Artificial Intelligence Technology Solutions Inc. - Quarter Report: 2013 November (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended November 30, 2013


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

For the transition period from ____________, to ____________

Commission File Number 333-168530

On the Move Systems Corp.

(Exact Name of Registrant as Specified in Charter)

Florida

27-2343603

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

3001 North Rocky Point East, Suite 200, Tampa, FL 33607

(Address of Principal Executive Offices)

(813) 367-7748

(Registrant’s Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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 o No x

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


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were 22,100,000 shares of the Registrant’s $0.0001 par value common stock outstanding as of January 20, 2014.

On the Move Systems Corp.

Contents


Part I – Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

Part II – Other Information

Item 1.	Legal Proceedings	16

Item 1A.	Risk Factors	16

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3.	Defaults Upon Senior Securities	17

Item 4.	Mine Safety Disclosures	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

Signatures		17

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PART I — FINANCIAL INFORMATION

Statements in this Form 10-Q Quarterly Report may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Form 10-Q Quarterly Report, under “Management’s Discussion and Analysis of Financial Condition or Plan of Operation” and in other documents which we file with the Securities and Exchange Commission.

In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q Quarterly Report, except as required by law.

Item 1. Financial Statements

On the Move Systems Corp.

Financial Statements

Contents


Consolidated Balance Sheets (unaudited)	4
Consolidated Statements of Operations (unaudited)	5
Consolidated Statements of Cash Flows (unaudited)	6
Notes to Consolidated Financial Statements (unaudited)	7

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On the Move Systems Corp.

Consolidated Balance Sheets

(Unaudited)


	November 30, 2013			February 28, 2013
ASSETS
Current assets:
Cash	$	24,333		$	18,718
Accounts receivable		9,933			3,794
Inventory		10,899			22,010
Total current assets		45,165			44,522

Fixed assets, net of accumulated depreciation of $35,612 and $26,871, respectively		23,884			32,625
Intangible assets, net of accumulated amortization of $10,667 and $7,667 respectively		9,333			12,333
Goodwill		54,724			54,724

TOTAL ASSETS	$	133,106		$	144,204

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	214,536		$	107,200
Accounts payable and accrued expenses – related party		25,073			26,681
Current portion of convertible note payable		32,600			32,600
Advances payable and accrued interest payable		24,070			273,462
Note payable to related party		25,375			38,714
Total current liabilities		321,654			478,657

Convertible notes payable, net of discount of $640,815 and $0, respectively		284,814			281,192
Notes payable		—			2,003
Total liabilities		606,468			761,852

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding at November 30, 2013 and February 28, 2013		—			—
Common stock, $0.0001 par value, 100,000,000 shares authorized, 22,100,000 and 18,500,000 shares issued and outstanding at November 30, 2013 and February 28, 2013, respectively		2,210			1,850
Additional paid-in capital		4,571,343			3,877,150
Accumulated deficit		(5,046,915	)		(4,496,648	)
Total stockholders’ deficit		(473,362	)		(617,648	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	133,106		$	144,204

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

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On the Move Systems Corp.

Consolidated Statements of Operations

(Unaudited)


	Nine Months Ended November 30,						Three Months Ended November 30,
	2013			2012			2013			2012

REVENUES	$	65,926		$	83,025		$	20,916		$	19,978
COST OF GOODS SOLD		41,758			29,391			12,872			8,293
GROSS PROFIT		24,168			53,634			8,044			11,685

OPERATING EXPENSES
Selling, general and administrative expense		522,611			267,092			220,907			62,154

LOSS FROM OPERATIONS		(498,443	)		(213,458	)		(212,863	)		(50,469	)

OTHER EXPENSE
Interest expense		(51,824	)		(3,865	)		(23,724	)		(571	)

Net loss	$	(550,267	)	$	(217,323	)	$	(236,587	)	$	(51,040	)

Net loss per common share – basic and diluted	$	(0.03	)	$	(0.01	)	$	(0.01	)	$	(0.00	)

