Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended July 31, 2009.
[ ] TRANSITION REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ________
Commission file number 333-61538
METRO ONE DEVELOPMENT, INC.
(Name of small business issuer in its charter)
DELAWARE 98-0231687
---------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Avenida Mesita San Clemente, CA 92673
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (949) 682-7891
Securities registered under Section 12(b) of the Exchange Act:
NONE.
Securities registered under Section 12(g) of the Exchange Act:
NONE.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ]; No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes [ ]; No [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]; No [ ]
Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Website, if any, every Interactive Data file
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(section 229.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post
such files). Yes [ ]; No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
1
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 [ ]
(Do not check if a smaller
reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes [ ]; No [X]
State the aggregate market value of the voting and non-voting common equity,
consisting solely of common stock, held by non-affiliates computed by reference
to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the
registrant's most recently completed second fiscal quarter: $1,120,109
(based on a total of shares of the registrant's common stock held
by non-affiliates on January 29, 2010, at the closing price of $0.077 per share)
The number of shares of outstanding common stock of the registrant as of
July 7, 2010 was 322,495,969.
Documents incorporated by reference: None.
2
METRO ONE DEVELOPMENT, INC.
FORM 10-K
TABLE OF CONTENTS
PAGE NO.
PART I
ITEM 1. Business...............................................4
ITEM 1A. Risk Factors...........................................6
ITEM 2. Properties............................................ 9
ITEM 3. Legal Proceedings..................................... 9
ITEM 4. (Removed and Reserved)
PART II
ITEM 5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities............................................10
ITEM 6. Selected Financial Data...............................12
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................12
ITEM 7A. Quantitative and Qualitative Disclosures About
Market Risk...........................................19
ITEM 8. Financial Statements and Supplementary Data.....F1 - F18
ITEM 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure...................20
ITEM 9A(T) Controls and Procedures...............................20
ITEM 9B. Other Information.....................................22
PART III
ITEM 10. Directors, Executive Officers and Corporate
Governance............................................22
ITEM 11. Executive Compensation................................24
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters............25
ITEM 13. Certain Relationships and Related Transactions, and
Director Independence.................................26
ITEM 14. Principal Accounting Fees and Services................27
ITEM 15. Exhibits, Financial Statement Schedules...............27
3
PART I
ITEM 1. BUSINESS
HISTORICAL DEVELOPMENT
We incorporated in the State of Delaware on July 21, 2000. We immediately
acquired International Mount Company Limited, a private corporation. In
October 2003, we acquired the assets and liabilities of Compuquest, Inc.
through our subsidiary International Mount. Compuquest was incorporated under
the laws of Ontario, Canada in November 1989. On May 18, 2004, we acquired
the assets and liabilities of Vital Baby Innovations, Inc., a Canadian company
headquartered in Toronto, Ontario.
On February 28, 2005, we advanced the sum of $200,000 as a secured loan to
1637033 Ontario Limited of the City of Vaughan in the Province of Ontario in
Canada. The borrower was subsequently found to be in default of the terms of
the loan and the shares of the borrower were surrendered by the stockholder
to us in full and final settlement of the outstanding loan. The assets of the
borrower included 100% of the outstanding stock of a private corporation known
as Helios/Oceana Ltd. which was primarily in the business of providing system
integration services related to computer hardware and software.
On July 5, 2005, we entered into an Asset Sale Agreement with Vital Products,
Inc. We agreed to sell all of the equipment used in our Childcare Division.
In exchange for the Childcare Division's assets, Vital Products agreed to
issue 1,000,000 shares of its common stock having an aggregate fair market
value of $250,000 to a trust which held the shares for the benefit of the
stockholders of our Company, and two term notes that have been paid in full.
On July 19, 2005, we entered into an agreement to purchase all of the issued
and outstanding shares of Infinity Technologies, Inc., a computer hardware
provider.
On January 10, 2006, we entered into an agreement to purchase all of the
issued and outstanding shares of Island Corporation, a company involved in
computer hardware distribution focusing in the medical field.
On January 31, 2006, we entered into an agreement to purchase certain assets
of Solutions In Computing, Inc., a supplier of computer hardware and software
focusing in the entertainment field.
During May 2006, we amalgamated all of our subsidiaries into On the Go
Technologies, Inc.
On March 18, 2008, we entered into a binding agreement with FTS Group, Inc.
and OTG Technologies Group, Inc., a Florida corporation and wholly-owned
subsidiary of FTS Group, Inc. (together, "FTS"), whereby FTS agreed to purchase
certain assets of our value-added reseller business unit, d/b/a On The Go
Technologies Group, including its goodwill and intellectual property. On
June 6, 2008, we agreed to amend certain terms of the binding agreement.
On July 14, 2008, FTS notified us that it intended to terminate this
transaction. We believe FTS breached its agreements with us and that the
promissory note issued pursuant to the binding agreement, as amended, is
in default. We intend to pursue all remedies that are available to us.
As of March 18, 2008 we discontinued all operations as a valued-added
reseller.
As a result of the sale of the value-added reseller business, we changed
our business focus to that of a custom builder and property developer in
the Greater Toronto Area in Canada and subsequently changed our name from
On The Go Healthcare, Inc. to Metro One Development, Inc. effective
April 14, 2008.
4
On May 1, 2009 we were redefined as a development stage company and on
June 1, 2009, we began marketing a series of interactive media displays,
specializing in touchless, gesture - hand and body motion enabled software
solutions that provide an innovative new way of interfacing with consumers.
We believe this technology is rapidly becoming one of the most effective
ways of engaging people in a public space, providing both entertainment and
relevant information.
OUR BUSINESS
During the fiscal year ended July 31, 2009, we operated primarily as an
interactive media display development company specializing in touchless,
gesture - hand and body motion enabled software solutions.
SALES AND MARKETING
Our sales and marketing strategies for our new business have been created
based on specific target markets. We are currently developing a marketing
program to target customers in the Greater Toronto Area. As of July 31, 2009
and July 21, 2010, we did not have any sales representatives in place to
further our marketing plans.
EMPLOYEES
As of July 31, 2009 and July 21, 2010, we had 2 full-time employees and
2 part-time employees.
CUSTOMERS
We are operating three installations in two shopping malls in southwestern
Ontario. We currently have no advertising revenue from our installations.
COMPETITION
We compete with other manufacturers and distributors who offer one or more
products that compete with the products we sell. However, we believe that
no single competitor serving our markets offers as competitive a price as
we do. Our principal means of competition are our quality, reliability,
and value-added services, including delivery and service alternatives.
Our industry is highly competitive, characterized by the frequent introduction
of new products and includes numerous domestic and foreign competitors, some
of which are substantially larger and have greater financial and other
resources than we do. Our competition includes:
* Gesturetek
DISTRIBUTION
We distribute our products through one primary point of distribution located
in Concord, Ontario, Canada. We plan to distribute our products from other
distribution facilities if and when required. However, we have not committed
our resources at this time for any additional distribution facilities.
PRODUCT DEVELOPMENT
Currently, our development efforts are limited to our new line of interactive
media displays. We do not intend to further develop any other products until
we raise additional funding.
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MANUFACTURING AND PRODUCT SOURCING
We intend to manufacture our interactive media display that is currently
under development. We intend for our operations to rely on a just-in-time
manufacturing processes. With just-in-time, production is triggered by
immediate customer demand and inventories of finished goods are either
nonexistent or kept to a minimum. We intend to only build products to meet a
customer's shipment schedule.
We anticipate that we will rely on subcontractors to manufacture the components
of our products. We plan to purchase all of the parts from the subcontractors
and perform the final assembly in our facility.
The nature of the relationships with these subcontractors is that the
subcontractor holds our proprietary processes so that the products are
exclusively those of our Company and cannot be used for other companies.
ITEM 1A. RISK FACTORS
RISKS RELATED TO OUR BUSINESS
OUR INDEPENDENT AUDITORS HAVE EXPRESSED DOUBT ABOUT OUR ABILITY TO CONTINUE
AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE FINANCING.
In their report dated July 28, 2010, our independent registered public
accounting firm has expressed doubt about our ability to continue as a going
concern in our financial statements for the fiscal year ended July 31, 2009.
The auditors raised concerns about our ability to continue as a going concern
as a result of losses during the year and working capital deficit. The auditors
also raised concerns about our need to obtain additional financing to continue
our operations. We may not be able to obtain sufficient additional funds in the
future. The auditors also state that these conditions cause substantial doubt
about our ability to continue as a going concern. A failure to continue as a
going concern would require that stated amounts of assets and liabilities be
reflected on a liquidation basis that could differ from the going concern
basis.
WE HAVE HAD LOSSES SINCE OUR INCEPTION AND EXPECT LOSSES TO CONTINUE IN THE
FORESEEABLE FUTURE. WE MAY NEVER BECOME PROFITABLE.
We had a net loss of $3,729,286 for the year ended July 31, 2009 and a net
loss of $12,058,773 for the year ended July 31, 2008. Our future operations
may not be profitable if we are unable to develop our business. Revenues
and profits, if any, will depend upon various factors, including whether we
will be able to receive funding to develop and market new products or find
additional businesses to operate and/or acquire. We may not achieve our
business objectives and the failure to achieve these goals would have an
adverse impact on our business.
WE HAVE SIGNIFICANT DEBTS THAT WE HAVE BEEN UNABLE TO PAY, WHICH HAS RESULTED
IN CLAIMS AND LITIGATION FILED AGAINST US.
At July 31, 2009, we had $8,571,279 of current liabilities, and we have no
assets. We have had an ongoing inability to pay for our current obligations.
We have received several demand letters for payment, and there have been
several complaints filed against us in various courts. Our ongoing inability
to pay our debts may affect our ability to secure debt financing in the future.
Please see the Legal Proceedings section of this Annual Report for a further
discussion of pending claims and litigation against us.
6
WE HAVE A LIMITED OPERATING HISTORY AND YOU MAY LOSE YOUR INVESTMENT IF WE
ARE UNABLE TO MARKET PROJECTS.
We are engaged only in limited business activities. We may be faced with
problems, delays, expenses and difficulties, which are typically encountered
by companies in an early stage of development, many of which may be beyond our
control. We may not be able to acquire our property at reasonable cost, or
market successfully, any of our projects. Therefore, we could go out of
business and you may lose your investment.
WE NEED EXTERNAL FUNDING TO SUSTAIN AND GROW OUR BUSINESS AND IF WE CANNOT FIND
THIS FUNDING ON ACCEPTABLE TERMS, WE MAY HAVE TO CURTAIL OUR OPERATIONS AND
WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN WHICH WOULD REDUCE OUR
REVENUES AND OUR STOCK MAY DECLINE.
We will not be able to generate sufficient revenues from our existing
operations to fund our capital requirements for the foreseeable future.
Accordingly, we will require additional funds to enable us to operate
profitably and grow our business. This financing may not be available on
terms acceptable to us or at all. We currently have no bank borrowings and
it is unlikely that we will be able to arrange debt financing. If we cannot
raise additional capital through issuing stock or bank borrowings, we may not
be able to sustain or grow our business. If we can not generate sufficient
revenues to cover our overhead, our business may fail and/or we may need to
seek bankruptcy protection.
OUR ORIGINAL STOCKHOLDERS WILL HAVE CONTROL OVER OUR POLICIES AND AFFAIRS FOR
THE FORESEEABLE FUTURE AND THESE STOCKHOLDERS MAY TAKE CORPORATE ACTIONS THAT
COULD NEGATIVELY IMPACT OUR BUSINESS AND STOCK PRICE.
As of July 21, 2010, our original stockholders own at least 51% of our voting
securities. The original stockholders will continue to control our policies
and affairs and all corporate actions requiring stockholder approval, including
election of directors. Additionally, Mr. Stuart Turk, our Chairman, President
and Chief Executive Officer, currently controls a majority of our voting
securities. Mr. Turk's holdings may delay, deter or prevent transactions,
such as mergers or tender offers that would otherwise benefit investors.
WE MAY ENCOUNTER DIFFICULTIES MANAGING OUR PLANNED GROWTH, WHICH WOULD
ADVERSELY AFFECT OUR BUSINESS AND COULD RESULT IN DECREASING REVENUES AS
WELL AS A DECREASE IN OUR STOCK PRICE.
As of July 31, 2009 and July 21, 2010, we had 2 employees and 2 part time
employees. We intend to expand our customer base. To manage our anticipated
growth, we must continue to improve our operational and financial systems and
expand, train, retain and manage our employee base. Because of the
registration of our securities, we are subject to reporting and disclosure
obligations, and we anticipate that we will need to hire additional finance
and administrative personnel to address these obligations. In addition, the
anticipated growth of our business will place a significant strain on our
existing managerial and financial resources. If we cannot effectively manage
our growth, our business may be harmed.
WE CURRENTLY DO NOT HAVE ANY CUSTOMERS AND IF WE CANNOT ATTRACT CUSTOMERS WE
WILL NOT GENERATE REVENUES AND OUR BUSINESS WILL FAIL.
As of July 31, 2009, we do not have any customers buying advertising in our
installations. We may not be able to successfully attract customers and in
the event that we do attract customers, we may not be able to maintain such
customers and as a result, we will not generate revenues and our business
will fail. If our business fails, you will lose all or part of your
investment.
