10-K 1 form_10-k.htm FORM 10-K FOR 02-29-2012

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-K

 

þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended February 29, 2012

 

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ________to _________

 

Commission File Number 333-168530

 

On The Move Systems Corp.

(Exact name of registrant as specified in its charter)

 

Florida

  

27-2343603

(State or other jurisdiction of incorporation or organization)

  

(I.R.S. Employer Identification No.)

  

  

  

3001 North Rocky Point Drive East, Suite 200

  

  

Tampa, FL

  

33607

(Address of principal executive offices)

  

(Zip Code)


Registrant’s telephone number, including area code:   (941) 586-3938


Securities registered pursuant to Section 12(b) of the Act: None


Securities registered pursuant to Section 12(g) of the Act:


Title

  

Name of each exchange on which registered

Common stock, $0.0001 par value

  

NASDAQ OTC


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o     No þ


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o     No þ


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ     No o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, ever Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o     No þ


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes þ     No o




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer

o

  

Accelerated filer

o

  

  

  

  

  

Non-accelerated filer

o

  

Smaller reporting company

þ


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   o     No þ


The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price on August 31, 2011, is $8,500,000. Shares of common stock held by each officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates.  This determination of affiliate status is not necessarily a conclusive determination for other purposes.


There were 18,500,000 shares of the registrant’s common stock issued and outstanding as of May 31, 2012.



IMPORTANT INFORMATION REGARDING THIS FORM 10-K


Unless otherwise indicated, references to “we,” “us,” and “our” in this Annual Report on Form 10-K refer to On The Move Systems Corp.


Readers should consider the following information as they review this Annual Report:


Forward-Looking Statements


The statements contained or incorporated by reference in this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements.  Forward-looking statements include any statement that may project, indicate or imply future results, events, performance or achievements.  The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expect,” “may,” “will,” “should,” “intend,” “plan,” “could,” “estimate” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.


Given the risks and uncertainties relating to forward-looking statements, investors should not place undue reliance on such statements.  Forward-looking statements included in this Annual Report on Form 10-K speak only as of the date of this Annual Report on Form 10-K and are not guarantees of future performance.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, such expectations may prove to have been incorrect.  All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.


Except to the extent required by applicable securities laws, we expressly disclaim any obligation or undertakings to release publicly any updates or revisions to any statement or information contained in this Annual Report on Form 10-K, including the forward-looking statements discussed above, to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement or information is based.


ii



ON THE MOVE SYSTEMS CORP.

FORM 10-K

TABLE OF CONTENTS


PART I

 

 

Page

Item 1.  Business.

 

1

Item 1A.  Risk Factors.

 

1

Item 1B.  Unresolved Staff Comments.

 

2

Item 2.  Properties

 

2

Item 3.  Legal Proceedings

 

2

Item 4.  (Removed and Reserved).

 

2

 

 

 

PART II

 

 

 

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

2

Item 6.  Selected Financial Data.

 

4

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

4

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

 

6

Item 8.  Financial Statements and Supplementary Data

 

6

 

 

 

Report of Independent Registered Public Accounting Firm

 

7

Balance Sheet

 

8

Statement of Operations

 

9

Statement of Changes in Stockholders’ Equity

 

10

Statement of Cash Flows

 

11

Notes to Financial Statements

 

12

 

 

 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

16

Item 9A.  Controls and Procedures.

 

16

Item 9B.  Other Information.

 

17

 

 

 

PART III

 

 

 

Item 10.  Directors, Executive Officers and Corporate Governance.

 

17

Item 11.  Executive Compensation.

 

19

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

22

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

 

22

Item 14.  Principal Accountant Fees and Services.

 

23

 

 

 

PART IV

 

 

 

Item 15.  Exhibits and Financial Statement Schedules.

 

24

 

 

 

Signatures

 

24


iii



Part I


Item 1. Business.


On the Move Systems Corp. (“we”, “us”, “our”, “OMVS”, or the “Company”) was incorporated in the State of Florida on March 25, 2010. The Company’s business focus is in the mobile electronics markets but it is currently investigating business opportunities within the personal and business safety and protection products. The Company’s fiscal year ends on February 28. The Company is located at 3001 North Rocky Point Drive East, Suite 200, Tampa, Florida 33607. Our telephone number is 941-586-3938.


On March 25, 2011, Crawford Mobile Installation Corp. (“CMIC”), a wholly owned subsidiary of the Company acquired all of the assets and assumed certain liabilities of Crawford Mobile Install (“CMI”).  The assets of CMI included cash, inventory, a vehicle and installation equipment.  On the date of the acquisition, a material relationship existed between the parties, because John Crawford was the sole officer and director of both the Company and CMIC as well as being the sole proprietor of CMI.  The purchase price for the assets and liabilities of CMI was $100,000. From the date of inception, March 25, 2010, through the date of the acquisition of CMI on March 25, 2011, the Company was in the development stage as defined in ASC 915, “Accounting and Reporting by Development Stage Enterprises”.  As a result of the acquisition of CMI, the Company has begun to generate revenue from operations and has emerged from the development stage. 


We currently provide mobile electronic services under the trade name “On the Move Systems Corporation.” Our services include the sale, installation, and servicing of after-market electronic and audio/video upgrades for markets such as auto, recreational vehicle and boat dealerships, and for government agencies and corporations that administer vehicle fleets for law enforcement, security, emergency response, sanitation, public utility, limousine, taxi, and other services.


