As filed with the
Securities and Exchange Commission on April 20, 2015
Registration No.
333-202651
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM S-1
Amendment
No. 1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT
OF 1933
WORLD MOTO, INC.
(Exact name of registrant as specified in its
charter)
Nevada |
|
77-0716386 |
(State or other jurisdiction |
|
(IRS Employer Identification No.) |
of Incorporation or organization) |
|
|
131 Thailand Science Park INC-1 #214
Phahonyothin Road
Klong1, Klong Luang
Pathumthani 12120
Thailand
(Address of principal executive offices and
zip code)
(646) 840-8781
(Registrant’s telephone number, including
area code)
Empire Stock Transfer, Inc.
1859 Whitney Mesa Dr.
Henderson, NV 89014
(702) 818-5898
(Name, address and telephone number of agent
for service)
Copies to:
Mark C. Lee
Sung Kim
Greenberg Traurig, LLP
1201 K Street, Suite 1100
Sacramento, California 95814
Telephone: (916) 442-1111
Approximate date of commencement of proposed
sale to the public: From time to time after this Registration Statement becomes effective.
If any of the securities being registered on
this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box. þ
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ¨
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 |
¨ |
Accelerated filer |
¨ |
Non-accelerated filer |
¨ |
Smaller reporting company |
þ |
(Do not check if a smaller reporting company) |
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CALCULATION OF REGISTRATION
FEE
Title of Each Class of Securities to be Registered | |
Amount to be Registered (1) | | |
Proposed Maximum Offering Price Per Share (1) | | |
Proposed Maximum Aggregate Offering Price | | |
Amount of Registration Fee | |
| |
| | |
| | |
| | |
| |
Common Stock underlying the Principal of Debentures(2) | |
| 205,388,799 | | |
$ | 0.03 | | |
$ | 6,161,663.97 | | |
$ | 715.99 | |
Common Stock underlying the Interest of Debentures(3) | |
| 31,321,554 | | |
$ | 0.03 | | |
$ | 939,646.62 | | |
$ | 109.19 | |
Total | |
| 236,710,355 | | |
$ | 0.03 | | |
$ | 7,101,310.65 | | |
$ | 825.17 | |
|
(1) |
Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on the average of the high and low prices of the common stock of the registrant as reported on the OTCQB on March 6, 2015. |
|
|
|
|
(2) |
Represents the shares of common stock of the Company issuable upon conversion of the principal amount of the Company’s convertible debentures (the “Debentures”). |
|
|
|
|
(3) |
Represents the shares of common stock of the Company issuable upon conversion of the interest accrued under the Debentures. |
In the event of stock splits, stock dividends,
or similar transactions involving the Registrant’s common stock, the number of shares registered shall, unless otherwise
expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated
under the Securities Act of 1933, as amended (the “Securities Act”).
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant
to said section 8(a), may determine.
The information in this
prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT
TO COMPLETION, DATED APRIL _, 2015
236,710,355 Shares
of Common Stock
WORLD MOTO INC.
This prospectus relates to the registration
and resale of up to 236,710,355 shares of our common stock, par value $0.0001 per share, by the selling security holders (the “Selling
Security Holders”), of which up to: (a) 29,787,588 shares of common stock are issuable upon the conversion of the principal
amount of the convertible debenture, dated April 4, 2014, issued to Dominion Capital LLC (the “Initial Dominion Debenture”),
(b) 9,334,550 shares of common stock are issuable upon the conversion of interest accrued under the Initial Dominion Debenture,
(c) 77,787,920 shares of common stock are issuable upon the conversion of the principal amount of the convertible debenture, dated
December 11, 2014, issued to Dominion Capital LLC (the “Subsequent Dominion Debenture”), (d) 9,334,550 shares of common
stock are issuable upon the conversion of interest accrued under the Subsequent Dominion Debenture, (e) 18,296,752 shares of common
stock are issuable upon the conversion of the principal amount of the convertible debenture, dated December 11, 2014, issued to
Redwood Management, LLC (the “Subsequent Redwood Debenture”), (f) 3,110,469 shares of common stock are issuable upon
the conversion of interest accrued under the Subsequent Redwood Debenture, (g) 7,951,654 shares of common stock issuable upon conversion
of the principal amount of the convertible debenture, dated March 5, 2015 issued to Redwood Management, LLC (the “Third Redwood
Debenture”), (h) 954,198 shares of common stock are issuable upon the conversion of interest accrued under the Third Redwood
Debenture, (i) 71,564,885 shares of common stock issuable upon conversion of the principal amount of the convertible debenture
to be issued by the Company to Redwood Management, LLC (the “Fourth Redwood Debenture” together with the Initial Dominion
Debenture, the Subsequent Dominion Debenture, the Subsequent Redwood Debenture, and the Third Redwood Debenture, the “Debentures”),
and (j) 8,587,782 shares of common stock are issuable upon the conversion of interest accrued under the Fourth Redwood Debenture
to be issued to Redwood Management, LLC .
We will not receive
any of the proceeds from the sale of shares by the Selling Security Holders. These shares will be offered for sale by the
Selling Security Holders in accordance with the “Plan of Distribution.” We will bear all costs associated with
this registration. No underwriter or person has been engaged to facilitate the sale of shares of our common stock in this offering.
Our common stock
is quoted on the OTCQB marketplace, operated by OTC Market Group, Inc., under the stock symbol “FARE.” On April 14,
2015, the closing price of our common stock was $0.02 per share.
Investing in our
common stock involves a high degree of risk. See “Risk Factors” beginning on page 12 to read about factors you
should consider before investing in shares of our common stock.
NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus
is: _____________, 2015
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus.
We have not authorized any other person to provide you with information different from or in addition to that contained in this
prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an
offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition,
results of operations and prospects may have changed since that date.
PROSPECTUS SUMMARY
This summary highlights selected information
contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing
in the common stock of World Moto Inc. (referred to herein as the “Company,” “we,” “our,” and
“us”). You should carefully read the entire Prospectus, including “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the accompanying financial statements and notes
before making an investment decision.
Overview
World Moto, Inc. was incorporated on March 24, 2008 in the State
of Nevada under the name Net Profits Ten Inc. Our original purpose was to market and distribute user-friendly interactive yearbook
software for the military. On November 8, 2012, we amended our Articles of Incorporation to increase our authorized shares of
common stock from 100,000,000 to 500,000,000 and our board of directors approved a stock dividend of 180 shares of common stock
of the Company for each share of common stock issued and outstanding. Additionally, on November 12, 2012, we amended our Articles
of Incorporation to change our name from “Net Profits Ten Inc.” to “World Moto, Inc.”., which name change
became effective on November 15, 2012, upon approval from the Financial Industry Regulatory Authority (“FINRA”). On
January 18, 2015, we amended our Articles of Incorporation to increase our authorized shares of common stock from 500,000,000
to 1,000,000,000. On April 9, 2015, we further amended our Articles of Incorporation to increase our authorized shares of common
stock from 1,000,000,000 to 2,000,000,000.
We were a shell company until the completion of the acquisition
of the World Moto Assets described below, which was consummated on November 14, 2012.
On January 30, 2013, we established two wholly owned subsidiaries,
World Moto Technologies, Inc. and World Moto Holdings, Inc. that were incorporated in the State of Nevada. On February 4, 2013,
World Moto Technologies Ltd. was organized under the laws of the Kingdom of Thailand. The name was later changed to World Moto
Co., Ltd. (“WM Co. Thailand”). WM Co. Thailand is owned in its entirety by World Moto, Inc., World Moto Technologies,
Inc. and World Moto Holdings, Inc. and represents our operating entity for the purposes of research and development in the Southeast
Asia region.
Acquisition of World Moto Assets
On September 1, 2012, we entered in an Asset Purchase Agreement
(“Agreement”) with World Moto (Thailand) Co., Ltd., a corporation established under the laws of the Kingdom of Thailand
(“Old WM”), Chris Ziomkowski, the Chief Technical Officer of Old WM and Paul Giles, the Chief Executive Officer of
Old WM. The Agreement was consummated on November 14, 2012. We purchased from Old WM substantially all of the intellectual property
and certain other specific intellectual property assets related to Old WM’s initial product, Moto-Meter (the “Assets”),
which included three United States patent applications, the data related to the patent applications, certain software related to
the operation of the Moto-Meter, several URLs and trade-names and associated names related to the Moto-Meter and Old WM. As part
of the transaction, Messrs. Ziomkowski and Giles became the management of the Company immediately after the acquisition. The Assets
did not include any plant and equipment, customer lists, suppliers and any other business and operational assets of Old WM, and
we did not hire any employees of Old WM other than Messrs. Giles and Ziomkowski. Old WM continues as a corporation, operating in
Thailand. Moto-Meters are devices that provide metering of rides on motor scooters, motorcycles and similar types of transportation
vehicles and were developed by Old WM.
The consideration paid for the Assets was an aggregate of 224,597,666
shares of common stock, then representing 60% of the outstanding shares of our common stock immediately after closing and the assumption
specified outstanding debt in the amount of approximately $75,000, which was converted into 576,923 shares of common stock at the
closing, at a conversion rate of $0.13.
Our Business
Motor-Meter
We seek to address the need for fare metering and mobile commerce
for motor scooters and motorcycle taxis. The use of these taxis is increasingly common in the developing world. Our planned products,
however, will have increased functionalities over a standard fare meter commonly used in an enclosed taxicab. We have designed
and developed and are beginning to manufacture and market the Moto-Meter, which has the basic functions of a taximeter in an enclosed
taxicab, but with additional characteristics that, over time, will permit mobile commerce, GPS tracking, advertising and other
capabilities.
The Moto-Meter will be a light emitting diode (LED) model and once
a market is established for that product, we will market a liquid crystal display premium model. The LED model will be a portable/universal
meter that is compact and easily swapped among vehicles. It will be rugged and will work with all vehicle classes. The meter will
provide starting rate, time, total fare and distance measures. The device will have event data recording, Global Positioning System
(GPS) functionality and advertising capacity. The premium product will have added features such as television and video display
capability. Mobile commerce will also be an early stage enhancement, which will allow for electronic payment of the fare and also
purchasing other products and services.
We are now accepting orders from qualified global distributors and
fleet operators for the Moto Meter. The global opening of sales came after several months of testing in Bangkok, Thailand and with
select partners. We believe that the Moto-Meter can withstand the extreme hazards that it will be subjected to in the field
and that the user experience from both passengers and drivers meets the standards that we set in order to begin general sales of
the product. A pre-production launch to motorcycle taxi-operators in Thailand, afforded an excellent opportunity to gauge
public opinion about the Moto-Meter. We are currently actively pursuing our goal of certifying the Moto-Meter with two administrative
authorities in preparation for advancing our negotiations on regulatory mandates. Negotiations for legislation mandating the
Moto-Meter will be pursued in parallel with the general sales process.
In conjunction with the opening of sales for the Moto-Meter, we
launched a smartphone application (App). The App connects directly to the Moto-Meter via a secure Bluetooth connection, and can
access data from the Moto-Meter in real-time, giving users the ability to view ratings and a profile of the driver before getting
on the motorcycle. During the ride, it provides continuous analysis on the fare and GPS location, augmenting the Moto-Meter's already
anti-tampering security protocols, as well as transmitting the location to designated individuals or safety monitoring services.
The application also has the ability to offer customized products and services to the users during the ride, with the purchase
conveniently added to the fare. As credit card use is still limited in the demographic that usually engages motorcycle taxis for
their daily mobility, we believe this feature can often prevent a special trip to a convenience store to pay for the needed product.
There also is increasing use of the moto-taxi in the developed world,
such as in Paris and London, because of their convenience and speed. We plan on developing a distribution network of the meter
products through franchised dealers, resellers and brick and mortar storefronts in our selected markets. We have decided to utilize
these types of vendors because aspects of the Moto-Meter include add on products, and these vendors will be able to help with installation
and provide explanations for use.
We have introduced the Moto-Meter in Thailand. Once we are satisfied
with this pre-production launch of our product in real-world conditions, we will begin to sell the Moto-Meter to other motorcycle-taxi
operators in Indonesia, Vietnam and Thailand by the end of the second quarter of 2015, and motorcycle-taxi operators in Brazil
in the next 12 months. To date we have not generated any revenues from the sale of the Moto-Meter.
Initially, we are developing and producing the Moto-Meter in-house
for the pre-production phase, and in the future will be outsourcing mass production. We are currently preparing to commission the
verification build for the Moto-Meter. Entry into the verification build process marks the transition from development to production,
and additional engineering time generally shifts from product modifications to the continued development and refining of tooling
and test fixtures necessary to guarantee the high quality required for mass production.
The estimated cost associated with the development of the Moto-Meter
for the next 12 months is $375,000.
Wheelies
We are also focused on the development of our advertising product,
Wheelies. Wheelies displays static and streaming media on the wheels of motorcycles and automobiles, providing a new mobile medium
for advertising, broadcasting, self-expression and publishing.
We have successfully completed a pre-production version of the Wheelies
and have successfully completed testing. DMC has now been tasked for outsourced production of the Wheelies. DMC recently concluded
an extensive proof of concept phase that included demonstrations of their capabilities to meet our rigorous standards for manufacture
of printed circuit boards, injection molded components, conformal sealing and assembly of the Wheelies device.
We will be moving immediately into limited production of the Wheelies
device, which involves low volume production runs of tens to hundreds of units in order to refine the production yields, increase
the efficiency, and decrease warranty and support costs of the manufacturing process. DMC will provide their experienced research
and development team to assist in the design of the automated test and analysis fixtures and programs required to optimize this
system. We anticipate the limited production and optimization stage to last approximately 6 months, after which full commercial
production will commence by the second quarter of 2015. Although we entered into an agreement to sell an initial 10 Wheelies, those
items have not yet been delivered so the purchase price for those items is currently being treated as a customer deposit and not
revenue. We intend to market Wheelies over the next 12 months primarily as an advertising platform in Thailand.
The estimated cost associated with the development of the Wheelies
during the next 12 months is $40,000.
Yes ™
As an element of mobile commerce, we developed “Yes™,”
a concierge service where persons can order products and have the products delivered to their address by motor scooter.
The Yes ™ service was developed in-house. The Yes™
service has been going through testing and is now being launched with our first customer, Mobile Advertising Ventures, Ltd in
Kuala Lumpur, Malaysia. We expect Yes to go live in the third quarter of 2015 in Kuala Lumpur, Malaysia. Yes™ was also launched
in Thailand on March 9, 2015, and we intend to launch in Cambodia over the next 12 months. We have also successfully completed
a pre-production version of Wheelies and have successfully completed testing. We anticipate licensing Wheelies exclusively to
advertisers over the next 12 months, after which we plan to begin retail sales.
The estimated cost associated with the development of Yes™
during the next 12 months is $140,000.
Our current burn rate is approximately $65,000 per month and
we currently have approximately $56,000 in cash on hand. We are dependent on additional capital to continue to operate. Failure
to complete a financing may have an adverse effect on our ability to operate and execute our business plan. We believe that $556,000
of funding over the following 12 months is sufficient for us to break-even and achieve self-sufficiency on a cash flow basis.
Based on the current burn rate, the Company has sufficient capital to continue operations through May 15, 2015, but only on a
very limited budget. Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve
months, as we look to expand our asset base and fund marketing, development and distribution of our products. See page 13 of “Risk
Factors” for further discussion of the risks related to our capital requirements.
We have earned limited revenues since inception. We have not
generated any revenues relating to our products, or material sales of our products. For the fiscal year ended December 31, 2014,
we incurred a net loss of $2,160,699 and for the period from inception (March 24, 2008) to December 31, 2014, we incurred a net
loss of $3,365,780. As of December 31, 2014, our assets total $257,058. Further, our auditors have issued a going concern opinion
in their audit report dated April 15, 2015. This means that there is substantial doubt that we can continue as an on-going business
for the next twelve months unless we obtain additional capital.
Corporate Information
Our principal executive offices are located
at 131 Thailand Science Park INC-1 #214 Phahonyothin Road, Klong1, Klong Luang, Pathumthani 12120 Thailand. Our telephone number
is (646) 840-8781. Our website is located at: http:// www.worldmoto.com/.
Stock Transfer Agent
Our stock transfer agent is Empire Stock Transfer,
Inc., and is located at 1859 Whitney Mesa Dr., Henderson, NV 89014. The agent’s telephone number is (702) 818-5898.
THE OFFERING
Issuer |
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World Moto, Inc. |
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Securities Offered |
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236,710,355 shares of common stock of the Company |
|
|
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Common Stock Outstanding Before the Offering |
|
439,696,519 |
|
|
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Common Stock to be Outstanding After the Offering |
|
676,406,874 |
|
|
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Use of Proceeds |
|
We will not receive any proceeds from the sale of the common stock offered hereby. |
|
|
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Trading |
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Our common stock is quoted on the OTCQB marketplace, operated by OTC Market Group, Inc., under the stock symbol “FARE”. |
|
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Risk Factors |
|
The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors”. |
Securities Purchase
Agreement
On April 4,
2014, we entered into a Securities Purchase Agreement (the “Initial Purchase Agreement”) with Dominion and
Redwood (collectively, the “Investors”) pursuant to which the Investors purchased convertible debentures (the
“Initial Debentures”) in the aggregate principal and interest amount of $543,478 for a purchase price of $500,000
(8% original issue discount). On December 11, 2014, the Investors purchased additional debentures (the “Subsequent
Debentures”), in the aggregate principal and interest amount of $543,478 for a purchase price of $500,000 (8% original
issue discount), for a total aggregate principal and interest amount of $1,086,956 for the aggregate purchase price of
$1,000,000 (8% original issue discount), with similar terms as the Initial Debentures.
On March 5, 2015,
we entered into a Securities Purchase Agreement (the “Subsequent Purchase Agreement”, together with the Initial Purchase
Agreement, the “Purchase Agreements”) with Redwood, pursuant to which Redwood purchased a convertible debenture (the
“Third Redwood Debenture”) in the principal amount of $54,348 for a purchase price of $50,000 (8% original issue discount).
Upon the effectiveness of a registration statement to be filed by us in connection therewith, Redwood will purchase an additional
debenture (the “Fourth Redwood Debenture”, together with the Initial Debentures, Subsequent Debentures, and the Third
Redwood Debenture, the “Debentures”) in the principal amount of $489,130 for a purchase price of $450,000 (8% original
issue discount) with similar terms as the Third Redwood Debenture.
The Purchase Agreements provide for a right of participation with
respect to any future sales of our securities during the time that the Debentures remain outstanding. The right of participation
allows the Investors, or Redwood, as applicable, to participate in an aggregate amount up to 30% of any proposed offering during
such time period. The Purchase Agreements also include customary representations, warranties and covenants of us and the Investors
or Redwood, as applicable, made to each other as of specific dates. The assertions embodied in those representations and warranties
were made solely for purposes of the Purchase Agreements and are not intended to provide factual, business, or financial information
about us and the Investors or Redwood, as applicable. In addition, we agreed to indemnify the Investors, or Redwood, as applicable,
and their affiliates from any losses incurred by the Investors or Redwood, as applicable, relating to any breaches of a representation
or warranty by us or brought against the Investors or Redwood, as applicable, or any of their affiliates related to the transactions
contemplated by the Purchase Agreements.
Pursuant to the terms
of the Initial Purchase Agreement, we agreed to reimburse the Investors for attorney’s fees in the amount of $20,000 and
reimburse Aegis Capital Corp. (“Aegis”) in the amount of $10,000 for due diligence expenses. Aegis Capital Corp. (“Aegis”)
has acted as exclusive placement agent in connection with the sale of the Debentures and will be paid a cash commission of 7.5%
of the gross proceeds and an equity commission (the “Equity Commission”) of 7.5% of the aggregate principal amount
of the gross receipts on an as-converted basis as of each closing date, as applicable, at 150% of the applicable conversion price.
Debentures
On April 4, 2014, we entered into the Initial
Debentures with the Investors in the aggregate principal and interest amount of $543,478 for a purchase price of $500,000 (8%
original issue discount). On December 11, 2014, we entered into the Subsequent Debentures with the Investors in the aggregate
principal and interest amount of $543,478 for a purchase price of $500,000 (8% original issue discount).
On March 5, 2015, we entered into the Third
Redwood Debenture with Redwood in the principal amount of $54,348 for a purchase price of $50,000 (8% original issue discount).
Unless earlier converted, redeemed or accelerated,
the Debentures mature on the twelve month anniversary of the original issuance date.
The Debentures accrue interest at the rate
of 12% annually, which interest shall be guaranteed regardless of the date of repayment, and have a maturity date of twelve months
from the date of issuance. Upon any conversion, early redemption or acceleration of the Debentures prior to maturity, we are required
to pay the holder of the Debentures an interest make-whole amount equal to, with respect to each $1,000 principal amount of Debentures,
the amount of any interest that, but for the conversion, redemption or acceleration of the Debentures, would have accrued under
the Debentures at the interest rate for the period from the date of conversion redemption or acceleration date through the one
year anniversary of the original issuance date of the Debenture. The interest make-whole amount is discounted to the present value
of such interest using a discount rate equal to the interest rate of U.S. Treasury Bonds with equivalent remaining terms from the
applicable conversion date, redemption date or acceleration date through the one year anniversary of the issuance date.
We are obligated to
make amortization payments beginning on the six month anniversary of the issuance date of the Debentures and continuing monthly
thereafter. The amortization payments may be made, at our option, in shares of our common stock, subject to the satisfaction of
certain equity conditions, or in cash. The amortization amount to be paid on each amortization date priority to maturity is equal
to the product of (a) the quotient of one divided by the number of remaining amortization dates, including the applicable amortization
date and the maturity date, and (b) the outstanding principal amount of the Debentures on the applicable amortization date, together
with the sum of any accrued and unpaid interest as of the amortization date under the Debentures.
Under its initial
terms, the Initial Debentures and Subsequent Debentures were convertible into shares of our common stock at any time at the discretion
of the Investors at a conversion price equal to the lesser of (i) $0.10 or (ii) 70% of the lowest traded price per share of the
common stock during the twenty five (25) trading days prior to the date of conversion. The Third Redwood Debenture and the Fourth
Redwood Debenture (when issued) are convertible into shares of our common stock at any time at the discretion of Redwood at a conversion
price equal to the lesser of (i) $0.03 or (ii) 60% of the lowest traded price per share of the common stock during the twenty five
(25) trading days prior to the date of conversion.
The number of shares
of our common stock issuable upon a conversion of the Debentures is calculated by dividing (x) the outstanding principal amount
of the Debenture being converted, plus accrued interest, plus, the applicable interest make-whole amount by (y) the Conversion
Price.
The following table
sets forth the total number of shares of common stock issuable to the Investors upon conversion of the Debentures at various conversion
prices, without taking into account the percentage ownership restrictions included in the Debentures.
Assumed Conversion
Price (1) | | |
Total Number of
Shares to be Issued | | |
Percentage of
Outstanding Shares (2) | |
$ | 0.01 | | |
| 190,782,120 | | |
| 43.39 | % |
$ | 0.025 | | |
| 76,313,000 | | |
| 17.36 | % |
$ | 0.05 | | |
| 26,956,500 | | |
| 6.13 | % |
$ | 0.075 | | |
| 17,971,000 | | |
| 4.09 | % |
$ | 0.10 | | |
| 13,478,250 | | |
| 3.07 | % |
|
(1) |
The conversion price for the Third Redwood Debenture and Fourth Redwood Debenture may not exceed $0.03 and the number of shares set forth in this table for any conversion prices above such amount does not reflect any amounts issuable pursuant to the Third Redwood Debenture and Fourth Redwood Debenture. |
|
(2) |
The denominator is based on 439,696,519 shares of common stock outstanding as of April 13, 2015.
The numerator is based on the number of Shares issuable to the Investors under the Debentures at the corresponding assumed
conversion price set forth in the adjacent column. |
The Debentures may not be converted with
respect to any note holder if, after giving effect to the conversion, the holder together with its affiliates would beneficially
own in excess of 4.99% of our outstanding shares of common stock. At each holder’s option, the limit on percentage ownership
may be raised or lowered to any other percentage not in excess of 9.99%, except that any increase will only be effective upon
61-days prior notice to the Company.
The conversion price
of the Debentures is subject to adjustment upon the occurrence of stock dividends, stock splits, sales of our securities, rights
offerings, certain pro rata distributions and upon the occurrence of certain fundamental transactions as defined in the Debentures.
In addition, the conversion price is also subject to a “full ratchet” anti-dilution adjustment if we issue or are deemed
to have issued securities at a price lower than the then applicable conversion price. See “Description of Securities To Be
Registered” for a more complete summary of the “full ratchet” anti-dilution adjustment.
On September 24, 2015,
we issued a convertible note in connection with a financing that included a conversion price for the convertible note equal to
the lower of 50% of the lowest traded price during the 20 trading days prior to conversion or 50% of the bid price on the day of
conversion. Accordingly, the conversion price of the Initial Debentures and Subsequent Debentures has been adjusted in accordance
with the terms thereof.
We also have the right to redeem some or all
of the outstanding principal balance under the Debentures in cash at a price equal to the sum of (A) 125% of the amount of the
Debentures being redeemed plus the accrued but unpaid interest thereon plus the applicable interest make-whole amount.
The Debentures include customary events of
default, such as defaults in payment, breaches of covenants or agreements, or changes in control. Upon the occurrence of an event
of default, each holder may accelerate all or any portion of the Debentures in cash, at a price equal to the greater of (i) the
outstanding principal amount of the Debenture, plus all accrued and unpaid interest thereon, plus the applicable interest make-whole
amount, divided by the conversion price on the date such amount is either (A) demanded (if demand or notice is required to create
an event of default) or otherwise due or (B) paid in full, whichever has a lower conversion price, multiplied by the volume weighted
average price (“VWAP”) on the date such amount is either (x) demanded or otherwise due or (y) paid in full, whichever
has a higher VWAP, or (ii) 118% of the outstanding principal amount of the Debenture, plus all accrued and unpaid interest thereon,
plus the applicable interest make-whole amount. Upon the occurrence of an event of default, the Debentures shall also become convertible
at the lesser of the conversion price and 60% of the VWAP for the five (5) trading days in the preceding twenty (20) trading days
that have the lowest VWAP during such period.
The Investors have been granted a security
interest on all of the assets of the Company to secure the obligations under the Initial and Subsequent Debentures. Redwood has
been granted a security interest on all assets of the Company to secure the obligations under the Third Redwood Debenture and the
Fourth Redwood Debenture, which security interest is junior to the security interest granted to the Investors.
Registration Rights
Agreement
On March 5, 2015,
we entered into the Registration Rights Agreement (the “Rights Agreement”) with Redwood pursuant to which we agreed
to register an amount of shares of our common stock equal to 125% of the shares of common stock issuable upon conversion of the
Subsequent Redwood Debenture and the interest that may accrue thereon through the maturity date (the “Registrable Securities”).
