10-K/A 1 omvs_10ka.htm AMENDMENT NO. 1 TO FORM 10-K On The Move 10-K/A 02-28-2017 (FINAL)


UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K/A

Amendment No. 1


(MARK ONE)


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended February 28, 2017

or


[_]  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _________ to _________


Commission File Number: 000-55079


ON THE MOVE SYSTEMS CORP.

(Exact name of registrant as specified in its charter)


 

 

 

Nevada

 

27-2343603

(State or other jurisdiction of Incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

 

 

701 North Green Valley Parkway, Suite 200

Henderson, Nevada

 

89074

(Address of principal executive offices)

 

(Zip code)


Registrant’s telephone number, including area code: 702-990-3271


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


 

 

Title of Each Class

Name of Each Exchange on which Registered

Common stock, $0.001 par value

OTC QB


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

Yes [_]  No [X]


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

Yes [_]  No [X]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]  No [_]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 [X]  No [_]


Indicate by check mark if disclosures 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 [X]  No [_]






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


 

 

 

 

 

 

Large accelerated filer

[_]

Accelerated filer

[_]

 

 

 

 

 

 

Non-accelerated filer

[_]

Smaller reporting company

[X]

 

(Do not check is smaller reporting company)

 

 

 

 

Emerging growth company

[_]


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]


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

Yes [_]  No [X]


The Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, August 31, 2016 was $383,408.


There were 43,791,804 shares of the Registrant’s common stock outstanding as of June 9, 2017.


- 2 -




EXPLANATORY NOTE


The purpose of this Amendment No. 1 to our Annual Report on Form 10-K for the year ended February 28, 2017 (“Form 10-K”) is to submit Exhibit 101 to the Form 10-K in accordance with Rule 405 of Regulation S-T.  Exhibit 101 consists of the Interactive Data Files relating to our Form 10-K for the year ended February 28, 2017, filed with the Securities and Exchange Commission on June 16, 2017.


Additionally, on page 26, Note 9. Debt Payment Obligations, we corrected typographical errors as follows:


1)    On the line item labeled “Note payable” under the “2019” column, the incorrect number “$365,036” has been corrected to “$—”.


2)    On the line item labeled “Note payable” under the “2020” column, the incorrect number “35,100” has been corrected to “$—”.







ON THE MOVE SYSTEMS CORP.


TABLE OF CONTENTS


 

 

 

Part I

 

5

Item 1.

Business

5

Item 1A.

Risk Factors

5

Item 1B.

Unresolved Staff Comments

5

Item 2.

Properties

5

Item 3.

Legal Proceedings

5

Item 4.

Mine Safety Disclosures

5

 

 

 

Part II

 

6

Item 5.

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

6

Item 6.

Selected Financial Data

8

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of operations

8

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

11

Item 8.

Financial Statements and Supplementary Data

11

 

Report of Independent Registered Public Accounting Firm

12

 

Consolidated Balance Sheets

13

 

Consolidated Statements of Operations

14

 

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

15

 

Consolidated Statement of Cash Flows

16

 

Notes to the Consolidated Financial Statements

17

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

31

Item 9A.

Controls and Procedures

31

Item 9B.

Other Information

32

 

 

 

Part III

 

32

Item 10.

Directors, Executive Officers and Corporate Governance

32

Item 11.

Executive Compensation

34

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

35

Item 13.

Certain Relationships and Related Transactions, and Director Independence

35

Item 14.

Principal Accounting Fees and Services

36

 

 

 

Part IV

 

37

Item 15.

Exhibits, Financial Statement Schedules

37


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION


Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.


OTHER PERTINENT INFORMATION


When used in this report, the terms, “we,” the “Company,” “OMVS,” “our,” and “us” refers to On the Move Systems Corp., a Nevada corporation.


- 4 -





PART I


ITEM 1. BUSINESS


Overview


On the Move Systems Corp. (“we”, “us”, “our”, “OMVS”, or the “Company”) was incorporated in Nevada on March 25, 2010. We reincorporated into Nevada on February 17, 2015. Our business focus is transportation services. We are currently exploring the on-demand logistics market by developing a network of logistics partnerships. Our year-end is February 28. The company is located at 701 North Green Valley Parkway, Suite 200, Henderson, Nevada 89074. Our telephone number is 702-990-3271.


Our business focus is transportation-related technology services.  We are currently exploring the online, on-demand logistics market by developing a shared economy network of trucking partnerships. We are in the process of building a shared economy app designed to put independent drivers and brokers together for more efficient pricing and booking, optimized operations and quick delivery turnarounds.  We have signed a letter of intent with a Houston-area software design firm regarding development of such a platform.  This app, when released, will revolutionize the trucking industry by connecting national and local carriers, enabling each to maximize revenues and reduce costs.


Employees and Employment Agreements


Our CEO is our sole employee. He does not have a written agreement.


ITEM 1A. RISK FACTORS


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


ITEM 1B. UNRESOLVED STAFF COMMENTS


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


ITEM 2. PROPERTIES


We maintain our corporate offices at 701 North Green Valley Parkway, Suite 200, Henderson, Nevada 89074. Our telephone number is 702-990-3271. This is a month to month lease.


ITEM 3. LEGAL PROCEEDINGS


On October 12, 2015, we received notice that the Company had been sued in the United States District Court for the Central District of California. The plaintiff alleges that we obtained certain trade secrets through a third party also named in the suit. The case was dismissed in December 2015 for lack of jurisdiction.


In February 2016, we received notice that the Company had been sued in the Clark County District Court of Nevada. The plaintiff alleges that we obtained certain trade secrets through a third party also named in the suit. We believe the suit is without merit and intend to vigorously defend it. An Arbitration was conducted on May 9, 2017, Plaintiff filed a Notice of trial de Novo, seeking a review of the merit dismissal. It is counsel’s opinion this Trial de Novo is without merit and the Company should prevail.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.


- 5 -





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 28, 2017

 

 

 

 

 

 

Quarter ended February 28, 2017

 

$

0.02

 

$

0.00

Quarter ended November 30, 2016

 

$

0.10

 

$

0.01

Quarter ended August 31, 2016

 

$

0.20

 

$

0.07

Quarter ended May 31, 2016

 

$

0.50

 

$

0.14

 

 

 

 

 

 

 

Fiscal Year Ended February 29, 2016

 

 

 

 

 

 

Quarter ended February 29, 2016

 

$

0.72

 

$

0.09

Quarter ended November 30, 2015

 

$

1.70

 

$

0.43

Quarter ended August 31, 2015

 

$

4.76

 

$

0.25

Quarter ended May 31, 2015

 

$

11.04

 

$

0.55


Holders


As of the date of this filing, there were fifty five 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 480,000,000 shares of common stock, with a par value of $0.001. The closing price of our common stock on June 9, 2017, as quoted by OTC Markets Group, Inc., was $0.078. There were 43,791,804 shares of common stock issued and outstanding as of June 9, 2017. 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 the Company’s common 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.


Our Articles of Incorporation, our Bylaws, and the applicable statutes of the state of Nevada contain a more complete description of the rights and liabilities of holders of our securities.


During the year ended February 28, 2017, 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.


On March 5, 2015, we effected a 500-for-1 reverse split, upon our reincorporation in Nevada. Each common shareholder received one common share in the Nevada company for every 500 common shares they held in the Florida company. Fractional shares were rounded up, and each share shareholder received at least 5 shares.


- 6 -





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, 2016.


 

 

 

 

 

 

 

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.

 

—

 

—

 

9,000

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders.

 

—

 

—

 

—

 

 

 

 

 

 

 

Total

 

—

 

—

 

9,000


Preferred Stock


We are authorized to issue up to 20,000,000 shares of $0.001 par value preferred stock. The board of directors is authorized to designate any series of preferred stock up to the total authorized number of shares.


Series E Preferred Stock


The board of directors has designated 4,350,000 shares of Series E preferred stock. As of the date of this report, there are 1,000,000 shares of Series E preferred stock outstanding. The Series E preferred stock ranks subordinate to the Company’s common stock. The Series E preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E preferred stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of common stock. As a result, the holder of Series E preferred stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.


