UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KT
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended _____________________
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from January 1, 2017 to February 28, 2017
Commission file number: 000-55079
ON THE MOVE SYSTEMS CORP.
(Exact name of registrant as specified in its charter)
Nevada |
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27-2343603 |
(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification No.) |
1 East Liberty, 6th Floor
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89501 |
(Address of principal executive offices) |
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(Zip Code) |
(702) 990-3271
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: Common Stock, par value $0.001 per share
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 issuer (1) 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 Web site, 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of 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. [X]
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
[X] |
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Emerging growth company |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter) 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]
As of March 1, 2018, there were 125,004,554 shares of the registrant’s common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosures |
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Item 12 . |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13 . |
Certain Relationships and Related Transactions, and Director Independence |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater detail under Item 1A - “Risk Factors” of this report.
We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
PART I
ITEM 1. BUSINESS
Business Overview
On the Move Systems Corp. (“OMVS”) was incorporated in Florida on March 25, 2010. OMVS reincorporated into Nevada on February 17, 2015. OMVS’s fiscal year end is February 28. OMVS is located at 701 North Green Valley Parkway, Suite 200, Henderson, Nevada 89074, and the telephone number is 702-990-3271.
OMVS’s prior business focus was transportation services, and we were previously exploring the on-demand logistics market by seeking to develop a network of logistics partnerships. On August 28, 2017, OMVS acquired all of the outstanding shares of Robotic Assistance Devices, Inc. (“we,” “us,” “our,” “RAD” or the “Company”). Following the RAD acquisition, our business consists of delivering artificial intelligence and robotic solutions for operational, security and monitoring needs.
Recent Developments
On August 28, 2017, OMVS entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with RAD and Steve Reinharz, as sole stockholder of RAD. Pursuant to the terms of the Stock Purchase Agreement, on August 28, 2017 we acquired 10,000 shares of RAD’s common stock, representing all of RAD’s issued and outstanding capital stock, from Mr. Reinharz in exchange for the issuance of (i) 3,350,000 shares of our Series E Preferred Stock and (ii) 2,450 shares of our Series F Convertible Preferred Stock. As a result of the RAD acquisition, RAD became a wholly owned subsidiary of OMVS. RAD was considered the acquirer for accounting and financial reporting purposes.
Business
Our business consists of seeking to deliver artificial intelligence and robotic solutions for operational, security and monitoring needs. We have targeted the security industry, which utilizes electronic systems and further involves approximately 1.1 million security guards in the U.S. alone. We plan to provide our artificial intelligence and robotic solutions to companies and governments so that they can employ such solutions for the purposes of protecting their assets, whether those assets are government, commercial or industrial. We believe that our robot security guard solutions combine both robotic and artificial intelligence solutions to provide a superior solution to our customers that can save our clients’ money on their security needs.
RAD was incorporated as a limited liability corporation under the laws of the State of Wyoming in July 2016 and later reincorporated in the State of Nevada in July 2017. RAD’s mission, and our mission since acquiring RAD, is to deliver artificial intelligence solutions to solve complex and expensive enterprise organizations’ challenges. We believe that RAD’s robots and forthcoming solutions can improve the security services of any enterprise due to advanced technology that is always on, compared to human guarding where it is difficult to maintain non-stop attention in mundane or dangerous guarding roles.
We believe that RAD’s solutions are designed to integrate into the work of security professionals and are suited to most environments that require security patrol coverage and ‘at-post’ coverage. The RAD solution to improving security combines the physical presence of its proprietary robots with real-time on-site data collection and analysis and a human-machine interface. The Company’s current flagship model, the S5 RADBot™, is an autonomous outdoor security robot, without the need for remote control, providing a visible, force multiplying, physical security presence to help protect assets, monitor changes in the environment and deter and report incidents all while reducing the cost to the client. The robots gather real-time data using a large array of sensors that are easily accessible through a company’s Security Operations Center (“SOC”) enabling security professionals to review events generated in real time. The Company’s robots are primarily furnished to customers using a Robot-as-a-Service (“RaaS”) recurring revenue model. To date, the Company has Proof of Concept contracts with two major Utility (“Power”) corporations, with 2 robots commercially deployed and 62 robot reservations.
We are a development company that seeks to begin implementing our business plan. The likelihood of success of the Company must be considered in light of the expenses, complications and delays frequently encountered in connection with the establishment and expansion of a new business and the competitive environment in which the Company will operate. The Company’s long-term viability, profitability and growth will depend upon its ability to raise sufficient funds to purchase revenue producing assets and its ability to successfully implement its business plan. As a development stage company, the Company has little or no relevant operating history upon which an evaluation of its performance can be made. Such performance must be considered in light of the risks, expenses and difficulties frequently encountered in establishing new products, services and markets.
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The Company’s mission is to improve customer security services of all types of enterprises while providing significant operating cost reduction through deployment of autonomous robotic systems. We believe that RAD’s robots can improve an enterprise security services due to advanced technology that is always on, compared to human guarding where it is difficult to maintain non-stop attention in mundane guarding roles.
We believe that the development and commercialization of self-driving vehicles, recent advancements in video recognition platforms and reduced battery costs have brought to light an opportunity in the security industry unavailable until this time. Further, due to the following advances in technology generally, we believe that there is currently more of a market for our products:
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Advanced video analytics, driven by technology advances in GPUs, were just entering the market in 2017; |
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Autonomous driving platforms are in the process of being finalized; and |
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High density energy storage is at historically low prices and falling. |
The Company’s robots seek to apply these current advances in targeting an industry that we believe is ripe for disruption. The security guard industry suffers from low client satisfaction, high turnover and can be a source of new liabilities for clients. Security guards often just ‘punch the clock’ and sometimes perform functions that are little more than ‘being there’. We believe that RAD Solutions are positioned to provide improved performance and lower costs to create a major disruption that we believe will only be limited by supply.
S5 RADBot ™
The Company’s entry to the market is with its S5 Security Robots that are designed to patrol areas autonomously for security intrusion detection. They are designed to outperform human security guards with superior performance at a significantly lower cost. The robots are designed to navigate challenging terrains and feature sophisticated systems to avoid people and objects in dynamic outdoor environments. To do this, the robots employ a number of autonomous motion and self-driving technologies, ultrasonic sensors, inertial measurement unit, GPS and wheel encoders. A key feature is how the robot is designed to use energy expeditiously. This is a key technology required so the robot can achieve long mission/patrol times. The robot will gather approximately 1 megabyte (“mb”) of telemetry data per day of operation. The term “telemetry” refers to the process of recording and transmitting the readings of an instrument. Depending on customer needs the robot can collect 75mb of video data per day. All data is accessible for review and analysis through the end users’ SOC. RAD seeks to provide a variety of user interfaces that are continuously being upgraded, bringing new features online. Clients can recall, review, and save the data for analysis or archival purposes. Clients may also utilize the patrol scheduler feature to schedule periodic or regular patrols during certain times for alternative patrol routes. RAD includes 24/7 robot telemetry monitoring from their California headquarters building. The dimensions of the S5 RADBot™ are as follows: 50” long x 30” wide x 48” at highest point and the weight is approximately 250lbs. To date, the Company has Proof of Concept contracts with two major Power corporations, with 2 robots commercially deployed and 62 robot reservations.
The robots are designed to be used outdoors in such environments as utility facilities, corporate and college campuses, hospitals, large parking lots, logistics facilities, airports, train stations and more. The robots’ primary role is performing sophisticated perimeter intrusion detection functions similar to those of the security guard market. RAD solutions are designed to be flexible enough to host a variety of technologies from other providers. Examples of such technologies which can be used on the RAD planform include, but are not limited to the following gas detection, thermal imaging, large public address audio systems and bird deterrent systems. RAD believes having an open platform will allow it to continuously deliver best-in-class and flexible solutions to meet the needs of a diverse and fractured market.
The robots include several communications features. The units can transfer data over 4G LTE networks and/or Wi-Fi. Each one has an intercom and a long-range paging horn that may be used for two-way communication with security personnel. In addition, one or multiple units may be used as a live broadcast public address system or to deliver pre-recorded messages. They also may have custom sensor packages added at the customer’s request (for an extra cost). Examples of custom packages include sensors to measure local conditions such as temperature, pressure, humidity and CO 2 levels.
The robots run on rechargeable batteries. They are configured to patrol autonomously for up to 12 hours, following which they recharge for up to 5 hours before resuming patrol, at the control of the customer. The RAD package of technology remains active on the robots during charging allowing the robots to operate artificial intelligence and security functions during charging, effectively delivering 24/7 continuous benefits when properly configured.
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The robots can operate with all the major Video Management Systems such as Genetec, Milestone, Sureview and Lenel. We believe that this ability to integrate into a client’s existing security systems platform with little to no effort allows for a seamless expansion of the Situational Awareness ability of the enterprise’s SOC. Key goals in the security industry include improving Situational Awareness and acquiring ‘force multiplication’ through the deployment of fixed cameras. The RADBot™, in addition to being an autonomous or mobile surveillance platform, which we believe in and of itself has significant marketable value, further adds functionality by including advanced human detection and two-way voice communication features. These are critical features of RAD’s platform and we believe, a strong distinguishing feature from competitors which use a custom interface requiring operator retraining, a key issue in the high turnover environment of the security guard industry. The Commercial Off The Shelf (“COTS”) systems such as Genetec, Milestone, et al are available through various channels including direct, through integrators and through RAD in certain circumstances.
RAD is debuting advanced analytics using the NVIDIA GPU platform bringing, what we believe to be, revolutionary human detection features to a moving robotic platform. Once alerted of a triggering event, such as a person spotted during a specific time in a particular location, the robot automatically notifies the SOC allowing authorized users to view the live stream of data and take appropriate action.
Although there are currently no filed applications for patents in the U.S. or abroad for our robots. We plan to apply for such patents for our configured designs featuring state of the art technology produced by SMP Robotics (“SMP”). SMP is an international manufacturer of autonomous mobile robots headquartered in California. RAD is party to a Master Distributor Agreement with SMP.
The security robots are intended to perform the following functions:
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Patrols a set route or routes depending on schedule; |
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While on patrol 360 degrees of video are captured in the security robot. This video is an extension of the organizations existing video system, whichever that may be; |
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Security officers and/or the SOC can access the video the security robot ’sees’ at any time; |
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Will alert a guard or the SOC when a human is identified. The robot can automatically announce an alert to the potential intruder and turn to the SOC for two-way voice control; |
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Captures license plate information while on patrol (if permitted by client); |
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Offers remote guards and the SOC a variety of additional visualization technology including pan/tilt/zoom cameras and infra-red; and |
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Additional custom packages can be added and integrated based on customer request. Examples include thermal cameras and industry specific sensors (for oil & gas, as an example). |
The robot’s key features include the following:
Software and Notifications
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NVIDIA-based technology for recognizing humans and activating SOPs; |
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Tap into robot via cellular connectivity for live/recorded video viewing, voice commands and additional functions; |
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Instantly communicate to SOC and/or mobile guards to report incidents; |
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Can be set to report on anomalies that are found on patrol routes; |
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Creates video record of everywhere the robot goes that can be used for forensics; and |
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Two-way voice communication with SOC. |
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Tracking
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Dashboard software allows current location and historical pathway to be viewed; and |
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Failsafe allows robot tracking to remain active even if main power is cut/damaged. |
Onboard Capability
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Our robots contain an autonomous mobile platform with North American surveillance platforms installed locally; and |
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Video is recorded and stored locally and is automatically uploaded when robot returns to charging location within Wi-Fi range as determined by client. |
Patrol Distance and Duration
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Robot can patrol approximately 10 miles. Best practices recommend 12-hour patrol/post assignments; |
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Up to 20 hours of operating time depending on configuration; and |
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Up to 12 miles of travel depending on configuration. |
Navigation
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Uses information from machine vision learning, GPS platforms and inertial navigation to know where they are and where they are going; |
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Advanced obstacle avoidance system; |
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Robust all-terrain vehicle style chassis and electric driving systems designed with input from a champion ATV driver; |
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Traverse surfaces as diverse as crushed rock and gravel to long grass and 5 inches of water; |
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Greater than 20 degree climbing ability. |
The RADBot’s advanced features include:
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Fixed 360-degree high definition night and day video capture; |
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Pan/tilt/zoom camera allowing close up zooming up to 20’ from robot; |
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Long range audio that can be heard 200” away (depending on ambient conditions); |
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Two-way intercom/audio; |
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Live streaming and recorded high definition video capabilities; |
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Optional automatic license plate recognition and related analytics/alarms; |
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People detection, which can alert a user in real-time of people detected on their premises, together with 360-degree recorded high-definition video. A user can use the time-stamp of the recording to search through other data detected to assess and better understand other conditions in the area patrolled by the Autonomous Data Machine (“ADM”); |
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Optional thermal imaging, which allows for triggered alerts based on temperature. For example, assisting with alerts regarding increased risks of fires (additional equipment available at extra cost upon customer request); and |
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Two-way communication feature may be utilized for both public announcements and avoidance of human physical confrontations with potentially dangerous individuals. |
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Sales & Marketing Strategy
The Company’s current primary target is critical infrastructure locations such as:
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Electrical production, distribution and transmission utilities; |
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Water Utilities; |
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College and Corporate campuses; |
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Distribution Centers and big box retailers; |
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Healthcare and higher education campuses; |
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First responders; and |
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Misc. critical infrastructure including data centers, telecom switch centers and other high value assets. |
In addition, the Company also plans to target such locations such as the following:
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Healthcare campuses; |
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Data Centers & Tech campuses; |
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Misc. campuses - education, misc. critical infrastructure; |
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Government - defense, ports; |
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Municipalities; and |
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Aviation - airfields. |
The Company currently has sales offices in Southern California and Northern California covering the U.S. and western Canada where it has completed over a dozen presentations to major firms. The Southern California sales offices consists of 5 employees and a branded RAD SOC van equipped with a fully loaded demonstration RADBot™. RAD currently owns and operates two RAD SOC vans. To date, the Company has Proof of Concept contracts with two major Power corporations, with 2 robots commercially deployed and 62 robot reservations.
RAD intends to continue to aggressively establish sales offices throughout North America, collect robot reservations and strategically deploy robots to early adopters that we believe will receive significant ROI and may participate in case studies and publicity. The goal is to establish RAD as the incumbent supplier of these robots.
Growth Strategy
Dealerships - The Company plans to primarily look to rent its robots through dealerships with guarding companies. Guarding companies are cognizant of the fact that failure to adopt new technology will severely impact their business in the future. The guarding partnership model is valuable as it provides RAD with instant access to the largest consumers of guarding services, the Company’s primary target market. After the International Security Conference (“ISC”) show in Las Vegas in April 2017, the Company signed up 5 dealers: WeSecure, Champion Security, Watchman, Reece Security and Clear Cloud Solutions, with plans to sign on additional dealers. Each of the 5 dealers agreed to various training commitments, promotion and seeking to book a minimum reservation of 10 robots each.
Development Partnerships - The Company has been working towards a co-development partnership to provide real-time, real-world feedback of its robots and intends to explore other co-development agreements with strategic partners. Currently, the Company is in discussions with at least one such strategic partner and plans to engage in similar discussions with additional potential partners.
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Autonomous Charging - The Company expects its robots to have full autonomous charging capabilities by the end of 2018. This will not only significantly increase the size of the Company’s immediate market, but will allow companies to add security to areas that are either not suitable for humans or cost effective for permanent security. With international labor safety standards becoming more stringent, robots are being deployed in hazardous environments in the place of humans. Robots find applications in situations that are dangerous and unsafe for humans to work, such as working in irregular terrain and handling hazardous substances. Robots enable organizations to avoid risks and reduce the number of work accidents.
Additional Solutions - the Company plans to utilize its RADBot™ package technology to create new and innovative delivery formats.
RADbot™ Essentials - The Company has developed a command and control software which allows complete visualization of the robot, historical pathways and insight into basic robot status. The software not only controls the Company’s robots but can integrate with any new robot entrants as well. It is an open and adaptable software package that enterprise clients can use to manage and control all of their security robots. This software is still in the development stages and the Company plans to have it available by the end of 2018.
Competition and Competitive Strengths
We are aware of only one competitor which is also in the business of renting security robots, but is more focused on crime prevention, whereas RAD is more focused on implementing real-life security improvements and cost saving measures. RAD is focused on partnering with industry and law enforcement to effect realistic improvements to security while providing a return on investment (“ROI”).
As the robotics industry continues to grow one can expect a number of new ventures, start-ups, and university research programs to develop products that could compete with the Company. Some outside of the security industry believe security robots compete against closed-circuit television providers, but cameras do not provide a physical presence, are typically used for forensics after an event, and do not offer a client the plethora of capabilities available in a robotic/SOC combination. The Company believes that having these systems working together provides a more effective approach.
The Company also competes indirectly with private physical security firms that provide clients with security personnel and other security services. There are more than 8,000 such firms in the U.S. alone. The Company’s robots offer clients a significant cost reduction compared to traditional security guards. In addition, the Company’s robots offer significantly more capabilities, such as license plate detection, data gathering, thermal imaging and people detection that are delivered consistently, on a 24/7 basis, without human intervention. In most cases, the Company’s technology complements and improves the operations of traditional security firms.
Manufacturing
RAD receives the S5 robot from SMP robotics at its facility in Laguna Hills California where it paints and does the final assembly, including, outfitting the S5 robot with Romeo Power battery packs, human detection hardware and software, VMS, dashboard technology and a secure cellular network. The value of RAD’s additions make up more than 50% of the cost of the security robot.
