##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-KSB
 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number: 001-32951
 SMART MOVE, INC.
  Delaware
    
    54-2189769(State or other jurisdiction of incorporation
    
    (IRS Employer Identification No.)or organization)
 5990 Greenwood Plaza Blvd, Suite 390
Greenwood Village, CO 80111
 Securities registered under Section 12(b) of the Exchange Act: None
 Securities registered under Section 12(g) of the Exchange Act: Common Stock, Par Value $0.0001
Registered on the American Stock Exchange
 
 þ o
 , þ
 o Yes þ No
    o þ
 DOCUMENTS INCORPORATED BY REFERENCE
  o þ




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NOTE CONCERNING FORWARD-LOOKING STATEMENTS
  
    
    The development of new services and product and the expansion of our current markets;
    
    Implementing aspects of our business plans;
    
    Expectations regarding business generated through marketing alliance and other referral programs
    
    Financing goals and plans;
    
    Our existing cash and whether and how long these funds will be sufficient to fund our operations
    
    Our raising of additional capital through future equity or
debt financings; and
    
    General economic conditions
  Item 1  Business Item 6  Managements Discussion and Analysis
   2




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##### 



Smart Move, Inc.
Form 10-KSB
Index
 PagePART I
    
    
    4ITEM 1. DESCRIPTION OF BUSINESS
    
    
    4ITEM 2. DESCRIPTION OF PROPERTY
    
    
    24ITEM 3. LEGAL PROCEEDINGS
    
    
    24ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    24PART II
    
    
    25ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    
    
    25ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    28ITEM 7. FINANCIAL STATEMENTS
    
    
    43ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    43ITEM 8A. CONTROLS AND PROCEDURES
    
    
    43ITEM 8B. OTHER INFORMATION
    
    
    44PART III
    
    
    45ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTIONS 16(a) OF THE EXCHANGE ACT
    
    
    45ITEM 10. EXECUTIVE COMPENSATION
    
    
    45ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    45ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    45ITEM 13. EXHIBITS
    
    
    45ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
    
    
    48PART F/SIndependent Auditors Report
    
    
    F1Balance Sheet
    
    
    F2Statement of Operations
    
    
    F3Statement of Changes in Shareholders Equity
    
    
    F4Statement of Cash Flows
    
    
    F5Notes to Financial Statements
    
    
    F6Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32
   3




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PART I
 
 ITEM 1.
    
    DESCRIPTION OF BUSINESS
 Overview and History
  Our Services
  
    
    competitive pricing;
    
    superior security;
    
    scheduling flexibility and expedited service;
    
    lower insurance claims rate
    
    industry acceptance of SmartVault as a complement to existing
major van lines operations
    
    more customer options; and
    
    full replacement value insurance coverage for customers shipped goods of $10,000 per
vault.
    4




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Liquidity and Capital Resources
    Strategy Overview
  
    
    Inflexible or indefinite schedules for consumer moves;
    
    Hidden costs of overhead or of insuring goods;
    
    Consumers inability to control important aspects of the move; and
    
    Risks of inadvertent offloads of goods at interim points during transit, increasing risk
of loss or property theft.
  
    
    Efficient utilization of our specially designed proprietary
SmartVault containers to ensure they are shipped back from the
original shipped-to destination to the nearest available terminal rather than a more
distant original shipped-from site; enabling us to achieve operational and freight cost
efficiencies by monitoring the availability of SmartVaults at various
terminals for outbound shipments by lowest cost long distance carriers to the nearest
location for which a current demand exists;
    
    Maintaining and enhancing our ability to scale operations rapidly and control costs by
outsourcing transportation, warehousing, and moving labor;
    
    Ability to open new markets with limited capital;
    
    Mitigation of risks of loss through use of state of the art GPS tracking technology
    
    Ability to replicate the model in additional markets to increase revenue opportunities;
and
    
    Offer our services direct to our competition, the industrys leading moving companies
as clients.
  5




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Asset Based Strategy
  
    
    A technologically advanced material composition of ultra-strong high density
polyethylene (HDPE) built on an aluminum deck and base with an expected 8-year useful life;
    
    A standard 262 cubic feet loadable storage capacity able to handle loads in excess of
3,000 pounds;
    
    Spacious interior dimensions consisting of 7 feet length, 5 feet 10 inches width and 6
feet 7 inches height;
    
    Superior functionality for use, weatherproof and incorporating special security
features;
    
    Ease of loading via forklift onto standard truck trailers and sea containers utilized
throughout the transportation and logistics industry.
  Strategic Outsourcing of Warehouse and Transportation Requirements
     6




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Use of Tracking Technology
  TM
 Market Opportunity
 (Source: The
American Movers and Storage Association, September 2005)
  Market Opportunity in the Domestic Moving and Storage Industry
  Consistent Migration of the U.S. Population
    7




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Other Statistical Indicators of the Domestic Opportunity
 (Source: US Census Bureau)
 
    
    40 million people (16% of the population) moved between March 2005 and 2006;
    
    14% of movers relocated to another state; 20% moved to another county in the same state;
the majority of which 62% stayed within the same county, 4% came from abroad;
    
    The average American moves 12 times in a lifetime;
    
    30% of renters in the US and 7% of homeowners moved to a different residence in 2006;
and
    
    20 to 29 year olds have the highest moving rates  about 33% of the total in that age
group moved in the last year; the next most active group being 30-34 year olds, with 22%
having moved during the last year.
 Competition
  Public Storage, Inc.
 PODS Enterprises, Inc.
 Major Van Lines,
 Local Movers
  8




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Low Overhead,
    
    Deployment ofOutsource
    
    Solution can beCan Handle
    
    
    
    Model, Low
    
    Accomplished
    
    Business ModelInterstate Moves
    
    State of the Art
    
    Capital
    
    with Standard
    
    does not DependProprietary
    
    to Top 61 Cities
    
    GPS Tracking
    
    Investment
    
    Delivery
    
    on FranchiseCompany
    
    Container
    
    in the USA
    
    Capability
    
    Requirements
    
    Equipment
    
    AgreementsSMART MOVE
    
    YES
    
    YES
    
    YES
    
    YES
    
    YES
    
    YESPODS
    
    YES
    
    Limited Interstate Service
    
    NO
    
    NO
    
    NO
    
    NOMajor Van Lines
    
    NO
    
    YES
    
    YES
    
    NO
    
    YES
    
    NOLocal Movers
    
    NO
    
    NO
    
    NO
    
    NO
    
    YES
    
    YESPublic Storage
    
    NO
    
    NO
    
    NO
    
    NO
    
    YES
    
    YES
   
    
    High overhead costs passed onto consumers;
    
    Capital-intensive infrastructure;
    
    Property theft and loss;
    
    Inflexible schedules for consumers;
    
    Hidden or unexpected costs charged to consumers;
    
    Lack of control by consumers over important aspects of the move; and
    
    Inefficient use of the moving companys assets.
 ®
 Value Added to the Customer
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
    
    No Trucks to Rent and Drive.When renting our SmartVault
container, the customers need for a moving truck is eliminated. Typically, when moving and
storing furnishings the consumers must first locate and reserve a rental truck of the
appropriate type and size. Often consumers are inexperienced at driving larger rental
trucks and have concerns upon accepting responsibility for damage to the truck and have
liability for accidents they may cause while operating the vehicle. In addition, many
states require that the driver of rental trucks to be at least 25 years of age. Since most
moves occur during the weekends, the appropriate size truck for a given move is often
unavailable, forcing the renter either to rent a truck that is too small for the job,
thereby necessitating multiple trips or, incurring increased costs of renting a larger
truck than is really needed and that may be more difficult to operate. Once a truck is
rented, customers drive it to their location and load the truck by carrying their
possessions up a ramp. The truck must be loaded and unloaded quickly in order for them to
be able to return the truck before the rental deadline. When the customers are ready to
retrieve their belongings at the destination site, this entire process must be repeated.
Our system wholly eliminates the need for our customers to rent a truck. The customers need
only contact us and a clean SmartVault will be delivered directly to
their location and left for packing. The customers can take as much time as they wish to
pack the SmartVault. Once loaded, we return to pick up, load and
transport the SmartVault to the customers final destination. Upon
the delivery of the SmartVault, the customers can take their time,
unloading it at their convenience. When the customers are finished, they simply call us to
retrieve the empty unit.
    
    Ease of Use and Loading of Contents.Our customers have the added benefit of renting a
vault that is easy to use. Our customers only move their possessions directly into the
SmartVault, which is placed at ground level for packing and does not
require the use of a cumbersome ramp.
    