Weighted average number of common shares outstanding		19,530,909			18,500,000			21,002,198			18,500,000

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

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On the Move Systems Corp.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended November 30,
	2013			2012

OPERATING ACTIVITIES:
Net loss	$	(550,267	)	$	(217,323	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		11,741			5,911
Amortization of discount on convertible notes payable		17,738			—
Changes in operating assets and liabilities:
Accounts receivable		(6,139	)		(2,085	)
Inventory		11,111			(11,422	)
Accounts payable and accrued expenses		105,728			18,720
Accrued interest payable		34,087			3,865
Net cash used in operating activities		(376,001	)		(202,334	)

FINANCING ACTIVITIES:
Proceeds from advances		396,958			211,436
Repayments of notes payable		(2,003	)		(6,403	)
Repayments of notes payable to related party		(13,339	)		—
Net cash provided by financing activities		381,616			205,033

NET INCREASE IN CASH		5,615			2,699
CASH, BEGINNING OF PERIOD		18,718			18,690
CASH, END OF PERIOD	$	24,333		$	21,389

Supplemental Information:
Cash paid during the period for:
Interest	$	—		$	—
Income Taxes	$	—		$	—
Non-cash financing activities:
Common stock issued for conversion of notes payable	$	36,000		$	—
Conversion of advances to convertible debt	$	658,553		$	—
Debt discount due to beneficial conversion feature	$	658,553		$	—

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

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On the Move Systems Corp.

Notes to Consolidated Financial Statements (Unaudited)

1. Background Information

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

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

The Company has since expanded into the area of private jet service. As a result, the Company is developing its ISTx platform in order to offer private jet service for charter, inter-modal freight and animal/exotic transport segments.

On October 9, 2013, the Company formed a joint venture to provide travelers with luxury ground transportation solutions with JetSet Executive Transport, Inc., DBA JetSet Car Service (“JetSet”). JetSet is a Texas-based luxury chauffeured car service. Under the terms of the joint venture, JetSet will soon offer top-flight transportation services through OMVS’ online portal now under development. OMVS has committed to fund up to $100,000 of the cash flow or asset requirements of the joint venture at the discretion of OMVS. In addition, OMVS will provide JetSet with online marketing and customer outreach. The Company will be allocated 40 percent of the earnings (losses) from this joint venture. This joint venture has not generated any revenues as of November 30, 2013.

On October 17, 2013, the Company signed a business development agreement with the Naples Connection, making the Florida-based provider of travel and transportation services the Company’s first partner to share in charter, travel and cargo revenues. The Naples Connection delivers online deals on flights, cruises, hotels and travel. Under the terms of the agreement, OMVS will refer new customers to the Naples Connection through its online portal in exchange for a share of the travel agent commissions.

2. Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the nine months ended November 30, 2013, the Company had a net loss of $550,267. The Company has not generated positive cash flow from operations since inception and does not expect to generate positive cash flow from operations during the coming year. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to achieve a level of profitability which would generate positive cash flow or from its ability to raise adequate capital either from sales of equity securities or the issuance of debt. The Company intends to finance its operations and its working capital needs largely through the issuance of debt. There is no assurance that the Company will be able to obtain adequate financing when needed or that such financing will be available on terms that are acceptable to the Company. The consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. Basis of Presentation and Significant Accounting Policies

INTERIM FINANCIAL STATEMENTS – The accompanying unaudited consolidated financial statements have been prepared on the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements for the period ended February 28, 2013 and notes thereto contained in the Company’s Annual Report filed with the SEC on Form 10-K on June 13, 2013. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended February 28, 2013, as reported in the Form 10-K filed on June 13, 2013, have been omitted.

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BASIS OF PRESENTATION – The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The financial statements have been prepared using the accrual basis of accounting in accordance with GAAP. See Note 2 regarding the assumption that the Company is a going concern.

