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EX-3.(II) - EXHIBIT 3.2 - MOMENTUM HEALTHCARE SERVICES, INC. | ex3-2.txt |
EX-5 - EXHIBIT 5.1 - MOMENTUM HEALTHCARE SERVICES, INC. | ex5-1.txt |
EX-3.(I) - EXHIBIT 3.1 - MOMENTUM HEALTHCARE SERVICES, INC. | ex3-1.txt |
EX-10 - EXHIBIT 10.2 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-2.txt |
EX-10 - EXHIBIT 10.5 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-5.txt |
EX-10 - EXHIBIT 10.1 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-1.txt |
EX-23 - EXHIBIT 23.1 - MOMENTUM HEALTHCARE SERVICES, INC. | ex23-1.txt |
EX-10 - EXHIBIT 10.6 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-6.txt |
EX-10 - EXHIBIT 10.7 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-7.txt |
EX-10 - EXHIBIT 10.4 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-4.txt |
EX-99 - EXHIBIT 99.2 - MOMENTUM HEALTHCARE SERVICES, INC. | ex99-2.txt |
EX-10 - EXHIBIT 10.3 - MOMENTUM HEALTHCARE SERVICES, INC. | ex10-3.txt |
EX-99 - EXHIBIT 99.1 - MOMENTUM HEALTHCARE SERVICES, INC. | ex99-1.txt |
EX-99 - EXHIBIT 99.3 - MOMENTUM HEALTHCARE SERVICES, INC. | ex99-3.txt |
As Filed With the Securities and Exchange Commission on January 6, 2010
Registration No.
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
Amendment No. 2
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 of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number)Identification 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 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.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JANUARY 6, 2010
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 Class
A Common Stock on a best efforts basis, with a 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. These securities will be offered for 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, if any.
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 January 6, 2010 .
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.
SAFE HARBOR
This document contains forward-looking statements within the meaning of the
federal securities laws. We intend these forward-looking statements to be
covered by the safe harbor provisions of the federal securities laws. In
particular, any projections regarding our future revenues, expenses, earnings,
capital expenditures, effective tax rates, client trading activity, accounts,
stock price, as well as the assumptions on which such expectations are based,
and future operations are forward-looking statements. These statements reflect
only our current expectations and are not guarantees of future performance or
results. These statements involve risks, uncertainties and assumptions that
could cause actual results or performance to differ materially from those
contained in the forward-looking statements. These risks, uncertainties and
assumptions include general economic and political conditions, interest rates,
market fluctuations and changes in client trading activity, increased
competition, systems failures and capacity constraints, ability to service debt
obligations, regulatory and legal matters and uncertainties and other risk
factors described herein. These forward-looking statements speak only as of the
date on which the statements were made. We undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................6
DEFINITIONS....................................................................8
THE OFFERING..................................................................12
DETERMINATION OF OFFERING PRICE...............................................13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................14
RISK FACTORS..................................................................14
USE OF PROCEEDS TO ISSUER.....................................................35
DILUTION......................................................................38
NO MARKET FOR MOMENTUM SHARES.................................................39
PLAN OF DISTRIBUTION..........................................................39
DIVIDEND POLICY...............................................................41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................................41
DISCUSSION OF THE INDIAN HOSPITAL AND HEALTHCARE INDUSTRY.....................55
DISCUSSION OF THE MEDICAL TRANSCRIPTION INDUSTRY..............................57
DISCUSSION OF MEDICAL BILLING INDUSTRY........................................58
DISCUSSION OF THE HEALTHCARE IT INDUSTRY......................................60
CASH AND CAPITALIZATION.......................................................63
PLAN OF OPERATIONS............................................................65
PROJECTED FINANCIAL STATEMENTS................................................65
BUSINESS FACILITIES...........................................................66
COMPETITION...................................................................66
ADVANTAGES OF COMPETITORS OVER US.............................................68
RESEARCH AND DEVELOPMENT......................................................68
EMPLOYEES.....................................................................68
INDEPENDENT DIRECTORS.........................................................68
MANAGEMENT....................................................................69
MANAGEMENT AND DIRECTOR BIOGRAPHIES...........................................70
PROSPECTIVE INDEPENDENT DIRECTOR BIOGRAPHIES..................................72
AUDIT COMMITTEE...............................................................73
COMPENSATION COMMITTEE........................................................74
NOMINATING COMMITTEE..........................................................74
RECENT SALES OF UNREGISTERED SECURITIES.......................................74
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.............................75
PROMOTERS AND CERTAIN CONTROL PERSONS.........................................75
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................75
DESCRIPTION OF CAPITAL STOCK..................................................77
REMUNERATION OF DIRECTORS AND OFFICERS........................................79
RELATED PARTY TRANSACTIONS....................................................79
STOCK INCENTIVE PLAN..........................................................81
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS.............................................81
SHARES ELIGIBLE FOR FUTURE SALE...............................................81
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES.................................................81
LEGAL MATTERS.................................................................82
EXPERTS.......................................................................82
INTEREST OF NAMED EXPERTS AND COUNSEL.........................................82
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE...................................................84
AVAILABLE INFORMATION.........................................................84
REPORTS TO SECURITY HOLDERS...................................................84
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.......................84
RECENT SALES OF UNREGISTERED SECURITIES.......................................92
EXHIBITS......................................................................93
UNDERTAKINGS..................................................................94
MARKET FOR COMMON EQUITY AND RELATED SECURITIES MATTERS.......................96
SIGNATURES....................................................................96
EXHIBIT INDEX.................................................................97
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.
MOMENTUM HEALTHCARE SERVICES, INC.
THE COMPANY
Momentum Healthcare Services, Inc. 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, healthcare
support services and Healthcare Information Technology, 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 a history of operations limited to
negotiating and closing relationships with other companies, but our operations
have not involved any revenue to date. 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. is in its development stage. The Company has
yet to generate revenue. Since its inception on April 15, 2009 through September
30, 2009 Momentum has incurred losses of $250,370. As of September 30, 2009 the
Company had assets totaling $180 in cash. Further investments have been made
into the Company and expenses have been incurred since September 30, 2009, and
these are disclosed in Note H - Subsequent Events of our September 30, 2009
financial statement below.
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.
DEFINITIONS
Management believes that it is necessary to understand certain terminology in
order to understand this Prospectus. The following terms are therefore defined
in order to facilitate reading of this Prospectus:
AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009. Legislation passed by the United
States Congress and signed by the President, which provides for financial
benefits to healthcare organizations installing healthcare information
technology systems prior to 2015. This legislation has many other provisions not
relevant to this filing.
APPLICATION SERVICE PROVIDER ALSO REFERRED TO AS ASP. An Application Service
Provider or ASP is a company that hosts services, products and applications on
their server, normally at a site outside the premises of the user. Individuals
then can purchase a subscription to access those services, products and
applications hosted on the server. Momentum intends to provide this service for
market research.? This service is also sometimes referred to as Software As A
Service or SaaS. Momentum intends to provide Healthcare Information Technology
services as
ARRA. See American Recovery and Reinvestment Act of 2009.
ASP. See Application Service Provider.
BPO. See Business Process Outsourcing.
BUSINESS PROCESS OUTSOURCING (BPO). Business process outsourcing is a form of
outsourcing that involves the contracting of the operations and responsibilities
of a specific business functions (or processes) to a third-party service
provider. In our case, Momentum intends to provide the business functions for
hospitals and doctors' offices.
CBAY. CBay is an abbreviation for CBay Systems, Ltd., and its affiliated
companies.
CCHIT. See Certification Commission for Healthcare Information Technology.
CERTIFICATION COMMISSION FOR HEALTHCARE INFORMATION TECHNOLOGY (CCHIT). CCHIT is
a private not-for-profit organization that serves as a recognized U.S.
certification authority for electronic health records and the networks through
which they operate.
GCI. ABBREVIATION FOR GCI MSC SDN BHD, A MALAYSIAN CORPORATION WITH WHICH
MOMENTUM HAS ENTERED INTO AN AGREEMENT. BESIDES THE FIRST THREE LETTERS, WHICH
STAND ON THEIR OWN, THE REMAINDER OF THE NAME, MSC SDN BHD, STAND FOR MULTIMEDIA
SUPER CORRIDOR PRIVATE LIMITED.
HEALTHCARE IT. Healthcare Information Technology, relating to all
computerization of healthcare facilities, including electronic medical records,
patient care systems, clinical support systems, clinical systems, materials
management, assets management, financial systems, business office systems, and
human resources.
HL7. HEALTH LEVEL 7 IS AN COMPUTER INTERFACE STANDARD FOR EXCHANGING AND
TRANSFERRING HEALTH DATA BETWEEN DIVERSE COMPUTER SYSTEMS.
INTEROPERABILITY. As it relates to this document and the Healthcare IT Industry,
interoperability means the ability of various computer systems to operate with
one another.
ICD-9 AND ICD-10. Codes used for the International Classification of Disease 9th
and 10th editions standardize the classification of disease, injuries, and
causes of death, by cause and location on the body, each codified into a 6-digit
number, which allows clinicians, statisticians, politicians, health planners and
others to speak a common language, both in the United States and
internationally.
JAVA. A programming language developed for the worldwide web. One of the guiding
principles of Java was that every computer system would implement it in a
standard way, which meant that, in theory, any software written in Java can run
unmodified on any computer system. It turned out there were practical
limitations to this concept, but it provided the impetus for the creation of a
standardized set of infrastructure software components, called J2EE (Java 2
Platform Enterprise Edition), which today forms the basis of many of the leading
web systems software platforms. Sun Microsystems owns and co-ordinates the
development of Java, J2EE, and the client specifications J2SE (Standard Edition)
and J2ME (Micro Edition).
MODULE. A unique piece of software meant to handle one specific part of a
comprehensive Healthcare IT system. The electronic medical records module or the
pharmacy module are examples.
MOMENTUM. Momentum is an abbreviation for Momentum Healthcare Services, Inc.,
which is the registrant in this Registration Statement.
NON-RESIDENT INDIAN. An Indian citizen who has migrated to another country, a
person of Indian ethnic origin who is born outside India, or a person of Indian
origin who resides outside India. Other terms with the same meaning are OVERSEAS
INDIAN and EXPATRIATE INDIAN. In common usage, NRI often includes Indian-born
individuals (and also people of other nations with Indian ancestry) who have
taken the citizenship of other countries.
NRI. SEE NON-RESIDENT INDIAN.
SAAS. See Application Service Provider.
SERVER. A server computer, sometimes called an enterprise server, is a computer
system that provides essential services across a network, to private users
inside a large organization or to public users in the . Many servers have
dedicated functionality such as web servers, print servers, and database
servers. Enterprise servers are known to be very fault tolerant, for even a
short-term failure can cost more than purchasing and installing the system. For
example, it may take only a few minutes' down time at a hospital to cause the
death of a patient, thereby justifying the expense of entirely replacing the
system with a more reliable system.
SOFTWARE AS A SERVICE ALSO REFERRED TO AS SAAS. See Application Service
Provider.
THIN CLIENT. An electronic device, such as a cell phone, which has some of the
features of a lap top computer, but lacks the computer storage and variety of
applications typical in a full computer system. A thin client relies on the
computing power and storage of a server computer in a different location.
UNIEMR. Abbreviation for Universal EMR Solutions LLC, a New York limited
liability corporation with which Momentum has entered into an agreement.
VERSIONING. Versioning is the process of updating versions of software. When
several different pieces of software rely on one another, updating the version
of one piece of software may impact the performance of the other pieces of
software on which it relies.
