SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November
NET PROFITS TEN INC.
Name of Registrant as Specified in Charter)
|(State or Other Jurisdiction of
||(Commission File Number)
||(IRA Employer |
||Identification No.) |
|1777 Moo 5 Soi Sukhumvit 107
|Sukhumvit Road, North Sumrong
|Amphur Muang, Samut Prakan
|(Address of Principal Executive Offices)
||(Zip Code) |
Registrants telephone number, including area code: (646)
(Former Name or Former Address,
if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction .2. below):
[ ] Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements, which reflect our views with
respect to future events and financial performance. These forward-looking
statements are subject to certain uncertainties and other factors that could
cause actual results to differ materially from such statements. These
forward-looking statements are identified by, among other things, the words
anticipates, believes, estimates, expects, plans, projects,
targets and similar expressions. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
the statement was made. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Important factors that may cause actual results to differ
from those projected include the risk factors specified below.
Item 1.01 Entry into Material Definitive Agreement.
On September 1, 2012, Net Profits Ten Inc. (the Company) entered in an Asset
Purchase Agreement (Agreement) with World Moto (Thailand) Co., Ltd., a
corporation established under the laws of the Kingdom of Thailand (World
Moto), Chris Ziomkowski, the Chief Technical Officer of World Moto and Paul
Giles, the Chief Executive Officer of World Moto. Pursuant to the agreement, the
Company has agreed to purchase from World Moto substantially all of the
intellectual property and certain other specific intellectual property assets
related to World Motos initial product, Moto-Meters (the Assets), which
includes three United States patent applications, the data related to the patent
applications, certain software related to the operation of the Moto-Meter,
several URLs and tradenames and associated names related to the Moto-Meter and
World Moto. As part of the transaction, Messrs. Ziomkowski and Giles will become
the management of the Company immediately after the acquisition. The Assets did
not include any plant and equipment, customer lists, suppliers and any other
business and operational assets of World Moto, and the Company did not hire any
employees of World Moto other than Messrs. Giles and Ziomkowski. World Moto will
continue as a corporation, operating in Thailand after the transaction.
Moto-Meters are devices that provide metering of rides on motor scooters,
motorcycles and similar types of transportation vehicles and have been developed
by World Moto.
On November 14, 2012, the Company completed the acquisition of the Assets. The
consideration paid for the Assets, at the closing, included the issuance to
World Moto and its designees of an aggregate of 224,597,666 shares of common
stock, representing 60% of the outstanding shares of the Companys common stock
immediately after closing and the assumption of a specific outstanding debt in
the amount of approximately $75,000, which was converted into 576,923 shares of
common stock at the closing, at a conversion rate of $0.13. The common stock
issued to World Moto had a contract stated value of $100,000, based on several
factors, including the limited trading of the common stock, the restricted
characterization of the securities with not less than a one year holding period
before Rule 144 would apply, the absence of registration rights, and the
determination of the value of the Assets by World Moto. Neither World Moto nor
the Company obtained an independent valuation of the Assets in connection with
the transaction. All the other shares issued in connection with the acquisition
transaction for the conversion of assumed debt, Company obligations and closing
private placement also will be restricted stock. All the issuances were made
under Section 4(2) of the Securities Act of 1933 (Securities Act), based on
their knowledge about the company and their sophistication as investors in
restricted securities of a small capitalized company in the development stage,
which bear many investment and business risks, some of which are set forth
The Agreement also includes the following material terms:
Prior to the Closing, the Company will commence to change its corporate
name from Net Profits Ten Inc. to World Moto, Inc. or similar name as is
legally available and the management of the Company and World Moto mutually
determine. Additionally, World Moto was to change its name to one that would
not be confusing with its former name. These provisions were modified from
being a condition to closing to a post-closing matter.
As a condition to the closing, the Company raised $246,000 by selling an
aggregate of 1,892,308 shares of common stock to one investor on a private
placement basis under Section 4(2) of the Securities Act, based on its being
an accredited investor as defined under Regulation D, at a per share price of
$0.13 of, which $58,000 will be used to pay existing liabilities of the
Company. The shares were issued with a restrictive legend, and the investors
were not granted any registration rights.
Prior to the Closing, the Company engaged the general services of World
Moto for the amount of $17,000 to be paid on September 1, 2012, and $10,000 to
be paid on the first of each month commencing October 1, 2012, until the
earlier of the Closing Date or December 1, 2012, for a maximum of $47,000 in
the aggregate. The Company paid to World Moto $37,000 prior to the closing.
On the Closing Date, Mr. Marlon Liam agreed to extinguish $52,183.91in
obligations owed to him by the Company for the issuance of 401,415 shares of
common stock, at a conversion rate of $0.13. The issuance was made based on
Section 4(2) of the Securities Act to an executive officer of the Company and
his knowledge of the Company and his sophistication as an investor in small
capitalized companies with substantial risk, some of which are set forth
On the Closing Date, the Company discharged an obligation of $25,000 by the
issuance of 192,308 shares of common stock at a conversion rate of $0.13. The
issuance was made under Section 4(2) of the Securities Act of 1933, based on
the investors knowledge about the company and its sophistication as an
investor in restricted securities of a small capitalized company in the
development stage, which bear many investment and business risks, some of
which are set forth herein.
On the Closing Date, Mr. Marlon Liam appointed Mr. Paul Giles as a director
of the Company, and Mr. Liam resigned as a director and officer of the
Company. This appointment and resignation effected a change of control of the
Company. The Company filed and distributed on October 19, 2012, a Schedule 14f
in respect of the change of control prior to the Closing.
After the Closing Date, the Company will use its reasonable commercial
efforts to raise $1,700,000 in equity capital.
The common stock received by World Moto and its designees on the Closing
Date is subject to a restriction on sales pursuant to Rule 144.
Separately from the terms of the Asset Purchase
Agreement, the board of directors and shareholders holding a majority of the
outstanding voting capital stock authorized on September 25, 2012, an amendment
to the Articles of Incorporation of the Company to increase the authorized
capital stock from 100,000,000 shares of common stock, par value $0.0001, to
500,000,000 shares of common stock, par value $0.0001 and effect a forward stock
split of the Company's issued and outstanding shares of common stock on a 181
for 1 share basis (the "Forward Split"). In connection with the Forward Split
and in anticipation of the acquisition of Assets, Mr. Marlon Liam contributed to
the capital of the Company an aggregate of 3,997,675 shares of common stock on a pre-Forward
Split basis, retaining 420,825 shares of common stock on a post-Forward Split
basis. As a result of the Forward Split, on November 8, 2012, a time before the
closing of the purchase of the Assets, there were 146,688,825 shares issued and
After all the stock issuance transactions noted above, immediately after the
closing of the asset purchase transaction, there were 374,329,445 shares of
common stock issued and outstanding.
A copy of the forms of Asset Purchase Agreement and the amendments thereto and
investor stock purchase agreement are filed as exhibits to this current report.
The acquisition transaction will be accounted for as a purchase of assets in
accordance with Rule 11-01(d) of Regulation S-X and ASC 805-10-55-4. The Assets
have a contract stated value of $100,000 and no goodwill is recognized in the
purchase. The valuation of the Assets is subject to review and possible
adjustment if it is determined that a valuation opinion of the assets is
Item 2.01 Completion of Acquisition or Disposition of Assets
On November 14, 2012, we completed the acquisition of certain designated
intellectual property and other assets of World Moto relating to the Moto-Meter
device that provides metering of rides on motor scooters, motorcycles and
similar types of transportation vehicles, which was initially developed by World
Moto. For the Assets we issued 224,597,666 shares of common stock and assumed
$75,000 in outstanding debt, which debt was converted into 576,923 shares of
FORM 10 DISCLOSURE
As disclosed elsewhere in this report, on November 14, 2012, we acquired certain
designated intellectual property assets of World Moto. We did not acquire the
entire business or operations of World Moto for various reasons, including tax
reasons, operational reasons and financial reporting reasons, and we hired only
two of their several employees. World Moto will continue as an operational
company in Thailand. The Company was a shell company immediately before the
asset acquisition, which requires the Company to disclose the information that
would be required if the Company were filing a general form for registration of
securities on Form 10. Accordingly, we are providing the information that would
be included in a Form 10 if we were to file a Form 10.
In this document, we rely on and refer to information and statistics regarding
industry relating to Moto-Meters that we have obtained from a variety of
sources, including World Moto. This information is publicly available for free
and has not been specifically prepared for us for use in this report or
otherwise. Although we believe that this information is generally reliable, we
cannot guarantee, nor have we independently verified, the accuracy and
completeness of this information.
Incorporation of Company
Net Profits Ten, Inc. was incorporated on March 24, 2008 in the State of Nevada.
On November 8, 2012 we increased the authorized common stock to 500,000,000,
$0.0001 par value.
The original purpose of the Company was to market and distribute user-friendly
interactive yearbook software for the military. We indicated on our first report
filed under the Securities and Exchange Act of 1934, as amended, that we were a
We have not held any annual meetings of stockholders since our incorporation.
One or more shareholders holding 15% or more of our common stock may seek to
compel the company to hold an annual meeting by application to a district court
in the State of Nevada, if we have not held an annual meeting during the
preceding 18 months.
The Company, after the acquisition of the Assets will be a development stage
company seeking to address the need for fare metering and m-commerce of motor
scooter and motorcycle taxis. The use of these taxis is increasingly common in
the developing world. Our planned products, however, will have increased
functionalities over a standard fare meter commonly used in an enclosed taxicab.
These planned products will be based on and expanded from the Assets acquired
from World Moto. We will design and develop and then manufacture, market and
sell the Moto-Meter, which has the basic functions of a taximeter in an enclosed
taxicab, but with additional characteristics over time that will permit mobile
commerce, GPS tracking, advertising and other capabilities.
In many parts of the world, the taxicab as is known in the developed economies
is being superseded by motor scooter and motorcycle taxis. The growth in the use
of the motor scooter and motorcycle taxi is particularly prevalent in the
heavily populated, faster growing Asian, African and South American cities.
While meters are ubiquitous in taxicabs, we believe there are no similar devices
for motor scooter and motorcycle taxis. Thus, moto-taxi fares are
un-standardized and must be calculated by hand or agreed upon or haggled
before, during or after a trip, often leading to failed negotiations and clashes
between drivers and passengers. In response to this problem, the Moto-Meter was
developed. This device will do for the moto-taxis what the taximeter did for
taxicabs more than 100 years ago. We currently have the plans for two Moto-Meter models, one with an
LED screen and the other an LCD monitor.
