- Securities Registration Statement (S-1/A)

Share Name	Share Symbol	Market	Type
Smart Move,	AMEX:MVE	AMEX	Ordinary Share

As filed with the Securities and Exchange Commission on December 9, 2008

Registration No. 333-155244

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Smart Move, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		4213 (Primary Standard Industrial Classification Code Number)		54-2189769 (IRS Employer Identification Number)

5990 Greenwood Plaza Blvd, #2 Suite 390

Greenwood Village, CO 80111

(720) 488-0204

(Address, including zip code, and telephone number, including area code of registrant’s principal executive office)

Chris Sapyta

President and Chief Executive Officer

5990 Greenwood Plaza Blvd, #2 Suite 390

Greenwood Village, CO 80111

(720) 488-0204

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy of all communications to:


Randal M. Kirk Messner & Reeves, LLC 1430 Wynkoop Street, Suite 400 Denver, CO 80202 Phone: 303-623-1800 Fax: 303-623-0552		Thomas P. Palmer Tonkon Torp LLP 1600 Pioneer Tower 888 S.W. Fifth Avenue Portland, Oregon 97204 Phone: (503) 221-1440 Fax: (503) 274-8779

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ

(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE

Proposed Maximum

Amount of

Title of Each Class of

Amount

Offering Price

Aggregate

Registration

Securities to be Registered

to be Registered

per Security

Offering Price

Fee

Units, each unit consisting of:(1)

6,325,000

(i) one share of common stock, par value $0.0001 per share;

6,325,000

(ii) one Class A warrant, each to purchase one share of common stock; and(2)(3)

6,325,000

(iii) one Class B warrant, each to purchase one share of common stock(2)(3)

6,325,000

Common stock underlying the Class A warrants and the Class B warrants included in the Units(4)

12,650,000

Representative’s warrants(3)

550,000

Units issuable upon exercise of the representative’s warrants, each consisting of:

550,000

(i) one share of common stock;

550,000

(ii) one Class A warrant, each to purchase one share of common stock; and

550,000

(iii) one Class B warrant, each to purchase one share of common stock

550,000

Common stock underlying the Class A warrants and the Class B warrants included in the Units issuable upon exercise of the Representative’s warrants(4)

1,100,000

Total

$9,487,500

$372.86(5)


(1)		Estimated solely for purposes of calculating the amount of the registration fee paid pursuant to Rule 457(g) under the Securities Act. Pursuant to Rule 457(g) under the Securities Act, no separate registration fee is required for the Warrants because the Registrant is registering those securities in the same registration statement as the underlying Common Stock.


(2)		Includes 825,000 Units issuable upon exercise of underwriter’s over-allotment option.


(3)		Pursuant to Rule 416 under the Securities Act, there are also being registered thereby such additional indeterminate number of securities as may become issuable pursuant to the anti-dilution provisions of the Class A and Class B warrants and the Representative’s warrants.

(4)		No registration fee required pursuant to Rule 457 under the Securities Act.


(5)		The Registrant previously paid $353.70 of the $372.86 Registration Fee.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We have filed a registration statement with the Securities and Exchange Commission relating to this offering. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 9, 2008

PRELIMINARY PROSPECTUS

5,500,000 Units

each Unit consisting of one share of common stock

and one Class A warrant

and one Class B warrant

We are offering 5,500,000 Units, each Unit consisting of one share of our common stock, one Class A Warrant and one Class B Warrant. Each redeemable Class A Warrant entitles the holder to purchase one share of our common stock at any time after the warrants become separately tradeable at an exercise price equal to 110% of the initial Unit public offering price specified below for a period of six months and thereafter at an exercise price equal to 150% of such Unit price, and is subject to redemption as described in this prospectus. Each non-redeemable Class B Warrant entitles the holder to purchase one share of our common stock at any time after the warrants become separately tradeable at an exercise price equal to 200% of the initial Unit public offering price specified below.

Initially, only the Units will trade. The common stock and the warrants will begin trading separately on the 30th calendar day following the date of this prospectus. Once separate trading in the common stock and Class A and Class B warrants begins, trading in the Units will cease, and the Units will be delisted.

Our common stock is traded on the NYSE Alternext US (“Alternext,” formerly known as the American Stock Exchange) under the symbol “MVE.” No public market currently exists for the Units being sold in this offering. We intend to apply to list the Units and Class A and Class B Warrants on the Alternext under the symbols “MVE.U,” “MVE.WSA” and “MVE.WSB,” respectively.

On December 5, 2008, the last reported sales price of our common stock as reported on the Alternext was $0.11 per share. The public offering price for the Units offered hereby will be determined by negotiation between us and the representative of the underwriters based upon market conditions on the day we price the Units.

Investing in our Units involves significant risks. See “Risk Factors” beginning on page 7 for a discussion of certain factors that should be considered by prospective purchasers of our Units.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


	Per Unit	Total

Initial public offering price	$	$
Underwriting discount	$	$
Proceeds to us, before expenses	$	$

We have also agreed to pay Paulson Investment Company, Inc., the representative of the underwriters of this offering (the “Representative”), a non-accountable expense allowance equal to 3% of the gross proceeds of this offering and to issue to the Representative a warrant covering 550,000 Units, identical to the Units offered by this prospectus, having an exercise price per Unit equal to 120% of the initial Unit public offering price. Additionally, we have granted the underwriters a 45-day option to purchase up to an additional 825,000 Units to cover over-allotments.

Paulson Investment Company, Inc.

The date of this prospectus is , 2008.

METROPOLITAN LOCATIONS CURRENTLY SERVED

BY SMART MOVE, INC.

The SmartMove ^® and SmartVault ^® names, designs and logos are trademarks and service marks of Smart Move, Inc. This Prospectus also includes trade names, trademarks and service marks of other companies and organizations.

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

TABLE OF CONTENTS


	Page

PROSPECTUS SUMMARY		1
THE OFFERING		4
SUMMARY FINANCIAL DATA		6
RISK FACTORS		7
DETERMINATION OF OFFERING PRICE		16
USE OF PROCEEDS		16
DIVIDEND POLICY		16
CAPITALIZATION		17
PRICE RANGE OF COMMON STOCK		18
DILUTION		19
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		20
BUSINESS		37
MANAGEMENT		46
EXECUTIVE COMPENSATION		49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		53
DESCRIPTION OF SECURITIES		54
SHARES ELIGIBLE FOR FUTURE SALE		57
UNDERWRITING		59
LEGAL MATTERS		61
EXPERTS		61
WHERE YOU CAN FIND MORE INFORMATION		61
INDEX TO FINANCIAL STATEMENTS		F-1
EX-1.1
EX-5.1
EX-23.1

Until , 2009 (the 25 ^th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to make available a prospectus. This is in addition to the obligation of dealers to make available a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before making an investment, you should read the entire prospectus carefully, including our financial statements and the related notes, and carefully consider, among other things, the matters discussed in “Risk Factors” on page 7. Some of the statements made in this prospectus discuss future events and developments, including our future business strategy and our ability to generate revenue, income and cash flow. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking statements. See “Cautionary Note Regarding the Forward Looking Statements.”

Information regarding our securities set forth in this prospectus has been adjusted to reflect a proposed reverse stock split approved by our stockholders on October 27, 2008. Pursuant to such approval, we have agreed with the Representative to adopt a one-for-thirteen reverse stock split prior to the effectiveness of the registration statement of which this prospectus is a part.

References to “we,” “us,” “our,” “the Company” or “Smart Move” means Smart Move, Inc. and its subsidiary.

Our Company

We provide an innovative, containerized method of transporting household and commercial goods securely on a time-guaranteed basis. The Company currently provides moving services within markets encompassing over 92% of the U.S. population from terminals in the 60 largest metropolitan areas. Our operations are coordinated through the terminals of our primary transportation provider, UPS Freight. The superior security for customer goods, scheduling flexibility and expedited service provided by our business model gives us specific competitive advantages over the service offerings of traditional van lines that currently perform the majority of long distance moves in the U.S.

Our business model incorporates two innovative features: the use of the SmartVault container, which is a specially designed standardized shipping container that is generally loaded and locked by the customer, and the use of third-party trucking logistics companies to transport the containers from point of origin to the final destination. The SmartVault container is a high-density polyethylene container built on an aluminum base that was designed to be loaded by forklift onto standard truck trailers and sea containers. The SmartVault is weather resistant, approximately seven feet long, six feet wide and seven feet high. The customer may use his or her own lock on the container to secure the contents, providing increased security compared to traditional moving vans where the customer’s goods may be off-loaded and repacked prior to reaching the final destination.

We market our containerized moving solution and manage our fleet of containers using modern logistics techniques to provide better service at a lower cost to consumers. We can operate efficiently with only a small labor force and without a need for the substantial investment of capital in transportation facilities that is typically required of national moving companies and their local agents. Instead of contracting with large national van lines for our long distance transportation needs, we have elected to take advantage of the recurring excess load capacity of UPS Freight and other trucking logistics companies to ship our SmartVaults. These companies regularly ship a wide range of commercial products on a time-sensitive delivery basis and can ship our SmartVaults far more efficiently than traditional van lines.

UPS Freight acts as our primary local cartage provider and takes responsibility for loading, unloading and transporting our SmartVaults in connection with our customer moves. UPS Freight provides this service to us on a cost-effective basis because we enable them to use their own excess load and storage capacity more effectively. Our agreement with UPS Freight requires UPS Freight to perform a variety of functions with regard to our containers including, but not limited to, delivery, pick-up, line-haul transportation and storage. We pay UPS Freight a set fee per trip, except for a fuel surcharge, which we pass on to our customers as part of the overall cost of the move. We also provide the trailer and forklift equipment for the local delivery. UPS Freight is required to provide on-going quality control inspections, training and safety consistent with our requirements. Our agreement with UPS Freight automatically renews on a monthly basis and is terminable by either party on 90 days notice. The current price terms of the agreement continue through January 2009.

Our business model addresses common problems experienced by consumers during moves. Our service: (i) does not require customers to rent or drive trucks to the destination; (ii) provides an easy-to-use SmartVault that customers may load at their convenience; and (iii) provides scheduling convenience and time savings that make the customer’s moving experience less stressful. Key benefits of our services include:


	•	Competitive pricing — We are able to offer competitive pricing compared to traditional van lines for most types of moves due to lower overhead, lower capital investment in trucks and warehouses, reduced handling costs resulting from the containerized shipment of goods, and reduced labor costs resulting from the typical customer’s packing of their own goods, which also typically results in lower insurance claims.


	•	Superior security — The SmartVault’s sturdy weather-resistant structure and ability to be locked and secured by the customer provide a high degree of protection from transit-related damage, tampering and theft.


	•	Scheduling flexibility and expedited service — Our reliance on trucking logistics companies rather than traditional van lines permits us to take advantage of recurring excess load capacity and offer expedited service because these trucking logistics companies regularly ship a wide variety of commercial products on a time-sensitive delivery basis compared to traditional van lines that often require customer goods to wait for transport until a full truck load is assembled.


	•	More customer options — Smart Move customers may exercise more control over their moves by electing a full-service move or loading the SmartVault themselves, selecting the dates of delivery and pick-up of the SmartVault, and choosing to have the SmartVault delivered directly to the destination or stored at the destination location at no additional charge for the first 28 days; and


	•	Full-coverage insurance — The durability of the SmartVaults, the ability of the customer to lock the SmartVaults, and our ability to track the containers in transit, permit us to offer full loss and damage insurance coverage of $10,000 per vault compared to standard van line coverage of sixty cents per pound.

We are pursuing initiatives to expand and diversify our sales through a variety of existing and new relationships. These revenue growth initiatives include:


	•	Capturing additional individual consumers through new website leads and online referrals;

	•	Accessing additional corporate clients through corporate human resources departments that manage employee relocations;

	•	Expanding current “private label” programs with Atlas Van Lines and Bekins A-1, and developing new private label programs with others, including Unigroup, Budd Van Lines and New World Van Lines;


	•	Broadening alliances with leading third-party relocation companies such as Cartus and Global Mobility Solutions;


	•	Expanding our affiliate program with local moving companies and local storage operators to generate additional bookings;

	•	Growing commercial shipping applications for our vaults; and

	•	Pursuing potential household goods moving for military personnel.

We believe that achieving increased sales will demonstrate the scalability of our business model and enable us to achieve economies of scale as we do not expect our overhead costs to increase significantly as our revenues increase.

Our corporate offices are located at 5990 Greenwood Plaza Blvd, #2, Suite 390, Greenwood Village, Colorado 80111 and our telephone number is (720) 488-0204. We maintain a website at www.gosmartmove.com. The information on our website is not part of this prospectus and you should rely only on the information contained in this prospectus in deciding whether to invest in the Units.

Financial Condition. We have incurred significant debt in order to fund our business. At September 30, 2008, we had $14,780,618 of outstanding long-term debt and $163,578 in equipment based capital

lease financing. At September 30, 2008, we had a working capital deficit of $11,000,790 and our accumulated deficit was $24,023,642. For the years ended December 31, 2007 and 2006 we reported a net loss of $12,805,559 and $9,869,676, respectively. For the nine months ended September 30, 2008 and 2007 we reported a net loss of $10,037,147 and $7,137,033, respectively. As of September 30, 2008, we were in default with respect to $7,779,153, or approximately 53%, of our outstanding convertible promissory notes. As a result of such defaults and working capital deficits, certain of our creditors may at any time elect to accelerate or declare currently due and payable the unpaid portion of the debt we owe to them. In the event that we are unable to pay such debts upon acceleration, such creditors may seize our assets and we would be unable to continue in operation. Subsequent to September 30, 2008, we have received waivers of default from approximately 87% of these note holders.

In addition, regardless of whether our creditors accelerate all or a portion of our outstanding indebtedness, we may be unable to pay our obligations in the near term as they arise in the ordinary course of our business, in which case we may be considered to be insolvent. As a result of such acceleration of our indebtedness or such insolvency, any amounts you invest in our business as a result of the purchase of our securities in this offering may be seized by our creditors or used to pay other current obligations rather than for investment in and expansion of our business. In such case, investors may lose all or a portion of their investment, and we may be unable to continue in operation.

Our significant debt requires us to use our limited cashflow for the payment of these debt obligations. These large debt service payments have caused us to incur significant interest expense which has increased our historical net loss and will increase our current and future net loss.

Alternext Listing. Our shares of common stock are traded on the Alternext (formerly known as the American Stock Exchange). On June 20, 2008, we received notice from the Alternext which stated that we did not satisfy Rule 1003(a)(iv) of its continued listing standards relating to financial condition and results of operations in that we have sustained losses which are so substantial in relation to our overall operations or our existing financial resources, or our financial condition has become so impaired that it appears questionable, in the opinion of the Alternext, as to whether we will be able to continue our operations or meet our obligations as they mature.

We submitted a plan to regain compliance on July 21, 2008. On September 5, 2008, we were notified that the Alternext had accepted the plan and that we must demonstrate we have become compliant with the listing requirements by December 22, 2008 or the Alternext could institute delisting procedures. Our plan consists of the following elements: implementation of our revenue growth plan; equity capital raises through private placements; this secondary offering of our securities; application of a portion of the proceeds from this offering to retire a portion of our current liabilities; and securing commitments from our existing convertible note holders to convert a portion of their investment into equity. In addition to our plan, we continue to pursue the sale-leaseback of our SmartVault containers. For the nine-month period ended September 30, 2008, our sales increased to $7,000,864 compared to $4,603,287 for the same period in 2007 and, as of November 30, 2008, we had raised $300,000 through the sale of a convertible debenture and one of our investors had converted $950,000 of debt into equity.

If delisting from the Alternext were to occur, we would apply for our common stock to be listed on the OTC Bulletin Board. If our common stock were to be excluded from the Alternext, the price of our common stock and the ability of holders to sell their stock could be adversely affected. We believe that if we are able to complete this offering, we will regain compliance with the Alternext continued listing standards. There can be no assurance, however, that we will be able to regain compliance with the continued listing standards by December 22, 2008 or thereafter.

Recent Development

At a special meeting of the stockholders of the Company held on October 27, 2008, our stockholders granted our Board of Directors discretionary authority to implement a reverse stock split of our common stock at a ratio of one-for-ten to one-for-fifteen. Pursuant to such authority, on December 8, 2008, the Board of Directors approved a reverse stock split at a ratio of one-for-thirteen. As approved by the Board, and with the agreement of the Representative, the one-for-thirteen reverse stock split will be implemented prior to the effectiveness of the registration statement of which this prospectus is a part.

THE OFFERING


Securities offered		5,500,000 Units, with each Unit consisting of one share of our common stock, one Class A redeemable common stock purchase warrant and one Class B non-redeemable common stock purchase warrant. Each warrant is exercisable to purchase one share of our common stock.


Common stock outstanding after this offering		7,046,788 shares or 7,871,788 shares if the over-allotment option is exercised in full (giving effect to the one-for-thirteen reverse stock split)(1)


Warrants:


Number of Class A warrants to be outstanding after this offering		5,500,000


Exercise terms		Each Class A warrant entitles its holder to purchase one share of common stock at any time after the warrants become separately tradeable at an exercise price equal to 110% of the initial Unit public offering price for a period of six months. Thereafter, the exercise price will be 150% of the initial Unit public offering price.


Expiration date		, 2013


Redemption		We may redeem some or all of the Class A warrants at any time after six months from the date of this prospectus, at a price of $0.25 per warrant, on 30 days’ notice to the holders, only if (i) our common stock has closed at 200% or more of the initial Unit public offering price on five consecutive trading days, and (ii) the common stock underlying the warrants is then registered for issuance.


Number of Class B warrants to be outstanding after this offering		5,500,000


Exercise terms		Each Class B warrant entitles its holder to purchase one share of common stock at an exercise price equal to 200% of the initial Unit public offering price at any time after the warrants become separately tradable.


Expiration date		, 2013

Redemption		The Class B warrants are not redeemable.

Use of proceeds		We intend to use the net proceeds from this offering to repay outstanding indebtedness, to increase sales and marketing activities and for general corporate purposes.


Proposed Alternext symbols		Units: MVE.U Class A Warrant: MVE.WSA Class B Warrant: MVE.WSB


Risk factors		You should consider carefully all of the information set forth in this prospectus and, in particular, the specific risks described under “Risk Factors” below before deciding whether or not to invest in our securities.

(1) The number of shares of common stock outstanding after this offering includes 200,000 shares that may be issued to one creditor upon the closing of this offering assuming an initial Unit public offering price of $1.50.

The number of shares of common stock to be outstanding after the offering is based on 1,346,788 shares outstanding as of November 26, 2008 (giving effect to the one-for-thirteen reverse stock split). Unless otherwise indicated, all information in this prospectus assumes no exercise of the over-allotment option granted to the underwriters and also excludes:


	•	1,697,427 shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of $34.09 per share;


	•	1,044,407 shares issuable upon conversion of outstanding convertible notes at a weighted average conversion price of $11.14 per share;


	•	75,000 shares reserved for issuance upon exercise of outstanding options awarded at a weighted average exercise price of $40.30 under our 2006 Equity Incentive Plan, as amended;


	•	550,000 shares included in Units issuable upon exercise of the Representative’s warrant and an additional 1,100,000 shares issuable upon the exercise of warrants included in the Units issuable upon the exercise of the Representative’s warrant;


	•	400,000 shares issuable upon the exercise of a warrant that may be issued to the November 2008 unsecured note holder at an exercise price equal to 150% of the initial Unit public offering price; and


	•	55,000 shares issuable upon the exercise of a warrant that may be issued to our November 2007 note holders at an exercise price equal to 150% of the initial Unit public offering price if they were to convert the remaining balance of their notes after this offering.

SUMMARY FINANCIAL DATA

You should read the following summary financial data together with our financial statements and related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections included elsewhere in this prospectus. The summary financial data for the years ended December 31, 2006 and 2007 set forth below are derived from, and are qualified by reference to, our financial statements that have been audited by Anton Collins Mitchell LLP, and are included elsewhere in this prospectus. The summary financial data as of September 30, 2008 and for the nine months ended September 30, 2007 and 2008 set forth below are derived from our unaudited financial statements that are included elsewhere in this prospectus. Historical results are not necessarily indicative of future results.


							Nine Months			Nine Months
	Year Ended			Year Ended			Ended			Ended
	December 31,			December 31,			September 30,			September 30,
	2006			2007			2007			2008
							(Unaudited)			(Unaudited)

Historical Statements of Operations Data:
Sales	$	4,184,554		$	5,810,898		$	4,603,287		$	7,000,864
Cost of moving and storage		4,827,273			6,337,360			4,908,590			6,711,201
Depreciation, amortization and impairment		1,104,590			4,417,954			2,421,573			2,343,226
Gross loss		(1,747,309	)		(4,944,416	)		(2,726,876	)		(2,053,563	)
Operating loss		(8,595,388	)		(11,378,404	)		(7,531,580	)		(6,775,728	)
Net loss		(9,869,676	)		(12,805,559	)		(7,137,033	)		(10,037,147	)
Historical basic and diluted loss per share	$	(1.77	)	$	(1.21	)	$	(0.68	)	$	(0.77	)
Historical weighted average shares outstanding		5,584,420			10,623,167			10,502,378			12,960,896
Proforma (unaudited) basic and diluted loss per share(1)	$	(22.98	)	$	(15.67	)	$	(8.83	)	$	(10.07	)
Proforma (unaudited) weighted average shares outstanding(1)		429,571			817,167			807,875			996,992


(1)		Reflects the retroactive application of the one-for-thirteen reverse stock split to be implemented prior to the effectiveness of the registration statement of which this prospectus is a part.

Our results of operations include significant non-cash expenses, and prospective investors should refer to the statement of cashflows and the notes to the financial statements included elsewhere in this prospectus.


	At December 31,			At September 30,
	2007			2008
				(Unaudited)

Balance Sheets Data:
Cash	$	369,189		$	571,703
Working capital (deficit)	$	(2,735,568	)	$	(11,000,790	)
Total assets	$	17,263,746		$	15,657,322
Long-term obligations, less current maturities and discounts	$	6,498,698		$	3,267,256
Total liabilities	$	10,441,748		$	16,220,704
Shareholders’ equity (deficit)	$	6,821,998		$	(563,382	)

RISK FACTORS

You should carefully consider and evaluate all of the information contained in this prospectus, including the following risk factors, before deciding to invest in our securities. Any of these risks could materially and adversely affect our business, financial condition and results of operations, which in turn could adversely affect the price of the Units, our common stock and warrants.

Risks Related to our Business and Industry

We have a history of operating losses and expect to incur losses for the foreseeable future.

We generated our first revenues in June 2005. We have sustained losses since our inception. We had an accumulated deficit as of September 30, 2008 of $24 million. We have also had negative cash flows from operating activities since inception. We have historically funded our operations through the sale of equity and debt securities. You must consider our prospects in light of the risks, expenses and challenges of attempting to introduce a new service in a mature and established market.

Our current financial condition may impair our ability to operate or grow our business.


	•	Our capital requirements have been and will continue to be significant, and we have an immediate and long-term need for 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.


	•	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 effect on our stockholders or we might be forced to cease operations.


	•	If we raise additional capital through the sale of equity securities, including additional convertible notes and warrants in the future, the ownership of our stockholders will be diluted.


	•	If we raise additional capital through the issuance of debt securities, the interests of our stockholders 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 additional indebtedness.

If we are not be able to raise additional equity capital to meet our obligations as they come due, we may not be able to continue as a going concern.

If we are not successful in raising sufficient equity capital through this offering or other financing prior to the time we are able to generate sufficient cash flows to meet our obligations as they come due, we will be required to reduce our overhead expenditures by the reduction of headcount, sale of assets or other available measures. We may also explore the possibility of a sale of the business. If we are not successful in increasing our revenue, reducing our expenses and raising additional capital or effecting a merger or acquisition, we may not be able to continue as a going concern.

We may not be able to pay our obligations in the ordinary course of business as they become due and therefore we may not be able to continue as a going concern.

At September 30, 2008 our accumulated deficit was $24,023,642, we had a working capital deficit of $11,000,790 and we were in default with respect to $7,779,153, or approximately 53%, of our outstanding convertible promissory notes. We may be unable to pay our obligations in the near term as they arise in the ordinary course of our business, in which case we may be considered to be insolvent. As a result of such insolvency, any amounts you invest in our business as a result of the purchase of our securities in this offering may be seized by our

lenders or used to pay other current obligations rather than for investment in and expansion of our business. In such case, investors may lose all or a portion of their investment, and we may be unable to continue in operation.

If we are unable to repay our substantial indebtedness, our lenders could foreclose on our assets and cause us to cease operations.

Our assets serve as collateral for various loan and note obligations. If we are unable to maintain compliance with loan covenants, procure waivers when required, or fail to pay our loans or notes in accordance with their terms, our lenders may declare an event of default and demand immediate payment of all or a portion of our indebtedness or seek to attach our assets, which could force us into bankruptcy.

We have not made required principal or interest payments to purchasers of certain convertible promissory notes which may give rise to an event of default under the terms of such notes.

We have not made required interest payments to purchasers of certain convertible promissory notes issued in September 2005, July 2006, August 2007, November 2007 and January 2008. As of September 30, 2008, the aggregate amount of interest in arrears was $956,468. As a result of such non-payment, pursuant to the terms of the notes, unless they are amended, such failure to pay may be an event of default for which the holders of such convertible notes may elect to exercise the right to accelerate the balance of the principal and interest. If acceleration occurs, we would not be able to repay our debt and it is unlikely that we would be able to borrow sufficient additional funds to refinance our debt. Even if new financing were available to us, it may not be available on acceptable terms. As result, we may have to take measures that could have a negative effect on our stockholders or we may not be able to continue as a going concern.

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

Our financial statements as of December 31, 2007 and September 30, 2008, have been prepared on the assumption that we are a going concern and that we will be able to realize our assets and discharge our liabilities in the normal course of business; however, certain events and conditions cast substantial doubt on this assumption. We have incurred net losses since our inception and we anticipate that we will continue to operate in a deficit position for the foreseeable future. These circumstances raise substantial doubt in our ability to continue as a going concern.

Because of our loss from operations, and our need for additional financing in order to fund 2008 and 2009 operations, our independent registered public accountants included an explanatory paragraph in their opinion on our financial statements for the year ended December 31, 2007 expressing substantial doubt about our ability to continue as a going concern.

We will need additional financing to fund any expansion of our business into additional geographic areas and we do not have commitments for additional financing.

We estimate that it requires approximately $135,000 to open a new metropolitan service area. While we have no current plans to open additional service areas, if we did we do not have commitments for the required capital. As a practical matter, our growth if any will therefore be limited to increasing the number of moves in existing service areas. New metropolitan areas that we currently do not serve could become attractive move destinations, and we may be unable to service such areas because of our limited capital.

Our outstanding convertible securities, options and warrants may impair our ability to obtain additional equity financing.

The existence of outstanding convertible securities, options and warrants may adversely affect the terms at which we could obtain additional equity financing. Although these securities are not presently “in the money,” the holders of these convertible securities, options and warrants may in the future have the opportunity to profit from a rise in the market price of our common stock and to exercise their securities at a time when we could obtain equity capital on more favorable terms than those contained in these securities.

We have a limited operating history and we have not operated through a recessionary business cycle, and may not be able to estimate our future revenue or the effect a decline in the economy will have on our business operations.

We have a limited operating history, and as such we have not been through an economic business decline. As a result, we may not be able to adequately predict the effects a recession will have on our sales and costs. Our budgeted revenues are based on our expectations, relationships with van lines and internet marketing programs and other sales channels. The effect of an economic downturn on our results cannot be fully anticipated. Based on general business trends in our industry that have occurred in historic economic downturn periods, we would expect that our business could suffer a significant decline in revenues.

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.

General economic conditions, industry cycles, financial, business and other factors may affect our operations and our ability to make principal and interest payments on our indebtedness. In particular, the current severe downturn in the economy has affected our industry as companies are deferring the relocation of employees and individuals are deferring relocations in part because of the difficulty displaced workers have selling their existing homes. If we cannot generate sufficient cash flow from operations in the future to service our debt, we may, among other things, be required to take one or more of the following actions:


	•	seek additional financing in the debt or equity markets,

	•	refinance or restructure all or a portion of our indebtedness,

	•	sell selected assets,

	•	reduce or delay planned capital expenditures, and

	•	discontinue operations.

These measures might not be sufficient to enable us to service our indebtedness. In addition, any financing, refinancing or sale of assets might not be available on economically favorable terms, which may prevent us from future expansion and growth in new markets and, thus, negatively affect our business and financial condition.

Our business plan is unproven, and our financial results will suffer if consumers do not adopt our moving solution.

Due to our limited operating history, it is too early to determine if our target consumers, which include a wide spectrum of customers seeking various moving services, will adopt our moving solution in sufficient numbers and as readily as we anticipate. If consumers do not react favorably to our solution, or if it takes us longer to develop customers than we have planned, our revenues and our financial operating results will suffer.

We cannot predict effectiveness of our third party marketing alliances, and revenue from these sales channels may not materialize.

As an early stage company, we have little historical information to assist management in identifying the factors and trends that may influence our future results. As we expand our sales channels, we will depend on partners in connection with the timing, as well as the effectiveness, of a number of our marketing initiatives.

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 a limited operating history and, as a result, our historical financial data may be of limited value in estimating future operating revenues and expenses. Our budgeted expense levels are based in part on our expectations concerning future revenues. However, the amount of these future revenues depends on the choices and demand of individuals and various entities, which are difficult to forecast accurately.

The results of our operations could cause our stock price to decline.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly and annual expenses as a percentage of our revenues may be significantly different from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause our stock price to fall. Each of the following risk factors may affect our operating results including (but not limited to):


	•	the seasonal nature of our business;

	•	our ability to attract new customers at a steady or increasing rate;

	•	our ability to maintain customer satisfaction;

	•	price competition in the industry;

	•	the costs we incur in operating our business, including fuel surcharges;

	•	the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure;

	•	unanticipated technical, legal and regulatory difficulties with respect to our service; and

	•	general economic conditions and economic conditions that are specific to our market.

A disruption in the service of our third-party carriers could result in significant loss of revenue and increased capital expense.

We depend on several third-party cartage companies to provide the local and long-haul transport services we require. With the exception of UPS Freight, which handles a majority of our long distance hauls and local pickups and deliveries, we do not have written agreements with these third-party cartage companies, and our arrangements with these service providers may be terminated at any time. Although we have a contract with UPS Freight, we cannot ensure that UPS Freight will be able to consistently make pickups and deliveries for our customers in the time and manner we may request or require in the future. Our month-to-month agreement with UPS Freight may be terminated by either party to the agreement upon 90 days written notice to the other party. If our arrangement with UPS Freight is terminated, we will attempt to contract with alternative cartage companies to provide the services we currently outsource from UPS Freight. Any material changes in our primary carrier relationships or our local pick-up and delivery arrangements would disrupt our business operations. In the event we are required to pursue new sources for these services or to purchase and maintain equipment and facilities we currently outsource, our results of operations could suffer due to delay in procuring acceptable alternative shipping arrangements and our access to available capital resources may be further limited.

We expect our business to continue to 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 expect that a significant portion of our revenue (as much as 50%, based on our experience to date and certain industry data) will be generated in the four months of June through September. We expect that this seasonality will result in dramatic fluctuations in our operating results from quarter to quarter. Most of our operating expenses, including general and administrative costs and debt service, are fixed and do not vary with the volume of our business. As a result, in the slower months it may be difficult to manage cash flow to meet our operating needs. If we fail to manage cash flow in anticipation of these quarterly fluctuations, or if the fluctuations vary significantly from our expectations, we may be required to incur additional debt, which will impair our profitability, or raise additional capital, which will be dilutive to our stockholders.

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.

We require our customers to agree in writing not to store hazardous materials in our containers. However, we do not inspect the containers to make sure they do not contain hazardous materials. If hazardous materials are stored in our containers and leak or otherwise cause a dangerous situation, we could be held liable for damages, be required to clean up the leak and suffer adverse publicity. We do not intend to carry insurance covering these occurrences. To date, no environmental-related claims have been asserted against us. However, a significant hazardous materials event could negatively impact our results of operations, disrupt our business, cause adverse publicity and subject us to significant liability and increase the risk of litigation, all which could harm our business and the trading price of our securities.

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 expect that any significant expansion of our business may place a strain on our limited managerial, operational and financial resources. Our future success will depend in large part on our ability to attract, train and retain additional skilled management, logistics and sales personnel. We may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms or at all. If we are unable to attract and retain skilled personnel, our operating results could be harmed, we may fail to meet our reporting and contractual obligations, and existing and potential stockholders may lose confidence in our business, all of which would harm our business and the trading price of our securities.

We are dependent on our management team and the loss of our key executives and employees would harm our business.

Our success is dependent, in large part, upon the continued services of Chris Sapyta, our Chief Executive Officer, and other members of our senior management team who have worked closely on the development or implementation of our business plan. There is no guarantee that any of the members of our management team will remain employed by us. While we have employment agreements with our CEO and CFO, their continued services cannot be assured. We do not maintain key person life insurance on any of our officers. The loss of our senior executives, particularly, would harm our business.

We encounter substantial competition from other moving companies, most of whom have greater resources than us.

The U.S. household moving and storage industry is serviced by approximately 8,000 providers. In this highly fragmented industry, the 20 largest providers control approximately 35% of the revenue. Many of our competitors are larger than we are and have much longer operating histories. As a result, we expect that many of our competitors have greater financial and human resources and more established sales and marketing capabilities than we have. Existing or future competitors with greater resources could readily duplicate certain of our services or business model.

We do not have any protected technologies that would preclude or inhibit competitors from entering our market.

We consider the design of our containers to be proprietary and have negotiated exclusive ownership rights to the design of the containers from the manufacturer. The container design, however, is not currently patented. Since the container design is not patented and may not be patentable, we rely on a combination of contractual and confidentiality procedures to protect our design. Despite our efforts to protect our design, it would be relatively easy for our competitors to copy certain aspects of our design or independently develop similar containers. Accordingly, our container design may not provide an effective barrier to entry against our competitors.

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 believe that continuing to build awareness of our brand name is critical to achieving widespread acceptance of our business. We believe that brand recognition is a key differentiating factor among providers of moving services. In order to maintain and build brand awareness, we must succeed in our marketing efforts. If we fail to successfully promote and maintain our brand, incur significant expenses in promoting our brand and fail to generate a corresponding increase in revenue as a result of our branding efforts, or encounter legal obstacles which prevent our continued use of our brand name, our business and the value of your shares could be materially adversely affected. In addition, our brand may be used by third parties unaffiliated with us which, in turn, may also harm our business and our ability to expand and achieve a profitable level of operations.

We may be unable to protect our trademarks or other proprietary intellectual property rights, which will harm our business.

Our future success may depend upon the protection of our brand names, Smart Move and Go Smart Move. If we are unable to protect our rights in the Smart Move brand, a key element of our strategy of promoting SmartMove as a brand could be disrupted and our business could be adversely affected. We may not be able to detect all unauthorized uses of our trademarks or take all appropriate steps to enforce our intellectual property rights. In addition, the validity, enforceability and scope of protection of our trademarks and related intellectual property is uncertain and still evolving. The laws of other countries in which we may market our goods and services in the future are uncertain and may afford little or no effective protection of our intellectual property.

We previously completed a private placement of debt that included beneficial conversion features. These features will have the effect of reducing our reported operating results while the debt remains outstanding.

In July 2006, we issued $5,000,000 in units of secured convertible debentures and warrants. Certain of the conversion features of such issue allowed for the reduction in conversion price upon the occurrence of stated events and constitute a “beneficial conversion feature” for accounting purposes. In August 2007 and November 2007, we issued convertible notes which also included a “beneficial conversion feature.” The accounting treatment related to the beneficial conversion feature will have an adverse effect on our results of operations while such notes are outstanding and will result in an increase in interest expense in all reporting periods during the term of the debt. The notes mature in June 2011, September 2009 and November 2008, respectively.

We have completed a placement of debt that included a derivative liability feature. That feature will have the effect of reducing or increasing our reported operating results during the term of the debt based upon numerous assumptions of which one is the price of our stock.

In future periods, while the January 2008 Notes and related common stock purchase warrants remain outstanding, we generally expect to report a gain on derivative liability as our stock price declines, and a loss on derivative liability as our stock price increases (assuming other assumptions used to estimate fair value remain constant). The non-cash gain or loss reported upon re-measurement of our embedded derivative liability may not be indicative of the operating results of our core business activities, but could significantly affect our future reported basic earnings or loss per share depending on numerous factors, including the volatility of our stock price.

We are subject to impairment of our long-lived assets that could affect future net income.

We have made a significant investment in long-lived assets such as containers, GPS equipment and forklifts and flatbed trailers. In accordance with applicable accounting standards, we periodically assess the value of long-lived assets in light of current circumstances to determine whether impairment has occurred. If an impairment should occur, we would reduce the carrying amount to our fair market value and record an amount of that reduction as a non-cash charge to income, which could adversely affect our net income reported in that quarter in accordance with generally accepted accounting principles. As of September 30, 2008, we have recorded an impairment of approximately $360,000 for certain GPS units that are not currently installed in our containers. We cannot

definitively determine the extent of impairments that may occur in the future, and if impairments do occur, what the timing might be or the extent to which any impairment might have a material adverse effect on our financial results.

We have had a material weakness in our system of internal control. We may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our business reputation and operating results could be harmed. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock. In connection with their evaluation of our disclosure controls and procedures during the year ended December 31, 2007 and the three quarters of 2008, our management determined that our controls did not operate effectively on a continuous basis throughout the reporting period which resulted in a material weakness in internal controls.

Provisions in our charter documents or Delaware law might discourage, delay or prevent a change of control of our Company, which could negatively affect your investment.

Our Amended and Restated Certificate of Incorporation and Bylaws contain provisions that could discourage, delay, or prevent a change of control of our Company or changes in our management that our stockholders may deem advantageous. These provisions include:


	•	authorizing the issuance of preferred stock that can be created and issued by our Board of Directors without prior stockholder approval, commonly referred to as “blank check” preferred stock, with rights senior to those of our common stock;

	•	limiting the persons who can call special stockholder meetings;

	•	establishing advance notice requirements to nominate persons for election to our Board of Directors or to propose matters that can be acted on by stockholders at stockholder meetings;

	•	the lack of cumulative voting in the election of directors;

	•	requiring an advance notice of any stockholder business before the annual meeting of our stockholders;

	•	filling vacancies on our Board of Directors by action of a majority of the directors and not by the stockholders; and

	•	the division of our Board of Directors into three classes with each class of directors elected for a staggered three year term. In addition, our organizational documents contain supermajority voting requirement for any amendments of the staggered Board provisions.