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 services to healthcare
organizations in the United States and India. We intend to serve as a Healthcare
IT application service provider and business process outsourcer of Medical
Transcription and Medical Billing to hospitals, clinics and doctor's offices
throughout the World. We have not yet ever built a hospital or clinic in India
or anywhere else, but Seshu Kumar, Donald Conover, and K.J. Dennis to have real
estate development and building experience in non-healthcare contexts. With
respect to our other businesses, Donald Conover, Seshu Kumar, Anoop Sivadasan,
Mary Louise Wisniewski, Kendall Tant, and John Thompson do have extensive
experience with business process outsourcing and Healthcare IT, but they have
not yet entered into delivery contracts on behalf of Momentum. Negotiations with
landowners in India and prospective clients in the United States have been
initiated in all of our businesses. To date, the discussion with landowners
other than Mr. K.J. Dennis have been informal and preliminary. In these cases,
while landowners have expressed interest in Momentum building a hospital on
their site, landowners have indicated that they prefer to see this offering
effective before they are prepared to enter into detailed negotiations. Except
for the parcel of land contracted with Dennis Steels Pvt. Ltd., all other
parcels will be acquired from unrelated third parties. See Exhibit 10.1 for the
contract related to the parcel for which we have already contracted.
The Company intends to enter into distribution agreements with business process
outsourcing suppliers in India and other countries outside the United States as
well as develop healthcare information system software outside of the United
States. While everyone mentioned in the previous paragraph has experience with
many companies in these fields, no contracts of supply have yet been finalized
on behalf of Momentum.
Management intends to pursue its various businesses with equal attention,
emphasizing one over another on given days, as opportunities and executive
responsibilities present themselves. The purchasing officers for our services to
the healthcare industry tend to be the same individual, allowing us to offer our
range of services in each sales call.
At this point in time we are focusing on a single hospital project at Arakkonam
in the State of Tamil Nadu, India. Our contract to purchase the land for this
project is attached hereto as Exhibit 10.1. This contract contains several
contingencies, including a requirement that this offering succeed is raising $10
million.
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. Momentum will use its registered Class A Common Stock to
acquire land from landowners in India. Management believes that there are
willing landowners based on the agreement with Dennis Steels Pvt. Ltd., which is
made a part hereof as Exhibit 10.1, and based on discussions with other
landowners, in which it has been noted that where landowners possess property in
excess of the land needed for a hospital, their other lands will increase in
value based on the addition of a major infrastructure investment such as a
hospital in close proximity. Management believes that, once Momentum owns a
piece of property within one of its subsidiaries, the State Bank of India or
other local banks will be willing to finance the construction loan for up to 75%
of the value of the building. The balance of the money necessary for building
construction will be solicited from local high net worth individuals, other
interested parties such as pharmaceutical companies, or the funds may be
provided from cash available to Momentum from this offering. Once the structures
are financed, management believes that U.S. ExIm Bank financing will be
available to subsidize the equipping of the hospital with high quality U.S.
capital equipment. We plan to operate each hospital through agreements entered
into with various healthcare professionals, who we plan to solicit from the
international healthcare community, as well as from India itself. Each hospital
subsidiary will be treated as a separate legal entity, with its own financing
strategies and governance, depending upon negotiations in each individual case.
Management believes that such facilities will enjoy their own profitability, but
they will also provide Momentum with additional outlets for its Healthcare IT
and business process outsourcing services.
According to the Government of India's ECONOMIC SURVEY 2008-09, India has a
shortage of 28,213 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 18 million people
per year. This number is approximately equal to 2/3 the total size of the
population of the Kingdom of Saudi Arabia, which has 314 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 50,000 doctors of Indian origin in the
United States and a proportional number in Great Britain, among many other
countries throughout the World. Management believes many of these doctors are
keenly aware of the healthcare deficiencies in India, and many would like to
find a way to help. We believe many have practiced outside of India for 10-40
years, and have amassed the financial wherewithal to help. We know from our
experience that 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.
Management discussions with non-resident Indian 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 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 is now listed on the London Stock Exchange (AIM:
CBAY). Management believes that the experiences of its founding officers at CBay
will be useful in developing the business of Momentum. After founding in July
1998, CBay became the largest Company in the American Medical Transcription
industry, which includes approximately 1,700 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 business process outsourcing businesses to address the Healthcare IT
space in the American healthcare industry. The Healthcare IT business can be
expected to grow dramatically over the next few years, as estimates of the
federal stimulus money to be expended on Healthcare IT range from $19 billion to
$34 billion (see HTTP://WWW.FORTHERECORDMAG.COM/ARCHIVES/041309P10.SHTML). 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. Since management plans to
complete Momentum's software development work in Indian development centers,
developing close relationships with the management teams at Momentum's hospital
projects will facilitate testing of systems prior to introduction into the
United States market. These relationships will permit the development of
references, which can be expected to be useful in marketing Momentum's products
throughout the world. Furthermore, we believe will be in a position to use our
hospitals as references to cross-sell our Healthcare IT and business process
outsourcing offerings into the Indian market itself, which can be expected to
grow dramatically and adopt international standards and practices over the
coming decades.
PRINCIPAL OPERATIONS, PRODUCTS AND SERVICES OF THE COMPANY
Momentum Healthcare Services, Inc. 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.
___________________________________________________________________________________________________
THE OFFERING
Securities Offered 6,000,000 shares of Class A common stock
___________________________________________________________________________________________________
Shareholder Corporate Treasury
___________________________________________________________________________________________________
Offering Price $5.00
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Shares outstanding prior to the offering No shares of Class A common stock and 5,604,000 shares
of Class B common stock*
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Shares outstanding after the offering 6,000,000 shares of Class A common stock and 8,004,000
shares of Class B common stock**
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Use of Proceeds Working Capital and Acquisitions
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*As of the date of this filing $20,000 of the original subscription to the
company remains unpaid. This sum is due to be paid January 15, 2010, at which
time the total outstanding Class B Common Shares will be 6,004,000.
**Upon closure of this offering in excess of $2,000,000 of equity raised, the
Company will issue an additional 2,000,000 shares of Class B Common Stock
pursuant to it's Promoter's Share Agreement, which is attached hereto as Exhibit
10.5.
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,
based on the valuations two companies negotiating with Momentum at arms length
are prepared to assign to our Class B Common Stock, each share of which
represents the same ownership interest as each share of Class A Common Stock,
and is convertible into Class A Common Stock on a one for one basis after a
lock-up period.
Momentum has entered a Term Sheet to acquire 100% of the shares of GCI MSC SDN
BHD for 1 million shares of Class B Common Stock. See Exhibit 10.7. The
valuation of GCI at $5 million was set arbitrarily based on the requirement of
GCI's management and Momentum management's judgment that GCI has developed a
large percentage of the Healthcare IT modules offered by Cerner Corporation, one
of the two leading Healthcare IT companies in the United States. A copy of our
analysis is attached hereto as Exhibit 99.1. In the same analysis, management
identifies other modules not covered in Cerner's offerings, including Financial
Accounting, Human Resources Management, Assets Management, and Materials
Management, which are offered by GCI modules. Management has been aware of the
efficacy of GCI's software modules since 2003, and believes that its software
has a value of not less than $5 million. No assurance can be given that
financial professionals other than management of the two companies would assign
a similar value to GCI.
Valuation of Universal EMR Solutions LLC ownership units by Momentum and UNIEMR
management was arrived at on an arms length basis, but is arbitrary based on
their management's understanding of the customary value of EMR software already
certified by the Certification Commission on Health Information Technology in
the American market. No assurance can be given that financial professionals
other than management of the two companies would assign a similar value to
Universal EMR Solutions LLC.
Additionally, Dennis Steels Pvt. Ltd., a company controlled by Momentum's
Chairman, Mr. K.J. Dennis, has agreed to sell us a ten acre parcel of land in
the State of Tamil Nadu, India, for our Class A Common Stock valued at the
land's appraised value divided by $5/share.
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.
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. 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. 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.
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.
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 REPRESENT 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 September 30, 2009, we
had a loss of $250,370. They further stated that the uncertainty related to
these conditions raised substantial doubt about our ability to continue as a
going concern. At September 30, 2009, our cash was $180. 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.
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.
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 in India. If a shareholder desired to sue, the shareholder
would have to serve a summons and complaint. Since these Directors do not live
in the United States, it may be impossible to effectuate service upon them in a
manner acceptable to federal or state courts located in the United States. 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.
Indian courts are not friendly to foreign judgments entered against its
citizens. While enforcement may be possible, it can be very difficult and can be
expected to take years and significant funding to accomplish. The Government of
India considers the United States of America a non-reciprocating territory. Only
filing a lawsuit in an Indian Court for a Judgment based on the foreign judgment
can enforce judgments from non-reciprocating territories. The foreign judgment
is considered evidentiary, and the procedure amounts to a second trial. The
foreign judgment is considered conclusive by an Indian Court if such judgment:
has been pronounced by a court of competent jurisdiction; has been given on the
merits of the case; is founded on a correct view of international law; is
contained in proceedings that followed principles of natural justice; has not
been obtained by fraud; and does not sustain a claim on a breach of any law in
force in India. Attempts to bring an original action against Indian citizens
residing in India in an Indian court to enforce liabilities based upon the U.S.
federal securities laws will similarly be extremely difficult, time consuming,
and expensive.
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.
All of the individuals listed as officers, with this exception of Anoop S.R.,
expect to spend full time on the business of Momentum, once their employment
contracts are settled. Anoop S.R. expects to spend at least 20 hours per week on
the business of the company. With the exception of Mr. Conover and Mr. Anoop
S.R., none of the other Directors of Momentum expect to be involved in the daily
operations of Momentum. These other Directors, including the prospective
Independent Directors described herein, expect to spend such time as is normal
for Directors in a public company of Momentum's size and level of complexity.
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. Additionally, as Mr. K.J. Dennis is a related party, there may
be further restriction on the sale of the shares related to this particular
transaction under Rule 144. In all other cases, the lock-in period of one year
shall apply, but there shall be no other restriction on the sale of our Class A
Common Stock by the landowners, as they are not expected to be related parties.
Besides the parcel of land identified above, no other specific piece of land has
yet been identified for purchase using Class A Common Shares. The Company may
have to return any and all of the land for the 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. As of the date of this filing, no other parcel has been
identified for acquisition by management. No assurance can be given that any
other landowner will be willing to accept our Class A Common Stock in return for
land.
EXCHANGING SHARES OF CLASS A COMMON STOCK FOR LAND IN INDIA WILL HAVE A DILUTIVE
EFFECT ON YOUR OWNERSHIP IN THE COMPANY
When Momentum exchanges shares of its Class A Common Stock for land in India
there will be more shares outstanding. Unless you purchase further shares in the
same proportion, your overall percentage shareholding in the company and your
voting power will be diluted. Although major purchases will have to be reported
as material events, it may difficult to learn when such transactions occur, and
therefore continue to purchase on a proportional basis, thereby maintaining the
proportional level of your ownership interest.
THE COMPANY HAS NO 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), including construction, 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. No member of management has experience in operating hospitals. We intend
to meet the standards of the Joint Commission International, 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 the
Joint Commission International, which is the accrediting authority for hospitals
internationally.
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.
(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.
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.
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 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.
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. 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.
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 while Momentum's written internal controls have
been established, they may not be sufficient to address future and anticipated
growth, and they expressed concerns that they may not be properly implemented
and operating effectively. Among others, Momentum needs to implement and use its
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, ITS 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.
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.
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,
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. On October 16, 2009, this
agreement was amended to extend for an additional 3 months without additional
payments, and the payment schedule was extended. See Exhibit 10.4. 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. Fourthly,
Momentum has a subscription agreement with Mr. K.J. Dennis and Mr. Anoop S.R.,
pursuant to which the business of the company will be commenced with a total
initial investment of $300,000. This agreement was amended on October 16, 2009.
