UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  (MARK ONE)  þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended August 31, 2016  or  oTRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from _________ to _________  Commission File Number: 0-55079  ON THE MOVE SYSTEMS CORP. (Exact name of registrant as specified in its charter)  Nevada27-2343603(State or other jurisdiction of Incorporation or organization)(I.R.S. Employer Identification Number)701 North Green Valley Parkway, Suite 200Henderson, Nevada89074(Address of principal executive offices)(Zip code)  Registrant’s telephone number, including area code: 702-990-3271  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months. Yes o No þ  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large accelerated fileroAccelerated fileroNon-accelerated fileroSmaller reporting companyþ(Do not check is smaller reporting company)  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ  Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 2, 2016, there were 7,229,226 shares of common stock are issued and outstanding.    TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION4Item 1. Financial Statements4Consolidated Balance Sheets  (Unaudited)4Consolidated Statements of Operations  (Unaudited)5Consolidated Statement of Stockholders’ Deficit  (Unaudited)6Consolidated Statements of Cash Flows  (Unaudited)7Notes to the Consolidated Financial Statements8Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations15Item 3. Quantitative and Qualitative Disclosures about Market Risk17Item 4. Controls and Procedures17PART II—OTHER INFORMATION18Item 1. Legal Proceedings18Item 1A. Risk Factors18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds18Item 3. Defaults upon Senior Securities18Item 4. Mine Safety Disclosures18Item 5. Other Information18Item 6. Exhibits18

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

OTHER PERTINENT INFORMATION

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


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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ON THE MOVE SYSTEMS CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

August 31, 2016February 29, 2016ASSETSCURRENT ASSETSCash and cash equivalents$735$2,223Prepaid expenses6513,484Total current assets1,3865,707Fixed assets net of accumulated depreciation of $841 and $182, respectively3,0803,739TOTAL ASSETS$4,466$9,446LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable and accrued liabilities$354,254$302,136Advances payable1,5941,594Current portion of convertible notes payable, net of discount of $350,560 and $422,298, respectively742,697515,418Short-term convertible notes payable, net of discount of $39,165 and $7,333, respectively79,53938,667Short-term accrued interest payable4,243—Current portion of accrued interest payable254,674185,447Current portion of capital lease3,8613,775Total current liabilities1,440,8621,047,037Convertible notes payable, net of discount of $371,900 and $500,485, respectively, net of current portion.425,194418,521Accrued interest payable132,911105,492Capital lease obligation5,4257,378Derivative liability36,671,152—TOTAL LIABILITIES38,675,5441,578,428COMMITMENTS AND CONTINGENCIES——STOCKHOLDERS’ EQUITY (DEFICIT)Common Stock, $0.001 par value; 480,000,000 shares authorized 5,537,816 and 4,908,816 shares issued and outstanding at August 31, 2016 and February 29, 2016, respectively.5,5384,909Series E Preferred Stock, $0.001 par value; 1,000,000 shares authorized; 1,000,000 shares issued and outstanding at August 31, 2016 and February 29, 2016, respectively.1,0001,000Preferred Stock, undesignated; 19,000,000 shares authorized; no shares issued and outstanding at August 31, 2016 and February 29, 2016, respectively.——Additional paid-in capital(41,831,860)6,072,872Retained earnings3,154,244(7,647,763)Total stockholders’ deficit(38,671,078)(1,568,982)TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$4,466$9,446
The accompany notes are an integral part of these unaudited consolidated financial statements.