These and other provisions in our organizational documents could affect your rights as a stockholder in a number of ways, including making it more difficult for stockholders to replace members of our Board of Directors. Because our Board of Directors is responsible for appointing members of our management team, these provisions could in turn affect any attempt to replace current members of management. These provisions could also limit the price that investors would be willing to pay in the future for shares of our common stock. We are also subject to the provisions of Section 203 of the Delaware General Corporation Law, which may discourage, delay, or prevent a change of control of our Company. See “Description of Securities.”

We have a risk of a possible future delisting of our shares from the Alternext that could affect our stock price and your ability to sell our stock.

On June 20, 2008, we received a notice from the Alternext (formerly the American Stock Exchange) advising us that we do not meet the Alternext’s continued listing standards. On September 5, 2008, the Alternext staff notified us that the plan we had submitted to regain compliance had been accepted, and that we must become compliant by December 22, 2008 or the Alternext could institute delisting procedures. We will be able to maintain the listing of our common stock and listed warrants on the Alternext during the plan period, provided that our

updates to the Alternext reflect that we are making progress consistent with the plan, which includes raising additional working capital. If a delisting from the Alternext were to occur, the common stock may trade on the OTC Bulletin Board. This alternative market is generally considered to be less efficient than, and not as broad as, the Alternext. If our common stock were to be delisted from the Alternext, the price of our common stock and the ability of holders to sell their stock would be adversely affected.

Risks Related to this Offering

There is a limited public market for our securities, and our stock price could be volatile and could decline following this offering, resulting in a substantial loss in your investment.

Prior to this offering, there has been a limited amount of trading in the public market for our securities. An active trading market for our securities may never develop or if it develops it may not be sustained, which could affect your ability to sell your securities and could depress the market price of your securities. In addition, the public offering price of the Units will be determined through negotiation between us and the Representative based upon market conditions and may bear no relationship to the price at which the Units will trade upon completion of this offering.

The stock market can be highly volatile. As a result, the market price of our securities can be similarly volatile, and investors in our securities may experience a decrease in value, including decreases unrelated to our operating performance or prospects. The market price of our Units, common stock and warrants after the offering will likely vary from the initial offering price and is likely to be highly volatile and subject to wide fluctuations in response to various factors, many of which are beyond our control. These factors include:


	•	variations in our operating results;

	•	changes in the general economy and in the local economies in which we operate;

	•	the departure of any of our key executive officers and directors;

	•	announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

	•	changes in the federal, state, and local commerce and transportation regulations to which we are subject; and

	•	future sales of our common stock.

Purchasers in this offering and current shareholders will experience immediate dilution in the book value of their investment.

The public offering price of the Units is higher than the net tangible book value per share of our common stock immediately after this offering. If you purchase our Units in this offering, you will incur an immediate dilution of $0.17 per share of common stock ($0.17 if the over-allotment option is exercised by the underwriters) in net tangible book value per share from the price you paid, based on an assumed initial offering price of $1.50 per Unit, of which $1.50 is attributed to each share of common stock. In addition, current shareholders will experience dilution of $0.12 per share.

We have significant market overhang which could adversely affect the trading price of our common stock.

As of September 30, 2008 (giving effect to the one-for-thirteen reverse stock split), we had (i) 1,343,085 shares of common stock outstanding, (ii) 75,000 shares of common stock issuable upon exercise of outstanding options, (iii) 1,697,427 shares of common stock issuable upon exercise of outstanding warrants and (iv) 894,984 shares of common stock issuable upon conversion of the principal amount of our outstanding convertible debentures. If all the outstanding options, warrants and convertible debentures were exercised or converted, as applicable, by their holders, then an additional 2,667,411 shares of common stock would be outstanding. This would represent an approximately 99% increase in our outstanding common stock. The convertible debentures are convertible, and the outstanding options and warrants are exercisable, at prices currently above the public trading prices of our common stock. However, in the event that even a portion of these outstanding options and warrants were to be exercised, or a portion

of the convertible debentures were to be converted, the resulting dilution could depress the trading price of our common stock.

The redemption of the Class A warrants issued in this offering may require potential investors to sell or exercise the Class A warrants at a time that may not be advantageous for a resale of the underlying shares of common stock.

Commencing six months from the date of this prospectus and until the expiration of the warrants, we may redeem all outstanding Class A warrants, in whole but not in part, upon not less than 30 days’ notice, at a price of $0.25 per warrant, only if (i) the closing sale price of our common stock equals or exceeds 200% of the initial Unit offering price for five consecutive trading days preceding our redemption announcement and (ii) the common stock underlying the warrants is registered for issuance. In the event we exercise our right to redeem the warrants, the warrants will be exercisable until the close of business on the date fixed for redemption in such notice. If any warrant called for redemption is not exercised by such time, it will cease to be exercisable and the holder thereof will be entitled only to the redemption price of $0.25 per warrant.

Notice of redemption of the warrants could force holders to exercise the warrants and pay the exercise price at a time when it may be disadvantageous for them to do so or to sell the warrants at the current market price when they might otherwise wish to hold the warrants or accept the redemption price.

We have substantial discretion as to how to use the offering proceeds, and the use of these proceeds may not produce favorable results.

While we currently intend to use the net proceeds of this offering as set forth in “Use of Proceeds” we have substantial discretion in these regards and therefore we may choose to use the net offering proceeds for different purposes. The effect of the offering will be to increase capital resources available to our Board of Directors and management, and our Board of Directors and management will allocate these capital resources as they determine is necessary or appropriate in order to enhance stockholder value. You will be relying on the judgment of our Board of Directors and management with regard to the use of the net proceeds of this offering, and the results of their investments may not be favorable.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are only predictions and you should not place undue reliance on them. Forward-looking statements typically are identified by use of terms such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend,” “may,” “will,” “should,” “estimate,” “predict,” “potential,” “continue,” and similar words, although some forward-looking statements are expressed differently. All forward-looking statements address matters that involve risks and uncertainties. There are many important risks, uncertainties and other factors that could cause our actual results, as well as trends and conditions within the markets we serve, levels of activity, performance, achievements and prospects to differ materially from the forward-looking statements contained in this prospectus. You should also carefully consider all forward-looking statements in light of the risks and uncertainties set forth under “Risk Factors” and elsewhere in this prospectus. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise.

In light of the significant uncertainties inherent in the forward-looking statements made in this prospectus, particularly in view of our early stage of operations, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives, future results, levels of activity, performance or plans will be achieved.

DETERMINATION OF OFFERING PRICE

The public offering price of the Units offered by this prospectus will be determined by negotiation between us and the Representative, based upon market conditions on the day we price the Units. The offering price will not necessarily reflect the price at which the common stock currently trades and should not be considered an indication of the actual value of the Units. That price is subject to change as a result of market conditions and other factors, and we cannot assure you that the Units, or the common stock and warrants contained in the Units, can be resold at or above the public offering price.

USE OF PROCEEDS

We expect to receive net proceeds of approximately $7,099,500 (or approximately $8,238,000 if the underwriters’ over-allotment option is exercised in full) from the sale and issuance of 5,500,000 Units at an assumed offering price of $1.50 per Unit and after deducting estimated underwriting discounts and other estimated expenses of approximately $1,150,500.

We intend to use the net proceeds of this offering as follows:


	Amount		Percent

Debt retirement	$	1,508,590		21	%
Sales and marketing		1,500,000		21	%
Working capital		4,090,910		58	%

Total	$	7,099,500		100	%

Debt retirement — We propose to apply $1,508,590 of the proceeds of this offering to the following indebtedness: $1,016,090 owing on our January 2008 Secured Notes that bear interest at 11% per annum and are due January 15, 2010; $192,500 owing on the November 2007 Notes that bear interest at 12% and were originally due October 31, 2008 (of which a portion of the original principal amount has been extended to January 31, 2009); and $300,000 of the November 2008 Unsecured Notes bearing interest at 10% and are due March 31, 2009. If the consent of our creditors is not received, a greater or lesser proportion of the offering proceeds may be applied to debt retirement.

Sales and marketing — The projected application of net proceeds consists of increasing print and internet advertising (including fees paid for internet leads acquired through web portals), establishing new sales channels and direct sales activities.

Working capital — The use of proceeds will include operating expenses, accounts payable and working capital reserves.

The amounts and timing of our actual expenditures will depend on numerous factors, including the results of our sales, our marketing activities, competition and the amount of cash generated or used by our operations. The amount and timing of our actual expenditures may vary substantially from the foregoing estimates. We may find it necessary or advisable to use the net proceeds for other purposes, and we will have broad discretion in the application of the balance of the net proceeds. Pending the application of proceeds for the uses as described above, we intend to invest the net proceeds in certificates of deposit, short-term obligations of the United States government, or other money-market instruments that are rated “investment grade” or its equivalent.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock and we do not anticipate declaring or paying any cash dividends for the foreseeable future. We currently expect to retain all earnings, if any, for investment in our business.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2008. You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and accompanying notes included elsewhere in this prospectus.

For purposes of the presentation of information in the table below:


	•	“Actual” is based on our unaudited financial statements as of September 30, 2008.


	•	“Pro Forma” reflects the issuance of 3,703 shares of common stock (giving effect to the one-for-thirteen reverse stock split) after September 30, 2008 for the payment of interest on our May 2008 Notes, the receipt after September 30, 2008 of gross note proceeds of $300,000 from our November 2008 Unsecured Note financing, the assumed issuance of 200,000 shares to this note holder at the estimated public offering price of $1.50, and the elimination of the derivative liability in the amount of $2,806,288 as of September 30, 2008.


	•	“Pro Forma Reverse Stock Split” gives effect to the one-for-thirteen reverse stock split that will be implemented prior to the effectiveness of the registration statement of which this prospectus is a part.


	•	“Pro Forma as Adjusted” gives effect to the sale of 5,500,000 Units in this offering, and the application of the net proceeds from this offering as described under “Use of Proceeds.”


	As of September 30, 2008 (unaudited)
							Pro Forma Reverse			Pro Forma as
	Actual			Pro Forma			Stock Split			Adjusted

Long-term debt and capital leases, including current maturities, net of discounts	$	8,786,048		$	9,086,048		$	—		$	7,577,458

Shareholder’s equity:
Preferred stock, $.0001 par value:
10,000,000 shares authorized, no shares issued and outstanding		—			—			—			—
Common stock $.0001 par value:
100,000,000 shares authorized, 17,460,111 shares issued (actual) and outstanding 20,108,250 (pro forma) and 1,546,788 issued and outstanding (pro forma reverse stock split) and 7,046,788 shares issued and outstanding (pro forma as adjusted)		1,745			2,011			(1,856	)		705
Paid-in capital		23,458,515			26,264,537			1,856			33,365,343
Accumulated deficit		(24,023,642	)		(24,023,642	)		—			(24,023,642	)

Total equity		(563,382	)		2,242,906			—			9,342,406

Total capitalization	$	8,222,666		$	11,328,954		$	—		$	16,919,864

PRICE RANGE OF COMMON STOCK

Our common stock is traded on the Alternext under the symbol “MVE.” The following table sets forth the range of high and low sales prices per share as reported on the Alternext for the periods indicated. The following share prices have been adjusted for the one-for-thirteen reverse stock split.


	High		Low

2006
Fourth Quarter	$	62.40	$	57.20
2007
First Quarter	$	61.10	$	44.20
Second Quarter	$	52.00	$	38.35
Third Quarter	$	43.55	$	14.30
Fourth Quarter	$	17.55	$	6.50
2008
First Quarter	$	10.92	$	3.25
Second Quarter	$	9.36	$	2.60
Third Quarter	$	5.72	$	0.65
Fourth Quarter (through December 5, 2008)	$	3.64	$	0.78

The last reported sale price of our common stock on the Alternext on December 5, 2008 was $1.17 per share (giving effect to the one-for-thirteen reverse stock split). There were approximately 1,180 holders of record of our common stock as of September 18, 2008.

DILUTION

If you invest in our Units, the book value of your common stock will be diluted to the extent of the difference between the public offering price attributable to each share of common stock and the adjusted net tangible book value per share of our common stock immediately following the completion of this offering. For the purposes of the dilution computation and the following tables, we have allocated the full purchase price of a Unit to the share of common stock included in the Unit and nothing to the warrants.

The pro forma net tangible book value of our common stock as of September 30, 2008 (giving effect to the one-for-thirteen reverse stock split) was $2,242,906 (calculated as net tangible book value at September 30, 2008 of ($563,382) and assuming the elimination of the derivative liability of $2,806,288 as of September 30, 2008). Net tangible book value per share before this offering has been determined by dividing pro forma net tangible book value (book value of total assets less intangible assets, less total liabilities) by the number of pro forma shares of common stock outstanding as of September 30, 2008 (giving effect to the one-for-thirteen reverse stock split, calculated as 1,343,085 shares outstanding as of September 30, 2008 including 3,703 shares issued subsequent to September 30, 2008 from the payment of interest using shares and the assumed issuance of 200,000 shares at the assumed unit public offering price issued to the November 2008 Unsecured Note holder upon completion of the offering, for total shares outstanding of 1,546,788) or $1.45 per share. After (i) giving effect to the sale of our Units in this offering at an assumed public offering of $1.50 per Unit, (ii) deducting underwriting discounts and commissions, the non-accountable expense allowance payable to the representative of the underwriters and estimated offering expenses payable by us, our pro forma adjusted net tangible book value as of September 30, 2008 would have been $9,342,406 or $1.33 per share. This represents an immediate decrease in net adjusted tangible book value of ($0.12) per share to existing holders of common stock and an immediate dilution of $0.17 per share to purchasers of common stock in this offering, as illustrated in the following table:


Assumed public offering price per Unit	$	1.50

Adjusted pro forma net tangible book value per share at September 30, 2008		1.45
Decrease per share attributable to new purchasers		(0.12	)

Pro forma adjusted net tangible book value per share		1.33
Net tangible book value dilution per share to new purchasers	$	0.17

Net tangible book value dilution per share to new purchasers as a percentage of public offering price per share		11.3	%

Assuming the underwriters exercise their over-allotment option in full, existing stockholders would have an immediate decrease in pro forma adjusted net tangible book value of ($0.12) per share and investors in this offering would incur an immediate dilution of $0.17 per share or 11.3%.

There are no warrants, options or convertible debt that have an exercise price below the public offering price.

The following table summarizes, on a pro forma basis after the closing of this offering (giving effect to the one-for-thirteen reverse stock split), the differences in total consideration paid by persons who are stockholders prior to completion of this offering and by persons investing in this offering:


											Average
	Shares Purchased					Total Consideration					Price per
	Number		Percent			Amount		Percent			Share

Officers, directors, promoters and affiliated persons		569,114		8.1	%	$	6,157,357		20.3	%	$	10.82
Other existing stockholders*		977,674		13.9	%		15,905,034		52.5	%	$	16.27
New Investors		5,500,000		78.0	%		8,250,000		27.2	%	$	1.50

Total		7,046,788		100	%	$	30,312,391		100	%	$	4.30


*		Assumes 200,000 shares issuable to the November 2008 unsecured note holder

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 prospectus. 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.

Unless otherwise indicated, all information regarding our securities in this discussion has been adjusted to reflect the one-for-thirteen reverse stock split.

History and Overview

Upon completion of our initial public offering in December 2006, we merged with our predecessor entity, A Smart Move, L.L.C., which had been providing containerized moving services in a limited number of locations since June 2005. Currently, we provide containerized moving services in 60 of the largest metropolitan centers in the United States from the terminals of our primary transportation provider, UPS Freight. We utilize UPS Freight for most of our outsourced transportation requirements in order to obtain rapid market penetration with less infrastructure than traditional movers.

In early 2007, we began a new strategic partnership with a national van line that was also a stockholder. In planning discussions for the 2007 moving season with this van line, we were advised by this entity that we should prepare to handle over 3,000 moves in less than six months. Therefore we ordered the necessary containers to meet this projected demand for the 2007 summer moving season. The van line continued to believe, as late as May 2007, that its projected moving volumes would materialize, but by mid-summer 2007, it became evident that these volumes and cash flow would not occur. We, however, had already committed to manufacturing purchase orders that were in progress or complete and could not be canceled. This commitment to build over 4,000 vaults represented a capital outlay of over $9,000,000.

As a result, we invested in an excess of approximately 2,500 or $5,000,000 of SmartVaults above our actual requirements. Our cash position was therefore reduced substantially below levels originally projected for 2007, and we were required to raise additional capital.

As both a management and financial tool, we seek to differentiate our moves based on five stages of completion. The first stage is the delivery of the empty SmartVault container to the moving customer. The second stage is the pick up of the fully loaded container from the customer. The third stage is the intercity transport of the loaded container to the UPS terminal in the destination city. The fourth stage is the delivery of the loaded container to the customer destination address. Stage five is the final stage, retrieval of the empty vaults from the destination, indicating completion of all required services and triggering revenue recognition. A “move in progress” is a contracted customer move which has yet to reach the final stage five, but for which we have delivered vaults and taken possession of the customer’s goods. The costs associated with moves in progress are reflected as deferred costs and any cash collected on a move in progress is reflected as deferred revenue. At December 31, 2007, we had $1,081,631 of moves in progress. At September 30, 2008, we had $1,838,000 of moves in progress compared to $1,176,000 at September 30, 2007. Included in moves in progress was deferred revenue which at December 31, 2007, September 30, 2008 and September 30, 2007 was $456,247, $1,003,048 and $349,942 respectively.

Recent Financial Results

For the nine months ended September 30, 2008 sales were $7,000,864, compared to $4,603,287 in the same period during 2007, representing an increase of 52%. The net loss for the nine months ended September 30, 2008 was $10,037,147 compared to a net loss of $7,137,033 for the nine months ended September 30, 2007, an increase of 41%. The net loss in the more recent period is principally due to significant noncash expenses. Total noncash expenses for the first nine months of 2008 were approximately $4,703,563 compared to approximately $1,901,236 in the first nine months of 2007. The noncash expenses for the 2008 nine-month period consisted primarily of

depreciation expense of $2,090,265, amortization of debt discounts of $1,461,275, a loss on debt extinguishment including incentives to induce conversion of debt to equity of $1,129,421, noncash compensation expense of $206,311 and an impairment expense of $355,600. These 2008 noncash expenses were reduced by a noncash gain on value of derivative liability of $553,112 related to the January 2008 Notes. The noncash expenses for 2007 were comprised primarily of $2,128,506 of depreciation expense, $1,214,253 of amortization of debt discounts, impairment expense of $406,011, and incentives to induce conversion of debt to equity recorded as interest expense of $250,437 and were reduced by a noncash deferred income tax benefit of $2,367,000.

Financial Condition

At September 30, 2008, we had a working capital deficit of $11,000,790 and an accumulated deficit of $24,023,642. We previously have incurred significant debt in order to fund our business. At September 30, 2008, we had $14,780,618 of outstanding long-term debt and $163,578 in equipment based capital lease financing.

As of September 30, 2008, we were in default with respect to $7,779,153 or approximately 53% in principal amount of our outstanding convertible promissory notes which are included in current portion of long-term debt. Our significant debt requires us to use our limited cash flow for the payment of these debt obligations. These large debt service payments have increased our historical net loss and will increase our current and future net loss.

Management’s Revenue Growth Plan

Our revenues and cash flows are not adequate to enable us to meet our present or anticipated obligations; therefore we need to raise additional funds to cover the projected shortfall through commercial loans, equipment leasing transactions or additional public or private offerings of our securities. We are currently investigating additional funding opportunities, and are in discussion with various potential lenders and investors who might be able to provide financing. We have no current commitments for additional financing, and there can be no assurance that any private or public offering of debt or equity securities or other funding arrangements could be effected on a timely basis or to an extent sufficient to enable us to continue to satisfy our capital requirements and continue in operations. If we continue to fail to demonstrate an ability to generate sufficient revenue to meet our obligations and sustain our operations, our ability to continue to raise capital may be impaired and we may not be able to continue as a going concern.

Management’s revenue growth plan for achieving profitability includes reducing operating costs and increasing revenue through expansion of existing, and development of new, revenue opportunities, including the following:


	•	capturing additional individual customers through our website, purchased internet leads and other marketing channels;

	•	approaching additional corporate human resources departments that manage employee relocations;

	•	expanding our affiliate program with local movers to obtain additional interstate bookings;

	•	developing new relationships with corporate relocation companies that manage multiple moves; and

	•	expanding our current “private label” program with Atlas Van Lines and Bekins A-1 to include other national and regional van lines that may desire to brand our services for smaller shipments.

Management believes increased revenue will permit economies of scale as our operating costs are not expected to increase in direct proportion to revenue.

Seasonality

Seasonal factors cause our revenue to fluctuate from quarter to quarter. Our peak revenue period (by as much as 50%, based on our experience to date) typically is the four months of June through September. Most of our operating expenses, including general and administrative costs and debt service, are fixed and do not vary with the volume of our business.

Critical Accounting Policies; Use of Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Critical accounting policies are those that we believe are both significant and that require us to make subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences, which are of a limited duration given our status as an early stage company. Actual results may differ from our current and previous estimates. The following is a discussion of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our financial statements for 2007 and 2008. For a further discussion on the application of these and other accounting policies, see Note 2 to our audited financial statements for the year ended December 31, 2007 included elsewhere in this prospectus.

Revenue and Cost Recognition. We recognize service revenue and expenses only upon completion of the applicable contract for our services. This policy involves deferring direct and incremental moving expenses, including freight and handling costs and the related revenue, until completion of the services covered by a given contract. We recognize advance billings and the related deferred revenue for contracts in process on a net basis. As of September 30, 2008, we also deferred expenses of $802,176 on contracts in process and deferred revenue of $1,003,048 with respect to cash payments we received on contracts in process in accordance with this policy. As of December 31, 2007, we had deferred expenses of $517,485 on contracts in process and deferred revenue of $456,247 with respect to cash payments we received on contracts.

We incur costs as each move is completed and generally receive payment for the full move upon completion and final delivery of services. As a consequence, we also defer expenses which may exceed advance payments we receive on contracts for which the services remaining to be performed will not be completed until after the end of a given month. The deferral of these associated costs is necessary to properly match revenue with corresponding direct and incremental moving expenses.

Credit Risk. Our standard payment terms are such that the entire balance is due at the earlier of the 28th day after the containers are delivered to the customer for loading or one day prior to when the containers are delivered to the customer’s final destination point. We seek to mitigate the credit risk associated with our services rendered prior to payment by extending credit terms with respect only to those limited trade accounts receivable of the customers we deem creditworthy. At December 31, 2007, we had an allowance of $45,000 compared to $32,000 at September 30, 2008 for estimated credit losses. We continually review the adequacy of our allowance for doubtful accounts and adjust it, as necessary, based upon current knowledge of the customers’ circumstances.

Impairment of Long-Lived Assets. We have adopted the provisions of SFAS No. 144, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of,” which requires that long-lived assets, including identifiable intangibles, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate the recoverability of long-lived assets based on estimated undiscounted future cash flows and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived asset. If impaired, the long-lived asset is written down to its estimated fair value. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, a probability-weighted approach is used for developing estimates of future undiscounted cash flows. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the impairment loss is measured as the excess of the asset’s carrying value over its fair value, such that the asset’s carrying value is adjusted to its estimated fair value. The assumptions used by management in its projections of undiscounted cash flows involve judgment about material estimates of future revenue and customer acceptance.

During the second quarter of 2007, the Company was notified by its GPS analog providers that the Federal Communications Commission had ruled that service providers of analog signals would be allowed to discontinue service when the so-called “analog sunset” took effect in February 2008. As of March 1, 2007, the Company had 2,660 analog GPS units in service. Beginning March 1, 2007, these units were depreciated over their remaining eleven month useful life to February 2008. This accelerated rate of depreciation resulted in an increase of

$460,550 in depreciation for the year ended December 31, 2007. During the quarter ended June 30, 2007, the Company impaired $75,094 full net book value of 333 analog GPS units that were no longer in use, were not being depreciated and had no known salvage value.

During the quarters ended June 30, September 30, and December 31, 2007, we also retired and recycled a portion of our inventory of the older prototype SmartVault Version I units that were damaged, and recorded an asset impairment of $48,970, $281,947 and $258,552, respectively, as these components were recycled. The remaining prototype SmartVault Version I containers are used exclusively in a local storage environment. During the fourth quarter of 2007, we performed a strategic review of the Version I vaults used in local storage. Due to the limited financial capital resources available to develop revenue, management assessed the recoverability of these Version I vaults and determined an impairment of $875,000. This impairment reflects the amount by which the carrying value of the Version I vaults exceeds their estimated fair values determined by their estimated future discounted cash flows. The impairment loss was recorded as a component of “Cost of moving and storage” for the year ended December 31, 2007. As of September 30, 2008, management determined that no further impairment existed.

Management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source. Sources to determine fair value include, but are not limited to, recent third party comparable sales, internally developed discounted cash flow analysis and analysis from outside advisors. Significant changes in market conditions resulting from events such as changes in commodity prices or the condition of an asset, or a change in management’s intent to utilize such asset, would generally require management to re-assess the cash flows related to the long-lived assets. As of September 30, 2008, management determined that an impairment existed with respect to certain GPS units that had not been placed into SmartVaults. The amount recorded as an expense in cost of goods sold relating to such impairment was $355,600.

Stock Based Compensation. We adopted our 2006 Equity Incentive Plan (“Plan”) prior to our initial public offering and the concurrent forward one for two stock split. Giving effect to the one-for-thirteen reverse stock split, we were authorized to issue up to 107,692 shares of common stock under the Plan pursuant to options, rights and stock awards. The number of shares authorized for issuance under the Plan was increased to 146,154 shares (giving effect to the one-for-thirteen reverse stock split) by a vote of stockholders at our annual meeting on June 24, 2008. The Plan is administered by the Compensation Committee of the Board of Directors. The exercise price of options granted under the Plan is determined by the Compensation Committee of the Board of Directors at an amount no less than the estimated fair value of our common stock at the date of grant.

Effective January 1, 2006, we adopted SFAS No. 123R, “Share-Based Payment,” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values. Stock based compensation is recognized on a straight-line basis over the requisite service period. The amount of compensation expense recognized for options with a graded vesting schedule equals no less than the portion of the award that is vested. SFAS 123R supersedes our previous accounting under APB 25 for periods beginning on or after January 1, 2006. We recognized compensation expense related to options of $200,147 for the year ended December 31, 2007. Compensation costs related to share-based payments that vested during the nine months ended September 30, 2008 and 2007 and recognized in the Statements of Operations were $156,872 and $144,555, respectively.

In 2007, directors who were not employees of Smart Move received as part of their compensation for services as directors an annual grant of restricted shares of our common stock having a fair market value of $10,000 at the beginning of the year, determined as the average closing price of a share of our common stock for each day during the month of December preceding the grant date. These stock grants vest as to one-half of the shares at June 30 and as to the other half at December 31 of each year. We expense these stock grants using the straight-line method over the vesting term and recognized $40,000 of compensation expense during the twelve months ended December 31, 2007. Beginning in January of 2008, the compensation increased to $15,000 per non-employee director or a total of $60,000 per year, based on the current composition of our Board of Directors. We recognized $49,349 of expense for the nine months ended September 30, 2008 and $30,000 for the nine months ended September 30, 2007, relating to the vested portion of restricted stock grants made to non-employee directors in January 2008 and 2007, respectively.

We expect that equity-based compensation expense for fiscal 2008 and 2009 from all existing awards to employees, officers and directors will be approximately $285,000 per year. This amount represents both stock option awards and restricted stock grants. The performance-based portion of the 26,307 options to purchase shares of common stock (giving effect to the one-for-thirteen reverse stock split) issued to our CEO and CFO in September of 2006 are not included in the equity-based compensation expense described above because management has determined that the attainment of the performance targets specified in the employment agreements is not probable. In the event that subsequent developments indicate that the attainment of the performance targets has become probable, our equity-based compensation expense would increase for 2008. Any future significant awards or changes in the estimated forfeiture rates of stock options and stock grants may impact these estimates. 8,769 of these options were subject to vesting at September 30, 2007 and 8,769 were subject to vesting at September 30, 2008, and the total of 17,538 have been forfeited as the performance conditions were not satisfied at the vesting dates (giving effect to the one-for-thirteen reverse stock split).

Nonemployee Options, Warrant and Convertible Debenture Valuation and Accounting. We apply SFAS No. 123R in valuing options granted to consultants and estimate the fair value of such options using the Black-Scholes option-pricing model. The estimated fair value is recorded as consulting expense as services are provided. Options granted to consultants for which vesting is contingent based on future performance are measured at their then current estimated fair value at each period end, until vested.

We issued warrants as part of our convertible debentures and other financings. We value the warrants using the Black-Scholes pricing model based on estimated fair value at issuance and the estimated fair value is recorded as debt discount. The debt discount is amortized to interest expense over the life of the debenture, using the effective interest method, assuming the debenture will be held to maturity. If the debenture is converted to equity prior to its maturity date, any debt discount not previously amortized is also charged against equity except for any beneficial conversion which is charged to expense. We also apply EITF No. 00-27 “Application of Issue No. 98-5 to Certain Convertible Instruments,” which requires us to estimate the fair value of the as converted shares upon the conversion of the convertible debentures and record a beneficial conversion (debt discount) if the value of the converted shares is greater than the conversion price.

The use of the Black-Scholes model requires that we estimate the fair value of the underlying equity instruments issuable upon the exercise of options and warrants and the conversion of convertible debt into equity. In determining the fair value of our options, warrants and convertible debentures we utilize the market price for our shares and valuations prepared by independent valuation consultants.

In accordance with EITF No. 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock,” options, warrants and convertible debentures with registration rights deemed outside of our control are reflected as liabilities and marked to estimated fair value in our financial statements.

Income Taxes. Our annual tax rate is determined based on income, statutory tax rates and the tax effect of items treated differently for tax purposes than for financial reporting purposes. Tax law requires some items to be included in the tax return at different times than the items reflected in the financial statements. As a result, the annual tax rate reflected in the financial statements is different than the rate reported on our tax return. Some of these differences are permanent, such as expenses that are not deductible in the tax return, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities.

Inherent in determining the annual tax rate are judgments regarding business plans, planning opportunities and expectations about future outcomes. Significant management judgments are required for the following items:


	•	Management reviews our 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 our tax positions are fully supported, we believe 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, case law and proposed legislation. While it is difficult to predict the final outcome or timing of resolution for any particular tax matter, we believe that the accruals reflect the likely outcome of known tax contingencies in accordance with FIN No. 48.

Derivatives. We follow the provisions of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” along with related interpretations EITF No. 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” and EITF No. 05-2 “The Meaning of ‘Conventional Convertible Debt Instrument’ in Issue No. 00-19.” SFAS No. 133 requires every derivative instrument (including certain derivative instruments embedded in other contracts) to be recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivative’s fair value recognized currently in earnings unless specific hedge accounting criteria are met. We value these derivative securities under the fair value method at the end of each reporting period (quarter), and their value is marked to market at the end of each reporting period with the gain or loss recognition recorded against earnings. We continue to revalue these instruments each quarter to reflect their current value in light of the current market price of our common stock. We utilize the Black-Scholes option-pricing model to estimate fair value. Key assumptions of the Black-Scholes option-pricing model include applicable volatility rates, risk-free interest rates and the instrument’s expected remaining life. These assumptions require significant management judgment. We classify derivatives as either current or long-term in the balance sheet based on the classification of the underlying instrument, security or contract.

Business Acquisition

In connection with management’s revenue growth plan to increase revenue opportunities, on January 31, 2008, we acquired certain business assets of Star Relocation Network Alliance, Inc., including trademarks, trade names, a customer list and other intangible assets related to Star Alliance’s co-branded and private label move management programs offered to the real estate brokerage community, third party relocation companies and human resource departments of major companies. In exchange for the business assets and giving effect to the one-for-thirteen reverse stock split, we issued 6,154 shares of common stock (fair value of $55,200) and warrants, exercisable for three years, to purchase 7,692 shares of common stock at an exercise price of $15.60 per share (fair value of $22,900). The acquisition has been accounted for as a business combination and the results of operation related to the business assets were not significant from the January 31, 2008 acquisition date. Had the business acquisition occurred on January 1, 2008 or 2007, our results of operations and loss per share would not be significantly different from reported amounts. The purchase price has been substantially allocated to identifiable intangible assets and the resulting amortization, and any changes upon finalization of the preliminary allocation, is not expected to be significant to our results of operations.

Results of Operations

Comparison of the nine months ended September 30, 2008 and 2007 (unaudited)


										%
	9 Months Ended September 30,						Increase/			Increase/
	2008			2007			(Decrease)			(Decrease)

Sales	$	7,000,864		$	4,603,287		$	2,397,577			52	%
Cost of moving and storage
Cost of moving and storage		6,711,201			4,908,590			1,802,611			37	%
Depreciation, amortization and impairment		2,343,226			2,421,573			(78,347	)		(3	)%

Total cost of moving and storage		9,054,427			7,330,163			1,724,264			24	%

Gross loss		(2,053,563	)		(2,726,876	)		(673,313	)		(25	)%
Selling, general and administrative expenses		4,619,526			4,691,760			(72,234	)		(2	)%
Depreciation and amortization		102,639			112,944			(10,305	)		(9	)%

Total selling, general and administrative expenses		4,722,165			4,804,704			(82,539	)		(2	)%

Operating loss		(6,775,728	)		(7,531,580	)		755,852			(10	)%

Other income (expense):
Interest income		4,584			283,195			(278,611	)		(98	)%
Interest expense		(3,457,134	)		(2,255,648	)		1,201,486			53	%
Gain on value of derivative liability		553,112			—			553,112			nm
Loss on debt extinguishment		(361,981	)		—			361,981			nm

Total other expense		(3,261,419	)		(1,972,453	)		1,288,966			65	%

Loss before income tax benefit		(10,037,147	)		(9,504,033	)		533,114			6	%
Income tax (benefit)		—			(2,367,000	)		(2,367,000	)		nm

Net loss	$	(10,037,147	)	$	(7,137,033	)	$	2,900,114			41	%

nm — percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.

Sales. Sales increased $2,397,577 for the nine months September 30, 2008 over the prior year period, an increase of 52%. The increase in sales can be attributed to increased direct sales as well as increased revenue from third party corporate relocation companies and van lines. Average gross per move revenue, (including storage) was $3,746 compared to $3,616 in the prior year. The increase in revenue per move is due to the Company becoming more competitive with our pricing matrix and completion of larger moves in 2008.

Cost of moving and storage (exclusive of depreciation, amortization and impairment) and gross margin. Cost of moving and storage consisted primarily of the cost of transportation to move containers (freight). Our cost of moving and storage for the nine months ended September 30, 2008, was $9,054,427, resulting in a gross loss of $2,053,563 (29%), compared to the nine months ended September 30, 2007 of cost of moving and storage of $7,330,163 and a gross loss of $2,726,876 (59%). Our gross loss decreased $673,313. The decrease in the gross loss is attributable to a reduction in variable costs of moving and storage, principally our freight costs. Depreciation expense of $2,343,226 for the nine months ended September 30, 2008 decreased by $78,347 over the prior year period.

Our gross profit percentage has been negatively impacted by the high depreciation costs associated with our operational fixed assets necessary to establish our national presence. We reported a gross profit of $289,663 (excluding depreciation and amortization) for the nine months ended September 30, 2008 compared to a gross loss (excluding depreciation and amortization) of $305,303 in the prior year period, or an increase in gross profit of $594,966. We have been able to increase our gross margin due to our concentration on reducing costs, through the upgrades of our software, additional personnel to monitor costs and consolidation of loads to take advantage of full

truck load freight rates. During the nine months ended September 30, 2008 we incurred repositioning costs and furniture pad purchases to provide stock to the new van lines with which we began doing business. We believe that our repositioning and furniture pad costs will decrease in the future (assuming no new containers are added to the fleet), as these costs are incurred to place the assets into position for use. For the nine months ending September 30, 2008 and 2007, we incurred repositioning costs and furniture pad expenditures of $464,612 and $630,221, respectively.

As we concentrate on sales growth and improved execution in our logistics, we are seeing improvements in our gross margins as a result of reductions in freight costs achieved by economies of scale and through enhancements to our logistics software which have reduced costs previously attributed to missed shipment deadlines. In addition, we are reducing warehouse and labor costs on our full service moves by expanding our network of third party warehouse and labor providers. Increasing revenues in existing locations will also help reduce fixed operational costs and contribute to higher operating margins. By increasing the size of our fleet of containers we will lower repositioning expenses.

Total selling, general and administrative expenses. Total selling, general and administrative expenses consist primarily of salaries, related benefits and fees for professional services, such as legal and accounting services. Total selling, general and administrative expenses were $4,722,165 for the nine months ended September 30, 2008, compared to $4,804,704 for the nine months ended September 30, 2007, or a decrease of $82,539. The major components of total selling, general and administrative expenses are comprised of salaries and wages for the nine months ended September 30, 2008, of $1,999,099 (including $156,872 of non-cash compensation) compared to salaries and wages for nine months ended September 30, 2007, of $1,665,085 (including non-cash compensation of $144,555) or an increase of $334,014. This increase was offset by a decrease of legal and accounting fees of $190,851 and a decrease in advertising and marketing of $138,272.

Also in total selling, general and administrative expenses was depreciation expense of $102,639 for the nine months ended September 30, 2008, compared to depreciation expense of $112,944 for the nine months ended September 30, 2007. We expect selling, general and administrative expenses to increase modestly as we focus our efforts on sales growth. It is our expectation that these expenses will continue to decrease as a percentage of revenue if we are successful in expanding our sales.

Total other expense. Total other expense consists of interest expense, interest income, and in 2008, a gain on value of derivative liability and a loss on debt extinguishment. Interest expense for the nine months ended September 30, 2008 was $3,457,134 compared to $2,255,648 for the nine months ended September 30, 2007. The increase is directly attributable to higher debt levels to fund our equipment purchases and operating loss and the elimination of some beneficial conversion features that are reported as interest expense. Interest income for the nine months ended September 30 2008 was $4,584 compared to $283,195 in the same period in the prior year. For the nine months ended September 30, 2008, we reported a gain on value of derivative liability of $553,112 and a loss on debt extinguishment of $361,981.