Research and Development
RAD is engaged in several research and development projects related to the commercialization of robotic platforms for the North American markets. These include:
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Power - RAD is working with a US-based advanced battery manufacturer of custom battery and battery management system (“BMS”) solutions designed to provide extended robot life. In addition, we believe that the BMS will have unique features for use in the commercial markets as well as integrate to RADs ‘dashboard’ software. |
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Dashboard software - This proprietary software is the basis of the Company’s ‘quick view’ features and we believe is exclusive to RAD. The Company plans to continue to expand features and integrations in the coming years. |
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Human/vehicle/object detection software - RAD is working on several development projects to perfect efficient advanced artificial intelligence powered software for advanced analytics and alarming. |
Research and development expenses were $20,153 for the two months ended February 28, 2017.
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Intellectual Property Protection
There are no patents filed as of the date of this report. RAD plans to file various applications for protection of certain aspects of its intellectual property in the United States.
Government Approvals
The Company is not aware of any government approvals applicable to its business and further is not aware of any pending or threatened investigation, proceeding or action by foreign, federal, state or local agencies, or third parties involving its current operations.
Environmental Matters
The Company is not aware of any environmental regulations applicable to its business and further is not aware of any pending or threatened environmental investigation, proceeding or action by foreign, federal, state or local agencies, or third parties involving its current operations.
Description of the Industry
The Security Guard Industry
We believe that the outlook for the private security services industry in the U.S. and abroad continues to be upbeat. Worldwide annual spending on private contract security services was estimated at $244 billion for 2016 with the U.S. being the biggest consumer accounting for 26% or $63.4 billion (1). Security guard services are expected to attract the largest share of overall U.S. security spending through 2019 with security guard and patrol services estimated at $19.4 billion in 2016(1). According to the Bureau of Labor Statistics there are currently over 1 million security guards employed in the U.S. generating $31.2 billion per year in wages.
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Summit Security report www.summitsecurity.com/looking-forward-security-industry-trends-and-outlook-for-2016-and-beyond/ . |
According to The Freedonia Group, U.S. demand for private contracted security services is expected to rise 4.2% annually through 2019 to $66.9 billion. Systems integration and security consulting is expected to be the fastest growing services, while guarding and alarm monitoring is expected to remain dominant. The nonresidential market is expected to remain the largest segment, while the institutional market grows the fastest. We believe that the introduction of autonomous security robots will be a major disruptive factor in the years to come.
The Robotics Industry
International Data Corporation (“IDC”) has identified robotics as one of six Innovation Accelerators that will drive digital transformation by opening new revenue streams and changing the way work is performed. In the new Worldwide Commercial Robotics Spending Guide, IDC forecasts global spending on robotics and related services to grow at a Compounded Annual Growth Rate (“CAGR”) of 17% from more than $71 billion in 2015 to $135.4 billion in 2019. Such broad-based growth in robotic adoption is being driven by increasing labor costs, shortage of skilled labor, and an increasing emphasis on repeatable quality in conjunction with a reduction in prices of robotic systems and strategic national initiatives. There were over 41,000 professional service robots sold in 2015 valued at $4.6 billion, up 25% from the year before.
The service robotics market is expected to reach $23.9 billion by 2022, growing at a CAGR of 15.2% between 2016 and 2022 with professional service robots holding the largest market share of the service robotics market in 2015. Professional service robotics is currently the most widely developed and deployed application area of service robots in terms of market value. The market is expected to be driven by the increase in demand for logistics applications. However, other emerging professional applications such as telepresence and inspection and maintenance are expected to fuel the overall service robotics market during the forecast period. The security robots market is expected to reach $2.4 billion by 2022, at a CAGR of 8.6% between 2016 and 2022 with North America expected to hold the largest share during this period.
Employees
As of February 2, 2018, we had 18 full-time employees. None of our employees are represented by a union. We consider our relations with our employees to be good.
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Legal Proceedings
See Item 3—Legal Proceedings.
ITEM 1A. RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS TRANSITIONAL REPORT ON FORM 10-K BEFORE DECIDING WHETHER TO INVEST IN THE REGISTRANT’S COMMON STOCK. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO THE REGISTRANT OR THAT THE REGISTRANT CURRENTLY DEEMS IMMATERIAL MAY ALSO IMPAIR THE REGISTRANT’S BUSINESS OPERATIONS.
IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, THE REGISTRANT’S BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY ADVERSELY AFFECTED. IN SUCH CASE, THE TRADING PRICE OR THE REGISTRANT’S COMMON STOCK COULD DECLINE AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT.
THE FOLLOWING ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. PLEASE SEE “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS”.
Risks Related to Our Industry and Our Company
Our business is at an early stage and we have not yet generated any profits or significant revenues.
RAD was formed in 2016 and made its first sale in 2016. Accordingly, the Company has a limited operating history upon which to evaluate its performance and future prospects. Our current and proposed operations are subject to all the business risks associated with new enterprises. These include likely fluctuations in operating results as the Company makes significant investments in research, development and product opportunities, and reacts to developments in its market, including purchasing patterns of customers, and the entry of competitors into the market. We cannot assure you that we will generate sufficient revenue to be profitable in the next three years or at all, which could lead to a loss of part or all of an investment in the Company.
We have a limited number of deployments and our success depends on an unproven market.
The market for advanced physical security technology is relatively new and unproven and is subject to a number of risks and uncertainties. In order to grow our business and extend our market position, we will need to place into service additional robots, expand our service offerings, and expand our presence. Our ability to expand the market for our products depends on a number of factors, including the cost, performance and perceived value associated with our products and services. Furthermore, the public’s perception of the use of robots to perform tasks traditionally reserved for humans may negatively affect demand for our products and services. Ultimately, our success will depend largely on our customers’ acceptance that security services can be performed more efficiently and cost effectively through the use of our robots and ancillary services, of which there can be no assurance.
We cannot assure you that we can effectively manage our growth.
RAD expects to continue hiring additional employees. The growth and expansion of our business and products create significant challenges for our management, operational, and financial resources, including managing multiple relationships and interactions with users, distributors, vendors, and other third parties. As the Company continues to grow, our information technology systems, internal management processes, internal controls and procedures and production processes may not be adequate to support our operations. To ensure success, we must continue to improve our operational, financial, and management processes and systems and to effectively expand, train, and manage our employee base. As we continue to grow, and implement more complex organizational and management structures, we may find it increasingly difficult to maintain the benefits of our corporate culture, including our current team’s efficiency and expertise, which could negatively affect our business performance.
Our costs may grow more quickly than our revenues, harming our business and profitability.
We expect our expenses to continue to increase in the future as we expand our product offerings, expand production capabilities and hire additional employees. We expect to continue to incur increasing costs, in particular for working capital to purchase inventory, marketing and product deployments as well as costs associated with customer support in the field. Our expenses may be greater than we anticipate which would have a negative impact on our financial position, assets and ability to invest further in the growth and expansion of our business.
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The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.
RAD currently depends on the continued services and performance of key members of the management team, in particular, founder and CEO, Steven Reinharz, and Chief Technology Officer, Aziz Sekander. If we cannot call upon them or other key management personnel for any reason, our operations and development could be harmed. The Company has not yet developed a succession plan. Furthermore, as the Company grows, it will be required to hire and attract additional qualified professionals such as accounting, legal, finance, production, service and engineering experts. The Company may not be able to locate or attract qualified individuals for such positions, which will affect the Company’s ability to grow and expand its business.
We have no employment agreements in place with our executive officers or directors.
We currently do not have any employment agreements in place with our only executive officer and director. Since the Company has no such agreements currently in place, there is a risk that our only executive officer and director may terminate their association with the Company. The loss of our only executive officer and director would have a material and adverse effect on our Company and our business prospects. Further, in the future, the Company may attract additional persons to serve as its executive officers and directors and may negotiate and consummate employment agreements with its executive officers and directors and such agreements may contain issuance of the Company’s securities as part of the compensation, which would lead our shareholders to experience dilution.
Because we do not currently have an audit committee, compensation committee or any other form of corporate governance committee, shareholders will have to rely on our only director, who is not independent, to perform these functions.
We do not have an audit committee, compensation committee or any form of corporate governance committees comprised of an independent director. The Board, which currently consists of our only director, performs these functions as a whole and the only member of the Board is not an independent director.
If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished and our business may be adversely affected.
RAD relies and expects to continue to rely on a combination of confidentiality agreements with its employees, consultants, and third parties with whom it has relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect its proprietary rights. As of the date of this report, there are no patents filed on behalf of the Company. The Company plans to file various applications in the United States for protection of certain aspects of its intellectual property. However, third parties may knowingly or unknowingly infringe our proprietary rights, may challenge proprietary rights held by us and pending and future trademark and patent applications may not be approved. In addition, effective intellectual property protection may not be available in every country in which we intend to operate in the future. In any or all of these cases, we may be required to expend significant time and expense in order to prevent infringement or to enforce our rights. Although we plan to take measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to those of RAD and compete with our business. If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our service and methods of operations. Any of these events could have an adverse effect on our business and financial results.
Our financial results will fluctuate in the future, which makes them difficult to predict.
RAD’s financial results may fluctuate in the future. Additionally, we have a limited operating history with the current scale of our business, which makes it difficult to forecast future results. As a result, you should not rely upon the Company’s past financial results as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by rapidly growing companies in evolving markets. Our financial results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including, but not limited to the following:
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Our ability to maintain and grow our client base; |
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Our clients may suffer downturns, financial instability or be subject to mergers or acquisitions; |
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The development and introduction of new products by RAD or our competitors; |
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Increases in marketing, sales, service and other operating expenses that we may incur to grow and expand our operations and to remain competitive; |
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RAD ability to maintain gross margins and operating margins; |
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Changes affecting our suppliers and other third-party service providers; |
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Adverse litigation judgments, settlements, or other litigation-related costs; and |
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Changes in business or macroeconomic conditions including regulatory changes. |
We have limited experience in operating the RAD robots in crowded environments and increased interactions may lead to collisions, possible liability and negative publicity which would negatively affect our business, financial conditions and operating results.
Our robots operate autonomously in environments that are surrounded by various moving and stationary physical obstacles and by humans. Such environments are prone to collisions, unintended interactions and various other incidents, regardless of our technology. Therefore, there is a possibility that our machines may be involved in a collision with any number of such obstacles. Our machines contain a number of advanced sensors that effectively prevent any such incidents and are intended to stop any motion at the detection of intervening objects. Nonetheless, real-life environments, especially those in crowded areas, are unpredictable and situations may arise in which the machines may not perform as intended. Recent highly publicized incidents of autonomous vehicle and human interactions have focused consumer attention on the safety of such systems. There can be no assurance that a collision, with property or with humans, will not occur, which could damage the robot, or lead to personal injury or property damage and may subject us to lawsuits. Moreover, any such incident, even without damage, may lead to adverse publicity for us. Such lawsuits or adverse publicity would negatively affect our brand and harm our business, prospects, financial condition and operating results.
Our business is subject to data security risks, including security breaches.
Our products employ technologies which are subject to various data security risks including security breaches and hacking and we cannot guarantee that our products may not be negatively affected by these risks causing them to suffer damages. Any occurrence of the foregoing may damage our brand and increase our costs. Any of these events or circumstances could materially adversely affect our business, financial condition and operating results.
Economic factors generally may negatively affect our operations.
The Company is subject to the general risks of the marketplace in which the Company does business. Moreover, the results of operations of the Company will depend on a number of factors over which the Company will have no control, including changes in general economic or local economic conditions, changes in supply of or demand for similar and/or competing products and services, and changes in tax and governmental regulations that may affect demand for such products and services. Any significant decline in general economic conditions or uncertainties regarding future economic prospects that affect industrial and consumer spending could have a material adverse effect on the Company’s business. For these and other reasons, no assurance of profitable operations can be given.
Our business success depends on large part on the success of our efforts to rent our products through dealerships.
The Company plans to primarily look to rent its robots through dealerships with guarding companies. The Company believes that the guarding partnership model is valuable. The Company currently has such partnerships with 5 dealers and plans to sign on additional dealers. However, there can be no assurance that the Company can successfully secure agreements with dealerships for the use of our products, which could materially impair our sales and our business prospects.
We may not be able to develop automatic charging four our products, which could negatively affect our growth strategy.
Part of the Company’s growth strategy is to implement automatic charging for our products. The Company plans to implement autonomous charging capabilities for its products as part of its long-term efforts. The Company believes that adding this feature would allow companies to add security to areas that are either not suitable for humans or cost effective for permanent security and thus expanding the market for our products. If the Company cannot implement automatic charging for its products it would impact the size of the market for its products and could negatively affect its growth strategy.
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We currently face some competition and may face additional competition in the future and if we are not able to compete effectively, our business prospects and operations would be harmed.
We are aware of a number of other companies that are already active in our industry and others that are developing physical security technology in the U.S. and abroad that may potentially compete with our technology and services. These, or new, competitors may have more resources than us or may be better capitalized, which may give them a significant advantage, for example, in offering better pricing than the Company, surviving an economic downturn or in reaching profitability. We cannot guarantee that we will be able to compete successfully against existing or emerging competitors. Additionally, existing private security firms may also compete on price by lowering their operating costs, developing new business models or providing other incentives. We cannot give any assurance that we can adequately compete with existing or new competitors which could lead us to expend additional funds toward our marketing efforts and would further adversely affect our business operations.
Our ability to operate and collect digital information on behalf of our clients is dependent on the privacy laws of jurisdictions in which our machines operate, as well as the corporate policies of our clients, which may limit our ability to fully deploy our technologies in various markets.
Our robots collect, store and analyze certain types of personal or identifying information regarding individuals that interact with the machines. While we maintain stringent data security procedures, the regulatory framework for privacy and security issues is rapidly evolving worldwide and is likely to remain uncertain for the foreseeable future. Federal and state government bodies and agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy, which in turn affect the breadth and type of features that we can offer to our clients. In addition, our clients have separate internal policies, procedures and controls regarding privacy and data security with which we may be required to comply. Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted or applied in a manner that is inconsistent with our current data management practices or the features of our products. If so, in addition to the possibility of fines, lawsuits and other claims and penalties, we could be required to fundamentally change our business activities and practices or modify our products, which could have an adverse effect on our business. Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our clients may limit the use and adoption of, and reduce the overall demand for, our products. Privacy and data security concerns, whether valid or not valid, may inhibit market adoption of our products, particularly in certain industries and foreign countries. If we are not able to adjust to changing laws, regulations, our business may be harmed.
Our success depends on the growth of our industry and specifically on the growing adoption and use of physical security technology in general and of our products.
The market for products and for physical security technology is relatively unproven and new, as well as being subject to many risks and uncertainties. Our ability to gain growing market acceptance and adoption of our products, depends on the market’s acceptance of physical security technology in general. If we are unable to increase acceptance of our products and if the market for physical security technology generally does not develop we will not be able to sell our products and our financial performance will be adversely affected.
Our shareholders do not have voting control over the Company due to the Company’s issued and outstanding shares of its Series E Preferred Stock.
Mr. Parsons, the Company’s President, Chief Executive Officer and Chief Financial Officer currently owns 1,000,000 shares of our Series E Preferred Stock and; Steve Reinharz is the CEO of RAD, and is currently the holder of 3,350,000 shares of our Series E Preferred Stock. 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 holders of Series E Preferred Stock have 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders, and therefore our other shareholders do not have voting control over the Company.
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Risks Related to our Common Stock
The Company’s continued operations may be dependent on the Company raising additional capital.
To the extent that the cash flow from operations are insufficient to fund the Company’s operations, we will be required to raise additional capital through equity or debt financing. Any additional equity financing may be dilutive to shareholders, and debt financing, if available, may involve significant restrictive covenants. The Company’s failure or inability to raise capital when needed, or on terms acceptable to the Company and our shareholders, could have a material adverse effect on the Company’s business, financial condition and results of operations. There can be no assurance that such financing will be available on terms satisfactory to the Company, if at all. If we are unable to obtain such financing when needed, in addition to having an adverse effect on our business operations, it would also have a negative adverse effect on the price of our Common Stock.
The Company may conduct further offerings in the future, in which case your shareholdings will be diluted.
The Company may rely on equity sales of common stock to fund operations. The Company may conduct further equity and/or convertible debt offerings in the future to finance operations or other projects that it decides to undertake. If common stock is issued in return for additional funds, or upon conversion or exercise of outstanding convertible debentures or warrants, the price per share could be lower than that paid by existing common stockholders. The Company anticipates continuing to rely on equity sales of common stock and issuances of convertible debt and/or warrants convertible or exercisable into shares of common stock in order to fund its business operations. If the Company issues additional shares of common stock, your percentage interest in the Company will be lower. This is often referred to as “dilution,” which could result in a reduction in the per share value of your shares of common stock.
The trading price of our common stock may fluctuate significantly.
Volatility in the trading price of our common stock may prevent our shareholders from being able to sell their shares of our common stock at prices equal to or greater than their purchase price. The trading price of our common stock could fluctuate significantly for various reasons, including:
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our operating and financial performance and prospects; |
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our quarterly or annual earnings or those of other companies in our industry; |
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the public ’ s reaction to our press releases, other public announcements and filings with the Securities and Exchange Commission; |
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changes in earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industry; |
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strategic actions by us or our competitors; |
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
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changes in accounting standards, policies, guidance, interpretations or principles; |
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changes in general economic conditions in the U.S. and global economies or financial markets, including such changes resulting from war or incidents of terrorism; and |
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sales of our common stock by us or members of our management team. |
In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the trading price of securities issued by many companies. The changes frequently occur irrespective of the operating performance of the affected companies. Hence, the trading price of our common stock could fluctuate based upon factors that have little or nothing to do with our business.
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The Company does not anticipate paying dividends in the future.
We have never declared or paid any cash dividends on our common stock. Our current policy is to retain earnings to reinvest in our business. Therefore, we do not anticipate paying cash dividends in the foreseeable future. The Company’s dividend policy will be reviewed from time to time by the Board of Directors in the context of its earnings, financial condition and other relevant factors. Until the Company pays dividends, which it may never do, its shareholders will not be able to receive a return on shares of our common stock unless they are able to sell them, of which there can be no assurance. In addition, there is no guarantee that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares or that our stockholders will be able to sell their shares of our common stock at all.
