ON THE MOVE SYSTEMS CORP.
Item 1. Business.
On the Move Systems Corp. (“we”, “us”, “our”, “OMVS”, or the “Company”) was incorporated in the State of Florida on March 25, 2010. The Company’s business focus is in the mobile electronics markets but it is currently investigating business opportunities within the personal and business safety and protection products. The Company’s fiscal year ends on February 28. The Company is located at 3001 North Rocky Point Drive East, Suite 200, Tampa, Florida 33607. Our telephone number is 941-586-3938.
On March 25, 2011, Crawford Mobile Installation Corp. (“CMIC”), a wholly owned subsidiary of the Company acquired all of the assets and assumed certain liabilities of Crawford Mobile Install (“CMI”). The assets of CMI included cash, inventory, a vehicle and installation equipment. On the date of the acquisition, a material relationship existed between the parties, because John Crawford was the sole officer and director of both the Company and CMIC as well as being the sole proprietor of CMI. The purchase price for the assets and liabilities of CMI was $100,000. From the date of inception, March 25, 2010, through the date of the acquisition of CMI on March 25, 2011, the Company was in the development stage as defined in ASC 915, “Accounting and Reporting by Development Stage Enterprises”. As a result of the acquisition of CMI, the Company has begun to generate revenue from operations and has emerged from the development stage.
We currently provide mobile electronic services under the trade name “On the Move Systems Corporation.” Our services include the sale, installation, and servicing of after-market electronic and audio/video upgrades for markets such as auto, recreational vehicle and boat dealerships, and for government agencies and corporations that administer vehicle fleets for law enforcement, security, emergency response, sanitation, public utility, limousine, taxi, and other services.
To this end, we have created relationships with a multitude of dealerships to provide on-site electronics sales, installation and servicing for vehicles purchased by them or by their customers. We also provide services directly to individual consumers. We currently offer all of our services from our sales and installation vehicle, eliminating the need for our customers to travel to our place of business. Although we maintain a small inventory of the electronic products that we offer to our customers, we anticipate that we will continue to order a majority of these products on an as-needed basis.
We provide our clients with electronic accessories and installation services that allow them and their customers to personalize vehicles for enhanced aesthetics and electronic performance. We believe that our service allows dealerships and other wholesale vehicle purchasers to order models with fewer options from their manufacturers, thereby reducing vehicle inventory costs. The corollary to this is that the dealerships’ retail customers can be given the alternative to select personalized electronic systems for their vehicles that are better suited to their individual budgets, tastes and needs.
We provide our services on-site at vehicle dealerships and directly to individuals. Mr. John B. Crawford, President of CMIC, and our former Chief Executive officer, applies his 18 years of mobile electronic accessory sales and installation experience to identify the latest in mobile audio-visual, GPS, and telecommunications technology, and to consult with our clients to select technology best suited to their specific performance requirements and budgets. Our base of operations is in the city of Sarasota, Florida and we primarily market our services in and around that city. In keeping with future demand and as our capacity allows, we will market and provide our services further afield in adjacent cities and states.
The Company is currently investigating the opportunities in the personal and business safety and protection markets and accordingly, on March 22, 2012, we signed a letter of intent to investigate new strategic opportunities with Kelley Emergency Alert Systems, LLC (“KEAS”). KEAS owns the license to a cutting-edge alert system designed to improve driver response time to approaching emergency vehicles. Integrated with registration tags mounted on vehicle windshields, the alert visually and audibly signals drivers to take caution when emergency vehicles such as fire trucks and ambulances are nearby.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
As of February 29, 2012, we have two employees. We do not have any employment agreements with any employees.
We do not presently have pension, health insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our sole director and officer.
Item 1A. Risk Factors.
As a smaller reporting company we are not required to provide the information required by this item.
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Item 1B. Unresolved Staff Comments.
Item 2. Properties.
Our executive offices are located at 3001 North Rocky Point Drive East, Suite 200, Tampa, Florida 33607. We rent office space on a month-to-month basis.
Item 3. Legal Proceedings.
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
Item 4. Removed and reserved.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “OMVS” in June 2011. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.
Fiscal Year Ended February 29, 2012
Quarter ended August 31, 2011
Quarter ended November 30, 2011
Quarter ended February 29, 2012
Fiscal Year Ending February 28, 2013
Quarter ended May 31, 2012
As of the date of this filing, there were three holders of record of our common stock.
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
We are authorized to issue 100,000,000 shares of common stock, with a par value of $0.0001. The closing price of our common stock on May 31, 2012, as quoted by OTC Markets Group, Inc., was $0.009.
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Shares of our common stock:
have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors;
are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
We refer you to the Bylaws of our Articles of Incorporation and the applicable statutes of the State of Florida for a more complete description of the rights and liabilities of holders of our securities.
