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On The Move Systems Corp (OTCMKTS:OMVS) Oversold And Due For A Bounce

On The Move Systems Corp (OTCMKTS:OMVS) Oversold And Due For A Bounce
Written by
Jarrod Wesson
Published on
September 7, 2017
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As it always happens when a company acquires another one paying with its own stock, the share price of On Move Systems Corp. (OTCMKTS:OMVS) declined recently reacting to the acquisition of Robotic Assistance Devices, Inc. ("RAD"). We have extensively discussed this acquisition, which was largely celebrated by the market in the first six months of 2017. The following articles help understand the outstanding potential of RAD:

In this article, we will revisit the deal and assess the dilution suffered by the shareholders. Before we provide any details, have a look at the most recent share price action: 1 month chart for OMVSRecent DevelopmentsLet's revisit the business objective of OMVS for those who are becoming aware of the company for the first time now. The company is based in Nevada and provides transportation services. Additionally, it is also developing a network of logistics partnerships. Given OMVS's business model, we believe that the acquisition of RAD, which developed all terrain robotic security guards, makes a lot of sense. Let's see the terms of the acquisition and how the executives reacted to the closing of the transaction.On August 31, 2017, the company announced the closing of the acquisition of Robotic Assistance Devices, Inc. According to the terms and conditions included in the acquisition contract, OMVS paid 3,350,000 shares of its Series E Preferred Stock and 2,450 shares of its Series F Preferred Stock. We found the following information about the Series E Preferred Stock in the annual report:

"The Series E preferred stock ranks subordinate to the Company’s common stock. The Series E preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E preferred stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of common stock. As a result, the holder of Series E preferred stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders." Source

Like any other acquisition, the new shares increased the amount of shares outstanding. According to the OTC Markets website, the company had, as of July 24, 2017, approximately 71 million shares. This means that the company increased the total amount of outstanding shares by 5%. Hence, we believe that the market reaction cannot be justified by the dilution created by the transaction.Other relevant news were released in August, but they were not as remarkable like the following. On August 25, 2017, the company released that RAD had signed an agreement with Romeo Power to outfit the SMP Robotics S5 Security Guard Robot with Romeo's lithium-ion energy solution. We believe that this news was a great news for RAD, as Romeo Power's advanced battery packs can be used for years without replacement. We agree with Steve Reinharz, President and Founder of RAD, when he said that the new deal will increase the efficiency and operational success of the robots. Finally, the announcement also included that Romeo Power will deploy two of the RAD's robots to patrol its headquarter office in Vernon, Calif.Additionally, on August 10, 2017, the company noted that it had signed a deal with a big company; one of the largest security companies in North America. The name was not disclosed, as it happened in previous announcements.Are we missing something?The first thing that came to our minds when we saw the massive stock reaction to the announcement was that there should be other news that are making the stock collapse. Thus, we checked other filings and news, but we found nothing. The previous filing was from EAGLE EQUITIES, LLC, which claimed to have acquired 9.9% of the total outstanding shares and that is good news. Hence, we concluded that the market was overreacting to the dilution risk created by the transaction.What did executives said about the transaction?Garett Parsons, president and CEO of OMVS, noted that they are excited to have completed the acquisition and Steve Reinharz, President and CEO of RAD, said that the company is well positioned to deliver "significant growth milestones in the near future" after the acquisition. Additionally, the tone of the press release was very positive, as it noted that RAD is working for "a sales pipeline of over 50 Fortune 500 companies."ConclusionOn Move Systems Corp. finally acquired Robotic Assistance Devices, Inc. We believe that RAD has a lot of potential with their innovative robots. Additionally, the share price increased when the acquisition was announced, thus we don't really understand why the share price declined after the closing of the transaction. We accept that the fact that the company is paying with stock is not ideal, but we checked the amount of shares issued and the dilution was not that great in the scheme of things. We will see what happens next, but from what shareholders are disclosing, smart money is using the selloff as an opportunist to load up. To sum up, be alert to assess the following news on this name!Be sure to check out our coverage on OMVS!We will be updating our subscribers as soon as we know more. For the latest updates on OMVS, sign up below!Image courtesy of Colin via FlickrDisclosure: We have no position in OMVS and have not been compensated for this article.

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