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ON THE MOVE SYSTEMS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Six months ended
August 31,Three months ended
August 31,2016201520162015OPERATING EXPENSESGeneral and administrative expenses$160,595$266,393$93,702$114,399Operating Loss(160,595)(266,393)(93,702)(114,399)OTHER INCOME (EXPENSE)Interest expense(345,645)(331,698)(207,170)(144,059)Gain on account payable forgiveness30,000—30,000—Gain on derivative instruments11,321,247—11,321,247—Loss on debt covenant violation(43,000)—(43,000)—Total Other Income (Expense)10,962,602(331,698)11,101,077(144,059)NET INCOME (LOSS)$10,802,007$(598,091)$11,007,375$(258,458)NET INOME (LOSS) PER COMMON SHARE –Basic$2.11$(0.39)$2.13$(0.11)Diluted$(0.00)$(0.39)$(0.00)$(0.11)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING –Basic5,126,8321,551,6565,156,9142,311,368Diluted383,759,8991,551,656383,767,1302,311,368
The accompany notes are an integral part of these unaudited consolidated financial statements.


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ON THE MOVE SYSTEMS CORP.
CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)

Common StockSeries E
Preferred StockAdditional
Paid-InAccumulatedSharesAmountSharesAmountCapitalDeficitTotalBALANCE,
February 29, 20164,908,816$4,9091,000,000$1,000$6,072,872$(7,647,763)$(1,568,982)Common stock issued for debt and interest conversion629,000629——20,567—21,196Beneficial conversion feature on issuance of convertible note payable————35,100—35,100Derivative liabilities reclassified from additional paid-in capital————(47,960,399)(47,960,399)Net Income—————10,802,00710,802,007BALANCE,
August 31, 20165,537,816$5,5381,000,000$1,000$(41,831,860)$3,154,244$(38,671,078)
The accompany notes are an integral part of these unaudited consolidated financial statements.


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ON THE MOVE SYSTEMS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Six months ended August 31,20162015CASH FLOW FROM OPERATING ACTIVITIES:Net income (loss)$10,802,007$(598,091)Adjustments to reconcile net loss to net cash used in operating activities:Amortization of discount on convertible note payable244,091252,246Depreciation & amortization6599,250Gain on accounts payable forgiveness(30,000)—Less on debt covenant violation43,000—Gain on derivative instruments(11,321,247)—Changes in operating assets and liabilities:Accounts receivable—3,750Prepaid expenses2,833—Accounts payable and accrued liabilities89,118103,925Accrued interest payable101,31878,134NET CASH USED IN OPERATING ACTIVITIES(68,121)(150,786)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from advances35,100157,012Proceeds from convertible promissory note33,500—Repayment of capital lease(1,867)(2,763)NET CASH PROVIDED BY FINANCING ACTIVITIES31,633154,249NET INCREASE (DECREASE) IN CASH(1,488)3,463CASH, at the beginning of the period2,2232,679CASH, at the end of the period$735$6,142Supplemental Disclosures of Cash Flow Information:Cash paid during the period for:Interest$234$—Taxes$—$—Noncash investing and financing transaction:Refinancing of advances into convertible notes payable$35,100$157,012Beneficial conversion discount on convertible note payable$35,100$157,012Conversion of convertible notes payable and interest$21,196$183,277Derivative liabilities reclassified from additional paid-in capital$47,960,399$—Debt discount from recognition of derivative liabilities$32,000$—
The accompany notes are an integral part of these unaudited consolidated financial statements.


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ON THE MOVE SYSTEMS CORP.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2016

Note 1. General Organization and Business

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

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

Note 2. Going Concern

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

For the six months ended August 31, 2016, the Company had negative cash flow from operating activities of $33,121. As of August 31, 2016, the Company had negative working capital of $1,439,476. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about the Company’s ability to continue as a going concern.

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

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

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

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


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Note 3. Summary of Significant Accounting Policies

Interim Financial Statements

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

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

Principles of Consolidation

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

Fair Value of Financial Instruments

ASC 820 Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third-party pricing services.

Level 3: Unobservable inputs to measure fair value of assets and liabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs are available without undue cost and effort.

As of August 31, 2016 the significant inputs to the Company’s derivative liability calculation were Level 3 inputs.