Series F Preferred Stock


The board of directors has designated 4,350 shares of Series F convertible preferred stock with a face value of $1.00 per share. As of the date of this report, there are 1,000 shares of Series F convertible preferred stock outstanding. The Series F convertible preferred stock is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends. The holder may, at any time and from time to time convert all, but not less than all. of its shares of Series F convertible preferred stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45). So long as any Series F convertible preferred stock are outstanding, the Company shall not, without first obtaining the approval of the majority of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F convertible preferred stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).


Series G Preferred Stock


The board of directors has designated 1,000 shares of Series G preferred stock. As of the date of this report, there are no shares of Series G preferred stock outstanding. The Series G preferred stock is does not have voting rights, does not have rights upon liquidation of the Company and does not receive dividends. These shares were created after February 28, 2017.


- 7 -





Recent Sales of Unregistered Securities


During the quarter ended February 28, 2017, the Company issued shares of common stock as a result of the conversion of Convertible Promissory Notes, as detailed in the following table:


 

 

 

 

 

 

 

 

Date

 

Amount Converted

 

Shares of

Common Stock

Converted

 

December 2, 2016

 

 

2,986

 

 

891,304

 

December 19, 2016

 

 

3,702

 

 

892,173

 

December 28, 2016

 

 

2,670

 

 

1,057,808

 

January 5, 2017, 2017

 

 

580

 

 

580,000

 

January 24, 2017

 

 

1,922

 

 

1,130,723

 

January 25,2017

 

 

1,077

 

 

621,000

 

January 27, 201

 

 

774

 

 

455,005

 

January 30, 2017

 

 

600

 

 

600,000

 

February 7, 2017

 

 

1,630

 

 

761,000

 

February 13, 2017

 

 

1,711

 

 

799,000

 

February 22, 2017

 

 

1,754

 

 

839,000

 

Total

 

$

19,406

 

 

8,637,013

 


Each issuance of securities was issued without registration in reliance of the exemption from registration Section 3(a)9 of the Securities Act of 1933.


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


THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.


The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives, and performance that involve risk, uncertainties, and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.


Background of our Company


We are a company incorporated in Nevada on March 25, 2010.


- 8 -





Our business focus is in the transportation-related technology services. We are currently exploring the online, on-demand logistics market by developing a shared economy network of trucking partnerships. We are in the process of building a shared economy app designed to put independent drivers and brokers together for more efficient pricing and booking, optimized operations and quick delivery turnarounds. As well, on May 11, 2017 the company announced that it has entered into a binding letter of intent with Robotic Assistance Devices (RAD - www.roboticassistancedevices.com) to acquire 100% of RAD. According to the binding LOI, RAD and OMVS will enter into a definitive agreement within the next 90 days to consummate the acquisition. RAD is specialized in the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs. RAD is initially targeting the security industry, which uses electronic systems, and approximately 1.1 million security guards in the US. The RAD robot security guard solution combines the best of both solutions to provide superior security at a price that delivers to its clients an immediate ROI.


Plan of Operations


We believe we do not have adequate funds to fully execute our business plan for the next twelve months unless we obtain additional funding. However, should we not raise this capital, we will allocate our funding to first assure that all State, Federal and SEC requirements are met.


As of February 28, 2017, we had cash on hand of $ 3,100.


We intend to pursue capital through public or private financing, as well as borrowing and other sources in order to finance our business activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.


Results of Operations


We recognized net income of $33,845,898 for the year ended February 28, 2017. We had a working capital deficit of $2,237,627, excluding the derivatives of $12,938,795 as of February 28, 2017. We do not anticipate having positive net income in the immediate future. Net cash used by operating activities for the year ended February 28, 2017 was $184,831.


Fiscal year ended February 28, 2017 compared to the fiscal year ended February 29, 2016.


General and Administrative Expenses


We recognized general and administrative expenses in the amount of $301,575 and $572,471 for the years ended February 28, 2017 and 2016, respectively. The reduction in general and administrative expenses was due to reduced professional fees.


Interest Expense


Interest expense increased from $647,990 for the year ended February 29, 2016 to $811,383 for the year ended February 28, 2017. Interest expense for the year ended February 28, 2017 included amortization of discount on convertible notes payable in the amount of $603,957, compared to $481,220 for the comparable period of 2016. The remaining increase is the result of the Company entering into interest-bearing convertible notes payable.


Gain on Asset Disposal


During the year ended February 28, 2017, we recognized a $5,789 gain on the disposal an asset and a gain of $1,808 for the year ended February 29, 2016


Impairment of Long Lived Assets


During the year ended February 29, 2016, we recognized a $49,302 impairment of the value of our trailers and leased delivery van. We recognized no impairment during the corresponding period in 2017.


Net Gain/Loss


We incurred a net gain of $33,845,898 for the year ended February 28, 2017 as compared to a net loss of $1,267,955 for the comparable period of 2016. The increase in the net income was primarily the result of a gain on financial derivative instruments.


- 9 -





Liquidity and Capital Resources


We anticipate needing additional financing to fund our operations and to effectively execute our business plan over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status, we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.


We raised the cash amounts to be used in these activities from the sale of common stock and from advances. We currently have negative working capital of $2,237,627, excluding the derivatives of $12,938,795.


As of February 28, 2017, we had $3,100 of cash on hand. This amount of cash will be adequate to fund our operations for less than one month.


We have no known demands or commitments and are not aware of any events or uncertainties as of February 28, 2017 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.


Capital Resources


We had no material commitments for capital expenditures as of February 28, 2017 and 2016. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financing in addition to what is required to fund our present operation.


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


We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


Critical Accounting Policies and Estimates


Derivative Liability - Beneficial Conversion Discount


Beneficial conversion feature is a non-detachable conversion feature that is in the money at the commitment date. The Company follows the guidance of ASC Subtopic 470-20 Debt with Conversion and Other Options to evaluate as to whether beneficial conversion feature exists. Pursuant to Section 470-20-30 an embedded beneficial conversion feature recognized separately under paragraph 470-20-25-5 shall be measured initially at its intrinsic value at the commitment date (see paragraphs 470-20-30-9 through 30-12) as the difference between the conversion price (see paragraph 470-20-30-5) and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. When the Company issues a debt or equity security that is convertible into common stock at a discount from the fair value of the common stock at the date the debt or equity security counterparty is legally committed to purchase such a security (Commitment Date), a beneficial conversion charge is measured and recorded on the Commitment Date for the difference between the fair value of the Company’s common stock and the effective conversion price of the debt or equity security. If the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the debt or equity security, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the debt or equity security.


- 10 -





We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the financial statements are prepared; actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies, which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.


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 CONERN - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended February 28, 2017, the Company had a net gain of $33,822,898 and generated negative cash flow from operating activities in the amount of $157,831. 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 or to obtain additional capital to finance its operations. The Company intends on financing its future 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.


New Accounting Pronouncements


For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 3: Significant Accounting Polices: Recently Issued Accounting Pronouncements” in Part II, Item 8 of this Form 10-K.


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


On the Move Systems Corp.


Consolidated Financial Statements


February 28, 2017


Contents


 

 

Report of Independent Registered Public Accounting Firm

12

 

 

Consolidated Balance Sheets

13

 

 

Consolidated Statements of Operations

14

 

 

Consolidated Statement of Change in Shareholders’ Deficit

15

 

 

Consolidated Statements of Cash Flows

16

 

 

Notes to the Consolidated Financial Statements

17


- 11 -





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders of

On The Move Systems Corp.

Henderson, Nevada


We have audited the accompanying consolidated balance sheets of On The Move Systems Corp. and subsidiaries (collectively, the “Company”) as of February 28, 2017 and February 29, 2016 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.


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


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of On The Move Systems Corp. and subsidiaries as of February 28, 2017 and February 29, 2016 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered losses from operations and has negative operating cash flows, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas


June 13, 2017


- 12 -





ON THE MOVE SYSTEMS CORP.

CONSOLIDATED BALANCE SHEETS


 

 

 

 

 

 

 

 

 

 

February 28, 2017

 

February 29, 2016

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,100

 

$

2,223

 

Prepaid expenses

 

 

—

 

 

3,484

 

Total current assets

 

 

3,100

 

 

5,707

 

 

 

 

 

 

 

 

 

Fixed assets, net of accumulated depreciation of $182 as of February 29, 2016

 

 

—

 

 

3,739

 

TOTAL ASSETS

 

$

3,100

 

$

9,446

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

98,214

 

$

302,136

 

Advances payable

 

 

1,594

 

 

1,594

 

Current portion of convertible notes payable, net of discount of $80,420 and $429,631, respectively

 

 

1,549,734

 

 

554,085

 

Short term note payable - related party

 

 

85,000

 

 

—

 

Short term note payable

 

 

50,000

 

 

—

 

Current portion of accrued interest payable

 

 

456,185

 

 

185,447

 

Current portion of capital lease

 

 

—

 

 

3,775

 

Derivative liability

 

 

12,938,795

 

 

—

 

Total current liabilities

 

 

15,179,522

 

 

1,047,037

 

 

 

 

 

 

 

 

 

Convertible notes payable, net of discount of $358,159 and $500,339, respectively.

