As Filed With the Securities and Exchange Commission on October 23, 2009
Registration No.
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
Amendment No. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MOMENTUM HEALTHCARE SERVICES, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 7375 26-4674273
________________________________________________________________________________
(State or jurisdiction (Primary Standard (IRS Employer
of incorporation Industrial Classification Identification
or organization) Code Number) Number)
3 Church Circle, Suite 130
Annapolis, MD
21401
Telephone 410-919-7571
Facsimile 443-403-2481
_________________________________________________________________
(Address, including zip code, Telephone and Facsimile Number
including area code, of Registrant's Principal Executive Offices)
2682 Claibourne Road
Annapolis, MD 21403
Telephone 410-280-6685
Fax: 443-403-2481
______________________________________________________
(Name, Address including zip code and Telephone Number
including area code of Resident Agent for Services)
Copies to:
Diane D. Dalmy, Attorney at Law
8965 W. Cornell Place
Lakewood, CO 80227
Telephone: 303-985-9324
Facsimile: 303-988-6954
Email: ddalmy@earthlink.net
Approximate Date of Proposed Sale to the Public: As soon as practicable after
the effective date of the Registration Statement.
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 of
1933 check the following box.[X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) 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.[ ]
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. [ ]
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.[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting Company. See definitions of "large
accelerated filer," "accelerated filer," and "smaller reporting Company," in
Rule 12b-2 of the Exchange Act. (Check one.)
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ]
Smaller reporting Company [X] (Do not check if a smaller reporting Company)
CALCULATION OF REGISTRATION FEE
========================================================================================================
Proposed Maximum
Title of Each Aggregate Proposed Maximum
Class of Securities Number of Shares Offering Price Aggregate Amount of
To be Registered to be Registered Per Share(1) Offering Price(1) Registration Fee
________________________________________________________________________________________________________
Common Stock,
$.001 par value (2) 6,000,000 $5.00 $30,000,000 $1,674
________________________________________________________________________________________________________
Total Registration Fee $1,674
========================================================================================================
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
amended.
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
2
PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER __ , 2009
MOMENTUM HEALTHCARE SERVICES, INC.
6,000,000 SHARES OF CLASS A COMMON STOCK
This prospectus relates to the sale of an aggregate of 6,000,000 shares of
common stock on a best efforts basis, with a reserve fixed selling price of
$5.00 per share and accepted by the Board of Directors, for the duration of the
offering, no minimum purchase of shares and an offering period of 9 months from
the date of this prospectus, or such shorter period as our Board of Directors
may determine, by Momentum Healthcare Services, Inc., the selling security
holder under this prospectus. These securities will be offered for sale by the
selling security holder identified in this prospectus in accordance with the
methods and terms described in the section of this prospectus entitled "Plan of
Distribution." There is currently no market for the shares and our securities
are not listed on any exchange or quotation service.
We will receive all of the proceeds from the sale of these shares. We will pay
all expenses, including brokerage expenses, fees, discounts and commissions
incurred in connection with the offering described in this prospectus. Our
common stock is more fully described in the section of this prospectus entitled
"Description of Securities."
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. See "Risk
Factors" on page 6 for risks of an investment in the securities offered by this
prospectus, which you should consider before you purchase any shares.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October , 2009.
This prospectus is not an offer to sell any securities other than the shares of
common stock offered hereby. This prospectus is not an offer to sell securities
in any circumstances in which such an offer is unlawful We have not authorized
anyone, including any salesperson or broker, to give oral or written information
about this offering, the Company, or the shares of common stock offered hereby
that is different from the information included in this prospectus. You should
not assume that the information in this prospectus, or any supplement to this
prospectus, is accurate at any date other than the date indicated on the cover
page of this prospectus or any supplement to it.
3
TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................6
THE OFFERING...................................................................9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..............................9
RISK FACTORS..................................................................10
USE OF PROCEEDS TO ISSUER.....................................................28
DILUTION......................................................................29
PLAN OF DISTRIBUTION..........................................................30
DIVIDEND POLICY...............................................................31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.....................................................31
SELECTED FINANCIAL DATA.......................................................41
PLAN OF OPERATIONS............................................................43
PROJECTED FINANCIAL STATEMENTS PREPARED BY MANAGEMENT.........................45
BUSINESS FACILITIES...........................................................48
COMPETITION...................................................................48
RESEARCH AND DEVELOPMENT......................................................49
EMPLOYEES.....................................................................49
INDEPENDENT DIRECTORS.........................................................49
MANAGEMENT....................................................................50
MANAGEMENT AND DIRECTOR BIOGRAPHIES...........................................50
PROSPECTIVE INDEPENDENT DIRECTOR BIOGRAPHIES..................................52
AUDIT COMMITTEE...............................................................53
COMPENSATION COMMITTEE........................................................53
NOMINATING COMMITTEE..........................................................54
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.............................54
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................54
DESCRIPTION OF CAPITAL STOCK..................................................56
REMUNERATION OF DIRECTORS AND OFFICERS........................................58
COMPENSATION OF DIRECTORS.....................................................58
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.....................58
STOCK INCENTIVE PLAN..........................................................58
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS................................................58
SHARES ELIGIBLE FOR FUTURE SALE...............................................59
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES....................................................59
4
LEGAL MATTERS.................................................................60
AUDITOR.......................................................................60
INTEREST OF NAMED EXPERTS AND COUNSEL.........................................60
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE......................................................60
AVAILABLE INFORMATION.........................................................60
REPORTS TO SECURITY HOLDERS...................................................60
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.......................61
RECENT SALES OF UNREGISTERED SECURITIES.......................................69
EXHIBITS......................................................................70
UNDERTAKINGS..................................................................70
MARKET FOR COMMON EQUITY AND RELATED SECURITIES MATTERS.......................72
SIGNATURES....................................................................72
EXHIBIT INDEX.................................................................73
5
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. IT
DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE
INVESTING IN OUR COMMON STOCK. YOU ARE URGED TO READ THE ENTIRE PROSPECTUS
CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS" AND OUR FINANCIAL
STATEMENTS AND THE RELATED NOTES. IN THIS PROSPECTUS, WE REFER TO MOMENTUM
HEALTHCARE SERVICES, INC. AS "WE," "US," "OUR," "MOMENTUM" AND THE "COMPANY."
MOMENTUM HEALTHCARE SERVICES, INC.
THE COMPANY
Momentum Healthcare Services, Inc. ("Momentum" or the "Company") was founded
under the name Dennis Healthcare Solutions, Inc., in the State of Delaware on
April 15, 2009. The Company is in the business of building for-profit hospitals
and clinics in India, and providing healthcare services to healthcare
organizations in the United States and India. Momentum plans to provide business
process outsourcing ("BPO"), healthcare support services and Healthcare
Information Technology ("Healthcare IT"), including electronic medical records,
and to serve as an application service provider to hospitals, clinics and
doctor's offices throughout the World.
Momentum is in the development stage and has no history of operations. We
presently do not have all of the funding we require to execute our business plan
or build name recognition. Provided we are successful with this offering, we
plan to continue to raise additional capital at future dates to fund
acquisitions and organic growth. Such raises of additional capital may prove to
be dilutive.
GENERAL INTRODUCTION
Momentum Healthcare Services, Inc. started operations on April 15, 2009 and is
in its development stage. The Company has yet to generate revenue. Since its
inception on April 15, 2009 through June 30, 2009 Momentum has incurred losses
of $100,126. As of June 30, 2009 the Company had assets totaling $13,074 in
cash.
We expect to continue to incur losses for several years. We do not expect to
generate sufficient revenue to cover our expenses, and we do not have sufficient
cash and cash equivalents to execute our plan of operations. We will need to
obtain additional financing to conduct our day-to-day operations, and to fully
execute our business plan. We anticipate raising capital necessary to fund our
business through the sale of equity securities although there is no certainty
that we may be able to raise the required funds (See "Plan of Operation").
Our independent auditors, EFP Rotenberg, LLP, have added an explanatory comment
to their report on the audit of our financial statements for the period ended
June 30, 2009, stating that our development stage loss, no revenues and
dependence on our ability to raise additional capital to continue our business,
raise substantial doubt about our ability to continue as a going concern. Our
financial statements and their explanatory notes included as part of this
prospectus do not include any adjustments that might result from the outcome of
this uncertainty. If we fail to obtain additional financing, either through an
offering of our securities or by obtaining loans, we may be forced to cease our
planned business operations altogether.
The Company's principal address is at 3 Church Circle, Suite 130, Annapolis, MD
21401. The Company's telephone is 410-919-7571 and facsimile is 443-403-2481.
BUSINESS DEVELOPMENT
The Company started in April 2009. The Company is in the business of building
for-profit hospitals and clinics in India, and providing healthcare services to
healthcare organizations in the United States and India. We intend to serve as a
Healthcare IT application service provider ("ASP") to hospitals, clinics and
doctor's offices throughout the World.
6
The Company intends to enter into distribution agreements with business process
outsourcing ("BPO") suppliers in India and other countries outside the United
States as well as develop healthcare information system software outside of the
United States.
SUMMARY OF UNIQUE FEATURES OF THE COMPANY
Momentum intends to build hospitals and clinics in India to address some of the
startling deficiencies of the Indian healthcare system using finance developed
in United States public markets, and in debt and equity markets throughout the
World, including India. According to the Government of India's ECONOMIC SURVEY
2008-09, India has a shortage of 28,000 healthcare centers throughout the
country. The ratio of United States to Indian doctors and hospital beds in
service is over 4:1. Additionally, India's population is growing by
approximately 25 million people per year. This number is approximately equal to
the total size of the population of the Kingdom of Saudi Arabia, which has 340
hospitals, and suggests that there will be an increasing need for building new
healthcare facilities for the foreseeable future.
India's demographic situation presents significant opportunity for investment in
the Indian healthcare sector. The government of India is actively encouraging
private initiatives in the sector by offering tax holidays to private hospitals
in certain areas. There are more than 40,000 doctors of Indian origin in the
United States and a proportional number in Great Britain, among many other
countries throughout the World. Many of these doctors are keenly aware of the
healthcare deficiencies in India, and many would like to find a way to help.
Many have practiced outside of India for 10-40 years, and have amassed the
financial wherewithal to help. Many have already tried to help, and some have
been successful. Others, however, have been thwarted by the complexity of
establishing a healthcare facility on the other side of the World.
Discussions with NRI doctors have suggested that the major stumbling block for
them developing healthcare projects in India has been their lack of time for
administrative focus and their lack of adequate financial training. Momentum
intends to resolve these shortcomings by building the structures, equipping and
administering them, while allowing the doctors to focus on the medical aspects
of the business. We intend to accomplish the financial portion of this mission
through a mixture of public funding, local bank finance, international finance
supported by the U.S. ExIm Bank and other international development banks, and
various equity partnerships within individual subsidiaries, keeping in mind our
intention to consolidate results by maintaining majority ownership in each
subsidiary.
Momentum intends to use some proceeds of this offering to enter the Business
Process Outsourcing Industry ("BPO") in the United States and the United
Kingdom. This initiative is expected to provide medium- to long-term cash flow
for development of Momentum's various businesses. Three of the first officers of
Momentum Healthcare Services, Inc. are three of the first four executive
employees hired by CBay Systems, Ltd., a Delaware corporation, whose successor
in interest, CBaySystems Holdings Limited ("CBay") is now listed on the London
Stock Exchange (AIM: CBAY). After founding in July 1998, CBay became the largest
Company in the American Medical Transcription industry, which includes
approximately 1,500 companies of all sizes. CBay's business spans Medical
Transcription, Healthcare Information Technology, and Patient Financial
Services, including Medical Billing.
Momentum also intends to use proceeds of this offering and cash flow generated
from its BPO businesses to address the Healthcare IT space in the American
healthcare industry. As Momentum's Indian hospitals come online over the next
24-36 months, Momentum intends to use them as test beds for improving and
certifying its Healthcare IT systems for the United States healthcare market.
Furthermore, we will be in a position to use our hospitals as references to
cross-sell our Healthcare IT and BPO offerings into the Indian market itself,
which can be expected to grow dramatically and adopt international standards and
practices over the coming decades. These activities will position Momentum to be
a major player in the global healthcare services industry.
7
PRINCIPAL OPERATIONS, PRODUCTS AND SERVICES OF THE COMPANY
Momentum Healthcare Services, Inc. started in April 2009. The Company is in the
business of building hospitals and clinics in India, and providing healthcare
services in the United States initially, and ultimately in India as well. These
services include providing business process outsourcing of medical
transcription, medical billing and other support services, as well as healthcare
IT, including electronic medical records, and serving as an application service
provider to hospitals, clinics and doctor's offices throughout the World.
DESCRIPTION OF PRODUCT:
Momentum is initially focusing on four discrete businesses in the Healthcare
Services Industry, including Hospital Development and Operations in the form of
construction and operation of for-profit hospitals in India, and Medical
Transcription, Medical Billing, and Healthcare IT in the United States. These
businesses are described in greater detail beginning at page 35.
Hospital Development and Operations is the planning, construction and operation
of for-profit hospitals in India. The Company initially envisions opening 5
hospitals with 75 beds each, offering complete medical and surgical care across
5 to 7 medical specialties. This business line has been occasioned by Momentum
being in a position to offer the financial and administrative expertise to
facilitate major healthcare projects over a broad spectrum. Momentum intends to
build and equip hospitals and clinics in India, and then collaborate with NRI
physicians and others to operate the medical aspects of these projects. Such
projects are a dire need for India, as explained in the discussion of "The
Indian Hospital and Healthcare Industry" below.
Momentum is in the process of reaching agreements with Indian landowners, who
will exchange significant parcels of land in return for the Company's Class A
Common Stock. Momentum plans to receive this land in Indian subsidiaries to be
formed, with each parcel owned by a separate subsidiary. Individual management
teams, Boards of Directors, and a separate project finance structure will
support each subsidiary. Since each of these subsidiaries may be quite
different, and is subject to substantial further development, no cash flow
structure for Momentum has yet been developed. We anticipate exchanging our
Class A Common Stock, valued at $5.00 per share, in return for the genuine
appraised value of the lands in each separate case, as verified by an
internationally recognized real estate appraiser. Future acquisitions may be
valued differently, depending upon the performance of our shares.
Medical Transcription is the process of converting dictations of physicians,
contained on computerized voice files, into typed files, which can become part
of the medical record in hospitals, clinics and doctors' offices.
Medical Billing is the process of taking responsibility for filing claims and
collecting fees for medical services of all kinds.
Healthcare IT ("HIT") includes the software, systems, and implementation of the
computerization of all functions in the healthcare industry, including, but not
limited to, enterprise resource planning ("ERP"), client relationship management
("CRM"), and supply chain management ("SCM"). Such systems are designed to
improve the performance of healthcare organizations at all levels. These are
multi-module applications systems, which integrate activities across functional
departments including, but not limited to management planning, purchasing,
inventory control, finance, accounting, human resources, electronic medical
records and all of the operational and functional aspects of healthcare
delivery.
Management believes that it is uniquely positioned to differentiate Momentum
from other companies in the Medical Services Industry by providing high quality
paradigm shifting products and services in an effective and efficient manner.
Management intends to explore future financings to grow quickly through
acquisitions, both in India and the United States.
8
THE OFFERING
Securities Offered 6,000,000 shares of Class A
common stock
Selling Shareholder Corporate Treasury
Offering Price $5.00
Shares outstanding prior to the offering No shares of Class A common stock
and 4,004,000 shares of Class B
common stock
Shares outstanding after the offering 6,000,000 shares of Class A
common stock and 8,004,000
shares of Class B common stock
Use of Proceeds Working Capital and Acquisitions
This prospectus relates to the sale of up to 6,000,000 shares of our Class A
common stock by Momentum Healthcare Services, Inc. These 6,000,000 Class A
common shares are being offered hereby by Momentum under this prospectus. These
shares have not been previously issued.
The number of common shares offered by this prospectus represents up to
approximately 42.8% of the total common stock outstanding after the offering.
THE REGISTRATION OF COMMON SHARES PURSUANT TO THIS PROSPECTUS DOES NOT
NECESSARILY MEAN THAT ANY OF THOSE SHARES WILL ULTIMATELY BE OFFERED OR SOLD BY
THE COMPANY.
DETERMINATION OF OFFERING PRICE
We intend to set our offering price at $5.00 per share of Class A Common Stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" that involve risk
uncertainties. We use words such as "anticipate", "expect", "intend", "plan",
"believe", "seek" and "estimate", and variations of these words and similar
expressions to identify such forward-looking statements. You should not place
too much reliance on these forward-looking statements. While our actual results
may differ from those anticipated in the forward-looking statements, we have a
reasonable basis for all of the disclosures in our registration statement. These
forward-looking statements address, among others, such issues as:
* future earnings and cash flow
* development projects
* business strategy
* expansion and growth of our business and operations
* our estimated financial information
These statements are based on assumptions and analyses made by us in light of
our experience and our perception of historical trends, current conditions and
expected future developments, as well as other factors we believe are
appropriate under the circumstances. However, whether actual results and
developments will meet our expectations and predictions depend on a number of
risks and uncertainties, which could cause our actual results, performance and
financial condition to differ materially from our expectation.
Consequently, these cautionary statements qualify all of the forward-looking
statements made in this prospectus. We cannot assure you that the actual results
or developments anticipated by us will be realized or, even if substantially
realized, that they would have the expected effect on us or our business or
operations.
9
RISK FACTORS
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE PURCHASERS OF THE
SECURITIES OFFERED HEREBY SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN
EVALUATING THE COMPANY AND ITS BUSINESS.
IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION COULD BE SERIOUSLY HARMED. THE TRADING PRICE OF OUR SHARES
OF COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR
PART OF YOUR INVESTMENT.
THE SECURITIES WE ARE OFFERING THROUGH THIS PROSPECTUS ARE SPECULATIVE BY NATURE
AND INVOLVE AN EXTREMELY HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY
PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THE FOLLOWING KNOWN RISK
FACTORS COULD CAUSE OUR ACTUAL FUTURE OPERATING RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS, ORAL OR WRITTEN, MADE BY
OR ON BEHALF OF US. IN ASSESSING THESE RISKS, WE SUGGEST THAT YOU ALSO REFER TO
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, INCLUDING OUR FINANCIAL
STATEMENTS AND RELATED NOTES.
(a) RISKS RELATED TO OUR BUSINESS AND THIS OFFERING
THE COMPANY HAS NO OPERATING HISTORY UPON WHICH TO BASE AN EVALUATION OF ITS
BUSINESS AND PROSPECTS. WE MAY NOT BE SUCCESSFUL IN OUR EFFORTS TO GROW OUR
BUSINESS AND TO EARN REVENUES. AN INVESTMENT IN OUR SECURITIES REPRESENTS
SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
We have a limited History of operations and we may not be successful in our
efforts to grow our business and to earn revenues. Our business and prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development. Sales and
operating results are difficult to forecast because they generally depend on the
volume and timing of the amount of business transacted - the frequency of which
is uncertain. As a result, management may be unable to adjust its spending in a
timely manner to compensate for any unexpected revenue shortfall. THIS inability
could cause net losses in a given period to be greater than expected. An
investment in our securities represents significant risk and you may lose all or
part your entire investment.
MOMENTUM IS A START-UP COMPANY WITH FORMATION LOSSES TO DATE. FUTURE LOSSES AND
NEGATIVE CASH FLOW MAY LIMIT OR DELAY OUR ABILITY TO BECOME PROFITABLE. IT IS
POSSIBLE THAT WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR
SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE
INVESTMENT.
We have yet to establish profitable operations or a History of profitable
operations. We anticipate that we will continue to incur substantial operating
losses for an indefinite period of time due to the significant costs associated
with the development of our business.
Since incorporation, we have expended financial resources on the development of
our business. As a result, losses have been incurred since incorporation.
Management expects to experience operating losses and negative cash flow for the
foreseeable future. Management anticipates that losses will continue to increase
from current levels because the Company expects to incur additional costs and
expenses related to: brand development, marketing and promotional activities;
the possible addition of new personnel; and the development of relationships
with strategic business partners.
The Company's ability to become profitable depends on its ability to generate
and sustain sales while maintaining reasonable expense levels. If the Company
does achieve profitability, it cannot be certain that it would be able to
sustain or increase profitability on a quarterly or annual basis in the future.
An investment in our securities represents significant risk and you may lose all
or part your entire investment.
10
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an ongoing business for the next
twelve months. We will need to obtain additional financing in order to complete
our business plan because we currently do not have any operations and we have no
income. We do not have any arrangements for financing and we may not be able to
find such financing if required. Obtaining additional financing would be subject
to a number of factors, including investor sentiment. These factors may
adversely affect the timing, amount, terms, or conditions of any financing that
we may obtain or make any additional financing unavailable to us. If we do not
obtain additional financing our business will fail. Please note that the share
structure of the Company, including super voting rights is such that the
founding shareholders will continue to control elections to the Board of
Directors and major aspects of the operations of the Company after the
completion of this offering and for the foreseeable future, including through
subsequent offerings. As such, this share structure and this offering might
negatively affect the Company's ability to raise needed funds through a further
offering of the Company's securities in the future.
OUR OPERATING RESULTS WILL BE VOLATILE AND DIFFICULT TO PREDICT. IF THE COMPANY
FAILS TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY DECLINE SIGNIFICANTLY.
Management expects both quarterly and annual operating results to fluctuate
significantly in the future. Because our operating results will be volatile and
difficult to predict, in some future quarter our operating results may fall
below the expectations of securities analysts and investors. If this occurs, the
trading price of our common stock may decline significantly.
A number of factors will cause gross margins to fluctuate in future periods.
Factors that may harm our business or cause our operating results to fluctuate
include the following: the inability to obtain new clients at reasonable cost;
the ability of competitors to offer new or enhanced services or products; price
competition; the failure to develop marketing relationships with key business
partners; increases in our marketing and advertising costs; increased fuel and
travel costs and increased labor costs that can affect demand for our product;
the amount and timing of operating costs and capital expenditures relating to
expansion of operations; a change to or changes to government regulations;
seasonality and a general economic slowdown. Any change in one or more of these
factors could reduce our ability to earn and earn revenues in future periods.
WE HAVE RECEIVED AN OPINION OF GOING CONCERN FROM OUR AUDITORS. IF WE DO NOT
RECEIVE ADDITIONAL FUNDING, WE WOULD HAVE TO CURTAIL OR CEASE OPERATIONS. AN
INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR
PART YOUR ENTIRE INVESTMENT.