Net loss before income taxes. We reported a loss before income taxes of $10,037,147 for the nine months ended September 30, 2008, compared to a loss before income taxes of $9,504,033 for the nine months ended September 30, 2007. The increase in the loss before income taxes is attributable primarily to an increase in interest expense of $1,201,486 and a loss on debt extinguishment of $361,981, offset by a gain on value of derivative liability of $553,112. In future periods, while the January 2008 Notes and related common stock purchase warrants remain outstanding, we generally expect to report a gain on derivative liability if our stock price declines, and a loss on derivative liability if our stock price increases (assuming other assumptions used to estimate fair value remain constant). The non-cash gain or loss reported upon re-measurement of our embedded derivative liability may not be indicative of the operating results of our core business activities, but could significantly affect our future reported basic earnings or loss per share depending on numerous factors including the volatility of our stock price.

Income taxes. For the nine months ended September 30, 2007, we recorded an income tax benefit of $2,367,000, compared to none for the same period in 2008, as the income tax benefits were fully utilized in 2007. Since the deferred tax liability has been reduced to zero, we will not recognize a tax benefit on additional net operating losses until we generate taxable income.

Net loss. We reported a net loss of $10,037,147 for the nine months ended September 30, 2008 compared to a net loss of $7,137,033 for the nine months ended September 30, 2007. Historical net loss per basic and diluted share was $0.77 for the nine months ended September 30, 2008 compared to $0.68 for the nine months ended September 30, 2007. Historical net loss per share is based upon historical weighted average shares outstanding of 12,906,896 for the nine months ended September 30, 2008 compared to 10,502,378 for the nine months ended September 30, 2007. Proforma net loss per basic and diluted shares (giving effect to the one-for-thirteen reverse stock split) was $10.07 for the nine months ended September 30, 2008 compared to $8.83 for the nine months ended September 30, 2007. Proforma net loss per share (giving effect to the one-for-thirteen reverse stock split) is based upon proforma weighted average shares outstanding of 996,992 for the nine months ended September 30, 2008 compared to 807,875 for the nine months ended September 30, 2007. The increase in weighted average shares is primarily due to the shares issued in the August 2008 equity offering and debt conversion and shares issued for payment of interest expense on the January 2008 Notes.

Comparison of Years ended December 31, 2007 and 2006


	Year Ended			Year Ended			Increase/			% Increase/
	December 31, 2007			December 31, 2006			Decrease			Decrease

Sales	$	5,810,898		$	4,184,554		$	1,626,344			39	%
Cost of moving and storage		6,337,360			4,827,273			1,510,087			31	%
Depreciation and amortization		2,878,391			1,104,590			1,773,801			161	%
Impairment of fixed assets		1,539,563			—			1,539,563			nm

Total cost of moving and storage		10,755,314			5,931,863			4,823,451			81	%

Gross loss		(4,944,416	)		(1,747,309	)		3,197,107			183	%
Selling, general and administrative expenses		6,240,640			6,099,422			141,218			2	%
Depreciation and amortization		162,553			99,395			63,158			64	%
Impairment of note receivable		—			47,000			(47,000	)		nm
Impairment of capitalized software		30,795						30,795			nm
Write off of deferred offering costs		—			602,262			(602,262	)		nm

Total selling, general and administrative expenses		6,433,988			6,848,079			(414,091	)		(6	)%

Operating loss		(11,378,404	)		(8,595,388	)		2,783,016			32	%

Other income (expense):
Interest income		288,437			107,043			(181,394	)		(169	)%
Interest expense		(2,754,027	)		(1,614,331	)		1,139,696			71	%
Loss on extinguishment of debt		(1,328,565	)		—			1,328,565			nm

Total other expense		(3,794,155	)		(1,507,288	)		2,286,867			152	%

Loss before income tax benefit		(15,172,559	)		(10,102,676	)		5,069,883			50	%
Income tax (benefit)		(2,367,000	)		(233,000	)		2,134,000			916	%

Net loss	$	(12,805,559	)	$	(9,869,676	)	$	2,935,883			30	%

nm — percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.

Sales. Sales increased $1,626,344 during the year ended December 31, 2007, as compared to 2006. The increase in revenues can be attributed to operating in 60 cities during the entire twelve months ended December 31, 2007 compared to 40 cities for the majority of 2006, as well as increased revenue from commercial and national van lines in 2007 compared to a minimal amount of revenue from such sources in 2006. In 2007, we completed 1,628

moves compared to 1,462 in 2006. In 2007 our average gross revenue per move (including storage revenue) was approximately $3,500 compared to approximately $2,800 in 2006.

Total cost of moving and storage. Total cost of moving and storage consisted primarily of the freight transportation to move our containers. Our cost of moving and storage for the year ended December 31, 2007 was $10,755,314, resulting in a gross loss of $4,944,416, compared to the total cost of moving and storage for the year ended December 31, 2006 of $5,931,863, resulting in a gross loss of $1,747,309. Our gross loss increased by $3,197,107 in the more recent year. The increase in the gross loss is attributable to an increase in depreciation expense due to the additional forklifts and flatbed trailers required for the 60 cities in operation for a full twelve months in 2007, and additional SmartVaults being placed into service during 2007. Included in cost of moving and storage for the year ended December 31, 2007 was $2,878,391 of depreciation on our SmartVaults, forklifts, GPS units and flat bed trailers, compared to depreciation of $1,104,590 for the year ended December 31, 2006. During the year ended December 31, 2007, we recorded total fixed asset impairments of $1,539,563, comprised of an asset impairment of $75,094 on 333 analog GPS units that were no longer in use, $589,469 on certain Version I vaults that were damaged, and $875,000 on Version I vaults used in local storage. The impairment of the Version I vaults resulted from our decision in the fourth quarter of 2007 not to invest any of our limited financial resources in the storage only business. Due to our limited revenue growth potential, we reported an impairment on these assets of $875,000.

Our gross loss percentage was negatively affected by our high depreciation costs associated with the operational fixed assets necessary to establish the national expansion. Our gross loss (excluding depreciation, impairment and amortization) as a percentage of sales decreased from 2006 to 2007 due to our focus on reducing costs, upgrades of our software, additional personnel to monitor costs, and consolidation of loads to take advantage of full truck load freight rates. Included in our costs of moving and storage are repositioning and furniture pad expenses. Our repositioning and furniture pad costs increased from the prior year as these costs were incurred to place the containers into position for use. For the year December 31, 2007, we incurred repositioning costs and furniture pad expenses of $657,348 (representing 11% of sales).

Selling, general and administrative expenses. Selling, general and administrative expenses consisted primarily of salaries, related benefits and fees for professional services. Selling, general and administrative expenses were $6,433,988 for the year ended December 31, 2007, compared to $6,848,079 for the year ended December 31, 2006, or a decrease of $414,091. The majority of the change is comprised of salaries and wages for year ended December 31, 2007 of $2,274,470 (including $284,180 of non-cash compensation) compared to salaries and wages for year ended December 31, 2006 of $4,286,340 (including non-cash compensation of $2,690,836) or a decrease of $2,011,870, offset by increases in legal and accounting expenses of $648,306, an increase in advertising and marketing expenses of $401,210, director fees of $115,000, and bad debts of $136,156 due to outdated collection policies that have been subsequently changed. In prior periods, our transportation providers administered arrangements by which funds due from customers paying by certified check were remitted to us. A significant portion of the increase in the bad debts is due to procedural problems or delays in remittance or collection of certified funds. All payments by check are currently required to be remitted directly to us prior to delivery of the containers to the ultimate destination point.

Also included in total selling, general and administrative expenses was depreciation and impairment expense of $193,348 for the year ended December 31, 2007, compared to depreciation expense of $99,395 for the year December 31, 2006. Selling, general and administrative expenses increased modestly as we transitioned from our national rollout to focus on sales growth.

During the period October 1, 2005 to December 31, 2005, we invested $151,930 in convertible notes of a service company, which provided us moving and handling services. We intended to supplement our moving services with those loading and unloading services provided by the service company to address the needs of our customers who sought full service moves. We originally intended to provide this entity with working capital loans up to $210,000 to maintain the service company’s operations until March 2006. However, the service company was not able to maintain budgeting necessary to reach a breakeven position and we discontinued the funding after providing an additional $47,000 in January 2006. During the first quarter of 2006, we determined that the convertible note value had been impaired as the service company was not able to execute its business plan and the future collection of

the notes receivable was doubtful. Accordingly, we recorded impairment for 100% of the notes receivable balance at September 30, 2006.

Included in total selling, general and administrative expenses for the year ended December 31, 2006 was the write off of $602,262 of deferred offering costs as a result of the withdrawal of a prior registration statement in July 2006.

Other expense. Other expense consisted primarily of interest expense, interest income and, in 2007, a loss on extinguishment of debt. Interest expense for the year ended December 31, 2007 was $2,754,027. This amount in 2007 included total non-cash interest of $2,027,978 comprised of $1,371,057 of non-cash interest from the amortization of debt discounts, including $870,523 from the expensing of the unamortized beneficial conversion discount upon the conversion of the January 2006 Notes to equity, and $250,437 of stock and warrants issued as inducements to convert accrued interest of $406,484 into equity. During 2006, we incurred $1,614,331 of interest expense, which included $351,754 of non-cash interest from the amortization of debt discounts and $161,140 of inducements to convert debt to equity. The increase was directly attributable to higher debt levels to fund our equipment purchases and operating loss. In the fourth quarter of 2007, we negotiated an interest deferral on the 2005 Notes and the waiver of scheduled principal payments on $2.7 million of the $3 million face amount of the notes. For accounting purposes, this caused the 2005 Notes to be deemed an extinguishment, and we recorded a non-cash loss of $1,328,565. Interest income for the year ended December 31, 2007 was $288,437 compared to $107,043 in the prior year.

Loss before income taxes. We reported a loss before income taxes of $15,172,559 for the year ended December 31, 2007, compared to a net loss of $10,102,676 for the year ended December 31, 2006. The increase in the loss before income taxes was attributable primarily to an increase in depreciation expense of approximately $1,836,959, an increase in impairments of $1,570,358, an increase in interest expense of $1,139,696, and a non cash loss on extinguishment of debt of $1,328,565. These increases were offset by a reduction in total selling, general and administrative expenses (excluding depreciation and impairment) of approximately $508,044.

Income tax benefit. For the year ended December 31, 2007, we recorded an income tax benefit of $2,367,000 compared to $233,000 in the prior year as we were a limited liability company treated as a partnership for income tax purposes until December 6, 2006. The tax benefit was a result of the reduction in the deferred tax liability originally recognized when we became a taxable corporation in December 2006. The deferred tax liability was reduced to zero, and we will not recognize a tax benefit on additional net operating losses until we generate taxable income and the use of the net operating losses is more likely than not.

Net loss. We reported a net loss of $12,805,559 for the year ended December 31, 2007, compared to a net loss of $9,869,676 for the year ended December 31, 2006. The principal reasons for the increased net loss were attributable to an increase in depreciation expense of approximately $1,836,959, an increase in impairments of $1,570,358, an increase in interest expense of $1,139,696, and a non cash loss on extinguishment of debt of $1,328,565. These increases were offset by a reduction in total selling, general and administrative expenses (excluding depreciation and impairment) of approximately $508,044. Historical net loss per basic and diluted share was $1.21 for the year ended December 31, 2007 compared to $1.77 for the year ended December 31, 2006. Historical net loss per share is based upon historical weighted average shares outstanding of 10,623,167 for the year ended December 31, 2007 compared to 5,584,420 for the year ended December 31, 2006. Proforma net loss per basic and diluted share (giving effect to the one-for-thirteen reverse stock split) was $15.67 for the year ended December 31, 2007, compared to $22.98 for the year ended December 31, 2006. Proforma net loss per share (giving effect to the one-for-thirteen reverse stock split) was based upon proforma weighted average shares outstanding of 817,167 for the year ended December 31, 2007, compared to 429,571 for the year ended December 31, 2006. The increase in weighted average shares was primarily due to the shares issued in conjunction with the December 2006 initial public offering and the conversion of debt and interest expense to common stock in 2006 and 2007.

Liquidity and Capital Resources

From inception through September 30, 2008, we have financed our operations through the private placement of our equity securities for gross proceeds of approximately $7,800,000, the private placement of convertible debentures for gross proceeds of $11,500,000, bank and capital lease financing for equipment purchases totaling

$2,700,000, and the public sale of our securities in our initial public offering for net proceeds of approximately $14,300,000.

We previously have incurred significant debt in order to fund our business. At September 30, 2008, we had $14,780,618 of outstanding long-term debt and $163,578 in equipment based capital lease financing. At September 30, 2008, we had a working capital deficit of $11,000,790 and our accumulated deficit was $24,023,642. For the years ended December 31, 2007 and 2006 we reported a net loss of $12,805,559 and $9,869,676, respectively. For the nine months ended September 30, 2008 and 2007 we reported a net loss of $10,037,147 and $7,137,033, respectively. As of September 30, 2008, we were in default with respect to $7,779,153, or approximately 53%, of our outstanding convertible promissory notes. As a result of such defaults and working capital deficits, certain of our creditors may at any time elect to accelerate or declare currently due and payable the unpaid portion of the debt we owe to them. In the event that we are unable to pay such debts upon acceleration, such creditors may seize our assets and we would be unable to continue in operation.

In addition, we may be unable to pay our obligations in the near term as they arise in the ordinary course of our business, in which case we may be considered to be insolvent. In the event of such acceleration of our indebtedness or such insolvency, investors in this offering may lose all or a portion of their investment, and we may be unable to continue in operation.

Recent Financing Activity

We anticipated at that we would need a total of $2,500,000 subsequent to March 31, 2008 to sustain our operations through the end of 2008. As of September 30, 2008, we have raised a total of approximately $2,160,000. In November 2008, we sold $300,000 in an unsecured convertible note. The note is payable from the proceeds of any offering that raises at least $5,000,000 of new capital. The note matures on March 31, 2009, but we may extend the note for a total of sixty days. We estimate that the proceeds of this offering, when combined with cash receipts from operations and debt restructuring, will be sufficient to fund our operations and capital requirements through mid-2009. We are currently investigating additional funding opportunities.

Management cannot provide any assurance that we will be able to obtain loans or raise sufficient money through the sale of our equity securities or otherwise. If we are not able to raise adequate funding, we will be unable to continue in business in our current form if at all. If we are able to raise funding in the equity markets, our stockholders will suffer significant dilution and the issuance of securities may result in a change of control.

We currently have a significant amount of debt outstanding that likely will increase if we are successful in securing additional funding. Our level of debt could significantly affect our business by: (i) making it more difficult for us to satisfy our obligations, including making scheduled principal and interest payments under our debt obligations; (ii) limiting our ability to obtain additional financing; (iii) requiring us to dedicate a significant portion of our cash flow from operations to payment of debt, thereby reducing the availability of our cash flow for other purposes; and (iv) limiting our flexibility to maintain operations and pursue future opportunities.

Cash Flows

Net cash used in operations was $4,438,398 for the nine months ended September 30, 2008 compared to $3,768,476 for the nine months ended September 30, 2007. For the nine months ended September 30, 2008 cash was consumed by the net loss of $10,037,147, reduced by non-cash expenses of approximately $4,703,563 and reduced by changes in operating assets of $895,186. For the nine months ended September 30, 2007 cash used in operations was consumed by the net loss of $7,137,033, reduced by non-cash expenses of $1,901,236 and reduced by changes in operating assets of $1,467,321.

Net cash used in operations was $5,579,441 for the twelve months ended December 31, 2007. Cash was consumed by the net loss of $12,805,559, reduced by non-cash expenses of $3,040,944 for depreciation, $1,371,057 of amortization of debt discounts, loss on debt extinguishment of $1,328,565, $284,180 of non-cash compensation,

impairments of $1,570,358, bad debts of $168,014, and shares and warrants issued as inducements to convert debt to equity of $250,437, offset by a non-cash cost of a deferred income tax benefit of $2,367,000. Cash was also consumed by increases in accounts receivable of $126,846, an increase in contracts in process of $149,597, an increase in packing supplies of $94,437 and an increase in prepaid and other assets of $31,434. Cash consumed was reduced by an increase in accounts payable of $934,247, an increase in accrued interest of $704,847, and an increase in deferred revenue of $342,783.

Investing Activities

For the nine months ended September 30, 2008 net cash outflows from investing activities consisted of the purchase of office equipment of $2,355, compared to the nine months ended September 30, 2007 during which net cash outflows from investing activities of approximately $9,800,000 was attributable to purchases of property and equipment consisting primarily of SmartVaults, totaling $9,766,000, and deposits of $39,200.

For the year ended December 31, 2007 net cash used in investing activities of $10,080,373 was attributable to purchases of property and equipment totaling $10,041,173, and a deposit on an office lease of $39,200.

For the year ended December 31, 2006 net cash used in investing activities of $5,880,427 was attributable to purchases of property and equipment totaling $5,789,427, advancing $47,000 under a note receivable, and a deposit on an office lease of $44,000.

Financing Activities

For the nine months ended September 30, 2008, financing activities consisted of issuance of notes payable and equity for which net proceeds were received in the amount of $5,106,217, reduced by repayments on debt and capital leases of $462,950, resulting in net cash provided by financing activities of $4,643,267. For the nine months ended September 30, 2007, financing activities consisted primarily of the issuance of notes payable for net proceeds in the amount of $1,604,725 reduced by repayments on debt and capital leases of $571,514.

For the year ended December 31, 2007, we received proceeds from the sale of notes of $2,829,000 which were offset by note payable issuance cost of $233,395 and payments of debt and capital leases of $802,425.

For the year ended December 31, 2006, our financing activities consisted primarily of the issuance of common stock and membership interests generating $18,660,008 of proceeds. In addition, we received $6,832,500 from proceeds of notes payable, and $500,000 from proceeds of bank debt. The proceeds from these financing activities were offset by offering and issuance costs of approximately $3,540,000.

Convertible Promissory Notes

The following table provides certain details of only our outstanding convertible promissory notes at November 30, 2008.


	Original or extended						Secured by	Conversion
Note Offering	maturity date	Unpaid principal		Interest rate			or unsecured	price(1)

2005 Notes	September 30, 2012	$	298,653		12	%	SmartVaults/tooling	$	65.00
2005 Notes	September 30, 2012	$	2,700,000		12	%	SmartVaults/tooling	$	39.00
2006 July Notes	June 30, 2011	$	5,000,000		10	%	SmartVaults/tooling	$	48.75
2007 August Notes	September 1, 2009	$	1,217,500		12	%	SmartVaults/tooling	$	26.00
2007 Deferred Interest Notes	October 1, 2010	$	355,500		12	%	Unsecured	$	13.00
2007 November Notes	October 31, 2008	$	275,000		12	%	Flatbeds/forklifts and other assets	$	9.75
January 2008 Notes	January 15, 2010	$	3,655,000		11	%	Flatbeds/forklifts and other assets	$	9.75
2008 April Secured Notes	June 30, 2011	$	750,000		12	%	Secured by 500 SmartVaults	$	5.20
May and June 2008 Notes	June 30, 2011	$	505,000		11	%	Secured by 800 SmartVaults	$	5.20
November 2008 Unsecured Note	March 31, 2009	$	300,000		10	%	Unsecured		*


(1)		Giving effect to the one-for-thirteen reverse stock split.

At November 30, 2008, the aggregate outstanding principal of secured and unsecured notes was $15,056,653. The notes bear interest ranging from 10% to 12% per annum.

2005 Notes and 2007 Deferred Interest Notes. Interest on the 2005 Notes aggregating $3,000,000 in principal amount was payable semi-annually during the first two years after issuance. On the third anniversary of the 2005 Notes issuance, we were required to begin making monthly principal payments on the notes on a five-year amortization basis. In November 2007, the holders of $2,700,000 of the 2005 Notes agreed to waive and defer the monthly principal amortization in exchange for a reduced conversion price and other consideration in the form of warrants. In conjunction with amending and restating the terms of the 2005 Notes, we issued convertible notes totaling $355,500 to certain of the 2005 Note holders bearing interest at 12% per annum in exchange for their agreement to defer interest payments. The deferred interest notes mature in October 2010. As of September 30, 2008, the principal outstanding was $355,500, and we are in arrears in the payment of the interest due on a portion of these notes. We are currently in discussion with the note holders regarding a proposal to defer the amount of interest currently due and to restructure the obligations so that all interest that would otherwise become due during the remainder of 2008 and during 2009 will be deferred until June 2010. Until a definitive agreement is concluded with the note holders, we have no assurance the proposed restructuring will be implemented. The holders of the Company’s 2005 Notes, the July 2006 Notes, and the August 2007 Notes, have entered into an Intercreditor Agreement and Stipulation which provides for pro rata sharing of collateral securing the respective notes. In addition, the holders of the 2005 Notes and the July 2006 Notes are parties to an Agreement Among Lenders which provides that no acceleration of maturity of indebtedness under any of the respective notes may occur upon a default unless a majority of the holders of all the notes issues a written notice to the Company.

2006 July Notes. The July 2006 Notes, in the amount of $5,000,000, require interest to be paid annually beginning June 30, 2007 for 5 years and all principal and any accrued and unpaid interest is due at maturity. We are in arrears in the payment of the interest due on these notes. We are currently in discussion with the note holders regarding a proposal to defer the amount of interest currently due and to restructure the obligations so that all interest that would otherwise become due during the remainder of 2008 and during 2009 will instead be deferred until June 2010. Until a definitive agreement is concluded with the note holders we have no assurance the proposed

restructuring will be implemented. The holders of the July 2006 Notes are parties to the Intercreditor Agreement and Agreement Among Lenders as described above.

2007 August Notes. The August 2007 Notes, in the amount of $1,217,500, bear interest at the rate of 12% per annum payable quarterly with principal due on September 1, 2009. These notes may be prepaid without penalty. We are in arrears in the payment of the interest due on these notes. We are currently in discussion with the note holders regarding a proposal to defer the amount of interest currently due and to restructure the obligations so that the principal and all interest that would otherwise become due during the remainder of 2008 and during 2009 will instead be deferred until June 2010. Until a definitive agreement is concluded with the note holders, we have no assurance the proposed restructuring will be implemented. The holders of the August 2007 Notes are parties to the Intercreditor Agreement and Stipulation with holders of the Company’s 2005 Notes and July 2006 Notes as described above.

2007 November Notes. The 2007 November Notes, in the amount of $275,000, bear interest at 12% per annum. Interest and principal on these notes was payable on the maturity date, October 31, 2008. The holders of our November 2007 Notes are secured by a second lien on certain assets held as security for the January 2008 secured note holders. The principal and interest on these notes remain unpaid. One of the note holders holding $250,000 of principal amount has agreed to defer the unpaid amount to January 31, 2009 and has also agreed that upon payment of 70% of the principal amount, the remaining unpaid principal will be due February 15, 2010.

January 2008 Notes. In January 2008, we entered into secured promissory notes aggregating $3,655,000 that mature on January 15, 2010. The lenders purchased these notes at a price equal to 85% of the issue amount representing a 15% original issue discount. These notes are secured by a first lien on all of our assets except container assets and its container tool mold. The January 2008 Notes bear interest at 11% per annum. Proceeds from these notes were used to retire debt to Silicon Valley Bank in the approximate amount of $358,778. Certain of the note holders have agreed to defer the receipt of interest and principal payments until December 31, 2008. At our election on October 31, 2008, we issued 30,055 shares to the holders of the January 2008 Notes in payment of approximately $109,513 of interest.

2008 April Secured Notes. In April 2008, we issued $750,000 of secured convertible notes with warrants that mature on June 30, 2011. The notes bear interest at 12% per annum, and are secured by 500 containers. In the event we use these containers as security for additional capital, we will issue the note holder additional warrants.

May and June 2008 Notes. Between May and July of 2008, we sold an aggregate of $505,000 secured convertible note units. The notes are due on the third anniversary of funding and bear interest at 11% per annum. Interest is payable quarterly in cash or kind (restricted shares) at our election during the first twelve months, and thereafter payable only in cash. At our election on October 31, 2008, we issued 3,703 shares to the holders of the May 2008 Notes in payment of approximately $13,093 of interest.

November 2008 Unsecured Note. In November 2008, we issued an unsecured promissory note and debenture to one investor in the principal amount of $300,000, pursuant to a bridge loan agreement. The loan bears interest at 10% per annum and matures on the earlier of March 31, 2009 or the consummation of one or more new financings aggregating $5,000,000 in new capital. The maturity date of the loan may be extended for up to two additional months at our discretion, provided we pay accrued interest and an extension fee of 200,000 shares of our common stock (without giving effect to the one-for-thirteen reverse stock split) for each month extended.

In the event of the closing of this offering, we will be obligated to pay the investor equity consideration in shares of our common stock equal to the original principal amount of the note divided by the initial Unit offering price. We have also agreed to issue to the investor at any such closing a warrant to purchase a number of shares of our common stock equal to 200% of the number of shares issued as equity consideration exercisable at a price equal to 150% of the initial Unit public offering price.

Due to the variable price provision of the January 2008 Notes, and as we are currently not in a financial position to redeem the balance of the payments due in cash, we potentially do not have the ability to issue a sufficient number of shares of common stock required to discharge our obligations under the current terms. Therefore, in accordance with EITF No. 00-19, at June 30, 2008, we have classified the January 2008 Notes as current on the balance sheet.

Additionally, if we do not have adequate shares to settle our obligations for the January 2008 Notes, we are precluded from concluding we have sufficient authorized or issued shares to settle these contracts within the scope of EITF 00-19. The inability to settle the January 2008 Notes has “tainted” financial instruments embedded in subsequent financings in a similar manner. It has been determined that the “toxic security” taints the equity classification of subsequently issued contracts subject to EITF 00-19. Because of this EITF, these tainted securities are classified as current liabilities until the toxic security expires or is settled. As a result of this EITF, all of the aforementioned notes affected by this toxic security have been recorded as current liabilities on the balance sheet as of September 30, 2008.

We recorded amortization of the respective debt discounts to interest expense for the three-month period ended September 30, 2008 in the amount of $519,275 and $1,461,275 for the nine-month period ended September 30, 2008. In addition, related to the September 2007 Note conversion, the November 2007 Note conversion and the January 2008 Unsecured Note conversion, the Company recorded the unamortized debt discount balance to interest expense on the date of conversion in the amount of $117,902. Included in interest expense is $720,929 to parties that own more than 10% of the Company.

We did not make certain scheduled interest payments for the quarter ended December 31, 2007, March 31, 2008, June 30, 2008 and September 30, 2008 as required under the terms of the August 2007 and 2005 Notes. The Company will be obligated to pay a default interest rate of 18% per annum on all outstanding principal amounts until the scheduled interest payments under the terms of the notes are paid current. In addition, at September 30, 2008, the Company did not make scheduled interest payments on the 2006 July Notes. Subsequent to September 30, 2008, the 2007 November Notes which were due October 31, 2008 have not been paid. We are currently in discussion with the holders of the respective notes regarding a proposal to defer the amount of interest currently due and to restructure the obligations so that all interest that would otherwise become due during the remainder of 2008 and during 2009 will be deferred until June 2010. Until a definitive agreement is concluded with the note holders, we have no assurance the proposed restructuring will be implemented. We have agreed to issue to the placement agent for the solicitation of these waivers a warrant to purchase 7,692 shares of common stock (giving effect to the one-for-thirteen reverse stock split) exercisable at $5.20 for a period of five years. The holders of the Company’s 2005 Notes, the July 2006 Notes, and the August 2007 Notes have entered into an Intercreditor Agreement and Stipulation which provides for pro rata sharing of collateral securing the respective notes. In addition, the holders of the 2005 Notes and the July 2006 Notes are parties to an Agreement Among Lenders which provides that no acceleration of maturity of indebtedness under any of the respective notes may occur upon a default unless a majority of the holders of all the notes issues a written notice to the Company.

The convertible promissory notes described above will have substantial financial impact on our future financial statements in accordance with the accounting procedures of EITF No. 00-27 “Application of Issue No. 98-5 to Certain Convertible Instruments,” and EITF No. 00-19 “Accounting for Derivative Financial instruments Indexed to, and Potentially Settled in a Company’s Own Stock.” As of September 30, 2008, we have allocated approximately $6.2 million of the $14.8 million total debt to the detachable warrants and conversion feature. Our future financial statements will reflect interest expense calculated at an effective interest rate of 64% on the detachable warrants and conversion feature.

Controls and Procedures

As of December 31, 2007, and again at September 30, 2008, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of such year and period. During 2008, we adopted and will complete remediation measures. We have engaged an independent financial accounting firm to help us evaluate, account for and prepare financial statement disclosures for complex accounting transactions as well as to review its required Securities and Exchange Commission filings. In the future as such controls change in relation to developments in our business and financial reporting requirements, our evaluation and monitoring measures will also address any additional corrective actions that may be required.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” which defers the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Earlier adoption is permitted, provided a company has not yet issued financial statements, including for interim periods, for that fiscal year. Effective January 1, 2008, we partially adopted SFAS No. 157 for financial assets and liabilities and certain non-financial assets and liabilities that are recognized and disclosed at fair value in the financial statements on a recurring basis and deferred adopting SFAS No. 157 for non-financial assets and liabilities recognized at fair value on a non-recurring basis until January 1, 2009.

In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115.” SFAS 159 permits entities to measure eligible assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. As of March 31, 2008, we did not elect the fair value option on any financial instruments or certain other items as permitted by SFAS 159.

In December 2007, the FASB issued Statement No. 141 (R) “Business Combinations.” This Statement establishes principles and requirements applicable to the manner in which the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. We do not believe the adoption will have a material impact on its financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”. SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The guidance in SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. We are currently assessing the impact of SFAS 161.

BUSINESS

We provide an innovative, containerized method of transporting household and commercial goods securely and on a time-guaranteed basis. We currently provide moving services within markets encompassing over 92% of the U.S. population from terminals in the 60 largest metropolitan areas. Our operations are coordinated through the terminals of our primary transportation provider, UPS Freight. We believe that the superior security for customer goods, scheduling flexibility and expedited service provided by our business model gives us specific competitive advantages over the service offerings of traditional van lines that currently perform the majority of long distance moves in the U.S. In 2006, 2007 and the first nine months of 2008, we completed 1,426, 1,628 and 2,330 moves, respectively.

We provide an innovative solution that addresses common problems experienced by consumers during moves. Our service model: (i) does not require customers to rent or drive trucks to the destination; (ii) provides ease of customer use of our standardized moving containers; and (iii) provides scheduling convenience and time savings that make the consumer’s moving experiences less stressful. Key benefits of our services include:


	•	competitive pricing;

	•	superior security;

	•	scheduling flexibility and expedited service;

	•	more customer options; and

	•	full-coverage insurance.

We can operate efficiently with only a small labor force and without a need for the substantial investment of capital in transportation facilities that is typically required of national moving van service providers and their local agents. We contract with third party trucking companies for the required transportation services and focus our efforts on the range of moving management services we can provide using our containers. UPS Freight acts as our primary local cartage provider and takes responsibility for loading, unloading and transporting our SmartVaults in connection with our customer moves. Instead of contracting with large national van lines for our long distance transportation needs, we have elected to take advantage of the recurring excess load capacity of UPS Freight and other trucking logistics companies to ship our SmartVaults. These companies regularly ship a wide range of commercial products on a time-sensitive delivery basis and can ship our SmartVaults far more efficiently for our customers than traditional moving vans. They are willing to provide this service to us on a cost-effective basis because we enable them to use their own excess load and storage capacity more effectively.

Moving and Storage Industry Overview

The moving and storage industry in the United States encompasses over 8,000 service companies that collectively generate over $16.5 billion in annual revenues in the United States in 2007 according to a report published by Nathan Associates, Inc., “The Moving and Storage Industry in the U.S. Economy” (August 15, 2008). The most recognized names in the moving industry are major van line companies, such as United Van Lines, Allied Van Lines, Atlas Van Lines, Mayflower Van Lines, Wheaton Van Lines, and Bekins Van Lines. These national moving companies conduct their operations through an affiliated network of local agents throughout the country who undertake to provide the transportation of household goods through independent contractors they engage who actually own and operate the trucks, tractors and trailers used to provide the transportation services. These local agents book and carry out a move from origination to the new destination where the local agent in the new location completes these moves.

We believe that the traditional moving industry is facing significant challenges that will require changes to the industry’s prevailing business model. The moving industry must adapt to the high costs of fuel and the inefficiencies of shipping less than a full truck load (small moves that are under 8,000 pounds) long distances. In addition, an inherent characteristic of the traditional van line business model requires the local agents to share their revenue with the national brand company, while the local agents bear the vast majority of the capital investment, risk and customer issues. In order for the national van lines to operate efficiently and provide national service, they in turn must rely on the local agent network.

We believe that under the current conditions it is increasingly difficult for traditional moving companies to address the structural problems confronting the moving industry, as well as basic consumer issues and service problems, in the following key respects:


	•	the local agents are experiencing higher overhead costs that must be passed on to consumers;

	•	the infrastructure is capital-intensive with a low return on invested capital;

	•	the moving companies’ assets are generally considered to be inefficiently used;

	•	the base of long-haul truck owner-operators is shrinking, resulting in delays in scheduling moves and inability to meet peak seasonal demand;

	•	the moving companies experience stable but high claims for property loss;

	•	the need to assemble full truck loads to reduce costs results in inflexible schedules for consumers;

	•	the number of small moves is increasing, resulting in a need for a cost efficient moving service solution that addresses requirements for expedited services and time critical constraints of customers;

	•	consumers frequently experience hidden or unexpected charges; and

	•	consumers desire, but cannot obtain, control over important aspects of a move.

As a result of these problems we believe there is a significant opportunity in the moving industry to introduce and expand an alternative business model, i.e., containerized moving services, that deals with these concerns by offering improved and more efficient services on a cost-effective basis applying up-to-date logistics principles.

Smart Move Solution

For consumers of all types (individuals and commercial), our business model eliminates the underlying cause of many common problems experienced during moves. Our service model: (i) does not require customers to rent or drive trucks to the destination; (ii) provides ease of customer use with our standardized moving containers and our ground level loading capability; and (iii) provides scheduling convenience and time savings that reduce the stressful scenarios typically associated with consumer moves. Our business model and implementation strategy is designed to minimize these common problems and to improve our customers’ moving experience. Key aspects of our solution include:


	•	competitive pricing;

	•	superior security;

	•	scheduling flexibility and expedited service;

	•	reduced loss and damage;

	•	customer control of service level and budget; and

	•	full replacement value insurance coverage for customers’ shipped goods of $10,000 per vault.

Smart Move believes its solution also addresses many of the current problems in the moving industry by offering the following benefits:


	•	lower capital investment through the use of existing long haul freight infrastructure that also provides for efficient, economical and timely shipment of goods;

	•	more efficient handling of small shipments through the containerized shipment of goods;

	•	the ability to deploy SmartVaults to complement existing operations of van lines;

	•	expedited transit times compared to traditional van lines that are attractive to corporate human resources departments and relocation service providers seeking to minimize temporary living expenses;


	•	reduced dependence on individual truck owner-operators and reduced exposure to potential shortages of drivers; and


	•	reduced claims for loss and damage due to the elimination of the multiple loading and off-loading of customer goods.

We believe that we can provide customers a cost savings of from 15% to 20% relative to the costs of traditional movers (depending upon the type of move, service level, distance, origin and destination). These savings can be derived in part through our ability to afford customers the convenience and flexibility of packing their own goods which is made possible through our greater control over scheduling. In contrast to the traditional full service move, the Smart Move solution gives the consumer the time to pack and fill the container prior to shipment and to unload it upon arrival at the destination site. For example, in a traditional full service move, the customer must, generally, be ready to move out and have all goods loaded in one day. Then, upon arrival at his or her destination, the customer must accept the household goods on the assigned delivery date or pay additional fees. Consumers using our services, in contrast, can load, take delivery of containers, and ship their goods to the destination city to be stored at a local warehouse at no additional charge for up to 28 days. If additional storage time is required beyond the 28 days provided, we are able to furnish the required storage at a very competitive price of $2.00 per day, per vault. In addition, most insurance and liability claims arising in the moving industry relate to lost or missing goods. The Smart Move solution minimizes the risk of loss of a customer’s goods by allowing the customer to place his or her own lock on the vaults. As an added security feature, a secure seal is attached by UPS Freight to the vault at the time of shipment. Customers are thereby assured that their goods have not been touched or handled multiple times, as is often the case with moves handled by traditional movers.

Our Business Model

We believe that our business model allows us to operate on a cost-efficient basis with a small labor force and without the need for a substantial investment of capital in transportation facilities that is typically required of national moving van service providers and their local agents. We contract with third party trucking companies for the transportation services we require. We focus our efforts on providing specialized moving containers and asset tracking and management services associated with our use of these containers. UPS Freight acts as our primary local cartage provider and takes responsibility for loading, unloading and transporting our SmartVaults in connection with our customer moves. Instead of contracting with large national van lines for our transport needs, we have elected to take advantage of the recurring excess load capacity of UPS Freight and other trucking companies to ship our SmartVaults for long distance moves. These trucking logistics companies regularly ship a wide range of commercial products on a basis that generally involves time-sensitive delivery requirements. Consequently, they can ship our SmartVaults far more efficiently than moving vans and are willing to provide this service to us on a cost-effective basis because they are able to utilize their transportation capabilities more effectively by aligning our requirements to transport uniform size containers with their need to use available excess freight load capacity.

The principal elements of our business model include the following:

SmartVault Container. The proprietary design of the SmartVault is a key component of our business model. Our corporate owned fleet of over 4,200 moving containers allows us to compete for long distance moving revenue and provides room to grow without further capital investment in vaults. The containerized service business model we developed was driven by our desire to scale rapidly without having to incur costly investment to acquire trucking and transportation infrastructure facilities.

The features of the SmartVault include:


	•	a technologically advanced side wall and top material composition of strong high density polyethylene (HDPE) built on an aluminum deck and base with an expected minimum 8-year useful life;

	•	a standard 262 cubic feet loadable storage capacity able to handle loads up to 2,800 pounds;

	•	spacious interior dimensions: 7 feet long, 5 feet 10 inches wide and 6 feet 7 inches high;

	•	superior weather protection and individual vault security features; and


	•	ease of loading via forklift onto standard truck trailers and sea containers used throughout the transportation and logistics industry.