 

 

41,977

 

 

418,521

 

Capital lease obligation

 

 

—

 

 

7,378

 

Accrued interest payable

 

 

41,093

 

 

105,492

 

TOTAL LIABILITIES

 

 

15,262,592

 

 

1,578,428

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

—

 

 

—

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Common Stock, $0.001 par value; 480,000,000 shares authorized; 17,656,844 and 4,908,816 shares issued and outstanding at February 28, 2017 and February 29, 2016, respectively

 

 

17,657

 

 

4,909

 

Series E Preferred Stock, $0.001 par value; 4,350,000 shares authorized; 1,000,000 shares issued and outstanding at February 28, 2017 and February 29, 2016, respectively

 

 

1,000

 

 

1,000

 

Series F Convertible Preferred Stock, $1.00 par value per share; 4,350 shares authorized; 1,000 shares issued and outstanding at February 28, 2017

 

 

1,000

 

 

—

 

Preferred Stock, undesignated; 15,645,650 shares authorized; no shares issued and outstanding at February 28, 2017 and February 29, 2016, respectively

 

 

—

 

 

—

 

Additional paid-in capital

 

 

(41,477,284

)

 

6,072,872

 

Accumulated deficit

 

 

26,198,135

 

 

(7,647,763

)

Total stockholders’ deficit

 

 

(15,259,492

)

 

(1,568,982

)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

3,100

 

$

9,446

 


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


- 13 -





ON THE MOVE SYSTEMS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS


 

 

 

 

 

 

 

 

Year ended,

 

 

February 28, 2017

 

February 29, 2016

 

 

 

 

 

 

REVENUE

$

—

 

$

—

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

General and administrative expenses

 

301,575

 

 

572,471

 

Gain on disposal of fixed assets

 

(5,789

)

 

(1,808

)

Impairment of fixed assets

 

—

 

 

(49,302

)

Operating loss

 

(295,786

)

 

(619,965

)

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

Interest expense

 

(811,383

)

 

(647,990

)

Gain on financial derivatives

 

34,966,067

 

 

—

 

Gain on debt forgiveness

 

30,000

 

 

—

 

Loss on debt covenant violations

 

(43,000

)

 

—

 

Total other income (expense)

 

34,141,684

 

 

(647,990

)

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

33,845,898

 

$

(1,267,955

)

 

 

 

 

 

 

 

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

Basic

$

4.47

 

$

(0.44

)

Diluted

$

0.07

 

$

(0.44

)

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

7,580,137

 

 

2,881,703

 

Diluted

 

492,480,090

 

 

2,881,703

 


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


- 14 -






ON THE MOVE SYSTEMS CORP.

CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS’ DEFICIT


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series E

 

Series F

 

Additional

 

 

 

 

 

 

 

Common Stock

 

Preferred Stock

 

Preferred Stock

 

Paid-In

 

Accumulated

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, February 28, 2015

 

75,360

 

$

75

 

1,000,000

 

$

1,000

 

—

 

$

—

 

$

5,351,237

 

$

(6,379,808

)

$

(1,027,496

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for debt conversion

 

4,822,667

 

 

4,823

 

—

 

 

—

 

—

 

 

—

 

 

195,006

 

 

—

 

 

199,829

 

Common stock issued for services

 

10,556

 

 

11

 

—

 

 

—

 

—

 

 

—

 

 

4,581

 

 

—

 

 

4,592

 

Share rounding on reverse split

 

233

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Beneficial conversion discount on issuance of convertible note payable

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

522,048

 

 

—

 

 

522,048

 

Net loss

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

(1,267,955

)

 

(1,267,955

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, February 29, 2016

 

4,908,816

 

$

4,909

 

1,000,000

 

$

1,000

 

—

 

$

—

 

$

6,072,872

 

$

(7,647,763

)

$

(1,568,982

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for debt conversion

 

12,748,028

 

 

12,748

 

—

 

 

—

 

—

 

 

—

 

 

54,402

 

 

—

 

 

67,150

 

Preferred stock issued for cash

 

—

 

 

—

 

—

 

 

—

 

1,000

 

 

1,000

 

 

4,000

 

 

—

 

 

5,000

 

Beneficial conversion discount on issuance of convertible note payable

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

35,100

 

 

—

 

 

35,100

 

Derivative liabilities reclassified from additional paid-in capital

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

(47,967,909

)

 

—

 

 

(47,967,909

)

Release of derivative liability on conversion of convertible notes payable

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

122,547

 

 

—

 

 

122,547

 

Related party debt forgiveness

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

201,704

 

 

—

 

 

201,704

 

Net income

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

33,845,898

 

 

33,845,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, February 28, 2017

 

17,656,844

 

$

17,657

 

1,000,000

 

$

1,000

 

1,000

 

$

1,000

 

$

(41,477,284

)

$

26,198,135

 

$

(15,259,492

)


On March 5, 2015, the Company effected a 500-for-1 reverse split. All share and per share amounts have been restated to reflect the reverse split.


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


- 15 -






ON THE MOVE SYSTEMS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS


 

 

 

 

 

 

 

 

 

 

Year ended February 29,

 

 

 

2017

 

2016

 

 

 

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

 

$

33,845,898

 

$

(1,267,955

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Amortization of discount on convertible note payable

 

 

603,957

 

 

481,220

 

Gain on derivative liability

 

 

(34,966,067

)

 

—

 

Gain on debt forgiveness

 

 

(30,000

)

 

—

 

Loss on debt covenant violation

 

 

43,000

 

 

—

 

Common stock issued for services

 

 

—

 

 

4,592

 

Depreciation

 

 

767

 

 

18,583

 

Gain on disposal of fixed assets

 

 

(5,789

)

 

(1,808)

 

Impairment of fixed assets

 

 

—

 

 

49,302

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

—

 

 

5,250

 

Prepaid expenses

 

 

3,484

 

 

(3,484)

 

Accounts payable and accrued liabilities

 

 

112,782

 

 

(5,706)

 

Accrued interest payable

 

 

207,137

 

 

164,166

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(184,831

)

 

(555,840

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from advances

 

 

35,100

 

 

523,642

 

Proceeds from convertible promissory note

 

 

100,500

 

 

38,000

 

Proceeds from sale of Series F Preferred Stock

 

 

5,000

 

 

—

 

Proceeds from promissory note

 

 

50,000

 

 

—

 

Repayment of convertible note payable

 

 

(2,500

)

 

—

 

Repayment of capital lease

 

 

(2,392

)

 

(6,258

)

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

185,708

 

 

555,384

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH

 

 

877

 

 

(456

)

 

 

 

 

 

 

 

 

CASH, at the beginning of the period

 

 

2,223

 

 

2,679

 

 

 

 

 

 

 

 

 

CASH, at the end of the period

 

$

3,100

 

$

2,223

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest

 

$

291

 

$

2,602

 

Income taxes

 

$

—

 

$

—

 

 

 

 

 

 

 

 

 

Noncash investing and financing transaction:

 

 

 

 

 

 

 

Refinancing of advances into convertible notes payable

 

$

35,100

 

$

522,048

 

Beneficial conversion discount on convertible note payable

 

$

35,100

 

$

522,048

 

Original issue discount on convertible notes payable

 

$

—

 

$

6,000

 

Conversion of convertible notes payable and accrued interest

 

$

67,150

 

$

199,829

 

Derivative liabilities reclassified from additional paid in capital

 

$

47,967,909

 

$

—

 

Release of derivative liability on conversion of convertible note payable

 

$

122,547

 

$

—

 

Note payable issued for reduction of accounts payable

 

$

85,000

 

$

—

 

Related party forgiveness of accounts payable

 

$

201,704

 

$

—

 

Automobile acquired under capital lease

 

$

—

 

$

11,766

 

Termination of capital lease for automobiles

 

$

2,972

 

$

—

 

Debt discount recognized from derivative liabilities

 

$

59,500

 

$

—

 


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


- 16 -





ON THE MOVE SYSTEMS CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 29, 2016


Note 1. Background Information


On the Move Systems Corp. (“we”, “us”, “our”, “OMVS”, or the “Company”) was incorporated in Nevada on March 25, 2010. We reincorporated into Nevada on February 17, 2015. Our year-end is February 28.