    Convenience and Time Savings.The typical loading period for our self service customers
usually takes place over a few days, which permits them to load and unload the contents at
their convenience. This eliminates the stress and rush associated with trying to beat a
deadline imposed by a rental truck company. In addition, our customers save a significant
amount of time by avoiding unnecessary packing and unpacking and in reduced driving time.
When choosing a traditional self-storage facility, customers have to pick up a truck, drive
it to their location, load the truck, drive it to a storage facility and then unpack their
possessions. Next, the customers must return the rental truck. When ready to retrieve their
possessions, the customers must once again obtain and pick up a rental truck, pack the
truck, drive their possessions to their new location, unpack them, and upon completion,
return the truck to the rental company. With our solution, our customers need only notify
us to arrange delivery of our SmartVault container, pack the unit we
provide and phone for a pickup.
 Future Competition.
  
    
    designing and engineering a functionally comparable storage container;
    
    locating a supplier of specialized storage containers built to specifications at
competitive prices;
    
    establishing goodwill with prospective customer groups and brand awareness.
  
    
    continuing our efforts to develop, and deploy Smart Vaults, which, when compared to
existing alternative moving containers available in the marketplace, perform more
efficiently and are made available as part of our services on terms that are acceptable to
the market;
    
    building upon the business platforms and alliance relationships we have established to
pursue additional co-marketing and cross-referral opportunities;
    
    pursuing opportunities in selected special use markets for which our GPS-enabled
containers support customers asset management and location monitoring requirements.
  10




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International Moving Opportunity
    Asset Tracking Technology-Market Opportunity
  The Rapid ID Solution
   Value Added to the Customer
  Execution of the Our Plan for Rapid ID
   11




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Competition in the Technology Sector
  
    
    Governmental Agencies;
    
    International shipping companies; and
    
    Assets including: Sea Containers, ULDs, truck trailers, mobile assets and moving containers, etc.
 Sales and Marketing
    Other Sales Opportunities
 Local Move Consumer Market.
 Storage and Moving Supplies.
 Homeland Security.
 National Van Lines.
  12




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Commercial Uses.
 Military Uses.
 New Services and Products
 Corporate Relocations. SM
 Manufacturing Relationships and Sourcing of Raw Materials
   Seasonality
  Our Intellectual Property and Trademarks
   13




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Information Systems
  Regulatory Matters
  
    
    Register with the FMCSA;
    
    Obtain an authorization certificate from the FMCSA for each state in which we conduct
business;
    
    Obtain a certificate of insurance or surety bond in each state in which we are
authorized by the FMCSA to conduct business; and
    
    Offer arbitration as a means of settling loss and damage disputes on collect-on-delivery
shipments
   
    
    Obtain a certificate of authority to conduct business as a foreign entity;
    
    Obtain sales tax licenses and permits; and
    
    Where our Company name may not be available, apply for the right to conduct business
under an assumed trade name.
   Research and Development
   14




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Environmental Regulations
  Employees
  Execution of Our Business Plan
  2007 Highlights
   
    
    We have added over $10.9 million of property and equipment, including over 4,100 new
SmartVault containers.
    
    We believe our current fleet of approximately 4,500 SmartVaults has the capacity to
enable us to generate over $18 million in annual revenues.
    
    Smart Move lowered its average freight expense as compared to the prior year period by
25%. Freight expense is the single biggest component of cost of goods sold; in 2006
freight expense was 83% of the top line revenues, for 2007, the average was 58%.
    
    We launched our affiliate program which allows local moving companies to book moves
through our proprietary software. We estimate that there are over 5,000 local moving
companies in the markets that we serve that we can target for this program.
    
    We refined our software to provide for automation in the quoting of long-distance
freight costs, and to help improve our operating margins.
    
    We have refined our internal processes to allow us to handle significant increases in
the volume of moves with our existing infrastructure.
    
    The Smart Move concept gained recognition within the close-knit moving industry
community. National relocation firms became aware that Smart Moves service offering
addresses specific current needs in their industry.
    
    We expanded our alliances with leading interstate van lines that are taking advantage of
the outstanding transit times and performance metrics that Smart Move has demonstrated it
can deliver.
    
    We acquired Star Move Alliance, which establishes us as a third party move manager. The
platform allows us to generate revenue from move lead referrals, from direct booking fees
from van lines and from our completed jobs.
 
  15




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Available Information
  RISK FACTORS
 Risks Related to our Business and Industry
 Our independent auditors have expressed substantial doubt about our ability to continue as a going
concern.
   We have a history of operating losses and may again incur losses in the future as we expand.
  We cannot predict effectiveness of our third party marketing alliances.
  Our business plan is unproven, and our financial results will suffer if consumers do not adopt our
moving solution.
  We depend on the third-party manufacturer for our SmartVaults moving
containers.
   16




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Our containers are subject to price increases by the manufacturer, and any significant increase in
price would negatively impact our operating margins.
  Risks related to our current financial condition
 
    
    Our capital requirements have been and will continue to be
significant, and we have an immediate and long-term need of capital to continue to operate.
    
    Currently, we are incurring losses from operations, have limited capital resources, and
do not have access to a line of credit or other debt facility.
    
    Our Management is pursuing various funding alternatives, including additional private
placement of debt, commercial loans and finance leases, but no definitive arrangements are
in place to ensure we will have capital to sustain operations.
    
    If we raise additional capital through the issuance of debt securities, the interests of
our shareholders will continue to be subordinated to the interests of our debt holders and
any cash interest payments would reduce the amount of cash available to operate and grow
our business. Additionally, we will be subject to all of the risks associated with
incurring indebtedness, including the risks that interest rates may fluctuate and that our
cash flow may be insufficient to pay principal and interest on any such indebtedness.
    
    If we raise additional capital through the sale of equity securities, including
additional convertible notes and warrants in the future, the ownership of our shareholders
would be diluted.
    
    Our assets serve as collateral for various loan and note obligations. If we are unable
to maintain compliance with loan covenants or procure waivers when required or in the event
we fail to pay loans and notes according to their terms, there can be no assurance that our
lenders will not declare an event of default and demand immediate payment or seek to attach
our assets.
    
    Should any of our large trade creditors demand immediate payment for services or
materials we require to conduct business, we would have to raise the needed funds to
satisfy the obligations, possibly on unsatisfactory terms or, failing that, we would have
to consider entering into arrangements with creditors or other debt
reorganization measures that could have a negative impact to our
shareholders.
 A disruption in the service of our third-party carriers could result in significant loss of revenue
and increased capital expense.
   17




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Since we rely on third party carriers for our deliveries, higher prices for fuel have resulted in
significant fuel surcharges in the past. Our operating margins and results of operation will
fluctuate during periods of fuel price volatility. If those surcharges continue or increase, it
will require us to raise prices at the risk of losing sales or reduce our operating margins.
  We have incurred substantial debt to finance our operations; our lenders could foreclose on our
assets and force us out of business in the event of our default on this debt.
  We will need to raise substantial additional capital to fund our operations, and we do not have any
existing commitments for additional capital.
  We
may need additional financing, including additional indebtedness, to
fund our business plan and we do not have commitments for additional financing.
  
    
    we may be required to use a portion of our cash flow from operations for the payment of
any principal or interest due on our outstanding indebtedness;
    
    our outstanding indebtedness and leverage will increase the impact of negative changes
in general economic and industry conditions as well as competitive pressures; and
    
    the level of our outstanding debt may affect our ability to obtain additional financing
for working capital, capital expenditures or general corporate purposes.
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General economic conditions, industry cycles, financial, business and other factors affecting our
operations, many of which are beyond our control, may affect our future performance.
  
    
    seek additional financing in the debt or equity markets;
    
    refinance or restructure all or a portion of our indebtedness;
    
    sell selected assets; and
    
    reduce or delay planned capital expenditures.
  We expect our business will be highly seasonal, which can cause dramatic fluctuations in our cash
flow and could require us to incur additional debt or raise additional capital.
  We could be held liable for damages under environmental laws or be required to clean up
contamination caused by hazardous materials transported or stored in our containers.
  As a result of our limited operating history, we may not be able to estimate correctly our future
operating expenses, which could lead to cash shortfalls.
  We have limited operating history, we have not been through a recession cycle, and may not be able
to estimate our future revenue or the effect of a decline in the economy will have on our business
operations.
   19




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We currently have limited human resources, and the effective management of our anticipated growth
will depend on our ability to attract and retain skilled personnel.
  We are dependent on our management team and the loss of any of these individuals would harm our
business.
  We encounter substantial competition from other moving companies, many of whom have greater
resources than Smart Move.
  We do not have any patent protected technologies that would preclude or inhibit competitors from
entering our market.
  Our ability to capture a meaningful share of our target market and achieve a profitable level of
operations is dependent upon our ability to establish and maintain our brand name.
  We may be unable to protect our trademark or other proprietary intellectual property rights.
   20




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We may face liability from intellectual property litigation that could be costly to prosecute or
defend and distract managements attention with no assurance of success.
  We operate in a regulated industry. Increased costs of compliance with, liability for violation of,
or changes in, existing or future regulations could result in increased regulatory compliance costs
or decreased revenues and, thus, adversely affecting our business and operations.
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Our proposed future international operations would subject us to risks associated with trade
restrictions, political, economic and social instability and currency exchange rate fluctuations.
  
    
    unexpected changes in regulatory requirements;
    
    export and import restrictions, tariffs and other trade barriers;
    
    difficulties in staffing and managing foreign operations;
    
    longer payment cycles and problems in collecting accounts receivable;
    
    potential adverse tax consequences;
    
    currency exchange rate fluctuations;
    
    increased risks of piracy and limits on our ability to enforce our intellectual property rights;
    
    limits on repatriation of funds; and
    
    political risks that may limit or disrupt international sales.
   We have completed a placement of debt that included a beneficial conversion feature. That feature
will have the effect of reducing our reported operating results during the term of the debt.
  Changes in accounting rules governing the recognition of stock-based compensation expense could
adversely affect our financial operations by reducing our income or increasing our losses.
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We incur increased costs as a result of being a public company.
  We
are subject to impairment of our long-lived assets that could affect future net income.
 
 If we fail to maintain an effective system of internal controls, we may not be able to accurately
report our financial results or prevent fraud. As a result, current and potential shareholders
could lose confidence in our financial reporting, which would harm our business and the trading
price of our stock.
   23




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ITEM 8B.
    