As of the date of this filing $280,000 has been paid for 5,600,000 shares of
Class B Common Stock, and $20,000 is due to be paid on or before January 15,
2010 for 400,000 shares of Class B Common Stock. Fifthly, on April 17, 2009,
Donald L. Conover subscribed for 4,000 shares of Class B Common Stock for $200,
which sum was used to open bank accounts. 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 PLANS TO COMPETE 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 plans to compete 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 offer products and services that are similar to those offered by
Momentum and compete with it for clients. If successful in its marketing,
Momentum will also compete 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 have financial, technical and marketing resources that
are greater than those of Momentum for the foreseeable future. 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.
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
will be 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 can be expected to fluctuate in the future. For example, if the US
dollar were to weaken against the Indian Rupee, costs of Medical Transcription,
Medical Billing and Software Development services performed in India could
increase in cost to Momentum in US dollar terms. Furthermore, if the Indian
Rupee would weaken against the US dollar, Indian land purchased by our shares
would become less valuable in US dollar terms. As a result of these facts,
Generally Accepted Accounting Principles may require us to devalue certain of
our assets, or provide reserves for certain exchange fluctuation risks to assure
Momentum can fulfill its contractual obligations.
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
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.
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. 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 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, 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.
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 throughout its
history, primarily because of disputes between its Hindu and Muslim populations,
but similar problems have related to many of India's other minority populations.
India is an extremely diverse country, where at least 30 regional languages are
spoken in addition to Hindi, and 14 of these are used to denominate the Indian
currency. India has recently been a target of terrorist attacks and such attacks
may happen in the future. These attacks have been reported throughout the
country, but have most notably centered on Mumbai, India's commercial capital;
Hyderabad, where there is a large Muslim population; and in Kashmir, where a
long standing dispute of territorial rights between India and Pakistan has
endured since the founding of the Republic of India. There is a large Maoist
movement in India, which has been known to be violent, primarily in the State of
West Bengal, near Calcutta. Neither American nor Indian members of management
have had their business disrupted by events such as these.
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 and 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.
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 will 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;
* 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.
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.
WE WILL NEED TO RAISE ADDITIONAL CAPITAL AND, IN SO DOING, COULD DILUTE YOUR
OWNERSHIP INTEREST AND VOTING RIGHTS.
We will need to raise additional capital, in addition to the financing as
reported in this registration statement, 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.
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.
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
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:
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 January 6, 2010, upon completion of this offering, we
will have outstanding 14,004,000 shares of common stock. 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.
______________________________________________________________________
Days After the Number of Shares Percent of
Date of this Eligible for Sale Outstanding Common
Prospectus* in U.S. Public Market** Stock****
______________________________________________________________________
579 3,004,000*** 21.5%
______________________________________________________________________
583 800,000*** 5.7%
______________________________________________________________________
610 1,200,000*** 8.6%
______________________________________________________________________
640 600,000*** 4.3%
______________________________________________________________________
730 2,400,000*** 17.1%
______________________________________________________________________
*Assumes "effective" date is January 15, 2010.
**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.
****Assumes sale of all shares offered in this registration statement.
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.
We are allowed issue an unlimited number of shares in connection with mergers
and acquisition transactions, joint ventures or other strategic transactions.
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.
INDIAN NATIONALS ARE LIMITED IN THE AMOUNT OF THEIR FOREIGN INVESTMENTS
Under the Liberalized Remittance Scheme of the Reserve Bank of India, [Indian]
resident individuals are limited to remit no more than US$200,000 per financial
year (April to March) for any current or capital account transaction or
combination of both. This includes investing in various stocks and options that
are traded on the exchanges in United States of America.
USE OF PROCEEDS
We estimate that we will receive net proceeds in cash of up to $30,000,000 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 offering expenses payable by us. If we do not
sell all 6,000,000 shares for cash, we may exchange up to 4,000,000 of these
shares of Class A common stock for land parcels in India, valued at
approximately $20,000,000. Since no parcels other than that at Arakkonam have
been identified, it is not possible to state the precise value of the land we
may acquire. The sum of $20,000,000 relates only to the approval of our Board of
Directors for management to seek out parcels of land, and not to valuation of
any specific parcel of land. In the event that we raise cash in excess of
$10,000,000, we intend to use that cash to add a cash component to the terms of
our acquisitions. There would be a commensurate reduction in the stock component
of our acquisitions.
We expect to use the net proceeds received by us from this offering for general
corporate purposes, including:
Year 2010 2010 2010 2010 2011
Calendar Quarter 1st 2nd 3rd 4th 1st
__________________________________________________________________________________________________
PROCEEDS (US$000S)
6 million shares at $5 per share
Cash $ 10,000
Registered Treasury Shares for Land
Acquisition $ 20,000
Total Proceeds $ 30,000
USES (US$000S)
INDIAN HEALTHCARE FACILITIES
Purchase of Land (In exchange for 4
million shares) $ (5,000) ($15,000)
Title insurance, deed registration,
regulatory approvals $ (350) $ (350)
Organization costs $ (100)
Hospital construction costs $ (1,291) $ (1,291)
___________________________________________________
Total Uses Indian Facilities Segment $ (5,350) ($15,450) $ - $ (1,291) $ (1,291)
MEDICAL TRANSCRIPTIONS & BILLING SERVICES
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)
___________________________________________________
Total Uses Medical Transcription Segment $ (230) $ (230) $ (230) $ (3,230) $ (230)
HEALTHCARE INFORMATION TECHNOLOGY SEGMENT
Marketing $ (50) $ (50) $ (50) $ (50) $ (50)
India Development Team $ (90) $ (90) $ (90) $ (90) $ (90)
Capital Expenditures $ (50) $ (50) $ (50) $ (50) $ (50)
___________________________________________________
Total Uses Healthcare Information
Technology Segment $(190) $ (190) $ (190) $ (190) $ (190)
CORPORATE SERVICES
Governance, Finance, Corporate Development,
etc $(250) $ (250) $ (250) $ (250) $ (250)
Total Uses Corporate Services $(250) $ (250) $ (250) $ (250) $ (250)
Total Uses by Calendar Quarter $(6,020) $(16,120) $ (670) $ (4,961) $ (1,961)
Cumulative Uses $(6,020) $(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 other than those disclosed in this
Prospectus. Pending such uses, we plan to invest the net cash proceeds of this
offering in short-term, investment grade securities.
The following table discloses how Momentum intends to use the proceeds in this
offering if we are less successful than we expect in selling our shares. Since
the level of investment this Prospectus will draw cannot be predicted, the
figures contained in this table should be regarded as illustrative only, as many
circumstances related to Momentum's plans can change based on the level of
equity investment the company raises.
In the following scenarios, which summarize the first 5 quarters of operations,
we assume that we will raise only a percentage of the cash included in the
assumptions above. The first data column of the following table assumes 100%
funding, as calculated in the preceding table, with the following columns
assuming 25%, 50%, and 75% funding over the first 5 quarters respectively.
Please note that in all scenarios we assume that there will be $20 million worth
of registered treasury stock for land acquisitions. The registered treasury
stock will need to be issued within 9 months in order to retain its registered
character. Any stock not issued after nine months from our effective date will
require a further filing before it can be issued. For the illustrative purposes
of this table, we have assumed that we have not identified lands for
acquisition, except at the levels indicated in each column heading.
As this table suggests, Momentum intends to give first priority to funding its
Healthcare IT business, with focus on Medical Transcription and Medical Billing
businesses on as permitted by funding basis. The company feels that the
Healthcare IT business has the greatest likelihood of providing cash flow to
achieve Momentum's other objectives over a long period of time. To the extent
that proceeds are identified for the purposes of acquisitions, there are no
acquisitions currently identified other than those contained in this prospectus.
Management has taken the position that it is pointless to initiate acquisitions
involving a cash component until the cash to implement the acquisition is on
hand. Management does proceed to discuss acquisition prospects willing to
consider a 100% share-for-share exchange.
Funding for the full construction of hospitals is beyond the scope of this
Prospectus requiring additional funding. The sums included in this prospectus
represent the portion of the necessary funding, which Momentum does contemplate
providing for these projects. Once parcels of land have been conveyed to
Momentum for its shares, the land will be used as collateral to justify
approximately 75% of the hospital construction cost being covered by loans from
local banks in India. These loans will be within the same subsidiaries of
Momentum as Momentum envisions creating for each individual hospital project.
The balance of the financing will come either from Momentum's available cash, or
from equity investors in each project.
_________________________________________________________________________________________________________________
Level of Investment Assumed in this Prospectus 100% 25% 50% 75%
_________________________________________________________________________________________________________________
PROCEEDS (US$000S) SUM
_________________________________________________________________________________________________________________
6 million shares at $5 per share Cash $ 10,000 $ 2,500 $ 5,000 $ 7,500
_________________________________________________________________________________________________________________
Registered Treasury Shares for Land Acquisition $ 20,000 $ 5,000 $ 10,000 $ 15,000
_________________________________________________________________________________________________________________
Total Proceeds $ 30,000 $ 7,500 $ 15,000 $ 22,500
_________________________________________________________________________________________________________________
USES (US$000S)
_________________________________________________________________________________________________________________
INDIAN HEALTHCARE FACILITIES
_________________________________________________________________________________________________________________
Purchase of Land (In Exchange for up to 4
million shares of Class A Common Stock) $(20,000) $(5,000) $(10,000) $(15,000)
_________________________________________________________________________________________________________________
Title Insurance, Deed Registration,
Regulatory Approvals $ (700) $ (250) $ (450) $ (700)
_________________________________________________________________________________________________________________
Organization Costs $ (100) $ (100) $ (100) $ (100)
_________________________________________________________________________________________________________________
Hospital Construction Costs $ (2,850) $ (700) $ (1,600) $ (2,000)
_________________________________________________________________________________________________________________
Total Indian Facilities $(23,382) $(6,050) $(12,150) $(17,550)
_________________________________________________________________________________________________________________
MEDICAL TRANSCRIPTION & BILLING SERVICES
_________________________________________________________________________________________________________________
Acquisitions $ (3,000) $ (800) $ (2,000)
_________________________________________________________________________________________________________________
Operations Development $ (500) $ (75) $ (250) $ (475)
_________________________________________________________________________________________________________________
Marketing $ (250) $ (63) $ (125) $ (238)
_________________________________________________________________________________________________________________
Inplementations $ (150) $ (25) $ (50) $ (100)
_________________________________________________________________________________________________________________
Capital Expenditures $ (250) $ (25) $ (50) $ (250)
_________________________________________________________________________________________________________________
Total Uses Medical Transcription & Billing Services $ (4,150) $ (188) $ (1,275) $ (3,063)
_________________________________________________________________________________________________________________
HEALTHCARE INFORMATION TECHNOLOGY
_________________________________________________________________________________________________________________
Marketing $ (250) $ (250) $ (250) $ (250)
_________________________________________________________________________________________________________________
India Development Team $ (450) $ (450) $ (450) $ (450)
_________________________________________________________________________________________________________________
Capital Expenditures $ (250) $ (250) $ (250) $ (250)
_________________________________________________________________________________________________________________
Total Uses Healthcare Information Technology $ (950) $ (950) $ (950) $ (950)
_________________________________________________________________________________________________________________
CORPORATE SERVICES
_________________________________________________________________________________________________________________
Governance, Finance, Corporate Development, etc. $ (1,250) $ (313) $ (625) $ (938)
_________________________________________________________________________________________________________________
Total Uses Corporate Services $ (1,250) $ (313) $ (625) $ (938)
_________________________________________________________________________________________________________________
Total Uses $(30,000) $(7,500) $(15,000) $(22,500)
_________________________________________________________________________________________________________________
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 September 30, 2009.