We are required to file a registration statement with the SEC to register the Registrable Securities by March 10, 2015
(the “Filing Deadline”) and have the registration statement declared effective by the SEC within sixty (60)
days of the Filing Deadline, or May 8, 2015 (the “Effectiveness Deadline”).
If we fail to meet
the Filing Deadline or the Effectiveness Deadline, or if the registration statement ceases or fails to remain effective for the
requisite time, we are required to pay liquidated damages equal to 1% of the aggregate purchase price paid by the Investors pursuant
to the Purchase Agreement on a monthly basis, until the expiration of the Effectiveness Deadline. The liquidated damages may not
exceed 10% of the purchase price paid by the Investors, in the aggregate.
The parties to the
Rights Agreement also agreed, among other things, to indemnify each other for losses that may arise based on untrue statements
that may be included in a registration statement and certain other fees and expenses that the parties may incur in connection therewith.
We have agreed to pay all expenses relating to the filing of the registration statement.
SUMMARY OF FINANCIAL
INFORMATION
The following selected financial information
is derived from the Company’s Financial Statements appearing elsewhere in this Prospectus and should be read in conjunction
with the Company’s Financial Statements, including the notes thereto, appearing elsewhere in this Prospectus.
Summary of Statements of Operations
| |
Year Ended December 31, 2013 | | |
Year Ended December 31, 2014 | |
| |
| | |
| |
Total Revenue | |
$ | 0 | | |
$ | 0 | |
Net loss | |
$ | (908,619 | ) | |
$ | (2,160,699 | ) |
Net loss per common share (basic and diluted) | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
Weighted average common shares outstanding
| |
| 378,033,149 | | |
| 380,674,272 | |
Balance Sheet Information
| |
December 31, 2013 | | |
December 31, 2014 | |
Cash | |
$ | 179,132 | | |
$ | 169,265 | |
Prepaid expenses | |
$ | 17,424 | | |
$ | 20,741 | |
Total current assets | |
$ | 196,556 | | |
$ | 192,992 | |
Total assets | |
$ | 229,533 | | |
$ | 257,058 | |
Total current liabilities | |
$ | 62,482 | | |
$ | 1,846,381 | |
Stockholders’ equity(deficit)
| |
$ | 167,051 | | |
$ | (1,589,323 | ) |
Total liabilities and stockholders’ deficit | |
$ | 229,533 | | |
$ | 257,058 | |
RISK FACTORS
You should carefully
consider the risks described below together with all of the other information included in this Prospectus before making an investment
decision with regard to our securities. The statements contained in or incorporated into this Prospectus that are not historic
facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially
from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business,
financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline,
and you may lose all or part of your investment.
You should carefully consider the following risk factors together
with the other information contained in this Prospectus. If any of the following risks actually occur, they may materially harm
our business and our financial condition and results of operations. In this event, the market price of our common stock could decline
and your investment could be lost.
Because we have generated limited revenues which are not
sufficient to cover our operating expenses and have incurred losses for the period from March 24, 2008 (inception) to December
31, 2014, there is an uncertainty about whether we will be able to continue as a going concern and, as a result, a possibility
that shareholders may lose some or all of their investment in our Company.
We have generated no revenues for the fiscal year ended December
31, 2014, and had a net loss of $2,160,696. We have a total accumulated deficit of $3,365,780 since inception. We anticipate generating
losses for the next 12 months. Therefore, we may be unable to continue operations in the future as a going concern. If financing
is available, it may involve issuing securities senior to our common stock. In addition, in the event we do not raise additional
capital from conventional sources, such as our existing investors or commercial banks, there is every likelihood that our growth
will be restricted and we may be forced to scale back or curtail implementing our business plan. No adjustment has been made in
the accompanying financial statements to the amounts and classification of assets and liabilities, which adjustment may have to
be made, should we be unable to continue as a going concern. If we cannot continue as a viable entity, our shareholders may lose
some or all of their investment in the Company.
Our independent auditors have expressed substantial doubt
about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
In their report dated April 15, 2015, our independent auditors
stated that our financial statements for the fiscal year ended December 31, 2014 were prepared assuming that we would continue
as a going concern. Our ability to continue as a going concern is an issue raised as a result of recurring losses from operations.
We continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to obtain
necessary funding from outside sources, including obtaining additional funding from the sale of our securities. Our continued
net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove
successful.
Our operating results are difficult to predict, and we may
experience significant fluctuations in our operating results.
Our operating results may fluctuate significantly. As a result,
you may not be able to rely on period to period comparisons of our operating results as an indication of our future performance.
Factors causing these fluctuations include, among others:
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our ability to maintain and increase sales to existing customers, attract new customers and satisfy our customers’ demands; |
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our ability to monetize our products; |
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the price we charge for our products or changes in our pricing strategies or the pricing strategies of our competitors; |
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timing and costs of marketing and promotional programs organized by us, including the extent to which we offer promotional discounts to our customers; |
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technical difficulties in manufacturing or maintaining our products; |
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the introduction by our competitors of new products and services; |
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the effects of strategic alliances, potential acquisitions and other business combinations, and our ability to successfully and timely integrate them into our business; |
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changes in government regulations with respect to the fare metering and m-commerce industry for motor scooters and motorcycle taxis and ; and |
|
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economic and geopolitical conditions in Thailand and elsewhere. |
In addition, a significant percentage of our operating expenses
are fixed in the short term. As a result, a delay in generating or recognizing revenue for any reason could result in substantial
operating losses.
We will need substantial capital to implement our business
plan and if we fail to raise additional capital, our ability to implement our business model and strategy could be compromised.
Our capital requirements are significant. In order to implement
our plan of operations for the next twelve (12) months, we estimate that we will need $556,000. Given our cash position of $56,000
as of April 15, 2015, management believes that our cash on hand and working capital are sufficient to meet our current anticipated
cash requirements through May 15, 2015, but only on a very limited budget.
We are not currently generating sufficient cash flow to fund our
operations. There can be no assurance that we will be able to generate sufficient cash flows in the future which will be sufficient
to fund our operations. We plan to seek additional equity capital in the very near future to fund our operations. There is no assurance
that we will be able to obtain this financing, in the amounts required or on terms acceptable to us. If additional financing is
obtained, we will most likely be selling additional equity securities with the consequence of dilution to our current shareholders.
If financing is not obtained, then we may have to curtail or reduce our activities. Aside from the sale of the Debentures, we have
no current arrangements with respect to additional financing. There can be no assurance that any sources of additional financing
will be available to us on acceptable terms, or at all.
Until we have developed and launched our products at commercial
levels, there is uncertainty of market acceptance and the efficacy of the commercialization strategy.
While we have launched our products in the pre-production stage,
we have not begun full production and sales at a commercial level, except for Moto-Meter which has recently completed the pre-production
phase, Wheelies which has begun limited production, and Yes which currently has one customer. Until we have consistent, proven
sales, there is uncertainty of product acceptance in the intended markets and our ability to commercialize our products. As with
any transformational product, there will be a time before customers embrace the produce and recognize its full value. If there
are no, or only low levels of, product acceptance and sales, we may have to alter our business plan. As is typical of any new
business concept, demand and market acceptance for newly introduced products and services is subject to great uncertainty. Achieving
market acceptance will require us to undertake substantial marketing efforts and to make significant expenditures to create awareness
of and demand for our products. We have limited marketing experience and limited financial, personnel and other resources to undertake
extensive marketing activities. Our efforts will be subject to all of the risks associated with the commercialization of new products,
including unanticipated delays, expenses, technical problems or difficulties and technological obsolescence due to changing technology
and the evolution of industry standards. There can be no assurance that markets for our products will not be limited, or that
our strategies will result in successful product commercialization or in initial or continued market acceptance for our products.
If we are unsuccessful in obtaining regulatory mandates or
cooperation from local governments for the use of the Moto-Meter, that could have a material effect on our ability and timing of
penetrating such local markets.
Although we are currently collaborating with the Bangkok (Thailand)
Governor’s office and we are in discussions with the office of the mayor of Montes Claros, Brazil and plan to enter into
discussions with other local governments regarding a regulatory mandate for the use of the Moto-Meter within such areas, we may
be unsuccessful in obtaining the cooperation of such local governments in requiring the use of the Moto-Meter. If our efforts at
obtaining a regulatory mandate are unsuccessful, we will have to market the Moto-Meter in an unregulated environment and it may
be more difficult to achieve expeditious market penetration which may result in higher marketing and distribution costs to us and
delays in realizing material sales.
Our products may be subject to price sensitivity in certain
markets, which may negatively impact our revenues and operating results.
Our products, such as the Moto-Meter and Wheelies, will be offered
in developing market economies. As a result, the Moto-Meter may be considered expensive for the small operators of moto-taxis,
many of which are individually owned. Therefore, we may have issues in being able to establish a market for the products and penetrating
the market as we try to expand it. To achieve market penetration, we may have to produce a lower cost models or reduce the price
of our product offerings, the latter of which would curtail our anticipated margins and may have an adverse effect on our ability
to operate and expand our business.
We are uncertain of our ability to effectively implement and
manage our growth strategy and any failure to effectively implement our business plan could adversely affect our business and financial
results.
As part of our business plan, we will be rolling out our Moto-Meter
product first in one of or all of Thailand, Indonesia and Vietnam, and then in other countries with developing economies, such
as Brazil. We also plan to expand our product offerings, including the sales of our Wheelies product. The success of our growth
strategy will depend on brand management, competitive conditions, our ability to manage increased sales and distribution, and local
law and cultural requirements. There is no assurance that we will be able to satisfy all the requirements of a successful product
development and launch and then expansion into the markets for our products and there is no assurance that we will be able to sell
our products in one of or all of Thailand, Indonesia and Vietnam or expand to other countries, such as Brazil. There can be no
assurance that we will be able to find the qualified personnel to implement the business plan. There is also no assurance that
our growth strategy will be successful or that our sales or net income will increase as a result of our strategy.
Our management and internal systems might be inadequate to
handle our potential growth which may strain our financial resources.
Successful implementation of our business strategy will require
us to develop our operations and effectively manage growth. Growth will place a significant strain on our management, financial,
product design, marketing, distribution and other resources, which would cause us to face operational difficulties. To manage future
growth, our management must build operational and financial systems and expand, train, retain and manage our employee base. Our
management may not be able to manage our growth effectively in which case, our expansion would be halted or delayed and we may
lose our opportunity to gain significant market share or the timing advantage with which we would otherwise gain significant market
share. Any inability to manage growth effectively may harm our ability to implement and execute our current or any subsequent business
plans.
Technical factors may limit product development resulting
in decreased revenue and if we do not respond effectively and on a timely basis to rapid technological change, our business could
suffer.
Although our research and development efforts relating to the technological
aspects of the existing version of the Moto-Meter are completed, we are continually seeking to refine and improve capabilities
and the components of the Moto-Meter and to develop additional related products and functionalities, such as the Wheelies product.
Our success will depend upon products meeting targeted costs and performance standards and also will depend upon their timely introduction
into the marketplace. There can be no assurance that development of additional versions and functions of the our products will
be successfully completed, that they will satisfactorily perform all of the functions for which they have been designed, that they
will meet current price or performance objectives or that unanticipated technical or other problems will not occur which would
result in increased costs or material delays in development or commercialization.
We will initially depend on third party suppliers and manufacturers
and any failure to adequately establish agreements with suppliers and manufacturers will impede our growth.
Initially we will use outside providers to add in the development
and implementation of aspects of our business plan, such as for research and development, design requirements and marketing. Additionally,
we plan to purchase product components from various third party suppliers and use third party manufacturers of our products. We
believe that there are several readily available sources for research, design and marketing tasks and for parts and for manufacturing.
While we will attempt to maintain alternative sources for our service providers, supplies and manufacturing, we are subject to
the risk of price fluctuations, product availability, delivery delay and quality consistency. Failure by service providers, suppliers
and manufacturers to supply us with the services or units on commercially reasonable terms, or at all, would have a material adverse
effect on our Company in establishing brand recognition and market share, obtaining sales and generating revenues. Failure or delay
in receiving necessary services and supplies or products by the Company would adversely affect our operations, and its ability
in turn to deliver our products on a timely, consistent basis. The use of third party providers may also make our products more
expensive or reduce our margins, therefore affecting our financial condition and results of operations.
Inability to protect our proprietary rights could damage our
competitive position.
We have filed several United States and foreign patent applications
covering certain aspects of the Moto-Meter and our Wheelies product. There can be no assurance as to the breadth or degree of protection
which existing or future patents, if any, may afford us, that any patent applications will result in issued patents, that our patents
or future trademarks, if any, will be upheld if challenged or that competitors will not develop similar or superior methods or
products outside the protection of any patent issued to us.
Although we believe that our current products, patent applications
and trademarks do not and will not infringe patents, trademarks or violate proprietary rights of others, it is possible that our
existing intellectual property may not be valid or that infringement of existing or future patents, trademarks or proprietary rights
may occur. In the event our products infringe patents or proprietary rights of others, we may be required to modify the design
of our products, change the name of our products or obtain a license. There can be no assurance that we will be able to do so in
a timely manner, upon acceptable terms and conditions or at all. The failure to do any of the foregoing could have a material adverse
effect upon our Company. In addition, there can be no assurance that we will have the financial or other resources necessary to
enforce or defend a patent infringement or proprietary rights violation action. Moreover, if our products infringe patents, trademarks
or proprietary rights of others, we could, under certain circumstances, become liable for damages, which also could have a material
adverse effect on our Company.
We also rely on proprietary know-how and employ various methods
to protect the source codes, concepts, ideas and documentation of our proprietary technology. However, such methods may not afford
complete protection and there can be no assurance that others will not independently develop similar know-how or obtain access
to our know-how or software codes, concepts, ideas and documentation. Although we have and expect to have confidentiality agreements
with our employees and appropriate vendors, there can be no assurance that such arrangements will adequately protect our trade
secrets.
Our products may be subject to government regulation which
may increase our costs or limit our products.
Certain functions of the Moto-Meter system utilize radio frequency
technology, which may be subject to regulation in the jurisdictions where we plan on marketing and selling the Moto-Meter. Failure
to obtain approval will disallow the use of the Moto-Meter's wireless interface in that jurisdiction until such time as approval
can be obtained or a waiver is granted from the relevant authority in the specific jurisdiction targeted for sales.
The Moto-Meter may also be subject to metrology regulation in the
category of weights and measures assurance in certain jurisdictions, such as Brazil. To date, we have not begun the process towards
metrology approvals in any jurisdiction. However we intend to begin this process in select countries such as Brazil within the
next 12 months. Failure to obtain approval in any specific region where metrology requirements exist would mean the Moto-Meter
could not be sold in this market until it had been modified to meet the requirements.
There can be no assurance that, in the future, we will be able to
obtain required licenses or that the relevant government authorities will not require us to comply with more stringent licensing
requirements. Failure or delay in obtaining required licenses would have a material adverse effect on us. Amendments to existing
statutes and regulations, adoption of new statutes and regulations and our product offerings in jurisdictions in addition to the
United States, could require us to alter methods of operations at costs that could be substantial, which could have an adverse
effect on us. There can be no assurance that we will be able, for financial or other reasons, to comply with applicable laws, regulations
and licensing requirements.
In the event Wheelies are used on public roads, they will be regulated
by the Thailand Land Traffic Act of 1979 and associated ministerial regulations. Strict interpretation of these existing regulations
limit any exterior vehicle lighting to headlamps, brake lights and turn signal indicators unless otherwise approved by the Department
of Land Transport. If we do not request a waiver from the Department of Land Transport before commencing advertising activities,
we may be subject to penalties, such as fines, or even a prohibition on using the Wheelies technology on public streets until a
waiver is obtained. Any such penalties or prohibition could have a material adverse impact on our Wheelies business in Thailand.
Our business depends substantially on the continuing efforts
of our executive officers and our business may be severely disrupted if we lose their services.
Our success is largely dependent on the personal efforts of Messrs.
Paul Giles and Chris Ziomkowski, and Ms. Lisa Ziomkowski-Boten. Messrs. Paul Giles and Chris Ziomkowski have written employment
agreements with us. The loss of the services of these persons would have a material adverse effect on our business and prospects.
Our success is also dependent upon our ability to hire and retain highly skilled financial, technical, marketing and other personnel
to implement the various aspects of the business plan. There can be no assurance that we will be able to hire or retain such necessary
personnel.
We do not have any key man insurance on either of Messrs. Paul Giles
or Chris Ziomkowski, or Ms. Ziomkowski-Boten and have no current intention to obtain such form of insurance.
Corporate insiders or their affiliates may be able to exercise
significant control over matters requiring a vote of our shareholders and their interests may differ from the interests of our
other shareholders.
Because our insiders collectively own approximately 48.23% of
the issued and outstanding shares of common stock of our Company, they will be able to influence, if not control, the Company,
elect all of our directors, increase the authorized capital, dissolve, merge, sell the assets of our Company and generally direct
our affairs.
Risks Related to Doing Business Internationally
We are subject to market risk through our sales to international
markets.
A portion of our sales are or will be derived from international
markets. These operations are subject to risks that are inherent in operating in foreign countries, including the following:
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foreign countries could change regulations or impose currency restrictions and other restraints; |
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changes in foreign currency exchange rates and hyperinflation or deflation in the foreign countries in which we operate; |
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exchange controls; |
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some countries impose burdensome tariffs and quotas; |
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political changes and economic crises may lead to changes in the business environment in which we operate; |
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international conflict, including terrorist acts, could significantly impact our financial condition and results of operations; and |
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economic downturns, political instability and war or civil disturbances may disrupt distribution logistics or limit sales in individual markets. |
No assurance can be given that we will be able to continue selling
our products in any of the foreign countries in which we currently or plan to do business. Any of the above-mentioned factors could
detrimentally affect our sales, and impact our financial condition and results of operations.
Our international operations subject us to risks associated
with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to the countries or
regions in which we operate, which could adversely affect our financial performance.
We currently conduct operations in Thailand, and plan on expanding
our operations to additional international markets. Our future operating results in international markets could be negatively affected
by a variety of factors, most of which are beyond our control. These factors include political conditions, including political
instability, economic conditions, legal and regulatory constraints, trade policies, currency regulations, and other matters in
any of the countries or regions in which we operate, now or in the future.
Moreover, the economies of some of the countries in which we currently
have, or plan to have operations, have in the past suffered from high rates of inflation and currency devaluations, which, if they
occurred again, could adversely affect our financial performance. Other factors which may impact our operations include foreign
trade, monetary and fiscal policies both of the United States and of other countries, laws, regulations and other activities of
foreign governments, agencies and similar organizations, and risks associated with having numerous officers located in countries
which have historically been less stable than the United States. Additional risks inherent in our international operations generally
include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty
in enforcing intellectual property rights in countries other than the United States.
Political unrest and demonstrations, as well as changes in
the political, social, business or economic conditions in Thailand, could harm our business, financial condition and operating
results.
Political, social, business and economic conditions in Thailand
may have a significant effect on our business. In March 2013, Thailand was assessed as a medium-high political risk by AON Political
Risk, a risk management, insurance and consulting firm. Any changes to tax regimes, laws, exchange controls or political action
in Thailand may harm our business, financial condition and operating results.
In September 2006, Thailand experienced a military coup that overturned
the existing government, and in 2008, political unrest and demonstrations in Bangkok sparked a series of violent incidents that
resulted in several deaths and numerous injuries. In April 2009, anti-government demonstrations in Bangkok caused severe traffic
congestion and numerous injuries, and in March 2010, protestors again held demonstrations calling for new elections. These demonstrations
in recent years in Bangkok and other parts of Thailand, which escalated in violence through May 2010, resulted in the country’s
worst political violence in nearly two decades with numerous deaths and injuries, as well as destruction of property. Certain hotels
and businesses in Bangkok were closed for weeks as the protestors occupied Bangkok’s commercial center, and governments around
the world issued travel advisories urging their citizens to avoid non-essential travel to Bangkok.
Any succession crisis in the Kingdom of Thailand could cause new
or increased instability and unrest. In the event that a violent coup were to occur or the current political unrest were to worsen,
such activity could prevent shipments from entering or leaving the country and disrupt our ability to manufacture products in Thailand,
and we could be forced to transfer our manufacturing activities to more stable, and potentially more costly, regions. Further,
the Thai government recently raised the minimum wage standards for labor and could repeal certain promotional certificates that
we have received or tax holidays for certain export and value added taxes that we enjoy, either preventing us from engaging in
our current or anticipated activities or subjecting us to higher tax rates. Future political instability such as coups or demonstrations
could harm our business, financial condition and operating results.
The fluctuation of foreign currency exchange rates could materially
impact our financial results.
Since we plan to conduct a significant portion our operations in
Thailand, our business is subject to foreign currency risks, including currency exchange rates fluctuations and difficulties in
converting Thai baht into U.S. dollars. The exchange rates between the Thai baht and the U.S. dollar, Euro and other foreign currencies
is affected by, among other things, changes in Thailand’s political and economic conditions. In addition, appreciation or
depreciation in the value of the Thai baht relative to the U.S. dollar would affect our financial results reported in U.S. dollar
terms without giving effect to any underlying change in our business, financial condition and results of operations.
Because our assets are located outside of the United States
and some of our directors and officers reside outside of the United States, it may be difficult for investors to enforce their
rights based on United States federal securities laws or any United States court judgments against us and our officers and directors.
Our operations and most of our assets, including cash and cash equivalents,
are currently located in the Thailand. In addition, some of our current directors and officers reside outside of the United States.
It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions
of the United States federal securities laws against us in the courts of either the United States or Thailand, and even if civil
judgments are obtained in United States courts, to enforce such judgments in Thailand courts. Further, it is unclear if extradition
treaties now in effect between the United States and Thailand would permit effective enforcement against us or our officers and
directors of criminal penalties, under the United States federal securities laws or other United States laws.
Most of our cash and cash equivalents are currently held in
Thai banks, which do not provide the same protections as U.S. banks.
Most of our cash and cash equivalents are currently held in
Thai banks, which do not provide the same protections as U.S. banks. For instance, Thailand’s Deposit Protection Agency
Act, which was established to take effect on August 11, 2008, provides that depositors in Thai commercial banks will only be insured
for ฿ 1,000,000 THB (or $30,742 USD based on an exchange
rate of 32.53 as of April 13, 2015) in each financial institution. If the recent political, social, business and economic conditions
in Thailand were to result in the failure of the financial institutions that hold our cash and cash equivalents, we may lose a
significant portion of our cash and cash equivalents to the extent such amounts exceed the protection provided by the Deposit
Protection Agency Act. If such events were to occur, they could have a materially adverse effect on our business, financial condition
and operating results.
Risks Relating to our Common Stock and
our Status as a Public Company
The relative lack of public company experience of our management
team may put us at a competitive disadvantage.
Our management team lacks public company experience and is generally
unfamiliar with the requirements of the United States securities laws and U.S. Generally Accepted Accounting Principles, which
could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002.
The individuals who now constitute our senior management team have never had responsibility for managing a publicly traded company.
Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior
management may not be able to implement programs and policies in an effective and timely manner that adequately responds to such
increased legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements could
lead to the imposition of fines and penalties and distract our management from attending to the growth of our business.
Our Articles of Incorporation have granted the authorization
to issue preferred stock in the discretion of the Board of Directors, and such preferred stock may have certain rights and privileges
superior to those held by holders of our common stock.
Our Articles of Incorporation authorize the issuance of “blank
check” preferred stock with such designations, rights and preferences as may be determined from time to time by the Board
of Directors. Accordingly, the Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of
our Common Stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company, which could have the effect of discouraging bids for the
Company and, thereby, prevent stockholders from receiving the maximum value for their shares. We have no present intention to issue
any shares of our preferred stock. However, there can be no assurance that preferred stock of the Company will not be issued at
some time in the future.
Our board of directors does not intend to declare or pay any
dividends to our stockholders in the foreseeable future.
We have paid no cash dividends on its common stock to date. Payment
of dividends on the common stock is within the discretion of the Board of Directors and will depend upon our earnings, capital
requirements and financial condition, and other relevant factors. We do not currently intend to declare any dividends on our Common
Stock in the foreseeable future.
A limited public trading market exists for our common stock,
which makes it more difficult for our stockholders to sell their common stock in the public markets.
Our common stock is currently traded under the symbol “FARE,”
but currently with low volume, based on quotations on the OTCQB marketplace, operated by OTC Markets Group, Inc., meaning that
the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small
or occasionally non-existent. This situation is attributable to a number of factors, including the fact that we are a small company
which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community
that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse
and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our stock until such
time as we became more viable. Additionally, many brokerage firms may not be willing to effect transactions in the securities.
As a consequence, there may be periods of several days or more when trading activity in our stock is minimal or non-existent, as
compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales
without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market
for our common stock will develop or be sustained, or that trading levels will be sustained.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its securities. Due to the volatility of our common stock
price, we may be the target of securities litigation in the future. Securities litigation could result in substantial costs and
divert management’s attention and resources.
Shareholders should also be aware that, according to SEC Release
No. 34-29093, the market for “penny stock,” such as our common stock, has suffered in recent years from patterns of
fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and
misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5)
the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the
abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical
limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns
or practices could increase the future volatility of our share price.
We will be required to incur significant costs and require
significant management resources to evaluate our internal control over financial reporting as required under Section 404 of the
Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse effect on our stock
price.
As a smaller reporting company as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial reporting under Section
404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include an internal control report
with the Annual Report on Form 10-K. This report must include management’s assessment of the effectiveness of our internal
control over financial reporting as of the end of the fiscal year. This report must also include disclosure of any material weaknesses
in internal control over financial reporting that we have identified. Failure to comply, or any adverse results from such evaluation
could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading price of our equity
securities. Management believes that its internal controls and procedures are currently not effective to detect the inappropriate
application of U.S. GAAP rules. Management realize there are deficiencies in the design or operation of our internal control that
adversely affect our internal controls which management considers to be material weaknesses including those described below:
|
i) |
We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis. |
|
ii) |
We do not have an audit committee or an independent audit committee financial expert. While not being legally obligated to have an audit committee or independent audit committee financial expert, it is the management’s view that to have an audit committee, comprised of independent board members, and an independent audit committee financial expert is an important entity-level control over our financial statements. |
|
iii) |
We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud related risks and the risks related to non- routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness. |
For the material weakness identified in (i), we plan to remediate
this material weakness in the next twelve (12) months by considering the hiring one or two additional accounting personnel with
the knowledge to design, implement and review internal controls. For the material weakness identified in (ii), we are in
the process of identifying additional independent directors to serve on our board and an Audit Committee with an objective to have
this process completed before the end of our fiscal year ending December 31, 2015. We will need to analyze the costs of such
additional independent directors in accordance with current market and industry practices. For the material weakness identified
in (iii), we plan to remediate this material weakness by working with our external auditor and legal counsel over the next 18 months
to perform periodic entity level risk assessment. This may cost us in excess of US $150,000 per year.