We plan to enter the moto-meter market initially in Thailand and then branch out
to additional countries with a high use of moto-taxis such as Brazil, Indonesia
and Nigeria and then other developing economies throughout the world. Moto-taxis
are most common in the economically developing and emerging growth countries.
There is increasing use, however, of the moto-taxi in the developed world, such
as in Paris and London, because of their convenience and speed. We plan on
developing a distribution network of the meter products through franchised
dealers, resellers and brick and mortar storefronts. Use of these kinds of
vendors is chosen because aspects of the Moto-Meter include add on products, and
these vendors will be able to help with installation and provide explanations
We believe that the Moto-Meter will be a quickly adopted product. First it will
provide a certainty to the fare which will overcome the problems faced by the
customer and driver that the fare is often undefined and has to be negotiated or
haggled. These negotiations often result in misunderstandings and
inconsistencies which annoy both the driver and the customer. Second, the
Moto-Meter will help authorities regulate fares, which will give communities and
regulatory agencies an easy and affordable method of standardizing moto-taxi
fares and support overall consumer and community satisfaction. Therefore, we
believe the Company will obtain support for its product in the markets it
addresses from the regulators as well as the customers and the drivers.
We also plan future products that complement the basic forms of Moto-Meters.
These may include advertising, booking, delivery, electronic payment and similar
products and devices. The basic Moto-Meter provides event data recording and GPS
positioning, which are valuable safety features.
The principal product currently is the Moto-Meter. The first product will be a
light emitting diode model and once a market is established for that product, we
will market a liquid crystal display premium model. The LED model will be a
portable/universal meter that is compact and easily swapped among vehicles. It
will be rugged and will work with all vehicle classes. The meter will provide
starting rate, time, total fare and distance measures. The device will have
event data recording, GPS functionality and advertising capacity. The premium
product will have added features such as TV and video display capability. Mobile
commerce will also be an early stage enhancement, which will allow for
electronic payment of the fare and also purchasing other products and services.
The initial product, which is known as the Eagle, will be waterproof, scratch
resistant, made of high density plastic and similar in size to a modern GPS
device; its dimensions are approximately 6 X 4 x 1. The Eagle model will have
a USB style connector that plugs into a motorcycle or vehicle providing the
meter with speed, distance, and sensor information while powering the unit. The
device will integrate with dispatch/vehicle management systems and will be
capable of almost unlimited tariff options. Firmware upgrades and
re-programmability are designed to be quick and simple. The life expectancy of
the Eagle model is expected to be 3-5 years. The Eagle model will be sold with a
one year warranty. The Eagle product will be sold as a kit, including the mount,
installation kit, and cost of warranty.
The Moto-Meter is also designed to be tamper proof, with multiple independent,
fully redundant tracking systems. These include a GPS and a completely
self-contained inertial navigation system, in addition to the traditional speed
sensors found on conventional taxi meters. Any one of the systems is enough to
give an accurate record of the distance and waiting time by itself, but all of
them combined allow for an accuracy and reliability unsurpassed by other
metering devices on the market today for similar uses.
An enhancement to the standard Moto-Meter includes a persistence of vision
advertising capability that works either independently or in conjunction with
the Moto-Meter display to provide graphics displayed on a rotating wheel at
speeds as low as 11km/h. Three rows of RGB LEDs are controlled via an advanced
graphics processor that can sense wheel position and rotation speed during
An additional enhancement will enable mobile commerce. The Money Max is a
dispatch and mobile merchant payment solution all rolled into a small compact
device which pops on and off the Moto-Meter. This unit has everything needed to
communicate and take electronic payments, perform payment transactions, send
e-receipts, as well as has added value features such as messaging, which will be
useful for bookings. The Money Max includes a card swipe, RFID reader, smart
card reader and chip on glass LED, similar to a mobile point of sales device.
The Moto-Meter also will have an event data recorder, commonly known as a black
box. This is a first for motorcycles. The black box is a tiny unit that comes
integrated with the Moto-Meter, or it can be sold separately as a safety device.
This will allow monitoring location and rides, which can provide safety for
riders and fleet tracking. The device automatically stores up to five years of
trip data, which data are encrypted for security.
The principal source of revenues will be from the sale of the Moto-Meter units
and related products to be used with the Moto-Meter. In the future, the Company
would expect to generate revenues from a number of additional sources. The
initial additional revenue is likely to be from the advertising displayed on the
Moto-Meters. Revenues also would be expected come from the mobile commerce
applications. Additional revenues may be generated from the booking services
which would include door to door, delivery, messenger, vehicle collection,
errands and emergency road services, but these revenues are considered to be
well in the future.
Depending on the means of distribution and sale, there may be revenue
opportunities from franchising and licensing of the Moto-Meter and its different
Manufacturing and Supplies
The Company plans to subcontract manufacturing. The Company believes that there
are many manufacturers capable of providing and assembling the parts for the
Moto-Meter, at a high quality level and efficient rate of production for prices
that will work within the projected pricing of the Moto-Meter units. In the
future, to assure adequate production and quality, the Company plans to
manufacture the devices themselves, either being fully responsible for the
production or in conjunction with other contract manufacturers. While the
Company believes there are many manufactures that can meet its requirements, it
will typically only work with only one or two at a time. Where useful, the
Company plans to use just in time stock strategies for hardware, supplies and
service parts to control margins and working capital requirements.
Certain of the components in our devices will be supplied by contract suppliers
to our specifications while other components will be provided by generic
manufacturers. We believe there are adequate providers in both categories of
The Company currently has no agreements with any manufacturers or suppliers.
The Company expects that its Moto-Meter will be subject to some level of
indirect regulation, but is not aware of any specific regulations at this time
in the intended markets. Regulation may come in the form of weights and measures
laws to assure the accuracy of the metrics of the Moto-Meter to prevent fraud in
commercial transactions. However, in many instances these kinds of regulations
are more oriented towards the user of devices so as to prevent tampering and
driver fraud on the consumer. The regulation of fares would have little impact
on the Company since the Moto-Meter may be set to various rates which is the
task and responsibility of the user not the manufacturer. Rather, the Company
expects that the regulatory authorities will embrace the Moto-Meter because it
will permit them to establish greater consumer protection and confidence in
transportation fares. Generally speaking, this kind of regulation will be seen
as benefiting the overall community. The safety features of the Moto-Meter will
also be embraced by governmental authorities because it will allow tracking and
positioning which will benefit crime prevention and monitoring.
Certain functions of the Moto-Meter system utilize radio frequency technology,
which is subject to regulation by the Federal Communications Commission ("FCC")
in the United States and may be similarly regulated in the other jurisdictions
where the Company plans on marketing and selling the Moto-Meter. Where
regulated, the Company will have to obtain the necessary registrations and
The customers of the Company first will be resellers and franchisees, who will
then on-sell the Moto-Meters to the moto-taxi owners, which may be individuals
or fleet owners. As the Company gains brand and product awareness, it expects to
sell directly to the owners of moto-taxis, thus expanding the customer base to
the primary user. The Company intends to establish and control pricing so that
there is a minimum of price competition in among its markets. The Company
currently does not have any distribution agreements of any kind in place.
The Company plans to use several channels to market its products. The overall
goal of the advertising will be to strengthen brand and product recognition. The
Company will seek to overcome the general low image and poor customer perception
of taxi products currently pervasive in the taxi meter industry. The Company
will attempt to stand apart in its corporate image and its product quality and
We plan to use direct sales calls, presentations and appointments with
regulatory agencies, associations, distributors, and operators of moto-taxi
fleets to generate recognition and acceptance of our products. Once the
Moto-Meter is established, the Company plans to promote its m-commerce services
directly to the drivers, who might then start selling these services to their
customers or the public.
We also plan to follow a course of marketing that deploys word of mouth,
guerilla marketing and viral marketing using various social networks and similar
marketing methods. Since the deployment of the Moto-Meter is frequently on an
independently owned vehicle, the Company understands that the acceptance of the
benefits of the Moto-Meter by the individual owner-drivers as well as the owners
and drivers of fleet owned vehicles is important in gaining acceptance and use.
As the benefits of more certain fares and the value of the related services
become known to the customers of moto-taxis, we expect that they will also drive
sales because they will prefer to use vehicles that are out-fitted with the
Moto-Meter for its benefits of safety, certainty of fare, m-commerce and other
We plan to pay particular attention to the development of the Company and
product website and its Facebook page. As its representation on the Internet,
these sites will increasingly be the first point of contact for potential
customers in need of information. The primary website will contain product
information, detailed photos, purchase information and use information. In
connection with its web presence, the Company will seek to maximize search
engine optimization. This involves organically improving the quality and volume
of traffic to a website through user searches on search engines such as Google
Print media and brochures will also be used in conjunction with sales. The
Company plans to distribute printed media to operators, potential customers,
channel partners, associations and government agencies. The focus of the print
media will be to highlight the Company, its location, benefits of the Moto-Meter
and contact information for further details and ordering.
We plan to use trade shows, demonstration opportunities and similar venues to
increase brand awareness and product understanding and recognition. These venues
can also foster valuable business partnerships. Once such trade show is the
Taxicab, Limousine, and Paratransit Association. Generally, these trade shows
are held on a regular annual basis and attract the important companies and users
within the industry, which will provide a valuable venue for the Company to
showcase the company and its products.
The Company also will seek to establish industry partnerships to help market the
Moto-Meter. The Company does not have any arrangements at this time, and cannot
predict if and when it may establish such arrangements.
The Company does not believe there is any direct competition for the
sophisticated products that the Company will be offering for use by moto-taxis.
Although a simple meter can be adapted for use with a motor scooter or
motorcycle, the Moto-Meter products will have many more functions and will be at
a higher level of quality and security. Notwithstanding the fact that the
Company expects to be first to market in this business sector, it is possible
that other meter manufacturers may decide to address the moto-taxi market and
develop products that will be able to compete with the Moto-Meter products. Such
companies may have greater financial and engineering capabilities, which will
make it more difficult for the Company to establish itself in various markets or
offer substantial competition product offerings and pricing.
