On April 1, 2015, Panama iPhone Corp. (formerly Masclo Investment Corporation) converted $100,000 of principal and accrued interest on the convertible note dated January 31, 2015 into 1,000,000 shares of common stock. As of August 31, 2015, the remaining principal balance on the convertible note was $66,889.
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 August 31, 2015, there was remaining principal balance or accrued interest on the convertible note.
During the six months ended August 31, 2015, we issued 1,684,467 shares of common stock to Panama iPhone Corp., a significant shareholder of the Company, upon the conversion of principal and accrued interest on a convertible note payable of $168,447. See Note 5.
During six months ended August 31, 2015, we issued 1,483,000 shares of common stock upon the conversion of principal and accrued interest on convertible notes payable of $14,830. See Note 6.
During period from August 31, 2015 until the issuance of this report, the holders of the Convertible Note Payable dated January 31, 2013 elected to convert principal and accrued interest in the amounts show below into shares of common stock at a rate of $0.01 per share. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.
On October 12, 2015, the Company received notice that it had been sued in the United States District Court for the Central District of California. The plaintiff alleges that the Company obtained certain trade secrets through a third party also named in the suit. The Company believes the suit is without merit and intends to vigorously defend it.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. OMVS is 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. The company has signed a letter of intent with a Houston-area software design firm regarding development of such a platform. The Company believes that this app, when released, could revolutionize the trucking industry by connecting national and local carriers, enabling each to maximize revenues and reduce costs.
Critical Accounting Policies
We prepare our Consolidated financial statements in conformity with GAAP, which requires management to make certain estimates 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 condensed Consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed Consolidated financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended February 28, 2015 on Form 10-K.
Results of Operations
Six months ended August 31, 2015 compared to the six months ended August 31, 2014.
Revenue
Revenue increased to $4,500 for the six months ended August 31, 2015, compared to $2,250 for the six months ended August 31, 2014. We did not begin race car advertising until June 2014, our prior year only included three months of income.
Expenses related to joint ventures and other business development agreements
We recognized expenses related to joint ventures and other business development agreements of $0 for the six months ended August 31, 2015, compared to $51,178 during the comparable period of 2013. The decrease is because we have not made additional contribution to our Xperience joint venture this year.
General and Administrative Expenses
We recognized general and administrative expenses in the amount of $266,393 and $334,729 for the six months ended August 31, 2015 and ended 2014, respectively. In the 2014 period, we had incurred $100,000 in non-cash professional fees, we did not reoccur in 2015.
Interest Expense
Interest expense increased from $124,972 for the six months ended August 31, 2014 to $331,698 for the six months ended August 31, 2015. Interest expense for the six months ended August 31, 2015 included amortization of discount on convertible notes payable of $252,246, compared to $74,233 for the comparable period of 2014. Excluding the amortization of the discount, interest expense would have been $79,452 and $50,739 for the six months ended August 31, 2015 and 2014, respectively. This remaining increase was due to the increase in average principal of convertible notes payable during 2015 as compared to 2014.
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Net Loss
We incurred a net loss of $593,591 for the six months ended August 31, 2015 as compared to $530,538 for the comparable period of 2014. The increase in the net loss was primarily the result of the increase in interest expense.
Three months ended August 31, 2015 compared to the three months ended August 31, 2014.
Revenue
We recognized revenue of $2,250 for each of the three months ended August 31, 2015 and 2014, as each period had three months of income from racecar advertising sales.
Expenses related to joint ventures and other business development agreements
We recognized expenses related to joint ventures and other business development agreements for to $27,392 during the three months ended August 31, 2014. We did not recognize any expenses during the current period, as we have provided no additional funding to our Xperience joint venture.
General and Administrative Expenses
We recognized general and administrative expenses in the amount of $114,399 and $135,930 for the three months ended August 31, 2015 and ended 2014, respectively. The decrease is due to lower spending on professional fees during the the current period.
Interest Expense
Interest expense increased from $63,072 for the three months ended August 31, 2014 to $144,059 for the three months ended August 31, 2015. This was caused by increased amortization of the discount on our convertible notes payable. Additionally, we had higher convertible debt balances in 2014, leading to increased interest expense.
Net Loss
We incurred a net loss of $256,208 for the three months ended August 31, 2015 as compared to $231,776 for the comparable period of 2014. The increase in the net loss was primarily the result of increases in professional fees and interest expense.
Liquidity and Capital Resources
At August 31, 2015, we had cash on hand of $6,142. The company has negative working capital of $1,238,998. Net cash used in operating activities for the six months ended August 31, 2015 was $150,786. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of August 31, 2015.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable to smaller reporting companies.
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ITEM 4. CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial Reporting
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)) as of August 31, 2015. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of August 31, 2015, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us 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.
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| As of August 31, 2015, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
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| As of August 31, 2015, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
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Our management, including our principal executive officer and principal financial officer, who is the same person, 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.
Change in Internal Controls Over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
ITEM 1A. RISK FACTORS
This item is not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 11, 2015, we issued 60,000 shares of common stock upon conversion of $600 of a convertible note.
On June 19, 2015, we issued 40,000 shares of common stock upon conversion of $500 of a convertible note.
On June 25, 2015, we issued 685,467 shares of common stock upon conversion of $68,447 of a related party convertible note.
On July 1, 2015, we issued 120,000 shares of common stock upon conversion of $1,200 of a convertible note.
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On July 10, 2015, we issued 45,000 shares of common stock upon conversion of $450 of a convertible note.
On July 16, 2015, we issued 94,000 shares of common stock upon conversion of $940 of a convertible note.
On July 17, 2015, we issued 95,000 shares of common stock upon conversion of $950 of a convertible note.
On August 3, 2015, we issued 145,000 shares of common stock upon conversion of $1,450 of a convertible note.
On August 5, 2015, we issued 167,000 shares of common stock upon conversion of $1,670 of a convertible note.
On August 10, 2015, we issued 193,000 shares of common stock upon conversion of $1,930 of a convertible note.
On August 13, 2015, we issued 100,000 shares of common stock upon conversion of $1,000 of a convertible note.
On August 24, 2015, we issued 54,000 shares of common stock upon conversion of $540 of a convertible note.
On August 25, 2015, we issued 80,000 shares of common stock upon conversion of $800 of a convertible note.
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 3. DEFAULTS UPON SENIOR SECURITIES
The Company has not defaulted upon senior securities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to the Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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3.1
| Articles of Incorporation (1)
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3.2
| Bylaws (1)
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14
| Code of Ethics (1)
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21
| Subsidiaries of the Registrant (2)
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31.1
| Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (2)
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32.1
| Section 1350 Certification of principal executive officer and principal financial accounting officer. (2)
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101
| XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (2),(3)
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(1)
| Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on April 14, 2010
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(2)
| Filed or furnished herewith
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(3)
| In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
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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.
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| On the Move Systems Corp.
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Date: October 15, 2015
| BY: /s/ Robert Wilson
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| Robert Wilson
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| President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer and Director
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