To this end, we have created relationships with a multitude of dealerships to provide on-site electronics sales, installation and servicing for vehicles purchased by them or by their customers. We also provide services directly to individual consumers. We currently offer all of our services from our sales and installation vehicle, eliminating the need for our customers to travel to our place of business. Although we maintain a small inventory of the electronic products that we offer to our customers, we anticipate that we will continue to order a majority of these products on an as-needed basis.


We provide our clients with electronic accessories and installation services that allow them and their customers to personalize vehicles for enhanced aesthetics and electronic performance. We believe that our service allows dealerships and other wholesale vehicle purchasers to order models with fewer options from their manufacturers, thereby reducing vehicle inventory costs. The corollary to this is that the dealerships’ retail customers can be given the alternative to select personalized electronic systems for their vehicles that are better suited to their individual budgets, tastes and needs.


We provide our services on-site at vehicle dealerships and directly to individuals. Mr. John B. Crawford, President of CMIC, and our former Chief Executive officer, applies his 18 years of mobile electronic accessory sales and installation experience to identify the latest in mobile audio-visual, GPS, and telecommunications technology, and to consult with our clients to select technology best suited to their specific performance requirements and budgets. Our base of operations is in the city of Sarasota, Florida and we primarily market our services in and around that city. In keeping with future demand and as our capacity allows, we will market and provide our services further afield in adjacent cities and states.


The Company is currently investigating the opportunities in the personal and business safety and protection markets and accordingly, on March 22, 2012, we signed a letter of intent to investigate new strategic opportunities with Kelley Emergency Alert Systems, LLC (“KEAS”). KEAS owns the license to a cutting-edge alert system designed to improve driver response time to approaching emergency vehicles. Integrated with registration tags mounted on vehicle windshields, the alert visually and audibly signals drivers to take caution when emergency vehicles such as fire trucks and ambulances are nearby.


EMPLOYEES AND EMPLOYMENT AGREEMENTS


As of February 29, 2012, we have two employees. We do not have any employment agreements with any employees.


We do not presently have pension, health insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our sole director and officer.


Item 1A. Risk Factors.


As a smaller reporting company we are not required to provide the information required by this item.


- 1 -



Item 1B. Unresolved Staff Comments.


Not applicable.


Item 2. Properties.


Executive Offices


Our executive offices are located at 3001 North Rocky Point Drive East, Suite 200, Tampa, Florida 33607.  We rent office space on a month-to-month basis.


Item 3. Legal Proceedings.


We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.


Item 4. Removed and reserved.


Part II


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.


Market Information


Our common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “OMVS” in June 2011. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.


 

 

High

 

 

Low

 

Fiscal Year Ended February 29, 2012

 

 

 

 

 

 

Quarter ended August 31, 2011

 

$

2.75

 

 

$

1.60

 

Quarter ended November 30, 2011

 

$

2.25

 

 

$

0.08

 

Quarter ended February 29, 2012

 

$

0.22

 

 

$

0.04

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ending February 28, 2013

 

 

 

 

 

 

Quarter ended May 31, 2012

 

$

0.14

 

 

$

0.01

 


Holders


As of the date of this filing, there were three holders of record of our common stock.


Dividends


To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.


Common Stock


We are authorized to issue 100,000,000 shares of common stock, with a par value of $0.0001. The closing price of our common stock on May 31, 2012, as quoted by OTC Markets Group, Inc., was $0.009.


- 2 -



Shares of our common stock:


 

have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors;

 

 

 

 

are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;

 

 

 

 

do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and

 

 

 

 

are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.


We refer you to the Bylaws of our Articles of Incorporation and the applicable statutes of the State of Florida for a more complete description of the rights and liabilities of holders of our securities.


There were 18,500,000 shares of common stock issued and outstanding as of May 31, 2012. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non- assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of common stock of the Company are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.


During the year ended February 29, 2012, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.


Non-cumulative voting


Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS


The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of February 29, 2012.


Plan category

 

Number of securities to be

issued upon exercise of

outstanding options, warrants

and rights

 

Weighted average exercise

price of outstanding

options, warrants and rights

 

Number of securities

remaining available

for future issuance

 

Equity compensation plans approved by security holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 


- 3 -



Preferred Stock


Our authorized preferred stock consists of 10,000,000 shares of $0.0001 par value preferred stock.  As of the date of this report, there are no shares of preferred stock outstanding.  The Company’s preferred stock ranks senior to all other equity securities, including common stock.  Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purpose.


Recent Sales of Unregistered Securities


None.


Item 6. Selected Financial Data.


As a smaller reporting company, we are not required to provide the information required by this Item.


Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


FORWARD LOOKING STATEMENTS


Caution Regarding Forward-Looking Information


All statements contained in this Form 10-K, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” and similar expressions . All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new acquisitions, products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.  These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ materially.


Consequently, all of the forward-looking statements made in this Form 10-K are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.  Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company’s views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


The following discussion and analysis should be read in connection with the Company’s consolidated financial statements and related notes thereto, as included in this report.


The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management.


Going Concern


We incurred a net loss of $4,088,407 for the year ended February 29, 2012. Net cash used by operations for the year ended February 29, 2012 was approximately $305,044. We do not anticipate having positive net income in the immediate future.   These conditions create an uncertainty as to our ability to continue as a going concern.


We will need to obtain loans or other financing in order to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will be able to obtain these loans or that they will be available to us on terms that are acceptable to the Company.  We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.