The SmartVault’s sturdy weather resistant structure and its ability to be locked and secured by the customer also provide a high degree of protection from transit-related damage, tampering and theft. The risk of loss or excessive delay in transit is further reduced by our ability to monitor the location of each of our SmartVaults through the combined tracking functionality of bar-code scanning and our internal systems. The SmartVaults are additionally equipped with a global positioning system device (GPS) which can supplement the online tracking functionality. We are not currently using the GPS technology on the SmartVaults. The SmartVault’s security features and our tracking technology allow us to procure lower cost insurance against the loss or damage of goods during transit for us and our customers. Unlike the PODS container, a competitive container which can only be handled with special equipment, the SmartVault can be loaded on to any standard truck trailer or inter-modal container by forklift. The aluminum base enables the container to be used in additional vertical markets where wood containers are generally considered unsuitable for transport of goods, such as pharmaceutical, food and international shipments.

Strategic Outsourcing of Warehouse and Transportation Requirements. Rather than building a costly infrastructure with associated continuing overhead and expansion costs, we maximize our operational leverage through outsourcing of trucking and warehouse infrastructure. Consequently, we avoid fixed costs for transportation and warehouse storage that conventional movers incur. National and regional freight carriers such as UPS Freight often cannot fill their trucks to capacity and consequently are able and willing to offer very competitive rates to move our vaults long distance in order to fill their unused trailer space. UPS Freight provides the vast majority of our pick-up and delivery needs within local markets. These local markets consists primarily of markets within an approximate 150-mile radius of 60 UPS terminals nationwide which allows us to provide moving services to approximately 92% of the U.S. population.

Our agreement with UPS Freight requires UPS Freight to perform a variety of functions with regard to our containers including, but not limited to, delivery, pick-up, line haul transportation and storage. We pay UPS Freight a set fee per trip, except for a fuel surcharge, which we pass on to our customer as part of the overall cost of the move. We also provide the trailer and forklift equipment for the local delivery. UPS Freight is required to provide on-going quality control inspections, training and safety consistent with our requirements. Our agreement with UPS Freight automatically renews on a monthly basis and is terminable by either party on 90 days notice. The current price terms continue through January 2009. We have the flexibility to use other similar logistics service providers to fill any gap, expand services or handle overflow situations to maintain our operating efficiencies and commitments. This enables us to control costs, remain flexible to meet customers’ needs and continue to grow revenue.

Interstate Focus. Our model is designed to compete favorably in the interstate or non-local movement of household goods. The local storage and moving sector within our industry involves numerous companies in most urban areas which compete with one another mainly on the basis of price. In contrast, the interstate segment is primarily serviced by major van lines. Our model allows us the flexibility to provide relocation services between major markets efficiently, and allows us to expand our service area with little or no additional capital investment. Our focus on interstate moves allows us not only to capture revenue directly from moving consumers, but also to provide our container and logistics services offerings directly to national moving companies, corporate human resource departments and corporate relocation services.

Scalability and Efficient Logistics Management. While UPS Freight remains our main strategic partner, we have established relationships with other major cartage providers in the logistics transport sector that can also meet our outsourcing requirements on a cost-effective basis. By actively expanding our service provider network, we create options and insulate ourselves from being dependent on just one logistics provider. This allows us to handle sales growth and deal with seasonal increased demands efficiently and on a timely basis. The flexibility afforded by our model is not only beneficial to our customers, but allows us to achieve operating leverage, maintain service levels, and consistently keep freight costs low by obtaining competitive bids. Our logistics objective is to maintain a sufficient number of locations from which containers can be accessed to allow movements within our network to be coordinated on the most cost-effective basis. Our proprietary fleet of SmartVaults allows positioning and redeployment of empty containers that are ready for next use to any other location within our network and avoids the

need for individual SmartVaults to be returned only to a base location. This allows freight cost and administrative efficiencies to be realized while fulfilling demand and reducing the length of empty back haul or repositioning. Our proprietary software allows us to efficiently plan and manage our fleet of SmartVault containers. Our software enables our logistics group personnel to monitor costs, compare rates and secure the least expensive freight bid for all shipments, making it possible to quickly identify opportunities to increase our gross margin. Our logistics group also uses the software technology to automatically issue bids for freight quotes every night, as well as to monitor the shipments each day and to combine loads for full truck load rates. These processes enable us to take advantage of the least expensive freight charges available for a given shipment.

Strategy and Revenue Generation

Our near term strategy is to increase revenues by simultaneously developing existing and new sales channels within the interstate segment of the broader moving and storage industry. We plan to focus on interstate or city-to-city moves because we believe we will be most competitive in meeting customers’ demands associated with these moves. We focus our marketing efforts on sales lead generation and the continued introduction of our moving concepts to individual consumers and corporate aggregators of moving services.

We are building a multi-faceted sales strategy and are diversifying our sales network through the following initiatives:


	•	Capturing additional individual consumers through our website and sales leads that we purchase. We maintain an internal sales staff that handles all inbound sales inquiries, responds to internet requests for quotes and contacts all purchased web sales leads. We are actively pursuing third party resources to identify prospective customers, so that we will have multiple sources of lead generation. We pursue various avenues for marketing, research and referrals. Resources we currently use include the internet, yellow pages, print material, direct mailings, real estate companies, corporate human resources departments, military leads and publications, universities, and search engine results directing the public to our website. We are also able to purchase leads generated from many of these different portals at any time for specific origination and destination combinations without any long-term contractual commitments. We have also employed a search engine optimization strategy to increase web presence, improve page rankings and reduce the current spend on pay per click and internet advertising expense. These internal sales efforts historically have accounted for over 75% of our revenue.


	•	Accessing additional corporate clients through third party corporate relocation services. We retain two outside sales representatives who focus efforts on identifying corporate move opportunities, expanding new lead resources from the real estate community, and presenting our services to third party relocation companies. We plan to pursue opportunities to undertake direct moves on a contract basis with larger businesses through targeted marketing to their human resources departments. We have performed relocations for large corporations successfully and believe we have demonstrated our ability to complete these moves efficiently and to meet our customers’ service requirements and expectations, while helping reduce the overall cost of relocations incurred by these corporations. We anticipate that this category of moves will help us gain broader market exposure and acceptance, and lead to additional corporate relocation business in the future.


	•	Expanding current “private label” operations for national moving companies. We provide the SmartVaults and logistics services to some of the nation’s largest van lines offering a containerized moving services as part of their service offerings. For example, the private label brand used by Atlas World Group is “Accel” and by Bekins A-1 is “CHRONOS.” We are attempting to develop similar relationships with other national van lines.


	•	Expanding affiliate move bookings. We have begun providing services to national van lines that include the use of SmartVault containers to fill orders for small customers whose shipments require an expedited or time guaranteed service. Our service allows moving companies, agents, realtors, move counselors and small local operators to book interstate moves through our affiliate web site. These affiliates would normally not be able to perform an interstate move themselves because of transportation regulations, limitations of


		equipment or simply because they are not in a position to offer and conduct interstate moves in their current operating structure. This service permits local moving companies to compete with the national van lines.


	•	Broadening alliances with leading third party relocation companies. We plan to pursue opportunities to undertake direct moves on a contract basis with larger businesses through targeted marketing to their human resources departments. We have performed relocations for large corporations successfully and believe we have demonstrated our ability to complete these strategic moves efficiently and to meet our customers’ service requirements and expectations, while helping reduce the overall cost of relocations incurred by to these corporations.

	•	Expanding local storage and sales of moving supplies. The original SmartVault prototypes can be effectively used for temporary or long-term storage. We offer flexibility to the consumer not offered by standard storage facilities. We also sell, market and distribute moving supplies such as cardboard boxes, tape, and other supplies to our own customers as well as to local moving and storage companies.

The acquisition of certain assets of the Star Relocation Alliance, Inc. also allows us to continue the expansion of relationships with national van lines, and our agreement with RELO Direct, a nationwide association of over 700 of the leading real estate brokerage companies, gives us the opportunity to receive relocation leads from all over the country.

Potential Sales Opportunities

We also intend to pursue the following potentially attractive opportunities for our business model when resources permit:


	•	Homeland Security. Security requirements have increased the need to ship high value goods in a secured container that can then be loaded within larger rail or marine shipping containers. New homeland security laws, regulations and custom clearance requirements may encourage corporations to seek additional ways to compartmentalize the shipment of high value goods. By insuring their integrity, these goods may pass through customs more quickly with less risk of tampering and loss.

	•	Local Move Consumer Market. The convenience our container-based model affords may be attractive to many local self-movers and could produce an additional source of demand from smaller populated towns and cities in the future.

	•	Military Applications. Medical supplies and electronic equipment need to be shipped in smaller quantities, within a portable container, by truck or helicopter at a moment’s notice. The container must be locked and tracked for security and content management. Moves associated with personnel relocation could also be a potential future source of revenue.

	•	International Moving Opportunities. We continue to evaluate potential opportunities for expansion of our services into Europe and elsewhere. The EU market, in particular, presents the same challenges and opportunities we have identified in the United States, i.e. long distances, high fuel costs and repositioning of the empty equipment. The SmartVault can be loaded into all standard sized sea containers used today to ship goods internationally.

	•	Commercial Applications. Corporate clients frequently need specialized transportation services for high value products that require specialized handling and tracking capabilities, such as computer parts, copier machines and trade show materials. We can deliver the components necessary to meet this demand.

Size of the Market Opportunity

A report published by Nathan Associates, Inc. on August 15, 2008 states that the U.S. household moving and storage industry represents revenues of approximately $16.5 billion annually. The 20 largest national moving companies control about 35 percent of the market.

According to the latest U.S. Census Bureau report, “Geographical Mobility 2006,” every year approximately 40 to 42 million Americans move. This involves 17 million households utilizing moving services of some nature,

whether it be a full service move or simply renting a truck for a self-move. Approximately 20% of those moves are regional in scope, involving a length of haul extending outside of a given county, but within the same state. Another 14% involve longer distance moves to another state or country. Our immediate target is the interstate market which is estimated at about 2,380,000 moves per year.

We currently operate in the top 60 cities with respect to their total moving activity. Significant synergies exist in serving these cities because over 80% of all moves are between these cities. The data we have received from the 10 largest national moving companies indicate that those companies provide over 500,000 interstate moves per year into and out of the top 30 cities. This data does not include any statistics regarding the number of self moves nor does it reflect second tier moving company activity. Consequently, we believe the market for these moves is actually larger.

Manufacturing Relationships

SmartVault components are currently manufactured by Orbis Corporation. We own the proprietary mold which Orbis uses in its plant to mold the components of the SmartVault, but we do not intend to engage in any manufacturing operations relating to these containers or container components. Pursuant to our manufacturing arrangements, Orbis may only utilize the mold for manufacture of SmartVaults on our behalf. We believe that HDPE is a widely available plastic product and that we are not dependent on a single or limited source of supply for this component.

Our Intellectual Property and Trademarks

Our competitive position is not dependent on the viability of patent protection. We protect our proprietary processes and trademarks through confidentiality agreements and through registrations of our key marks. We hold rights to the following United States trademarks:


	•	Go Smart Move

	•	Changing the Way the World Moves

	•	Smart Move Changing the Way the World Moves

	•	Smart Move (stylized)

	•	SmartVault

We do not own any patents, copyrights or any other trademarks. We own the design and tooling mold used to manufacture the SmartVault and our manufacturing agreement prohibits the manufacturer from using the design mold to produce containers for anybody but us.

Competition

Our primary competitors include the national moving service providers, portable storage and moving service providers, and the truck rental companies described below. The discussion which follows reflects our own assessment of the competition and is based in part on our review of a variety of publicly available sources of information regarding these companies.

Major Van Lines. These competitors include well known long distance moving companies such as United Van Lines, Atlas Van Lines, North American Van Lines, Allied Van Lines, Mayflower Van Lines, Bekins Van Lines and Wheaton Van Lines, each with annual revenues of $500 million to over $1 billion. Each of these companies provides a range of services within markets that include those in which we operate. These companies offer full service moves to consumers through their network of agents and have operations in a majority of the largest 100 cities in the United States. These van lines all operate and require their local agents to operate trucks and trailers to complete the moves required by their traditional customer base.

U-Haul. U-Haul is North America’s largest do-it-yourself moving and storage operator. U-Haul rents trucks and trailers, and offers self-storage rooms, through a network of nearly 1,450 company-operated moving centers

and approximately 14,500 independent U-Haul dealers. U-Haul serves more than 11 million do-it-yourself household moving customers annually.

PODS Enterprises, Inc. PODS provides portable on demand storage and moving services in 47 states. PODS is a franchiser of protected franchise areas, with a reported 130,000 PODS containers in service as of June 2008. PODS is a private company that emphasizes local storage, but is believed to provide substantial intercity moving services.

Local Movers. Local movers include thousands of existing small, local companies that perform moves only within their immediate local markets. The typical local mover has 15 employees or fewer, two to three trucks, and annual revenues of less than $1 million.

Although we believe that we offer superior flexibility, cost structure, asset pooling efficiencies and technology-enabled containers, we recognize that cost-driven entry barriers for this industry are relatively low. In addition, as more businesses become aware of our business model and services, we believe others may attempt to copy our concept. However, a competitor desiring to gain entry into this industry and to compete directly with us by offering a similar service would have to overcome the following obstacles:


	•	designing and engineering a functionally comparable storage container;

	•	locating a supplier of specialized storage containers built to specifications at competitive prices; and

	•	establishing goodwill with prospective customer groups and brand awareness.

We believe that we will need to continue to maintain superior quality moving containers and service standards, and plan to pursue an aggressive marketing program in order to maintain and expand our market share within market sectors in relation to these competitors.

Research and Development

During 2005 and 2006, we refined our container design based on our experiences, customer feedback and our ongoing logistics management activities. During 2007, we undertook additional development of our proprietary technology processes and software development activities. Management believes that these activities are necessary to enable us to maintain and enhance our competitive advantage over those participants in the moving industry that do not provide this service component.

Regulatory Matters

We are regulated by the Federal Motor Carrier Safety Administration (FMCSA). Under the FMCSA’s regulatory framework, we are considered a “freight forwarder.” As a freight forwarder, we must:


	•	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.

We believe that we are in compliance with all FMCSA requirements. In addition, we must comply with regulatory requirements imposed by the local and state authorities in each jurisdiction where we are deemed to conduct business to the extent we must obtain certain licenses and permits. We believe we are in compliance with all of these requirements.

Various federal and state labor laws govern our relationship with our employees, including minimum wage requirements, overtime, working conditions and immigration requirements. Significant additional government imposed increases in minimum wages, paid leaves of absence and mandated health benefits, or increased tax reporting and tax payment requirements for employees could have an adverse effect on our results of operations.

Environmental Regulations. As a provider of storage services, we are subject to a variety of federal, state and local governmental laws and regulations related to the storage, use and disposal of hazardous materials. We do not permit any users of our containers to store or discharge any toxic, volatile or otherwise hazardous chemicals and wastes. If and to the extent any toxic or hazardous materials are ever transported or stored in our containers, with or without our permission, we could be subject to fines or orders requiring us to cease operations. In addition, under some foreign, federal, state and local statutes and regulations, a governmental agency may seek recovery and response costs from operators of property where releases of hazardous substances have occurred or are ongoing, even if the operator was not responsible for the release or otherwise was not at fault. Any failure by us to control the use of or to restrict adequately the discharge of, hazardous substances could subject us to substantial financial liabilities, operational interruptions and adverse publicity, any of which could materially and adversely affect our business, results of operations and financial condition.

Facilities and Employees

Facilities. We occupy our 6,360 square foot headquarter office facility in Denver, Colorado under a lease that terminates in May 2011 and calls for monthly payments of $8,799. We believe that our existing facilities are adequate to support our existing operations. We also lease a 48,500 square foot Denver warehouse under sub-lease arrangements which expire in June 2009 and call for monthly base rent payments of $13,359. We use this facility for our local storage operation, assembly and repair of the SmartVault containers and the warehousing and sales of moving boxes and supplies.

Other Facilities. We do not own any of the moving or storage facilities that we use. In three of our markets, we use warehousing facilities provided by UPS Freight that are made available to us as a customer of UPS Freight. Risk of loss is borne by UPS Freight, whose insurance provides coverage in the event of damage or destruction of the vaults. We pay a daily storage charge for empty vaults under our master agreement with UPS Freight.

In 56 markets, we have separate warehouse arrangements with third parties to store empty vaults. The arrangements are each long term but can be cancelled by either party for any reason upon 45 days’ notice. Monthly storage charges are approximately $16 to $19 per vault. Warehouse space is plentiful in all of these markets and should any warehouse arrangement be terminated, we believe that alternative arrangements could be secured on a timely and cost-effective basis.

We occasionally provide long-term storage of full vaults for clients. When we enter into a long-term warehouse agreement for the client, we are the party to the warehouse agreement, and the containers and their contents are subject to the warehouse owner’s insurance coverage. We then have a separate agreement with our client to cover the warehouse cost.

Employees. We currently employ 25 people, including 23 employees in our headquarters location in Colorado who perform corporate and administrative as well as sales and marketing functions. None of our employees are unionized or covered by a collective bargaining agreement.

Company Background

Smart Move, Inc. was incorporated in Delaware on December 5, 2005, as a wholly-owned subsidiary of its predecessor entity, A Smart Move, L.L.C., with which we merged on December 6, 2006 when we commenced our initial public offering. We currently conduct business in 34 states and in all but six states we operate under our corporate name, Smart Move, Inc. Our corporate name was not available in California, Connecticut, Texas, Illinois, Indiana and New Jersey, so we conduct business under the trade name “Go Smart Move” in those states.

MANAGEMENT

The following table sets forth the names, ages and positions of our directors and executive officers as of September 30, 2008:


Name	Age		Position

Chris Sapyta		49	Chief Executive Officer, Director, Chairman of the Board
L. Edward Johnson		56	Chief Financial Officer, Director
John J. Burkholder(1)(3)(4)		63	Director
John Jenkins(2)(3)(4)		58	Lead Director
Kent Lund(1)(2)(3)(4)		52	Director
Jeff McGonegal(1)(2)(3)(4)		57	Director
Pete Bloomquist		51	Senior Vice President, Corporate Finance, Treasurer
Mike Ellis		36	Senior Vice President of Operations


(1)		Member of the Audit Committee

(2)		Member of the Compensation Committee

(3)		Member of the Nominating and Governance Committee

(4)		Independent director

The backgrounds of our directors and executive officers are described below:

Chris Sapyta has served as our Chief Executive Officer and as a director since our inception. Mr. Sapyta started A Smart Move, L.L.C. in August 2004 and served as its Managing Member until it merged with Smart Move, Inc. in 2006. In 1996, he founded MicroStar Keg Management L.L.C., a keg asset company with over 5 million keg assets under its management, and served as its President until 2004. From 2001 to 2004, Mr. Sapyta served as Senior Vice President of New Markets at TrenStar, Inc., MicroStar’s successor company. Mr. Sapyta received his B.A. degree in accounting from St. Mary’s University in 1982.

L. Edward Johnson, CPA, has served as a manager of A Smart Move, L.L.C. from August 2004 and as a director and our Chief Financial Officer since November 2005. In 2003 Mr. Johnson was a principal of Johnson & Co, a certified public accounting firm. Mr. Johnson received his B.B.A. degree in Accounting from Texas Tech University in 1974.

John J. Burkholder has served on our Board of Directors since February 2006. Mr. Burkholder is the principal of several companies engaged in real estate, hotel and resort development. Since 1997, he has served as Managing Director of Golf Lodging, LLC, a hotel resort development firm. He received a B.A. from Cornell University in 1968 and an MBA from Fordham University in 1972.

John Jenkins has served on our Board of Directors since February 2006. Mr. Jenkins was Chairman and Chief Executive Officer of SAN Holdings, a provider of data storage and management solutions to industry and government, from 2001 to March 2007. Mr. Jenkins holds a B.S.M.E. from the University of Washington, which he earned in 1973 and a J.D. from the University of Denver Law School, which he earned in 1977.

Kent Lund has served on our Board of Directors since February 2006. Mr. Lund currently serves as Executive Vice President and Chief Compliance Officer of George K. Baum & Company, an investment banking firm. During 2007, Mr. Lund served as a Director of SAN Holdings, Inc., a public company. From 2005 to 2007, he served as an independent business, legal and securities compliance consultant. From 2002 to 2005, Mr. Lund served as a Board member and/or Corporate Secretary of four affiliated financial services companies (Kirkpatrick, Pettis, Smith, Polian Inc., a FINRA member securities broker dealer, two registered investment advisers and a state chartered trust company). Mr. Lund earned a B.A. degree, magna cum laude, from Midland Lutheran College in 1977, a J.D. degree, with honors, from Drake University Law School in 1980 and a M.B.A. degree from the University of Colorado in 2005.

Jeff McGonegal has served on our Board of Directors since September 2008. Mr. McGonegal has, since June 2003, served as the Chief Financial Officer of AspenBio Pharma, Inc., (Nasdaq: APPY), a biotechnology research and development company. He also serves as Chief Financial Officer and currently as Chief Executive Officer of PepperBall Technologies, Inc., (formerly Security With Advanced Technology, Inc. (Nasdaq: PBAL)), a provider of hardware and software security related products. Mr. McGonegal is a director of Imagenetix, Inc., a publicly held company in the nutritional supplements industry. He received a B.A. degree in accounting from Florida State University in 1973. Mr. McGonegal is a certified public accountant licensed in the state of Colorado.

Pete Bloomquist has served as our Senior Vice President of Corporate Finance, Treasurer from 2006 to present. From July 1997 to 2006, Mr. Bloomquist was employed by Bathgate Capital Partners LLC, a full service investment bank, as manager in the corporate finance group. Mr. Bloomquist is a director of Global Casinos, Inc., a publicly held company in the gaming industry. He received his Bachelor of Science degree in Business Management with an emphasis in Accounting from the University of Northern Colorado in 1980.

Mike Ellis has served as our Senior Vice President of Operations since August 2004. From 1993 to 2004, Mr. Ellis was the President of Goff Moving and Storage, Inc., a private moving company serving the greater Denver, Colorado area, where he was responsible for the day-to-day operations, business planning, sales/forecasting and military consulting.

All officers of the Company, except Mr. Johnson, devote their full-time attention to our business. Mr. Johnson has agreed to devote a minimum of 20 hours per week to our business. No director or executive officer is related to any other of our directors or executive officers, and there are no arrangements or understandings between any director or officer and any other person that such person will be elected as a director or appointed an officer.

Board of Directors

Our Board of Directors currently consists of six members who are divided into three classes. Each year stockholders elect the members of one of the three classes to a three-year term. The terms of our Class I Directors (Messrs. Lund and Jenkins), Class II Directors (Messrs. Burkholder and McGonegal) and Class III Directors (Messrs. Johnson and Sapyta) expire in 2010, 2011 and 2009, respectively.

Mr. Lund, Mr. Jenkins, Mr. McGonegal and Mr. Burkholder qualify as independent directors in accordance with the standards set by the Alternext as defined in Section 301 of the Sarbanes-Oxley Act of 2002, and under Rule 10A(3)(b)(1) of the Securities Exchange Act, as amended. Accordingly, as required by the Alternext, our Board of Directors is comprised of a majority of independent directors.

Board Committees

Our Board of Directors has three Standing Committees: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, each composed entirely of persons the Board has determined to be independent Directors. Each Standing Committee operates pursuant to a written charter adopted by our Board of Directors which sets forth the Standing Committee’s role and responsibilities and provides for an annual evaluation of its performance by the Board of Directors. The charters of all three Standing Committees are available on our corporate website at www.gosmartmove.com together with the corporate governance principles developed by our Nominating and Governance Committee and adopted by our Board of Directors.

Audit Committee. The Audit Committee assists the Board of Directors in overseeing the audit of our financial statements and the quality and integrity of our accounting, auditing and financial reporting processes. The Audit Committee has direct responsibility for the selection and engagement of our independent registered public accountants and for reviewing the scope of the annual audit, audit fees, results of the audit and auditor qualifications and independence. The Audit Committee also reviews and discusses with management and the Board of Directors such matters as accounting policies, internal accounting controls and procedures for preparation of financial statements. The Audit Committee’s responsibilities include reviewing the qualifications, independence and performance of the independent auditors who report directly to the Audit Committee. The Audit Committee retains, determines the compensation of, evaluates, and, when appropriate, replaces the Company’s independent auditors and pre-approves audit and permitted non-audit services.

The Audit Committee is required to establish procedures to handle complaints received regarding our accounting, internal controls or auditing matters. It is also required to ensure the confidentiality of employees who have expressed a concern regarding or otherwise reported questionable accounting or auditing practices. The Audit Committee may retain independent advisors, at the Company’s expense, that it considers necessary for the completion of its duties.

The members of the Audit Committee are Mr. McGonegal (Chair), Mr. Lund and Mr. Burkholder. The Audit Committee held seventeen meetings in 2007. Our Board of Directors has determined that all of the Audit Committee members meet the enhanced Securities and Exchange Commission independence requirements of audit committee members have the financial literacy to serve on the Audit Committee, and that Mr. McGonegal is an audit committee financial expert as defined in Securities and Exchange Commission regulations.

Compensation Committee. The Compensation Committee oversees our executive compensation policies and programs. In accordance with its charter, the Compensation Committee reviews, approves and makes recommendations to the Board regarding the compensation level of our executive officers based on an evaluation of performance against corporate goals and objectives approved by the Compensation Committee. The Compensation Committee also reviews and approves the terms of written employment agreements with our executive officers, recommends compensation to be paid to our outside directors, considers the design and competitiveness of our compensation plans, administers our equity compensation plans and reviews disclosures to be filed with the Securities and Exchange Commission and distributed to our stockholders regarding executive compensation.

The Compensation Committee held five meetings in 2007. The members of the Compensation Committee are Mr. Jenkins (Chair), Mr. Lund, and Mr. McGonegal.

Nominating and Governance Committee. The Nominating and Governance Committee administers and oversees all aspects of the Company’s corporate governance functions on behalf of the Board of Directors. The Nominating and Governance Committee oversees the evaluation of the performance of the Board and its committees, reviews and makes recommendations regarding succession plans for positions held by executive officers, and reports to the Board of Directors regarding the performance and effectiveness of the Standing Committees of the Board of Directors. The responsibilities of the Nominating and Governance Committee include developing and recommending corporate governance principles to the Board and periodically (at least annually) reviewing the adequacy of such principles and recommending appropriate changes to the Board.

The Nominating and Governance Committee proposes criteria to determine the qualifications to serve and continue to serve as a director. In fulfilling these responsibilities, the Nominating and Governance Committee identifies and reviews the qualifications of, and recommends to the Board: (i) individuals to be nominated by the Board for election to the Board by stockholders at each annual meeting of stockholders, (ii) individuals to be nominated and elected to fill any vacancy on the Board that occurs for any reason (including increasing the size of the Board) and (iii) appointments to committees of the Board. The Nominating and Governance Committee also reviews stockholder nominees of qualified candidates for election to the Board, if such nominations are within the time limits and meet other requirements established by our Bylaws.

The Nominating and Corporate Governance Committee held meetings in 2007. The members of the Committee are Mr. Burkholder (Chair), Mr. Lund, and Mr. Jenkins.

Indemnification and Limitation of Director and Officer Liability

Our Certificate of Incorporation includes provisions requiring us to indemnify our directors and officers to the fullest extent required by Delaware law against claims arising from their service in these capacities, provided they acted in good faith and that they reasonably believed their conduct or action was in, or not opposed to, our best interest.

In addition, our Certificate of Incorporation provides that no director will be liable to us or our stockholders for monetary damages for breach of certain fiduciary duties as a director. The effect of this provision is to restrict our

rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of certain fiduciary duties as a director, except that a director will be personally liable for:


	•	any breach of the director’s duty of loyalty to us or our stockholders;

	•	acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

	•	the payment of dividends or the redemption or purchase of stock in violation of Delaware law; or

	•	any transaction from which the director derived an improper personal benefit.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to our organizational documents and Delaware law, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

EXECUTIVE COMPENSATION

The following table summarizes all plan and non-plan compensation earned by or paid to our Chief Executive Officer, Mr. Sapyta, our Chief Financial Officer, Mr. Johnson, and our Vice President of Corporate Finance, Mr. Bloomquist, for our last two completed fiscal years. No other executive officer received total annual salary and bonus during those periods that exceeded $100,000.

SUMMARY COMPENSATION TABLE


							Stock		Options
	Fiscal		Salary		Bonus		Awards		Awards		Total
Name and Principal Position	Year		($)		($)		($)		($)(1)		($)

Chris Sapyta,		2007	$	196,000		—		—	$	—	$	196,000
Chief Executive Officer		2006	$	188,000		75,000		1,400,000	$	26,900	$	1,689,900
Edward Johnson,		2007	$	182,400		—		—	$	—	$	182,400
Chief Financial Officer		2006	$	175,000		50,000		1,000,000	$	26,900	$	1,251,900
Pete Bloomquist,		2007	$	137,500		—		—	$	—	$	137,500
Senior Vice President and Treasurer		2006	$	41,666		—		—	$	87,750	$	129,416


(1)		For a description of FAS 123R and the assumptions used in determining the value of the options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2007

The following table summarizes information related to grants of stock options made during the fiscal year ended December 31, 2007 to each of the named executive officers, giving effect to the one-for-thirteen reverse stock split and adjusted to reflect our merger with A Smart Move, L.L.C., pursuant to which each outstanding individual membership interest converted into two shares of common stock immediately prior to the commencement of our initial public offering:


	Number of		Number of
	Securities		Securities
	Underlying		Underlying
	Unexercised		Unexercised
	Options (#)		Options (#)			Option Exercise Price			Option Expiration
Name	Exercisable		Unexercisable			($)			Date

Chris Sapyta				9,846	(1)	$	78.00 and $91.00	(1)		November 15, 2016	(1)
		519		519	(2)	$	61.49			December 29, 2016	(2)
Edward Johnson				7,692	(1)	$	78.00 and $91.00	(1)		November 15, 2016	(1)
		519		519	(2)	$	61.49			December 29, 2016	(2)
Pete Bloomquist		1,731		1,731	(3)	$	61.49			December 29, 2016	(2)


(1)		Options granted pursuant to November 15, 2006 amendments to employment agreements, covering 9,846 shares issuable to Mr. Sapyta and 7,692 shares issuable to Mr. Johnson, have exercise prices from $78.00 to $91.00. The options vest ratably in equal increments on September 30, 2008 and 2009, subject to Mr. Sapyta’s and Mr. Johnson’s continued employment on those dates, provided we achieve a targeted booked number of moves of 12,000 and 15,000 as of the annual period ending on each date.


(2)		Options to purchase 1,038 shares of common stock at an exercise price of $61.49 per share were granted on December 29, 2006. These options were vested and exercisable as to 25% of the covered shares on the grant date and the remaining shares vest ratably over the next 12 quarters.


(3)		Options to purchase 3,462 shares of common stock at an exercise price of $61.49 per share were granted on December 29, 2006. These options were vested and exercisable as to 25% of the covered shares on the grant date and the remaining shares vest ratably over the next 12 quarters.

Option exercises 2006 and 2007. None of the outstanding options granted during fiscal 2006 or fiscal 2007 to our executive officers were exercised in fiscal 2007. In July 2006, certain options granted to Mr. Sapyta and Mr. Johnson by A Smart Move, L.L.C. were exercised into 12,462 shares of our common stock on a cashless basis, at a strike price of $58.50 per share, giving effect to the one-for-thirteen reverse stock split. Pursuant to the determination of our Board of Directors, the subject options, upon the cashless exercise, were converted into 7,598 and 1,658 shares of our common stock issued to Mr. Sapyta and Mr. Johnson, respectively. In addition, during 2006, options to purchase 3,077 shares held by Mr. Johnson were exercised by cash purchase, generating cash proceeds to the Company totaling $25,000.

Employment agreements We have entered into written employment agreements with Mr. Sapyta, our Chief Executive Officer, and Edward Johnson, our Chief Financial Officer. The employment agreements were entered into with our predecessor entity A Smart Move, L.L.C. and became applicable to Smart Move, Inc. upon our merger with A Smart Move, L.L.C. on December 6, 2006. Pursuant to the agreements, we agreed to pay Mr. Sapyta a base salary of $188,000 per annum and Mr. Johnson a base salary of $175,000 per annum, each which may be increased at the discretion of the Compensation Committee. The agreements are subject to an initial employment period until September 30, 2011 and will be extended to subsequent one year periods unless either party gives notice of non-renewal at least ninety days prior to the expiration of the employment period. The employment agreements also provide for bonuses based upon earnings before interest, taxes, depreciation and amortization, as well as the number of moves booked during the year.

Each of the employment agreements provides that if employment under the agreement is terminated by us without cause, we will pay a lump sum payment equal to one year of the base salary and will continue for two years following such termination to provide the benefits and perquisites that the officer was receiving at the time of the termination. In addition, upon a change of control, all options that have not yet vested and become exercisable will be deemed to have vested and to have become exercisable as of the time immediately preceding the change of control.

Director Compensation

Directors who are also our employees do not receive compensation for their services as directors. Our Board recently adopted the following compensation policy for our non-management directors for 2008. Directors receive an annual cash retainer of $22,000 paid in quarterly installments at the beginning of each quarter. Each non-employee director serving on one or more of our standing committees also receives a cash fee of $2,500 per committee per year, paid in quarterly installments at the beginning of each quarter. The chairpersons of our Compensation and Nominating and Governance Committees receive an additional annual cash payment of $5,000. The chairperson of our Audit Committee receives an additional annual cash payment of $12,000, and our Lead Director, appointed in February 2008, will receive additional compensation of $12,000 per year for services in that capacity, proportionately reduced to the extent the term of service is less than a full 12 months. Each non-employee director also will receive an annual grant of restricted shares of our common stock having a fair market value of $15,000 at the beginning of each year commencing in fiscal 2008, determined according to the average closing price of a share of our common stock for the month of December preceding the grant date.

All directors are reimbursed for their reasonable out of pocket expenses associated with attending meetings. In fiscal 2007, non-employee directors were compensated as follows:


	Fees Earned or		Stock
	Paid in Cash		Awards		Total
Name	($)		($)(1)		($)

Kent Lund	$	15,000	$	10,000	$	25,000
John Jenkins		20,000		10,000		30,000
Doug Kelsall		20,000		10,000		30,000
John J. Burkholder		20,000		10,000		30,000


(1)		The annual grant of restricted shares to each of our non-employee directors for 2007 (giving effect to the one-for-thirteen reverse stock split) consisted of 167 shares of our common stock, based on the stipulated total grant value of $10,000 and a fair market value per share of $59.93 determined by the average per share closing price of a share of our common stock on the Alternext on trading days between and including December 20, 2006 and December 29, 2006 (the only period in December 2006 during which our common stock traded).

2006 Equity Incentive Plan

In February 2006, we adopted our 2006 Equity Incentive Plan (the “Plan”) for our officers, directors, employees and outside consultants and advisors to align the interest of these persons with those of our stockholders and to provide incentives for these persons to exert maximum effort toward, and to contribute materially to, our success. The Plan became effective after the date of the merger on December 6, 2006. In June 2008, our stockholders approved an increase in shares reserved for issuance under the Plan from 107,692 shares to 146,154 shares (giving effect to the one-for-thirteen reverse stock split).

The Plan is not subject to the provisions of the Employment Retirement Income Security Act and is not a “qualified plan” within the meaning of Section 401 of the Internal Revenue Code, as amended (the “Code”). The Plan is administered by our Compensation Committee, which has exclusive discretion to select the participants who will receive awards under the Plan and to determine the type, size and terms of each award.

Shares Subject to the Plan. We may issue up to 146,154 shares under the Plan, subject to adjustment to prevent dilution from stock dividends, stock splits, recapitalization or similar transactions. Grants may be made in cash, in stock, or in a combination of the two, as determined by the Compensation Committee.

Awards under the Plan. Under the Plan, the Compensation Committee may grant awards in the form of incentive stock options, nonqualified stock options, stock units, stock awards, stock appreciation rights and other stock-based awards.

Options. The duration of any option shall be within the sole discretion of the Compensation Committee, except that any incentive stock option granted to a 10% or less stockholder or any nonqualified stock option must be exercised within ten years after the date the option is granted, and any incentive stock option granted to a greater than 10% stockholder must be exercised within five years after the date the option is granted. The exercise price of all options will be determined by the Compensation Committee, except that the exercise price of an option (including incentive stock options and nonqualified stock options) will be equal to, or greater than, the fair market value of a share of our stock on the date the option is granted, and incentive stock options may not be granted to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary, as defined in section 424 of the Code, unless the price per share is at least 110% of the fair market value of our stock on the date of grant.

Stock Units. The Compensation Committee may grant stock to an employee, consultant or non-employee director, on such terms and conditions as the Compensation Committee deems appropriate under the Plan. Each stock unit represents the right to receive a share of our stock or an amount based on the value of a share of our stock.

Stock Awards. The Compensation Committee may issue shares of our stock to an employee, consultant or non-employee director under a stock award, upon such terms and conditions as the Committee deems appropriate

under the Plan. The Compensation Committee may establish conditions under which restrictions on stock awards shall lapse over a period of time or according to such other criteria as the Compensation Committee deems appropriate, including restrictions based upon the achievement of specific performance goals.

Other Awards. Other awards may be granted that are based on or measured by our stock to employees, consultants and non-employee directors, on such terms and conditions as the Compensation Committee deems appropriate. Other stock-based awards may be granted subject to achievement of performance goals or other conditions and may be payable in our stock, cash, or a combination of the two.

Termination of Employment. If the employment or service of a participant is terminated for cause, the options of such participant, both accrued and future, will terminate immediately. If the employment or service is terminated by either the participant or us for any reason other than for cause, death or disability, the options of the participant then outstanding shall be exercisable by the participant at any time prior to the expiration of the options or within three months after the date of such termination, whichever is shorter, but only to the extent of the vested options at the date of termination. If a participant becomes disabled or dies, his or her then outstanding options are exercisable at any time prior to the sooner of expiration of the options or one year after the date of termination of employment or service due to disability or death, but only to the extent of the vested options at the date of such termination. The terms and conditions regarding any other awards under the Plan will be determined by the Compensation Committee.

Termination or Amendment of the Plan. Our Board of Directors may at any time terminate the Plan or amend the Plan as it deems advisable without stockholder action, unless stockholder approval is required by law. However, no termination or amendment will, without the consent of the individual to whom any option has been granted, affect or impair the rights of such individual.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of November 1, 2008, as to the beneficial ownership of shares of our common stock by:


	•	each person (or group of affiliated persons) known to us to beneficially own more than 5% of the outstanding shares of our voting stock;

	•	each of our directors and executive officers; and

	•	all of our officers and directors as a group.

According to the rules and regulations of the Securities and Exchange Commission, shares that a person has a right to acquire within 60 days of November 1, 2008 are deemed to be outstanding for the purpose of computing the percentage of that person, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The percentage of beneficial ownership shown in the following table is based on 1,346,788 outstanding shares of common stock as of November 1, 2008 and 7,046,788 shares of common stock outstanding immediately after this offering (giving effect to the one-for-thirteen reverse stock split).