Our independent auditors noted in their report accompanying our financial
statements for the period ended June 30, 2009 that there is substantial doubt
about our ability to continue as a going concern. As of June 30, 2009, we had a
loss of $100,126. They further stated that the uncertainty related to these
conditions raised substantial doubt about our ability to continue as a going
concern. At June 30, 2009, our cash was $13,074. We do not currently have
sufficient capital resources to fund operations. To stay in business, we will
need to raise additional capital through public or private sales of our
securities, debt financing or short-term bank loans, or a combination of the
foregoing.
We will need additional capital to fully implement our business, operating and
development plans. However, additional funding from an alternate source or
sources may not be available to us on favorable terms, if at all. To the extent
that money is raised through the sale of our securities, the issuance of those
securities could result in dilution to our existing security holders. If we
raise money through debt financing or bank loans, we may be required to secure
the financing with some or all of our business assets, which could be sold or
retained by the creditor should we default in our payment obligations. If we
fail to raise sufficient funds, we would have to curtail or cease operations.
11
THE COMPANY IS GOVERNED BY A BOARD OF DIRECTORS, WHICH DOES NOT YET HAVE
SUFFICIENT INDEPENDENT DIRECTORS TO SATISFY THE REQUIREMENTS OF LISTING ON
NATIONAL STOCK EXCHANGES AND, AS SUCH, THERE MAY BE SIGNIFICANT RISK TO THE
COMPANY FROM A CORPORATE GOVERNANCE PERSPECTIVE.
We have written and adopted effective disclosure and accounting controls to
comply with applicable laws and regulations, but have not yet hired sufficient
staff with which to implement and operate, which could result in fines,
penalties and assessments against us. There may be significant risk to the
Company from a corporate governance perspective.
Our founding shareholders will continue to have effective voting control of the
Company for the foreseeable future, including the election of directors and the
approval of significant corporate transactions. We have not voluntarily
implemented various corporate governance measures, in the absence of which,
shareholders may have more limited protections against the transactions
implemented by vote of shareholders, conflicts of interest and similar matters.
BECAUSE THREE OF OUR DIRECTORS AND FOUNDING SHAREHOLDERS, MR. K.J. DENNIS, MR.
P. SIVADASAN, AND MR. ANOOP SIVADASAN, ARE NOT RESIDENT OF THE UNITED STATES, IT
MAY BE DIFFICULT TO ENFORCE ANY LIABILITIES AGAINST THEM.
Accordingly, if an event occurs that gives rise to any liability, shareholders
would likely have difficulty in enforcing such liabilities because three of our
Directors and founding Shareholders, Mr. K.J. Dennis, Mr. P. Sivadasan, and Mr.
Anoop Sivadasan reside outside the United States. If a shareholder desired to
sue, the shareholder would have to serve a summons and complaint. Even if
personal service is accomplished and a judgment is entered against that person,
the shareholder would then have to locate assets of that person, and register
the judgment in the foreign jurisdiction where assets are located.
BECAUSE OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE OTHER BUSINESS INTERESTS, THEY
MAY NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO THE
COMPANY'S BUSINESS OPERATIONS, WHICH MAY CAUSE OUR BUSINESS TO FAIL.
None of the executive officers or directors is an employee of the Company.
Employment agreements with the Company will be developed and become effective
only upon successful completion of this offer, as determined by the Board of
Directors, and after further action by the Compensation Committee of the Board
of Directors.
It is possible that the demands on our Officers and Directors from other
obligations could increase prior to the effective date of this offering with the
result that they would no longer be able to devote sufficient time to the
management of the Company's business. In addition, they may not possess
sufficient time for the Company's business, if the demands of managing the
Company's business increase substantially beyond current levels.
THE COMPANY IS EXCHANGING SHARES OF ITS CLASS A COMMON STOCK FOR LAND IN INDIA
WHERE IT INTENDS TO PLAN, CONSTRUCT AND OPERATE A NUMBER OF WORLD-CLASS MEDICAL
FACILITIES, WHICH COULD DEPRESS FUTURE SHARE PRICES
The company intends to exchange company Class A Common Stock we deem valued of
$5 dollars per share as determined by the Board of Directors in exchange for
land suitable to plan, construct and operate at least 5 world class medical
facilities. The Company's Board of Directors has approved the purchase of 5
parcels with an appraised market value of up to $20 million in the aggregate.
Momentum has one contract to acquire land for such a project, in a related party
transaction with Dennis Steels Pvt. Ltd., at the major railway junction of
Arakkonam, in the State of Tamil Nadu, 70 kilometers west of Chennai. A copy of
this contract, which is contingent upon Momentum successfully raising $10
million in new shareholder investment and Momentum establishing to its
satisfaction that the construction of a building on the site can be financed
from within the Indian banking or other financing community, is attached hereto
as Exhibit 10.1. The consideration for the purchase of this parcel shall be a
number to be determined of Momentum Class A Common Shares, determined by solving
for an equation using as a numerator the appraised value of the parcel of land
and as a denominator $5.00. The seller agrees to hold the said shares for a
period of 1 year. The Company may have to return any and all of the land for the
12
original transaction price if the land is not developed for medical hospitals.
While any seller of the land in India to Momentum are precluded from selling
their stock for 1 to 2 years, should they choose to liquidate their shares after
such period, it could put downward pressure on the company's stock price in the
market. The land will be valued on Momentum's Financial Statements at the Fair
Value when acquired or the market value of the shares transferred, whichever is
more certain. Since there is no current market for our stock, the first
valuation is likely to be the Fair Value as established by independent
appraisals. The Company may not be able to obtain adequate financing for the
construction of its planned hospitals. Said hospitals are not expected to be a
source of cash flow to the Company for the foreseeable future.
THE COMPANY HAS LIMITED EXPERTISE IN THE CONSTRUCTION AND MANAGEMENT OF
HOSPITALS IN INDIA
While the Company does have several Officers and Directors with Indian real
estate development experience (K.J. Dennis, Donald L. Conover, and V. Seshu
Kumar), none has direct experience in the development of hospitals. We intend to
affiliate with teaching hospitals and medical practices in the United States,
the United Kingdom, and India, which do have such experience, and will provide
us with the specifications and necessary guidance to accomplish these tasks, but
no such affiliations have been agreed at this time. We further intend to meet
the standards of the Joint Commission International ("JCI"), which has compiled
clear benchmarks regarding all aspects of World Class hospital development and
operation, but the company has not yet developed a working relationship with
JCI.
THE COSTS OF BEING A PUBLIC COMPANY WILL PUT A STRAIN ON OUR RESOURCES
After the consummation of this offering, we will be subject to the reporting
requirements of the Securities Exchange Act of 1934, or the "Exchange Act," and
the Sarbanes-Oxley Act of 2002. The Exchange Act requires that we file annual,
quarterly and current reports with respect to our business and financial
condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure
controls and procedures and internal control for financial reporting. These
requirements will place a strain on our systems and resources as well as add
additional costs to our business in complying with these regulations. The cost
and effort required to stay compliant with these regulations will divert
management's attention from other business concerns, which could have a material
adverse effect on our business, financial condition, results of operations and
cash flows. If we are unable to conclude that our disclosure controls and
procedures and internal control over financial reporting are effective, or if
our independent public accounting firm is unable to provide us with an
unqualified report as to the effectiveness of our internal control over
financial reporting in future years, investors may lose confidence in our
business and the value of our stock may decline.
An investment in our Common Shares may not be suitable for all recipients of
this document. Investors are therefore strongly recommended to consult an
investment adviser who specializes in advising on investments of this nature
before making their decision to invest.
INCOME TAXES
There is no provision for income taxes in our financial statements because of
our expected net operating loss for the foreseeable future. At such time as we
do expect profits, we intend to make estimates to determine our current
provision for income taxes, as well as our income taxes payable. Our estimates
will take into account current tax laws and our interpretation of current tax
laws, as well as possible outcomes of any future tax audits. Changes in tax laws
or our interpretation of tax laws and the resolution of any future tax audits
could significantly impact the amounts provided for income taxes in our
financial statements.
LEGAL CONTINGENCIES
We are not currently subject to either threatened or pending litigation, actions
or administrative proceedings. However, from time to time, we are involved in
routine legal matters incidental to our business. In the opinion of management,
the ultimate resolution of such matters will not have a material adverse effect
on our financial position, results of operations or liquidity.
13
INFLATION
The rate of inflation has had little impact on the Company's past results of
operations and is not expected to have significant impact on the continuing
operations.
(b) RISKS RELATED TO THE HEALTHCARE SERVICES BUSINESS
OUR INDUSTRY IS COMPETITIVE AND IS CHARACTERIZED BY GROSS MARGINS OF 30 TO 50
PERCENT OF COSTS. A MINOR SHORTFALL FROM EXPECTED REVENUE COULD AFFECT THE
DEMAND FOR OUR SERVICES, HAVE A SIGNIFICANT IMPACT ON OUR ABILITY TO GENERATE
REVENUE, AND CAN CAUSE OUR BUSINESS TO FAIL.
Our industry is competitive. There are many different suppliers of business
process outsourcing and healthcare IT and our products and services are not
unique to other products.
Aggressive marketing tactics implemented by our competitors could impact our
limited financial resources and adversely affect our ability to compete in our
market.
OUR INDUSTRY IS CYCLICAL AND THESE FLUCTUTAIONS COULD HAVE SIGNIFICANT IMPACT ON
OUR BUSINESS VOLUME DURING CERTAIN OFF PEAK MONTHS, AND POSSIBLY CAUSE OUR
BUSINESS TO FAIL.
The healthcare services industry experiences economic cyclical fluctuations in
the timing of elective medical procedures, which tend to be less frequent during
certain months and during certain holiday periods. As of the time of this
registration statement the healthcare services industry in North America is
experiencing an economic down turn. We expect that this could adversely affect
our operating results and could lead to lower revenues than expected.
IF WE ARE UNABLE TO MEET SERVICE AND QUALITY OBLIGATIONS UNDER OUR CLIENT
CONTRACTS, THE BUSINESS AND RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED.
Momentum Healthcare Services, Inc. currently has no client contracts. At such
time as contracts are obtained, if Momentum is unable to meet its service
obligations under its client contracts, through failure to provide sufficient
quality or on-time delivery, the business and results of operations may be
adversely affected. If it does not meet its service obligations, its prospective
revenues will suffer and Momentum may suffer reputational harm to its reputation
or lose clients. In particular, Momentum's medical transcription work must
satisfy strict quality standards set out in its client contracts, including the
key thresholds specified by the Association for Healthcare Documentation
Integrity ("AHDI") that all transcription work must score at least 98 on a scale
of 100 quality points, free of typographical errors, spelling mistakes or
grammatical errors.
Medical transcription work can be subject to errors because Momentum's medical
transcriptionists will be largely non-native English speakers and the quality
assurance team may review only a selected sample of transcriptions. In addition,
medical transcription work must be performed within strict turnaround times
specified in client contracts. Under certain medical transcription client
contracts, medical transcription work must be performed in a supplier-owned
transcription center. Where these obligations are not met the client is not
required to pay for some or all of the services provided under the contract, or
may review, cancel or otherwise seek to alter the terms of the contract,
significantly harming Momentum's business and results from operations.
In addition, Momentum's Medical Billing business will be performed on the basis
that payment for such work will be directly linked to Momentum's success at
performing its obligations under the relevant client contracts. Momentum will
not generally receive a fixed or continual fee for carrying out such services
for its clients. As a result, the revenue derived from our Medical Billing
contracts is not fixed and depends upon the success of Momentum to carry out its
duties under the contract. No assurance can be given that Momentum will be able
to achieve the maximum revenue possible from all of its client contracts.
14
Momentum will rely heavily on the successful operation of its information
technology systems to meet its client service obligations. Each of Momentum's
business areas rely on technology to communicate with clients and to carry out
all areas of its operations. If serious breaches, errors or breakdowns of
Momentum's information technology or telecommunications systems or if its
operations are subject to power or other failures and are prolonged or occur on
a regular basis, then Momentum could incur substantial costs in identifying and
fixing the systems (including increased labor costs and maintenance fees), could
lose the goodwill of its clients and could also materially breach contracts it
has with its clients and thereby lose revenues, face client claims and suffer
reputational harm.
If security breaches occur in Momentum's information technology systems,
Momentum may be in breach of its client contracts or applicable laws and its
business and results of operations may be adversely affected Momentum will
process sensitive and private medical and financial data that is protected under
a number of US federal and state laws, including the Healthcare Insurance
Portability and Accountability Act of 1996 ("HIPAA"). There is a risk that this
data could become public if there were a security breach at within Momentum's
purview. There can be no assurance that any security systems or protocols put in
place by Momentum to protect sensitive data will always be adhered to by every
Momentum employee or any other third-party who has been allowed access to the
Momentum's systems. If a security breach were to occur Momentum could face
liability under data protection laws such as HIPAA, violate its contractual
obligations to its clients and could also lose the goodwill of its clients,
which would have a material adverse effect on Momentum's business. Momentum may
also be required to indemnify its clients for any costs they may incur as a
result of such breaches under the terms of their agreements and its reputation
and ability to retain or attract clients may be seriously affected, which may
significantly harm the Momentum's business and results of operations.
If the Momentum is unable successfully to develop and implement new technology,
the Momentum may be unable to compete effectively and its business and results
of operations may be adversely affected.
To achieve its strategic objectives Momentum will have to become competitive and
will have to continuously develop new and enhance existing information systems
and technology platforms developed by others, which may require the acquisition
of equipment and software and the development, either internally or through
independent third party suppliers of new proprietary software and other
technological developments. No assurance can be given that Momentum can
successfully design, develop, implement or utilize effectively technology that
provides the capabilities necessary for Momentum to compete effectively, nor can
any assurance be given that the implementation of such initiatives will be
appropriately prioritized or done in a way that will not disrupt Momentum's
operations.
Momentum will compete with a number of large companies of better financial
standing, who may be able to gain competitive advantage through their ability to
invest more in new technologies and to improve their existing technologies at a
faster rate or in a more effective way than Momentum, thereby making Momentum's
systems obsolete and adversely affecting its ability to retain clients or gain
new clients.
UNFORESEEN FUTURE GOVERNMANT REGULATIONS COULD CAUSE OUR OPERATING COSTS TO
INCREASE, ADVERSELY IMPACTING OUR OPERATING RESULTS, AND POSSIBLY CAUSE OUR
BUSINESS TO FAIL.
Our products and services are required to adhere to federal, state, and local
statutes and regulations. Our Company is at risk to any number of future
regulation changes imposed by government bodies. Any future changes in
regulations that we may have to comply with may change the way we operate our
business and add unforeseen costs to our business.
UNFORESEEN INDUSTRY TRENDS COULD ADVERSELY IMPACT OUR OPERATING RESULTS.
Industry efforts are focused upon improving the quality of products and
services; however, unforeseen industry trends could adversely impact operational
results and subsequently cause our business to fail.
15
OUR QUARTERLY RESULTS ARE SIGNIFICANTLY AFFECTED BY MANY FACTORS, AND OUR
RESULTS OF OPERATIONS FOR ANY ONE QUARTER ARE NOT NECESSARILY INDICATIVE OF OUR
ANNUAL RESULTS OF OPERATIONS. THE COMPANY HAS A LIMITED OPERATING HISTORY UPON
WHICH TO BASE AN EVALUATION OF ITS BUSINESS AND PROSPECTS. IT IS POSSIBLE THAT
WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS
SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT.
Our results of operations in any single quarter are not necessarily indicative
of our annual results of operations. It is possible that we may never earn
enough revenue to achieve profitability. An investment in our securities
represents significant risk and you may lose all or part your entire investment.
MOMENTUM MAY NOT BE ABLE TO IMPROVE AND MAINTAIN ITS INTERNAL CONTROLS AND
PROCEDURES WITH RESPECT TO FINANCIAL REPORTING TO KEEP PACE WITH ITS ANTICIPATED
GROWTH
Momentum's auditors stated that Momentum's written internal controls are not
currently established, and need to be established prior to the effective date of
this offering. Among others, Momentum needs to establish formal written
procedures regarding: internal audit and control procedures; closing of books of
account at financial year end; completion and audit of financial statements;
documentation of accounting processes; and adoption of benchmarks to facilitate
tracking of performance against plan. Momentum can give no assurance that it
will be able to address these issues nor can it assure that any measures taken
to correct these issues will be successful. Failure to address successfully
these matters could result in a material adverse effect on Momentum's business
and results of operations.
IF MOMENTUM IS UNABLE TO EFFECTIVELY MANAGE OR INTEGRATE ITS PLANNED
ACQUISITIONS, IT'S BUSINESS AND RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED.
Momentum Healthcare Services, Inc. intends to grow its operations and augment
its service and product offerings through domestic and international strategic
acquisitions. Momentum may not be able to identify appropriate acquisition
opportunities or may not be able to complete planned acquisitions on acceptable
terms. Furthermore, Momentum may not be able to raise sufficient funds on
reasonable terms to execute and implement its acquisition strategy. Failure to
implement its acquisition strategy would have an adverse effect on Momentum's
ability to grow and may prejudice its ability to remain competitive or gain
market share. Momentum is actively seeking potential acquisitions in medical
transcription and medical billing in the United States and India. However,
Momentum does not have a letter of intent with any potential acquisitions at
this time. If cash is unavailable to finance these acquisitions, Momentum may be
required to seek alternative sources of funding to complete such transactions,
including without limitation, by incurring debt or through the issue of
additional Common Shares or other securities. The negotiation and implementation
of these and other potential acquisitions are likely to require substantial
amounts of management time, and Momentum's performance operations may be
adversely affected by these potential disruptions. Even if future acquisitions
are completed, Momentum may not be able to successfully integrate new operations
with its existing businesses, thereby adversely affecting its business and
results of operations.
MOMENTUM MAY NOT BE ABLE TO MANAGE ITS GROWTH STRATEGY, WHICH MAY ADVERSELY
AFFECT ITS BUSINESS AND RESULTS OF OPERATIONS
The successful implementation of Momentum's growth strategy depends on, among
other factors: (i) identifying areas of business with opportunities for growth;
(ii) hiring, training and retraining qualified personnel; (iii) identifying
industry needs for Momentum's services; (iv) investing in technology; and (v)
generating a satisfactory return on these investments. There can be no assurance
that Momentum will be successful in implementing its objectives, or, if
successfully implemented, this strategy will produce favorable financial
results.
16
ADDITIONAL MANAGEMENT RESPONSIBILITIES MAY ADVERSELY AFFECT MOMENTUM'S
PRODUCTIVITY AND EFFICIENCY
The planned future growth of Momentum, including acquisitions, will result in
new and increased responsibilities for the management team as well as increased
demands on Momentum's internal systems, procedures and controls and on its
managerial, administrative, financial, marketing, information and other
resources. Significant time and attention is also required for the Directors to
implement Momentum's expansion strategy. These responsibilities and demands,
including the diversion of management attention from existing business
operations during any expansion process and the lack adequate of strategic
business reporting, may significantly harm Momentum's business and results of
operations.
MOMENTUM IS HIGHLY DEPENDENT ON CERTAIN KEY PERSONNEL INCLUDING DONALD L.
CONOVER, ANOOP SIVADASAN, MARY LOUISE WISNIEWSKI, JOHN B. THOMPSON, AND KENDALL
TANT.
The operations and future success of Momentum are dependent upon the existence
and expertise in this sector of certain key personnel. In particular, Momentum
relies substantially on the experience and services of Donald L. Conover, Anoop
Sivadasan, Mary Louise Wisniewski, John B. Thompson and Kendall Tant.
Furthermore, Momentum does not currently maintain "key man" insurance policies
cover any key management personnel. The loss of services of any of these
individuals for any reason or Momentum's inability to attract suitable
replacements would have a material adverse effect on the financial condition of
Momentum's business and operations. Management intends to acquire suitable "key
man" insurance policies, as approved by the Board of Directors, immediately upon
the successful closure of this offering.
IF MOMENTUM IS NOT ABLE TO ADEQUATELY PROTECT AND ENFORCE ITS INTELLECTUAL
PROPERTY RIGHTS AND LICENSES, ITS BUSINESS AND RESULTS OF OPERATIONS MAY BE
ADVERSELY AFFECTED
Momentum will depend on software business processes and other technology for its
operations. Momentum may be unable adequately to protect intellectual property
rights that it currently owns, and intellectual property that it develops in the
future. Momentum does not currently have any patent protection on technology
that it has developed, and gaining patent protection in the future for its
technology could be expensive and such protection is not always available
(especially with respect of software patents). Much of the key software Momentum
intends to use will be licensed from third parties. There can be no assurances
that Momentum's licensed intellectual property does not infringe third-party
rights or that third parties have not been granted access to that intellectual
property in breach of the Momentum's rights. Momentum may be subject to material
litigation if it is found to be in breach of third-party intellectual property
rights. In addition, while some software Momentum may license may include
step-in rights allowing Momentum to take control of the software and services
provided by the relevant licensor under its agreements, should the licensor be
unable to perform its duties due to insolvency or bankruptcy, there can be no
assurance that Momentum will be able to enforce such rights or that third
parties will not have a prior or superior claim over the underlying intellectual
property rights. Moreover, enforcement by Momentum of any such step-in rights is
likely to be costly.
MOMENTUM RELIES AND WILL RELY ON COPYRIGHT AND VARIOUS LAWS RELATING TO TRADE
SECRETS AND CONFIDENTIAL INFORMATION TO LIMIT THE ABILITY OF OTHERS TO COMPETE
WITH IT USING ITS PROPRIETARY TECHNOLOGY
Momentum relies and will rely on copyright and various laws relating to trade
secrets and confidential information to limit the ability of others to compete
with it using its proprietary technology. These rights only afford limited
protection and may not adequately protect Momentum's intellectual property to
the extent necessary to sustain any competitive advantage Momentum currently may
have. Momentum relies and will rely on confidentiality agreements with its
clients, medical transcription center providers and software developers although
no assurance can be given that the parties to any confidentiality agreement will
abide by its terms. Momentum may also license certain aspects of its
intellectual property to its outsourcing providers and software developers,
17
although no assurance can be given that the parties to such licenses will abide
by the terms of the license and any breach could result in a material effect
upon Momentum's business through the release of important intellectual property
to competitors. If it becomes necessary to test the ownership of Momentum's
intellectual property in the courts, significant costs would be involved along
with the diversion of resources and management attention which would have an
impact on Momentum's business and reputation. In addition this may cause the
Momentum's relationship with any adverse party with whom Momentum normally does
business with and which is involved in such proceedings against Momentum to
deteriorate, which may affect the ability of Momentum and the adverse party to
co-operate on future projects. Also, if such proceedings were unsuccessful
Momentum could lose the right to the technology in question which could prevent
it from trading as it did before the action and it could also open up its market
for more competition. Such a failure to succeed in proceedings would
significantly harm Momentum's business and results of operations.