The business of manufacturing and selling taximeters, however, is a low-profile
business. Overall, we believe that competition within the industry of taximeters
and related products is low, with just a few brands monopolizing sales and all
of which are oriented towards taxicabs. These brands include Cygnus Automotive
(UK) and Centrodyne (US). The taximeter industry is largely stagnant, lacking
innovation, and is constrained by legacy products and methods of business.
Current manufacturers have existing products that they are improving
incrementally, but they are most concerned about maintaining product lines and
market share within the taxicab industry, which stymies innovation and invites
disruption from companies starting out with a modern mentality and design
innovation such as we plan to deploy with the Moto-Meter.
We also believe that we will be able to compete based on our intellectual
property, some of which is subject to current patent applications in the United
States. We plan to act to protect our intellectual property rights to safeguard
our products and market share, and we plan to continue development of new
proprietary products that will aid our competitive position. Our pricing
strategy is currently geared to be competitive with products used in the taxicab
situation, but as we ramp up our manufacturing and even take over manufacturing, we believe that we will also be able
to compete increasingly effectively on pricing strategies.
The Assets purchased include United States three patent applications. All three
patents are titled Universal Vehicle Management System and are identified as
follows: (i) US provisional patent application 61/401,337, filed August 10,
2010, (ii) US utility patent application 13/137,345 filed on August 8, 2011,
which claims priority to August 10, 2010 using PPA 61/401,337 and (iii) PCT
patent application PCT/US2011/001401 filed on August 8, 2011 with receiving
office USPTO, which claims priority to August 10, 2010 using PPA 61/401,337.
These are patent applications, and there is no assurance that we will be awarded
patents after review by the USPTO. The lack of patent protection may make the
Company vulnerable to product copying and undercutting pricing, making our
market entry and maintenance more difficult or impossible.
In addition to the patent protection that we seek, we also rely on the
confidentiality of our operations, proprietary know-how and business secrets.
Although we do not have formal agreements with our employees at this time, we
plan on implementing a program whereby employees will enter into formal
agreements with respect to our intellectual property, we do consider our
employees work to be proprietary and owned by the Company. Where necessary, we
will take steps to protect our intellectual property interests under the laws of
the United States and the jurisdictions in which we intend to operate. There can
be no assurance that we will be able to enforce our rights if they are
improperly taken by our employees or adopted by our competitors outside of
sanctioned use and royalty agreements with the Company.
The Company does not have any significant trademarks in use at this time.
However, as our business develops, we plan to develop specific trademarks for
our products and services and seek registration of those marks with government
authorities for their protection.
At the time of this report, the Company has only two employees, Messrs. Paul
Giles and Chris Ziomkowski.
Upon completion of the acquisition of the Assets and the change of control, the
Company will seek new officers to relocate from its office in Manila,
Philippines. The management intends to find offices in Thailand which will be
the country of its initial launch of the Moto-Meter. Management believes that
there is ample office space available for its needs at reasonable prices. Such
space can be obtained on short and long term leases.
Because we are a development stage company, we face many obstacles
as a start-up venture, and therefore we may never be able to execute our
business plan in respect of the Moto-Meter. We were incorporated
on March 24, 2008. To date, we have had no substantive operations of any kind.
We have been a shell company for the greater part of that time. We have only
acquired certain defined assets from World Moto relating to a product called the
Moto-Meter, and therefore we must develop a full business plan around those assets and implement the plan. There
can be no assurance that we will have the personnel and financing to be able to
design, develop, manufacture and sell the Moto-Meter.
Because our business plan may be unsuccessful, we may not be able to
continue operations as a going concern. Our ability to continue as
a going concern is dependent upon our generating cash flow sufficient to fund
operations and reduce operating expenses or finding adequate financing to
support our operations. Our business plan may not be successful in addressing
these issues. If we are unable to continue as planned, we may have to curtail
some or all of our business plan and operations. In such case, investors will
lose all or a portion of their investment.
Because we have no operating history there is no assurance that our
future operations will result in profitable operations. Because we
are a start-up, development stage company, there is no operating history upon
which to base any assumption as to the likelihood that we will prove successful,
and we cannot provide investors with assurances that we will generate any
operating revenues or ever achieve profitable operations. If we are unsuccessful
in addressing these risks, our business will most likely fail and investors will
lose their investment.
The lack of an operating history makes it difficult to validate our
business plan and to raise capital for our future development.
Investors in the current market favor companies which are further
along in their development. Although we have several patents applications filed,
we are still considered a speculative business with an unproven business
opportunity and an unproven ability to finance and bring to market our proposed
products. It is difficult to express with any certainty our prospects and
revenue opportunities. Therefore, it will be difficult to raise substantial
amounts of capital as a development stage, start-up company. Without substantial
funding, we will not be able to pursue our business plan. If that is the case,
investors may lose their entire investment.
Because we expect to incur losses over the near term, our
stockholders may lose their entire investment in us. We expect to
incur losses over the near to mid-term, and certainly during the next 12 months,
if not longer, because we do not yet have any revenues to offset the expenses
associated with the design, development, manufacture and sale of our Moto-Meter
products. We cannot give any assurance that the Company will ever be successful
in generating revenues in the future. We recognize that if we are unable to
generate revenues, we will not be able to earn profits or continue operations.
Our ability to continue as a going concern is dependent upon our generating cash
flow sufficient to fund operations. Our business plans may not be successful in
addressing these issues.
The Company will need substantial capital to implement its business
plan. The Company's capital requirements will be significant. The
Company is not currently generating any cash flow to fund its operations. There
can be no assurance that the Company will be able to generate cash flows in the
future which will be sufficient to fund its operations. In connection with the
acquisition of the Assets, the Company raised $246,000 in a private placement,
but these funds are not sufficient to implement the business plan. Therefore,
the Company plans to seek additional equity capital in the very near future to
fund its operations. There is no assurance that it will be able to obtain this
financing, in the amounts required or on terms acceptable to the Company. If
additional financing is obtained, the Company will most likely be selling
additional equity securities with the consequence of dilution to the current
investors. If financing is not obtained, then the Company may have to curtail or
reduce its activities. The Company has no current arrangements with respect to
additional financing. There can be no assurance that any sources of additional
financing will be available to the Company on acceptable terms, or at all.
Until the Company has developed and launched its Moto-Meter product
at commercial levels, there is uncertainty of market acceptance and the efficacy
of the commercialization strategy. As the Company is a start-up,
development stage company, it has not yet launched its Moto-Meter products at a commercial level. Until it has consistent, proven sales,
there is uncertainty of the product acceptance in the intended markets and the
ability of the Company to commercialize its products. As with any
transformational product, there will be a time before customers embrace the
produce and recognize its full value. Until then, the Company believes it will
have to fund its operations from capital rather than revenues. If there are no,
or only low levels of, product acceptance and sales, the Company will have to
alter its business plan. As is typical of any new business concept, demand and
market acceptance for newly introduced products and services is subject to great
uncertainty. Achieving market acceptance will require the Company to undertake
substantial marketing efforts and to make significant expenditures to create
awareness of and demand for its products. The Company has limited marketing
experience and limited financial, personnel and other resources to undertake
extensive marketing activities. The Company's efforts will be subject to all of
the risks associated with the commercialization of new products, including
unanticipated delays, expenses, technical problems or difficulties and
technological obsolescence due to changing technology and the evolution of
industry standards. There can be no assurance that markets for the Company's
products will not be limited, or that the Company's strategies will result in
successful product commercialization or in initial or continued market
acceptance for the Moto-Meter.
Our Moto-Meter products may be subject to price sensitivity in
certain markets. Our Moto-Meter products will be offered in
developing market economies. As a result, our product may be considered
expensive for the small operators of moto-taxis, many of which are individually
owned. Therefore, we may have issues in being able to establish a market for the
products and penetrating the market as we try to expand it. To achieve market
penetration, we may have to produce a lower cost Moto-Meter model or reduce the
price of the product offerings, the latter of which would curtail our
anticipated margins and may have an adverse effect on our ability to operate and
expand our business.
We are uncertain of our ability to effectively implement and manage
our growth strategy. As part of our business plan, we will be
rolling out our Moto-Meter product first in Thailand and then in other countries
in the developing economies, such as Nigeria, Indonesia and Brazil. We also
plan to expand our product offerings. The success of our growth strategy will
depend on brand management, competitive conditions, our ability to manage increased
sales and distribution, and local law and cultural requirements. There is no
assurance that we will be able to satisfy all the requirements of a successful
product development and launch and then expansion into the markets for our products.
There can be no assurance that we will be able to find the qualified personnel
to implement the business plan. There is also no assurance that our growth strategy
will be successful or that our sales or net income will increase as a result
of our strategy.
Our management and internal systems might be inadequate
to handle our potential growth. Successful implementation of our business strategy will require us to develop
our operations and effectively manage growth. Growth will place a significant
strain on our management, financial, product design, marketing, distribution and
other resources, which would cause us to face operational difficulties. To
manage future growth, our management must build operational and financial
systems and expand, train, retain and manage our employee base. Our management
may not be able to manage our growth effectively in which case, our expansion
would be halted or delayed and we may lose our opportunity to gain significant
market share or the timing advantage with which we would otherwise gain
significant market share. Any inability to manage growth effectively may harm
our ability to implement and execute our current or any subsequent business
Technical factors may limit product development.
Although the Company's research and development efforts relating
to the technological aspects of the existing version of the Moto-Meter are
completed, the Company is continually seeking to refine and improve capabilities
and the components of the Moto-Meter and to develop additional related products
and functionalities. The Company's success will depend upon products meeting targeted costs and
performance standards and also will depend upon their timely introduction into
the marketplace. There can be no assurance that development of additional
versions and functions of the Moto-Meter will be successfully completed, that
they will satisfactorily perform all of the functions for which they have been
designed, that they will meet current price or performance objectives or that
unanticipated technical or other problems will not occur which would result in
increased costs or material delays in development or commercialization.
