Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 2010
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to __________
Commission File Number: 333-61538
METRO ONE DEVELOPMENT, INC.
---------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 98-0231687
---------------------- --------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
125 Avenida Mesita, San Clemente, California 92673
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(Address of principal executive offices)
(949) 682-7891
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(Registrant's telephone number, including area code)
Not Applicable
---------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(Section 232.405 of this chapter) during the preceding 12 months (or such
shorter period that the registrant was required to submit and post such
files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filed,
an accelerated filed, a non-accelerated filed, or a small reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"small reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated filer [ ] Accelerated filer [ ]
Non-Accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of September 15, 2010 the Issuer had 322,495,969 shares of common stock
issued and outstanding, par value $0.0001 per share.
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 2010
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1 - Balance Sheets as of April 30, 2010 (unaudited)
and July 31, 2009 (audited).......................................F1
Statements of Operations for the Three and Nine Months
ended April 30, 2010 and 2009 and from May 1, 2009
to April 30, 2010 (Unaudited).....................................F2
Statements of Cash Flows for the Nine Months Ended
April 30, 2010 and 2009 and from May 1, 2009
to April 30, 2010 (Unaudited).....................................F3
Notes to Financial Statements (Unaudited)....................F4 - F11
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................4
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..........8
Item 4T - Controls and Procedures.............................................9
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings...................................................9
Item 1A - Risk Factors.......................................................10
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds........11
Item 3 - Defaults Upon Senior Securities....................................12
Item 4 - Submission of Matters to a Vote of Security Holders................12
Item 5 - Other Information .................................................12
Item 6 - Exhibits...........................................................12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, July 31,
2010 2009
(Unaudited) (Audited)
------------ ------------
ASSETS
Current assets
Cash $ -- $ --
------------ ------------
Total current assets -- --
------------ ------------
Total assets $ -- $ --
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses $ 6,856,024 $ 6,202,437
Accounts payable due to related party 784,000 514,000
Dividend payable - Series B 1.5%
convertible preferred stock 405,000 270,000
Loans payable to related party 400,085 341,293
Legal settlement 1,344,756 1,243,549
------------ ------------
Total current liabilities 9,789,865 8,571,279
------------ ------------
Total liabilities 9,789,865 8,571,279
------------ ------------
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 0 issued
and outstanding, respectively -- --
Common stock; $0.0001 par value;
1,000,000,000 shares authorized,
22,495,969 and 22,495,969 issued
and outstanding, respectively 2,249 2,249
Additional paid-in capital 21,903,389 21,903,389
Accumulated other comprehensive income 7,162 595,738
Accumulated deficit (28,955,560) (28,955,560)
Accumulated deficit during the development
stage (3,747,105) (3,117,095)
------------ ------------
Total stockholders' deficit (10,789,865) (9,571,279)
------------ ------------
Total liabilities and stockholders' deficit $ -- $ --
============ ============
The accompanying notes are an integral part of the financial
statements. F1
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
For the three months For the nine months From
ended April 30, ended April 30, May 1, 2009 to
2010 2009 2010 2009 April 30, 2010
------------ ------------ --------- ---------- ------------
Sales $ -- $ -- $ -- $ -- $ --
Cost of revenues -- -- -- -- --
------------ ------------ --------- ---------- ------------
Gross profit -- -- -- -- --
------------ ------------ --------- ---------- ------------
Operating expenses
Selling, general and administrative 97,488 150,316 495,010 827,246 3,249,242
------------ ------------ --------- ---------- ------------
Total operating expenses 97,488 150,316 495,010 827,246 3,249,242
------------ ------------ --------- ---------- ------------
Other income (expense)
Gain on recovery of previously
written-off receivable -- 39,375 -- 170,055 98,570
Loss on settlement -- -- -- -- (416,433)
------------ ------------ --------- ---------- ------------
Total other income (expense) -- 39,375 -- 170,055 (317,863)
------------ ------------- --------- ---------- ------------
Net loss (97,488) (110,941) (495,010) (657,191) (3,567,105)
Preferred stock dividend (45,000) (45,000) (135,000) (135,000) (180,000)
------------ ------------ --------- ---------- ------------
Net loss attributable to
common stockholders $ (142,488) $(155,941) $(630,010) $(792,191) $(3,747,105)
============ ============ ========= ========== ============
Earnings per share computation:
Net loss per common share -
Basic and diluted $ ( 0.01) $ ( 0.01) $ (0.03) $ (0.14)
============ ============ ========= ==========
Weighted average common shares
outstanding - basic and diluted 22,495,969 17,711,086 22,495,969 5,796,191
============ ============ ========= ==========
The accompanying notes are an integral part of the
financial statements. F2
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