Our shares are subject to the Securities and Exchange Commission’s “penny stock” rules that limit trading activity in the market, which may make it more difficult for our shareholders to sell their common stock.
Penny stocks generally are equity securities with a price of less than $5.00. Since our common stock is trading at less than $5.00 per share, we are subject to the penny stock rules adopted by the Securities and Exchange Commission that require broker-dealers to deliver extensive disclosure to its customers prior to executing trades in penny stocks not otherwise exempt from the rules. The broker-dealer must also provide its customers with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held by the customer. Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $200,000 individually, or $300,000 together with his or her spouse, is considered an accredited investor. The additional burdens from the penny stock requirements may deter broker-dealers from effecting transactions in our securities, which could limit the liquidity and market price of our securities. These disclosure requirements may cause a reduction in the trading activity of our common stock, which likely would make it difficult for our stockholders to resell their securities.
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules described above, FINRA has adopted Rule 2111 that requires a broker-dealer to have reasonable grounds for believing that an investment is suitable for a customer before recommending the investment. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
Because we are a small company with a limited operating history, stockholders may find it difficult to sell their common stock in the public markets.
The number of persons interested in purchasing our common stock s at any given time may be relatively small. This situation is attributable to a number of factors, including the fact that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would likely be reluctant to follow an unproven company such as ours. Additionally, many brokerage firms may not be willing to effect transactions in our securities. As a consequence, there may be periods when trading activity in our common stock is minimal or even non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity. We cannot give you any assurance that an active public trading market for our common stock will develop or be sustained, or that trading levels will be sustained.
We will continue to incur significant costs to ensure compliance with United States corporate governance and accounting requirements.
We will continue to incur significant costs associated with our public company reporting requirements, costs associated with applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations will result in significant legal and financial compliance costs and to make some activities more time consuming and costly. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
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An investment in the Company’s common stock is extremely speculative and there can be no assurance of any return on any such investment.
An investment in the Company’s common stock is extremely speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment. The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other factors, many of which we have little or no control over. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.
Our shareholders’ percentage of ownership may become diluted upon conversion of shares of our Series F convertible preferred stock, 1,000 shares of which are currently issued and outstanding and held by Garett Parsons, our President, Chief Executive Officer and Chief Financial Officer and 2,450 shares of which are currently issued and outstanding and held by Steve Reinharz, the CEO of RAD.
Garett Parsons, our President, Chief Executive Officer and Chief Financial Officer, is the current holder of 1,000 shares of the Company’s Series F Convertible Preferred Stock, and Steve Reinharz, the CEO of RAD, is currently the holder of 2,450 shares of Series F Convertible Preferred Stock. As the holders of such stock, Mr. Parsons and Mr. Reinharz, can each, at any time, convert all, but not less than all of their shares of Series F Convertible Preferred Stock into a number of fully paid and nonassessable shares of the Company’s 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 conversion of such shares shall cause substantial dilution to the Company’s current shareholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We maintain our corporate offices at 1 East Liberty. 6th Floor, Reno, Nevada 89501, pursuant to a month-to-month lease. Our annual rental cost for this facility is approximately $936 annually. RAD maintains its offices at 23121 La Cadena Suite B/C Laguna Hills, California 92675, pursuant to a five-year term ending March 31, 2022. Its annual rental cost for this facility is approximately $65,000, plus a proportionate share of operating expenses of approximately $35,000 annually. We believe these facilities are adequate for our and RAD’s current and near-term future needs.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are no legal proceeding pending at this time.
On October 12, 2015, OMVS received notice that it had been sued in the United States District Court for the Central District of California. The plaintiff alleges that OMVS 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, OMVS received notice that it had been sued in the Clark County District Court of Nevada. The plaintiff alleges that OMVS obtained certain trade secrets through a third party also named in the suit. OMVS believes 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 OMVS should prevail, however there can be no assurance of this and an adverse result of this suit could harm its business.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
Market Information
OMVS’s 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.
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Fiscal Year Ended February 28, 2017 |
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Quarter ended February 28, 2017 |
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$ |
0.02 |
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$ |
0.00 |
Quarter ended November 30, 2016 |
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$ |
0.10 |
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$ |
0.01 |
Quarter ended August 31, 2016 |
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$ |
0.20 |
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$ |
0.07 |
Quarter ended May 31, 2016 |
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$ |
0.50 |
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$ |
0.14 |
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Fiscal Year Ended February 29, 2016 |
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Quarter ended February 29, 2016 |
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$ |
0.72 |
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0.09 |
Quarter ended November 30, 2015 |
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1.70 |
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0.43 |
Quarter ended August 31, 2015 |
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4.76 |
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0.25 |
Quarter ended May 31, 2015 |
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11.04 |
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0.55 |
On February 2, 2018, the closing price per share of OMVS’s common stock as quoted on the OTC was $0.07.
Dividends
To date, we have not paid dividends on shares of OMVS’s 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, OMVS’s financial condition, and other factors deemed relevant by its Board of Directors.
Holders of Common Stock
As of March 1, 2018, there were approximately 13 holders of OMVS’s common stock. The number of foregoing holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.
Common Stock
OMVS is authorized to issue 480,000,000 shares of common stock, with a par value of $0.001. The closing price of its common stock on March 1, 2018, as quoted by OTC Markets Group, Inc., was $0.07. There were 125,004,554 shares of common stock issued and outstanding as of March 1, 2018. 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 OMVS, the holders of common stock will share equally in any balance of its assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of OMVS’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, OMVS’s 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 OMVS’s common stock as a result of the issuance of any other class of securities or the modification thereof.
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On March 5, 2015, OMVS effected a 500-for-1 reverse split, upon its 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.
Non-cumulative voting
Holders of shares of OMVS’s 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.
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
OMVS is 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 4,350,000 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 Convertible Preferred Stock
The board of directors has designated 4,350 shares of Series F Convertible Preferred Stock with a par value of $1.00 per share. As of the date of this report, there are 4,350 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 each holder may, at any time and from time to time convert all, but not less than all, of their 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) on a pro rata basis. So long as any shares of 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).
- 16 -
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 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.
Transfer Agent and Registrar
The Transfer Agent for our capital stock is Island Stock Transfer with an address at 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760. Their telephone number is Office phone: 727-289-0010.
Recent Sales of Unregistered Securities
The following is a summary of transactions by OMVS involving sales of its securities that were not registered under the Securities Act.
On August 28, 2017, OMVS entered into a Stock Purchase Agreement with RAD and Steve Reinharz, as sole stockholder of RAD. Pursuant to the terms of the Stock Purchase Agreement, OMVS acquired, on August 28, 2017, 10,000 shares of RAD’s common stock, representing all of RAD’s issued and outstanding capital stock, from Mr. Reinharz in exchange for the issuance by OMVS of (i) 3,350,000 shares of our Series E Preferred Stock and, (ii) 2,450 shares of our Series F Convertible Preferred Stock. In connection with the foregoing, the Registrant relied upon the exemption from registration under the Securities Act of 1933, as amended and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation D thereunder.
During the period from June 1, 2017 through July 25, 2017, OMVS issued 8,922,279 shares of common stock upon cashless exercise of warrants held by one of the Company’s lenders who also converted $3,358 in interest and principal for 395,667 shares for a total of 9,317,946 shares issued.
On July 8, 2017, we issued a convertible note payable for $200,000 which bears interest at 8% per annum and is due July 6, 2018. The note is convertible into common stock of the Company at a 40% discount to the lowest trading price in during the 20 trading days prior to conversion.
In connection with the foregoing, the Registrant relied upon the exemption from registration under the Securities Act of 1933, as amended and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation D thereunder.
On February 16, 2017, the Company closed on a Share Purchase Agreement with Capital Venture Holdings LLC (“Capital Venture”), a Wyoming Limited Liability Company, whereby the Company issued Capital Venture 1,000 shares of Series F Convertible Preferred Stock, representing all of the issued and outstanding shares of Series F Convertible Preferred Stock to Capital Venture in consideration for $5,000. Mr. Garett Parsons is the sole and managing member of Capital Venture.
In connection with the foregoing, the Company relied upon the exemption from registration under the Securities Act of 1933, as amended and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation D thereunder.
Convertible Notes Issued (1)
Subsequent to February 28, 2017, we issued the following convertible notes payable for cash proceeds. All principal and accrued interest is payable on the maturity date.
Issued |
|
Maturity |
|
Interest Rate |
|
Conversion Rate per Share |
|
Amount of Note |
|
||
March 7, 2017 |
|
March 7, 2021 |
|
8% |
|
|
35% discount |
|
$ |
50,000 |
|
March 8, 2017 |
|
March 8, 2021 |
|
10% |
|
|
40% discount |
|
|
100,000 |
|
May 2, 2017 |
|
May 2, 2021 |
|
8% |
|
|
35% discount |
|
|
50,000 |
|
Total |
|
|
|
|
|
|
|
|
$ |
200,000 |
|
__________
(1) |
The convertible notes are convertible into shares of OMVS upon the closing of the merger with RAD in August 2017. |
|
|
|
Each issuance of securities above was issued without registration in reliance of the exemption from registration Section 3(a)9 of the Securities Act of 1933. |
- 17 -
Penny Stock Regulations
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock falls within the definition of penny stock and therefore is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. In addition, the broker-dealer must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market. In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’ ability to buy and sell our stock.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal year ended February 28, 2017.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Forward-Looking Statements and Business sections in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Overview
The Company was incorporated in Nevada on March 25, 2010. We reincorporated into Nevada on February 17, 2015. Our fiscal year end is February 28. The Company is located at 1 East Liberty, 6 th Floor, Reno, NV 89501 and our telephone number is 702-990-3271.
Our prior business focus was transportation services and were exploring the on-demand logistics market by developing a network of logistics partnerships.
- 18 -
On August 28, 2017, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with RAD and Steve Reinharz, as sole stockholder of RAD. Pursuant to the terms of the Stock Purchase Agreement, we acquired, on August 28, 2017, 10,000 shares of RAD’s common stock, representing all of RAD’s issued and outstanding capital stock, from Mr. Reinharz in exchange for the issuance by us of (i) 3,350,000 shares of our Series E Preferred Stock and, (ii) 2,450 shares of our Series F Convertible Preferred Stock. As a result of the RAD Acquisition, RAD is a wholly owned subsidiary of the Company. As a result of the closing of the RAD Acquisition, we have succeeded to the business of RAD, in which we purchased all of the outstanding shares of capital stock of RAD. As a result, our business going forward will consist of one segment activity which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
The RAD Acquisition is being treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of our prior operations were disposed of as part of the consummation of the transaction and therefore no goodwill or other intangible assets were recorded. RAD is treated as the accounting acquirer as its stockholders control the Company after the RAD Acquisition, even though the Company was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
Results of Operations
The following table shows our results of operations:
|
|
Two Months Ended February 28, 2017 |
|
|
|
|
|
|
|
Revenues |
|
$ |
— |
|
|
|
|
|
|
Operating expenses |
|
|
81,203 |
|
|
|
|
|
|
Loss from operations |
|
|
(81,203 |
) |
|
|
|
|
|
Other income (expense) |
|
|
(2,732 |
) |
|
|
|
|
|
Net loss |
|
$ |
(83,935 |
) |
Revenue
The Company had no revenue for the two months ended February 28, 2017.
Operating expenses
Operating expenses for the two months ended February 28, 2017 were $81,203 and were comprised of the following:
|
|
Two Months Ended February 28, 2017 |
|
|
|
|
|
|
|
General and administrative expenses |
|
$ |
54,856 |
|
Research and development |
|
|
20,153 |
|
Depreciation |
|
|
6,194 |
|
|
|
$ |
81,203 |
|
Operating expenses were comprised of general and administrative of $54,856, research and development of $20,153 and depreciation of $6,194 for the two months ended February 28, 2017. The operating expenses noted for the two months ended February 28, 2017 represent incremental expenses incurred by RAD to achieve its business plan.
Other income (expense)
Other income (expense) for the two months ended February 28, 2017, was an expense of $2,732 that was comprised of other income of $1,926 and interest expense of $4,658.
- 19 -
Going Concern
The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. We have incurred net losses of approximately $185,000 since inception, have had no revenue, and cash flows used in operating activities of $225,153 as of February 28, 2017. These conditions raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these financial statements. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.
There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, we may be required to curtail or cease its operations.
The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.
Capital Resources
The following table summarizes total current assets, liabilities and working capital for the period indicated:
|
|
As of
|
|
|
|
|
|
|
|
Current assets |
|
$ |
214,685 |
|
Current liabilities |
|
|
103,149 |
|
Working capital |
|
$ |
111,536 |
|
As of February 28, 2017, we had a cash balance of $56,907.
Summary of Cash Flows
|
|
For the
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
$ |
(225,153 |
) |
Net cash used in investing activities |
|
$ |
(85,050 |
) |
Net cash provided by financing activities |
|
$ |
317,514 |
|
Net cash used in operating activities
Net cash used in operating activities for the two months ended February 28, 2017, was $225,153. This included a net loss of $83,935, non-cash charges related to depreciation of $6,194, and changes in accounts receivable, prepaid expenses, and accounts payable and accrued expenses of $147,412.
Net cash used in investing activities
Net cash used in investing activities for the two months ended February 28, 2017, was $85,050, which consisted solely of capital expenditures.
Net cash provided by financing activities
Net cash provided by financing activities for the two months ended February 28, 2017, was $317,514, which resulted from proceeds from the issuance of convertible notes of $315,000, proceeds of $53,864 from a shareholder loan netted against repayments to the shareholder of $50,022, and payments on a vehicle loan of $1,328.
- 20 -
Off-Balance Sheet Arrangements
We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.
Significant Accounting Policies
Revenue Earning Robots
Revenue earning robots are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The Company continually evaluates revenue earning robots to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the vehicle should be evaluated for possible impairment. The Company uses a combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from two to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently.
Research and development equipment |
|
2 years |
Vehicles |
|
3 years |
Leasehold improvements |
|
5 years, the life of the lease |
RAD periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income.
Research and Development
Research and development costs are expensed in the period they are incurred, unless they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At February 28, 2017, RAD had no deferred development costs.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, goods are delivered for rental and/or services are rendered, sales price is determinable, and collection is reasonably assured.
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.
ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 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).
- 21 -
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 under ASC Topic 820 are described as follows:
|
● |
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. |
|
|
|
|
● |
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include 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; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|
|
|
|
● |
Level 3 – Inputs that are unobservable for the asset or liability. |
The carrying amounts of RAD ’ s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Recently Adopted Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-01, Business Combinations: Clarifying the Definition of a Business , which amends the current definition of a business. Under ASU 2017-01, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. ASU 2017-01 further states that when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The new guidance also narrows the definition of the term “outputs” to be consistent with how it is described in Topic 606, Revenue from Contracts with Customers . The changes to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions. The guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The Company has elected to early adopt ASU 2017-01 and to apply it to any transaction, which occurred prior to the issuance date that has not been reported in financial statements that have been issued or made available for issuance.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This standard is effective for fiscal years and interim reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that period. The Company is in the process of performing an initial review of custom contracts to determine the impact that ASU 2014-09 and its subsequent updates will have on the Company’s financial statements or financial statement disclosures upon adoption. Based on this preliminary review, the Company believes that the timing and measurement of revenue for these customers will be similar to the current revenue recognition. However, this view is preliminary and could change based on the detailed analysis associated with the conversion and implementation phases of ASU 2014-09.
From March 2016 through December 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606):Narrow-Scope Improvements and Practical Expedients , ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers and ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments. These amendments are intended to improve and clarify the implementation guidance of Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements of ASU No. 2014-09 and ASU No. 2015-14.
- 22 -
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which is effective for public entities for annual reporting periods beginning after December 15, 2018. Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company is currently evaluating the effects of ASU 2016-02 on its unaudited condensed financial statements.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception . Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity , because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not have any financial instruments that are exposed to significant market risk. We maintain our cash and cash equivalents in bank deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents securities, or our earnings on such cash equivalents.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 through F-14 of this annual report on Form 10-KT.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On February 19, 2018 our Board of Directors approved and ratified the engagement of GBH CPAs, PC (“GBH”) as the Company’s independent registered public accounting firm for the Company’s fiscal year ended February 28, 2018, effective immediately, and dismissed Friedman, LLP (“Friedman”) as the Company’s independent registered public accounting firm.
The Company has not completed its financial statements and has not filed its Quarterly Report on Form 10-Q for the quarter ended August 31, 2017 and for the quarter ended November 30, 2017. From September 25, 2017 to February 19, 2018, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Friedman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
Prior to the appointment of GBH, on September 25, 2017, our Board of Directors approved and ratified the engagement of Friedman LLP (“Friedman”) as our independent registered public accounting firm for the Company’s fiscal year ending February 28, 2018, effective immediately, and dismissed MaloneBailey, LLP (“MaloneBailey”) as our independent registered public accounting firm.
MaloneBailey’s audit report on the Company’s consolidated financial statements as of and for the fiscal year ended February 28, 2017, did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, other than an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern.
- 23 -
During the two months ended February 28, 2017, and the subsequent interim periods through September 25, 2017, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and MaloneBailey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to MaloneBailey’s satisfaction, would have caused MaloneBailey to make reference thereto in their report on the financial statements for such year, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S- K.
During the two months ended February 28, 2017, and the subsequent interim periods through September 25, 2017, neither the Company nor anyone acting on its behalf has consulted with Friedman regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements or the effectiveness of internal control over financial reporting, and neither a written report or oral advice was provided to the Company that Friedman concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of February 28, 2017, 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 February 28, 2017, 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. |
- 24 -
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 (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission 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 U.S. 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.