Achieving continued compliance with Section 404 may require us to
incur significant costs and expend significant time and management resources. We cannot assure you that we will be able to fully
comply with Section 404 or that we and our independent registered public accounting firm would be able to conclude that our internal
control over financial reporting is effective at fiscal year end. As a result, investors could lose confidence in our reported
financial information, which could have an adverse effect on the trading price of our securities, as well as subject us to civil
or criminal investigations and penalties. In addition, our independent registered public accounting firm may not agree with our
management’s assessment or conclude that our internal control over financial reporting is operating effectively.
Our stock is categorized as a penny stock. Trading of our
stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s ability to buy and sell
our stock.
Our stock is categorized as a “penny stock.” The SEC
has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as
defined) less than $4.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities
are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by
the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer
also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the
customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be
given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before
or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock
not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny
stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe
that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements may also limit a shareholder’s
ability to buy and sell our stock.
In addition to the “penny stock” rules described above,
the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment
to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts
to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under
interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not
be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market
for our shares.
State securities laws may limit secondary trading, which may
restrict the states in which you can sell our shares of common stock.
You may not be able to resell the shares of common stock held in
the Company in a state unless and until the shares of our common stock are qualified for secondary trading under the applicable
securities laws of such state, or there is confirmation that an exemption, such as listing in certain recognized securities manuals,
is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying
our common stock for secondary trading, or identifying an available exemption for secondary trading in our common stock in every
state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, our common stock in
any particular state, the shares of common stock could not be offered or sold to, or purchased by, a resident of that state. In
the event that a significant number of states refuse to permit secondary trading in our common stock, the market for the common
stock will be limited which could drive down the market price of our common stock and reduce the liquidity of the shares of our
common stock and limit a stockholder’s ability to resell shares of our common stock at all or at current market prices, which
could increase a stockholder’s risk of losing some or all of his investment.
Shares of our common stock that have not been registered under
the Securities Act of 1933, as amended, regardless of whether such shares are restricted or unrestricted, are subject to resale
restrictions imposed by Rule 144, including those set forth in Rule 144(i) which apply to a “shell company.” In addition,
any shares of our common stock that are held by affiliates, including any received in a registered offering, will be subject to
the resale restrictions of Rule 144(i).
Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule
144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal
assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents
and nominal other assets. As such, we were a “shell company” pursuant to Rule 144 prior to the acquisition of the Assets,
and as such, sales of our securities pursuant to Rule 144 are not able to be made until a period of at least twelve months has
elapsed from the date that our Current Report on Form 8-K was filed with the Commission reflecting the Company’s status as
a non- “shell company.” Therefore, any restricted securities we sell in the future or issue to consultants or employees,
in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered
with the Commission and/or until a year after the date of the filing of our Current Report on Form 8-K and we have otherwise complied
with the other requirements of Rule 144. As a result, it may be harder for us to fund our operations and pay our consultants with
our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities
unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future.
Our previous status as a “shell company” could prevent us from raising additional funds, engaging consultants, and
using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities,
if any, to decline in value or become worthless. Lastly, any shares held by affiliates, including shares received in any registered
offering, will be subject to the resale restrictions of Rule 144(i).
The elimination of monetary liability against our directors,
officers and employees under Nevada law and the existence of indemnification rights to our directors, officers and employees may
result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contain a provision permitting us
to eliminate the personal liability of our directors to our company and shareholders for damages for breach of fiduciary duty as
a director or officer to the extent provided by Nevada law. We may also have contractual indemnification obligations under our
employment agreements with our officers. The foregoing indemnification obligations could result in the Company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup.
These provisions and resultant costs may also discourage our Company from bringing a lawsuit against directors and officers for
breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against
our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.
We are obligated to provide anti-dilution protection to the
Investors under the Debentures, and such anti-dilution protections may make it more difficult and expensive for us to raise additional
capital in the future and may result in further dilution to current shareholders.
The Debentures provide that the conversion price will adjust to
the lowest price per share at which additional shares (with certain exceptions) are issued or deemed to be issued (a “full-ratchet”
adjustment). Because these anti-dilution provisions will have the effect of lowering the price at which shares of our common stock
are issued upon conversion of the Debentures, if we are unable to raise additional capital at an effective price per share that
is higher than the exercise price of these Debentures, these provisions may make it more difficult and more expensive to raise
capital in the future. The additional shares we would have to issue or potentially issue could cause dilution to our then current
shareholders and may have an adverse impact on our stock price. The potential dilutive effect of such a financing could deter potential
future investors from investing in our Company. If we are unable to raise capital because of such anti-dilution provisions, it
may have a material adverse impact on our business and ability to grow.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Prospectus contains
certain forward-looking statements. When used in this Prospectus or in any other presentation, statements which are not historical
in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,”
“intend,” “may,” “project,” “plan” or “continue,” and similar expressions
are intended to identify forward-looking statements. They also include statements containing a projection of revenues, earnings
or losses, capital expenditures, dividends, capital structure or other financial terms.
The forward-looking
statements in this Prospectus are based upon our management’s beliefs, assumptions and expectations of our future operations
and economic performance, taking into account the information currently available to them. These statements are not statements
of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us that
may cause our actual results, performance or financial condition to be materially different from the expectations of future results,
performance or financial condition we express or imply in any forward-looking statements. These forward-looking statements are
based on our current plans and expectations and are subject to a number of uncertainties and risks that could significantly affect
current plans and expectations and our future financial condition and results.
We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Prospectus might not occur.
We qualify any and all of our forward-looking statements entirely by these cautionary factors. As a consequence, current plans,
anticipated actions and future financial conditions and results may differ from those expressed in any forward-looking statements
made by or on our behalf. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information
presented herein.
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be
offered and sold from time to time by the Selling Security Holders named herein. There will be no proceeds to us from the
sale of shares of common stock in this offering.
DETERMINATION OF OFFERING PRICE
There currently is a limited public market
for our common stock. The Selling Security Holders will determine at what price they may sell the offered shares, and such sales
may be made at prevailing market prices or at privately negotiated prices. See “Plan of Distribution” below for more
information.
DILUTION
Dilution represents the difference between
the offering price and the net tangible book value per share immediately after completion of this offering. Net tangible
book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares
of common stock outstanding. Dilution in the as adjusted net tangible book value per share represents the difference between the
amount per share paid by purchasers of our common stock in this offering and the as adjusted net tangible book value per share
of common stock immediately after the consummation of this offering.
As of December 31, 2014, the net
tangible book value was negative at $1,589,323 or approximately $0.00 per share, based upon 395,369,204 shares outstanding.
After giving effect to the sale of the 236,710,355 shares of our common stock in this offering at
an offering price of $0.03 per share, less estimated offering expenses payable by us, our as adjusted net tangible book value
as of December 31, 2014 would have been approximately $5,511,988 or $0.01 per share. The following table illustrates this per
share dilution:
The following table illustrates this calculation
on a per share basis as of December 31, 2014:
Offering price per share of common stock | |
$ | 0.03 | |
Net tangible book value per share of common stock | |
$ | (0.00 | ) |
Increase in net tangible book value per share of common stock attributable to the offering | |
$ | 0.01 | |
Pro forma net tangible book value per share of common stock after giving
effect to the offering | |
$ | 0.01 | |
Dilution in net tangible book value per share of common stock to purchasers | |
$ | 0.02 | |
The foregoing table and calculations are
based on the number of shares of our common stock outstanding as of December 31, 2014.
SELLING STOCKHOLDERS
This offering relates
to the registration and resale of up to 236,710,355 shares of our common stock, par value $0.0001 per share, by the selling security
holders (the “Selling Security Holders”), of which up to: (a) 29,787,588 shares of common stock are issuable upon the
conversion of the principal amount of the convertible debenture, dated April 4, 2014, issued to Dominion Capital LLC (the “Initial
Dominion Debenture”), (b) 9,334,550 shares of common stock are issuable upon the conversion of interest accrued under the
Initial Dominion Debenture, (c) 77,787,920 shares of common stock are issuable upon the conversion of the principal amount of the
convertible debenture, dated December 11, 2014, issued to Dominion Capital LLC (the “Subsequent Dominion Debenture”),
(d) 9,334,550 shares of common stock are issuable upon the conversion of interest accrued under the Subsequent Dominion Debenture,
(e) 18,296,752 shares of common stock are issuable upon the conversion of the principal amount of the convertible debenture, dated
December 11, 2014, issued to Redwood Management, LLC (the “Subsequent Redwood Debenture”), (f) 3,110,469 shares of
common stock are issuable upon the conversion of interest accrued under the Subsequent Redwood Debenture, (g) 7,951,654 shares
of common stock issuable upon conversion of the principal amount of the convertible debenture, dated March 5, 2015 issued to Redwood
Management, LLC (the “Third Redwood Debenture”), (h) 954,198 shares of common stock are issuable upon the conversion
of interest accrued under the Third Redwood Debenture, (i) 71,564,885 shares of common stock issuable upon conversion of the principal
amount of the convertible debenture to be issued by the Company to Redwood Management, LLC (the “Fourth Redwood Debenture”
together with the Initial Dominion Debenture, the Subsequent Dominion Debenture, the Subsequent Redwood Debenture, and the Third
Redwood Debenture, the “Debentures”), and (j) 8,587,782 shares of common stock are issuable upon the conversion of
interest accrued under the Fourth Redwood Debenture to be issued to Redwood Management, LLC . We will not receive any of the proceeds
from the sale of shares by the Selling Security Holders.
Pursuant to the terms
of the Initial Purchase Agreement, the Selling Security Holders purchased the Initial Debentures in the aggregate principal amount
of $543,478 for a purchase price of $500,000 (8% original issue discount) and the Subsequent Debentures in the aggregate principal
amount of $543,478 for a purchase price of $500,000 (8% original issue discount). Pursuant to the terms of the Subsequent Purchase
Agreement, Redwood purchased the Third Redwood Debenture in the aggregate principal amount of $54,348 for a purchase price of $50,000
(8% original issue discount). Upon the effectiveness of a registration statement to be filed by us in connection therewith, Redwood
will purchase the Fourth Redwood Debenture in the aggregate principal amount of $489,130 for a purchase price of $450,000 (8% original
issue discount).
Unless earlier converted,
redeemed or accelerated, the Debentures mature on the twelve month anniversary of the original issuance date.
The Debentures accrue
interest at the rate of 12% annually, which interest shall be guaranteed regardless of the date of repayment, and have a maturity
date of twelve months from the date of issuance. We are obligated to make amortization payments beginning on the six month anniversary
of the issuance date of the Debentures and continuing monthly thereafter. The Initial Debentures and the Subsequent Debentures
are convertible into shares of our common stock at any time at the discretion of the Investors at a conversion price equal to the
lesser of (i) $0.10 or (ii) the lower of 50% of the lowest traded price during the 20 trading days prior to conversion or 50% of
the bid price on the day of conversion. The Third Redwood Debenture and Fourth Redwood Debenture (when issued) are convertible
into shares of our common stock at any time at the discretion of the Redwood at a conversion price equal to the lesser of (i) $0.03
or (ii) 60% of the lowest traded price per share of the common stock during the twenty five (25) trading days prior to the date
of conversion.
The shares of common
stock underlying the Debentures will be issued in reliance upon an exemption from the registration requirements of the Securities
Act and/or Rule 506 of Regulation D promulgated thereunder.
The following table sets forth the names
of the Selling Security Holders, the number of shares of common stock beneficially owned by each Selling Security Holder as of
the date hereof and the number of shares of common stock being offered by each Selling Security Holder. The shares being
offered hereby are being registered to permit public secondary trading, and the Selling Security Holders may offer all or part
of the shares for resale from time to time. However, the Selling Security Holders are under no obligation to sell all or any portion
of such shares nor are the Selling Security Holders obligated to sell any shares immediately upon effectiveness of this prospectus.
All information with respect to share ownership has been furnished by the Selling Security Holders. The “Number
of Shares of Common Stock Beneficially Owned After Offering” column assumes the sale of all shares offered. However, any
or all of the securities listed below may be retained by any of the Selling Security Holders, and therefore, no accurate forecast
can be made as to the number of securities that will be held by the selling stockholders upon termination of this offering. The
Selling Security Holders are not making any representation that any shares covered by this prospectus will be offered for sale.
Name | |
Shares of Common
Stock Beneficially Owned prior to Offering (1)(2) | | |
Percentage Ownership
before Offering(2) | | |
Maximum Number of
Shares of Common Stock to be Offered | | |
Number of Shares of
Common Stock Beneficially Owned after Offering (3) | | |
Percent Ownership
after Offering | |
| |
| | |
| | |
| | |
| | |
| |
Dominion Capital LLC | |
| 21,940,856 | | |
| 4.99 | % | |
| 126,244,608 | (4) | |
| 0 | | |
| 0 | % |
Redwood Management, LLC | |
| 21,940,856 | | |
| 4.99 | % | |
| 111,121,688 | (5) | |
| 0 | | |
| 0 | % |
(1) Beneficial
ownership is determined in accordance with Rule 13d-3 of the Exchange Act. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into shares of
our common stock, or convertible or exercisable into shares of our common stock within 60 days of the date hereof are deemed outstanding.
Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Except
as indicated in the footnotes to the following table, each stockholder named in the table has sole voting and investment power
with respect to the shares set forth opposite such stockholder’s name. The percentage of beneficial ownership is based on
422,391,215 shares of common stock outstanding as of the date of this prospectus.
(2) The
Debentures are subject to a 4.99% blocker and the amounts and percentages set forth in this these columns give effect to such
blocker. Without giving effect to the 4.99% blocker, Dominion Capital LLC would be the beneficial owner of 100,995,686 shares
of common stock (22.97%) and Redwood Management, LLC would be the beneficial owner of 24,143,042 shares of common stock (5.49%).
(3) Assumes
that all securities registered will be sold.
(4)
Represents 125% of the shares of common stock issuable upon conversion of the principal and interest under the Initial Dominion
Debenture, and the Subsequent Dominion Debenture based on a conversion price of $0.00655. The business address of Dominion is 341
West 38 th Street, Suite 800, New York, NY 10018. Dominion’s principal business is that of a private investment
firm. We have been advised that Mikhail Gurevich is the managing member of Dominion that Mr. Gurevich has power to vote or to direct
the vote and power to dispose or to direct the disposition of all securities owned directly by Dominion. We have been advised that
Dominion is not a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, and that neither
Dominion nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer.
(5)
Represents 655,941 shares of common stock held by Redwood, 125% of the shares of common stock issuable upon conversion of the principal
and interest under the Second Redwood Debenture, based on a conversion price of $0.00655 and the principal and interest under the
Third Redwood Debenture and Fourth Redwood Debenture, based on a conversion price of $0.00786. The business address of Redwood
is 16850 Collins Avenue, Suite 112-341, Sunny Isles, FL 33160. Redwood’s principal business is that of a private investment
firm. We have been advised that John DeNobile is the manager of Redwood that Mr. DeNobile has power to vote or to direct the vote
and power to dispose or to direct the disposition of all securities owned directly by Redwood. We have been advised that Redwood
is not a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, and that neither Redwood
nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer.
PLAN OF DISTRIBUTION
This prospectus relates
to the resale of 236,710,355 shares of common stock, by the Selling Security Holders listed under “Selling Security Holders”,
issuable upon conversion of the Debentures
The Selling Security
Holders and any of their respective pledges, donees, assignees and other successors-in-interest may, from time to time, sell any
or all of their shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or
in private transactions. The Selling Security Holders may use any one or more of the following methods when selling
shares:
|
· |
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
|
· |
block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
|
· |
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
· |
an exchange distribution in accordance with the rules of the applicable exchange; |
|
· |
privately negotiated transactions; |
|
· |
broker-dealers may agree with a Selling Security Holder to sell a specified number of such shares at a stipulated price per share; |
|
· |
through the writing of options on the shares; |
|
· |
a combination of any such methods of sale; and |
|
· |
any other method permitted pursuant to applicable law |
The Selling Security
Holders or their respective pledgees, donees, transferees or other successors in interest, may also sell the shares directly to
market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers
may receive compensation in the form of discounts, concessions or commissions from the Selling Security Holders and/or the purchasers
of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a
particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares
will do so for their own account and at their own risk. It is possible that the Selling Security Holders will attempt
to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below
the then market price. The Selling Security Holders cannot assure that all or any of the shares offered in this prospectus
will be issued to, or sold by, the Selling Security Holders. In addition, the Selling Security Holders and any brokers,
dealers or agents, upon effecting the sale of any of the shares offered in this prospectus may be deemed “underwriters”
as that term is defined under the Securities Act or the Exchange Act, or the rules and regulations under such acts. In
such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities Act.
Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a Selling Security Holder.
The Selling Security Holders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares if liabilities are imposed on that person under the Securities Act.
The Selling Security
Holders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them, and,
if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares
of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3)
or any other applicable provision of the Securities Act amending the list of Selling Security Holders to include the pledgee, transferee
or other successors in interest as Selling Security Holder under this prospectus.
The Selling Security
Holders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from
time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of Selling Security Holders to include the pledgee, transferee or other successors
in interest as a Selling Security Holder under this prospectus.
The Selling Security
Holders acquired or will acquire the securities offered hereby in the ordinary course of business and have advised us that they
have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale
of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of
shares of common stock by any Selling Security Holder. We will file a supplement to this prospectus if a Selling Security
Holder enters into a material arrangement with a broker-dealer for sale of common stock being registered. If the Selling
Security Holders use this prospectus for any sale of the shares of common stock, it will be subject to the prospectus delivery
requirements of the Securities Act.
Pursuant to a requirement
by the Financial Industry Regulatory Authority, or FINRA, the maximum commission or discount to be received by any FINRA member
or independent broker/dealer may not be greater than eight percent (8%) of the gross proceeds received by us for the sale of any
securities being registered pursuant to SEC Rule 415 under the Securities Act.
The anti-manipulation
rules of Regulation M under the Exchange Act, may apply to sales of our common stock and activities of the Selling Security Holders. The
Selling Security Holders will act independently of us in making decisions with respect to the timing, manner and size of each sale.
We will pay all expenses
incident to the registration, offering and sale of the shares of our common stock to the public hereunder other than commissions,
fees and discounts of underwriters, brokers, dealers and agents. We estimate that the expenses of the offering to be
borne by us will be approximately $17,825. We will not receive any proceeds from the resale of any of the shares of
our common stock in this offering.
DESCRIPTION OF SECURITIES
TO BE REGISTERED
Authorized Capital Stock
We are authorized to issue 2,000,000,000
shares of common stock, $0.0001 par value per share and 50,000,000 shares of preferred stock, $0.0001 par value per share.
Common Stock
As of April 13, 2015, 439,696,519 shares
of common stock are issued and outstanding.
Upon liquidation, dissolution or winding
up of the corporation, the holders of common stock are entitled to share ratably in all net assets available for distribution to
shareholders after payment to creditors. The common stock is not convertible or redeemable and has no pre-emptive, subscription
or conversion rights. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. Each
outstanding share of common stock is entitled to one vote on all matters submitted to a vote of shareholders. There are no cumulative
voting rights.
Each shareholder is entitled to receive
the dividends as may be declared by our Directors out of funds legally available for dividends and, in the event of liquidation,
to share pro rata in any distribution of our assets after payment of liabilities. Our Directors are not obligated to declare a
dividend. Any future dividends will be subject to the discretion of our Directors and will depend upon, among other things, future
earnings, the operating and financial condition of our company, our capital requirements, general business conditions and other
pertinent factors.
There are no provisions in our articles
of incorporation or our bylaws that would delay, defer or prevent a change in control of our company.
Preferred Stock
As of the date hereof, there were no preferred
shares issued and outstanding. Our board of directors is authorized by our articles of incorporation to divide the authorized
shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each
series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations
prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences,
limitations and terms of the shares of any series of preferred stock including, but not limited to, the following:
1. |
The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter or title; |
2. |
The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; |
3. |
Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
4. |
Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; |
5. |
Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
6. |
Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
7. |
The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; |
8. |
Any other relative rights, preferences and limitations of that series. |
Holders
As of April 13, 2015, there were 18
shareholders of record of our common stock. Such number does not include any shareholders holding shares in nominee or “street
name.”
Dividends
We have never declared or paid any cash
dividends on shares of our capital stock. We currently intend to retain earnings, if any, to fund the development and growth of
our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be
at the discretion of our board of directors after taking into account various factors, including our financial condition, operating
results, cash needs and growth plans.
Debentures
On April 4, 2014, we entered into the
Initial Debentures with the Investors in the aggregate principal and interest amount of $543,478 for a purchase price of $500,000
(8% original issue discount). On December 11, 2014, we entered into the Subsequent Debentures with the Investors in the aggregate
principal and interest amount of $543,478 for a purchase price of $500,000 (8% original issue discount).
On March 5, 2015, we entered into the Third
Redwood Debenture with Redwood in the principal amount of $54,348 for a purchase price of $50,000 (8% original issue discount).
Unless earlier converted, redeemed or accelerated,
the Debentures mature on the twelve month anniversary of the original issuance date.
The Debentures accrue interest at the rate
of 12% annually, which interest shall be guaranteed regardless of the date of repayment, and have a maturity date of twelve months
from the date of issuance. Upon any conversion, early redemption or acceleration of the Debentures prior to maturity, we are required
to pay the holder of the Debentures an interest make-whole amount equal to, with respect to each $1,000 principal amount of Debentures,
the amount of any interest that, but for the conversion, redemption or acceleration of the Debentures, would have accrued under
the Debentures at the interest rate for the period from the date of conversion redemption or acceleration date through the one
year anniversary of the original issuance date of the Debenture. The interest make-whole amount is discounted to the present value
of such interest using a discount rate equal to the interest rate of U.S. Treasury Bonds with equivalent remaining terms from the
applicable conversion date, redemption date or acceleration date through the one year anniversary of the issuance date.
We are obligated to
make amortization payments beginning on the six month anniversary of the issuance date of the Debentures and continuing monthly
thereafter. The amortization payments may be made, at our option, in shares of our common stock, subject to the satisfaction of
certain equity conditions, or in cash. The amortization amount to be paid on each amortization date priority to maturity is equal
to the product of (a) the quotient of one divided by the number of remaining amortization dates, including the applicable amortization
date and the maturity date, and (b) the outstanding principal amount of the Debentures on the applicable amortization date, together
with the sum of any accrued and unpaid interest as of the amortization date under the Debentures.
Under its initial
terms, the Initial Debentures and Subsequent Debentures were convertible into shares of our common stock at any time at the discretion
of the Investors at a conversion price equal to the lesser of (i) $0.10 or (ii) 70% of the lowest traded price per share of the
common stock during the twenty five (25) trading days prior to the date of conversion. The Third Redwood Debenture and the Fourth
Redwood Debenture (when issued) are convertible into shares of our common stock at any time at the discretion of Redwood at a conversion
price equal to the lesser of (i) $0.03 or (ii) 60% of the lowest traded price per share of the common stock during the twenty five
(25) trading days prior to the date of conversion.
The Debentures may
not be converted with respect to any note holder if, after giving effect to the conversion, the holder together with its affiliates
would beneficially own in excess of 4.99% of our outstanding shares of common stock. At each holder’s option, the limit on
percentage ownership may be raised or lowered to any other percentage not in excess of 9.99%, except that any increase will only
be effective upon 61-days’ prior notice to the Company.
The conversion price
of the Debentures is subject to adjustment upon the occurrence of stock dividends or stock splits while the Debentures are outstanding.
If one of the events occur, the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number
of shares of common stock outstanding immediately prior to the event, and of which the denominator shall be the number of shares
of common stock immediately after the event.
If at any time while
the Debentures are outstanding, we sell or grant any option or rights to purchase any common stock or securities that would entitle
the holder to acquire common stock (“Common Stock Equivalent”), at an effective price per share that is lower than
the Fixed Conversion Price, then the Fixed Conversion Price will be reduced to such lower price. However, no adjustments will be
made to the Fixed Conversion Price in respect of certain exempt issuances, such as issuances to employees or management pursuant
to an equity incentive plan or shares issued pursuant to acquisitions or strategic transactions approved by a majority of disinterested
directors of the Company. Such adjustment to the Fixed Conversion Price shall be made whenever such common stock or Common Stock
Equivalents are issued while the Debentures are outstanding and such anti-dilution rights will terminate upon full conversion or
repayment of the Debentures.
On September 24, 2015,
we issued a convertible note in connection with a financing that included a conversion price for the convertible note equal to
the lower of 50% of the lowest traded price during the 20 trading days prior to conversion or 50% of the bid price on the day of
conversion. Accordingly, the conversion price of the Initial Debentures and Subsequent Debentures has been adjusted in accordance
with the terms thereof.
If at any time
while the Debentures are outstanding, we issue rights, warrants or options to all holders of common stock (and not to the Investors)
entitling them to subscribe for or purchase warrants, securities or other property pro rata to all holders of common stock (the
“Purchase Rights”), then the Investors will be entitled to acquire the same Purchase Rights that the Investors would
have been entitled to acquire if they had held the number of shares of common stock acquirable upon conversion of the Debentures.
If at any time while
the Debentures are outstanding, we distribute to all holders of common stock (and not to the Investors), evidences of our indebtedness
or assets or rights or warrants to subscribe for or purchase any security other than common stock, then the Fixed Conversion Price
will be adjusted by multiplying the Fixed Conversion Price by a fraction of which the denominator is the volume weighted average
price (“VWAP”) as of the record date of the distribution and the numerator is the VWAP as of the record date of the
distribution less the then per share fair market value of such assets or evidence of indebtedness or rights of warrants so distributed
applicable to one outstanding share of the common stock as determined by the board of directors in good faith.
If at any time while
the Debentures are outstanding, we enter into any merger or consolidation, sale of all or substantially all of our assets, purchase
offer, exchange offer or tender offer, reclassification, reorganization or recapitalization, or stock purchase (a “Fundamental
Transaction”), then upon conversion of the Debentures, the Investors shall have the right to receive, for each conversion
share that would have been issuable upon such conversion immediately prior to the occurrence of the Fundamental Transaction, the
number of shares of common stock of the successor or acquiring company or of the Company if it is the surviving company, and any
additional consideration receivable as a result of such transaction by a holder of the number of shares of common stock for which
the Debentures are convertible.
We also have the right to redeem some or all
of the outstanding principal balance under the Debentures in cash at a price equal to the sum of (A) 125% of the amount of the
Debentures being redeemed plus the accrued but unpaid interest thereon plus the applicable interest make-whole amount.