For the nine months From
ended April 30, May 1, 2009 to
2010 2009 April 30, 2010
------------ ----------- -------------
Cash flows from operating activities:
Net loss $ (495,010) $ (657,191) $(3,567,105)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Stock-based compensation -- 87,510 3,050
Interest earned on due from Vital
Products, Inc. -- -- 1
Loss on settlement -- -- 416,433
Changes in operating assets and
liabilities:
Change in accounts payable
and accrued expenses 1,024,794 356,355 3,961,298
------------ ------------ ------------
Net cash provided by (used in)
operating activities 529,784 (213,326) 813,677
------------ ------------ ------------
Cash flows from financing activities:
Payments on long term debt -- (88,705) 88,705
Proceeds from related party loan 58,792 89,465 151,776
Advance on bank overdraft -- (16,395) --
Dividend paid on preferred stock -- -- (180,000)
------------ ------------ ------------
Net cash provided by (used in) financing
activities 58,792 (15,635) 60,481
------------ ------------ ------------
Effect of foreign currency exchange (588,576) 228,992 (874,189)
------------ ------------ ------------
Net change in cash -- 31 (31)
Cash, beginning of period -- -- 31
------------ ------------ ------------
Cash, end of period $ -- $ 31 $ --
============ ============ ============
The accompanying notes are an integral part of the
financial statements. F3
METRO ONE DEVELOPMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2010 AND 2009
(Unaudited)
1. BASIS OF PRESENTATION AND HISTORY OF THE COMPANY
Basis of presentation - The accompanying unaudited financial
statements have been prepared in accordance with Securities and Exchange
Commission requirements for interim financial statements. Therefore, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. The financial statements should be read in conjunction with the
Form 10-K for the year ended July 31, 2009 of Metro One Development, Inc.
(the "Company").
The interim financial statements present the balance sheet, statements of
operations and cash flows of the Company. The financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States.
The interim financial information is unaudited. In the opinion of management,
all adjustments necessary to present fairly the financial position as of
April 30, 2010 and the results of operations, stockholders' deficit and cash
flows presented herein have been included in the financial statements. All
such adjustments are the normal and recurring in nature. Interim results are
not necessarily indicative of results of operations for the full year.
History 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.
F4
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
$3,567,105 from May 1, 2009 to April 30, 2010.
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 $9,789,865, and net losses for the nine
months ended April 30, 2010 totaling $495,010. 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 do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event the company
cannot continue in existence.
2. SIGNIFICANT ACCOUNTING POLICIES
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 stock-based compensation, 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 period-end for assets and liabilities and average exchange rates
during each reporting period for the results of operations. Adjustments
resulting from translation of financial statements are included as a component
of other comprehensive income (loss) within stockholders' equity.
F5
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 April 30, 2010 and 2009, 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.
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.
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 505.
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.
F6
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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. The Company adopted FSP APB 14-1 on August 1, 2009. The
adoption of APB 14-1 has had no material impact on the
Company's 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. The Company adopted FSP EITF 03-06-1
on August 1, 2009. The adoption of FSP EITF 03-6-1 has had no material impact
on our 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 Company adopted FSP FAS 115-2 and FAS 124-2 on
August 1, 2009. The adoption of FSP FAS 115-2 and FAS 124-2 has had no
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 Company adopted FSP FAS 157 on August 1, 2009.
The adoption of FSP FAS 157 has had no material impact on the Company's
financial position, results of operations or cash flows.
F7
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 Company adopted FASP FAS 107-1 and APB 28-1 on
August 1, 2009. The adoption of FSP FAS 107-1 and APB 28-1 has had no
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 on
August 1, 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 on August 1, 2010. The adoption
of FASB ASC 810-10 is not expected to 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 FASB ASC 105-10 is not expected to have any material impact
on the Company's financial position, results of operations or cash flows.
F8
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 Company will adopt ASU 2009-05
on November 1, 2009. The adoption of this statement 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 2010-01, "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 Company will adopt ASU 2010-01 on
February 1, 2010. 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 or
annual reporting period ending on or after December 15, 2009. The Company will
adopt ASU 2010-02 on February 1, 2010. 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.
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 2010-06 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 Company will adopt ASU 2010-06 on February 1, 2011. 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 Company will adopt ASU 2010-11 on August 1, 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.