Investors participating in this offering will incur immediate, substantial
dilution. Our projected net tangible book value was $0.001 per share of Class A
and Class B common stock at September 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 estimated offering expenses, our
projected as adjusted net tangible book value at September 30, 2009, would have
been $3.00 per share of common stock. This represents an immediate increase in
projected net tangible book value of $3.00 per share of common stock to our
existing stockholders and an immediate dilution of $2.00 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
September 30, 2009 $0.001
________________________________________________________________________________
Increase in projected net tangible book value per
share attributable to this offering $ 3.00
________________________________________________________________________________
Projected as adjusted net tangible book value per
share after the offering $ 3.00
________________________________________________________________________________
Dilution to new investors $ 2.00
________________________________________________________________________________
*Assumes 10,004,000 shares outstanding on September 30, 2009, if this offering
were done on that date.
NO MARKET FOR MOMENTUM SHARES
There is currently no market for any of Momentum's shares, and there can be no
assurance that the shares offered by this Prospectus will have a market value,
or that they can be resold at the offered price if and when an active secondary
market might develop, nor can any assurance be given that a public market for
Momentum securities can be sustained even if developed. There is no agreement
with a market maker or to list Momentum shares on any exchange or bulletin
board.
SEC Rule 15c2-11 requires that, before a broker or dealer publishes proprietary
quotes on a quotation medium, it must gather, review, and retain certain
information about the issuer. The market maker must file a Form 211 with the
Financial Industry Regulatory Authority OTC Compliance Unit, along with two
copies of the required issuer information. After a successful review, the FINRA
Compliance Unit will notify the market maker that it may enter a quotation on
the Pink Quote system. Issuers may contact a registered broker-dealer for
sponsorship of a security on the Pink Quote system. Thereafter the company can
apply to be listed on exchanges such as the OTC Bulletin Board or other
exchanges. No assurance can be given that Momentum shares will ever be listed on
a quotation service. We estimate that, if Momentum is successful in achieving a
listing, this process may take three to nine months to achieve.
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.
Since this is our first public offering, Momentum will sell our Class A Common
Shares ourselves from our company offices or may use broker dealers to act as
agents to sell our Class A Common Stock. No arrangement has been made to sell
our shares through a broker dealer at this time. If we use a broker dealer to
sell the offered shares Momentum will pay the customary commission on the sale
of our Class A Common Stock. We plan to sell our Class A Common Stock at a fixed
price per share of $5.00 using our best efforts. As of the date of filing no one
has agreed to buy any of our Class A Common Shares.
We intend to sell our Class A Common Stock to friends, family members, business
acquaintances and members of the general public. There is no minimum amount of
common shares we must sell, so no money raised from the sale of our Class A
common shares will go into escrow, trust or another similar arrangement.
Our Class A common shares will be sold by an John B. Thompson, Treasurer of
Momentum relying on the safe harbor in Rule 3a4-1 of the Securities Exchange Act
of 1934 to sell the common shares. No sales commission will be paid for common
shares sold by Mr. Thompson. Mr. Thompson is not subject to a statutory
disqualification and is not an associated person of a broker or dealer.
Additionally, Mr. Thompson primarily performs substantial duties on behalf of
Momentum otherwise than in connection with transactions in securities. Mr.
Thompson was not a broker or dealer or an associated person of a broker or
dealer within the preceding 12 months and has not participated in selling an
offering of securities for any issuer more than once every 12 months other than
in reliance on paragraph (a)4(i) or (a)4(iii) of Rule 3a4-1 of the Securities
Exchange Act of 1934.
The offering will commence on the effective date of this prospectus and will
terminate 270 days from the effective date.
There are currently no finders.
PROCEDURE FOR SUBSCRIBING
If you decide to subscribe for any shares in this Offering, you must:
(i) Execute and deliver a subscription agreement, attached hereto as Exhibit
99.3; and
(ii) Deliver a check or certified funds to us by registered mail for acceptance
or rejection at Momentum Healthcare Services, Inc., 3 Church Circle, Suite
130, Annapolis, MD 21401.
All checks for subscriptions must be made payable to Momentum Healthcare
Services, Inc.
RIGHT TO REJECT SUBSCRIPTIONS
We have the right to accept or reject subscriptions in whole or in part, for any
reason or for no reason. We will return all monies from rejected subscriptions
immediately to the subscriber, without interest or deductions. Subscriptions for
securities will be accepted or rejected within 48 hours after we receive them.
There will be no brokerage fees, taxes or discounts paid in connection with
these transactions. A registration fee in the amount of $1,640 has been paid to
the SEC in conjunction with this offering. Additionally, management estimates
that legal fees and accounting fees in connection with this offering will be
$5,000 each. Fees of our legal printer in connection with this offering are
estimated to be $3,000. All of these sums have been paid by Momentum.
Funds from this offering received and accepted by us will be immediately
available for our use.
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 $14,640. 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.
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. is a development stage Company with a limited
operating history. To date the company has no revenues and is entirely dependent
upon future investors to implement its plans. While management believes the
personnel identified to be part of the management team of Momentum have
sufficient experience in the healthcare services industry in general to
implement the plans set forth in this Prospectus, there are a large number of
potential risks, enumerated above and possibly including risks Momentum has not
foreseen, which could prevent Momentum from implementing some or all of its
business plan.
During the time since inception, Momentum has been a development stage and has a
history of operations limited to negotiating and closing relationships with
other companies, but our operations have not involved any revenue to date.
During the first quarter, Momentum developed its business plan and strategy for
fundraising. Meetings were held with various individuals, groups and entities in
the United States, India, and Saudi Arabia to establish the most productive
means for fundraising. During the second quarter, Momentum established that
traditional private placement equity funding is relatively non-existent as
compared to times prior to the current international financial crisis, and
decided to proceed with this direct initial public offering as the most fruitful
means to make the Company most attractive to the broadest spectrum of investors.
The initial filing of this registration statement was completed on October 16,
2009, and amended on October 23, 2009 to comply with a requirement of the
Securities & Exchange Commission. During the third quarter management succeeded
in negotiating an operating understanding with Universal EMR Solutions LLC, a
New York corporation with software developed for Healthcare IT in the
physicians' office segment, and agreed to purchase GCI MSC SDN BHD, a Malaysian
company with software developed for Healthcare IT in the hospital segment.
Management also committed significant time to revising this registration
statement to satisfy comments received from the Securities & Exchange Commission
in its letter dated November 13, 2009. Also during the third quarter, management
commenced a strategy of approaching physicians of Indian origin to sell its
Healthcare IT solutions into their offices and into hospitals with which they
are affiliated.
Expenses incurred to date have paid for the professional services and expenses
of Conover Associates, LLC, including its professional staff, to develop the
Company's business plan and capital formation activities, and for attorneys,
accountants, and legal printers to assist in the preparation of the Company's
financial statements and its filings with the U.S. Securities & Exchange
Commission. Since the company to date received no revenue, these development
stage activities have resulted in a net loss of $(150,244) for the period from
inception (April 15, 2009) to June 30, 2009; a net loss of $(100,126) for the
quarter from July 1, 2009 to September 30, 2009, and a cumulative net loss of
$(250,370) for the period from inception (April 15, 2009) to September 30, 2009.
Management believes that capital formation is the most material and difficult
task faced by Momentum. This task is made all the more difficult by the global
financial situation of 2009-2010, which is widely accepted to be the worst since
the 1930s. Dating back to the 19th Century, start-up companies were able to
finance the commencement of their operations from private sources. This task has
been made more and more difficult by legal requirements imposed by legislative
and regulatory authorities at the state and federal levels. Management expected
that its plans would be implemented through private investment, but these plans
proved impossible given the current global financial situation. Management
believes statutory and regulatory restrictions make it impossible for management
to receive sufficient private investment from anyone but the wealthiest
individuals, and many of these individuals have seen their net worth severely
deteriorated in the 2009-2010 economic environment. These facts make high net
worth individuals less likely to be willing to make sufficiently substantial
investments or any investments at all. Institutional private equity investment
has been severely reduced in the current environment, and requirements placed on
receiving such investment normally require that a business be operational at a
substantial level before such institutional private equity investment can be
considered.
As a result of the unavailability of sufficient private funds to commence its
operations at a significant level, management decided that its best course of
action would be to raise its required capital through the public market for
securities. Once this offering is effective, management will be in a position to
promote investment in the company more broadly than is permissible by a private
company. Furthermore, investment in the company by most adults will be
permissible. Management believes that because Momentum's plans largely involve
businesses with significant component parts in India, many individuals of Indian
origin will be attracted to invest in the activities of the company. This
strategy is complex and failure of this approach to capital formation can cause
Momentum to fail. The rules and regulations for achieving and maintaining public
status are onerous for any but the largest companies. Management believes that
public policy is such that companies are and should be encouraged to be publicly
reporting companies. It is management's opinion that it is widely accepted that
small businesses are the primary vehicles for adding jobs to the economy, and
that regulators will see their duty to facilitate public offers and public
listings by small and start-up companies as a primary means to improve the
economic performance of the United States.
Management further believes that the other primary material uncertainty for
Momentum is the continuing availability of Momentum's President, Donald L.
Conover, to the capital formation and further business development of the
company. Mr. Conover is the chief architect of the business planning represented
by this Prospectus, as well as its chief author. Mr. Conover has no employment
agreement with the company, and his services are provided through the
Contracting Agreement with Conover Associates LLC, as amended, which is attached
hereto as Exhibit 10.4. It is the belief of management that Mr. Conover will
enter into a long-term employment agreement with Momentum upon reasonable
recommendation of the Compensation Committee of the Board of Directors,
comprised of Independent Directors, but said Committee has not yet been formed,
so no assurance of its actions nor Mr. Conover's reaction to those
recommendations can be predicted.
Management believes that one additional material uncertainty relates to the
status of financial markets, which have experienced extreme volatility over the
past two years in particular. There are many factors, discussed in detail in
Risk Factors above, which may decrease the market price of our common stock,
regardless of our operating performance. This uncertainty relates both to the
success of this offering and our ability to raise additional equity investment
in the future.
* 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.
Momentum's is launching four discrete businesses in the Healthcare Services
Industry, the material trends and uncertainties of each are as follows:
1. Hospital Development and Operations in the form of construction and
operation of for-profit hospitals in India.
Management believes that the material trends in the healthcare industry suggest
an increasing demand for healthcare facilities on a global basis over the next
two decades. Management believes that it is generally accepted that the
abnormally large increase in births for the 18 years immediately following World
War II will result in an abnormally large increase in old age illness leading to
death, with its increase in healthcare requirements, in the coming two or three
decades. Management believes that this trend will result in greater demand for
healthcare facilities on a global basis, from which our business may be expected
to benefit. Various estimates of the required number of beds for India range
from 450,000 by PriceWaterhouseCoopers HEALTHCARE IN INDIA 2007 (P. 14) to well
over 1,000,000 suggested by The World Health Organization's report, WORLD HEALTH
STATISTICS 2009 (P. 98). The PriceWaterhouseCoopers report indicated that $25.7
Billion would need to be invested to achieve the 450,000 additional beds
suggested by PriceWaterhouseCoopers in 2007.
Against this positive trend driving the need for hospital beds, there is the
material uncertainty that Momentum management will be capable of handling the
management of even one hospital. Management believes that the real estate
development experience of several of its officers, as well as their broad
management experience across multiple industries, will permit management to
properly develop this business area. Management makes no claim that it can
handle the actual delivery of medical services, which is the purview of the
medical profession, which management intends to engage for this purpose at the
appropriate time.
2. Healthcare IT for hospitals and physician's offices in the United States.
Management believes that the aging of the post World War II baby generation will
increase the demand for all healthcare services, including Healthcare IT.