7
THE CURRENT AND FUTURE CHALLENGING GLOBAL ECONOMY MAY ADVERSELY AFFECT OUR
BUSINESS
The current economic slowdown and any further economic decline in future
reporting periods could negatively affect our business and results of
operations. The volatility of the current economic climate makes it difficult
for us to predict the complete impact of this slowdown on our business and
results of operations. Due to these current economic conditions, our potential
customers may face financial difficulties, the unavailability of or reduction
in commercial credit, or both, that may result in decreased sales and revenues
of our Company. Our potential customers may cease operations or seek
bankruptcy protection, which would reduce our ability to generate sales and
adversely impact our results of operations. Potential customers that are
financially viable and not experiencing economic distress may elect not to
purchase our products in an effort to remain financially stable or as a
result of the unavailability of commercial credit which would negatively
affect our results of operations. Further, we may experience challenges in
forecasting revenues and operating results due to these global economic
conditions. The difficulty in forecasting revenues and operating results
may result in volatility in the market price of our common stock.
RISKS RELATED TO OUR STOCK
A TRADING MARKET MAY NOT DEVELOP FOR OUR COMMON STOCK AND YOU MAY FIND IT
DIFFICULT OR IMPOSSIBLE TO SELL YOUR SHARES FOR THE FORESEEABLE FUTURE.
Our common stock currently trades on the Pink Sheets. If a trading market
does not develop for our common stock, you may find it difficult or
impossible to sell your shares.
"PENNY STOCK" RULES MAY MAKE BUYING OR SELLING OUR SECURITIES DIFFICULT
WHICH MAY MAKE OUR STOCK LESS LIQUID AND MAKE IT HARDER FOR INVESTORS TO
BUY AND SELL OUR SHARES.
Trading in our securities is subject to the SEC's "penny stock" rules and
it is anticipated that trading in our securities will continue to be subject
to the penny stock rules for the foreseeable future. The SEC has adopted
regulations that generally define a penny stock to be any equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions. These rules require that any broker-dealer who recommends our
securities to persons other than prior customers and accredited investors
must, prior to the sale, make a special written suitability determination
for the purchaser and receive the purchaser's written agreement to execute
the transaction. Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the risks
associated with trading in the penny stock market. In addition,
broker-dealers must disclose commissions payable to both the broker-dealer
and the registered representative and current quotations for the securities
they offer. The additional burdens imposed upon broker-dealers by these
requirements may discourage broker-dealers from recommending transactions in
our securities, which could severely limit the liquidity of our securities
and consequently adversely affect the market price for our securities.
WE ARE EXPOSED TO FOREIGN CURRENCY RISKS.
Significantly all of our operations are located in Canada and most of our
transactions are in the local currency. In the future, we intend to expand
our operations, possibly into the U.S. and therefore we may be exposed to
exchange rate fluctuations. We do not trade in hedging instruments and a
significant change in the foreign exchange rate between the Canadian Dollar
and U.S. Dollar could have a material adverse effect on our business,
financial condition and results of operations.
8
ITEM 2. PROPERTIES.
We are headquartered in San Clemente, California. We have an oral contract
for a month-to-month lease and pay $2,500 per month in rent. We believe
this facility is adequate for our needs for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
On September 25, 2008, Laurus Master Fund, Ltd. filed a Complaint in the
Supreme Court of the State of New York naming Metro One Development, Inc.
and another party as defendants alleging breach of contract and promissory
estoppel and sought damages in the amount of $874,471. The claim relates
to a $5,500,000 financing agreement we entered into with Laurus on
July 14, 2005, as later amended. In its complaint, Laurus alleges that we
are in breach of the security agreement by selling substantially all of
the assets subject to their security interest and failing to direct all
present and future payments constituting collateral into an account under
Laurus' control. On September 17, 2009, Laurus Master Fund, Ltd. was awarded
judgment against Metro One Developments, Inc. of $1,243,549. We have fully
accrued this award in our financial statements at July 31, 2009.
On October 6, 2008, Arrow Electronics, Inc. sent us and another company a
formal demand for payment of $461,097 Canadian dollars relating to product
we purchased in the first nine months of the year ended July 31, 2008. We
have accrued $527,214 Canadian dollars for the initial claim plus estimated
interest as of July 31, 2009.
On July 15, 2008, EqualLogic Inc. filed a motion against us under our
previous trade name of On the Go Healthcare, Inc. in the State of New
Hampshire for $658,464 relating to product we purchased on January 18, 2008.
The letter is addressed to a third party and under a previous trade name
that we had been using before selling it to the third party. We have accrued
$705,963 for the initial claim plus estimated interest as of July 31, 2009.
On July 31, 2008, Ingram Micro, Inc. sent us a formal demand for payment of
$85,567 Canadian dollars relating to product we purchased in the beginning
of March 2008 and product purchased by another company. The Company has
accrued $99,304 Canadian dollars for the initial claim plus estimated
interest as of July 31, 2009 to account for our estimated liability.
On August 7, 2008, Supercom Canada, Ltd. sent us a formal demand for payment
of $37,771 Canadian dollars relating to product we purchased in 2006. We
have accrued $42,561 Canadian dollars for the initial claim plus estimated
interest as of July 31, 2009.
On August 7, 2008, Tech Data Canada Corporation sent us a formal demand for
payment of $329,998 Canadian dollars relating to product we purchased in
the first nine months of the year ended July 31, 2008. We have accrued
$371,850 Canadian dollars for the initial claim plus estimated interest as
of July 31, 2009.
On August 26, 2008, Isilon Systems Inc. filed a motion of default judgment
in the State of Washington against us and another company for $192,834
relating to product we purchased on October 24, 2007 and December 20, 2007.
We have accrued $227,149 for the initial claim plus estimated interest as
of July 31, 2009.
On August 28, 2008, Synnex Canada Limited sent a formal demand for payment
of $124,333 Canadian dollars relating to product we purchased in March 2008.
We have accrued $142,161 Canadian dollars for the initial claim plus
estimated interest as of July 31, 2009.
9
On September 3, 2008, Autodesk Inc. sent us a formal demand for payment of
$54,776 relating to product we purchased in January 2008. The letter is
addressed under our previous trade name of OTG Digital Media that we had
used before selling it to a third party. We have accrued $60,507 for the
initial claim plus estimated interest as of July 31, 2009.
On October 20, 2008, Silicon Graphics Limited filed a claim against us with
the Ontario Superior Court of Justice for $189,134 Canadian dollars relating
to product we purchased November 20, 2006. We have accrued $213,058 Canadian
dollars for the initial claim plus estimated interest as at July 31, 2009.
We may be involved from time to time in ordinary litigation, negotiation and
settlement matters that will not have a material effect on our operations or
finances. Other than the litigation described above, we are not aware of any
other pending or threatened litigation against our Company or our officers
and directors in their capacity as such that could have a material impact on
our operations or finances.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock has traded over the counter since February 5, 2003. The
stock currently trades on the Pink Sheets under the symbol "MTRO.PK." The
following table sets forth the high and low bid prices for our common stock
for each quarter during the last two fiscal years, so far as information is
reported, as quoted on the Pink Sheets. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions. Prices are not restated for a 50:1 reverse split on
August 10, 2006, a 50:1 reverse split on November 16, 2007, a 1000:1 reverse
split on April 14, 2008, a 1000:1 reverse split on August 15, 2008 and a
1000:1 reverse split on February 9, 2009.
High Low
For the Fiscal Year Ended July 31, 2009
First Quarter ended October 31, 2008 $ 100 $ 0.10
Second Quarter ended January 31, 2009 $ .40 $ 0.10
Third Quarter ended April 30, 2009 $ 1.04 $ 0.16
Fourth Quarter ended July 31, 2009 $ 1.25 $ 0.16
For the Fiscal Year Ended July 31, 2008
First Quarter ended October 31, 2007 $ .0074 $ 0.0015
Second Quarter ended January 31, 2008 $ .05 $ 0.0018
Third Quarter ended April 30, 2008 $ .40 $ 0.0002
Fourth Quarter ended July 31, 2008 $ 0.40 $ 0.0001
10
Holders
The number of record holders of our common stock as of July 27, 2010 was
approximately 2,500, not including nominees of beneficial owners.
Dividends
Since our inception, we have not paid dividends on our common stock. We do not
expect to pay dividends on our common stock in the foreseeable future; rather
we intend to retain any earnings for use in our business activities.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table summarizes securities authorized for issuance under equity
compensation plans as of July 31, 2009:
Equity Compensation Plan Information
------------------------------------
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price remaining available
exercise of outstanding of outstanding for future issuance
options, options, warrants under equity
warrants and rights and rights compensation plans
(excluding securities
reflected in
column (a))
-------------- ----------------------- ---------------- -------------------
(a) (b) (c)
-------------- ----------------------- ---------------- -------------------
Equity
compensation
plans approved
by security
holders 0 $ - 0
Equity
compensation
plans not
approved by
security holders 0 $ - 0
----------------------- ---------------- -------------------
Total 0 $ - 0
======================= ================ ===================
SECURITIES ISSUED UNDER STOCK OPTION PLANS
During the fiscal year ended July 31, 2009, we adopted the following stock
option plan.
Stock Option Plan Number of Shares Authorized for Issuance
Pursuant to Plan
---------------------------------------------- -----------------------
2008 Stock Option Plan, dated September 10, 2008 500,000,000
11
The common stock issued pursuant to the above plan was registered on Form S-8
with the Securities and Exchange Commission and shares were issued to
consultants and employees in lieu of cash compensation. We adopted these
plans without the approval of our security holders. The plan authorizes the
plan administrator to issue options, stock appreciation rights, or SARs, and
restricted shares of our common stock to employees, directors and consultants.
Options issued under the plan, if any, shall expire no later than 10 years
following the date of grant. No grant may be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will
or by the laws of descent or distribution and may be exercised only by the
grantee during the lifetime of the grantee; provided, however, during the
lifetime of the grantee, SARs may be transferred by gift to members of the
grantee's immediate family to the extent and manner determined by the plan
administrator.
RECENT SALES OF UNREGISTERED SECURITIES
We did not issue any unregistered securities during the quarter ended
July 31, 2009
ITEM 6. SELECTED FINANCIAL DATA.
As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act
and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure
reporting obligations and therefore are not required to provide the
information requested by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Important Factors Regarding Forward Looking Statements
This annual report on Form 10-K contains forward looking statements that
involve risks and uncertainties. You should not place undue reliance on these
forward looking statements. Our actual results could differ materially from
those anticipated in the forward looking statements for many reasons, including
the risks described in this report and other reports we file with the
Securities and Exchange Commission. Although we believe the expectations
reflected in the forward looking statements are reasonable, they relate only
to events as of the date on which the statements are made. We do not intend
to update any of the forward looking statements after the date of this annual
report to conform these statements to actual results or to changes in our
expectations, except as required by law.
The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto, and other financial information
included elsewhere in this annual report on Form 10-K.
Overview
Metro One Development, Inc., formerly known as On The Go Healthcare, Inc.
(the "Company"), was incorporated on July 21, 2000 in the State of Delaware.
Our fiscal year end is July 31.
Management's Strategic Vision
Our overall business strategy primarily rests on our ability to secure
additional capital through financing activities. In June 2009, we changed our
business plan to pursue a new line of business as a developer and distributor
of interactive media displays products. We are in the very early stage of
this change in business model. We will not be able to move forward with our
business plan until we can raise additional capital.
12
Challenges and Uncertainties
We currently have no cash and no bank borrowings and we may not be able to
arrange any debt financing. Additionally, we may not be able to successfully
consummate offerings of stock or other securities in order to meet our future
capital requirements. If we cannot raise additional capital through issuing
stock or incurring debt, we may not be able to sustain or grow our business
which may cause our revenues and stock price to decline.
At July 31, 2009, we had $8,571,279 of current liabilities, and we have no
assets. We have no assets or cash to pay for our current obligations. Our
ongoing inability to pay our debts may affect our ability to secure financing
for our operations in the future. Please see the Legal Proceedings section of
this Annual Report for a further discussion of pending claims and litigation
against us.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in the Financial Statements and accompanying notes. Estimates are used for,
but not limited to, the accounting for the allowance for doubtful accounts,
inventories, impairment of long-term assets, income taxes and loss
contingencies. Management bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances. Actual results could differ from these estimates under
different assumptions or conditions.
Foreign Currency Translation
We consider the functional currency to be the local currency being Canadian
dollars and, accordingly, our financial information is translated into U.S.
dollars using exchange rates in effect at year-end for assets and liabilities
and average exchange rates during each reporting period for the results of
operations. Adjustments resulting from translation of foreign exchange are
included as a component of other comprehensive income (loss) within
stockholders' deficit.
Revenue Recognition
We recognize revenue in accordance ASC Topic 605 - Revenue Recognition. Under
Topic 605, revenue is recognized at the point of passage to the customer of
title and risk of loss, there is persuasive evidence of an arrangement, the
sales price is determinable, and collection of the resulting receivable is
reasonably assured. We generally recognize revenue at the time of delivery
of goods. Sales are reflected net of discounts and estimated returns. Amounts
billed to customers for shipping and handling are recorded as sales revenues.