The Company will initially depend on third party suppliers and
manufacturers. Initially the Company will use outside providers to
add in the development and implantation of aspects of our business plan, such as
for research and development, design requirements and marketing. Additionally,
we plan to purchase product components from various third party suppliers and
use third party manufacturers for the Moto-Meter. The Company believes that
there are several readily available sources for research, design and marketing
tasks and for parts and for manufacturing. While the Company will attempt to
maintain alternative sources for the Company's service providers, supplies and
manufacturing, the Company is subject to the risk of price fluctuations, product
availability, delivery delay and quality consistency. Failure by service
providers, suppliers and manufacturers to supply the Company with the services
or units on commercially reasonable terms, or at all, would have a material
adverse effect on the Company in establishing brand recognition and market
share, obtaining sales and generating revenues. Failure or delay in receiving
necessary services and supplies or products by the Company would adversely
affect the Company's operations, and its ability in turn to deliver its products
on a timely, consistent basis. The use of third party providers may also make
our products more expensive or reduce our margins, therefore affecting our
financial condition and results of operations.
Patents, trademark and proprietary information. The
Company has made three United States patent applications covering certain
aspects of the Moto-Meter. There can be no assurance as to the breadth or degree
of protection which existing or future patents, if any, may afford the Company,
that any patent applications will result in issued patents, that the Company's
patents or future trademarks, if any, will be upheld if challenged or that
competitors will not develop similar or superior methods or products outside the
protection of any patent issued to the Company.
Although the Company believes that its current products, patent applications and
trademarks do not and will not infringe patents, trademarks or violate
proprietary rights of others, it is possible that its existing intellectual
property may not be valid or that infringement of existing or future patents,
trademarks or proprietary rights may occur. In the event the Company's products
infringe patents or proprietary rights of others, the Company may be required to
modify the design of its products, change the name of its products or obtain a
license. There can be no assurance that the Company will be able to do so in a
timely manner, upon acceptable terms and conditions or at all. The failure to do
any of the foregoing could have a material adverse effect upon the Company. In
addition, there can be no assurance that the Company will have the financial or
other resources necessary to enforce or defend a patent infringement or
proprietary rights violation action. Moreover, if the Company's products
infringe patents, trademarks or proprietary rights of others, the Company could,
under certain circumstances, become liable for damages, which also could have a
material adverse effect on the Company.
The Company also relies on proprietary know-how and employs various methods to
protect the source codes, concepts, ideas and documentation of its proprietary
technology. However, such methods may not afford complete protection and there
can be no assurance that others will not independently develop similar know-how
or obtain access to the Company's know-how or software codes, concepts, ideas
and documentation. Although the Company has and expects to have confidentiality
agreements with its employees and appropriate vendors, there can be no assurance
that such arrangements will adequately protect the Company's trade secrets.
The Company products may be subject to government regulation which
may increase it costs or limit its products. Certain functions of
the Moto-Meter system utilize radio frequency technology, which is subject to
regulation by the Federal Communications Commission ("FCC") in the United States
and may be similarly regulated in the other jurisdictions where the Company
plans on marketing and selling the Moto-Meter. The Moto-Meter may also be
subject to regulation in the category of weights and measures assurance. The
Company believes that it is or will be in substantial compliance with all
applicable regulations governing the manufacture and operation of the
Moto-Meter. There can be no assurance that, in the future, the Company will be
able to obtain required licenses or that the relevant government authorities
will not require the Company to comply with more stringent licensing
requirements. Failure or delay in obtaining required licenses would have a
material adverse effect on the Company. Amendments to existing statutes and
regulations, adoption of new statutes and regulations and the Company's product
offerings in jurisdictions in addition to the United States, could require the
Company to alter methods of operations at costs that could be substantial, which
could have an adverse effect on the Company. There can be no assurance that the
Company will be able, for financial or other reasons, to comply with applicable
laws, regulations and licensing requirements.
The Company is dependent on its current employees. The
success of the Company will be largely dependent on the personal efforts of
Messrs. Paul Giles and Chris Ziomkowski. Neither of these individuals have
written employment agreements with the Company. The loss of the services of
either of these persons would have a material adverse effect on the Company's
business and prospects. The success of the Company is also dependent upon its
ability to hire and retain highly skilled financial, technical, marketing and
other personnel to implement the various aspects of the business plan. There can
be no assurance that the Company will be able to hire or retain such necessary
The Company does not have any key man insurance on either of Messrs. Paul Giles
or Chris Ziomkowski, and has no current intention to obtain such form of
Mr. Giles has functional control of the Company. Because Mr. Paul Giles has
approximately 45.6% of the issued and outstanding shares of common stock of the
Company, he will be able to influence, if not control, the Company, elect all of
the Company's directors, increase the authorized capital, dissolve, merge, sell
the assets of the Company and generally direct the affairs of the Company.
The Company certificate of incorporation has granted the
authorization to issue preferred stock in the discretion of the Board of
Directors. The Company's Certificate of Incorporation authorizes
the issuance of "blank check" preferred stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without stockholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock. In the event of issuance, the preferred
stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company, which
could have the effect of discouraging bids for the Company and, thereby, prevent
stockholders from receiving the maximum value for their shares. The Company has
no present intention to issue any shares of its preferred stock. However, there
can be no assurance that preferred stock of the Company will not be issued at
some time in the future.
The Company has paid no cash dividends to date. The
Company has paid no cash dividends on its common stock to date. Payment of
dividends on the common stock is within the discretion of the Board of Directors
and will depend upon the Company's earnings, its capital requirements and
financial condition, and other relevant factors. The Company does not currently
intend to declare any dividends on its Common Stock in the foreseeable future.
There is not now or may never be an active market for our common
stock. We are providing no assurances of any kind or nature
whatsoever that an active market for our common stock will ever develop.
Investors should understand that there may be no alternative exit strategy for
them to recover or liquidate their investments in the common stock of the
Company. Accordingly, investors must be prepared to bear the entire economic
risk of an investment in the common stock for an indefinite period of time. If a
public or private market ever develops for our common stock, we anticipate that
our then financial condition, product offerings, and product roll out strategy
and implementation will greatly impact the value of the stock, which may not
reflect our business prospects.
There may be no liquid market for our common stock.
Even if a trading market develops over time, we cannot predict how
liquid that market might become. The trading price of our common stock is likely
to be highly volatile and could be subject to wide fluctuations in price in
response to various factors, some of which are beyond our control.
These factors include:
· Quarterly variations in our results of operations or those of our
· Announcements by us or our competitors of acquisitions, new software products,
significant contracts, commercial relationships or capital commitments;
· Disruption to our operations;
· Commencement of, or our involvement in, litigation;
· Any major change in our board or management;
· Changes in governmental regulations or in the status of our regulatory
· General market conditions and other factors, including factors unrelated to
our own operating performance.
In addition, the stock market in general has experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of such public companies. Such fluctuations may be even
more pronounced in the trading market shortly following this offering. These
broad market and industry factors may seriously harm the market price of our
common stock, regardless of our actual operating performance. In addition, in
the past, following periods of volatility in the overall market and the market
price of a companys securities, securities class action litigation has often
been instituted against these companies. This type of litigation, if instituted
against us, could result in substantial costs and a diversion of our
managements attention and resources.
We are subject to the reporting requirements of the United States
securities laws, which will require expenditure of capital and other resources.
We are a public reporting company subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and other federal
securities laws, including, without limitation, compliance with the
Sarbanes-Oxley Act (Sarbanes). The costs of preparing and filing annual and
quarterly reports, proxy statements and other information with the SEC and
furnishing audited reports to stockholders will cause our expenses to be
substantially higher than they would otherwise be if we were privately-held. It
will be difficult, costly, and time-consuming for us to develop and implement
internal controls and reporting procedures required by Sarbanes, and we will
require additional staff and third-party assistance to develop and implement
appropriate internal controls and procedures. If we fail to or are unable to comply with
Sarbanes, we will not be able to obtain independent accountant certifications
that the Sarbanes requires publicly-traded companies to obtain.
Investor confidence and market price of our shares may be adversely
impacted if we are unable to attest to the adequacy of the internal controls
over our financial reporting, as required by Section 404 of the U.S.
Sarbanes-Oxley Act of 2002. The SEC, as directed by Section 404 of
Sarbanes, adopted rules requiring public companies to include a report of
management of their internal control structure and procedures for financial
reporting in their annual reports on Form 10-K that contains an assessment by
management of the effectiveness of their internal controls over financial
reporting. Our management may conclude that our internal controls over financial
reporting are not effective. In such case, there may be an adverse reaction in
the financial marketplace due to a loss of investor confidence in the
reliability of our financial statements, which could negatively impact the
market price of our shares and our ability to fund the Company.
We may not be able to attract the attention of major brokerage firms
or securities analysts in our efforts to raise capital. In due
course, we will seek to have our common stock quoted on a securities market in
the United States. There can be no assurance that we will be able to garner a
quote for our common stock. Even if we are successful in doing so, security
analysts and major brokerage houses may not provide coverage of us. We may also
not be able to attract any brokerage houses to conduct secondary offerings with
respect to our securities.
We make no representations and provide no assurance that our common stock will
become listed on a United States securities market. Investors may find it
difficult to dispose of shares or to obtain accurate quotations as to the market
value of the common stock. In addition, we will be subject to an SEC rule (Rule
15c2-11) that imposes various requirements on broker-dealers who sell securities
governed by the rule to persons other than established customers and accredited
investors. The requirement that broker-dealers comply with this rule will deter
broker-dealers from recommending or selling our Companys common stock, thus
further adversely affecting the liquidity and share price of the common stock,
as well as our ability to raise additional capital.
Because we will be subject to the Penny Stock rules once our
shares are quoted on the over-the-counter bulletin board, the level of trading
activity in our stock may be reduced. If a trading market does
develop for our stock, it is likely that our stock will be subject to the
regulations applicable to "Penny Stock." The regulations of the SEC promulgated
under the Exchange Act that require additional disclosure relating to the market
for penny stocks in connection with trades in any stock defined as a penny
stock. The SEC regulations define penny stocks to be any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. Unless an exception is available, those regulations require
the broker-dealer to deliver, prior to any transaction involving a penny stock,
a standardized risk disclosure schedule prepared by the SEC, to provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction,
monthly account statements showing the market value of each penny stock held in
the purchasers account, to make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity, if any, in the secondary
market for a stock that becomes subject to the penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage market investor
interest in and limit the marketability of our common stock.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the FINRA has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the FINRA believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The FINRA requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may limit your
ability to buy and sell our stock.
Because future sales by our stockholders could cause the stock price
to decline, our investors may lose money on their investment in our stock.