F9
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In March 2010, the FASB issued ASU No. 2010-17, "Revenue Recognition-Milestone
Method (Topic 605): Milestone Method of Revenue Recognition," ("ASU 2010-17"),
which provides guidance related to revenue recognition that applies to
arrangements with milestones relating to research or development deliverables.
This guidance provides criteria that must be met to recognize consideration
that is contingent upon achievement of a substantive milestone in its entirety
in the period in which the milestone is achieved. ASU 2010-17 is effective for
interim and annual periods beginning after June 15, 2010. Early adoption is
permitted. The Company will adopt ASU 2010-17 on August 1, 2010. The
adoption of ASU 2010-17 is not expected to have any material impact on the
Company's financial position, results of operations or cash flows.
3. STOCKHOLDERS' EQUITY
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.
Stock options - During the nine months ended April 30, 2010 and 2009, the
Company granted -0- and -0- options, respectively. As of April 30, 2010 and
2009, the Company had options outstanding of -0- and -0-, respectively.
Warrants - During the nine months ended April 30, 2010 and 2009, the Company
issued warrants for -0- and -0- shares of common stock, respectively. As of
April 30, 2010 and 2009, the Company had warrants outstanding of -0- and
-0-, respectively.
4. 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 595,738
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
April 30, 2010" category as comparative amounts have been accumulated since
May 1, 2009.
5. RELATED PARTY TRANSACTIONS
a) During the nine months ended April 30, 2010 and 2009 the Company paid
rent of approximately $21,299 and $18,847, 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.
F10
5. RELATED PARTY TRANSACTIONS (continued)
b) Included in current liabilities at April 30, 2010 is accounts payable for
$784,000 and loans payable for $400,085 and at July 31, 2009 is accounts
payable of $514,000 and loans payable of $341,293, 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.
6. GAIN ON RECOVERY OF PREVIOUSLY WRITTEN-OFF RECEIVABLE
During the nine months ended April 30, 2009, the Company received
78,000,000 of shares of Vital Product, Inc. with a total fair value of
$170,055 as settlement for amounts due from Vital Products, Inc., which
were previously written-off during the year ended July 31, 2008. As a
result, the Company has recorded a gain for the fair value of these shares
totaling $170,055. During the same nine months ended April 30, 2009,
the Company distributed the 78,000,000 shares of Vital Products, Inc. to
pay $170,055 of consulting expenses incurred during this period.
7. SUBSEQUENT EVENTS
On May 3, 2010, we issued 300,000,000 shares of our common stock for services
provided to the Company valued at $300,000.
F11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q 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 Form 10-Q and in our Form 10-K filed
August 4, 2010, for the year ended July 31, 2009, and other filings we make
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 report to conform these statements to actual results or to changes in our
expectations, except as required by law.
The following discussion and analysis of financial condition and results of
operations is based upon, and should be read in conjunction with our audited
financial statements and related notes thereto included elsewhere in this
report, and in our Form 10-K filed August 4, 2010, for the year ended
July 31, 2009.
OVERVIEW
History 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.
4
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, 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.
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, stock-based
compensation, 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.
We believe the following critical accounting policies, among others, may be
impacted significantly by judgment, assumptions and estimates used in the
preparation of the Financial Statements:
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.
5
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 505.
RESULTS OF OPERATIONS
COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED APRIL 30, 2010 AND 2009.
Revenues
We did not generate any revenues from sales for the nine month periods ended
April 30, 2010 and 2009. As a result of our recent change in business,
focusing on interactive media displays, we have not generated any sales from
operations.
Cost of Sales
We did not incur any cost of sales for the nine month periods ended
April 30, 2010 and 2009. As a result of our recent change in business focus,
we have not incurred any cost of sales from operations.
Gross Profit
Our gross profit for the nine month periods ended April 30, 2010 and 2009
totaled $0 in each period.
Selling, General and Administrative Expenses
Selling, general and administrative Expenses decreased to $495,010 for the
nine months ended April 30, 2010, from $827,246 for the nine months
ended April 30, 2009. We are continuing to evaluate our staffing needs and
other administrative expenses in order to determine how to operate and grow
our business efficiently as we develop our new business model.
Interest and Financing Expense
Interest and financing expense related to promissory notes were $0 for the
nine month periods ended April 30, 2010 and 2009. No new promissory notes
were issued for the nine months ended April 30, 2010.
Net loss
Our net loss of $495,010 for the nine months ended April 30, 2010, compared
to a net loss of $657,191 for the nine months ended April 30, 2009, was
attributable to a decrease in our administrative expenses.