The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of August 31, 2016:

Fair Value Measurements as of
August 31, 2016Level 1Level 2Level 3AssetsNone$$$Total assets———LiabilitiesWarrant derivative liability——89,521Conversion option derivative liability——36,582,396Total liabilities——36,671,152

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The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:

Significant Unobservable Inputs
(Level 3)
Three Months Ended
August 31,Significant Unobservable Inputs
(Level 3)
Six Months Ended
August 31,2016201520162015Beginning balance$—$—$—$—Change in fair value11,321,247—11,321,247—Additions reclassified from equity(47,960,399)—(47,960,399)—Other(32,000)—(32,000)—Ending balance$36,671,152$—$36,671,152$—
Note 4. Advances

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

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

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

Note 5. Related Party Transactions

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

Services Provided by KM Delaney & Assoc.

During the six months ended August 31, 2016 and 2015, KM Delaney & Associates (“KMDA”) provided certain administrative functions to us. The services provide include accounting and bookkeeping services, treasury and cash management services, financial reporting, and other support staffing requirements. As part of the services provided to the Company, KMDA receives the advances from the lender (See note 4) and disburses those funds to us. We discontinued our arrangement with KMDA on April 30, 2016. During the six months ended August 31, 2016 and 2015, KMDA billed us $35,100 and $95,254, respectively, for those services. As of August 31, 2016 and February 29, 2016, we owed KMDA $183,568 and $198,568, respectively. These amounts are included in accounts payable on the balance sheet.

Note 6. Gain on Accounts Payable Forgiveness

During the six months ended August 31, 2016, we impaired the value of our 10 tri-axel truck trailers. The original agreement had called for a payment of $60,000, of which we had paid $30,000. The seller agreed to forgive the remaining $30,000, which we recorded as a gain on accounts payable forgiveness.


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Note 7. Convertible Notes Payable

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

IssuedMaturityInterest
RateConversion Rate per ShareBalance
August 31,
2016Balance
February 29,
2016February 28, 2011February 27, 20137%$0.015$32,600$32,600January 31, 2013February 28, 201710%$0.01119,091120,562May 31, 2013November 30, 201610%$0.01261,595261,595November 30, 2013November 30, 201710%$0.01396,958396,958August 31, 2014August 31, 201610%$0.002355,652355,652November 30, 2014November 30, 201610%$0.002103,950103,950February 28, 2015February 28, 201710%$0.00163,35763,357May 31, 2015May 31, 201710%$1.0065,38365,383August 31, 2015August 31, 201710%$0.3091,62991,629November 30, 2015November 30, 201810%$0.30269,791269,791February 3, 2016February 3, 20175%49% discount24,70546,000February 29, 2016February 28, 201910%60% discount95,24595,245March 22, 2016March 22, 20175%49% discount60,000—May 31, 2016May 31, 201910%60% discount35,100—July 18, 2016July 18, 20178%49% discount9,000—August 30, 2016August 30, 20178%50% discount25,000—Total convertible notes payable$2,009,056$1,902,722Less: short-term convertible notes payable(118,704)(46,000)Less: current portion of convertible notes payable(1,093,257)(937,716)Less: discount on noncurrent convertible notes payable(371,900)(500,485)Long-term convertible notes payable, net of discount$425,195$418,521Current portion of convertible notes payable1,093,257937,716Less: discount on current portion of convertible notes payable(350,560)(422,298)Current portion of convertible notes payable, net of discount$742,697$515,418Short-term convertible notes118,70446,000Less: discount on short-term convertible notes(39,165)(7,333)Short-term convertible notes, net of discount$79,539$38,667
All of the notes above are unsecured. The note dated February 28, 2011 is currently is in default and bears default interest at 18% per annum.