    OTHER INFORMATION
 Consultants
  
 ITEM 2.
    
    DESCRIPTION OF PROPERTY
 Facilities
 Corporate Offices.
 Facilities.
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   (1)
    
    In the election of directors, each
nominee was elected by a vote of the
shareholders as follows:
 Director (Term Expiring)
    
    FOR
    
    
    WITHHELDKent Lund (2010)
    
    
    5,305,756
    
    
    
    331,860John Jenkins (2010)
    
    
    5,305,756
    
    
    
    331,860
  Term Expiring
    
    Term Expiringin 2008
    
    in 2009Doug Kelsall
    
    Chris SapytaJack Burkholder
    
    Edward Johnson
  24




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(2)
    
    The proposal to approve the
appointment of Anton Collins
Mitchell LLP as our independent
registered public accounting
firm for 2007 was approved by
shareholders as follows:
 FOR
    
    AGAINST
    
    ABSTAIN5,441,656
    
    182,110
    
    13,850
 
 PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
  Common Stock Symbol MVEHigh
    
    
    Low2006 Fourth Quarter (2006 (from December 21 through
December 31, 2006)
    
    $
    4.80
    
    
    $
    4.402007 First Quarter
    
    $
    4.70
    
    
    $
    3.402007 Second Quarter
    
    $
    4.00
    
    
    $
    2.952007 Third Quarter
    
    $
    3.55
    
    
    $
    1.102007 Fourth Quarter
    
    $
    1.35
    
    
    $
    0.50
 Warrants Symbol MVE.WSHigh
    
    
    Low2006 Fourth Quarter (2006 (from December 21 through
December 31, 2006)2007 First Quarter
    
    $
    0.88
    
    
    $
    0.502007 Second Quarter
    
    $
    0.83
    
    
    $
    0.502007 Third Quarter
    
    $
    0.55
    
    
    $
    0.062007 Fourth Quarter
    
    $
    0.30
    
    
    $
    0.03
   Dividend Policy.
  25




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Securities Authorized for Issuance Under Equity Compensation Plans
  Number of SecuritiesRemaining AvailableNumber of Securities
    
    
    
    
    
    
    for Future Issuanceto be Issued Upon
    
    
    Weighted-Average
    
    
    Under EquityExercise of
    
    
    Exercise Price of
    
    
    CompensationOutstanding
    
    
    Outstanding
    
    
    Plans (ExcludingOptions,
    
    
    Options, Warrants
    
    
    Securities Reflected inWarrants and Rights
    
    
    and Rights
    
    
    Column (a)Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    801,500
    
    
    $
    4.53
    
    
    
    598,500Equity compensation
plans not approved
by security holdersTotal
    
    
    801,500
    
    
    $
    4.53
    
    
    
    598,500
 Recent sales of Unregistered Securities and Use of Proceeds
 (a)
    
    Unregistered Sales of Securities
    26




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Use of the Proceeds of our Initial Public Offering
   Aggregate offering proceeds to the Company
    
    $
    16,560,000Underwriting discounts and commissions
    
    
    1,798,800Finders fee
    
    
    Other fees and expenses
    
    
    503,515Total expenses
    
    
    2,302,315Net proceeds to the Company
    
    $
    14,257,685
    27




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ITEM 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our audited financial statements and related notes that appear
elsewhere in this filing. In addition to historical financial information, the following discussion
contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual
results could differ materially from those discussed in the forward-looking statements. Factors
that could cause or contribute to these differences include those discussed below and elsewhere in
this filing.
 Liquidity and Going Concern
        28




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Our Business
  Smart Move Strategy
  
    
    Efficient utilization of our proprietary SmartVault containers
which is achieved by ensuring that our containers are shipped back from the original
destination to the nearest available terminal where they can be utilized in the most
efficient manner and by shipping them through long distance courier;
    
    Ability to control costs by outsourcing transportation, warehousing, and moving labor;
    
    Ability to open new markets with limited capital;
    
    Utilization of state of the art GPS tracking & barcode technology; and
    
    Ability to expand markets and increase revenue opportunities.
 Summary of Financial Results
      29




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Three Months
    
    
    Three Months
    
    
    Three Months
    
    
    Three Months
    
    
    YearEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,
    
    
    December 31,Sales:2007
    
    $
    1,207,611
    
    
    $
    2,311,168
    
    
    $
    1,344,171
    
    
    $
    947,948
    
    
    $
    5,810,8982006
    
    $
    957,151
    
    
    $
    1,490,934
    
    
    $
    994,614
    
    
    $
    741,855
    
    
    $
    4,184,554Percentage change
from 2006 to 2007
    
    
    26
    %
    
    
    55
    %
    
    
    35
    %
    
    
    28
    %
    
    
    39
    %Quarterly gross
profit (loss) as a
percentage
(exclusive of
depreciation,
impairment and
amortization) of
2007 sales
    
    
    (16
    )%
    
    
    3
    %
    
    
    (20
    )%
    
    
    (11
    )%
    
    
    (9
    )%Quarterly gross
loss as a
percentage
(exclusive of
depreciation,
impairment and
amortization) of
2006 sales
    
    
    (7
    )%
    
    
    (9
    )%
    
    
    (33
    )%
    
    
    (16
    )%
    
    
    (15
    )%Additions to
property and
equipment and
capitalized
software in 2007
    
    $
    253,221
    
    
    $
    1,107,582
    
    
    $
    5,816,543
    
    
    $
    3,747,722
    
    
    $
    10,925,068Additions to
property and
equipment in 2006
    
    $
    1,454,004
    
    
    $
    756,439
    
    
    $
    3,718,870
    
    
    $
    52,698
    
    
    $
    5,982,011
    30




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##### Table of Contents



Three Months Ended
    
    
    Three Months Ended
    
    
    Three Months Ended
    
    
    Three Months EndedDecember 31, 2007
    
    
    September 30, 2007
    
    
    June 30, 2007
    
    
    March 31, 2007Number
    
    
    Amount
    
    
    Number
    
    
    Amount
    
    
    Number
    
    
    Amount
    
    
    Number
    
    
    AmountCompleted Moves
    
    
    355
    
    
    $
    1,104,074
    
    
    
    658
    
    
    $
    1,948,008
    
    
    
    378
    
    
    $
    1,082,362
    
    
    
    237
    
    
    $
    801,696Storage and other
    
    
    
    
    
    
    103,537
    
    
    
    
    
    
    
    363,160
    
    
    
    
    
    
    
    261,809
    
    
    
    
    
    
    
    146,252Total Sales
    
    
    
    
    
    $
    1,207,611
    
    
    
    
    
    
    $
    2,311,168
    
    
    
    
    
    
    $
    1,344,171
    
    
    
    
    
    
    $
    947,948At December 31, 2007
    
    
    At September 30, 2007
    
    
    At June 30, 2007
    
    
    At March 31, 2007Moves in Progress
    
    
    410
    
    
    $
    1,081,631
    
    
    
    356
    
    
    $
    1,176,632
    
    
    
    412
    
    
    $
    1,394,912
    
    
    
    224
    
    
    $
    893,655
   Components of Cost of Goods SoldThree Months Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Variable Costs
Freight, labor,
insurance and
service
    
    $
    1,092,347
    
    
    $
    882,657
    
    
    $
    4,683,069
    
    
    $
    4,189,451Percent of Sales
    
    
    90
    %
    
    
    92
    %
    
    
    81
    %
    
    
    100
    %Fixed Costs
GPS and storage costs
    
    $
    309,296
    
    
    $
    95,904
    
    
    $
    996,943
    
    
    $
    212,819Percent of Sales
    
    
    26
    %
    
    
    10
    %
    
    
    17
    %
    
    
    5
    %Furniture pads and
repositioning
    
    $
    27,127
    
    
    $
    43,776
    
    
    $
    657,348
    
    
    $
    425,003Percent of Sales
    
    
    2
    %
    
    
    5
    %
    
    
    11
    %
    
    
    10
    %Total cost of goods
sold (excluding
depreciation,
amortization and
impairment)
    
    $
    1,428,770
    
    
    $
    1,022,337
    
    
    $
    6,337,360
    
    
    $
    4,827,273Percent of Sales
    
    
    118
    %
    
    
    107
    %
    
    
    109
    %
    
    
    115
    %
  31




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##### Table of Contents



Principal Costs and Expenses:
  Cost of Revenues
 Depreciation, Impairment and Amortization:
 Selling, General and Administrative Expenses:
 Interest Expense:
 Future Revenues and Operating Expenses
  Revenues
 
    
    We are working to develop a number of additional revenue-generating opportunities by
increasing the number of relationships we have with national and local moving companies,
through increased use of our SmartVault containers for special purposes in other vertical
markets, and by deployment or licensing of our tracking technology components within other
industries which require asset tracking.
 Expenses
 
    
    Accounting and Reporting:We have expanded our accounting staff and invested in
additional accounting system software to assist us in administering a higher volume of
transactions and we are implementing better controls to facilitate our ongoing reporting
obligations as a public company.
    
    Public Company Administrative Costs:As a public company we have incurred, and will
continue to incur, additional legal, accounting and other expenses that we did not incur as
a private company. These additional costs include the recurring legal, accounting fees and
investor relation fees associated with ongoing reporting requirements under the Securities
Exchange Act of 1934, as amended, and compliance with the various provisions of the
Sarbanes-Oxley Act of 2002, investor relations administration costs, fees to independent
Board members for their services as directors, and certain director and officer liability
insurance costs. We obtained directors and officers liability insurance on December 4,
2006 and key man life insurance on our CEO which we did not have in the past and for
which we will incur additional premium costs. We also expect the outside legal, accounting
and other expenses that we incur as a public company on an annual basis will be in excess of
$600,000.
    