PRINCIPLES OF CONSOLIDATION – The consolidated financial statements include the accounts On the Move Systems Corp. and our wholly-owned subsidiary, Crawford Mobile Installation Corp. All material intercompany accounts and transactions are eliminated in consolidation. The year end for the Company and its subsidiary is February 28.

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

CASH AND CASH EQUIVALENTS – Cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $24,333 and $18,718 at November 30, 2013 and February 28, 2013, respectively.

INVENTORY – The Company follows FASB ASC 330, “Inventory”. Inventories are stated at the lower of cost or net realizable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories is determined using the specific identification method. Inventory is reduced for the estimated losses due to obsolescence. This reduction is determined for groups of products based on purchases in the recent past and/or expected future demand.

Inventory represents purchased aftermarket electronic products and other items.

FIXED ASSETS – The Company follows ASC 360, Property, Plant, and Equipment, for its fixed assets. Equipment is stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets (4 years). All equipment with an acquisition value greater than $500 and a useful life of over one year is capitalized.

IMPAIRMENT OF LONG-LIVED ASSETS – Long-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. The Company determined that there was no impairment of long-lived assets during the nine months ended November 30, 2013.

GOODWILL – Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and intangible assets of businesses acquired. Goodwill is not amortized, but it is evaluated for impairment at least annually, or more frequently if events or circumstances indicate impairment may exist.

REVENUES AND COST RECOGNITION – In accordance with ASC 605, Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is generated from the sales and installation of aftermarket electronic components and other items. Revenue is recognized net of sales returns and allowances.

INCOME TAXES – The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of November 30, or February 28, 2013.

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EARNINGS (LOSS) PER COMMON SHARE – The Company computes basic and diluted earnings per common share amounts in accordance with ASC 260, Earnings per Share. Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. The Company’s convertible debt is considered anti-dilutive due to the Company’s net loss for the nine month and three month periods ended November 30, 2013 and 2012. As a result, the Company did not have any potentially dilutive common shares for those periods. For the nine months ended November 30, 2013 and 2012, potentially issuable shares as a result of conversions of convertible notes payable have been excluded from the calculation. At November 30, 2013, the Company has 95,059,046 potentially issuable shares upon the conversion of convertible notes payable and interest.

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

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


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

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

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

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of November 30, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, accounts payable and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

COMMITMENTS AND CONTINGENCIES – The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies as of November 30, 2013 and February 28, 2013.

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

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4. Related Party Transactions

Note Payable to related party

On March 25, 2011, CMIC, a wholly owned subsidiary of the Company, entered into an agreement to purchase all of the assets and the business of CMI for $100,000. CMI was a sole proprietorship owned and operated by John Crawford. John Crawford is also the sole officer-director of the Company and CMIC. The purchase price was paid with $10,000 in cash at closing and a note payable for the remaining $90,000. The note bears interest at 10% per year and is payable in monthly installments of $2,500 with a balloon payment of the remaining principal and interest due February 1, 2014. The balance of the note payable was $25,375 and $38,714 as of November 30, 2013 and February 28, 2013, respectively.

Accounts payable and accrued expenses to related party

As of November 30, 2013 and February 28, 2013, the Company had accrued expenses in the amount of $25,073 and $26,681, respectively, which represented amounts owed to John Crawford for unpaid salary and other non-interest bearing advances to the Company.

Other

The Company’s sole officer and director is involved in other business activities and may, in the future, become involved in other business opportunities that become available. He may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

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

5. Advances

During the nine months ended November 30, 2013, the Company received proceeds for working capital in the amount of $396,958. These advances are non-interest bearing and payable upon demand. The lender of these advances is the same lender of the convertible promissory notes discussed in Notes 6. The funds were advanced to the Company through an intermediary agent which also provides certain legal, accounting and support services to the Company.