Additionally, management believes there is growing obsolescence in the
Healthcare IT systems installed in the past two decades, and that this trend
will create greater demand for Healthcare IT solutions in general. Furthermore,
pursuant to The American Recovery and Reinvestment Act of 2009 up to $34 Billion
will be expended on Healthcare It over the coming 5 years.
In contrast to this trend to increase Healthcare IT spending over the coming
decade, one material uncertainty is whether management will be capable of
developing, marketing and handling the delivery of Healthcare IT solutions in
the American marketplace. Based on its long and varied experience in providing
complex medical services to a variety of parties, ranging from teaching
hospitals to solo practitioner clinics, management believes that it is capable
of overcoming any of its shortcomings by engaging experienced talent to satisfy
any shortcomings.
One additional material trend, which can be expected to develop over the
near-term, is the creation of many new competitors in this field. Management
believes that it is capable of competing with even the largest companies in the
Healthcare IT industry. Management has already taken steps, through its
marketing arrangement with Universal EMR and its purchase or GCI, to acquire the
necessary expertise to achieve its objectives.
3. Medical Transcription for hospitals and physicians' offices in the United
States.
The long-standing uncertainty of the Medical Transcription industry has been the
advent of voice recognition and template reporting in electronic medical records
as replacements for its services. In management's experience, these factors have
been present in the industry for at least two decades, without significant net
effect on the industry. Management believes that while it is true that some
dictation has and will continue to decline, particularly from doctors' offices
thanks to development of electronic medical records, the demographically driven
increase in the need for healthcare services has offset any reduction in gross
business. By comparison, management believes that hospitals tend to have more
complex medical transcription needs thanks to the greater liability created by
procedures performed there. As a result, management believes that the overall
demand for medical transcription will remain relatively constant, and that the
demand for outsourced medical transcription may gradually increase due to the
increased comfort level hospitals are experiencing in using outsourced services,
such as that we intend to provide.
Management believes that one material opportunity in the medical transcription
industry is the failure of major companies in the industry to train for and
insist upon the best quality performance from Indian production centers.
Management believes that it has the experience to improve on the training
techniques and insist on proper performance through economic pressures if
production centers do not measure up to standard.
4. Medical Billing for physicians' offices in the United States.
The chief uncertainty in the medical billing industry is the lack of clarity on
what billing provisions will be contained in new healthcare legislation
currently before Congress. Further, the stimulus contained in the American
Recovery and Reinvestment Act of 2009 suggests that major changes in
technologies will be required in order to implement billing methodologies over
the next five years. To the extent that billing companies we might acquire
already have established business methodologies, such changes can be highly
disruptive. Management is monitoring the changes being proposed, and carefully
considering how these changes, and changes to Healthcare IT in general may
affect any prospective acquisition.
HOW MOMENTUM PLANS TO GENERATE REVENUE
HOSPITAL DEVELOPMENT
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. Momentum intends to build and equip hospitals and
clinics in India, and then collaborate with non-resident Indian 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 management has no direct experience in the
building or managing of hospitals, but several of its officers do have relevant
experience in the real estate development sector, as well as broad experience
developing complex enterprises. Management does intend to seek professional
advice and assistance with the building and operating of hospitals in India.
Mr. K.J. Dennis is the Chairman of Dennis Infra Pvt. Ltd., a real estate
development company with a project to build 3,400 middle-income homes in the
vicinity of Arakkonam, in the Indian State of Tamil Nadu. Mr. V. Seshu Kumar is
the Managing Director of Bhavana Developers Pvt. Ltd.
(http://www.bhavanadevelopers.com), which is a real estate development company
primarily focusing its activities in the Indian State of Andhra Pradesh and the
City of Hyderabad. Mr. Kumar has been developing real estate in India since
1992. Mr. Donald Conover has served as Chairman of Bhavana Developers Pvt. Ltd.
Both Messrs. Kumar and Conover have been noted speakers at international
conferences on the Indian real estate industry
(HTTP://WWW.TERRAPINN.COM/2008/REIWIN/SPEAKERLIST.STM).
Momentum envisions a process for building Indian hospitals involving separate
Indian subsidiaries for each site. Management believes each project can be
expected to reach operational status in 24-36 months from the time Momentum
acquires the necessary site.
The steps to implement these projects are expected to be as follows:
1. Identify a piece of property and make an agreement to purchase the land
from the landowner. Momentum envisions purchasing the land for Class A
Common Stock, after it is effective, valued at $5.00 per share during the
time this offering remains open. Once this offering is closed, the
valuation of Momentum shares shall be determined by market factors,
including the price of our Class A Common Stock in U.S. markets, and the
situation in the Indian real estate industry. The land will be appraised,
and the number of shares to be transferred to the landowner will be
determined by dividing the appraised value by $5.00 during the time of this
offering, and thereafter by the agreed value. An example of one such
contract, already agreed, is attached to this Prospectus as Exhibit 10.1.
2. Momentum will form an Indian subsidiary for each hospital project. Each
subsidiary will have its own Board of Directors and Officers, but as the
100% shareholder of such subsidiary, management believes Momentum can be
expected to dominate the governance of the subsidiary. This structure will
allow flexibility in the later financing of each hospital project. Momentum
will exchange sufficient Class A Common Stock with the subsidiary, in
return for its stock, to purchase the land. At that point in time the
Momentum Class A Common Stock will be an asset of the Indian subsidiary,
and the Indian subsidiary shares will be an asset of Momentum.
3. Momentum's Indian subsidiary will then exchange the Momentum Class A Common
Stock for the land, and register the land holding. Such investments are
permitted by Indian foreign direct investment regulations under the
automatic investment route ( See HTTP://WWW.WHOINDIA.ORG/LINKFILES/TRADE_
AGREEMENT_FOREIGN_INVESTMENT-FULL_TEXT.PDF).
4. Once Momentum's Indian subsidiary owns the land parcel and has established
itself as an operating entity, it will then seek local bank financing for a
construction loan. Management believes that such financing is available for
75% of the construction cost of a hospital project. Management believes
that the remaining 25% of the construction cost, including working capital
for the Indian subsidiary, can be developed through local private equity
investors in the specific project, or Momentum will consider supplementing
funds necessary through loans to its Indian subsidiary, depending on the
circumstances in each subsidiary and the availability of funds for
investment.
5. Once the structure is near completion, Momentum's Indian subsidiary will
equip the facility with state-of-the-art equipment using financing
available through 85% loans provided by the United States Export-Import
Bank. Management believes that the balance of the cost of this equipment,
as well as the cost of equipment sourced locally, will be provided by local
private equity, local bank loans, or vendor supplied financing terms.
6. During the process of building and equipping these projects, Momentum
intends to collaborate with its subsidiaries to identify medical
professionals, who would be engaged to operate each facility. Management
believes that such personnel will be available either in the local
community or through collaboration with non-resident Indian doctors
currently living in the United States, the United Kingdom, or other
locations around the world.
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.
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
compatibilities 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, 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.
HEALTHCARE IT
Healthcare IT is expected to be Momentum's main marketing priority in the United
States, and includes the software, systems, and implementation of the
computerization of all functions in the healthcare industry, including, but not
limited to, enterprise resource planning, client relationship management, and
supply chain management. 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.
Several members of Momentum's management team have been involved in the
development of Healthcare IT solutions for hospitals and physicians' offices for
as much as two decades. Mr. Conover first became involved in the industry in
1989. Mr. Thompson became involved in 1991. The experiences of Mr. Tant and Ms.
Wisniewski predate the advent of CBay in 1998. Mr. K.J. Dennis, Mr. Anoop S.R.,
and Mr. P. Sivadasan have a variety of management experiences related to
Healthcare IT since 1999.
With a view of entering into the market for electronic medical records in the
physicians' office market space, on October 30, 2009, Momentum Healthcare
Services, Inc, and Universal EMR Solutions LLC entered into an agreement by
which they shall collaborate in order to modify UNIEMR's Physician's Solution(R)
EMR Software and its related products for Momentum to sublicense and otherwise
utilize in its business of providing integrated health care solutions to
hospitals, physician groups and other health care providers throughout the
World. The UNIEMR transaction provides Momentum with the additional value that
it is already operating in the United States market for physicians' office EMR
software, and the Certification Commission for Health Information Technology has
certified its software since 2007. In exchange for its sub-license of
Physician's Solution(R) to Momentum, and its commitment to collaborate with
Momentum in the future, UNIEMR shall receive 200,000 shares of Momentum Class B
Common Stock, and options to purchase an additional 990,000 shares of Momentum
Class A Common Stock at the initial public offering rate of $5 per share at any
time over the next five years. UNIEMR will also receive commercially reasonable
license/royalty and maintenance fees for all end users of Momentum's integrated
health care solutions that include Physician's Solution(R) or an EMR system
based upon any version of Physician's Solution(R) or any other product designed
or developed by UNIEMR. Momentum has agreed to pay UNIEMR commercially
reasonable rates for the software development and other work involved in
modifying Physician's Solution(R) for use in Momentum's integrated health care
solutions. Momentum shall also receive the non-exclusive right to sell UNIEMR's
products to physician groups throughout the World as an independent sales
representative. To further solidify the Momentum-UNIEMR business relationship,
Momentum has also agreed to purchase 20% of the outstanding ownership units in
UNIEMR for $1 million ($500,000 in cash and $500,000 in Momentum Class B Common
Stock valued at $5/share), contingent upon Momentum raising not less than $5
million cash in this offering. In the event that Momentum raises more than $6.5
million in this offering, payment for 20% of UNIEMR ownership units will be in
cash. A copy of the Term Sheet for this transaction is attached hereto as
Exhibit 10.6. The combination of UNIEMR at the physicians' office level and
GCI's software at the hospital level is expected to enhance the
comprehensiveness of the broad-based Healthcare IT solutions to be offered by
Momentum.
Momentum has agreed to acquire 100% of the shares of GCI MSC SDN BHD for 1
million shares of Class B Common Stock. A copy of the term sheet for this
transaction is attached as Exhibit 10.7. Members of management have been
familiar with the work of GCI since 2003, particularly in its installations in
Saudi Arabia, where it has software modules installed at King Faisal Specialist
Hospital and Research Center. Management believes that with the acquisition of
GCI, it is uniquely positioned to provide a comprehensive solution in the
Healthcare IT industry space by using GCI's experience of major interoperable
systems to develop Java/Thin Client solutions. Management further believes that
it can change the business model of the industry from sales followed by
maintenance contracts to a subscription service, thus reducing one of the main
capital expenditures faced by all hospitals. Momentum intends to offer
continuous updates of its software with its subscription service.
Management believes that some modules already developed can be offered into the
United States market within 90 days, and that redesigned modules can be offered
within 9-12 months. The estimated development cost for the first 12 months is
$500,000, with an additional $250,000 required for marketing. Management expects
that existing developers in the GCI organization will provide some of the
planned development, while development in the Java/Thin Client environment will
be accomplished in a new development center located in Hyderabad, India. Setup
and operation of the new development center can be expected to cost $250,000
over the first year. Using existing modules, management believes it can achieve
self-sustaining cash flow in its Healthcare IT business within 12 months. This
statement assumes the placement of 5-10 modules in U.S. hospitals, which will
generate $10,000-20,000 per month in subscription revenue each. Steps for
implementing our Healthcare IT model involves:
1. Momentum management's short-term strategy is marketing GCI and UNIEMR
modules in their current form. Management continues to make sales calls to
discuss available products.
2. Upon adequate funding, Momentum will begin development of systems focusing
on the Java/Thin Client environment. It is anticipated that the first
parallel modules, which are based on previously built modules based on
earlier technologies, will be available for market in 6 to 9 months from
the time Momentum achieves a minimum level of cash funding of $500,000.
3. Within 12 months management expects to be in a position to aggressively
market a broad variety of Healthcare IT modules using its new Java/Thin
Client developments.