MOMENTUM HAS ENTERED INTO CERTAIN RELATED PARTY TRANSACTIONS AND AGREEMENTS
WHICH MAY CREATE A CONFLICT OF INTEREST FOR CERTAIN MOMENTUM PERSONNEL OR
ADVERSELY AFFECT SHAREHOLDERS OR MOMENTUM
Momentum has entered into certain related party transactions and agreements,
which may create a conflict of interest for certain Momentum personnel or
adversely affect Shareholders or Momentum. These related party transactions are:
Firstly, Momentum has entered into a "Contracting Agreement" dated May 14, 2009
with Conover Associates LLC. Conover Associates LLC is the consulting business
of Momentum's President, Donald L. Conover. Pursuant to this agreement, Conover
Associates LLC has been engaged for a period of six months at the rate of
$50,000 per month for the purpose of developing Momentum Healthcare Services,
Inc. into a going concern with appropriate financing. Secondly, Momentum has
entered into a "Promoter's Share Agreement" dated May 14, 2009, through which P.
Sivadasan and Michael Brown will be issued 1 million Class B common shares to
share among themselves and their nominees at their sole discretion and Donald L.
Conover will be awarded one million Class B common shares to share among himself
and his nominees at his sole discretion each at such time as Momentum has either
$10 million in revenue, or it has raised $2 million in shareholder's equity.
Thirdly, Momentum has a contract to acquire 10 acres of land from Dennis Steels
Pvt. Ltd., at the major railway junction of Arakkonam, in the State of Tamil
Nadu, 70 kilometers west of Chennai. Mr. K.J. Dennis, Chairman of Momentum,
controls Dennis Steels Pvt. Ltd. No assurances can be given that the Directors
and employees of Momentum will be able to address these conflicts of interest or
others in an impartial manner. If it is not possible successfully to address
such matters, it may significantly harm Momentum's business and results of
operations. For additional information on Momentum's related party transactions
please see Part VI of this document.
MOMENTUM IS RELIANT ON CLIENTS PAYING IN A TIMELY MANNER
If Momentum is successful in winning clients in the future, it will be reliant
on its clients paying for services in a timely manner. Any delay in making such
payments will have a significant adverse effect on Momentum's revenues, business
and results of operations. Momentum's clients will receive regular invoices
requesting the payment of services supplied to them by Momentum. There can be no
assurance that Momentum's clients will abide by the payment terms of the
invoices or will ensure that payment is received by Momentum within the time
period requested. Furthermore, no assurance can be given that Momentum will be
able to obtain any of the sums unpaid or overdue under any particular invoice.
Momentum may incur further costs in pursuing any late payments. Should any
payments be unpaid or delayed by clients, Momentum may also be unable to meet
its own payment obligations to suppliers. Any delay in receiving payment for
services will have a significant effect upon Momentum's revenue, business and
results of operations.
MOMENTUM COMPETES WITH OTHER BUSINESSES IN THE MARKETS FOR ITS PRODUCTS AND
SERVICES, AND IF IT IS UNABLE TO SUCCESSFULLY COMPETE, ITS BUSINESS AND RESULTS
OF OPERATIONS MAY BE ADVERSELY AFFECTED
Momentum competes with other businesses in the markets for its products and
services in fragmented markets that include national, regional and local service
providers, as well as service providers with global operations. These companies
18
offer products and services that are similar to those offered by Momentum and
compete with it for clients. Momentum also competes with the in-house operations
of its clients. There can be no assurance that Momentum will be able to compete
effectively against its competitors or timely implement new or enhanced products
and services to meet innovations introduced by its competitors. Many of its
competitors attempt to differentiate themselves by offering lower priced
alternatives to the products and services offered by Momentum. Increased
competition and cost pressures affecting the healthcare markets in general may
result in lower prices for Momentum's services, reduced operating margins and
the inability to increase its market share.
In particular, as technology evolves, including the continued refinement of
speech recognition technology, healthcare information technology providers may
provide services that replace, or reduce the use of medical transcription.
Furthermore, companies that provide services complementary to medical
transcription, such as electronic medical records, coding and billing, may
expand the services they provide to include medical transcription. Current and
potential competitors may have financial, technical and marketing resources that
are greater than those of Momentum. As a result, competitors may be able to
respond more quickly to evolving technological developments or changing client
needs or devote greater resources to the development, promotion or sale of their
technology or services than Momentum. In addition, competition may increase due
to consolidation of medical transcription companies. As a result of such
consolidation, there may be a greater number of providers of medical
transcription services with sufficient scale and service mix to attract
additional clients. Current and potential competitors may establish cooperative
relationships with third parties to increase their ability to attract Momentum's
current and potential clients and this may significantly harm Momentum's
business and results of operations.
MOMENTUM'S GROWTH IS DEPENDENT ON THE WILLINGNESS OF NEW CLIENTS TO OUTSOURCE
AND ADOPT NEW TECHNOLOGY PLATFORMS
Momentum plans to grow, in part, by capitalizing on perceived market
opportunities to provide its services to new clients. If Momentum is to attract
new clients to its products and services, those clients must be willing to
outsource functions, which may otherwise have been performed within their
organizations. For example, the up-front cost involved in changing medical
transcription providers or in converting from an in-house medical transcription
department to an outsourced provider is significant. A medical transcription
system provided to a hospital will typically take approximately four months or
longer to be fully operational once Momentum has been given a mandate to proceed
with the project. New clients also need to be willing to adopt new technologies
and incur the time and expense needed to integrate such technologies into their
existing systems. Many clients may prefer to remain with their current provider
or keep their transcription in-house rather than incur these costs or experience
a potential disruption in services as a result of changing service providers.
Also, as the maintenance of accurate medical records is a critical element of a
healthcare provider's ability to deliver quality care to its patients and to
receive proper and timely reimbursement for the services it renders, potential
clients may be reluctant to outsource such an important function. Likewise,
potential patient financial services clients may be unwilling to outsource
sensitive matters such as collection or to change providers. If any of these
risks occur then it may significantly harm Momentum's business and results of
operations.
MOMENTUM CANNOT CONFIRM THAT IT WILL ALWAYS BE ADEQUATELY INDEMNIFIED OR RECEIVE
PROPER COMPENSATION TO COVER ANY LOSS OF BUSINESS OR REVENUE AS A RESULT OF
SUB-STANDARD WORK PRODUCED BY A THIRD PARTY
Momentum cannot confirm that it will always be adequately indemnified or receive
proper compensation to cover any loss of business or revenue as a result of
sub-standard work produced by a third party. Contracts entered into by Momentum
with the outsourced production centers may not contain sufficient indemnities
granted to Momentum by to cover all potential losses incurred as a result of
sub-standard work.
19
IF MOMENTUM IS UNABLE TO DEVELOP AND MAINTAIN SUFFICIENT BACK-OFFICE CAPACITY TO
CARRY OUT ITS CONTRACTUAL OBLIGATIONS, ITS ABILITY TO GROW AND SATISFY CLIENTS
WILL BE IMPAIRED
If Momentum is unable to develop and maintain sufficient back-office capacity to
carry out its contractual operations, its ability to meet current client demand
and to grow its business will be materially adversely affected to the extent
Momentum depends on its back-office capabilities to perform its medical
transcription operations and will, in future, depend on such capabilities for
certain of its medical billing work. There can be no assurance that Momentum
will be able to continue to grow its back-office capacity in order to meet
future demand.
IF MOMENTUM IS UNABLE TO SUCCESSFULLY RECRUIT AND RETAIN QUALIFIED PERSONNEL,
ITS ABILITY TO GROW ITS BUSINESS MAY BE ADVERSELY AFFECTED
If Momentum is unable successfully to recruit and retain qualified personnel,
its ability to grow its business may be adversely affected. Momentum's success
depends, in part, upon its ability to manage effectively its production
capacity, including its ability to attract and retain qualified medical
transcriptionists who can provide accurate medical transcription services. There
is a shortage of qualified medical transcription professionals in India and, as
a result, competition for hiring these professionals is intense. Competition may
force Momentum to increase the compensation and benefits paid to its medical
transcriptionists, which could reduce operating margins and profitability. In
addition, rising wage costs in India and Momentum's need to accommodate these in
order to recruit and retain employees may also reduce operating margins and
profitability. Being a medical transcriptionist is a skilled position in which
significant training is required and experience is valuable. Momentum requires
that its medical transcriptionists have substantial experience or receive
substantial training before they can be used to provide medical transcription
services for Momentum. Momentum plans to provide extensive training at its own
expense to help ensure that its medical transcriptionists have and maintain the
requisite skills although the cost of such training may rise as time goes on.
MOMENTUM'S INSURANCE COVERAGE MAY NOT BE ADEQUATE TO COMPENSATE IT FULLY FOR
LIABILITIES OR OTHER EXPOSURE
Momentum's insurance coverage may not be adequate to compensate it fully for
liabilities or other exposure. While Momentum has obtained insurance respecting
its exposure to risks relating to liabilities arising from its operations and
other generally insured risks, there can be no assurance that such insurance
covers all potential liabilities faced by Momentum or will cover fully those
liabilities or potential liabilities for which cover has been acquired. In
addition there can be no assurance that any claims made by Momentum under such
policies will be timely or fully paid out by its insurers. Any failure in
coverage or reimbursement may significantly harm Momentum's business and results
of operations.
MOMENTUM WILL BE EXPOSED TO FLUCTUATIONS OF THE VALUE OF THE INDIAN RUPEE
AGAINST THE US DOLLAR
Although Momentum's accounts are prepared in US dollars much of its operations
are carried out in India with resulting payments to staff and suppliers made in
Rupees. Movements in the rate of exchange between the Indian Rupee and the US
dollar could have an adverse effect on returns to investors. Momentum has not
hedged the exchange rate risk at this point in time. The exchange rate between
the Indian Rupee and the US dollar has changed substantially in the last two
decades and could fluctuate in the future.
ANY CHANGE IN LEGISLATION, REGULATION OR MARKET PRACTICES IN THE UNITED STATES
AFFECTING HEALTHCARE INSURANCE MAY MATERIALLY ADVERSELY AFFECT MOMENTUM'S
BUSINESS AND RESULTS OF OPERATIONS
Over the past twenty years the US healthcare industry has endured a variety of
regulatory and market driven changes to how it is operated and funded. For
example, Health Maintenance Organizations have developed from being largely
non-existent twenty years ago into important figures in the United States
healthcare market. No assurance can be given that further changes, whether by
government policy shift, insurance Company changes or otherwise, will not happen
20
and any such changes may adversely affect the US healthcare information and
services market. As business process outsourcing and ``off-shoring'' have grown
in recent years, concerns have also grown about the impact of these phenomena on
jobs in the United States. Such politically motivated concerns may drive policy
in a way which is disadvantageous to Momentum. Momentum does not have a
contingency plan to diversify its revenue stream should there be a shift in
focus in the United States healthcare information and services market.
MOMENTUM'S FINANCIAL CONDITION COULD BE NEGATIVELY AFFECTED IF THE GOVERNMENT OF
INDIA REDUCES OR WITHDRAWS TAX BENEFITS AND OTHER INCENTIVES IT CURRENTLY
PROVIDES TO COMPANIES WITHIN MOMENTUM'S INDUSTRY
Under the Indian Finance Act, 2000, Indian medical transcription production
centers benefit from a ten-year holiday from Indian corporate income taxes. As a
result, Momentum's Indian operations, including any businesses Momentum
acquires, have been subject to relatively low Indian tax liabilities. The Indian
Finance Act, 2000, phases out the tax holiday over a ten-year period from fiscal
year 2000 through to fiscal year 2009. Momentum's Indian tax expense may
materially increase and this increase could have a material impact on the
Momentum's results of operations. In the absence of a tax holiday, income
derived from India would be taxed up to a maximum of the then existing annual
tax rate of 33.66 percent.
US AND INDIAN TRANSFER PRICING REGULATIONS REQUIRE THAT ANY INTERNATIONAL
TRANSACTIONS INVOLVING ASSOCIATED ENTERPRISES BE UNDERTAKEN ON AN ARM'S LENGTH
BASIS.
United States and Indian transfer pricing regulations require that any
international transactions involving associated enterprises be undertaken at an
arm's-length price. If the applicable income tax authorities review any of
Momentum's tax returns and determine that the transfer prices Momentum has
applied are not appropriate, Momentum may incur increased tax liabilities,
including accrued interest and penalties, which would cause Momentum's tax
expense to increase, possibly materially, thereby materially reducing Momentum's
profitability and cash flows.
MORE STRINGENT LABOR LAWS CAN AFFECT MOMENTUM'S PERFORMANCE ADVERSELY
If more stringent labor laws than those currently in effect become applicable to
Momentum, Momentum's profitability may be materially adversely affected. India
has stringent labor legislation that protects the interests of workers,
including legislation that sets forth detailed procedures for dispute resolution
and employee removal and legislation that imposes financial obligations on
employers upon retrenchment. Though Momentum is exempt from a number of these
labor laws at present, there can be no assurance that such laws will not become
applicable to the business process outsourcing industry in India in the future.
In addition, Momentum's employees may in the future form unions. If these labor
laws become applicable to the Momentum's workers or if Momentum's employees
unionize, it may become difficult for Momentum to maintain flexible human
resource policies, discharge employees or downsize, and Momentum's profitability
may be materially adversely affected.
POLITICAL AND ECONOMIC INSTABILITY COULD ADVERSELY AFFECT BUSINESS
Political and economic instability could adversely affect business and economic
conditions in India generally and Momentum's business, results of operations and
financial condition. A substantial part of Momentum's operations and assets, and
a significant majority of its employees will be located in India. Consequently,
political, economic, and social factors, changes in Indian law or regulations
and the status of India's relations with other countries may adversely affect
Momentum's operations and its ability to carry out its business. In addition,
the Indian economy may differ favorably or unfavorably from other economies in
several respects, including the rate of growth of Gross Domestic Product, the
rate of inflation, resource self-sufficiency and balance of payments position.
The Indian government has traditionally exercised and continues to exercise a
significant influence over many aspects of the Indian economy. Further actions
or changes in policy (including taxation) by the Indian central government or
the respective Indian state governments could have a significant effect on the
Indian economy, which could adversely affect private sector companies, market
21
conditions and the success of Momentum's operations. Since 1991, successive
Indian governments have pursued policies of economic liberalization and
financial sector reforms. The Indian parliament was dissolved in February 2004
and, following the general elections held during April and May 2004, a new
coalition government, the United Progressive Alliance ("UPA"), led by the Indian
National Congress Party, was formed. The new government has pursued its general
intention to continue India's current economic and financial sector
liberalization and deregulation policies. The UPA was re-elected in May 2009
with an even stronger coalition, which is expected to continue liberalization
even further. However, there can be no assurance that such policies will
continue and any significant change in the Indian government's future policies
could affect general business and economic conditions in India and could also
affect Momentum's business. There can be no assurance that a new government will
not seek to reverse some or all of the deregulation and liberalization policies
of past governments.
POLITICAL INSTABILITY IN INDIA COULD ADVERSELY AFFECT THE INDIAN ECONOMY IN
GENERAL, WHICH COULD AFFECT MOMENTUM'S BUSINESS
Any political instability in India could adversely affect the Indian economy in
general, which could also affect the business and operations of Momentum. India
has in the past experienced periods of political instability and, in some cases,
civil unrest and clashes among various interest groups, and is located in a
region historically characterized by instability. The occurrence of local unrest
or external tensions could also adversely affect India's political and economic
stability and, consequently, adversely affect Momentum's operations. India has
witnessed civil disturbances in recent years. While these civil disturbances
have not had any direct effect on Momentum's operations, it is possible that
future civil unrest, as well as other adverse social, economic and political
events in India, could have an adverse impact upon Momentum and its business and
operations. India has recently been a target of terrorist attacks and such
attacks may happen in the future.
MOMENTUM MAY NEED TO OBTAIN ADDITIONAL CAPITAL TO FUND ITS OPERATIONS
Momentum may need to obtain additional capital to fund its operations which may
require the raising of equity financing, which will dilute existing
Shareholders' interest in the Company. Momentum may require additional capital
for expansion or business development, including for acquisitions it is
presently contemplating. If Momentum is unable to obtain financing on terms
acceptable to it, then it may be forced to curtail its planned development or
may need to raise additional capital from equity sources. If additional funds
are raised through the issuance of new equity or equity-linked securities of
Momentum other than on a pro rata basis to existing Shareholders or if Common
Shares are used as consideration for any acquisition or other transaction, the
percentage of Common Shares held by the Shareholders in the share capital of
Momentum may be reduced. Shareholders may experience subsequent dilution and/or
such securities may have preferred rights, options and pre-emption rights senior
to Common Shares. There is no assurance that further capital raises will be
successful and this may significantly harm Momentum's business and results of
operations.
LITIGATION CAN ADVERSELY AFFECT MOMENTUM'S RESULTS
Momentum's business, results of operations or financial condition could be
materially adversely affected by litigation. Any litigation by Momentum or
against it, is likely to be costly and lengthy and there can be no assurance
that Momentum would prevail. Litigation could also involve a significant
diversion of resources and management attention and be disruptive to normal
business operations. An unfavorable resolution of a particular lawsuit or the
costs associated with substantial litigation may significantly harm Momentum's
business and results of operations.
At present Momentum is not subject to any litigation that could have a
materially adverse effect on Momentum's operations, business or reputation.
However, no assurance can be given that Momentum may not in the future be
subject to litigation and/or court proceedings that could damage its reputation
and significantly affect its business and operations.
22
MOMENTUM CANNOT GUARANTEE THAT IT WILL PAY A DIVIDEND
There can be no assurance as to the level and frequency of future dividends. The
declaration, payment and amount of any future dividends of the Company is
subject to the discretion of the Directors and will depend, amongst other
things, upon Momentum's earnings, financial position, cash requirements and
availability of profits as well as the provisions of relevant laws.
SIGNIFICANT DIFFERENCES EXIST BETWEEN INDIAN GAAP, IFRS AND US GAAP, WHICH MAY
BE MATERIAL TO THE FINANCIAL INFORMATION PREPARED AND PRESENTED IN ACCORDANCE
WITH US GAAP CONTAINED IN THIS AND FUTURE FILINGS
The Historical financial information and other financial information included in
this document, unless otherwise specified, are prepared and presented in
conformity with US GAAP consistently applied during the periods stated, and no
attempt has been made to reconcile the financial information given in this
document to any other principles or to base it on any other standards. US GAAP
differs from accounting principles and auditing standards with which prospective
investors may be familiar in other countries, such as Indian GAAP or IFRS.
Significant differences exist between Indian GAAP, IFRS and US GAAP, which may
be material to the financial information prepared and presented in accordance
with US GAAP in this document. In making an investment decision, investors must
rely upon their own examination of the Momentum, the terms of the Offer and the
US GAAP financial information contained in this document. Use of non-US GAAP
financial data may not be an accurate measure of Momentum's past, present or
future performance. To help shareholders understand its financial performance
and its future results, Momentum supplements the financial results that it
provides in accordance with US GAAP, with non-US GAAP financial measures,
including earnings before income taxes, depreciation, amortization and interest,
or EBITDA. The method Momentum uses to produce non-US GAAP results is not
necessarily computed according to US GAAP and may differ from the methods used
by other companies. Momentum's non-US GAAP results are not meant to be
considered in isolation or as a substitute for comparable US GAAP measures and
should be read only in conjunction with Momentum's Historical financial
information prepared in accordance with US GAAP. While Momentum's management
regularly uses its supplemental non-US GAAP financial measures internally to
understand, manage and evaluate its business and make operating decisions and
these non-US GAAP measures are among the primary factors management used in
planning for and forecasting future periods, they may not be an accurate measure
of Momentum's past, present or future performance. Non-US GAAP financial
measures, such as EBITDA, have limitations as analytical tools, and they should
not be considered in isolation, or as alternatives to pre-tax income or any
other operating performance measure presented in accordance with US GAAP.
(c) RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES AND RISKS RELATED TO THIS
OFFERING
THE SALE OF OUR COMMON STOCK COULD CAUSE THE PRICE OF OUR COMMON STOCK TO
DECLINE. THIS MAY RESULT IN SUBSTANTIAL LOSSES TO INVESTORS IF INVESTORS ARE
UNABLE TO SELL THEIR SHARES AT OR ABOVE THEIR PURCHASE PRICE.
A sale of shares under this offering at any given time could cause the trading
price of our common stock to decline. The sale of our common stock under this
offering could make it more difficult for us to sell equity securities in the
future at a time and at a price that we might not otherwise want to affect
sales.
THE TRADING PRICE OF OUR COMMON STOCK MAY DECREASE DUE TO FACTORS BEYOND OUR
CONTROL. THESE FACTORS MAY RESULT IN SUBSTANTIAL LOSSES TO INVESTORS IF
INVESTORS ARE UNABLE TO SELL THEIR SHARES AT OR ABOVE THEIR PURCHASE PRICE.
The trading price of our common stock is subject to significant fluctuations due
to a number of factors, including:
* our status as a development stage Company with a limited operating
History;
* no revenues to date, which may make risk-averse investors more
inclined to sell their shares on the market more quickly and at
greater discounts than may be the case with the shares of a seasoned
issuer in the event of negative news or lack of progress and
announcements of new products by us or our competitors;
23
* the timing and development of products and services that we may offer;
* general and industry-specific economic conditions;
* actual or anticipated fluctuations in our operating results;
* our capital commitments; and
* the loss of any of our key management personnel.
In addition, the financial markets have experienced extreme price and volume
fluctuations. The market prices of securities in this industry have been highly
volatile and may continue to be highly volatile in the future, some of which may
be unrelated to the operating performance of particular companies. The sale or
attempted sale of a large amount of common stock into the market may also have a
significant impact on the trading price of our common stock. Many of these
factors are beyond our control and may decrease the market price of our common
stock, regardless of our operating performance. In the past, securities class
action litigation has often been brought against companies that experience
volatility in the market price of their securities. Whether or not meritorious,
litigation brought against us could result in substantial costs, divert
management's attention and resources and harm our financial condition and
results of operations.
WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS IN THE FORESEEABLE FUTURE, WHICH MAY
REDUCE THE RETURN ON YOUR INVESTMENT IN OUR COMMON STOCK.
To date, the Company has not paid any cash dividends on its Common Stock and
does not anticipate paying any such dividends in the foreseeable future. Payment
of future dividends will depend on earnings and the capital requirements of the
Company, and the Company's debt facilities and other factors considered
appropriate by the Company's Officers and Director. We cannot guarantee that we
will, at any time, generate sufficient profits or surplus cash that would be
available for distribution as a dividend to the holders of our common stock. We
plan to use any profits that we may generate, if we generate any profits at all,
to fund our operations. Therefore, any return on your investment would derive
from an increase in the price of our stock, which may or may not occur.