Convertible notes issued

IssuedMaturityInterest RateConversion Rate per ShareAmount of NoteOriginal Issue DiscountBeneficial Conversion FeatureMarch 22, 2016March 22, 20175%49% discount (1)$40,000$6,500$—May 31, 2016May 31, 201910%60% discount (2)35,100—35,100July 18, 2016July 18, 20178%49% discount (1)9,0002,000—August 30, 2016August 30, 20178%50% discount (3)25,000——Total$108,420$8,500$35,100

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__________
(1)This note is convertible at 49% discount to the lowest trading price over the preceding 20 trading days. The note becomes convertible 180 days after issuance.(2)This note is convertible at a 60% discount to the volume weighted average closing price over the preceding five trading days, subject to the condition that the conversion price shall never be less than $0.01 per share.(3)This note is convertible at 50% discount to the lowest trading price over the preceding 20 trading days. As this note was a modification of an existing note that was convertible, it is immediately convertible.
Advances Refinanced into Convertible Notes

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

The Company evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We evaluated the conversion features for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, we recognized a discount for the beneficial conversion features of $67,100, in aggregate, on the date the notes were signed. We amortize the discounts for the notes dated May 31, 2016 at an effective interest rates of 317.38%. The beneficial conversion feature was recorded as an increase in additional paid-in capital and a discount to the convertible notes payable. The discount to the convertible notes payable will be amortized to interest expense over the life of the notes. During the six months ended August 31, 2016 and 2015, we amortized discount on convertible notes payable of $239,575 and $252,246, respectively, to interest expense.

Convertible Notes Issued for Cash

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

On August 30, 2016, we issued a convertible promissory note with a face value of $31,320. The note has an original issue discount of $6,320. The note matures on August 30, 2017, and bears interest at 8% per annum. The terms of the note allow the noteholder to convert principal and accrued interest into shares of common stock beginning 180 days after issuance. The variable conversion rate is a 50% discount to the lowest trading price over the preceding 20 trading days. As of August 31, 2016, we had not received the cash proceeds from this note, so these funds appear on the balance sheet as “Note proceeds receivable.” The funds were received subsequent to the end of the quarter, and is considered a subsequent event.

We evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The conversion met the definition of a liability and therefore we bifurcated the conversion feature and account for it as a separate derivative liability. We recognized derivative liability of $48,833. $25,000 of this was recorded as a discount to the convertible note, and the remaining $23,833 was immediately expensed to loss on derivative instruments.

Convertible Notes Issued for payment of Accounts Payable

On July 18, 2016, we issued a convertible promissory note for $9,000, with an original issue discount of $2,000. The note matures on July 18, 2017, and bears interest at 8% per annum. The noteholder paid the proceeds from this note directly to one of our vendors to reduce our outstanding account payable. The variable conversion rate is a 49% discount to the lowest trading price over the preceding 20 trading days. The terms of the note allow the noteholder to convert principal and accrued interest into shares of common stock immediately upon issuance.


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We evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The conversion features met the definition of a liability and therefore we bifurcated the conversion feature and account for it as a separate derivative liability. We recognized a $19,894 derivative liability related to the note using Black-Scholes model, $7,000 of which was recorded as a discount, and $12,894 as a loss on derivative instruments. Due to the embedded derivative, we had to evaluate our existing convertible notes for derivative liabilities. See Note 8.

The terms of the convertible note required us to issue 900,000 warrants with a strike price of $0.01 per share, with a maturity date of July 18, 2021. We recognized $117,058 derivative liability, which was immediately recognized as a loss on derivative instruments.

Violation of Debt Covenants

We violated the terms of our agreements for the convertible notes dated February 3, 2016 and March 22, 2016 on July 20, 2016 and July 25, 2016, respectively. The agreement had required us to file all quarterly and annual reports with the SEC on time. We filed our quarterly report on form 10-Q for the period May 31, 2016 after the deadline. As a result, the annual interest rate on each note increased from 5% per year to 18% per year. Additionally, the agreement called for us to increase the principal balance of the notes by 50% of their original face value. We recognized a loss on debt covenant violations of $23,000 and $20,000 on the notes dates February 3, 2016 and March 22, 2016, respectively. $25,000 of one of the note was re-assigned to another note holder and convertible immediately. The conversion feature was determined to be derivative liabilities, see Note 8.