Except as indicated in the footnotes to the table below, each stockholder named in the table has sole voting and investment power with respect to the shares shown in the table as beneficially owned by such stockholder.


	Number of
	Shares of
	Common Stock		Outstanding Shares Owned
	Beneficially		Before			After
Name of Stockholder(1)	Owned		Offering			Offering

Chris Sapyta(2)		49,014		3.6	%		*
Edward Johnson(3)		35,247		2.6	%		*
Kent J. Lund(4)		7,771			*		*
John Jenkins(5)		10,508			*		*
Doug Kelsall(6)		15,431		1.1	%		*
John J. Burkholder(7)		4,049			*		*
Jeff McGonegal(8)		13,943		1.0	%		*
Pete Bloomquist(9)		13,790		1.0	%		*
Lee Schlessman(10)		397,955		23.9	%		5.4	%
Thomas P. Grainger (11)(12)		470,080		35	%		6.6	%
All officers and directors as a group (8 persons)		149,753		11	%		2	%


*		Less than one percent (1%)


(1)		All addresses are c/o Smart Move, Inc., 5990 Greenwood Plaza Boulevard, Suite 390, Greenwood Village, CO, 80111, except for that of Mr. Lee Schlessman, which is 1301 Pennsylvania Street, Suite 800, Denver, CO 80203-8015, and Mr. Thomas P. Grainger, which is P.O. Box 7, Saratoga, WY 82331.


(2)		Includes 972 shares issuable upon exercise of vested options.


(3)		Includes 928 shares issuable upon the exercise of vested options and 83,670 shares issuable upon the exercise of warrants.


(4)		Includes 2,308 shares issuable upon the exercise of warrants.


(5)		Includes 5,115 shares issuable upon the exercise of warrants.


(6)		Includes 5,577 shares issuable upon the exercise of warrants.


(7)		Includes 1,154 shares issuable upon the exercise of warrants.


(8)		Includes 6,231 shares issuable upon the exercise of warrants and 4,808 shares issuable upon conversion of convertible notes.


(9)		Includes 2,573 shares issuable upon the exercise of vested options and 134,374 shares issuable upon the exercise of warrants.


(10)		Includes 127,133 shares issuable upon the exercise of warrants and 194,844 shares issuable upon the conversion of convertible notes and other convertible debt.


(11)		Mr. Grainger agreed in August 2008 (subject to listing approval by the Alternext which we received on September 18, 2008) not to exercise any warrants, or to convert any indebtedness under any convertible note, to the extent that his ownership, after giving effect to such exercise or conversion, would exceed 35% of our shares of common stock then outstanding. Under the agreement, Mr. Grainger retains the right to exercise or convert securities in excess of such limitation provided the shares obtained are immediately sold.


(12)		Includes 506,373 shares issuable upon the exercise of warrant and 144,231 shares issuable upon conversion of a convertible note.

DESCRIPTION OF SECURITIES

The following is a description of our capital stock as set forth in our Amended and Restated Certificate of Incorporation, which has been filed as exhibits to the registration statement of which this prospectus is a part.

General

Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. Upon completion of this offering, 7,046,788 shares of common stock will be issued and outstanding giving effect to the one-for-thirteen reverse stock split (including the 5,500,000 shares of common stock forming a part of the Units issued in this offering, assuming no exercise of the underwriters’ over-allotment option). There are no shares of preferred stock outstanding.

Units

Each Unit consists of one share of common stock, one redeemable Class A warrant and one non-redeemable Class B warrant. The holder of each warrant will be entitled to purchase one share of our common stock at any time after the warrants become separately tradeable. The Units will have no rights (i.e., voting, redemption, etc.) independent of the rights existing in the common stock and the warrants which form the Unit. We have applied for listing of our Units on the Alternext. Initially, only the Units will trade. The common stock and the warrants will begin trading separately on the 30 ^th calendar day following the date of this prospectus. Once separate trading in the common stock and Class A and Class B warrants begins, trading in the Units will cease, and the Units will be delisted.

Common Stock

Voting Rights. The holders of common stock are entitled to one vote per share on all matters submitted to vote of our stockholders.

Dividends. Each share of common stock has an equal and ratable right to receive dividends to be paid from our assets legally available therefor when, as and if declared by our Board of Directors. We do not anticipate paying cash dividends on the common stock in the foreseeable future.

Liquidation. In the event we dissolve, liquidate or wind up, the holders of common stock are entitled to share equally and ratably in the assets available for distribution after payments are made to our creditors and to the holders of any outstanding preferred stock we may designate and issue in the future with liquidation preferences greater than those of the common stock.

Other. The holders of shares of common stock have no preemptive, subscription or redemption rights and are not liable for further call or assessment. All of the outstanding shares of common stock are, and the shares of common stock offered hereby will be, fully paid and nonassessable.

Proposed Reverse Stock Split

Warrants

One Class A warrant will entitle the holder to purchase one share of common stock at an exercise price equal to 110% of the initial Unit offering price beginning on the date the Units separate through the date which is six months after the date of this prospectus. Thereafter the Class A warrant will be exercisable at 150% of the initial Unit offering price until five years after the date of this prospectus, subject to the redemption rights described below. One Class B warrant will entitle the holder to purchase one share of common stock at an exercise price equal to 200% of the initial Unit offering price beginning on the date the Units separate through the date which is five years after the date of this prospectus. The warrants will be issued pursuant to the terms of a warrant agreement between the warrant agent and us. We have reserved for issuance the shares of common stock issuable upon exercise of the warrants.

We will make adjustments to the terms of the warrants if certain events occur. If we distribute to our stockholders additional shares of common stock through a dividend or distribution, or if we effect a stock split of our common stock, we will adjust the total number of shares of common stock purchasable on exercise of a warrant so that the holder will be entitled to receive the number of shares of common stock the holder would have received if the warrant holder had exercised the warrant before the event causing the adjustment. The aggregate exercise price of the warrant will remain the same, but the effective purchase price per share of common stock purchasable upon exercise of the warrant will be proportionately reduced because a greater number of common stock shares will then be purchasable upon exercise of the adjusted warrant. We will make equivalent changes in warrants if we effect a reverse stock split.

We may redeem the Class A warrants at $0.25 per warrant on 30 days prior written notice if (i) the closing sales price of the common stock on the Alternext or an exchange equals or exceeds 200% of the initial Unit offering price for five consecutive trading days immediately preceding the call for redemption, and (ii) the shares outstanding upon exercise of the Class A warrants are covered by a then effective registration statement filed with the Securities and Exchange Commission to the extent necessary to permit a public distribution of the shares by us for the entire period between the date of the notice of redemption and the redemption date. From and after the date of redemption specified in the notice (unless we default in providing money for the payment of the redemption price), all rights of the warrant holder(s) shall cease, except for the right to receive the redemption price thereof, without interest, and the warrants shall no longer be deemed outstanding.

Each Class B warrant will entitle the registered holder of such warrant to purchase one share of our common stock at an exercise price equal to 200% of the initial Unit offering price. The Class B warrants are not redeemable.

We are not required to issue any fractional shares of common stock upon the exercise of warrants or upon the occurrence of adjustments pursuant to anti-dilution provisions. We will pay to holders of fractional shares an amount equal to the cash value of such fractional shares based upon the then-current market price of a share of common stock.

The warrants may be exercised upon surrender of the certificate representing such warrants on or prior to the expiration date (or earlier redemption date) of such warrants at the offices of the warrant agent with the form of “Election to Purchase” on the reverse side of the warrant certificate completed and executed as indicated, accompanied by payment of the full exercise price in cash or by official bank or certified check payable to the order of us for the number of warrants being exercised. Shares of common stock issued upon exercise of warrants for which payment has been received in accordance with the terms of the warrants will be fully paid and nonassessable. The warrants do not confer on the warrant holder any voting or other rights of our stockholders.

We currently have outstanding warrants issued in connection with financing activities to purchase an aggregate of 1,697,427 shares of our common stock at a weighted average exercise price of $34.06 per share (giving effect to the one-for-thirteen reverse stock split). The warrants have terms of five to seven years, and contain customary anti-dilution rights (for stock splits, stock dividends and sales of substantially all of our assets).

Preferred Stock

Our Board of Directors is authorized, without further stockholder action, to issue from time to time up to the 10,000,000 share of preferred stock. The Board may divide any or all shares of our authorized preferred stock into series and fix and determine the designations, preferences and relative participating, optional or other dividend rights, liquidation preferences, redemption rights and conversion or exchange privileges. Our Board of Directors has no plans, agreements or understandings for the issuance of any shares of preferred stock.

Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Certificate of Incorporation and Bylaws

Provisions of Delaware law and our Certificate of Incorporation and Bylaws could make our acquisition by means of a tender offer, a proxy contest or otherwise, and the removal of incumbent officers and directors, more difficult. These provisions are summarized below.

Delaware Law. We are subject to Section 203 of the Delaware General Corporation Law. Under that provision, we may not engage in any business combination with any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:


	•	Prior to the date of the transaction, our Board of Directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

	•	Upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock outstanding at the time the transaction began; or

	•	On or following that date the business combination is approved by our Board of Directors, it is authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

In general, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is any person or entity who owns, together with affiliates and associates, or an affiliate or associate of the corporation that at any time within three years prior to the date of determination of interested stockholder status did beneficially own, 15% or more of the outstanding voting stock of the corporation.

Amended and Restated Certificate of Incorporation and Bylaws. Our Amended and Restated Certificate of Incorporation and Bylaws contain a number of provisions that could make our acquisition by means of a tender or exchange offer, a proxy contest or otherwise more difficult. These provisions include:


	•	Special meetings of the stockholders may be called only by our Chairman of the Board, the chief executive officer, the president, or the Board of Directors, or in their absence, by any vice president.


	•	Stockholder proposals and stockholder nominations require advance written notice. Generally, notice of stockholder director nominees must be received at our principal executive offices not less than 120 days prior to the meeting of stockholders at which such directors are to be elected.


	•	The common stock does not have cumulative voting rights with respect to the election of directors. Under cumulative voting, a minority stockholder holding a sufficient number of shares may be able to ensure the election of one or more directors. The absence of cumulative voting may have the effect of limiting the ability of minority stockholders to effect changes in the Board of Directors and, as a result, may have the effect of deterring a hostile takeover or delaying or preventing changes in control or management of our Company.


	•	Vacancies on our Board of Directors may be filled by a majority of directors in office, although less than a quorum, and not by the stockholders.


	•	The members of our Board of Directors serve staggered terms. The Board of Directors is divided into three staggered classes, and each director serves a term of three years. At each annual stockholders’ meeting only those directors comprising one of the three classes will have completed their term and stand for re-election or replacement. In addition, our organizational documents contain supermajority voting requirement for any amendments of the staggered board provisions.

	•	We may issue, without stockholder approval, up to 10,000,000 shares of preferred stock that could adversely affect the rights and powers, including voting rights, of the holders of common stock. In some circumstances, this issuance could have the effect of decreasing the market price of the common stock as well as having an anti-takeover effect.

These provisions are intended to enhance the likelihood of continuity and stability in the composition of our Board of Directors and in the policies formulated by it and to discourage certain types of transactions that may involve an actual or threatened change of control of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, these provisions could have the effect of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts. These provisions also may have the effect of preventing changes in our management.

Transfer Agent

Corporate Stock Transfer, Inc., Denver, Colorado, has been appointed as the transfer agent for our Units, common stock and warrants.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of our common stock in the public market after the restrictions lapse as described below, or the perception that those sales may occur, could cause the prevailing market price to decrease or to be lower than it might be in the absence of those sales or perceptions.

Upon completion of this offering and giving effect to the one-for-thirteen reverse stock split, we will have outstanding 7,046,788 shares of common stock (including the 5,500,000 shares of common stock forming a part of the Units issued in this offering, and assuming no exercise of the underwriters’ over-allotment option) without taking into account any options or warrants that may be granted or exercised and convertible notes that may be converted. Upon completion of this offering, we will have warrants outstanding to purchase 14,802,427 shares of common stock and convertible notes that are convertible into 817,556 shares of common stock.

Of the 7,046,788 shares of common stock outstanding upon completion of this offering, 6,277,673 shares of common stock, including 5,500,000 shares of common stock to be sold in this offering, will be freely transferable without restriction or further registration under the Securities Act of 1933 immediately following this offering. An additional 777,673 shares will be freely tradeable beginning on , 2009 following termination of the lock-up agreements entered into by the holders of those shares with the Representative. The remaining shares of common stock held by us, our executive officers, directors, and stockholders will be eligible for resale pursuant to Rule 144 as described below, after the expiration of any lock-up arrangements described below.

Restricted Stock, Lock-Up Agreements and Rule 144

The 777,673 shares of restricted stock may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemption from registration afforded by Rule 144. The holders of these shares have agreed not to sell or otherwise dispose of any of their shares of common stock (or any securities convertible into shares of common stock) for a period of one year after completion of this offering, and without the prior written consent of the Representative, subject to certain limited exceptions. After the expiration of this lock-up period, or earlier with the prior written consent of the Representative, all of the outstanding restricted shares subject to the lock-up may be sold in the public market pursuant to Rule 144.

In general, under Rule 144, as in effect as of February 15, 2008, a person who may be deemed to be our affiliate and has beneficially owned shares for at least six months, may sell within any three-month period a number of

shares of common stock that does not exceed a specified maximum number of shares. This maximum is equal to the greater of 1% of the then outstanding shares of our common stock or the average weekly trading volume in the common stock during the four calendar weeks immediately preceding the sale. Sales under Rule 144 are also subject to restrictions relating to manner of sale, notice and availability of current public information about us. A person who is not our affiliate, has not been an affiliate of ours within three months prior to the sale and has beneficially owned shares for at least six months would be entitled to sell such shares immediately without regard to volume limitations, manner of sale provisions, or notice requirements, so long as we have been subject to the reporting requirements of the Securities Exchange Act and have filed all required reports thereunder.

Stock Options

As of September 30, 2008, we had granted and had outstanding stock options to purchase 75,000 shares of common stock under our Option Plan (giving effect to the one-for-thirteen reverse stock split). A total of 71,154 shares of common stock currently are reserved for issuance under our Option Plan, and we intend to register these shares under the Securities Act. However, none of the shares registered will be eligible for resale until expiration of the lock-up agreements to which they are subject.

Other Warrants

In addition to the stock options described above, we have issued warrants to purchase a total of 1,697,427 shares of common stock as follows (giving effect to the one-for-thirteen reverse stock split):


Warrant Summary by Exercise Price
Number	Exercise Price

649,824	$	5.20 to 12.35
551,946	$	13.00 to 26.00
110,358	$	32.50 to 65.00
385,299	$	81.25 to 109.20

1,697,427

None of the shares issued upon exercise of these warrants will be eligible for resale until the later of the expiration of the lock-up agreements to which they are subject or such time as they are registered under the Securities Act or an exemption from registration is available, including the exemption afforded by Rule 144.

UNDERWRITING

Paulson Investment Company, Inc. is acting as the representative of the underwriters named below. We have entered into an underwriting agreement with these underwriters regarding the units being offered under this prospectus. In connection with this offering and subject to certain conditions, each of these underwriters has severally agreed to purchase, and we have agreed to sell, the number of units set forth opposite the name of the underwriter.


Underwriter	Number of Units

Paulson Investment Company, Inc.




Total		5,500,000

The underwriting agreement provides that the underwriters are obligated to purchase all of the Units offered by this prospectus, other than those covered by the over-allotment option, if any Units are purchased. The underwriting agreement also provides that the underwriters’ obligations to pay for and accept delivery of the Units is subject to the approval of certain legal matters by counsel and other conditions, including, among other things, the requirements that no stop order suspending the effectiveness of the registration statement be in effect and that no proceedings for this purpose have been instituted or threatened by the Securities and Exchange Commission.

The Representative has advised us that the underwriters propose to offer our Units to the public initially at the offering price set forth on the cover page of this prospectus and to selected dealers at that price less a concession of not more than $ per Unit. The underwriters and selected dealers may reallow a concession to other dealers, including the underwriters, of not more than $ per unit. After the public offering of the Units is complete, the offering price, the concessions to selected dealers and the reallowance to their dealers may be changed by the underwriters.

The Representative has informed us that they do not expect the underwriters to confirm sales of our Units offered by this prospectus on a discretionary basis.

Over-allotment Option. Pursuant to the underwriting agreement, we have granted the Representative an option, exercisable for 45 days from the date of this prospectus, to purchase up to an additional 825,000 Units on the same terms as the other Units being purchased by the underwriters from us. The Representative may exercise the option solely to cover over-allotments, if any, in the sale of the Units that the underwriters have agreed to purchase. If the over-allotment option is exercised in full, the total public offering price, underwriting discount and proceeds to us before offering expenses will be $ , $ and $ , respectively.

Stabilization and Other Transactions. The rules of the Securities and Exchange Commission generally prohibit the underwriters from trading in our securities on the open market during this offering. However, the underwriters are allowed to engage in some open market transactions and other activities during this offering that may cause the market price of our securities to be above or below that which would otherwise prevail in the open market. These activities may include stabilization, short sales and over-allotments, syndicate covering transactions and penalty bids, as described more fully below.


	•	Stabilizing transactions consist of bids or purchases made by the managing underwriter for the purpose of preventing or slowing a decline in the market price of our securities while this offering is in progress.

	•	Short sales and over-allotments occur when the managing underwriter, on behalf of the underwriting syndicate, sells more of our shares than it purchases from us in this offering. In order to cover the resulting short position, the managing underwriter may exercise the over-allotment option described above and may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate covering transaction. The underwriters will deliver a prospectus in connection with any such short sales. Purchasers of shares sold short by the underwriters are entitled to the same remedies under the federal securities laws as any other purchaser of Units covered by the registration statement.


	•	Syndicate covering transactions are bids for or purchases of our securities on the open-market by the managing underwriter on behalf of the underwriters in order to reduce a short position incurred by the managing underwriter on behalf of the underwriters.

	•	A penalty bid is an arrangement permitting the managing underwriter to reclaim the selling concession that would otherwise accrue to an underwriter if the common stock originally sold by the underwriter were later repurchased by the managing underwriter and therefore was not effectively sold to the public by such underwriter.

If the underwriters commence these activities, they may discontinue them at any time without notice. The underwriters may carry out these transactions on the Alternext, in the over-the-counter market or otherwise.

Indemnification. The underwriting agreement provides for indemnification between us and the underwriters against specified liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriters to payments that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the Securities and Exchange Commission, indemnification for liabilities under the Securities Act is against public policy as expressed in the Securities Act and is therefore unenforceable.

Underwriters’ Compensation. We have agreed to sell the Units to the underwriters at the initial offering price of $ per Unit, which represents the public offering price of the Units set forth on the cover page of this prospectus less an 8.0% underwriting discount. The underwriting agreement also provides that the Representative will be paid a nonaccountable expense allowance equal to 3.0% of the gross proceeds from the sale of the Units offered by this prospectus, excluding any Units purchased on exercise of the over-allotment option. The underwriting agreement also grants the underwriter, for a period of 36 months from the closing of this offering, the right of first refusal to act as the lead underwriter for any and all of our future public and private equity and debt offerings, including the offerings by any successor to or subsidiary of ours, excluding ordinary course of business financings such as bank lines of credit, accounts receivable and factoring.

On completion of this offering, we will issue to the Representative a warrant to purchase up to 550,000 Units, for a price per unit equal to 120% of the initial Unit offering price. The Representative’s warrants will be exercisable for Units at any time beginning one year after the effective date of this offering and will expire on the fifth anniversary of the effective date. However, neither the Representative’s warrants nor the underlying securities may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of one year immediately following the date of effectiveness or commencement of sales of the offering, except to any member participating in the offering and the officers or partners thereof, and only if all securities so transferred remain subject to the one-year lock-up restriction for the remainder of the lock-up period. After one year, the warrants may be transferred without restriction to any officer, director or stockholder of an underwriter.

The holder of the Representative’s warrants will have, in that capacity, no voting, dividend or other stockholder rights. Any profit realized on the sale of the Units issuable upon exercise of these warrants may be deemed to be additional underwriting compensation. The securities underlying these warrants are being registered pursuant to the registration statement of which this prospectus is a part. During the term of the Representative’s warrants, the holder thereof is given the opportunity to profit from a rise in the market price of our common stock, our Class A warrants and our Class B warrants. We may find it more difficult to raise additional equity capital while the Representative’s warrants are outstanding. At any time at which the Representative’s warrants are likely to be exercised, we may be able to obtain additional equity capital on more favorable terms.

The following table summarizes the underwriting discount and non-accountable expense allowance we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.

Total

Without Over-

With Over-

Per Unit

Allotment

Underwriting discount

Non-accountable expense allowance

Warrant Solicitation Fee. We have engaged the Representative, on a non-exclusive basis, as our agent for the solicitation of the exercise of the Class A and Class B warrants. To the extent not inconsistent with the guidelines of the Financial Industry Regulatory Authority and the rules and regulations of the Securities and Exchange Commission, we have agreed to pay the Representative for bona fide services rendered a commission of 5% of the exercise price for each warrant exercised more than one year after the date of this prospectus if the exercise was solicited by the Representative. No compensation will be paid to the Representative upon the exercise of the warrants if:


	•	the market price for the underlying shares of common stock is lower than the exercise price;


	•	the holder of the warrants has not confirmed in writing that the underwriter solicited his, hers or its exercise;


	•	the warrants are held in a discretionary account, unless prior specific written approval for the exercise is received from the holder;


	•	the warrants are exercised in an unsolicited transaction; or


	•	the arrangement to pay the commission is not disclosed in the prospectus provided to warrant holders at the time of exercise.

Lock-Up Agreements. All our officers and directors and certain of our stockholders have agreed that, for a period of one year from the date this registration statement becomes effective, they will not sell, contract to sell, grant any option for the sale or otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable for our equity securities, without the consent of the Representative. The Representative may consent to an early release from the lock-up periods if, in its opinion, the market for the common stock would not be adversely impacted by sales and in cases of an officer, director or other stockholders’ financial emergency. We are unaware of any officer, director or current stockholder who intends to ask for consent to dispose of any of our equity securities during the lock-up period.

Determination of Offering Price. The public offering price of the Units offered by this prospectus will be determined by negotiation between us and the Representative, based upon market conditions on the day we price the Units. The offering price will not necessarily reflect the price at which the common stock currently trades and should not be considered an indication of the actual value of the Units. That price is subject to change as a result of market conditions and other factors, and we cannot assure you that the Units, or the common stock and warrants contained in the Units, can be resold at or above the public offering price.

LEGAL MATTERS

Messner & Reeves, LLC, Denver, Colorado, has acted as our counsel in connection with this offering, including with respect to the validity of the issuance of the securities offered by this prospectus. The underwriters have been represented by Tonkon Torp LLP, Portland, Oregon.

EXPERTS

The financial statements of Smart Move, Inc. as of and for the years ended December 31, 2007 and 2006 included in this prospectus and elsewhere in this registration statement have been so included in reliance on the report of Anton Collins Mitchell LLP, an independent registered public accounting firm (which report on the financial statements includes an explanatory paragraph regarding the Company’s ability to continue as a going concern) appearing elsewhere herein and in the registration statement, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the reporting and information requirements of the Securities and Exchange Act of 1934, as amended, and as a result file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). These periodic reports, proxy statements and other information will be available

for inspection and copying at the SEC’s public reference room and website of the SEC referred to above, as well as our website, http://www.gosmartmove.com . This reference to our website is not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to the Units.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act that registers the Units to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. For additional information about us and our securities, we refer you to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract or any other documents to which we refer are not necessarily complete. In each instance, you should refer to the copy of the contract or other document filed as an exhibit to the registration statement and each statement is qualified in all respects by that reference.

You may read an copy the reports and other information we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. You may also obtain copies of this information by mail from the public reference section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information regarding the operation of the public reference room by calling 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC. The address of the website is http://www.sec.gov . This reference to the SEC’s website is an inactive textual reference only, and is not a hyperlink.

SMART MOVE, INC,

INDEX TO FINANCIAL STATEMENTS


Balance sheets as of September 30, 2008 (unaudited) and December 31, 2007			F-2
Statements of Operations for the nine months ended September 30, 2008 and 2007 (unaudited)			F-3
Statements of Cash Flows for the nine months ended September 30, 2008 and 2007(unaudited)			F-4
Notes to Financial Statements (unaudited)			F-5 - F-13
Report of Independent Registered Public Accounting Firm			F-14
Balance Sheet as of December 31, 2007			F-15
Statements of Operations for the years ended December 31, 2007 and 2006			F-16
Statement of Changes in Shareholders’ Equity for January 1, 2006 through December 31, 2006 and January 1, 2007 through December 31, 2007			F-17
Statements of Cash Flows for the years ended December 31, 2007 and 2006			F-18
Notes to Financial Statements			F-19 - F-43

F-1

Financial Statements

Smart Move, Inc.

Condensed Balance Sheets


	September 30,			December 31,
	2008			2007
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	571,703		$	369,189
Accounts receivable trade, net of allowance of $32,000 and $45,000, respectively		430,285			80,112
Packing supplies		89,070			94,437
Contracts in process		802,176			517,485
Prepaids and other		59,424			146,259

Total current assets		1,952,658			1,207,482

Property and equipment, net		13,472,405			15,942,718
Other assets		232,259			113,546

		13,704,664			16,056,264

Total assets	$	15,657,322		$	17,263,746


LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	2,505,220		$	2,550,281
Salaries payable		68,017			—
Accrued interest		1,052,083			435,804
Deferred revenue		1,003,048			456,247
Current portion of long-term debt and notes payable, net of discounts of $6,087,923 and $1,051,310, respectively		5,421,068			409,070
Derivative liability		2,806,288			—
Current portion of obligations under capital leases		97,724			91,648

Total current liabilities		12,953,448			3,943,050

Long-term liabilities:
Long-term debt and notes payable, less current portion, net of discounts of $70,225 and $3,552,103, respectively		3,201,402			6,353,045
Obligations under capital leases, less current portion		65,854			145,653

Total long-term liabilities		3,267,256			6,498,698

Total liabilities		16,220,704			10,441,748

Commitments and contingent liabilities
Shareholders’ equity (deficit):
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 17,460,111 and 10,979,699 issued and outstanding, respectively		1,745			1,097
Additional paid-in-capital		23,458,515			20,807,395
Accumulated deficit		(24,023,642	)		(13,986,494	)

Total shareholders’ equity (deficit)		(563,382	)		6,821,998

Total liabilities and shareholders’ equity (deficit)	$	15,657,322		$	17,263,746

F-2

Smart Move, Inc.

Condensed Statements of Operations


	Nine Months Ended September 30,
	2008			2007
	(Unaudited)

Sales	$	7,000,864		$	4,603,287
Cost of moving and storage		6,711,201			4,908,590
Depreciation, amortization and impairment		2,343,226			2,421,573

Total cost of moving and storage		9,054,427			7,330,163

Gross loss		(2,053,563	)		(2,726,876	)
Selling, general and administrative expenses		4,619,526			4,691,760
Depreciation and amortization		102,639			112,944

Total selling, general and administrative expenses		4,722,165			4,804,704

Operating loss		(6,775,728	)		(7,531,580	)

Other income (expense):
Interest income		4,584			283,195
Interest expense		(3,457,134	)		(2,255,648	)
Gain on value of derivative liability		553,112			—
Loss on debt extinguishment		(361,981	)		—

Total other expense		(3,261,419	)		(1,972,453	)

Loss before income tax benefit		(10,037,147	)		(9,504,033	)
Income tax benefit		—			(2,367,000	)

Net loss	$	(10,037,147	)	$	(7,137,033	)

Net loss per share:
Basic and diluted	$	(0.77	)	$	(0.68	)

Shares used to compute net loss per share:
Basic and diluted		12,960,896			10,502,378

F-3

Smart Move, Inc.

Condensed Statements of Cash Flows


	Nine Months Ended September 30,
	2008			2007
	(Unaudited)

Cash flows from operating activities:
Net loss	$	(10,037,147	)	$	(7,137,033	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,090,265			2,128,506
Vault inventory used for repairs		26,803			—
Impairment		355,600			406,011
Non-cash compensation		206,311			174,555
Gain on value of derivative liability		(553,112	)		—
Bad debt (recovery) allowance		(13,000	)		94,474
Amortization of debt discount		1,461,275			1,214,253
Loss on debt extinguishment including incentives to induce conversion of debt to equity		1,129,421			250,437
Deferred income tax benefit		—			(2,367,000	)
Change in operating assets and liabilities:
Accounts receivable		(337,173	)		(204,018	)
Packing supplies		5,367			(96,247	)
Prepaids and other		30,876			57,145
Contracts in process		(284,691	)		(103,354	)
Accounts payable		22,956			1,194,728
Accrued interest		911,050			382,589
Deferred revenue		546,801			236,478

Net cash used in operating activities		(4,438,398	)		(3,768,476	)

Cash flows from investing activities:
Additions of property and equipment		(2,355	)		(9,775,964	)
Deposits on office lease		—			(39,200	)

Net cash used in investing activities		(2,355	)		(9,815,164	)

Cash flows from financing activities:
Proceeds from notes payable		4,614,817			1,757,500
Proceeds from equity financing		750,000			—
Notes payable and equity issuance costs		(258,600	)		(152,775	)
Payments on bank debt		(389,227	)		(497,641	)
Payments on obligations under capital leases		(73,723	)		(73,873	)

Net cash provided by financing activities		4,643,267			1,033,211

Net increase (decrease) in cash and cash equivalents		202,514			(12,550,429	)
Cash and cash equivalents at beginning of period		369,189			14,235,823

Cash and cash equivalents at end of period	$	571,703		$	1,685,394

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	316,818		$	408,419
Supplemental disclosure of noncash investing and financing activities:
Equipment acquired included in accounts payable	$	—		$	895,883
Conversion of accrued interest to common shares and debt	$	294,521		$	406,484
Conversion of debt to common shares	$	1,136,366		$	1,373,867
Allocation of value to warrants and beneficial conversion feature in connection with debt offerings	$	243,421		$	65,101
Purchase of assets with common shares and warrants	$	78,100		$	—
Recovery of deferred offering costs in accounts payable	$	—		$	32,108
Adoption of FIN 48 increase in deferred tax liability and accumulated deficit	$	—		$	80,000
Warrants issued for debt offering costs	$	—		$	18,507
Allocation of value to derivative liability associated with derivative debt and equity financings	$	3,359,400		$	—

F-4

Smart Move, Inc.

Notes to Financial Statements (unaudited)


1.	BASIS OF PRESENTATION

The accompanying unaudited interim condensed financial statements have been prepared by Smart Move, Inc. (“Smart Move” or the “Company”) in accordance with the instructions to quarterly reports on Form 10-Q and article 10 of regulation S-X. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2008, and for all periods presented have been made. Certain information and footnote data necessary for a fair presentation of financial position and results of operations in conformity with accounting principals generally accepted in the United States have been condensed or omitted. Consequently, these unaudited interim condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s latest Annual Report on Form 10-KSB filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 28, 2008. Interim results are not necessarily indicative of results for a full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the related reported amounts of revenues and expenses during the reporting period. The significant estimates made by management in the accompanying condensed financial statements include allowances for doubtful accounts, determination of income taxes, contingent liabilities, useful lives used in depreciation and amortization and the assumptions utilized to compute stock-based compensation and other equity instruments. Actual results could differ from those estimates.

Going Concern

The accompanying condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate the Company as a going concern. However, the Company has sustained substantial operating losses since inception and has used substantial amounts of working capital in its operations. These conditions raise substantial doubt in the Company’s ability to continue as a going concern. Realization of a major portion of the assets reflected on the accompanying balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability to meet its financing requirements and succeed in establishing profitability of its future operations. Management’s plans include increasing revenue opportunities directly through new marketing programs targeted to the relocation industry, partnerships with van lines and other strategic alliances. The Company has implemented an affiliate program designed to work with local movers to use its services to provide inter-state moves. In addition, the Company is working with corporate relocation companies to use its services for their corporate customers. The Company’s Board of Directors has authorized management to explore the full range of strategic alternatives available to address financing objectives and enhance shareholder value. The alternatives being pursued include raising capital through commercial loans, equipment leasing transactions and additional public or private offerings of the Company’s securities. Concurrently, the Company will evaluate cost control measures such as restructuring current debt obligations, reductions of workforce, changes in storage options and changes in transportation providers. The Company expects to increase its revenues during fiscal 2008. However, there can be no assurance that the anticipated revenues and corresponding cash flows will materialize. At March 31, 2008, the Company indicated that it would require additional funding of approximately $2,500,000 during 2008 in order to finance its operations, make debt payments and implement its business plan. During the second and third quarters of 2008, the Company received $2,005,000 of this necessary funding including $750,000 from the Operating and Security Agreement, $505,000 from the May 2008 private placement of Secured Notes, and $750,000 from an equity investment. As of the date of this filing, the Company has yet to secure commitments to fulfill the balance of its projected $2,500,000 requirement.

F-5

Smart Move, Inc.

Notes to Financial Statements — (Continued)

While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the going concern assumption used in preparing these financial statements, this is predicated upon the Company being able to continue to raise additional capital to maintain operations and execute its business plan until the peak summer moving season of 2009. There can be no assurance that the Company’s further capital raising will be successful.

These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a going concern. If the Company were unable to continue as a going concern, then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used.

Business Acquisition

In connection with management’s plans to increase revenue opportunities, on January 31, 2008, the Company acquired certain business assets of Star Relocation Network Alliance, Inc. (“Star Alliance”), including trademarks, trade names, a customer list and other intangible assets related to Star Alliance’s co-branded and private label move management programs offered to the real estate brokerage community, third party relocation companies and human resource departments of major companies. In exchange for the business assets, the Company issued 80,000 shares of common stock (fair value of $55,200) and warrants, exercisable for 3 years, to purchase 100,000 shares of common stock at an exercise price of $1.20 per share (fair value of $22,900). The acquisition has been accounted for as a business combination and the results of operation related to the business assets were not significant from the January 31, 2008 acquisition date. Had the business acquisition occurred on January 1, 2008 or 2007, the Company’s results of operations and loss per share would not be significantly different from reported amounts. The purchase price has been substantially allocated to identifiable intangible assets and the resulting amortization, and any changes upon finalization of the preliminary allocation, is not expected to be significant to the Company’s results of operations.

Deferred Revenues

Smart Move recognizes advanced billings and the related deferred revenue of contracts in process on a net basis. Cash payments totaling $1,003,048 which were received on advanced billings as of September 30, 2008 and $456,247 as of December 31, 2007, are included in the financial statements as deferred revenue.

Customer Concentrations

At September 30, 2008, two customers accounted for 20% each, and a third customer accounted for 22% of the Company’s accounts receivable. As of December 31, 2007, no customer accounted for more than 10% of the Company’s accounts receivable. For the nine months ended September 30, 2008 one customer accounted 18% of total revenue, respectively. For the nine months ended September 30, 2007, one customer accounted for more than 10% of total revenue.

Stock Based Compensation

In accordance with the provisions of Statement of Financial Accounting Standards No. 123, “Share-Based Payments” (“SFAS 123R”), the Company records stock-based compensation expense for all share-based payment arrangements, including stock options, warrants and restricted stock grants. There were no options exercised in the nine months ended September 30, 2008. During the same period, the Company granted 343,000 options. Compensation cost related to share-based payments that vested during the nine months ended September 30, 2008 and which are recognized in the Statements of Operations, was $156,872. For the nine months ended September 30, 2007 the compensation cost recognized in the Statements of Operations, was $144,555.

F-6

Smart Move, Inc.

Notes to Financial Statements — (Continued)

On January 15, 2008, Smart Move granted 89,884 shares of restricted common stock, valued at $60,000, to its non-employee directors that vest during the year ended December 31, 2008, in accordance with the Company’s compensation plan for non-employee directors. The Company recognized $49,439 of expense for the nine months ended September 30, 2008, respectively, relating to this stock grant. During the nine months ended September 30, 2007, the Company issued 8,676 shares of stock valued at $40,000 to the non-employee directors for which the Company recognized $30,000 of expense for the nine months ended September 30, 2007, respectively.

Loss Per Share

Loss per share is computed based on the weighted average number of shares outstanding each period. Convertible notes, stock options, unvested grants of restricted stock and warrants are not considered in the calculation, as the impact of the potential dilution (34,837,113 shares at September 30, 2008 and 11,614,469 shares at September 30, 2007) would be to decrease basic loss per share. Therefore, diluted loss per share is equivalent to basic loss per share for all periods shown.

Derivatives

The Company follows the provisions of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”) along with related interpretations EITF No. 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”) and EITF No. 05-2 “The Meaning of ‘Conventional Convertible Debt Instrument’ in Issue No. 00-19” (“EITF 05-2”). SFAS No. 133 requires every derivative instrument (including certain derivative instruments embedded in other contracts) to be recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivative’s fair value recognized currently in earnings unless specific hedge accounting criteria are met. The Company values these derivative securities under the fair value method at the end of each reporting period (quarter), and their value is marked to market at the end of each reporting period with the gain or loss recognition recorded against earnings. The Company continues to revalue these instruments each quarter to reflect their current value in light of the current market price of its common stock. The Company utilizes the Black-Scholes option-pricing model to estimate fair value. Key assumptions of the Black-Scholes option-pricing model include applicable volatility rates, risk-free interest rates and the instrument’s expected remaining life. These assumptions require significant management judgment.

The Company classifies derivatives as either current or long-term in the balance sheet based on the classification of the underlying instrument, security or contract. For accounting purposes, a sequencing approach under EITF 00-19 as it pertains to toxic securities is permitted. Under the sequencing approach, some contracts may continue to qualify as equity under EITF 00-19 despite the existence of a “toxic” security. The sequencing approach permits tainted contracts to be evaluated based on (1) earliest issuance date or (2) latest maturity date. For purposes of applying EITF 00-19 to tainted securities, the Company has elected to employ the earliest issuance date to its debt instruments issued subsequent to the January 2008 Notes.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157), “Fair Value Measurements,” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” which defers the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually), to fiscal years beginning after

F-7

Smart Move, Inc.