WE MAY RAISE ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE
YOUR OWNERSHIP INTEREST AND VOTING RIGHTS.
We will need to raise additional capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the holders of our common stock. The issuance of additional
common stock or securities convertible into common stock will also have the
effect of diluting the proportionate equity interest and voting power of holders
of our common stock.
OUR INCORPORATION DOCUMENTS AND DELAWARE LAW INCLUDE PROVISIONS THAT MAY INHIBIT
AN ATTEMPT BY OUR SHAREHOLDER TO CHANGE OUR DIRECTION OR MANAGEMENT, OR MAY
INHIBIT A POSSIBLE TAKEOVER THAT SHAREHOLDERS CONSIDER FAVORABLE. THE OCCURRENCE
OF SUCH EVENTS COULD LIMIT THE MARKET PRICE OF YOUR STOCK.
Our certificate of incorporation and bylaws contain provisions that could delay
or prevent a change in control of our Company, such as prohibiting cumulative
voting in the election of directors, which would otherwise allow less than a
majority of shareholders to elect director candidates. In addition, our Class B
Preferred shares, held by our founding shareholders, contain super voting
rights, which will allow the founding shareholders to control Momentum for the
foreseeable future, which may prevent or frustrate any attempt by our Common
shareholders to change our management or the direction in which we are heading.
These and other provisions in our amended and restated certificate of
incorporation and bylaws and under Delaware law could reduce the price that
investors might be willing to pay for shares of our common stock in the future
and result in the market price being lower than it would be without these
provisions.
24
WE WILL NEED TO RAISE ADDITIONAL CAPITAL AND, IN SO DOING, WILL FURTHER DILUTE
THE TOTAL NUMBER OF SHARES ISSUED AND OUTSTANDING.
We will need to raise additional capital, in addition to the financing as
reported in this registration statement, by issuing additional shares of common
stock and will, thereby, increase the number of common shares outstanding. There
can be no assurance that this additional capital will be available and, if the
capital is available at all, that it will be available on terms acceptable to
the Company. The issuances of additional equity securities by the Company may
result in a significant dilution in the equity interests of its current security
holders. Alternatively, we may have to borrow large sums, and assume debt
obligations that require us to make substantial interest and capital payments.
If we are able to raise additional capital, we cannot assure that it will be on
terms that enhance the value of our common shares. If the Company is unable to
obtain financing in the amounts and on terms deemed acceptable, the business and
future success of the Company will almost certainly be adversely affected.
WE ARE DEPENDENT ON KEY PERSONNEL.
Momentum's success will largely rely on the efforts and abilities of
certain key personnel. While the Company does not foresee any reason why such
key personnel will not remain with the Company, if for any reason they do not,
the Company could be adversely affected. The Company has not purchased key man
life insurance for any of these individuals.
AN ACTIVE TRADING MARKET FOR OUR COMMON SHARES MAY NOT DEVELOP.
Our common shares are new issues of securities with no established trading
markets or prior trading histories, and there can be no assurance regarding the
future development of markets for our common shares, the ability of holders of
our common shares to sell or the prices for which holders may be able to sell
their holdings of our common shares. Furthermore, the liquidity of, and trading
markets for, our common shares may be adversely affected by changes in the
healthcare services industry and in the overall economy, as well as by any
changes in our financial condition or results of operations.
OUR STOCK MAY BE A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE
SEC'S PENNY STOCK REGULATIONS AND THE NASD'S SALES PRACTICE REQUIREMENTS, WHICH
MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
The Company's common shares may be deemed to be "penny stock" as that term is
defined in Regulation Section "240.3a51-1" of the Securities and Exchange
Commission (the "SEC"). Penny stocks are stocks: (a) with a price of less than
U.S. $5.00 per share; (b) that are not traded on a "recognized" national
exchange; (c) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ - where listed stocks must still meet requirement (a) above); or
(d) in issuers with net tangible assets of less than US$2,000,000 (if the issuer
has been in continuous operation for at least three years) or US$5,000,000 (if
in continuous operation for less than three years), or with average revenues of
less than U.S. $6,000,000 for the last three years. Section "15(g)" of the
United States Securities Exchange Act of 1934, as amended, and Regulation
Section "240.15g(c)2" of the SEC require broker dealers dealing in penny stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.
Potential investors in the Company's common shares are urged to obtain and read
such disclosure carefully before purchasing any common shares that are deemed to
be "penny stock".
Moreover, Regulation Section "240.15g-9" of the SEC requires broker dealers in
penny stocks to approve the account of any investor for transactions in such
stocks before selling any penny stock to that investor. This procedure requires
the broker dealer to: (a) obtain from the investor information concerning his or
her financial situation, investment experience and investment objectives; (b)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (c) provide the investor with a written statement
25
setting forth the basis on which the broker dealer made the determination in
(ii) above; and (d) receive a signed and dated copy of such statement from the
investor confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for investors in the Company's
common shares to resell their common shares to third parties or to otherwise
dispose of them. Security holders should be aware that, according to Securities
and Exchange Commission Release No. 34-29093, dated April 17, 1991, the market
for penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include:
(i) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of purchases; and
sales and false and misleading press releases;
(iii) boiler room practices involving high-pressure sales tactics; and
unrealistic price projections by inexperienced sales persons;
(iv) excessive and undisclosed bid-ask differential and markups by selling
broker-dealers;
(v) the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along with
the resulting inevitable collapse of those prices and with consequent investor
losses.
Our management is aware of the abuses that have occurred Historically in the
penny stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
THE CONCENTRATION OF OUR CAPITAL STOCK OWNERSHIP WITH OUR FOUNDERS, EXECUTIVE
OFFICERS, EMPLOYEES, AND OUR DIRECTORS AND THEIR AFFILIATES WILL LIMIT YOUR
ABILITY TO INFLUENCE CORPORATE MATTERS.
After our offering, our Class B common stock will have one hundred votes per
share and our Class A common stock, which is the stock we are selling in this
offering, will have one vote per share. We anticipate that our founders,
executive officers, directors (and their affiliates) and employees will together
own approximately 100% of our Class B common stock, representing approximately
99% of the voting power of our outstanding capital stock. In particular,
following this offering, our three founders, our CEO, and their nominees will
control approximately 100 % of our outstanding Class B common stock,
representing approximately 99% of the voting power of our outstanding capital
stock. They will therefore have significant influence over management and
affairs and over all matters requiring stockholder approval, including the
election of directors and significant corporate transactions, such as a merger
or other sale of our Company or its assets, for the foreseeable future. In
addition, because of this dual class structure, our founders, directors,
executives and employees will continue to be able to control all matters
submitted to our stockholders for approval even if they come to own less than
50% of the outstanding shares of our common stock. This concentrated control
will limit your ability to influence corporate matters and, as a result, we may
take actions that our stockholders do not view as beneficial. As a result, the
market price of our Class A common stock could be adversely affected.
Provisions in our charter documents and under Delaware law could discourage a
takeover that stockholders may consider favorable.
Provisions in our certificate of incorporation and bylaws, as amended and
restated upon the closing of this offering, may have the effect of delaying or
preventing a change of control or changes in our management. These provisions
include the following:
26
o Our certificate of incorporation provides for a dual class common stock
structure. As a result of this structure our founders, executives and employees
will have significant influence over all matters requiring stockholder approval,
including the election of directors and significant corporate transactions, such
as a merger or other sale of our Company or its assets. THIS concentrated
control could discourage others from initiating any potential merger, takeover
or other change of control transaction that other stockholders may view as
beneficial.
o Our board of directors has the right to elect directors to fill a
vacancy created by the expansion of the board of directors or the resignation,
death or removal of a director, which prevents stockholders from being able to
fill vacancies on our board of directors.
o Our stockholders may not act by written consent. As a result, a holder,
or holders, controlling a majority of our capital stock would not be able to
take certain actions without holding a stockholders' meeting.
o Our certificate of incorporation prohibits cumulative voting in the
election of directors. THIS limits the ability of minority stockholders to elect
director candidates.
o Stockholders must provide advance notice to nominate individuals for
election to the board of directors or to propose matters that can be acted upon
at a stockholders' meeting. These provisions may discourage or deter a potential
acquirer from conducting a solicitation of proxies to elect the acquirer's own
slate of directors or otherwise attempting to obtain control of our Company.
o Our board of directors may issue, without stockholder approval, shares
of undesignated preferred stock. The ability to authorize undesignated preferred
stock makes it possible for our board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to acquire us.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover
provisions. Under Delaware law, a corporation may not engage in a business
combination with any holder of 15% or more of its capital stock unless the
holder has held the stock for three years or, among other things, the board of
directors has approved the transaction. Our board of directors could rely on
Delaware law to prevent or delay an acquisition of us. For a description of our
capital stock, see "Description of Capital Stock."
FUTURE SALES OF SHARES COULD CAUSE OUR STOCK PRICE TO DECLINE
We cannot predict the effect, if any, that market sales of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales of our Class A common stock in the public market after the
restrictions described in this prospectus lapse, or the perception that those
sales may occur, could cause the trading price of our stock to decrease or to be
lower than it might be in the absence of those sales or perceptions. Based on
shares outstanding as of September xx, 2009, upon completion of this offering,
we will have outstanding 14,004,000 shares of common stock, assuming no exercise
of an underwriters' over-allotment option. Of these shares, only the shares of
Class A common stock sold in this offering will be freely tradable, without
restriction, in the public market. We may, in our sole discretion, permit our
officers, directors, employees and current stockholders who are subject to
contractual lock-up agreements with us to sell shares prior to the expiration of
their lock-up agreements.
After the selling restriction agreements pertaining to this offering expire,
additional shares will be eligible for sale in the public market.
27
Number of Shares Percent of
Days After the Date Eligible for Sale Outstanding
of this Prospectus* in U.S. Public Market** Common Stock
669 3,004,000*** 21.5%
673 800,000*** 5.7%
700 1,200,000*** 8.6%
730 3,000,000*** 21.4%
*Assumes "effective" date is October 15, 2009.
**Shares will continue to face restrictions against sale related to the "control
securities" provisions of Rule 144 promulgated by the U.S Securities and
Exchange Commission pursuant to the Securities Act of 1933.
***Two-year lock-up period for Class B common stock holders is contained in
Article FOURTH of the Amended and Restated Certificate of Incorporation
Section 2(f)(ii), dated August 12, 2009, and attached hereto as Exhibit
3.1.
Upon closing of this offering, 8,004,000 Class B common shares will be held by
directors, executive officers and other affiliates and will be subject to volume
limitations under Rule 144 promulgated under the Securities Act of 1933 and
various vesting agreements. In addition, the shares issuable upon exercise of
outstanding warrants and the shares issuable upon exercise of outstanding
options and reserved for future issuance under our stock plans will become
eligible for sale in the public market to the extent permitted by the provisions
of various vesting agreements, the selling restriction agreements and Rules 144
and 701 under the Securities Act of 1933, as amended, or the Securities Act. If
these additional shares are sold, or if it is perceived that they will be sold,
in the public market, the trading price of our common stock could decline.
In addition, we have agreed with our underwriters not to sell any shares of our
common stock beyond those registered by this offering for a period of 180 days
after the date of this prospectus. However, this agreement is subject to a
number of exceptions, including an exception that allows us to issue an
unlimited number of shares in connection with mergers and acquisition
transactions, joint ventures or other strategic transactions. After the
expiration of the 180-day period, there is no contractual restriction on our
ability to issue additional shares. Any sales of common stock by us, or the
perception that such sales could occur, could cause our stock price to decline.
The risks noted above do not necessarily comprise all those faced by Momentum
and are not intended to be presented in any assumed order of Priority.
USE OF PROCEEDS
We estimate that we will receive net proceeds in cash of $10,000,000 from our
sale of the 6,000,000 shares of Class A common stock offered by us in this
offering, based upon an assumed initial public offering price of $5.00 per
share, after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us. Furthermore, we intend to exchange up
to 4,000,000 shares of Class A common stock for land parcels in India, valued at
approximately $20,000,000.
28
We expect to use the net proceeds received by us from this offering for general
corporate purposes, including:
Year 2009 2010 2010 2010 2010
Quarter 4th 1st 2nd 3rd 4th
___________________________________________________________________
PROCEEDS (US000'S)
6 million shares at $5 per share $ 30,000
USES (US000'S)
INDIAN HEALTHCARE FACILITIES SEGMENT
Purchase of Land (In exchange for 4 million shares) $(20,000)
Title insurance, deed registration, regulatory approvals $ (700)
Organization costs $ (100)
Hospital construction costs $ (1,291) $ (1,291)
___________________________________________________________________
$(20,700) $ (100) $ - $ (1,291) $ (1,291)
MEDICAL TRANSCRIPTIONS & BILLING SERVICES SEGMENT
Acquisitions $ (3,000)
Operations Development $ (100) $ (100) $ (100) $ (100) $ (100)
Marketing $ (50) $ (50) $ (50) $ (50) $ (50)
Implementations $ (30) $ (30) $ (30) $ (30) $ (30)
Capital Expenditures $ (50) $ (50) $ (50) $ (50) $ (50)
___________________________________________________________________
$ (230) $ (230) $ (230) $ (3,230) $ (230)
HEALTHCARE INFORMATION SERVICES SEGMENT
Marketing $ (50) $ (50) $ (50) $ (50) $ (50)
US Operations Team $ - $ - $ - $ - $ -
India Development Team $ (90) $ (90) $ (90) $ (90) $ (90)
Capital Expenditures $ (50) $ (50) $ (50) $ (50) $ (50)
___________________________________________________________________
$ (190) $ (190) $ (190) $ (190) $ (190)
CORPORATE SERVICES
Governance, Finance, Corporate Development, etc $ (250) $ (250) $ (250) $ (250) $ (250)
Total Uses $(21,370) $ (770) $ (670) $ (4,961) $ (1,961)
Cumulative Uses $(21,370) $(22,140) $(22,810) $(27,771) $(29,732)
Although we may use a portion of the net proceeds to acquire businesses,
technologies or other assets, we have no current agreements or commitments with
respect to any material acquisitions.
Pending such uses, we plan to invest the net proceeds in short-term, investment
grade securities.
DILUTION
If you invest in our Class A common stock, your interest will be diluted to the
extent of the difference between the initial public offering price per share of
our Class A common stock and the projected as adjusted net tangible book value
per share of our Class A and Class B common stock immediately after this
offering. Projected net tangible book value per share represents the amount of
our total tangible assets less total liabilities, divided by the number of
shares of Class A and Class B common stock outstanding at June 30, 2009.
29
Investors participating in this offering will incur immediate, substantial
dilution. Our projected net tangible book value was $0.01 per share of Class A
and Class B common stock at June 30, 2009. Assuming the sale by us of shares of
Class A common stock offered in this offering at an initial public offering
price of $5.00 per share, and after deducting estimated underwriting discounts
and commissions and estimated offering expenses, our projected as adjusted net
tangible book value at June 30, 2009, would have been $4.43 per share of common
stock. This represents an immediate increase in projected net tangible book
value of $4.44 per share of common stock to our existing stockholders and an
immediate dilution of $0.56 per share to the new investors purchasing shares in
this offering.
The following table illustrates this per share dilution:
Assumed initial public offering price per share of Class
A common stock $5.00
Projected net tangible book value per share at June 30,
2009 $0.01
Increase in projected net tangible book value per share
attributable to this offering $4.44
Projected as adjusted net tangible book value per share
after the offering $4.43
Dilution to new investors $0.56
PLAN OF DISTRIBUTION
We are registering 6,000,000 shares of our Class A common stock for sale by
Momentum Healthcare Services, Inc. The Company will receive all of the proceeds
from the sale of these shares, except fees, commissions and expenses. The buyers
of our shares may sell some or all of their common stock in one or more
transactions, including block transactions:
* on such public markets or exchanges as the common stock may from time
to time be trading;
* in privately negotiated transactions;
* through the writing of options on the common stock;
* settlement of short sales; or,
* in any combination of these methods of distribution.
Subscribers for our shares may sell shares directly to market makers acting as
principals or brokers or dealers, who may act as agent or acquire the common
stock as a principal. Any broker or dealer participating as agent in such
transactions, may receive a commission from the selling security holder or, if
they act as agent for the purchaser of such common stock, a commission from the
purchaser. The selling security holder will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers will be required to sell
the securities at a fixed price of $5.00 per share for the duration of the
offering.
If, after the date of this prospectus, the Company enters into an agreement to
sell its shares to a broker-dealer as principal and the broker-dealer is acting
as an underwriter, we will need to file a post-effective amendment to the
registration statement of which this prospectus is a part. We will need to
identify the broker-dealer, provide required information on the plan of
distribution, and revise the disclosures in that amendment, and file the
agreement as an exhibit to the registration statement. Also, the broker-dealer
would have to seek and obtain clearance of the underwriting compensation and
arrangements from the NASD Corporate Finance Department.
We are bearing all costs relating to the registration of the common stock, which
are estimated at $20,000. Any selling shareholder, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
subsequent sale of the common stock by them.
30
Momentum is paying the expenses of the offering because we seek to: (i) become a
reporting Company with the Commission under the Securities Exchange Act of 1934
(the "1934 Act"); and (ii) enable our common stock to be traded on the OTC
Bulletin Board or a national exchange. We believe that the registration of this
offering may facilitate the development of a public market in our common stock
if our common stock is approved for trading on the OTC Bulletin Board or a
national exchange.
We consider that the development of a public market for our common stock will
make an investment in our common stock more attractive to future investors. We
will at some point in the near future need to raise additional capital through
further offerings, private placement offerings, or debt. We believe that
obtaining reporting Company status under the 1934 Act and trading on the OTC
Bulletin Board or a national exchange should increase our ability to raise these
additional funds from investors.
Any broker-dealers or agents involved in this offering must comply with the
requirements of the Securities Act and the Securities Exchange Act in the offer
and sale of the common stock. In particular, during such times as any
broker-dealers or agents may be deemed to be engaged in a distribution of the
common stock, he must comply with applicable law and may, among other things:
* Not engage in any stabilization activities in connection with our
common stock;
* Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus, as amended from time to time,
as may be required by such broker or dealer; and,
* Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Securities Exchange Act.
DIVIDEND POLICY
We have never declared or paid any cash dividend on our capital stock. We
currently intend to retain any future earnings and do not expect to pay any
dividends in the foreseeable future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF
OUR OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
THE NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REFLECTING OUR CURRENT
EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS AND THE TIMING
OF EVENTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN THESE FORWARD-LOOKING
STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE DISCUSSED IN THE SECTION
ENTITLED "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
Overview
Momentum Healthcare Services, Inc. ("Momentum") was founded in the State of
Delaware April 15, 2009 and is in its development stage. The Company has yet to
generate revenue. Since its inception, Momentum has incurred losses of $100,126,
and as of June 30, 2009 the Company had assets totaling $13,074 in cash.
Momentum is initially focusing on four discrete businesses in the Healthcare
Services Industry, including Hospital Development and Operations in the form of
construction and operation of for-profit hospitals in India, and Medical
Transcription, Medical Billing, and Healthcare IT in the United States.
Hospital Development and Operations is the planning, construction and operation
of for-profit hospitals in India. The Company initially envisions opening 5
hospitals with 75 beds each, offering complete medical and surgical care across
5 to 7 medical specialties. This business line has been occasioned by Momentum
31
being in a position to offer the financial and administrative expertise to
facilitate major healthcare projects over a broad spectrum. Momentum intends to
build and equip hospitals and clinics in India, and then collaborate with NRI
physicians and others to operate the medical aspects of these projects. Such
projects are a dire need for India, as explained in the discussion of "The
Indian Hospital and Healthcare Industry" below.
Momentum is in the process of reaching agreements with Indian landowners, who
will exchange significant parcels of land in return for the Company's Class A
Common Stock. Momentum plans to receive this land in Indian subsidiaries to be
formed, with each parcel owned by a separate subsidiary. Individual management
teams, Boards of Directors, and a separate project finance structure will
support each subsidiary. Since each of these subsidiaries may be quite
different, and is subject to substantial further development, no cash flow
structure for Momentum has yet been developed. We anticipate exchanging our
Class A Common Stock, valued at $5.00 per share, in return for the genuine
appraised value of the lands in each separate case, as verified by an
internationally recognized real estate appraiser. Future acquisitions may be
valued differently, depending upon the performance of our shares.
Medical Transcription is the process of converting dictations of physicians,
contained on computerized voice files, into typed files, which can become part
of the medical record in hospitals, clinics and doctors' offices.
Medical Billing is the process of taking responsibility for filing claims and
collecting fees for medical services of all kinds.
Healthcare IT ("HIT") includes the software, systems, and implementation of the
computerization of all functions in the healthcare industry, including, but not
limited to, enterprise resource planning ("ERP"), client relationship management
("CRM"), and supply chain management ("SCM"). Such systems are designed to
improve the performance of healthcare organizations at all levels. These are
multi-module applications systems, which integrate activities across functional
departments including, but not limited to management planning, purchasing,
inventory control, finance, accounting, human resources, electronic medical
records and all of the operational and functional aspects of healthcare
delivery.
Management believes that it is uniquely positioned to differentiate Momentum
from other companies in the Medical Services Industry by providing high quality
paradigm shifting products and services in an effective and efficient manner.
Management intends to explore future financings to grow quickly through
acquisitions, both in India and the United States.
Momentum is in the development stage and has a limited History of operations. We
presently do not have all of the funding we require to execute our business plan
or build name recognition. Provided we are successful with this offering, we
plan to raise additional capital at a future date to build up our business and
name recognition.
We expect to continue to incur losses for at least the next several years. We do
not expect to generate sufficient revenue to cover our expenses, and we do not
have sufficient cash and cash equivalents to execute our plan of operations. We
will need to obtain additional financing to conduct our day-to-day operations,
and to fully execute our business plan. We anticipate raising capital necessary
to fund our business through the sale of equity securities although there is no
certainty that we may be able to raise the required funds (See "Plan of
Operation").
Three of the first officers of Momentum Healthcare Services, Inc. are three of
the first four executive employees hired by CBay Systems, Ltd., a Delaware
corporation, whose successor in interest, CBaySystems Holdings Limited ("CBay")
is now listed on the London Stock Exchange (AIM: CBAY). After founding in July
1998, CBay became the largest Company in the American Medical Transcription
industry, which includes approximately 1,500 companies of all sizes. CBay's
business spans Medical Transcription, Healthcare Technology, and Patient
Financial Services, including medical billing.