Costs incurred for shipping and handling are included in cost of sales.
Stock-based compensation
We recognize stock-based compensation in accordance with ASC Topic 718 - Stock
Compensation, which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees and directors
including employee stock options and employee stock purchases related to an
Employee Stock Purchase Plan based on the estimated fair values.
For non-employee stock-based compensation, we have adopted ASC Topic 505 -
Equity-Based Payments to Non-Employees, which requires stock-based compensation
related to non-employees to be accounted for based on the fair value of the
related stock or options or the fair value of the services on the grant date,
whichever is more readily determinable in accordance with ASC Topic 718.
13
New accounting pronouncements
In January 2008, Staff Accounting Bulletin, or SAB, 110, "Share-Based Payment"
was issued (codified within ASC 225 -Income Statement). Registrants may
continue, under certain circumstances, to use the simplified method in
developing estimates of the expected term of share options as initially
allowed by SAB 107, "Share-Based Payment". The adoption of SAB 110 did not
have any material effect on our financial position and results of operations.
In May 2008, the Financial Accounting Standards Board, or FASB, issued Staff
Position APB 14-1, "Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlements),"
(codified within ASC 470 -Debt). This pronouncement requires a portion of
this type of convertible debt to be recorded as equity and to record
interest expense on the debt portion at a rate that would have been charged
on nonconvertible debt with the same terms. This pronouncement takes effect
in the first quarter of fiscal years beginning after December 15, 2008 and
will be applied retrospectively for all periods presented. It will be
effective for us on August 1, 2009. The adoption of APB 14-1 is not expected
to have any material impact on our financial position, results of operations
or cash flows.
In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,"
(codified within ASC 260 -Earnings Per Share). Securities participating in
dividends with common stock according to a formula are participating
securities. FSP EITF 03-6-1 determined that unvested shares of restricted
stock and stock units with non-forfeitable rights to dividends are
participating securities. Participating securities require the "two-class"
method to be used to calculate basic earnings per share. This method lowers
basic earnings per common share. This pronouncement takes effect in the first
quarter of fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented. It will be effective for us on
August 1, 2009. The adoption of FSP EITF 03-6-1 is not expected to have a
material impact on our financial position, results of operations or cash
flows.
In June 2008, the FASB ratified the consensus reached on EITF Issue No. 07-05,
"Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity's Own Stock," (codified within ASC 815 -Derivatives and Hedging).
EITF Issue No. 07-05 clarifies the determination of whether an instrument
(or an embedded feature) is indexed to an entity's own stock, which would
qualify as a scope exception under FAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." EITF Issue No. 07-05 is effective for
financial statements issued for fiscal years beginning after December 15, 2008.
It will be effective for us on August 1, 2009. Early adoption for an existing
instrument is not permitted. The adoption of EITF Issue No. 07-05 is not
expected to have any material impact on our financial position, results of
operations or cash flows.
In January 2009, the FASB issued FASB Staff Position No. EITF 99-20-1,
"Amendments to the Impairment Guidance of EITF Issue No. 99-20," (codified
within ASC 325 -Investments). EITF 99-20-1 amends the impairment guidance in
EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to
Be Held by a Transferor in Securitized Financial Assets," to achieve more
consistent determination of whether an other-than-temporary impairment has
occurred. Additionally, EITF 99-20-1 retains and emphasizes the objective
of an other-than-temporary impairment assessment and the related disclosure
requirements in FASB Statement No. 115 "Accounting for Certain Investments
in Debt and Equity Securities," and other related guidance. This guidance
is effective for interim and annual reporting periods ending after
December 15, 2008, and is applied prospectively. The adoption of EITF
99-20-1 did not have a material impact on our financial position, results
of operations or cash flows.
14
In April 2009, the FASB issued FAS 115-2 and FAS 124-2, "Recognition and
Presentation of Other-Than-Temporary Impairments," (codified within ASC 320
- Investments - Debt and Equity Securities). FAS 115-2 and FAS 124-2 change
the method for determining whether an other-than-temporary impairment exists
for debt securities and the amount of the impairment to be recorded in
earnings. FAS 115-2 and FAS 124-2 are effective for interim and annual
periods ending after June 15, 2009. The adoption of FAS 115-2 and FAS 124-2
are not expected to have any material impact on our financial position,
results of operations or cash flows.
In April 2009, the FASB issued FAS 157-4, "Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That are Not Orderly," (codified
within ASC 820 - Fair Value Measurements and Disclosures). FAS 157-4 provides
additional guidance for estimating fair value when the volume and level of
activity for the asset or liability have significantly decreased. It also
includes guidance on identifying circumstances that indicate a transaction
is not orderly. FAS 157-4 becomes effective for interim and annual reporting
periods after June 15, 2009 and shall be applied prospectively. The adoption
of FAS 157 is not expected to have any material impact on our financial
position, results of operations or cash flows.
In April 2009, the FASB issued FAS 107-1 and APB 28-1, "Interim Disclosures
about Fair Value of Financial Instruments," (codified within ASC 825 -
Financial Instruments). FAS 107-1 and APB 28-1 require fair value
disclosures in both interim as well as annual financial statements in
order to provide more timely information about the effects of current
market conditions on financial instruments. FAS 107-1 and APB 28-1 are
effective for interim and annual periods ending after June 15, 2009. The
adoption of FAS 107-1 and APB 28-1 are not expected to have any material
impact on our financial position, results of operations or cash flows.
In May 2009, the FASB issued FAS No. 165, "Subsequent Events," (codified
within ASC 855 - Subsequent Events). FAS 165 establishes general standards
of accounting for and disclosure of events that occur after the balance
sheet date but before the financial statements are issued or are available
to be issued. Specifically, FAS 165 sets forth the period after the balance
sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure
in the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in
its financial statements and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. FAS 165 is
effective prospectively for interim and annual periods ending after
June 15, 2009. The adoption of FAS 165 is not expected to have any material
impact on our financial position, results of operations or cash flows.
In June 2009, the FASB issued FASB ASC 105-10, "Generally Accepted Accounting
Principles" replaces SFAS No. 162, which establishes the FASB Accounting
Standards Codification ("Codification") as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with GAAP.
Rules and interpretive releases of the Securities and Exchange Commission
("SEC") under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. The FASB will no longer issue new
standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead the FASB will issue Accounting Standards
Updates. Accounting Standards Updates will not be authoritative in their own
right as they will only serve to update the Codification. The issuance of
FASB ASC 105-10 and the Codification does not change GAAP. FASB ASC 105-10
becomes effective for interim and annual periods ending after
September 15, 2009. The adoption of this statement did not have a material
impact on the Company's financial position, cash flows and results of
operations.
15
In August 2009, the FASB issued Accounting Standards Update, or ASU,
No. 2009-05, "Measuring Liabilities at Fair Value," (codified within
ASC 820 - Fair Value Measurements and Disclosures). ASU 2009-05 amends the
fair value and measurement topic to provide guidance on the fair value
measurement of liabilities. ASU 2009-05 is effective for interim and annual
periods beginning after August 26, 2009. The adoption of ASU 2009-05 is not
expected to have any material impact on our financial position, results of
operations or cash flows.
In September 2009, the FASB issued ASU No. 2009-12, "Investments in Certain
Entities that Calculate Net Asset Value per Share (or its Equivalent),
" (codified within ASC 820 -Fair Value Measurements and Disclosures).
ASU 2009-12 amends the input classification guidance under ASC Topic 820.
ASU 2009-12 is effective for interim and annual periods ending after
December 15, 2009. The adoption of ASU 2009-12 is not expected to have any
material impact on our financial position, results of operations or cash
flows.
In September 2009, the Financial Accounting Standards Board (FASB) issued
ASU 2009-12, "Fair Value Measurements and Disclosures" (Topic 820):
Investments in Certain Entities That Calculate Net Asset Value Per Share
(or Its Equivalent). This update provides amendments to subtopic 820-10,
Fair Value Measurements and Disclosures - Overall, for the fair value
measurement of investments in certain entities that calculate net asset
value per share (or its equivalent). The amendments in this update are
effective for interim and annual periods ending after December 15, 2009.
Early application is permitted in financial statements for earlier interim
and annual periods that have not been issued. The adoption of this statement
did not have a material impact on the Company's financial position, cash
flows and results of operations.
In October 2009, the FASB issued ASU No. 2009-13, "Multiple Deliverable
Revenue Arrangements - a consensus of the FASB Emerging Issues Task Force,
" (codified within ASC Topic 605). ASU 2009-13 addresses the accounting for
multiple-deliverable arrangements to enable vendors to account for products
or services (deliverables) separately rather than as a combined unit.
ASU 2009-13 is effective prospectively for revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010,
with early adoption permitted. The adoption of ASU 2009-13 is not expected
to have any material impact on our financial position, results of operations
or cash flows.
In October 2009, the FASB issued ASU 2009-15, "Accounting for Own-Share
Lending Arrangements in Contemplation of Convertible Debt Issuance or Other
Financing." ASU 2009-15 amends the accounting and reporting guidance for
debt (and certain preferred stock) with specific conversion features or
other options. ASU 2009-15 is effective for fiscal years beginning on or
after December 15, 2009. The adoption of ASU 2009-15 is not expected to
have any material impact on our financial position, results of operations
or cash flows.
In December 2009, the FASB issued ASU 2009-16, "Transfers and Servicing
(Topic 860) - Accounting for Transfers of Financial Assets." ASU 2009-16
amends the accounting for transfers of financial assets and will require
more information about transfers of financial assets, including
securitizations, and where entities have continuing exposure to the risks
related to transferred financial assets. ASU 2009-16 is effective at the
start of a reporting entity's first fiscal year beginning after
November 15, 2009, with early adoption not permitted. The adoption of
ASU 2009-16 is not expected to have any material impact on our financial
position, results of operations or cash flows.
16
In December 2009, the FASB issued ASU 2009-17, "Consolidations (Topic 810)
- Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities." ASU 2009-17 changes how a reporting entity determines
when an entity that is insufficiently capitalized or is not controlled
through voting (or similar rights) should be consolidated. ASU 2009-17 also
requires a reporting entity to provide additional disclosures about its
involvement with variable interest entities and any significant changes in
risk exposure due to that involvement. ASU 2009-17 is effective at the start
of a reporting entity's first fiscal year beginning after November 15, 2009,
or August 1, 2010, for us. Early adoption is not permitted. The adoption of
ASU 2009-17 is not expected to have any material impact on our financial
position, results of operations or cash flows.
In January 2010, the FASB issued ASU 2010-01, "Equity (Topic 505) -
Accounting for Distributions to Shareholders with Components of Stock and
Cash." ASU 2010-01 clarifies that the stock portion of a distribution to
shareholders that allows them to elect to receive cash or shares with a
potential limitation on the amount of cash that all shareholders can elect
to receive is considered a share issuance. ASU 2010-01 is effective for
interim and annual periods ending on or after December 15, 2009 and should
be applied on a retrospective basis. The adoption of ASU 2010-01 is not
expected to have any material impact on our financial position, results of
operations or cash flows.
In January 2010, the FASB issued ASU 2010-02, "Consolidation (Topic 810)
- Accounting and Reporting for Decreases in Ownership of a Subsidiary - A
Scope Clarification." ASU 2010-02 clarifies the scope of the decrease in
ownership provisions of Subtopic 810 and expands the disclosure requirements
about deconsolidation of a subsidiary or de-recognition of a group of assets.
ASU 2010-02 is effective beginning in the first interim of annual reporting
period ending on or after December 15, 2009. The amendments in ASU 2010-02
must be applied retrospectively to the first period that an entity adopted
FAS 160. The adoption of ASU 2010-02 is not expected to have any material
impact on our financial position, results of operations or cash flows.
In January 2010, the FASB issued ASU No. 2010-06, "Improving Disclosures
about Fair Value Measurements," (codified within ASC 820 -Fair Value
Measurements and Disclosures). ASU 2010-06 improves disclosures originally
required under FAS No. 157. ASU 2010-16 is effective for interim and annual
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances and settlements in the roll forward of activity
in Level 3 fair value measurements. Those disclosures are effective for
fiscal years beginning after December 15, 2010, and for interim periods
within those years. The adoption of ASU 2010-06 is not expected to have any
material impact on our financial position, results of operations or cash
flows.
In March 2010, the FASB issued ASU No. 2010-11, "Derivatives and Hedging
(Topic 815): Scope Exception Related to Embedded Credit Derivatives,"
(codified within ASC 815 -Derivatives and Hedging). ASU 2010-11 improves
disclosures originally required under FAS No. 161. ASU 2010-11 is
effective for interim and annual periods beginning after
June 15, 2010. The adoption of ASU 2010-11 is not expected to have any
material impact on our financial position, results of operations or cash
flows.
17
Results of Operations for the Fiscal Year Ended July 31, 2009 Compared to
the Fiscal Year Ended July 31, 2008
Revenues:
Revenues from continuing operations were $0 for both the year ended
July 31, 2009 and for the same period in 2008. As a result of our recent
change in business focusing on interactive media displays, we have not
generated any sales from continuing operations.
