Today's students are people who were born in digital world. They are called Digital Natives since they have grown up using computers, internet, videogames, mobile phones and other technologies of digital age. Technology is a part of their lives. They have been networked most of their lives. They have a little patience for traditional University lectures based on step-by-step instructions and theoretical approach to problem solving. Universities must reconsider current methodology of teaching, learning content in order to include new technologies and spark the student's interest in learning and further education. In order to improve current situation many Universities have begun to employ a variety of mobile technologies for game-based teaching and learning. Game Based Mobile Learning (GBML) is based on using mobile educational games specifically utilized for learning which is also played on a mobile phone, smart phone, PDA or handheld devices. The main aim of GBML is to use mobile games to enhance motivation of students in knowledge acquisition and enhance effectiveness of learning content transfer or other specific learning outcomes. However, just having technical features does not make a mobile educational game either engaging or pedagogical. The challenges in designing educational games for mobile learning are to provide usability and positive gaming user experiences in the same application, in order to achieve learning outcomes. Mobile educational games, especially location-based based games played on mobile devices using GPS integrate player's position (indoor or outdoor) into the game play and can support learning and user experience by adding virtual elements in teaching and learning. In this paper we discuss the results of a pilot usability study on Geostep, a location based mobile game-based learning application for formal and informal educational developed at Faculty for Information Technologies, University "Mediterranean", Montenegro. Geostep is played on mobile phone with GPS receiver. It is designed for research how game based mobile game applications can contribute to students' engagement on learning. Before pilot and its results discussed we describe the design, game-play procedure and usability method used for Geostep. During pilot study the usability of Geostep application was tested with students (n= 81) on different IT courses at University "Mediterranean" and University of Belgrade. The results showed that Geostep application fit in digital lifestyle of future students and have great motivation power who enjoyed playing the Geostep. Finding of this study can contribute to game studies and understanding how learning occurs through game play and how games can be used to support formal and informal education.