Our business focus is in the transportation-related technology services. We are currently exploring the online, on-demand logistics market by developing a shared economy network of trucking partnerships. We are in the process of building a shared economy app designed to put independent drivers and brokers together for more efficient pricing and booking, optimized operations and quick delivery turnarounds. As well, on May 11, 2017 the company announced that it has entered into a binding letter of intent with Robotic Assistance Devices (RAD - www.roboticassistancedevices.com) to acquire 100% of RAD. According to the binding LOI, RAD and OMVS will enter into a definitive agreement within the next 90 days to consummate the acquisition. RAD is specialized in the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs. RAD is initially targeting the security industry, which uses electronic systems, and approximately 1.1 million security guards in the US. The RAD robot security guard solution combines the best of both solutions to provide superior security at a price that delivers to its clients an immediate ROI.


Note 2. Going Concern


For the fiscal year ended February 28, 2017, the Company had a net gain of $33,845,898 and negative cash flow from operating activities of $184,831. As of February 28, 2017, the Company has negative working capital of $15,176,422.


These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.


The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.


Management has plans to address the Company’s financial situation as follows:


In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raises doubts about the Company’s ability to continue as a going concern.


In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company that will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.


Note 3. Significant Accounting Policies


The significant accounting policies that the Company follows are:


Basis of Presentation


These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules of the Securities and Exchange Commission (“SEC”)


- 17 -





Principles of Consolidation


The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, On the Move Experience, LLC and OMV Transports, LLC. Intercompany transactions have been eliminated in consolidation. The fiscal year-end for the Company and its subsidiaries is February 28.


Use of Estimates


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


Cash and Cash Equivalents


For the purpose of the financial statements, cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $3,100 and $2,223 at February 28, 2017 and February 29, 2016, respectively.


Fixed Assets


Fixed assets of the Company include vehicles and are stated at cost. In accordance with ASC Topic 360 Property, Plant and Equipment, expenditure for fixed assets that 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 of the asset for. Our delivery van is depreciated over three years.


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. During the year ended February 28, 2017, we determined that we needed to


Revenue and cost recognition


In accordance with ASC 605, Revenue 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 generated from advertising on our race car and from delivery services. Revenue is recognized net of sales returns and allowances. We invoiced customers for revenue of $0 and $9,143 during the years ended February 28, 2017 and February 29, 2016, respectively; however, we have not recognized any revenue for that time period since collectability of the revenue was not reasonable assured.


Advertising Costs


The Company’s policy is to expense advertising costs when they are incurred.


Income Taxes


The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of February 28, 2017 and 2016, respectively.


- 18 -





Earnings (Loss) Per Share


Basic loss per share is computed in accordance with ASC Topic 260, Earnings per Share, 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 antidilutive and thus are excluded from the calculation.


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, 2016. As a result, the Company did not have any potentially dilutive common shares for that period. At February 28, 2017, the Company had 536,321,460 potentially issuable shares upon the conversion of convertible notes payable and interest. Based on our stock price on February 28, 2017, the value of these shares if exercised would be $13,294,122. The company also has 900,000 warrants.


Related Parties


The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.


Financial Instruments


The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.


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 28, 2017 and February 29, 2016. 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, 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 that is not significantly different from its stated value.


Reclassifications


Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation.


- 19 -





Commitments and Contingencies


The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. See Note 13 for a discussion of the Company’s commitments and contingencies.


Subsequent events


The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.


Recently Issued Accounting Pronouncements


We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.


In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in ASU No. 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company is required to adopt the provisions of ASU 2015-03 beginning with the fiscal year ending February 28, 2017. The Company has chosen to adopt this ASU during the year ended February 29, 2016. As a result, we reclassified debt issuance costs of $2,000 from current assets to current liabilities.


In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which modifies the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from all leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, which is the year ending February 29, 2020 for the Company. Early application is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on their financial position and results of operations.


Note 4. Advances


During the years ended February 28, 2017 and February 29, 2016, the Company received unsecured advances totaling $35,100 and $522,048, respectively. These advances are non-interest bearing and payable on demand. Vista View Ventures, Inc. provided $35,100 and $522,048 of these advances for years ended February 28, 2017 and February 29, 2016, respectively. As discussed in Note 5, the advances were paid from Vista View Ventures Inc. to KMDA and then by KMDA to the Company on behalf of Vista View Ventures, Inc. These advances are typically converted to convertible notes on a quarterly basis.


During the years ended February 28, 2017 and February 29, 2016, we refinanced $35,100 and $522,048, respectively, of non-interest bearing advances into convertible notes. See Note 6.


At February 28, 2017 and February 29, 2016, we did not owe Vista View Ventures Inc. anything for advances provided to us.


At February 28, 2017 and February 29, 2016, we owed a third party $1,594 and $1,594, respectively, for advances provided to us.


- 20 -





Note 5. Related Party Transactions


Our officers and 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. We have not formulated a policy for the resolution of such conflicts.


During the years ended February 28, 2017 and February 29, 2016, we paid Robert Wilson $33,846 and $108,461, respectively, for his services as CEO.


During the year ended February 28, 2017, Garett Parsons made $2,000 for his services as CEO.


During the year ended February 28, 2017, Garett Parsons purchased the outstanding 1,000,000 shares of Series E Preferred Stock from Panama iPhone Corp. for $10,000. During the year ended February 28, 2017, the Company issued 1,000 shares of Series F Preferred Stock to Mr. Parsons for cash proceeds of $5,000.


Conversion of Related Party Convertible Note


On April 1, 2015, Panama iPhone Corp. (formerly Masclo Investment Corporation), a significant shareholder of the Company, converted $100,000 of principal and accrued interest on the convertible note dated January 31, 2015 into 1,000,000 shares of common stock.


On June 25, 2015, Panama iPhone Corp. converted $68,447 of principal and accrued interest on the convertible note dated January 31, 2015 into 684,467 shares of common stock. As of February 29, 2016, there was remaining principal balance or accrued interest on the convertible note.


Services Provided by KM Delaney & Assoc.


During the year ended February 28, 2017 and 2016, KM Delaney & Associates (“KMDA”), a service provider to the Company, has provide office space and certain administrative functions to us under a management services agreement. The services provide include a furnished executive suite, use of office equipment and supplies, accounting and bookkeeping services, treasury and cash management services, financial reporting, and other support staffing requirements. The management services agreement calls for monthly payments of $18,000 during calendar year 2015 and $17,550 during calendar year 2016. As part of the services provided to the Company, KMDA receives the advances from the lender (See Note 4) and disburses those funds to us. During the years ended February 28, 2017 and 2016, KMDA billed us $105,330 and $202,354, respectively, for those services. As of February 29, 2016, we owed KMDA $195,568 which was included in accounts payable on the balance sheet.


During the year ended February 28, 2017, the Company had a total forgiveness of debt of $201,704. KMDA forgave $85,934 and Robert Wilson forgave 44,616 and an accrued salary of 71,154. We paid KMDA $50,000 for prior outstanding accounts payable and We issued a note payable to KMDA in the amount of $85,000 to settle with various vendors., resulting in gain on settlement of $201,704 recognized as additional paid in capital. The note is non-interest bearing and requires five monthly principal payments of $17,000 beginning June 1, 2017.


Lease of Delivery Van


In December 2015, we leased a delivery van from an individual. The lessor is a relative of the owner of KMDA. The lease calls for monthly payments of $350 for a period of three years. The lease cost includes the operating cost and insurance on the van. We determined that the lease should be accounted for as a capital lease. We recorded the van as a fixed asset based on the present value of the future lease payments of $11,766. We immediately impaired the value of the van by comparing the present value of the future lease payments to the fair market value of the van and recognized impairment of $7,844. During the year ended February 28, 2017, this lease was terminated and the asset was returned to the lessor by mutual agreement of the parties.