- 4 -



Results of Operations for the year ended February 29, 2012 compared to the period from inception (March 25, 2010) through February 28, 2011


Revenue, Cost of Goods Sold and Gross Profit


During the year ended February 29, 2012, we recognized revenue of $72,256 and cost of goods sold of $32,404, resulting in gross profit of $39,852. We did not recognize any revenue or cost of goods sold during the year ended February 28, 2011. From the date of inception, March 25, 2010, through the date of the acquisition of CMI on March 25, 2011, we were in the development stage. As a result of the acquisition of CMI, we began to generate revenue from operations and emerged from the development stage. 


General and administrative expenses


We recognized general and administrative expenses in the amount of $4,113,886 and $35,065 for the year ended February 29, 2012 and for the period from inception (March 25, 2010) through February 28, 2011, respectively. During the year ended February 29, 2012, we issued stock for services resulting in general and administrative expense of $3,750,000. The remaining increase in general and administrative expenses was the result of the increased operations of the Company as a result of the acquisition of CMI.


Interest expense


We incurred interest expense of $14,373 for the year ended February 29, 2012 primarily related to a note payable related to the acquisition of CMI.


Net loss


Net loss for the year ended February 29, 2012 increased to $4,088,407 from $35,065 for the period from inception (March 25, 2010) through February 28, 2011. The increase in the net loss was primarily the result of the increase in general and administrative expenses discussed above.


Liquidity and Capital Resources


Net cash used by operating activities was $305,044 for the year ended February 29, 2012.


The Company anticipates it will require around $100,000 to sustain operations and implement its business plan over the next twelve months. The Company intends to seek to raise these funds through equity and debt financing; however, there is no guarantee that funds will be raised and the Company has no agreements in place as of the date of this filing for any financing.


We do not have any material commitments for capital expenditures. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financings in addition to what is required to fund our present operations.


Additional Financing


Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.


Off Balance Sheet Arrangements


None.


Critical Accounting Policies and Recent Accounting Pronouncements


We have identified the policies below as critical to our business operations and the understanding of our financial statements. A complete discussion of our accounting policies is included in Notes 2 and 3 of the Notes to Financial Statements.


- 5 -



USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


GOING CONCERN - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For year ended February 29, 2019, the Company had a net loss of $4,088,407 and had negative cash flow from operating activities of $305,044. In view of these matters, the Company’s ability to continue as a going concern is dependent upon its ability to achieve a level of profitability. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.


As a smaller reporting company, we are not required to provide the information required by this Item.


Item 8. Financial Statements and Supplementary Data.


- 6 -



Peter Messineo

Certified Public Accountant

1982 Otter Way Palm Harbor FL 34685

peter@pm-cpa.com

T   727.421.6268   F   727.674.0511


Report of Independent Registered Public Accounting Firm


To the Board of Directors and Shareholders:

On The Move Systems Corp.


I have audited the balance sheets of On The Move Systems Corp. (the “Company”) as of February 29, 2012 and February 28, 2011, and the related statements of operations, stockholders’ equity, and cash flows for each of the periods then ended and from inception (March 25, 2010) until February 29, 2012. These financial statements were the responsibility of the Company’s management.  My responsibility was to express an opinion on these financial statements based on my audits.


I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements were free of material misstatement.  The Company was not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting.  My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, I express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provide a reasonable basis for my opinion.


In my opinion, the financial statements, referred to above, present fairly, in all material respects, the financial position of On The Move Systems Corp. as of February 29, 2012, and the results of its operations and its cash flows for the year then ended and for the period of March 25, 2010 (date of inception) through February 29, 2012, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated positive net income or positive cash flow from operating activities and is requiring traditional financing or equity funding to commence its operating plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty were also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Peter Messineo, CPA

Peter Messineo, CPA

Palm Harbor, Florida

June 12, 2012


- 7 -



On The Move Systems Corp.
BALANCE SHEET


 

 

February 29,
2012

 

February 28,
2011

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,690

 

$

128,760

 

Accounts receivable

 

 

5,702

 

 

 

Inventory

 

 

17,135

 

 

 

Total current assets

 

 

41,527

 

 

128,760

 

 

 

 

 

 

 

 

 

Fixed assets

 

 

37,839

 

 

 

Intangible assets

 

 

16,333

 

 

 

Goodwill

 

 

108,724

 

 

 

TOTAL ASSETS

 

$

204,423

 

$

128,760

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

28,071

 

$

2,225

 

Accounts payable and accrued expenses – related party

 

 

10,446

 

 

 

Current portion of notes payable and accrued interest payable

 

 

288,115

 

 

 

Total Current Liabilities

 

 

326,632

 

 

2,225

 

 

 

 

 

 

 

 

 

Convertible note payable

 

 

32,600

 

 

100,100

 

Notes payable

 

 

10,467

 

 

 

Notes payable to related party

 

 

79,196

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

448,895

 

 

102,325

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

Preferred stock; $0.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding

 

 

 

 

 

Common stock: 100,000,000 authorized; $0.0001 par value 18,500,000 shares and 12,500,000 shares issued and outstanding at February 29, 2012 and February 28, 2011, respectively

 

 

1,850

 

 

1,250

 

Additional paid in capital

 

 

3,877,150

 

 

60,250

 

Accumulated deficit

 

 

(4,123,472

)

 

(35,065

)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

(244,472

)

 

26,435

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$

204,423

 

$

128,760

 


The accompanying notes are an integral part of these financial statements.