6. Convertible Notes Payable

Convertible notes payable consist of the following as of November 30, 2013 and February 28, 2013:


	November 30, 2013			February 28, 2013
Convertible note payable, dated February 28, 2011, bearing interest at 7% per annum, matured on February 27, 2013 and convertible into shares of common stock at $0.015 per share; it is in default and bears default interest at 18% per annum	$	32,600		$	32,600
Convertible note payable, dated January 31, 2013, bearing interest at 10% per annum, matures on February 28, 2015 and convertible into shares of common stock at $0.01 per share		267,076			281,192
Convertible note payable, dated May 31, 2013, bearing interest at 10% per annum, matures on May 31, 2015 and convertible into shares of common stock at $0.01 per share		261,595			—
Convertible note payable, dated November 30, 2013, bearing interest at 10% per annum, matures on November 30, 2015 and convertible into shares of common stock at $0.01 per share		396,958			—
Total convertible notes payable		958,229			313,792
Less: current portion of convertible notes payable		(32,600	)		(32,600	)
Less: discount on noncurrent convertible notes payable		(640,815	)		—
Long-term convertible notes payable, net of discount	$	284,814		$	281,192

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On February 28, 2011, the Company borrowed $100,100 through a convertible note for the purpose of obtaining operating capital. Under the terms of the note, interest shall accrue at 7% per annum; and principal and accrued interest shall become due on February 27, 2013, unless extended by mutual consent of the parties. Unpaid principal and accrued interest are convertible into common stock of the Company at $0.015 per share. On November 3, 2011, the holder of the note elected to convert principal in the amount of $67,500 into 4,500,000 shares of common stock. As of November 30, 2013 and February 28, 2013, the remaining balance of the convertible note payable was $32,600. The note is in default and bears default interest at 18% per annum.

On January 31, 2013, the Company signed a convertible promissory note with Vista View Ventures Inc. which refinanced non-interest bearing advances in the amount of $281,192 into a convertible note payable. The convertible promissory note bears interest at 10% per annum and is payable along with accrued interest on February 28, 2015. The convertible promissory note is convertible into common stock at the option of the holder at the rate of $0.01 per share.

On May 31, 2013, the Company signed a convertible promissory note with Vista View Ventures Inc. which refinanced non-interest bearing advances in the amount of $261,595 into a convertible note payable. The convertible promissory note bears interest at 10% per annum and is payable along with accrued interest on May 31, 2015. The convertible promissory note is convertible into common stock at the option of the holder at the rate of $0.01 per share.

On August 1, 2013, the holder of the convertible promissory note dated January 31, 2013, elected to convert principal and interest in the amount of $18,000 into 1,800,000 shares of common stock.

On October 9, 2013, the holder of the convertible promissory note dated January 31, 2013, elected to convert principal and interest in the amount of $9,000 into 900,000 shares of common stock.

On November 13, 2013, the holder of the convertible promissory note dated January 31, 2013, elected to convert principal and interest in the amount of $9,000 into 900,000 shares of common stock.

On November 30, 2013, the Company signed a convertible promissory note with Vista View Ventures Inc. which refinanced non-interest bearing advances in the amount of $396,958 into a convertible note payable. The convertible promissory note bears interest at 10% per annum and is payable along with accrued interest on November 30, 2015. The convertible promissory note is convertible into common stock at the option of the holder at the rate of $0.01 per share.

The Company evaluated the terms of the convertible notes in accordance with ASC 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized a beneficial conversion feature in the amount of $261,595 and $396,958 at May 31, 2013 and November 30, 2013, respectively. The beneficial conversion feature is being amortized to interest expense over the life of the notes using the effective interest method.

7. Subsequent Events

Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no events have occurred requiring adjustment or disclosure.

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PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

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

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

OVERVIEW OF THE COMPANY

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

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

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

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

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

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

The Company has since expanded into the area of private jet service. As a result, the Company has developed its ISTx platform in order to offer private jet service for the charter, inter-modal freight and animal/exotic transport segments.