- 21 -





Note 6. Convertible Notes Payable


Convertible notes payable consist of the following as of February 28, 2017 and February 29, 2016:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued

 

Maturity

 

Interest Rate

 

Conversion
Rate per Share

 

Balance

February 28,

2017

 

Balance

February 29,

2016

 

February 28, 2011

 

February 27, 2013 *

 

7%

 

$0.015

 

$

32,600

 

$

32,600

 

January 31, 2013

 

February 28, 2016 *

 

10%

 

$0.01

 

 

119,091

 

 

120,562

 

May 31, 2013

 

November 30,2016 *

 

10%

 

$0.01

 

 

261,595

 

 

261,595

 

November 30, 2013

 

November 30, 2017

 

10%

 

$0.01

 

 

394,458

 

 

396,958

 

August 31, 2014

 

August 31, 2016 *

 

10%

 

$0.002

 

 

355,652

 

 

355,652

 

November 30, 2014

 

November 30, 2016 *

 

10%

 

$0.002

 

 

103,950

 

 

103,950

 

February 28, 2015

 

February 28, 2017 *

 

10%

 

$0.001

 

 

63,357

 

 

63,357

 

May 31, 2015

 

May 31, 2017

 

10%

 

$1.00

 

 

65,383

 

 

65,383

 

August 31, 2015

 

August 31, 2017

 

10%

 

$0.30

 

 

91,629

 

 

91,629

 

November 30, 2015

 

November 30, 2018

 

10%

 

$0.30

 

 

269,791

 

 

269,791

 

February 3, 2016

 

February 3, 2017 *

 

5%

 

49% discount

 

 

5,299

 

 

46,000

 

February 29, 2016

 

February 28, 2019

 

10%

 

60% discount

 

 

95,245

 

 

95,245

 

March 22, 2016

 

March 22, 2017

 

10%

 

.003

 

 

60,000

 

 

—

 

May 31, 2016

 

May 31, 2019

 

10%

 

.003

 

 

35,100

 

 

—

 

July 18,2016

 

July 18,2017

 

10%

 

.003

 

 

6,500

 

 

—

 

August 30,2016

 

August 30,2017

 

10%

 

.003

 

 

—

 

 

—

 

September 6, 2016

 

September 6, 2017

 

10%

 

.003

 

 

31,320

 

 

—

 

January 4, 2017

 

January 4, 2018

 

—

 

—

 

 

1,320

 

 

—

 

January 13, 2017

 

October 13, 2017

 

—

 

—

 

 

38,000

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total convertible notes payable

 

 

 

$

2,030,290

 

$

1,902,722

 

 

 

 

 

 

 

 

 

 

 

Noncurrent convertible notes payable

 

 

 

 

400,136

 

 

919,006

 

Less: discount on noncurrent convertible notes payable

 

 

 

 

(358,159

)

 

(500,485

)

Noncurrent convertible notes payable, net of discount

 

 

 

$

41,977

 

$

418,521

 

 

 

 

 

 

 

 

 

 

 

Current portion of convertible notes payable

 

 

 

 

1,630,154

 

 

983,716

 

Less: discount on current portion of convertible notes payable

 

 

 

 

(80,420

)

 

(429,631

)

Current portion of convertible notes payable, net of discount

 

 

 

$

1,549,734

 

$

554,085

 


* The indicated notes were is in default as of February 28, 2017 and bear default interest of between 18% and 25% per annum.


During the year ended February 28, 2017, we incurred original issue discounts of $17,820 and derivative discount of $59,500 on convertible notes issued during that period. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the notes.


During the year ended February 28, 2017, we incurred default penalties of $46,000 on the notes dated February 3, 2016 and March 22, 2016. The penalties were added to the principal of the notes.


We also issued a note of $75,000 to an individual for proceeds of $50,000 and a fee of $25,000 that was not paid as of February 28, 2017. The note is non-interest bearing.


All of the notes above are unsecured. As of February 28, 2017, we had accrued interest payable of $497,278.


- 22 -





Convertible notes issued


During the year ended February 28, 2017, we refinanced $35,100 of non-interest bearing advances into a convertible note. All principal and accrued interest is payable on the maturity date.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued

 

Maturity

 

Interest Rate

 

Conversion
Rate per Share

 

Amount
of Note

 

Original Issue Discount

 

Beneficial Conversion Feature

 

May 31, 2016

 

May 31, 2017

 

10%

 

$

0.30

 

$

35,100

 

$

—

 

$

35,100

 

Total

 

 

 

 

 

 

 

 

$

35,100

 

$

0

 

$

35,100

 


During the year ended February 29, 2016, we refinanced $522,048 of non-interest bearing advances into a convertible note. All principal and accrued interest is payable on the maturity date.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued

 

Maturity

 

Interest

Rate

 

Conversion

Rate per Share

 

Amount

of Note

 

Original

Issue

Discount

 

Beneficial

Conversion

Feature

 

May 31, 2015

 

May 31, 2017

 

10%

 

$

1.00

 

$

65,383

 

$

—

 

$

65,383

 

August 31, 2015

 

August 31, 2017

 

10%

 

 

0.30

 

 

91,629

 

 

—

 

 

91,629

 

November 30, 2015

 

November 30, 2018

 

10%

 

 

0.30

 

 

269,791

 

 

—

 

 

269,791

 

February 3, 2016

 

February 3, 2017

 

5%

 

 

49% discount (1)

 

 

46,000

 

 

6,000

 

 

—

 

February 29, 2016

 

February 28, 2019

 

10%

 

 

60% discount (2)

 

 

95,245

 

 

—

 

 

95,245

 

Total

 

 

 

 

 

 

 

 

$

568,048

 

$

6,000

 

$

522,048

 

_________

(1)

This note is convertible beginning six months after the date of issuance at 49% discount to the lowest trading price over the preceding 20 trading days

 

 

(2)

This note is convertible at a 60% discount to the volume weighted average closing price over the preceding five trading days, subject to the condition that the conversion price shall never be less than $0.01 per share.


The Company evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The convertible note payable dated February 3, 2016 is not convertible until six months after the date of issuance; therefore, it is not considered a derivative until August 3, 2016. The convertible note payable dated February 29, 2016 has a minimum conversion price of $0.01 per share and does not meet the definition of a derivative. We evaluated the conversion features for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, during the years ended February 28, 2017 and February 29, 2016, we recognized a discount for the beneficial conversion features of $35,100 and $522,048, respectively and in aggregate, on the date the notes were signed. The beneficial conversion feature was recorded as an increase in additional paid-in capital and a discount to the convertible notes payable. The discount to the convertible notes payable will be amortized to interest expense over the life of the notes. During the year ended February 28, 2017 and 2016, we amortized discount on convertible notes payable of $603,957 and $481,220, respectively, to interest expense.


- 23 -





Conversions to common stock


During year ended February 28, 2017, the holders of certain Convertible Note Payable elected to convert principal and accrued interest in the amounts shown below into shares of common stock. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.


 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion

 

Principal

 

Interest

 

Total Amount

 

Shares

 

Date

 

Converted

 

Converted

 

Converted

 

Converted

 

March 1, 2016

 

$

1,471

 

$

429

 

$

1,900

 

190,000

 

August 8, 2016

 

 

9,870

 

 

—

 

 

9,870

 

175,000

 

August 26, 2016

 

 

9,425

 

 

—

 

 

9,425

 

264,000

 

September 8, 2016

 

 

6,000

 

 

3

 

 

6,003

 

193,633

 

September 9, 2016

 

 

7,268

 

 

—

 

 

7,268

 

285,000

 

September 22, 2016

 

 

3,065

 

 

—

 

 

3,065

 

299,000

 

September 29, 2016

 

 

1,550

 

 

8

 

 

1,558

 

259,635

 

September 29, 2016

 

 

1,928

 

 

—

 

 

1,928

 

315,000

 

October 7, 2016

 

 

973

 

 

—

 

 

973

 

360,000

 

October 10, 2016

 

 

1,700

 

 

13

 

 

1,713

 

339,142

 

November 7, 2016

 

 

1,870

 

 

25

 

 

1,895

 

715,249

 

November 23, 2016

 

 

2,110

 

 

36

 

 

2,146

 

715,356

 

December 2, 2016

 

 

2,930

 

 

56

 

 

2,986

 

891,304

 

December 19, 2016

 

 

3,620

 

 

82

 

 

3,702

 

892,173

 

December 28, 2016

 

 

2,605

 

 

65

 

 

2,670

 

1,067,808

 

January 5, 2017

 

 

580

 

 

—

 

 

580

 

580,000

 

January 24, 2017

 

 

1,865

 

 

57

 

 

1,922

 

1,130,723

 

January 25, 2017

 

 

1,077

 

 

—

 

 

1,077

 

621,000

 

January 27, 2017

 

 

750

 

 

24

 

 

774

 

455,005

 

January 30, 2017

 

 

600

 

 

—

 

 

600

 

600,000

 

February 7, 2017

 

 

1,630

 

 

—

 

 

1,630

 

761,000

 

February 13, 2017

 

 

1,711

 

 

—

 

 

1,711

 

799,000

 

February 22, 2017

 

 

1,754

 

 

—

 

 

1,754

 

839,000

 

Total

 

$

66,352

 

$

798

 

$

67,150

 

12,748,028

 


- 24 -





During year ended February 29, 2016, the holders of certain Convertible Note Payable elected to convert principal and accrued interest in the amounts shown below into shares of common stock. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.


