10QSB 1 otg10qsb_october312006.txt ON THE GO 10QSB OCTOBER 31 2006 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2006 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission File Number: 333-61538 ON THE GO HEALTHCARE, INC. (Exact name of Registrant as specified in its Charter) DELAWARE 98-0231687 ---------------------- -------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 85 Corstate Avenue, Unit #1, Concord, Ontario, Canada L4K 4Y2 (Address of principal executive offices) (905) 760-2987 (Issuer's telephone number) Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of November 10, 2006 the Issuer had 2,110,179 shares of common stock issued and outstanding, par value $0.0001 per share. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] ON THE GO HEALTHCARE, INC. QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED OCTOBER 31, 2006 TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements: Index............................3 Consolidated Balance Sheet as of October 31, 2006 (Unaudited) and July 31, 2006..................................................F1 Consolidated Statements of Operations and Comprehensive (loss) Income for the Three Months Ended October 31, 2006 and 2005 (Unaudited)...............................................F2 Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2006 and 2005 (Unaudited)..............................F3 Consolidated Statement of Changes in Stockholders' Equity For the three months ended October 31, 2006 (Unaudited).............F4 Notes to Consolidated Financial Statements (Unaudited).........F5 - F12 Item 2 - Management's Discussion and Analysis or Plan of Operation...........4 Item 3 - Controls and Procedures ............................................7 PART II - OTHER INFORMATION Item 1 - Legal Proceedings...................................................8 Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.........8 Item 3 - Defaults Upon Senior Securities.....................................8 Item 4 - Submission of Matters to a Vote of Security Holders.................8 Item 5 - Other Information ..................................................8 Item 6 - Exhibits and Reports on Form 8-K....................................8 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. On the Go Healthcare, Inc. Consolidated Financial Statements Three Months Ended October 31, 2006 and 2005 (Unaudited) Contents Consolidated Financial Statements: Consolidated Balance Sheet as of October 31, 2006 (Unaudited) and July 31, 2006..................................................F1 Consolidated Statements of Operations and Comprehensive (loss) Income for the Three Months Ended October 31, 2006 and 2005 (Unaudited)...............................................F2 Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2006 and 2005 (Unaudited)..............................F3 Consolidated Statement of Changes in Stockholders' Equity For the three months ended October 31, 2006 (Unaudited).............F4 Notes to Consolidated Financial Statements (Unaudited).........F5 - F12 3 On the Go Healthcare, Inc. Consolidated Balance Sheet October 31, 2006 (Unaudited) and July 31, 2006 October 31, 2006 July 31, 2006 ------------ ------------ (Unaudited) ASSETS Current assets Cash $ 988,153 $ 481,799 Accounts receivable 5,964,541 4,906,301 Inventory 154,087 213,848 Income tax receivable 39,596 82,743 Prepaid expenses 100,367 135,486 Due from Vital Products, Inc. 1,287,330 1,206,000 ------------ ------------ Total current assets 8,534,074 7,026,177 Investment in Vital Products, Inc. 250,000 250,000 Property and equipment, net of accumulated depreciation 632,242 646,212 Goodwill 4,423,383 4,423,383 ------------ ------------ Total assets $ 13,839,699 $ 12,345,772 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 5,700,030 $ 4,154,827 Note payable 121,570 194,019 Current portion of long-term debts 887,838 767,798 ------------ ------------ Total current liabilities 6,709,438 5,116,644 Long-term debts 3,861,996 2,973,084 ------------ ------------ Total liabilities 10,571,434 8,089,728 ------------ ------------ Stockholders' equity Preferred stock; $0.01 par value; 1,000,000 shares authorized, 269,000 and 284,134 issued and outstanding, respectively 2,690 2,841 Common stock; $0.0001 par value; 100,000,000 shares authorized, 1,990,179 and 463,529 issued and outstanding, respectively 199 46 Additional paid-in capital 14,213,950 14,213,952 Accumulated other comprehensive income (304,007) (345,831) Accumulated deficit (10,644,567) (9,614,964) ------------ ------------ Total stockholders' equity 3,268,265 4,256,044 ------------ ------------ Total liabilities and stockholders' equity $ 13,839,699 $ 12,345,772 ============ ============ The accompanying notes are an integral part of the consolidated financial statements. F1 On the Go Healthcare, Inc. Consolidated Statements of Operations and Comprehensive (Loss) (Unaudited) For the three months ended October 31, --------------------------- 2006 2005 ------------ ------------ Sales $ 7,386,217 $ 6,196,511 Cost of revenues 6,525,694 5,030,449 ------------ ------------ Gross profit 860,523 1,166,062 ------------ ------------ Operating expenses Depreciation and amortization 45,941 37,920 Selling, general and administrative 1,508,263 1,558,630 ------------ ------------ Total operating expenses 1,554,204 1,596,550 ------------ ------------ Loss from operations (693,681) (430,488) ------------ ------------ Other income (expense) Interest and financing expense (424,350) (165,586) Interest income 88,428 - ------------ ------------ Total other income (expense) (335,922) (165,586) ------------ ------------ Loss before provision for income taxes (1,029,603) (596,074) Provision for income taxes - - ------------ ------------ Net loss $(1,029,603) $ (596,074) ============ ============ Earnings per share computation: Net loss $ (0.93) $ (7.86) ============ ============ Weigthed average common shares outstanding - basic and diluted 1,109,492 75,848 ============ ============ The accompanying notes are an integral part of the consolidated financial statements. F2 On the Go Healthcare, Inc. Consolidated Statement of Changes in Stockholders' Equity For the three months ended October 31, 2006 (Unaudited)