Notes to Financial Statements — (Continued)

November 15, 2008, and interim periods within those fiscal years. Earlier adoption is permitted, provided a company has not yet issued financial statements, including for interim periods, for that fiscal year. Effective January 1, 2008, Smart Move partially adopted SFAS No. 157, for financial assets and liabilities and certain non-financial assets and liabilities that are recognized and disclosed at fair value in the financial statements on a recurring basis and deferred adopting SFAS No. 157 for non-financial assets and liabilities recognized at fair value on a non-recurring basis until January 1, 2009. The Company does not believe the adoption will have a material impact on its financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS 159), “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115.” SFAS 159 permits entities to measure eligible assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. As of March 31, 2008, the Company did not elect the fair value option on any financial instruments or certain other items as permitted by SFAS 159.

In December 2007, the FASB issued statement No. 141 (R) “Business Combinations.” This Statement establishes principles and requirements applicable to the manner in which the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company does not believe the adoption will have a material impact on its financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“FAS 161”). SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The guidance in FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company is currently assessing the impact of FAS 161.


2.	PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:


	September 30,			December 31,
	2008			2007

SmartVaults ^tm	$	10,455,033		$	10,455,033
GPS equipment		1,574,317			2,587,199
Vault mold		1,773,751			1,773,751
Rolling stock and trailers		3,773,853			3,773,853
Container components		703,064			1,085,465
Office equipment		464,164			461,808
Leasehold improvements		11,475			11,475

		18,755,657			20,148,584
Less accumulated depreciation		(5,283,252	)		(4,205,866	)

Property and equipment, net	$	13,472,405		$	15,942,718

F-8

Smart Move, Inc.

Notes to Financial Statements — (Continued)

Depreciation expense was $2,090,265 and $2,128,506 for the nine months ended September 30, 2008 and 2007, respectively. During the third quarter of 2008, the Company performed an impairment analysis in accordance with SFAS No. 144 “Accounting for Impairment or Disposal of Long-Lived Assets” and determined that GPS units not currently installed in a SmartVault had no realizable value and therefore an impairment of $355,600 was recorded. Management’s analysis of the remaining move related assets, based on the undiscounted cash flows, determined no additional impairment existed as of September 30, 2008. During the second quarter of 2007, the Company wrote off $1,012,882 of fully depreciated GPS units, reducing the cost basis and accumulated depreciation.

During the year ended December 31, 2007, the Company began assembling a majority of its SmartVault ^tm containers at its Denver warehouse. The Company receives the components required to be assembled or affixed, consisting of the plastic walls, top, aluminum base, signage and GPS units and then assembles or attaches the components to create a completed container. The completed SmartVault ^tm container is then shipped to a terminal for use. At September 30, 2008, the container components consisted of $451,705 of sides, bases and tops, $28,000 of GPS units, $142,613 of signage and $80,746 of various additional, miscellaneous components. During 2008, the Company impaired $355,600 of GPS units included in Container components and used $26,803 of component sides for replacement on existing containers.


3.	LONG-TERM DEBT

During the nine-month period ended September 30, 2008, the Company entered into several debt financing arrangements generating net proceeds of $4,363,150 (face value of $5,110,000 less original issue discounts of $548,250 and debt offering costs of $198,600). The financings included a January 2008 unsecured convertible debenture (the “January 2008 Unsecured Notes”) in the amount of $200,000, a January 2008 private financing transaction of convertible debentures (the “January 2008 Notes”) in the amount of $3,655,000, a secured operating loan and security agreement of convertible debentures (the “2008 Secured Notes”) in the amount of $750,000, and a private placement memorandum of secured convertible debentures (the “May 2008 PPM Notes”) in the amount of $505,000 (of which $25,000 is held by the newly elected audit committee chairman).

Each of the above debt offerings include various financing terms including conversion features and warrants. The table below summarizes the maturity date, interest rate, conversion price and the number of warrants to purchase common stock included in each respective financing.


	January
	2008
	Unsecured	January	2008 Secured	May 2008
	Notes	2008 Notes	Notes	PPM Notes

Maturity date Ù	January 2009	January 2010	April/May 2011	May-July 2011
Interest rate	12%	11%	12%	11%
Original issue discount	n/a	15%	n/a	n/a
Conversion price	$0.75	$0.75	$0.40	$0.40
Number of warrants*	570,000	2,436,667	1,875,000	1,262,500


Ù		The January 2008 Unsecured Notes were converted to common stock in August 2008.


*		The warrants have varying terms ranging from 3 to 5 years and exercise prices ranging from $0.80 to $1.25.

In January 2008, the Company entered into an unsecured convertible debenture agreement with a related party (the “January 2008 Unsecured Notes”). In accordance with EITF 00-27, the Company allocated $184,000 of the proceeds to a beneficial conversion feature and the warrants resulting in a debt discount of $184,000 with the corresponding entry to additional paid in capital.

F-9

Smart Move, Inc.

Notes to Financial Statements — (Continued)

In order to effectuate the January 2008 Notes financing transaction, the Company offered to debt holders of its November 2007 Notes ($1,071,500 outstanding at the date of the inducement) two alternative elections as inducements to convert the notes and/or relinquish their second lien security interest in the collateral pledged to the respective November 2007 Notes. The Company received elections to convert $796,500 of the then outstanding notes to equity at a reduced conversion price of $0.65 resulting in the issuance of 1,250,040 restricted shares of the Company’s common stock. In addition to the reduced conversion price, the electing debt holders received a one year extension and a reduced exercise price on the warrants initially issued with the November 2007 Notes and additional warrants to purchase 398,250 restricted shares of the Company’s common stock. The Company also received elections, related to $275,000 of the then outstanding notes, to subordinate their security interests to the purchasers of the January 2008 Notes. The electing debt holders received a reduced conversion price and a reduced exercise price on the warrants issued with the November 2007 Notes.

The Company recorded an inducement expense to convert debt to equity related to the converted November 2007 Notes in the amount of $224,580 and, a loss on extinguishment of debt in the amount of $171,969, related to the subordination of security interests.

In addition to the inducement offered to holders of November 2007 Notes, the Company amended and restated certain terms of the September 2007 Notes, resulting in a loss on debt extinguishment of $190,012.

The January 2008 Notes include an anti-dilution feature that does not meet the definition of a “standard” anti-dilution feature. Therefore, the conversion feature and warrants associated with the January 2008 Notes were determined to be embedded derivatives in accordance with SFAS No. 133. Accordingly, the Company bifurcated the derivatives from the January 2008 Notes and measured the conversion feature and warrants at their fair value on the date of issuance using the Black-Scholes option pricing model. A derivative liability in the amount of $1,783,640 was recorded on the issuance date with the corresponding entry to debt discount.

The January 2008 Notes also include a variable pricing provision that causes the Company to potentially not have the ability to issue a sufficient number of shares of common stock required to discharge its obligations under the current terms. As the Company is currently not in a financial position to redeem the balance of the payments due in cash, the January 2008 Notes are recorded as current in the accompanying balance sheet.

Additionally, as the Company does not potentially have adequate shares to settle its obligation for the January 2008 Notes, the Company is precluded from concluding it has sufficient authorized or issued shares to settle certain contracts within the scope of EITF 00-19. The inability to settle the January 2008 Notes has “tainted” financial instruments embedded in subsequent financings in a similar manner. The Company determined that the “toxic security” taints the equity classification of subsequently issued contracts subject to EITF 00-19; therefore, these securities are classified as liabilities until the toxic security expires or is settled. A sequencing approach under EITF 00-19 as it pertains to toxic securities is permitted. Under the sequencing approach, some contracts may continue to qualify as equity despite the existence of a “toxic” security. The sequencing approach permits tainted contracts to be evaluated based on 1) earliest issuance date or 2) latest maturity date. For purposes of applying EITF 00-19 to tainted securities, the Company has elected to employ the earliest issuance date to its debt instruments issued subsequent to the January 2008 Notes.

In April 2008, the Company entered into an Operating Loan and Security Agreement with a beneficial owner of greater than 10% of the Company’s securities, and therefore a related party (the “2008 Secured Notes”). Due to the tainted nature of the securities, as discussed above, the conversion feature and warrants issued in the transaction were recorded as a derivative liability in the amount of $458,150 on the issuance date with the corresponding entry to debt discount. The Company determined the fair value of the derivative liability utilizing the Black-Scholes option pricing model. The Company applied a 32% discount factor to the Black-Scholes calculation determined by the limited liquidity, the number of warrants, the Company’s volatility, historical financial results, and Rule 144 restrictions associated with these securities.

F-10

Smart Move, Inc.

Notes to Financial Statements — (Continued)

In order to execute the 2008 Secured Notes financing transaction, the Company granted warrants to purchase 1,000,000 shares of the Company’s common stock to holders of the 2005 Notes, the July 2006 Notes, and the August 2007 Notes. The warrants to purchase the shares of common stock were granted to the secured lenders in exchange for releasing their lien on 800 Smart Vaults. The fair value attributable to the warrants was recorded as a derivative liability at the date of grant in the amount of $74,800 with a corresponding entry to debt discount.

In May through July 2008, the Company sold in a private placement memorandum secured convertible notes (the “May 2008 Notes”). Due to the tainted nature of the securities, the conversion feature and warrants issued in the transaction were recorded as a derivative liability in the amount of $431,895 on the issuance date with the corresponding entry to debt discount. As with the 2008 Secured Notes, the Company determined the fair value of the derivative liability utilizing the Black-Scholes option pricing model and a 32% discount factor.

In August 2008, in relation to an equity funding transaction, the Company offered an inducement to the holder of the September 2007 Notes and the January 2008 Unsecured Notes to convert the then outstanding principal balance of $740,000 to equity. The inducement offered and accepted reduced the respective conversion prices ($0.80 and $0.75, respectively) to $0.32. The inducement expense in the amount of $424,958 is included in interest expense on the accompanying income statement. The conversion resulted in the Company issuing 2,343,750 restricted shares of common stock.

In addition, as part of the equity funding transaction, the Company granted the holder warrants to purchase 3,515,625 restricted common shares related to the equity financing and warrants to purchase 82,500 restricted shares of common stock to release certain collateral related to the converted debt. The Company determined the fair value of the warrants, $576,141 and $12,566, respectively, utilizing the Black-Scholes option pricing model and a 32% discount. Due to the securities being tainted, the value was recorded as a derivative liability.

Certain of the debt financings were completed through placement agents and the Company granted warrants to purchase an aggregate 191,000 restricted shares of common stock to the placement agents. The Company determined the fair value of the warrants utilizing the Black-Scholes option pricing model and a 32% discount. The value attributable to the placement warrants, $22,208, was recorded as a derivative liability on the issuance date.

The following table summarizes our total outstanding debt as of September 30, 2008:


Note	Face Amount		Discounts		Total

July 2006 Notes ***	$	5,000,000	$	3,546,937	$	1,453,063
2005 Notes ****	$	2,998,653	$	81,383	$	2,917,270
2007 Deferred Interest Note	$	355,500	$	—	$	355,500
August 2007 Notes*	$	1,217,500	$	71,824	$	1,145,676
November 2007 Notes*	$	275,000	$	—	$	275,000
January 2008 Notes **	$	3,655,000	$	1,544,261	$	2,110,739
2008 Secured Notes **	$	750,000	$	465,448	$	284,552
May 2008 PPM Notes **	$	505,000	$	448,295	$	56,705
Other * Ù	$	23,965	$	—	$	23,965

Total	$	14,780,618	$	6,158,148	$	8,622,470


*		Classified as current in the accompanying balance sheet. Note is due within 12 months.


**		Classified as current in the accompanying balance sheet due to the variable pricing provision of the January 2008 Notes as previously discussed.


***		Classified as current in the accompanying balance sheet due to default on certain terms of the Note.

F-11

Smart Move, Inc.

Notes to Financial Statements — (Continued)


****		Certain of the 2005 Notes ($71,368, net of discounts) were classified as current in the accompanying balance sheet as the amount is due within 12 months.


Ù		The Company financed $53,067 related to insurance premiums during the nine-month period ended September 30, 2008.

At each measurement date, in accordance with SFAS No. 133, the Company revalues the derivative liabilities related to the respective securities. The Company determines the fair value of the derivatives utilizing the Black-Scholes option pricing model and a 32% discount. The revaluation resulted in a loss on the derivative liability of $298,803 for the three-month period ended September 30, 2008 and a gain on the derivative liability of $553,112 for the nine-month period ended September 30, 2008.

The Company recorded amortization of the respective debt discounts to interest expense in the amount of $1,461,275 for the nine-month period ended September 30, 2008. In addition, related to the September 2007 Note conversion, the November 2007 Note conversion and the January 2008 Unsecured Note conversion, the Company recorded the unamortized debt discount balance to interest expense on the date of conversion in the amount of $117,902. Included in interest expense is $720,929 of related party interest.


4.	STOCK INCENTIVES AND OPTIONS

Overview

In January of 2008 the Company granted options to acquire 343,000 shares of common stock to employees. In addition, in January 2008, Smart Move granted 89,884 shares of restricted stock valued at $60,000, to its non-employee directors that vest during the year ended December 31, 2008. On September 15, 2008 the Company granted 13,528 shares of restricted stock to a new director valued at $4,439.

A summary of option activity from December 31, 2007 to September 30, 2008 is as follows:


				Weighted
				Average
				Exercise
	Shares			Price

Outstanding as of December 31, 2007		801,500		$	4.53
Granted		343,000		$	0.68
Forfeited		(169,500	)	$	4.96

Outstanding as of September 30, 2008		975,000		$	3.10

Vested and Exercisable as of September 30, 2008		369,827		$	2.20

A summary of the status of the Company’s unvested shares as of September 30, 2008:


				Weighted
				Average
				Grant-Date
	Shares			Fair Value

Unvested as of December 31, 2007		574,968		$	1.47
Granted		343,000		$	0.68
Forfeited		(169,500	)	$	0.40
Vested		(143,295	)	$	1.53

Unvested as of September 30, 2008		605,173		$	0.73

F-12

Smart Move, Inc.

Notes to Financial Statements — (Continued)


5.	EQUITY

In January 2008, the Company issued 89,884 shares of common stock to its non-employee Directors valued at $60,000 in consideration of services for the year 2008.

In January 2008 the Company issued 1,250,040 shares of common stock for the conversion of $796,500 of face amount of notes issued in November of 2007.

On January 31, 2008 the Company purchased certain assets of Star Relocation Alliance, Inc., for 80,000 shares of common stock, together with three year warrants to purchase 100,000 additional shares of common stock at an exercise price of $1.20 to complete the asset acquisition. If certain top line revenues numbers are achieved in 2008, the Company will be required to issue an additional 20,000 to 45,000 shares of common stock.

On August 28, 2008, the Company entered into an Equity Investment Commitment in the amount of $750,000 with a shareholder that controls more than 10% of the Company’s shares on a beneficial basis, and therefore, a related party. In connection with the transaction, the Company sold 2,343,750 restricted shares of the Company’s common stock at $0.32 per share and issued a five year common stock purchase warrant covering 3,515,625 of restricted shares exercisable at $0.40.

The Company recorded a $576,141 derivative liability for the fair value of the common stock purchase warrant noted above and netted it against the investment as a cost of the transaction.

In addition on August 28, 2008 the Company converted $740,000 of debt to equity by issuing 2,312,500 shares of common stock.

In September 2008 the Company issued 13,528 shares of restricted common stock to a new director valued at $4,439.

In July, August and September 2008 the Company issued 390,710 shares of common stock in payment of $100,474 interest on certain notes.


6.	SUBSEQUENT EVENTS

At a special meeting of shareholders on October 27, 2008, the shareholders approved granting discretionary authority to the Board of Directors to effect a reverse stock split within a range of one-for-ten and one-for-fifteen for a period of 12 months following the meeting.

On November 10, 2008 the Company filed a registration statement with the Securities and Exchange Commission for the purpose of selling additional shares in an underwritten offering.

F-13

Report of Independent Registered Public Accounting Firm

Board of Directors

Smart Move, Inc.

Denver, Colorado

We have audited the accompanying balance sheet of Smart Move, Inc (the “Company”) as of December 31, 2007 and the related statements of operations, shareholders’ equity, and cash flows for the years ended December 31, 2007 and 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Smart Move, Inc. at December 31, 2007, and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the financial statements, in 2006, the Company changed its method of accounting for stock-based compensation in accordance with the guidance provided in Statement of Financial Accounting Standards No. 123(R), Share-Based Payment.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Anton Collins Mitchell LLP

Denver, Colorado

March 28, 2008

F-14

Smart Move, Inc.

Balance Sheet


	December 31, 2007

ASSETS
Current assets:
Cash and cash equivalents	$	369,189
Account receivable trade, net of allowance of $45,000		80,112
Packing supplies		94,437
Contracts in process		517,485
Prepaid and other		146,259

Total current assets		1,207,482

Property and equipment, net		15,942,718
Other assets		113,546

		16,056,264

Total assets	$	17,263,746


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,550,281
Accrued interest		435,804
Deferred revenue		456,247
Current portion of long-term debt and notes payable, (face amount of $1,460,380) net of discounts of $1,051,310		409,070
Current portion of obligations under capital leases		91,648

Total current liabilities		3,943,050

Long-term liabilities:
Long-term debt and notes payable, less current portion, (face amount of $9,905,148) net of discounts of $3,552,103		6,353,045
Obligations under capital leases, less current portion		145,653
Total long-term liabilities		6,498,698

Total liabilities		10,441,748

Commitments and contingent liabilities
Shareholders’ 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		1,097
Additional paid-in-capital		20,807,395
Accumulated deficit		(13,986,494	)

Total shareholders’ equity		6,821,998

Total liabilities and shareholders’ equity	$	17,263,746

The accompanying notes are an integral part of these financial statements.

F-15

Smart Move, Inc.

Statements of Operations


	Year Ended			Year Ended
	December 31,			December 31,
	2007			2006

Sales	$	5,810,898		$	4,184,554
Cost of moving and storage (exclusive of depreciation, amortization and impairment shown separately below)		6,337,360			4,827,273
Depreciation and amortization		2,878,391			1,104,590
Impairment of fixed assets		1,539,563			—

Total cost of moving and storage		10,755,314			5,931,863

Gross 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			6,099,422
Depreciation and amortization		162,553			99,395
Impairment of note receivable		—			47,000
Impairment of capitalized software		30,795			—
Write off of deferred offering costs		—			602,262

Total selling, general and administrative expenses		6,433,988			6,848,079

Operating loss		(11,378,404	)		(8,595,388	)

Other income (expense):
Interest income		288,437			107,043
Interest 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

The accompanying notes are an integral part of these financial statements.

F-16

Smart Move, Inc.

Statement of Changes in Shareholders’ Equity


											Additional						Total			Total
	Members Equity						Common Stock				Paid-in			Accumulated			Shareholders’			Members’
	Shares			Amount			Shares		Amount		Capital			Deficit			Equity			Equity

Members’ Equity January 1, 2006		4,342,840		$	6,072,916			—	$	—		—		$	(4,088,199	)	$	—		$	1,984,717
Issuance of member shares to officers for services rendered		500,000			2,500,000			—		—		—			—			—			2,500,000
Exercise of options for cash		40,000			25,000			—		—		—			—			—			25,000
Cashless 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			—		—		—			—			—			1,969,039
Issuance of shares and warrants in connection with conversion of 2004 debt at a premium		7,334			161,140			—		—		—			—			—			161,140
Issuance of member shares in connection with private placement, net of offering costs of $120,000		473,204			1,980,008			—		—		—			—			—			1,980,008
Conversion of accrued interest to member shares, net of fees $23,736		65,934			272,964			—		—		—			—			—			272,964
Proceeds allocated to warrants and beneficial conversion features		—			5,278,436			—		—		—			—			—			5,278,436
Value 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		$	—

The accompanying notes are an integral part of these financial statements.

F-17

Smart Move, Inc.

Statements of Cash Flows


	Year Ended			Year Ended
	December 31,			December 31,
	2007			2006

Cash 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			1,203,985
Impairment of fixed assets		1,539,563			—
Impairment of capitalized/purchased software		30,795			—
Non-cash compensation		284,180			2,690,836
Write off of deferred offering costs		—			602,262
Amortization of debt discount		1,371,057			351,754
Loss on debt extinguishment		1,328,565			—
Amortization of warrants for services		—			11,786
Bad debt expense		168,014			31,858
Additional shares issued upon conversion of debt to equity		185,482			36,670
Additional warrants issued upon conversion of debt to equity		64,955			124,470
Loss on asset disposal		—			7,446
Impairment of notes receivable		—			47,000
Deferred 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			121,996
Accrued interest		704,847			442,433
Deferred revenue		342,783			15,273

Net 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		—			2,100,008
Offering costs on sale of and conversion to member shares		—			(176,766	)
Proceeds from IPO		—			16,560,000
Offering costs on IPO		—			(2,302,315	)
Proceeds from exercise of options		—			25,000
Proceeds from notes payable		2,829,000			6,832,500
Notes payable issuance costs		(233,395	)		(532,113	)
Proceeds from bank debt		—			500,000
Bank 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		—			100
Checks drawn in excess of available bank balances		—			(199,802	)
Deferred offering costs		—			(520,279	)

Net cash provided by financing activities		1,793,180			21,553,057

Net increase (decrease) in cash and cash equivalents		(13,866,634	)		10,891,752
Cash and cash equivalents at beginning of year		14,235,823			3,344,071

Cash and cash equivalents at end of year	$	369,189		$	14,235,823

The accompanying notes are an integral part of these financial statements.

F-18

Smart Move, Inc.

Notes to Financial Statements


1.	Nature of Business, Organization and Going Concern

Business Description

A Smart Move, L.L.C. dba Smart Move was formed and registered as a Colorado limited liability company on August 11, 2004. In June 2005 Smart Move, L.L.C. commenced revenue producing activities and emerged from the development stage. As a result and in accordance with Statements of Financial Accounting Standards (“SFAS”) No. 7 “Accounting and Reporting by Development Stage Enterprises” the financial statements for prior periods do not reflect cumulative amounts in the statements of operations and cash flows.

On December 6, 2006, immediately prior to A Smart Move’s initial public offering, A Smart Move, L.L.C. merged into Smart Move, Inc. (“Smart Move” or the “Company”) a Delaware Corporation. The purpose of the merger was to reorganize as a Delaware corporation. As a result of the merger all issued and outstanding shares of membership interest in A Smart Move L.L.C. automatically converted into two shares of Smart Move, Inc. and all issued and outstanding options, warrants and notes exercisable to purchase or convertible into shares of membership interest of A Smart Move L.L.C. will convert when exercised into two shares of Smart Move, Inc. As of the date of the merger the accumulated deficit of A Smart Move, L.L.C. was treated as a constructive distribution and reflected as a reduction in additional paid-in capital. All references to share amounts have been retroactively adjusted to reflect the merger as if the merger had taken place as of the beginning of the earliest period presented.

Smart Move provides intrastate, interstate and international moving services. Smart Move’s services involve arranging for packing and unpacking, shipping, insurance and storage of customers’ household goods by utilizing specialized containers owned by Smart Move called a SmartVault ^tm .

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate the Company as a going concern. However, the Company has sustained substantial operating losses since inception and has used substantial amounts of working capital in its operations. These conditions raise substantial doubt in the Company’s ability to continue as a going concern. Realization of a major portion of the assets reflected on the accompanying balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability to meet its financing requirements and succeed in its future operations. Management’s plans include increasing revenue opportunities through partnerships with van lines and other partners. The Company has implemented an affiliate program designed to work with local movers to use its services to provide inter-state moves. In addition, the Company is targeting corporate relocation companies to use its services for their corporate customers. The Company is exploring means of reducing its operating costs, which may include reductions of workforce, changes in its storage options and changes in transportation partners. The Company expects to increase its revenues during fiscal 2008. However, there can be no assurance that the anticipated revenues and corresponding cash flows will materialize. The Company will need to raise capital to meet its current operating cash flow deficit and debt service requirements. If the Company is not able to increase its revenues and cash flows it will need to raise additional funds through either commercial loans, equipment leasing transactions or additional public or private offerings of its securities. The Company is currently investigating additional funding opportunities and talking to various potential lenders and investors who could provide financing. The Company is exploring various options to raise additional capital to meet its requirements and is currently in discussions with existing lenders regarding restructuring of current debt obligations, as well as discussions with other non-traditional lenders and investment banks about possible financing options. As of the date of this filing the Company has no formal agreements or commitments for additional funding. Management believes that actions being taken will provide the Company with the opportunity to continue as a going concern; however there can be no assurance that such activities will be successful.

These financial statements do not reflect adjustments that would be necessary if the Company was unable to continue as a going concern. While management believes that the actions already taken or planned, will mitigate the

F-19

Smart Move, Inc.

Notes to Financial Statements — (Continued)

adverse conditions and events which raise doubt about the validity of the going concern assumption used in preparing these financial statements, there can be no assurance that these actions will be successful.

If the Company were unable to continue as a going concern, then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used.


2.	Summary of Significant Accounting Policies

Revenue Recognition

Revenue on a self move (when a customer does the packing and unpacking) includes the use and shipment of the SmartVault ^tm . Revenue on a self move and the direct and incremental costs of the move are recognized when the container is delivered to its final destination, the price is fixed, and Smart Move has no further service obligations.

Revenue on a full service move includes the use of the SmartVault ^tm and the packing, shipping and unpacking of the container. Revenue on a full service move and the direct and incremental costs of the move are recognized after the container is unpacked at its final destination, the price is fixed, and Smart Move has no further service obligations.

When a container is delivered to a storage facility, revenue related to the move to the storage facility is recognized upon delivery to the storage facility and revenue related to the move from the storage facility to the final destination is recognized when the container is delivered to its final destination or unpacked for a full service move.

Smart Move recognizes advanced billings and the related deferred revenue of contracts in process on a net basis. Cash payments received totaling $456,247 on advanced billings are included in the financial statements as deferred revenue at December 31, 2007. The Company has advanced billings of approximately $351,059 which have not been recognized in accounts receivable or deferred revenue at December 31, 2007.

Smart Move receives commissions for the placement of moving contents damage insurance purchased by its customers. These commissions are recognized when the customer has entered into a legally binding contract for the insurance and the collection of the commission is probable. The insurance transactions are recorded on a net basis in accordance with EITF No. 99-19, “Reporting Revenue Gross Versus Net”.

Contracts in Process

Contracts in process include the direct and incremental costs of a move including freight and handling costs for contracts in process at the end of a reporting period. These costs are deferred and recognized in cost of moving and storage upon recognition of revenue for the related contract.

Cash and Cash Equivalents

Cash equivalents include demand deposits and money market funds for purposes of the statements of cash flows. Smart Move considers all highly liquid monetary instruments with original maturities of three months or less to be cash equivalents.

Restricted Cash

Smart Move was required to open a $15,000 certificate of deposit to secure for possible charge backs from customers’ credit card payments. Restricted cash is shown in other assets.

F-20

Smart Move, Inc.

Notes to Financial Statements — (Continued)

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets. The estimated useful lives used in computing depreciation are summarized as follows:


Class of Asset		Useful Life in Years

SmartVaults ^tm		8 years
Electronic equipment		5 years
Rolling stock and trailers		5 years
Vault mold		15 years
Office equipment		3 to 5 years
Leasehold improvements		Shorter of term of lease or asset life

Ordinary repair and maintenance costs are charged to operations as incurred.

Income Taxes

Effective with the merger on December 6, 2006, the Company became a C-corporation for income tax purposes. Prior to the Reorganization Transactions, the Company was a limited liability company that elected to be treated as a partnership for income tax purposes.

The Company records income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is recorded against deferred tax assets if it is “more likely than not” that such assets will not be realized.

Deferred offering costs

Deferred offering costs consist of legal, accounting, filing and miscellaneous fees incurred that are directly related to the Smart Move’s proposed initial public offering. These deferred costs were written off upon Smart Move’s withdrawal of its offering in July of 2006.

Advertising Expenses

Advertising costs are charged to expense as incurred. For the years ended December 31, 2007 and 2006, advertising expenses totaled approximately $442,436, and $165,834, respectively.

Fair Value of Financial Instruments

Smart Move’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and long-term liabilities. The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short maturities. The fair value of Smart Move’s bank note payable approximates its carrying value as the current interest rate on the note approximates the interest rate currently available to Smart Move on similar borrowings. The fair value of Smart Move’s long-term debt approximates their carrying value as these financial instruments are reflected net of discounts which management of Smart Move believes to be reflective of discounts that a willing party would require in order to invest in a similar type of debt instrument.

Concentrations of Credit, Service Provider and Supplier Risk

Financial instruments that potentially subject Smart Move to concentrations of credit risk primarily consist of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents consist primarily of money

F-21

Smart Move, Inc.

Notes to Financial Statements — (Continued)

market accounts which, although in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits, are maintained with high credit quality financial institutions. Generally customers are required to pay for their move upon delivery. Credit risk with respect to trade accounts receivable is mitigated by the large number of geographically diverse customers and Smart Move’s credit evaluation procedures. Although generally no collateral is required, when feasible, mechanics’ liens are filed and personal guarantees are signed to protect Smart Move’s interests. As of December 31, 2007, Smart Move has provided an allowance for possible credit losses of $45,000. Actual write offs may exceed or be lower than the actual allowance.

At December 31, 2007 no customer accounted for more than 10% of the Company’s accounts receivable. For the years ended December 31, 2007 and 2006, no single customer accounted for more than 10% of total revenue.

Smart Move purchases substantially all of its transportation shipping services from the same transportation provider with whom it has a distribution agreement. The terms of the distribution agreement include storage and local delivery of the SmartVaults ^tm . Smart Move believes that while there are alternative sources for the transportation services it purchases, termination of the agreement could have a material adverse effect on Smart Move’s business, financial condition or results of operation if Smart Move were to be unable to obtain an adequate or timely replacement for the services rendered by this transportation provider.

Smart Move purchases its SmartVaults ^tm from a single manufacturer. Smart Move believes that while there are alternative sources for the manufacture of the SmartVaults ^tm , termination of the agreement could have a material adverse effect on Smart Move’s business, financial condition or results of operation if Smart Move were to be unable to obtain an adequate or timely replacement manufacturer.

Impairment of Long-Lived Assets

The financial statements adhere to the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of”, which requires that long-lived assets, including identifiable intangibles, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Smart Move evaluates the recoverability of its long-lived assets based on estimated undiscounted future cash flows and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived asset. If impaired, the long-lived asset is written down to its estimated fair value. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, a probability-weighted approach is used for developing estimates of future undiscounted cash flows. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the impairment loss is measured as the excess of the asset’s carrying value over its fair value, such that the asset’s carrying value is adjusted to its estimated fair value. The assumptions used by management in its projections of undiscounted cash flows involves significant judgment of material estimates of future revenue and customer acceptance. If the assumptions utilized in the projections do not materialize the SmartVault ^tm , GPS equipment, vault mold, rolling stock and trailers and container components carrying values could become impaired resulting in a substantial impairment expense in the future.

Management assesses the fair value of long-lived assets using commonly accepted techniques, and may use more than one source. Sources to determine fair value include, but are not limited to, recent third party comparable sales, internally developed discounted cash flow analysis and analysis from outside advisors. Significant changes in market conditions resulting from events such as changes in commodity prices or the condition of an asset, or a change in management’s intent to utilize the asset would generally require management to re-assess the cash flows related to the long-lived assets.

During the second quarter of 2007 the Company was notified by its GPS analog providers that the FCC had ruled that service providers of analog signals will be allowed to discontinue service when the so-called “analog sunset” takes effect in February 2008. As of March 1, 2007 the Company had 2,660 of analog GPS units in service. Beginning March 1, 2007 these units will be depreciated over their remaining 11 month useful life. This accelerated

F-22

Smart Move, Inc.

Notes to Financial Statements — (Continued)

rate of depreciation resulted in an increase of $460,550 in depreciation for the year ended December 31, 2007. During the quarter ended June 30, 2007, the Company impaired the $75,094 full net book value of 333 analog GPS units that are no longer in use and have no known salvage value.

During the quarters ended June 30, September 30, and December 31, 2007 the Company retired and recycled a portion of its inventory of the older prototype SmartVault ^tm -Version I units that were damaged and recorded an asset impairment of $48,970, $281,947 and $258,552, respectively as these components were recycled. The remaining prototype “SmartVault ^tm -Version I are used exclusively in local storage environment. A portion of Version I vaults have shown forklift damage to the plastic base and corner joints. The new version vaults have a solid aluminum base proven to handle significant stress and the new construction vaults also feature a one piece rounded molded corner and the over all design provides significant strength to the container compared to the Version I prototype. During the fourth quarter of 2007, the Company performed a strategic review of the Version I local storage opportunity due to its limited financial capital; and assessed the recoverability of these Version I vaults and determined an impairment of $875,000. This impairment reflects the amount by which the carrying value of Version I vaults exceed their estimated fair values determined by their estimated future discounted cash flows. The impairment loss is recorded as a component of “Cost of moving and storage” for December 31, 2007. In addition management assessed the recoverability of its other long-lived assets based on estimated undiscounted future cash flows and determined that such undiscounted cash flows are sufficient to recover the carrying amount of the other long-lived asset.

Stock Based Compensation

Effective January 1, 2006, Smart Move adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments”, (“SFAS 123R”) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values. Stock based compensation is recognized on a straight-line basis over the requisite service period. The amount of compensation expense recognized for options with a graded vesting schedule equals no less than the portion of the award that is vested. SFAS 123R supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS 123R. The Company has applied the provisions of SAB 107 in its adoption of SFAS 123R.

A total of 182,000 options were granted to new employees and no options were exercised during the year ended December 31, 2007. In accordance with Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (“SFAS 123R”), compensation costs related to share-based payments that vested during the year ended December 31, 2007 and 2006 and recognized in the Statements of Operations was $200,147 and $190,836, respectively. The Company has recognized $40,000 of expense for the year ended December 31, 2007, relating to the vested portion of restricted stock grants made to non-employee directors in January, 2007. During the year ended December 31, 2006, the Company issued 500,000 shares of membership interest valued at $2,500,000 to certain officers.

Options exercisable into 342,000 shares of common stock have vesting subject to performance conditions. As of December 31, 2007 management determined the performance conditions are not probable of being achieved and accordingly no compensation expense has been recognized for these options. Of these options 114,000 were subject to vesting at September 30, 2007, and have been forfeited as the performance conditions were not satisfied at the vesting date.

Nonemployee stock based compensation

Stock based grants, including warrants, issued to non-employees are measured at estimated fair value and recorded in the financial statements.

F-23

Smart Move, Inc.

Notes to Financial Statements — (Continued)

Loss Per Share

SFAS No. 128, “Earnings Per Share”, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution; diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue member shares were exercised or converted into member shares or resulted in the issuance of member shares that then shared in the earnings of Smart Move.

Loss per share is computed based on the weighted average number of member shares outstanding each period. Convertible notes, stock options and warrants are not considered in the calculation, as the impact of the potential dilution (15,963,189 shares at December 31, 2007, and 10,550,311 shares at December 31, 2006) would be to decrease basic loss per share. Therefore, diluted loss per share is equivalent to basic loss per share for all periods shown.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. The use of estimates and assumptions may affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and such differences could be material.

Recently Issued Accounting Pronouncements

In September 2006, the SEC issued “Staff Accounting Bulletin” No. 108 (“SAB 108”) . SAB 108 provides guidance on the consideration of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. The staff believes registrants must quantify the impact of correcting all misstatements, including both carryover and reversing effects of prior year misstatements, on the Company’s current year financial statements. The staff prescribes two approaches to assessing the materiality of misstatements; the “rollover” approach, which quantifies misstatements based on the amount of error originating in the current year income statement and the “iron curtain approach”, which quantifies misstatements based on the effects of correcting the cumulative effect existing in the balance sheet at the end of the current year. If under either approach, misstatements are deemed material, the Company is required to adjust its financial statements, including correcting prior year financial statements, even though such correction was and continues to be immaterial to the prior year financial statements. Correcting prior year financial statements for immaterial errors would not require the Company to amend previously filed reports, rather such corrections may be made the next time the Company files its prior year statements. The application of SAB 108 had no impact on the Company’s financial statements.

In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110, “Share-Based Payment” (“SAB 110”). SAB 110 establishes the continued use of the simplified method for estimating the expected term of equity based compensation. The simplified method was intended to be eliminated for any equity based compensation arrangements granted after December 31, 2007. SAB 110 is being published to help companies that may not have adequate exercise history to estimate expected terms for future grants. The Company utilized the guidance in SAB 110 in estimating the expected terms of options granted to employees.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157) ‘‘Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies in those instances where other accounting pronouncements require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective on January 1, 2008. The Company is currently evaluating the impact of this pronouncement on the financial statements.

F-24

Smart Move, Inc.

Notes to Financial Statements — (Continued)

In February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” or FAS 159. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. FAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within the year of adoption. The Company believes that the implementation of FAS 159 will have no material impact on its financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (FAS 160). FAS 160 was issued to improve the relevance, comparability and transparency of the financial information provided by requiring: ownership interests be presented in the consolidated statement of financial position separate from parent equity; the amount of net income attributable to the parent and the noncontrolling interest be identified and presented on the face of the consolidated statement of income; changes in the parent’s ownership interest be accounted for consistently; when deconsolidating, that any retained equity interest be measured at fair value; and that sufficient disclosures identify and distinguish between the interests of the parent and noncontrolling owners. The guidance in FAS 160 is effective for fiscal years beginning on or after December 15, 2008. The Company believes the adoption of FAS 160 will have no material impact on its financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“FAS 161”). FAS 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The guidance in FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company is currently assessing the impact of FAS 161.


3.	Prepaid and Other Assets

Prepaid and other assets consisted of the following:


	December 31,
	2007

Prepaid insurance	$	130,435
Accounts receivable other		15,824

	$	146,259


4.	Property and Equipment

Property and equipment consisted of the following:


	December 31,
	2007

SmartVaults ^tm	$	10,455,033
GPS equipment		2,587,199
Vault mold		1,773,751
Rolling stock and trailers		3,773,853
Container components		1,085,465
Office equipment		461,808
Leasehold improvements		11,475

		20,148,584
Less accumulated depreciation		(4,205,866	)

Property and equipment, net	$	15,942,718

F-25

Smart Move, Inc.

Notes to Financial Statements — (Continued)

Depreciation expense was $3,040,944 and $1,203,985 for the years ended December 31, 2007 and 2006, respectively. Included in property and equipment are assets under capital lease arrangements with a cost of $712,468 and accumulated depreciation of $368,109 at December 31, 2007. No purchases under capital leases were made during the year ended December 31, 2007.