There were 18,500,000 shares of common stock issued and outstanding as of May 31, 2012. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non- assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of common stock of the Company are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
During the year ended February 29, 2012, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of February 29, 2012.
Number of securities to be
issued upon exercise of
outstanding options, warrants
Weighted average exercise
price of outstanding
options, warrants and rights
Number of securities
for future issuance
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
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Our authorized preferred stock consists of 10,000,000 shares of $0.0001 par value preferred stock. As of the date of this report, there are no shares of preferred stock outstanding. The Company’s preferred stock ranks senior to all other equity securities, including common stock. Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purpose.
Recent Sales of Unregistered Securities
Item 6. Selected Financial Data.
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD LOOKING STATEMENTS
Caution Regarding Forward-Looking Information
All statements contained in this Form 10-K, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” and similar expressions . All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new acquisitions, products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ materially.
Consequently, all of the forward-looking statements made in this Form 10-K are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company’s views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The following discussion and analysis should be read in connection with the Company’s consolidated financial statements and related notes thereto, as included in this report.
The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management.
We incurred a net loss of $4,088,407 for the year ended February 29, 2012. Net cash used by operations for the year ended February 29, 2012 was approximately $305,044. We do not anticipate having positive net income in the immediate future. These conditions create an uncertainty as to our ability to continue as a going concern.
We will need to obtain loans or other financing in order to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will be able to obtain these loans or that they will be available to us on terms that are acceptable to the Company. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.
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Results of Operations for the year ended February 29, 2012 compared to the period from inception (March 25, 2010) through February 28, 2011
Revenue, Cost of Goods Sold and Gross Profit
During the year ended February 29, 2012, we recognized revenue of $72,256 and cost of goods sold of $32,404, resulting in gross profit of $39,852. We did not recognize any revenue or cost of goods sold during the year ended February 28, 2011. From the date of inception, March 25, 2010, through the date of the acquisition of CMI on March 25, 2011, we were in the development stage. As a result of the acquisition of CMI, we began to generate revenue from operations and emerged from the development stage.
General and administrative expenses
We recognized general and administrative expenses in the amount of $4,113,886 and $35,065 for the year ended February 29, 2012 and for the period from inception (March 25, 2010) through February 28, 2011, respectively. During the year ended February 29, 2012, we issued stock for services resulting in general and administrative expense of $3,750,000. The remaining increase in general and administrative expenses was the result of the increased operations of the Company as a result of the acquisition of CMI.
We incurred interest expense of $14,373 for the year ended February 29, 2012 primarily related to a note payable related to the acquisition of CMI.
Net loss for the year ended February 29, 2012 increased to $4,088,407 from $35,065 for the period from inception (March 25, 2010) through February 28, 2011. The increase in the net loss was primarily the result of the increase in general and administrative expenses discussed above.
Liquidity and Capital Resources
Net cash used by operating activities was $305,044 for the year ended February 29, 2012.
The Company anticipates it will require around $100,000 to sustain operations and implement its business plan over the next twelve months. The Company intends to seek to raise these funds through equity and debt financing; however, there is no guarantee that funds will be raised and the Company has no agreements in place as of the date of this filing for any financing.
We do not have any material commitments for capital expenditures. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financings in addition to what is required to fund our present operations.
Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.
Off Balance Sheet Arrangements
Critical Accounting Policies and Recent Accounting Pronouncements
We have identified the policies below as critical to our business operations and the understanding of our financial statements. A complete discussion of our accounting policies is included in Notes 2 and 3 of the Notes to Financial Statements.
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USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
GOING CONCERN - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For year ended February 29, 2019, the Company had a net loss of $4,088,407 and had negative cash flow from operating activities of $305,044. In view of these matters, the Company’s ability to continue as a going concern is dependent upon its ability to achieve a level of profitability. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary Data.
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Certified Public Accountant
1982 Otter Way Palm Harbor FL 34685
T 727.421.6268 F 727.674.0511
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders:
On The Move Systems Corp.
I have audited the balance sheets of On The Move Systems Corp. (the “Company”) as of February 29, 2012 and February 28, 2011, and the related statements of operations, stockholders’ equity, and cash flows for each of the periods then ended and from inception (March 25, 2010) until February 29, 2012. These financial statements were the responsibility of the Company’s management. My responsibility was to express an opinion on these financial statements based on my audits.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements were free of material misstatement. The Company was not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that were 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, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements, referred to above, present fairly, in all material respects, the financial position of On The Move Systems Corp. as of February 29, 2012, and the results of its operations and its cash flows for the year then ended and for the period of March 25, 2010 (date of inception) through February 29, 2012, in conformity with accounting principles generally accepted in the United States of America.
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 not generated positive net income or positive cash flow from operating activities and is requiring traditional financing or equity funding to commence its operating plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty were also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Peter Messineo, CPA
Peter Messineo, CPA
Palm Harbor, Florida
June 12, 2012
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On The Move Systems Corp.