Cost of Sales:
Cost of Sales for continuing operations was $0 for the year ended
July 31, 2009 and for the same period in 2008. As a result of our recent
change in business focus, we have not incurred any cost of sales from
continuing operations.
Depreciation and Amortization:
Depreciation and Amortization expense decreased from $154,958 for the
year ended July 31, 2008 to -0- for the year ended July 31, 2009 due to
the sale and discontinuance of operations of our value-added reseller
business.
Selling, General and Administrative Expenses:
Selling, General and Administrative Expenses for our continuing operations
have increased to $3,581,478 for the year ended July 31, 2009 from
$1,339,244 for the year ended July 31, 2008. The overall increase of
$2,242,234 was principally due to product development cost associated
with our new business plan.
Other Income and Expense:
In the year ended July 31, 2008, we recorded $4,411,594 of other expense,
primarily due to interest, financing and bad debt expenses. In the year
ended July 31, 2009, other income of $268,625 was recorded as a result
of a gain on recovery of previously written-off receivables and a
$416,433 loss was recorded as a loss on debt settlement.
Net loss:
We had a decrease in our net loss to $3,729,286 for the year ended
July 31, 2009 from $12,058,773 for the year ended July 31, 2008. The
decrease in net loss was primarily due to fewer costs associated with
our discontinued operations as well as the factors discussed above.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off balance sheet arrangements to report for the
fiscal year ended July 31, 2009.
Liquidity and Capital Resources
Until such a time when we are able to generate positive cash flows from
operations in an amount sufficient to cover our current liabilities and debt
obligations as they become due, we will remain reliant on borrowing funds or
selling equity to cover our expenses.
18
At July 31, 2009, we had $8,571,279 of current liabilities, and we have no
assets. We have no assets or cash to pay for our current obligations. Our
ongoing inability to pay our debts may affect our ability to secure financing
for our operations in the future.
We intend to raise funds through the issuance of debt or equity. Raising funds
in this manner typically requires significant time and effort to find
accredited investors, and the terms of such an investment must be negotiated
for each investment made. We may not be able to raise sufficient funds to meet
our obligations. If we do not raise sufficient funds, our operations will be
curtailed or will cease entirely and you may lose all of your investment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act
and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure
reporting obligations and therefore are not required to provide the information
requested by this Item.
19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and related notes are included as part of this Annual
Report.
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
INDEX
July 31, 2009 and 2008
Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..............F1
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..............F2
FINANCIAL STATEMENTS
Balance Sheets....................................................... F3
Statements of Operations............................................. F4
Statements of Stockholders' Deficit.................................. F5
Statements of Cash Flows............................................. F6
NOTES TO FINANCIAL STATEMENTS.................................. F7 - F18
Report of Independent Registered Public Accounting Firm
To The Board of Directors and Stockholders
Metro One Development, Inc.
San Clemente, CA 92673
We have audited the accompanying balance sheet of Metro One Development, Inc
(A Development Stage Enterprise) as of July 31, 2009, and the related
statements of operations, stockholders' deficit, and cash flows for the year
then ended and from May 1, 2009 to July 31, 2009. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements based on our audit. We did not
audit the financial statements of Metro One Development, Inc. for the year
ended July 31, 2008. Those statements were audited by other auditors whose
report has been furnished to us and our opinion, in so far as it relates to
amounts included in the year ended is based solely on the report of other
auditors.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Metro One Development,
Inc (A Development Stage Enterprise) as of July 31, 2009, and the results
of their operations and cash flows for the year then ended and from
May 1, 2009 to July 31, 2009 in conformity with accounting principles
generally accepted in the United States.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from
operations, which raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
Henderson, Nevada
July 28, 2010
F1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Metro One Development, Inc.
We have audited the accompanying consolidated balance sheet of Metro One
Development, Inc. as of July 31, 2008 and the related consolidated
statements of operations, stockholders' equity and cash flows for the
year then ended. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these consolidated financial statements based
on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free
of material misstatement. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the company's
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Metro One Development, Inc. as of July 31, 2008, and
the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted
in the United States of America.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern.
As discussed in Note 2 to the financial statements, the Company has
incurred significant losses from operations, anticipates additional
losses in the next fiscal year, and has insufficient working capital
as of July 31, 2008 to fund the anticipated losses. These conditions
raise substantial doubt as to the ability of the Company to continue
as a going concern. Managements' plans in regards to these matters
are described in Note 2. These financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
/s/ MSCM LLP
--------------------
MSCM LLP
Toronto, Canada
December 8, 2008
F2
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
(Audited)
July 31, July 31,
2009 2008
------------ ------------
ASSETS
Current assets
Cash $ -- $ --
Due from Vital Products, Inc. -- 1
------------ ------------
Total current assets -- 1
------------ ------------
Total assets $ -- $ 1
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank overdraft $ -- $ 16,395
Accounts payable and accrued expenses 6,986,437 3,693,578
Loans payable to related party 341,293 158,844
Legal settlement 1,243,549 917,134
------------ ------------
Total current liabilities 8,571,279 4,785,951
Total liabilities 8,571,279 4,785,951
------------ ------------
Stockholders' deficit
Conditionally redeemable convertible
preferred stock; Series B 1.5%
convertible preferred stock 1,000,000 1,000,000
Preferred stock; $0.01 par value;
1,000,000 shares authorized,
0 and 229,134 issued
and outstanding, respectively -- 2,291
Common stock; $0.0001 par value;
1,000,000,000 shares authorized,
22,495,969 and 657 issued and
outstanding, respectively 2,249 --
Additional paid-in capital 21,903,389 21,812,787
Accumulated other comprehensive income 595,738 562,341
Accumulated deficit (28,955,560) (28,163,369)
Accumulated deficit during the development
stage (3,117,095) --
------------ ------------
Total stockholders' deficit (9,571,279) (5,785,950)
------------ ------------
Total liabilities and stockholders' deficit $ -- $ 1
============ ============
The accompanying notes are an integral part of the financial
statements. F3
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Statements of Operations
(Audited)
For the years From
ended July 31, May 1, 2009 to
2009 2008 July 31, 2009
------------ ------------ -------------
Sales $ -- $ -- $ --
Cost of revenues -- -- --
----------- ------------ ------------
Gross profit -- -- --
----------- ------------ ------------
Operating expenses
Depreciation and amortization -- 154,958 --
Selling, general
and administrative 3,581,478 1,339,244 2,754,232
----------- ------------ ------------
Total operating
expenses 3,581,478 1,494,202 2,754,232
----------- ------------ ------------
Other income (expense)
Gain on recovery of
previously written-off
receivable 268,625 -- 98,570
Loss on settlement (416,433) -- (416,433)
Interest and financing
expense -- (2,361,350) --
Loss on sale of
fixed assets -- (3,730) --
Bad debt write offs -- (2,099,712) --
Impairment of assets -- (250,000) --
Interest income -- 303,198 --
------------ ------------ ------------
Total other
income (expense) (147,808) (4,411,594) (317,863)
------------ ------------ ------------
Net loss from
continuing operations (3,729,286) (5,905,796) (3,072,095)
Loss on sale of assets from
discontinued operations -- (1,773,079) --
Net loss from
discontinued operations -- (4,379,898) --
------------ ------------ -------------
Net loss (3,729,286) (12,058,773) (3,072,095)
Preferred stock dividend (180,000) (180,000) (45,000)
------------ ------------ -------------
Net loss attributable to
common stockholders $ (3,909,286) $(12,238,773) $ (3,117,095)
============== ============= =============
Earnings per share computation:
Net loss from
continuing operations
$ (0.37) $ (83,180)
============ =============
Net Loss on sale of
assets from discontinued
operations per common share $ -- $ (24,973)
============ =============
Net loss from
discontinued
operations $ -- $ (61,689)
============ =============
Net loss
attributable to
common
stockholders $ (0.39) $ (172,377)
============ =============
Weighted average common
shares outstanding -
basic and diluted 10,012,648 71
============ =============
The accompanying notes are an integral part of the financial statements F4
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Deficit
For the years ended July 31, 2009 and 2008
Prepaid Accumulated
Expenses Accumulated Deficit
Additional Paid with Other During the Total
Preferred Stock Common Stock Paid-in Common Comprehensive Development Accumulated Stockholders'
Shares Amount Shares Amount Capital Stock Income(Loss) Stage Deficit Equity
--------- ------- ---------- ------- -------- -------- ------------- ----------- ------------- -----------
Balance,
July 31, 2007 229,134 $2,291 - - $19,190,803 $(441,569) $(279,508) - $(15,924,596) $2,547,421
Issuance of
common stock
for services - - 495 - 2,193,799 146,792 - - - 2,340,591
Issuance of
common stock
for payment on
related party
accrued
liabilities - - - - 120,000 - - - - 120,000
Issuance of
common stock
as principal
payment on
notes payable
totaling $308,185 - - 162 - 308,185 - - - - 308,185
Current period
expense of
prepaid expenses
paid with
common stock - - - - - 294,777 - - - 294,777
Dividends paid
preferred stock,
Series B - - - - - - - - (180,000) (180,000)
Foreign
currency
translation - - - - - - 841,849 - - 841,849
Net loss - - - - - - - - (12,058,773) (12,058,773)
--------- ------- ---------- ------ ------------ ------- -------- ----------- ------------- -----------
Balance,
July 31, 2008 229,134 2,291 657 - 21,812,787 - 562,341 - (28,163,369) (5,785,950)
Issuance of
common stock
for services - - 73,412 7 87,503 - - - - 87,510
Conversion of Series A
preferred stock
into common
stock (229,134) (2,291) 22,413,900 2,241 50 - - - - -
Issuance of
common stock
for services - - 8,000 1 3,049 - - - - 3,050
Dividend paid
preferred stock,
Series B - - - - - - - (45,000) (135,000) (180,000)
Foreign currency
translation - - - - - - 33,397 - - 33,397
Net loss - - - - - - - (3,072,095) (657,191) (3,729,286)
--------- ------- ---------- ------ ------------ ------- -------- ----------- ------------- -----------
Balance,
July 31 2009 - $ - 22,495,969 $ 2,249 $ 21,903,389 $ - $595,738 $(3,117,095) $(28,955,560) $(9,571,279)
========= ======= ========== ======= ============ ======== ======== =========== ============ ===========
The accompanying notes are an integral part of the financial statements F5
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Statements of Cash Flows
(Audited)
For the years From
ended July 31, May 1,2009 to
2009 2008 July 31, 2009
------------ ------------ -------------
Cash flows from operating activities:
Net loss $ (3,729,286) $(12,058,773) $(3,072,095)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation and
consideration for services rendered 90,560 2,284,330 3,050
Loss on settlement 416,433 - 416,433
Financing cost related to convertible
debt - 1,819,954 -
Depreciation and amortization 154,958 -
Interest earned on due from Vital
Products, Inc. 1 (294,368) 1
Bad debt expense related to due from
Vital Products, Inc. - 2,099,712 -
Impairment losses - 2,651,699 -
Loss on sale of discontinued operations - 2,031,627 -
Changes in operating assets and liabilities:
Change in accounts receivable - 4,115,899 -
Change in inventory - 159,697 -
Change in prepaid expenses - 50,938 -
Change in income tax receivable - 5,580 -
Change in accounts payable and accrued
expenses 3,292,859 182,857 2,936,504
------------- ------------ ------------
Net cash provided (used) in
operating activities 70,567 3,204,110 283,893
------------- ------------ ------------
Cash flows from investing activities:
Disposal of property and equipment - 19,674 -
Purchase of property and equipment - (13,603) -
------------- ------------ ------------
Net cash provided (used) in
investing activities - 6,071 -
------------- ------------ ------------
Cash flows from financing activities:
Payments on long-term debt - (18,845,464) -
Payments on notes payable - (15,279) -
Proceeds from related party loan 182,449 - 92,984
Proceeds from long term debt - 14,509,058 88,705
Financing costs paid with common stock - 358,929 -
Advance on bank overdraft (16,395) 16,395 -
Dividend on preferred stock (180,000) (180,000) (180,000)
------------- ------------ ------------
Net cash provided/(used) by financing
activities (13,946) (4,156,361) 1,689
------------- ------------ ------------
Effect of foreign currency exchange (56,621) 64,049 (285,613)
------------- ------------ ------------
Net change in cash - (882,131) (31)
Cash, beginning of period - 882,131 31
------------- ------------- ------------
Cash, end of period $ - $ - $ -
============= ============= ============
The accompanying notes are an integral part of the financial statements. F6
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
1. DESCRIPTION OF HISTORY AND BUSINESS OF THE COMPANY
Metro One Development, Inc., formerly known as On The Go Healthcare, Inc.
(the "Company"), formerly doing business as On The Go Technologies Group,
was incorporated on July 21, 2000 in the State of Delaware. In October 2003,
the Company acquired the assets and liabilities of Compuquest, Inc. through
its subsidiary the International Mount Company. On May 18, 2004, the Company
signed an agreement to acquire substantially all of the assets and assume the
liabilities of Vital Baby Innovations Inc. The acquisition was completed in
June 2004.