Management believes that there is a high degree of uncertainty in the Healthcare
IT industry, particularly brought on by the complex terms of The American
Recovery and Reinvestment Act of 2009 (ARRA) and the healthcare legislation
currently working its way through Congress. In management's experience standards
in the Healthcare Industry have traditionally been slow in developing because of
the diversity of interest groups in the industry, including vendors, providers,
insurance companies and government itself. Some clarity is being provided by the
Certification Commission for Health Information Technology (CCHIT(TM)), which is
a private entity designated by the U.S. Department of Health and Human Services
as the only recognized certification body for the industry. To date, CCHIT has
focused its efforts on the area of the electronic health record for both
physicians' offices and hospitals, and the final standards, under ARRA, will be
issued in the spring of 2010. CCHIT began certifying software systems for
electronic health records in 2006, using laws in place at that time. CCHIT began
preliminary certification under ARRA in October 2009. Momentum will have to
comply with the standards set by CCHIT. Momentum is in the process of acquiring
marketing rights to CCHIT certified electronic medical record software from
Universal EMR Solutions, LLC. A copy of the term sheet for this transaction is
attached hereto as Exhibit 10.6. CCHIT certification is an ongoing process, with
frequent expiration dates requiring recertification. Universal EMR's products
have been certified by CCHIT since 2007.
Management believes that it is uniquely positioned to differentiate Momentum
from other companies in the Healthcare IT Industry by providing high quality
paradigm shifting products and services in an effective and efficient manner.
Management has observed that major companies in the Healthcare IT business space
in the United States developed their broad offerings from acquisitions. While
this strategy allowed these companies to offer up to 100 software modules at the
hospital level, the necessary tradeoff was the introduction of complications
caused by disparate operating systems, versioning issues, and interoperability
issues. Further, management observed in the 1990s that establishing a standard
to interface these various modules, now called HL7, took nearly ten years to
accomplish. During the same period, companies operating outside the United
States have not been so readily in a position to broaden their offerings in
Healthcare IT through acquisition. Major hospitals operating in countries like
the Kingdom of Saudi Arabia have instead hired entire IT teams through a variety
of companies from throughout the world. In the Arab world, medicine tends to be
practiced in English due to the unavailability of Arabic speaking nurses. This,
in turn, has facilitated the adoption of international standards for hospital
management. In Saudi Arabia, for example, many hospitals are accredited by the
Joint Commission International, which bases its accreditation on the same
standards used in the United States. Management has observed that the result has
been teams working together to build Healthcare IT systems from the ground up in
hospitals comparing favorably in their delivery of medicine with leading
hospitals in the United States. Management believes the result has been fewer
problems related to operating systems, versioning and interoperability in
healthcare systems operating substantially like the American healthcare system
in all material respects.
Momentum has agreed to purchase 100% of the shares of GCI MSC SDN BHD, a
Malaysian Healthcare IT company, for 1 million shares of Class B Common Stock,
valued at $5 per share. A copy of the agreement is attached hereto as Exhibit
10.7. GCI has worked with members of the Momentum management team since 2003 in
connection with their collaborative work with King Faisal Specialist Hospital
and Research Center and HealthGulf, a medical services firm located in Riyadh,
Saudi Arabia. Management believes that the GCI acquisition positions it to make
a broadly based offering to the American hospitals immediately upon funding.
Momentum intends to gradually convert the GCI modules to operate in a software
environment suitable for all computers including large mainframe computers,
using the knowledge and software development capabilities of GCI and other
capabilities to be developed in India. GCI currently operates a 60-person
development shop in Chennai, India. The advantage of developing the Java/Thin
Client technology is that it will be computer operating system independent, and
it will allow users to function without having a personal computer in close
proximity. Management believes that the larger companies in the Healthcare IT
industry typically operate in Microsoft based client/server environments, which
in hospitals means the use of many servers to provide full functionality.
Management believes that, in a Java/Thin Client environment, the number of
servers can be reduced, allowing more efficient functionality of broad-based
hospital IT departments. Momentum management believes that Java/Thin Client
systems will allow the use of larger computers as servers, which will allow more
complete interoperability, better security and better backup systems than are
currently broadly available in the Healthcare IT industry. Java/Thin Client also
will mean that it will be unnecessary for hospitals to maintain large numbers of
personal computers for individual workstations, as they will be able to push
necessary functionality into cell phones or very simple electronic notebooks.
Management believes that the major companies in the Healthcare IT industry will
face difficulty converting to the Java/Thin Client environment, because of the
knowledge base and experience of their technical staff being focused on
Microsoft client/server environments and their legacy systems in hospitals will
have to be continuously serviced for many years into the future. Management
believes this conversion to Java/Thin Client will gradually give it a
competitive advantage over other Healthcare IT companies. It is true that large
players in the Healthcare IT industry do have greater financial resources to
pursue a change to Java/Thin Client it they so choose. It is Momentum
management's position, however, that changing technology in their situation,
with large numbers of legacy systems in the field, will be easier said than done
because of complexities of implementing change in large organizations.
Management believes that most Healthcare IT companies rely on a business model
of the sale of their software followed by continuous maintenance fees of as much
as 18% to 20% of the purchase price of their software. Momentum believes that we
can change this business paradigm by offering our software modules on a
software-as-service model, where there is no up-front fee, but continuous
subscription payments after installation. In this model, Momentum will provide
the hardware to each client, either on their own site or at a Momentum
operations center. Momentum will operate, maintain and upgrade the software
modules required by each client on hardware provided by Momentum. In so doing,
Momentum will retain the ability to upgrade the software at any time, as well as
assure security and proper backups of client data. Management believes this will
allow Momentum to operate larger and more comprehensive servers, which will
offer lower cost of operations.
In management's experience, software tends to be difficult to change out after
installation in the Healthcare IT industry, except at the time of major system
upgrades required by generational improvements in software. Management believes
that such upgrades are underway in the industry, and can be expected to continue
for the next decade. Management believes that implementing such a change of
business model will cause serious competitive difficulties for companies
depending on the sale/maintenance agreement model.
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 or Software as Service style
solutions, although many do hold themselves out as "available on the Internet."
Management believes that converting its product lines to be compatible with
mainframe computers, we will simplify the system architecture required by
client/server based systems, and make it easier for us to operate our systems
off site or remotely. 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.
Having software as service style solutions typically means that internal
personnel need not operate the actual hardware for a computer system. In the
case of healthcare providers, software as service solutions can provide a
significant savings, by reducing the number of IT technical personnel that need
to be employed. Other advantages are the ease with which versions can be
changed, without interrupting the operational activities of medical staff, and
by making it easier to maintain a secure computing environment with appropriate
backups of data in multiple locations. Momentum management does believe that
some healthcare providers will wish to maintain their data on their own sites,
and we envision facilitating that desire by maintaining our systems directly on
the site of the provider where required. The traditional approach was for a
provider to buy the hardware and software, and provide at least first level
service on site. This approach was costly in both manpower and space
requirements in healthcare facilities.
We believe that the technical staffs of major competitors will resist this
change to technology compatible with mainframe computing primarily because such
systems are outside of their training and experience. Furthermore, even if they
adopt our strategy, they will have difficulty converting since many of the
largest companies have hundreds of installations using what we believe to be
obsolete client/server approaches. They will have to go back to their clients
and convince them of the value of the change, while maintaining the old systems
already in place. Management believes this is a difficult task, which will give
Momentum an advantage in marketing the next generation of computer systems.
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 for a
fully comprehensive system, 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, relying on a subscription only model.
Management plans to make price points approximately equivalent to the
maintenance fees charged by our competitors. Management believes that this
removal of the up-front sales charge 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. Management believes that it will
be able to sustain this model because it is not planning to sell its Healthcare
IT solutions, but simply maintain them for our clients. Management believes that
there are significant excess charges in the marketplace, which can be forgone in
the interest of aggressive pricing competition. We believe that once we have
created each module in the form we desire, we will be able to copy and sell it
to multiple clients without large additional development costs.
We plan to begin marketing at least one major module needed by all major
healthcare institutions within twelve months. Our GCI acquisition already brings
us completely implemented modules for electronic medical records, pharmacy, and
supply chain management applications, in addition to many other modules not
offered by Cerner. Assuming closure of the transaction contained in Exhibit
10.7, a full comparison of Momentum's modules to those of Cerner Corporation is
attached as Exhibit 99.1. We have identified EMR as a primary focus because the
Congressional Budget Office estimates that the amount of money to be spent for
electronic health records under the American Recovery and Reinvestment Act of
2009 will be up to $34 billion on improvements and implementations in this area
over the life of the program.(HTTP://WWW.FORTHERECORDMAG.COM/ARCHIVES/041309P10.
SHTML). Pharmacy is a priority because inventory control and security of
pharmaceuticals is mission critical in all major healthcare institutions. Supply
chain management is critical because of the volume of items, which a typical
healthcare institution must maintain. According to management's experience and
estimates, 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.
MEDICAL TRANSCRIPTION AND MEDICAL BILLING
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. All of the
founding officers and directors of Momentum have had extensive experience in the
Medical Transcription Industry, with four of them serving as four of the first
five founding officers of CBay, which today is the largest company in the
industry. Management is confident that the personal relationships its officers
have established with suppliers of medical transcription services located in
India will allow Momentum to deliver the highest quality product available from
outsourced vendors. Management expects to begin a campaign of medical
transcription sales upon the completion of this offering, at an approximately
cost for sales, marketing, and customer service of $250,000 during the first
year, before revenues are established. Once medical transcription revenues are
established, management expects to expand Momentum's medical transcription
budget as sales permit.
Medical Billing is the process of taking responsibility for filing claims and
collecting fees for medical services of all kinds. Management believes that with
healthcare IT and medical transcription businesses, it will be in a position to
cross-sell medical billing services to its clients in other sectors. Mr. Conover
has had experience with medical billing operations since 1994, and Ms.
Wisniewski has had medical billing experience since 1996. At this time,
management plans to build Momentum's medical billing business by acquisitions.
Management believes that once this offering is effective it will be in a
position to exchange Momentum's Class A or Class B Common Stock for controlling
interests of small size medical transcription and medical billing companies,
ranging in size from $150,000 in sales per year to $5 million in sales per year.
Management believes there are approximately 1,500 companies in each group, and
that few of them have appropriate places to sell their companies upon
retirement. Few are large enough to even consider a public offering. Each such
acquisition will require evaluation and negotiation to determine under what
terms the acquisition can be made. Management believes that it is possible to
bring in some acquisitions by means of a share exchange only, once Momentum's
Class A Common Stock is effective. Management believes that typical terms for
this type of transaction are to pay 0.6 times to 1.0 times revenue for the
valuation of such companies, and to make these payments one-third in cash,
one-third in shares, and one-third in debt taken back by the selling company.
Management will develop actual terms in each given situation.
Our steps in medical transcription and medical billing will be as follows:
1. Management will contact prospective medical transcription clients as time
permits. To the extent that funds permit, a marketing campaign of up to
$250,000 will be undertaking to create organic growth in a medical
transcription business for Momentum. Management believes that this
investment can generate annual revenue of $750,000, with gross profit of
$250,000. 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.
2. Once funds are available through this offering, management will undertake
to acquire medical transcription and medical billing companies with U.S.
business, which can be directed to production centers known to management
in India. The size of these acquisitions will be entirely dependent upon
the results of this offering. Management has been in contact with several
companies, but none of them were prepared to proceed with detailed
negotiations until such time as our offering is effective. 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 public companies have
a higher valuation than private companies, all other considerations being
equal. 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 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,
management believes that the availability of American sources of medical
transcription labor is diminishing, and Indian medical transcription labor is
widely accepted in the industry. Management further believes that all major
medical transcription companies have embraced the idea of using offshore labor.
