





17