The Debentures include customary events of
default, such as defaults in payment, breaches of covenants or agreements, or changes in control. Upon the occurrence of an event
of default, each holder may accelerate all or any portion of the Debentures in cash, at a price equal to the greater of (i) the
outstanding principal amount of the Debenture, plus all accrued and unpaid interest thereon, plus the applicable interest make-whole
amount, divided by the conversion price on the date such amount is either (A) demanded (if demand or notice is required to create
an event of default) or otherwise due or (B) paid in full, whichever has a lower conversion price, multiplied by the VWAP on the
date such amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 118% of the
outstanding principal amount of the Debenture, plus all accrued and unpaid interest thereon, plus the applicable interest make-whole
amount. Upon the occurrence of an event of default, the Debentures shall also become convertible at the lesser of the conversion
price and 60% of the VWAP for the five (5) trading days in the preceding twenty (20) trading days that have the lowest VWAP during
such period.
The Investors have been granted a security
interest on all of the assets of the Company to secure the obligations under the Initial and Subsequent Debentures. Redwood has
been granted a security interest on all assets of the Company to secure the obligations under the Third Redwood Debenture and the
Fourth Redwood Debenture, which security interest is junior to the security interest granted to the Investors.
Registration Rights
Agreement
On March 5, 2015,
we entered into the Registration Rights Agreement (the “Rights Agreement”) with Redwood pursuant to which we agreed
to register an amount of shares of our common stock equal to 125% of the shares of common stock issuable upon conversion of the
Subsequent Redwood Debenture and the interest that may accrue thereon through the maturity date (the “Registrable Securities”).
We are required to file a registration statement with the SEC to register the Registrable Securities by March 10, 2015
(the “Filing Deadline”) and have the registration statement declared effective by the SEC within sixty (60)
days of the Filing Deadline, or May 8, 2015 (the “Effectiveness Deadline”).
If we fail to meet
the Filing Deadline or the Effectiveness Deadline, or if the registration statement ceases or fails to remain effective for the
requisite time, we are required to pay liquidated damages equal to 1% of the aggregate purchase price paid by the Investors pursuant
to the Purchase Agreement on a monthly basis, until the expiration of the Effectiveness Deadline. The liquidated damages may not
exceed 10% of the purchase price paid by the Investors, in the aggregate.
The parties to the
Rights Agreement also agreed, among other things, to indemnify each other for losses that may arise based on untrue statements
that may be included in a registration statement and certain other fees and expenses that the parties may incur in connection therewith.
We have agreed to pay all expenses relating to the filing of the registration statement.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus
as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant
or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries
as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The annual financial statements
for the years ended December 31, 2014 and 2013 and for the included in this prospectus and in the registration statement have
been audited by GBH CPAs, PC and are included in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
The validity of the issuance of the common
stock hereby will be passed upon for us by Greenberg Traurig, LLP.
INFORMATION WITH RESPECT TO THE REGISTRANT
Corporate History
General
World Moto, Inc. was incorporated on March 24, 2008 in the State
of Nevada under the name Net Profits Ten Inc. Our original purpose was to market and distribute user-friendly interactive yearbook
software for the military. On November 8, 2012, we amended our Articles of Incorporation to increase our authorized shares of
common stock from 100,000,000 to 500,000,000 and our board of directors approved a stock dividend of 180 shares of common stock
of the Company for each share of common stock issued and outstanding. Additionally, on November 12, 2012, we amended our Articles
of Incorporation to change our name from “Net Profits Ten Inc.” to “World Moto, Inc.”., which name change
became effective on November 15, 2012, upon approval from the Financial Industry Regulatory Authority (“FINRA”). On
January 18, 2014, we amended our Articles of Incorporation to increase our authorized shares of common stock from 500,000,000
to 1,000,000,000. On April 9, 2015, we further amended our Articles of Incorporation to increase our authorized shares of common
stock from 1,000,000,000 to 2,000,000,000.
We were a shell company until the completion of the acquisition
of the World Moto Assets described below, which was consummated on November 14, 2012.
On January 30, 2013, we established two wholly owned subsidiaries,
World Moto Technologies, Inc. and World Moto Holdings, Inc. that were incorporated in the State of Nevada. On February 4, 2013,
World Moto Technologies Ltd. was organized under the laws of the Kingdom of Thailand. The name was later changed to World Moto
Co., Ltd. (“WM Co. Thailand”). WM Co. Thailand is owned in its entirety by World Moto, Inc., World Moto Technologies,
Inc. and World Moto Holdings, Inc. and represents our operating entity for the purposes of research and development in the Southeast
Asia region.
Organizational Chart
Acquisition of World Moto Assets
On September 1, 2012, we entered in an Asset Purchase Agreement
(“Agreement”) with World Moto (Thailand) Co., Ltd., a corporation established under the laws of the Kingdom of Thailand
(“Old WM”), Chris Ziomkowski, the Chief Technical Officer of Old WM and Paul Giles, the Chief Executive Officer of
Old WM. The Agreement was consummated on November 14, 2012. We purchased from Old WM substantially all of the intellectual property
and certain other specific intellectual property assets related to Old WM’s initial product, Moto-Meter (the “Assets”),
which included three United States patent applications, the data related to the patent applications, certain software related to
the operation of the Moto-Meter, several URLs and trade-names and associated names related to the Moto-Meter and Old WM. As part
of the transaction, Messrs. Ziomkowski and Giles became the management of the Company immediately after the acquisition. The Assets
did not include any plant and equipment, customer lists, suppliers and any other business and operational assets of Old WM, and
we did not hire any employees of Old WM other than Messrs. Giles and Ziomkowski. Old WM continues as a corporation, operating in
Thailand. Moto-Meters are devices that provide metering of rides on motor scooters, motorcycles and similar types of transportation
vehicles and were developed by Old WM.
The consideration paid for the Assets was an aggregate of 224,597,666
shares of common stock, then representing 60% of the outstanding shares of our common stock immediately after closing and the assumption
specified outstanding debt in the amount of approximately $75,000, which was converted into 576,923 shares of common stock at the
closing, at a conversion rate of $0.13.
At the same time as the acquisition of the Assets, Mr. Marlon Liam,
our former sole director and officer, agreed to extinguish $52,183 in obligations owed to him by the Company for the issuance of
401,415 shares of common stock, at a conversion rate of $0.13.
The acquisition transaction of the Assets was accounted for as a
purchase of assets in accordance with Rule 11-01(d) of Regulation S-X and ASC 805-10-55-4. The Assets had a contract stated value
of $100,000 based on several factors about the shares issued as consideration, including the limited trading of the common stock,
the restricted characterization of the securities with not less than a one year holding period before Rule 144 would apply, the
absence of registration rights, and the determination of the value of the Assets by Old WM. No goodwill was recognized in the purchase.
No formal, independent valuation was obtained in connection with the purchase of the Assets. In accordance with Generally Accepted
Accounting Principles, we valued the Assets at $0.
Business
We seek to address the need for fare metering and m-commerce for
motor scooters and motorcycle taxis. The use of these taxis is increasingly common in the developing world. Our planned products,
however, will have increased functionalities over a standard fare meter commonly used in an enclosed taxicab. We have designed
and developed and are beginning to manufacture and market the Moto-Meter, which has the basic functions of a taximeter in an enclosed
taxicab, but with additional characteristics that, over time, will permit mobile commerce, GPS tracking, advertising and other
capabilities. As an element of mobile commerce, we are introducing “Yes,” a concierge service where persons can order
products and have the products delivered to their address by motor scooter. We are also focused on the development of our advertising
product, Wheelies, which displays static and streaming media on the wheels of motorcycles and automobiles.
The Moto-Meter is in the verification build stage and the pre-production
phase has been completed in Thailand. We anticipate expanding to Indonesia and Vietnam during the second quarter 2015 and in Brazil
within the next 12 months. We will be outsourcing mass production for the Moto-Meter to a third party manufacturer in the coming
weeks. We have also launched the App, which is a smartphone application, in conjunction with the launch of the Moto-Meter. The
Yes service has been going through testing and is now being launched with our first customer, Mobile Advertising Ventures, Ltd.
in Kuala Lumpur, Malaysia. We expect Yes to go live in in the third quarter of 2015 in Kuala Lumpur, Malaysia. Yes™ was
also officially launched in Thailand on March 9, 2015, and we intend to launch in Cambodia over the next 12 months. We have also
successfully completed a pre-production version of Wheelies and have successfully completed testing. We anticipate licensing Wheelies
exclusively to advertisers over the next 12 months, after which we plan to begin retail sales.
In many parts of the world, the taxicab as it is known in developed
economies, is being superseded by motor scooters and motorcycle taxis. The growth in the use of the motor scooter and motorcycle
taxi is particularly prevalent in the heavily populated, faster growing Asian, African, and South American cities. While meters
are ubiquitous in taxicabs, we believe there are no similar devices for motor scooters and motorcycle taxis. Thus, moto-taxi fares
are un-standardized and must be calculated by hand or agreed upon or “haggled” before, during or after a trip, often
leading to failed negotiations and clashes between drivers and passengers. In response to this problem, the Moto-Meter was developed.
We believe this device will do for the moto-taxis what the taximeter did for taxicabs more than 100 years ago. We currently have
plans for two Moto-Meter models, one with an LED screen and the other an LCD monitor.
We have entered the moto-meter market in Thailand, and we plan
to expand to Indonesia and Vietnam, and then branch out to additional countries that have a high use of moto-taxis such as Brazil
and other developing economies throughout the world. Moto-taxis are most common in economically developing and emerging growth
countries. There also is increasing use of the moto-taxi in the developed world, such as in Paris and London, because of their
convenience and speed. We plan on developing a distribution network of the meter products through franchised dealers, resellers
and brick and mortar storefronts in our selected markets. We have decided to utilize these types of vendors because aspects of
the Moto-Meter include add on products, and these vendors will be able to help with installation and provide explanations for
use.
In late 2012, we collaborated with the Bangkok Governor's Office
to carry out trials of the Moto-Meter product, which were conducted to test both the hardware and software of the meter and to
determine how quickly it could be deployed throughout the city. We have not entered into any formal agreement with the Bangkok
Governor’s Office.
The trials were carried out along a prominent thoroughfare in the
heart of the city and received praise from both drivers and passengers. Based on the trials, we believe that there will be strong
demand once the Moto-Meter enters full production. According to the Thai Ministry of Transportation, it is estimated that there
are over 200,000 motorcycle taxis in Bangkok and an estimated 700,000 motorcycle taxis across the country. Once the Moto-Meter
is in widespread use, we plan to use Bangkok as a flagship city as sales and marketing efforts are ramped up to enter other cities
and areas across Thailand in conjunction with other major markets around the world.
We have entered into discussions with the office of the mayor
of Montes Clare, Brazil, to mandate the use of Moto-Meters on all moto taxis within the city of Montes Claros. Montes Claros is
considered the "motorcycle taxi capital" of northern Brazil and an ideal city to launch the Moto-Meter in Brazil. We
believe that a regulatory mandate here will act as a springboard into the potentially larger markets of Brazil's other highly
populated cities. Although no agreement has yet been entered into with respect to the use of the Moto-Meter in Montes Claros,
we intend to follow up with the office of the mayor of Montes Clares regarding the launch of the Moto-Meter in the second quarter
of 2015.
We have signed letters of intent for the distribution of our flagship
product, the Moto-Meter with qualified distributors in 7 countries. The distributors were selected for their ability to both sell
and support our products as well as to protect our brand image in strategic markets. We are continuing discussions with several
other distributors out of the hundreds of retail agents and operators that have contacted us to express their interest in the Moto-Meter
and associated products. The letters of intent authorize the distributors to sell and support our flagship product, the Moto-Meter,
as well as establish priority for Wheelies and our future products and services. However, there are no minimum purchase requirements
under the letters of intent and no obligations on distributors to purchase any of our products.
In Africa, we established an office in Lagos, Nigeria. Previously,
we have had discussions with HRH Oriteme Banigo (who is currently employed by UBA Plc) who has informed us that certain government
officials in Nigeria have expressed interest in the Moto-Meter. However, no agreements have been entered into with respect to
the use of the Moto-Meter in Lagos. We intend to follow up with Mr. Banigo regarding the launch of the Moto-Meter in the second
quarter of 2015. Establishing a physical presence in the city is now essential for us as we enter the process of formalizing these
discussions into a clear plan to introduce the Moto-Meter into Lagos and cities across Africa. On November 4, 2013, we were awarded
a patent on the Moto-Meter technology until 2033 in Nigeria, a country with more than 3 million motorcycle taxis. According to
Reuters, there are "as many as one million motorcycle taxis in Lagos," a city of Nigeria, and estimates for the total
number of motorcycle taxis in Nigeria exceed 3 million — a number that is equal to the total number of automobile taxis
in the entire world.
Products
Moto-Meter
Our principal product currently is the Moto-Meter, which has been
introduced in Thailand. Our first product is a light emitting diode (LED) model and once a market is established for that product,
we will market a liquid crystal display as a premium model. The LED model will be a portable/universal meter that is compact and
easily swapped among vehicles. It will be rugged and will work with all vehicle classes. The meter will provide starting rate,
time, total fare and distance measures. The device will have event data recording, Global Positioning System (GPS) functionality
and advertising capacity. The premium product has added features such as television and video display capability. Mobile commerce
will also be an early stage enhancement, which will allow for electronic payment of the fare and also purchasing other products
and services.
The initial product, which is known as the Eagle, is waterproof,
scratch resistant, made of high density plastic and similar in size to a modern GPS device; its dimensions are approximately 6”
X 4” x 1”. The Eagle model has a Universal Serial Bus (USB) style connector that plugs into a motorcycle or vehicle
providing the meter with speed, distance, and sensor information while powering the unit. The device is capable of almost unlimited
tariff options. Firmware upgrades and re-programmability are designed to be quick and simple. The life expectancy of the Eagle
model is expected to be 3 to 5 years. The Eagle model will be sold with a one year warranty. The Eagle product will be sold as
a kit, including the mount, installation kit, and cost of warranty.
The Moto-Meter is also designed to be tamper proof, with multiple
independent, fully redundant tracking systems. These include a GPS and a completely self-contained inertial navigation system,
in addition to the traditional speed sensors found on conventional taxi meters. Any one of the systems is enough to give an accurate
record of the distance and waiting time by itself, but we believe all of them combined allow for an accuracy and reliability unsurpassed
by other metering devices on the market today for similar uses.
An enhancement to the standard Moto-Meter includes a persistence
of vision advertising capability that works either independently or in conjunction with the Moto-Meter display to provide graphics
displayed on a rotating wheel at speeds as low as 11km/h. Three rows of RGB color model (one red, one green and one blue) LED’s
are controlled via an advanced graphics processor that can sense wheel position and rotation speed during normal operations.
The Moto-Meter also has an event data recorder, commonly known as
a “black box.” This is a first for motorcycles. The black box is a tiny unit that comes integrated with the Moto-Meter,
or it can be sold separately as a safety device. This will allow monitoring location and rides, which can provide safety for riders
and fleet tracking. The device automatically stores up to five years of trip data, which data are encrypted for security.
We believe that the Moto-Meter has many advantages as a product.
First it will provide a certainty to the fare which will overcome the problems faced by the customer and driver that the fare is
often undefined and has to be negotiated or “haggled.” These negotiations often result in misunderstandings and inconsistencies
which annoy both the driver and the customer. Second, the Moto-Meter will help authorities regulate fares, which will give communities
and regulatory agencies an easy and affordable method of standardizing moto-taxi fares and support overall consumer and community
satisfaction. Therefore, we believe we will obtain support for our product in the markets we address from regulators as well as
customers and drivers.
The primary disadvantage of the Moto-Meter when compared against
its primary competition is the need to expend capital both for acquisition of the meter and for annual maintenance. However, we
believe this is a minor inconvenience due to the increased efficiency that the Moto-Meter offers. When considering this drawback,
it is also important to consider that the investment capital for the Moto-Meter can come from a variety of sources other than the
driver or operator of the vehicle, such as governments, advertising agencies, charitable funds, or other organizations who are
willing to fund the Moto-Meter in exchange for access to the usage data that our product offers. In fact, governments themselves
may find that the tax receipts that could be generated by recording revenues from the Moto-Meter far outweigh the minor costs associated
with purchase and maintenance. Also, in the event that no third party is available to subsidize the cost of the Moto-Meter and
the entire acquisition cost falls to the owner or operator, we have plans to enlist the services of regional investment banks to
help fund the initial capital outlays, as well as software provisions to disable the Moto-Meter if the owner or operator fails
to meet the agreed upon repayment terms of the loan.
We plan on developing future products that complement the basic
forms of Moto-Meters. These may include advertising, booking, delivery, electronic payment and similar products and devices and
includes the “Yes™” concierge capability and the “App” (see descriptions below). The basic Moto-Meter
provides event data recording and GPS positioning, which are valuable safety features.
We are now accepting orders from qualified global distributors
and fleet operators for the Moto Meter™. The global opening of sales came after several months of rigorous testing on the
streets of Bangkok and with select partners. We believe that the ongoing quality assurance process demonstrated that the Moto-Meter™
can withstand the extreme hazards that it will be subjected to in the field. We believe that the testing additionally demonstrated
that not only is the ruggedized device capable of withstanding the physical assaults of daily operations, but that the user experience
from both passengers and drivers meets the standards that the company has set in order to begin general sales of the product.
A pre-production launch to motorcycle taxi-operators in Thailand, afforded an opportunity to gauge public opinion about the Moto-Meter™
and we have generally received a positive response from people from all walks of life, including motorcycle taxi drivers, students,
celebrities, officials and business people. We are currently actively pursuing our goal of certifying the Moto-Meter™ with
two administrative authorities in preparation for advancing negotiations on regulatory mandates. Negotiations for legislation
mandating the Moto-Meter™ will be pursued in parallel with the general sales process. We anticipate expanding sales of Moto-Meter™
to Indonesia and Vietnam during the second quarter 2015 and in Brazil within the next 12 months.
In conjunction with the opening of sales for the Moto Meter,
we launched a smartphone application (the “App”). The App connects directly to the Moto-Meter™ via a secure
Bluetooth connection, and can access data from the meter in real-time, giving users the ability to view ratings and a profile
of the driver before getting on the bike. During the ride, it provides continuous analysis on the fare and GPS location, augmenting
the Moto-Meter's already significant anti-tampering security protocols, as well as transmitting the location to designated individuals
or safety monitoring services. The application also has the ability to offer customized products and services to the users during
the ride, with the purchase conveniently added to the fare. As credit card use is still limited in the demographic that usually
engages motorcycle taxis for their daily mobility, this feature can often prevent a special trip to a convenience store to pay
for the needed product.
The App also has the ability to offer per trip insurance to motorcycle
taxi passengers for a nominal fee. In much of the developing world, the operators of such taxis are often uninsured or underinsured,
and additional third party insurance can either augment the user's own insurance or provide benefits to those whose own policies
may restrict coverage. While optional insurance is common in the case of long distance travel such as with airlines, the ability
to offer pay per trip micro insurance for local driving is a unique feature not currently offered. We anticipate that this type
of novel service, which requires both a regulated and trusted device on the motorcycle plus a trusted device of the purchaser,
will be a strong driver of Moto-Meter™ sales.
Initially, we are developing and producing the Moto-Meter in-house
for the pre-production phase, and in the future we will be outsourcing mass production. We are currently preparing to commission
the verification build for the Moto-Meter. The verification build, or v-build, is the first automated assembly process of a production
electronic device. The build usually encompasses between a few dozen to as many as 100 units. The goal of the v-build is to establish
a reliable factory process that can be used to produce thousands of units with high yield and repeatable, high quality. Where mature
assembly processes may experience production yields of 99% or more and at rates exceeding many thousands of units per day, the
v-build typically results in only a few units per day as assembly line matters are sorted out, components are inspected, operators
are trained, and testing procedures are refined.
Entry into the v-build process marks the transition
from development to production, and additional engineering time generally shifts from product modifications to the continued development
and refining of tooling and test fixtures necessary to guarantee the high quality required for mass manufacture. We are now ready
to enter commercial production with our Wheelies product, and are currently endeavoring to find a suitable advertising agency to
help the company launch the product as a premium advertising medium.
The estimated cost associated with the development of Moto-Meter
during the next 12 months is $375,000. See page 13 of “Risk Factors” for further discussion of the risks related to
our capital requirements.
Wheelies
We are also focused on the development of our
advertising product, Wheelies. Wheelies displays static and streaming media on the wheels of motorcycles and automobiles, providing
a new mobile medium for advertising, broadcasting, self-expression and publishing. Wheelies has gone through extensive testing
and is now ready to be sold on a limited basis, while we refine our manufacturing process.
We have successfully completed a pre-production version of Wheelies
and have successfully completed testing. DMC has now been tasked for outsourced production of Wheelies. DMC recently concluded
an extensive proof of concept phase that included demonstrations of their capabilities to meet our rigorous standards for manufacture
of printed circuit boards, injection molded components, conformal sealing and assembly of Wheelies.
We will be moving immediately into limited production of Wheelies,
which involves low volume production runs of tens to hundreds of units in order to refine the production yields, increase the
efficiency, and decrease warranty and support costs of the manufacturing process. DMC will provide their experienced research
and development team to assist in the design of the automated test and analysis fixtures and programs required to optimize this
system. We anticipate the limited production and optimization stage to last approximately 6 months, after which full commercial
production will commence by the second quarter of 2015 for ventures with advertising agencies in Thailand. Although we entered
into an agreement to sell an initial 10 Wheelies, those items have not yet been delivered so the purchase price for those items
is currently being treated as a customer deposit and not revenue.
We believe the technology has the potential to turn essentially
any wheel in the world into a full color billboard or video screen. All digital content, including ads and videos, can be sequenced
and triggered at a specific time, location, or manually under the command of an operator using gesture recognition and a wearable
device. This gives Wheelies the ability to serve up highly targeted advertisements to different demographics.
We believe that by combining certain aspects of social networking
and modern LED displays, the Wheelies technology offers the ability for new generations of consumers to connect with members of
their local community using methods similar to those used by online services today. Unlike locally targeted internet forums, Wheelies
can spread an idea quickly and easily to every corner of a region without restricting the message to select individuals who actively
seek information from a specific website.
The Wheelies product can be deployed independently or in conjunction
with the Moto-Meter and Yes™.
The estimated cost associated with the development of Wheelies
during the next 12 months is $40,000.
Yes ™
We have been developing the Yes™ service further in 2015 mainly
targeting developing countries where motorcycle use is more pervasive. Yes™ is a personal retail and delivery service superimposed
on a mobile delivery infrastructure. A user may simply tap an app to obtain refreshments, toothpaste, diapers and other necessities,
delivered anywhere in less than 20 minutes. We believe Yes™ will make brick and mortar commerce as convenient as the Internet.
The Yes ™ service was developed in-house. The Yes™
service has been going through testing and is now being launched with our first customer, Mobile Advertising Ventures, Ltd in
Kuala Lumpur, Malaysia. We expect Yes to go live in the third quarter of 2015 in Kuala Lumpur, Malaysia. Yes™ was also launched
in Thailand on March 9, 2015, and we intend to launch in Cambodia over the next 12 months. We have also successfully completed
a pre-production version of Wheelies and have successfully completed testing. We anticipate licensing Wheelies exclusively to
advertisers over the next 12 months, after which we plan to begin retail sales.
Shopping on the internet has already reached unprecedented levels
of convenience. However, increasing competition in the e-commerce space has driven success in this marketplace to the final front
- last mile delivery. With advantages on price and assortment having reached the point of diminishing returns, we believe the new
online battle is being fought over the efficiency of getting a product to the consumer as quickly as possible and at the lowest
possible cost. New one hour delivery services such as eBay now leverage brick and mortar stores to provide rapid delivery. However,
they are discovering that this is a different market than they are used to. According to Sucharita Mulpuru at Forrester Research,
it is an "H.R. issue, not a tech issue." Successful companies in this arena are likely to be ones that can combine technology
with the ability to mobilize huge armies of experienced human "valets" that possess a work ethic to go beyond a script
and service the customer in an individual fashion.
Yes™ was conceived with this requirement in mind. We believe
that we have the ability to access more than 20 million motorcycle taxi operators around the world, each having already been self-selected
for their ability to provide exactly the qualities demanded by this profession. The preexisting nature of this human infrastructure
means it can be accessed as necessary with minimal training during expansion into new geographical areas. Local commerce in much
of the world is already facilitated by motorcycle taxis, so the drivers already understand the issues. Dr. Claudio Sopranzetti,
a transportation expert from Harvard, describes their role as follows: "The drivers operate not only as transportation providers
but also as messengers and personal assistants, paying bills and delivering commodities." Traditionally, however, these services
have been offered individually, on an ad-hoc, undependable basis. We plan to develop Yes™ as the trusted brand.
The estimated cost associated with the development of Yes during
the next 12 months is $140,000.
Potential Revenue Lines and Distribution
The principal source of revenues will be from the sale of the Moto-Meter
and Wheelies units and related products to be used with the Moto-Meter. We may also derive revenues from advertising partnerships
with Wheelies units. In the future, we would expect to generate revenues from a number of additional sources, including the Yes™
service. The initial additional revenue is likely to be from the advertising displayed on the Moto-Meters. Revenues also would
be expected to come from the mobile commerce applications. Additional revenues may be generated from the booking services which
would include door to door, delivery, messenger, insurance coverage, vehicle collection, errands and emergency road services, but
these revenues are considered to be well in the future. We expect to generate additional revenues from all three of our product
lines within the next 12 months, including from the following agreements:
Lucky Distributors, Ltd.
On December 19, 2012, we entered into a distribution agreement with
Lucky Distributors, Ltd. (“Lucky”), a Thailand based distribution company. Lucky has a regional network that currently
provides parts and servicing for motorcycles and motor scooters. Lucky also is a preferred supplier for the Motorcycle Taxi Association
of Thailand. Under the terms of the distribution agreement, Lucky has the non-exclusive rights to distribute, sell and service
the Moto-Meter and Moto-Meter accessories throughout the country of Thailand and surrounding border markets.
The agreement is for a term of five years and may be terminated
(i) by either party upon a substantial breach of the agreement, (ii) by us if Lucky undergoes a change in control, or (iii) by
us at any time after three years. The products will be sold at prices stated at FOB our offices in Thailand and will not include
transportation costs, which will be borne by Lucky. Lucky will use its best efforts to promote the sale and distribution of the
products and we will assist Lucky with any advertising campaigns to be conducted. We also agree to indemnify Lucky from any losses
relating to allegations that the products infringe upon any patents, copyrights, or proprietary right. This agreement is not revenue
producing as yet, and we expect it to be producing revenues by the fourth quarter of 2015
Mobile Advertising Ventures, Ltd.
On December 2, 2013, our subsidiary, WM Co. Thailand entered into
a Purchase and Licensing Agreement (the “PL Agreement”) with Mobile Advertising Ventures Ltd. (“MAV”).
Pursuant to the terms of the PL Agreement, MAV will purchase 10 initial “Wheelies” from WM Co. Thailand at a purchase
price of $35,000, and will have an option to purchase an additional 190 Wheelies at a purchase price of $3,500 per unit. WM Co.
Thailand also grants a non-exclusive license to MAV for the use of its software in connection with the operation of the Wheelies
in consideration for a fee based on net revenue per quarter from advertising sales relating to the use of the Wheelies.