No predictions can be made of the effect, if any, that market
sales of shares of our common stock or the availability of such shares for sale
will have on the market price prevailing from time to time. Nevertheless, sales
of significant amounts of our common stock could adversely affect the prevailing
market price of the common stock, as well as impair our ability to raise capital
through the issuance of additional equity securities.
State securities laws may limit secondary trading, which may
restrict the states in which you can sell our shares of common stock.
You may not be able to resell the shares of common stock held in
the Company in a state unless and until the shares of our common stock are
qualified for secondary trading under the applicable securities laws of such
state, or there is confirmation that an exemption, such as listing in certain
recognized securities manuals, is available for secondary trading in such state.
There can be no assurance that we will be successful in registering or
qualifying our common stock for secondary trading, or identifying an available
exemption for secondary trading in our common stock in every state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of, our common stock in any particular state, the shares of common stock
could not be offered or sold to, or purchased by, a resident of that state. In
the event that a significant number of states refuse to permit secondary trading
in our common stock, the market for the common stock will be limited which could
drive down the market price of our common stock and reduce the liquidity of the
shares of our common stock and limit a stockholder's ability to resell shares of
our common stock at all or at current market prices, which could increase a
stockholder's risk of losing some or all of his investment.
PLAN OF OPERATIONS
Plan of Operation
We plan to establish ourselves as a company that will design, manufacture,
market and sell the Moto-Meter products, which are devices that provide
moto-taxi fare metering and other communication capabilities. We have three
patent applications pending for aspects of our products.
We plan to implement our marketing first in Thailand, and then expand into
markets where the motor scooter and/or motorcycle is commonly used as a taxi.
These countries include Nigeria, Indonesia and Brazil in the first instance, and
then other similar country profiles within the developing economies.
We will have to commence manufacturing and sourcing, developing contacts and
capabilities, finalizing design and develop a marketing strategy. Assuming we
have proper funding, we expect that this will take approximately five months to
implement. Thereafter, commencing manufacturing and marketing will take an
additional four months. Once we begin the manufacturing phase of our initial
inventory, we will roll out at the same time our preliminary advertising and
viral cognizance program to begin to generate awareness. During this
manufacturing phase, if not before, we will solidify our market channels,
including any bricks and mortar outlets and any resellers. Therefore, we
anticipate that we will begin to generate sales revenues in not less than nine
We plan to use outside consultants and service companies from time to time for
various tasks in the development and manufacturing of our products and product
launch and distribution, under provider contracts, to the extent that we are not
able to perform the required functions. Using such outside vendors may make a
particular task more expensive, but using such experts should improve the
outcome or speed up the timing of product development and time to market. There
is no assurance that we will be able to control the costs and deliveries of such
activities in the same manner as if we were performing the tasks ourselves, and
therefore are at the usual risks of using outside providers.
Currently, we will continue to prosecute our patent applications. We do not
expect that these will be final by the time we commence marketing, but we do
believe that since we have filed applications, we will be able to commence the
foregoing manufacturing and marketing. To the extent necessary we will enter
into non-disclosure and similar agreements to protect our intellectual property
Until we begin to generate revenues, we will rely entirely on equity capital and
other forms of funding. We have no arrangements for any such funding at this
time. We anticipate that until the commencement of sale, we will need
approximately $4,000,000 in capital. We expect that we will begin to seek a
substantial portion of that funding amount in the fourth quarter of fiscal 2012
into the first quarter of fiscal 2013. We anticipate that ultimately there will
have to be several rounds of funding to reach a position of cash flow which can
support our basic operations. We will probably then need additional
developmental capital for additional product development and market expansion
efforts. At this time, we have no arrangements for any additional capital, and
we do not have determined the securities or their terms that might be offered to
investors for our necessary capital requirements.
Estimated Expenses for the Next Twelve-Month Period
The following provides an overview of our estimated expenses to fund our plan of
operations over the next twelve months. We plan to pay for such expenses as
described below under Liquidity and Capital Resources.
|Legal, Accounting and Transfer Agent
|Product Development (research and
|Marketing and Advertising(6)
|Administration and Overhead(7)
|Office Rent, Equipment and Supplies
Includes additional legal, accounting and filing costs
associated with our ongoing periodic and current report filing obligations
and general day to day requirements.
Includes engineering salaries, test equipment and
Includes legal and technical fees for the prosecution of
our existing patent applications. Does not include any additional patent
or related intellectual property filings and prosecutions.
Includes component charges for production of
Includes NRE charges, deposits, preparation of dies, and
the like, depending on the part and the process of supply and
Includes estimated expenses of packaging, marketing
presentations, internet and print media, adverting agency fees and similar
or related expenses.
Includes CEO, clerical and human resource
Results of Operations for the Years Ended December 31, 2011
We generated no revenue for the year ended December 31, 2011 compared to $10,188
of revenue for the year ended December 31, 2010. We do not anticipate earning
significant and consistent revenues until we are able to successfully market our
interactive digital software.
Our operating expenses were $21,466 for the year ended December 31, 2011,
compared to $46,504, for the year ended December 31, 2010. Our operating
expenses for the years ended December 31, 2011 and 2010 consisted solely of
general and administrative expenses. Our general and administrative expenses
decreased in 2011 due to the completion of our registration with the SEC in
We had a net loss of $21,466 for the year ended December 31, 2011, compared to a
net loss of $36,316 for the year ended December 31, 2010.
We anticipate our operating expenses will increase as we implement our business
plan. The increase will be attributable to expenses to implement our business
plan and the professional fees to be incurred in connection with our continuing
as a reporting company under the Securities Exchange Act of 1934.
Results of Operations for the Three Months Ended September
30, 2012, compared to the Three Months Ended September 30, 2011
We generated no revenues for the three months ended September 30, 2012 and 2011.
We have generated a total of $10,188 of revenues since inception.
We had operating expenses of $31,777 for the three months ended September 30,
2012, compared to $4,432 in operating expenses for the three months ended
September 30, 2011, the increase was due us incurring more consulting and
professional expenses during the three months ended September 30, 2012, largely
in connection with the proposed transaction with World Moto. We had a net loss
of $31,777 for the three months ended September 30, 2012 compared to a net loss
of $4,432 in 2011.
Results of Operations for the Nine Months Ended September
30, 2012, compared to the Nine Months Ended September 30, 2011
We generated no revenues for the nine months ended September 30, 2012 and 2011.
We have generated a total of $10,188 of revenues since inception.
We had operating expenses of $42,934 for the nine months ended
September 30, 2012, compared to $17,130 in operating expenses for the nine
months ended September 30, 2011, the increase was due us incurring more
consulting and professional expenses during the nine months ended September 30,
2012, associated with the proposed transaction with World Moto. We had a net
loss of $42,934 for the nine months ended September 30, 2012 compared to a net
loss of $17,130 in 2011. We anticipate our operating expenses will increase as
we implement our business plan.
Liquidity and Capital Resources
In the past we raised $400 from the sale of stock to our officer and directors.
In June 2008, we sold an aggregate of 808,000 shares of our common stock for
aggregate consideration of $40,400 ($0.05 per share) to 38 investors in an
offshore transaction. In November 2012, we sold 1,892,308 shares of our common
stock for an aggregate consideration of $246,000 ($0.13 per share) to one
investor in an offshore transaction
At September 30, 2012, we had a working capital deficit of $69,049, which
represented $1,650 of prepaid expenses offset by $70,699 of current liabilities,
$6,530 of accounts payable and $64,169 of advances from related parties, which
accrue no interest and are payable on demand. We had a deficit accumulated
during the development stage of $115,035 as of September 30, 2012.
We had net cash used in operating activities of $36,957 for the nine months
ended September 30, 2012, which mainly consisted of the net loss of $42,934 for
the nine months ended September 30, 2012, adjusted by $1,290 of non-cash
depreciation expense, $1,650 increase in prepaid expenses, and $6,337 of
increase in accounts payable.
We had cash provided by financing activities of $36,913 for the nine months
ended September 30, 2012, which was solely due to advances from related party
At the time of the acquisition of the Assets from World Moto, we discharged
$52,183.91 of our obligations to a related party by the issuance of 401,415
shares of common stock, at the rate of $0.13 per share. We also discharged an
obligation of $25,000 in payment of a finders fee by the issuance of 192,308
shares of common stock. We extinguished the assumed debt of World Moto in the
amount of $75,000 by the issuance of 576,923 shares of common stock. All the
above shares were issued at the rate of $0.13, which was the same rate as we
sold shares of common stock in a private placement offering at the same time.
Additionally, we paid approximately $60,000 in professional and other fees and
expenses of the Company associated with the acquisition of the Assets from World
In the opinion of our management, funds currently available will not satisfy our
working capital requirements for the next twelve months. Estimated funding
required during the twelve-month period is $40,000, without consummation of the
proposed transaction with World Moto. With the consummation of the transaction
with World Moto, however, we will need substantially more capital to meet the
requirements of our business plan to develop, manufacture and market the
Moto-Meter products and to continue our business operations. Although we raised
$246,000 in funds in a private placement connection with the transaction with
World Moto, we used approximately $60,000 to pay certain professional fees and
other expenses associated with the transaction. The balance is not sufficient
for us to implement our business plan. See the discussion of our plan of
operations above which indicate our immediate capital requirements and the
capital required for the commencement of our business plan.
Given our cash position of $Nil as of September 30, 2012, the minimal capital we
have as a result of the private placement in November 2012, and our proposed
business plan, we will experience a shortfall in the next twelve months without
additional capital. How long the Company will be able to satisfy its cash
requirements depends on how quickly we can raise capital, implement the proposed
business plan and generate revenue.
We will require additional funds to implement our business plan, continue our
operations and pay expenses associated with us being a public reporting company.
These funds may be raised through equity financing, debt financing, or other
sources, which may result in the dilution in the equity ownership of our shares.
We currently do not have any arrangements for further financing and we may not
be able to obtain financing when required. Our future is dependent upon our
ability to obtain financing. The issuance of additional equity or equity based
securities by us could result in a significant dilution in the equity interests
of our current stockholders. Obtaining commercial loans, assuming those loans
would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required
for our continued operations. We will pursue various financing alternatives to
meet our immediate and long-term financial requirements. There can be no
assurance that additional financing will be available to us when needed or, if
available, that it can be obtained on commercially reasonable terms. If we are
not able to obtain the additional financing on a timely basis, we will be unable
to conduct our operations as planned, and we will not be able to meet our other
obligations as they become due. In such event, we will be forced to scale down
or perhaps even cease our operations.