6
Liquidity and Capital Resources
As of April 30, 2010, we had current assets of $0 and current liabilities
of $9,789,865, resulting in a working capital deficit of $9,789,865 as
compared to current assets of $0 and current liabilities of 8,571,279,
resulting in a working capital deficit of $8,571,279 at July 31, 2009.
For the nine months ended April 30, 2010, we had cash provided by operations in
the amount of $529,784, as compared to cash used in operations of $213,326 for
the nine months ended April 30, 2009. The increase in cash from operations is
due to the appreciation in valuation of the Canadian dollar relative to the
United States dollar during the nine months ended April 30, 2009. As the
Company's financial statements are reported in United States dollars, unpaid
liabilities due in Canadian dollars have increased in value upon translation,
which has increased accounts payable and has been primarily responsible for
the foreign exchange loss reported in accumulated other comprehensive income.
The increase in accounts payable is reported as providing cash from operations
in the statement of cash flows.
For the nine months ended April 30, 2010 and 2009, cash used in investing
activities was $0.
For the nine months ended April 30, 2010, cash provided by financing
activities was $58,792 as compared to cash used in financing activities of
$15,635 for the nine months ended April 30, 2009. The primary source
of financing for the nine month period ended April 30, 2010 has been
advances from a related party.
We believe the cash flow from operating activities and capital raised, as
needed, through existing debt financing will not be sufficient to provide
necessary capital for our operations for the next twelve months.
FINANCING ACTIVITIES
In July 2005, we entered into an equity line of credit agreement through a
convertible debt facility with Laurus Master Fund, Ltd. granting us access to
borrow up to $5,500,000. The financing consisted of a $500,000 secured term
loan and a $5,000,000 secured revolving note. On January 13, 2006, we agreed
to revise the financing facility with Laurus. The revised facility consists
of (i) a $500,000 Secured Convertible Note, (ii) a Secured Convertible Minimum
Borrowing Note, and (iii) a Secured Revolving Note (collectively, the "Amended
and Restated Notes"). The Amended and Restated Notes are secured by a
security interest in substantially all of our assets.
Pursuant to the Agreement, we agreed to amend the conversion price to $0.50
and the exercise price of the warrants to $0.65.
As of April 30, 2010, the balance due on the Amended and Restated Notes
totaled $1,344,756 including outstanding interest and legal fees. A judgment
was received by Laurus Master Fund, Ltd., on February 1, 2010, against
Metro One Development, Inc. of $1,286,013. We have accrued $1,344,756 for
the judgment received plus estimated interest as of April 30, 2010.
MATERIAL TRENDS AND UNCERTAINTIES
Effective March 18, 2008, we entered into a binding agreement with FTS Group,
Inc. and OTG Technologies Group, Inc., that was subsequently amended on
June 6, 2008, whereby we agreed to sell certain assets in our value-added
computer reseller business. As part of our decision to sell this business,
we determined that it would be in the best interests of our Company and our
stockholders to divest of the assets related to our value-added computer
reseller business and change our business model to one that focuses on custom
building and property development in the Greater Toronto Area in Canada.
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. We have not yet fully
established our new business model and do not yet have any projects
underway. Additionally, as of September 15, 2010, we did not have sufficient
capital to pursue our new line of business. If we do not raise sufficient
capital to implement our business plan, we will not be able to generate
revenue. However, we will continue to incur expenses in our next fiscal
quarter and beyond associated with our remaining assets, overhead costs
related to remaining a public company and expenses including salaries and
office space for our remaining employees. We may not be successful in
raising capital and implementing our new business model and this change
in business model will have a material impact on our liquidity, capital
resources and results of operations.
7
Our financial condition is uncertain at this time. On February 1, 2010,
Laurus Master Fund, Ltd. was awarded judgment against Metro One
Development, Inc. of $1,286,013. We do not have sufficient assets to
pay the judgment and we will likely have to seek bankruptcy protection.
Our Secured Revolving Note with Laurus was our primary source of financing
until March 17, 2008. Without this source of funding, we no longer have
access to capital to allow us to develop our operations. In addition,
having sold our assets as described above, we will not have a significant
source of capital until we either raise funds or generate revenues pursuant
to our business plan. If we do not raise sufficient funds to cover our
debts and overhead, our business will likely fail.