 

 

 

 

 

 

Date

 

Amount Converted

 

Number of Shares Issued

April 22, 2015

 

$

500

 

50,000

April 23, 2015

 

 

500

 

50,000

May 20, 2015

 

 

1,650

 

165,000

May 21, 2015

 

 

250

 

25,000

June 11, 2015

 

 

600

 

60,000

June 19, 2015

 

 

400

 

40,000

July 1, 2015

 

 

1,200

 

120,000

July 10, 2015

 

 

450

 

45,000

July 16, 2015

 

 

940

 

94,000

July 17, 2015

 

 

950

 

95,000

August 3, 2015

 

 

1,450

 

145,000

August 5, 2015

 

 

1,670

 

167,000

August 10, 2015

 

 

1,930

 

193,000

August 13, 2015

 

 

1,000

 

100,000

August 24, 2015

 

 

540

 

54,000

August 25, 2015

 

 

800

 

80,000

September 11, 2015

 

 

1,200

 

120,000

September 17, 2015

 

 

875

 

87,500

September 24, 2015

 

 

1,720

 

172,000

September 29, 2015

 

 

600

 

60,000

October 2, 2015

 

 

1,290

 

129,000

October 14, 2015

 

 

1,020

 

102,000

October 16, 2015

 

 

3,014

 

301,400

December 22, 2015

 

 

3,010

 

301,000

January 7, 2016

 

 

800

 

80,000

January 18, 2016

 

 

1,493

 

149,300

February 17, 2016

 

 

1,530

 

153,000

Total

 

$

31,382

 

3,138,200


- 25 -





Note 7. Fixed Assets


Racecar Lease


On February 29, 2016, we came to a mutual agreement with our vendor to discontinue the lease on our racecar. We had originally leased the racecar on May 1, 2014. The lease called for 60 monthly payments of $680. Upon disposal of the racecar, we recognized a gain on the disposal of $1,808.


Tri-axel Trailers


On August 14, 2014, we purchased ten 53-foot tri-axle trailers for $60,000 to be used in its specialty transportation segment. We paid a $15,000 down payment and have paid an additional $15,000 toward this purchase. The remaining $30,000 is included in accounts payable as of February 28, 2015.


On August 14, 2014, we purchased ten 53-foot tri-axle trailers for $60,000 to be used in our specialty transportation segment. As of February 29, 2016, we determined that the value of the trailers was impaired and recognized loss on impairment of $41,458. We have paid $30,000 toward this purchase. The remaining $30,000 is included in accounts payable as of February 29, 2016 and subsequently realized as a gain when the debt was forgiven on August 17, 2016.


Delivery Van Lease


On December 23, 2015, we agreed to lease for a delivery van, beginning January 10, 2015. The lease agreements stipulated 36 monthly payments of $350. The lease for the delivery van meets the accounting criteria for a capital lease covering over 75% of the economic life of the asset.


Upon the start of the lease, we determined that the present value of minimum lease payments exceeded the fair market value, and we recorded the delivery van asset at $3,921 and recognized an impairment expense of $7,844. During the year ended February 28, 2017, this lease was terminated by mutual agreement of the parties and we recognized a gain of $5,789.


Depreciation


Depreciation on the leased vehicle is provided on the straight-line method over the five-year term of the lease. Depreciation of the trailers is calculated on the straight-line method over the estimated useful lives of five years. The Company recognized depreciation expense of $767 and $18,583 during the years ended February 28, 2017 and February 29, 2016, respectively.


Note 8. Capital Lease Obligations


 

 

 

 

 

 

 

 

 

February 28,

2017

 

February 29,

2016

Capital lease – race car, interest at 10%, payments of $680 per month, term 5 years

 

$

—

 

$

11,153

Capital lease – delivery van, interest at 4.5%, payments of $350 per month, term 3 years.

 

 

—

 

 

—

 

 

 

 

 

 

 

Less: current portion of capital lease obligations

 

 

—

 

 

3,775

 

 

$

—

 

$

7,378


Note 9. Debt Payment Obligations


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years ending February 28,

 

 

 

2018

 

2019

 

2020

 

2021

 

2022

 

Total

 

Convertible notes

 

$

1,630,154

 

$

365,036

 

$

35,100

 

$

—

 

$

—

 

$

2,030,290

 

Note payable - related party

 

$

85,000

 

$

—

 

$

—

 

$

—

 

$

—

 

$

85,000

 

Note payable

 

$

50,000

 

$

—

 

$

—

 

$

—

 

$

—

 

$

50,000

 


- 26 -





Note 10. Derivative Liabilities


On July 18, 2016, we issued a convertible promissory note with embedded variable price conversion options and reset provision that is determined to be derivative instrument (see Note 6). We recognized a derivative liability of $19,894, which was recorded as a $7,000 discount to the note and a loss on derivative instruments of $12,894.


The same note required us to issue 900,000 warrants, which are also valued as a derivative instrument. Therefore, we recognized a derivative liability $117,058. This was recorded as a $117,058 loss on derivative instruments.


The embedded derivative in the July 18, 2016 convertible note tainted our outstanding convertible notes issues prior to that period and during the remaining period ended February 28, 2017. We calculated a $47,967,909 derivative liability related to those notes, which we reclassified from additional paid-in capital.


During the year ended February 28, 2017, we released $122,547 of our derivative liability to equity due to conversions of principal on the associated notes.


On February 28, 2017, we revalued the fair value all of our derivative instruments and determined that we had total derivative liabilities of $12,938,795. During the year ended February 28, 2017, we recognized gain on derivative of $34,966,067.


The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing model using the following key assumptions during the year ended February 28, 2017:


 

 

 

 

Expected dividends

 

—

%

Expected term (years)

 

0.25 – 4.39

 

Volatility

 

317% – 632

%

Risk-free rate

 

0.53% – 2.38

%


The following fair value hierarchy table presents information about the Company’s financial liabilities measured at fair value on a recurring basis as of February 28, 2017:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

 

Significant Other

Observable

Inputs

(Level 2)

 

Significant

Unobservable

Inputs

(Level 3)

 

Balance at

February 28,

2017

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

—

 

 

—

 

 

12,938,795

 

 

12,938,795

 

Total liabilities

 

$

—

 

$

—

 

$

12,938,795

 

$

12,938,795

 


Note 11. Stockholders’ Equity


Conversion of convertible notes payable


During the year ended February 29, 2016, we issued 1,684,467 shares of common stock to Panama iPhone Corp., a significant shareholder in the Company, upon conversion of principal and accrued interest on a convertible note payable of $168,447. See Note 6.


During the year ended February 29, 2016, we issued 3,138,200 shares of common stock upon the conversion of principal and accrued interest on a convertible note for $31,382. During the year ended February 28, 2017, we issued 12,748,028 shares of common stock upon the conversion of principal and accrued interest on a convertible note for $67,150. See Note 6.


Common stock issued for Services


On February 18, 2016 we issued 10,556 shares of common stock as a finder’s fee for the convertible promissory note issued February 3, 2016. The shares were valued at $4,592 based on the fair market value of the stock on the date it was issued. We recognized a expense of finder’s fee of $4,592.


- 27 -





Preferred Stock


Series E Preferred Stock


The board of directors has designated 4,350,000 shares of Series E preferred stock. As of the date of this report, there are 1,000,000 shares of Series E preferred stock outstanding. The Series E preferred stock ranks subordinate to the Company’s common stock. The Series E preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E preferred stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of common stock. As a result, the holder of Series E preferred stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.