    Expenses:We believe that our recurring expenses for labor, materials and general
administrative costs of conducting sales and operations will not increase proportionately
to increased revenues if we are successful and the volume of our business expands, and that
we will continue to experience a decrease in our expenses as a percentage of sales.
  32




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Critical Accounting Policies; Use of Estimates
    Revenue and Cost Recognition
    33




---



##### Table of Contents



Credit Risk, Service Provider and Supplier Risk
    Impairment of Long-Lived Assets
     34




---



##### Table of Contents



Stock Based Compensation
  th st
  Income Taxes
   35




---



##### Table of Contents




    
    Management reviews Smart Moves deferred tax assets for realizability. Valuation
allowances are established when management believes that it is more likely than not
that some portion of the deferred tax assets will not be realized. Changes in valuation
allowances from period to period are included in the tax provision.
    
    We establish accruals for uncertain tax contingencies when, despite the belief that
Smart Moves tax return positions are fully supported, Smart Move believes that an
uncertain tax position does not meet the recognition threshold of FASB Interpretation
(FIN) No. 48, Accounting for Uncertainty in Income Taxes. The tax contingency
accruals are adjusted in light of changing facts and circumstances, such as the
progress of tax audits, the expiration of the statute of limitations for the relevant
taxing authority to examine a tax return, case law and emerging legislation. While it
is difficult to predict the final outcome or timing of resolution for any particular
tax matter, Smart Move believes that the accruals reflect the likely outcome of known
tax contingencies in accordance with FIN No. 48.
 Nonemployee Options, Warrant and Convertible Debenture Valuation and Accounting
     Contractual Obligations and Commitments
  Payment Due by PeriodTotal
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012Long-term debt obligations:(1)Principal
    
    $
    11,365,528
    
    
    $
    1,460,380
    
    
    $
    1,283,554
    
    
    $
    776,532
    
    
    $
    5,066,237
    
    
    $
    2,778,825Interest
    
    
    3,843,865
    
    
    
    1,028,860
    
    
    
    1,031,612
    
    
    
    905,958
    
    
    
    629,510
    
    
    
    247,925Capital leases
    
    
    267,310
    
    
    
    115,205
    
    
    
    115,205
    
    
    
    36,900
    
    
    
    
    
    
    
    Operating leases
    
    
    644,690
    
    
    
    283,160
    
    
    
    201,470
    
    
    
    119,780
    
    
    
    40,280
    
    
    
    GPS service
    
    
    544,194
    
    
    
    161,772
    
    
    
    161,772
    
    
    
    125,022
    
    
    
    88,272
    
    
    
    7,356$
    16,665,587
    
    
    $
    3,049,377
    
    
    $
    2,793,613
    
    
    $
    1,964,192
    
    
    $
    5,824,299
    
    
    $
    3,034,106
 (1)
    
    Long-term debt obligations reflect payments for the principal and interest that is based on rates that range from 7.00% to 12.00%.  36




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##### Table of Contents



Diversification of Revenues
  Qualitative and Quantitative Disclosures about Market Risk
    Results of Operations
 Year ended December 31, 2007 compared to 2006
 Sales
 For the Year endedDecember 31,2007
    
    
    2006
    
    
    % Change(In thousands, except percentages)Sales
    
    $
    5,811
    
    
    $
    4,185
    
    
    
    39
    %
  37




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##### Table of Contents



Total cost of moving and storage
 For the Year endedDecember 31,2007
    
    
    2006
    
    
    % Change(In thousands, except percentages)Total cost moving
and storage
    
    $
    10,755
    
    
    $
    5,932
    
    
    
    81
    %Gross loss as a
percent of sales
    
    
    (85
    )%
    
    
    (42
    )%
 Cost of moving and storage (exclusive of depreciation, impairment and amortization)
 For the Year endedDecember 31,2007
    
    
    2006
    
    
    % Change(In thousands, except percentages)Cost moving and
storage (exclusive
of depreciation,
impairment and
amortization)
    
    $
    6,337
    
    
    $
    4,827
    
    
    
    31
    %Gross loss as a
percent (exclusive
of depreciation,
impairment and
amortization) of
sales
    
    
    (9
    )%
    
    
    (15
    )%
   38




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##### Table of Contents



Total selling, general and administrative expenses
 For the Year endedDecember 31,2007
    
    
    2006
    
    
    % Change(In thousands, except percentages)Total selling, general
and administrative
expenses
    
    $
    6,434
    
    
    $
    6,848
    
    
    
    (6
    )%As a percentage of sales
    
    
    111
    %
    
    
    164
    %
       39




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##### Table of Contents



Total other expense
 For the Year endedDecember 31,2007
    
    
    2006
    
    
    % Change(In thousands, except percentages)Total other expense
    
    $
    3,794
    
    
    $
    1,507
    
    
    
    151
    %As a percentage of sales
    
    
    65
    %
    
    
    36
    %
     Issuance of Stock Options
   40




---



##### Table of Contents



Liquidity and Capital Resources
          41




---



##### Table of Contents



Cash Flows
 th
 Investing Activities
   Financing Activities
   Convertible Promissory Notes
   42




---



##### Table of Contents



Off-Balance Sheet Arrangements
  
 ITEM 7.
    
    FINANCIAL STATEMENTS
  
 ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 None
 
 ITEM 8A.
    
    CONTROLS AND PROCEDURES
     43




---



##### Table of Contents



ITEM 8B.
    
    OTHER INFORMATION
 None
  44




---



##### Table of Contents



PART III
 
 ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTIONS 16(a) OF THE EXCHANGE ACT
  www.gosmartmove.com
 
 ITEM 10.
    
    EXECUTIVE COMPENSATION
  
 ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 12.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 13.
    
    EXHIBITS
 The following exhibits are filed herewith and this list is intended to constitute the exhibit index:
 Exhibit Index
 Exhibit No.
    
    Description2.1
    
    Agreement and Plan of Merger*2.2
    
    Certificate of Merger3.1(i)
    
    Certificate of Incorporation, as amended and restated3.1(ii)
    
    Bylaws4.1
    
    Specimen Common Stock Certificate4.2
    
    Specimen Unit Certificate4.3
    
    Specimen Warrant Certificate4.4
    
    Form of 12% Secured Convertible Note due September 1, 2009 (2)4.5
    
    Form of Warrant to Purchase 2,500 Shares at an exercise price of $7.50 per share,
expiring December 5, 2011 (2)4.6
    
    Securities Purchase Agreement dated as of January 15, 2008 among the Company and the
Purchasers listed on Exhibit A thereto (7)4.7
    
    11% Secured Convertible Debenture due January 15, 2010 to Professional Offshore
Opportunity Fund, Ltd. in the amount of $2,800,000.(7)4.8
    
    Professional Offshore Opportunity Fund, Ltd. Warrant to purchase 1,866,666 shares at an
exercise price of (the lesser of $1.00 or the New Transaction Price), expiring on the
last day of the month in which occurs the fifth anniversary of the effective date of a
registration statement (7).4.9
    
    Registration Rights Agreement dated as of January 15, 2008 among the Company and the
Purchasers Listed on Schedule 1 thereto (7)4.10
    
    Security Agreement dated as of January 15, 2008 among the Company and the Investors (7)4.11
    
    Investor Rights Agreement dates as of January 15, 2008 among the Company and the
Investors (7)
  45




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##### Table of Contents



Exhibit No.
    
    Description10.1
    
    Form of Secured Promissory Note dated October 6, 200410.2
    
    Security Agreement October 2004 debt financing10.3
    
    Form of Warrant dated October 6, 2004 debt financing10.4
    
    Form of Warrant dated September 30, 2005 equity financing10.5
    
    Form of Secured Promissory Note dated September 26, 2005 debt financing10.6
    
    Security Agreement September 2005 debt financing10.7
    
    Form of Warrant dated September 26, 2005 debt financing10.8
    
    Form of Unsecured Note dated January 200610.9
    
    Form of Warrant dated January 2006 debt financing10.10
    
    Form of Secured Note dated July 200610.11
    
    Security Agreement dated July, 2006 debt financing10.12
    
    Form of Warrant dated July, 2006 debt financing10.13
    
    Loan and Security Agreement between A Smart Move, L.L.C. and Silicon Valley Bank dated
April 26, 200510.14
    
    Loan Modification Agreement between A Smart Move, L.L.C. and Silicon Valley Bank dated
June 21, 200510.15
    
    Second Amendment to the Loan and Security Agreement between A Smart Move, L.L.C. and
Silicon Valley Bank dated August 29, 200510.16
    
    Third Amendment and Waiver to the Loan and Security Agreement between A Smart Move,
L.L.C. and Silicon Valley Bank dated December 30, 200510.17
    
    Warrant to Purchase Common Stock dated April 15, 2005 in favor of Silicon Valley Bank10.18
    
    Warrant to Purchase Common Stock dated December 21, 2005 in favor of Silicon Valley Bank10.19
    
    Bailee Waiver to the Loan and Security Agreement between A Smart Move, L.L.C. and Silicon
Valley Bank dated August 29, 200510.20
    
    A Smart Move, L.L.C. Amended and Restated Operating Agreement dated November 30, 200510.21
    