We have, in the past, issued our common stock to employees and consultants to
cover a portion of their compensation. As of September 15, 2010, the closing
price of our common stock, as quoted on the Pink Sheets, was $0.013. Due to
the price of our common stock, we must issue a substantial number of shares
to provide adequate compensation to employees and consultants. Due to our
limited capital resources, we anticipate continuing to issue common stock
to compensate employees and consultants. Our issuances of common stock
will dilute the stockholders of our common stock and will likely cause our
stock price to decline further. As a result, we determined that it would be
in the best interests of our Company and our stockholders to implement a
reverse split of our common stock in order to have sufficient stock to use
for compensation purposes or to raise capital. Our previous reverse stock
splits have resulted in a decline in our stock price and we believe our stock
price will likely decline again, particularly if we have not yet implemented
our new business model.
To the extent that we raise additional capital through the sale of equity or
convertible debt securities, the issuance of such securities may result in
dilution to existing stockholders. If additional funds are raised through
issuance of debt securities, these securities may have rights, preferences
and privileges senior to holders of common stock and the terms of such debt
could impose restrictions on our operations.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off balance sheet arrangements to report for the quarter
ended April 30, 2010.
ITEM 3. 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.
8
ITEM 4T. CONTROLS AND PROCEDURES
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 defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended, as of the end of the period
covered by this quarterly report on Form 10-Q. 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.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting that
occurred during the quarter ended April 30, 2010 that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. 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 a 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. On
February 1, 2010, this amount was amended to $1,286,013 for additional interest
and fees. We have accrued $1,344,756 for the initial claim plus estimated
interest as of April 30, 2010.
On October 6, 2008, Arrow Electronics, Inc. sent us and another company a
formal demand for payment of $461,097 relating to product we purchased in
the first nine months of the year ended July 31, 2008. We have accrued
$593,435 for the initial claim plus estimated interest as of April 30, 2010.
9
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 $772,101 for
the initial claim plus estimated interest as of April 30, 2010.
On July 31, 2008, Ingram Micro, Inc. sent us a formal demand for payment of
$85,567 relating to product we purchased in the beginning of March 2008
and product purchased by another company. We have accrued $111,777 for the
initial claim plus estimated interest as of April 30, 2010.
On August 7, 2008, Supercom Canada, Ltd. sent us a formal demand for payment
of $37,771 relating to product we purchased in 2006. We have accrued $45,825
for the initial claim plus estimated interest as of April 30, 2010.
On August 7, 2008, Tech Data Canada Corporation sent us a formal demand for
payment of $329,998 relating to product we purchased in the first nine
months of the year ended July 31, 2008. We have accrued $400,361 for
the initial claim plus estimated interest as of April 30, 2010.
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 products we purchased on October 24, 2007 and December 20, 2007.
We have accrued $259,719 for the initial claim plus estimated interest as of
April 30, 2010.
On August 28, 2008, Synnex Canada Limited sent a formal demand for payment
of $124,333 relating to products we purchased in March 2008. We have accrued
$160,017 for the initial claim plus estimated interest as of April 30, 2010.
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 $66,175 for the initial
claim plus estimated interest as of April 30, 2010.
On October 20, 2008, Silicon Graphics Limited filed a claim against us with
the Ontario Superior Court of Justice for $189,134 relating to products we
purchased November 20, 2006. We have accrued $239,819 for the initial claim
plus estimated interest as of April 30, 2010.
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
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.
ITEM 1A. RISK FACTORS
WE HAVE SIGNIFICANT DEBTS THAT WE HAVE BEEN UNABLE TO PAY, WHICH HAS RESULTED
IN CLAIMS AND LITIGATION FILED AGAINST US.
At April 30, 2010, we had $9,789,865 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.
10
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 cannot generate sufficient
revenues to cover our overhead, our business may fail and/or we may need to
seek bankruptcy protection.
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 April 30, 2010 and September 15, 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 April 30, 2010, 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.
Other than as listed above, there have been no material changes from risk
factors previously disclosed in our annual report on Form 10-K for the
fiscal year ended July 31, 2009.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
As of April 30, 2010, we are in default with respect to indebtedness
described above including indebtedness to Laurus Master Fund, Ltd.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the quarter ended April 30, 2010, we did not submit any matters to
a vote of security holders.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS
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).
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).
12
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).
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).
13
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 24, 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).
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).
14
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).
21.1 List of Subsidiaries of the Registrant (included as Exhibit 21.1 to
the Form 10-KSB filed October 30, 2006, and incorporated herein by
reference).
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
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.
15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
METRO ONE DEVELOPMENT, INC.
Dated: September 16, 2010 By:/s/ Stuart Turk
----------------------------
Stuart Turk, President, CEO
Chairman and Director
Dated: September 16, 2010 By:/s/ Evan Schwartzberg
----------------------------
Evan Schwartzberg, Chief Financial
and Principal Accounting Officer
15