- 8 -



On The Move Systems Corp.
STATEMENT OF OPERATIONS


 

 

Year Ended
February 29, 2012

 

Period from
March 25, 2010
(Date of Inception)
through
February 28, 2011

 

 

 

 

 

 

 

 

 

REVENUE

 

$

72,256

 

$

 

COST OF GOODS SOLD

 

 

32,404

 

 

 

GROSS PROFIT

 

 

39,852

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

4,113,886

 

 

35,065

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(4,074,034

)

 

(35,065

)

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest expense

 

 

(14,373

)

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(4,088,407

)

$

(35,065

)

 

 

 

 

 

 

 

 

Net loss per share – basic and fully diluted

 

$

(0.27

)

$

(0.00

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding
basic and fully diluted

 

 

14,987,705

 

 

9,614,167

 


The accompanying notes are an integral part of these financial statements.


- 9 -



On The Move Systems Corp.
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY


 

 

Common Stock

 

Additional Paid-In

 

Accumulated

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Inception, March 25, 2010

 

 

$

 

$

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 25, 2010, $0.001 per share

 

9,000,000

 

 

900

 

 

8,100

 

 

 

 

9,000

 

December 23 through 31, 2010, $0.015 per share

 

2,000,000

 

 

200

 

 

29,800

 

 

 

 

30,000

 

January 2 through 9, 2011, $0.015 per share

 

1,500,000

 

 

150

 

 

22,350

 

 

 

 

22,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

(35,065

)

 

(35,065

)

Balance, February 28, 2011

 

12,500,000

 

$

1,250

 

$

60,250

 

$

(35,065

)

$

26,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for services

 

1,500,000

 

 

150

 

 

3,749,850

 

 

 

 

3,750,000

 

Stock issued for conversion of debt

 

4,500,000

 

 

450

 

 

67,050

 

 

 

 

67,500

 

Net loss

 

 

 

 

 

 

 

(4,088,407

)

 

(4,088,407

)

Balance, February 29, 2012

 

18,500,000

 

$

1,850

 

$

3,877,150

 

$

(4,123,472

)

$

(244,472

)


The accompanying notes are an integral part of these financial statements.


- 10 -



On The Move Systems Corp.
STATEMENT OF CASH FLOWS


 

 

Year Ended
February 29, 2012

 

Period from
March 25, 2010
(Date of Inception)
through
February 28, 2011

 

 

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net loss

 

$

(4,088,407

)

$

(35,065

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,165

 

 

 

Stock-based compensation

 

 

3,750,000

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,660

)

 

 

Inventory

 

 

(16,685

)

 

 

Accounts payable and accrued liabilities

 

 

31,170

 

 

2,225

 

Accrued interest payable

 

 

14,373

 

 

 

Net cash used in operating activities

 

 

(305,044

)

 

(32,840

)

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Acquisition of Crawford Mobile, net of cash acquired

 

 

(7,700

)

 

 

Purchases of fixed assets

 

 

(23,290

)

 

 

Net cash used by investing activities

 

 

(30,990

)

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of loans

 

 

284,938

 

 

100,100

 

Proceeds from issuance of common stock

 

 

 

 

61,500

 

Repayments of notes payable

 

 

(36,974

)

 

 

Repayments of notes payable to related parties

 

 

(22,000

)

 

 

Net cash provided by financing activities

 

 

225,964

 

 

161,600

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

(110,070

)

 

128,760

 

CASH, BEGINNING OF PERIOD

 

 

128,760

 

 

 

CASH, END OF PERIOD

 

$

18,690

 

$

128,760

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest

 

$

 

$

 

Taxes

 

$

 

$

 

 

 

 

 

 

 

 

 

Noncash Investing and Financing Transactions:

 

 

 

 

 

 

 

Acquisition of Crawford Mobile Installation for note payable

 

$

90,000

 

$

 


The accompanying notes are an integral part of these financial statements.


- 11 -



On the Move Systems Corp.
Notes to Financial Statements
For the year ended February 29, 2012


1. Background Information


On The Move Systems Corp., a Florida corporation (“we”, “us”, “our”, “OMVS”, or the “Company”), was formed to provide mobile electronic services to automobile, recreational vehicle and boat dealerships, government agencies as well as individual consumers. The Company installs its inventoried after market electronic products desired by the customer at their location. The Company was incorporated on March 25, 2010 (Date of Inception) with its corporate headquarters located in Tampa, Florida. Its fiscal year-end is February 28.


On March 25, 2011, Crawford Mobile Installation Corp. (“CMIC”), a wholly owned subsidiary of the Company acquired all of the assets and assumed certain liabilities of Crawford Mobile Install (“CMI”).  The assets of CMI included cash, inventory, a vehicle and installation equipment.  On the date of the acquisition, a material relationship existed between the parties, because John Crawford was the sole officer and director of both the Company and CMIC as well as being the sole proprietor of CMI.  The purchase price for the assets and liabilities of CMI was $100,000.  


On March 22, 2012, we signed a letter of intent to investigate new strategic opportunities with Kelley Emergency Alert Systems, LLC (“KEAS”). KEAS owns the license to a cutting-edge alert system designed to improve driver response time to approaching emergency vehicles. Integrated with registration tags mounted on vehicle windshields, the alert visually and audibly signals drivers to take caution when emergency vehicles such as fire trucks and ambulances are nearby.