On October 9, 2013, the Company formed a joint venture to provide travelers with luxury ground transportation solutions with JetSet Executive Transport, Inc., DBA JetSet Car Service (“JetSet”). JetSet is a Texas-based luxury chauffeured car service with aggressive expansion goals. Under the terms of the joint venture, JetSet will soon offer top-flight transportation services through OMVS’ ambitious online portal now under development. OMVS has committed to fund up to $100,000 of the cash flow or asset requirements of the joint venture at the discretion of OMVS. In addition, OMVS will provide JetSet with aggressive online marketing and customer outreach.

On October 17, 2013, the Company signed a business development agreement with the Naples Connection, making the Florida-based provider of travel and transportation services the company’s first partner to share in charter, travel and cargo revenues. The Naples Connection delivers online deals on flights, cruises, hotels and travel, making the company a valuable partner for OMVS. Under the terms of the agreement, OMVS will refer new customers to the Naples Connection through its online portal in exchange for a share of the travel agent commissions.

In addition, the Company is currently investigating the opportunities in the personal and business safety and protection markets.

Our auditor issued a going concern opinion on our audited financial statements for the year ended February 28, 2013. This means there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. Accordingly, we must raise cash from sources other than loans we undertake.

Our ability to continue to implement our business plan is dependent on our ability to generate positive cash flow from operations and to secure sufficient financing; however there is no guarantee that we will be successful in this regard. In order to implement our business plan, we anticipate that we will require at least $425,000 in financing over the next eighteen months. We have taken no steps to secure the $425,000 in additional financing that we will need to implement our business plan. Furthermore, even if we successfully execute our business, there is no guarantee that there will be a significant market for our services or that we will achieve significant revenues, if any.

Results of Operations

Nine months ended November 30, 2013 compared to the nine months ended November 30, 2012

Revenues

During the nine months ended November 30, 2013, we recognized revenue of $65,926 compared to $83,025 during the nine months ended November 30, 2012. The decrease in revenue was the result of unusually high revenue during the second quarter of the period ended November 30, 2012 and a change in the mix of revenues.

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Cost of Goods Sold

During the nine months ended November 30, 2013, we recognized cost of goods sold of $41,758 compared to $29,391 for the nine months ended November 30, 2012. Cost of goods sold increased although revenue decreased. There was change in the mix of sales which resulted in higher cost of goods sold.

Gross Profit

Gross profit decreased to $24,168 for the nine months ended November 30, 2013 from $53,634 for the nine months ended November 30, 2012. The decrease was the result of decreased revenue and increased cost of goods sold as discussed above.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $522,611 and $267,092 for the nine months ended November 30, 2013 and 2012, respectively. The increase is the result of increased spending for investor relations.

Interest Expense

We incurred interest expense of $51,824 and $3,865 for the nine months ended November 30, 2013 and 2012, respectively. The increase in interest expense was the result of refinancing non-interest bearing advances into interest bearing convertible notes and the amortization of the debt discount.

Net Loss

Net loss for the nine months ended November 30, 2013 increased to $550,267 from $217,323 for the nine months ended November 30, 2012. The increase in the net loss was primarily the result of the decrease in gross profit and the increase in general and administrative expense and interest expense.

Three months ended November 30, 2013 compared to the three months ended November 30, 2012

Revenues

During the three months ended November 30, 2013, we recognized revenue of $20,916 compared to $19,978 during the three months ended November 30, 2012. Revenues were relatively unchanged year over year.

Cost of Goods Sold

During the three months ended November 30, 2013, we recognized cost of goods sold of $12,872 compared to $8,293 for the three months ended November 30, 2012. The increase in cost of goods sold was greater than the small increase in sales. There was a significant increase in the costs of installed components.

Gross Profit

Gross profit decreased to $8,044 for the three months ended November 30, 2013 from $11,685 for the three months ended November 30, 2012. The increase was the result of decreased revenue and increased cost of goods sold as discussed above.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $220,907 and $62,154 for the three months ended November 30, 2013 and 2012, respectively. The increase is the result of increased spending for investor relations.

