Artificial Intelligence Technology Solutions Inc. - Quarter Report: 2016 May (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)


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

For the quarterly period ended May 31, 2016


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

For the transition period from _________ to _________

Commission File Number: 0-55079

ON THE MOVE SYSTEMS CORP.

(Exact name of registrant as specified in its charter)


Nevada		27-2343603
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

701 North Green Valley Parkway, Suite 200 Henderson, Nevada		89074
(Address of principal executive offices)		(Zip code)

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

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

Yes o No þ

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.

Yes o No þ

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


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check is smaller reporting company)

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

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of July 28, 2016, there were 5,294,816 shares of common stock are issued and outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION	4

Item 1. Financial Statements	4

Consolidated Balance Sheets (Unaudited)	4

Consolidated Statements of Operations (Unaudited)	5

Consolidated Statement of Stockholders’ Deficit (Unaudited)	6

Consolidated Statements of Cash Flows (Unaudited)	7

Notes to the Consolidated Financial Statements	8

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk	13

Item 4. Controls and Procedures	13

PART II — OTHER INFORMATION	14

Item 1. Legal Proceedings	14

Item 1A. Risk Factors	14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3. Defaults upon Senior Securities	14

Item 4. Mine Safety Disclosures	14

Item 5. Other Information	14

Item 6. Exhibits	14

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended February 29, 2016. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

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

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ON THE MOVE SYSTEMS CORP.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	May 31, 2016			February 29, 2016

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	6,467		$	2,223
Prepaid expenses		2,533			3,484
Total current assets		9,000			5,707

Fixed assets net of accumulated depreciation of $512 and $182, respectively		3,409			3,739
TOTAL ASSETS	$	12,409		$	9,446

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	304,443		$	302,136
Advances payable		1,594			1,594
Current portion of convertible notes payable, net of discount of $409,732 and $422,298, respectively		591,896			515,418
Short-term convertible notes payable, net of discount of $11,000 and $7,333, respectively		75,000			38,667
Short-term accrued interest payable		1,127			—
Current portion of accrued interest payable		217,544			185,447
Current portion of capital lease		3,818			3,775
Total current liabilities		1,195,422			1,047,037

Convertible notes payable, net of discount of $461,692 and $500,485, respectively, net of current portion.		427,031			418,521
Accrued interest payable		120,899			105,492
Capital lease obligation, net of current portion		6,407			7,378
TOTAL LIABILITIES		1,749,759			1,578,428

STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock, $0.001 par value; 480,000,000 shares authorized 5,098,816 and 4,908,816 shares issued and outstanding at May 31, 2016 and February 29, 2016, respectively.		5,099			4,909
Series E Preferred Stock, $0.001 par value; 1,000,000 shares authorized; 1,000,000 shares issued and outstanding at May 31, 2016 and February 29, 2016, respectively.		1,000			1,000
Preferred Stock, undesignated; 19,000,000 shares authorized; no shares issued and outstanding at May 31, 2016 and February 29, 2016, respectively.		—			—
Additional paid-in capital		6,109,682			6,072,872
Accumulated deficit		(7,853,131	)		(7,647,763	)
Total stockholders’ equity (deficit)		(1,737,350	)		(1,568,982	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	12,409		$	9,446

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

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ON THE MOVE SYSTEMS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three months ended May 31,
	2016			2015

OPERATING EXPENSES
General and administrative expenses	$	66,893		$	151,994

Operating Loss		(66,893	)		(151,994	)

OTHER INCOME (EXPENSE)
Interest expense		(138,475	)		(187,639	)

NET LOSS	$	(205,368	)	$	(339,633	)

NET LOSS PER COMMON SHARE – Basic and diluted	$	(0.04	)	$	(0.43	)

COMMON SHARES OUTSTANDING – Basic and diluted		5,096,751			791,944

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

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ON THE MOVE SYSTEMS CORP.

CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS’ DEFICIT

(UNAUDITED)


	Common Stock			Series E Preferred Stock			Additional Paid-In		Accumulated
	Shares	Amount		Shares	Amount		Capital		Deficit			Total

BALANCE, February 29, 2016	4,908,816	$	4,909	1,000,000	$	1,000	$	6,072,872	$	(7,647,763	)	$	(1,568,982	)

Common stock issued for debt and interest conversion	190,000		190	—		—		1,710		—			1,900
Common stock issued for services	—		—	—		—		—		—			—
Share rounding on reverse split	—		—	—		—		—		—			—
Beneficial conversion feature on issuance of convertible note payable	—		—	—		—		35,100		—			35,100
Net Loss	—		—	—		—		—		(205,368	)		(205,368	)

BALANCE, May 31, 2016	5,098,816	$	5,099	1,000,000	$	1,000	$	6,109,682	$	(7,853,131	)	$	(1,737,350	)

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

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ON THE MOVE SYSTEMS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three months ended May 31,
	2016			2015

CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss	$	(205,368	)	$	(339,633	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on convertible note payable		89,292			147,100
Depreciation & amortization		330			4,625
Changes in operating assets and liabilities:
Prepaid expenses		951			—
Accounts payable and accrued liabilities		37,407			88,502
Accrued interest payable		49,060			39,874
NET CASH USED IN OPERATING ACTIVITIES		(28,328	)		(59,532	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets		—			—
NET CASH USED IN INVESTING ACTIVITIES		—			—

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances		—			65,383
Proceeds from convertible promissory note		33,500			—
Repayment of capital lease		(928	)		(1,376	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		32,572			64,007

NET INCREASE (DECREASE) IN CASH		4,244			4,475

CASH, at the beginning of the period		2,223			2,679

CASH, at the end of the period	$	6,467		$	7,154

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	122		$	—
Taxes	$	—		$	—

Noncash investing and financing transaction:
Refinancing of advances into convertible notes payable	$	35,100		$	65,383
Beneficial conversion on convertible note payable	$	35,100		$	65,383
Conversion of convertible notes payable and interest	$	1,900		$	102,900

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

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ON THE MOVE SYSTEMS CORP.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2016

Note 1. General Organization and Business

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

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

Note 2. Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

For the three months ended May 31, 2016, the Company had a net loss of $205,368 and negative cash flow from operating activities of $28,328. As of May 31, 2016, the Company had negative working capital of $1,186,422. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about the Company’s ability to continue as a going concern.

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

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

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

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

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Note 3. Summary of Significant Accounting Policies

Interim Financial Statements

These unaudited financial statements have been prepared in accordance with generally accepted accounting (“GAAP”) principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended February 29, 2016 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).

The results of operations for the three month period ended May 31, 2016 are not necessarily indicative of the results to be expected for the full fiscal year ending February 28, 2017.

Principles of Consolidation

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

Note 4. Advances

During the three months ended May 31, 2016, Vista View Ventures, Inc. (“Vista View”) paid $35,100 of expenses on behalf of the company. These funds were paid from Vista View to KMDA and then by KMDA to the Company on behalf of Vista View. At the end of the quarter, we issued a convertible promissory note to Vista View for $35,100. See Note 5 and Note 6.

At May 31, 2016 and February 29, 2016, we did not owe Vista View. anything for advances provided to us or expenses paid on our behalf.

At May 31, 2016 and February 29, 2016, we owed a third party. $1,594 and $1,594, respectfully, for advances provided to us.

Note 5. Related Party Transactions

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

Services Provided by KM Delaney & Assoc.

During the three months ended May 31, 2016 and 2015, KM Delaney & Associates (“KMDA”) provided certain administrative functions to us. The services provide include accounting and bookkeeping services, treasury and cash management services, financial reporting, and other support staffing requirements. As part of the services provided to the Company, KMDA receives the advances from the lender (See note 4) and disburses those funds to us. We discontinued our arrangement with KMDA on April 30, 2016. During the three months ended May 31, 2016 and 2015, KMDA billed us $35,100 and $73,119, respectively, for those services. As of May 31, 2016 and February 29, 2016, we owed KMDA $183,568 and $198,568, respectively. These amounts are included in accounts payable on the consolidated balance sheets.

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Note 6. Convertible Notes Payable

Convertible notes payable consist of the following as of May 31, 2016 and February 29, 2016:


Issued	Maturity	Interest Rate	Conversion Rate per Share	Balance May 31, 2016			Balance February 29, 2016
February 28, 2011	February 27, 2013	7%	$0.015	$	32,600		$	32,600
January 31, 2013	February 28, 2017	10%	$0.01		119,091			120,562
May 31, 2013	November 30, 2016	10%	$0.01		261,595			261,595
November 30, 2013	November 30, 2017	10%	$0.01		396,958			396,958
August 31, 2014	August 31, 2016	10%	$0.002		355,652			355,652
November 30, 2014	November 30, 2016	10%	$0.002		103,950			103,950
February 28, 2015	February 28, 2017	10%	$0.001		63,357			63,357
May 31, 2015	May 31, 2017	10%	$1.00		65,383			65,383
August 31, 2015	August 31, 2017	10%	$0.30		91,629			91,629
November 30, 2015	November 30, 2018	10%	$0.30		269,791			269,791
February 3, 2016	February 3, 2017	5%	49% discount		46,000			46,000
February 29, 2016	February 28, 2019	10%	60% discount		95,245			95,245
March 22, 2016	March 22, 2017	5%	49% discount		40,000			—
May 31, 2016	May 31, 2019	10%	60% discount		35,100			—
Total convertible notes payable				$	1,976,351		$	1,902,722

Less: short-term convertible notes payable					(86,000	)		(46,000	)
Less: current portion of convertible notes payable					(1,001,628	)		(937,716	)
Less: discount on noncurrent convertible notes payable					(461,692	)		(500,485	)
Long-term convertible notes payable, net of discount				$	427,031		$	418,521

Current portion of convertible notes payable					1,001,628			937,716
Less: discount on current portion of convertible notes payable					(409,732	)		(422,298	)
Current portion of convertible notes payable, net of discount				$	591,896		$	515,418

Short-term convertible notes					86,000			46,000
Less: discount on short-term convertible notes					(11,000	)		(7,333	)
Short-term convertible notes, net of discount				$	75,000		$	38,667

All of the notes above are unsecured. The note dated February 28, 2011 is currently in default and bears default interest at 18% per annum.

Convertible notes issued


Issued	Maturity	Interest Rate	Conversion Rate per Share		Amount of Note		Original Issue Discount		Beneficial Conversion Feature
March 22, 2016	March 22, 2017	5%	$	49% discount (1)	$	40,000	$	6,500	$	—
May 31, 2016	May 31, 2019	10%		60% discount (2)		35,100		—		35,100
Total					$	75,100	$	6,500	$	35,100


	(1)	This note is convertible at 49% discount to the lowest trading price over the preceding 20 trading days. The note becomes convertible 180 days after issuance.

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

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Advances Refinanced into Convertible Notes

During the three months ended May 31, 2016, we refinanced $35,100 of non-interest bearing advances into a convertible note. All principal and accrued interest is payable on the maturity date.

The Company evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We evaluated the conversion features for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, we recognized a discount for the beneficial conversion features of $35,100, in aggregate, on the date the notes were signed. We amortize the discounts for the notes dated May 31, 2016 at an effective interest rates of 317.38%. The beneficial conversion feature was recorded as an increase in additional paid-in capital and a discount to the convertible notes payable. The discount to the convertible notes payable will be amortized to interest expense over the life of the notes. During the three months ended May 31, 2016 and 2015, we amortized discount on convertible notes payable of $89,292 and $147,100, respectively, to interest expense.

Convertible Notes Issued for Cash

On March 22, 2016, we issued a convertible promissory note for $40,000. The note has an original issue discount of $6,500. The note matures on March 22, 2017, and bears interest at 5% per annum. The terms on the note allow the noteholder to convert principal and accrued interest into share of our common stock beginning 180 days after issuance. The variable conversion rate is a 49% discount to the lowest trading price over the preceding 20 trading days.

The Company evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. Once the note becomes convertible 180 days after issuance, the conversion features will meet the definition of a liability and therefore we will need to bifurcate the conversion feature and account for it as a separate derivative liability. We amortize the discounts for the notes dated May 31, 2016 at an effective interest rates of 26.12%. The original issue discount to the convertible notes payable will be amortized to interest expense over the life of the note.

Conversions to common stock

During three months ended May 31, 2016, the holders of the Convertible Note Payable dated January 31, 2013 elected to convert principal and accrued interest in the amounts show below into shares of common stock at a rate of $0.01 per share. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.


Date	Amount Converted		Number of Shares Issued
March 1, 2016	$	1,900	190,000
Total	$	1,900	190,000

Note 7. Debt Payment Obligations


	Twelve months ended May 31,
		2017		2018		2019		2020		2021		Total
Convertible notes	$	1,087,628	$	488,587	$	400,136	$	—	$	—	$	1,976,351
Capital lease		3,818		3,993		2,414		—		—		10,225
Total	$	1,091,446	$	492,580	$	402,550	$	—	$	—	$	1,986,576

Note 8. Subsequent Events

On June 28, 2016, we issued 196,000 shares of common stock upon conversion of principal and interest on a convertible promissory note.

On July 18, 2016, we issued a convertible promissory note for $9,000. The note matures on July 18, 2017, bears interest at 8% per year, and is convertible into common stock at a 49% discount to the lowest trading price over the preceding 20 trading days.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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

Critical Accounting Policies

We prepare our Consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed Consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed Consolidated financial statements.

While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended February 29, 2016 on Form 10-K.

Results of Operations

Three months ended May 31, 2016 compared to the three months ended May 31, 2015.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $66,893 and $151,994 for the three months ended May 31, 2016 and ended 2015, respectively. The decrease is due to lower professional fees during the current period.

Interest Expense

Interest expense decreased from $187,639 for the three months ended May 31, 2015 to $138,475 for the three months ended May 31, 2016.

Interest expense for the three months ended May 31, 2016 included amortization of discount on convertible notes payable of $89,292, compared to $147,100 for the comparable period of 2015.

The remaining interest expense was due to interest on our convertible notes payable and the interest portion of our capital lease.

Net Loss

We incurred a net loss of $205,368 for the three months ended May 31, 2016 as compared to $339,633 for the comparable period of 2015. The decrease in the net loss was primarily the result of lower professional fees and interest expense.

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Liquidity and Capital Resources

At May 31, 2016, we had cash on hand of $6,467. The Company has negative working capital of $1,186,422 . Net cash used in operating activities for the three months ended May 31, 2016 was $28,328. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of May 31, 2016.

Additional Financing

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

Off Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of May 31, 2016. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of May 31, 2016, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


	1.	As of May 31, 2016, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

	2.	As of May 31, 2016, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Change in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On October 12, 2015, we received notice that it had been sued in the United States District Court for the Central District of California. The plaintiff alleges that we obtained certain trade secrets through a third party also named in the suit. We believe the suit is without merit and intend to vigorously defend it.

ITEM 1A. RISK FACTORS

This item is not applicable to smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 1, 2016, we issued 190,000 shares of common stock upon conversion of $1,900 of a convertible note.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has not defaulted upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable to the Company.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


3.1	Articles of Incorporation (1)

3.2	Bylaws (2)

14	Code of Ethics (2)

21	Subsidiaries of the Registrant (3)

31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (3)

32.1	Section 1350 Certification of principal executive officer and principal financial accounting officer. (3)

101	XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (4)

__________


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

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

(3)	Filed or furnished herewith.

(4)	To be submitted by amendment.

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SIGNATURES

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


	On the Move Systems Corp.


Date: July 28, 2016	BY: /s/ Robert Wilson
	Robert Wilson
	President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer and Director

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