Series F Preferred Stock


The board of directors has designated 4,350 shares of Series F convertible preferred stock with a face value of $1.00 per share. As of the date of this report, there are 1,000 shares of Series F convertible preferred stock outstanding. The Series F convertible preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The holder may, at any time and from time to time convert all, but not less than all of its shares of Series F convertible preferred stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45). The original designation was 2.22 conversion rate and was subsequently amended to 3.45. So long as any Series F convertible preferred stock are outstanding, the Company shall not, without first obtaining the approval of the majority of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F convertible preferred stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).


Series G Preferred Stock


The board of directors has designated 1,000 shares of Series G preferred stock. As of the date of this report, there are no shares of Series G preferred stock outstanding. The Series G preferred stock is does not have voting rights, does not have rights upon liquidation of the Company and does not receive dividends.


Note 12. Income Taxes


There is no current or deferred income tax expense or benefit for the period ended February 28, 2017 and February 29, 2016.


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. The items causing this difference for the years ended February 28, 2017 and February 29, 2016 are as follows.


 

 

 

 

 

 

 

 

 

 

2017

 

2016

 

Tax benefit at U.S. statutory rate

 

$

1,232,074

 

$

443,784

 

Valuation allowance

 

 

(1,232,074

)

 

(443,784

)

 

 

$

—

 

$

—

 


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.


The tax returns for fiscal years 2011 through 2017 are still open for review by the Internal Revenue Service.


As of February 28, 2017, the Company had United States net operating loss carryforwards (“NOLs”) of approximately $3,520,000 which begin to expire in 2023. These NOLs may be used to offset future taxable income, to the extent we generate any taxable income, and thereby reduce or eliminate our future federal income taxes otherwise payable. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an ownership change as defined in Section 382. We may be found to have experienced an ownership change under Section 382 as a result of events in the past or the issuance of shares of common stock upon a conversion of notes. If so, the use of our NOLs against our future taxable income may be subject to an annual limitation under Section 382.


- 28 -





Note 13. Commitments and Contingencies


Litigation


On October 12, 2015, we received notice that the Company had been sued in the United States District Court for the Central District of California. The plaintiff alleges that we obtained certain trade secrets through a third party also named in the suit. The case was dismissed in December 2015 for lack of jurisdiction.


In February 2016, we received notice that the Company had been sued in the Clark County District Court of Nevada. The plaintiff alleges that we obtained certain trade secrets through a third party also named in the suit. We believe the suit is without merit and intend to vigorously defend it. We have not accrued any liability for this lawsuit as we believe that the likelihood of an unfavorable outcome is remote.


Note 14. Earnings per Share


Basic earnings per share (EPS) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is similarly calculated except that the common shares outstanding for the period is increased to reflect the potential dilution that could occur if outstanding warrants and convertible debt were exercised and stock awards were vested at the end of the applicable period. Anti-dilutive shares represent potentially dilutive securities that are excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive.


The following is a calculation of basic and diluted weighted-average shares outstanding:


 

 

 

 

 

 

 

 

Year Ended February 28,

 

 

2017

 

2016

Weighted-average shares - basic

 

7,580,137

 

2,881,703

Dilution effect of potentially issuable shares related to convertible notes payable at end of period

 

492,480,090

 

—

Dilution effect of warrants at end of period

 

900,000

 

—

Weighted-average shares – diluted

 

493,380,090

 

2,881,703


Note 15. Subsequent Events


On March 1, 2017, we issued a Convertible Promissory Note with a face value of $75,000 for cash proceeds of $71,250. The note is secured and bears interest at 8% per year. It is payable along with interest on November 1, 2017. This is the initial note and funded and there is another back end note dated March 1, 2017 but not funded yet.


On March 8, 2017, we issued a Convertible Promissory Note with a face value of $100,000 for cash proceeds of $42,500 for the first tranche. The note is unsecured and bears interest at 8% per year. It is payable along with interest on March 8, 2018. The note is convertible beginning six months after the date of issuance at a 40% discount to the lowest trading price during the 20-day period prior to conversion.


On March 21, 2017, we issued a Convertible Promissory Note with a face value of $40,000 for cash proceeds of $38,000. The note is unsecured and bears interest at 8% per year. It is payable along with interest on March 21, 2018. The note is convertible beginning six months after the date of issuance at a 40% discount to the lowest trading price during the 20-day period prior to conversion. This is the initial note and funded and there is another back end note dated March 1, 2017 but not funded yet.


On April 4, 2017, we issued a Convertible Promissory Note with a face value of $33,000 for cash proceeds of $30,000. The note is unsecured and bears interest at 10% per year. It is payable along with interest on December 4, 2017. The note is convertible beginning six months after the date of issuance at a 40% discount to the lowest trading price during the 20-day period prior to conversion.


On April 19, 2017, we issued a Convertible Promissory Note with a face value of $96,250 for cash proceeds of $70,000. The note is unsecured and bears interest at 15% per year. It is payable along with interest on April 19, 2018. The note is convertible beginning six months after the date of issuance at a 50% discount to the lowest trading price during the 30-day period prior to conversion.


On April 20, 2017, we issued a Convertible Promissory Note with a face value of $28,000 for cash proceeds of $25,000. The note is unsecured and bears interest at 8% per year. It is payable along with interest on January 30, 2018. The note is convertible beginning six months after the date of issuance at a 40% discount to the lowest trading price during the 20-day period prior to conversion.


- 29 -





On April 26, 2017, we entered into a non-interest bearing convertible debenture agreement for principal amount of $50,000, due on April 26, 2018. The conversion price is at $0.001 per share. The note is due on demand and payable in cash upon default.


On May 4, 2017, we issued a Convertible Promissory Note with a face value of $150,000 for cash proceeds of $142,500. The note is unsecured and bears interest at 8% per year. It is payable along with interest on May 4, 2018. The note is convertible beginning six months after the date of issuance at a 40% discount to the lowest trading price during the 20-day period prior to conversion.


On June 7, 2017, we issued a Convertible Promissory Note with a face value of $200,000 for cash proceeds of $190,000. The note is unsecured and bears interest at 8% per year. It is payable along with interest on February 7, 2018. The note is convertible beginning six months after the date of issuance at a 40% discount to the lowest trading price during the 20-day period prior to conversion. This is the initial note and funded and there is another back end note dated March 1, 2017 but not funded yet.


On March 13, 2017, we loaned $100,000 under a promissory note with principal due on April 13, 2017. The note and interest are secured by the company’s assets at an interest rate of 1.5%. the note has not been paid as of June 15, 2017 but is accrueing interest.


On April 27, 2017, we loaned Robotic Assitance Devices, LLC $50,000 under two entered two promissory notes of $25,000 each principal.. The note is due on August 27, 2017 and is not interest bearing.


On May 11, 2017, we loaned Robotic Assistance Devices, LLC $100,000 principal under a promissory note. The note is due on August 22, 2017 and is not interest bearing.


On June 8, 2017, we loaned Robotic Assistance Devices, LLC $150,000 principal under a promissory note. The note is due on August 22, 2017 and is not interest bearing.


On May 17, 2017, The Company exchanged its $50,000 promissory note into an $85,000 convertible note with $35,000 OID. The convertible note bears interest at 10% per annum and is convertible from 1/15/2018 to 5/17/2020 at 50% of the lowest closing price for 5 days prior to conversion. There is no consideration for the modification of the promissory note into the convertible note


On May 11, 2017 the Company entered into a binding letter of intent with Robotic Assistance Devices which both parties agreed that OMVS shall purchase the whole equity of RAD with 3,350,000 shares of Series E preferred stock and 2,450 shares of Series F preferred stock.


On May 11, 2017, The Company amended the designation of Series E Preferred stock that the number of authorized shares shall be 4,350,000. The Company also amended the designation of Series F preferred stock that the number of authorized shares shall be 3,450 which face amount of $1.00 per share and all Series F PS can be converted into the Company’s common shares by multiplying the number of outstanding CS on the date of conversion by 3.45.


On May 11, 2017, the Company announced that it has entered into a binding letter of intent with Robotic Assistance Devices (RAD - www.roboticassistancedevices.com) to acquire 100% of RAD. According to the binding LOI, RAD and OMVS will enter into a definitive agreement within the next 90 days to consummate the acquisition.