This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
Other than the resignation of Robert Wilson from all positions with the Company and the appointment of Mr. Parsons as our President, Chief Executive Officer and Chief Financial Officer on February 16, 2017, no changes were made to our internal control over financial reporting during the quarter ended February 28, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
- 25 -
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names, positions and ages of our directors and executive officers as of the date of this report. Our directors serve for one year and until their successors are elected and qualified. Our officers are elected by the board of directors to a term of one 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.
Name |
|
Age |
|
Position(s) |
Garett Parsons |
|
34 |
|
President, Chief Executive Officer, Chief Financial Officer and Director |
Biographical information concerning our director and executive officer listed above is set forth below.
Garett Parsons. Mr. Parsons has served as our President, Chief Executive Officer, Chief Financial Officer and member of our board of directors since February 2017. Mr. Parsons has over 10 years of financial consulting for both private and public equity markets. Mr. Parsons has extensive 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 and an Associate of Arts in Liberal Studies/ Business San Joaquin Delta College and West Hills College.
There are no family relationships between any of the executive officers and directors. During the past 10 years, Mr. Parsons was involved in any of the legal proceedings listed in Item 401(f) of Regulation S-K. There are no arrangements or understandings between Mr. Parsons and any other person pursuant to which he was or is to be selected as an executive officer or director.
Board Committees and Director Independence
As Mr. Parsons serves as our sole director, we do not have a separately designated audit committee, compensation committee or nominating and corporate governance committee. The functions of those committees are being undertaken by our sole director. Because we do not have any independent directors and have only one director, 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 currently do not have any non-employee or independent directors, as such term is defined in the listing standards of The NASDAQ Stock Market, and we do not anticipate appointing additional directors in the near future.
Our sole director is not an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. 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.
Procedures for Nominating Directors
There have been no material changes to the procedures by which security holders may recommend nominees to the Board since the most recently completed fiscal quarter. 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.
- 26 -
Director Qualifications
Mr. Parsons was appointed to our board in February 2017. Mr. Parsons has significant operational experience in our industry and brings both a practical understanding of the industry and as well as hands-on experience in our business sector to our board and a greater understanding of certain of the challenges we face in executing our growth strategy.
Code of Ethics and Business Conduct
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 ethics.
Director Compensation
Mr. Parsons, our sole director, does not receive any additional compensation for his services as a director. 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 two months ended February 28, 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.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, or written representations that no other reports were required, and to the best of our knowledge, we believe that all of our officers, directors, and owners of 10% or more of our common stock filed all required Forms 3, 4, and 5.
- 27 -
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes all compensation recorded by us in the past two fiscal years for Mr. Parsons, our President, Chief Executive Officer and Chief Financial Officer and Mr. Wilson, our former Chief Executive Officer.
2017 SUMMARY COMPENSATION TABLE
Name and Principal Position |
|
Year |
|
Salary
|
|
Bonus
|
|
Stock
|
|
Option
|
|
Non-Equity
|
|
Non-Qualified
|
|
All Other
|
|
Total
|
Garett Parsons, |
|
2017 |
|
2,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
2,000 |
President, Chief Executive Officer and Chief Financial Officer (1) |
|
2016 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Wilson, |
|
2017 |
|
120,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
120,000 |
Former Chief Executive Officer (2) |
|
2016 |
|
108,461 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
108,461 |
__________
(1) |
Mr. Parsons was appointed President, Chief Executive Officer and Chief Financial Officer on February 16, 2017. |
(2) |
Mr. Wilson ceased to be an executive officer on February 16, 2017. |
Employment Agreements
We are not currently a party to an employment agreement with Mr. Parsons, our sole executive officer. We may enter into an employment agreement with Mr. Parsons in the future, however. We have no plans providing for the payment of any retirement benefits.
Outstanding Equity Awards at 2017 Fiscal Year-End
The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for Mr. Parsons, our sole executive officer outstanding as of 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 or Units of Stock That Have Not Vested (#) |
|
Market Value of Shares or Units of Stock That Have Not Vested ($) |
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
|
Garett Parsons |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
At February 2, 2018, OMVS had 125,004,554 shares of its common stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our common stock as of February 2, 2018, and reflects:
|
● |
each of our executive officers, |
|
|
|
|
● |
each of our directors, |
|
|
|
|
● |
all of our directors and executive officers as a group, and |
|
|
|
|
● |
each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock. |
- 28 -
Information on beneficial ownership of securities is based upon a record list of our stockholders and we have determined beneficial ownership in accordance with the rules of the SEC. We believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws, except as otherwise provided below.
Name |
|
Amount and
|
|
Percent of
|
Named Executive Officers and Directors: |
|
|
|
|
Garett Parsons (3) |
|
125,004,554 |
|
22.47% |
Robert Wilson (4) |
|
— |
|
0.0% |
All executive officers and directors as a group (1 persons) |
|
306,261,157 |
|
22.47% |
|
|
|
|
|
5% Stockholders: |
|
|
|
|
Steve Reinharz (5) |
|
306,261,157 |
|
55.06% |
23121 La Cadena Suite B/C, Laguna Hills, California 92675 |
|
|
|
|
__________
(1) |
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this Report, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on as of the date of this Report 125,004,554 shares, and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares. |
|
|
(2) |
Based on 125,004,554 shares of the Company’s common stock issued and outstanding as of the date of this report. |
|
|
(3) |
Mr. Parsons is the Company’s President, Chief Executive Officer and Chief Financial Officer and owns 1,000,000 shares of our Series E Preferred Stock and 1,000 shares of our Series F Preferred Stock. If Mr. Parsons converted the 1,000 shares of the Company’s Series F Preferred stock, he would receive 431,265,711 shares of the Company’s common stock, which is included in the chart above as if such conversion has occurred. Further, 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. |
|
|
(4) |
Mr. Wilson ceased to be an officer and director in February 2017 and sold his shares in the market to unrelated parties. |
|
|
(5) |
Steve Reinharz is the CEO of RAD and is the holder of (i) 3,350,000 shares of our Series E Preferred Stock and, (ii) 2,450 shares of our Series F Convertible Preferred Stock. If Mr. Reinharz converted the 2,450 shares of the Company’s Series F Convertible Preferred Stock, he would receive 306,261,157 shares of the Company’s common stock, which is included in the chart above as if such conversion has occurred. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
We do not have a written policy for the review, approval or ratification of transactions with related parties or conflicted transactions. When such transactions arise, they are referred to our board of directors for its consideration.
The sole shareholder and owner of RAD loaned RAD certain funds to pay for RAD’s expenses. The loans are non-interest bearing and unsecured, with no specific terms of repayment or collateral. During the two months ended February 28, 2017, the shareholder loaned RAD $53,864 and RAD made repayments in the amount of $50,022. The balance of the amounts owed to the shareholder at February 28, 2017, was $62,528.
- 29 -
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
On September 25, 2017, our Board of Directors approved and ratified the engagement of Friedman LLP (“Friedman”) as our independent registered public accounting firm for the Company’s fiscal year ending February 28, 2018, effective immediately, and dismissed MaloneBailey as the Company’s independent registered public accounting firm. GBH CPAs, PC (“GBH CPAs”) previously served as our independent registered public accounting firm until May 12, 2015.
The following table shows the fees that were billed for the audit and other services provided by MaloneBailey and GBH CPAs for the fiscal years ended February 28, 2017 and 2016.
|
|
2017 |
|
2016 |
||
Audit Fees |
|
|
|
|
|
|
MaloneBailey |
|
$ |
30,000 |
|
$ |
18,000 |
GBH CPAs |
|
|
— |
|
|
1,525 |
Total Audit Fees |
|
$ |
30,000 |
|
$ |
19,525 |
Audit-Related Fees |
|
|
— |
|
|
— |
Tax Fees |
|
|
— |
|
|
— |
All Other Fees |
|
|
— |
|
|
— |
Total |
|
$ |
30,000 |
|
$ |
19,525 |
Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category would include consultation regarding correspondence with the SEC, other accounting consulting and other audit services.
Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees - This category consists of fees for other miscellaneous items.
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 and GBH CPAs 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.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements and Financial Statement Schedules on page F-1 and included on pages F-2 through F-14.
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the SEC are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
- 30 -
(3) Exhibits.
Exhibit No. |
|
Description of Document |
2.1 |
|
Stock Purchase Agreement, dated August 28, 2017, by and among the registrant, Steve Reinharz and Robotic Assistance Devices Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the Commission on August 31, 2017). |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-1 (File No. 333-168530), filed with the Commission on August 4, 2010). |
|
|
|
3.4 |
|
Certificate of Designations filed with the Nevada Secretary of State on February 8, 2017. * |
|
|
|
3.5 |
|
Certificate of Designations filed with the Nevada Secretary of State on May 3, 2017. * |
|
|
|
3.6 |
|
Amendment to Certificate of Designations filed with the Nevada Secretary of State on May 3, 2017 (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the Commission on May 12, 2017). |
|
|
|
10.1 |
|
|
|
|
|
14.1 |
|
Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s registrant statement on Form S-1 (File No. 333-168530) , filed with the Commission on August 4, 2010). |
|
|
|
21.1 |
|
|
|
|
|
31.1 |
|
|
|
|
|
32.1 |
|
|
|
|
|
101.INS |
|
XBRL Instance |
|
|
|
101.SCH |
|
XBRL Taxonomy Extension Schema |
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation |
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition |
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Labels |
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation |
__________
+ |
Management contract or compensatory plan or arrangement. |
* |
Filed or furnished herewith. |
- 31 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 12, 2018 |
By: |
/s/ Garett Parsons |
|
|
Garett Parsons |
|
|
President, Chief Executive Officer and Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature |
|
Title |
|
Date |
/s/ Garett Parsons |
|
President, Chief Executive Officer, Chief Financial Officer, and Director (principal executive officer, principal financial officer and principal accounting officer) |
|
March 12, 2018 |
Garett Parsons |
|
|
|
|
- 32 -
ON THE MOVE SYSTEMS CORP.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm |
F-2 |
|
|
Balance Sheet – February 28, 2017 |
F-3 |
|
|
Statement of Operations for the Two Months Ended February 28, 2017 |
F-4 |
|
|
Statement of Changes in Stockholders’ Deficit for the Two Months Ended February 28, 2017 |
F-5 |
|
|
Statement of Cash Flows for the Two Months Ended February 28, 2017 |
F-6 |
|
|
Notes to the Financial Statements |
F-7 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
On The Move Systems Corp.
(formerly Robotic Assistance Devices, Inc.)
Reno, Nevada
We have audited the accompanying balance sheet of On The Move Systems Corp. (formerly Robotic Assistance Devices, Inc.) as of February 28, 2017, and the related statements of operations, stockholders’ deficit, and cash flows for the two months ended February 28, 2017. On The Move Systems Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit 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 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of On The Move Systems Corp. as of February 28, 2017, and the results of its operations and its cash flows for the two months ended February 28, 2017, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that On The Move Systems Corp. will continue as a going concern. As discussed in Note 2 to the financial statements, On The Move Systems Corp. has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these 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/ GBH CPAs, PC
GBH CPAs, PC
www.gbhcpas.com
Houston, Texas
March 9, 2018
F-2
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
BALANCE SHEET
|
|
February 28, 2017 |
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
56,907 |
|
Accounts receivable |
|
|
7,778 |
|
Deposits |
|
|
150,000 |
|
Total current assets |
|
|
214,685 |
|
Revenue earning robots , net of accumulated depreciation of $3,544 |
|
|
81,506 |
|
Fixed assets, net of accumulated depreciation of $2,650 |
|
|
45,052 |
|
Total assets |
|
$ |
341,243 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
12,720 |
|
Customer deposits |
|
|
20,000 |
|
Vehicle loan - current portion |
|
|
7,900 |
|
Shareholder advances |
|
|
62,529 |
|
Total current liabilities |
|
|
103,149 |
|
Convertible notes payable |
|
|
365,000 |
|
Vehicle loan |
|
|
38,134 |
|
Total liabilities |
|
|
506,283 |
|
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
|
Series E Preferred Stock, $0.001 par value; 4,350,000 shares authorized; 3,350,000 shares issued and outstanding |
|
|
3,350 |
|
Series F Convertible Preferred Stock, $1.00 par value per share; 3,450 shares authorized; 2,450 shares issued and outstanding |
|
|
2,450 |
|
Preferred Stock, undesignated; 15,646,550 shares authorized; no shares issued and outstanding |
|
|
— |
|
Common stock, $0.001 par value; 480,000,000 shares authorized; no shares issued and outstanding |
|
|
— |
|
Additional paid-in capital |
|
|
13,857 |
|
Accumulated deficit |
|
|
(184,697 |
) |
Total stockholders’ deficit |
|
|
(165,040 |
) |
Total liabilities and stockholders’ deficit |
|
$ |
341,243 |
|
The accompanying notes are an integral part of these audited financial statements.
F-3
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
STATEMENT OF OPERATIONS
|
|
Two Months Ended February 28, 2017 |
|
|
|
|
|
|
|
Revenues |
|
$ |
— |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
Research and development |
|
|
20,153 |
|
General and administrative |
|
|
54,856 |
|
Depreciation |
|
|
6,194 |
|
Total operating expenses |
|
|
81,203 |
|
|
|
|
|
|
Loss from operations |
|
|
(81,203 |
) |
|
|
|
|
|
Other income (expense) |
|
|
|
|
Interest expense |
|
|
(4,658) |
|
Other income |
|
|
1,926 |
|
Total other income (expense) |
|
|
(2,732 |
) |
|
|
|
|
|
Net loss |
|
$ |
(83,935 |
) |
|
|
|
|
|
Net loss per share attributable to common shareholders – basic |
|
|
N/A |
|
|
|
|
|
|
Net loss per share attributable to common shareholders – diluted |
|
|
(0.00 |
) |
|
|
|
|
|
Weighted average number of common shares outstanding – basic |
|
|
N/A |
|
|
|
|
|
|
Weighted average number of common shares outstanding – diluted (1) |
|
|
60,916,112 |
|
(1) |
The weighted average number of common shares outstanding was computed by multiplying the number of common shares of OMVS outstanding as of February 28, 2017 by 3.45 based on the terms listed under the amended Certificate of Designation for OMVS’s Series F Convertible Preferred Stock. |
The accompanying notes are an integral part of these audited financial statements.
F-4
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE TWO MONTHS ENDED FEBRUARY 28, 2017
|
|
Series E |
|
Series F Convertible |
|
|
|
Additional |
|
|
|
Total |
|
||||||||||||
|
|
Preferred Stock |
|
Preferred Stock |
|
Common Stock |
|
Paid-In |
|
Accumulated |
|
Stockholders’ |
|
||||||||||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Deficit |
|
||||||
Balance at
|
|
3,350,000 |
|
$ |
3,350 |
|
2,450 |
|
$ |
2,450 |
|
— |
|
$ |
— |
|
$ |
13,857 |
|
$ |
(100,762 |
) |
$ |
(81,105 |
) |
Net loss |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(83,935 |
) |
|
(83,935 |
) |
Balance at
|
|
3,350,000 |
|
$ |
3,350 |
|
2,450 |
|
$ |
2,450 |
|
— |
|
$ |
— |
|
$ |
13,857 |
|
$ |
(184,697 |
) |
$ |
(165,040 |
) |
The accompanying notes are an integral part of these audited financial statements.
F-5
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
STATEMENT OF CASH FLOWS
The accompanying notes are an integral part of these audited financial statements.
F-6
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION
On the Move Systems Corp. (“OMVS”) was incorporated in Nevada on March 25, 2010 and reincorporated into Nevada on February 17, 2015.
Robotic Assistance Devices, LLC (“RAD”), was incorporated in the State of Nevada on July 26, 2016 as an LLC. On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. through the issuance of its 10,000 authorized common shares to its sole shareholder.
On August 28, 2017, OMVS completed the acquisition of RAD (the “Acquisition”), whereby OMVS acquired all the ownership and equity interest in RAD for 3,350,000 shares of OMVS Series E Preferred Stock and 2,450 shares of Series F Convertible Preferred Stock. OMVS’s prior business focus was transportation services, and OMVS was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, OMVS has succeeded to the business of RAD, in which OMVS purchased all of the outstanding shares of capital stock of RAD. As a result, OMVS’s business going forward will consist of one segment activity which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
The Acquisition is being treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of OMVS’s operations were disposed of as part of the consummation of the transaction and therefore no goodwill or other intangible assets were recorded by the Company as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though OMVS was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
2. GOING CONERN
RAD remains highly dependent upon funding from non-operational sources. RAD’s financial statements have been presented on the basis that it will continue to operate as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. RAD has incurred net losses of approximately $165,000 since inception, have had no revenue, and cash flows used in operating activities of $225,153 as of February 28, 2017. These conditions raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these financial statements. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.
There are no assurances that RAD will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support RAD’s working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, RAD will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, RAD may be required to curtail or cease its operations.
3. ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the instructions on Form 10-KT and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements include the accounts of RAD based upon the Acquisition noted above being treated as a reverse recapitalization in which stockholders’ equity of RAD is presented based on the historical equity of the accounting acquirer RAD prior to the Acquisition retroactively restated to reflect the number of shares received in the Acquisition. The results of operations for the two months ended February 28, 2017 are not necessarily indicative of the results that may be expected for the entire year.
F-7
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
Cash
RAD considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. RAD places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.
Accounts Receivable
Accounts receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances.
Deposits
Deposits are comprised of deposits of $150,000 on robots that are expected to be received within one year.
Revenue Earning Robots
Revenue earning robots are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The Company continually evaluates revenue earning robots to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the vehicle should be evaluated for possible impairment. The Company uses a combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from two to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently.
Research and development equipment |
|
2 years |
Vehicles |
|
3 years |
Leasehold improvements |
|
5 years, the life of the lease |
RAD periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income.
Research and Development
Research and development costs are expensed in the period they are incurred, unless they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At February 28, 2017, RAD had no deferred development costs.