Development Stage Company


From the date of inception, March 25, 2010, through the date of the acquisition of CMI on March 25, 2011, the Company was in the development stage as defined in ASC 915, “Accounting and Reporting by Development Stage Enterprises”.  As a result of the acquisition of CMI, the Company has begun to generate revenue from operations and has emerged from the development stage.


2. Going Concern


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended February 29, 2012, the Company had a net loss of $4,088,407. The Company has not generated positive cash flow from operations since inception and does not expect to generate positive cash flow from operations during the coming year. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to achieve a level of profitability which would generate positive cash flow or from its ability to raise adequate capital either from sales of equity securities or the issuance of debt. The Company intends on financing its operations and its working capital needs largely through the issuance of debt.  There is no assurance that the Company will be able to obtain adequate financing when needed or that such financing will be available on terms that are acceptable to the Company. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.


3. Significant Accounting Policies


The significant accounting policies followed are:


USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


CASH AND CASH EQUIVALENTS - All cash, other than cash held in escrow, is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits.  Temporary cash investments with an original maturity of three months or less are considered to be cash equivalents.


- 12 -



INVENTORY - Inventory represents purchased aftermarket electronic products and other items valued at the lower of cost or market with cost determined using the specific identification method, and with market defined as the lower of replacement cost or realizable value.


FIXED ASSETS – Fixed assets of the Company include vehicles and are stated at cost. Expenditures for fixed assets which substantially increase the useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed as incurred.


Depreciation is provided principally on the straight-line method over the estimated useful lives ranging of four years for financial reporting purposes. The Company recognized depreciation expense of $8,165 during the year ended February 29, 2012.  


IMPAIRMENT OF LONG-LIVED ASSETS – Long-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. The Company determined that there was no impairment of long-lived assets during the year ended February 29, 2012.


GOODWILL - Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and intangible assets of businesses acquired. We evaluate goodwill for impairment utilizing undiscounted projected cash flows in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other” (“ASC Topic 350”). The Company has determined that there was no impairment of goodwill as of February 29, 2012.


REVENUE AND COST RECOGNITION - The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is recognized net of sales returns and allowances.


ADVERTISING COSTS - The Company’s policy regarding advertising is to expense advertising when incurred.


RESEARCH AND DEVELOPMENT EXPENSES - Expenditures for research, development, and engineering of products are expensed as incurred.


INCOME TAXES - Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.


The Company adopted the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.


EARNINGS (LOSS) PER SHARE - Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. The Company’s convertible debt is considered anti-dilutive due to the Company’s net loss for the year ended February 29, 2012 and February 28, 2011. As a result, the Company did not have any potentially dilutive common shares for those periods.


- 13 -



FINANCIAL INSTRUMENTS - In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities.  The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).  The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


 

·

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

 

 

 

·

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

 

 

·

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.


Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 29, 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.


RECENT ACCOUNTING PRONOUNCEMENTS


Recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.


4. Acquisition of CMI


On March 25, 2011, the Company purchased the assets and businesses of CMI, a sole proprietorship owned by the Company’s sole officer and director, in execution of its business plan. The terms of the acquisition required a down payment of $10,000 payable at closing with a Promissory Note for $90,000, at 10% interest rate, payable in monthly installments of $2,500 with a balloon payment of the remaining principal and interest due February 1, 2014.


The acquisition of CMI was accounted for using purchase accounting as OTMSC acquired substantially all of the assets, debt and business of CMI. CMI’s results of operations and cash flows are included in the accompanying consolidated financial statements from the date of acquisition.


The acquisition price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values. The Company determined that assets acquired included an intangible asset associated with the customer list for CMI’s existing customer relationships. The customer list was valued at $20,000 and has an estimated life of five years. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:


- 14 -



 

 

Amount

 

Cash

 

$

2,300

 

Accounts receivable

 

 

2,042

 

Inventory

 

 

450

 

Fixed assets

 

 

19,047

 

Intangible asset

 

 

20,000

 

Goodwill

 

 

108,724

 

Total assets acquired

 

 

152,563

 

 

 

 

 

 

Debt assumed (accounts and notes payable)

 

 

52,563

 

Net assets acquired

 

$

100,000

 

 

 

 

 

 

Cash payment at closing

 

$

10,000

 

Note payable to John Crawford

 

 

90,000

 

 

 

 

 

 

Total purchase price

 

$

100,000

 


5. Related Party Transactions


During May 2010, the Company sold 9,000,000 shares of its $0.0001 common stock to John Crawford, the sole officer and director of the Company for $9,000.


The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.


On March 25, 2011, CMIC, a wholly owned subsidiary of the Company, entered into an agreement to purchase all of the assets and the business of CMI for $100,000.  CMI was a sole proprietorship owned and operated by John Crawford.  John Crawford is also the sole officer-director of the Company and CMIC.  The purchase price was paid with $10,000 in cash at closing and a note payable for the remaining $90,000.  The note bears interest at 10% per year and is payable in monthly installments of $2,500 with a balloon payment of the remaining principal and interest due February 1, 2014.


The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.


6. Income Taxes


There are no current or deferred income tax expense or benefit for the year ended February 29, 2012 and for the period from inception (March 25, 2010) through February 28, 2011.


The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes.


 

 

Year Ended
February 29, 2012

 

March 25, 2010
(Date of Inception)
through
February 28, 2011

 

Tax benefit at U.S. statutory rate

 

$

1,144,800

 

$

12,800

 

Non deductible stock based compensation

 

 

(1,050,000

)

 

 

Valuation allowance

 

 

(94,800

)

 

(12,800

)

Tax benefit

 

$

 

$

 


The Company did not have any temporary differences during the year ended February 29, 2012 or for the period from March 25, 2010 (Date of Inception) through February 28, 2011.