On February 28, 2005, the Company acquired 1637033 Ontario Limited and its
wholly-owned subsidiary, Helios/Oceana Ltd., an Ontario-based company, that
provides IT professional services. The Company paid for this acquisition by
acting on a security agreement on a note receivable.
In July 2005, the Company sold all of the significant assets in its childcare
division to Vital Products, Inc.
On July 19, 2005, the Company acquired Infinity Technologies Inc., a computer
hardware provider.
In January 2006, the Company purchased Island Corporation, a company involved
in computer hardware distribution focusing in the medical field.
In January 2006, the Company completed the purchase of Solutions In Computing
Inc., a supplier of computer hardware and software focusing in the
entertainment field.
During May 2006, the Company amalgamated all of its subsidiaries into On the
Go Technologies, Inc. Accordingly, as of July 31, 2007, the Company conducts
its operations directly.
On March 18, 2008, the Company entered into a binding agreement with FTS Group,
Inc. and OTG Technologies Group, Inc., a Florida corporation and wholly-owned
subsidiary of FTS Group, Inc. (together, "FTS"), whereby FTS agreed to purchase
certain assets of the Company's value-added reseller business unit, d/b/a On
The Go Technologies Group, including its goodwill and intellectual property.
On June 6, 2008, the Company agreed to amend certain terms of the binding
agreement. On July 14, 2008, FTS notified the Company that it intended to
terminate this transaction. The Company believes FTS has breached its
agreements with it and that the promissory note issued pursuant to the
binding agreement, as amended, is in default. The Company intends to pursue
all remedies that are available to it. As of March 18, 2008 the Company
discontinued all operations as a valued-added reseller.
As a result of the sale of the value-added reseller business, the Company
changed its business focus to that of a custom builder and property developer
in the Greater Toronto Area in Canada and subsequently changed its name from
On The Go Healthcare, Inc. to Metro One Development, Inc. on April 14, 2008.
On May 1, 2009 we were redefined as a development stage company and on
June 1, 2009, the Company began marketing a series of interactive media
displays, specializing in touchless, gesture - hand and body motion enabled
software solutions for interfacing with consumers. Thus on May 1, 2009, the
Company entered into a development stage accumulating a net loss of
$3,072,095 from May 1, 2009 to July 31, 2009.
F7
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES
Going concern - The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
nominal assets, liabilities totaling $8,571,279, and net losses for the year
ended July 31, 2009 totaling $3,729,286. The Company's ability to raise
additional capital through the future issuances of common stock or debt is
unknown. The obtainment of additional financing, the successful development
of the Company's contemplated plan of operations and its ultimate transition
to the attainment of profitable operations are necessary for the Company to
continue operations. The ability to successfully resolve these factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements of the Company do not include any adjustments that
may result from the outcome of these aforementioned uncertainties.
Use of estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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 revenue
and expenses during the reporting period. Financial statement items subject
to significant management judgment include the allowance for doubtful accounts
and the valuation of amounts due from Vital Products, Inc., as well as income
taxes and loss contingencies. Actual results could differ from those
estimates.
Foreign currency translation - The Company considers the functional currency
to be the local currency being Canadian dollars and, accordingly, its
financial information is translated into U.S. dollars using exchange rates in
effect at year-end for assets and liabilities and average exchange rates
during each reporting period for the results of operations. Adjustments
resulting from translation of foreign subsidiaries' financial statements are
included as a component of other comprehensive income (loss) within
stockholders' equity.
Revenue recognition - The Company recognizes revenue in accordance ASC
Topic 605 - Revenue Recognition. Under Topic 605, revenue is recognized at
the point of passage to the customer of title and risk of loss, there is
persuasive evidence of an arrangement, the sales price is determinable, and
collection of the resulting receivable is reasonably assured. The Company
generally recognizes revenue at the time of delivery of goods. Sales are
reflected net of discounts and estimated returns. Amounts billed to customers
for shipping and handling are recorded as sales revenues. Costs incurred for
shipping and handling are included in cost of sales.
Cash and cash equivalents - Cash equivalents comprise highly liquid investments
with original maturities of three months or less when purchased. Cash and cash
equivalents are on deposit with financial institutions without any
restrictions. At July 31, 2009 and 2008, the Company had no cash equivalents.
Allowance for doubtful accounts - The allowance for doubtful accounts is
maintained to provide for losses arising from customers' inability to make
required payments. If there is a deterioration of the credit worthiness of the
Company's customers and/or there is an increase in the length of time that the
receivables are past due greater than the historical assumptions used,
additional allowances may be required.
F8
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes - The Company accounts for its income taxes in accordance ASC
Topic 740 - Income Taxes, which requires recognition of deferred tax assets
and liabilities for future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in
operations in the period that includes the enactment date. As of
July 31, 2009, the Company has available for income tax purposes a net
operating loss carry forward of approximately $17,802,286, expiring in the
years from 2009 to 2029, that may be used to offset taxes on future taxable
income. As of July 31, 2009, the Company has provided a valuation reserve
against the full amount of the net operating loss benefit, since, in the
opinion of management, based upon the limited earning history of the Company,
it is more likely than not that the benefits will not be realized.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
statement purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of
July 31, 2009 and 2008 are as follows:
2009 2008
----------- -----------
Non-capital losses carry forward $17,802,286 $14,289,754
----------- -----------
Enacted tax rate - 34% and 34%,
respectively
Deferred tax assets 6,052,777 5,144,311
Less: Valuation allowance (6,052,777) (5,144,311)
----------- -----------
$ - $ -
=========== ===========
In assessing the realizability of future tax assets, management considers
whether it is more likely than not that some portion or all of the future tax
assets will not be realized. The ultimate realization of future tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of future tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.
The effective income tax rate for the years ended July 31, 2009 and 2008 was
34% and 34%, respectively.
Stock-based compensation - The Company recognizes stock-based compensation in
accordance with ASC Topic 718 - Stock Compensation, which requires the
measurement and recognition of compensation expense for all share-based payment
awards made to employees and directors including employee stock options and
employee stock purchases related to an Employee Stock Purchase Plan based on
the estimated fair values.
For non-employee stock-based compensation, we have adopted ASC Topic 505 -
Equity-Based Payments to Non-Employees, which requires stock-based compensation
related to non-employees to be accounted for based on the fair value of the
related stock or options or the fair value of the services on the grant date,
whichever is more readily determinable in accordance with ASC Topic 718.
F9
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings (loss) per share - The Company reports earnings (loss) per share
in accordance with ASC Topic 260 - Earnings per Share. Basic earnings (loss)
per share is computed by dividing income (loss) available to common
shareholders by the weighted average number of common shares available.
Diluted earnings (loss) per share is computed similar to basic earnings
(loss) per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if
the potential common shares had been issued and if the additional common
shares were dilutive. Diluted earnings (loss) per share has not been
presented since the effect of the assumed exercise of options and warrants
to purchase common shares would have an anti-dilutive effect.
Comprehensive income (loss) - The Company has adopted ASC Topic 220 -
Comprehensive Income, which establishes standards for reporting and the
display of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except
those resulting from investments by owners or distributions to owners.
Among other disclosures, Topic 220 requires that all items that are required
to be recognized under the current accounting standards as a component of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. Comprehensive
income is displayed in the statement of stockholders' deficit and in the
balance sheet as a component of stockholders' deficit.
New accounting pronouncements
In January 2008, Staff Accounting Bulletin ("SAB") 110, "Share-Based Payment"
was issued (codified within ASC 225 -Income Statement). Registrants may
continue, under certain circumstances, to use the simplified method in
developing estimates of the expected term of share options as initially
allowed by SAB 107, "Share-Based Payment". The adoption of SAB 110 did not
have any material effect on the financial position and results of operations
of the Company.
In May 2008, the FASB issued Staff Position ("FSP") APB 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlements)," (codified within ASC 470 -Debt).
This FSP requires a portion of this type of convertible debt to be recorded
as equity and to record interest expense on the debt portion at a rate that
would have been charged on nonconvertible debt with the same terms. This FSP
takes effect in the first quarter of fiscal years beginning after
December 15, 2008 and will be applied retrospectively for all periods
presented. It will be effective for the Company on August 1, 2009. The
adoption of APB 14-1 is not expected to have any material impact on the
Company's financial position, results of operations or cash flows.
F10
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,"
(codified within ASC 260 -Earnings Per Share). Securities participating in
dividends with common stock according to a formula are participating
securities. FSP EITF 03-6-1 determined that unvested shares of restricted
stock and stock units with non-forfeitable rights to dividends are
participating securities. Participating securities require the "two-class"
method to be used to calculate basic earnings per share. This method lowers
basic earnings per common share. This pronouncement takes effect in the first
quarter of fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented. It will be effective for us on
August 1, 2009. The adoption of FSP EITF 03-6-1 is not expected to have a
material impact on our financial position, results of operations or cash
flows
In January 2009, the FASB issued FASB Staff Position No. EITF 99-20-1,
"Amendments to the Impairment Guidance of EITF Issue No. 99-20," (codified
within ASC 325 -Investments). This EITF 99-20-1 amends the impairment
guidance in EITF Issue No. 99-20, "Recognition of Interest Income and
Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue to Be Held by a Transferor in Securitized Financial Assets," to
achieve more consistent determination of whether an other-than-temporary
impairment has occurred. Additionally, the FSP retains and emphasizes the
objective of an other-than-temporary impairment assessment and the related
disclosure requirements in FASB Statement No. 115 "Accounting for Certain
Investments in Debt and Equity Securities," and other related guidance.
This guidance is effective for interim and annual reporting periods ending
after December 15, 2008, and is applied prospectively. The adoption of
EITF 99-20-1 did not have a material impact on the Company's financial
position, results of operations or cash flows.
In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, "Recognition
and Presentation of Other-Than-Temporary Impairments," ("FSP FAS 115-2 and
FAS 124-2") (codified within ASC 320 - Investments - Debt and Equity
Securities). FSP FAS 115-2 and FAS 124-2 change the method for determining
whether an other-than-temporary impairment exists for debt securities and
the amount of the impairment to be recorded in earnings. FSP FAS 115-2 and
FAS 124-2 are effective for interim and annual periods ending after
June 15, 2009. The adoption of FSP FAS 115-2 and FAS 124-2 is not expected
to have any material impact on the Company's financial position, results
of operations or cash flows.
In April 2009, the FASB issued FSP FAS 157-4 "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That are Not Orderly,"
(codified within ASC 820 - Fair Value Measurements and Disclosures). FSP
FAS 157-4 provides additional guidance for estimating fair value when the
volume and level of activity for the asset or liability have significantly
decreased. It also includes guidance on identifying circumstances that
indicate a transaction is not orderly. FSP FAS 157-4 becomes effective for
interim and annual reporting periods after June 15, 2009 and shall be
applied prospectively. The adoption of FSP FAS 157 is not expected to have
any material impact on the Company's financial position, results of
operations or cash flows.
F11
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, "Interim Disclosures
about Fair Value of Financial Instruments," ("FSP FAS 107-1 and APB 28-1")
(codified within ASC 825 - Financial Instruments). FSP FAS 107-1 and APB 28-1
require fair value disclosures in both interim as well as annual financial
statements in order to provide more timely information about the effects of
current market conditions on financial instruments. FSP FAS 107-1 and
APB 28-1 are effective for interim and annual periods ending after
June 15, 2009. The adoption of FSP FAS 107-1 and APB 28-1 are not expected
to have any material impact on the Company's financial position, results of
operations or cash flows.
In June 2009, the FASB issued FASB ASC 860-10, "Transfers and Servicing",
FASB ASC 860-10 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets, and
requires additional disclosures in order to enhance information reported to
users of financial statements by providing greater transparency about
transfers of financial assets, including securitization transactions, and an
entity's continuing involvement in and exposure to the risks related to
transferred financial assets. FASB ASC 860-10 is effective for fiscal years
beginning after November 15, 2009. The Company will adopt FASB ASC 860-10 in
fiscal 2010. The Company does not expect that the adoption of FASB ASC 860-10
will have a material impact on its financial position, cash flows or results
of operations.
In June 2009, the FASB issued FASB ASC 810-10, "Consolidation", which included
the following: (1) the elimination of the exemption for qualifying special
purpose entities, (2) a new approach for determining who should consolidate a
variable-interest entity, and (3) changes to when it is necessary to reassess
who should consolidate a variable-interest entity. FASB ASC 810-10 is
effective for the first annual reporting period beginning after
November 15, 2009 and for interim periods within that first annual reporting
period. The Company will adopt FASB ASC 810-10 in fiscal 2010. The Company
does not expect that the adoption of FASB ASC 810-10 will have a material
impact on its financial position, cash flows or results of operations.
In June 2009, the FASB issued FASB ASC 105-10, "Generally Accepted Accounting
Principles" replaces SFAS No. 162, which establishes the FASB Accounting
Standards Codification ("Codification") as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with GAAP.
Rules and interpretive releases of the Securities and Exchange Commission
("SEC") under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. The FASB will no longer issue new
standards in the form of Statements, FASB Staff Positions, or Emerging Issues
Task Force Abstracts; instead the FASB will issue Accounting Standards Updates.