Contingencies
Occasionally, RAD may be involved in claims and legal proceedings arising from the ordinary course of its business. RAD records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on RAD’s financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
F-8
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, goods are delivered for rental and/or services are rendered, sales price is determinable, and collection is reasonably assured.
Income Taxes
Income taxes are not provided in the financial statements as presented as RAD was an LLC and the income or loss flowed through to the shareholder for the two months ended February 28, 2017.
On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. through the issuance of its 10,000 authorized common shares to its sole shareholder. Therefore, income taxes will be accounted for under the asset and liability method from that date forward. Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and net operating loss and other tax credit carry-forwards. These items are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. RAD will record a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to be realized.
Leases
Lease agreements are evaluated to determine if they are capital leases meeting any of the following criteria at inception: (a) transfer of ownership; (b) bargain purchase option; (c) the lease term is equal to 75 percent or more of the estimated economic life of the leased property; or (d) the present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor.
If, at its inception, a lease meets any of the four lease criteria above, the lease is classified by RAD as a capital lease; and if none of the four criteria are met, the lease is classified by RAD as an operating lease.
Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.
ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 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 under ASC Topic 820 are described as follows:
F-9
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
|
● |
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. |
|
|
|
|
● |
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include 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; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|
|
|
|
● |
Level 3 – Inputs that are unobservable for the asset or liability. |
The carrying amounts of RAD’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Earnings (Loss) per Share
Basic net loss per share amounts are computed by dividing the net loss by the weighted average number of common shares and common share equivalents over the reporting period. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive.
For the two months ended February 28, 2017, the Company excluded 28,957,529 shares of common stock equivalents related to convertible debt and warrants to purchase shares of OMVS common stock, as the inclusion of such shares would be anti-dilutive.
Recently Adopted Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-01, Business Combinations: Clarifying the Definition of a Business , which amends the current definition of a business. Under ASU 2017-01, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. ASU 2017-01 further states that when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The new guidance also narrows the definition of the term “outputs” to be consistent with how it is described in Topic 606, Revenue from Contracts with Customers . The changes to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions. The guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The Company has elected to early adopt ASU 2017-01 and to apply it to any transaction, which occurred prior to the issuance date that has not been reported in financial statements that have been issued or made available for issuance.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This standard is effective for fiscal years and interim reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that period. The Company is in the process of performing an initial review of custom contracts to determine the impact that ASU 2014-09 and its subsequent updates will have on the Company’s financial statements or financial statement disclosures upon adoption. Based on this preliminary review, the Company believes that the timing and measurement of revenue for these customers will be similar to the current revenue recognition. However, this view is preliminary and could change based on the detailed analysis associated with the conversion and implementation phases of ASU 2014-09.
F-10
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
From March 2016 through December 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606):Narrow-Scope Improvements and Practical Expedients , ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers and ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments. These amendments are intended to improve and clarify the implementation guidance of Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements of ASU No. 2014-09 and ASU No. 2015-14.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which is effective for public entities for annual reporting periods beginning after December 15, 2018. Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company is currently evaluating the effects of ASU 2016-02 on its unaudited condensed financial statements.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception . Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity , because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures.
Subsequent Events
The Company has evaluated all transactions through the date the financial statements were issued for subsequent event disclosure consideration.
4. REVENUE EARNING ROBOTS
Revenue earning robots consisted of the following:
|
|
February 28, 2017 |
|
|
|
|
|
|
|
Revenue earning robots |
|
$ |
85,050 |
|
Less: Accumulated depreciation |
|
|
(3,544 |
) |
|
|
$ |
81,506 |
|
Additions to revenue earning robots for the two months ended February 28, 2017 were $85,050. Depreciation expense was $3,544 for the two months ended February 28, 2017.
F-11
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
5. FIXED ASSETS
Fixed assets consisted of the following:
|
|
February 28, 2017 |
|
|
|
|
|
|
|
Automobile |
|
|
47,702 |
|
Less: Accumulated depreciation |
|
|
(2,650 |
) |
|
|
$ |
45,052 |
|
In December 2016, the Company had additions to fixed assets of $47,702. Depreciation expense was $2,650 for the two months ended February 28, 2017.
6. CUSTOMER DEPOSITS
As of February 28, 2017, RAD received a $20,000 deposit from a customer towards the rental of equipment which was subsequently delivered in July 2017.
7. SHAREHOLDER ADVANCES
The sole shareholder of RAD made several loans to RAD to pay for expenses incurred. The loans are non-interest bearing and unsecured, with no specific terms of repayment or collateral, and are repayable on demand. During the two months ended February 28, 2017, the shareholder loaned RAD $53,864 and RAD made repayments of $50,022. The balance of the amounts owed to the shareholder at February 28, 2017 was $62,529, all classified as current.
Subsequent to February 28, 2017, the loan has been revolving through a series if additional loans and repayments with a balancing outstanding at August 31, 2017 of approximately $80,000.
8. CONVERTIBLE NOTES PAYABLE
During the two months ended February 28, 2017, RAD issued several convertible notes payable (the “Convertible Debentures”) to unrelated parties that bear interest at 8% per annum, are payable in cash or shares, are unsecured and mature in four years. During the two-month period ended February 28, 2017, RAD issued these Convertible Debentures with a face value of $315,000, to investors which would be convertible into shares and warrants of On the Move Systems Corp. after the transaction has taken place on August 28, 2017 (“Post-Merger”).
As the aforementioned transaction with On the Move Systems Corp. did not close until August 28, 2017, the Convertible Debentures are not readily convertible into common stock, thus not readily convertible into cash, and does not meet the net settlement criteria for derivative or beneficial conversion feature under ASC-815. Each Convertible Debenture shall be convertible into Units (the “Units”) of the public entity at the Conversion Price (defined below) comprised of one share of common stock of the public entity (“Shares”) and one half a warrant with a 3-year maturity (“Warrants”). Each warrant shall have an exercise price equal to 1.66 times the Conversion Price (defined below). Warrants are exercisable at the option of the Convertible Debenture holder at any time on or prior to Maturity.
For the Conversion Price, the debentures shall convert at a 35% discount to the 5-day average closing price immediately prior to the conversion date. The debentures shall never convert at a conversion price higher than the Conversion Ceiling defined as follows:
● $3,000,000 divided by the total number of common shares outstanding is equal to the Conversion Price.
The balance of the amounts owed to the Convertible Debenture holders at February 28, 2017 was $365,000, with $0 classified as current and $365,000 long-term.
During the two months ended February 28, 2017, RAD has interest expense of $3,600, which is included in accrued expenses as of February 28, 2017, on the accompanying balance sheet.
F-12
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
At February 28, 2017, RAD’s future minimum payments are as follows:
February 28, 2018 |
|
$ |
— |
|
February 28, 2019 |
|
|
— |
|
February 29, 2020 |
|
|
— |
|
February 28, 2021 |
|
|
365,000 |
|
|
|
$ |
365,000 |
|
9. VEHICLE LOAN
In December 2016, RAD entered into a vehicle loan secured by the automobile described in Note 4 for $47,704. The loan is repayable over 5 years, maturing November 9, 2021, and repayable at $1,019 per month including interest and principal. During the two months ended February 28, 2017, the principal repayments were $1,329. The balance of the amounts owed on the vehicle loan at February 28, 2017 was $46,034, of which $7,900 was classified as current and $38,134 as long-term.
At February 28, 2017, RAD’s future principal payments are as follows:
February 28, 2018 |
|
$ |
7,900 |
|
February 28, 2019 |
|
|
8,700 |
|
February 29, 2020 |
|
|
9,700 |
|
February 28, 2021 |
|
|
10,800 |
|
February 28, 2022 and thereafter |
|
|
8,934 |
|
Total principal payments |
|
|
46,034 |
|
Less current portion |
|
|
(7,900 |
) |
Long-term |
|
$ |
38,134 |
|
10. COMMITMENTS & CONTINGENCIES
RAD’s principal facility is located in Orange County, California. The lease agreement includes, escalating lease payments, renewal provisions and other provisions. The lease began in April 2017 and expires in March 2022. RAD’s lease is accounted for as an operating lease. Rent expense is recorded over the lease term on a straight-line basis. Accordingly, rent expense was $0 for the two months ended February 28, 2017.
At February 28, 2017, RAD’s future minimum payments are as follows:
February 28, 2018 |
|
$ |
47,203 |
|
February 28, 2019 |
|
|
52,911 |
|
February 29, 2020 |
|
|
54,498 |
|
February 28, 2021 |
|
|
56,133 |
|
February 28, 2022 and thereafter |
|
|
62,646 |
|
|
|
$ |
273,391 |
|
On October 12, 2015, OMVS received notice that it had been sued in the United States District Court for the Central District of California. The plaintiff alleges that OMVS 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, OMVS received notice that it had been sued in the Clark County District Court of Nevada. The plaintiff alleges that OMVS obtained certain trade secrets through a third party also named in the suit. OMVS believes the suit is without merit and intends to vigorously defend it. An Arbitration was conducted on May 9, 2017, and the 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 OMVS should prevail, however there can be no assurance of this and an adverse result of this suit could harm its business. No amounts have been recorded, accordingly as OMVS is expecting to prevail.
F-13
ON THE MOVE SYSTEMS CORP.
(f/k/a ROBOTIC ASSISTANCE DEVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
11. PREFERRED STOCK
As of February 28, 2017, OMVS was authorized to issue 4,350,000 shares of its Series E Preferred Stock, 3,450 shares of its Series F Convertible Preferred Stock, and 15,646,550 shares of undesignated preferred stock.
As a part of the Acquisition described in Note 1, OMVS issued 3,350,000 shares of its Series E Preferred Stock and 2,450 shares of its Series F Convertible Preferred Stock to the shareholder of the Company on August 28, 2017.
The shares of Series E Preferred Stock are non-redeemable, do not have rights upon liquidation of OMVS, and do not receive dividends. The outstanding shares of Series E Preferred Stock do 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.
The shares of Series F Preferred Stock are also non-redeemable, do not have rights upon liquidation of OMVS, do not have any voting rights, and do not receive dividends. The each holder may, at any time, convert all of their shares of Series F Convertible Preferred Stock into a number of shares of common stock determined by multiplying the number of OMVS’s issued and outstanding shares of common stock on the date of conversion by 3.45 on a pro rata basis.
12. SUBSEQUENT EVENTS
RAD issued Convertible Debentures in March and May 2017, with a total face value of $100,000 to an existing investor which would be convertible into shares of the OMVS upon the closing of the merger with RAD. The Convertible Debentures bear interest at 8% per annum, are payable in cash or shares, are unsecured and mature in three years. For the Conversion Price, the Convertible Debentures shall convert at a 35% discount to the 5-day average closing price immediately prior to the conversion date. The Debenture shall never convert at a conversion price higher than the Conversion Ceiling defined as follows:
● $3,000,000 divided by the total number of common shares outstanding is equal to the Conversion Price.
RAD issued other Convertible Debentures in March 2017, with a total face value of $100,000 to an investor which would be convertible into shares of the OMVS upon the closing of the merger with RAD. The Convertible Debentures bear interest at 10% per annum, are payable in cash or shares, are unsecured and mature in three years. For the Conversion Price, the Convertible Debentures shall convert at a 40% discount to the 10-day average closing price immediately prior to the conversion date. The Debenture shall never convert at a conversion price higher than the Conversion Ceiling defined as follows:
● $5,000,000 divided by the total number of common shares outstanding is equal to the Conversion Price.
F-14
Exhibit 3.1
State Seal |
ROSS MILLER Secretary of State 204 North Carson Street, Suite 4 Carson City, Nevada 89701-4520 (775) 684-5708 Website: www.nvsos.gov |
Articles of Incorporation |
(PURSUANT TO NRS CHAPTER 78)
|
USE BLACK INK ONLY- DO NOT HIGHLIGHT |
ABOVE SPACE IS FOR OFFICE USE ONLY |
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1. Name of Corporation: |
On the Move Systems Corp. |
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2. Registered Agent for Service of Process: (check only one box) |
[X] Commercial Registered Agent: Inc. Plan of Nevada Name [_] Noncommercial Registered Agent OR [_] Office or Position with Entity (name and address below) (name and address below) ____________________________________________________________________________________ Name of Noncommercial Registered Agent OR Name of Title of Office or Other Position with Entity _____________________________________ __________________ Nevada ___________ Street Address City Zip Code _____________________________________ __________________ Nevada ___________ Mailing Address (if different from street address) City Zip Code |
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3. Authorized Stock: (number of shares corporation is authorized to issue) |
Number of shares with par value: 500,000,000
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Par value per share: $ .001
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Number of shares without par value:
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4. Names and Addresses of the Board of Directors/Trustees: (each Director/Trustee must be a natural person at least 18 years of age; attach additional page if more than two directors/trustees) |
1) Robert Wilson Name 5011 South State Road 7, Suite 106 Davie FL 33314 Street Address City State Zip Code
2) ________________________________________________________________________________ Name _________________________________________ _____________________ _______ _________ Street Address City State Zip Code |
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5. Purpose: (optional; required only if Benefit Corporation status selected) |
The purpose of the corporation shall be: |
6. Benefit Corporation: (see instructions) [_] Yes |
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7. Name, Address and Signature of Incorporator: (attach additional page if more than one incorporator) |
I declare, to the best of my knowledge under penalty of perjury, that the Information contained herein Is correct and acknowledge that pursuant to NRS 239.330, it is a category C felony to knowingly offer any false or forged instrument for filing in the Office of the Secretary of State.
Caroline Quigley X Name Incorporator Signature 20C Trolley Square Wilmington DE 19806 Street Address City State Zip Code |
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8. Certificate of Acceptance of Appointment of Registered Agent: |
I hereby accept appointment as Registered Agent for the above named Entity.
X /s/ Robert Wilson 9-8-14 Authorized Signature of Registered Agent or On Behalf or Registered Agent Entity Date |
This form must be accompanied by appropriate fees |
Nevada Secretary of State NRS 78 Articles Revised: 11-13-13 |
EXHIBIT A
TO
ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the Corporation is On the Move Systems Corp. (hereinafter, the “Corporation”).
ARTICLE II
REGISTERED OFFICE AND AGENT
The name of the Corporation’s registered agent in the State of Nevada is Inc. Plan of Nevada, Inc., and the street address of the said registered agent where process may be served on the Corporation is 613 Saddle River Court, Henderson, Nevada 89015. The mailing address and the street address of the said registered agent are identical.
ARTICLE III
POWERS
The purpose for which the Corporation is organized is to transact all lawful business for which corporations may be incorporated pursuant to the laws of the State of Nevada. The Corporation shall have all the powers of a corporation organized under the Revised Statutes of the State of Nevada.
ARTICLE IV
TERM
The Corporation is to have perpetual existence.
ARTICLE V
CAPITAL STOCK
Number and Designation . The total number of shares of all classes that this Corporation shall have authority to issue shall be 500,000,000, of which 480,000,000 shall be shares of common stock, par value $0.001 per share, and 20,000,000 shall be shares of preferred stock, par value $0.001 per share. The shares may be issued by the Corporation from time to time as approved by the board of directors of the Corporation without the approval of the stockholders except as otherwise provided in this Article V or the rules of a national securities exchange if applicable. The consideration for subscriptions to, or the purchase of, the capital stock to be issued by the corporation shall be paid in such form and in such manner as the board of directors shall determine. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such consideration shall be conclusive. The capital stock so issued shall be deemed to be fully paid and nonassessable stock upon receipt by the corporation of such consideration. In the case of a stock dividend, the part of the surplus of the Corporation which is transferred to stated capital upon the issuance of shares as a stock dividend shall be deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the Corporation’s capital stock, and a statement of the relative powers, designations, preferences and rights of the shares of each class and series (if any) of capital stock, and the qualifications, limitations or restrictions thereof, are as follows:
Designated common stock . Shares of common stock not at the time designated as shares of a particular series pursuant to this Article V or any other provision of these Articles of Incorporation may be issued from time to time in one or more designated series. The board of directors may determine, in whole or in part, the preferences, voting powers, qualifications and special or relative rights or privileges of any such series before the issuance of any shares of that series. The board of directors shall determine the number of shares constituting each series of common stock and each series shall have a distinguishing designation.
Undesignated common stock . Shares of common stock not at the time designated as shares of a particular series, pursuant to this Article V or any other provision of these Articles of Incorporation may be issued from time to time without any distinctive designation. Such undesignated common stock is referred to herein as “common stock”. Except as provided in these Articles or the designation of any series or class of capital stock, the holders of the common stock shall exclusively possess all voting power. Subject to the provisions of these Articles, each holder of
Nevada Articles of Incorporation
shares of common stock shall be entitled to one vote for each share held by such holder. The term “common stock” shall mean all shares now or hereafter authorized of any class of common stock of the Corporation.
Whenever there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class or series of stock having preference over the common stock as to the payment of dividends, the full amount of dividends and sinking fund or retirement fund or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock, and on any class or series of stock entitled to participate therewith as to dividends, out of any assets legally available for the payment of dividends, but only when and as declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the Corporation, after there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class having preference over the common stock in any such event, the full preferential amounts to which they are respectively entitled, the holders of the common stock and of any class or series of stock entitled to participate therewith, in whole or in part, as to distribution of assets shall be entitled, after payment or provision for payment of all debts and liabilities of the Corporation, to receive the remaining assets of the Corporation available for distribution, in cash or in kind.
Each share of undesignated common stock shall have the same relative powers, preferences and rights as, and shall be identical in all respects with, all the other shares of common stock of the Corporation.
Serial Preferred Stock . Shares of Preferred Stock not at the time designated as shares of a particular series pursuant to this Article V or any other provision of these Articles of Incorporation may be issued from time to time in one or more additional series. The board of directors may determine, in whole or in part, the preferences, voting powers, qualifications and special or relative rights or privileges of any such series before the issuance of any shares of that series. The board of directors shall determine the number of shares constituting each series of Preferred Stock and each series shall have a distinguishing designation. Each share of each series of serial preferred stock shall have the same relative powers, preferences and rights as, and shall be identical in all respects with, all the other shares of the Corporation of the same series, except the times from which dividends on shares which may be issued from time to time of any such series may begin to accrue.