    A Smart Move, L.L.C. Service Agreement between A Smart Move, L.L.C. and Overnite
Transportation Company dated May 9, 200510.22
    
    Master Purchase Agreement dated August 24, 200510.23
    
    Leasing Agreements between Park Western Leasing Inc. and A Smart Move, L.L.C. dated April
5, 200510.24
    
    Office Building Lease between BRCP Greenwood Corporate Plaza, L.L.C. and A Smart Move,
L.L.C. dated October 22, 200410.25
    
    Employment Agreement with Chris Sapyta dated January 15, 200610.26
    
    Employment Agreement with Edward Johnson dated January 15, 200610.27
    
    Promissory Note between A Smart Move, L.L.C. and Chris Sapyta, dated June 15, 200510.28
    
    2006 Equity Incentive Plan*10.29
    
    Form of Option Grant Agreement10.30
    
    First Amendment to the Employment Agreement for Chris Sapyta dated September 15, 200610.31
    
    First Amendment to the Employment Agreement for Edward Johnson dated September 15, 200610.32
    
    Default Waiver and Fifth Amendment to Loan and Security Agreement10.33
    
    Form of Underwriters Warrant10.34
    
    Form of Warrant Agreement*10.35
    
    Warehouse Sublease Agreement between ACC Acquisition, LLC and Smart Move, Inc, dated
January 29, 200710.36
    
    Default Waiver and Seventh Amendment to Loan and Security Agreement dated August 30,
2007, between Smart Move, Inc. and Silicon Valley Bank (3)10.37
    
    Form of Note and Warrant Purchase Agreement (4)10.38
    
    Form of 7% Unsecured Convertible Note ($540,000) due September 2, 2010.(4)10.39
    
    Form of Warrant to Purchase expiring December 5, 2011(4)10.40
    
    Form of 12% Secured Convertible Note ($25,000) due October 31, 2008 (5)
  46




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##### Table of Contents



Exhibit No.
    
    Description10.41
    
    Form of Warrant to Purchase 50,000 shares (subject to adjustment), 25,000 shares at $1.25
and 25,000 shares at $1.50 exercise prices, expiring October 31, 2012 (5)10.42
    
    Letter Agreement between Smart Move, Inc. and StarRelocation Network Alliance, Inc.(6)10.43
    
    Summary of Compensation of Named Executive Officers (1)10.44
    
    Amended and Restate Note and Warrant Purchase Agreement dated January 22, 2008 by and
between Smart Move, Inc. and Thomas P. Grainger (8)10.45
    
    12% Unsecured Convertible Note to Thomas P. Grainger in the amount of $200,000, due
January 22, 2009 (8)10.46
    
    Thomas P. Grainger Warrant to Purchase 285,000 shares at an exercise price of $1.00 per
share, expiring January 22, 2012 (8)10.47
    
    Thomas P. Grainger Warrant to Purchase 285,000 shares at an exercise price of $1.25 per
share, expiring January 22, 2012 (8)10.48
    
    Amended 7% Unsecured Convertible Note to Thomas P. Grainger in the amount of $540,000,
due September 2, 2010.(8)10.49
    
    Amendment to Existing Thomas P. Grainger Warrant  100,000 shares at an exercise price
of $1.00, expiring September 2, 2010. (8)10.50
    
    Amendment to Existing Thomas P. Grainger Warrant  100,000 shares at an exercise price
of $1.25 expiring September 2, 2010,(8)10.51
    
    Amendment to Existing Thomas P. Grainger Warrant  100,000 shares at an exercise price
of $1.50, expiring September 2, 2010 (8)14.0
    
    Code of Ethics**23.1
    
    Consent of Houlihan Smith & Company Inc.**24.1
    
    Power of Attorney (included on signature pages hereto).**31.1
    
    Certification of Chief Executive Officer of Smart Move, Inc. pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.**31.2
    
    Certification of Chief Financial Officer of Smart Move, Inc. pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.**32
    
    Certification of Chief Executive Officer and Chief Financial Officer of Smart Move, Inc.
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
    
    Previously filed with Smart Moves Registration Statement of Form SB-2 (SEC File No. 333-137931) and incorporated by reference herein.*
    
    Previously filed with Smart Move, Inc.s Annual Report
on Form 10-KSB for the year ended December 31, 2006, filed with the Securities and Exchange Commission on April 2, 2007 (File No. 001-32951).**
    
    Filed herewith.           47




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##### Table of Contents



ITEM 14.
    
    PRINCIPAL ACCOUNTANTS FEES AND SERVICES
   48




---



##### Table of Contents



SIGNATURES
  SMART MOVE, INC.By:
    /s/ Edward JohnsonName:
    Edward JohnsonTitle:
    Chief Financial Officer   Signature
    
    Date
    
    Title/s/ Chris Sapyta
    
    March 28, 2008
    
    Chief Executive OfficerChris Sapyta
    
    
    
    (principal executive officer)/s/ Edward Johnson
    
    March 28, 2008
    
    Chief Financial OfficerEdward Johnson/s/ Doug Kelsall
    
    March 28, 2008
    
    DirectorDoug Kelsall/s/ Jack Burkholder
    
    March 28, 2008
    
    DirectorJack Burkholder/s/ John Jenkins
    
    March 28, 2008
    
    DirectorJohn Jenkins/s/ Kent Lund
    
    March 28, 2008
    
    DirectorKent Lund
  49




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Share-Based Payment.
   
  F1




---



##### Table of Contents



Smart Move, Inc.
Balance Sheet
 December 31, 2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    369,189Account receivable trade, net of allowance of $45,000
    
    
    80,112Packing supplies
    
    
    94,437Contracts in process
    
    
    517,485Prepaid and other
    
    
    146,259Total current assets
    
    
    1,207,482Property and equipment, net
    
    
    15,942,718Other assets
    
    
    113,54616,056,264Total assets
    
    $
    17,263,746LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,550,281Accrued interest
    
    
    435,804Deferred revenue
    
    
    456,247Current portion of long-term debt and notes payable, (face amount of
$1,460,380) net of discounts of $1,051,310
    
    
    409,070Current portion of obligations under capital leases
    
    
    91,648Total current liabilities
    
    
    3,943,050Long-term liabilities:Long-term debt and notes payable, less current portion, (face amount of
$9,905,148) net of discounts of $3,552,103
    
    
    6,353,045Obligations under capital leases, less current portion
    
    
    145,653Total long-term liabilities
    
    
    6,498,698Total liabilities
    
    
    10,441,748Commitments and contingent liabilitiesShareholders equity:Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued
    
    
    Common stock, $0.0001 par value, 100,000,000 shares authorized 10,979,699 issued
and outstanding
    
    
    1,097Additional paid-in-capital
    
    
    20,807,395Accumulated deficit
    
    
    (13,986,494
    )Total shareholders equity
    
    
    6,821,998Total liabilities and shareholders equity
    
    $
    17,263,746
   F2




---



##### Table of Contents



Smart Move, Inc.
Statements of Operations
 Year ended
    
    
    Year endedDecember 31,
    
    
    December 31,2007
    
    
    2006Sales
    
    $
    5,810,898
    
    
    $
    4,184,554Cost of moving and storage (exclusive of
depreciation, amortization and impairment shown
separately below)
    
    
    6,337,360
    
    
    
    4,827,273Depreciation and amortization
    
    
    2,878,391
    
    
    
    1,104,590Impairment of fixed assets
    
    
    1,539,563
    
    
    
    Total cost of moving and storage
    
    
    10,755,314
    
    
    
    5,931,863Gross loss
    
    
    (4,944,416
    )
    
    
    (1,747,309
    )Selling, general and administrative expenses
(exclusive of depreciation, amortization and
impairment shown separately below and including
non-cash compensation of $284,180 and $2,690,836
for the year ended December 31, 2007 and 2006,
respectively)
    
    
    6,240,640
    
    
    
    6,099,422Depreciation and amortization
    
    
    162,553
    
    
    
    99,395Impairment of note receivable
    
    
    
    
    
    
    47,000Impairment of capitalized software
    
    
    30,795Write off of deferred offering costs
    
    
    
    
    
    
    602,262Total selling, general and administrative expenses
    
    
    6,433,988
    
    
    
    6,848,079Operating loss
    
    
    (11,378,404
    )
    
    
    (8,595,388
    )Other income (expense):Interest income
    
    
    288,437
    
    
    
    107,043Interest expense
    
    
    (2,754,027
    )
    
    
    (1,614,331
    )Loss on extinguishment of debt
    
    
    (1,328,565
    )
    
    
    Total other expense
    
    
    (3,794,155
    )
    
    
    (1,507,288
    )Loss before income tax benefit
    
    
    (15,172,559
    )
    
    
    (10,102,676
    )Income tax (benefit)
    
    
    (2,367,000
    )
    
    
    (233,000
    )Net loss
    
    $
    (12,805,559
    )
    
    $
    (9,869,676
    )Net loss per share:Basic and diluted
    
    $
    (1.21
    )
    
    $
    (1.77
    )Shares used to compute net loss per share:Basic and diluted
    
    
    10,623,167
    
    
    
    5,584,420
   F3




---



##### Table of Contents



Smart Move, Inc.
Statement of Changes in Shareholders Equity
 Additional
    
    
    
    
    
    
    Total
    
    
    TotalMembers Equity
    
    
    Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Shareholders
    
    
    MembersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Equity
    
    
    EquityMembers Equity January 1, 2006
    
    
    4,342,840
    
    
    $
    6,072,916
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (4,088,199
    )
    
    $
    
    
    
    $
    1,984,717Issuance of member shares to officers for services
rendered
    
    
    500,000
    
    
    
    2,500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500,000Exercise of options for cash
    
    
    40,000
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000Cashless exercise of options
    
    
    537,780
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion of 2004 Notes to member shares, net of
discounts of $199,931 and fees of $33,030
    
    
    880,800
    
    
    
    1,969,039
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,969,039Issuance of shares and warrants in connection with
conversion of 2004 debt at a premium
    
    
    7,334
    
    
    
    161,140
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,140Issuance of member shares in connection with private
placement, net of offering costs of $120,000
    
    
    473,204
    
    
    
    1,980,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,980,008Conversion of accrued interest to member shares, net
of fees $23,736
    
    
    65,934
    
    
    
    272,964
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272,964Proceeds allocated to warrants and beneficial
conversion features
    
    
    
    
    
    
    5,278,436
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,278,436Value of placement agent warrants repurchased for
cash
    
    
    
    
    
    
    (293,360
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (293,360
    )Net loss for the period January 1, 2006 through
December 6, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,768,741
    )
    
    
    
    
    
    
    (8,768,741
    )Effect of the merger of A Smart Move L.L.C. into
Smart Move, Inc.
    