- 15 -



The Company has not recognized an income tax benefit for the period based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the current period presented is offset by a valuation allowance (100%) established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.


7. Notes Payable


On February 28, 2011, the Company borrowed $100,100 through a convertible note, for the purpose of raising operating capital. Under the terms of the note, interest shall accrue at 7% per annum; and principal and accrued interest shall become due on February 27, 2013, unless extended by mutual consent of the parties. Unpaid principal and accrued interest are convertible into common stock of the company at $0.015 per share.


On November 3, 2011, the holder of the note elected to convert principal in the amount of $67,500 into 4,500,000 shares of common stock.


During the year ended February 29, 2012, the Company received advances in the amount of $284,938 for working capital.  These advances are non-interest bearing and payable on demand.


8. Stockholders’ Equity


On June 21, 2011, the Company issued 1,500,000 shares of common stock as compensation for consulting services.  The shares were valued at $3,750,000 based on the market value of the stock on the date of issuance.


On November 3, 2011, the Company issued 4,500,000 shares of common stock for conversion of the convertible note payable in the amount of $67,500.


Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure


None.


Item 9A. Controls and Procedures


Evaluation of Disclosure Controls and Procedures


We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).  Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


Limitations on Systems of Controls


Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.


- 16 -



Management’s Report on Internal Control Over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated Framework , is known as the COSO Report. Our principal executive officer and our principal financial officer, have has chosen the COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of February 29, 2012.


This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report on Form 10-K. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.  We have identified the following material weaknesses:


1.

As of February 29, 2012, we did not maintain effective controls over the control environment.  Specifically we have not developed and effectively communicated to our employees its accounting policies and procedures.  This has resulted in inconsistent practices.  Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K.  Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

 

 

2.

As of February 29, 2012, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.   Accordingly, management has determined that this control deficiency constitutes a material weakness.


Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of February 29, 2012, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO.


Changes In Internal Control Over Financial Reporting


There were no changes in our internal control over financial reporting that occurred during the three months ended February 29, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 


Item 9B. Other Information


None.


Part III


Item 10. Directors, Executive Officers and Corporate Governance.


Officers and Directors


Our sole Officer and Director will serve until his successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until his successor(s) is duly elected and qualified, or until he is removed from office. The board of directors has no nominating, auditing or compensation committees.


- 17 -



The name, address, age and position of our president, secretary/treasurer, and director is set forth below:


Name and Address

 

Age

 

Position(s)

 

 

 

 

 

Patrick Brown

 

45

 

President, Secretary/Treasurer

3001 North Rocky Point Drive East, Suite 200

 

 

 

Chief Executive Officer

Tampa, Florida 33607

 

 

 

Principal Financial Officer and Sole Director


John Crawford was the sole Officer and Director at the inception of the Company.


On June 1, 2011 our Board of Directors appointed Chet Gutowsky to serve as President and a member of the Board of Directors.  Mr. Gutowsky was compensated $120,000 per year for his services.  He was not covered under an employment agreement and does not own any shares of our stock.


Additionally, on June 1, 2011 Mr. John Crawford resigned as our Chairman, President and Director. Mr. Crawford’s resignation was not the result of a disagreement with the Company. Mr. Crawford remains president of our wholly owned subsidiary, Crawford Mobile Installation Corp.  


On September 12, 2011 our Board of Directors appointed Patrick Brown to serve as Chief Executive Officer and President. Mr. Brown was also appointed as a director. Mr. Brown is being compensated $5,000 per month for his services.  There is no written employment agreement between the Company and Mr. Brown.


Additionally, on September 12, 2011 Mr. Chet Gutowsky resigned as our CEO, President and Director in order to pursue other interests.  Mr. Gutowsky’s resignation was not the result of a disagreement with the Company. As part of Mr. Gutowsky’s resignation, the Company agreed to pay him $5,000 per month severance for the months of October, November, and December, in exchange for the release of all claims against the Company.


Business Experience


PATRICK BROWN, CHIEF EXECUTIVE OFFICER AND SOLE DIRECTOR


Over the past two decades, Mr. Brown has cultivated a wealth of knowledge and expertise as an executive and financial consultant for international clean-energy innovators in the U.S. and abroad. In addition to his work assessing the prospects and feasibility of clean-energy projects, Mr. Brown is highly experienced in securing financing for new technologies from government and venture capital sources. Prior to joining On The Move Systems Corp. Mr. Brown was the President of West Coast Financial Services, Ltd. which provided boutique financial consulting services for private and pre-listed public companies. From 2009 – 2011, he worked for MNP, LLP, a Canadian accounting firm, where he maintained a client base in entertainment, renewable energy and emerging markets. From 2005 to 2009, he worked for RSM Richter, LLP where he branded the firm’s emerging markets and renewable energy practice specialty. He is trained as a Canadian Chartered Accountant, and holds a diploma from the British Columbia Institute of Technology in Financial Management with an option in Taxation. Mr Brown also serves as Chief Executive Office and sole director of Rainbow Coral Corp.


Mr. Brown does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.


Family Relationships


There are no family relationships among our directors, executive officers or persons nominated to become executive officers or directors.


Involvement in Certain Legal Proceedings


During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listed in Item 401 (f) of Regulation S-K.