We also entered into a Fleet Franchise Agreement with MAV on March
10, 2014. Pursuant to the terms of the agreement, we granted a fleet franchise license to MAV in the Federal Territory of Kuala
Lumpur, Malaysia, exclusive of the surrounding suburban areas of the Klang Valley (the “Region”). The grant includes
the right to operate “Yes” delivery services in the Region and the use of certain proprietary systems and property
(including any Wheelies products for direct advertising) in connection with such services for a term of 10 years. The initial franchise
fee is $25,000.00 and royalty payments equal to 5% of the gross proceeds from delivery fees and net sales of the franchise are
due after 12 months from the first commercial “Yes” delivery by the franchise. MAV is also required to contribute 1%
of its gross proceeds from delivery fees and net sales to our marketing program.
We are required to provide training and ongoing guidance and assistance
with respect to the services provided by MAV. Additionally, MAV agrees to indemnify us against any losses arising in connection
with the operation of the franchise or any actions taken under the agreement resulting from negligence or willful misconduct. MAV
is required to submit monthly reports to us detailing its financial condition, including a profit and loss statement, and a report
on gross proceeds from delivery fees and net sales for such periods.
Depending on the means of distribution and sale, there may be revenue
opportunities from additional franchising and licensing of the Moto-Meter and its different capabilities. The concierge service
“Yes” is one such other potential source of revenue for the Company.
Manufacturing and Suppliers
We subcontract manufacturing and believe that there are many manufacturers
capable of providing and assembling the parts for the Moto-Meter, at a high quality level and efficient rate of production for
prices that will work within the projected pricing of the Moto-Meter units. In the future, to assure adequate production and quality,
we plan to manufacture the devices ourselves, either being fully responsible for the production or in conjunction with other contract
manufacturers. While we believe there are many manufactures that can meet our requirements, we typically will work with only one
or two at a time. Where useful, we plan to use just in time stock strategies for hardware, supplies and service parts to control
margins and working capital requirements.
Certain of the components in our devices will be supplied by contract
suppliers to our specifications while other components will be provided by generic manufacturers. We believe there are adequate
providers in both categories of suppliers.
In January 2014, we contracted with DMC for production of our Wheelies
LED display technology.
DMC recently concluded an extensive proof of concept phase that
included demonstrations of their capabilities to meet our rigorous standards for manufacture of printed circuit boards, injection
molded components, conformal sealing and assembly of the Wheelies device. The successful completion of this phase and the subsequent
agreement between the Company and DMC signified the beginning of the production stage of Wheelies.
This collaboration allowed us to move immediately into limited
production of the Wheelies device, which involves low volume production runs of tens to hundreds of units in order to refine the
production yields, increase the efficiency, and decrease warranty and support costs of the manufacturing process. DMC will provide
their experienced research and development team to assist in the design of the automated test and analysis fixtures and programs
required to optimize this system. We anticipate the limited production.to continue until the second quarter of 2015, after which
Wheelies will be produced on an as needed basis for qualified advertisers in Thailand. We anticipate moving to retail sales in
approximately 12 months.
Regulations
Moto-Meter
We intend to market the Moto-Meter primarily into 4 countries over
the next 12 months – Indonesia, Vietnam, Thailand and Brazil. We will rely primarily on our in country distributors to apply
for any licenses and certificates necessary in their specific regions, and we will support them with any results from testing laboratories
and foreign compliance certificates.
Of these 4 regions, we believe that only Brazil has a specific metrology
requirement which is governed by Brazil’s National Institute of Metrology, Inmetro. We intend to submit the Moto-Meter for
certification to Inmetro within the next 12 months. Although Thailand also has a metrology requirement for licensed
metered taxis, motorcycle taxis are not considered licensed metered taxis and therefore no metrology requirement applies with regard
to selling the Moto-Meter to motorcycle taxi operators in Thailand. Similarly, neither Indonesia nor Vietnam have a specific
metrology requirement for motorcycle taxis. In these unregulated jurisdictions without a specific legal metrology requirement,
we will certify the Moto-Meter to operate in accordance with the specifications described in the International Organization of
Legal Metrology recommendation R-21. Since most of the world’s taxi meter regulations are either heavily based on or directly
copied from this standard it should provide a useful declaration for operating in countries that have not yet regulated the industry.
In addition to metrology approvals, the Moto-Meter uses a 2.4GHz
wireless interface for communication and therefore may be subject to radio frequency approvals. Use of this technology in Thailand,
Indonesia, Vietnam and Brazil, requires a certificate of compliance from that jurisdiction's authority on radio frequency.
Our research indicates that in all of these jurisdictions an approval from either a Federal Communications Commission (“FCC”)
conformance body under the relevant statutes of part 15 or a CE mark will allow the certification of the device without further
testing under each country’s radio frequency laws simply by making a formal application to the specific authority. We
are currently in the process of selecting a Telecommunications Certification Body (“TCB”) to begin approval of the
Moto-Meter under the relevant FCC Part 15 standards and signing a declaration of conformity to use the CE mark. Failure to obtain
approval from a jurisdiction’s authority on radio frequency will disallow the use of the Moto-Meter's wireless interface
in that jurisdiction until such time as approval can be obtained or a waiver is granted in the specific jurisdiction targeted
for sales. We are not currently aware of any requirement that we believe will result in a failure of the Moto-Meter to obtain
an FCC Part 15 compliance certificate or sign a declaration of conformity for a CE mark.
Except for the requirements of an intentional transmitter in the
2.4 GHz spectrum, as an automotive product, the Moto-Meter is exempt from radiated emissions requirements under FCC Part 15.103.
It is our understanding that Brazil, Thailand, Indonesia and Vietnam also recognize this exemption. Because of this, failure to
obtain FCC certification will not result in a delay in sales, but may result in the inability of customers to use the wireless
radio features of the device until approval can be obtained.
Wheelies
We intend to market Wheelies over the next 12 months primarily
as an advertising platform in Thailand. The technology may require permits and waivers to be used on public streets in Thailand.
In the event that Wheelies are used in a fixed, outdoor location, such as on a stage at the entrance to a building, the only governing
regulation is the fees that must be paid to acquire an outdoor signage tax permit. Permits are issued on a nondiscriminatory basis
by the governing municipal authority and taxes are based purely on the area of the display medium.
In the event Wheelies are used on public roads, they will be
regulated by the Thailand Land Traffic Act of 1979 and associated ministerial regulations. Strict interpretation of these existing
regulations limit any exterior vehicle lighting to headlamps, brake lights and turn signal indicators unless otherwise approved
by the Department of Land Transport. In practice, however, we have observed that these rules are overly restrictive and not currently
enforced. Vehicles with hundreds of variations of external lighting displays are common on the streets of Thailand. We do
not currently intend on requesting a waiver from the Department of Land Transport before commencing advertising activities and
therefore, it may be subject to penalties, such as fines, or even a prohibition on using the Wheelies technology on public streets
until a waiver is obtained from the Department of Land Transport. Any of the foregoing results may have a material adverse effect
on our Wheelies business in Thailand.
Yes ™
Yes™ was launched in a 6 square kilometer area of the
Wattana District in downtown Bangkok, Thailand on March 9, 2015. We intend on expanding the coverage area to other areas of Bangkok
during the coming 12 months. Additionally, we intend to launch Yes™ in the third quarter of 2015 in Kuala Lumpur, Malaysia,
and in Cambodia over the coming 12 months. Both e-commerce as well as messenger and delivery services are currently entirely unregulated
in all of these jurisdictions, and we are not aware of any legal or regulatory standards that would inhibit our ability to execute
on our business plans regarding this product.
Customers and Industry
We currently have one customer for our Wheelies product, Lucky Distributors,
Ltd. and one customer for our Yes service, Mobile Advertising Ventures, Ltd. We do not currently have any existing customers for
the Moto-Meter. Lucky Distributors, Ltd. and Mobile Advertising Ventures, Ltd. (“MAV”) are both resellers and our initial
plan is to engage other resellers who will then on-sell the Moto-Meters to the moto-taxi owners, which may be individuals or fleet
owners. As we gain brand and product awareness, we expect to sell directly to the owners of moto-taxis, thus expanding the customer
base to the primary user. We intend to establish and control pricing so that there is minimum price competition within our markets.
For advertisers, we believe Wheelies is a high impact medium for
showcasing brands and businesses to new customers in locations of mass consumer exposure with the potential ability to target up
to 400,000 people a day, per motorcycle. For retail buyers, we believe Wheelies is a personal medium of self-expression, and a
fun way to share content, engage, collaborate and create entirely new experiences. We expect that retail buyers will eventually
make up the largest portion of Wheelies users. Global sales of OEM motorcycle components and accessories represent a market worth
approximately $50 billion annually.
The global advertising industry is worth nearly $500 billion annually,
with outdoor display type advertising as one of the fastest growing segments of the advertising industry. We believe that the appeal
to advertisers together with the additional revenue streams available to agents, operators and drivers will result in demand for
our products.
On December 2, 2013, our subsidiary, WM Co. Thailand entered into
a Purchase and Licensing Agreement (the “PL Agreement”) with MAV. Pursuant to the terms of the PL Agreement, MAV will
purchase 10 initial “Wheelies” from WM Co. Thailand at a purchase price of $35,000, and will have an option to purchase
an additional 190 Wheelies at a purchase price of $3,500 per unit. WM Co. Thailand also grants a non-exclusive license to MAV for
the use of its software in connection with the operation of the Wheelies in consideration for a fee based on net revenue per quarter
from advertising sales relating to the use of the Wheelies. Although we entered into an agreement to sell an initial 10 Wheelies,
those items have not yet been delivered so the purchase price for those items is currently being treated as a customer deposit
and not revenue.
Marketing
We are using several channels to market our products including social
media, direct sales and trade shows. The overall goal of the advertising will be to strengthen brand and product recognition, which
will also support product distribution and sales. We will seek to overcome the general low image and poor customer perception of
taxi products currently pervasive in the taxi meter industry. We will attempt to stand apart in our corporate image and our product
quality and placement.
We plan to use direct sales calls, presentations and appointments
with regulatory agencies, associations, distributors, and operators of moto-taxi fleets to generate recognition and acceptance
of our products. The use of public demonstrations to target users will also be deployed, which will be in conjunction with the
cooperation of local municipal authorities. Once the Moto-Meter is established, we plan to promote our m-commerce services directly
to the drivers, who might then start selling these services to their customers or the public.
We also plan to follow a course of marketing that deploys word of
mouth, guerilla marketing and viral marketing using various social networks and similar marketing methods. Since the deployment
of the Moto-Meter is frequently on an independently owned vehicle, we understand that the acceptance of the benefits of the Moto-Meter
by the individual owner-drivers as well as the owners and drivers of fleet owned vehicles and public authorities is important in
gaining acceptance and use. As the benefits of more certain fares and the value of the related services become known to the customers
of moto-taxis, we believe that they will also drive sales preferring to use vehicles out-fitted with the Moto-Meter for its benefits
of safety, certainty of fare, m-commerce and other services.
We plan to pay particular attention to the development of the Company’s
website and its Facebook page. As its representation on the Internet, these sites will increasingly be the first point of contact
for potential customers in need of information. The primary website contains product information, detailed photos, purchase information
and use information. In connection with our web presence, we will seek to maximize search engine optimization. This involves organically
improving the quality and volume of traffic to a website through user searches on search engines such as Google and Yahoo.
Print media and brochures are also being used in conjunction with
sales, including at trade shows. We plan to distribute printed media to operators, potential customers, channel partners, associations
and government agencies. The focus of the print media will be to highlight our Company, location, benefits of the Moto-Meter and
contact information for further details and ordering.
We plan to use trade shows, demonstration opportunities and similar
venues to increase brand awareness and product understanding and recognition. These venues can also foster valuable business partnerships.
One such trade show is the Taxicab, Limousine, and Paratransit Association. Generally, these trade shows are held on a regular
annual basis and attract the important companies and users within the industry, which will provide a valuable venue for us to showcase
the Company and our products.
We also will seek to establish industry partnerships to help market
the Moto-Meter. We have signed letters of intent for the distribution of our flagship product, the Moto-Meter with qualified distributors
in 7 countries. The distributors were selected for their ability to both sell and support our products as well as to protect our
brand image in strategic markets. We are continuing discussions with several other distributors out of the hundreds of retail agents
and operators that have contacted us to express their interest in the Moto-Meter and associated products. The letters of intent
authorize the distributors to sell and support our flagship product, the Moto-Meter, as well as establish priority for Wheelies
and future products and services of World Moto.
Competition
Since the Moto-Meter can be used for any class of vehicles, we may
compete with manufacturers of automobile taxi-meters. Although a simple automobile taxi-meter can be adapted for use with a motor
scooter or motorcycle, the Moto-Meter products have many more functions and we believe at a higher level of quality and security.
We are currently unaware of any other company that has successfully developed a similar-type product to the Moto-Meter.
Notwithstanding the fact that we expect to be first to market in
this industry, it is possible that other meter manufacturers may decide to address the moto-taxi market and develop products that
will be able to compete with the Moto-Meter products. Such companies may have greater financial and engineering capabilities, which
will make it more difficult for us to establish ourselves in various markets or offer substantial competition product offerings
and pricing.
The business of manufacturing and selling taximeters, however, is
a low-profile business. Overall, we believe that competition within the industry of taximeters and related products is low, with
just a few brands monopolizing sales and all of which are oriented towards taxicabs. These brands include Cygnus Automotive (UK)
and Centrodyne (US). We believe the taximeter industry is largely stagnant, lacking innovation, and is constrained by legacy products
and methods of business. Current manufacturers have existing products that they are improving incrementally, but we believe they
are most concerned about maintaining product lines and market share within the taxicab industry and as a result not targeting the
moto-taxis industry.
We also believe that we will be able to compete based on our intellectual
property, some of which is subject to current patent applications in the United States. We plan to act to protect our intellectual
property rights to safeguard our products and market share, and we plan to continue development of new proprietary products that
will aid our competitive position. Our pricing strategy is currently geared to be competitive with products used in the taxicab
industry, but as we ramp up our manufacturing and even take over manufacturing, we believe that we will be able to be even more
price competitive.
Intellectual Property
We have three U.S. patent applications pending. All three patents
are titled “Universal Vehicle Management System” and are identified as follows: (i) U.S. provisional patent application
61/401,337, filed August 10, 2010, (ii) U.S. utility patent application 13/137,345 filed on August 8, 2011, which claims priority
to August 10, 2010 using PPA 61/401,337 and (iii) PCT patent application PCT/US2011/001401 filed on August 8, 2011 with receiving
office USPTO, which claims priority to August 10, 2010 using PPA 61/401,337. These are patent applications, and there is no assurance
that we will be awarded patents after review by the USPTO. The lack of patent protection may make us vulnerable to product copying
and undercutting pricing, making our market entry and maintenance more difficult or impossible.
We have filed for patent protection for our Moto-Meter technology
in 61 countries throughout Asia, Africa, Europe and the Americas. These countries were carefully selected to cover the vast majority
of the world's mototaxi fleet and population. Nigeria is the first locality to complete its investigations and issue a patent.
The patent was granted as filed, with no changes or office actions required on any of its 28 claims, and will remain in force until
February 8, 2033. Additionally, Mexico has officially signaled its intention to issue the patent as filed, with no changes required
on any of its 28 claims. On January 10, 2014, the Instituto Mexicano de la Propiedad Industrial (IMPI), or the Mexican Patent Office,
issued an official communication informing us that our Moto-Meter patent had met all requirements for patentability and successfully
overcome the formal examination stage for issuing a patent. The application is now awaiting publishing in the IMPI's Official Gazette,
and the formal patent may be issued thereafter. The Dominican Republic granted the patent as filed, with no changes or office actions
required on any of its 28 claims, and will remain in force until February 8th, 2031.
The remaining 59 countries are currently in the substantive evaluation
period and are expected to complete their investigations within the next 4 years. Based on our success in Nigeria and Mexico, and
the original favorable review from the Patent Cooperation Treaty Examiner, we expect ultimately to be awarded a patent in every
targeted jurisdiction.
Patent Applications Completed Substantive Evaluation and Awaiting
Publication
Mexico Patent - 93533 (MX/2013/071677) - Universal Vehicle Management
System
Issued Patents
Nigeria Patent 001031 (NG/C/2013/085) - Universal Vehicle Management
System [Expires August 6, 2033]
The Dominican Republic Patent [expires February 8th, 2031]
South Africa Patent
Morocco Patent
In addition to the patent protection that we seek, we also rely
on the confidentiality of our operations, proprietary know-how and trade secrets. We have implemented a program whereby all of
our employees have signed non-disclosure agreements with respect to our intellectual property, we do consider our employees’
work to be proprietary and owned by us. Where necessary, we will take steps to protect our intellectual property interests under
the laws of the jurisdictions in which we operate and intend to operate. There can be no assurance that we will be able to enforce
our rights if they are improperly taken by our employees or adopted by our competitors outside of sanctioned use and royalty agreements
with us.
We have not registered any trademarks at this time and are relying
on common law trademark protection. However, as our business develops, we plan to develop specific trademarks for our products
and services and seek registration of those marks with government authorities for their protection.
Research and Development
In the fiscal year ended December 31, 2014, we spent approximately $406,284 on
research and development activities and spent approximately $366,000 on research and development activities in the fiscal year
ended December 31, 2013. It is anticipated that for the 2015 fiscal year, we will devote approximately $500,000 to product
development activities.
Employees
We have three executive employees, Messrs. Paul Giles, Chris Ziomkowski
and Ms. Lisa Ziomkowski-Boten. We currently have 12 employees at our WM Co. Thailand subsidiary to assist with product development
and engineering.
Corporate Information
Our principal executive offices are located at: 131 Thailand Science
Park INC-1 #214 Phahonyothin Road, Klong1, Klong Luang, Pathumthani 12120 Thailand. Our main telephone number is:
(646) 840-8781 and our website is located at: http://www.worldmoto.com/ .
DESCRIPTION OF PROPERTIES
The principal executive offices for the Registrant are located at:
131 Thailand Science Park INC-1 #214 Phahonyothin Road, Klong1, Klong Luang, Pathumthani 12120 Thailand. We have approximately
665 square feet which includes our executive offices and engineering facilities. Annual rent for this location is approximately
$7,500.
On December 25, 2013 we entered into a lease agreement for a larger
office in the Thai Science Park. The lease runs through November 30, 2016. Annual rent for this space is approximately $21,000.
The Company has shared office space in New York City, located at
55 Broad Street, 28th Floor, New York, NY 10004. The annual rent for this location is currently being gifted to the Company. It
is expected that the Company will pay fair market value for office space in New York in the future.
The Company has shared office space in London, United Kingdom, located
145-157 St. John Street, Lower Ground Floor, LP-19896, London EC1V 4PW. The annual rent for which is $300.
The Company also has shared office space in Lagos, Nigeria, located
at 19, Sinari Daranijo Street, Victoria Island, Lagos. The Company opens its Lagos office as a part of its plan to introduce the
Moto-Meter into Lagos and cities across Africa. The annual rent for this location is currently being gifted to the Company. It
is expected that the Company will pay fair market value for office space in Nigeria in the future.
LEGAL PROCEEDINGS
None.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Our common stock is traded on the OTCQB
marketplace, operated by OTC Markets Group, Inc. under the ticker symbol “FARE.” The closing price of our common stock
on April 14, 2015 was $0.02 per share. The high and low closing bid prices for trading of our stock for each of the quarters during
2014, 2013 and 2012 are as follows:
Fiscal Year Ending December 31, 2014 | |
High | | |
Low | |
First Quarter - March 31, 2014 | |
$ | 0.12 | | |
$ | 0.09 | |
Second Quarter – June 30, 2014 | |
$ | 0.10 | | |
$ | 0.05 | |
Third Quarter – September 30, 2014 | |
$ | 0.06 | | |
$ | 0.04 | |
Fourth Quarter – December 31, 2014 | |
$ | 0.05 | | |
$ | 0.02 | |
Fiscal Year Ending December 31, 2013 | |
High | | |
Low | |
First Quarter - March 31, 2013 | |
$ | 0.34 | | |
$ | 0.03 | |
Second Quarter - June 30, 2013 | |
$ | 0.07 | | |
$ | 0.04 | |
Third Quarter - September 30, 2013 | |
$ | 0.05 | | |
$ | 0.04 | |
Fourth Quarter - December 31, 2013 | |
$ | 0.10 | | |
$ | 0.04 | |
Fiscal Year Ending December 31, 2012 | |
High | | |
Low | |
First Quarter - March 31, 2012 | |
$ | 0.03 | | |
$ | 0.03 | |
Second Quarter - June 30, 2012 | |
$ | 0.03 | | |
$ | 0.03 | |
Third Quarter - September 30, 2012 | |
$ | 0.03 | | |
$ | 0.03 | |
Fourth Quarter - December 31, 2012 | |
$ | 2.50 | | |
$ | 0.03 | |
All prices reflect inter-dealer prices without retail mark-up, mark-down,
or commission and may not necessarily reflect actual transactions.
Approximate Number of Holders of Common
Stock
As of April 13, 2015, there were 18
shareholders of record of our common stock. Such number does not include any shareholders holding shares in nominee or “street
name.”
Dividends
We have never declared or paid any cash
dividends on shares of our common or preferred stock. We currently intend to retain earnings, if any, to fund the development and
growth of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends
will be at the discretion of our board of directors after taking into account various factors, including our financial condition,
operating results, cash needs and growth plans.
Securities Authorized for Issuance Under Equity Compensation
Plans
There are no options, warrants or convertible securities outstanding
pursuant to an equity compensation plan.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion summarizes the significant factors affecting
the operating results, financial condition, liquidity and cash flows of the Company for the fiscal years ended December 31, 2014
and 2013. The discussion and analysis that follows should be read together with our financial statements and the notes to the
financial statements included elsewhere in this Registration Statement on Form S-1. Except for historical information, the matters
discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning
various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently
subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed
in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.
Background
World Moto, Inc. was incorporated on March 24, 2008, in the
State of Nevada under the name Net Profits Ten Inc. On November 8, 2012, we amended our Articles of Incorporation to increase
our authorized shares of common stock from 100,000,000 to 500,000,000 and our board of directors approved a stock dividend of
180 shares of common stock of the Company for each share of common stock issued and outstanding. Additionally, on November 12,
2012, we amended our Articles of Incorporation to change our name from “Net Profits Ten Inc.” to “World Moto,
Inc.”, which name change became effective on November 15, 2012, upon approval from the Financial Industry Regulatory Authority
(“FINRA”). On January 18, 2015, we amended our Articles of Incorporation to increase our authorized shares of common
stock from 500,000,000 to 1,000,000,000. On April 9, 2015 we further amended our Articles of Incorporation to increase our authorized
shares of common stock from 1,000,000,000 to 2,000,000,000.
On September 1, 2012, we entered in an Asset Purchase Agreement
(“Agreement”) with World Moto (Thailand) Co., Ltd., a corporation established under the laws of the Kingdom of Thailand
(“Old WM”), Chris Ziomkowski, the Chief Technical Officer of Old WM and Paul Giles, the Chief Executive Officer of
Old WM. The Agreement was consummated on November 14, 2012. We purchased from Old WM substantially all of the intellectual property
and certain other specific intellectual property assets related to Old WM’s initial product, the Moto-Meter (the “Assets”),
which includes three United States patent applications, the data related to the patent applications, certain software related to
the operation of the Moto-Meter, several URLs and trade-names and associated names related to the Moto-Meter and Old WM.
On January 30, 2013, we established two wholly owned subsidiaries
that were incorporated in the State of Nevada. World Moto Technologies, Inc. and World Moto Holdings, Inc. were both established,
but have no activity to report to date. On February 4, 2013, World Moto Technologies Ltd. was organized under the laws of the Kingdom
of Thailand. The name was later changed to World Moto Co., Ltd. (“WM Co. Thailand”). WM Co. Thailand is owned in its
entirety by World Moto, Inc., World Moto Technologies, Inc. and World Moto Holdings, Inc. and represents our operating entity for
the purposes of research and development in the Southeast Asia region.
As of December 31, 2014, WM Co. Thailand had 12 employees. WM
Co. Thailand has been performing extensive research and development activities since its inception related to improving the Moto-Meter
design to allow for higher yields in mass production, as well as substantial work on the Wheelies product, previously known as
Circulars.
Business Overview
Plan of Operations
We plan to establish ourselves as a company that designs, manufactures,
markets and sells the Moto-Meter products, which are devices that provide moto-taxi fare metering and other communication capabilities.
We currently have patent applications pending for our products in 56 countries. To achieve our objective, we have established our
operational subsidiary in Thailand for product development and a presence in two additional potential markets, Brazil and Nigeria,
and begun expanding our work force to be able to implement our business plan.
The Moto-Meter is in the verification build stage and the pre-production
phase has been completed in Thailand. We anticipate expanding to Indonesia, and Vietnam during the second quarter 2015 and in
Brazil within the next 12 months. We will be outsourcing mass production for the Moto-Meter to a third party manufacturer in the
coming weeks.
In conjunction with the opening of sales for the Moto Meter,
we launched the App, which is a smartphone application. The App connects directly to the Moto-Meter™ via a secure Bluetooth
connection, and can access data from the meter in real-time, giving users the ability to view ratings and a profile of the driver
before getting on the bike.
As an element of mobile commerce, we have introduced “Yes,”
a concierge service where persons can order products and have the products delivered to their address by motor scooter. The Yes
service has been going through testing and was launched on March 9, 2015 in Bangkok, Thailand. We expect Yes to go live in in
the third quarter of 2015 in Kuala Lumpur, Malaysia. We also intend to launch Yes™ over the next 12 months in Cambodia.
We have procured our first customer for Wheelies in Thailand.
We are focused on the development of Wheelies as a unique advertising product, which displays static and streaming media on the
wheels of motorcycles and automobiles, providing a new mobile medium for advertising, broadcasting, self-expression and publishing.
We have successfully completed a pre-production version of Wheelies and have successfully completed testing. We are currently
in negotiations for an exclusive advertising arrangement on the Wheelies product.
In Thailand, we entered into a distribution agreement with Lucky
Distributors, Ltd. (“Lucky”). Under the terms of this distribution agreement, Lucky has the non-exclusive right to
distribute, sell and service the Moto-Meter and Moto-Meter accessories throughout Thailand and the surrounding border markets.
Lucky is a national distribution company based in Thailand. It is also a preferred supplier for the Motorcycle Taxi Association
of Thailand. We believe Lucky’s reputation and relationship with the moto taxi community will help promote Moto-Meter in
Thailand.
On October 30, 2013, we announced the signing of multiple letters
of intent for the distribution of our flagship product, the Moto-Meter. To date, we signed letters of intent with qualified distributors
in 7 countries. The distributors were selected for their ability to both sell and support our products as well as to protect our
brand image in strategic markets. We are continuing discussions with dozens of further prominent distributors out of the hundreds
of retail agents and operators that have contacted us expressing interest in the Moto-Meter and associated products. The letters
of intent include authorizations to sell and support our flagship product, the Moto-Meter, as well as establishing priority for
Wheelies and our other future products and services.