Interest Expense

We incurred interest expense of $23,724 and $571 for the three months ended November 30, 2013 and 2012, respectively. The increase in interest expense was the result of refinancing non-interest bearing advances into interest bearing convertible notes and the amortization of the debt discount.

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Net Loss

Net loss for the three months ended November 30, 2013 increased to $236,587 from $51,040 for the three months ended November 30, 2012. The increase in the net loss was primarily the result of the decrease in gross profit and the increase in general and administrative expense and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended November 30, 2013, we had net cash used in operating activities of $376,001. As of November 30, 2013, we had cash on hand of $24,333 and negative working capital of $276,489. We expect that this cash will be adequate to fund our operations for less than three months. We will require additional funding to continue our business plan.

We anticipate needing a minimum of $425,000 to effectively execute our business plan over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status, we believe that we may be able to issue additional notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.

The Company currently has no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. See Note 2 of our financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

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

Critical Accounting Policies

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

INVENTORY – The Company follows FASB ASC 330, “Inventory”. Inventories are stated at the lower of cost or net realizable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories is determined using the specific identification method. Inventory is reduced for the estimated losses due to obsolescence. This reduction is determined for groups of products based on purchases in the recent past and/or expected future demand.

IMPAIRMENT OF LONG-LIVED ASSETS – Long-lived assets, including fixed assets and identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.

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REVENUES AND COST RECOGNITION – In accordance with ASC 605, Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is generated from the sales and installation of aftermarket electronic components and other items. Revenue is recognized net of sales returns and allowances.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of and for the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective. Material weaknesses noted are: lack of a functioning audit committee due to a lack of a majority of independent members; lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives and affecting the functions of authorization, recordkeeping, custody of assets, and reconciliation; and, management dominated by a single individual/small group without adequate compensating controls.

Currently, management contracts with a professional services firm to assist with the preparation of the filings. However, until the Company has received additional funding, they are unable to remediate the above material weaknesses.

For a full discussion of our internal control over financial reporting, please refer to Item 9, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the period ended February 28, 2013 on Form 10-K.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the nine months ended November 30, 2013, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this Quarterly Report, neither we nor any of our officers or directors is involved in any litigation either as plaintiffs or defendants. As of this date, there is not any threatened or pending litigation against us or any of our officers or directors.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On August 1, 2013, the Company issued 1,800,000 shares of common stock as a result of the conversion of a Convertible Note Payable in the amount of $18,000.

On October 9, 2013, the Company issued 900,000 shares of common stock as a result of the conversion of a Convertible Note Payable in the amount of $9,000.

On November 13, 2013, the Company issued 9,000 shares of common stock as a result of the conversion of a Convertible Note Payable in the amount of $9,000.

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During the nine month period ended November 30, 2013, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The Company does not have any other material information to report with respect to the three month period ended November 30, 2013.

Item 6. Exhibits

(a) Exhibits included herewith are:


2.1	Asset Purchase Agreement, dated as of March 25, 2011, by and among Crawford Mobile Installation Corporation and Crawford Mobile Install (sole proprietorship). (2)
3.1	Articles of Incorporation of On The Move Systems Corporation (1)
3.2	Bylaws of On The Move Systems Corporation (1)
3.3	Articles of Incorporation of Crawford Mobile Installation Corporation (2)
3.4	Bylaws of Crawford Mobile Installation Corporation (2)
10.1	Convertible Note from On the Move Systems Corporation to Global Equities Limited (2)
10.2	Note from Crawford Mobile Installation to John Crawford (2)
10.3	Note from Crawford Mobile Install to Greg Crawford dated September 28, 2010 (2)
10.4	Note from Crawford Mobile Install to Greg Crawford dated February 11, 2011 (2)
31.1 *	Section 302 Certification
32.1 *	Section 906 Certification
101 **	XBRL Interactive Data

* Filed or furnished herewith

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

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

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

SIGNATURES

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


	ON THE MOVE SYSTEMS CORP

Dated: January 21, 2014	By:	/s/ Robert Wilson
		Robert Wilson President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director

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