- 18 -



Arrangements


There are no arrangements or understandings between an executive officer, director or nominee and any other person pursuant to which he was or is to be selected as an executive officer or director.


Item 11. Executive Compensation.


Mr. Brown is being paid $5,000 per month. We have no employment agreement with Mr. Brown. He receives no other compensation other than the salary described above.


Subsequent to the acquisition of the assets of Crawford Mobil Install, Mr. Crawford is being compensated at a rate of $2,500 per month.


The table below summarizes all compensation awarded to, earned by, or paid to our named Officers and Directors for all services rendered in all capacities to us during the year ended February 29, 2012 and for the period from inception (March 25, 2010) through February 28, 2011.



SUMMARY COMPENSATION TABLE


Name and principal position

 

Year

 

Salary
($)

 

Bonus
($)

 

Stock
Awards
($)

 

Option
Awards
($)

 

Non-Equity
Incentive Plan
Compensation
($)

 

Nonqualified
Deferred
Compensation
Earnings ($)

 

All Other
Compensation

 

Total
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick Brown, CEO

 

2012

 

$ 30,000

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$ 30,000

 

 

2011

 

$        —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$        —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chet Gutowsky, former CEO

 

2012

 

$ 20,000

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$ 20,000

 

 

2011

 

$        —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$        —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John B. Crawford, former CEO

 

2012

 

$ 30,000

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$ 30,000

 

 

2011

 

$        —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$    —

 

$        —


There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our Officers and Director other than as described herein.


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END


The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of February 29, 2012.


- 19 -



 

 

OPTION AWARDS

 

STOCK AWARDS

Name

 

Number of
Securities
Underlying
Unexercised
Option (#)
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

 

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

 

Option
Exercise
Price ($)

 

Option
Expiration
Date

 

Number of
Shares or
Units of
Stock That
Have Not
Vested (#)

 

Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)

 

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)

 

Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick Brown

 

 

 

 

 

 

 

 

 

Chet Gutowsky

 

 

 

 

 

 

 

 

 

John B. Crawford

 

 

 

 

 

 

 

 

 


There were no grants of stock options since inception to the date of this disclosure.


We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.


The Company has not adopted any stock option plans. We have no plans to adopt a stock option plan, but may choose to do so in the future. If such a plan is adopted, this may be administered by the board or a committee appointed by the board (the “Committee”). The committee would have the power to modify, extend or renew outstanding options and to authorize the grant of new options in substitution therefore, provided that any such action may not impair any rights under any option previously granted. We may develop an incentive based stock option plan for our officers and directors and may reserve up to 10% of our outstanding shares of common stock for that purpose.


OPTIONS GRANTS DURING THE LAST FISCAL YEAR / STOCK OPTION PLANS


We do not currently have a stock option plan in favor of any director, officer, consultant or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights (known as SARs) or freestanding SARs have been made to our Sole Director and Officer since our inception; accordingly, no stock options have been granted or exercised by our Sole Director and Officer since we were founded.


AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR


No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole Officer and Director since our inception; accordingly, no stock options have been granted or exercised by our sole Officer and Director since we were founded.


LONG-TERM INCENTIVE PLANS AND AWARDS


We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to our sole Officer and Director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by our Sole Director and Officer or employees or consultants since we were founded.


- 20 -



COMPENSATION OF DIRECTORS


Our sole Officer and Director is compensated at the rate of $5,000 per month. He is reimbursed for reasonable out-of-pocket expenses incurred.


There are no arrangements pursuant to which our sole Officer and Director is or will be compensated in the future for any services provided as a Director.


We do not have any agreements for compensating our Directors for their services in their capacity as Directors, although such Directors are expected in the future to receive compensation for their services.


EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS


There are no compensation plans or arrangements, including payments to be made by us, with respect to Mr. Brown that would result from his resignation, retirement or any other termination. There are no arrangements for Directors, Officers or Employees that would result from a change-in-control.


DIRECTOR COMPENSATION


The table below summarizes all compensation awarded to, earned by, or paid to our sole Officer and Director for all services rendered in all capacities to us for the year ended February 29, 2012.


DIRECTOR COMPENSATION


Name

 

Fees Earned
or Paid in Cash
($)

 

Stock
Awards
($)

 

Option
Awards
($)

 

Non-Equity
Incentive Plan
Compensation
($)

 

Non-Qualified
Deferred
Compensation
Earnings
($)

 

All Other
Compensation
($)

 

Total
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick Brown

 

0

 

0

 

0

 

0

 

0

 

0

 

0

Chet Gutowsky

 

0

 

0

 

0

 

0

 

0

 

0

 

0

John B. Crawford

 

0

 

0

 

0

 

0

 

0

 

0

 

0


At this time, we have not entered into any employment agreements with our sole Officer and Director. If there is sufficient cash flow available from our future operations, we may enter into employment agreements with our sole Officer and Director or future key staff members.


Certain Relationships and Related Transactions, and Director Independence


On March 25, 2010 we issued 9,000,000 shares of our common stock to our sole director and officer at $0.001 per share for aggregate proceeds of $9,000.