Accumulated Additional Other Total Preferred Stock Common Stock Paid-in Comprehensive Accumulated Stockholders' Shares Amount Shares Amount Capital Income(Loss) Deficit Equity --------- ----------- ----------- ---------- ----------- ----------- ------------ ----------- Balance, July 31, 2006 284,134 $ 2,841 463,529 $ 46 $14,213,952 $ (345,831) $ (9,614,964) $ 4,256,044 Conversion of preferred stock into common stock (15,134) (151) 1,513,400 151 - - - - Issuance of common stock related to exercise of warrants - - 13,250 2 (2) - - - Foreign currency translation - - - - - 41,824 - 41,824 Net loss - - - - - - (1,029,603) (1,029,603) --------- ----------- ----------- ---------- ----------- ----------- --=--------- ----------- Balance, October 31, 2006 269,000 2,690 1,990,179 $ 199 $14,213,950 $ (304,007) $(10,644,567) $ 3,268,265 ========= =========== =========== ========== =========== =========== ============ ===========
The accompanying notes are an integral part of the consolidated financial statements. F3 On the Go Healthcare, Inc. Consolidated Statements of Cash Flows (Unaudited) For the three months ended October 31, --------------------------- 2006 2005 ------------ ------------ Cash flows from operating activities: Net loss $(1,029,603) $ (596,074) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation - 100,000 Financing cost related to convertible debt 339,897 92,661 Depreciation and amortization 45,941 37,920 Interest earned on Due from Vital Products (81,330) - Changes in operating assets and liabilities: Change in accounts receivable (1,058,240) 4,508 Change in inventory 59,761 265,170 Change in prepaid expenses 66,283 12,612 Change in income tax receivable 43,147 29,073 Change in other assets (31,164) - Change in accounts payable and accrued expenses 1,545,203 (1,059,305) ------------ ------------ Net cash used in operating activities (100,105) (1,113,435) ------------ ------------ Cash flows from investing activities: Purchase of property and equipment (31,971) (183,636) ------------ ------------ Net cash used in investing activities (31,971) (183,636) ------------ ------------ Cash flows from financing activities: Payments on notes payable (72,449) - Payments on convertible debts (5,518,147) - Proceeds from convertible debts 6,187,202 - Proceeds from stock issuances - 46,000 Proceeds from warrants issued - - Net cash provided by ------------ ------------ financing activities 596,606 46,000 ------------ ------------ Effect of foreign currency exchange 41,824 172,379 Net change in cash 506,354 (1,078,692) Cash, beginning of period 481,799 1,704,663 ------------ ------------ Cash, end of period $ 988,153 $ 625,971 ============ ============ The accompanying notes are an integral part of the consolidated financial statements. F4 On the Go Healthcare, Inc. Notes to Consolidated Financial Statements Three Months Ended October 31, 2006 Unaudited) 1. BASIS OF PRESENTATION AND HISTORY OF THE COMPANY Basis of presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-KSB for the year ended July 31, 2006 of On The Go Healthcare, Inc., doing business as On The Go Technologies Group (the "Company"). The interim financial statements present the balance sheet, statements of operations, stockholders' equity and cash flows of On The Go Healthcare, Inc. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of October 31, 2006 and the results of operations, stockholders' equity and cash flows presented herein have been included in the financial statements. All such adjustments are the normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year. History of the Company - On The Go Healthcare, Inc. (the "Company"), doing business as On The Go Technologies Group, was incorporated on July 21, 2000 in the State of Delaware. The Company immediately acquired International Mount Company Limited, a private corporation owned and operated by Stuart Turk. In October 2003, the Company acquired the assets and liabilities of Compuquest, Inc. through its subsidiary International Mount. Compuquest is an authorized dealer of computer hardware, software and peripherals for Acer America, AST Computer, Hewlett-Packard, Microsoft and Toshiba. On May 18, 2004, the Company signed an agreement to acquire substantially all of the assets and assume the liabilities of Vital Baby Innovations Inc. The acquisition was completed in June 2004. On February 28, 2005, the Company acquired 1637033 Ontario Limited and its wholly-owned subsidiary, Helios/Oceana Ltd., an Ontario-based company, that provides IT professional services. The Company paid for this acquisition by acting on a security agreement on a note receivable. In June 2005, the Company sold all of the significant assets in its childcare division to Vital Products, Inc. On July 19, 2005, the Company acquired Infinity Technologies Inc., a computer hardware provider. In October 2005, the Company entered into a Letter of Intent to purchase Island Corporation, a company involved in computer hardware distribution focusing in the medical field. The acquisition was completed in January 2006. F5 In January 2006, the Company completed the purchase of Solutions in Computing, a supplier of computer hardware and software focusing in the entertainment field. During May 2006, the Company amalgamated all of its subsidiaries into On the Go Technologies, Inc. Accordingly, as of July 31, 2006, the Company conducted its operations directly and through its wholly-owned subsidiary On The Go Technologies, Inc. The Company is in the business as a value added distributor of computer and computer related products. The Company operates in Canada and its headquarters located in Ontario, Canada. Liquidity and capital resources - As of October 31, 2006, the Company had total current assets of $8,534,074 and total current liabilities of $6,709,438 resulting in a working capital surplus of $1,824,636. As of October 31, 2006, the Company had cash totaling $988,153. Our cash flow from operating activities for the three months ended October 31, 2006 resulted in a deficit of $100,105. Our cash flow from investing activities resulted in a deficit of $31,971. Our cash flows from financing activities resulted in a surplus of $596,606. Overall, the Company's cash flows for the three months ended October 31, 2006, increased by $506,354. During the three months ended October 31, 2006, the Company was able to raise approximately $6,187,202 through advances from its revolving note, see Note 5. The Company believes the cash flow from current operating activities and capital raised, as needed, through existing debt financing will be sufficient to provide necessary capital for the Company's operations for the next twelve months. 