Conversions to common stock

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

DateAmount ConvertedNumber of Shares IssuedMarch 1, 2016$1,900190,000August 8, 20169,871175,000August 26, 20169,425264,000Total$21,196629,000
Note 8. Derivative Liabilities

On July 18, 2016, we issued a convertible promissory note with embedded variable price conversion options that is determined to be derivative instrument (see Note 7). We recognized a derivative liability of $19,894, which was recorded as a $7,000 discount to the note and a loss on derivative instruments of $12,894.

The same note required us to issue 900,000 warrants, which are also valued as a derivative instrument. Therefore, we recognized a derivative liability $117,058. This was recorded as a $117,058 loss on derivative instruments.

The embedded derivative in the July 18, 2016 convertible note tainted our outstanding convertible notes issues prior to that period. We calculated a $47,960,399 derivative liability related to those notes, which we reclassified from additional paid-in capital.

On August 30, 2016, we issued a modified convertible promissory note for $25,000, which had an embedded derivative liability of $48,833. We recognized this as a $25,000 discount against the note and a $23,833 loss on derivative instruments.

On August 31, 2016, we revalued the fair value all of our derivative instruments and determined that we had total derivative liabilities of $36,671,152. We recognized a gain on derivative instruments of $11,475,032. During the six months ended August 31, 2016, we recognized gain on derivative of $11,321,247.

We used Black-Scholes model to determine the fair value of the conversion option and warrants.

As of August 31, 2016, the aggregate fair value of the outstanding derivative liabilities was $36,371,152.


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The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing model using the following key assumptions during the six months ended August 31, 2016

Expected dividends—%Expected term (years)0.25 – 5.00Volatility121% – 295%Risk-free rate1.57% – 1.59%
Note 9. Debt Payment Obligations

Twelve months ended August 31,20172018201920202021TotalConvertible notes$1,211,961$396,958$400,137$—$—$2,009,056Capital lease3,8614,0381,387——9,286Total$1,215822$400,996$401,524$—$—$2,018,342
Note 10. Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is similarly calculated except that the common shares outstanding for the period is increased to reflect the potential dilution that could occur if outstanding convertible notes payable were converted and warrants were exercised. Anti-dilutive shares represent potentially dilutive securities that which are excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive.

The following is a calculation of basic and diluted weighted-average shares outstanding:

Six months ended
August 31,Three months ended
August 31,2016201520162015Weighted-average shares – basic5,126,8321,551,6565,156,9142,311,368Dilution effect of warrants850,793—827,942—Dilution effect of convertible notes payable377,782,274—377,782,274—Weighted-average shares - diluted383,759,8991,551,656383,767,1302,311,368
The following is a calculation of weighted-average shares excluded from diluted EPS due to the anti-dilutive effect:

Six months ended
August 31,Three months ended
August 31,2016201520162015Weighted-average common stock issuable under convertible notes payable excluded from diluted EPS due to the anti-dilutive effect due to net loss—1,692—1,393
Note 10. Subsequent Events

On September 4, 2016, we issued into a convertible promissory note for $31,320, for $25,000 in cash proceeds.

On September 8, 2016, the holder of our modified convertible promissory note dated August 30, 2016, converted $6,002 of principal and accrued interest into 193,633 shares of our common stock.

On September 9, 2016, the holder of our convertible promissory note dated February 3, 2016, converted $7,268 of principal into 285,000 shares of our common stock.

On September 22, 2016, the holder of our convertible promissory note dated February 3, 2016, converted $3,065 of principal into 299,000 shares of our common stock.


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On September 29, 2016, the holder of our modified convertible promissory note dated August 30, 2016, converted $1,558 of principal and accrued interest into 259,635 shares of our common stock.

On September 29, 2016, the holder of our convertible promissory note dated February 3, 2016, converted $1,928 of principal into 315,000 share of our common stock.

On October 10, 2016, the holder of our modified convertible promissory note dated August 30, 2016, converted $1,713 of principal and accrued interest into 339,142 shares of our common stock.