On March 25, 2011, Crawford Mobile Installation Corp. (“CMIC”) a wholly owned subsidiary of On The Move Systems Corp. (“OTMSC”) entered into a Definitive Acquisition Agreement and acquired all of the assets and assumed the liabilities of Crawford Mobile Install (“CMI”). The assets of CMI included cash, inventory, a vehicle and installation equipment. As of the date on which the agreement was entered into, because John B. Crawford is the sole officer and director of both OTMSC and CMIC, and is the sole proprietor of CMI, a material relationship existed between the parties. The amount of consideration exchanged for the assets was $100,000; $10,000 cash at closing and a $90,000 note to John Crawford. The purchase price was determined by using market multiples of EBITDA.


DIRECTOR INDEPENDENCE


We do not currently have any independent directors and we do not anticipate appointing additional directors in the foreseeable future. If we engage further directors and officers, however, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.


- 21 -



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.


The following table sets forth certain information as of May 31, 2012, with respect to the beneficial ownership of shares of the Company’s common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of the Company’s common stock, (ii) each of our Directors, (iii) each of our Executive Officers, and (iv) all of our Executive Officers and Directors as a group. Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares shown.  As of May 31, 2012, there were 18,500,000 shares of the Company’s common stock issued and outstanding.


Name and address of beneficial owner

 

Relationship to
Registrant

 

Number of Shares of
Common Stock

 

Percentage of
Common Stock  (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder

 

 

9,000,000

 

 

48.6

%

 

 

 

 

 

 

 

 

 

 

Patrick Brown

 

Sole Director and CEO

 

 

-nil-

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

All Officers and Directors as a group (total of 1)

 

  

 

 

-nil-

 

 

0.0

 %


 

(1)

Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.  Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).  In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.  As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on March 31, 2011.


Item 13. Certain Relationships and Related Transactions, and Director Independence.


Related Transactions


On March 25, 2010, we issued 9,000,000 shares of our common stock to our sole director and officer at $0.001 per share for aggregate proceeds of $9,000.


On March 25, 2011, Crawford Mobile Installation Corp. (“CMIC”) a wholly owned subsidiary of On The Move Systems Corp. (“OTMSC”) entered into a Definitive Acquisition Agreement and acquired all of the assets and assumed the liabilities of Crawford Mobile Install (“CMI”). The assets of CMI included cash, inventory, a vehicle and installation equipment. As of the date on which the agreement was entered into, because John B. Crawford is the sole officer and director of both OTMSC and CMIC, and is the sole proprietor of CMI, a material relationship existed between the parties. The amount of consideration exchanged for the assets was $100,000; $10,000 cash at closing and a $90,000 note to John Crawford. The purchase price was determined by using market multiples of EBITDA.


Mr. Crawford’s father has advanced funds to support operating cash flows of CMI. These advances were amalgamated and evidenced in two separate notes. The first note was entered into on September 28, 2010 for $23,100, carries a 10% interest rate and matures on September 28, 2013. The second was entered into on February 11, 2011 for $6,250, carries a 10% interest rate and matures on February 11, 2014.


Director Independence


We do not currently have any independent directors and we do not anticipate appointing additional directors in the foreseeable future. If we engage further directors and officers, however, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.


- 22 -



Item 14. Fees and Services.


The following is a summary of the fees billed to the Company by its independent accountants, Peter Messineo, CPA, for the year ended February 29, 2012:


Fee Category

 

2012

 

 

 

Audit Fees

 

$

2,500

 

 

 

 

Audit-Related Fees (1)

 

 

 

 

 

 

Tax Fees (2)

 

 

 

 

 

 

All Other Fees (3)

 

 

 

 

 

 

Total Fees

 

$

2,500


Notes to the Accountants Fees Table:


(1)

Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.”

 

 

(2)

Consists of fees for professional services rendered by our principal accountants for tax related services.

 

 

(3)

Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit Fees,” “Audit-Related Fees” and “Tax Fees” above.


As part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board. All of the services provided by Peter Messineo, CPA described above were approved by our Board.


The Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.


- 23 -



Part IV


Item 15. Exhibits and Financial Statement Schedules.


Exhibit Number Description


2.1

Asset Purchase Agreement, dated as of March 25, 2011, by and among Crawford Mobile Installation Corporation and Crawford Mobile Install (sole proprietorship). (2)

 

 

3.1

Articles of Incorporation of On The Move Systems Corporation (1)

 

 

3.2

Bylaws of On The Move Systems Corporation (1)

 

 

3.3

Articles of Incorporation of Crawford Mobile Installation Corporation (2)

 

 

3.4

Bylaws of Crawford Mobile Installation Corporation (2)

 

 

10.1

Convertible Note from On the Move Systems Corporation to Global Equities Limited (2)

 

 

10.2

Note from Crawford Mobile Installation to John Crawford (2)

 

 

10.3

Note from Crawford Mobile Install to Greg Crawford dated September 28, 2010 (2)

 

 

10.4

Note from Crawford Mobile Install to Greg Crawford dated February 11, 2011 (2)

 

 

23.1

Consent of Independent Registered Public Accounting Firm from Peter Messineo, CPA dated March 28, 2011 (2)

 

 

31.1 *

Section 302 Certification

 

 

32.1 *

Section 906 Certification

 

 

101

XBRL Interactive Data


* Filed Herewith


(1) Incorporated by reference to the comparable exhibit filed with our Registration Statement on Form S-1


(2) Incorporated by reference to the Form 8-K filed on March 28, 2011


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: June 13, 2012

On The Move Systems Corp.

 

 

 

 

 

By: /s/ Patrick Brown

 

 

Patrick Brown

 

 

Chairman of the Board

 

 

Chief Executive Officer

 

 

Principal Financial Officer

 


- 24 -