Accounting Standards Updates will not be authoritative in their own right as
they will only serve to update the Codification. The issuance of FASB
ASC 105-10 and the Codification does not change GAAP. FASB ASC 105-10 becomes
effective for interim and annual periods ending after September 15, 2009.
The adoption of this statement did not have a material impact on the Company's
financial position, cash flows and results of operations.
F12
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In August 2009, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) 2009-05, "Fair Value Measurements and
Disclosures (Topic 820): Measuring Liabilities at Fair Value". The guidance
provided in this update is effective for the first reporting period beginning
after issuance. The adoption of this statement has had no material effect on
the Company's financial position, cash flows or results of operations.
In August 2009, the FASB issued Accounting Standards Update ("ASU")
No. 2009-05, "Measuring Liabilities at Fair Value," ("ASU 2009-05") (codified
within ASC 820 - Fair Value Measurements and Disclosures). ASU 2009-05 amends
the fair value and measurement topic to provide guidance on the fair value
measurement of liabilities. ASU 2009-05 is effective for interim and annual
periods beginning after August 26, 2009. The adoption of ASU 2009-05 is not
expected to have any material impact on the Company's financial position,
results of operations or cash flows.
In September 2009, the Financial Accounting Standards Board (FASB) issued
ASU 2009-12, "Fair Value Measurements and Disclosures" (Topic 820): Investments
in Certain Entities That Calculate Net Asset Value Per Share (or Its
Equivalent). This update provides amendments to subtopic 820-10, Fair
Value Measurements and Disclosures - Overall, for the fair value measurement
of investments in certain entities that calculate net asset value per share
(or its equivalent). The amendments in this update are effective for interim
and annual periods ending after December 15, 2009. Early application is
permitted in financial statements for earlier interim and annual periods
that have not been issued. The adoption of this statement did not have a
material impact on the Company's financial position, cash flows and results
of operations.
In January 2010, the FASB issued ASU 2010-01, "Equity (Topic 505) - Accounting
for Distributions to Shareholders with Components of Stock and Cash,"
("ASU 2010-01"). ASU 2010-01 clarifies that the stock portion of a distribution
to shareholders that allows them to elect to receive cash or shares with a
potential limitation on the amount of cash that all shareholders can elect to
receive is considered a share issuance. ASU 2010-01 is effective for interim
and annual periods ending on or after December 15, 2009 and should be applied
on a retrospective basis. The adoption of ASU 2010-01 is not expected to have
any material impact on the Company's financial position, results of operations
or cash flows.
In January 2010, the FASB issued ASU 2010-02, "Consolidation (Topic 810) -
Accounting and Reporting for Decreases in Ownership of a Subsidiary - A Scope
Clarification," ("ASU 2010-02"). ASU 2010-02 clarifies the scope of the
decrease in ownership provisions of Subtopic 810 and expands the disclosure
requirements about deconsolidation of a subsidiary or de-recognition of a
group of assets. ASU 2010-02 is effective beginning in the first interim of
annual reporting period ending on or after December 15, 2009. The amendments
in ASU 2010-02 must be applied retrospectively to the first period that an
entity adopted FAS 160. The adoption of ASU 2010-02 is not expected to have
any material impact on the Company's financial position, results of
operations or cash flows.
F13
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In January 2010, the FASB issued ASU No. 2010-06, "Improving Disclosures about
Fair Value Measurements," ("ASU 2010-06") (codified within ASC 820 -Fair Value
Measurements and Disclosures). ASU 2010-06 improves disclosures originally
required under FAS No. 157. ASU 2010-16 is effective for interim and annual
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances and settlements in the roll forward of activity
in Level 3 fair value measurements. Those disclosures are effective for fiscal
years beginning after December 15, 2010, and for interim periods within those
years. The adoption of ASU 2010-06 is not expected to have any material impact
on the Company's financial position, results of operations or cash flows.
In March 2010, the FASB issued ASU No. 2010-11, "Derivatives and Hedging
(Topic 815): Scope Exception Related to Embedded Credit Derivatives,"
("ASU 2010-11") (codified within ASC 815 - Derivatives and Hedging).
ASU 2010-11 improves disclosures originally required under FAS No. 161.
ASU 2010-11 is effective for interim and annual periods beginning after
June 15, 2010. The adoption of ASU 2010-11 is not expected to have any
material impact on the Company's financial position, results of operations
or cash flows.
3. VITAL PRODUCTS, INC.
As discussed in Note 1, the Company sold its childcare division to Vital
Products, Inc. ("Vital") in July 2005. Proceeds received on sale of the
childcare division comprised 1,000,000 shares of Vital's common stock.
The Company has amounts due from Vital for monies loaned comprising the
following at July 31, 2009 and 2008:
July 31, July 31,
2009 2008
---------- ----------
Note receivable plus accrued interest, interest rate
at 20% per annum, unsecured and due on
demand (past due maturity of July 5, 2008) $ - $ 1
Note receivable plus accrued interest, interest rate
at 20% per annum, unsecured and due on
demand (past due maturity of June 15, 2008) - -
Advances receivable - -
Accrued interest on notes receivable - -
---------- ----------
$ - $ 1
========== ==========
For the year ended July 31, 2008, the Company had fully impaired all amounts
due from Vital Products, Inc. due to the uncertainty of its ability to collect
such amounts and had recorded as bad debt expense totaling $2,099,712.
For the year ended July 31, 2009, the Company received 30,395,187 shares of
common stock of Vital as full settlement for all amounts due. These Vital
shares have a fair value of $268,625 and are recorded as a gain on recovery of
previously written-off receivable in the Statement of Operations.
F14
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
4. LOANS PAYABLE TO RELATED PARTY
Loans payable to related party totaling $341,293 and $158,844 at July 31, 2009
and 2008, respectively, are comprised of advances from a business entity which
the Company's Chief Executive Officer and President is an owner. The advances
are due on demand, unsecured and non-interest bearing.
5. STOCKHOLDERS' EQUITY
On June 19, 2008, the Company approved an amendment to its certificate of
incorporation increasing the authorized shares of common stock to
5,000,000,000 shares. As of July 31, 2009 the Company has not increased the
authorized shares of common stock and it remains at 1,000,000,000 shares
On July 18, 2007, the Company issued 1,000 shares of Series B 1.5% Convertible
Preferred Stock in satisfaction of a $1,000,000 note payable to a corporation
controlled by the Company's Chief Executive Officer and President. The
preferred stock entitles the holder to receive cumulative dividends of 1.5%
per month beginning August 1, 2007. The Series B Preferred Stock is
convertible into common stock at a conversion price of $0.005. The fair value
of common stock conversion was estimated at $0.005 which was equal to the
conversion price.
Upon conversion, the preferred stock will be reclassified to common stock
outstanding. Each holder of the issued preferred stock shall have voting
rights, as to the number of votes equal to the aggregate number of shares of
common stock into which such holder's shares of the Series B 1.5% Convertible
Preferred Stock are convertible, multiplied by two.
Preferred stock - Each share of Series A preferred stock is convertible into
100 shares of common stock
- Each share of Series B preferred stock is convertible into
200,000 shares of common stock
On August 25, 2008, the Company converted 5,000 of preferred stock into 500
shares of common stock.
On November 15, 2007, the Company's common stock was adjusted to take into
account a 50-to-1 reverse stock split. The Company's common stock has been
adjusted on a retroactive basis, accordingly, all previous balances have been
adjusted for this reverse stock split.
On March 25, 2008, the Company's common stock was adjusted to take into
account a 1,000-to-1 reverse stock split. The Company's common stock has
been adjusted on a retroactive basis, accordingly, all previous balances have
been adjusted for this reverse stock split.
On August 15, 2008, the Company's common stock was adjusted to take into
account a 1,000-to-1 reverse stock split. The Company's common stock has
been adjusted on a retroactive basis, accordingly, all previous balances have
been adjusted for this reverse stock split.
On February 5, 2009, the Company's common stock was adjusted to take into
account a 1,000-to-1 reverse stock split. The Company's common stock has been
adjusted on a retroactive basis; accordingly, all previous balances have been
adjusted for this reverse stock split.
F15
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
5. STOCKHOLDERS' EQUITY (continued)
During the year ended July 31, 2009 the Company issued 72,412 shares of its
common stock to consultants for services rendered by them for an aggregate
fair value of $87,510 based on the quoted market price of the shares at time
of issuance.
During the year ended July 31, 2009 the Company issued 8,000 shares of its
common stock to consultants for services rendered by them for an aggregate fair
value of $$3,050 based on the quoted market price of the shares at time of
issuance.
On February 19, 2009, the Company converted 224,134 of preferred stock owned
by the Company's President and CEO into 22,413,400 shares of common stock.
Stock options - During the years ended July 31, 2009 and 2008, the Company
granted -0- and -0- options, respectively. As of July 31, 2009 and 2008, the
Company had options outstanding of -0- and -0-, respectively.
Warrants - During the year ended July 31, 2009 and 2008, the Company issued
warrants for -0- and -0- shares of common stock. As of July 31, 2009 and 2008,
the Company had warrants outstanding of -0- and -0-, respectively.
6. PRIOR PERIOD AMOUNTS INCLUDED IN THE DEVELOPMENT STAGE COMPANY
On May 1, 2009, the Company was redefined as a development stage company in
accordance with ASC Topic 915 Development Stage Entities and its requirements.
The equity accounts at May 1, 2009 were as follows:
Common stock $ 2,249
Additional paid-in capital 21,903,389
Accumulated other comprehensive income 1,371,697
Accumulated deficit (28,955,560)
These amounts are included in the equity accounts during the entire development
stage of the Company. All amounts recorded in the "from May 1, 2009 to
July 31, 2009" category as comparative amounts have been accumulated since
May 1, 2009.
7. RELATED PARTY TRANSACTIONS
a) During the years ended July 31, 2009 and 2008, the Company paid rent of
approximately $25,575 and $96,652, respectively, to a company related to a
director of the Company. This related party transaction is not necessarily
indicative of the amounts that would have been incurred had a comparable
transaction been entered into with an independent party. Management
believes the terms of these transactions were more favorable to the
Company than would have been attained had the transactions been negotiated
at arm's length.
b) During the years ended July 31, 2009 and 2008, the Company paid $0 and
$111,289, respectively, to a company controlled by a director of the
Company for equipment rental. This related party transaction is not
necessarily indicative of the amounts that would have been incurred had
a comparable transaction been entered into with an independent party.
Management believes the terms of these transactions were more favorable
to the Company than would have been attained had the transactions been
negotiated at arm's length.
F16
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
7. RELATED PARTY TRANSACTIONS (continued)
c) Included in current liabilities at July 31, 2009 and 2008 is $341,293
and $158,844, respectively, which is due to The Cellular Connection Ltd.,
a Company owned and controlled by the Company's President and CEO. The
amounts due to the Cellular Connection Ltd. are non-interest bearing,
unsecured and due on demand.
8. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is involved in various legal
proceedings. Based upon the Company's evaluation of the information presently
available, management believes that the ultimate resolution of any such
proceedings will not have a material adverse effect on the Company's financial
condition, liquidity or results of operations.
9. DISCONTINUED OPERATIONS
On March 18, 2008, we entered into a binding agreement with FTS Group, Inc.
and OTG Technologies Group, Inc., a Florida corporation and wholly-owned
subsidiary of FTS Group, Inc. (together, "FTS"), whereby FTS agreed to
purchase certain assets of our value-added reseller business unit, d/b/a On
The Go Technologies Group, including its goodwill and intellectual property.
On June 6, 2008, we agreed to amend certain terms of the binding agreement.
On July 14, 2008, FTS notified us that it intended to terminate this
transaction. We believe FTS has breached its agreements with us and that the
promissory note issued pursuant to the binding agreement, as amended, is in
default. We intend to pursue all remedies that are available to us. As of
March 18, 2008 we discontinued all operations as a valued-added reseller.
The sale of the Company's value-added reseller business operations to FTS
resulted in loss on sale by the Company totaling $1,773,079.
The sale of the Company's value-added reseller business operations has been
accounted for as discontinued operations in the financial statements for the
periods presented herein, in accordance with ASC Topic 360 - Property, Plant
and Equipment.
The following is a summary of the results of discontinued operations in the
statements of operations:
Year ended July 31
2008
-------------
Net sales $ 13,571,885
Cost of sales 10,854,339
-------------
2,717,546
Operating expenses 7,097,444
-------------
Income (loss) from
discontinued operations $ (4,379,898)
=============
F17
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009
(Audited)
10. SUBSEQUENT EVENTS
On May 3, 2010, we issued 300,000,000 shares of our common stock for services
provided to the Company.
F18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On July 9, 2010, MSCM LLP, principal accountant of Metro One Development, Inc.
(the "Company"), notified the Board of Directors of the Company that they
were withdrawing as auditors for the Corporation.