In the opinion of our management, funds currently available will not satisfy our
working capital requirements for the next twelve months. The Company will need a
substantial amount of capital to fund its operations and SEC reporting
obligations. It has no contracts or arrangements for any such funding. There can
be no assurance that the Company will be able to raise any funding. If we are
not able to obtain the additional financing on a timely basis, we will be unable
to conduct our operations as planned, and we will not be able to meet our other
obligations as they become due. In such event, we will be forced to scale down
or perhaps even cease our operations. As a result of the fact that the Company
financial resources are inadequate for it business operations at this time,
there is a substantial doubt as to its ability to continue as a going concern.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements, including any
outstanding derivative financial instruments, off-balance sheet guarantees,
interest rate swap transactions or foreign currency contracts. The Company does
not engage in trading activities involving non-exchange traded contracts.
Recent Accounting Pronouncements
For the three month period ended September 30, 2012, there were no accounting
standards or interpretations issued that are expected to have a material impact
on our financial position, operations or cash flows.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
The following table sets forth information regarding beneficial ownership of our
common stock as of the date hereof (i) by each person who is known by us to
beneficially own more than 5% of our common stock; (ii) by each of our current
officers and current and proposed directors; and (iii) by all of our officers
and directors as a group. The address of each of the persons set forth below is
1777 Moo 5 Soi Sukhumvit 107 Sukhumvit Road, North Sumrong, Amphur Muang, Samut
Prakan, Bangkok, Thailand.
The table below reflects an aggregate of 374,329,445 shares issued and
outstanding as the date of this Current Report, taking into account (i) the
issuance of 224,597,666 shares of common stock in the acquisition of the assets
from World Moto, (ii) the assumption and conversion of debt of World Moto in the
amount of $75,000 into 576,923 shares of common stock, (iii) the issuance of
401,415 shares of common stock in payment of certain obligations of the Company
with a value of $52,183, (iv) the issuance of 1,892,308 shares of common stock
in the private placement for gross proceeds of $246,000 that was a condition to
the acquisition of the assets from World Moto, (v) the issuance of 192,308
shares of common stock in payment of the finders fee associated with the
private placement in the amount of $25,000, and (vi) the dividend of 180 shares
for each outstanding share of common stock with a payment date of November 8,
|Name of Beneficial Owner
||Director or Officer
||Amount and Nature of
||Beneficial Ownership (1)
||Director, CEO and President
||Chief Technical Officer
|All officers and directors (two persons)
Beneficial ownership is determined in accordance with the
rules of the SEC and generally includes voting or investment power with
respect to securities. Each of the beneficial owners listed above has
direct ownership of and sole voting power and investment power with
respect to the shares of our common stock.
Based on 374,329,445 shares of our common stock issued
Mr. Ziomkowskis beneficial ownership represents shares
of common stock held by a corporation of which his spouse is a
Change in Control
As a result of the closing of the acquisition of assets from World Moto and the
issuance of the shares as consideration for those assets, there has been a
change of control of the Company. Messrs. Giles and Ziomkowski have been
designated as the new sole director and president, CEO, and the chief technical
officer, respectively of the Company, and together they own beneficially
approximately 57% of the issued and outstanding shares of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information regarding our current directors and executive
officers. Except as set forth below, there are no family relationships between
any of our directors or executive officers. Directors are elected each year by
our stockholders at the annual meeting. Each director holds his office until his
successor is elected and qualified or resignation or removal. Executive officers
are elected annually by our Board of Directors. Each executive officer holds his
office until he resigns or is removed by the Board or his successor is elected
||Director, CEO and
Paul Giles, commencing November 2012, upon the acquisition of the
Assets from World Moto, will serve as the CEO and President and a director of
the Company. Mr. Giles invented the Moto-Meter and is recognized by CNN,
Newsweek, Wired, Fast Company, Inc. Magazine, EFE, and other international
media. Mr. Giles is a leading expert in the global moto-taxi industry and has
more than 20 years of experience in founding and operating businesses. From
March, 2009 to September, 2012, Mr. Giles served as President and director of
World Moto (Thai) Co., Ltd. From 2002 to January, 2009, Mr. Giles was the
co-founder of Nirvana Resorts Group, and partner in ESC Ltd., a security
services company that was acquired by Securitas, one of world's largest security
Chris Ziomkowski, commencing November 2012, upon the acquisition of the
Assets from World Moto, will serve as the Chief Technical Officer of the
Company. Mr. Ziomkowski is the foremost authority in the design of taxi meters
for motorcycles, and has significant experience in artificial intelligence,
practical programs and telecommunications. From March, 2009 to September, 2012,
Mr. Ziomkowski was Chief Technology Officer of World Moto (Thai) Co. Ltd. From
1999 to 2008, Mr. Ziomkowski founded the largest VoIP carrier in Thailand. Mr.
Ziomkowski received his bachelor's degree in Computational Neural Systems from
the California Institute of Technology.
There are no family relationships between our current officers and
Board Composition and Committees
The board of directors is currently composed of one person, Mr. Paul Giles. Mr.
Giles was appointed as the sole director in connection with the acquisition of
the Assets from World Moto. At the time of appointment, the former director, Mr.
Marlon Liam, resigned as the sole director and officer.
We do not have a Board member that qualifies as "independent" as the term is
used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of
1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA Rules.
We are not required to have and we do not have an Audit Committee. The Company's
director performs some of the same functions of an Audit Committee, such as
recommending a firm of independent certified public accountants to audit the
financial statements; reviewing the auditors' independence, the financial
statements and their audit report; and reviewing management's administration of
the system of internal accounting controls. The Company does not currently have
a written audit committee charter or similar document.
We have no audit committee financial expert. Our director has financial
statement preparation and interpretation ability obtained over the years from
past business experience and education. We believe the cost related to retaining
a financial expert at this time is prohibitive. Further, because of the nature
of our current limited operations, we believe the services of a financial expert
are not warranted.
Our company currently does not have nominating or compensation committees nor
does our company have a written nominating or compensation committee charter.
Our director believes that it is not necessary to have such committees, at this time, because
the functions of such committees can be adequately performed by the Board of
Code of Ethics
The Company has not formally adopted a written code of business conduct that
governs the Companys employees, officers and directors.
Conflict of Interest
We have not adopted any policies or procedures for the review, approval, or
ratification of any transaction between our company and any executive officer,
director, nominee to become a director, 10% shareholder, or family member of
such persons, required to be reported under paragraph (a) of Item 404 of
Regulation S-K promulgated by the SEC.
Currently, we do not have any plans to compensate our directors for their
services as directors, until the Company is more extensively funded or cash flow
positive. Further compensation arrangements are anticipated to include cash and
equity incentive awards. These compensation arrangements will be for directors
who are not also executive officers of the Company.
Since inception we have not compensated our directors.
We currently do not have any formal, written compensation arrangements with our
senior executives and the current remuneration will depend on the availability
of our working capital. The actual salary amounts have not yet been established.
Once we are more extensively funded or cash flow positive, we anticipate
formulating written compensation arrangements for our executive officers, which
will include cash compensation, bonus terms and equity incentive awards.
Prior to the acquisition of the Assets from World Moto, we have not compensated
our officers or directors.
Equity Awards and Employee Benefit Plans
We currently do not have any equity award or other benefit plans for our
directors, officers or employees and others who would ordinarily be rewarded
with equity awards or other benefits. We anticipate that in the future we will
adopt such plans, but there are no current plans or arrangements for such plans.
In the past we have, and in the future we may, compensate persons providing
services to the Company with equity awards, which have included the issuance of
shares and the issuance of warrants for the purchase of shares of common stock.
To date, these have been singular situations, specifically negotiated, not under
an overall plan for equity benefits.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On November 14, 2012, the Company acquired certain designated assets from World
Moto, a company controlled by Messrs. Giles and Ziomkowski, for consideration
representing shares of common stock. World Moto, or its designees, were issued
an aggregate of 224,597,666 shares of common stock, of which Messrs. Giles and
Ziomkowski beneficially hold an aggregate of 212,060,126 shares of common stock,
representing approximately 57% of the issued and outstanding shares of common
stock of the Company on the date of this Current Report. Messrs. Giles and
Ziomkowski also became the director and officers of the Company as a result of
the asset acquisition transaction. The asset purchase agreement assigned a value
of $100,000 to all the assets acquired from World Moto.
DESCRIPTION OF SECURITIES
Description of Common Stock
We are authorized to issue 500,000,000 common shares with a par value of
$0.0001. The number of shares authorized to be filed was increased to the
foregoing number on November 8, 2012. As of the date of this filing, there were
374,329,445 shares of our common stock issued and outstanding.
Upon liquidation, dissolution or winding up of the corporation, the holders of
common stock are entitled to share ratably in all net assets available for
distribution to shareholders after payment to creditors. The common stock is not
convertible or redeemable and has no pre-emptive, subscription or conversion
rights. There are no conversion, redemption, sinking fund or similar provisions
regarding the common stock. Each outstanding share of common stock is entitled
to one vote on all matters submitted to a vote of shareholders. There are no
cumulative voting rights.
Each shareholder is entitled to receive the dividends as may be declared by our
Directors out of funds legally available for dividends and, in the event of
liquidation, to share pro rata in any distribution of our assets after payment
of liabilities. Our directors are not obligated to declare a dividend. Any
future dividends will be subject to the discretion of our directors and will
depend upon, among other things, future earnings, the operating and financial
condition of our company, our capital requirements, general business conditions
and other pertinent factors. It is not anticipated that dividends will be paid
in the foreseeable future.
There are no provisions in our articles of incorporation or our bylaws that
would delay, defer or prevent a change in control of our company.
Description of Preferred Stock
We are authorized to issue 50,000,000 shares of preferred stock with a par value
of $0.0001. As of the date of this filing, there were no preferred shares issued
and outstanding. Our board of directors is authorized by our articles of
incorporation to divide the authorized shares of our preferred stock into one or
more series, each of which must be so designated as to distinguish the shares of
each series of preferred stock from the shares of all other series and classes.