    
    (6,847,892
    )
    
    
    (17,966,143
    )
    
    
    6,847,892
    
    
    
    685
    
    
    
    5,108,518
    
    
    
    12,856,940
    
    
    
    5,109,203
    
    
    
    (5,109,203
    )Deferred tax on warrant discounts at date of merger
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,486,000
    )
    
    
    
    
    
    
    (1,486,000
    )
    
    
    Deferred tax on beneficial conversion features at
date of merger
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,034,000
    )
    
    
    
    
    
    
    (1,034,000
    )
    
    
    Common stock issued on December 7, 2006 pursuant to
initial public offering, net of offering costs of $2,302,315
    
    
    
    
    
    
    
    
    
    
    3,312,000
    
    
    
    331
    
    
    
    14,257,354
    
    
    
    
    
    
    
    14,257,685
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,836
    
    
    
    
    
    
    
    190,836
    
    
    
    Issuance of underwriters warrants in connection with
IPO for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    
    Conversion of 2004 Notes to common stock
    
    
    
    
    
    
    
    
    
    
    11,200
    
    
    
    1
    
    
    
    27,999
    
    
    
    
    
    
    
    28,000
    
    
    
    Net loss for the period December 7, 2006 through
December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,100,935
    )
    
    
    (1,100,935
    )
    
    
    Shareholders Equity December 31, 2006
    
    
    
    
    
    
    
    
    
    
    10,171,092
    
    
    
    1,017
    
    
    
    17,064,807
    
    
    
    (1,100,935
    )
    
    
    15,964,889
    
    
    
    Adoption of FIN 48 increase in deferred tax liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80,000
    )
    
    
    (80,000
    )
    
    
    Directors common stock grant
    
    
    
    
    
    
    
    
    
    
    8,676
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    40,000
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,147
    
    
    
    
    
    
    
    200,147
    
    
    
    Conversion of $1,932,500 face amount of notes to
common stock
    
    
    
    
    
    
    
    
    
    
    515,332
    
    
    
    52
    
    
    
    1,373,815
    
    
    
    
    
    
    
    1,373,867
    
    
    
    Recovery of deferred offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,108
    
    
    
    
    
    
    
    32,108
    
    
    
    Conversion of accrued interest to common stock
    
    
    
    
    
    
    
    
    
    
    284,559
    
    
    
    28
    
    
    
    656,893
    
    
    
    
    
    
    
    656,921
    
    
    
    Officers waived compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,033
    
    
    
    
    
    
    
    44,033
    
    
    
    Warrants and conversion price changes on
extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    776,909
    
    
    
    
    
    
    
    776,909
    
    
    
    Proceeds allocated to warrants and beneficial
conversion features
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    618,683
    
    
    
    
    
    
    
    618,683
    
    
    
    Net loss for the year ended December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,805,559
    )
    
    
    (12,805,559
    )
    
    
    Shareholders Equity December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    10,979,659
    
    
    $
    1,097
    
    
    $
    20,807,395
    
    
    $
    (13,986,494
    )
    
    $
    6,821,998
    
    
    $
    
   F4




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##### Table of Contents



Smart Move, Inc.
Statements of Cash Flows
 Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (12,805,559
    )
    
    $
    (9,869,676
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    3,040,944
    
    
    
    1,203,985Impairment of fixed assets
    
    
    1,539,563
    
    
    
    Impairment of capitalized/purchased software
    
    
    30,795
    
    
    
    Non-cash compensation
    
    
    284,180
    
    
    
    2,690,836Write off of deferred offering costs
    
    
    
    
    
    
    602,262Amortization of debt discount
    
    
    1,371,057
    
    
    
    351,754Loss on debt extinguishment
    
    
    1,328,565
    
    
    
    Amortization of warrants for services
    
    
    
    
    
    
    11,786Bad debt expense
    
    
    168,014
    
    
    
    31,858Additional shares issued upon conversion of debt to equity
    
    
    185,482
    
    
    
    36,670Additional warrants issued upon conversion of debt to equity
    
    
    64,955
    
    
    
    124,470Loss on asset disposal
    
    
    
    
    
    
    7,446Impairment of notes receivable
    
    
    
    
    
    
    47,000Deferred income tax benefit
    
    
    (2,367,000
    )
    
    
    (233,000
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (126,846
    )
    
    
    (114,720
    )Prepaid and other
    
    
    (31,434
    )
    
    
    (102,083
    )Packing supplies
    
    
    (94,437
    )
    
    
    Contracts in process
    
    
    (149,597
    )
    
    
    (149,168
    )Accounts payable
    
    
    934,247
    
    
    
    121,996Accrued interest
    
    
    704,847
    
    
    
    442,433Deferred revenue
    
    
    342,783
    
    
    
    15,273Net cash used in operating activities
    
    
    (5,579,441
    )
    
    
    (4,780,878
    )Cash flows from investing activities:Additions of property and equipment (excluding items under
capital lease)
    
    
    (9,788,357
    )
    
    
    (5,789,427
    )Capitalized internally developed software
    
    
    (252,816
    )
    
    
    Notes receivable
    
    
    
    
    
    
    (47,000
    )Deposits on office lease
    
    
    (39,200
    )
    
    
    (44,000
    )Net cash used in investing activities
    
    
    (10,080,373
    )
    
    
    (5,880,427
    )Cash flows from financing activities:Proceeds from sale of member shares
    
    
    
    
    
    
    2,100,008Offering costs on sale of and conversion to member shares
    
    
    
    
    
    
    (176,766
    )Proceeds from IPO
    
    
    
    
    
    
    16,560,000Offering costs on IPO
    
    
    
    
    
    
    (2,302,315
    )Proceeds from exercise of options
    
    
    
    
    
    
    25,000Proceeds from notes payable
    
    
    2,829,000
    
    
    
    6,832,500Notes payable issuance costs
    
    
    (233,395
    )
    
    
    (532,113
    )Proceeds from bank debt
    
    
    
    
    
    
    500,000Bank debt issuance costs
    
    
    
    
    
    
    (4,500
    )Payments on bank debt
    
    
    (704,930
    )
    
    
    (649,637
    )Payments on obligations under capital leases
    
    
    (97,495
    )
    
    
    (79,139
    )Issuance of underwriter warrants in connection with IPO for cash
    
    
    
    
    
    
    100Checks drawn in excess of available bank balances
    
    
    
    
    
    
    (199,802
    )Deferred offering costs
    
    
    
    
    
    
    (520,279
    )Net cash provided by financing activities
    
    
    1,793,180
    
    
    
    21,553,057Net increase (decrease) in cash and cash equivalents
    
    
    (13,866,634
    )
    
    
    10,891,752Cash and cash equivalents at beginning of year
    
    
    14,235,823
    
    
    
    3,344,071Cash and cash equivalents at end of year
    
    $
    369,189
    
    
    $
    14,235,823
  
  F5




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##### Table of Contents



1.
    
    Nature of Business, Organization and Going Concern
 Business Description
    Going Concern
     F6




---



##### Table of Contents



2.
    
    Summary of Significant Accounting Policies
 Revenue Recognition
      Contracts in Process
  Cash and Cash Equivalents
  Restricted Cash
  Property and Equipment
  Class of Asset
    
    Useful Life in YearsSmartVaults
    
    8 yearsElectronic equipment
    
    5 yearsRolling stock and trailers
    
    5 yearsVault mold
    
    15 yearsOffice equipment
    
    3 to 5 yearsLeasehold improvements
    
    Shorter of term of lease or asset life
   F7




---



##### Table of Contents



Income Taxes
   Deferred offering costs
  Advertising Expenses
  Fair Value of Financial Instruments
  Concentrations of Credit, Service Provider and Supplier Risk
      F8




---



##### Table of Contents



Impairment of Long-Lived Assets
     Stock Based Compensation
   F9




---



##### Table of Contents



Nonemployee stock based compensation
  Loss Per Share
   Use of Estimates
  Recently Issued Accounting Pronouncements
 (SAB 108)
 Share-Based
Payment
  F10




---



##### Table of Contents



Fair Value Measurements.
 Fair Value Option for Financial Assets and
Financial Liabilities
 Noncontrolling Interests in Consolidated
Financial Statements
 Disclosures about Derivative Instruments and
Hedging Activitiesan amendment of FASB Statement No. 133
 3.
    