During the year ended December 31, 2007, the Company began assembling a majority of its SmartVault ^tm containers at its Denver warehouse. The Company receives the components required to be assembled or affixed, consisting of the plastic walls, top, aluminum base, signage and GPS units and then assembles or attaches the components to create a completed container. The completed SmartVault ^tm container is then shipped to a terminal for use. At December 31, 2007, the container components consisted of $478,506 of sides, bases and tops, $383,600 of GPS units, $142,613 of signage and $80,746 of various additional, miscellaneous components.

The Company accounts for internal-use software development costs in accordance with American Institute of Certified Public Accountants (“AICPA”) Statement of Position 98-1, “Accounting for the Cost of Software Developed or Obtained for Internal Use,” or SOP 98-1. SOP 98-1 specifies that software costs, including internal payroll costs incurred in connection with the development or acquisition of software for internal use, is charged to technology development expense as incurred until the project enters the application development phase. Costs incurred in the application development phase are capitalized and will be depreciated using the straight-line method over an estimated useful life of three years, commencing on the date when the software is ready for use. During the year ended December 31, 2007 the Company capitalized software development costs of $252,816 in accordance with SOP 98-1. In the fourth quarter of 2007 the Company expensed $30,795 of purchased software which was not compatible with its internally developed software.


5.	Other Assets

Other assets consisted of the following:


	December 31,
	2007

Debt issuance costs	$	15,346
Restricted cash		15,000
Deposits		83,200

	$	113,546


6.	Notes Receivable

In January 2006 and during the period from October to December 2005 Smart Move invested $47,000 and $151,930 respectively in convertible notes maturing on July 31, 2007 with a stated interest rate of 3% and are convertible into 70% of the equity of a service company, which provided moving and handling services to Smart Move. In 2006 Smart Move determined that the notes value had been impaired as the service company was not able to execute its business plan and the future collection of the notes receivable is doubtful. Accordingly, for the year ended December 31, 2006 Smart Move has recorded an impairment for 100% of the notes receivable balance and is not recognizing interest income due under the terms of the notes receivable.


7.	Long-Term Debt

In October 2004, Smart Move sold in a private placement 223 Notes Units (the 2004 Notes) for $2,230,000. The convertible secured subordinated notes bear interest at 12% and are due November 1, 2011. In connection with the offering, the 2004 note holders were granted warrants (collectively the 2004 PPM warrants) to purchase 243,272 Smart Move shares at an exercise price of $0.625 per share with a five year term. The estimated fair market value of the as converted shares on the commitment date was less than the $2.50 conversion price and therefore there was no

F-26

Smart Move, Inc.

Notes to Financial Statements — (Continued)

beneficial conversion feature to record. In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to the 2004 Notes and the 2004 PPM Warrants were allocated based on their relative fair values. The fair value of the 2004 PPM Warrants was determined using the Black-Scholes option-pricing model. Total funds received of $2,230,000 (before cash offering costs of $111,500) were allocated $115,727 to the 2004 PPM Warrants and $2,114,273 to the 2004 Notes based on their relative fair values. In connection with the offering, placement agent warrants to purchase 180,000 Smart Move, shares at an exercise price of $0.625 per share with a five year term were granted. The fair value of the placement agent warrants of $56,700 at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional shareholders’ equity and reduced the carrying value of the 2004 Notes as a debt discount. The discounts on the 2004 Notes, including the 2004 PPM Warrants and the offering costs are being amortized to interest expense, using the effective interest method, over the term of the 2004 Notes.

In September 2006 $2,202,000 of the 2004 Notes converted into 880,800 shares of the Company and in December 2006 $28,000 of the 2004 notes converted into 11,200 shares of the Company.

Total interest expense recognized relating to these discounts and offering costs was $24,227 and $28,787 during the years ended December 31, 2006.

In September 2005 Smart Move sold in a private placement 300 Note Units (the 2005 Notes) for $3,000,000. The convertible secured subordinated notes bear interest at 12% and are due November 1, 2012. In connection with the offering, the 2005 Note holders were granted warrants (collectively the 2005 PPM Warrants) to purchase 360,000 Smart Move shares at an exercise price of $2.50 per share with a five year term. The 2005 Notes are convertible into 600,000 shares at a conversion price of $5.00 per share. The estimated fair market value of the as converted shares on the commitment date was less than the $5.00 conversion price and therefore there was no beneficial conversion feature to record. In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to both the 2005 Notes and the 2005 PPM Warrants were allocated based on their relative fair values. The fair value of the 2005 PPM Warrants was determined using the Black-Scholes option-pricing model. Total funds received of $3,000,000 (before cash offering costs of $150,000) were allocated $545,008 to the 2005 PPM Warrants and $2,454,992 to the 2005 Notes based on their relative fair values. In connection with the offering, placement agent warrants to purchase 120,000 Smart Move shares at an exercise price of $2.50 per share and warrants to purchase 60,000 Smart Move shares at an exercise price of $5.00 per share both with a five year term were granted. The relative fair value of the placement agent warrants of $205,500 at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional equity and reduced the carrying value of the 2005 Notes as a debt discount. The discount on the 2005 Notes including, the 2005 PPM warrants and the offering costs are being amortized to interest expense, using the effective interest method, over the term of the 2005 Notes.

In November of 2007 the Company presented to the holders of the 2005 Secured Convertible Notes the option to defer the scheduled principal amortization, due to mature on September 30, 2012, and amend the interest payment terms of the 2005 Notes. The 2005 Notes had been scheduled to begin amortization on a sixty (60) months schedule beginning October 2007. The 2005 Note holders were presented with two deferral options or they could preserve the original 2005 Note terms.

Holders of $1,975,000 of the total $3,000,000 original principal amount outstanding on the 2005 Notes elected the terms of Option I and in November 2007 finalized agreements to defer both principal and interest on the 2005 Notes. The terms of Option I consisted of: (i) the amortization of principal would be deferred until final maturity of the 2005 Notes on September 30, 2012 and (ii) that in lieu of the holders’ right under the original note terms to receive their proportionate share of the aggregate amount of interest that would accrue through October 1, 2008, the holders would instead receive the corresponding amount (“Deferred Interest Amount”) in a lump sum on October 1, 2010. The Company and the holders of the 2005 Notes also agreed that the Deferred Interest Amount would be separately convertible at the election of the holders of the 2005 Notes at any time prior to October 1, 2010 at a conversion price of $1.00. The conversion price applicable to the outstanding original principal amount of the

F-27

Smart Move, Inc.

Notes to Financial Statements — (Continued)

2005 Notes would be revised from $5.00 to $3.00 per share. The Company will make semi-annual interest payments in arrears on the outstanding original principal amount of the 2005 Notes at the rate of 12% per annum, calculated from October 1, 2008, commencing April 1, 2009. As consideration for the deferrals, the holders will be granted additional warrants to purchase common stock of the Company aggregating shares equal to the value of the deferred interest amount. These warrants are exercisable at $1.50 for a period of five years.

Note holders electing Option I were issued convertible notes of $355,500 representing the Deferred Interest Amount (the Deferred Interest Notes). The Deferred Interest Note consists of $118,500 of accrued interest as of September 30, 2007 and $237,500 of future deferred interest. The future deferred interest is being amortized to interest expense over the original terms of the 2005 Notes. The Deferred Interest Note is shown net of the unamortized portion of the future deferred interest amount. The Deferred Interest Notes bear interest at 12% per annum and are due October 1, 2010. Payments of accrued interest on the Deferred Interest Notes shall be made in arrears semi-annually beginning October 1, 2008 and ending October 1, 2010. The Deferred Interest Notes totaling $355,500 shall be convertible at the Holders options into equity at any time prior to October 1, 2010 at a conversion price of $1.00. In connection with deferring the interest in the form of the Deferred Interest Note, holders, were granted warrants to purchase 355,500 shares of common stock at an exercise price of $1.50 per common stock purchase warrant for a period of five years. The balance of the Deferred Interest Note is $177,500 (net of unamortized discounts of $177,500) at December 31, 2007.

Holders of $725,000 of the total $3,000,000 original principal amount outstanding on the 2005 Notes selected the terms of Option II. The modified terms of Option II consisted of: (i) the amortization of principal would be deferred until final maturity of the 2005 Notes on September 30, 2012, but not defer the right to receive interim payments of accrued interest. Interest shall be payable prior to maturity in semi-annual installments due on October 1 and April 1 of each year, commencing effective October 1, 2007 and (ii) The conversion price applicable to the principal amount of the 2005 Notes would be reduced from $5.00 to $3.00 and the exercise price under existing warrants held by 2005 Note Holders electing Option II would be reduced from $2.50 to $1.50. As of December 31, 2007, the Option II notes holders were subject to default interest of 18% as a result of the Company being late on payment of interest due, which was paid in January of 2008.

The holders of an aggregate $300,000 principal amount of the 2005 Notes did not finalize amortization deferral agreements with the Company and will continue to be entitled to receive interim principal amortization and interest payments in accordance with the original terms of the 2005 Notes, but will not be entitled to receive the additional common stock purchase warrants. As of December 31, 2007, the original notes holders were subject to default interest of 18% as a result of the Company being late on payment of interest due, which was paid in January of 2008.

In accordance with EITF 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments” and EITF 06-6 “Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt Instruments”, the Company determined that the revised terms of the convertible debentures constituted a substantial change compared to the original terms. Consequently, a new effective interest rate was determined based on the carrying amount of the original debt instrument, adjusted for an increase in the fair value of an embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) resulting from the modification, and the revised cash flows. The Company evaluated the change in the discounted cash flows between the original terms of the 2005 Notes and revised terms of Options I and Option II. The Company compared the change in cash flows both on a consolidated and standalone basis for the two options and concluded the revised terms were a substantial change of the original 2005 note in both instances. Under EITF 96-19 a substantial change requires the extinguishment of the original notes associated with Option I and Option II. The debt extinguishment resulted in a non cash loss totaling $1,328,565. The loss on debt extinguishment consisted of $551,656 of unamortized debt discounts on the original notes and $776,909 from the increase in the fair value of the embedded conversion options and warrants associated with Option I and Option II 2005 Notes and the fair value of the warrants issued in connection with the Deferred Interest Note. The fair

F-28

Smart Move, Inc.

Notes to Financial Statements — (Continued)

value of the embedded conversion options and warrants were determined using the Black-Scholes option-pricing model.

In connection with the offering, placement agent warrants to purchase 18,000 Smart Move shares at an exercise price of $1.50 per share with a five year term were granted. The relative fair value of the placement agent warrants was $12,528 at the time of issuance, which was determined using the Black-Scholes option-pricing model. The fair value of the placement agent warrants was allocated to the New Notes and amortized to interest expense using the effective interest method over the life of the loan.

Total interest expense recognized relating to these discounts and offering costs was $112,125 and $22,410 during the year ended December 31, 2006. Total interest expense recognized relating to these discounts and offering costs was $104,708 and $20,928 during the year ended December 31, 2007. At December 31, 2007 the unamortized discount and unamortized offering costs on the 2005 Notes is $70,347.

In April 2005 Smart Move borrowed $1,490,578 from a financial institution (“2005 Bank Note”) with interest payable at prime plus 2.5% until final draw on April 26, 2005 and fixed at 8.23% on $1,377,149 and 8.39% on $113,429. The loan is secured by all business assets excluding the SmartVaults ^tm , and is payable in monthly installments of $41,400 plus interest, and matures in September 2008. In connection with the original issuance of the loan agreement, the bank was issued warrants to purchase 100,000 Smart Move shares at an exercise price of $0.875 per share with a seven year term. The fair value of the warrants was $60,445 at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional equity and reduced the carrying value of the note payable as a debt discount. This discount is being amortized to interest expense, using the effective interest method, over the term of the loan.

Total interest expense recognized relating to this discount was $14,520 during the year ended December 31, 2007 and $28,975 for the year ended December 31, 2006. At December 31, 2007 the unamortized discount is $1,323.

In January 2006 Smart Move borrowed $500,000 from a financial institution (“2006 Bank Note”) with interest payable at 8.84%. The loan is secured by all business assets excluding the SmartVaults ^tm , and is payable in monthly installments of $13,889 plus interest, and matures in January 2009. The 2006 Bank Note has the same covenant requirements as the 2005 Bank Note described above. In connection with the original issuance of the loan agreement, the bank was issued warrants to purchase 13,000 Smart Move shares at an exercise price of $3.75 per share with a seven year term. The fair value of the warrants was $35,764 at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional equity and reduced the carrying value of the note payable as issuance costs. This discount is being amortized to interest expense, using the effective interest method, over the term of the loan.

Total interest expense recognized relating to this discount was $19,901 during the year ended December 31, 2006 and $11,234 for the year ended December 31, 2007. At December 31, 2007, the unamortized discount is $4,630.

In January 2006 Smart Move sold in a private placement 258 Note Units (the “2006 January Notes”) for $1,932,500. The 2006 January Notes bear interest at 10% and are due December 31, 2010. In connection with the offering, the 2006 January Note holders were granted warrants (collectively the “January 2006 PPM Warrants”) to purchase 128,834 of the Company’s shares at an exercise price of $5.00. The Company has a redemption right to redeem the January 2006 PPM Warrants at $0.01 if the current trading price is greater than 150% of the January 2006 PPM Warrants exercise price for 20 of the 30 days immediately preceding the notice of redemption. The 2006 January Notes are convertible into Smart Move shares at a conversion price of $3.75. Because the conversion right is clearly and closely related to the debt host it is not bifurcated in accordance with EITF No. 05-2 “The Meaning of “Conventional Convertible Debt Instrument” in Issue No. 00-19.” In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to the non-cash beneficial conversion feature, the 2006 January Notes and the January 2006 PPM Warrants were allocated based on their relative fair values. The beneficial conversion feature of the Notes amounted to $943,041 and as such, the amount

F-29

Smart Move, Inc.

Notes to Financial Statements — (Continued)

was recorded as a debt discount and a corresponding increase to paid-in capital. The fair value of the January 2006 PPM Warrants was determined using the Black-Scholes option-pricing model. Total funds received of $1,932,500 (before cash offering costs of $155,111) were allocated $297,130 to the January 2006 PPM Warrants and $1,635,370 to the 2006 January Notes based on their relative fair values. In connection with the offering, the placement agent was issued warrants to purchase 41,226 Smart Move shares at an exercise price of $3.75 per share and warrants to purchase 10,306 Smart Move shares at an exercise of $5.00 per share both with a five year term were issued. The relative fair value of the placement agent warrants of $148,830 at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional equity and reduced the carrying value of the 2006 January Notes as a debt discount. The discount on the 2006 January Notes including, the January 2006 PPM warrants, the beneficial conversion feature and the offering costs are being amortized to interest expense, using the effective interest method, over the term of the 2006 January Notes. During the year ended December 31, 2007, Holders of the Company’s January 2006 Convertible Notes converted $1,932,500 of the principal amount ($1,373,867, net of offering costs) into 515,332 shares of the Company’s common stock at a conversion price of $3.75 per share. At the date of conversion the unamortized beneficial conversion discount of $870,523 was recorded as interest expense.

Total interest expense recognized relating to these discounts and offering costs was $73,910 for the year ended December 31, 2006 and $909,824 for the year ended December 31, 2007.

On July 26, 2006, Smart Move sold in a private placement 20 Note Units (the “2006 July Notes”) for $5,000,000 issued at a discount of 2%. The 2006 July Notes bear interest at 10% and are due June 30, 2011. In connection with the offering, the 2006 July Note holders were granted warrants (collectively the “July 2006 PPM Warrants”) to purchase 400,000 Smart Move shares at an exercise price of $7.00 per share. The 2006 July Notes are convertible into Smart Move shares at a conversion price of $3.75. The 2006 July Notes are convertible into Smart Move shares at a conversion price of $3.75. Because the conversion right is clearly and closely related to the debt host it is not bifurcated in accordance with EITF No. 05-2 “The Meaning of “Conventional Convertible Debt Instrument” in Issue No. 00-19.” In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to the non-cash beneficial conversion feature, the 2006 July Notes and the July 2006 PPM Warrants were allocated based on their relative fair values. The beneficial conversion feature of the Notes amounted to $2,613,489 and as such, the amount was recorded as a debt discount and a corresponding increase to paid-in capital. The fair value of the July 2006 PPM Warrants was determined using the Black-Scholes option-pricing model. The face value of $5,000,000 (before cash offering costs of $477,000) was allocated $946,822 to the July 2006 PPM Warrants and $4,053,178 to the 2006 July Notes based on their relative fair values. In connection with the offering, the placement agent was issued warrants to purchase 80,000 Smart Move shares at an exercise price of $3.75 per share and warrants to purchase 24,000 Smart Move shares at an exercise of $5.00 per share both with a five year term were issued. The relative fair value of the placement agent warrants of $293,360 at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional equity and reduced the carrying value of the 2006 July Notes as debt discount costs. Effective July 26, 2006 the holders of the “2006 July Notes” agreed to the compensation change to the placement agent fees from 6.5% cash and 6% warrants for fees to 7.54% cash fees and no warrants. The placement agent warrants (104,000 warrants) (with a net unamortized value of $293,360) originally issued were repurchased and cancelled for $52,000 in October 2006. The discount on the 2006 July Notes including, the July 2006 PPM warrants, the beneficial conversion feature and the offering costs are being amortized to interest expense using the effective interest method, over the term of the 2006 July Notes.

Total interest expense recognized relating to these discounts and offering costs was $48,512 and $6,499 during the year ended December 31, 2006, and $183,851 and $24,632 during the year ended December 31, 2007. At December 31, 2007 the unamortized discount and unamortized offering costs on the 2006 July Notes are $3,327,949 and $445,869, respectively. Interest on the July 2006 Note is payable annually on June 30 th beginning June 30, 2007. The principal is due and payable June 30, 2011.

F-30

Smart Move, Inc.

Notes to Financial Statements — (Continued)

In August 2007 Smart Move sold in a private placement note units (the “2007 August Notes”) for $1,217,500 issued at a discount of 1%. The 2007 August Notes are secured by a first lien on all of the Company’s container assets, bear interest at 12% and are due September 1, 2009. In connection with the offering, the 2007 August Note holders were granted warrants to purchase 121,750 shares of the Company’s common stock (collectively the “August 2007 PPM Warrants”) and exercisable at a price of $7.50 per share for a period of 4.4 years. The 2007 August Notes are convertible into Smart Move shares at a conversion price of $2.00. The fair market value of the as converted shares on the commitment date was less than the $2.00 conversion price and therefore there was no beneficial conversion feature to record. In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to both the 2007 August Notes and the August 2007 PPM Warrants were allocated based on their relative fair values. The fair value of the August 2007 PPM Warrants was determined using the Black-Scholes option-pricing model. The face value of $1,217,500 (before cash offering costs of $109,575) was allocated $3,238 to the August 2007 PPM Warrants and $1,214,262 to the 2007 August Notes based on their relative fair values. In connection with the offering, the placement agent was issued warrants to purchase 48,700 Smart Move shares at an exercise price of $2.00 per share with a five year term. The relative fair value of the placement agent warrants of $18,506 at the time of issuance, which was determined using the Black-Scholes option-pricing model was recorded as a debt discount and corresponding increase to paid in capital. Interest on the 2007 August Notes is payable quarterly on the first day of March, June, September and December beginning December 1, 2007. The principal is due and payable September 1, 2009. As of December 31, 2007, the August 2007 notes were subject to default interest of 18% as a result of the Company being late on payment of interest due.

Total interest expense recognized relating to these discounts and offering costs was $3,189 and $16,071 during the year ended December 31, 2007. At December 31, 2007, the unamortized discount and unamortized offering costs on the 2007 August Note are $18,555 and $93,504, respectively.

In September 2007 Smart Move sold in a private placement an unsecured note (the “2007 September Note”) for $540,000. The 2007 September Note bears interest at 7% and is due September 2, 2010. In connection with the offering, the 2007 September Note holder was granted warrants (collectively the “September 2007 PPM Warrants”) to purchase 100,000 Smart Move shares at an exercise price of $7.50 per share, 100,000 Smart Move shares at an exercise price of $3.25 per share, and 100,000 Smart Move shares at an exercise price of $2.50 per share. All the warrants are exercisable for a period of 5 years. The 2007 September Notes are convertible into Smart Move shares at a conversion price of $1.80. The fair market value of the as converted shares on the commitment date was less than the $1.80 conversion price and therefore there was no beneficial conversion feature to record. In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to both the 2007 September Note and the September 2007 PPM Warrants were allocated based on their relative fair values. The fair value of the September 2007 PPM Warrants was determined using the Black-Scholes option-pricing model. The face value of $540,000 (before cash offering costs of $43,200) was allocated $61,863 to the September 2007 PPM Warrants and $478,137 to the 2007 September Note based on their relative fair values. Interest on the 2007 September Note is payable quarterly on the first day of March, June, September and December beginning December 1, 2007. The principal is due and payable September 2, 2010.

Total interest expense recognized relating to these discounts and offering costs was $4,328 and $3,023 during the year ended December 31, 2007. At December 31, 2007, the unamortized discount and unamortized offering costs on the 2007 September Note are $57,534 and $40,177, respectively.

In November 2007 Smart Move sold in a private placement note units (the “2007 November Notes”) for $1,071,500. The notes were sold in Note Units of $25,000 and secured by a second lien position on certain of the Company’s assets. The notes bear interest at 12% and are due October 31, 2008. The November Note holders shall have the right to convert the outstanding and unpaid principal amount prior to the day it is paid in full at $1.00 per share (“the conversion price”). In connection with the offering, the 2007 November Note holders were granted warrants equal to 200% of the number of shares to be issued on an as converted basis. One half of the warrants shall be exercisable at 125% of the conversion price, and the other half of the warrants shall be exercisable at 150% of the

F-31

Smart Move, Inc.

Notes to Financial Statements — (Continued)

conversion price. In accordance with EITF No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the values assigned to both the 2007 November Notes and the November 2007 PPM Warrants were allocated based on their relative fair values. The fair value of the November 2007 PPM Warrants was determined using the Black-Scholes option-pricing model. Net of the warrant valuations, the fair value of the common stock on the commitment dates exceeded the effective conversion price of the stock resulting in a beneficial conversion feature of $113,251. The amount was recorded as a debt discount and a corresponding increase to paid-in capital. The face value of $1,071,500 (before cash offering costs of $80,620) was allocated $409,297 to the November 2007 PPM Warrants and $662,203 to the 2007 November Notes based on their relative fair values. The debt discounts on the 2007 November Notes including, the 2007 PPM warrants, the beneficial conversion feature and the offering costs are being amortized to interest expense, using the effective interest method, over the term of the Notes.

Total interest expense recognized relating to these discounts and offering costs was $51,736 and $7,896 during the year ended December 31, 2007. At December 31, 2007, the unamortized discount and unamortized offering costs on the 2007 November Note are $470,801 and $72,724, respectively.

A summary of long-term debt and scheduled future maturities as of December 31, 2007 follows:


																			2007
				2005			2006			2006			2007			2007			Deferred		2007
	2005			Bank			July			Bank			August			September			Interest		November
Year Ending December 31,	Notes			Note			Notes			Note			Notes			Note			Note		Notes			Total

2008	$	43,990		$	178,223		$	—		$	166,667		$	—		$	—		$	—	$	1,071,500		$	1,460,380
2009		52,166			—			—			13,888			1,217,500			—			—		—			1,283,554
2010		58,782			—			—			—			—			540,000			177,750		—			776,532
2011		66,237			—			5,000,000			—			—			—			—		—			5,066,237
2012		2,778,825			—			—			—			—			—			—		—			2,778,825

Total		3,000,000			178,223			5,000,000			180,555			1,217,500			540,000			177,750		1,071,500			11,365,528
Less discounts		60,639			1,323			3,327,949			4,630			18,555			57,534			—		470,801			3,941,431
Less offering costs		9,708			—			445,869			—			93,504			40,177			—		72,724			661,982
Less current maturity		43,990			178,223			—			166,667			—			—			—		1,071,500			1,460,380
Current 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

The Company did not make certain scheduled interest payments for the quarter ended December 31, 2007, as required under the terms of the August 2007 and 2005 Notes (the “Notes”). As a result, the Company will be obligated to pay a default interest rate of 18% per annum on all outstanding principal amounts until the scheduled interest payments under the terms of the Notes are paid current. On August 28, 2007, an Intercreditor Agreement and Stipulation (the “Intercreditor Agreement”) was entered into by the holders of the August 2007 Notes, the 2005 Notes and the 2006 July Notes which precludes acceleration of the August 2007 note principal amount as long as the 2005 Notes and the 2006 July Notes are not in default. As of March 28, 2008, interest due and payable, at December 1, 2007, totaling $57,000 on the August 2007 Notes has not been paid. As of December 31, 2007, the Company is current in its payments of principal and interest under the terms of the 2006 July Notes and $1,975,000 of the 2005 Notes. In January 2008, the required interest payments on the remaining $1,025,000 of the 2005 Notes were made and therefore the August 2007 Note holders have no acceleration rights and the August 2007 Notes have been classified as long-term.


8.	Capital Lease Obligations

In 2005 Smart Move entered into capital leases for the purchase of 30 trailers. The terms are a base lease term of 60 months with an interest rate of 8.6% and a purchase option of 10% of the fair value equipment cost at the end

F-32

Smart Move, Inc.

Notes to Financial Statements — (Continued)

of the term. In connection with the lease agreement Smart Move was required to make an up front payment of $247,593. Total payments due under the capital lease obligations are as follows at December 31, 2007:


Year Ending December 31,

2008	$	115,200
2009		115,200
2010		36,900

Total		267,300
Less interest		29,999

		237,301
Less current maturity		91,648

Long-term portion	$	145,653


9.	Authorized Capital

Common Stock

The Company’s authorized capital stock consists of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. At December 31, 2007 there were 10,979,699 shares of common stock issued and outstanding.

Preferred Stock

The Board of Directors is authorized, without further shareholder action, to divide any or all shares of the Company’s authorized preferred stock into series and to fix and determine the designations, preferences and relative participating, optional or other dividend rights, liquidation preferences, redemption rights and conversion or exchange privileges. There are no shares of preferred stock issued or outstanding at December 31, 2007.

In June 2006 Smart Move issued 500,000 membership interests to certain officers of the Company valued at $2,500,000.

In September 2006, the Company sold in two private placement offerings, 473,204 Units (consisting of one share of common stock and one warrant.) The warrant is exercisable into one share of common stock for a five year period at an exercise price of $7.50. The cash proceeds of the offerings were $2,100,008, net of offering costs of $120,000. In addition the Company converted $296,700 of accrued interest on the 2004 and 2005 convertible debt, net of offering costs of $23,736, into 65,934 Units.

On September 15, 2006 the holders of the “2004 Notes” converted $2,202,000 in face value of notes outstanding at $2.50 per share for 880,800 shares of the Company, less discounts of $199,931 and fees of $33,030. Note holders who converted their entire principal amount in the “2004 Notes” were granted in aggregate an additional 7,334 shares and 60,000 warrants valued at $36,670 and $124,470, respectively. The warrants are exercisable into one share for a five year period at an exercise price of $7.50. On December 20, 2006 holders of the remaining $28,000 of the 2004 Notes converted their notes into 11,200 shares of the Company’s common stock.

On December 7, 2006 the Company sold in its initial public offering 3,312,000 Units (consisting of one share of common stock and one common stock purchase warrant). The warrant is exercisable into one share of common stock for a five year period at an exercise price of $7.50 and in no event are the holders entitled to a net cash settlement. The cash proceeds of the offerings were $16,560,000, net of offering costs of $2,302,315.

On January 3, 2007, Smart Move, Inc. granted 8,676 shares of restricted common stock of the Company in accordance with the Company’s compensation plan for non-employee directors. The 8,676 shares of common stock

F-33

Smart Move, Inc.

Notes to Financial Statements — (Continued)

issued were valued at $40,000, and became vested as to 4,338 shares as of June 30, 2007, with the remaining shares to vest on December 31, 2007.

In May 2007, holders of the Company’s January 2006 Convertible Notes converted $1,932,500 of the principal amount ($1,373,867, net of offering costs) into shares of the Company’s common stock at a conversion price of $3.75 per share. At the date of conversion the unamortized beneficial conversion discount of $870,523 was recorded as interest expense. As a result of this conversion of debt to equity, the Company issued an additional 515,332 shares of previously authorized but unissued common stock.

In August of 2007, holders of the July 2006 Convertible Notes converted $406,484 of accrued interest into 195,425 shares of the common stock of the Company. As an inducement to convert the accrued interest to equity the note holders were issued an additional 89,174 shares of the Company’s common stock and were issued warrants to purchase 120,440 shares of the Company’s common stock exercisable at $3.375 for a period of five years. Additionally, in connection with this transaction the Company issued 11,852 warrants to placement agents to purchase shares of the Company’s common stock exercisable at $3.375 for a period of five years. The inducement shares ($185,482) and warrants ($64,955) were recorded as additional interest expense and additional paid in capital totaling $250,437.


10.	Stock Incentives and Options

Overview

In December 2006, the Company adopted the Smart Move, Inc. 2006 Equity Incentive Plan (the “2006 Option Plan”). The purpose of the 2006 Option Plan is to enable the Company to continue to (a) attract and retain high quality directors, officers, employees and potential employees, consultants, and independent contractors of the Company; (b) motivate such persons to promote the long-term success of the business of the Company. An aggregate of 1.4 million shares of common stock has been reserved for issuance under the 2006 Option Plan, which permits the award of incentive stock options, non-qualified stock options, stock appreciation rights, and shares of restricted common stock. The 2006 Option Plan also provides annual stock grants to Directors. Outstanding options generally vest over a period of four years and are exercisable for ten years from the date of grant. The 2006 Option Plan had 598,500 shares available for grant as of December 31, 2007.

Employee options granted by A Smart Move, L.L.C. exercisable into 800,000 shares were fully vested as of December 31, 2005. On July 26, 2006 the Board of Directors voted to allow the option holders to exercise their options on a cashless basis and the holders of 760,000 options elected to convert their options as a cashless exercise with a strike price of $4.50 a share. The Company issued 537,780 shares in exchange for 760,000 options. In addition, in 2006, 40,000 options were exercised for cash proceeds to the Company totaling $25,000.

In September 2006, the Company granted 342,000 options under employment agreements entered into with the CEO and CFO prior to the effectiveness of 2006 option plan. These options are to be administered and deemed issued out of the 2006 option plan. These options are subject to future vesting based upon the number of moves booked for the 12 month periods ended September 30, 2007, 2008 and 2009. One third of the options are exercisable at $5.00, one third at $6.00 and the balance at $7.00. The options, if earned, are exercisable for a term of 10 years from the date of grant. The options were valued, at the date of grant using the Black Scholes model. The $5 options have a value of $2.05, the $6.00 options have a value of $1.73 and the $7.00 options have a value of $1.46. The $5 options totaling 114,000 were forfeited during 2007, as the performance requirement for these to vest was not met. In accordance with SFAS 123R compensation costs will be recorded when it is probable that the performance condition of the number of moves booked will be achieved. As of December 31, 2007 management of the Company determined that it was not probable that the performance conditions will be met and no stock based compensation has been recognized for these awards.

On December 29, 2006 Smart Move, Inc. granted stock options covering 432,000 shares of Smart Move, Inc. stock to employees of Smart Move, Inc. at an exercise price of $4.73, which was the closing price of Smart Move,

F-34

Smart Move, Inc.

Notes to Financial Statements — (Continued)

Inc.’s stock on the date of the grants. The options were vested as to 25% of the shares on the option grant date, and subject to the employee’s continued employment with Smart Move, Inc., the options covering the remaining 75% of the shares vest and become exercisable in equal quarterly increments over the next 12 calendar quarters.

On September 11, 2007 Smart Move, Inc. granted stock options covering 182,000 shares of Smart Move, Inc. stock to employees of Smart Move, Inc. at an exercise price of $1.40, which was the closing price of Smart Move, Inc.’s stock on the date of the grants. 10,000 of the options granted were vested as to 25% of the shares on the option grant date, and subject to the employee’s continued employment with Smart Move, Inc., the options covering the remaining grant of the shares vest and become exercisable in equal quarterly increments over the next 12 calendar quarters.

The following table provides the range of assumptions used for stock options granted in 2007 and 2006:


	Year Ended			Year Ended
	December 31,			December 31,
	2007			2006

Risk-free interest rate		4.31	%		4.62 to 4.71	%
Expected life in years		6			6
Expected volatility		36.7	%		33	%
Dividend yield		—			—

The weighted average fair value of the options granted in 2007 and 2006 was $0.60 and $1.86, respectively.

The Company’s computation of expected volatility for the year ended December 31, 2007 and 2006 is a blended computation based on a mid-point range of eight peer group companies for the pre IPO period and for the Company’s stock price for the post IPO period.. The Company’s computation of expected life is calculated using the simplified method in accordance with Staff Accounting Bulletin N0. SAB 107 “Share-Based Payment”. The Company’s dividend yield is 0.0%, since there is no history of paying dividends and there are no plans to pay dividends. The Company’s risk-free interest rate is the U.S. Treasury bill rate for the period equal to the expected term based on the U.S. Treasury note strip principal rates as reported in well-known and widely used financial sources.

A summary of option activity as of December 31, 2007 and for the years ended December 31, 2007 and 2006 are as follows:


						Weighted
						Average
				Weighted		Remaining
				Average		Contract		Aggregate
				Exercise		Term		Intrinsic
	Shares			Price		in Years		Value

Outstanding as of January 1, 2006		800,000		$	1.28
Exercised for Cash		(40,000	)	$	0.625
Exercised cashless (537,780 net shares)		(760,000	)	$	1.32
Granted		774,000		$	5.29

Outstanding as of December 31, 2006		774,000		$	5.29		8.99
Forfeited		(154,500	)	$	4.64		8.97
Granted		182,000		$	1.80		9.70

Outstanding 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	$	—

F-35

Smart Move, Inc.

Notes to Financial Statements — (Continued)

A summary of the status of the Company’s unvested shares as of December 31, 2007 and 2006 are as follows:


				Weighted
				Average
				Grant-Date
	Shares			Fair Value

Unvested as of December 31, 2006		666,000		$	1.85
Granted		182,000		$	0.60
Forfeited		(147,750	)	$	1.91
Vested		(125,282	)	$	1.69

Unvested as of December 31, 2007		574,968		$	1.47

As of December 31, 2007, there was approximately $562,403 of total unrecognized compensation cost (including the impact of expected forfeitures as required under SFAS 123R) related to unvested share-based compensation arrangements granted under the Plan that the Company had not recorded. That cost is expected to be recognized over the weighted-average period of three years. The total fair value of shares vested during the year ended December 31, 2007 and 2006 was $200,147 and $190,836, respectively.

Cash received from option exercises under all share-based payment arrangements for the year ended December 31, 2006, was $25,000. No options were exercised during the year ended December 31, 2007.

F-36

Smart Move, Inc.

Notes to Financial Statements — (Continued)


11.	Warrants

During the period from inception August 11, 2004 to December 31, 2004, the years ended December 31, 2005, 2006 and 2007 Smart Move granted the following warrants:


Date of Grant	Granted for	Shares		Exercise Price		Years

September-04	Consulting agreement		120,000	$	0.625		5
September-04	Placement agent equity offering		178,876	$	0.625		5
September-04	2004 Note offering		243,272	$	0.625		5
September-04	Placement agent debt offering		180,000	$	0.625		5

December 31, 2004	Balance		722,148	$	0.625		5

April-05	Bank debt		100,000	$	0.875		7
March-05	Placement agent interest conversion to equity		10,000	$	1.20		5
September-05	Equity offering		673,070	$	5.00		5
September-05	Placement agent equity offering		134,614	$	2.50		5
September-05	Placement agent equity offering		67,308	$	5.00		5
September-05	2005 Note		273,000	$	2.50		5
September-05	2005 Note		87,000	$	1.50		5
September-05	Placement agent debt offering		120,000	$	2.50		5
September-05	Placement agent debt offering		60,000	$	5.00		5

	Balance		1,524,992	$	0.875 to $5.00		5 to 7

December 31, 2005	Total		2,247,140	$	0.625 to $5.00		5 to 7

January-06	Bank debt		13,000	$	3.75		7
January-06	Placement agent debt offering		41,226	$	3.75		5
January-06	Placement agent debt offering		10,306	$	5.00		5
January-06	2006 Note offering (“January Notes”)		128,834	$	5.00		5
September-06	2006 Note offering (“July Notes”)		400,000	$	7.00		5
September-06	Equity offering		473,204	$	7.50		5
September-06	Interest conversion		65,934	$	7.50		5
September-06	Inducement warrants		60,000	$	7.50		5
December-06	Public offering warrants		3,312,000	$	7.50		5
December-06	Underwriters option		288,000	$	6.25		5
December-06	Underwriters option		288,000	$	8.40		5

December-06	Balance		5,080,504	$	3.75 to $8.40		5 to 7

December 31, 2006	Total		7,327,644	$	0.625 to $8.40		5 to 7

August-07	Interest conversion		120,440	$	3.38		5
August-07	Placement agent warrants		11,852	$	3.38		5
August-07	Private placement		121,750	$	7.50		5
August-07	Placement agent warrants		48,700	$	2.00		5
September-07	Unsecured debt warrants		100,000	$	7.50		4.4
September-07	Unsecured debt warrants		100,000	$	3.25		4.4
September-07	Unsecured debt warrants		100,000	$	2.50		4.4
November-07	Interest deferral		355,500	$	1.50		5
November-07	Private placement		1,071,500	$	1.50		5
November-07	Private placement		1,071,500	$	1.25		5
November-07	Placement agent warrants		85,720	$	1.00		5
November-07	Placement agent warrants		18,000	$	1.50		5

December-07	Balance		3,204,962	$	1.00 to $7.50		4.4 to 5

December 31, 2007	Total		10,532,606	$	0.625 to $8.40		4.4 to 7

F-37

Smart Move, Inc.

Notes to Financial Statements — (Continued)

At December 31, 2007 the range of warrant prices for shares and the weighted-average remaining contractual life is as follows:


Warrants Outstanding and Exercisable
							Weighted-Average
							Remaining
	Range of Warrant		Number of		Weighted-Average		Contractual Life
Year of Grant	Exercise Price		Warrants		Exercise Price		(Years)

2004	$	0.625		722,148	$	0.625		1.75
2005	$	0.875 to $5.00		1,524,992		3.64		2.85
2006	$	3.75 to $8.40		5,080,504		7.33		3.86
2007	$	1.00 to $7.50		3,204,962		1.99		4.74

Total	$	0.625 to $8.40		10,532,606	$	4.71		3.84

At December 31, 2007 all warrants are fully exercisable and no warrants have been exercised. See Note 7 long-term debt for a discussion of warrants granted in connection with debt agreements and Note 9 for a discussion of warrants granted in connection with equity offerings.