32
Donald L. "Skip" Conover, President and Director of Momentum Healthcare
Services, Inc., was a founding Director of CBay, serving as such from July 1998
to October 2006. He served as the first President and Chief Operating Officer of
CBay, and later as Vice Chairman of the Board of Directors. Mr. Conover was the
first mover in the Indian Medical Transcription Industry, first conceptualizing
the idea of sending American medical transcription work to India in October
1989. The Indian Medical Transcription Industry is estimated to employ over
25,000 people. Mr. Conover's non-compete with CBay expired on September 30,
2008.
Momentum intends to establish its business by developing hospitals and clinics
in India, by direct selling of its medical transcription and medical billing
services; by acquisition of medical transcription and medical billing companies,
and by developing and marketing Healthcare IT for the United States market.
How Momentum Plans to Generate Revenue
Momentum plans to derive its revenue by building and operating hospitals and
clinics in India, and by selling its medical transcription, medical billing, and
healthcare IT in the United States.
Momentum has recognized an opportunity to develop hospitals and clinics in
India. This has been occasioned by Momentum being in a position to offer the
financial and administrative expertise to facilitate major healthcare projects
over a broad spectrum. Momentum intends to build and equip hospitals and clinics
in India, and then collaborate with Non-Resident Indian ("NRI") physicians and
others to operate the medical aspects of these projects. Such projects are a
dire need for India, as explained in the discussion of "The Indian Hospital and
Healthcare Industry" below.
Momentum is in the process of reaching agreements with Indian landowners, who
will exchange significant parcels of land in return for the Company's Class A
Common Stock. Momentum plans to receive this land in Indian subsidiaries to be
formed, with each parcel owned by a separate subsidiary. Individual management
teams, Boards of Directors, and a separate project finance structure will
support each subsidiary. Since each of these subsidiaries may be quite
different, and is subject to substantial further development, no cash flow
structure for Momentum has yet been developed. We anticipate exchanging our
Class A Common Stock; valued at $5.00 per share, in return for the genuine
appraised value of the lands in each separate case, as verified by an
internationally recognized real estate appraiser. Future acquisitions may be
valued differently, depending upon the performance of our shares.
We have prepared a notional PROJECTED FINANCIAL STATEMENT of one acute care
hospital project of 75 beds, which is attached hereto as Exhibit 99.1. Momentum
already has one contract to acquire land for such a project at the major railway
junction of Arakkonam, in the State of Tamil Nadu, 70 kilometers west of
Chennai. A copy of this contract, which is contingent upon Momentum successfully
raising $10 million in new shareholder investment and Momentum establishing to
its satisfaction that the construction of a building on the site can be financed
from within the Indian banking or other financing community, is attached hereto
as Exhibit 10.1. The consideration for the purchase of this parcel shall be a
number to be determined of Momentum Class A Common Shares, determined by solving
for an equation using as a numerator the appraised value of the parcel of land
and as a denominator $5.00. The seller agrees to hold the said shares for a
period of 1 year.
We believe this strategy will position Momentum to be a major player in the
Indian healthcare industry in years to come, and provide us with substantial
synergies with our Healthcare IT strategy. Momentum will control the Healthcare
IT decision-making within each project. It is not anticipated that any such
project will be operational for at least 2 years, but when they come online,
they will provide Momentum with test beds for our Healthcare IT strategy,
together with operating platforms from which we can certify our Healthcare IT
modules with the Certification Commission for Healthcare Information Technology
("CCHIT"), which was recognized as a certifying body by the Department of Health
and Human Services of the U.S. Government in 2006, and to date is the only
certifying authority of healthcare software in the United States. Further, as
India's healthcare industry advances into World standards, which is its
potential, this strategy will provide Momentum with major reference clients
throughout India, providing us with marketing advantages over local Healthcare
IT competitors.
33
In addition to organic sales of medical transcription and medical billing
services, we intend to acquire medical transcription and medical billing
companies with revenue in excess of $30 million, subject to availability of
funds from this offer. Based on our experience, we believe that there is a
public/private arbitrage in the value of such companies. Small companies in
these markets tend to be sold by their founders to larger companies for prices
below their gross revenue. On the other hand, public companies often sell at a
multiple higher than their gross revenue. We therefore believe that each
acquisition we make will add to the value of Momentum on the public markets.
We further intend to create a sales and marketing operation, which will compete
effectively with major industry players. The medical transcription industry has
been tarnished in recent years by allegations of overbilling, failure to deliver
satisfactory quality, and resultant financial instability. We plan to capitalize
on the vulnerability of major industry competitors by highlighting Momentum's
ability to deliver reliable quality with transparent billing techniques.
We plan to acquire most of our production from India. Ten to fifteen years ago
the Indian medical transcription industry was not well established, and many of
the major players in the industry were derisive outsourcing work offshore.
Several of the biggest companies made it an important marketing point to declare
in their marketing materials that they would only use production from the United
States. Some of these same companies found themselves in financial difficulties
because they failed to make the shift to offshore labor soon enough. Today, the
availability of American sources of medical transcription labor is diminishing,
and Indian medical transcription labor is widely accepted in the industry. All
major medical transcription companies have embraced the idea of using offshore
labor. In so doing, however, many have failed to understand the necessity for
building quality into the product at the source. Instead, they either rely on
substantial editing efforts in the United States, or they deal with client
complaints by hiring complaint takers--personnel whose job it is to hear
complaints, while those complaints may or may not be resolved. Such companies
recognize that changing a medical transcription supplier is a major undertaking
within a hospital or major clinic, so they rely on tolerance of a certain level
of bad quality ameliorated by the soothing intercession of their complaint
takers.
Momentum, on the other hand, was founded and is led by executives who know that
excellent quality can be achieved in any production center with proper guidance
and training. We plan to use the knowledge and experience of how to accomplish
excellent quality as an important differentiator of our Momentum
Transcriptions(TM) brand in the marketplace. Furthermore, our commitment to
being a reporting public Company from the outset demonstrates our commitment to
operating our business in a fair and transparent manner for all stakeholders.
Similar phenomena occur in the medical billing industry.
In Healthcare IT, Momentum has the advantage of being founded by executives who
have seen excellent computerization of healthcare institutions operating outside
of the United States. These experiences have taught us that the chronic problems
of incompatible operating systems, versioning, and module interoperability are
largely solvable with the right overall vision. (See "Discussion of the
Healthcare IT Industry" below.) We intend to develop excellent systems, using
the benefit of our experiences, and then change the market paradigm. Current
systems are typically disjointed client/server systems, which do not lend
themselves to Application Service Provider ("ASP") or Software as Service
("SAS") style solutions, although many do hold themselves out as "available on
the Internet." There is a significant qualitative difference between being
accessible through the Internet and being operated off site, as is typical of
ASPs. We intend to build a system that is completely indifferent to the location
of the hardware, which supports it.
By owning our software, and not offering it "for sale," we can dramatically
reduce the capital costs faced by major healthcare institutions. Typically, such
institutions pay a purchase price, often $10 million to $15 million or more,
have to wait for installation, and then pay ongoing maintenance fees of 18% to
20% per year for continued support of their systems. Momentum plans to change
this paradigm by vastly reducing the up- front capital expenditure of such
institutions. THIS plan will force competitors, which rely on "selling" their
modules, to change their business model and their product lines that fail to
lend themselves to the ASP model.
34
We plan to begin marketing at least one major module needed by all major
healthcare institutions within twelve months. Our first modules can be expected
to support electronic medical records ("EMR"), pharmacy, and supply chain
management ("SCM") applications. We have identified EMR as a primary focus
because the Obama Administration has said that it intends to spend $19 billion
on improvements and implementations in this area over its term of office.
Pharmacy is a priority because inventory control and security of pharmaceuticals
is mission critical in all major healthcare institutions. SCM is critical
because of the volume of items, which a typical healthcare institution must
maintain. A typical hospital must inventory as many as 50,000 items, from
cleaners and mops to sutures and operating room light bulbs. Every room of a
hospital tends to be a mini-warehouse, and the tracking of inventoried items in
such a complex environment is therefore significantly more complicated than in
typical institutions in other industries.
DISCUSSION OF THE INDIAN HOSPITAL AND HEALTHCARE INDUSTRY
While India is well known for training doctors and medical staff, who become
leaders in countries throughout the World, its healthcare industry at home has
been neglected. India spends roughly 3.6% of its GDP on healthcare, 75% of which
is spent by the private sector. About 20 million Indians slip below the poverty
line each year due to indebtedness caused by medical expenses. Seventy-two (72)
infants per thousand die before reaching the age of five, and malnutrition
afflicts almost half of all Indian children. Malnutrition of workers alone is
estimated to cost 3-9% of GDP annually. Maternal and child care is a major issue
of concern as are contagious diseases. Malaria, tuberculosis, HIV/AIDS, and
lifestyle diseases such as diabetes and cardiac problems continue to be
prevalent. Non-contagious diseases have become the leading cause of death for
the age group 30-59, and they are projected to account for 60% of all deaths by
2015.
The Government of India has not facilitated the creation of a World Class
healthcare insurance industry, which would have driven Indian healthcare toward
the use of standardized coding systems, such as ICD-9 and ICD-10. Adoption of
such standards has facilitated the improvement of healthcare practices
throughout much of the rest of the World. Among other deficiencies, failure to
adopt such standards has hamstrung the Indian IT industry, which, outside of
healthcare, is otherwise a leader in the World. Only 11% of India's population
is covered by health insurance, according to PricewaterhouseCoopers' HEALTHCARE
IN INDIA: EMERGING MARKET REPORT 2007. There are only 13 Joint Commission
International (JCI) hospitals certified in India, as compared to 28 in the
Kingdom of Saudi Arabia, which has 1/40th the population of India.
India's rapidly growing middle-class population demands better access to
healthcare. India needs about 28,000 Health Centers, according to the Government
of India's ECONOMIC SURVEY 2008-09. Other sources, such as
PricewaterhouseCoopers, put the need considerably higher. According to the
PricewaterhouseCoopers study, India has only 20% as many hospital beds as the
world average, and requires 450,000 new beds by 2010. They estimate that the
cost of such investment is approximately $25.7 Billion, of which the government
will only fund 15-20%.
35
The following statistics provide a sense of the orders of magnitude of the
startling deficiencies of the Indian healthcare system:
India United States
(Per 10,000 population) (Per 10,000 population)
____________________________________________________________________________________________
Doctors 6 26
Nursing/Midwives 13 94
Dentists 1 16
Hospital Beds 7 30
Deaths Under 5 Years of Age 720 80
Attended Births 47% 99%
Healthcare Expenditure as a % of GDP 3.6% 15.3%
As a % of Total Government 3.4% 19.3%
Expenditures
Healthcare Expenditures/Capita $ 29 $6,719
Healthcare Expenditures/Capita PPP $ 86 $6,719
Source: WORLD HEALTH STATISTICS 2009, published by The World Health Organization
____________________________________________________________________________________________
While India does have several relatively large hospital groups, even the largest
of these, Apollo Hospitals Enterprise Limited ("Apollo"), which claims to be the
largest healthcare group in Asia, has only 43 hospitals and 7,500 beds. If this
size were juxtaposed into the U.S. healthcare system, it would amount to less
than 1% of the total healthcare services industry, and India's population is
approximately 4 times the size of the U.S. population. These statistics simply
demonstrate that the size of the needs in the Indian healthcare industry are
quite enormous, while government commitment to satisfying these needs falls far
short of World standards.
There is good news, however. The low figures present significant opportunity for
investment in the Indian healthcare sector. The government of India is actively
encouraging private initiatives in the sector by offering tax holidays to
private hospitals in certain areas. There are more than 40,000 doctors of Indian
origin in the United States and a proportional number in Great Britain, among
many other countries throughout the World. Many of these doctors are keenly
aware of the healthcare deficiencies in India, and many would like to find a way
to help. These doctors have practiced outside of India for 10-40 years, and have
amassed the financial wherewithal to help. Many have already tried to help, and
some have been successful. Others, however, have been thwarted by the complexity
of establishing a healthcare facility on the other side of the World.
Momentum has found that there is a certain cadre of landowners in India, who
will gladly supply a parcel of land for a hospital or clinic, if Momentum will
provide the organizing principal for developing such a facility. Such landowners
are prepared to exchange parcels of their land for Momentum Class A Common
Stock. One of these landowners, Dennis Steels Pvt. Ltd. has already agreed to
provide approximately 10 acres near the major railway junction of Arakkonam,
approximately 70 kilometers west of Chennai, in the State of Tamil Nadu. A copy
of the agreement to provide such land is attached hereto and made a part hereof
as Exhibit 10.1. The closing of this transaction is planned for completion by
December 31, 2009, subject to the completion of a variety of formalities, and
the removal of contingencies. Momentum intends to verify valuation of projects
of this sort through appraisals provided by internationally recognized real
estate appraisers such as Jones, Lang, LaSalle, CB Richard Ellis, or Cushman &
Wakefield. We intend to assure our title to any lands in question by acquiring
title indemnity insurance through internationally recognized insurance
companies.
36
Discussions with NRI doctors have suggested that the major stumbling block for
them developing healthcare projects in India has been the lack of administrative
focus and financial acumen. Momentum intends to provide this shortcoming by
building the structures and equipping them, while allowing the doctors to focus
on the medical aspects of the business. We intend to accomplish this through a
mixture of local bank finance, international finance supported by the U.S. ExIm
Bank and other international development banks, and various equity partnerships
within individual subsidiaries, keeping in mind our intention to consolidate
results by maintaining majority ownership in each subsidiary.
Development of the business plans for these projects will be done individually,
with a separate Momentum Indian subsidiary being established for each project.
These subsidiaries will have their own management teams in India, their own
Boards of Directors, and their own project finance structure. Since each of
these projects may be substantially different, with objectives from fully
operational acute care hospitals to cardiac catheterization clinics to maternity
clinics, the individual project plans are beyond the scope of our current
offering. Nonetheless, we have prepared a generic projected project plan for one
acute care hospital, to provide visibility into how these projects may develop
in the future. This projected project plan is attached hereto and made a part
hereof as Exhibit 99.1.
DISCUSSION OF THE MEDICAL TRANSCRIPTION INDUSTRY
The Medical Transcription industry in the United States is approximately $12
billion, of which approximately 40% is outsourced. The primary target market for
Momentum Transcriptions(TM) is approximately 4,900 community-based hospitals,
with estimated sales of $2.5 billion. Approximately 1,500 companies currently
service this market, with most achieving revenues of $1 million on less. Only
10-12 companies enjoy revenue in excess of $15 million.
Major companies in the industry include MedQuist (NASDAQ: MEDQ) with
approximately $285 million of medical transcription revenue, a 6% market share;
Spheris with approximately $184 million of revenue, a 4% market share; Transcend
(NASDAQ: TRCR) with approximately $49 million in 2008 revenue; CBay (AIM: CBAY)
with approximately $45 million in medical transcription revenue; and several
other companies, including Nuance (NASDAQ: NUAN), Webmedx, and SPI.
Market trends affecting the industry include: 1) the advancing age of the "Baby
Boomer" generation driving the need for healthcare services and increasing
costs; 2) increased requirements for documenting patient encounters for
insurance and regulatory purposes; 3) the domestic labor market is not growing
fast enough to meet demand for medical transcriptionists; 4) increased use of
business process outsourcing ("BPO") services by hospitals, particularly
including medical transcription; 5) competitive pricing by some vendors to can
market share; and 6) the adoption of speech recognition technology to increase
productivity. While voice recognition technology has long been discussed as a
threat to medical transcription companies, it has only replaced them in two
functional areas: radiology departments and emergency medicine. Those gains were
achieved in the mid-1990s. Best practices now include using voice recognition
engines to make first drafts of documents, followed by editing by professional
transcriptionists. Momentum plans to implement all of its medical transcription
business on this model.
Medical transcription production began in India in 1994, pioneered by
Transcriptions International, Inc., a pre-cursor of CBay also founded by Skip
Conover, and HealthScribe, now a component of Spheris. By 2000, The National
Association of Software and Services Companies ("NASSCOM") reported that there
were 640 medical transcription companies operating in India. Of these, only CBay
and HealthScribe achieved major success in the American hospital market as
direct suppliers. All other companies satisfied themselves with serving
hospitals through American medical transcription companies or by selling to the
doctors' offices of their kinsmen in the United States. Many of those year 2000
companies either failed for lack of knowledge of the United States market or
were subsumed under larger and stronger participants in the industry. The
survivors now face tough choices.
37
Many of medical transcription and medical billing companies have failed to
achieve critical mass, and few Indian companies control their own destiny in the
sense that they have no direct contact with their ultimate client. Their
founding entrepreneurs, like the founders of many of the small businesses in the
United States, now face the dilemma of finding a financial "exit route" from
their companies in a down market. Many of these entrepreneurs have invested over
a decade to developing their companies, and are anxious to retire. Since they do
not have the size or sophistication to reach the public markets on their own,
they need a better solution to their "exit route" problem. If they sell
privately they peg the value of their investment at a most difficult economic
time.
Momentum believes that it is positioned to acquire such companies at or below
their revenue run rates, and provide its investors with the benefits of the
public/private arbitrage. Public companies in healthcare services are typically
valued at a multiple above revenue run rates.
DISCUSSION OF MEDICAL BILLING INDUSTRY
Momentum intends to cross sell medical billing services into its medical
transcription clientele. Like medical transcription, over a thousand small
entrepreneurial companies and a few major national players, such as Perot
Systems and Per-Se Technologies, Inc, characterize the medical billing industry.
During the past five years Indian companies have developed to service this
industry, again by relying on American companies to handle their sales and
client services needs. Momentum intends to combine the medical transcription and
medical billing software it intends to develop, along with other BPO services
software, into an organic continuum with HIT healthcare IT software. In this
way, Momentum will create an environment, which will facilitate its cross
selling.
Payment in the medical billing industry is based on a fixed fee or a percentage
commission on the amounts obtained for the client. Client relationships are
governed by standard form agreements, which may vary from client to client. Much
of the billing activity required by healthcare providers focuses on identifying
and recovering lost payments from denied claims by insurance companies and state
and federal organizations such as Medicare and TriCare. Billing companies
identify the root causes of payment delays and correct problems to help prevent
claim denials. Momentum will identify acquisition candidates, which use
effective software for delay and denial management analytics looking at entire
active aged accounts receivable, taking into account both delayed and denied
claims. Trends and root causes for delays and denials can be uncovered and
addressed by delay management analytic software.
Momentum's medical billing operation will be designed to obtain payment on
outstanding balances from third-party payers such as insurance companies,
government organizations and private individuals. Each client will be assigned a
team of experts, who have extensive provider and payer experience, to assist
them in the accounts receivable management process. We will focus on making
certain that the client is able to monitor progress on claims and can use
Momentum's applications to generate a diverse range of detailed analytical
reports.
A large share hospital reimbursement is in Medicare payments that a hospital
receives if it services a disproportionate number of Medicaid-eligible patients,
which includes all Americans over 65 years of age. Hospitals are often denied
payments because necessary documentation is missing, incomplete or
non-compliant, or there is a lack of internal reimbursement or accounting
resources to correctly analyze potential reimbursement opportunities. Momentum's
focus will be to provide a comprehensive, turnkey service, from the preparation
of data to the complete reimbursement package preparation and follow-up with any
fiscal intermediary, and to support the process through to the audit. Momentum
will invest to build its sales and marketing infrastructure in immediately upon
the closure of this offering. As a new entrant in this marketplace, Momentum
will focus on brand building. We will maintain a balance between short-term
growth and profitability and investment in the development of a sales pipeline.
We intend to build Momentum with a direct sales program through a variety of
marketing strategies and active cross selling, in addition to our acquisition
strategy.
38
DISCUSSION OF THE HEALTHCARE IT INDUSTRY
Momentum Healthcare Services, Inc., intends to use proceeds of this offering and
cash flow generated from its Business Process Outsourcing ("BPO") businesses to
address the Healthcare IT ("HIT") space in the American healthcare industry.
THIS will allow Momentum to move into a market space, which typically enjoys PE
ratios above 20, while typical PE ratios for BPO activities typically fall below
that level. THIS refocusing of the Company over the next 3-5 years will position
Momentum to be a major player in the overall healthcare services industry. The
HIT space currently suffers from several major structural flaws:
1) Most healthcare computer systems had their origins in the 1980s, when
developers began focusing on using Microsoft microcomputer applications.
Microcomputer development was natural because it meant developers did not
need access to mainframe computers to do their work, but it meant that
certain tradeoffs were made, which have become less and less appropriate as
the healthcare industry has matured in its computerization. Implicit in
development on microcomputers is the idea that each healthcare application
is based on "client-server" functionality. What typically has occurred is
that each significant module has its own discrete server, which is
connected to other servers by local area networks. To the extent that these
systems are interoperable, they are fitted together with an interfacing
standard called HL7. HL7 took approximately 10 years to be agreed by the
industry, during the 1990s. Many hospitals that have adopted HIT over the
past twenty years have scores of servers in their computer rooms. This
phenomenon was caused by the fact that the larger companies operating in
the HIT space developed their offerings by acquiring many modules from
smaller developers and niche players. These systems suffer from
incompatibility of operating systems, versioning issues, and
interoperability issues. These problems will only get worse in the
short-run thanks to the entry of Google into the operating system market
previously dominated by Microsoft. Having suffered through the complexities
of implementing new versions of the Microsoft operating system on personal
computers, everyone can easily imagine the nightmare complexity of keeping
diverse client-server systems interoperable in hospitals with hundreds of
personal computers using divergent operating systems.
2) Considering the long gestation time for standards of any kind, particularly
in the healthcare industry, technological innovation often occurs before
standards can be agreed. The most effective companies will therefore be
those which make their systems and services ubiquitous and compelling
without waiting for the development of industry wide standards.
3) Most laymen and developers have made an assumption that the Electronic
Medical Records module ("EMR") constitutes the main area to improve
hospital and medical delivery efficiency. The main thrust of the Obama
Administration's stimulus money in HIT is in this arena, which has
attracted literally hundreds of small companies. Practically all of these
new entrants, however, suffer from the same issues mentioned in paragraph 1
above. While it is quite important, "me too" EMR systems developers often
miss the point that modern hospital computer needs are much more complex
than the EMR module, and fall into the same trap of developing on modular
client-server platforms.
4) The major companies in this space, McKesson Corporation (NYSE: MCK) and
Cerner Corporation (NASDAQ: CERN) grew their businesses during the 1990s in
this merger and acquisition, client-server environment. Their systems
therefore suffer from these major interoperability and versioning
shortcomings. These companies, and most others in the HIT space, are
vulnerable because any change in the marketing paradigm and technical
approach for the industry will force them to address thousands of legacy
systems, which will prove to be an overwhelming and time consuming
activity.