Our board of directors is authorized, within any limitations prescribed by law
and our articles of incorporation, to fix and determine the designations,
rights, qualifications, preferences, limitations and terms of the shares of any
series of preferred stock including, but not limited to, the following:
1. The number of shares constituting that series and the distinctive
designation of that series, which may be by distinguishing number, letter or
2. The dividend rate on the shares of that series, whether dividends
will be cumulative, and if so, from which date(s), and the relative rights of
priority, if any, of payment of dividends on shares of that series;
3. Whether that series will have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
4. Whether that series will have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the board of directors determines;
5. Whether or not the shares of that series will be redeemable, and,
if so, the terms and conditions of such redemption, including the date or date
upon or after which they are redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions and at
different redemption dates;
6. Whether that series will have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amount of such
7. The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the corporation, and
the relative rights of priority, if any, of payment of shares of that series;
8. Any other relative rights, preferences and limitations of that
There are no outstanding warrants or options to purchase our securities.
Shares of common stock are registered at the transfer agent, Empire Stock
Transfer Inc., Henderson, Nevada, and are transferable at such office by the
registered holder (or duly authorized attorney) upon surrender of the common
stock certificate, properly endorsed. No transfer shall be registered unless the
Company is satisfied that such transfer will not result in a violation of any
applicable federal or state security laws. The Companys transfer agent for its
common stock is Empire Stock Transfer Inc.
MARKET PRICE AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY
RELATED STOCKHOLDER MATTERS
In February 2011, we obtained quotation for our common stock on the
Over-The-Counter Bulletin Board (OTCBB) under the symbol NPFT.OB; however,
there is currently no market for our common stock, and no shares of our common
stock have traded on the OTCBB to date.
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a market price of less than $5.00, other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the SEC, that: (a) contains a description of the nature and level of
risk in the market for penny stocks in both public offerings and secondary
trading; (b) contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with respect
to a violation of such duties or other requirements of the securities laws; (c)
contains a brief, clear, narrative description of a dealer market, including bid
and ask prices for penny stocks and the significance of the spread between the
bid and ask price; (d) contains a toll-free telephone number for inquiries on
disciplinary actions; (e) defines significant terms in the disclosure document
or in the conduct of trading in penny stocks; and (f) contains such other
information and is in such form, including language, type size and format, as
the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, the customer with (a) bid and offer quotations for the penny stock;
(b) the compensation of the broker-dealer and its salesperson in the
transaction; (c) the number of shares to which such bid and ask prices apply, or
other comparable information relating to the depth and liquidity of the market
for such stock; and (d) a monthly account statement showing the market value of
each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity for our common stock. Therefore, stockholders may have difficulty
selling our securities.
Holders of Our Common Stock
As of November 12, 2012, we had 18 registered shareholders.
Since inception we have not paid any dividends on our common stock. We currently
do not anticipate paying any cash dividends in the foreseeable future on our
common stock. Although we intend to retain our earnings, if any, to finance the
expansion and growth of our business, our board of directors will have the
discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, capital
requirements, and other factors that our board of directors may deem relevant.
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where after giving effect to the
distribution of the dividend:
1. We would not be able to pay our debts as they become due in the
usual course of business, or;
2. Our total assets would be less than the sum of our total
liabilities plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving the
Securities Authorized for Issuance under Equity Compensation
We do not have any equity compensation plans. In the future, we may adopt equity
based compensation arrangements, including adopting one or more equity award
Reports to Stockholders
We plan to furnish our stockholders with an annual report for each fiscal year
ending December 31, containing financial statements audited by our independent
certified public accountants. Additionally, we may, in our sole discretion,
issue unaudited quarterly or other interim reports to our stockholders as we
deem appropriate. We intend to continue to comply with the periodic reporting
requirements of the Exchange Act. You may read and copy any document we file at
the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
You can request copies of these documents by writing to the SEC and paying a fee
for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the public reference room. Our SEC filings are also
available to the public at the SECs web site at http://www.sec.gov.
As of the date of this report, we are not a party to any material lawsuits or
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the NRS), our articles of incorporation and our by-laws.
Chapter 78 of the NRS, pertaining to private corporations, provides that we are
required to indemnify our officers and directors to the extent that they are
successful in defending any actions or claims brought against them as a result
of serving in that position, including criminal, civil, administrative or
investigative actions and actions brought by or on behalf of Company.
Chapter 78 of the NRS further provides that we are permitted to indemnify our
officers and directors for criminal, civil, administrative or investigative
actions brought against them by third parties and for actions brought by or on
behalf of the Company, even if they are unsuccessful in defending that action,
unless the officer or directors:
action or inaction constituted a breach of his fiduciary duties as a director or
the breach of those duties involved intentional misconduct, fraud, or a knowing
violation of law.
However, with respect to actions brought by or on behalf of the Company against
our officers or directors, we are not permitted to indemnify our officers or
directors where they are adjudged by a court, after the exhaustion of all
appeals, to be liable to us or for amounts paid in settlement to Company,
unless, and only to the extent that, a court determines that the officers or
directors are entitled to be indemnified.
Our articles and by-laws provide that we will indemnify our
directors and officers to the fullest extent not prohibited by Nevada law;
provided, however, that we shall not be required to indemnify any director or
officer in connection with any proceeding (or part thereof) initiated by such
person unless: (a) such indemnification is expressly required to be made by law;
(b) the proceeding was authorized by our board of directors; (c) such
indemnification is provided by us, in our sole discretion, pursuant to the
powers vested in us under Nevada law; or (d) such indemnification is required to
be made pursuant to the bylaws.
We do not have at this time any indemnification agreements or directors and
officers insurance. In the future, we may enter into indemnification agreements
with our directors and officers, and certain service providers, and we may
purchase director and officer insurance.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On November 14, 2012, we issued a total of 224,597,666 shares of common stock to
World Moto or its designees for the acquisition of certain assets of World Moto,
with a contract assigned value of $100,000. The designees included 13
individuals and corporations that are shareholders of World Moto. The shares
were issued or directed to individuals and corporate investors, all of whom were
either accredited investors, as defined by Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the Securities Act),
or who are sophisticated investors or donees of the shares. The securities were
issued in reliance upon the exemption from registration under Section 4(2) of
the Securities Act. All the shares were issued as restricted stock, and a
suitable legend was placed on the certificates representing the shares to
indicate the restricted nature of the shares. The recipients also acknowledged
that the shares were being acquired for investment purposes and not with a view
to distribution. The holders of these shares were not granted any registration
On November 14, 2012, we issued a total of 576,923 shares of common stock to one
holder of debt of World Moto that was assumed by the Company in connection with
the acquisition of assets from World Moto. The debt represented an aggregate of
$75,000 in principal and interest. The shares were issued to an accredited
investor, as defined by Rule 501 of Regulation D promulgated under the
Securities Act. The securities were issued in reliance upon the exemption from
registration under Section 4(2) of the Securities Act. All the shares were
issued as restricted stock, and a suitable legend was placed on the certificates
representing the shares to indicate the restricted nature of the shares. The
recipient also acknowledged that the shares were being acquired for investment
purposes and not with a view to distribution. The holder of these shares was not
granted any registration rights.
On November 14, 2012, we issued a total of 401,415 shares of common stock to one
holder who held obligations for payment from the Company as of the closing of
the acquisition of assets from World Moto. The obligations represented an
aggregate of $52,184. The shares were issued to an accredited investor, as
defined by Rule 501 of Regulation D promulgated under the Securities Act. The
securities were issued in reliance upon the exemption from registration under
Section 4(2) of the Securities Act. All the shares were issued as restricted
stock, and a suitable legend was placed on the certificates representing the
shares to indicate the restricted nature of the shares. The holder of these
shares was not granted any registration rights.
On November 14, 2012, we issued a total of 192,308 shares of common stock to one
holder of debt of World Moto, in the amount of $25,000, as the finders fee for
the private placement of shares of common stock on the same date. The shares
were issued to an accredited investor, as defined by Rule 501 of Regulation D
promulgated under the Securities Act. The securities were issued in reliance
upon the exemption from registration under Section 4(2) of the Securities Act.
All the shares were issued as restricted stock, and a suitable legend was placed
on the certificates representing the shares to indicate the restricted nature of the shares. The recipient also
acknowledged that the shares were being acquired for investment purposes and not
with a view to distribution. The holder of these shares was not granted any
On November 14, 2012, we sold a total of 1,892,308 shares of common stock, at a
purchase price of $0.13 per share, to one investor, resulting in gross proceeds
to the Company of $246,000. The shares were sold to an accredited investor, as
defined by Rule 501 of Regulation D promulgated under the Securities Act. The
securities were sold in reliance upon the exemption from registration under
Regulation S promulgated under the Securities Act. The investor represented to
us that the investor was an accredited investor and the investors intention to
acquire our securities for investment purposes only and not with a view to or
for sale in connection with any distribution thereof. All the shares were issued
as restricted stock, and a suitable legend was placed on the certificates
representing the shares to indicate the restricted nature of the shares. The
holders of these shares were not granted any registration rights.
On November 8, 2012, we effected a recapitalization so that each outstanding
share of common stock resulted in 181 shares of common stock outstanding. The
shares issued in respect of outstanding common stock that is restricted stock
will have the same restricted character as the shares on which they were issued,
and the dividend shares issued in respect of outstanding common stock that is
free trading will be also be free trading shares. As a result of this corporate
action, as of November 8, 2012, there were 146,688,825 shares issued and
outstanding. Prior to the dividend, the principal shareholder of the Company
contributed to the capital of the Company an aggregate of 3,997,675 shares of
common stock for cancellation.
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT
Reference is made to the disclosure set forth under Item 2.01 of this report,
which disclosure is incorporated herein by reference.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS;
ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY
ARRANGEMENTS OF CERTAIN OFFICERS
Upon the closing of the acquisition of Assets from World Moto, Marlon Liam, the
sole director and officer of the Company, submitted his resignation letter
pursuant to which he resigned from his position as director, effective
immediately, on the basis of the prior mailing by the Company of an information
statement to stockholders on October 19, 2012, that complies with the
requirements of Section 14f-1 of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, reflecting the anticipated resignation and the
appointment of Mr. Paul Giles as the sole director to replace Mr. Liam. The
resignation of Mr. Liam was not in connection with any known disagreement with
us on any matter.
A copy of this report has been provided to Mr. Liam and provided with the
opportunity to furnish us as promptly as possible with a letter addressed to us
stating whether he disagrees with the statements made by us in this report. No
such letter has been received by us.