RAD is specialized in the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs. RAD is initially targeting the security industry, which uses electronic systems, and approximately 1.1 million security guards in the US. The RAD robot security guard solution combines the best of both solutions to provide superior security at a price that delivers to its clients an immediate ROI.


Conversions to common stock


During the period from March 1, 2017 through the date of issuance of this report, the Company issued 26,134,960for the conversion of principal of $81,565 and interest of $6456.


- 30 -





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


Changes in Accounts


None.


Disagreements with Accountants


There were no disagreements with accountants on accounting and financial disclosures for the years ended February 29, 2016 and 2015.


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.


Management’s Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:


 

 

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

 

 

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

 

 

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


- 31 -





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.


As of February 28, 2017, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.


The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: lack of a functioning audit committee; lack of a majority of independent members and a lack of a majority of outside directors on our board of directors; inadequate segregation of duties consistent with control objectives; and, management is dominated by a single individual. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of February 28, 2017


Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.


ITEM 9B. OTHER INFORMATION


None.


PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


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


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


 

 

 

 

 

Name

 

Age

 

Position

Garett Parsons

701 North Green Valley Parkway, Suite 200

Henderson, Nevada 89074

 

34

 

President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer and Director


Mr. Parsons was appointed as CEO and a member of the board of directors on February 16, 2017.


Biographies


Mr. Parsons has over 10 years of financial consulting for both private and public equity markets, Mr. Parsons has much experience in the field of asset valuation, funding structures and public release document generation. His education includes a Bachelor of Arts in Political Science/ Economics from California State University Sacramento, Sacramento, Ca. and Associate of Arts in Liberal Studies/ Business San Joaquin Delta College and West Hills College, Stockton/ Coalinga Ca.


- 32 -





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 listen in Item 401 (f) of Regulation S-K.


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.


Committees of the Board of Directors


Our sole director has not established any committees, including an Audit Committee, a Compensation Committee, or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by our sole director. Because we do not have any independent directors, our sole director believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.


We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.


While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.


Our sole director is not an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:


 

 

•

understands generally accepted accounting principles and financial statements,

 

 

•

is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

 

 

•

has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

 

 

•

understands internal controls over financial reporting, and

 

 

•

understands audit committee functions


Our Board of Directors is comprised of solely of Mr. Wilson who is involved in our day-to-day operations. We would prefer to have an audit committee financial expert on our board of directors. As with most small, early stage companies until such time our company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officer’s insurance, the Company does not have any immediate prospects to attract independent directors. When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.


- 33 -





WE DO NOT HAVE ANY INDEPENDENT DIRECTORS AND THE COMPANY HAS NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST, AND SIMILAR MATTERS.


Code of Business Conduct and Ethics


We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely, and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethic.


ITEM 11. EXECUTIVE COMPENSATION


Mr. Parsons is paid $24,000 per year for his services to the company. He does not have a written employment agreement with the company.


The table below summarizes all compensation awards to, earned by, or paid to our named executive officer for all service rendered in all capacities to us for the fiscal years ended February 28, 2017 and 2016.


SUMMARY COMPENSATION TABLE


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and Principal Position

 

Fiscal Year

 

Salary ($)

 

Bonus ($)

 

Stock Awards ($)

 

Option Awards ($)

 

Non-Equity Incentive Plan Compensation ($)

 

Nonqualified Deferred Compensation ($)

 

All Other Compensation ($)

 

Total
($)

Garett Parsons

 

2017

 

2,000

 

—

 

—

 

—

 

—

 

—

 

—

 

2,000

Chief Executive

 

2016

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

Officer

 

2015

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert Wilson

 

2017

 

120,000

 

—

 

—

 

—

 

—

 

—

 

—

 

120,000

Former Chief

 

2016

 

108,461

 

—

 

—

 

—

 

—

 

—

 

—

 

108,461

Executive Officer

 

2015

 

130,000

 

—

 

—

 

—

 

—

 

—

 

—

 

130,000



OUTSTANDING EQUITY AWARDS AT FEBRUARY 28, 2017


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option Awards

 

Stock Awards

Name

 

Number of Securities Underlying Unexercised Options (#) 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 of Stock That Have Not Vested (#)

 

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

 

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

 

Equity Incentive Plan Awards: market or Payout Value of Unearned Shares or Other Rights That Have Not Vested ($)

Garett Parsons

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—


- 34 -





Employment Agreements & Retirement Benefits


None of our executive officers is subject to employment agreements, but we may enter into such agreements with them in the future. We have no plans providing for the payment of any retirement benefits.


Director Compensation


Directors receive no compensation for serving on the Board. We have no non-employee directors.


Our Board of Directors is comprised of Garett Parsons. Mr. Parsons also serves as the CEO of the Company. None of our directors has or had a compensation arrangement with the Company for director services, nor have any of them been compensated for director services since the Company’s inception.


We reimburse our directors for all reasonable ordinary and necessary business related expenses, but we did not pay director’s fees or other cash compensation for services rendered as a director in the year ended February 29, 2017 to any of the individuals serving on our Board during that period. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. We may pay fees for services rendered as a director when and if additional directors are appointed to the Board of Directors.


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.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


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.


The following table sets forth certain information as of June 9, 2017, with respect to the beneficial ownership of our common stock by each beneficial owner of more than 5% of the outstanding shares of common stock of the Company, each director, each executive officer named in the “Summary Compensation Table” and all executive officers and directors of the Company as a group, and sets forth the number of shares of common stock owned by each such person and group. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.


 

 

 

 

 

 

Name of Beneficial Owner

 

Number of Shares

Beneficially Owned

 

Percentage of

Outstanding Common

Stock Owned

Panama iPhone Corp.

 

1,684,467

 

34.4

%

San Francisco, 65 East Street, House No. 35

 

 

 

 

 

Panama City, Panama

 

 

 

 

 

 

 

 

 

 

 

Robert Wilson, former CEO

 

—

 

0.0

%

 

 

 

 

 

 

Garett Parsons, CEO *

 

—

 

0.0

%

 

 

 

 

 

 

All directors and executive officers as a group (1) person.

 

—

 

0.0

%


Mr. Parsons owns 1,000,000 shares of our Series E Preferred Stock and 1,000 shares of our Series F Preferred Stock.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


None.


- 35 -





ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES


The following table summarize the fees billed to the Company by its independent accountants, MaloneBailey, LLP, and its former independent accountants, GBH CPAs, PC, for the years ended February 28, 2017 and February 29, 2016:


 

 

 

 

 

 

 

 

 

2017

 

2016

Audit Fees

 

 

 

 

 

 

Paid to MaloneBailey, LLP

 

$

30,000

 

$

18,000

Paid to GBH CPAs, PC

 

 

 

 

 

1,525

 

 

 

 

 

 

 

Audit Related Fees (1)

 

$

—

 

$

—

 

 

 

 

 

 

 

Tax Fees (2)

 

$

—

 

$

—

 

 

 

 

 

 

 

All Other Fees (3)

 

$

—

 

$

—

 

 

 

 

 

 

 

Total Fees

 

$

30,000

 

$

19,525


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 MaloneBailey, LLP; and GBH CPAs, PC 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.


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PART IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES


 

 

3.1

Articles of Incorporation (1)

 

 

3.2

Bylaws (2)

 

 

14

Code of Ethics (2)

 

 

21

Subsidiaries of the Registrant (3)

 

 

31.1

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (4)

 

 

32.1

Section 1350 Certification of principal executive officer and principal financial accounting officer. (4)

 

 

101

XBRL data files of Financial Statement and Notes contained in this Annual Report on Form 10-K. (5)

__________

 

 

(1)

Incorporated by reference of our Form DEF 14C file with the Securities and Exchange Commission on February 11, 2015.

 

 

(2)

Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on August 4, 2010.

 

 

(3)

Previously filed or furnished with original Annual Report on Form 10-K for February 28, 2017 filed with the Securities and Exchange Commission on June 16, 2017.

 

 

(4)

Filed or furnished herewith.

 

 

(5)

In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Annual Report on Form 10-K shall be deemed “furnished” and not “filed.”



SIGNATURES


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


 

 

 

On the Move Systems Corp.

 

 

 

 

Date: June 19, 2017

BY: /s/ Garett Parsons

 

Garett Parsons

 

President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer and Director


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