WKHS

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2009, for Title Starts Online, Inc. (the "Company"). On December 28, 2009, the Company completed a reverse-merger transaction with Advanced Mechanical Products, Inc. (AMP). AMP is considered the accounting acquirer; consequently, the historical financial statements presented are those of AMP. The Company is no longer a shell company and its operations focus on the design, marketing, and sale of modified automobiles with all-electric drivetrains and battery systems. The Company is classified as a development-stage enterprise.

Key Financial Metrics

Debt and Liquidity: As of December 31, 2009, the Company held no cash. Current liabilities included $379,819 in accounts payable, $96,000 in customer deposits, $60,000 in notes payable, and $45,064 in shareholder advances. The Company has a working capital deficiency and relies on financing activities to fund operations.

Material Changes vs. Prior Period

• Corporate Structure: The most significant change was the reverse-merger with AMP on December 28, 2009, shifting the Company's business from a shell entity to an electric vehicle conversion business.
• Expenses: Total operating expenses increased by approximately 10.4% from 2008 to 2009. This increase was driven primarily by higher payroll and payroll taxes ($710,216 in 2009 vs. $389,508 in 2008) due to hiring additional employees for product development.
• Liquidity: Cash reserves were depleted entirely during 2009, dropping from $58,303 to $0. Net cash used by operating activities increased to $1,243,039 in 2009 from $1,037,159 in 2008.
• Liabilities: Current liabilities more than doubled, largely due to increased accounts payable and the accumulation of customer deposits ($96,000) which were not recognized as revenue as delivery had not occurred.

Guidance, Outlook, Risks, and Unusual Items

Outlook and Capital Needs: Management estimates a need for between $2,000,000 and $2,500,000 to execute its business plan for the next twelve months. The Company has no revenue and expects net losses to continue through 2010. There is substantial doubt about the Company's ability to continue as a going concern without additional financing.

Subsequent Events (Post-2009): Between January and March 2010, the Company raised approximately $615,275 through the sale of common stock and issued a $100,000 promissory note.

Risks and Contingencies:

• Going Concern: The Company has negative working capital and no revenue, raising substantial doubt about its ability to continue operations.
• Competition: The Company faces intense competition from well-capitalized OEMs like Tesla, GM (Chevy Volt), and Nissan (Leaf).
• Regulatory Compliance: The Company is subject to strict federal and state regulations regarding vehicle safety and emissions, which are costly to comply with.
• Internal Controls: Management identified material weaknesses in internal controls over financial reporting, including a lack of segregation of duties and reliance on external auditors for adjustments.
• Intellectual Property: The Company holds no patents and relies on trade secrets, creating a risk of infringement or inability to protect proprietary technology.

Investor Verification Checklist

• Capital Sufficiency: Verify if the Company has successfully raised the estimated $2.0M–$2.5M required for operations, as cash on hand was $0 at year-end.
• Revenue Recognition: Confirm the status of the $96,000 in customer deposits and whether any have been converted to revenue or refunded.
• Product Viability: Assess the progress of the electric drivetrain conversions and the timeline for commercial delivery, given the lack of sales since inception.
• Debt Obligations: Review the terms of the $60,000 note payable and shareholder advances, specifically regarding maturity dates and potential conversion to equity.
• Internal Controls: Evaluate the remediation plan for the identified material weaknesses in financial reporting controls.