2. SIGNIFICANT ACCOUNTING POLICIES Use of estimates - The preparation of consolidated 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 assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Principles of consolidation - The accompanying consolidated financial statements include the accounts of On The Go Healthcare, Inc. and its wholly owned subsidiaries, The International Mount Company, 1637033 Ontario Limited, Helios/Oceana Ltd., Infinity Technologies Inc., 2film Corporation and Island Corporation. The accompanying consolidated financial statements have been prepared in accordance accounting principles generally accepted in the United States. All material inter-company accounts and transactions have been eliminated in consolidation. During May 2006, the Company amalgamated all of its subsidiaries into On the Go Technologies, Inc. Accordingly, as of October 31, 2006, the Company conducted its operations directly and through its wholly-owned subsidiary On The Go Technologies Inc. Reclassifications - Certain prior year amounts were reclassified to conform to current period presentation. Foreign currency translation - The Company considers the functional currency to be the local currency and, accordingly, their financial information is translated into U.S. dollars using exchange rates in effect at quarter-end for assets and liabilities and average exchange rates during each reporting period for the results of operations. Adjustments resulting from translation of foreign subsidiaries' financial statements are included as a component of other comprehensive income (loss) within stockholders' equity. F6 Revenue and expense recognition - The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101" as modified by Securities and Exchange Commission Staff Accounting Bulletin No.104. Under SAB 101, revenue is recognized at the point of passage to the customer of title and risk of loss, there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. The Company generally recognizes revenue at the time of delivery of goods. Sales are reflected net of discounts and returns. Allowance for doubtful accounts - The allowance for doubtful accounts is an estimate made by management, based upon current information, to reserve for potential credit losses in the future. While these losses have been within management's expectations in the past, it is reasonably possible that the allowance for doubtful accounts will need to be revised in the future to reflect changing information and conditions. Inventory - Inventory is comprised of finished goods held for sale and is stated at lower of cost or market value. Cost is determined by the average cost method. The Company estimates the realizable value of inventory based on assumptions about forecasted demand, market conditions and obsolescence. If the estimated realizable value is less than cost, the inventory value is reduced to its estimated realizable value. If estimates regarding demand and market conditions are inaccurate or unexpected changes in technology affect demand, the Company could be exposed to losses in excess of amounts recorded. Goodwill and intangible asset - In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under SFAS No. 142, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows. The Company has goodwill of $4,423,383 as of October 31, 2006 and July 31, 2006, respectively, which in the opinion of management, no impairment is deemed necessary. SFAS 142 requires the Company to compare the fair value of the reporting unit to its carrying amount on an annual basis to determine if there is potential impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. Stock based compensation - On January 1, 2006, the Company adopted SFAS No. 123 (R) "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 and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values. F7 Earnings (loss) per share - The Company reports earnings (loss) per share in accordance with SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise of options and warrants to purchase common shares would have an anti-dilutive effect. Comprehensive income (loss) - The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income", which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners or distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under the current accounting standards as a component of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income is displayed in the statement of shareholder's equity and in the balance sheet as a component of shareholder's equity. 3. VITAL PRODUCTS, INC. As discussed in Note 1, the Company sold its Child Care division including the assets of the Child Care Division to Vital Products, Inc. ("Vital") in June 2005 in exchange for 1,000,000 shares of Vital's common stock. Investment in Vital Products totaling $250,000 consist of the 1,000,000 shares of common stock in Vital representing less than 10% of the outstanding shares, reflected at cost. The Company also has amounts due from Vital Products, Inc. for money loaned consisting of the following at October 31, 2006 and July 31, 2006: October 31, July 31, 2006 2006 ----------- ----------- Note receivable plus accrued interest, interest rate at 20% per annum, secured and due on demand (past due maturity of July 5, 2007) $ 900,000 $ 900,000 Note receivable plus accrued interest, interest rate at 20% per annum, secured and due on demand (past due maturity of June 15, 2007) 306,000 306,000 Accrued interest on notes receivable 81,330 - ----------- ----------- $ 1,287,330 $ 1,206,000 =========== =========== 4. NOTES PAYABLE Notes payable totaling $121,570 at October 31, 2006 and $194,019 at July 31, 2006 arose from the acquisition of Island Corporation and Solutions in Computing as discussed in Note 1. These note payables are non-interest bearing and required to be paid starting in January 2006 and ending February 2007. F8 5. LONG TERM DEBTS During the quarter, the Company received $270,338 from a company controlled by the CEO, The note is non-interest bearing and has no fixed terms of payment. On November 30, 2005, the Company issued to Dutchess Private Equities Fund, LP ("Dutchess") a promissory note in the amount of $800,000 for a purchase price of $640,000. The note is due and payable in full on November 30, 2006. Other than the $160,000 discount inherent in the purchase price, the note is non-interest bearing. The note will be repaid using 50% of the proceeds of each put notice delivered by the Company to Dutchess or $66,667 per month. In connection with the note, the Company paid Dutchess a facility fee of $40,000 and issued to Dutchess 180,000 shares of restricted common stock as incentive shares with a fair value of $153,000. The $40,000 fee, $160,000 inherent discount and $153,000 incentive shares in the note are being amortized to debt discount cost over the term of the note. On January 6, 2006, the Company issued to Dutchess a promissory note in the amount of $1,250,000 for a purchase price of $1,000,000. The note is due and payable in full on June 30, 2007. Other than the $250,000 discount inherent in the purchase price, the note is non-interest bearing. The note will be repaid using 50% of the proceeds of each put notice delivered by the Company to Dutchess or $69,445 per month. In connection with the note, the Company paid Dutchess a facility fee of $65,000 and issued 280,000 shares of common stock as incentive shares with a fair value of $224,000. The $65,000 fee, $250,000 inherent discount and $224,000 incentive shares in the note are being amortized to debt discount cost over the term of the note. The Company accounts for convertible debt securities by the method specified by Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" and its related interpretations. SFAS No. 133 requires that a conversion option should be accounted for separately as a derivative if the conversion option meets certain criteria. On July 14, 2005, the Company executed a convertible debt facility with Laurus Master Fund, Ltd. ("Laurus") granting access to borrow up to $5,500,000. This financing consisted of a $500,000 secured term loan (the "Term Note") and a $5,000,000 secured revolving note (the "Revolving Note"). The Revolving Note was effectuated through a $2,500,000 convertible minimum borrowing note and provided for advances of up to 90% of eligible accounts receivable. To the extent the Company repaid the amount outstanding under the Revolving Note and/or Laurus converted amounts due under the Revolving Note into Common Stock, the Company could reborrow or make additional borrowings, provided that the aggregate amount outstanding did not exceed the eligible accounts receivable. Both the $500,000 Term Note and the $2,500,000 Convertible Minimum Borrowing Note (together the "Notes") provided for conversion, at the option of Laurus, of the amounts outstanding into the Company's common stock at a fixed conversion price of $1.02 per share (the "Fixed Conversion Price"). In the event that the Company issued common stock or derivatives convertible into our common stock for a price less than $1.02 per share, then the price at which Laurus may convert its shares was reset to that lower price. The conversion prices under the Notes are subject to equitable adjustment for stock splits, stock dividends and similar events. Laurus was obligated to convert scheduled principal and interest payments under the Term Note when (i) a registration F9 statement became effective with respect to the shares of common stock underlying the indebtedness, (ii) the five (5) day average market price of the Company's common stock was 115% of the Fixed Conversion Price, and (iii) certain trading volume criteria had been met. Using the Black-Scholes option pricing model, the Company determined the fair value of the conversion feature related to the Notes was $2,365,000 if the full $5,500,000 available under the note was advanced. The assumptions used in the fair value calculation for the warrants were as follows: stock price of $1.03, exercise price of $1.02, weighted average term of three (3) years, volatility (annual) of 59%, dividends rate of 0% and a risk free interest rate of 3.0%. Accordingly, the fair value per share of the warrants was calculated to be $0.43 per share. As a result of the beneficial conversion feature, a discount on debt issued of $2,900,000 was recorded and is being amortized to interest expense over the three year life of the debt agreement. As part of the transaction, the Company also issued Laurus a seven-year warrant to purchase 1,420,000 shares of its common stock at a price of $1.11 per share subject to adjustment. The fair market value of the warrants issued was determined to be $869,000 using the Black-Scholes option pricing model. The assumptions used in the fair value calculation of the warrants were as follows: stock price of $1.03, exercise price of $1.11, weighted average term of seven (7) years, volatility of 59%, dividend rate of 0% and a risk free interest rate of 3.0%. Accordingly, the fair value per share of the warrants was calculated to be $0.61 per share. The Company will amortize this relative fair value of the stock and warrants to interest expense over the three (3) year life of the debt agreement, using the interest method. The loan costs, conversion feature and warrants issued in connection with the Notes, result in an effective interest rate on the debt of approximately 90%. The Notes bear annual interest at the prime rate (as reported in the Wall Street Journal) plus 2% subject to a floor of eight percent, and mature in three years. The interest rate on the Notes will be decreased by 2.0% for every 25% increase in the market value of the Company's common stock above the Fixed Conversion Price up to a minimum of 0.0%. Monthly interest payments on the Notes began August 1, 2005. Monthly amortizing payments of principal on the Term Note, equal to $15,625, are payable on the first day of each month commencing December 1, 2005. The final principal amortization payment on the Term Note is due December 1, 2005.Under the Term Note, if monthly payments of interest and principal are made in cash rather than converted to shares of common stock, the Company will pay Laurus 100% of the then monthly amount due. Prepayments under the Term Note are subject to a premium in the amount of 30% of the principal being repaid. The Revolving Note terminates, and borrowings there under become due July 14, 2008. The Notes also require the Company to have an effective registration statement covering the common stock underlying the conversion feature of the Notes and the Warrants issued in connection with the Notes. In November 2005, Laurus advanced the Company an additional $200,000. As of October 31, 2006, the outstanding balance of the term loan is $188,250. We intend to use the revolving note as our primary source of financing. As of October 31, 2006, the balance of the revolving note is $4,993,946. At October 31, 2006, $6,054 remains available for borrowing under the Revolving Note. F10 On January 13, 2006, the Company agreed to revise the financing facility with Laurus. The revised facility consists of (i) a $500,000 Secured Convertible Note (ii) a Secured Convertible Minimum Borrowing Note, and (iii) a Secured Revolving Note (collectively, the "Amended and Restated Notes"). The Amended and Restated Notes are secured by a security interest in substantially all of the Company assets. Pursuant to the Agreement, the Company and Laurus agreed to amend the conversion price to $0.50. In addition, the Company and Laurus agreed to amend the exercise price of the warrants to $0.65, subject to adjustment. The modification of the convertible notes and attached warrants, as described in the revised facility, has been accounted for as a debt extinguishment and the issuance of a new debt instrument in accordance with EITF 96-19, "Debtor's Accounting for a Modification of Debt Instruments". Accordingly, in connection with extinguishment of the original debt, the Company recognized a $633,479 loss. The Amended and Restated Notes were assigned fair value at January 13, 2006, as follows: Principal $ 3,600,000 Less: Stock warrants issued in connection with revised facility (618,166) Value of beneficial conversion features ( 1,036,392) ------------ Fair value of modified convertible notes $ 1,945,442 ============ The assumptions used in the fair value calculation of the stock warrants and beneficial conversion features at January 13, 2004 using the Black-Scholes option pricing model were as follows: Beneficial Conversion Warrants Feature ---------------------- Stock price $ 0.47 $ 0.47 Exercise price $ 0.65 $ 0.50 Term 6.5 years 2.5 years Volatility (annual basis) 140% 140% The following is a maturity schedule of these long-term debts for the next two years: 2007 $ 171,875 2008 5,010,321 ----------- $ 5,182,196 =========== F11 6. STOCKHOLDERS' EQUITY On August 10, 2006, the Company's common stock was adjusted to take into account a 50-to-1 reverse stock split. The Company's common stock have been adjusted on retroactive basis, accordingly, all balance all previous balances have been adjusted for this reverse stock split. On August 10, 2006, the Company's Chief Executive Officer converted 2,800 shares of preferred stock into 280,000 shares of common stock. On August 10, 2006, a business entity owned by the Company's Chief Executive Officer converted 3,334 shares of preferred stock into 333,400 shares of common stock. On September 6, 2006, an individual converted 500 shares of preferred stock into 50,000 shares of common stock. On September 18, 2006, an individual exercised warrants for 13,250 shares of common stock. On September 20, 2006, an individual converted 600 shares of preferred stock into 60,000 shares of common stock. On October 6, 2006, an individual converted 900 shares of preferred stock into 90,000 shares of common stock. On October 20, 2006, an individual converted 1,000 shares of preferred stock into 100,000 shares of common stock. On October 31, 2006, the Company's Chief Executive Officer converted 1,000 shares of preferred stock into 100,000 shares of common stock. On October 31, 2006, a business entity owned by the Company's Chief Executive Office converted 5,000 shares of preferred stock into 500,000 shares of common stock. During the three months ended October 31, 2006, there were no new stock options or warrants granted. F12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. INTRODUCTION The following discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included elsewhere in this report and our Form 10-QSB for the three months ended October 31, 2006 and 2005 which have been prepared in accordance with accounting principle generally accepted in the United States. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report contains certain "forward-looking statements" that involve risks an uncertainties. We generally use words such as "believe," "may," "could," "will," "intend," "expect," "anticipate," "plan," and similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including general economic conditions, the markets for and market price of our products, the strength and financial resources of our competitors, our ability to find and retain skilled personnel, the results of financing efforts, regulatory developments and compliance and other risks described in our annual report on Form 10-KSB filed with the Securities and Exchange Commission and elsewhere in this report. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations, except as required by law. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, inventories, and impairment of long-term assets, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of them Consolidated Financial Statements: We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," or SAB 101 as modified by SAB 104. Under SAB 101, revenue is recognized at the point of passage to the customer of title and risk of loss, there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. We generally recognize revenue at the time of delivery of goods. Sales are reflected net of discounts and returns. The allowance for doubtful accounts is maintained to provide for losses arising from customers' inability to make required payments. If there is a deterioration of our customers' credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. 4 Inventories are stated at the lower of cost (determined on an average cost basis) or market. Based on our assumptions about future demand and market conditions inventories are written-down to market value. If our assumptions about future demand change and/or actual market conditions are less favorable than those projected, additional write-downs of inventories may be required. Amounts billed to customers for shipping and handling are recorded as sales revenues. Costs incurred for shipping and handling are included in cost of sales. We offer discounts and point-of-sale rebates to our customers on some of our products. The costs of these discounts and point-of-sale rebates are recognized at the date at which the related sales revenue is recognized and are recorded as a reduction of sales revenue. We assess the recoverability of long-lived assets whenever events or changes in business circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of the expected undiscounted future net cash flows over the remaining useful life is less than the carrying amount of the assets. We account for stock-based employee compensation plans under the recognition and measurement principles of Financial Accounting Standards 123R. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 2006 AND 2005. Revenues Revenues from sales for the three months ended October 31, 2006 were $7,386,217 compared to $6,196,511 for the three months ended October 31, 2005. The primary reason for the increase is the acquisition of Island Corporation in January 2006 and Solutions In Computing in January 2006. Additionally, the ability to cross sell amongst the different divisions of our company have created new opportunities for our sales force. Cost of Sales Our cost of sales was $6,525,694 for the three months ended October 31, 2006 compared to $5,030,449 for the three months ended October 31, 2005. The increase in cost of sales is primarily due to the increase in revenues mainly attributed to the acquisition of Island Corporation in January 2006, and Solutions in Computing in January 2006. Gross Profit Our gross profit for the three months ended October 31, 2006 totaled $860,523 compared to $1,166,062 for the three months ended October 31, 2005. Overall, our percentage of cost of sales to revenues for the three months ended October 31, 2006 approximated was 11.7% of cost of sales to revenues. For the three months ended October 31, 2005 our cost of revenue was 18.8%. Decrease in our gross profit percentage primarily related two sales purchase orders during the quarter ended October 31, 2006 valued at more that $1,700,000 with a lower gross profit margin, 6%. We do not consider these two sale purchase order as a traditional purchase order with regards to the low gross profit margin and do not anticipate future similar sale purchase orders with such low gross profit margins unless we believe the sale represents a strategic opportunity. 5 Selling, General and Administrative Expenses Selling, General and Administrative Expenses decreased to $1,508,263 for the three months ended October 31, 2006 from $1,558,630 for the three months ended October 31, 2005. The decrease in selling, general and administrative expenses can be mainly attributed to staff reduction required to give us a competitive edge. We will continue to evaluate our staffing needs and other administrative expenses in order to determine the necessity of such expenditures in terms of our operational requirements. Interest and Financing Expense Interest and financing expense increased to $424,350 for the three months ended October 31, 2006 from $165,586 for the three months ended October 31, 2005. The increase was primarily the result of new convertible debentures which had deemed beneficial conversion features resulting not only in normal interest expense but also expense related to the deemed beneficial conversion feature. We believe such interest and financing expense will continue at similar levels for the next twelve months related to the deemed beneficial conversion feature related to the convertible debentures. Net loss We had an increase in our net loss to $1,029,603 for the three months ended October 31, 2006 from $596,074 for the three months ended October 31, 2005. The increase in net loss was due to the factors discussed above. Liquidity and Capital Resources As of October 31, 2006, we had current assets of $8,534,074 and current liabilities of $6,709,438, resulting in a working capital surplus of $1,824,636. As of that date we had cash of $988,153. For the three months ended October 31, 2006, cash used in operations was $100,105 as compared to cash used $(1,113,435) for the three months ended October 31, 2005. The increase in the cash provided is due to an increase in collections of accounts receivable during the three months end October 31, 2006. For the three months ended October 31, 2006, cash used in investing activities was $31,971 as compared to $183,636 for the three months ended October 31, 2005. The increase cash used in investing activities is due to purchasing equipment. For the three months ended October 31, 2006, cash provided by financing activities was $596,606 as compared to cash provided by financing activities of $46,000 for the three months ended October 31, 2005 The primary source of financing for the three months ended October 31, 2006 has been common shares issued as part of an Investment Agreement for an equity line of credit and our $5.0 million revolving line of credit. In November 2005, we entered into debt agreement with Dutchess Private Equities Fund, LP ("Dutchess") for the issuance of a $800,000 promissory note for a purchase price of $640,000. In January 2006, we entered into a debt agreement with Dutchess for the issuance of a $1,250,000 promissory note for a purchase price of $1,000,000. In July 2005, we entered into an equity line of credit agreement through a convertible debt facility with Laurus Master Fund, Ltd. ("Laurus") granting access to borrow up to $5,500,000. The financing consisted of a $500,000 secured term loan and a $5,000,000 secured revolving note. In January 2006, we agreed to revise the convertible debt facility with Laurus. 6 Whereas we have been successful in the past in raising capital, these sources of financing may not continue to be available to us. Additionally, financing may not be available on terms favorable to us. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuance of our stock in lieu of cash, which may also result in dilution to existing stockholders. SUBSIDIARY As of October 31, 2006, our wholly-owned subsidiary is On The Go Technologies Inc. ITEM 3. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-QSB. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the reasonable assurance level to ensure that to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. Changes in Internal Controls over Financial Reporting There were no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 7 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On June 23,2006, Frank Abate, Elaine Abate, John Abate and Gerhard Schmid filed a Statement of Claim in Ontario Superior Court against On The Go Healthcare, Inc. for alleged damages for breach of contract in the amount of $281,522 and damages for wrongful dismissal of Frank Abate and John Abate. We have responded with a counter claim for damages caused by Frank Abate and John Abate. We have paid severance pay for Frank Abate and John Abate's termination and we believe the plaintiff's entire claim is frivolous. It is too early to determine the outcome of such allegations, however, we intend to vigorously defend against the plaintiff's claim. We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. Other than the litigation described above, we are not aware of any pending or threatened litigation against the Company or our officers and directors in their capacity as such that could have a material impact on our operations or finances. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 5. OTHER INFORMATION. On October 1, 2004, we did a reverse stock split and exchanged all of our common shares on the basis of 30 shares for 1 and on August 10, 2006 we did a reverse stock split and exchanged all of our common shares on the basis of 50 shares for 1 new common share and began trading under the new ticker symbol "ONGO.OB." On December 6, 2006, the Company issued to Dutchess Private Equities Fund LP. a promissory note in the amount of $1,937,000 for a purchase price of $1,550,000. The note is due and payable in full on July 11, 2008. Other than the $387,000 discount inherent in the purchase price, the note is non-interest bearing. The note will be repaid in payments of $60,000 U.S. per month for the first seven months and $126,500 U.S. per month for the remaining months until the note is paid in full. In connection with the note, the Company issued 400,000 shares of restricted common stock as incentive shares. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Exhibit Number Description of Exhibit 2.1 Memorandum of Agreement between the Company and Elaine Abate, John Abate, Gerhard Schmid, Frank Abate, 1066865 Ontario Inc, and Infinity Technologies Inc., dated July 19, 2005 (included as Exhibit 2.1 to the Form 8-K filed July 22, 2005, and incorporated herein by reference). 8 3.1 Restated Certificate of Incorporation (included as Exhibit 3.4 to the Form 10-KSB filed October 27, 2004, and incorporated herein by reference). 3.2 By-laws (included as Exhibit 3.4 to the Form SB-2 filed May 24, 2001, and incorporated herein by reference). 3.3 Certificate of Amendment of the Certificate of Incorporation (included as Exhibit 3.5 to the Form 10-KSB filed October 27, 2004, and incorporated herein by reference). 4.1 Registration Rights Agreement between the Company and Dutchess Private Equities Fund, L.P., dated February 27, 2004 (included as Exhibit 10.3 to the Form SB-2 filed February 27, 2004, and incorporated herein by reference). 4.2 Certificate of Designation of Series A Convertible Preferred Stock (included as Exhibit 4.1 to the Form 10-KSB filed October 27, 2004, and incorporated herein by reference). 4.3 Form of Series C Common Stock Purchase Warrant (included as Exhibit 4.2 to the Form SB-2 filed November 19, 2004, and incorporated herein by reference). 4.4 Promissory Note between the Company and Dutchess Private Equities Fund, II, L.P., dated March 7, 2005 (included as Exhibit 10.5 to the Form 10-QSB filed March 10, 2005, and incorporated herein by reference). 4.5 Secured Convertible Term Note between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.1 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.6 Secured Revolving Note between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.2 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.7 Secured Convertible Minimum Borrowing Note between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.3 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.8 Security and Purchase Agreement between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.4 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.9 Master Security Agreement between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.5 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.10 Share Pledge Agreement between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.6 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.11 Form of Common Stock Purchase Warrant between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.7 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 9 4.12 Subsidiary Guaranty between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.8 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.13 Funds Escrow Agreement between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.9 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.14 Forbearance Agreement between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.10 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.15 Joinder Agreement between the Company and Laurus Master Fund, Ltd., dated July 20, 2005 (included as Exhibit 4.11 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.16 Registration Rights Agreement between the Company and Laurus Master Fund, Ltd., dated July 14, 2005 (included as Exhibit 4.12 to the Form 8-K filed July 20, 2005, and incorporated herein by reference). 4.17 Promissory Note between the Company and Elaine Abate, John Abate, and Gerhard Schmid, dated July 19, 2005 (included as Exhibit 4.1 to the Form 8-K filed July 22, 2005, and incorporated herein by reference). 4.18 Promissory Note between the Company, Dutchess Private Equities Fund, L.P., and Dutchess Private Equities Fund, II, L.P., dated November 30, 2005 (included as Exhibit 4.1 to the Form 8-K filed December 5, 2005, and incorporated herein by reference). 4.19 Promissory Note between the Company and Dutchess Private Equities Fund, L.P. and Dutchess Private Equities Fund, II, L.P., dated January 6, 2006 (included as Exhibit 4.1 to the Form 8-K filed January 12, 2006, and incorporated herein by reference). 4.20 Promissory Note between the Company and Norman Drolet and Ettore Naccarato dated January 10, 2006 (included as Exhibit 4.1 to the Form 8-K filed January 12, 2006, and incorporated herein by reference). 4.21 Amended and Restated Secured Convertible Term Note between the Company and Laurus Master Fund, Ltd., dated January 13, 2006 (included as Exhibit 4.1 to the Form 8-K filed January 30 2006, and incorporated herein by reference). 4.22 Amended and Restated Secured Revolving Note between the Company and Laurus Master Fund, Ltd., dated January 13, 2006 (included as Exhibit 4.2 to the Form 8-K filed January 30, 2006, and incorporated herein by reference). 4.23 Amended and Restated Secured Convertible Minimum Borrowing Note between the Company and Laurus Master Fund, Ltd., dated January 13, 2006 (included as Exhibit 4.3 to the Form 8-K filed January 30, 2006, and incorporated herein by reference). 4.24 Amended and Restated Security Purchase Agreement between the Company and Laurus Master Fund, Ltd., dated January 13, 2006 (included as Exhibit 4.4 to the Form 8-K filed January 30, 2006 and incorporated herein by reference). 10 4.25 Amended and Restated Form of Common Stock Purchase Warrant between the Company and Laurus Master Fund, Ltd., dated January 13, 2006 (included as Exhibit 4.5 to the Form 8-K filed January 30, 2006 and incorporated herein by reference). 4.26 Amended and Restated Registration Rights Agreement between the Company and Laurus Master Fund, Ltd., dated January 13, 2006 (included as Exhibit 4.6 to the Form 8-K filed January 30, 2006, and incorporated herein by reference). 4.27 Promissory Note between the Company and Val Silva, dated February 2, 2006 (included as Exhibit 4.1 to the Form 8-K filed February 6, 2006 and Incorporated herein by reference). 4.28 Form of Series "D" Common Stock Purchase Warrant (included as Exhibit 4.22 to the Form SB-2 filed February 21, 2006 and Incorporated herein by reference). 4.29 Promissory Note between the Company and Dutchess Private Equities Fund, L.P, dated December 6, 2006. 10.1 Consulting Agreement between the Company and Katherine Evans, dated November 17, 2003 (included as Exhibit 10.6 to the Form S-8 filed November 28, 2003, and incorporated herein by reference). 10.2 Investment Agreement between the Company and Dutchess Private Equities Fund, L.P., dated February 27, 2004 (included as Exhibit 10.2 to the Form SB-2 filed February 27, 2004, and incorporated herein by reference). 10.3 Placement Agent Agreement between the Company, Dutchess Private Equities Fund, L.P. and Charleston Capital Securities, Inc., dated February 27, 2004 (included as Exhibit 10.4 to the Form SB-2 filed February 27, 2004, and incorporated herein by reference). 10.4 Consulting Agreement between the Company and DC Design, dated March 10, 2004 (included as Exhibit 10.2 to the Form S-8 filed March 10, 2004, and incorporated herein by reference). 10.5 Consulting Agreement between the Company and David Walt, dated March 11, 2004 (included as Exhibit 10.1 to the Form S-8 filed June 17, 2004, and incorporated herein by reference). 10.6 Consulting Agreement between the Company and Michael Levine, dated March 11, 2004 (included as Exhibit 10.2 to the Form S-8 filed June 17, 2004, and incorporated herein by reference). 10.7 Consulting Agreement between the Company and Thirusenthil Navaratnarajh, dated March 11, 2004 (included as Exhibit 10.3 to the Form S-8 filed June 17, 2004, and incorporated herein by reference). 10.8 Consulting Agreement between the Company and 964434 Ontario Inc., dated June 15, 2004 (included as Exhibit 10.5 to the Form S-8 filed June 17, 2004, and incorporated herein by reference). 11 10.9 Consulting Agreement between the Company and Jack Tepperman, dated June 15, 2004 (included as Exhibit 10.6 to the Form S-8 filed June 17, 2004, and incorporated herein by reference). 10.10 Letter of Intent between the Company and Infinity Technologies Inc. for the Acquisition of Infinity Technologies Inc. dated May 31, 2005 (included as Exhibit 10.1 to the Form 8-K filed June 6, 2005, and incorporated herein by reference). 10.11 Asset Sale Agreement between the Company and Vital Products, Inc., dated July 5, 2005 (included as Exhibit 10.1 to the Form 8-K filed July 5, 2005, and incorporated herein by reference). 10.12 Letter of Intent between the Company and Island Corporation, dated October 21, 2005 (included as Exhibit 10.1 to the Form 8-K filed October 24, 2005, and incorporated herein by reference). 10.13 Secured Promissory Note between the Company and Vital Products, Inc., dated February 23, 2006 (included as Exhibit 10.1 to the Form 8-K filed February 27, 2006, and incorporated herein by reference). 10.14 Secured Promissory Note between the Company and Vital Products, Inc., dated February 23, 2006 (included as Exhibit 10.2 to the Form 8-K filed February 27, 2006, and incorporated herein by reference). 21.1 Subsidiaries of the Registrant (included as Exhibit 21.1 to the Form 10-KSB filed October 31, 2005, and incorporated herein by reference). 31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 12 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. ON THE GO HEALTHCARE, INC. Dated: December 12, 2006 By:/s/ Stuart Turk ---------------------------- Stuart Turk, President, Chief Executive Officer, Chairman and Director Dated: December 12, 2006 By:/s/ Evan Schwartzberg ---------------------------- Evan Schwartzberg, Chief Financial and Principal Accounting Officer 13