    Prepaid and Other Assets
  December 31,2007Prepaid insurance
    
    $
    130,435Accounts receivable other
    
    
    15,824$
    146,259
  F11




---



##### Table of Contents



4.
    
    Property and Equipment
  December 31,2007SmartVaults
    
    $
    10,455,033GPS equipment
    
    
    2,587,199Vault mold
    
    
    1,773,751Rolling stock and trailers
    
    
    3,773,853Container components
    
    
    1,085,465Office equipment
    
    
    461,808Leasehold improvements
    
    
    11,47520,148,584Less accumulated depreciation
    
    
    (4,205,866
    )Property and equipment, net
    
    $
    15,942,718
   Accounting for the
Cost of Software Developed or Obtained for Internal Use,
 5.
    
    Other Assets
  December 31,2007Debt issuance costs
    
    $
    15,346Restricted cash
    
    
    15,000Deposits
    
    
    83,200$
    113,546
 6.
    
    Notes Receivable
   F12




---



##### Table of Contents



7.
    
    Long-Term Debt
        F13




---



##### Table of Contents



F14




---



##### Table of Contents



F15




---



##### Table of Contents



th
  F16




---



##### Table of Contents



F17




---



##### Table of Contents



20072005
    
    
    2006
    
    
    2006
    
    
    2007
    
    
    2007
    
    
    Deferred
    
    
    2007Year Ending
    
    2005
    
    
    Bank
    
    
    July
    
    
    Bank
    
    
    August
    
    
    September
    
    
    Interest
    
    
    NovemberDecember 31,
    
    Notes
    
    
    Note
    
    
    Notes
    
    
    Note
    
    
    Notes
    
    
    Note
    
    
    Note
    
    
    Notes
    
    
    Total2008
    
    $
    43,990
    
    
    $
    178,223
    
    
    $
    
    
    
    $
    166,667
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,071,500
    
    
    $
    1,460,3802009
    
    
    52,166
    
    
    
    
    
    
    
    
    
    
    
    13,888
    
    
    
    1,217,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,283,5542010
    
    
    58,782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    540,000
    
    
    
    177,750
    
    
    
    
    
    
    
    776,5322011
    
    
    66,237
    
    
    
    
    
    
    
    5,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,066,2372012
    
    
    2,778,825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,778,825Total
    
    
    3,000,000
    
    
    
    178,223
    
    
    
    5,000,000
    
    
    
    180,555
    
    
    
    1,217,500
    
    
    
    540,000
    
    
    
    177,750
    
    
    
    1,071,500
    
    
    
    11,365,528Less discounts
    
    
    60,639
    
    
    
    1,323
    
    
    
    3,327,949
    
    
    
    4,630
    
    
    
    18,555
    
    
    
    57,534
    
    
    
    
    
    
    
    470,801
    
    
    
    3,941,431Less offering costs
    
    
    9,708
    
    
    
    
    
    
    
    445,869
    
    
    
    
    
    
    
    93,504
    
    
    
    40,177
    
    
    
    
    
    
    
    72,724
    
    
    
    661,982Less current maturity
    
    
    43,990
    
    
    
    178,223
    
    
    
    
    
    
    
    166,667
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,071,500
    
    
    
    1,460,380Current portion of
discounts
    
    
    (18,358
    )
    
    
    (1,323
    )
    
    
    (389,880
    )
    
    
    (4,576
    )
    
    
    (62,801
    )
    
    
    (30,847
    )
    
    
    
    
    
    
    (543,525
    )
    
    
    (1,051,310
    )Long-term portion
    
    $
    2,904,021
    
    
    $
    
    
    
    $
    1,616,062
    
    
    $
    13,834
    
    
    $
    1,168,242
    
    
    $
    473,136
    
    
    $
    177,750
    
    
    $
    
    
    
    $
    6,353,045
  8.
    
    Capital Lease Obligations
  Year Ending December 31,2008
    
    $
    115,2002009
    
    
    115,2002010
    
    
    36,900Total
    
    
    267,300Less interest
    
    
    29,999237,301Less current maturity
    
    
    91,648Long-term portion
    
    $
    145,653
  F18




---



##### Table of Contents



9.
    
    Authorized Capital
 Common Stock
  Preferred Stock
          F19




---



##### Table of Contents



10.
    
    Stock Incentives and Options
 Overview
       Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2007
    
    
    2006Risk-free interest rate
    
    
    4.31
    %
    
    
    4.62 to 4.71
    %Expected life in years
    
    
    6
    
    
    
    6Expected volatility
    
    
    36.7
    %
    
    
    33
    %Dividend yield
    
    
    
    
    
    
    
    F20




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##### Table of Contents



WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contract
    
    
    AggregateExercise
    
    
    Term
    
    
    IntrinsicShares
    
    
    Price
    
    
    In Years
    
    
    ValueOutstanding as of January 1, 2006
    
    
    800,000
    
    
    $
    1.28Exercised for Cash
    
    
    (40,000
    )
    
    $
    0.625Exercised cashless (537,780 net shares)
    
    
    (760,000
    )
    
    $
    1.32Granted
    
    
    774,000
    
    
    $
    5.29Outstanding as of December 31, 2006
    
    
    774,000
    
    
    $
    5.29
    
    
    
    8.99Forfeited
    
    
    (154,500
    )
    
    $
    4.64
    
    
    
    8.97Granted
    
    
    182,000
    
    
    $
    1.80
    
    
    
    9.70Outstanding as of December 31, 2007
    
    
    801,500
    
    
    $
    4.53
    
    
    
    9.10
    
    
    $
    Vested and Exercisable as of December 31, 2007
    
    
    226,532
    
    
    $
    4.38
    
    
    
    9.07
    
    
    $
    
  WeightedAverageGrant-DateShares
    
    
    Fair ValueUnvested as of December 31, 2006
    
    
    666,000
    
    
    $
    1.85Granted
    
    
    182,000
    
    
    $
    0.60Forfeited
    
    
    (147,750
    )
    
    $
    1.91Vested
    
    
    (125,282
    )
    
    $
    1.69Unvested as of December 31, 2007
    
    
    574,968
    
    
    $
    1.47
    F21




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##### Table of Contents



11.
    
    Warrants
  Date of Grant
    
    Granted For
    
    Shares
    
    
    Exercise Price
    
    
    YearsSeptember-04
    
    Consulting agreement
    
    
    120,000
    
    
    $
    0.625
    
    
    
    5September-04
    
    Placement agent equity offering
    
    
    178,876
    
    
    $
    0.625
    
    
    
    5September-04
    
    2004 Note offering
    
    
    243,272
    
    
    $
    0.625
    
    
    
    5September-04
    
    Placement agent debt offering
    
    
    180,000
    
    
    $
    0.625
    
    
    
    5December 31, 2004
    
    Balance
    
    
    722,148
    
    
    $
    0.625
    
    
    
    5April-05
    
    Bank debt
    
    
    100,000
    
    
    $
    0.875
    
    
    
    7March-05
    
    Placement agent interest conversion to equity
    
    
    10,000
    
    
    $
    1.20
    
    
    
    5September-05
    
    Equity offering
    
    
    673,070
    
    
    $
    5.00
    
    
    
    5September-05
    
    Placement agent equity offering
    
    
    134,614
    
    
    $
    2.50
    
    
    
    5September-05
    
    Placement agent equity offering
    
    
    67,308
    
    
    $
    5.00
    
    
    
    5September-05
    
    2005 Note
    
    
    273,000
    
    
    $
    2.50
    
    
    
    5September-05
    
    2005 Note
    
    
    87,000
    
    
    $
    1.50
    
    
    
    5September-05
    
    Placement agent debt offering
    
    
    120,000
    
    
    $
    2.50
    
    
    
    5September-05
    
    Placement agent debt offering
    
    
    60,000
    
    
    $
    5.00
    
    
    
    5Balance
    
    
    1,524,992
    
    
    $
    0.875 to $5.00
    
    
    
    5 to 7December 31, 2005
    
    Total
    
    
    2,247,140
    
    
    $
    0.625 to $5.00
    
    
    
    5 to 7January-06
    
    Bank debt
    
    
    13,000
    
    
    $
    3.75
    
    
    
    7January-06
    
    Placement agent debt offering
    
    
    41,226
    
    
    $
    3.75
    
    
    
    5January-06
    
    Placement agent debt offering
    
    
    10,306
    
    
    $
    5.00
    
    
    
    5January-06
    
    2006 Note offering (January Notes)
    
    
    128,834
    
    
    $
    5.00
    
    
    
    5September-06
    
    2006 Note offering (July Notes)
    
    
    400,000
    
    
    $
    7.00
    
    
    
    5September-06
    
    Equity offering
    
    
    473,204
    
    
    $
    7.50
    
    
    
    5September-06
    
    Interest conversion
    
    
    65,934
    
    
    $
    7.50
    
    
    
    5September-06
    
    Inducement warrants
    
    
    60,000
    
    
    $
    7.50
    
    
    
    5December-06
    
    Public offering warrants
    
    
    3,312,000
    
    
    $
    7.50
    
    
    
    5December-06
    
    Underwriters option
    
    
    288,000
    
    
    $
    6.25
    
    
    
    5December-06
    
    Underwriters option
    
    
    288,000
    
    
    $
    8.40
    
    
    