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

Overview

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

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

Critical Accounting Policies

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

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

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

Results of Operations

Six months ended August 31, 2016 compared to the six months ended August 31, 2015.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $160,595 and $266,393 for the six months ended August 31, 2016 and ended 2015, respectively.  The decrease is due to a reduction in professional fees.

Interest Expense

Interest expense increased from $331,698 for the six months ended August 31, 2015 to $345,645 for the six months ended August 31, 2016. Interest expense for the six months ended August 31, 2016 included amortization of discount on convertible notes payable of $244,091, compared to $252,246 for the comparable period of 2015.


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Gain on Derivative Instruments

During the six months ended August 31, 2016, we realized a $11,321,247 gain on the derivative liabilities related to our convertible notes and warrants. We had no derivative liabilities during the six months ended August 31, 2015.

Gain on Debt Forgiveness

During the six months ended August 31, 2016, we recognized a $30,000 gain on accounts payable that had been forgiven. We had no gain on debt forgiveness in the prior year.

Loss on Debt Covenant Violations

During the six months ended August 31, 2016, we recognized a $43,000 loss on debt covenant violations. We had no losses on debt covenant violations in the prior year. See Note 7.

Net Income

We had net income of $10,802,007 for the six months ended August 31, 2016 as compared to a $598,091 loss for the comparable period of 2015. The increase in net income relates entirely to the gain on derivative instruments related to our convertible notes payable and warrants.

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

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $93,702 and $114,399 for the three months ended August 31, 2016 and ended 2015, respectively. The decrease is due to lower professional fees during the current period.

Interest Expense

Interest expense increased from $144,059 for the three months ended August 31, 2015 to $207,170 for the three months ended August 31, 2016.

Interest expense for the three months ended August 31, 2016 included amortization of discount on convertible notes payable of $154,800, compared to $105,146 for the comparable period of 2015.

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

Gain on Derivative Instruments

During the three months ended August 31, 2016, we realized a $11,321,247 gain on the derivative liabilities related to our convertible notes. We had no derivative liabilities during the three months ended August 31, 2015.

Gain on Debt Forgiveness

During the three months ended August 31, 2016, we recognized a $30,000 gain on accounts payable that had been forgiven. We had no gain on debt forgiveness in the prior year.

Loss on Debt Covenant Violations

During the three months ended August 31, 2016, we recognized a $43,000 loss on debt covenant violations. We had no losses on debt covenant violations in the prior year. See Note 7.

Net Income

We had net income of $11,007,375 for the three months ended August 31, 2016 as compared to a $258,458 loss for the comparable period of 2015. The increase in net income relates entirely to the gain on derivative instruments related to our convertible notes payable.


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Liquidity and Capital Resources

At August 31, 2016, we had cash on hand of $735. The company has negative working capital of $1,439,476 . Net cash used in operating activities for the six months ended August 31, 2016 was $33,121. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of August 31, 2016.

Additional Financing

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

Off Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

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

1.As of August 31, 2016, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.2.As of August 31, 2016, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Change in Internal Controls Over Financial Reporting

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


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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

This item is not applicable to smaller reporting companies.

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

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

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has not defaulted upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable to the Company.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

3.1Articles of Incorporation (1)3.2Bylaws (2)14Code of Ethics (2)21Subsidiaries of the Registrant (3)31.1Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (3)32.1Section 1350 Certification of principal executive officer and principal financial accounting officer. (3)101XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (4)__________
(1)Incorporated by reference of our Form DEF 14C file with the Securities and Exchange Commission on February 11, 2015.(2)Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on August 4, 2010.(3)Filed or furnished herewith.(4)To be submitted by amendment.

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SIGNATURES

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

On the Move Systems Corp.Date: November 4, 2016BY: /s/ Robert WilsonRobert WilsonPresident, Chief Executive Officer, Chief Financial Officer, 
Principal Accounting Officer, Treasurer and Director

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