On December 2, 2013, World Moto Co. Thailand entered into a Purchase
and Licensing Agreement (the “PL Agreement”) with Mobile Advertising Ventures Ltd. (“MAV”). Pursuant to
the terms of the PL Agreement, MAV will purchase 10 initial “Wheelies” from World Moto Co. Thailand at a purchase price
of $35,000, and will have an option to purchase an additional 190 Wheelies at a purchase price of $3,500 per unit. World Moto Co.
Thailand also grants a non-exclusive license to MAV for the use of its software in connection with the operation of the Wheelies
in consideration for a fee based on net revenue per quarter from advertising sales relating to the use of the Wheelies. This sale
will be completed during 2015.
We entered into discussions to mandate the use of Moto-Meters on
all moto taxis within the city of Montes Claros, Brazil. Montes Claros is considered the "motorcycle taxi capital" of
northern Brazil and an ideal city to launch the Moto-Meter in Brazil. We anticipate that a regulatory mandate here will act as
a springboard into the potentially larger markets of Brazil's other highly populated cities.
In Africa, we established an office in Lagos, Nigeria. Previously,
the officials in Nigeria have expressed strong interest in the Moto-Meter, and feedback from our initial discussions has been positive.
Establishing a physical presence in the city is now essential for us as we enter the process of formalizing these discussions into
a clear plan to introduce the Moto-Meter into Lagos and cities across Africa. On November 4, 2013, we were awarded a patent on
the Moto-Meter technology until 2033 in Nigeria, a country with more than 3 million motorcycle taxis.
We have assembled an optimal number of employees, including experienced
engineers in our research and development division at the Thailand Science Park. The development focus is simultaneously devoted
to our advertising product, Wheelies, as well as our flagship product, the Moto-Meter.
In parallel with this, we have completed the work to adapt the Moto-Meter
electronics so that it can pass all current and anticipated regulatory requirements of INMETRO, the National Institute of Metrology
for Brazil, as well as other international regulatory agencies. Additional work is currently being undertaken to improve the weatherization
technology used in the Moto-Meter to enhance its ability to withstand environmental stresses, as well as work to provide a more
generic Moto-Meter installation kit and wiring harness that will allow its installation into a wider variety of vehicles, such
as auto rickshaws.
We plan to use outside consultants and service companies from time
to time for various tasks in the sales, development and manufacturing of our products and product launch and distribution, under
provider contracts, to the extent that we are not able to perform the required functions. Using such outside vendors may make a
particular task more expensive, but we believe that using such experts should improve the outcome or speed up the timing of product
development and time to market. There is no assurance that we will be able to control the costs and deliveries of such activities
in the same manner as if we were performing the tasks ourselves, and therefore we are subject to the usual risks of using outside
providers.
Estimated Expenses
The following provides an overview of our estimated expenses to
fund our plan of operations for each of our products over the next 12 months. Funding will be with our current cash assets and
may include future capital that we may have to raise. We plan to pay for such expenses as described below under “Liquidity
and Capital Resources.”
Moto-Meter
| |
Estimated | |
Description
| |
Expenses
| |
| |
| |
Engineering | |
$ | 120,000 | |
Additional Prototyping and Mechanical Construction | |
$ | 15,000 | |
Initial Sales Training and Support | |
$ | 10,000 | |
Production Tooling and NRE Charges | |
$ | 50,000 | |
Development of Production Test Fixtures | |
$ | 50,000 | |
Licensing and Certification | |
$ | 20,000 | |
Components for Initial Production | |
$ | 65,000 | |
Training and Equipment | |
$ | 45,000 | |
| |
| | |
Total | |
$ | 375,000 | |
Wheelies
| |
Estimated | |
Description | |
Expenses | |
| |
| |
Establish Production and Support | |
$ | 35,000 | |
Warranty Service | |
$ | 5,000 | |
| |
| | |
Total | |
$ | 40,000 | |
Yes
| |
Estimated | |
Description | |
Expenses | |
| |
| |
Continued Development of Handset Application | |
$ | 50,000 | |
Continued Development of Agent Handset Application | |
$ | 50,000 | |
Establishment of Customer Service Center | |
$ | 5,000 | |
Initial Awareness Campaign | |
$ | 35,000 | |
| |
| | |
Total | |
$ | 140,000 | |
In order to execute on our plan of operations over the next 12 months,
we will need to raise additional amounts of working capital through debt or equity offerings. There are no assurances that we will
be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when
needed. Any failure to secure additional financing may force us to modify or delay our business plan.
Results of Operations for the Years Ended December 31, 2014
and 2013
We generated no revenue for the year ended December 31, 2014
and no revenue for the year ended December 31, 2013.
Our operating expenses were $1,192,141 for the year ended December
31, 2014, compared to $915,225, for the year ended December 31, 2013. Our operating expenses for the years ended December 31,
2014 and 2013 consisted solely of research and development and general and administrative expenses. Our general and administrative
expenses increased during 2014 due to increased professional costs related to the filing of a registration statement on Form
S-1.
We had a net loss of $2,160,699 for the year ended December
31, 2014, compared to a net loss of $910,518 for the year ended December 31, 2013.
We anticipate our operating expenses will increase as we further
implement our business plan. The increase will be attributable to expenses to implement our business plan and the professional
fees to be incurred in connection with our continuing as a reporting company under the Securities Exchange Act of 1934, as amended.
Liquidity and Capital Resources
As of December 31, 2014, we had cash and equivalents on hand
of $169,265 and working capital deficit of $1,653,389. We had a deficit accumulated of $3, 365,780 as of December 31, 2014.
Cash Flows:
| |
For the year ended | |
| |
December 31, | |
| |
2014 | | |
2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| (1,075,474 | ) | |
$ | (865,038 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| (179 | ) | |
| (33,503 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| 1,083,207 | | |
| 1,000,000 | |
EFFECT OF CURRENCY TRANSLATIONS | |
| (17,421 | ) | |
| 1,899 | |
Net increase (decrease) in cash
| |
$ | (9,867 | ) | |
$ | 103,358 | |
On April 4, 2014, we entered into a securities purchase agreement
with certain institutional investors pursuant to which we issued convertible debentures in the aggregate principal and interest
amount of $543,378 for a purchase price of $500,000 (8% original issue discount). On December 11, 2014, such investors purchased
additional debentures in the aggregate principal and interest amount of $543,378 for a purchase price of $500,000 (8% original
issue discount), for a total aggregate principal amount of $1,086,756 for the aggregate purchase price of $1,000,000 (8% original
issue discount). The debentures have a maturity date of 12 months with 12% interest paid at maturity or upon conversion of the
amounts owed under the debentures.
On September 24, 2014, the Company completed a convertible debt
offering by entering into a securities purchase agreement and convertible promissory note with Macallan Partners for an aggregate
principal amount of $105,500 which included a 5% original issue discount.
Subsequent to the end of our fiscal year, on March 5, 2015,
we entered into a securities purchase agreement with an institutional investor pursuant to which we issued a convertible debenture
in the principal amount of $54,348 for a purchase price of $50,000 (8% original issue discount). Upon the effectiveness of a registration
statement to be filed by the Company in connection therewith, such investor will purchase an additional convertible debenture
in the principal amount of $489,130 for a purchase price of $450,000 (8% original issue discount), for a total aggregate principal
amount of $543,478 for a purchase price of $500,000.
Subsequent to the end of our fiscal year, on March 26, 2015,
we entered into a convertible promissory note with Macallan Partners for the principal amount of $112,000.
Given our cash position of $56,000 as of April 15, 2015, and
the proceeds from the equity financings, management believes that our cash on hand and working capital are sufficient to meet
our current anticipated cash requirements through May 15, 2015.
We have incurred an accumulated loss of $3,365,780 since inception.
Our independent auditors have issued an audit opinion for our financial statements for the periods ended December 31, 2014 and
2013, which includes a statement expressing substantial doubt as to our ability to continue as a going concern due to our limited
liquidity and our lack of revenues.
Our current cash requirements are significant due to planned
development and marketing of our current products, and we anticipate generating losses. While obtaining $556,000 will allow us
to execute on our business strategy over the next 12 months, commensurate with the goals for our planned marketing, development
and distribution efforts – we are actually targeting an additional $1,000,000 over the next 12 months in additional working
capital in order to increase our growth plans on an expedited basis.
Our management believes that we should be able to raise sufficient
amounts of working capital through debt or equity offerings, as may be required to meet our short-term obligations. However, the
incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial
covenants that would restrict our operations. Additionally, our ability to raise additional capital may be limited due to the
grant of a security interest on all of the assets of the Company to secure the obligations under the convertible debentures issued
on April 4, 2014 and the convertible debenture issued on March 5, 2015. Changes in our operating plans, increased expenses, acquisitions,
or other events, may cause us to seek additional equity or debt financing in the future. We anticipate continued and additional
marketing, development and distribution expenses. Accordingly, we expect to continue to use debt and equity financing to fund
operations for the next twelve months, as we look to expand our asset base and fund marketing, development and distribution of
our products.
There are no assurances that we will be able to raise the required
working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure
additional financing may force us to modify our business plan. In addition, we cannot be assured of profitability in the future.
Significant Accounting Policies
Long-lived Assets
Property and equipment
Property and equipment are recorded at cost. Expenditures for
major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred.
When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over
the estimated useful lives of the related assets using the straight-line method of 3 years for financial statement purposes.
Software
The Company capitalizes software acquisition and development
costs incurred during the software application development stage. The software application development stage is characterized
by software design and configuration activities, coding, testing and installation. Training and maintenance costs are expensed
as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional
functionality. Capitalized software acquisition and development costs, once placed in service, are amortized using the straight-line
method over the estimated useful life of 3 to 10 years. Capitalized software acquisition and development costs subject to amortization
are carried at cost less accumulated amortization.
Patents
Patents are initially measured based on their fair values. Patents
are being amortized on the straight-line method over the estimated useful life of 10 to 20 years.
Management evaluates the recoverability of the Company’s
property and equipment including patent development costs when events or circumstances indicate a potential impairment exists.
The Company considers certain events and circumstances in determining whether the carrying value of identifiable property and
equipment may not be recoverable including, but not limited to: significant changes in performance relative to expected operating
results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the business
strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use
and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets' carrying values and
the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds
the fair value of the assets.
Revenue Recognition
The Company recognizes revenue only when all of the following
criteria have been met:
| · | Persuasive
evidence of an arrangement exists; |
| · | Delivery
has occurred or services have been rendered; |
| · | The
fee for the arrangement is fixed or determinable; and |
| · | Collectability
is reasonably assured. |
Persuasive Evidence of an Arrangement –The Company documents
all terms of an arrangement in a written contract signed by the customer prior to recognizing revenue.
Delivery Has Occurred or Services Have Been Performed –
The Company performs all services or delivers all products prior to recognizing revenue. Monthly services are considered to be
performed ratably over the term of the arrangement. Professional consulting services are considered to be performed when the services
are complete. Equipment is considered delivered upon delivery to a customer’s designated location.
The Fee for the Arrangement Is Fixed or Determinable –
Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the written contract.
Fees for most monthly services, professional consulting services, and equipment sales and rentals are fixed under the terms of
the written contract. Fees for certain monthly services, including certain portions of networking, storage, and content distribution
and caching services, are variable based on an objectively determinable factor such as usage. Those factors are included in the
written contract such that the customer’s fee is determinable. The customer’s fee is negotiated at the outset of the
arrangement and is not subject to refund or adjustment during the initial term of the arrangement.
Collectability Is Reasonably Assured – The Company determines
that Collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer by customer basis
based on criteria outlined by management. New customers are subject to a credit review process, which evaluates the customer’s
financial position and ultimately its ability to pay. The Company does not enter into arrangements unless Collectability is reasonably
assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors.
If it is determined during the arrangement that Collectability is not reasonably assured, revenue is recognized on a cash basis.
Franchise Fee Revenue
Revenues from licensees include a royalty based on a percent
of sales, and may include initial fees. Continuing royalties are recognized in the period earned. Initial fees are recognized
upon granting of a new franchise term, which is when the Company has performed substantially all initial services required by
the franchise arrangement and after the franchisee commences operations. Additionally, the first twelve months of operations are
royalty free for the franchisee.
Foreign Currency Translation
The functional currency of our subsidiary is the Thai Baht.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional
currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional
currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange
gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective
periods.
For financial reporting purposes, the financial statements of
the subsidiary are translated into the Company’s reporting currency, United States Dollars (“USD”). Asset and
liability accounts are translated using the closing exchange rate in effect at the balance sheet date, equity account and dividend
are translated using historical exchange rates and income and expense accounts are translated using the average exchange rate
prevailing during the reporting period.
Adjustments resulting from the translation, if any, are included
in accumulated other comprehensive income (loss) in stockholder’s equity (deficit).
Stock-based Compensation
The Company expenses the cost of employee services received
in exchange for an award of equity instruments based on the grant date fair value of such instruments over the service period.
Equity instruments issued to parties other than employees for
acquiring goods or services are recorded at either the fair value of the consideration received or the fair value of the instruments
issued in exchange for such services, whichever is more reliably measurable.
Off-Balance Sheet Arrangements
We have not entered into any other financial guarantees or other
commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that
are indexed to its shares and classified as shareholder’s equity or that are not reflected in its consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity
that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and
development services with it.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Set forth below are the present directors and executive officers
of the Company. Except as set forth below, there are no other persons who have been nominated or chosen to become directors nor
are there any other persons who have been chosen to become executive officers. Other than as set forth below, there are no arrangements
or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director
or an officer.
Name |
|
Age |
|
Position |
|
Since |
|
|
|
|
|
|
|
Paul Giles |
|
46 |
|
Director, Chief Executive Officer and President |
|
2012 |
Chris Ziomkowski |
|
43 |
|
Chief Technical Officer |
|
2012 |
Lisa Ziomkowski-Boten |
|
45 |
|
Secretary and Treasurer |
|
2012 |
Julpas Kruesopon |
|
47 |
|
Director |
|
2012 |
The Board of Directors is comprised of only one class. All of the
directors serve for a term of one year and until their successors are elected at the Company’s Annual Shareholders’
Meeting and are qualified, subject to removal by the Company’s shareholders. Each executive officer serves, at the pleasure
of the Board of Directors, for a term of one year and until his successor is elected at a meeting of the Board of Directors and
is qualified.
Our Board of Directors believes that all members of the Board and
all executive officers encompass a range of talent, skill, and experience sufficient to provide sound and prudent guidance with
respect to our operations and interests. The information below with respect to our directors and executive officers includes each
individual’s experience, qualifications, attributes, and skills that led our Board of Directors to the conclusion that he
or she should serve as a director and/or executive officer.
Biographies
Set forth below are brief accounts of the business experience during
the past five years of each director, executive officer and significant employees of the Company.
Paul Giles , Chief Executive Officer, President and Director
Mr. Giles is the inventor of the Moto-Meter. Prior to his appointment
with the Company in November 2012, from March 2009 to September 2012, Mr. Giles served as President and director of World Moto
(Thai) Co., Ltd. From 2002 to January 2009, Mr. Giles was the co-founder of Nirvana Resorts Group, and a partner in ESC Ltd., a
security services company that was acquired by Securitas, a security services companies. We believe that Mr. Giles’ experience
and industry knowledge will help further the Company’s goals and business efforts.
Chris Ziomkowski, Chief Technical Officer
Mr. Ziomkowski is experienced in the design of taxi meters for motorcycles,
and has experience in artificial intelligence, practical programs and telecommunications. Prior to his appointment with the Company
in November 2012, from March 2009 to September 2012, Mr. Ziomkowski was Chief Technology Officer of World Moto (Thai) Co. Ltd.
From 1999 to 2008, Mr. Ziomkowski founded a VoIP carrier in Thailand. Mr. Ziomkowski received his bachelor’s degree in Computational
Neural Systems from the California Institute of Technology.
Lisa Ziomkowski-Boten , Secretary and Treasurer
Ms. Ziomkowski-Boten is a Certified Public Accountant in California.
Ms. Ziomkowski-Boten is currently the Cost Accountant for Oregon’s Wild Harvest, a position she has held since July 2009.
Previously, from October 2007 to March 2009, Ms. Ziomkowski-Boten was a Senior Staff Accountant with The Kaseno CPA Firm in San
Diego, CA. Ms. Ziomkowski-Boten received her bachelor’s degree in Accounting from the University of San Diego and currently
lives in Washington State.
Julpas Kruesopon , Director
Mr. Kruesopon is currently an advisor to the Prime Minister of Thailand
and president of Panda Security (US & Asia Pacific), a position he has held since January 2009. Mr. Kruesopon was formerly
Chief Executive Officer of Y*Not Communications Co., Ltd., marketing agency, from November 2007 to October 2010. Prior to working
at Y*Not Communications, Mr. Kruesopon was the managing director of Nortel Networks Thailand. Prior to working at Nortel, he worked
for Samart Corporation PLC, where he was named president in August 1997. His responsibilities included the day-to-day operations
and the development and implementation of the group’s overall business strategies.
Mr. Kruesopon graduated from California State University Los Angeles,
with a degree in Political Science and has completed executive management and marketing programs from the University of Michigan,
the University of Ontario and University of California Los Angeles. We believe that Mr. Kruesopon’s business experience in
Thailand and throughout Southeast Asia will bring value to our Company as we seek to grow our business.
Family Relationships
Chris Ziomkowski is the brother of Lisa Ziomkowski-Boten. Other
than the foregoing, there are no other family relationships between or among any of our directors, executive officers and any incoming
directors or executive officers.
Involvement in Certain Legal Proceedings
No director, executive officer, significant employee or control
person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
Committees of the Board
Our Board of Directors held no formal meetings in the prior fiscal
year. All proceedings of the Board of Directors were conducted by resolutions consented to in writing by the directors and filed
with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote
on that resolution at a meeting of the directors are, according to the Nevada Revised Statutes and the bylaws of our Company, as
valid and effective as if they had been passed at a meeting of the directors duly called and held. We do not presently have a policy
regarding director attendance at meetings.
We do not currently have a standing audit, nominating or compensation
committee of the Board of Directors, or any committee performing similar functions. Our Board of Directors performs the functions
of audit, nominating and compensation committees.
Audit Committee
Our Board of Directors has not established a separate audit committee
within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Instead, the entire Board of Directors acts as the audit committee within the meaning of Section 3(a)(58)(B) of the Exchange Act
and will continue to do so until such time as a separate audit committee has been established.
Audit Committee Financial Expert
We currently have not designated anyone as an “audit committee
financial expert,” as defined in Item 407(d)(5) of Regulation S-K as we have not yet created an audit committee of the Board
of Directors.
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange Act requires our executive
officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions
in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings.
Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe that during the fiscal year ended December 31, 2013,
our officers, directors and greater than 10% percent beneficial owners complied with all applicable filing requirements, except
that Mr. Julpas Kruesopon, a member of our Board of Directors, filed a late Form 3 and Form 4 in connection with his appointment
as a director and the issuance to Mr. Kruesopon of shares of Company common stock.
Nominations to the Board of Directors
Our directors take a critical role in guiding our strategic direction
and oversee the management of the Company. Board candidates are considered based upon various criteria, such as their broad-based
business and professional skills and experiences, a global business and social perspective, concern for the long-term interests
of the stockholders, diversity, and personal integrity and judgment.
In addition, directors must have time available to devote to Board
activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain highly qualified
directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.
In carrying out its responsibilities, the Board will consider candidates
suggested by stockholders. If a stockholder wishes to formally place a candidate’s name in nomination, however, he or she
must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for candidates to be evaluated by the proposed
directors must be sent to the Board of Directors, c/o World Moto, Inc., 131 Thailand Science Park INC-1 #214 Phahonyothin Road,
Klong1, Klong Luang, Pathumthani 12120 Thailand.
Director Nominations
As of December 31, 2014, we did not effect any material changes
to the procedures by which our shareholders may recommend nominees to our Board of Directors.
Board Leadership Structure and Role on Risk Oversight
Paul Giles currently serves as the Company’s principal executive
officer and a director. The Company determined this leadership structure was appropriate for the Company due to our small size
and limited operations and resources. The Board of Directors will continue to evaluate the Company’s leadership structure
and modify as appropriate based on the size, resources and operations of the Company. It is anticipated that the Board of Directors
will establish procedures to determine an appropriate role for the Board of Directors in the Company’s risk oversight function.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between our board of directors
and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the
past.
Code of Ethics
The Company has not formally adopted a written code of business
conduct that governs the Company’s employees, officers and directors.
EXECUTIVE COMPENSATION
General Philosophy
Our Board of Directors is responsible for establishing and administering
the Company’s executive and director compensation.
Executive Compensation
The following summary compensation table indicates the cash
and non-cash compensation earned from the Company during the fiscal years ended December 31, 2014 and 2013 by the current and
former executive officers of the Company and each of the other two highest paid executives or directors, if any, whose total compensation
exceeded $100,000 during those periods.
Summary Compensation Table
| |
| |
| | |
| | |
| | |
| | |
Non-Equity | | |
| | |
| |
Name and Principal | |
| |
| | |
| | |
Stock | | |
Option | | |
Incentive Plan | | |
All Other | | |
| |
Position | |
Year | |
Salary | | |
Bonus | | |
Awards | | |
Awards | | |
Compensation | | |
Compensation | | |
Total | |
Paul Giles, | |
2014 | |
| 106,154 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 106,154 | |
Chief Executive Officer, President and Director | |
2013 | |
| 84,064 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 84,064 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Chris Ziomkowski, | |
2014 | |
| 84,923 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 84,923 | |
Chief Technical Officer | |
2013 | |
| 67,250 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 67,250 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Lisa Ziomkowski- | |
2014 | |
| 21,337 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 21,337 | |
Boten, Secretary and Treasurer | |
2013 | |
| 18,657 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 18,657 | |
We have employment agreements in place with both Paul Giles and
Chris Ziomkowski.
Employment Agreements
Paul Giles
On April 1, 2013, the Company entered into an employment agreement
with Paul Giles for his services as the Chief Executive Officer of the Company. Mr. Giles’ employment with the Company is
“at-will” and provides for a base salary of $8,816.90 per month, or ฿ 287,500 THB based on a USD/THB exchange
rate of 0.03067 as of June 5, 2014, for the first six months of employment, with an adjustment to the base salary at the discretion
of the board of directors of the Company after such initial six months and annually thereafter. Mr. Giles is entitled to receive
a standard benefits package pursuant to his agreement.
Mr. Giles’ employment contract includes a change of control
provision which states that if his employment is terminated upon a change of control (as defined therein) of the Company, Mr. Giles
is entitled to 200% of his annual base compensation and annual incentive bonus immediately. Mr. Giles is subject to standard restrictions
regarding usage of the Company’s confidential information, and is subject to unfair competition and non-solicitation provisions.
The Company also agrees to indemnify Mr. Giles for claims brought against him due to his position as an executive of the Company.
Chris Ziomkowski
On April 1, 2013, the Company entered into an employment agreement
with Chris Ziomkowski for his services as the Chief Technology Officer of the Company. Mr. Ziomkowski’s employment with the
Company is “at-will” and provides for a base salary of $7,053.52 per month, or ฿ 230,000 THB based on a USD/THB
exchange rate of 0.03067 as of June 5, 2014, for the first six months of employment, with an adjustment to the base salary at the
discretion of the board of directors of the Company after such initial six months and annually thereafter. Mr. Ziomkowski is entitled
to receive a standard benefits package pursuant to his agreement.
Mr. Ziomkowski’s employment contract includes a change of
control provision which states that if his employment is terminated upon a change of control (as defined therein) of the Company,
Mr. Ziomkowski is entitled to 200% of his annual base compensation and annual incentive bonus immediately. Mr. Ziomkowski is subject
to standard restrictions regarding usage of the Company’s confidential information, and is subject to unfair competition
and non-solicitation provisions. The Company also agrees to indemnify Mr. Ziomkowski for claims brought against him due to his
position as an executive of the Company.
Potential Payments Upon Termination or Change-in-Control
SEC regulations state that we must disclose information regarding
agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection with any termination
of employment or change in control of the Company.
Other than as described in the “Employment Agreements”
section above, none of our executive officers or directors received, nor do we have any arrangements to pay out, any bonus, stock
awards, option awards, non-equity incentive plan compensation, or non-qualified deferred compensation.
Compensation of Directors
We have no standard arrangement to compensate directors for their
services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to review and consider
future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed
by us, if and when incurred.
The following table sets forth compensation paid to our non-executive
directors for the fiscal year ended December 31, 2014.
| |
Fees | | |
| | |
| | |
| | |
Nonqualified | | |
| | |
| |
| |
Earned | | |
| | |
| | |
Non-Equity | | |
Deferred | | |
All | | |
| |
| |
or Paid | | |
Stock | | |
Option | | |
Incentive Plan | | |
Compensation | | |
Other | | |
| |
| |
in Cash | | |
Awards | | |
Awards | | |
Compensation | | |
Earnings | | |
Compensation | | |
Total | |
Name | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
Julpas Kruesopon (1) | |
$ | 4,250 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 4,250 | |
(1) |
On December 19, 2012, we entered into a Board Advisory Agreement (the “Agreement”) with Mr. Julpas “Tom” Kruesopon, whereby Mr. Kruesopon consented to serve as a director of the Company. Pursuant to the Agreement, Mr. Kruesopon received five hundred thousand (500,000) shares of restricted Company common stock vesting upon the first anniversary date of Mr. Kruesopon’s appointment to the board in connection with his service as a director and a onetime fee of $10,000 for consulting services. Additionally, under the Agreement, Mr. Kruesopon will receive $3,000 for attendance at the Company’s annual meeting of shareholders, and $1,000 for attendance at any director’s meeting in excess of one meeting per year. |
Stock Option Plans - Outstanding Equity Awards at Fiscal Year
End
None.
Pension Table
None.
Retirement Plans
We do not offer any annuity, pension, or retirement benefits to
be paid to any of our officers, directors, or employees in the event of retirement. There are also no compensatory plans or arrangements
with respect to any individual named above which results or will result from the resignation, retirement, or any other termination
of employment with our company, or from a change in the control of our Company.
Compensation Committee
The Company does not have a separate Compensation Committee. Instead,
the Company’s Board of Directors reviews and approves executive compensation policies and practices, reviews salaries and
bonuses for other officers, administers the Company’s stock option plans and other benefit plans, if any, and considers other
matters.
Risk Management Considerations
We believe that our compensation policies and practices for our
employees, including our executive officers, do not create risks that are reasonably likely to have a material adverse effect on
our Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of April
13, 2015, with respect to the beneficial ownership of our common stock for (i) each director and officer, (ii) all of our directors
and officers as a group, and (iii) each person known to us to own beneficially five percent (5%) or more of the outstanding shares
of our common stock. As of April 13, 2015, there were 439,696,519 shares of common stock outstanding.