    5December-06
    
    Balance
    
    
    5,080,504
    
    
    $
    3.75 to $8.40
    
    
    
    5 to 7December 31, 2006
    
    Total
    
    
    7,327,644
    
    
    $
    0.625 to $8.40
    
    
    
    5 to 7August-07
    
    Interest conversion
    
    
    120,440
    
    
    $
    3.38
    
    
    
    5August-07
    
    Placement agent warrants
    
    
    11,852
    
    
    $
    3.38
    
    
    
    5August-07
    
    Private placement
    
    
    121,750
    
    
    $
    7.50
    
    
    
    5August-07
    
    Placement agent warrants
    
    
    48,700
    
    
    $
    2.00
    
    
    
    5September-07
    
    Unsecured debt warrants
    
    
    100,000
    
    
    $
    7.50
    
    
    
    4.4September-07
    
    Unsecured debt warrants
    
    
    100,000
    
    
    $
    3.25
    
    
    
    4.4September-07
    
    Unsecured debt warrants
    
    
    100,000
    
    
    $
    2.50
    
    
    
    4.4November-07
    
    Interest deferral
    
    
    355,500
    
    
    $
    1.50
    
    
    
    5November-07
    
    Private placement
    
    
    1,071,500
    
    
    $
    1.50
    
    
    
    5November-07
    
    Private placement
    
    
    1,071,500
    
    
    $
    1.25
    
    
    
    5November-07
    
    Placement agent warrants
    
    
    85,720
    
    
    $
    1.00
    
    
    
    5November-07
    
    Placement agent warrants
    
    
    18,000
    
    
    $
    1.50
    
    
    
    5December-07
    
    Balance
    
    
    3,204,962
    
    
    $
    1.00 to $7.50
    
    
    
    4.4 to 5December 31, 2007
    
    Total
    
    
    10,532,606
    
    
    $
    0.625 to $8.40
    
    
    
    4.4 to 7
  F22




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##### Table of Contents



Warrants Outstanding and ExercisableWeighted-AverageRemainingYear of
    
    Range of Warrant
    
    
    Number of
    
    
    Weighted-Average
    
    
    Contractual LifeGrant
    
    Exercise Price
    
    
    Warrants
    
    
    Exercise Price
    
    
    (Years)2004
    
    
    $0.625
    
    
    
    722,148
    
    
    $
    0.625
    
    
    
    1.752005
    
    
    $0.875 to $5.00
    
    
    
    1,524,992
    
    
    
    3.64
    
    
    
    2.852006
    
    
    $3.75 to $8.40
    
    
    
    5,080,504
    
    
    
    7.33
    
    
    
    3.862007
    
    
    $1.00 to $7.50
    
    
    
    3,204,962
    
    
    
    1.99
    
    
    
    4.74Total
    
    
    $0.625 to $8.40
    
    
    
    10,532,606
    
    
    $
    4.71
    
    
    
    3.84
   Risk Free
    
    
    ExpectedInterest
    
    
    Dividend
    
    
    Expected
    
    
    VolatilityDate of Grant
    
    Rate
    
    
    Yield
    
    
    Life
    
    
    RangeSeptember 30, 2004 at $0.625
    
    
    3.44
    %
    
    $
    
    
    
    
    5
    
    
    
    45%-65
    %April 30, 2005 at $0.875 to $1.20
    
    
    4.09
    %
    
    $
    
    
    
    
    5 to 7
    
    
    
    45%-65
    %September 30, 2005 at $2.50 to $5.00
    
    
    4.18
    %
    
    $
    
    
    
    
    5
    
    
    
    45%-65
    %January 24, 2006 at $3.75 to $5.00
    
    
    4.28
    %
    
    $
    
    
    
    
    5 to 7
    
    
    
    45%-65
    %July 26, 2006 at $3.75 to $7.50
    
    
    4.99
    %
    
    $
    
    
    
    
    5
    
    
    
    45%-65
    %September 15, 2006 at $7.50
    
    
    4.76
    %
    
    $
    
    
    
    
    5
    
    
    
    45%-65
    %August, 2007 at $2.00 to $7.50
    
    
    4.25
    %
    
    $
    
    
    
    
    4.4 to 5
    
    
    
    36.70
    %September 2007 at $2.50 to $7.50
    
    
    4.27
    %
    
    $
    
    
    
    
    5
    
    
    
    36.70
    %November 2007 at $1.00 to $1.50
    
    
    3.38 to 4.02
    %
    
    $
    
    
    
    
    5
    
    
    
    53.17
    %
    F23




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##### Table of Contents



12.
    
    Income Taxes
   Balance at January 1, 2007
    
    $
    (2,287,000
    )Additions to tax basis of property and equipment
    
    
    61,000Reductions in tax basis of intangibles
    
    
    (141,000
    )Adjusted balance at January 1, 2007
    
    
    (2,367,000
    )Reductions in net deferred tax liability in current period
    
    
    2,367,000Balance at December 31, 2007
    
    $
    
    Year EndedDecember 31,2007Current:Federal
    
    $
    State
    
    
    Deferred:Federal
    
    
    (2,071,000
    )State
    
    
    (296,000
    )(2,367,000
    )Income tax (benefit)
    
    $
    (2,367,000
    )
  Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2007
    
    
    2006Provision (benefit)Computed tax on book loss at the federal statutory rate of 35%
    
    $
    (5,310,000
    )
    
    $
    (3,536,000
    )Pretax loss of A Smart Move, L.L.C. from January 1, 2006 to
December 6, 2006 at the federal statutory rate of 35%
    
    
    
    
    
    
    3,151,000State taxes, net of federal benefit
    
    
    (759,000
    )
    
    
    (55,000
    )Non-deductible incentive stock options and other
    
    
    80,000
    
    
    
    75,000Non-deductible conversion options and other
    
    
    329,000
    
    
    
    Deferred tax expense upon merger with Smart Move, Inc.
    
    
    
    
    
    
    132,000Change in valuation allowance
    
    
    3,293,000
    
    
    
    Income tax (benefit)
    
    $
    (2,367,000
    )
    
    $
    (233,000
    )
  F24




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##### Table of Contents



December 31,
    
    
    December 31,2007
    
    
    2006Current deferred tax assets (liabilities):Deferred revenue
    
    $
    182,000
    
    
    $
    45,000Allowance for doubtful accounts
    
    
    18,000
    
    
    
    16,000Accrued vacation
    
    
    3,000
    
    
    
    3,000Deferred expenses
    
    
    (207,000
    )
    
    
    (147,000
    )Prepaid insurance
    
    
    (52,000
    )
    
    
    (39,000
    )(56,000
    )
    
    
    (122,000
    )Long-term deferred tax assets (liabilities):Intangibles assets
    
    
    48,000
    
    
    
    474,000Net operating loss carryforwards
    
    
    5,395,000
    
    
    
    394,000Beneficial conversion features
    
    
    (1,018,000
    )
    
    
    (1,031,000
    )Warrant allocation on debt offerings
    
    
    (529,000
    )
    
    
    (1,456,000
    )Property and equipment
    
    
    (547,000
    )
    
    
    (546,000
    )3,349,000
    
    
    
    (2,165,000
    )Valuation allowance
    
    
    3,293,000
    
    
    
    Net deferred tax (liability)
    
    $
    
    
    
    $
    (2,287,000
    )
   F25




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##### Table of Contents



13.
    
    Supplemental Disclosure of Cash Flow Information
 Year Ending December 31,
    
    2007
    
    
    2006Supplemental disclosure of cash flow informationCash paid during the period for interest
    
    $
    427,686
    
    
    $
    627,460Supplemental schedule of noncash investing and
financing activities:Conversion of accrued interest to shares
    
    $
    406,484
    
    
    $
    296,700Conversion of debt to shares
    
    $
    1,373,867
    
    
    $
    2,030,069Recovery of deferred offering costs in accounts
payable
    
    $
    32,108
    
    
    $
    Adoption of FIN 48 increase in deferred tax
liability and accumulated deficit
    
    $
    80,000
    
    
    $
    Placement agent warrants issued for debt
offering costs
    
    $
    31,034
    
    
    $
    184,594Allocation of value of warrants issued in
connection with debt
    
    $
    474,398
    
    
    $
    1,243,952Fair value of conversion option and warrants
included in loss on debt extinguishment
    
    $
    776,909
    
    
    $
    Allocation of value of beneficial conversion
feature in connection with debt
    
    $
    113,251
    
    
    $
    3,556,530Equipment acquired included in accounts payable
    
    $
    883,895
    
    
    $
    192,584
 14.
    
    Related-Party Transactions
       F26




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##### Table of Contents



15.
    
    Commitments and Contingents
 Operating lease commitments
     Year Ending December 31,2008
    
    $
    113,4202009
    
    
    116,6002010
    
    
    119,7802011
    
    
    40,280Total
    
    $
    390,080
 Employment Agreements
  Retirement plan
  Legal Proceedings
   F27




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##### Table of Contents



16.
    
    Subsequent Events
        F28




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description**23.1
    
    Consent of Houlihan Smith & Company Inc.**24.1
    
    Power of Attorney (included on signature pages hereto).**31.1
    
    Certification of Chief Executive Officer of Smart Move, Inc. pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.**31.2
    
    Certification of Chief Financial Officer of Smart Move, Inc. pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.**32
    
    Certification of Chief Executive Officer and Chief Financial Officer of Smart Move, Inc.
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 **
    
    Filed herewith.