MSCM LLP audited the Company's financial statements for the fiscal year ending
July 31, 2008. Except as reported in the Annual Report on Form 10-KSB for the
fiscal year ended July 31, 2008, which stated that "the accompanying
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern" and that "the Company has incurred
significant losses from operations, anticipates additional losses in the
next fiscal year, and has insufficient working capital as of July 31, 2008
to fund the anticipated losses. These conditions raise substantial doubt
as to the ability of the Company to continue as a going concern," MSCM LLPs'
report on the Company's consolidated financial statements for the fiscal year
ended July 31, 2008 did not contain an adverse opinion or disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope
or accounting principles.
During the year ended July 31, 2008 and through the date hereof, there were
no disagreements with MSCM LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure
which, if not resolved to MSCM LLPs' satisfaction, would have caused them to
make reference to the subject matter of such disagreements in connection with
their report on the Company's financial statements for such year.
Effective July 9, 2010, the Company appointed the firm of DeJoya Griffith &
Company, LLC to serve as independent public accountants of the Company for the
fiscal year ending July 31, 2009. The Board of Directors approved the decision
to appoint DeJoya Griffith & Company, LLC.
During the year ended July 31, 2008 through the date hereof, the Company did
not consult with DeJoya Griffith & Company, LLC with respect to the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements.
ITEM 9A(T). CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management evaluated, with the participation of our Chief Executive Officer
and our Chief Financial Officer, the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this Annual Report on
Form 10-K. Based on this evaluation, our Chief Executive Officer and our Chief
Financial Officer have concluded that our disclosure controls and procedures
are effective to ensure that information we are required to disclose in reports
that we file or submit under the Securities Exchange Act of 1934 (i) is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and (ii) is accumulated
and communicated to our management, including our Chief Executive Officer and
our Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure. Our disclosure controls and procedures are designed to
provide reasonable assurance that such information is accumulated and
communicated to our management. Our disclosure controls and procedures include
components of our internal control over financial reporting. Management's
assessment of the effectiveness of our internal control over financial
reporting is expressed at the level of reasonable assurance that the control
system, no matter how well designed and operated, can provide only reasonable,
but not absolute, assurance that the control system's objectives will be met.
20
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting
principles. Our internal control over financial reporting includes those
policies and procedures that:
1. pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect our transactions and dispositions of our assets;
2. provide reasonable assurance that our transactions are recorded as necessary
to permit preparation of our financial statements in accordance with
generally accepted accounting principles, and that our receipts and
expenditures of our Company are being made only in accordance with
authorizations of our management and our directors; and
3. provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could
have a material effect on our financial statements.
Internal control over financial reporting includes the controls themselves,
monitoring and internal auditing practices and actions taken to correct
deficiencies identified.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we conducted an
assessment of the effectiveness of our internal control over financial
reporting as of July 31, 2009. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework. Based on this
evaluation, our management concluded that our internal control over financial
reporting was effective as of July 31, 2009.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to the temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting, which
are included within disclosure controls and procedures, that occurred during
our fiscal quarter ended July 31, 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
21
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth the name, age, positions and offices that each
director and officer has held for the past five years as of July 31, 2009.
Members of the Board are elected and serve for one year terms or until their
successors are elected and qualify. Our executive officers are elected by and
serve at the pleasure of our Board of Directors. There are no family
relationships among our directors and executive officers.
NAME AGE POSITION Director Since
-------------------- --- ------------------------- --------------
Stuart Turk 41 President, Chairman, 2000
Chief Executive Officer,
Secretary, Treasurer and
Director
Evan Schwartzberg, 42 Chief Financial Officer
BA, CCM
Ralph Magid, B.A.Sc., 63 Director 2000
MBA, P.Eng, P.E.O
BIOGRAPHIES OF EXECUTIVE OFFICERS AND DIRECTORS
STUART TURK. Mr. Turk has been our Chairman, President and Chief Executive
Officer since July 2000. Mr. Turk founded The Cellular Connection Ltd., a
manufacturer of mounting accessories and packaging for cellular phones in
May 1988. He currently serves as the Chief Executive Officer of The Cellular
Connection.
EVAN SCHWARTZBERG. Mr. Schwartzberg has been our Chief Financial Officer
since July 2000. Prior to January 31, 2006, Mr. Schwartzberg has worked for
the TD Bank Financial Group as a Senior Cash Manager, previously the Manager
of Corporate Cash Management of Canada Trust, within the Treasury and Balance
Sheet Management group of the Finance Division. Prior to such time, and
since 1989, Mr. Schwartzberg was a Senior Cash Manager of Canada Trust.
Mr. Schwartzberg holds an Economics degree from the University of Toronto,
passed the Canadian Securities Course from the Canadian Securities Institute,
and earned the Certified Cash Manager designation from the Association for
Financial Professionals, a U.S. based organization.
RALPH MAGID. Mr. Magid has been our director since July 2000. Currently,
Mr. Magid is the president of InnoTech Capital Corporation, a company
specializing in providing advisory services for Canadian technology companies
on how to fund and manage their Research and Development. Mr. Magid has more
than 25 years of experience in manufacturing and operations both in Canada and
internationally. He has worked with small Canadian owned companies as well as
large multinationals including Motorola and Geac Computers. Research and
Development has been an integral part of Mr. Magid's responsibilities in his
position of Vice President, Operations held with several manufacturing
organizations. Mr. Magid holds an Industrial Engineering degree from the
University of Toronto, B.A.Sc., an MBA from York University and is a member
of the Professional Engineers of Ontario.
22
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
We are not aware of any material legal proceedings that have occurred within
the past five years concerning any director, director nominee, or control
person which involved a criminal conviction, a pending criminal proceeding, a
pending or concluded administrative or civil proceeding limiting one's
participation in the securities or banking industries, or a finding of
securities or commodities law violations.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We do not have any securities registered under Section 12 of the Exchange Act,
as amended. Accordingly, our directors, executive officers, and stockholders
beneficially owning more than 10% of our common stock are not required to
comply with the reporting requirements of Section 16(a) of the Exchange Act.
CODE OF ETHICS
We have adopted a code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of our code of
ethics is available on our website at www.metro-one.com. The information on
our website does not constitute part of this report.
PROCEDURE FOR NOMINATING DIRECTORS
There have been no material changes to the procedures by which security holders
may recommend nominees to our Board of Directors.
The Board of Directors will consider candidates for director positions that are
recommended by any of our stockholders. Any such recommendation for the 2011
Annual Meeting of Stockholders should be provided to our corporate secretary by
January 30, 2011. The recommended candidate should be submitted to us in
writing addressed to 125 Avenida Mesita, San Clemente, California 92673. The
recommendation shall include the following information: name of candidate;
address, phone, and fax number of candidate; a statement signed by the
candidate certifying that the candidate wishes to be considered for nomination
to our Board of Directors and stating why the candidate believes that he or
she meets the director qualification criteria and would otherwise be a valuable
addition to our Board of Directors; a summary of the candidate's work
experience for the prior five years and the number of shares of our stock
beneficially owned by the candidate.
The Board will evaluate the recommended candidate and will determine whether
or not to proceed with the candidate in accordance with our procedures. We
reserve the right to change our procedures at any time to comply with the
requirements of applicable laws.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad corporate
policies and reviewing our overall performance rather than day-to-day
operations. The Board's primary responsibility is to oversee management of
our company and, in so doing, serve the best interests of our company and our
stockholders. Our full Board of Directors performs all of the functions
normally designated to an Audit Committee, Compensation Committee and
Nominating Committee.
23
Although our Board does not have a separately-designated standing Audit
Committee, our full Board of Directors performs the functions usually
designated to an Audit Committee. As of July 31, 2009, Mr. Magid has been
designated as the Board's "audit committee financial expert" as defined in
Item 407(d)(5)(ii) of Regulation S-K. We have determined that Mr. Magid is
"independent" as independence for audit committee members is defined in
Rule 5605 of the Nasdaq Marketplace Rules and Rule 10A-3 of the Securities
Exchange Act of 1934. Mr. Magid's experience and background has provided him
with an understanding of accounting principles generally accepted in the
United States of America and financial statements prepared thereon.
Mr. Magid has experience preparing, auditing, analyzing and evaluating
financial statements that present a breadth and level of complexity of
accounting issues comparable to the issues that can reasonably be expected
to be raised by our financial statements. Mr. Magid has an understanding
of audit committee functions.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION
The following table shows the compensation paid or accrued during the fiscal
years ended July 31, 2009 and 2008 to our Principal Executive Officer and
our Chief Financial Officer, referred to herein as our "Named Executive
Officers." No other executive officer or employee earned over $100,000 in
the last completed fiscal year.
Summary Compensation Table
-------------------------------------------------------------------------------
Name and Year Base Bonus Stock Option Non- All Dollar Value
Principal Ended Salary Awards Awards qualified Other of Total
Position July Deferred Compensa- Compensation
31, compensa- tion for the
tion Covered
Earnings Fiscal
Year
$ $ $ $ $ $ $
(a) (b) (c) (d) (e) (f) (h) (i) (j)
-------------------------------------------------------------------------------
Stuart
Turk,
Chief
Executive
Officer 2009 $ 0 $ 0 $ 0
2008 $272,756 $12,000(1) $284,756
Evan
Schwartzberg,
Chief
Financial
Officer 2009 $ 0 $ 0 $ 0
2008 $160,000 $ 6,000(2) $166,000
-------------------------------------------------------------------------------
24
(1) "All Other Compensation" amount for Mr. Turk includes personal use of
Company vehicle.
(2) "All Other Compensation" amount for Mr. Schwartzberg includes personal
use of Company vehicle.
NARRATIVE TO SUMMARY COMPENSATION TABLE
EMPLOYMENT AGREEMENTS
We do not currently have any employment agreements, oral or written, with any
of our Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
As of July 31, 2009, our named executive officer did not have any equity awards
outstanding.
Potential Payments Upon Termination or Change of Control
We do not have any potential payments upon termination or change of control.
DIRECTOR COMPENSATION
We do not currently have any formal arrangements to compensate our directors.
From time to time, we may compensate our directors in shares of our common
stock to preserve capital to grow our company. We did not compensate our
directors for their services during the fiscal years ended July 31, 2009 or
July 31, 2008.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the beneficial
ownership of our outstanding common stock as of June 21, 2010, by each person
known by us to be (i) the beneficial owner of more than 5% of the outstanding
shares of common stock, (ii) each current director and nominee, (iii) each of
the Named Executive Officers named in the Summary Compensation Table who were
serving as executive officers at the end of the July 31, 2009 fiscal year and
(iv) all of our directors and current executive officers as a group. Unless
otherwise indicated below, to our knowledge, all persons listed below have sole
voting and investment power with respect to their shares of common stock except
to the extent that authority is shared by spouses under applicable law.
The calculation of percentage ownership for each listed beneficial owner is
based upon the number of shares of common stock issued and outstanding on
June 7, 2010, plus shares of common stock subject to options, warrants and
conversion rights held by such person on June 7, 2010, and exercisable or
convertible within 60 days thereafter.
25
Title of class Name and address of Amount and Percent of
beneficial owner (1) nature of class (2)
beneficial
owner
Common Stuart Turk (3) 207,759,099 64.5 %
Common The Cellular Connection, 206,265,099 64.5 %
Ltd.(4)
Common Evan Schwartzberg 190,000 *
Common Ralph Magid 1 *
All officers and directors
as a group (3 persons) 207,949,100 64.5 %
* less than 1%
(1) Unless otherwise indicated, the address for each of these stockholders is
c/o Metro One Development, Inc., 125 Avenida Mesita, San Clemente,
California 92673.
(2) Beneficial ownership is determined in accordance with the rules of the SEC
based on 322,495,969 shares of common stock issued and outstanding on
June 7, 2010.
(3) Mr. Turk's beneficial ownership is comprised of 1,494,000 shares of common
stock owned directly. In addition, Mr. Turk is the sole control person for
The Cellular Connection, Ltd., and, as such, has full voting and
dispositive control over shares held by The Cellular Connection, Ltd.
The Cellular Connection, Ltd. owns 6,265,099 shares of common stock as
well as 1,000 shares of Series B 1.5% Convertible Preferred Stock that
can convert into 200,000,000 shares of common stock, all of which are
beneficially owned by Mr. Turk.
(4) The Cellular Connection, Ltd. owns 6,265,099 shares of common stock as
well as 1,000 shares of Series B 1.5% Convertible Preferred Stock that can
convert into 200,000,000 shares of common stock. Mr. Turk is the sole
control person for The Cellular Connection, Ltd., and, as such, has full
voting and dispositive control over shares held by The Cellular
Connection, Ltd.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the years ended July 31, 2009 and 2008, we paid rent of approximately
$25,575 and $96,652, respectively, to a company related to a director.
Included in current liabilities at July 31, 2009 was $341,293 due to The
Cellular Connection Ltd., a company owned and controlled by our Chairman and
Chief Executive Officer, Mr. Turk. This amount arose from the current portion
of the loans from Mr. Stuart Turk.
During the years ended July 31, 2009 and 2008, we paid $0 and $111,289,
respectively to The Cellular Connection Ltd., a company owned and controlled
by Mr. Turk as described above, for equipment rental.