Members of management were involved in the development of 38 production centers
in India, and are familiar with at least four with known quality standards,
which are seeking other outlets for their services. We intend to contract with
these suppliers to provide our production capacity.
Management believes that 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. Management observed many occasions
in our previous companies where poor performance at the level of the medical
transcriptionist was glossed over until sufficient economic pressure was put on
our outside suppliers of medical transcription. Momentum's management intends to
require high quality performance by refusing to pay vendors not meeting our
standards. Management believes this will be a huge relief to our clients. Direct
experiences of Momentum management suggest that economic pressure does cause
outside supplier management to take more care in the delivery of an excellent
product.
Our Momentum Transcription(TM) and Momentum Healthcare Services(TM) brand were
filed through the Trademark Electronic Application System of the United States
Patent and Trademark Office on June 26, 2009. Management intends to continuously
pursue these trademarks until their registration is granted.
Management believes Momentum's 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.
Management intends to explore future financings to grow quickly through
acquisitions, both in India and the United States. In so doing, we intend to
find small to medium size medical transcription and medical billing companies,
which have profitable operations, but have little or no ability on their own to
reach critical mass for a public offering in the United States or other markets.
Momentum's target companies can be expected to have annual gross revenue of $1
million to $5 million, but can be as small as $150 thousand in gross revenue.
GCI is expected to have gross revenue of $500 thousand for 2009, while Universal
EMR's revenue is expected to be about $370,000 for 2009. Management believes
that it will be in a position to cross-sell the medical transcription, medical
billing, and Healthcare IT solutions across the client lists of all acquired
companies. While discussions have been commenced with some medical transcription
and medical billing companies, none have reached a final stage of negotiation,
and all have indicated their desire to see the success of this offering prior to
closing any transaction. No assurance can therefore be given that any of these
acquisitions will ever be consummated.
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 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 1,700 companies of all sizes. CBay's business spans
Medical Transcription, Healthcare Technology, and Patient Financial Services,
including medical billing.
DISCUSSION OF THE INDIAN HOSPITAL AND HEALTHCARE INDUSTRY
While Momentum management believes 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. Seventy-two (72)
infants per thousand die before reaching the age of five, and malnutrition
afflicts almost half of all Indian children. 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.
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, the standards
adopted in much of the rest of the World. 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 30 in the Kingdom of Saudi Arabia,
which has 2.3% of 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. A calculation on the
number of beds needed to bring India to just average in the World yields
3,614,600 beds needed. They estimate that the cost of such investment is
approximately $25.7 Billion, of which the government will only fund 15-20%.
Management believes that a very small percentage of these hospital beds were
built since the study was issued. 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 Expenditures 3.4% 19.3%
_________________________________________________________________________________________________
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, which claims to be the
largest healthcare group in Asia, has only 46 hospitals and 8,065 beds. If this
size were juxtaposed into the U.S. healthcare system, it would amount to less
than 2.7% 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 50,000 doctors of Indian
origin in the United States and a proportional number in Great Britain, among
many other countries throughout the World. Management believes many of these
doctors are keenly aware of the healthcare deficiencies in India, and many would
like to find a way to help. Management believes many of 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 believes 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. We believe
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 May 31, 2010, 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 satisfactory to
rules adopted under Generally Accepted Accounting Principles. We intend to
assure our title to any lands in question by acquiring title indemnity insurance
through internationally recognized insurance companies.
Discussions with non-resident Indian doctors have suggested that the major
stumbling block for them developing healthcare projects in India has been that
they preferred and were better suited to focus on medical rather than
administrative and financial issues. Momentum intends to satisfy these
shortcomings 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.
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 1,700 companies currently
service this market. Management believes most are 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 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
Momentum's President and Chief Executive Officer, Donald L. Conover, and
HealthScribe, now a component of Spheris. By 2000, The National Association of
Software and Services Companies 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. Management believes that 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.
Management believes that the CBay experiences of several of its officers has
prepared them to properly develop and manage Momentum through a complex
healthcare services environment. This environment has been characterized by
significant change over the past two decades. These changes ranged from
requiring all medical transcriptionists to work in identified offices, with
large investments in infrastructure to the same personnel being able to work
from home, and finally from many offshore locations, particularly India. Donald
Conover was a first mover in these changes in the industry 9 years before the
founding of CBay, and accelerated the process of change after founding CBay. In
so doing, Mr. Conover gained broad knowledge and experience in the Healthcare IT
industry. Further change is inevitable as methods for delivering services change
with second-generation Healthcare IT technologies. Having worked through the
earlier developments, are officers have experiences to guide them through the
complexities of change in the future.
Management believes that 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 gross annual revenue, and provide its investors with the benefits of the
achieving a higher valuation for their investment by holding it in public shares
rather than private shares. Public companies in healthcare services are
typically valued at a multiple above gross annual income.
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 business
process outsourcing services software, into an organic continuum with 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.
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 businesses to address
the Healthcare IT 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 business process outsourcing activities typically
fall below that level. Management believes that 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 following discussion contains
management's belief about the major structural flaws facing the Healthcare IT
industry:
1) Management believes that 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. That
is, there was a single computer, which would operate the primary
functionality of each module of software, and other computers would access
this data from that server. 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. As more functional standards are addressed, they can be expected
to be even more contentious in their development process, because so many
different interest groups will want to provide inputs and see the results
match their operational methods. Many hospitals that have adopted
Healthcare IT 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 Healthcare IT 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 constitutes the main area to improve hospital and
medical delivery efficiency. The main thrust of the Obama Administration's
stimulus money in Healthcare IT 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 Healthcare IT 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 Healthcare IT companies today requires large
capital outlays for hospitals and doctors' offices. Major American
Healthcare IT 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 Healthcare IT systems for hospitals can cost in excess
of $15 million, and often considerably more. Healthcare IT therefore
becomes one of the largest capital expenses for a hospital, often requiring
special funding.
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 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
Healthcare IT 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
Healthcare IT 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 knowledge of and experience with Healthcare IT
modules 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 Healthcare
IT 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 Healthcare IT 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 Healthcare IT products on a non-capital expense basis,
thereby undercutting one of the major revenue generators of the top players in
the Healthcare IT 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 Healthcare IT universe over time. By developing an effectively
functioning Java based system, management believes that Momentum will create a
standard in the industry, which will be very difficult for major competitors to
replicate, given the complexity of the issues they will face with existing
customers in changing out systems developed using older technologies. 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.
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 Healthcare IT
companies, its primary function will be to implement the user friendliness and
uniformity of the Momentum Healthcare IT 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
Healthcare IT.
Management believes Momentum has the opportunity to create a standard for the
entire Healthcare IT 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. Management believes HL7 is the only standard adopted by all
participants in the Healthcare IT industry. In management's experience, the HL7
interfacing standard took nearly ten years for the industry to discuss and
adopt. HL7 is a standard permitting diverse healthcare software modules to
communicate with one another in a common way. While Momentum intends 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 Healthcare IT space as the clients WANT it to be, rather than how IT
professionals develop it without proper inputs from clients. Management believes
that by focusing on its own standard, refining it as it develops internally,
Momentum will ultimately create a operational model for Healthcare IT software
and catch the competition unprepared to easily convert their last generation
client-server offerings to more effective software models.
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 Healthcare IT products at the Healthcare Information
and Management Systems Society (HIMSS) conference in Atlanta, March 1-4, 2010.
Using the SaaS 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 Healthcare
IT 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 Healthcare IT 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 Healthcare IT, 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 Healthcare IT aspects of its business, and franchise the "Supply Chain
Management" opportunity on a country by country basis. Organic business process
outsourcing modules for medical transcription, billing and coding, to name only
three, will allow Momentum to amplify and adjust its businesses in the business
process outsourcing industry.
CASH AND CAPITALIZATION
The following table sets forth our cash, cash equivalents, short-term
investments and capitalization at September 30, 2009, as follows:
o On an actual basis.
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.
________________________________________________________________________________
(Unaudited) September 30, 2009
Actual
________________________________________________________________________________
Cash, cash equivalents and short-term investments $ 180
Accounts Receivable --
Current Assets $ 180
Net Property Plant & Equipment --
Intangibles (7 year average life) --
LAND --
_________
Total Assets $ 180
=========
Accounts Payable
Accrued Expenses - Due to Related Parties $ 50,350
Current Liabilities $ 50,350
LONG-TERM LIABILITIES
Total Liabilities $ 50,350
Stockholder's Equity:
Class A common stock, $0.001 par value,
80,000,000 shares authorized,
10,000,000 issued and outstanding after IPO: --
Class B common stock, $0.001 par value,
one hundred votes per share, 20,000,000
shares authorized, 4,004,000 issued and
outstanding: $ 4,004
Common stocks subscribed but not paid $ 2,000
Common stocks subscription receivable $(100,000)
Additional paid-in capital $ 240,160
Retained Earnings $(250,370)
Total Stockholder's Equity (Deficit) $ (50,170)
Total Liabilities and Shareholder's equity $ 180
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," intends to specialize on 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, management plans to build out Momentum's 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. The approximate costs listed are the total expected costs for 1 year.
____________________________________________________________________________________________________
Timeline Approximate
(From Jan 2010 to Dec 2010 Description Cost ($000)
____________________________________________________________________________________________________
1st 90 Days *Close real estate land purchases for up to five $ 1,200
parcels of 10 acres each in various localities in
India.
*Establish medical transcription and medical $ 150
billing marketing in the United States. This
will involve hiring 2 salesmen and preparing
exhibition booths and marketing literature,
travel, and trade show expenses.
*Develop process for acquisitions, including $ 25
using counsel to develop terms and conditions and
draft documents.
*Acquire 1 medical transcription supplier in $ 500
India.
*Establish software development center in India. $ 250
This will involve hiring approximately 10
software developers, and providing them with
workspace, computers, utilities, and other needs
for operations. Commence conversion of one
module. This will involve translating the
functionality of the software in one software
format into another software format. Each such
conversion can be expected to take 8-12 weeks.
*Negotiate "work for hire" contracts with
knowledgeable suppliers. The main expenditures $ 100
involved will be for travel, due diligence, and
legal services.
____________________________________________________________________________________________________
2nd Quarter *Develop Healthcare IT marketing plan and launch $ 100
first products.
*Acquire 2 medical transcription and 1 medical $ 3,000
billing Company in the United States with
combined revenue of $30 million.
*Acquire 1 additional medical transcription $ 250
supplier in India. After the first acquisition,
a larger component will be for shares rather than
cash.
*Begin organizing Boards of Directors and staff $ 50
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 $10,000
companies and 1 additional medical billing
Company in the United States with additional
combined revenue of $30 million.
*Complete government permissions for hospital and $ 100
clinic projects in India, and identify sources of
local finance for the construction projects of
each separate subsidiary. This is to be handled
through Indian staff.
____________________________________________________________________________________________________
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
Outside Supplier Contracting: US and India 240
India Software Development Center 250
Capital Expenditures including Land Closing Costs 1,250
HQ Operations 600
_____
Gross Expenditure 3,040
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.
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
As a development stage company with no operating history, nominal capital, no
firm commitment for the shares in this offering, no financing in place for the
construction of hospitals, and no current clients it is impossible to assert
that a reasonably objective
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 business
process outsourcing services software, into an organic continuum with 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 Healthcare IT 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 business process outsourcing and Healthcare IT 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. Momentum believes its management team
has broad experience in the healthcare services industry, such that it
recognizes the shortcomings of many of its competitors, and knows what needs to
be done to avoid those shortcomings and create a competitive product.
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, which claims to be the largest
healthcare group in Asia, has only 46 hospitals and 8,065 beds. If this size
were juxtaposed into the U.S. healthcare system, it would amount to less than
2.7% 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 we believe government commitment to satisfying these needs
falls far short of World standards.