Series E Preferred Stock . There shall be a series of Preferred Stock designated as “Series E Preferred Stock,” par value $.001 per share, and the number of shares constituting such series shall be 1,000,000. Such series is referred to herein as the “Series E Preferred Stock.”
(a) Stated Capital . The amount to be represented in stated capital at all times for each share of Series E Preferred Stock shall be $.001.
(b) Rank . All shares of Series E Preferred Stock shall rank subordinate and junior to all of the Corporation’s common stock, par value $.001 per share, and preferred stock, par value $.001 per share, now or hereafter issued, as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.
(c) Dividends . No dividend shall be declared or paid on the Series E Preferred Stock.
(d) No Liquidation Participation . In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, the holders of shares of Series E Preferred Stock shall not be entitled to participate in the distribution of the assets of the Corporation. A liquidation, dissolution, or winding-up of the Corporation, as such terms are used in this Article (V) shall not be deemed to be occasioned by or to include any merger of the Corporation with or into one or more corporations or other entities, any acquisition or exchange of the outstanding shares of one or more classes or series of the Corporation, or any sale, lease, exchange, or other disposition of all or a part of the assets of the Corporation.
(e) Right to Action by Vote or Consent . Except as otherwise required by law, the shares of outstanding Series E Preferred Stock shall 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 capital stock such that the holders of outstanding shares of Series E Preferred Stock shall always constitute sixty-six and two thirds (66 2/3rds) of the voting rights of the Corporation. The 66 2/3rds voting rights may be exercised by vote or written consent based on the will of a majority of the holders of Series E Preferred Stock. Except as otherwise required by law or by the Articles of
Nevada Articles of Incorporation
2
Incorporation of which this designation is a part, the holders of shares of common stock and Series E Preferred Stock shall vote together and not as separate classes.
(f) No Redemption . The shares of Series E Preferred Stock are not redeemable.
(g) Preemptive Rights . The Series E Preferred Stock is not entitled to any preemptive or subscription rights in respect of any securities of the Corporation.
ARTICLE VI
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series, or any unissued bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock or carrying any right to purchase stock may be issued pursuant to resolution of the board of directors of the Corporation to such persons, firms, corporations or associations, whether or not holders thereof, and upon such terms as may be deemed advisable by the board of directors in the exercise of its sole discretion.
ARTICLE VII
DIRECTORS
(a) Number: Vacancies . The number of directors of the Corporation shall be such number, not less than one nor more than 15 (exclusive of directors, if any, to be elected by holders of preferred stock of the Corporation), as shall be provided from time to time in a resolution adopted by the board of directors, provided that no decrease in the number of directors shall have the effect of shortening the term of any incumbent director, and provided further that no action shall be taken to decrease or increase the number of directors from time to time unless at least two-thirds of the directors then in office shall concur in said action. Exclusive of directors, if any, elected by holders of preferred stock, vacancies in the board of directors of the Corporation, however caused, and newly created directorships shall be filled by a vote of two-thirds of the directors then in office, whether or not a quorum, and any director so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which the director has been chosen expires and when the director’s successor is elected and qualified. The board of directors shall be classified in accordance with the provisions of Section (b) of this Article VII.
(b) Classified Board . The board of directors of the Corporation (other than directors which may be elected by the holders of preferred stock) shall be divided into three classes of directors which shall be designated Class I, Class II and Class III. Such classes shall be as nearly equal in number as the then total number of directors constituting the entire board of directors shall permit, exclusive of directors, if any, elected by holders of preferred stock, with the terms of office of all members of one class expiring each year. Should the number of directors not be equally divisible by three, the excess director or directors shall be assigned to Classes I or II as follows: (1) if there shall be an excess of one directorship over the number equally divisible by three, such extra directorship shall be classified in Class I; and (2) if there be an excess of two directorships over a number equally divisible by three, one shall be classified in Class I and the other in Class II. At the first meeting of the board of directors of the Corporation, directors of Class I shall be elected to hold office for a term expiring at the first annual meeting of stockholders, directors of Class II shall be elected to hold office for a term expiring at the second succeeding annual meeting of stockholders and directors of Class III shall be elected to hold office for a term expiring at the third succeeding annual meeting thereafter. Thereafter, at each succeeding annual meeting, directors of each class shall be elected for three-year terms. Notwithstanding the foregoing, the director whose term shall expire at any annual meeting shall continue to serve until such time as his successor shall have been duly elected and shall have qualified unless his position on the board of directors shall have been abolished by action taken to reduce the size of the board of directors prior to said meeting.
(c) Increase and Reduction in Number of Directors . Should the number of directors of the Corporation be reduced, the directorship(s) eliminated shall be allocated among classes as appropriate so that the number of directors in each class is as specified in the position(s) to be abolished. Notwithstanding the foregoing, no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Should the number of directors of the Corporation be increased, other than directors which may be elected by the holders of preferred stock, the additional directorships shall be allocated among classes as appropriate so that the number of directors in each class is as specified in the immediately preceding paragraph.
Nevada Articles of Incorporation
3
(d) Directors Elected by Preferred Stockholders . Whenever the holders of any one or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the board of directors shall include said directors so elected in addition to the number of directors fixed as provided in this Article VII. Notwithstanding the foregoing, and except as otherwise may be required by law, whenever the holders of any one or more series of preferred stock of the Corporation elect one or more directors of the Corporation, the tem1s of the director or directors elected by such holders shall expire at the next succeeding annual meeting of stockholders.
(e) Removal of Directors . Notwithstanding any other provision of these Articles or the bylaws of the Corporation, any director or all the directors of a single class (including the entire board of directors) of the Corporation may be removed, at any time, but only by the affirmative vote or consent of the holders of at least 2/3ds of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Notwithstanding the foregoing, whenever the holders of any one or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the preceding provisions of this Article VII shall not apply with respect to the director or directors elected by such holders of preferred stock.
(f) Additional Authority of Directors . In furtherance, but not in limitation of the powers conferred by statute, the board of directors is expressly authorized to do the following:
(i) Designate one (1) or more committees, each committee to consist of one or more of the directors of the Corporation and such number of natural persons who are not directors as the board of directors shall designate, which to the extent provided in the Resolution, or in the by-laws of the Corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the Corporation.
(ii) As provided by Nevada Revised Statutes 78.140, without repeating the section in full here, the same is adopted and no contract or other transaction between this Corporation and any of its officers, agents or directors shall be deemed void or voidable solely for that reason. The balance of the provisions of the code section cited, as it now exists, allowing such transactions, is hereby incorporated into this Article as though more fully set forth, and such Article shall be read and interpreted to provide the greatest latitude in its application.
(iii) As provided by Nevada Revised Statutes 78.207, without repeating the section in full here, the board of directors shall have the authority to change the number of shares of any class or series, if any, of authorized stock by increasing or decreasing the number of authorized shares of the class or Series and correspondingly increasing or decreasing the number of issued and outstanding shares of the same class or series held by each stockholder of record at the effective date and time of the change by a resolution adopted by the board of directors, without obtaining the approval of the stockholders.
(iv) If a proposed increase or decrease in the number of issued and outstanding shares of any class or series would adversely alter or change any preference or any relative or other right given to any other class or series of outstanding shares, then the decrease must be approved by the vote, in addition to any vote required, of the holders of shares representing a majority of the voting power of each class or series whose preference or rights are adversely affected by the increase or decrease, regardless of limitations or restrictions on the voting power thereof. The increase or decrease does not have to be approved by the vote of the holders of shares representing a majority of the voting power in each class or series whose preference or rights are not adversely affected by the increase or decrease.
(v) Have the sole authority to call annual or special meetings of the stockholders or delegate a committee of the board of directors the power to call special meetings by the board of directors.
(vi) Change the name of the Corporation at any time and from time to time to any name authorized by Nevada Revised Statutes 78.039.
ARTICLE VIII
VOTING
(a) Cumulative Voting . Except for the right, if any, of holders of shares of preferred stock then outstanding to cumulate votes expressly set forth in the resolution, resolutions or designation providing for the issuance of such shares, cumulative voting is not permitted with respect to the election of directors.
Nevada Articles of Incorporation
4
(b) Stockholder Proposals . Any stockholder desiring to make a nomination for the election of directors or a proposal for new business at a stockholder meeting must submit written notice not less than 30 or more than 60 days in advance of the meeting: provided, however, that if less than forty days’ notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the secretary of the company not later than the close of the tenth day following the day on which notice of the meeting was mailed to stockholders.
ARTICLE IX
INDEMNIFICATION
Any person who was or is a party or was or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (whether or not by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, incorporator, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, incorporator, employee, partner, trustee, or agent of another corporation, partnership, joint venture, trust, or other enterprise (including an employee benefit plan), shall be entitled to be indemnified by the Corporation to the full extent then permitted by law against expenses (including counsel fees and disbursements), judgments, fines (including excise taxes assessed on a person with respect to an employee benefit plan), and amounts paid in settlement incurred by him in connection with such action, suit, or proceeding and, if so requested, the Corporation shall advance (within two business days of such request) any and all such expenses to the person indemnified; provided, however, that (i) the foregoing obligation of the Corporation shall not apply to a claim that was commenced by the person indemnified without the prior approval of the Board of Directors. Such right of indemnification shall inure whether or not the claim asserted is based on matters which antedate the adoption of this Article IX. Such right of indemnification shall continue as to a person who has ceased to be a director, officer, incorporator, employee, partner, trustee, or agent and shall inure to the benefit of the heirs and personal representatives of such a person. The indemnification provided by this Article IX shall not be deemed exclusive of any other rights which might be provided now or in the future under any provision currently in effect or hereafter adopted of the bylaws, by any agreement, by vote of stockholders, by resolution of disinterested directors, by provisions of law, or otherwise.
ARTICLE X
LIMITATIONS ON DIRECTORS’ LIABILITY
No director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for damages for breach of fiduciary duty as a director or officer, except: (a) for acts or omissions that involve intentional misconduct, fraud or a knowing violation of law; or (b) the payment of distributions in violation of Nevada Revised Statutes Section 78.300. If the Nevada Revised Statutes are amended after the date of filing of these Articles to further eliminate or limit the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Nevada Revised Statutes, as so amended. Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
ARTICLE XI
SEVERABILITY PROVISIONS
If any voting powers, preferences and relative, participating, optional and other special rights of any class or series of capital stock and qualifications, limitations and restrictions thereof is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of all classes and series of capital stock and qualifications, limitations and restrictions thereof set forth in these Articles of Incorporation which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of any series or class of capital stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences or relative, participating, optional or other special rights of any class or series of capital stock and qualifications, limitations, and restrictions thereof set forth shall be deemed dependent upon any other such voting powers, preferences or relative, participating, optional or other special rights of any class or series of capital stock and qualifications, limitations and restrictions thereof unless so expressed herein.
Nevada Articles of Incorporation
5
ARTICLE XII
STATUTORY ELECTIONS
(a) The Corporation hereby elects not to be governed by, and to otherwise opt out of, the provisions of NRS 78.378 to 78.3793, inclusive, relating to acquisition of a controlling interest in the Corporation.
(b) The Corporation hereby elects not to be governed by, and to otherwise opt out of, the provisions of NRS 78.411 to 78.444, inclusive, relating to combinations with interested stockholders.
ARTICLE XIII
BYLAWS AMENDMENT
In furtherance and not in limitation of the powers conferred by statute, the board of directors of the Corporation is expressly authorized to adopt, repeal, alter, amend and rescind the bylaws of the Corporation only by a unanimous vote of the board of directors without a vote or other action by the stockholders.
Nevada Articles of Incorporation
6
Exhibit 3.2
PLAN AND AGREEMENT OF MERGER OF
ON THE MOVE SYSTEMS CORP.
(a Florida Corporation)
AND
ON THE MOVE SYSTEMS CORP.
(a Nevada Corporation)
PLAN AND AGREEMENT OF MERGER by and between ON THE MOVE SYSTEMS CORP., a Florida corporation (“On the Move Florida”), and ON THE MOVE SYSTEMS CORP., a Nevada corporation (“On the Move Nevada”).
WHEREAS, On the Move Florida is a business corporation of the State of Florida with its registered office therein located at 5011 South State Road 7, Suite 106 Davie, Florida 33314; and
WHEREAS, the total number of shares of stock which On the Move Florida has authority to issue is 100,000,000 shares of common stock, $.0001 par value per share; and
WHEREAS, On the Move Nevada is a business corporation of the State of Nevada with its registered office therein located at 613 Saddle River Court, Henderson, Nevada 89015; and
WHEREAS, the total number of shares of stock which On the Move Nevada has authority to issue is 500,000,000, of which 480,000,000 are common stock, $.001 par value per share, and 20,000,000 are preferred stock, $.001 par value per share; and
WHEREAS, the Florida Business Corporation Act permits a merger of a business corporation of the State of Florida with and into a business corporation of another jurisdiction; and
WHEREAS, the Revised Statutes the State of Nevada permits the merger of a business corporation of another jurisdiction with and into a business corporation of the State of Nevada; and
WHEREAS, On the Move Florida and On the Move Nevada and the respective Boards of Directors thereof declare it advisable and to the advantage, welfare, and best interests of said corporations and their respective stockholders to merge On the Move Florida with and into On the Move Nevada pursuant to the provisions of the Florida General Corporation Law and pursuant to the provisions of the Revised Statutes of the State of Nevada upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual agreement of the parties hereto hereby determine and agree as follows.
ARTICLE I
MERGER
1.1. CONSTITUENT CORPORATIONS. The name, address and jurisdiction of organization of each of the constituent corporations are set forth in the recitals above.
1.2. SURVIVING CORPORATION. On the Move Nevada shall be the surviving corporation. The principal place of business, Articles of Incorporation, bylaws, officers and directors of On the Move Nevada shall survive the merger without amendment or revision and be the principal place of business, Articles of Incorporation, bylaws, officers and directors of the surviving corporation.
1.3. MERGER. On the Effective Date (as hereinafter set forth) and subject to the terms and conditions of this Agreement, the applicable provisions of the Florida Business Corporation Act (“Florida Law”), and the applicable provisions of Title 7, Chapter 78 of the Nevada Revised Statutes (“Nevada Law”), On the Move Florida is merged with and into On the Move Nevada. The separate existence of On the Move
Florida shall cease on and after the Effective Date.
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ARTICLE II
EXCHANGE AND CONVERSION OF SHARES
2.1. CONVERSION OF CAPITAL STOCK. On the Effective Date, each 500 issued and outstanding share of the common stock, $.0001 par value per share, of On the Move Florida shall be converted into the right to receive one fully paid and non-assessable share of the common stock, $.001 par value per share, of On the Move Nevada.
2.2. FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued by On the Move Nevada as a result of the merger and no shareholder will own less than five shares. Each fractional share that would otherwise result from the merger shall be cancelled and returned to the authorized and unissued capital stock of On the Move Nevada and one full share of On the Move Nevada common stock, $.001 par value per share, shall be issued in its place. The necessary number of whole shares will be issued such that no shareholder will own less than five shares.
2.3. NO MANDATORY EXCHANGE. Pursuant to the provisions of NRS 78.250, any certificate representing shares of the common stock, $.0001 par value per share of On the Move Florida may be surrendered to On the Move Nevada for cancellation and exchanged for certificates representing shares of On the Move Nevada common stock, $.001 par value per share. Any stock represented by certificates that have not been so surrendered and exchanged shall be entitled to notice of and vote on any matters on which the shareholders of On the Move Nevada are entitled to vote and shall be entitled to receive any distributions on On the Move Nevada capital stock.
2.4. CANCELLATION OF EXISTING SHARES. On the Effective date, each share of the common stock, $.001 par value per share, of On the Move Nevada outstanding immediately prior to the merger shall be cancelled and returned to the authorized and unissued capital stock of On the Move Nevada.
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS
3.1. SUBMISSION TO SERVICE IN FLORIDA. On the Move Nevada agrees that it may be served with process in the State of Florida in any proceeding for enforcement of any obligation of On the Move Nevada arising from this merger, including any suit or other proceeding to enforce the rights of any stockholders as determined in appraisal proceedings pursuant to the provisions of 607.1321 of the Florida Business Corporation Act, and irrevocably appoints the Secretary of State of Florida as its agent to accept services of process in any such suit or proceeding.
3.2. COOPERATION. This Agreement has been approved and adopted by the stockholders of On the Move Florida in accordance with Florida Law. Therefore, the parties hereto agree that they will cause to be executed and filed and recorded any document or documents prescribed by Florida Law or Nevada Law, and that they will cause to be performed all necessary acts within the State of Florida and the State of Nevada and elsewhere to effectuate the merger herein provided for.
3.3. ADDITIONAL ASSURANCES. On the Move Florida hereby appoints the officers and directors, each acting alone, as its true and lawful attorneys in fact to do any and all acts and things, and to make, execute, deliver, file, and record any and all instruments, papers, and documents which shall be or become necessary, proper, or convenient to carry out or put into effect any of the provisions of this Agreement or of the merger herein provided for.
ARTICLE IV
EFFECTIVE DATE
4.1. EFFECTIVE DATE. The effective date in the State of Florida and the State of Nevada, shall be on the date of the last to occur:
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the first day after the 20th day after the date of mailing an Information Statement in compliance with the provisions of Section 14(c) of the Securities Exchange Act of 1934; |
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the filing and acceptance of articles of merger with the Secretary of State of Florida in accordance with Florida Law or at such later time as is agreed to by the parties hereto and specified in the certificate of merger; or |
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the filing and acceptance of articles of merger with the Secretary of State of Nevada in accordance with Nevada Law or at such later time as is agreed to by the parties hereto and specified in the certificate of merger. |
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4.2. TERMINATION. Notwithstanding the full approval and adoption of this Agreement, the said Agreement may be terminated by either party at any time prior to the Effective Date.