5) The payment model to major HIT companies today requires large capital
outlays for hospitals and doctors' offices. Major American HIT companies
operate on the basis of a sale of their software, followed by maintenance
agreements with clients of 18-20% of the purchase price per year. Full HIT
systems for hospitals can cost in excess of $15 million, and often
considerably more. HIT therefore becomes one of the largest capital
expenses for a hospital, often requiring special funding.
39
6) The Obama Administration currently proposes to subsidize such outlays for
doctors' offices, but at the moment these plans focus on the EMR space,
which represents a very small portion of the overall need in healthcare.
There are many other modules, which have the same or greater impact on the
financial performance of healthcare facilities. These include supply chain
management, finance, human resources management, benefits management,
scheduling management, clinical imaging interoperability, radio frequency
identification ("RFID") of major components of hospital equipment, and
bio-surveillance to name just of few major applications.
Momentum has the benefit of the perspective of several professionals, who have
experienced and observed the inconveniences of these shortcomings in the HIT
space first hand. These professionals have also had the opportunity to see
firsthand the appropriate solutions for many of these problems, which have been
implemented outside the United States. Whereas McKesson and Cerner had the
"luxury," within the context of the American financial sector, of acquiring
systems module by module from individual developers, this has not been the case
in other parts of the World. Hospital IT professionals outside of the United
States and Western Europe have tended to be forced to develop their solutions
internally, often very effectively, or to use small IT companies, which
developed their solutions at individual hospitals, often becoming the IT
department of the hospital during their installation process. The result of this
approach has been systems which often are more homogeneous and interoperable
than the systems provided by the largest HIT providers in the United States.
Further, these systems tend to be compatible with American healthcare standards,
because they have been developed using internationally accepted provider,
procedure and diagnostic codes (ICD-9 and ICD-10) at hospitals approved by The
Joint Commission International. Indeed, since American systems are still using
ICD-9 coding, while many overseas hospitals went directly to ICD-10 when they
began to computerize, in many cases these overseas systems are already prepared
for the next generation of coding to be adopted in the United States. Mr.
Conover and other members of the Momentum team know that these offshore
suppliers do have interest in ramping up their marketing efforts in and making
them compatible with the United States market. The major shortcoming of these
systems is that they too have been developed in client-server environments using
software development platforms such as C++ and .net.
Momentum envisions using the domain knowledge of these overseas companies to
develop fully interoperable and upgradeable systems using the Java programming
language. Momentum can negotiate contracts and begin marketing immediately upon
funding on the strength of the existing software of these companies, but will
immediately undertake a module by module build up of a fully interoperable
system spanning the entire HIT universe. As the process progresses, the Momentum
solution will become the "Best of Breed" solution in the industry.
Momentum envisions a "Software as a Service" or ASP model, undercutting the
business model of many of the major players in the HIT industry, which rely on
the initial sale and follow on maintenance model. Because Momentum will own its
developments, replicating its software will be a relatively low cost. Momentum
will offer HIT products on a non-capital expense basis, thereby undercutting one
of the major revenue generators of the top players in the HIT space. By
maintaining its software in a comprehensive manner, essentially for the
maintenance cost faced by most hospitals and clinics, Momentum will drive
interoperability, versioning and operating system problems out of the HIT
universe over time. By developing an effectively functioning Java based system,
Momentum will create a DE FACTO standard in the industry, which will be very
difficult for major competitors to replicate, given the complexity of the legacy
issues they will face with existing customers. Naturally, Momentum will adopt
any standards developed in the industry, and participate in the development of
such standards by serving on industry panels with such mandates.
Upon funding, Phase I of this process will be two-fold. In the United States, a
sales and marketing team will develop a strategy to utilize the existing
software developments of our overseas partners. As sales are made, suitable
operations centers for the SAS model will be established. We imagine that some
hospitals will want their systems on their site, with access by their own IT
professionals. Momentum will provide the solution at any suitable site with full
Momentum training, support, upgrades, and customer service. To the extent that
clients choose to have their own IT personnel involved in the process, those
costs will be for the client's account.
40
The second facet of Phase I will be to begin developing the comprehensive Java
based solution module by module at a development center in India. THIS strategy
implies limiting or eliminating the nightmare of servers and spaghetti wires,
which are typical in the average hospital computer room today. While this center
may use outside contractors and assets from the existing overseas HIT companies,
its primary function will be to implement the user friendliness and uniformity
of the Momentum HIT system across the entire healthcare universe. THIS activity
will be a never ending and ongoing process. As it expands into the various
modules of the healthcare universe, it will cause a DE FACTO shift in the way
that the healthcare industry thinks about and pays for HIT.
By envisioning building its own HIT universe wide standard, Momentum has the
opportunity to create a DE FACTO standard for the entire HIT industry. While
many companies will wait for industry standards to emerge, this process will be
long and messy. The HL7 example is a case in point. Just the HL7 interfacing
standard took nearly ten years for the industry to discuss and adopt. While
MOMENTUM wants to be cognizant of the standards process in the industry,
adopting standards as they are adopted along the way, it wants to avoid being
hobbled by the idea that a new standard must be completed next year or next
decade. Inevitably, this will be a complex decades-long process, favoring the
nimble Company that envisions the HIT space as the clients WANT it to be, rather
than how IT professionals hammer it out in caffeine choked meeting rooms. By
focusing on its own DE FACTO standard, refining it as it develops internally,
Momentum will ultimately catch the competition out of sync with their messy last
generation client-server offerings.
By envisioning itself as a global Company with a global market, Momentum will
have several advantages. Within 2-3 years, it will be positioned to garner major
pieces of business throughout the World, in addition to the United States
market. Countries like India have not yet even adopted the international coding
schemes, which have already become ubiquitous throughout most of the developed
World. Once the healthcare leaders of countries like India recognize that they
must adopt such standards, companies with perspectives on markets like India and
the Middle East will thrive, while hide bound American companies will tend to
limit their vision to North America and Western Europe. Once Momentum succeeds
in developing its DE FACTO standard, it will be very difficult for other
companies to compete across the entire spectrum. Smaller companies will lack
broad enough scope to address the entire universe, while the larger companies
will be hobbled by their legacy systems.
The initial objective, with an investment of approximately $2 million, is to
begin to market Momentum's HIT products at the Healthcare Information and
Management Systems Society (HIMSS) conference in Atlanta, March 1-4, 2010. Using
the SAS model, the products marketed at that time will be a combination of the
existing modules developed by our overseas suppliers, and the new modules
developed under Momentum's Phase I development plan. It is envisioned that
initial sales will help cover the costs of further modular developments and
justify a major secondary public offering to allow Momentum to expedite the
development of its DE FACTO standard modules.
Follow on businesses naturally emerge from achieving success in the HIT space.
McKesson Corporation (NYSE: MCK) is #15 on the Fortune 500, because of its
"Supply Chain Management" business, primarily in pharmaceuticals. Its leadership
in the HIT space informs its pharmaceutical purchasing and warehousing business.
Since the average hospital inventories 50,000 different items, from sutures to
bedpans, there is tremendous scope for developing global supply chain management
businesses over the next two decades. Since Cerner (NASDAQ: CERN), which focuses
only on HIT, enjoys a PE ratio of 24.75, while McKesson's PE ratio is only
14.78, it may make sense for Momentum to focus on the HIT aspects of its
business, and franchise the "Supply Chain Management" opportunity on a country
by country basis. Organic BPO modules for medical transcription, billing and
coding, to name only three, will allow Momentum to amplify and adjust its
businesses in the BPO arena.
SELECTED FINANCIAL DATA
You should read the following selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the related notes appearing
elsewhere in this prospectus.
41
The Historical results are not necessarily indicative of the results to be
expected in any future period.
(in thousands, except per share data)
________________________________________________________________________________
STATEMENTS OF OPERATIONS DATA AS OF JUNE 30, 2009:
Net Revenues $ 0
Costs and Expenses
Cost of Revenues
Research and Development
Sales and Marketing
General and Administrative $ 100
Total Costs and Expenses $ 100
Net income (loss) ($100)
________________________________________________________________________________
CASH AND CAPITALIZATION
The following table sets forth our cash, cash equivalents, short-term
investments and capitalization at June 30, 2009, as follows:
o On an actual basis.
o On a projected as adjusted basis to give effect to receipt of the net
proceeds from the sale by us in this offering of shares of Class A common stock
at an assumed initial public offering price of $5.00 per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses.
You should read this table in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and related notes included elsewhere in
this prospectus.
Assumptions:
10,000,000 shares Class A common stock sold at IPO
Selling price in IPO is $5.00 per share
42
_____________________________________________________________________________________________________________
(In thousands, except par value)(Unaudited) June 30, 2009 December 31, 2009
Actual Projected
_____________________________________________________________________________________________________________
Cash, cash equivalents and short-term investments $ 13 $ 9,572
Accounts Receivable $ 8
Current Assets $ 13 $ 9,580
Net Property Plant & Equipment 50
Intangibles (7 year average life)
LAND $10,000
Total Assets $ 13 $19,630
Accounts Payable $ 20
Accrued Expenses $ 10
Current Liabilities $ 30
LONG-TERM LIABILITIES
Total Liabilities
Stockholder's Equity:
Common Stock, $0.01 par value, 10,000,000 shares $ 23 N/A
Class A common stock, $0.001 par value, 80,000,000 shares authorized, N/A $ 100
10,000,000 issued and outstanding after IPO:
Class B common stock, $0.001 par value, one hundred votes per share, N/A $ 60
20,000,000 shares authorized, 4,004,000 issued and outstanding:
Additional paid-in capital $ 90 $20,110
Deferred stock-based compensation
Retained Earnings ($100) $ (670)
Total Liabilities and Shareholder's equity $ 13 $19,630
_____________________________________________________________________________________________________________
PLAN OF OPERATIONS
Momentum Healthcare Services, Inc. was incorporated in the State of Delaware on
April 15, 2009. Momentum Healthcare Services, Inc., also referred to as the
"Company", or "Momentum," specializes healthcare business process outsourcing,
particularly medical transcription and medical billing, and in healthcare IT, as
described herein, for delivery to healthcare institutions throughout the world,
but with particular emphasis on the North American market. We further intend to
develop hospitals and clinics in India.
Over the next twelve months, Momentum plans to build out its brand recognition,
reputation and network in the healthcare services industry, thereby attracting
additional interest in its activities, products and services. Shown below are
the significant steps and milestones the Company plans for this fiscal year.
43
________________________________________________________________________________
Timeline Description
(From Sep 2009 to Aug 2010
________________________________________________________________________________
1st 90 Days *Close real estate land purchases for up to five
parcels of 10 acres each in various localities
in India.
*Establish medical transcription marketing in the
United States.
*Develop process for acquisitions.
*Acquire 1 medical transcription supplier in
India.
*Establish software development center in India.
Commence conversion of one module.
*Negotiate "work for hire" contracts with domain
knowledge suppliers.
________________________________________________________________________________
2nd Quarter *Develop Healthcare IT marketing plan and launch
first products.
*Acquire 2 medical transcription and 1 medical
billing Company in the United States with
combined revenue of $30 million.
*Acquire 1 additional medical transcription
supplier in India.
*Begin organizing Boards of Directors and staff
for Indian subsidiaries. Each land parcel will
be a separate subsidiary, with separate
management and project operational and financial
planning.
________________________________________________________________________________
3rd to 4th Quarter *Acquire 2 additional medical transcription
companies and 1 additional medical billing
Company in the United States with additional
combined revenue of $30 million.
*Complete government permissions for hospital and
clinic projects in India, and identify sources
of local finance for the construction projects
of each separate subsidiary.
________________________________________________________________________________
We expect to incur the following expenses in the next six months in connection
with our business operations:
Data ($000)
Operations Development 200
Marketing 250
Implementations 250
Domain Knowledge Contracting: US and India 240
India Development Team 190
Capital Expenditures including Land Closing Costs 1,250
HQ Operations 600
Gross Expenditure 2,980
Based on our current operating plan, we do not expect to generate revenue that
is sufficient to cover our expenses for the next six months. In addition, we do
not have sufficient cash and cash equivalents to execute our operations and will
need to obtain additional financing to operate our business for the next six
months. Additional financing, whether through public or private equity or debt
financing, arrangements with the security holder or other sources to fund
operations, may not be available, or if available, may be on terms unacceptable
to us. Our ability to maintain sufficient liquidity is dependent on our ability
to raise additional capital.
44
If we issue additional equity securities to raise funds, the ownership
percentage of our existing shareholders will be reduced. New investors may
demand rights, preferences or privileges senior to those of existing holders of
our common stock. Debt incurred by us would be senior to equity in the ability
of debt holders to make claims on our assets. The terms of any debt issued could
impose restrictions on our operations. If adequate funds are not available to
satisfy either short or long-term capital requirements, our operations and
liquidity could be materially adversely affected and we could be forced to cease
operations. At the present time, we have not received any confirmation from any
party of their willingness to loan or invest funds to the Company but will seek
funding advances from sources such as our officers and directors or from sale of
our common stock.
Currently the Company does not employ any employees, however as the Company
grows, it plans to employ employees, as required.
PROJECTED FINANCIAL STATEMENTS
Based on our plan of operations as described herein, the projected financial
statements for Momentum over the next three years, through 2012, which were
prepared by management and not subjected to audit procedures, are presented on
the following page, and include the following forward looking assumptions:
1. We will offer 6,000,000 Class A Common Shares in this offering and expect
to sell 2,000,000 for cash and exchange 4,000,000 for land acquisitions,
producing $30,000,000 in total new investment into Momentum; $10,000,000
cash and land parcels in India with approximate market value of
$20,000,000.
2. Each HIT module we sell will be a Software as a Service ("SaaS") contract,
producing revenue of $20,000 per month. We assume that we will be able to
sell 58 modules through 2012. Since one complete HIT system in one hospital
can include up to 100 different modules, management believes that this
level of sales projection is conservative.
3. Management believes that it is uniquely positioned to win over clients of
some of the major companies in the medical transcription industry because
of general client dissatisfaction with quality performance of Momentum's
competitors.
4. Momentum plans to acquire companies with annual revenue in medical
transcription of $30 million by the 4th quarter of 2010 and acquire a
second round of companies with annual revenue in medical transcription of
$30 million by the 4th quarter of 2011. Momentum will issue stock for the
preponderance of those acquisitions.
5. Indian landowners will sell Momentum land in India, with appraised value of
approximately $20 million, for shares valued at $5 per share, substantially
simultaneously with the closing of this offering.
45
________________________________________________________________________________
Income Statement ($000) Projected 2009 2010 2011 2012
________________________________________________________________________________
Revenue 50 17,400 55,500 86,268
Direct Cost of Revenues
(excl. depreciation and amort.) 120 8,163 23,925 28,990
Gross Profit (70) 9,237 31,575 57,278
Marketing & Selling Expenses 220 1,436 2,163 3,233
G&A 280 1520 1770 2520
Depreciation - 66 371 605
Amortization - 2,045 6,134 8,179
R&D 220 1,436 2,163 3,233
Operating Income (790) 2,734 18,974 39,508
15.7% 34.2% 45.8%
Interest Expense - 30 1,200 1,200
Preferred Dividend - - - -
Taxes - 926 7,110 15,523
Net Income (790) 1,778 10,664 22,785
Net Income as % of Sales 0.0% 10.2% 19.2% 27.0%
P/E - 18 18 18
Market Cap - 99,974 278,051 470,021
Share Price $5.00 $ 5.00 $ 13.24 $ 22.38
________________________________________________________________________________
46
__________________________________________________________________________________________
Balance Sheet ($000) Projected 2009 2010 2011 2012
__________________________________________________________________________________________
Cash 29,572 2,014 2,011 2,979
Accounts Receivable 8 1,354 3,035 3,520
Other current assets 0 48 106 124
Current Assets 29,580 3,416 5,152 6,623
Net Property Plant and Equipment 100 790 1,442 2,005
Intangibles (7 year average life) - 27,577 51,160 42,375
Land 20,700 20,700 20,700 20,700
Total Assets 50,380 52,483 78,454 71,703
Accounts Payable 20 222 413 390
Accrued Expenses 10 133 248 234
ST Debt - - 7,000 -
Current Liabilities 30 355 7,661 624
LT Debt - - - -
Preferred Stock $5 Par 5% Cumulative Dividend
Convertible 1:1 to Common - - - -
Total Liabilities 30 355 7,661 624
Par Value $0.001 100,000,000 Authorized 20 20 21 21
Additional Paid in Capital 51,000 51,000 58,999 58,999
Retained Earnings (670) 1,108 11,773 12,059
Total Liabilities and Shareholders Equity 50,380 52,483 78,454 71,703
__________________________________________________________________________________________
47
BUSINESS FACILITIES
The Company's address is 3 Church Circle, Suite 130, Annapolis, MD 21401.
COMPETITION
There are many companies who are engaged in the healthcare services industry and
this segment is highly competitive.
Major companies in the medical transcription industry include MedQuist (NASDAQ:
MEDQ) with approximately $285 million of medical transcription revenue, a 6%
market share; Spheris with approximately $184 million of revenue, a 4% market
share; Transcend (NASDAQ: TRCR) with approximately $49 million in 2008 revenue;
CBay (AIM: CBAY) with approximately $45 million in medical transcription
revenue; and several other companies, including Nuance (NASDAQ: NUAN), Webmedx,
and SPI.
Momentum intends to cross sell medical billing services into its medical
transcription clientele. Like medical transcription, over a thousand small
entrepreneurial companies and a few major national players, such as Perot
Systems and Per-Se Technologies, Inc, characterize the medical billing industry.
During the past five years Indian companies have developed to service this
industry, again by relying on American companies to handle their sales and
client services needs. Momentum intends to combine the medical transcription and
medical billing software it intends to develop, along with other BPO services
software, into an organic continuum with HIT healthcare IT software. In this
way, Momentum will create an environment, which will facilitate its cross
selling.
The major companies in healthcare IT, McKesson Corporation (NYSE: MCK) and
Cerner Corporation (NASDAQ: CERN) grew their businesses during the 1990s in a
merger and acquisition, client-server environment. Their systems, and most
others, therefore suffer from these major interoperability and versioning
shortcomings. These companies, and most others in the HIT space, are vulnerable
because any change in the marketing paradigm and technical approach for the
industry will force them to address thousands of legacy systems, which will
prove to be an overwhelming and time consuming activity.
We believe that the most effective way to compete in the healthcare services
industry, both with our BPO and HIT products and services, is to ensure that we
differentiate ourselves by providing a high level of quality and service. THIS
includes providing high quality documentation and training regarding our
products and services so that the end users are able to optimize their usage of
our offerings. Nevertheless, many of our competitors have significantly greater
financial and other resources as well as more robust managerial staffs than we
do and are therefore, in certain respects, in a better position than we are to
provide competitive services. There can be no assurance that we will be able to
successfully compete against these businesses.
While India does have several relatively large hospital groups, even the largest
of these, Apollo Hospitals Enterprise Limited ("Apollo"), which claims to be the
largest healthcare group in Asia, has only 43 hospitals and 7,500 beds. If this
size were juxtaposed into the U.S. healthcare system, it would amount to less
than 1% of the total healthcare services industry, and India's population is
approximately 4 times the size of the U.S. population. These statistics simply
demonstrate that the size of the needs in the Indian healthcare industry are
quite enormous, while government commitment to satisfying these needs falls far
short of World standards.
India needs about 28,000 Health Centers, according to the Government of India's
ECONOMIC SURVEY 2008-09. Other sources, such as PricewaterhouseCoopers, put the
need considerably higher. According to PricewaterhouseCoopers' HEALTHCARE IN
INDIA: EMERGING MARKET REPORT 2007, India has only 20% as many hospital beds as
the world average, and requires 450,000 new beds by 2010. They estimate that the
cost of such investment is approximately $25.7 Billion, of which the government
will only fund 15-20%.
48
ADVANTAGES OF COMPETITORS OVER US
The Company believes the following are advantages of Competitors over us.
* CLIENT BASE: Presently the Company does not have a well-established
regular client base.
* FINANCIAL RESOURCES: The Company believes that many of its competitors
have significantly greater financial and other resources than we do
and are therefore, in certain respects, in a better position to
provide similar products.
* HOSPITAL DEVELOPMENT: The Company currently has no experience with
building hospitals and clinics, and there are several hospital groups
in India, which have built numerous acute care hospitals.
RESEARCH AND DEVELOPMENT
The Company is not currently conducting any research and development activities.
However, research and development is required in the future, we intend to rely
on third party service providers. To complete practically all of this research
and development on a "for hire" basis, meaning that Momentum will own the
intellectual property at the completion of the development cycle.
EMPLOYEES
Momentum has no current employees. All of its activities are performed pursuant
to the Company's consulting contract with Conover Associates LLC. Upon closing
of this offering the Board of Directors intends to appoint a Compensation
Committee of the Board of Directors comprised solely of Independent Directors.
The Compensation Committee will then take upon itself the task of establishing
suitable levels of compensation and employment agreements for all of the senior
employees of the Company. The following individuals were elected as officers of
the company on June 4, 2009, and are compensated for their roles in developing
the Company pursuant to the Conover Associates LLC contract or voluntarily
without compensation:
Donald L. "Skip" Conover, President and Chief Executive Officer
Anoop Sivadasan, Vice President, Operations
Mary Louise Wisniewski, Vice President, Operations and Secretary
V. Seshu Kumar, Vice President
John B. Thompson, Treasurer
We intend to hire additional employees on an as needed basis as the business of
Momentum grows.
INDEPENDENT DIRECTORS
The size of the Board of Directors of Momentum will grow to nine immediately
upon the successful closure of this offering. The Board of Directors of Momentum
intends to elect five Independent Directors of the Company, who will comprise a
majority of the Board, provided the company raises not less than $5,000,000 in
equity financing. The Company currently has verbal understandings with three
prospective Independent Directors: Mr. Leonard Schutzman, Mr. Brent Longnecker,
and Dr. Mark Zupan.
The Independent Directors of Momentum will be compensated for their services
according to standards generally accepted in the United States for service on
the Board of public companies of Momentum's size and stage of development.
Typical compensation packages for Independent Directors of this category include
an equity component of approximately 0.25% of the post-money equity raise plus a
cash component of up to $50,000 per annum.
The Company has no current plans to begin paying salaries or fees to founding
Directors, who are major shareholders, nor to Corporate Officers except to cover
their traveling and other expenses related to their service.