The fair value of the warrants granted was estimated at the date of grant using the Black Scholes option model applying the following weighted average assumptions:


	Risk Free			Expected
	Interest			Dividend		Expected		Volatility
Date of Grant	Rate			Yield		Life		Range

September 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%

In September 2004, 120,000 consulting warrants were issued at $0.625 per share, are fully vested and have a five year term. The holders of the 120,000 consulting warrants had demand registration rights that required the Smart Move to file a registration statement with the Securities and Exchange Commission to register for resale of the common stock issueable upon the exercise of the Warrants. Under EITF No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF No. 00-19”), the ability to register stock is deemed to be outside of the Smart Move’s control. Accordingly, the initial fair value of the Warrants of $26,400 was recorded as prepaid consulting and was being amortized over the initial term of the agreement (December 31, 2006). The related $26,400 accrued warrant liability was marked to estimated fair value at the end of each reporting period. Effective November 22, 2005 the warrant holders contractually waived the demand registration rights and the accrued warrant liability balance of $241,800 was reclassified to equity at that date. For the period January 1, 2005 to November 22, 2005 the warrant liability valuation resulted in other expense of $204,000.

All of the other warrants granted by Smart Move have piggy back registration rights, however, the holders have no demand registration rights and there are no penalties to Smart Move if the shares underlying the warrants are not registered. Accordingly, under EITF 00-19 these warrants are not required to be accounted for as a liability.

F-38

Smart Move, Inc.

Notes to Financial Statements — (Continued)


12.	Income Taxes

On December 6, 2006, the Company’s predecessor entity, A Smart Move, L.L.C. merged into Smart Move, Inc. Upon the merger of the limited liability company predecessor entity with the C-Corporation, the Company recorded a net deferred tax liability and income tax expense of $2,652,000.

On January 1, 2007, Smart Move, Inc. adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”. As a result of the implementation of Interpretation 48, the Company recognized an $80,000 increase in its unrecognized tax liability, which increase was accounted for as an addition to the Company’s January 1, 2007, accumulated deficit. A reconciliation of the beginning and ending amount of unrecognized tax liabilities follows:


Balance at January 1, 2007	$	(2,287,000	)
Additions to tax basis of property and equipment		61,000
Reductions 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		2,367,000

Balance at December 31, 2007	$	—

The Company classifies interest on tax deficiencies as interest expense, and we classify income tax penalties as an operating expense. As of December 31, 2007, we have not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

Tax years 2004 through 2007 remain open to examination by the major taxing jurisdictions to which we are subject. There are no pending examinations by any federal or state taxing jurisdictional authority and the Company has not been notified by any taxing jurisdictions of any proposed or planned examination.

The federal and state income tax (benefit) is summarized as follows:


	Year Ended
	December 31,
	2007

Current:
Federal	$	—
State		—

		—

Deferred:
Federal		(2,071,000	)
State		(296,000	)

		(2,367,000	)

Income tax (benefit)	$	(2,367,000	)

F-39

Smart Move, Inc.

Notes to Financial Statements — (Continued)

A reconciliation of the income tax (benefit) with amounts determined by applying the statutory U.S. federal income tax rate to loss before tax benefit is as follows:


	Year Ended			Year Ended
	December 31,			December 31,
	2007			2006

Provision (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%		—			3,151,000
State taxes, net of federal benefit		(759,000	)		(55,000	)
Non-deductible incentive stock options and other		80,000			75,000
Non-deductible conversion options and other		329,000			—
Deferred tax expense upon merger with Smart Move, Inc.		—			132,000
Change in valuation allowance		3,293,000			—

Income tax (benefit)	$	(2,367,000	)	$	(233,000	)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:


	December 31,			December 31,
	2007			2006

Current deferred tax assets (liabilities):
Deferred revenue	$	182,000		$	45,000
Allowance for doubtful accounts		18,000			16,000
Accrued vacation		3,000			3,000
Deferred 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			474,000
Net operating loss carryforwards		5,395,000			394,000
Beneficial 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	)

At December 31, 2007, the Company had available unused operating loss carryforwards that expire in 2022, that may be applied against future taxable income of approximately $14 million. The utilization of such carryforwards may be limited upon the occurrence of certain ownership changes, including the issuance or exercise of rights to acquire stock, the purchase or sale of stock by 5% stockholders, as defined in the Treasury regulations, and the offering of stocks by us during any three-year period resulting in an aggregate change of more than 50% in the beneficial ownership of the Company. In the event of an ownership change (as defined for income

F-40

Smart Move, Inc.

Notes to Financial Statements — (Continued)

tax purposes), Section 382 of the Code imposes an annual limitation on the amount of a corporation’s taxable income that can be offset by these carryforwards. The limitation is generally equal to the product of (i) the fair market value of the equity of the Company multiplied by (ii) a percentage approximately equivalent to the yield on long-term tax exempt bonds during the month in which an ownership change occurs. In addition, the limitation is increased if there are recognized built-in gains during any post-change year, but only to the extent of any net unrealized built-in gains (as defined in the Internal Revenue Code) inherent in the assets sold. Due to the changes in ownership over the years for debt conversions and equity financings, the Company may have triggered a Section 382 limitation on the utilization of such net operating loss carryforwards. The Company has not performed such an evaluation to determine whether the net operating loss carryforwards have been limited.


13.	Supplemental Disclosure of Cash Flow Information


Year Ending December 31,	2007		2006

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	427,686	$	627,460
Supplemental schedule of noncash investing and financing activities:
Conversion of accrued interest to shares	$	406,484	$	296,700
Conversion of debt to shares	$	1,373,867	$	2,030,069
Recovery 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	$	184,594
Allocation of value of warrants issued in connection with debt	$	474,398	$	1,243,952
Fair 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	$	3,556,530
Equipment acquired included in accounts payable	$	883,895	$	192,584


14.	Related-Party Transactions

During 2005 Smart Move raised equity and capital through a private placement and debt offerings through Bathgate Capital Partners. Steven M. Bathgate served as the Senior Managing Director of Corporate Finance and Chairman of the Commitment Committee for Bathgate Capital Partners LLC and was (resigned on December 8, 2005) a manager and on the board of Smart Move. During the year ended December 31, 2006 Smart Move paid to Bathgate Capital Partners for the January 2006 and July 2006 debt offering $155,111 and $325,000, respectfully. In September of 2006 Smart Move paid Bathgate Capital Partners $33,030 and $63,736 in connection with the interest conversion and the September equity offering, respectively and $52,000 to repurchase 104,000 placement agent warrants issued in connection with the July 2006 Notes. Bathgate Capital Partners L.L.C. was one of four underwriters of our initial public offering in December 2006 and was paid $10,000 in underwriting fees. During 2007 Smart Move paid Bathgate Capital Partners $97,400 in cash compensation in connections with the August 2007 debt offering and $80,620 in cash compensation in connection with the November 2007 debt offering. In addition, Smart Move issued a total of 164,272 warrants with exercise prices ranging from $3.38 to $1.00 as compensation for the placement agent services.

In January 2007, Smart Move paid to its non-employee directors $75,000 in cash compensation and issued $40,000 of value of restricted share of common stock.

In May 2007 — A note holder who has a greater than 10% beneficial interest converted notes into 266,666 shares of Smart Move, Inc stock at $3.75 per share. In addition, this note holder in July 2007 converted

F-41

Smart Move, Inc.

Notes to Financial Statements — (Continued)

accrued interest into 236,573 shares of common stock and 100,116 warrants. Again in November 2007 this Note holder agreed to defer interest into a new note in the amount of $276,300. This note is convertible at $1.00 per share and they were issued an additional 276,300 warrants as part of the consideration

In the November 2007 Notes four directors and one person that has a greater than 10% beneficial interests participated in the offering. The amount of principal owed to the Directors was $85,000 and $25,000 to the 10% beneficial owner.

Three members of management agreed to waive a total of $44,033 of salary for the months of November and December 2007. This amount is reported as an increase in non-cash compensation and an increase in additional paid-in capital.


15.	Commitments and Contingents

Operating lease commitments

Smart Move leased its corporate office under an operating lease which commenced in October 2004 and required annual payments of approximately $40,000 through December 2007. In May 2006 Smart Move was requested to early terminate this lease by the landlord and Smart Move early terminated.

Smart Move entered into a new lease for its corporate office under an operating lease agreement which commenced in May 2006 and expires in April 2011. The agreement contains provisions for rent free periods and future rent increases. The total amount of rental payments due over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent. Under the terms of the lease agreement, Smart Move was required to pay a security deposit of $44,000 (see Note 5).

Rent expense was $238,333 for the year ended December 31, 2007 and $77,480 for the year ended December 31, 2006.

Minimum annual rental commitments under this non-cancelable lease as of December 31, 2007 are as follows:


Year Ending December 31,

2008	$	113,420
2009		116,600
2010		119,780
2011		40,280

Total	$	390,080

Employment Agreements

Effective November 15, 2006, the Company entered into employment agreements with the CEO and the CFO. The agreements are for five-year terms initially set to expire in 2011. These agreements provide for base salaries of $188,000 and $175,000, respectively. These officers additionally are eligible for cash bonuses up to 50% of base salaries. In addition, they were granted 342,000 options that vest based upon exceeding certain performance targets. On April 27, 2007, the Board of Directors voted to approve the Compensation Committee’s recommendation to increase executive salaries to $196,000 in the case of the Chief Executive Officer and $182,400 in the case of the Chief Financial Officer with the adjustments to be effective from February 15, 2007. The performance criteria applicable for the cash bonuses during 2007 will consist of two components, an EBITDA target threshold to be measured both semi-annually and annually, and an annual target for “number of moves.” If the specified targets are met, the CEO and CFO will each be eligible to earn cash bonuses up to the greater of 50% of base salary or a stipulated amount for each officer, being $125,000, in the case of the Chief Executive Officer, and $110,000 in the case of the Chief Financial Officer. As of December 31, 2007, management has determined that these performance targets will not be met and no bonus has been accrued. Additionally 114,000 options were subject to vesting at September 30, 2007, and have been forfeited as the performance conditions were not satisfied at the vesting date. In

F-42

Smart Move, Inc.

Notes to Financial Statements — (Continued)

November 2007, the CEO, CFO and other members of the management team agreed to waive 50% of their salaries for the months of November and December 2007. This waived cash compensation totaling $44,033 is reflected as non-cash compensation expense and a credit to paid-in capital in the fourth quarter of 2007.

Retirement plan

In January 2005 Smart Move adopted a 401(k) Plan (“Plan”) to provide retirement benefits for its employees. Employees may contribute up to 90% of their annual compensation to the Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The Company matches employee contributions dollar for dollar up to a maximum of 4% of the individual contribution percentage. All matching contributions vest immediately. In addition, the Plan provides for discretionary contributions as determined by the Board of Directors. Such contributions to the Plan are allocated among eligible participants in the proportion of their salaries to the total salaries of all participants. Matching contributions to the Plan totaled $56,145 and $28,974 for the year ended December 31, 2007 and 2006, respectively.

Legal Proceedings

On March 3, 2006, a Notice of Opposition to the Smart Move’s “SmartVault” trademark was filed with the U.S. Patent and Trademark Office on behalf of Smartbox Moving & Storage LLC (“Smartbox”), a Richmond, Virginia company. On November 6, 2006 the parties agreed to a settlement without monetary penalty and to withdraw of opposition.


16.	Subsequent Events

In the January 15, 2008 offering, the Company offered to its November 2007 note holder’s two options as an inducement to release their second lien security interest in the collateral pledged to their notes. Of the $1,071,500 November Notes outstanding, $796,500 elected to convert at $0.65 per share and received a reduction in the exercise price of their warrants, and received a new warrant for each two dollars of note converted. The remainder representing $275,000 subordinated their second lien security interest.

On January 15, 2008, the Company sold secured convertible debentures to investors in the amount $3,655,000. The Debenture was issued to the Purchasers at an original issue discount of 15% and matures 24 months after the date of its issuance. Subject to certain deferral rights of the Purchaser, the Debenture is payable in monthly installments of principal and interest. The Company and the Purchaser agreed that the proceeds from sale of the Debenture and Warrant would be used to pay the secured indebtedness owed to Silicon Valley Bank in the approximate amount of $345,000 and that the remainder of the proceeds would be used primarily for working capital.

On January 15, 2008 the board of Directors agreed to increase the compensation of the non-employee directors. The agreed upon compensation was for total cash compensation of $125,000 paid quarterly and the issuance of shares of restricted common stock valued at $60,000.

On January 15, 2008, the Company granted 343,000 stock options to employees at an exercise price of $0.68, the closing stock price on the date of grant.

On January 31, 2008 the Company purchased Star Relocation Alliance, Inc. (“Star Alliance”), for 80,000 shares of common stock, par value of $.0001 per share, together with three year warrants to purchase 100,000 additional shares of common stock at an exercise price of $1.20 to complete the asset acquisition. If certain top line revenues numbers are achieved in 2008, the Company will be required to issue an additional 20,000 to 45,000 shares of common stock.

On January 23, 2008 the Company sold an unsecured convertible note, with a face amount of $200,000 at an interest rate of 12% and matures in 12 months and is convertible at $0.75 a share. With this transaction the Company amended and restated certain terms of the September 2007 Note, by reducing the conversion price and the exercise price of the warrants.

F-43

5,500,000 Units

PROSPECTUS

Paulson Investment Company, Inc.

December , 2008

PART II — INFORMATION NOT REQUIRED IN PROSPECTUS


Item 13.	*Other Expenses of Issuance and Distribution.*

The following table shows the costs and expenses, payable in connection with the sale and distribution of the securities being registered pursuant to this registration statement. We will pay all of these amounts. All amounts except the SEC registration fee are estimated.


SEC registration fee	$	372.86
FINRA filing fee	$	3,500.00
Accounting fees and expenses		50,000
Legal fees and expenses		100,000
Printing fees and expenses		50,000
Transfer Agent fees and expenses		5,000
Underwriter fees and expenses		907,500
Miscellaneous		34,127.14

Total	$	1,150,500.00


Item 14.	*Indemnification of Directors and Officers.*

Delaware General Corporation Law

Pursuant to Section 145 of the Delaware General Corporation Law (“DGCL”), our Amended and Restated Certificate of Incorporation and Bylaws authorize us to indemnify any director or officer who is made party to a proceeding because the officer or director is or was an officer or director or is or was serving at our request as a director, officer, employee, or agent of another corporation or partnership, joint venture, trust, or other enterprise, against expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid in settlement and actually and reasonably incurred by the officer or director in connection with the proceeding, if the officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to our best interests and, with respect to a criminal proceedings, had no reasonable cause to believe his conduct was unlawful. If an officer or director made party to a proceeding is successful on the merits or otherwise in his defense, Section 145 of the DGCL and our Amended and Restated Articles of Incorporation and Bylaws require us to indemnify the officer or director against expenses (including attorneys’ fees) that the officer or director actually and reasonably incurred in connection with the proceeding. The indemnification provisions in our Amended and Restated Certificate of Incorporation and Bylaws may be sufficiently broad to permit indemnification of our directors and officers for liabilities arising under the Securities Act.

As permitted by Section 102(b)(7) of the DGCL, our Amended and Restated Certificate of Incorporation includes a provision that eliminates the personal liability of our directors for monetary damages for conduct as a director, except for (i) any breach of the director’s duty of loyalty to the Corporation or its stockholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) payment of dividends or stock purchases or redemptions by the corporation in violation of Section 174 of the DGCL; or (iv) any transaction from which the director derived an improper personal benefit. As a result of this provision, we and our stockholders may be unable to obtain monetary damages from a director for certain breaches of his or her fiduciary duties. The provision does not affect a director’s responsibilities under any other laws, such as the federal securities laws.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities

II-1

being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Underwriting Agreement

The underwriting agreement (filed as Exhibit 1.1 to this registration statement) provides for reciprocal indemnification between us and our controlling persons, on the one hand, and the underwriters and their respective controlling persons, on the other hand, against certain liabilities in connection with this offering, including liabilities arising under the Securities Act of 1933, as amended, or otherwise.

Directors’ and Officers’ Liability Insurance

We maintain directors’ and officers’ liability insurance policies, which insure against liabilities that directors or officers may incur in such capacities. These insurance policies, together with the indemnification agreements, may be sufficiently broad to permit indemnification of our directors and officers for liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended, or otherwise.


Item 15.	*Recent Sales of Unregistered Securities.*

The following summarizes all sales of unregistered securities by Smart Move, Inc. during the past three years, including sales of membership interests in the case of issuances made by our predecessor limited liability company, A Smart Move, L.L.C. The number of shares and respective prices described below have not been adjusted to reflect the one-for-thirteen reverse stock split described elsewhere in this registration statement.

(a) In March 2005, (i) we issued an aggregate of 131,700 equity shares to 28 holders of the convertible notes in payment of accrued and unpaid interest totaling $131,700, or $1.00 per share and (ii) we issued warrants exercisable to purchase up to 10,000 of our equity shares.

(b) In April 2005, we issued warrants exercisable to purchase 100,000 of our equity shares at a price of $0.875. The securities were issued to Silicon Valley Bank as a fee in connection with a commercial loan obtained from it as lender.

(i) an aggregate of 673,070 units to 88 investors, each unit consisting of two equity shares and one warrant exercisable to purchase one additional equity share at a price of $5.00 per share, in consideration of an aggregate of $3,365,350, or $5.00 per unit;

(ii) warrants exercisable to purchase up to 134,614 of our equity shares at a price of $2.50 per share and warrants exercisable to purchase 67,308 of our equity shares at a price of $5.00 per share as compensation to a placement agency service;

(iii) an aggregate of $3.0 million in 12% convertible notes and warrants exercisable to purchase up to 360,000 of our equity shares to 34 investors;

(iv) warrants exercisable to purchase up to 120,000 of our equity shares at a price of $2.50 per share and warrants exercisable to purchase 60,000 shares of our equity shares at a price of $5.00 per share. The securities were issued in consideration for placement agency services.

(d) In December 2005, we borrowed $500,000 from Silicon Valley Bank. In connection with the loan agreement, we issued the bank warrants to purchase 13,000 of our common stock shares.

(e) In January 2006, we issued:

(i) an aggregate of $1,932,500 in 10% convertible notes and warrants exercisable to purchase up to 128,834 of our shares to 32 investors.

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(ii) warrants exercisable to purchase up to 41,226 of our equity shares at a price of $3.75 per share and warrants exercisable to purchase 10,306 of our equity shares at a price of $5.00 per share as compensation to a placement agency service.

(iii) a restricted stock grant of 500,000 common stock shares to our executive officers (280,000 shares to Mr. Sapyta, 200,000 to Mr. Johnson and 20,000 to Mr. Ellis) as compensation.

(f) In July 2006, we issued:

(i) an aggregate of $5,000,000 in 10% secured convertible notes and warrants exercisable to purchase 400,000 of our shares at $7.00 to four investors.

(g) In September 2006, we issued:

(i) an aggregate of 117,648 units to one investor, each unit consisting of one share and one warrant exercisable at $7.50 at a price of $4.25 per unit.

(ii) an aggregate of 421,490 units to 37 investors, each unit consisting of one share and one warrant exercisable at $7.50 at a price of $4.50 per unit.

(iii) 888,134 shares and 60,000 warrants to 32 debt holders who converted $2,202,000 of notes into equity. The warrant is exercisable at $7.50.

(h) In August of 2007 we issued:

(i) an aggregate of $1,217,500 in 12% secured convertible notes and warrants exercisable to purchase 121,750 of our shares at $7.50 to 21 investors.

(ii) 284,599 shares and 120,440 warrants to three debt holders who converted $406,484 of interest into equity. The warrants are exercisable at $3.38.

(i) In September of 2007 we issued:

(i) an aggregate of $540,000 in 7% unsecured convertible note and warrants exercisable to purchase 100,000 of our shares at $7.50, 100,000 of our shares at $3.25 and 100,000 of our shares at $2.50 to one investor.

(j) In November of 2007 we amended the terms of the 2005 Secured Convertible Notes as follows:

(i) the holders of the 2005 Secured Convertible Notes elected to defer the scheduled principal amortization of $1,975,000 until final maturity on September 30, 2012 and agreed that, in lieu of receiving their proportionate share of the aggregate amount of interest that would accrue through October 1, 2008, these holders would instead receive the corresponding amount (“Deferred Interest Amount”) in a lump sum on October 1, 2010.

(ii) the Company and the holders of the 2005 Notes also agreed that the Deferred Interest Amount would be separately convertible at the election of the holders at any time prior to October 1, 2010 at a conversion price of $1.00. The conversion price applicable to the outstanding original principal amount of the 2005 Notes was revised from $5.00 to $3.00 per share. In addition the holders were granted 360,000 warrants to purchase common stock at an exercise price of $1.50.

(k) In January 2008 we issued:

(i) 1,250,040 shares and 398,250 warrants exercisable at $1.00 per share to 26 existing debt holders who converted $796,500 of notes into equity. In addition the exercise price of the original warrants held by such note holders was reduced.

(ii) an aggregate of $3,655,000 in 11% secured convertible notes and common stock purchase warrants exercisable to purchase 2,436,667 of our shares at $1.00 to 17 investors.

(iii) an aggregate of $200,000 in 12% unsecured convertible notes and warrants exercisable to purchase 285,000 of our shares at $1.00 and 285,000 warrants at $1.25 to one investor. With this transaction we amended

II-3

and restated certain terms of the September 2007 Note, by reducing the conversion price and the exercise price of the warrants.

(iv) we purchased Star Relocation Alliance, Inc. (“Star Alliance”), for 80,000 shares of common stock, par value of $.0001 per share, together with three year warrants to purchase 100,000 additional shares of common stock at an exercise price of $1.20.

(l) In April 2008 we issued an aggregate of $750,000 in 12% secured convertible notes and warrants exercisable to purchase 1,875,000 of our shares at $0.80 to one investor. We agreed to issue an additional 1,875,000 warrants at $1.00 if the investor had to release his security.

(m) In June 2008 we issued an aggregate of $505,000 in 12% secured convertible notes and warrants exercisable to purchase 1,262,500 of our shares at $0.80 to twelve investors. We agreed to issue an additional 1,262,500 warrants at $1.00 if the investors had to release their security.

(n) In August 2008, we agreed to issue and issued effective upon our receipt of the Alternext listing approval received September 18, 2008, 2,343,750 shares and 3,515,625 warrants exercisable at $0.40 to an accredited investor who is not an officer or director of the Company but deemed an affiliate because of ownership in excess of 10% of our common stock, on terms which included an exercise limitation applicable to all the holder’s convertible notes and warrants limiting ownership of our common stock to a maximum of 35% of our outstanding shares.

(o) November 2008 Unsecured Note. In November 2008 we issued a $300,000 unsecured convertible note to a single investor. The note bears interest at 10% per annum and principal and interest is due the earlier of March 31, 2009 or to be repaid from the proceeds on any offering that raises at least $5,000,000. The note may be extended for two thirty day periods.

If the note is repaid from the proceeds of an offering, the investor shall receive shares of stock equal to the face amount of the note divided by the price of the securities issued in an offering of $5,000,000 or more. In addition the investor shall receive warrants equal to 200% of the shares issued. The warrants are exercisable for a period of three years at 150% of the price of the securities issued in the offering. If the note is not retired by May 31, 2009, the investor may convert the note into shares at the higher of $1.30 (assuming a one-for-thirteen reverse stock split) or 75% of the market price of the common stock on the date of conversion.

(p) We also granted options to purchase equity shares to our directors, executive officers, and employees, on the following dates and in the following amounts:


Date	Number		Exercise Price

March 2005		400,000	$	1.00
September 2005		200,000	$	2.50
January 2008		343,000	$	0.68

The securities in each of items (a) through (o) were (i) made without registration and (ii) were subject to restrictions under the Securities Act and the securities laws of certain states, in reliance on the private offering exemptions contained in Sections 4(2), 4(6) and/or 3(b) of the Securities Act and on Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws as a transaction not involving a public offering. Each of the investors had access to the kind of information about us that we would provide in a registration statement. All sales of unregistered securities by us since our initial public offering have been made pursuant to Rule 506 of Regulation D promulgated under the Securities Act to “accredited investors” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act and persons who represented to us their intention to acquire our securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof. Appropriate legends were affixed to the certificates representing the securities issued. Unless stated otherwise, no placement or underwriting fees were paid in connection with these transactions. Proceeds from the sales of these securities were used for our general working capital purposes. There were no underwriting discounts

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in connection with our private placements but commissions were paid in connection with the sale of these securities to FINRA registered broker dealers.


Item 16.	*Exhibits and Financial Statement Schedules.*


Exhibit
Number			Description

	1	.1	Form of Underwriting Agreement
	3	.1(A)	Amended and Restated Certificate of Incorporation
	3	.2(B)	Bylaws
	4	.1(C)	Specimen Common Stock certificate
	4	.2*	Specimen Unit certificate
	4	.3*	Specimen Warrant certificate for Class A Warrant
	4	.4*	Specimen Warrant certificate for Class B Warrant
	4	.5(D)	Form of 12% Secured Convertible Note due September 1, 2009
	4	.6(D)	Form of Warrant to Purchase 2,500 Shares at an exercise price of $7.50 per share, expiring December 5, 2011
	4	.7(H)	Securities Purchase Agreement dated as of January 15, 2008 among the Company and the Purchasers listed on Exhibit A thereto
	4	.8(H)	11% Secured Convertible Debenture due January 15, 2010 to Professional Offshore Opportunity Fund, Ltd. in the amount of $2,800,000.
	4	.9(H)	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
	4	.10(H)	Registration Rights Agreement dated as of January 15, 2008 among the Company and the Purchasers Listed on Schedule 1 thereto
	4	.11(H)	Security Agreement dated as of January 15, 2008 among the Company and the Investors
	4	.12(H)	Investor Rights Agreement dates as of January 15, 2008 among the Company and the Investors
	5	.1	Opinion of Messner & Reeves LLC
	10	.4(K)	Form of Warrant dated September 30, 2005 equity financing
	10	.5(K)	Form of Secured Promissory Note dated September 26, 2005 debt financing
	10	.6(K)	Security Agreement September 2005 debt financing
	10	.7(K)	Form of Warrant dated September 26, 2005 debt financing
	10	.8(K)	Form of Unsecured Note dated January 2006
	10	.9(K)	Form of Warrant dated January 2006 debt financing
	10	.10(K)	Form of Secured Note dated July 2006
	10	.11(K)	Security Agreement dated July, 2006 debt financing
	10	.12(K)	Form of Warrant dated July, 2006 debt financing
	10	.17(K)	Warrant to Purchase Common Stock dated April 15, 2005 in favor of Silicon Valley Bank
	10	.18(K)	Warrant to Purchase Common Stock dated December 21, 2005 in favor of Silicon Valley Bank
	10	.21(K)	A Smart Move, L.L.C. Service Agreement between A Smart Move, L.L.C. and Overnite Transportation Company (UPS Freight) dated May 9, 2005
	10	.22(K)	Master Purchase Agreement dated August 24, 2005
	10	.23(K)	Leasing Agreements between Park Western Leasing Inc. and A Smart Move, L.L.C. dated April 5, 2005
	10	.24(K)	Office Building Lease between BRCP Greenwood Corporate Plaza, L.L.C. and A Smart Move, L.L.C. dated October 22, 2004
	10	.25(K)	Employment Agreement with Chris Sapyta dated January 15, 2006
	10	.26(K)	Employment Agreement with Edward Johnson dated January 15, 2006

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Exhibit
Number			Description

	10	.27(K)	Promissory Note between A Smart Move, L.L.C. and Chris Sapyta, dated June 15, 2005
	10	.28(K)	2006 Equity Incentive Plan
	10	.29(L)	Form of Option Grant Agreement
	10	.30(K)	First Amendment to the Employment Agreement for Chris Sapyta dated September 15, 2006
	10	.31(K)	First Amendment to the Employment Agreement for Edward Johnson dated September 15, 2006
	10	.33(K)	Form of Underwriter’s Warrant
	10	.34(K)	Form of Warrant Agreement
	10	.35(L)	Warehouse Sublease Agreement between ACC Acquisition, LLC and Smart Move, Inc, dated January 29, 2007
	10	.37(E)	Form of Note and Warrant Purchase Agreement
	10	.38(E)	Form of 7% Unsecured Convertible Note ($540,000) due September 2, 2010.
	10	.39(E)	Form of Warrant to Purchase expiring December 5, 2011
	10	.40(F)	Form of 12% Secured Convertible Note ($25,000) due October 31, 2008
	10	.41(F)	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
	10	.42(G)	Letter Agreement between Smart Move, Inc. and StarRelocation Network Alliance, Inc.(6)
	10	.44(I)	Amended and Restated Note and Warrant Purchase Agreement dated January 22, 2008 by and between Smart Move, Inc. and Thomas P. Grainger(8)
	10	.45(I)	12% Unsecured Convertible Note to Thomas P. Grainger in the amount of $200,000, due January 22, 2009(8)
	10	.46(I)	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(I)	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(I)	Amended 7% Unsecured Convertible Note to Thomas P. Grainger in the amount of $540,000, due September 2, 2010.(8)
	10	.49(I)	Amendment to Existing Thomas P. Grainger Warrant — 100,000 shares at an exercise price of $1.00, expiring September 2, 2010.(8)
	10	.50(I)	Amendment to Existing Thomas P. Grainger Warrant — 100,000 shares at an exercise price of $1.25 expiring September 2, 2010.(8)
	10	.51(I)	Amendment to Existing Thomas P. Grainger Warrant — 100,000 shares at an exercise price of $1.50, expiring September 2, 2010(8)
	10	.52(J)	Equity Investment Conversion Commitment dated July 28, 2008
	10	.53**	Thomas P. Grainger Warrant to Purchase 3,515,625 shares at an exercise price of $0.40 per share, expiring July 28, 2013
	10	.54(M)	Bridge Loan Agreement and related 10% Unsecured Debenture, Warrant and Registration Rights Agreement dated as of November 26, 2008
	21	.1*	Subsidiaries of Smart Move
	23	.1	Consent of Anton Collins Mitchell LLP
	23	.2	Consent of Messner & Reeves, LLC (contained in Exhibit 5.1)
	24	.1	Power of Attorney (Included on Signatures hereto)


*		To be filed by amendment


**		Previously filed

II-6

Items listed in (A) through (L) below are incorporated by reference to Smart Move, Inc.’s previous Registration Statement, Annual Report filed on Form 10-KSB or Current Reports on Form 8-K as follows:

(A) Previously filed with Smart Move’s Registration Statement on Form SB-2 (File No. 333-137931) and incorporated by reference.

(B) Previously filed with Smart Move’s Registration Statement on Form SB-2 (File No. 333-137931) and incorporated by reference.

(C) Previously filed with Smart Move’s Registration Statement on Form SB-2 (File No. 333-137931) and incorporated by reference.

(D) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on August 28, 2007.

(E) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on October 1, 2007.

(F) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on November 15, 2007.

(G) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on January 2, 2008.

(H) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on January 18, 2008.

(I) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on January 28, 2008.

(J) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on August 1, 2008.

(K) Previously filed with Smart Move’s Registration Statement on Form SB-2 (SEC File No. 333-137931) and incorporated by reference herein.

(L) 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).

(M) Incorporated by reference to Smart Move, Inc.’s Current Report on Form 8-K (File No. 001-32951) filed with the Securities and Exchange Commission on December 3, 2008.


Item 17.	*Undertakings.*

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

(a) include any prospectus required by Section 10(a)(3) of the Securities Act;

(b) reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

II-7

(c) include any additional or changed material, information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(a) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(b) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(c) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(d) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(5) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(6) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Greenwood Village, State of Colorado, on the December 9, 2008.

SMART MOVE, INC.


	By:	/s/ Chris Sapyta

Chris Sapyta

Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints Chris Sapyta as his true and lawful attorney-in-fact, acting alone, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments to this registration statement, and any related registration statement filed pursuant to Rule 462(b) of the Securities Act of 1933 and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitutes, each acting alone, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Position	Date


/s/ Chris Sapyta Chris Sapyta	Chief Executive Officer, President and Director (Principal Executive Officer)	December 9, 2008

/s/ L. Edward Johnson L. Edward Johnson	Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer)	December 9, 2008

/s/ Jeff McGonegal Jeff McGonegal	Director	December 9, 2008

/s/ John Jenkins John Jenkins	Director	December 9, 2008

/s/ Kent Lund Kent Lund	Director	December 9, 2008

/s/ J.J. Burkholder, Jr. J.J. Burkholder, Jr.	Director	December 9, 2008

II-9

Exhibit Index


Exhibit
Number			Description

	1	.1	Form of Underwriting Agreement
	3	.1(A)	Amended and Restated Certificate of Incorporation
	3	.2(B)	Bylaws
	4	.1(C)	Specimen Common Stock certificate
	4	.2*	Specimen Unit certificate
	4	.3*	Specimen Warrant certificate for Class A Warrant
	4	.4*	Specimen Warrant certificate for Class B Warrant
	4	.5(D)	Form of 12% Secured Convertible Note due September 1, 2009
	4	.6(D)	Form of Warrant to Purchase 2,500 Shares at an exercise price of $7.50 per share, expiring December 5, 2011
	4	.7(H)	Securities Purchase Agreement dated as of January 15, 2008 among the Company and the Purchasers listed on Exhibit A thereto
	4	.8(H)	11% Secured Convertible Debenture due January 15, 2010 to Professional Offshore Opportunity Fund, Ltd. in the amount of $2,800,000.
	4	.9(H)	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
	4	.10(H)	Registration Rights Agreement dated as of January 15, 2008 among the Company and the Purchasers Listed on Schedule 1 thereto
	4	.11(H)	Security Agreement dated as of January 15, 2008 among the Company and the Investors
	4	.12(H)	Investor Rights Agreement dates as of January 15, 2008 among the Company and the Investors
	5	.1	Opinion of Messner & Reeves LLC
	10	.4(K)	Form of Warrant dated September 30, 2005 equity financing
	10	.5(K)	Form of Secured Promissory Note dated September 26, 2005 debt financing
	10	.6(K)	Security Agreement September 2005 debt financing
	10	.7(K)	Form of Warrant dated September 26, 2005 debt financing
	10	.8(K)	Form of Unsecured Note dated January 2006
	10	.9(K)	Form of Warrant dated January 2006 debt financing
	10	.10(K)	Form of Secured Note dated July 2006
	10	.11(K)	Security Agreement dated July, 2006 debt financing
	10	.12(K)	Form of Warrant dated July, 2006 debt financing
	10	.17(K)	Warrant to Purchase Common Stock dated April 15, 2005 in favor of Silicon Valley Bank
	10	.18(K)	Warrant to Purchase Common Stock dated December 21, 2005 in favor of Silicon Valley Bank
	10	.21(K)	A Smart Move, L.L.C. Service Agreement between A Smart Move, L.L.C. and Overnite Transportation Company (UPS Freight) dated May 9, 2005
	10	.22(K)	Master Purchase Agreement dated August 24, 2005
	10	.23(K)	Leasing Agreements between Park Western Leasing Inc. and A Smart Move, L.L.C. dated April 5, 2005
	10	.24(K)	Office Building Lease between BRCP Greenwood Corporate Plaza, L.L.C. and A Smart Move, L.L.C. dated October 22, 2004
	10	.25(K)	Employment Agreement with Chris Sapyta dated January 15, 2006
	10	.26(K)	Employment Agreement with Edward Johnson dated January 15, 2006
	10	.27(K)	Promissory Note between A Smart Move, L.L.C. and Chris Sapyta, dated June 15, 2005
	10	.28(K)	2006 Equity Incentive Plan
	10	.29(L)	Form of Option Grant Agreement
	10	.30(K)	First Amendment to the Employment Agreement for Chris Sapyta dated September 15, 2006
	10	.31(K)	First Amendment to the Employment Agreement for Edward Johnson dated September 15, 2006


Exhibit
Number			Description

	10	.33(K)	Form of Underwriter’s Warrant
	10	.34(K)	Form of Warrant Agreement
	10	.35(L)	Warehouse Sublease Agreement between ACC Acquisition, LLC and Smart Move, Inc, dated January 29, 2007
	10	.37(E)	Form of Note and Warrant Purchase Agreement
	10	.38(E)	Form of 7% Unsecured Convertible Note ($540,000) due September 2, 2010.
	10	.39(E)	Form of Warrant to Purchase expiring December 5, 2011
	10	.40(F)	Form of 12% Secured Convertible Note ($25,000) due October 31, 2008
	10	.41(F)	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
	10	.42(G)	Letter Agreement between Smart Move, Inc. and StarRelocation Network Alliance, Inc.(6)
	10	.44(I)	Amended and Restated Note and Warrant Purchase Agreement dated January 22, 2008 by and between Smart Move, Inc. and Thomas P. Grainger(8)
	10	.45(I)	12% Unsecured Convertible Note to Thomas P. Grainger in the amount of $200,000, due January 22, 2009(8)
	10	.46(I)	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(I)	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(I)	Amended 7% Unsecured Convertible Note to Thomas P. Grainger in the amount of $540,000, due September 2, 2010.(8)
	10	.49(I)	Amendment to Existing Thomas P. Grainger Warrant — 100,000 shares at an exercise price of $1.00, expiring September 2, 2010.(8)
	10	.50(I)	Amendment to Existing Thomas P. Grainger Warrant — 100,000 shares at an exercise price of $1.25 expiring September 2, 2010.(8)
	10	.51(I)	Amendment to Existing Thomas P. Grainger Warrant — 100,000 shares at an exercise price of $1.50, expiring September 2, 2010(8)
	10	.52(J)	Equity Investment Conversion Commitment dated July 28, 2008
	10	.53**	Thomas P. Grainger Warrant to Purchase 3,515,625 shares at an exercise price of $0.40 per share, expiring July 28, 2013
	10	.54(M)	Bridge Loan Agreement and related 10% Unsecured Debenture, Warrant and Registration Rights Agreement dated as of November 26, 2008
	21	.1*	Subsidiaries of Smart Move
	23	.1	Consent of Anton Collins Mitchell LLP
	23	.2	Consent of Messner & Reeves (contained in Exhibit 5.1)
	24	.1	Power of Attorney (Included on Signatures hereto)


*		To be filed by amendment


**		Previously filed

Items listed in (A) through (M) below are incorporated by reference to Smart Move, Inc.’s previous Registration Statement, Annual Report filed on Form 10-KSB or Current Reports on Form 8-K as follows: