During the six months ended June 30, 2017 the Company recorded $31,219 of depreciation expense (period inception July 26, 2016 to December 31, 2016 - $ nil).
The sole shareholder (owner) loaned the Company money to pay for Company expenses. The loans are non-interest bearing and unsecured, with no specific terms of repayment or collateral. During the six months ended June 30, 2017 and the period July 26, 2016 inception to December 31, 2016 the shareholder loaned the Company $221,400 and $60,807, respectively and the Company made repayments in the amounts of $225,358 and $2,120, respectively. The balance of the amounts owed to the shareholder at June 30, 2017 and December 31, 2016 was $54,729 and $58,687, respectively.
During the six months ended June 30, 2017 On the Move Systems (see Note 9) made a series of loans to the Company maturing in August and September 2017. The loans are non-interest bearing and unsecured. The total balance of the amounts owed on the loan payable to On the Move Systems Corp. at June 30, 2017 and December 31, 2016 was $322,500 and nil, respectively. As of August 28, 2017 the Company is default of $222,500 of these notes. The Company expects to resolve payment on these notes after the merger transaction described in Note 9 has taken place.
The Company has issued Convertible Debentures that bear interest at 8% per annum, payable in cash or shares, are unsecured and mature in four years. During the six month period ended June 30, 2017 the Company issued these Convertible Debentures with a face value of $415,000, and for the period July 26, 2016 inception to December 31, 2016 the Company issued these Convertible Debentures with a face value of $50,000 to investors which would be convertible into shares and warrants of the new acquired public entity with On the Move Systems Corp. after the transaction has taken place outlined in Note 9. (“Post-Merger”).
As the above mentioned transaction with On the Move Systems Corp has not yet closed as of June 30, 2017, the note is 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 Debenture shall be convertible into Units (the “Units) of the Company (“Post-Merger”)at The Conversion Price (defined below) comprised of one share of common stock of the Company (“Shares”) and one half a warrant with a 3 year maturity (“Warrants”). Each warrant shall have and exercise price equal to 1.66 times the Conversion Price (defined below). Warrants are exercisable at the option of the Debenture holder at any time on or prior to Maturity.
For the Conversion Price, the debenture 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.
In addition , the Company has issued other Convertible Debentures in March 2017 with a face value of $100,000 to an investor which would be convertible into shares of the Company Post-Merger. The Convertible Debentures bear interest at 10% per annum, payable in cash or shares, are unsecured and mature in three years.
For the Conversion Price, the debenture 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.
During the six months ended June 30, 2017 and the period July 26, 2016 inception to December 31, 2016 the Company issued Convertible Debentures of $515,000 and $50,000, respectively. The balance of the amounts owed to the Convertible Debenture holders at June 30, 2017 and December 31, 2016 was $565,000 and $50,000, respectively.
During the six months ended June 30, 2017 and the period July 26, 2016 inception to December 31, 2016 the Company has accrued interest expense of $20,100 and nil, respectively.
NOTE 8 – VEHICLE LOAN
In December 2016, the Company entered into a vehicle loan secured by the vehicle for $47,704. The loan is repayable over 5 years maturing November 9, 2021 and repayable $ 1,019 per month including interest and principal. During the six months ended June 30, 2017 and Inception July 26, 2016 through December 31, 2016 the principal repayments were $3,916 and $342,respectively. The balance of the amounts owed on the vehicle loan at June 30, 2017 and December 31, 2016 was $43,446 and $47,362, respectively of which $8,600 and $7,700 is classified as current and $34,846 and 39,662 as long-term , respectively.
NOTE 9 – COMMITMENTS
Down Payment on Purchase
During the six months ended June 30, 2017 the Company has paid fifty percent down payment totaling $231,500 on fixed asset robot purchases and has committed to pay the remaining balance of fifty percent due totaling $231,500 upon taking delivery of robots from a supplier.
Operating Lease
The Company’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. Security deposit of $25,747 is recorded as long term asset as of June 30, 217. The Company’s lease is accounted for as operating leases. Rent expense is recorded over the lease terms on a straight-line basis. Rent expense was $ 15,520 and nil for the six months ended June 30, 2017 and period inception July 26, 2016 to December 31, 2016, respectively.
F-9
The Company’s five year minimum payment is as follows:
At December 31, 2016 and June 30, 2017, future minimum payments are as follows:
| | | | | | | | | | |
At December 31, 2016 | | Vehicle Loan | | Office Lease | | Convertible note | |
12/31/2017 | | $ | 7,700 | | $ | 38,621 | | $ | — | |
12/31/2018 | | | 8,530 | | | 52,653 | | | — | |
12/31/2019 | | | 9,443 | | | 54,233 | | | — | |
12/31/2020 | | | 10,453 | | | 55,860 | | | 50,000 | |
12/31/2021 and thereafter | | | 11,236 | | | 72,025 | | | — | |
Total | | $ | 47,362 | | $ | 273,392 | | $ | 50,000 | |
| | | | | | | | | | |
| | | | | | | | | | |
At June 30, 2017 | | Vehicle Loan | | Office Lease | | Convertible note | |
6/30/2018 | | $ | 8,600 | | $ | 51,881 | | $ | — | |
6/30/2019 | | | 8,975 | | | 53,437 | | | — | |
6/30/2020 | | | 9,935 | | | 55,040 | | | — | |
6/30/2021 | | | 10,999 | | | 56,691 | | | 565,000 | |
6/30/2022 and thereafter | | | 4,937 | | | 43,468 | | | — | |
Total | | $ | 43,446 | | $ | 260,517 | | $ | 565,000 | |
NOTE 10 – SUBSEQUENT EVENTS
On July 25, 2017 the Company converted to a C Corp and changed its name to Robotic Assistance Devices Inc. through the issuance of 10,000 no par shares to its sole shareholder.
Effective August 28, 2017, On the Move Systems Corp completed the acquisition of 100% of the equity of Robotic Assistance Devices Inc. in a transaction that has been accounted for as a recapitalization of Robotic Assistance Devices Inc.
On the Move Systems Corp issued 3,350,000 shares of Series E Preferred Stock and 2,450 shares of Series F Preferred Stock to the sole shareholder of Robotic Assistance Devices in exchange for all of the Company’s issued and outstanding 10,000 shares.
F-10
