On The Move Systems Corp (OTCMKTS:OMVS) With a Remarkable Bounce

On The Move Systems Corp (OTCMKTS:OMVS) made quite a jump during yesterday’s session. A massive 172% was gained in a matter of six and a half hours and the ticker reached a close of $1.50 per share. Seeing a stock double its value (and then some) in such a short period of time is not that uncommon in OTC land, but normally, these astonishing jumps are reserved for sub-penny tickers or, at best, those that cost a couple of cents. OMVS showed us that even the more expensive stocks can get investors mightily excited. But what was it exactly that made so many people jump in all at once?

Well, the company certainly has an interesting business plan. In fact, the idea of creating an Uber-like app for freighters seems to be quite hot at the moment. So much so, that even Forbes wrote about the numerous advantages of such a platform about a month ago.

So, OMVS‘ business idea is definitely interesting, but unfortunately that’s just about the only positive thing we can say about the company. Take the press releases, for example. The latest one hit the wire a couple of hours before the start of yesterday’s session and, in a fashion similar to the Forbes article, it talks about how many problems OMVS‘ platform could potentially solve. What it doesn’t say is how far they’ve gone in terms of development.

If the latest 10-Q is anything to go by, they probably haven’t made much progress. Here’s a summary:

• cash: $7,154
• current assets: $14,654
• current liabilities: $1,132,843
• quarterly revenues: $2,250
• quarterly net loss: $337,383

The revenues, in case you’re wondering, come from selling advertising space on a race car owned by a joint venture of which OMVS is a part. They are quite simply pitiful and the same goes for the rest of the financial statement. And this means that before they can think about turning the trucking industry on its head, OMVS need to raise some money. So, how exactly are they going to do that?

Well, one option is to borrow money under convertible notes with a fixed conversion price. They’ve done it many times in the past.

The notes in question were issued between February 2011 and February 2015 and they had their conversion rates set at between $0.001 and $0.015 per share which, though not completely fair, didn’t represent such a shocking discount.

In March, however, the management team decided that OMVS‘ sub-penny status isn’t doing the stock any favors and, indeed, the microscopic volumes suggested that they’re right. They reckoned that a reverse split is their only option and they set the ratio at 1 for 500. They knew that OMVS will emerge on the other end of the split with a price of over $1 per share and we’re pretty sure that they realized that if they don’t do anything about the conversion rates discussed in the previous paragraph, they’ll put the shareholders in grave danger. So, what did they do?

Nothing.

As a result, between June 11 and July 10, when OMVS‘ market price hovered between $0.70 and $1.84, some note holders received 265,000 shares at a rate of $0.01 apiece. Immediately after the conversion, there was still around $1,350,000 worth of debt which was convertible at between $0.001 and $0.015 per share.