Remote Dynamics Inc (RMTD)

[Pick _M_Low]

I put the tell tail signs in bold from the last 10Q:

http://www.sec.gov/Archives/edgar/data/944400/000114420409058708/v166049_10q.htm

1. ORGANIZATION, BUSINESS OVERVIEW, AND GOING CONCERN

Organization and Business Overview

The consolidated financial statements presented are those of Remote Dynamics, Inc. and its wholly-owned subsidiaries, BounceGPS, Inc. (formerly known as Huron Holdings, Inc.) and HighwayMaster of Canada, LLC.

Remote Dynamics, Inc., a Delaware Corporation, (“Remote Dynamics”, “Company” and/or “We”) was originally incorporated on February 3, 1994. We market, sell and support automatic vehicle location (“AVL”) and mobile resource management solutions targeting companies that own and operate private vehicle fleets, construction equipment, and unpowered assets such as containers and trailers. Our AVL solutions are designed for diverse industry vertical markets such as construction, field services, distribution, limousine, electrical/plumbing, waste management, and government. Our core technology, telematics, combines wireless communications, GPS location technology, geospatial solutions and vehicle data integration with a web-accessible application that aids in the optimization of remote business solutions. We believe our fleet management solution contributes to increased operator efficiency by improving the productivity of mobile workers through real-time position reports, route-traveled information, and exception based reporting designed to highlight mobile workforce inefficiencies. This in-depth reporting enables our customers to correct those inefficiencies and deliver cost savings to their bottom line.

Our REDIview product line forms the basis of our current business plan. We expect this product line to provide the foundation for a growth in revenues and, if our revenues grow as we anticipate, ultimately profitability. We do not expect to achieve profitability or positive cash flow for 2009. Our plans for 2009 include growing our subscriber base through direct sales to new and existing customers and continuing to control our operating costs. However, there can be no assurance that we will achieve our sales targets for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations. Moreover, despite actions to increase revenue, control operating costs, and to improve profitability and cash flow, our operating losses and net operating cash outflows will continue through 2009.

August 2008 Reverse Stock Split

On August 13, 2008, we amended our Amended and Restated Certificate of Incorporation to (i) effect a one-for-four hundred reverse stock split of our common stock and (ii) authorize (after giving effect to the reverse stock split) 5,000,000,000 authorized shares of our common stock having a par value of $0.0001 per share. All equity transactions have been retroactively restated to reflect these changes.

April 2009 Increase in Authorized Common Stock

On April 17, 2009, we amended our Amended and Restated Certificate of Incorporation to increase our authorized shares of our common stock to 15,000,000,000.

November 2009 Increase in Authorized Common Stock

On November 3, 2009, we amended our Amended and Restated Certificate of Incorporation to increase our authorized shares of our common stock to 100,000,000,000 having a par value of $.00001 per share.

Going Concern

We have incurred significant operating losses since our inception, and these losses will continue for the near future. We may not ever achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profits on a quarterly or annual basis. For 2008 and 2007, our independent registered public accounting firm issued an opinion on our financial statements which included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.


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We do not expect to achieve profitability or positive cash flow for 2009. Our plans for 2009 include growing our subscriber base through direct sales to new and existing customers and continuing to control our operating costs. However, there can be no assurance that we will achieve our sales targets for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations.

Critical success factors in our plans to achieve positive cash flow from operations include:


·

Ability to increase sales of the REDIview product line.


·

Significant market acceptance of our product offerings from new customers, including our REDIview product line, in the United States.


·

Maintaining and expanding our direct sales channel.


·

Training and development of new sales staff.

There can be no assurances that any of these success factors will be realized or maintained.

We had a working capital deficit of $3.8 million, excluding the gross outstanding amount of our secured convertible notes of $9.4 million, as of September 30, 2009. We believe that we will have sufficient capital to fund our ongoing operations through 2009, assuming that we are able to meet our sales targets and operating cost reduction plans and to negotiate acceptable payment arrangements with our senior security holders, vendors and other creditors. The sufficiency of our cash resources depends to a certain extent on general economic, financial, competitive or other factors beyond our control.

We do not currently have any arrangements for additional financing and we may not be able to secure additional debt or equity financing on terms acceptable to us, or at all, at the time when we need such financing. Further, our ability to secure certain types of additional financings is restricted under the terms of our existing financing arrangements. There can be no assurance that we will be able to consummate a transaction for additional capital prior to substantially depleting our available cash reserves, and our failure to do so may force us to restructure, file for bankruptcy, sell assets or cease operations.

We have failed to comply with certain of our other obligations relating to our secured convertible notes, including our failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the related private placements. The notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and for liquidated damages for non-compliance with our registration obligations. As of September 30, 2009, we have accrued $1,916,418 in default interest and liquidated damages under our secured convertible notes.

Our non-compliance with the terms of the notes also exposes us to the risk that our note holders could seek to exercise prepayment or other remedies under the notes. We have received one outstanding notice of default from a holder of our Series A Notes. The notice demands immediate payment in cash of $287,500. To date, we have made no payment in respect of the note holder demand and it remains outstanding

In March, 2008, we resumed making payments to certain of our note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. In the first nine months of 2009, we issued 6,402,645,880 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $937,110 of obligations due under the notes. Additionally, during the same period, we issued 3,255,173,554 shares of common stock as partial payments on the Series B Notes in satisfaction of $429,404 of obligations due under the notes. On September 8, 2009, a holder of our Series B Notes agreed to convert $1,688,032 of obligations due under the notes into 18,756,355,556 shares of our common stock. This conversion represents an issuance price of $.00009 per share. On November 6, 2009, we completed this transaction and issued 18,756,355,556 common shares in full satisfaction of $1,688,032 of obligations under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during the remainder of 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.


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We do not currently have the cash on hand to repay amounts due under our secured convertible notes if the note holders elect to exercise their repayment or other remedies. If our efforts to restructure or otherwise satisfy our obligations under the notes are unsuccessful, and we are unable to raise enough money to cover the amounts payable under the notes, we may be forced to restructure, file for bankruptcy, sell assets or cease operations.