Name and Address of | |
Beneficially | | |
Percentage | |
Beneficial Owner(1) | |
Owned | | |
Owned(2) | |
| |
| | |
| |
Directors and Executive Officers | |
| | |
| |
| |
| | |
| |
Paul Giles, Chief Executive Officer, President and Director
25/1 Soi Sii Dan 14
Moo Baan Laddawan, Sri Nakarin, Bang Kaeow, Bang PreeSamut Prakan, Bangkok, Thailand 10540 | |
| 170,756,615 | | |
| 38.84 | % |
| |
| | | |
| | |
Lisa Ziomkowski-Boten, Secretary and Treasurer
1777 Moo 5 Soi Sukhumvit 107 Sukhumvit Rd North
Sumrong, Amphur Muang, Samut Prakan, Bangkok W1 10270 | |
| 611,420 | | |
| 0.05 | % |
| |
| | | |
| | |
Chris Ziomkowski, Chief Technical Officer
1777 Moo 5 Soi Sukhumvit 107 Sukhumvit Rd North
Sumrong, Amphur Muang, Samut Prakan, Bangkok W1 10270 | |
| 41,303,511 | (3) | |
| 9.39 | % |
| |
| | | |
| | |
Julpas Kruesopon, Director
1777 Moo 5 Soi Sukhumvit 107 Sukhumvit Rd North Sumrong, Amphur
Muang, Samut Prakan, Bangkok W1 10270 | |
| 0 | (4) | |
| 0 | % |
| |
| | | |
| | |
All Officers and Directors | |
| 212,671,546 | | |
| 48.23 | % |
| |
| | | |
| | |
5% Stockholders | |
| | | |
| | |
| |
| | | |
| | |
Paul Giles
25/1 Soi Sii Dan 14 Moo Baan Laddawan, Sri Nakarin, Bang Kaeow, Bang PreeSamut
Prakan, Bangkok, Thailand 10540 | |
| 170,756,615 | | |
| 38.84 | % |
| |
| | | |
| | |
Lucky Twins Ventures Co., Ltd.(5)
209/123 Muang Ake Phase 5, T. Lkhak A. Muang Pathumthani,
12000 Thailand | |
| 41,303,511 | | |
| 9.39 | % |
|
(1) |
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table. |
|
(2) |
Based on 439,696,519 shares of our common
stock issued and outstanding as of April 13, 2015. |
|
(3) |
Mr. Ziomkowski’s beneficial ownership represents shares of common stock held by a Lucky Twins Ventures Co. Ltd. (“Lucky Ltd.”). Mr. Ziomkowski’s spouse, Ms. Nutchanoot Ziomkowski, is a director of Lucky Ltd. |
|
(4) |
Does not include 500,000 shares of restricted stock that were to be issued and vested on December 19, 2014, to Mr. Kruesopon. |
|
(5) |
The business address of Lucky Ltd. is 209/123 Muang Ake Phase 5, T. Lkhak A. Muang, Pathumthani, 12000, Thailand. The principal business of Lucky Ltd. is that of a private investment firm. Mrs. Nutchanoot Ziomkowski has power to vote or to direct the vote and power to dispose or to direct the disposition of all securities owned directly by Lucky Ltd. |
Securities Authorized for Issuance Under Equity Compensation
Plans
None.
Non-Cumulative Voting
The holders of our shares of common stock do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors,
can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be
able to elect any of our Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Certain Relationships and Transactions
Mr. Chris Ziomkowski, our Chief Technical Officer, is the brother
of Ms. Lisa Ziomkowski-Boten, our Secretary and Treasurer. Other than the foregoing, there are no family relationships between
any of our former directors or executive officers and new directors or new executive officers. None of the new directors and executive
officers were directors or executive officers of the Company prior to the acquisition of the Assets from Old WM, nor did any hold
any position with the Company prior to the acquisition of the Assets from Old WM, nor have been involved in any material proceeding
adverse to the Company or any transactions with the Company or any of its directors, executive officers, affiliates or associates
that are required to be disclosed pursuant to the rules and regulations of the SEC.
Related Party Transactions
As noted above under “Employment Agreements,” we have
entered into employment agreements with Paul Giles, our President and Chief Executive Officer, and Chris Ziomkowksi, our Chief
Technology Officer.
Other than the foregoing, none of our current officers or directors
has been involved in any material proceeding adverse to the Company or any transactions with the Company or any of its directors,
executive officers, affiliates or associates that are required to be disclosed pursuant to the rules and regulations of the SEC.
Review, Approval or Ratification of Transactions with Related
Persons
As we have not adopted a Code of Ethics, we rely on our Board to
review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction in light
of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions
are presented to our Board for approval before they are entered into or, if this is not possible, for ratification after the transaction
has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if
any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of
the Company.
Director Independence
During the year ended December 31, 2014, we had one independent
director on our board – Mr. Julpas Kruesopon. We evaluate independence by the standards for director independence established
by applicable laws, rules, and listing standards including, without limitation, the standards for independent directors established
by The New York Stock Exchange, Inc., the NASDAQ National Market, and the Securities and Exchange Commission.
Subject to some exceptions, these standards generally provide that
a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member
of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director
or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other
than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s
immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants,
or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family
is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves
on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer
of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past
three years, exceeds the greater of $1,000,000 or two percent of that other company’s consolidated gross revenues.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Sections 78.7502 and 78.751 of the Nevada Revised Statutes authorizes
a court to award, or a corporation’s board of directors to grant indemnity to directors and officers in terms sufficiently
broad to permit indemnification, including reimbursement of expenses incurred, under certain circumstances for liabilities arising
under the Securities Act of 1933, as amended. In addition, the registrant’s Articles of Incorporation provide that the registrant
has the authority to indemnify the registrant’s directors and officers and may indemnify the registrant’s employees
and agents (other than officers and directors) against liabilities to the fullest extent permitted by Nevada law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1, together with
all amendments and exhibits, with the SEC. This Prospectus, which forms a part of that registration statement, does not contain
all information included in the registration statement. Certain information is omitted and you should refer to the registration
statement and its exhibits. With respect to references made in this Prospectus to any of our contracts or other documents, the
references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies
of the actual contracts or documents. You may read and copy any document that we file at the Commission’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our filings and the registration statement can also be reviewed by accessing the SEC’s website
at http://www.sec.gov. We maintain a website at http://www.worldmoto.com/
FINANCIAL STATEMENTS
Our audited consolidated financial statements
as of and for the fiscal years ended December 31, 2014 and 2013 are included herewith.
WORLD
MOTO, INC.
FOR THE YEARS
ENDED DECEMBER 31, 2014 AND 2013
INDEX TO FINANCIAL
STATEMENTS
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
World Moto, Inc.
Bangkok, Thailand
We have audited the accompanying consolidated balance sheets of
World Moto, Inc. (the “Company”) as of December 31, 2014 and 2013 and the related consolidated statements of operations
and other comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the years then ended.
The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013 and the
results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the
Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/GBH CPAs, PC |
|
GBH CPAs, PC |
|
www.gbhcpas.com |
|
Houston, Texas |
|
April 15, 2015 |
|
World Moto,
Inc.
Consolidated Balance Sheets
| |
December 31, 2014 | | |
December 31, 2013 | |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 169,265 | | |
$ | 179,132 | |
Prepaid expenses and other current assets | |
| 20,741 | | |
| 17,424 | |
Inventories | |
| 2,986 | | |
| - | |
| |
| | | |
| | |
Total current assets | |
| 192,992 | | |
| 196,556 | |
| |
| | | |
| | |
Property and equipment, net of accumulated depreciation | |
| 24,215 | | |
| 31,273 | |
Deferred financing costs, net of accumulated amortization | |
| 28,867 | | |
| - | |
Other assets | |
| 10,984 | | |
| 1,704 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 257,058 | | |
$ | 229,533 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 211,336 | | |
$ | 27,482 | |
| |
| | | |
| | |
Customer deposits | |
| - | | |
| 35,000 | |
Convertible note payable, net of discount of $1,053,696 and $0, respectively | |
| 274,123 | | |
| - | |
Derivative note liabilities | |
| 1,256,159 | | |
| - | |
Short-term debt – related party | |
| 45,707 | | |
| - | |
Unearned revenues | |
| 59,056 | | |
| - | |
| |
| | | |
| | |
Total current liabilities | |
| 1,846,381 | | |
| 62,482 | |
Commitments and contingencies | |
| | | |
| | |
Stockholders’ equity (deficit): | |
| | | |
| | |
Preferred stock, $0.0001 par value; 50,000,000 shares authorized; no shares issued and outstanding | |
| - | | |
| - | |
Common stock, $0.0001 par value, 2,000,000,000 shares authorized; 395,369,204 and 378,033,149 shares issued and outstanding, respectively | |
| 39,536 | | |
| 37,802 | |
Additional paid-in capital | |
| 1,752,443 | | |
| 1,332,431 | |
Accumulated deficit | |
| (3,365,780 | ) | |
| (1,205,081 | ) |
Other comprehensive income (loss) | |
| (15,522 | ) | |
| 1,899 | |
Total stockholders' equity (deficit) | |
| (1,589,323 | ) | |
| 167,051 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
$ | 257,058 | | |
$ | 229,533 | |
The accompanying notes are an integral part
of these financial statements.
World Moto,
Inc.
Consolidated Statements of Operations and Comprehensive Loss
| |
For the year ended | |
| |
December 31, | |
| |
2014 | | |
2013 | |
| |
| | |
| |
Revenues | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Research and development | |
| 406,284 | | |
| 365,910 | |
General and administrative | |
| 785,857 | | |
| 549,315 | |
Total operating expenses | |
| 1,192,141 | | |
| 915,225 | |
| |
| | | |
| | |
Loss from operations | |
| 1,192,141 | | |
| 915,225 | |
| |
| | | |
| | |
Other income expense: | |
| | | |
| | |
Interest expense | |
| 1,075,665 | | |
| - | |
Interest income | |
| (6 | ) | |
| (749 | ) |
Change in fair value of derivative liabilities | |
| (92,875 | ) | |
| - | |
Foreign currency exchange gain | |
| (14,226 | ) | |
| (3,958 | ) |
| |
| | | |
| | |
Net loss | |
$ | (2,160,699 | ) | |
$ | (910,518 | ) |
| |
| | | |
| | |
Other comprehensive income (loss): | |
| | | |
| | |
Foreign currency translations | |
| (17,421 | ) | |
| 1,899 | |
| |
| | | |
| | |
Total comprehensive loss | |
| (2,178,120 | ) | |
$ | (908,619 | ) |
| |
| | | |
| | |
Net loss per common share - basic and diluted | |
$ | (0.01 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | |
Weighted average number of common shares outstanding – basic and diluted | |
| 380,674,272 | | |
| 378,033,149 | |
The accompanying notes are an integral part
of these financial statements.
World Moto,
Inc.
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
| |
| | |
| | |
Additional | | |
| | |
Accumulated | | |
Total | |
| |
| | |
| | |
Paid-in | | |
| | |
Other | | |
Stockholders' | |
| |
Common Stock | | |
Capital | | |
Accumulated | | |
Comprehensive | | |
Equity | |
| |
Shares | | |
Amount | | |
(Deficiency) | | |
Deficit | | |
Income | | |
(Deficit) | |
Balances, December 31, 2012 | |
| 374,329,445 | | |
$ | 37,432 | | |
$ | 332,801 | | |
$ | (294,563 | ) | |
$ | | | |
$ | 75,670 | |
Shares issued for cash | |
| 3,703,704 | | |
| 370 | | |
| 999,630 | | |
| - | | |
| - | | |
| 1,000,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency transactions | |
| | | |
| | | |
| | | |
| | | |
| 1,899 | | |
| 1,899 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (910,518 | ) | |
| - | | |
| (910,518 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balances, December 31, 2013 | |
| 378,033,149 | | |
| 37,802 | | |
| 1,332,431 | | |
| (1,205,081 | ) | |
| 1,899 | | |
| 167,051 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares issued for conversion of debt | |
| 17,336,055 | | |
| 1,734 | | |
| 266,962 | | |
| | | |
| | | |
| 268,696 | |
Reclassification of fair value of derivatives from liabilities to equity | |
| | | |
| | | |
| 153,050 | | |
| | | |
| | | |
| 153,050 | |
Foreign currency transactions | |
| | | |
| | | |
| | | |
| | | |
| (17,421 | ) | |
| (17,421 | ) |
Net loss | |
| | | |
| | | |
| | | |
| (2,160,699 | ) | |
| | | |
| (2,160,699 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balances, December 31, 2014 | |
| 395,369,204 | | |
$ | 39,536 | | |
$ | 1,752,443 | | |
$ | (3,365,780 | ) | |
| (15,522 | ) | |
$ | (1,589,323 | ) |
The accompanying notes are an integral part
of these financial statements.
World
Moto, Inc.
Consolidated Statements of Cash Flows
| |
For the year ended | |
| |
December
31, | | |
| |
| |
2014 | | |
2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net loss | |
$ | (2,160,699 | ) | |
$ | (910,518 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 7,237 | | |
| 2,230 | |
Fair value of derivative in excess of debts | |
| 528,490 | | |
| - | |
Amortization of debt discount and deferred financing cost | |
| 450,046 | | |
| - | |
Change in fair value of derivative liability | |
| (92,875 | ) | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses and other current assets | |
| (12,597 | ) | |
| 17,924 | |
Inventories | |
| (2,986 | ) | |
| - | |
Unearned revenues | |
| 24,056 | | |
| - | |
Accounts payable and accrued expenses | |
| 183,854 | | |
| 25,326 | |
Net cash used in operating activities | |
| (1,075,474 | ) | |
| (865,038 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Purchases of property and equipment | |
| (179 | ) | |
| (33,503 | ) |
Net cash used in investing activities | |
| (179 | ) | |
| (33,503 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds from convertible notes, net of costs | |
| 1,037,500 | | |
| 1,000,000 | |
Advances from related parties | |
| 45,707 | | |
| - | |
Net cash provided by financing activities | |
| 1,083,207 | | |
| 1,000,000 | |
| |
| | | |
| | |
EFFECT OF FOREIGN CURRENCY TRANSLATIONS | |
| (17,421 | ) | |
| 1,899 | |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| (9,867 | ) | |
| 103,358 | |
Cash and cash equivalent at beginning of the year | |
| 179,132 | | |
| 75,774 | |
| |
| | | |
| | |
Cash and cash equivalent at end of the year | |
$ | 169,265 | | |
$ | 179,132 | |
| |
| | | |
| | |
SUPPLEMENTAL CASH FLOWS INFORMATION: | |
| | | |
| | |
Cash paid for: | |
| | | |
| | |
Income tax | |
$ | - | | |
$ | - | |
Interest | |
| - | | |
| - | |
NONCASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
Shares issued for conversion of debt | |
$ | 268,696 | | |
$ | - | |
Reclassification of fair value of derivatives from liabilities to equity | |
| 153,050 | | |
| | |
The accompanying notes are an integral part
of these financial statements.
World Moto,
Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2014 and 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
World Moto, Inc. (the “Company”) was incorporated in
the State of Nevada on March 24, 2008 under the name Net Profits Ten Inc. The original purpose of the Company was to market and
distribute user-friendly interactive yearbook software for the military. The Company was considered as a shell company until the
completion of its acquisition of the World Moto Assets, which was consummated on November 14, 2012, as discussed in Note 3. Effective
November 12, 2012, the Company amended its Articles of Incorporation to change its name from “Net Profits Ten Inc.”
to “World Moto, Inc.”
On January 30, 2013, World Moto, Inc. established two wholly owned
subsidiaries that were incorporated in the State of Nevada. World Moto Technologies, Inc. and World Moto Holdings, Inc. were both
established but have no activity to report to date. On February 4, 2013, World Moto Technologies Ltd, a wholly owned subsidiary
of the Company, was organized under the laws of the Kingdom of Thailand and the name of this company was later changed to World
Moto Co., Ltd. World Moto Co., Ltd. is owned in its entirety by World Moto, Inc. and it is an operating entity of the Company in
Thailand for the purposes of research and development in the Southeast Asia region.
Basis of Presentation
These financial statements and related notes are presented in accordance
with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal
year-end is December 31.
Principal of Consolidation
The consolidated financial statements include the accounts of World
Moto Technologies, Inc., World Moto Holdings, Inc., and World Moto Co. Ltd, all 100% owned subsidiaries. All significant intercompany
balances and transactions have been eliminated upon consolidation.
Use of Estimates
The preparation of 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 at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
The functional currency of our subsidiary is the Thai Baht. Monetary
assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency
are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or
losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.
For financial reporting purposes, the financial statements of the
subsidiary are translated into the Company’s reporting currency, United States Dollars (“USD”). Asset and liability
accounts are translated using the closing exchange rate in effect at the balance sheet date, equity account and dividend are translated
using historical exchange rates and income and expense accounts are translated using the average exchange rate prevailing during
the reporting period.
Adjustments resulting from the translation, if any, are included
in accumulated other comprehensive income (loss) in stockholder’s equity (deficit).
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with
a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
Long-lived Assets
Property and equipment
Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred.
When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over
the estimated useful lives of the related assets using the straight-line method of 3 years for financial statement purposes.
Software
The Company capitalizes software acquisition and development costs
incurred during the software application development stage. The software application development stage is characterized by software
design and configuration activities, coding, testing and installation. Training and maintenance costs are expensed as incurred,
while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality.
Capitalized software acquisition and development costs, once placed in service, are amortized using the straight-line method over
the estimated useful life of 3 to 10 years. Capitalized software acquisition and development costs subject to amortization are
carried at cost less accumulated amortization.
Patents
Patents are initially measured based on their fair values. Patents
are being amortized on the straight-line method over the estimated useful life of 10 to 20 years.
Management evaluates the recoverability of the Company’s property
and equipment including patent development costs when events or circumstances indicate a potential impairment exists. The Company
considers certain events and circumstances in determining whether the carrying value of identifiable property and equipment may
not be recoverable including, but not limited to: significant changes in performance relative to expected operating results; significant
changes in the use of the assets; significant negative industry or economic trends; and changes in the business strategy. In determining
if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of
these assets. If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows,
the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Income Taxes
The Company uses the asset and liability method in accounting for
income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting
and income tax carrying amounts of assets and liabilities and are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company reviews deferred tax assets for a valuation allowance based upon
whether it is more likely than not that the deferred tax asset will be fully realized. A valuation allowance, if necessary, is
provided against deferred tax assets, based upon management’s assessment as to their realization.
Fair Value Measurement
The Company values its derivative instruments under FASB ASC 820
which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants
would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation
technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair
value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1 - Quoted prices are available in active markets for identical
assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur
in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial
instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 3 - Pricing inputs include significant inputs that are generally
less observable from objective sources. These inputs may be used with internally developed methodologies that result in management's
best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
The following table sets forth by level with the fair value hierarchy
the Company's financial assets and liabilities measured at fair value on December 31, 2014.
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Level 4 | |
| |
| | |
| | |
| | |
| |
Liabilities | |
| - | | |
| - | | |
| - | | |
| - | |
Derivative liability | |
$ | | | |
$ | | | |
$ | 1,256,159 | | |
$ | 1,256,159 | |
Revenue Recognition
The Company recognizes revenue only when all of the following criteria
have been met:
| · | Persuasive evidence of an arrangement
exists; |
| · | Delivery has occurred or services have
been rendered; |
| · | The fee for the arrangement is fixed or
determinable; and |
| · | Collectability is reasonably assured. |
Persuasive Evidence of an Arrangement –The Company documents
all terms of an arrangement in a written contract signed by the customer prior to recognizing revenue.
Delivery Has Occurred or Services Have Been Performed – The
Company performs all services or delivers all products prior to recognizing revenue. Monthly services are considered to be performed
ratably over the term of the arrangement. Professional consulting services are considered to be performed when the services are
complete. Equipment is considered delivered upon delivery to a customer’s designated location.
The Fee for the Arrangement Is Fixed or Determinable – Prior
to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the written contract. Fees for
most monthly services, professional consulting services, and equipment sales and rentals are fixed under the terms of the written
contract. Fees for certain monthly services, including certain portions of networking, storage, and content distribution and caching
services, are variable based on an objectively determinable factor such as usage. Those factors are included in the written contract
such that the customer’s fee is determinable. The customer’s fee is negotiated at the outset of the arrangement and
is not subject to refund or adjustment during the initial term of the arrangement.
Collectability Is Reasonably Assured – The Company determines
that collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer by customer basis
based on criteria outlined by management. New customers are subject to a credit review process, which evaluates the customer’s
financial position and ultimately its ability to pay. The Company does not enter into arrangements unless collectability is reasonably
assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors.
If it is determined during the arrangement that collectability is not reasonably assured, revenue is recognized on a cash basis.
Franchise Fee Revenue
Revenues from licensees include a royalty based on a percent of
sales, and may include initial fees. Continuing royalties are recognized in the period earned. Initial fees are recognized upon
granting of a new franchise term, which is when the Company has performed substantially all initial services required by the franchise
arrangement and once the franchisee commences operations. Additionally, the first twelve months of operations are royalty free
for the franchisee.
Stock-based Compensation
The Company expenses the cost of employee services received in exchange
for an award of equity instruments based on the grant date fair value of such instruments over the service period.
Equity instruments issued to parties other than employees for acquiring
goods or services are recorded at either the fair value of the consideration received or the fair value of the instruments issued
in exchange for such services, whichever is more reliably measurable.
Subsequent Events
The Company evaluates subsequent events through the date when financial
statements are issued for disclosure consideration.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that
are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements
that have been issued that might have a material impact on its financial position or results of operations.
The Company has limited operations and was considered to be in the
development stage. During the quarter ended June 30, 2014, the Company has elected to early adopt Accounting Standards Update No.
2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this
Update allows the Company to remove the inception-to-date information and all references to development stage.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company
has an accumulated deficit of $3,365,780 as of December 31, 2014, has limited liquidity, and has not established a reliable source
of revenues sufficient to cover operating costs over an extended period of time. These factors raise substantial doubt about the
Company’s ability to continue as a going concern.
Management anticipates that the Company will be dependent, for the
near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may
be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances
that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3 - UNEARNED REVENUES
On December 2, 2013, WM Co. Thailand entered into a Purchase and
Licensing Agreement (the "PL Agreement") with Mobile Advertising Ventures Ltd. ("MAV"). Pursuant to the terms
of the PL Agreement, MAV will purchase 10 initial "Wheelies" from WM Co. Thailand at a purchase price of $35,000, and
will have an option to purchase an additional 190 Wheelies at a purchase price of $3,500 per unit. WM Co. Thailand also grants
a non-exclusive license to MAV for the use of its software in connection with the operation of the Wheelies in consideration for
a fee based on net revenue per quarter from advertising sales relating to the use of the Wheelies. The Company received $35,000
from MAV before December 31, 2013 and recorded unearned revenues at December 31, 2014 and 2013.
On March 10, 2014, the Company entered into a Fleet Franchise Agreement
("the Franchise Agreement") with Mobile Advertising Ventures, Ltd. ("MAV"). MAV paid the Company $24,056 for
the right to utilize the Yes software and all other trademarks of the Company, including but not limited to "Yes", "World
Moto" and "Wheelies" (collectively, the "Marks") in the Federal Territory of Kuala Lumpur, Malaysia. Initial
training has been completed for the Franchisee; however, the Franchisee has not begun operations. This revenue will be reclassified
as earned when MAV completes its first sale using the Yes software.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the year ended December, 31 2014, the Company received a
loan from one of the major shareholders and directors in the amount of $45,707. The loan will be paid back from proceeds of the
debenture financing that is expected to be completed by the end of 2014. The loan is accruing interest at a rate of 0%. All proceeds
were used for operating expenses incurred during the third quarter of 2014.
NOTE 5 – LONG-LIVED ASSETS
The following table summarizes the long-lived assets the Company
had at December 31, 2014 and 2013:
| |
Useful | |
Year Ended December 31, | |
| |
Lives | |
2014 | | |
2013 | |
| |
| |
| | |
| |
Machinery and equipment | |
3-5 years | |
$ | 33,682 | | |
$ | 33,503 | |
Less: accumulated depreciation | |
| |
| (9,467 | ) | |
| (2,230 | ) |
Property and equipment, net | |
| |
$ | 24,215 | | |
$ | 31,273 | |
NOTE 6 – NOTE PAYABLE
On April 4, 2014, the Company entered into the initial RM–DC
Convertible Notes (“RM-DC Notes) with the Investors in the aggregate principal and interest amount of $608,696 for a purchase
price of $500,000 (8% original issue discount). The Holder is guaranteed interest at the rate of 12% and the notes have a maturity
date of April 4, 2015. The Company is obligated to make amortization payments beginning on the six month anniversary of the issuance
date of the Debentures and continuing monthly thereafter. Currently, the Company is in default on the initial tranche and the balance
is due on demand. The RM-DC Notes are convertible into shares of common stock of the Company at any time at the discretion of the
Investors at a conversion price equal to the lesser of (i) $0.10 or (ii) 70% of the lowest traded price per share of the common
stock during the twenty five (25) trading days prior to the date of conversion.
For the year ended December 31, 2014, the Company recorded a debt
discount of $389,221, as result of the embedded conversion feature being a financial derivative, for proceeds received. The Company
also recorded a debt discount of $63,482, as result of the 8% original issue discount and $20,000 in fees related to fees paid
to the investors.
The discounts on the first tranche of RM-DC Notes are amortized
by the Company through interest expense over the life of the notes. During the year ended December 31, 2014, the Company recorded
$214,908 amortization of the debt discount on the first tranche of RM-DC Notes.
On December 11, 2014, the Company entered into the second tranche
of RM–DC Notes with the Investors in the aggregate principal and interest amount of $608,696 for a purchase price of $500,000
(8% original issue discount). The Holder is guaranteed interest at the rate of 12% and the notes have a maturity date of December
11, 2015. The Company is obligated to make amortization payments beginning on the six month anniversary of the issuance date of
the Debentures and continuing monthly thereafter. The Debentures are convertible into shares of common stock of the Company at
any time at the discretion of the Investors at a conversion price equal to the lesser of (i) $0.10 or (ii) 70% of the lowest traded
price per share of the common stock during the twenty five (25) trading days prior to the date of conversion.
For the year ended December 31, 2014, the Company recorded a debt
discount of $585,203 as result of the embedded conversion feature being a financial derivative, for proceeds received. The Company
also recorded a debt discount of $23,493, as result of the 8% original issue discount.
The discounts on the second tranche of RM-DC Notes are amortized
by the Company through interest expense over the life of the notes. During the year ended December 31, 2014, the Company recorded
$73,973 amortization of the debt discount on the second tranche of RM-DC Notes.