4.3. AMENDMENT. Notwithstanding the full approval and adoption of this Agreement, this Agreement may be amended at any time and from time to time prior to the Effective Date except that, without the approval of the stockholders of On the Move Florida and the stockholders of On the Move Nevada, no such amendment may (a) change the rate of exchange for any shares of On the Move Florida or the types or amounts of consideration that will be distributed to the holders of the shares of stock of On the Move Florida; (b) change any term of the Articles of Incorporation of On the Move Nevada; or (c) adversely affect any of the rights of the stockholders of On the Move Florida or On the Move Nevada.
ARTICLE V
MISCELLANEOUS
5.1. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which may have different signatures and be signed at different times. When all parties have signed at least one counterpart, each counterpart shall be deemed complete and shall constitute the same instrument.
5.2. ENTIRE AGREEMENT. This Agreement is intended by the parties to be the final expression of their agreement with respect to the matter set forth herein and is intended to contain all of the terms of such agreement without the need to refer to other documents. There are no other understandings, written or
oral, among the parties with respect to the matter set forth herein.
5.3. AMENDMENT. This Agreement may not be amended except by a written instrument signed by the parties hereto.
IN WITNESS WHEREOF, this Agreement is hereby executed upon behalf of each of the parties thereto this day of March 25, 2015.
ON THE MOVE SYSTEMS CORP. |
ON THE MOVE SYSTEMS CORP. |
A Florida corporation |
A Nevada corporation |
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By: /s/ Robert Wilson |
By: /s/ Robert Wilson |
Robert Wilson |
Robert Wilson |
President and CEO |
President and CEO |
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Exhibit 3.4
State Seal |
BARBARA K. CEGAVSKE Secretary of State 202 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov |
Certificate of Designation (PURSUANT TO NRS 78.1955) |
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Filed in the office of /s/ Barbara K. Cegavske Barbara K. Cegavske Secretary of State State of Nevada |
Document Number |
20170058053-11 |
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Filing Date and Time |
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02/08/2017 9:58 AM |
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Entity Number |
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E0461922014-7 |
USE BLACK INK ONLY – DO NOT HIGHLIGHT |
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ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Designation For
Nevada Profit Corporations
(Pursuant to NRS 78.1955)
1. Name of corporation:
On The Move Systems Corp. |
2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions, and relative rights of the following class or series of stock.
Series F Preferred Stock: (a) Designation and Amount. There shall be a series of Preferred Stock designated as Series F Convertible Preferred Stock," and the number of shares constituting such series shall be 1,000... CONTINUED ON ATTACHED EXHIBIT A
Series G Preferred Stock: (a) Designation and Amount. There shall be a series of Preferred Stock designated as Series G Preferred Stock," and the number of shares constituting such series shall be 100,000... CONTINUED ON ATTACHED EXHIBIT B |
3. Effective date of filing: (optional) |
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(must not be later than 90 days after the certificate is filed) |
4. Signature: (required)
X /s/ Robert Wilson |
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Signature of Officer |
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Filing Fee: $175.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees. |
Nevada Secretary of State Stock Designation
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EXHIBIT A
TO
CERTIFICATE OF DESIGNATION
SERIES F CONVERTIBLE PREFERRED STOCK
I. DESIGNATION AND AMOUNT
There shall be a series of preferred stock designated as “Series F Convertible Preferred Stock”, and the number of shares constituting such series shall be 1,000, the face amount per share is $1.00 and the total face amount of all shares is $1.00 (“Face Amount”). Such series is referred to herein as the “Series F Convertible Preferred Stock”.
II. DIVIDENDS
The holders of the Series F Convertible Preferred Stock shall not be entitled to receive dividends.
III. CONVERSION
(a) Conversion at the Option of holder . The holder may, at any time and from time to time convert each 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 two and 22 100ths (2.22) and dividing the result by 1,000 (Conversion Price”).
(b) Mechanics of Conversion . To convert the Series F Convertible Preferred Stock, a holder shall: (i) email, fax (or otherwise deliver by other means resulting in notice) a copy of a fully executed notice of conversion in the form provided by the Company and (ii) within three (3) business days surrender or cause to be surrendered to the Company the certificates representing the Series F Convertible Preferred Stock being converted (the “Preferred Stock Certificates”) accompanied by duly executed stock powers and the original executed version of a notice of conversion. The date of the Company’s receipt of the notice of conversion shall be the “Conversion Date”.
(c) Conversion Disputes . In the case of any dispute with respect to a conversion, the Company shall promptly issue such number of shares of common stock as are not disputed in accordance with the other provisions of this Article III. If such dispute involves the calculation of the Conversion Price, the Company shall submit the disputed calculations to an independent accounting firm, acceptable to holder, via facsimile within two (2) business days of receipt of the notice of conversion. The accounting firm shall audit the calculations and notify the Company and the holder of the results no later than two (2) business days from the date it receives the disputed calculations. The accounting firm’s calculation shall be deemed conclusive, absent manifest error. The Company shall then issue the appropriate number of shares of common stock in accordance with this Article III.
(d) Timing of Conversion . No later than the third business day following the Conversion Date (the “Delivery Period”), provided that the Company has received prior to such date the Preferred Stock Certificates, the Company shall deliver to the holder (or at its direction) (x) that number of shares of common stock issuable upon conversion of the number of Series F Convertible Preferred Stock being converted and (y) a certificate representing the number of Series F Convertible Preferred Stock not being converted, if any. The person or persons entitled to receive shares of common stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares at the close of business on the Conversion Date and such shares shall be issued at such time, unless the notice of conversion is revoked as provided in Section III(e). The Delivery Period shall be extended until the business day following the date of delivery to the Company of the Preferred Stock Certificates to be converted.
(e) Revocation of notice of conversion . In addition to any other remedies which may be available to the holder, in the event the Company fails for any reason to effect delivery to the holder of certificates representing the shares of common stock receivable upon conversion of the Series F Convertible Preferred Stock by the business day
following the expiration of the Delivery Period, the holder may revoke the notice of conversion by delivering a notice to such effect to the Company. Upon receipt by the Company of such a revocation notice, the Company shall immediately return the subject Preferred Stock Certificates and other conversion documents, if any, delivered by holder, to the holder, and the Company and the holder shall each be restored to their respective positions held immediately prior to delivery of the notice of conversion.
(f) Stamp, Documentary and Other Similar Taxes . The Company shall pay all stamp, documentary, issuance and other similar taxes which may be imposed with respect to the issuance and delivery of the shares of common stock pursuant to conversion of the Series F Convertible Preferred Stock; provided that the Company will not be obligated to pay stamp, transfer or other taxes resulting from the issuance of common stock to any person other than the registered holder of the Series F Convertible Preferred Stock.
(g) No Fractional Shares . No fractional shares of common stock are to be issued upon the conversion of Series F Convertible Preferred Stock, but the Company shall pay a cash adjustment in respect of any fractional share which would otherwise be issuable in an amount equal to the same fraction of the Closing Bid Price on the Conversion Date of a share of common stock; provided that in the event that sufficient funds are not legally available for the payment of such cash adjustment any fractional shares of common stock shall be rounded up to the next whole number.
(h) Electronic Transmission . In lieu of delivering physical certificates representing the common stock issuable upon conversion, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program (the “FAST Program”), upon request of a holder who shall have previously instructed such holder’s prime broker to confirm such request to the Company’s transfer agent and upon the holder’s compliance with Section III(b), the Company shall use its commercially reasonable efforts to cause its transfer agent to electronically transmit the common stock issuable upon conversion to the holder by crediting the account of holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system. Subject to the foregoing, the Company will use its commercially reasonable efforts to maintain the eligibility of its common stock for the FAST Program.
IV. RESERVATION OF AUTHORIZED SHARES OF COMMON STOCK
Subject to the provisions of this Article IV, the Company shall at all times reserve and keep available out of its authorized but unissued shares of common stock, solely for the purpose of effecting the conversion of the Series F Convertible Preferred Stock a sufficient number of shares of common stock to provide for the conversion of all outstanding Series F Convertible Preferred Stock upon issuance of shares of common stock (the “Reserved Amount”). If the Reserved Amount for any three (3) consecutive trading days (the last of such three (3) trading days being the “Authorization Trigger Date”) is less than one hundred seventy-five percent (175%) of the number of shares of common stock issuable on such trading days upon conversion of the outstanding Series F Convertible Preferred Stock (without giving effect to any limitation on conversion or exercise thereof) then the Company shall immediately take all necessary action (including stockholder approval to authorize the issuance of additional shares of common stock) to increase the Reserved Amount to two hundred percent (200%) of the number of shares of common stock issuable upon conversion of the outstanding Series F Convertible Preferred Stock (without giving effect to any limitation on conversion or exercise thereof).
V. FAILURE TO CONVERT
If, at any time, (x) the Conversion Date has occurred and the Company fails for any reason to deliver, on or prior to the second business day following the expiration of the Delivery Period for such conversion (said period of time being the “Extended Delivery Period”), such number of shares of common stock to which such holder is entitled upon such conversion, or (y) the Company provides notice (including by way of public announcement) to any holder at any time of its intention not to issue shares of common stock upon exercise by any holder of its conversion rights in accordance with the terms of this Certificate of Designation (other than because such issuance would exceed such holder’s allocated portion of the Reserved Amount) (each of (x) and (y) being a “Conversion Default”), then the Company shall pay to the affected holder, in the case of a Conversion Default described in clause (x) above, and to all holders, in the case of a Conversion Default described in clause (y) above, an amount equal to
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1% of the Face Amount of the Series F Convertible Preferred Stock with respect to which the Conversion Default exists (which amount shall be deemed to be the aggregate Face Amount of all outstanding Series F Convertible Preferred Stock in the case of a Conversion Default described in clause (y) above) for each day thereafter until the Cure Date. “Cure Date” means (i) with respect to a Conversion Default described in clause (x) of its definition, the date the Company effects the conversion of the portion of the Series F Convertible Preferred Stock submitted for conversion and (ii) with respect to a Conversion Default described in clause (y) of its definition, the date the Company undertakes in writing to issue common stock in satisfaction of all conversions of Series F Convertible Preferred Stock in accordance with the terms of this Certificate of Designation (provided that the Company thereafter so performs such obligations). The Company shall promptly provide each holder with notice of the occurrence of a Conversion Default with respect to any of the other holders.
VI. REDEMPTION. The Series F Convertible Preferred Stock may not be redeemed.
VII. RANK
All shares of the Series F Convertible Preferred Stock shall rank (i) prior to the common stock; (ii) prior to any class or series of capital stock of the Company now outstanding or hereafter created (unless, with the consent of a majority of the holders obtained in accordance with Article IX hereof, such hereafter created class or series of capital stock specifically, by its terms, ranks senior to or pari passu with the Series F Convertible Preferred Stock) (collectively, with the common stock, “Junior Securities”); and (iii) pari passu with any class or series of capital stock of the Company hereafter created (with the consent of a majority of the holders obtained in accordance with Article IX hereof) specifically ranking, by its terms, on parity with the Series F Convertible Preferred Stock (the “ pari passu Securities”); and (iv) junior to any class or series of capital stock of the Company hereafter created (with the consent of a majority of the holders obtained in accordance with Article IX hereof) specifically ranking, by its terms, senior to the Series F Convertible Preferred Stock (the “Senior Securities”), in each case as to distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. The Liquidation Preference with respect to any pari passu Securities shall be as set forth in the Certificate of Designation filed in respect thereof.
VIII. VOTING RIGHTS. No holder of the Series F Convertible Preferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Company for their vote, waiver, release or other action, except as may be otherwise expressly required by law and, in addition, the vote of a majority of the Series F holders shall be required for the following: (a) altering or changing the rights, preferences, or privileges of any class of shares; (b) issuing any shares of any class of the Company’s stock; and (c) increasing the number of authorized shares of any class of the Company’s stock.
IX. PROTECTION PROVISIONS So long as any Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of a majority of the holders: (a) alter or change the rights, preferences or privileges of the Series F Convertible Preferred Stock; (b) 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; (c) create any Senior Securities; (d) create any pari passu Securities; (e) increase the authorized number of shares of Series F Convertible Preferred Stock; (f) do any act or thing not authorized or contemplated by this 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).
X. MISCELLANEOUS
A. Lost or Stolen Certificates. Upon receipt by the Company of (i) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (ii) (y) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company, or (z) in the case of mutilation, upon surrender and cancellation of the Series F Convertible Preferred Stock Certificate(s), the Company shall execute and deliver new Series F Convertible Preferred Stock Certificate(s) of like tenor and date. However, the Company shall not be obligated to reissue such
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lost, stolen, destroyed or mutilated Preferred Stock Certificate(s) if the holder contemporaneously requests the Company to convert such Series F Convertible Preferred Stock.
B. Statements of Available Shares. Upon request, the Company shall deliver to the holder a written report notifying the holder of any occurrence which prohibits the Company from issuing common stock upon any such conversion. The report shall also specify (i) the total number of shares of common stock which are reserved for issuance upon conversion of the Series F Convertible Preferred Stock as of the date of the request, and (ii) the total number of shares of common stock which may thereafter be issued by the Company upon conversion of the Series F Convertible Preferred Stock before the Company would exceed the Reserved Amount. The Company shall, within five (5) days after delivery to the Company of a written request by any holder, provide all of the information enumerated in clauses (i) – (2) of this Section X(B) and, at the request of a holder, make public disclosure thereof.
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EXHIBIT B
TO
CERTIFICATE OF DESIGNATION
SERIES G PREFERRED STOCK
(a) Designation and Amount . There shall be a series of Preferred Stock designated as “Series G Preferred Stock,” and the number of shares constituting such series shall be 100,000, par value $.001. Such series is referred to herein as the “Series G Preferred Stock”.
(b) Stated Capital . The amount to be represented in stated capital at all times for each share of Series G Preferred Stock shall be $.001.
(c) Rank . All shares of Series G Preferred Stock all rank prior to all of the Corporation’s common stock, par value $.001 per share (the “Common Stock”), now or hereafter issued, as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or involuntary. All shares of Series G Preferred Stock will rank subordinate and junior to all shares of Series F Preferred Stock and pari passu with any of the Corporation’s preferred stock hereafter issued as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or involuntary.
(d) Dividends . The holders of the Preferred Stock shall not be entitled to receive dividends.
(e) Voting Rights . No holder of the Series G Preferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Corporation for their vote, waiver, release or other action, except as may be otherwise expressly required by law.
(f) Prior Notice of Certain Events . In case:
(1) The Corporation shall (1) declare any dividend (or any other distribution) on its Common Stock, other than (A) a dividend payable in shares of Common Stock or (B) a dividend payable in cash out of its retained earnings other than any special or nonrecurring or other extraordinary dividend or (2) declare or authorize a redemption or repurchase of in excess of 10% of the then-outstanding shares of Common Stock;
(2) the Corporation shall authorize the granting to the holders of Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights or warrants (other than any rights specified in subsection (3) of this subsection (f);
(3) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation shall be required, or of the sale or transfer of all or substantially all of the assets of the Corporation or of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or other property; or
(4) of the voluntary or involuntary dissolution or winding up of the Corporation; then the Corporation shall cause to be filed with the transfer agent for the Series G Preferred Stock, and shall cause to be mailed to the holders of record of the Series G Preferred Stock, at their last address as they shall appear upon the stock transfer books of the Corporation, at least 15 days prior to the applicable record date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption or granting of rights or warrants or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution or winding up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice).
(g) Optional Redemption by the Corporation.
(a) At any time, the Corporation may, at its option, redeem for cash out of funds legally available therefor, any or all of the outstanding Preferred Stock (“Optional Redemption”) at $1,000 per share.
(b) The Corporation shall provide each holder of Preferred Stock with at least 30 days’ notice of any proposed optional redemption pursuant this Section (g) (an “Optional Redemption Notice”). Any optional redemption pursuant to this Section (g) shall be made ratably among holders in proportion to the Liquidation Value of Preferred Stock then outstanding and held by such holders. The Optional Redemption Notice shall state the Liquidation Value of Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the Corporation to the holders at the address of such holder appearing on the register of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (x) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holders, and (y) the holders will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption.
(h) Securities Not Registered . The shares of Series G Preferred Stock have not been registered under the Securities Act of 1933 or the laws of any state of the United States and may not be transferred without such registration or an exemption from registration. Therefore, each certificate for shares of Series G Preferred Stock and each preferred stock certificate issued upon the transfer of any such shares of Series G Preferred Stock, shall be stamped or otherwise imprinted with a legend in substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”
(i) Preemptive Rights . The Series G Preferred Stock is not entitled to any preemptive or subscription rights in respect of any securities of the Corporation.
(j) Severability of Provisions . Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law.
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Exhibit 3.5
State Seal |
BARBARA K. CEGAVSKE Secretary of State 202 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov |
Certificate of Designation (PURSUANT TO NRS 78.1955) |
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Filed in the office of /s/ Barbara K. Cegavske Barbara K. Cegavske Secretary of State State of Nevada |
Document Number |
20170196891-74 |
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Filing Date and Time |
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05/03/2017 1:14 PM |
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Entity Number |
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E0461922014-7 |
USE BLACK INK ONLY – DO NOT HIGHLIGHT |
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ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Designation For
Nevada Profit Corporations
(Pursuant to NRS 78.1955)
1. Name of corporation:
ON THE MOVE SYSTEMS CORP.
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2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions, and relative rights of the following class or series of stock.
By resolution of the Board of Directors and by unanimous approval of all the holders of Series ‘E’ Preferred Stock, this certificate brings certain modification to the rights, preferences and authorized Share Capital of the Series ‘E’ Preferred Stock. Please see attached Exhibit A.