On November 14, 2012, Mr. Paul Giles was appointed as our CEO and president, and
Mr. Chris Ziomkowski was appointed as our chief technical officer.
For certain biographical and other information regarding the newly appointed
officers and directors, see the disclosure under Item 2.01 of this report, which
disclosure is incorporated herein by reference.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS
Reference is made to the disclosure set forth under Item 2.01 and 5.01 of this
report, which disclosure is incorporated herein by reference. The Company ceased
being a shell company on November 14, 2012.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Audited financial statements of the Company for the years ended December 31,
2011 and 2010. (Incorporated by reference from Form 10-K, as filed with the SEC
on March 27, 2012, pages 48 through 60.)
Unaudited financial statements of the Company for the fiscal quarters ended
September 30, 2012 and 2011. (Incorporated by reference from Form 10-Q, as filed
with the SEC on November 7, 2012.)
Unaudited Pro-Forma Balance Sheet of the Company as of September 30, 2012. See
page 32 and following.
Certificate of Incorporation of Net Profits Inc., a
Nevada corporation (filed as an exhibit to the registration statement, as
filed with the SEC on June 25, 2010, and incorporated herein by
Amendment to Certificate of Incorporation of Net Profits
Inc., a Nevada corporation, reflecting the increase in the authorized
shares of common stock to 500,000,000 shares (filed as an exhibit to Form
8-K as filed with the SEC on November 8, 2012)
By-laws of the registrant (filed as an exhibit to the
registration statement on Form SB-2, as filed with the SEC on June 25,
2010, and incorporated herein by reference).
Asset Purchase Agreement, dated September 1, 2012, among
the registrant, World Moto (Thailand) Co. Ltd. Paul Giles and Chris
Ziomkowski (filed as exhibit 10.1 to the Current Report on Form 8-K file
on September 10, 2012.)
No. 1, dated October 31, 2012, to the Asset Purchase Agreement, dated
September 1, 2012
No. 2, dated November 14, 2012, to the Asset Purchase Agreement, dated
September 2, 2012
of Securities Purchase Agreement by and among the registrant, and certain
investors, dated November 8, 2012.
of Assignment and Assumption Agreement by and between World Moto(Thailand)
Co., Ltd and the registrant, relating to certain debt, dated November
Letter from Marlon Liam to the registrant of his position on the Board
of Directors and officer of the registrant, dated November 14, 2012.
of Independent Auditors re financial statements incorporated by reference.
* Incorporated by reference
Net Profits Ten Inc.
(A Development Stage
PRO-FORMA BALANCE SHEET
Unaudited - Prepared by Management
Net Profits Ten Inc.
Development Stage Company)
As of September 30, 2012
Expressed in U.S. Dollars
Unaudited - Prepared by
||Net Profits Ten
|Total current assets
|Property, plant and
|LIABILITES AND STOCKHOLDERS EQUITY
|Accounts payable and accrued liabilities
|Total current liabilities
|Due to related parties
|STOCKHOLDERS EQUITY (DEFICIT)
|Additional paid-in capital
|Deficit accumulated during
the development stage
|Total stockholders equity (deficit)
|Total liabilities and
stockholders equity (deficit)
- See Accompanying Notes to the Pro-Forma Balance Sheet
|Net Profits Ten Inc. |
|(A Development Stage Company) |
|Notes to Pro-Forma Balance Sheet |
|Expressed in U.S. Dollars |
|Unaudited - Prepared by Management |
Note 1. Basis of Presentation
The accompanying unaudited pro-forma balance sheet of Net
Profits Ten, Inc. (the Company) as of September 30, 2012, has been compiled
for illustrative purposes only for inclusion in the Form 8-K and to give effect
to the asset purchase (the Asset Purchase) between the Company and World Moto
(Thailand) Company Ltd. (World Moto), as described in Note 2.
It is managements opinion that the unaudited pro-forma balance
sheet presents fairly, in all material respects, the transaction described in
Note 2 in accordance with accounting principles generally accepted in the United
States of America. The accounting policies used in the preparation of the
unaudited pro-forma balance sheet are consistent with the accounting policies of
the Company used throughout 2012. The pro-forma adjustments, as described in
Note 3, are based on available information and certain estimates and
assumptions. The unaudited pro-forma balance sheet is not intended to reflect
the financial position of the Company which would have actually resulted had the
proposed transactions been effected on the dates indicated. Further, the
unaudited pro-forma balance sheet is not necessarily indicative of the results
of operations that may be obtained in the future.
The unaudited pro-forma balance sheet should be read in
conjunction with the historical financial statements of the Company.
Note 2. Pro-Forma Transaction
On September 1, 2012, the Company entered in an Asset Purchase
Agreement, which was subsequently amended (the Agreement), with World Moto, a
corporation established under the laws of the Kingdom of Thailand; Chris
Ziomkowski, the Chief Technical Officer of World Moto; and Paul Giles, the Chief
Executive Officer of World Moto (the Officers). Pursuant to the Agreement, the
Company purchased from World Moto substantially all of the intellectual property
and other specific assets related to World Motos moto-meters (the Assets) in
exchange for 224,597,666 shares of common stock valued at $100,000, representing
60% of the outstanding shares of the Companys common stock and the assumption
of a specific debt of World Moto in the amount of $75,000, which was converted
into 576,923 common stock at a conversion rate of $0.13.
Prior to the closing date of the Agreement, the Company
commenced to change its corporate name from Net Profits Ten Inc. to World Moto,
Inc. or similar name as is legally available and the management of the Company
and World Moto mutually determine. In addition, a director and officer of the
Company appointed an Officer of Moto as a director of the Company before
resigning as the director and officer of the Company.
At the time of the Asset Purchase, the Company had 146,668,825
shares of common stock issued and outstanding.
The Company has no stock options or warrants issued or
outstanding at the time of the Asset Purchase.
|Net Profits Ten Inc.
|(A Development Stage Company)
|Notes to Pro-Forma Balance Sheet
|Expressed in U.S. Dollars
|Unaudited - Prepared by Management
Note 3. Pro-Forma Assumptions and Adjustments
The unaudited pro-forma balance sheet as of September 30, 2012
has been prepared assuming that the Asset Purchased was completed on September
30, 2012, based on the following assumptions and adjustments:
To record transactions that occurred prior to the
completion of the Asset Purchase:
The director and officer of the Company cancelled
3,997,675 common stock held, with a par value of $0.0001 per share, as a
contribution to capital.
The result is a decrease to share capital and an increase
to additional paid-in capital of $400.
To record a stock dividend of the Companys issued and
outstanding common stock on a 181 to 1 share basis, prior to the Asset
The result is an increase to share capital and a decrease
to additional paid-in capital of $14,586.
The above transactions result in a net increase to share
capital and a net decrease to additional paid-in capital of
To record transactions that occurred upon and immediately
after the completion of the Asset Purchase, pursuant to the terms of the
To record the issuance of 224,597,666 shares of common
stock, with a par value of $0.0001 per share, to World Moto or its
designees for the acquisition of intangible assets valued at $100,000 and
assumption of a loan payable of $75,000 (Note 2).
The result is an increase to intangible assets of
$100,000, an increase to loan payable of $75,000, an increase to share
capital of $22,460, and an increase to additional paid-in capital of
To record the issuance of 576,923 shares of common stock,
with a par value of $0.0001 per share, in relation to discharging the loan
payable of $75,000 assumed from World Moto.
The result is a decrease to loan payable of $75,000, an
increase to share capital of $58 and an increase to additional paid-in
capital of $74,942.
To record the issuance of 401,415 shares of common stock,
with a par value of $0.0001 per share, related to the discharge of
obligations payable to a director and officer of the Company.
The result is a decrease to due to related parties of
$52,184, an increase to share capital of $40, and an increase to
additional paid-in capital of $52,144.
|Net Profits Ten Inc.
|(A Development Stage Company)
|Notes to Pro-Forma Balance Sheet
|Expressed in U.S. Dollars
|Unaudited - Prepared by Management
To record the issuance of 1,892,308 shares of common
stock, with a par value of $0.0001 per share, for cash proceeds of
$246,000 in a private placement by the Company, the issuance of 192,308
shares of common stock, with a par value of $0.0001 per share, in payment
of the $25,000 placement agent fees, and cash payment of $58,000 in fees
and expenses associated with the Asset Purchase.
The result is an increase to cash of $188,000, an
increase to share capital of $208, and an increase to additional paid-in
capital of $187,792.
The above transactions result in a net
increase to cash of $188,000, a net increase to intangible assets of $100,000, a
net decrease to due to related parties of $52,184, a net increase to share
capital of $22,766, and a net increase to additional paid-in capital of
Upon the completion of the Asset Purchase, the Company will
have 374,329,445 shares of common stock issued and outstanding.
Note 4. Pro-Forma Common Stock
|500,000,000 common shares, $0.0001 par
|50,000,000 preferred shares, $0.0001 par value (non-issued)
|Shares issued and outstanding:
|At September 30, 2012
|Share cancellation (Note 3(a)(i))
|Pro-forma shares and share capital, prior to stock
|Pro-forma shares and share capital, post to stock
dividend (Note 3(a)(i))
|Additional share issuances:
|Share issuance (Note 3(b)(i))
|Share issuance (Note 3(b)(ii))
|Share issuance (Note 3(b)(iii))
|Share issuance (Note 3(b)(iv))
|Share issuance (Note 3(b)(iv))
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Current Report on Form 8-K to be signed on its behalf by the
undersigned hereunto duly authorized.
|| NET PROFITS TEN INC. |
|Date: November 14, 2012
||By: /S/ Paul Giles |
|| Paul Giles,
President and Director |
of Incorporation of Net Profits Inc., a Nevada corporation (filed as an
exhibit to the registration statement, as filed with the SEC on June 25,
2010, and incorporated herein by reference).
to Certificate of Incorporation of Net Profits Inc., a Nevada corporation,
reflecting the increase in the authorized shares of common stock to 500,000,000
shares (filed as an exhibit to Form 8-K as filed with the SEC on November
the registrant (filed as an exhibit to the registration statement on Form
SB-2, as filed with the SEC on June 25, 2010, and incorporated herein
Agreement, dated September 1, 2012, among the registrant, World Moto (Thailand)
Co. Ltd. Paul Giles and Chris Ziomkowski (filed as exhibit 10.1 to the
Current Report on Form 8-K file on September 10, 2012.)
* Incorporated by reference