49
MANAGEMENT
DIRECTOR, EXECUTIVE OFFICER, AND CONTROL PERSON
The following table sets forth and identifies our current Executive Officers and
Directors, and the respective date of election or appointment:
______________________________________________________________________________________________________
INITIAL ELECTION OR POSITION
NAME AND POSITION POSITION AGE AND TERM OF OFFICE
______________________________________________________________________________________________________
K.J. Dennis Chairman of the Board of 52 Director, June 4, 2009
Directors (one year)
Donald L. Conover Director and President 62 Director, April 16, 2009 (one year)
President, June 4, 2009 (next Annual
Meeting)
P. Sivadasan Director 70 Director, June 4, 2009
(one year)
Anoop Sivadasan Director and 34 Director, June 4, 2009
Vice President Operations (one year)
Vice President, June 4, 2009
(next Annual Meeting)
Mary Louise Wisniewski Vice President, Operations 55 Vice President and Secretary, June 4,
2009
(next Annual Meeting)
V. Seshu Kumar Vice President 50 Vice President, June 4, 2009
(next Annual Meeting)
John B. Thompson Treasurer 70 Treasurer, June 4, 2009
(next Annual Meeting)
______________________________________________________________________________________________________
The Officers and Directors hold office until the next annual meeting of the
Board of Directors and Shareholders respectively following their appointment and
until a successor has been appointed and qualified.
Set forth below is a description of the recent employment and business
experience of our Executive Officers and Directors.
MANAGEMENT AND DIRECTOR BIOGRAPHIES
K.J. DENNIS, Chairman of the Board of Directors, is CEO and founder of DC Mills
Pvt. Ltd. ("DC Mills") In 1982 he envisioned building a broadly based
conglomerate, which began by exporting Indian natural fiber products with an
aggressive management team and a new factory. Mr. Dennis has received special
awards from the President of India for being the best exporter in his space for
several years. DC Mills also started the only fully vertical polypropylene and
wool carpet mill in India. DC Mills manufactures furniture in India, China, and
the United Arab Emirates. It has permanent showrooms in High Point, North
Carolina and Las Vegas, Nevada. Another of Mr. Dennis's businesses, founded in
2003, Dennis Steels Pvt. Ltd., in Tamil Nadu , India, produces rolled steel and
rebar for the booming construction industry in South East Asia. Dennis Infra
Pvt. Ltd. deals with high-end real estate development in Tamil Nadu and other
areas of southern India. It is currently developing 200 acres of land for the
real estate business. Euro Home Industries sells in the Middle East market. It
produces an entire range of modular as well non-modular furniture. It sells
turnkey contracts throughout the Middle East. Mr. Dennis also runs a Upper Level
Secondary school with 1800 Students.
50
DONALD L. "SKIP" CONOVER, President and Director of Momentum Healthcare
Services, Inc., was a founding Director of CBay, serving as such from July 1998
to October 2006. He served as the first President of CBay, and later as Vice
Chairman of the Board of Directors. Mr. Conover was the first mover in the
Indian Medical Transcription Industry, first conceptualizing the idea of sending
American medical transcription work to India in October 1989. The Indian Medical
Transcription Industry is estimated to employ over 25,000 people. Prior to CBay
he was Founder and President of Transcriptions International, Inc., which
established the first medical transcription operation in India; he was Founder
and Representative Director of Schlegel Engineering K.K. ("SEKK") in Tokyo for
five years. SEKK was a subsidiary of Schlegel Corporation of Rochester, New
York. He also served 23 years in the U.S. Marine Corps Reserve, including 3
years on active duty for Vietnam service. He was awarded the Bronze Star Medal
with Combat "V" for HIT Vietnam service.
Mr. Conover holds an M.B.A. from the William E. Simon Graduate School of
Business Administration, and was recognized as a distinguished alumnus in 2005.
He currently serves on the Executive Advisory Committee of The Simon Graduate
School. Mr. Conover also practiced law for five years in Rochester, New York, is
a licensed New York and District of Columbia attorney, and holds a J.D. from the
State University of New York. He holds a B.A. from Hamilton College.
Mr. Conover was awarded 2008 International Entrepreneur of the Year at the
United Nations in February, 2009, and was featured in the cover story of GLOBAL
CEO magazine for June 2008. He also serves on several corporate Boards of
Directors, including Iconic Bio-Sciences Pvt. Ltd. and Bhavana Infra Developers
Pvt. Ltd., both Indian corporations; as well as Venture Network Services, Inc.,
an American corporation dedicated to set up alumni based venture capital
networks at colleges throughout the United States. He is Chairman of the Board
of Directors of Bhavana Infra Developers Pvt. Ltd.
P. SIVADASAN, Director, is now a Legal Consultant. He has 35 years of experience
in the State Bank of India in various capacities as a Senior Manager and
Coordinator for Banks. He was General Manager at DC Mills Pvt. Ltd. He is a
founder and CEO of Dennis Soft Solutions Pvt. Ltd.
ANOOP SIVADASAN, Director and Vice President of Operations of Momentum
Healthcare Services, Inc., has ten (10) years experience successfully operating
a Medical Transcription supplier. He founded Dennis Soft Solutions Pvt. Ltd.,
which services the American healthcare industry from Coimbatore, India.
JOHN B. THOMPSON, Treasurer of Momentum Healthcare Services, Inc., was the first
Treasurer of CBay from inception in 1998, and later served as Vice President
until 2005. Prior to joining CBay, Mr. Thompson served in various marketing and
financial roles in Medical Transcription beginning in 1991. Prior to 1991, Mr.
Thompson worked in the Fixed Income Securities Industry in sales and trading.
His assignments included Davenport and Company of Virginia (1976-77), Merrill
Lynch (1977-81), Ferris & Company, Inc. (1981-89) and Crestar Securities
(1989-91). During the period 1992-93, Mr. Thompson managed a $2 Billion
portfolio for Resolution Trust Corporation.
MARY LOUISE WISNIEWSKI, Vice President of Operations of Momentum Healthcare
Services, Inc., was one of the two primary operations officers of CBay from
inception in 1998, and was later elected as an Assistant Vice President, a role
she had until 2007, serving in duties including Director of Vendor Relations and
Director of Client Relations. In those roles she had occasion to implement
training systems in India and Saudi Arabia, and bring online the largest
hospital in the Middle East. She also has direct experience as Practice
Administrator at Cal Arundel Family Medicine (2007-09).
Additionally, other key officers of Momentum Healthcare Services, Inc. have
important experience with BPO and Healthcare IT companies.
51
SESHU KUMAR VEERAMACHANENI ("Seshu") has more than 20 years of experience in
Information Technology, both as a developer and IT entrepreneur. Originally
groomed as a software professional for engineering applications (1980-88), he
moved into customized commercial applications involving various vertical and
horizontal segments since that time. His experience includes product development
in MIS, ERP & Workflow automation. He has experience with a variety of different
platforms, beginning with the DEC 20/VAX 730 (1980-86) and moving on to IBM
4361/AS400/ES9000 (1986-2004). In recent years his focus has been with PCs and
Internet applications. His programming skills include Cobol/FORTRAN
/C-C+/Visual+/UNIX over a broad variety of platforms from IBM mini-computers and
mainframes to PCs. Mr. Veeramachaneni holds an M.S. from the Indian Institute of
Technology.
During the period 1986-94, he was employed by CMC Ltd. (a Government of India
Enterprise, later acquired by Tata Consultancy Services). One of his notable
achievements was to successfully port and implement an engineering application
software, FEAST, developed by Vikram Sarabhai Space Center (VSSC), Trivandrum,
to an IBM 4361 situated at Kolkata, and later interlink that with other two IBM
4361s at Mumbai and Chennai. The specific purpose of this task includes offering
FEAST as a solution to various engineering R&D departments across India using
the Application Service Provider ("ASP") model.
In 1994, Seshu founded Credence Technology, a Lotus/IBM Premier business
partner. The focus of this business was offering workflow automation solutions
to various clients in the United States and United Kingdom. Credence provided
customized ERP solutions using SAP to companies with large database
applications, including logistics for large petrochemical industries by
implementing "SeeBeyond" software in the Middle East and Europe. In 2002, Seshu
founded Sunrise Information Systems to provide IT enabled services to American
hospitals and clinical groups.
KENDALL R. TANT will be elected Vice President for Sales & Marketing of Momentum
Healthcare Services, Inc. Most recently, Mr. Tant was Vice President of Business
Development for Spryance Inc. (now a component of Spheris Corporation, the
second largest company in the Medical Transcription Industry). Mr. Tant was the
first Vice President of Sales & Marketing of CBay (1999-2001). He is currently a
principal of iData, LLC, a medical transcription company operating from
Annapolis, Maryland. Prior to CBay, he had other industry relevant experience as
Regional Manager of Dictaphone Corporation (now a Nuance, Inc. component) and as
Regional Manager of Kurzweil Applied Intelligence, working in the field of
speech recognition technology. During the period 1992-95, Mr. Tant was Regional
Manager of Citation Computer Systems (acquired by Cerner in 1999), responsible
for selling full Healthcare IT, nursing, radiology, and laboratory modules into
hospitals and major clinics. He holds a B.A. CUM LAUDE from North Carolina State
University.
PROSPECTIVE INDEPENDENT DIRECTOR BIOGRAPHIES
The following individuals will become Independent Directors upon completion of a
successful public offering of not less than $5,000,000.
MR. LEONARD SCHUTZMAN served PepsiCo, Inc. for 20 years, most recently as Senior
Vice President and Treasurer, responsible for PepsiCo's worldwide financing
activities. As such, he was a key architect of PepsiCo's international
expansion, particularly in the high-growth areas of Latin America and Asia.
Earlier in his career he served as Senior Vice President, Finance, for several
of PepsiCo's business units, including Taco Bell, Frito Lay, and Pepsi Cola
International. He is a founder of the Leonard Schutzman Center for
Entrepreneurship at Queens College, New York. He is a member of several Boards
of Directors, and the owner of many entrepreneurial businesses. He is Executive
Professor of Business Administration at The William E. Simon Graduate School of
Business Administration and serves on its Executive Advisory Committee. He also
serves as a Trustee of the Queens College Foundation. Mr. Schutzman holds a B.A.
from Queens College and an M.B.A. from The Simon Graduate School.
52
DR. MARK ZUPAN is Dean of The William E. Simon Graduate School of Business
Administration at the University of Rochester, New York, which is ranked among
the leading graduate business schools in the World. Dean Zupan came to The Simon
Graduate School after serving as Dean of the Eller College of Business and
Public Administration at the University of Arizona (1997-2003). Prior to 1997,
Dean Zupan taught at the University of Southern California's School of Business
Administration. He also served as a visiting faculty professor at the Amos Tuck
School of Business Administration at Dartmouth College. He holds a B.A. from
Harvard College and a Ph.D. in Economics from The Massachusetts Institute of
Technology. Dean Zupan also serves on the Board of Directors of Constellation
Brands (NYSE: STZ) and PAETEC Holding Corp. (NASDAQ: PAET).
Dean Zupan's scholarship has focused on industrial organization, regulation and
political economy. He is co-author of MICROECONOMIC THEORY AND APPLICATIONS
(John Wiley and Sons) and MICROECONOMIC CASES AND APPLICATIONS (HarperCollins).
He serves on the editorial boards of JOURNAL OF BUSINESS ECONOMICS and RESEARCH
IN LAW AND ECONOMICS.
MR. BRENT LONGNECKER is a leading consultant on compensation, having been
identified as one of the top 25 consultants in the United States in 2005 by
CONSULTING MAGAZINE. Mr. Longnecker's specialties are in executive compensation
and corporate governance. He is a specialist on compensation and human resources
planning with regard to mergers and acquisitions, initial public offerings
("IPOs"), leveraged buyouts ("LBOs") and spin-offs. He has served on several
Boards of Directors and Executive Advisory Committees to Boards, and typically
chairs the Compensation Committee, while also serving on Audit Committees. He
holds an M.B.A. and a B.A. from the University of Houston.
Since 2003, Longnecker & Associates has led its field in providing high quality
human resources, executive compensation, and corporate governance consulting
services. His primary mission is to create fiduciary sound solutions for
companies that attract and retain executives, bolster shareholder value, and
reflect premier corporate governance practices. Mr. Longnecker previously served
as National Principal-in-Charge for the Performance Management and Compensation
Consulting Practice of Deloitte & Touche, and before that as its Principal
In-Charge for the Human Resources Strategies Group. Prior to Deloitte, Mr.
Longnecker served as a consultant at KPMG Peat Marwick.
Mr. Longnecker is the author of numerous books and scores of articles, including
STOCK OPTION ALTERNATIVES: A STRATEGIC AND TECHNICAL GUIDE OF LONG-TERM
INCENTIVES (2004, 2006); EQUITY AT WORK: CONSTRUCTING A BROAD-BASED STOCK OPTION
PLAN (2002); BOARD OF DIRECTORS EXECUTIVE COMPENSATION SUMMARY (1993), and
Rethinking Strategic Compensation (2004, 2006).
AUDIT COMMITTEE
Upon satisfactory closure of this offering, the Audit Committee of the Board of
Directors will prospectively be chaired by Mr. Leonard Schutzman and include Mr.
Brent Longnecker and Dr. Mark Zupan.
The Audit Committee is empowered to make such examinations as are necessary to
monitor the corporate financial reporting and the external audits of the
Company, to provide to the Board of Directors (the "Board") the results of its
examinations and recommendations derived there from, to outline to the Board
improvements made, or to be made, in internal control, to nominate independent
auditors, and to provide to the Board such additional information and materials
as it may deem necessary to make the Board aware of significant financial
matters that require Board attention.
COMPENSATION COMMITTEE
Upon satisfactory closure of this offering, the Compensation Committee of the
Board of Directors will prospectively be chaired by Mr. Brent Longnecker and
will include Mr. Leonard Schutzman, and Dr. Mark Zupan.
The compensation committee is authorized to review and make recommendations to
the Board regarding all forms of compensation to be provided to the executive
officers and directors of the Company, including stock compensation, and bonus
compensation to all employees.
53
NOMINATING COMMITTEE
Upon satisfactory closure of this offering, the Nominating Committee of the
Board of Directors will be chaired by Mr. K.J. Dennis, and will include Mr.
Donald L. Conover, and Dr. Mark Zupan.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
directors and executive officers and persons who beneficially own more than ten
percent (10%) of a registered class of its equity securities, file with the SEC
reports of ownership and changes in ownership of its common stock and other
equity securities. Executive officers, directors, and greater than ten percent
(10%) beneficial owners are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports that they file. Based solely upon a
review of the copies of such reports furnished to us or written representations
that no other reports were required, the Company believes that to date, all
filing requirements applicable to its executive officers, directors, and greater
than ten percent (10%) beneficial owners were met.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our securities as of June 30, 2009 by (i) each person who is known
by us to own beneficially more than five percent (5%) of the outstanding shares
of each class of our voting securities, (ii) each of our directors and executive
officers, and (iii) all of our directors and executive officers as a group. We
believe that each individual or entity named has sole investment and voting
power with respect to the securities indicated as beneficially owned by them,
subject to community property laws, where applicable, except where otherwise
noted.
As of the time of closing of this offering, there are One Hundred Million
(100,000,000) shares of Common Stock authorized, of which Eighty Million
(80,000,000) shares are Class A Common Stock and Twenty Million (20,000,000)
shares are Class B Common Stock. Of these, no shares of Class A common stock and
3,800,000 shares of Class B common stock are issued and outstanding.
Additionally, 2,200,000 shares of Class B common stock are currently subscribed
but not yet issued and outstanding by Mr. K.J. Dennis, and Mr. Anoop S.R.
54
As of September 6, 2009, we had the following security holders holding greater
than 5% or serving as an Officer of Momentum:
_____________________________________________________________________________________________________________
Name & Address of Owner Amount and Nature of Percentage of Percentage of
and Position if Applicable Beneficial Ownership Class Before Class After
by Class* Offering** Offering***
_____________________________________________________________________________________________________________
K.J. Dennis, 3,000,000 Class B common stock** 49.966% 37.48%
Chairman of the Board of Directors
DC Mills Pvt. Ltd.
Alappuzha, Kerala, India
_____________________________________________________________________________________________________________
Anoop S.R., 3,000,000 Class B common stock**** 49.966% 37.48%
Director and Vice President,
Dennis Soft Solutions, Pvt. Ltd.
_____________________________________________________________________________________________________________
P. Sivadasan, 1,000,000 Class B Common stock**** 0.00% 12.50%
Director and CEO
Dennis Soft Solutions Pvt. Ltd.
_____________________________________________________________________________________________________________
Donald L. Conover, 1,004,000 Class B common stock**** 0.068% 12.54%
Director and President
3 Church Circle, Suite 130
Annapolis, MD 21401
_____________________________________________________________________________________________________________
Public Shareholders Class A common stock 0.00% 100%
_____________________________________________________________________________________________________________
* Mr. K.J. Dennis and Mr. Anoop S.R. have entered into a subscription
agreement with Dennis Healthcare Solutions, Inc., now named Momentum
Healthcare Services, Inc., on May 14, 2009, to purchase 6 million shares of
Common Stock for $300,000. Thereafter, on August 5, 2009, the Board of
Directors and Shareholders by resolution deemed the shares so subscribed
Class B common stock.
** Of the K.J. Dennis and Anoop S.R. subscription of May 14, 2009, at the date
of offering, 4,000,000 shares of Class B common stock are issued and
outstanding, and we expect the remaining 2,000,000 shares of Class B common
stock so subscribed will be issued and outstanding by October 14, 2009, as
required by their subscription agreement. For the purposes of this table,
since the issuance of these shares is contracted by subscription, it is
assumed that they are beneficially owned by the relevant party.
*** For the purposes of this table, it is assumed that 6,000,000 shares of
Class A Common Stock of Momentum will be sold in the offering. Any lesser
subscription will result in a lesser percentage of shares of Common Stock
being held by the public.
**** Under the Promoter's Share Agreement of May 14, 2009, P. Sivadasan and
Donald L. Conover, or their nominees, will each receive 1 million shares of
Class B common stock upon the happening of one of two events: Either the
Company has revenue of $10 million or the Company has successfully raised
not less than $2 million in equity from shareholders other than the
Founders. For the purposes of this table, it is assumed that these shares
will be issued immediately after the successful completion of this
offering. Since both P. Sivadasan and Donald L. Conover may name who is to
receive these shares, other than themselves, these shares may be held by
other persons, corporations or institutions after this offering.
55
Subsequent to the successful closure of this offering, the following table sets
forth the beneficial ownership of the Company, which will be held by the various
parties, without differentiating by class of stock:
__________________________________________________________________________________________
Percentage Percentage
Name & Address of Owner and Amount and Nature of Before After
Position if Applicable Beneficial Ownership Offering** Offering***
__________________________________________________________________________________________
K.J. Dennis, 3,000,000 Shares 49.966% 21.42%
Chairman of the Board of Directors
__________________________________________________________________________________________
P. Sivadasan, 1,000,000 Shares 00.00% 7.15%
Director
__________________________________________________________________________________________
Anoop S.R., 3,000,000 Shares 49.966% 21.42%
Director and Vice President
__________________________________________________________________________________________
Donald L. Conover 1,004,000 Shares 0.068% 7.17%
__________________________________________________________________________________________
Class A Common Shareholders 6,000,000 Shares 0.0% 42.84%
__________________________________________________________________________________________
DESCRIPTION OF CAPITAL STOCK
General
The following is a summary of the rights of our Common Stock and related
provisions of our Certificate of Incorporation and Bylaws, as they will be in
effect upon the closing of this offering. For more detailed information, please
see our certificate of incorporation, and bylaws.
Upon closing of this offering, our certificate of incorporation will provide, we
will have two classes of Common Stock: Class A common stock, which will have one
vote per share, and Class B common stock, which will have one hundred votes per
share. Any holder of Class B common stock may convert his or her shares at any
time into shares of Class A common stock on a share-for-share basis, upon the
completion of their 2-year lockup period. Otherwise the rights of the two
classes of common stock will be identical.
Immediately following the closing of this offering, our authorized capital stock
will consist of 100,000,000 shares of Common Stock, each with a par value of
$0.001 per share, of which:
o 80,000,000 shares are designated as Class A common stock.
o 20,000,000 shares are designated as Class B common stock.
At October 5, 2009, we had outstanding no shares of Class A Common Stock and
4,004,000 shares of Class B common stock.
56
Voting Rights
Holders of our Class A and Class B common stock have identical rights, except
that holders of our Class A common stock are entitled to one vote per share and
holders of our Class B common stock are entitled to one hundred votes per share.
Holders of shares of Class A common stock and Class B common stock will vote
together as a single class on all matters (including the election of directors)
submitted to a vote of stockholders, unless otherwise required by law. We have
not provided for cumulative voting for the election of directors in our
certificate of incorporation.
Dividends
Subject to preferences that may apply to any shares of preferred stock
outstanding at the time, the holders of Class A common stock and Class B common
stock shall be entitled to share equally in any dividends that our Board of
Directors may determine to issue from time to time. In the event a dividend is
paid in the form of shares of Common Stock or rights to acquire shares of Common
Stock, the holders of both Class A and Class B common stock shall receive Class
A common stock, or rights to acquire Class A common stock.
Liquidation Rights
Upon our liquidation, dissolution or winding-up, the holders of Class A common
stock and Class B common stock shall be entitled to share equally all assets
remaining after the payment of any liabilities and the liquidation preferences
on any outstanding preferred stock.
Conversion
Our Class A common stock is not convertible into any other shares of our capital
stock.
Each share of Class B common stock is convertible at any time at the option of
the holder into one share of Class A common stock, upon completion of a 2-year
lockup period. In addition, each share of Class B common stock shall convert
automatically into one share of Class A common stock upon any transfer, whether
or not for value, except for certain transfers described in our certificate of
incorporation, including the following:
o Transfers between our Founders.
o Transfers for tax and estate-planning purposes, including to trusts,
corporations and partnerships controlled by a holder of Class B common
stock.
In addition, partnerships or limited liability companies that hold more than 5%
of the total outstanding shares of Class B common stock as of the closing of the
offering may distribute their Class B common stock to their respective partners
or members (who may further distribute the Class B common stock to their
respective partners or members) without triggering a conversion to Class A
common stock. Such distributions must be conducted in accordance with the
ownership interests of such partners or members and the terms of any agreements
binding the partnership or limited liability Company.
The death of any holder of Class B common stock who is a natural person will
result in the conversion of his or her shares of Class B common stock to Class A
common stock. However, our Founders may transfer voting control of shares of
Class B common stock to the other Founders contingent or effective upon their
death without triggering a conversion to Class A common stock, provided that the
shares of Class B common stock so transferred shall convert to Class A common
stock nine months after the death of the transferring founder.