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3. Effective date of filing: (optional) |
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(must not be later than 90 days after the certificate is filed) |
4. Signature: (required)
X /s/ Garett Parsons |
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Signature of Officer |
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Filing Fee: $175.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees. |
Nevada Secretary of State Stock Designation
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EXHIBIT A
ARTICLE V
CAPITAL STOCK
SERIES E CONVERTIBLE PREFERRED STOCK
The number of shares constituting the Series E Preferred Shares in Article V shall be modified as follows:
Series E Preferred Stock. The number of shares constituting the Series E Preferred Stock and authorized to be issued shall be 4,350,000 shares.
No other changes are being made.
Subsection (h) shall be added to Article V and shall read as follows. No other changes are being made to Article V.
(h) Negative Control. So long as any Series E Preferred Stock are outstanding, the Company shall not, without first obtaining the unanimous approval of all of the holders of the Series E Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series E Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series E Preferred Stock; (c) create or designate any series or class of shares; (d) issue any shares of any series of preferred stock; (e) increase the authorized number of shares of Series E Preferred Stock; (f) increase the authorized number of shares of any series or class of the Company’s stock; (g) amend, repeal or modify the bylaws; (h) sell or otherwise dispose of any of the assets of the Company not in the ordinary course of business; (i) elect members to the Board of Directors; (i) incur debt not in the ordinary course of business (j) effect or undergo any change of control of the Company.
Exhibit 10.1
PREFERRED STOCK PURCHASE AGREEMENT
Preferred Stock Purchase Agreement (“ Agreement ”), dated as of January 31, 2017, by and among On the Move Systems Corp., a Nevada corporation (the “ Company ”), and Capital Venture Holdings LLC, a Wyoming limited liability company, who is referred to herein as a “ Purchaser. ”
WHEREAS , the Company proposes to issue and sell to the Purchaser 1,000 shares of the Company’s Series F Preferred Stock, par value $.001 per share (the “ Preferred Stock ”). The Preferred Stock will be offered and sold to the Purchaser in a private placement without being registered under the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission (the “ Commission ”) thereunder (collectively, the “ Securities Act ”), in reliance upon Section 4(a)(2) (“ Section 4(a)(2) ”) thereof and Regulation D (“ Regulation D ”) thereunder or Regulation S if the Purchase is not a U.S. entity.
The Company hereby confirms its agreement with the Purchaser as follows:
Section 1. Purchase and Sale of the Preferred Stock.
(a) Closing . Subject to the satisfaction or waiver of the conditions set forth in Sections 5 and 6 below, at the closing (the “ Closing ”), the Company shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company on the Closing Date (as defined below), 1,000 shares of Preferred Stock for the purchase price of US$5,000 together with transaction costs (the “ Purchase Price ”). The date of the Closing (the “ Closing Date ”) shall be no later than January 31, 2017. Prior to Closing, the Purchaser shall deliver the Purchase Price for the Preferred Stock to Sonfield & Sonfield, as Escrow Agent pursuant to the terms of the “ Escrow Agreement” by and among the Escrow Agent, Purchaser and K.M. Delaney and Associates, LLC.
(b) Closing Mechanics . The Closing shall take place and the Purchase Price shall be paid pursuant to the terms of the Escrow Agreement.
Section 2. Representations and Warranties of The Purchaser.
The Purchaser represents and warrants to the Company that:
(a) Purchaser acknowledges that, prior to the execution and delivery of this Agreement to the Company, Purchaser has had a full opportunity to ask questions of and receive answers from the Company or any person or persons acting on behalf of the Company concerning the terms and conditions of an investment in the Company.
(b) Purchaser is acquiring the Preferred Stock to be issued for its own account for investment purposes and not with a view toward, or for resale or transfer in connection with, the sale or distribution thereof within the meaning of the Securities Act that would be in violation of the Securities Act or any securities or “blue sky” laws of any state of the United States or other applicable law, and has no contract, agreement, undertaking or arrangement, and no intention to enter into any contract, agreement, undertaking or arrangement to pledge such Preferred Stock or any part thereof.
(c) Purchaser has been advised by the Company that (i) the Preferred Stock is being offered and sold by the Company pursuant to an exemption from registration provided under Section 4(a)(2) of the Securities Act and neither the offer nor sale of any Preferred Stock has been registered under the Securities Act or any state or foreign securities or “blue sky” laws; (ii) the Preferred Stock is a “restricted securities” under the Securities Act because it is being acquired from the Company in a transaction not involving a public offering and that the undersigned must continue to bear the economic risk of the investment in its Preferred Stock unless the offer and sale of its Preferred Stock is subsequently registered under the Securities Act and all applicable state or foreign securities or “blue sky” laws or an exemption from such registration is available; (iii) it is not anticipated that there will be any public market for the Preferred Stock in the foreseeable future; (iv) when and if the Preferred Stock may be resold without
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registration in reliance on Section 4(a)1 of the Securities Act and Rule 144 thereunder; (v) a restrictive legend in the form satisfactory to the Company shall be placed on the certificate representing the Preferred Stock; and (vi) a notation shall be made in the appropriate records of the transfer agent for the Preferred Stock indicating that the Preferred Stock is subject to restrictions on transfer.
(d) Purchaser is an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3), (4) or (7) of Regulation D under the Securities Act and has such knowledge, skill and experience in business, financial and investment matters so that the undersigned is capable of evaluating the merits, risks and consequences of an investment in the Preferred Stock and is able to bear the economic risk of loss of such investment, including the complete loss of such investment.
(e) Purchaser is not, to its knowledge, purchasing the Preferred Stock as a result of any advertisement, article, notice or other communication regarding the Preferred Stock published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to Purchaser’s knowledge, any other general solicitation or general advertisement.
(f) This Agreement has been duly and validly executed and delivered by Purchaser and constitutes the valid, binding and enforceable agreement of Purchaser except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws relating to or affect creditor’s rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Purchaser has all the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.
(g) Purchaser hereby notifies the Company that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “ Patriot Act ”), the Investor is required to obtain, verify and record information that identifies principals of the Company, which information includes the name, address, tax identification number and other information regarding the principals that will allow the Investor to identify the parties in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is effective as to the Purchaser.
(h) Such investment will not result in any violation of or conflict with any term of agreement of Purchaser or any law or regulation applicable to it.
(i) Purchaser acknowledges that the Company is a company with a limited operating history.
(j) All information which Purchaser has provided to the Company concerning the person making the investment decision on its behalf, is correct and complete as of the date hereof and may be relied upon.
Section 3. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Purchaser as follows:
(a) The Preferred Stock . The Company has all necessary power and authority to issue and deliver the Preferred Stock; the Preferred Stock has been duly authorized, and, when duly issued and delivered to Purchaser, the Preferred Stock will be duly and validly issued, fully paid and nonassessable and will be issued in compliance with federal and state securities laws. None of the Preferred Stock will be issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company.
(b) No Applicable Registration or other Similar Rights . There are no persons with registration or other similar rights to have any equity or debt securities of the Company or any affiliate (as defined in Rule 501(b) of Regulation D) registered for sale under a registration statement.
(c) No Conflicts . The execution, delivery and performance of the Agreement by the Company and the consummation by the Company of the Agreement will not (i) result in a violation of the certificate of incorporation, bylaws or other organizational documents of the Company or any of its subsidiaries or (ii)
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conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, mortgage, deed of trust, loan agreement or instrument to which the Company or any of its subsidiaries is a party or by which any property or asset of the Company or any of its subsidiaries is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal U.S. and state and non-U.S. securities laws) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected.
(d) Consents . Other than: (1) the filing of a designation of the Preferred Stock with the Secretary of State of Nevada, (2) the filing of a Form D with respect to the Preferred Stock as required under Regulation D, (3) such filings required under applicable securities or Blue Sky laws of the states of the United States, and (4) such filings as may be required under any rule or regulation promulgated by any U.S. regulatory authority (all of the foregoing, the “ Required Approvals “), the Company and its subsidiaries are not required to obtain any consent, approval, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for the Company to execute, deliver or perform any of its obligations under or contemplated by the Agreement, in each case, in accordance with the terms hereof or thereof.
(e) No General Solicitation . Neither the Company, nor any of its affiliates, nor any Person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Preferred Stock.
(f) No Directed Selling Efforts . None of the Company, its affiliates nor any person acting on its behalf has engaged or will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Preferred Stock and each of the Company, its affiliates and any person acting on its or their behalf has complied and will comply with the offering restrictions requirement of Regulation S.
(g) Accredited Investor or Non-U.S. Person . The Company will not offer or sell any of the Preferred Stock to any person whom it reasonably believes is not (i) an “accredited investor” (as defined in clauses (1), (2), (3), (4) and (7) of Rule 501(a) of Regulation D); or (ii) a non-U.S. person as defined under Regulation S of the Securities Act.
Section 4. Covenants.
(a) Reasonable Best Efforts . Each party shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Sections 5 and 6 of this Agreement.
(b) Form D and Blue Sky . The Company agrees to file a Form D with respect to the Preferred Stock as required under Regulation D and to comply with any applicable state securities and “Blue Sky” laws in connection with the sale of the Preferred Stock. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Preferred Stock for sale to the Purchaser at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Purchaser on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Preferred Stock required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.
(c) Use of Proceeds . The proceeds from the sale of the Preferred Stock (less the fees and expenses of the Offering) will be used by the Company in the manner disclosed to the Purchaser.
(d) Fees and Expenses . Except as otherwise set forth in the Agreement, each party to this Agreement shall bear its own expenses in connection with the sale of the Preferred Stock to the Purchaser.
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(e) General Solicitation . Neither the Company nor any of its Affiliates have engaged, and will engage, directly or indirectly in any form of “general solicitation” or “general advertising” in connection with the offering of the Preferred Stock (as those terms are used in Regulation D) under the Securities Act or in any manner involving a public offering within the meaning of Section 4(2); and the Company has not entered, and will not enter, into any arrangement or agreement with respect to the distribution of the Preferred Stock, and the Company agrees not to enter into any such arrangement or agreement.
(f) Publicity . The Purchaser agrees that, it will not issue any press release or otherwise make any public statement, filing or other communication regarding the Offering or the business, operations or financial condition of the Company without the prior consent of the Company (as applicable), except to the extent required by law or legal process, in which case the Purchaser shall provide the Company with prior notice of such disclosure. The Company agrees that it will not publicly disclose the name of any Purchaser or include the name of any Purchaser, without the prior written consent of Purchaser, in any press release or other public statement, filing or other communication, except to the extent required by law or legal process, in which case the Company shall provide Purchaser with prior notice of such disclosure.
(g) The Purchaser covenants and agrees to promptly furnish to the Company any and all information concerning Purchaser and its investment in the Company that the Company may from time to time reasonably request for the purpose of complying with any federal, state, local or foreign law, statute, rule, regulation or governmental or regulatory requirement, and the Purchaser warrants and represents that, at the time any such information is furnished to the Company, such information will be accurate and complete.
(h) The Purchaser acknowledges that no federal or state agency or regulatory authority has made any finding or determination as to the fairness of the Offering for public investment, or any recommendation or endorsement of the Preferred Stock.
Section 5. Conditions to the Company’s Obligation to Sell.
The obligation of the Company hereunder to issue and sell the Preferred Stock to the Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Purchaser with prior written notice thereof:
(a) The Purchaser shall have executed this Agreement and the Escrow Agreement and delivered the same to the Company.
(b) The Purchaser shall have delivered the Purchase Price as provided in the Escrow Agreement.
(c) The representations and warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Purchaser at or prior to the Closing Date.
(d) No injunction, restraining order, action or order of any nature by a governmental or regulatory authority shall have been issued, taken or made or no action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority of competent jurisdiction that would, prior to or as of the Closing Date, prevent or materially interfere with the consummation of the Agreement. In addition, no action, suit or proceeding before any court or any governmental agency shall have been commenced or threatened, no investigation by any governmental agency shall have been commenced and no action, suit or proceeding by any governmental agency shall have been threatened against Purchaser or the Company (i) seeking to
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restrain, prevent or change the Agreement or questioning the validity or legality of any of such Agreement or (ii) which could reasonably be expected to have a Material Adverse Effect.
Section 6. Conditions to the Purchaser’ Obligation to Purchase.
The obligation of the Purchaser hereunder to purchase the Preferred Stock at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Purchaser’ several and sole benefit and may be waived by the Purchaser at any time in Purchaser’s sole discretion by providing the Company with prior written notice thereof:
(a) The Company shall have executed and delivered, or caused to be delivered, to the Purchaser (i) each of the Agreement to which it is a party and (ii) the Preferred Stock being purchased by Purchaser at the Closing pursuant to this Agreement, in each case, in form and substance reasonably satisfactory to Purchaser.
(b) The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Agreement to be performed, satisfied or complied with by the Company, as applicable, at or prior to the Closing Date.
(c) No injunction, restraining order, action or order of any nature by a governmental or regulatory authority shall have been issued, taken or made or no action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority of competent jurisdiction that would, prior to or as of the Closing Date, prevent or materially interfere with the consummation of the Agreement; and no stop order suspending the qualification or exemption from qualification of any of the Preferred Stock in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or, to the knowledge of the Company after reasonable inquiry, be pending or contemplated as of the Closing Date.
(d) The Company is (i) incorporated and in good standing in its jurisdiction of incorporation; and (ii) qualified as a foreign corporation and good standing in each of the jurisdictions in which the Company operates.
(e) No material adverse change shall have occurred in the Company’s consolidated business or financial condition since the date of the Company’s most recent financial statements.
Section 7. Termination; Survival.
(a) In the event that the Closing shall not have occurred due to the failure of the Company or Purchaser to satisfy the conditions set forth in Sections 5 and 6 above (and the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on the fifth business day following the Closing Date.
(b) Unless this Agreement is terminated under Section 7(a) , the representations and warranties of the Purchaser and the Company contained in Sections 2 and 3 , respectively, and this Agreement and covenants set forth in Sections 4 and 8 shall survive the Closing.
Section 8. Miscellaneous.
(a) Notices . Any notice or other communication required or permitted to be provided hereunder shall be in writing and shall be delivered in person or by first class mail (registered or certified, return receipt
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requested), facsimile, electronic mail, or overnight air courier guaranteeing next day delivery. The address for such notices and communications shall be as follows:
If to the Company :
On the Move Systems Corp.
701 North Green Valley Parkway, Suite 200
Henderson, Nevada 89074
Telephone: 702-990-3271
Attention: Robert Wilson
Chief Executive Officer
with copies to (which shall not constitute delivery) :
Sonfield & Sonfield
2500 Wilcrest Drive, 3 rd floor
Houston, Texas 77042
Telephone: (713) 877-8333
Facsimile: (713) 877-1547
Attention: Robert L. Sonfield, Jr. Esq.
If to Purchaser :
To the address set forth under Purchaser’s name on the signature pages hereto or such other address as may be designated in writing hereafter, in the same manner, by such person.
All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; when sent, if sent via electronic mail to the address set forth above provided that a mail delivery failure or similar message is not received by the sender; and the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Failure to provide a notice or communication to one party hereto or any defect in it shall not affect its sufficiency with respect to other parties hereto.
(b) Governing Law; Jurisdiction. This Agreement will be governed by the laws of the State of Nevada. The internal law of the state of Nevada will govern and be used to construe this Agreement without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. No legal proceeding may be commenced, prosecuted or continued by any party hereto in any court other than the competent courts of the State of Texas located in Houston, Texas or in the United States District Court for the Southern District of Texas, which courts shall have jurisdiction over the adjudication of such matters, and the Company and the Purchaser hereby consents to the jurisdiction of such courts and personal service with respect thereto.
(c) Amendments and Waivers . No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and Purchaser representing a majority of the Preferred Stock purchased or to be purchased, and any amendment to this Agreement made in conformity with the provisions of this Section 8(d) shall be binding on the Purchaser and all holders of the Preferred Stock purchased under this Agreement, as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party from whom such waiver is requested.
(d) Further Assurances . Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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(e) Entire Agreement . This Agreement supersedes all other prior oral or written agreements among the parties hereto and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, none of the parties hereto makes any representation, warranty, covenant or undertaking with respect to such matters.
(f) Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party shall assign any of its rights or obligations hereunder without the prior written consent of the other party.
(g) Counterparts; Facsimile Copies. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission or electronic portable document format, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile or electronic signature were the original thereof.
(h) Severability . If any provision of this Agreement shall be invalid, unenforceable, illegal or void in any jurisdiction, such invalidity, unenforceability, illegality or voidness shall not affect the validly or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. In that case, the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining provisions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(i) Headings . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
(j) No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
IN WITNESS WHEREOF, the parties hereto have caused their respective signature page to this Stock Purchase Agreement to be duly executed as of the date first written above.
On the Move Systems Corp.
By: /s/ Robert Wilson Robert Wilson, President and CEO |
/s/ Garett Parsons Capital Venture Holdings LLC, Purchaser
By: Garett Parsons, Managing Member
Address for notice: 1712 Pioneer Ave., Suite 500 Cheyenne, Wyoming |
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Exhibit 21.1
On the Move Systems Corp.
Subsidiaries
Name |
|
Jurisdiction of Incorporation |
On the Move Experience, LLC |
|
Texas |
On the OMV Transports, LLC |
|
Texas |
Robotic Assistance Devices, Inc. |
|
Nevada |
Exhibit 31.1
CERTIFICATIONS
I, Garett Parsons, certify that:
1. I have reviewed this transition report on Form 10-KT of On the Move Systems Corp. (the “Company”) for the transition period from January 1, 2017 to February 28, 2017;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 12, 2018 |
/s/ Garett Parsons |
|
Garett Parsons |
|
President, Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial officer ) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the transition report on Form 10-KT of On the Move Systems Corp. (the “Company”) for the transition period from January 1, 2017 to February 28, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Garett Parsons, President, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: March 12, 2018 |
/s/ Garett Parsons |
|
Garett Parsons, President, Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial officer) |
This certification accompanies this Annual Report on Form 10-KT pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.