On August 24, 2014, the Company completed an offering by entering
into a Securities Purchase Agreement (the “Securities Purchase Agreement”), with Macallan Partners (the “Holder”)
for an aggregate principal amount of $105,000 (“MP Note”) (the “Purchase Price” with a $5,000 OID and $8,000
in Deferred Financing Costs-Broker Fees) in the form of a convertible note.
The MP Note earns an interest rate equal to 8% per annum and matures
on September 30, 2015. This Note may be prepaid in whole or in part. Any amount of principal or interest on this MP Note which
is not paid when due shall bear interest at the rate of 18% per annum from the due date thereof until the same is paid and a penalty
of 50%. The MP Note is redeemable for 125%-150% at various intervals.
The MP Note is convertible any time after 120 days after issuance, and the Purchaser has the right to convert the MP Note into
shares of the Company's common stock at a conversion price equal to the lower of: 50% of the lowest traded price during the 20
trading days prior to the election to convert or 50% of the bid price on the day of the conversion notice. If conversion shares
are not deliverable by DWAC then an additional 5% discount will apply to the conversion price. If the shares are ineligible for
deposit into the DTC system for any reason and only eligible for "X clearing" then an additional 10% discount will apply
to the conversion price. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations
of shares and similar recapitalization transactions and any issuances of securities below the Conversion Price (a dilutive reset).
For the year ended December 31, 2014, the Company recorded a debt discount of $100,000, as result of the embedded conversion feature
being a financial derivative. The Company also recorded a debt discount of $5,000 as result of the 5% original issue discount.
The Company determined that the fair value of the conversion feature was $196,408 at the issuance date. The fair value of the conversion
feature in excess of the principal amount allocated to the notes of $96,408 was expensed immediately as additional interest expense.
During the year ended December 31, 2014, the Company recorded $4,796 amortization of the debt discount on the notes.
As summary of value changes to the notes for the period ended from April 4, 2014 to December 31, 2014 is as follows:
RM-DC Note | |
$ | 1,217,392 | |
MP Note | |
| 105,000 | |
Total principal | |
| 1,322,392 | |
Less: conversion of principal | |
| (268,696 | ) |
Less: discount related to fair value of the embedded conversion feature | |
| (1,074,426 | ) |
Less: discount related to original issue discount | |
| (91,975 | ) |
Add: amortization of discount | |
| 386,828 | |
Carrying value of Convertible Notes December 31, 2014 | |
$ | 274,123 | |
In connection with the sale of the RM-DC Notes, the Company agreed
to issue 520,000 shares of common stock, valued at $46,584 on the date of agreement, and cash in the amount of $45,500 to its placement
agent for services. The fees have been recorded to deferred financing cost. The deferred financing cost are amortized by the Company
through interest expense over the life of the notes. During the year ended December 31, 2014, the Company recorded $63,217 amortization
of the deferred financing cost. These shares were not issued by the Company as of December 31, 2014 and were recorded in the Accounts
Payable and Accrued Expenses.
NOTE 7 – DERIVATIVE LIABILITY
The Company has determined that the variable conversion prices under
its convertible notes caused the embedded conversation feature to be a financial derivative. The Company may not have enough authorized
common stock to settle its obligation if the note holder elects to convert the note into common shares when the trading price is
lower than a certain threshold.
The derivative instruments were valued at loan origination date,
date of debt conversion and at December 31, 2014The fair values of the derivative liabilities related to the conversion options
of these notes was estimated on the transaction dates (loan original date and date of debt conversion) using the Multinomial Lattice
option pricing model, under the following assumptions:
| |
RM - DC Tranche 1 | | |
MP | | |
RM – DC Tranche 2 | |
Shares of common stock issuable upon exercise of debt | |
| 6,086,956 | | |
| 4,642,214 | | |
| 6,086,956 | |
Estimated market value of common stock on measurement date | |
$ | 0.09-0,155 | | |
$ | 0.05 | | |
$ | 0.05 | |
Exercise price | |
$ | 0.10 | | |
$ | 0.02262 | | |
$ | 0.10 | |
Risk free interest rate (1) | |
| 0.11%-0.03% | | |
| 0.11 | % | |
| 0.21 | % |
Expected dividend yield | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % |
Expected volatility (2) | |
| 49.41%-219% | | |
| 94.98 | % | |
| 102.85 | % |
Expected exercise term in years | |
| 1.00- 0.25 | | |
| 1.00 | | |
| 1 | |
| (1) | The risk –free interest rate was determined by management using the one month Treasury bill yield as of the issuance
dates. |
| (2) | The volatility was determined by referring to the average historical volatility of a peer group of public companies because
we do not have sufficient trade history to determine our historical volatility. |
The fair value of the debt derivative liabilities related to the
conversion options of these notes was estimated as of December 31, 2014 using the Multinomial Lattice option pricing model, under
the following assumptions:
| |
RM – DC | | |
| | |
RM – DC | |
| |
Tranche 1 | | |
MP | | |
Tranche 2 | |
| |
| | |
| | |
| |
Shares of common stock issuable upon exercise of debt | |
| 3,400,000 | | |
| 13,707,030 | | |
| 6,086,957 | |
Estimated market value of common stock on measurement date | |
$ | | | |
$ | | | |
$ | | |
Exercise price | |
$ | 0.1 | | |
$ | 0.00766 | | |
$ | 0.1 | |
Risk free interest rate (1) | |
| 0.04 | % | |
| 0.12 | % | |
| 0.25 | % |
Expected dividend yield | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % |
Expected volatility (2) | |
| 61.54 | % | |
| 76.90 | % | |
| 105 | % |
Expected exercise term in years | |
| 0.25 | | |
| 0.75 | | |
| 1.00 | |
The change in fair values of the derivative liabilities related
to the Convertible Notes are summarized as:
Fair value of derivatives related to RM-DC Notes | |
$ | 1,305,676 | |
Fair value of derivatives related to MP Note | |
| 196,408 | |
Conversion of derivative liability | |
| (153,050 | ) |
Change in fair value of derivative liability | |
| (92,875 | ) |
Fair value of derivative liabilities at December 31, 2014 | |
$ | 1,256,159 | |
NOTE 8 – INCOME TAXES
No provision for federal income taxes has been recognized for the
years ended December 31, 2014 and 2013, as the Company incurred a net operating loss for income tax.
The Company has tax losses that may be applied against future taxable
income. The potential tax benefits arising from these losses carryforwards, which expire beginning the year 2028, are offset by
a valuation allowance due to the uncertainty of profitable operations in the future. During the period from March 24, 2008 (inception)
to December 31, 2014, the Company had tax net operating losses of $3,365,780. The statutory tax rates for fiscal years 2014 and
2013 are 35%.
Tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 2014 and 2013 are presented below:
| |
Year Ended December 31, | |
| |
2014 | | |
2013 | |
Net operating losses carryforwards | |
$ | 1,140,226 | | |
$ | 419,000 | |
Less: valuation allowance | |
| (1.140,226 | ) | |
| (419,000 | ) |
Deferred tax assets, net | |
$ | - | | |
$ | - | |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The Company occupies 665 square feet of office space at 131 Thailand
Science Park INC -1 # 214, Pathumthani, Thailand. This office includes its executive offices and engineering facilities. The annual
rent for this location is approximately $7,500. During the second quarter of 2014, the Company moved into a larger facility in
the science park. Rent for the new offices is approximately $21,000 per year.
The Company has a shared office space in New York City, located
at 55 Broad Street, 28th Floor, New York, NY 10004. The annual rent for this location is currently being gifted to the Company
by a related party. It is expected that the Company will pay fair market value for office space in New York in the future.
The Company has a shared office space in London, United Kingdom,
located 145-157 St. John Street, Lower Ground Floor, LP-19896, London EC1V 4PW. The annual rent for which is $300.
The Company also has shared office space in Lagos, Nigeria, located
at 19, Sinari Daranijo Street, Victoria Island, Lagos. The Company opens its Lagos office as a part of its plan to introduce the
Moto-Meter into Lagos and cities across Africa. The annual rent for this location is currently being gifted to the Company. It
is expected that the Company will pay fair market value for office space in Nigeria in the future.
NOTE 10 – EQUITY TRANSACTIONS
Preferred Stock
The Company is authorized to issue 50,000,000 shares of preferred
stock with a par value of $0.0001. As of December 31, 2014 and 2013, there were no preferred shares issued and outstanding. The
Company’s Board of Directors is authorized by the articles of incorporation to divide the authorized shares of preferred
stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock
from the shares of all other series and classes. The Company’s Board of Directors is also authorized, within any limitations
prescribed by law and the articles of incorporation, to fix and determine the designations, rights, qualifications, preferences,
limitations and terms of the shares of any series of preferred stock.
Common Stock
The Company is authorized to issue 500,000,000 common shares with
a par value of $0.0001. As of December 31, 2014 and 2013, there were 395,369,204 and 378,033,149 shares of common stock issued
and outstanding, respectively. Upon liquidation, dissolution or winding up of the corporation, the holders of common stock are
entitled to share ratably in all net assets available for distribution to shareholders after payment to creditors. The common stock
is not convertible or redeemable and has no pre-emptive, subscription or conversion rights. There is no conversion, redemption,
sinking fund or similar provisions regarding the common stock. Each outstanding share of common stock is entitled to one vote on
all matters submitted to a vote of shareholders. There are no cumulative voting rights. Each shareholder is entitled to receive
the dividends as may be declared by our directors out of funds legally available for dividends and, in the event of liquidation,
to share pro rata in any distribution of assets after payment of liabilities. The Company’s directors are not obligated to
declare a dividend. Since inception the Company has not paid or declared any dividends on common stock. On January 18, 2014, the
Company amended its Articles of Incorporation to increase the authorized shares of common stock from 500,000,000 to 1,000,000,000.
On April 9, 2015, the Company further amended its Articles of Incorporation to increase the authorized shares of common stock from
1,000,000,000 to 2,000,000,000.
On January 8, 2013, the Company consummated a private placement
offering with an accredited investor for the sale of 3,703,704 shares of common stock at a purchase price of $0.27 per share, for
aggregate consideration of $1,000,000.
During the year ended December 31, 2014, the Company issued 17,336,055
shares of common stock for the conversion of notes payable and accrued interests in the amount of $268,696.
NOTE 11 – SUBSEQUENT EVENTS
On March 26, 2015 , the Company entered into a convertible promissory
note with MacAllan Partners LLC, for the principal amount of $112,000.
Subsequent to December 31, 2014, the Company issued 44,327,315 shares
for conversion of notes and payable accrued interests.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by
us in connection with the issuance and distribution of the securities being registered hereunder. No expenses will be borne by
Selling Security Holder. All of the amounts shown are estimates, except for the SEC registration fee.
SEC registration fee | |
$ | 825.17 | |
Accounting fees and expenses | |
$ | 2,000.00 | |
Legal fees and expenses | |
$ | 15,000.00 | |
Total | |
$ | 17,825.17 | |
Item 14. Indemnification of Directors and Officers.
Charter Provisions and Other Agreement of the Company
The current articles of incorporation of the Company include the
following provisions:
The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and
supplemented. Any repeal or amendment of this Article by the stockholders of the Corporation shall be prospective.
The Corporation shall, to the fullest extent permitted by the General
Corporation Law of the State of Nevada, as the same may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said Law from and against any and all of the expenses, liabilities, or other matters referred to
in or covered by said Law, and the indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
Nevada Law
Our company is incorporated under the laws of the State of Nevada.
Section 78.7502 of the Nevada Revised Statutes provides that a Nevada corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including
attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with
the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that,
with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
Section 78.7502 further provides a Nevada corporation may indemnify
any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action
or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of
the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by
a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid
in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other
court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly
and reasonably entitled to indemnity for such expenses as the court deems proper.
Section 78.751 of the Nevada Revised Statutes provides that discretionary
indemnification under Section 78.7502 unless ordered by a court or advanced pursuant to subsection 2 of section 78.751, may be
the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be made by:
|
· |
By the board of directors by majority vote of a quorum consisting of directors - who were not parties to the action, suit or proceeding; |
|
· |
If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or |
|
· |
If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. |
The Articles of Incorporation, the Bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit
or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers
may be entitled under any contract or otherwise by law.
The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to NRS Section 78.751:
|
· |
does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to section 78.7502 or for the advancement of expenses made pursuant to subsection 2 of section 78.751, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action; and |
|
· |
continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person. |
Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of our company under Nevada law or otherwise, we have been
advised the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities
(other than payment by us for expenses incurred or paid by a director, officer or controlling person of our company in successful
defense of any action, suit, or proceeding) is asserted by a director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction, the question of whether such indemnification by it is against public policy in the Securities
Act and will be governed by the final adjudication of such issue.
Item 15. Recent Sales of Unregistered Securities.
On November 8, 2012, we effected a recapitalization so that each
outstanding share of common stock resulted in 181 shares of common stock outstanding. The shares issued in respect of outstanding
common stock that is restricted stock will have the same restricted character as the shares on which they were issued, and the
dividend shares issued in respect of outstanding common stock that is free trading will be also be free trading shares. As a result
of this corporate action, as of November 8, 2012, there were 146,688,825 shares issued and outstanding. Prior to the dividend,
the principal shareholder of the Company contributed to the capital of the Company an aggregate of 3,997,675 shares of common stock
for cancellation.
On November 14, 2012, we issued a total of 224,597,666 shares of
common stock to Old WM or its designees for the acquisition of certain assets of Old WM, with a contract assigned value of $100,000.
The designees included 13 individuals and corporations that are shareholders of Old WM. The shares were issued or directed to individuals
and corporate investors, all of whom were either “accredited investors”, as defined by Rule 501 of Regulation D promulgated
under the Securities Act or who are sophisticated investors or donees of the shares. The securities were issued in reliance upon
the exemption from registration under Section 4(2) of the Securities Act. All the shares were issued as restricted stock, and a
suitable legend was placed on the certificates representing the shares to indicate the restricted nature of the shares. The recipients
also acknowledged that the shares were being acquired for investment purposes and not with a view to distribution. The holders
of these shares were not granted any registration rights.
On November 14, 2012, we issued a total of 576,923 shares of common
stock to one holder of debt of Old WM that was assumed by the Company in connection with the acquisition of assets from Old WM.
The debt represented an aggregate of $75,000 in principal and interest. The shares were issued to an “accredited investor”,
as defined by Rule 501 of Regulation D promulgated under the Securities Act. The securities were issued in reliance upon the exemption
from registration under Section 4(2) of the Securities Act. All the shares were issued as restricted stock, and a suitable legend
was placed on the certificates representing the shares to indicate the restricted nature of the shares. The recipient also acknowledged
that the shares were being acquired for investment purposes and not with a view to distribution. The holder of these shares was
not granted any registration rights.
On November 14, 2012, we issued a total of 401,415 shares of common
stock to one holder who held obligations for payment from the Company as of the closing of the acquisition of assets from Old WM.
The obligations represented an aggregate of $52,184. The shares were issued to an “accredited investor”, as defined
by Rule 501 of Regulation D promulgated under the Securities Act. The securities were issued in reliance upon the exemption from
registration under Section 4(2) of the Securities Act. All the shares were issued as restricted stock, and a suitable legend was
placed on the certificates representing the shares to indicate the restricted nature of the shares. The holder of these shares
was not granted any registration rights.
On November 14, 2012, we issued a total of 192,308 shares of common
stock to one holder of debt of Old WM, in the amount of $25,000, as the finder’s fee for the private placement of shares
of common stock on the same date. The shares were issued to an “accredited investor”, as defined by Rule 501 of Regulation
D promulgated under the Securities Act. The securities were issued in reliance upon the exemption from registration under Section
4(2) of the Securities Act. All the shares were issued as restricted stock, and a suitable legend was placed on the certificates
representing the shares to indicate the restricted nature of the shares. The recipient also acknowledged that the shares were being
acquired for investment purposes and not with a view to distribution. The holder of these shares was not granted any registration
rights.
On November 14, 2012, we sold a total of 1,892,308 shares of common
stock, at a purchase price of $0.13 per share, to one investor, resulting in gross proceeds to the Company of $246,000. The shares
were sold to an “accredited investor”, as defined by Rule 501 of Regulation D promulgated under the Securities Act.
The securities were sold in reliance upon the exemption from registration under Regulation S promulgated under the Securities Act.
The investor represented to us that the investor was an accredited investor and the investor’s intention to acquire our securities
for investment purposes only and not with a view to or for sale in connection with any distribution thereof. All the shares were
issued as restricted stock, and a suitable legend was placed on the certificates representing the shares to indicate the restricted
nature of the shares. The holders of these shares were not granted any registration rights.
On December 19, 2012, Mr. Julpas Kruesopon received 500,000 shares
of restricted common stock as compensation for his services as director of the Company. The shares of common stock were issued
in reliance upon Regulation S of the Securities Act to investors who are “accredited investors” as such term is defined
in Rule 501(a) under the Securities Act, or in offshore transactions (as defined in Rule 902 under Regulation S of the Securities
Act), based upon representations made by Mr. Kruesopon.
On January 8, 2013, we completed a private placement offering with
an accredited investor for the issuance and sale of 3,703,704 shares of our common stock of at a purchase price of $0.27 per share,
for aggregate consideration of $1,000,000. The shares of common stock were issued in reliance upon Regulation S of the Securities
Act to an investor who is an “accredited investor,” as such term is defined in Rule 501(a) under the Securities Act,
in an offshore transaction (as defined in Rule 902 under Regulation S of the Securities Act), based upon representations made by
such investor.
On April 4, 2014, we entered into a securities
purchase agreement with certain accredited investors pursuant to which such accredited investors purchased convertible debentures
in the aggregate principal and interest amount of $608,696 for a purchase price of $500,000 (8% original issue discount). In connection
with the sale of the convertible debentures, we issued 520,000 shares of common stock valued at $46,584 and cash in the amount
of $45,500 to a placement agent. The issuance of these securities was exempt from the registration requirements of the Securities
Act pursuant to the exemption for transactions by an issuer not involved in any public offering under Section 4(a)(2) of the Securities
Act and Rule 506 of Regulation D. The Company made this determination based on the representations of the Investors and placement
agent that they are “accredited investors” within the meaning of Rule 501 of Regulation D and have access to information
about the Company and their investment.
On September 24, 2014, we entered into a financing agreement with
an investor pursuant to which we issued a convertible debenture in the principal amount of $105,000, for a purchase price of $100,000
(4.76% original issue discount). The convertible debenture has a maturity date of September 30, 2015 and accrues interest at 8%
annually. The investor has the right to convert the outstanding principal and interest into shares of common stock of the Company
at a conversion price equal to the lower of: 50% of the lowest traded price during the 20 trading days prior to the election to
convert or 50% of the bid price on the day of the conversion notice. The issuance of the convertible debenture was exempt from
the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption
for transactions by an issuer not involved in any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation
D.
On December 11, 2014, we entered into a securities purchase
agreement with certain accredited investors pursuant to which such accredited investors purchased convertible debentures in the
aggregate principal and interest amount of $543,478 for a purchase price of $500,000 (8% original issue discount). The issuance
of these securities was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions
by an issuer not involved in any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D. The
Company made this determination based on the representations of the Investors that they are “accredited investors”
within the meaning of Rule 501 of Regulation D and have access to information about the Company and their investment.
On March 5, 2015, we entered into a securities purchase agreement
with an accredited investor pursuant to which such accredited investor purchased a convertible debenture in the principal amount
of $54,348 for a purchase price of $50,000 (8% original issue discount). The issuance of the convertible debenture was exempt from
the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involved in any
public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D. The Company made this determination based
on the representations of the investor that it is an “accredited investors” within the meaning of Rule 501 of Regulation
D and has access to information about the Company and their investment.
On March 26, 2015, we entered into a convertible promissory
note with an accredited investor for the principal amount of $112,000. The issuance of the convertible promissory note was exempt
from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involved
in any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.
Item 16. Exhibits
The following exhibits are included as part of this registration
statement on Form S-1 by reference:
(b) Exhibits:
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Articles of Incorporation, as amended (incorporated by reference
to our Annual Report on Form 10-K filed on April 15, 2015). |
3.2 |
|
By-laws (filed as an exhibit to the registration statement on Form S-1, as filed with the SEC on June 25, 2010, and incorporated herein by reference). |
5.1+ |
|
Opinion of Greenberg Traurig, LLP |
10.1 |
|
Lease Agreement, dated December 24, 2013, between World Moto Co., Ltd., and National Science and Technology Development Agency (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.2 |
|
Securities Purchase Agreement, dated April 4, 2014, between the Company and certain investors (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.3 |
|
Form of Debenture (incorporated by reference to our Current Report on Form 8-K, filed on April 7, 2014). |
10.4 |
|
Form of Registration Rights Agreement (incorporated by reference to our Current Report on Form 8-K, filed on April 7, 2014). |
10.5 |
|
Form of Security Agreement (incorporated by reference to our Current Report on Form 8-K, filed on April 7, 2014). |
10.6 |
|
Employment Agreement, dated April 1, 2014, between World Moto Co. Ltd. and Paul Giles (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.7 |
|
Employment Agreement, dated April 1, 2014, between World Moto Co. Ltd. and Chris Ziomkowski (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.8 |
|
Purchase and Licensing Agreement by and between World Moto Co., Ltd. and Mobile Advertising Ventures Ltd., dated as of December 2, 2013 (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.9 |
|
Asset Purchase Agreement, dated September 1, 2012, among the registrant, World Moto (Thailand) Co. Ltd. Paul Giles and Chris Ziomkowski (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.10 |
|
Amendment No. 1, dated October 31, 2012, to the Asset Purchase Agreement, dated September 1, 2012 (filed as exhibit 10.2 to the Current Report on Form 8-K file on November 15, 2012). |
10.11 |
|
Amendment No. 2, dated November 14, 2012, to the Asset Purchase Agreement, dated September 2, 2012 (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.12 |
|
Form of Securities Purchase Agreement by and among the registrant, and certain investors, dated November 8, 2012 (filed as exhibit 10.4 to the Current Report on Form 8-K file on November 15, 2012). |
10.13 |
|
Form of Assignment and Assumption Agreement by and between World Moto(Thailand) Co., Ltd and the registrant, relating to certain debt, dated November 14, 2012(filed as exhibit 10.5 to the Current Report on Form 8-K file on November 15, 2012). |
10.14 |
|
Board Advisory Agreement dated December 19, 2012, with Mr. Julpas “Tom” Kruesopon (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
Exhibit No. |
|
Description |
|
|
|
10.15 |
|
Form of Securities Purchase Agreement for sale of 3,703,704 shares of common stock of the Company (filed as exhibit 10.1 to the Current Report on Form 8-K on January 11, 2013). |
10.16 |
|
Form of Distribution Agreement with Lucky Distributors Ltd., dated December 2012 (incorporated by reference to our Annual Report on Form 10-K, filed on April 11, 2013). |
10.17 |
|
Fleet Franchise Agreement, dated March 10, 2014, between World Moto, Inc. and Mobile Advertising Ventures Ltd. (incorporated by reference to our Current Report on Form 8-K, filed on March 17, 2014). |
10.18 |
|
Form of Letter of Intent (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.19 |
|
Letter of Intent, dated June 11, 2014, by and among the Company, Mobile Advertising Ventures, Ltd., and Forever Network (incorporated by reference to our Amendment No. 1 to the Registration Statement on Form S-1, filed on June 17, 2014). |
10.20 |
|
Financing Agreement, dated September 24, 2014, between the Company and Macallan Partners, LLC (incorporated by reference to our Quarterly Report on Form 10-Q filed on November 19, 2014). |
10.21 |
|
Convertible Debenture, dated September 24, 2014, between the Company and Macallan Partners, LLC. (incorporated by reference to our Quarterly Report on Form 10-Q filed on November 19, 2014). |
10.22 |
|
Securities Purchase Agreement, dated
March 5, 2015, between the Company and Redwood Management, LLC (incorporated by reference to our Current Report on Form 8-K
filed on March 11, 2015) |
21 |
|
List of Subsidiaries: World Moto Technologies, Inc.; World Moto Holdings, Inc.; World Moto Co., Ltd. |
23.1* |
|
Consent of GBH CPAs, PC |
23.2+ |
|
Consent of Greenberg Traurig, LLP (filed as part of Exhibit
5.1) |
24 + |
|
Power of Attorney |
101* |
|
Interactive Data File |
* Filed herewith.
+ Previously filed.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) Rule 415 Offering :
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that:
(A) Paragraphs
(a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8 (§ 239.16b of this chapter),
and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and
(B)
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 (§
239.13 of this chapter) or Form F-3 (§ 239.33 of this chapter) and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or
is contained in a form of prospectus filed pursuant to Rule 424(b) (§ 230.424(b) of this chapter) that is part of the registration
statement.
(C) Provided
further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed
securities on Form S-1 (§ 239.11 of this chapter) or Form S-3 (§ 239.13 of this chapter), and the information required
to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB (§ 229.1100(c)).
(2) That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) If
the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial
statements required by “Item 8.A. of Form 20-F (17 CFR 249.220f)” at the start of any delayed offering or throughout
a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished,
provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required
pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at
least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements
on Form F-3 (§239.33 of this chapter), a post-effective amendment need not be filed to include financial statements and information
required by Section 10(a)(3) of the Act or §210.3-19 of this chapter if such financial statements and information are contained
in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(5) That,
for the purpose of determining liability under the Securities Act to any purchaser:
(i) If
the registrant is relying on Rule 430B:
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract
of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
or
(ii) If
the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in
a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such date of first use.
(6) That,
for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Pathumthani, Thailand on April 20, 2015.
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World Moto Inc. |
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By: |
/s/ Paul Giles |
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Paul Giles |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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By: |
/s/ Lisa Ziomkowski |
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Lisa Ziomkowski |
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Treasurer and Secretary (Principal |
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Financial Officer and Principal |
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Accounting Officer) |
Pursuant to the requirements of the Securities
Act, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Dated: April 20, 2015 |
/s/ Paul
Giles |
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Paul Giles |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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Dated: April 20, 2015 |
/s/ Lisa Ziomkowski* |
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Lisa Ziomkowski |
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Treasurer and Secretary (Principal |
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Financial Officer and Principal |
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Accounting Officer) |
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Dated: April 20, 2015 |
/s/ Julpas Kruesopon* |
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Julpas Kruesopon |
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Director |
*/s/ Paul
Giles |
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Paul Giles |
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Attorney-in-Fact |
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Dated: April 20, 2015
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
We hereby consent to the inclusion in this Amendment No.1 of
Registration Statement on Form S-1 of our report dated April 15, 2015, relating to the consolidated financial statements of
World Moto, Inc. as of December 31, 2014 and 2013 and for the years then ended. We also consent to the reference to our firm
under the heading "Interests of Named Experts and Counsel" appearing therein.
/s/ GBH CPAs, PC |
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GBH CPAs, PC |
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www.gbhcpas.com |
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Houston, Texas |
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April 17, 2015 |
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