26
The above related party transactions are not necessarily indicative of the
amounts that would have been incurred had a comparable transaction been entered
into with an independent party. We believe the terms of these transactions
were more favorable than would have been attained if the transactions were
negotiated at arm's length.
DIRECTOR INDEPENDENCE
As of July 31, 2009, Stuart Turk and Ralph Magid served as our directors.
Only Mr. Ralph Magid has been deemed by our board of directors to be an
"independent" director, as defined under the standards of independence set
forth in the Marketplace Rules of the NASDAQ Stock Market, Rule 4200(a)(15).
We are currently traded on the Pink Sheets under the symbol MTRO.PK. The Pink
Sheets do not require that a majority of the board be independent.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
MSCM LLP audited our financial statements for the fiscal years ended
July 31, 2008 and reviewed the October 31, 2008, January 31, 2009 and
April 31, 2009 quarterly filings.
De Joya Griffith & Company, LLC audited our financial statements for the fiscal
year ended July 31, 2009
Fees related to services performed by MSCM and De Joya Griffith in the years
ended July 31, 2009 and 2008 were as follows:
2009 2008
Audit Fees $ 9,000 $ 10,000
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total $ 9,000 $ 10,000
Pre-Approval Policies
The Board's policy is to pre-approve all audit services and all non-audit
services before they commence, including the fees and terms thereof, to be
provided by our independent auditor. All of the services provided during the
fiscal year ended July 31, 2009 were pre-approved. No audit, review or attest
services were approved in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X during the fiscal year ended July 31, 2009. During the approval process,
the Board considered the impact of the types of services and the related fees
on the independence of the independent registered public accounting firm. The
services and fees were deemed compatible with the maintenance of that firm's
independence, including compliance with rules and regulations of the SEC.
Throughout the year, the Board will review any revisions to the estimates of
audit fees initially estimated for the engagement.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
a. The following documents are filed as part of this annual report on
Form 10-K:
27
1. FINANCIAL STATEMENTS
The following documents are filed in Part II, Item 8 of this annual report on
Form 10-K:
Reports of Independent Registered Public Accounting Firm
Balance Sheets at July 31, 2009 and 2008
Statements of Operations for the years ended July 31, 2009 and 2008
Statements of Stockholders' Deficit for the years ended July 31, 2009 and 2008
Statements of Cash Flows for the years ended July 31, 2009 and 2008
Notes to Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted as they are not required,
not applicable, or the required information is otherwise included.
3. EXHIBITS
The exhibits listed below are filed with or incorporated by reference in
this annual report on Form 10-K.
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
2.1 Memorandum of Agreement between the Company and Elaine Abate, John
Abate, Gerhard Schmid, Frank Abate, 1066865 Ontario Inc, and Infinity
Technologies Inc., dated July 19, 2005 (included as Exhibit 2.1 to
the Form 8-K filed July 22, 2005, and incorporated herein by
reference).
3.1 Restated Certificate of Incorporation (included as Exhibit 3.4 to the
Form 10-KSB filed October 27, 2004, and incorporated herein by
reference).
3.2 By-laws (included as Exhibit 3.4 to the Form SB-2 filed May 24, 2001,
and incorporated herein by reference).
3.3 Certificate of Amendment of the Certificate of Incorporation (included
as Exhibit 3.5 to the Form 10-KSB filed October 27, 2004, and
incorporated herein by reference).
3.4 Certificate of Amendment of the Certificate of Incorporation, dated
June 6, 2007 (included as Exhibit 3.4 to the Form 10-QSB filed
June 12, 2007, and incorporated herein by reference).
3.5 Certificate of Amendment to the Amended and Restated Certificate of
Incorporation, as amended, dated August 13, 2007 (included as
Exhibit 3.1 to the Form 8-K filed August 17, 2007, and incorporated
herein by reference).
3.6 Certificate of Amendment to the Amended and Restated Certificate of
Incorporation, as amended, dated January 12, 2009 (included as Exhibit
3.1 to the Form 8-K filed January 30, 2007, and incorporated herein
by reference).
4.1 Certificate of Designation of Series A Convertible Preferred Stock
(included as Exhibit 4.1 to the Form 10-KSB filed October 27, 2004,
and incorporated herein by reference).
28
4.2 Secured Convertible Term Note between the Company and Laurus Master
Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.1 to the
Form 8-K filed July 20, 2005, and incorporated herein by reference).
4.3 Secured Revolving Note between the Company and Laurus Master Fund,Ltd.,
dated July 14, 2005 (included as Exhibit 4.2 to the Form 8-K filed
July 20, 2005, and incorporated herein by reference).
4.4 Secured Convertible Minimum Borrowing Note between the Company and
Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit
4.3 to the Form 8-K filed July 20, 2005, and incorporated herein by
reference).
4.5 Security and Purchase Agreement between the Company and Laurus Master
Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.4 to the
Form 8-K filed July 20, 2005, and incorporated herein by reference).
4.6 Master Security Agreement between the Company and Laurus Master Fund,
Ltd., dated July 14, 2005 (included as Exhibit 4.5 to the Form 8-K
filed July 20, 2005, and incorporated herein by reference).
4.7 Share Pledge Agreement between the Company and Laurus Master Fund,
Ltd., dated July 14, 2005 (included as Exhibit 4.6 to the Form 8-K
filed July 20, 2005, and incorporated herein by reference).
4.8 Form of Common Stock Purchase Warrant between the Company and Laurus
Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.7 to
the Form 8-K filed July 20, 2005, and incorporated herein by
reference).
4.9 Subsidiary Guaranty between the Company and Laurus Master Fund, Ltd.,
dated July 14, 2005 (included as Exhibit 4.8 to the Form 8-K filed
July 20, 2005, and incorporated herein by reference).
4.10 Funds Escrow Agreement between the Company and Laurus Master Fund,
Ltd., dated July 14, 2005 (included as Exhibit 4.9 to the Form 8-K
filed July 20, 2005, and incorporated herein by reference).
4.11 Forbearance Agreement between the Company and Laurus Master Fund,
Ltd., dated July 14, 2005 (included as Exhibit 4.10 to the Form 8-K
filed July 20, 2005, and incorporated herein by reference).
4.12 Joinder Agreement between the Company and Laurus Master Fund, Ltd.,
dated July 20, 2005 (included as Exhibit 4.11 to the Form 8-K filed
July 20, 2005, and incorporated herein by reference).
4.13 Registration Rights Agreement between the Company and Laurus Master
Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.12 to the
Form 8-K filed July 20, 2005, and incorporated herein by reference.
4.14 Amended and Restated Secured Convertible Term Note between the
Company and Laurus Master Fund, Ltd., dated January 13, 2006
(included as Exhibit 4.1 to the Form 8-K filed January 30, 2006,
and incorporated herein by reference).
4.15 Amended and Restated Secured Revolving Note between the Company
and Laurus Master Fund, Ltd., dated January 13, 2006 (included as
Exhibit 4.2 to the Form 8-K filed January 30, 2006, and incorporated
herein by reference).
29
4.16 Amended and Restated Secured Convertible Minimum Borrowing Note
between the Company and Laurus Master Fund, Ltd., dated
January 13, 2006 (included as Exhibit 4.3 to the Form 8-K filed
January 30, 2006, and incorporated herein by reference).
4.17 Amended and Restated Security Purchase Agreement between the Company
and Laurus Master Fund, Ltd., dated January 13, 2006 (included as
Exhibit 4.4 to the Form 8-K filed January 30, 2006, and incorporated
herein by reference).
4.18 Amended and Restated Form of Common Stock Purchase Warrant between
the Company and Laurus Master Fund, Ltd., dated January 13, 2006
(included as Exhibit 4.5 to the Form 8-K filed January 30, 2006, and
incorporated herein by reference).
4.19 Amended and Restated Registration Rights Agreement between the Company
and Laurus Master Fund, Ltd., dated January 13, 2006 (included as
Exhibit 4.6 to the Form 8-K filed January 30, 2006, and incorporated
herein by reference).
4.20 Form of Series "D" Common Stock Purchase Warrant (included as Exhibit
4.22 to the Form SB-2 filed February 21, 2006, and incorporated herein
by reference).
4.21 Omnibus Agreement, dated July 11, 2007 (included as Exhibit 4.7 to the
Form 8-K filed July 17, 2007, and incorporated herein by reference).
4.22 Second Omnibus Agreement, dated September 23, 2007 (included as
Exhibit 4.8 to the Form 8-K filed September 28, 2007, and incorporated
herein by reference).
4.23 Third Omnibus Agreement, dated October 15, 2007 (included as Exhibit
4.9 to the Form 8-K filed October 19, 2007, and incorporated herein
by reference).
4.24 Convertible Promissory Note between the Company and Dutchess Private
Equities Fund, L.P., dated December 6, 2006 (included as Exhibit 4.29
to the Form 10-KSB filed December 12, 2006 and incorporated herein by
reference).
4.25 Amended Convertible Promissory Note between the Company and Dutchess
Private Equities Fund, L.P., dated March 5, 2008 (included as Exhibit
4.2 to the Form 8-K filed March 6, 2008 and incorporated herein by
reference).
10.1 Secured Promissory Note between the Company and Vital Products, Inc.,
dated February 23, 2006 (included as Exhibit 10.1 to the Form 8-K
filed February 27, 2006, and incorporated herein by reference).
10.2 Secured Promissory Note between the Company and Vital Products, Inc.,
dated February 23, 2006 (included as Exhibit 10.2 to the Form 8-K
filed February 27, 2006, and incorporated herein by reference).
10.3 2007 Stock Option Plan, dated January 16, 2007 (included as Exhibit
10.1 to the Form S-8 filed January 16, 2007, and incorporated herein
by reference).
10.4 Investment Agreement between the Company and Dutchess Private Equities
Fund, Ltd., dated January 16, 2007 (included as Exhibit 10.14 to the
Form SB-2 filed January 16, 2007, and incorporated herein by
reference).
30
10.5 Side Letter Agreement between the Company and Dutchess Private
Equities Fund, Ltd., dated March 19, 2007 (included as Exhibit 10.15
to the Form SB-2 filed March 20, 2007, and incorporated herein
by reference).
10.6 2007 Stock Option Plan, dated April 24, 2007 (included as
Exhibit 10.1 to the Form S-8 filed April 25, 2007, and incorporated
herein by reference).
10.7 On The Go Healthcare, Inc. 2007 Stock Option Plan, dated June 6, 2007
(included as Exhibit 10.1 to the Form S-8 filed June 7, 2007, and
incorporated herein by reference).
10.8 On The Go Healthcare, Inc. August 2007 Stock Option Plan, dated
August 14, 2007 (included as Exhibit 10.1 to the Form S-8 filed
August 14, 2007, and incorporated herein by reference).
10.9 2007 Stock Option Plan, dated October 5, 2007 (included as
Exhibit 10.1 to the Form S-8 filed October 5, 2007, and incorporated
herein by reference).
10.10 2007 Stock Option Plan, dated October 19, 2007 (included as Exhibit
10.1 to the Form S-8 filed October 19, 2007, and incorporated herein
by reference).
10.11 2007 Stock Option Plan, dated November 19, 2007 (included as Exhibit
10.1 to the Form S-8 filed November 19, 2007, and incorporated herein
by reference).
10.12 On The Go Healthcare, Inc. February 2008 Stock Option Plan, dated
February 26, 2008 (included as Exhibit 10.1 to the Form S-8 filed
February 26, 2008, and incorporated herein by reference).
10.13 Binding Agreement between the Company on one side and FTS Group, Inc.
and OTG Technologies Group, Inc. on the other side, dated
March 18, 2008 (included as Exhibit 10.1 to the Form 8-K filed
March 27, 2008, and incorporated herein by reference).
10.14 Metro One Development, Inc. April 2008 Stock Option Plan, dated
April 14, 2008 (included as Exhibit 10.1 to the Form S-8 filed
April 14, 2008, and incorporated herein by reference).
10.15 Amendment No. 1 to Transaction Documents, dated June 6, 2008
(included as Exhibit 10.1 to the Form 8-K filed June 16, 2008, and
incorporated herein by reference).
10.16 Metro One Development, Inc. June 2008 Stock Option Plan, dated
June 18, 2008 (included as Exhibit 10.1 to the Form S-8 filed
June 26, 2008, and incorporated herein by reference).
10.17 Metro One Development, Inc. September 2008 Stock Option Plan, dated
September 10, 2008 (included as Exhibit 10.1 to the Form S-8 filed
September 10, 2008, and incorporated herein by reference).
23.1 Consent of Independent Registered Public Accounting Firm
23.2 Consent of Independent Registered Public Accounting Firm
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31
31.2 Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
METRO ONE DEVELOPMENT, INC.
Date: August 4, 2010
/s/ Stuart Turk
----------------------------
Stuart Turk
Principal Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.
SIGNATURE TITLE DATE
By:/s/ Stuart Turk August 4, 2010
------------------------- President, Chief Executive Officer,---------------
Stuart Turk Chairman and Director
By:/s/ Evan Schwartzberg Chief Financial Officer, Principal August 4, 2010
------------------------- Accounting Officer ---------------
Evan Schwartzberg
By:/s/ Ralph Magid Director August 4, 2010
------------------------- ---------------
Ralph Magid
32