Once transferred and converted into Class A common stock, the Class B common
stock shall not be reissued. No class of common stock may be subdivided or
combined unless the other class of common stock concurrently is subdivided or
combined in the same proportion and in the same manner.
57
REMUNERATION OF DIRECTORS AND OFFICERS
Momentum has no current employees. All of its activities are performed pursuant
to the Company's consulting contract with Conover Associates LLC. Upon closing
of this offering, the Board of Directors intends to appoint a Compensation
Committee of the Board of Directors comprised solely of Independent Directors.
The Compensation Committee will then take upon itself the task of establishing
suitable levels of compensation and employment agreements for all of the senior
employees of the Company. The following individuals were elected as officers of
the company on June 4, 2009, and are compensated for their roles in developing
the Company pursuant to the Conover Associates LLC contract or voluntarily
without compensation:
Donald L. "Skip" Conover, President and Chief Executive Officer
Anoop Sivadasan, Vice President, Operations
Mary Louise Wisniewski, Vice President, Operations and Secretary
V. Seshu Kumar, Vice President
John B. Thompson, Treasurer
COMPENSATION OF DIRECTORS
The Independent Directors of Momentum will be compensated for their services
according to standards generally accepted in the United States for service on
the Board of public companies of Momentum's size and stage of development.
Typical compensation packages for Independent Directors of this category include
an equity component of approximately 0.25% of the post-money equity raise plus a
cash component of up to $50,000 per annum.
The Company has no current plans to begin paying salaries or fees to founding
Directors, who are major shareholders, nor to Corporate Officers except to cover
their traveling and other expenses related to their service.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
With the exception of the Subscription Agreements dated April 17, 2009 and May
14, 2009 respectively, the Contracting Agreement dated May 14, 2009, the
Promoter's Share Agreement dated May 14, 2009, and the agreement to purchase a
parcel of land at Arakkonam, Tamil Nadu, India of August 5, 2009, as of the date
of this prospectus there are no, and have not been since inception, any material
agreements or proposed transactions, whether direct or indirect, with any of the
following:
* any Director or Officer;
* any nominee for election as a director;
* any principal shareholder identified in the preceding "Security
Ownership of Selling Shareholder and Management" section; or
* any relative, spouse, or relative of such spouse, of the above
referenced person.
STOCK INCENTIVE PLAN
To date, the Company has not adopted a Stock Incentive Plan.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
To date, the Company has no employment agreements in effect with its Executive
Officers. We do not pay compensation to our Founding Directors for attendance at
meetings. We reimburse Directors for reasonable expenses incurred during the
course of their performance. Upon the successful closure of this offering at a
level of at least $5 million cash, Mr. Leonard Shutzman, Mr. Brent Longnecker
and Dr. Mark Zupan will be elected "Independent Directors" of the Corporation.
58
SHARES ELIGIBLE FOR FUTURE SALE
Assuming successful completion of this offering of 6,000,000 shares, upon
completion of the offering, we will have outstanding 14,004,000 shares of common
stock. The 6,000,000 shares of Class A common stock to be sold in this offering,
will be freely tradable in the public market without restriction under the
Securities Act, unless the shares are held by our "affiliates," as that term is
defined in Rule 144 under the Securities Act.
The remaining shares of common stock outstanding upon completion of the offering
will be "restricted securities," as that term is defined in Rule 144. Restricted
securities may be sold in the public market only if they are registered or if
they qualify for an exemption from registration, such as the exemption afforded
by Rule 144.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Our certificate of incorporation contains provisions that limit the liability of
our Officers and Directors for monetary damages to the fullest extent permitted
by Delaware law. Consequently, our directors will not be personally liable to us
or our Stockholders for monetary damages for any breach of fiduciary duties as
Officers and Directors, except liability for the following:
o Any breach of their duty of loyalty to our company or our
stockholders.
o Acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law.
o Unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law.
o Any transaction from which the director derived an improper personal
benefit.
Our Bylaws provide that we are required to indemnify our Officers and Directors
and may indemnify our employees and other agents to the fullest extent permitted
by Delaware law. Our Bylaws also provide that we shall advance expenses incurred
by an Officer or Director in advance of the final disposition of any action or
proceeding, and permit us to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in that capacity, regardless of whether our Bylaws would otherwise
permit indemnification. We have entered and expect to continue to enter into
agreements to indemnify our Directors, Executive Officers and other employees as
determined by the board of directors. These agreements provide for
indemnification for related expenses including attorneys' fees, judgments, fines
and settlement amounts incurred by any of these individuals in any action or
proceeding. We believe that these bylaw provisions and indemnification
agreements are necessary to attract and retain qualified persons as Directors
and Officers. We intend to maintain Directors' and Officers' Liability
Insurance.
The limitation of liability and indemnification provisions in our Amended and
Restated Certificate of Incorporation and Bylaws may discourage Shareholders
from bringing a lawsuit against our directors for breach of their fiduciary
duty. They may also reduce the likelihood of derivative litigation against our
directors and officers, even though an action, if successful, might benefit us
and other stockholders. Furthermore, a stockholder's investment may be adversely
affected to the extent that we pay the costs of settlement and damage awards
against Directors and Officers as required by these indemnification provisions.
At present, there is no pending litigation or proceeding involving any of our
Directors, Officers or employees regarding which indemnification is sought, and
we are not aware of any threatened litigation that may result in claims for
indemnification.
59
Insofar as the provisions of our Amended and Restated Certificate of
Incorporation or Bylaws provide for indemnification of Directors or Officers for
liabilities arising under the Securities Act, we have been informed that in the
opinion of the Securities and Exchange Commission this indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
LEGAL MATTERS
Diane D. Dalmy, Attorney at Law, 8965 W. Cornell Place, Lakewood, Colorado
80227, Telephone 303-985-9324, Facsimile 303-988-6954, has provided an opinion
upon certain matters relating to the legality of the common stock offered hereby
for us.
AUDITOR
The financial statements for Momentum Healthcare Services, Inc. in this
prospectus have been audited by EFP Rotenberg, LLP, a registered independent
accounting firm to the extent and for the periods set forth in their report
appearing elsewhere herein and are included in reliance upon such report given
upon the authority of that firm as experts in auditing and accounting.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency basis
or had, or is to receive, in connection with the offering, a substantial
interest, directly or indirectly, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents, subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements regarding accounting and financial disclosure
matters with our independent certified public accountants.
AVAILABLE INFORMATION
We have not previously been subject to the reporting requirements of the
Securities and Exchange Commission. We have filed with the Commission a
registration statement on Form S-1 under the Securities Act with respect to the
shares offered hereby. THIS prospectus does not contain all of the information
set forth in the registration statement and the exhibits and schedules thereto.
For further information with respect to our securities and us you should review
the registration statement and the exhibits and schedules thereto. Statements
made in this prospectus regarding the contents of any contract or document filed
as an exhibit to the registration statement are not necessarily complete. You
should review the copy of such contract or document so filed.
You can inspect the registration statement and the exhibits and the schedules
thereto filed with the commission, without charge, in our files in the
Commission's public reference room at 100 F Street, N.E., Room 1580, Washington,
DC 20549. You can also obtain copies of these materials from the public
reference section of the commission at 100 F Street, N.E., Room 1580 Washington,
D.C. 20549, at prescribed rates. You can obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Commission
maintains a web site on the Internet that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission at HTTP://WWW.SEC.GOV.
REPORTS TO SECURITY HOLDERS
As a result of filing the registration statement, we are subject to the
reporting requirements of the federal securities laws, and are required to file
periodic reports and other information with the SEC. We will furnish our
security holders with annual reports containing audited financial statements
certified by independent public accountants following the end of each fiscal
year and quarterly reports containing unaudited financial information for the
first three quarters of each fiscal year following the end of such fiscal
quarter.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
June 30, 2009 Financials and Footnotes
[Begins on Following Page]
60
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
of Momentum Healthcare Services, Inc.
(formerly known as Dennis Healthcare
Solutions, Inc)
(a Delaware Corporation)
We have audited the accompanying balance sheet of Momentum Healthcare
Services, Inc. (formerly known as Dennis Healthcare Solutions, Inc.) as of June
30, 2009, and the related statements of operations, changes in stockholders'
equity, and cash flows for the period from the date of inception (April 15,
2009) through June 30, 2009. Momentum Healthcare Services, Inc.'s management is
responsible for these financial statements. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides 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 Momentum Healthcare
Services, Inc. as of June 30, 2009, and the results of its operations and its
cash flows for the period from the date of inception (April 15, 2009) through
June 30, 2009 in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note D to the
financial statements, the Company's development stage loss raises substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
EFP Rotenberg, LLP
Rochester, New York
October 5, 2009
61
MOMENTUM HEALTHCARE SERVICES, INC.
(FORMERLY DENNIS HEALTHCARE SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2009
2009
(In Dollars)
____________
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 13,074
TOTAL CURRENT ASSETS 13,074
TOTAL ASSETS 13,074
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES
ACCRUED EXPENSES 500
TOTAL CURRENT LIABILITIES 500
TOTAL LIABILITIES 500
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, $.01 Par, 10,000,000 Shares Authorized
2,254,000 Issued and Outstanding 22,540
Additional Paid in Capital 90,160
RETAINED EARNINGS (DEFICIT) (100,126)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 12,574
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 13,074
The accompanying notes are an integral part of these financial statements.
62
MOMENTUM HEALTHCARE SERVICES, INC.
(FORMERLY DENNIS HEALTHCARE SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
PERIOD FROM DATE OF
INCEPTION (APRIL 15, 2009)
THROUGH JUNE 30, 2009
(IN DOLLARS)
__________________________
SALES
EXPENSES
Consulting 100,000
BANK FEES 126
TOTAL EXPENSES (100,126)
NET LOSS (100,126)
LOSS PER SHARE - BASIC AND DILUTED (0.14)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 714,935
The accompanying notes are an integral part of these financial statements.
63
MOMENTUM HEALTHCARE SERVICES, INC.
(FORMERLY DENNIS HEALTHCARE SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN OWNER'S EQUITY
FOR THE PERIOD FROM DATE OF INCEPTION (APRIL 15, 2009) THROUGH JUNE 30, 2009
COMMON ADDITIONAL PAID RETAINED
# SHARES STOCK IN CAPITAL EARNINGS TOTAL
____________________________________________________________________
INCEPTION (APRIL 15, 2009) - BALANCE - - - - -
COMMON STOCK ISSUED FOR CASH 2,254,000 22,540 90,160 112,700
NET LOSS (100,126) (100,126)
JUNE 30, 2009 - BALANCE 2,254,000 22,540 90,160 (100,126) 12,574
The accompanying notes are an integral part of these financial statements.
64
MOMENTUM HEALTHCARE SERVICES, INC.
(FORMERLY DENNIS HEALTHCARE SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM DATE OF
INCEPTION (APRIL 15,
2009) THROUGH JUNE
30, 2009
(IN DOLLARS)
____________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) (100,126)
CHANGES IN ASSETS AND LIABILITIES
ACCRUED EXPENSES 500
NET CASH FLOWS FROM OPERATING ACTIVITIES (99,626)
NET CASH FLOWS FROM INVESTING ACTIVITIES -
NET CASH FLOWS FROM FINANCING ACTIVITIES
ISSUANCE OF COMMON STOCK FOR CASH 112,700
NET CASH FLOWS FROM FINANCING ACTIVITIES 112,700
Net Change in Cash and Cash Equivalents 13,074
CASH AND CASH EQUIVALENTS - INCEPTION OF COMPANY -
CASH AND CASH EQUIVALENTS - END OF PERIOD 13,074
The accompanying notes are an integral part of these financial statements.
65
MOMENTUM HEALTHCARE SERVICES, INC.
(FORMERLY DENNIS HEALTHCARE SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE A - THE COMPANY
The Company, a Delaware corporation, headquartered in Annapolis, Maryland, is a
development stage company that intends to provide healthcare services in the
form of medical transcriptions, billing, and business process outsourcing,
healthcare information systems and hospitals in India. The Company has retained
Conover Associates LLC to prepare a business plan, raise capital, and commence
operations. Conover Associates charges the Company $50,000 per month to
accomplish these matters.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis in accordance
with generally accepted accounting principles. The significant accounting
policies are as follows:
DEVELOPMENT STAGE
The Company has operated as a development stage enterprise since its inception
by devoting substantially all of its efforts to financial planning, raising
capital, and developing markets for its services. The company prepares its
financial statements in accordance with the requirements of Statement of
Financial Accounting Standards No. 7, "Account and Reporting by Development
Stage Enterprises."
FISCAL YEAR
The Company's fiscal year ends on the last day of March.
CASH EQUIVALENTS
The company considers all highly liquid investments with a maturity of 3 months
or less to be cash equivalents. The Company did not have any cash equivalents at
June 30, 2009. The Company does not maintain its cash in bank demand deposit and
savings accounts that exceed federally insured limits.
LOSS PER COMMON SHARE
Loss per common share is computed in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share," by dividing income (loss)
available to common stockholders by weighted average number of common shares
outstanding for each period.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles 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 financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results can differ from those estimates.
66
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash. Unless otherwise noted, it
is management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
value of these financial instruments approximate their carrying value, unless
otherwise noted.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No, 109, "Accounting for Income Taxes", using the asset and
liability approach, which requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the carrying amounts and the tax basis of such assets and liabilities. This
method utilizes enacted statutory tax rates in effect for the year in which the
temporary differences are expected to reverse and gives immediate effect to
changes in income tax rates upon enactment. Deferred tax assets are recognized,
net of any valuation allowance, for temporary differences and net operating loss
and tax credit carry forwards. Deferred income tax expense represents the change
in net deferred assets and liabilities balances. The Company had no income tax
liability. The Company is liable for Delaware franchise taxes.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position, or cash flow.
NOTE C - EQUITY SECURITIES
The Company has 2,254,000 shares outstanding. The Company has 10,000,000 shares
of authorized common stock with $0.01 par value.
NOTE D - GOING CONCERN
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. From date of inception (April
15, 2009) to June 30, 2009 the Company has reported a net loss of $100,126.
The Company's continued existence is dependent upon its ability to raise
capital. The financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern.
NOTE E - GENERAL AND ADMINISTRATIVE EXPENSES
The Company incurred $100,000 of consulting expenses and $126 in bank fees from
inception to June 30, 2009.
NOTE F - RELATED PARTY TRANSACTIONS
Mr. Conover is a consultant to the Company via his company Conover Associates
LLC, a stockholder and President of the Company. Conover Associates LLC was
engaged by the major shareholders to develop the Company. The expenses listed on
the financial statement of $100,000 were paid to Mr. Conover. Future payments on
the contract as of June 30, 2009 are $200,000 with an ending date of October 31,
2009.
Momentum has entered into a "Promoter's Share Agreement" dated May 14, 2009,
through which P. Sivadasan and Michael Brown will be issued 1 million Class B
common shares to share among themselves and their nominees at their sole
discretion and Donald L. Conover will be awarded 1 million Class B common shares
to share among himself and his nominees at his sole discretion each at such time
as Momentum has either $10 million in revenue, or it has raised $2 million in
shareholder's equity.
67
NOTE G - SUBSEQUENT EVENTS
Subsequent events were evaluated through October 5, 2009, the date the financial
statements were issued. On August 12, 2009 the Company restated their
certificate of incorporation with the following changes: 1) the name of the
Company was changed from Dennis Healthcare Solutions, Inc. to Momentum
Healthcare Services, Inc. 2) increasing the number of authorized shares was
changed from ten million (10,000,000) to one-hundred million (100,000,000) 3)
one class of stock was changed to two classes of common stock, a Class A with up
to eighty million (80,000,000) authorized shares and a Class B with up to twenty
million (20,000,000) authorized shares; both classes being equal in all respects
except that Class B has one hundred votes per share and 4) added that change of
control requires sixty percent (60%) of the number of the shares of capital
stock.
Total shares of Class B Common Stock outstanding as of October 5, 2009, pursuant
to subscription agreements dated April 17, 2009 and May 14, 2009 respectively,
were 4,004,000 shares of Class B Common Stock.
On August 5, 2009, Momentum entered a contract to acquire 10 acres of land from
Dennis Steels Pvt. Ltd., at the major railway junction of Arakkonam, in the
State of Tamil Nadu, 70 kilometers west of Chennai, India. Mr. K.J. Dennis,
Chairman of Momentum, controls Dennis Steels Pvt. Ltd. Momentum will purchase
this land using registered Class A Common Stock valued at $5.00 per share,
contingent upon Momentum raising $10 million in equity prior to closing.
[REGISTRATION STATEMENT CONTINUES ON THE FOLLOWING PAGE]
68
RECENT SALES OF UNREGISTERED SECURITIES
ISSUANCE TO FOUNDERS
As of October 5, 2009, we had either issued shares to Founders or have
contracted to issue shares to Founders on the following basis:
_____________________________________________________________________________________________________________
Name & Address of Owner Amount and Nature of Percentage of Percentage of
and Position if Applicable Beneficial Ownership Class Before Class After
by Class* Offering** Offering***
_____________________________________________________________________________________________________________
K.J. Dennis, 3,000,000 Class B common stock 49.97% 37.48%
Chairman of the Board of Directors
P.B. No. 169 Cocodale
M.O. Ward, Alleppey
Kerala, India 688 001
_____________________________________________________________________________________________________________
Anoop S.R., 3,000,000 Class B common stock**** 49.97% 37.48%
Director and Vice President,
46/1586, Preethi Buildings
Vyttila Jn., Kochi,
Kerala, India 682 019
_____________________________________________________________________________________________________________
P. Sivadasan, 1,000,000 Class B Common stock 0.00% 12.50%
Director and CEO
46/1586, Preethi Buildings
Vyttila Jn., Kochi
Kerala, India
_____________________________________________________________________________________________________________
Donald L. Conover, 1,004,000 Class B common stock**** 0.06% 12.54%
Director and President
3 Church Circle, Suite 130
Annapolis, MD 21401
_____________________________________________________________________________________________________________
*Mr. K.J. Dennis and Mr. Anoop S.R. have entered into a subscription agreement
with Dennis Healthcare Solutions, Inc., now named Momentum Healthcare Services,
Inc., on May 14, 2009, to purchase 6 million shares of Common Stock for
$300,000. Thereafter, on August 5, 2009, the Board of Directors and Shareholders
by resolution deemed the shares so subscribed Class B common stock.
**Of the K.J. Dennis and Anoop S.R. subscription of May 14, 2009, at the date of
offering, 5,000,000 shares of Class B common stock are issued and outstanding,
and we expect the remaining 1,000,000 shares of Class B common stock so
subscribed will be issued and outstanding by October 14, 2009, as required by
their subscription agreement. For the purposes of this table, since the issuance
of these shares is contracted by subscription, it is assumed that the relevant
party beneficially owns them.
***For the purposes of this table, it is assumed that 6,000,000 shares of Common
Stock of Momentum will be sold in the offering. Any lesser subscription will
result in a lesser percentage of shares of Common Stock being held by the
public.
****Under the Promoter's Share Agreement of May 14, 2009, P. Sivadasan and
Donald L. Conover, or their nominees, will each receive 1 million shares of
Class B common stock upon the happening of one of two events: Either the Company
has revenue of $10 million or the Company has successfully raised not less than
$2 million in equity from shareholders other than the Founders. For the purposes
of this table, it is assumed that these shares will be issued immediately after
the successful completion of this offering. Since both P. Sivadasan and Donald
L. Conover may name who is to receive these shares, other than themselves, other
persons, corporations or institutions may hold these shares after this offering.
69
EXHIBITS
The following exhibits are included as part of this Form S-1 or are incorporated
by reference to our previous filings:
Exhibit No. Description
___________ ___________
3.1 Articles of Incorporation, as amended*
3.2 Bylaws*
5.1 Legal Opinion of Diane Dalmy, Attorney at Law, October 15, 2009*
10.1 Contingent Contract to Purchase Parcel of Land Near Arakkonam,
Tamil Nadu*
23.1 Consent of EFP Rotenberg, LLP, October 5, 2009*
23.2 Consent of Diane Dalmy, Attorney at Law, October 15, 2009
(included in Exhibit 5.1)*
99.1 Generic Projected Project Plan for one 75-bed Acute Care
Hospital*
_________________
* Filed with S-1 on October 15, 2009
UNDERTAKINGS
a. 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:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after the
effective date of the 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 the registration statement.
Notwithstanding the foregoing, any increase or decrease in 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) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
70
iii. To include any 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 of 1933, each such post-effective amendment 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.
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. Intentionally omitted.
5. That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
i. Intentionally omitted.
ii. If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
6. That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
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:
i. Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
ii. 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;
iii. 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
iv. Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
71
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Our securities are not listed on any exchange or quotation service. We are not
required to comply with the timely disclosure policies of any exchange or
quotation service. The requirements to which we would be subject if our
securities were so listed typically include the timely disclosure of a material
change or fact with respect to our affairs and the making of required filings.
When this offer becomes effective, Momentum Healthcare Services, Inc. intends to
be a reporting Company with the Securities and Exchange Commission. The public
may read and copy any materials filed with the Securities and Exchange
Commission at the Security and Exchange Commission's Public Reference Room at
100 F Street N.E., Washington, D.C. 20549. The public may also obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. All filings of
Momentum will be made electronically. The address of that site is www.sec.gov.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this Registration Statement Form S-1 to be signed on its behalf by
the undersigned, thereunto duly authorized, on October 23, 2009.
MOMENTUM HEALTHCARE SERVICES, INC.
(Registrant)
/s/ DONALD L. CONOVER
________________________________________
By: Donald L. Conover
Chief Executive Officer, President,
and Director
72
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacity and on the
date indicated.
Signature Title Date
/s/ K.J. DENNIS Chairman of the Board of Directors October 23, 2009
_____________________
K. J. Dennis
/s/ DONALD L. CONOVER President October 23, 2009
_____________________
Donald L. Conover
/s/ ANOOP S. R. Director October 23, 2009
_____________________
Anoop S. R.
/s/ P. SIVADASAN Director October 23, 2009
_____________________
P. Sivadasan
EXHIBIT INDEX
Exhibit No. Description
___________ ___________
3.1 Articles of Incorporation, as amended*
3.2 Bylaws*
5.1 Legal Opinion of Diane Dalmy, Attorney at Law, October 15, 2009*
10.1 Contingent Contract to Purchase Parcel of Land Near Arakkonam,
Tamil Nadu*
23.1 Consent of EFP Rotenberg, LLP, October 5, 2009*
23.2 Consent of Diane Dalmy, Attorney at Law, October 15, 2009
(included in Exhibit 5.1)*
99.1 Generic Projected Project Plan for one 75-bed Acute Care
Hospital*
_________________
* Filed with S-1 on October 15, 2009
7