India needs about 28,213 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%.
ADVANTAGES OF COMPETITORS OVER US
The Company believes the following are advantages of Competitors over us.
* CLIENT BASE: As a development stage company, Momentum has no client
base at this time.
* FINANCIAL RESOURCES: The Company believes that many of its competitors
have significantly greater financial and other resources than we do
and are therefore, in these 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 companies of the appropriate type are included in Standard Industrial
Classification Code 7375, which includes Healthcare Information Systems. 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.
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 (one year)
Directors
_____________________________________________________________________________________________________________
Donald L. Conover Director and President 63 Director, April 16, 2009 (one year from
June 4, 2009)
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 (one year)
Mr. Anoop Sivadasan is the Vice President Operations Vice President, June 4, 2009
son of Mr. P. Sivadasan.
_____________________________________________________________________________________________________________
Mary Louise Wisniewski Vice President, Operations 55 Vice President and Secretary, June 4,
2009
(next Annual Meeting)
_____________________________________________________________________________________________________________
Seshu Kumar Veeramachaneni 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. In 1982 he began by exporting Indian natural fiber products. Mr.
Dennis has received special awards from the President of India for being the
best exporter in his industrial 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. Mr.
Dennis founded and currently operates other businesses as well. In 2003, he
founded Dennis Steels Pvt. Ltd., in Tamil Nadu, India, which produces rolled
steel and rebar for the booming construction industry in South 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 an Upper
Level Secondary school with 1800 Students. Mr. Dennis has operated all of these
businesses since inception.
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. Prior to CBay Mr. Conover was Founder and
President of Transcriptions International, Inc. (1989-98), which established the
first medical transcription operation in India. During this period (1994-96), as
a parallel activity supporting Transcriptions International, Mr. Conover
organized and served as the first President of Tiger Communications
International, Ltd., which operated private telecommunications circuitry between
Annapolis, Maryland and Chennai, India. In his activity with Tiger
Communications Mr. Conover developed operational uses for the circuitry in
medical transcription, legal transcription, medical billing, accounting, and
telemarketing. This activity became unnecessary after the Internet became
operational in India. He was Founder and Representative Director of Schlegel
Engineering K.K. in Tokyo for five years (1979-84). 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 his 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 served as Chairman of the
Board of Directors of Bhavana Infra Developers Pvt. Ltd. (2007-09), and assisted
in the development of several major real estate projects in Hyderabad, India.
These activities included developing the financial structuring for the projects,
developing marketing plans for the projects, and representing the firm's
strategies as a speaker at real estate investment conferences in India, Dubai,
New York and Singapore.
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 started his career in 1964 and retired from the State
Bank of Indian in 1999. He was General Manager at DC Mills Pvt. Ltd. from 1999
to 2005 and then assumed responsibility as CEO of Dennis Soft Solutions Pvt.
Ltd., a medical transcription firm operating in Coimbatore, India.
Anoop Sivadasan, Director and Vice President of Operations of Momentum
Healthcare Services, Inc., has ten (10) years experience successfully operating
a Medical Transcription supplier and operating the healthcare division of DC
Mills group of companies from 1999. He founded Dennis Soft Solutions Pvt. Ltd.,
which services the American healthcare industry from Coimbatore, India. He holds
a B.Tech. degree in Civil Engineering and an M.B.A. in Finance.
John B. Thompson, Treasurer and Chief Financial Officer 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 for Transcriptions
International, Inc. (1991-92 and 1994-96) and Datakey, Inc. (1996-98). 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 Medical Practice
Administrator at Cal Arundel Family Medicine (2007-09).
Additionally, other key officers of Momentum Healthcare Services, Inc. have
important experience with business process outsourcing and Healthcare IT
companies.
Seshu Kumar Veeramachaneni was elected a Vice President of Momentum in June 2009
and will serve as the Managing Director of Momentum's software development
center, which we plan to establish in Hyderabad, India. Since June 2009, Mr.
Veeramachaneni has taken the lead in identifying landowners in India, interested
in Momentum's hospital development strategy. Mr. Veeramachaneni 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 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 medical transcription and other
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). Since 2001 he has
been 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.
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,
leveraged buyouts 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.
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.
RECENT SALES OF UNREGISTERED SECURITIES
The following table lists unregistered securities sold to date, as required by
Item 701 of Regulation S-K of the Securities and Exchange Commission:
Date of Sale* Title Number of Price per Total
Shares Sold Share Consideration
April 17, 2009 Class B Common Stock 4,000 $0.05 $ 200
May 14, 2009 Class B Common Stock 6,000,000 $0.05 $300,000
* The date of sale reflects the date of the agreement for subscription of
shares, and not the date upon which payment was received and the securities were
actually issued by Momentum. As of the date of this filing, 5,604,000 shares of
Class B Common Stock have been fully paid and issued. The balance due on the
subscriptions of K.J. Dennis and Anoop S.R. is $20,000, which is due on January
15, 2010, according to the amended subscription agreement attached as Exhibit
10.3. The remaining 400,000 shares of Class B Common Stock subscribed under
these subscriptions will be issued upon payment, on January 15, 2010.
These securities were sold pursuant to exemptions from registration granted by
Rule 504 of Regulation D the Securities and Exchange Commission and Section
7309(b)(9) of the Securities Act of the State of Delaware. These exemptions are
claimed because these sales were for less than $1,000,000 and were sold to fewer
than 25 persons. There were no brokerage fees, taxes or discounts paid in
connection with these transactions.
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 on the
fact that no securities of Momentum have been within a registered class of stock
or other equity securities prior to this offering, 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.
PROMOTERS AND CERTAIN CONTROL PERSONS
As required by Item 404(c) of Regulation S-K, the following are Promoters and/or
Control Persons of Momentum as therein defined:
________________________________________________________________________________
Individual Value Received by Individual Value Given by Individual
________________________________________________________________________________
K.J. Dennis 3,000,000 Class B Common Stock* $150,000*
Services as Promoter
________________________________________________________________________________
P. Sivadasan 1,000,000 Class B Common Stock** Services as Promoter**
________________________________________________________________________________
Anoop Sivadasan 3,000,000 Class B Common Stock* $150,000*
Services as Promoter
________________________________________________________________________________
Donald L. Conover 4,000 Class B Common Stock*** $200***
1,000,000 Class B Common Stock** Services as Promoter**
$80,000 Salary*** Services as CEO****
________________________________________________________________________________
* Total amount after final payment on Subscription Agreement attached hereto
as Exhibit 10.3.
** Upon satisfaction of requirements of Promoter's Share Agreement attached
hereto as Exhibit 10.5.
*** Amount paid under Subscription Agreement of April 17, 2009 for the purpose
of opening bank accounts for the Company, attached hereto as Exhibit 10.2.
**** Total amount paid or to be paid through Contracting Agreement with Conover
Associates LLC, attached hereto as Exhibit 10.4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our securities as of September 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
5,604,000 shares of Class B common stock are issued and outstanding.
Additionally, 400,000 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.
As of January 6, 2010, we had the following security holders holding greater
than 5% or serving as an Officer of Momentum:
_________________________________________________________________________________________
Amount and Nature of Percentage of Percentage of
Name & Address of Owner and Beneficial Ownership Class Before Class After
Position if Applicable by Class* Offering** Offering***
_________________________________________________________________________________________
K.J. Dennis, 3,000,000 Class B 49.966% 37.48%
Chairman of the Board of Directors common stock**
DC Mills Pvt. Ltd.
Alappuzha, Kerala, India
_________________________________________________________________________________________
Anoop S.R.,
Director and Vice President, 3,000,000 Class B 49.966% 37.48%
Dennis Soft Solutions, Pvt. common stock****
Ltd.
_________________________________________________________________________________________
P. Sivadasan, 1,000,000 Class B 0.00% 12.50%
Director and CEO of Common stock****
Dennis Soft Solutions Pvt. Ltd.
_________________________________________________________________________________________
Donald L. Conover, 1,004,000 Class B 0.068% 12.54%
Director and President common stock****
3 Church Circle, Suite 130
Annapolis, MD 21401
_________________________________________________________________________________________
Public Shareholders 6,000,000 Class A 0.00% 100%
common stock
_________________________________________________________________________________________
* 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. The Subscription Agreement is attached hereto as
Exhibit 10.3.
** Of the K.J. Dennis and Anoop S.R. subscription of May 14, 2009, at the date
of this Prospectus, 5,600,000 shares of Class B common stock are issued and
outstanding, and we expect the remaining 400,000 shares of Class B common
stock so subscribed will be issued and outstanding by January 15, 2010, 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, other persons, corporations or
institutions may hold these shares after this offering. A copy of the
Promoter's Share Agreement is attached hereto as Exhibit 10.5.
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:
_________________________________________________________________________________
Amount and Nature Percentage Percentage
Name & Address of Owner and of Beneficial Before After
Position if Applicable Ownership Offering** Offering***
_________________________________________________________________________________
K.J. Dennis, 3,000,000 Shares 49.966% 21.42%
Chairman of the Board of Directors
_________________________________________________________________________________
P. Sivadasan, Director 1,000,000 Shares 00.00% 7.15%
_________________________________________________________________________________
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 January 6, 2010, we had outstanding no shares of Class A Common Stock and
5,604,000 shares of Class B common stock.
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.
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 are voluntarily
serving without compensation until appropriate action by a Compensation
Committee comprised solely of Independent Directors:
__________________________________________________________________________
Officer Salary Paid to Date of Filing
__________________________________________________________________________
Donald L. Conover,
President and CEO $80,000
__________________________________________________________________________
Anoop Sivadasan,
Vice President, Operations None
__________________________________________________________________________
Mary Louise Wisniewski,
Vice President, Operations & Secretary $14,500
__________________________________________________________________________
Seshu Kumar Veeramachaneni,
Vice President None
__________________________________________________________________________
John B. Thompson,
Treasurer and Chief Financial Officer None
__________________________________________________________________________
RELATED PARTY TRANSACTIONS
According to the Momentum Healthcare Services, Inc. Policies and Procedures
manual, related party transactions are required to be disclosed in the footnotes
of our financial statements. Management has interpreted this provision to mean
the types of transactions and the standards for related party transactions as
defined by Item 404(a) of Regulation S-K of the Securities and Exchange
Commission as required by the Securities Act of 1933 and the Securities Exchange
Act of 1934. Momentum's policies and procedures are the operational
responsibility of the Chief Executive Officer, Mr. Conover, and the Board of
Directors.
The following are related party transactions as defined by Item 404(a) of
Regulation S-K, which have been approved by the Board of Directors, and are
being implemented by management:
1. Subscription Agreement dated April 17, 2009. Attached hereto as Exhibit
10.2.
2. Subscription Agreement dated May 14, 2009. Attached hereto as Exhibit 10.3.
3. Contracting Agreement dated May 14, 2009, as amended on October 16, 2009.
Attached hereto as Exhibit 10.4.
4. Promoter's Share Agreement dated May 14, 2009. Attached hereto as Exhibit
10.5.
5. Purchase of Parcel of Land at Arakkonam dated August 5, 2009. Attached
hereto as Exhibit 10.1.
______________________________________________________________________________________________
Transaction Related Person Interest in Transaction Dollar Value of Dollar Value of
Transaction Related Person's
Interest
______________________________________________________________________________________________
1. Donald L. Conover Shareholder $200 $200
______________________________________________________________________________________________
2. K.J. Dennis Shareholder $150,000 $150,000
______________________________________________________________________________________________
3. Anoop Sivadasan Shareholder $150,000 $150,000
______________________________________________________________________________________________
4. Donald L. Conover Employee of Conover $300,000 $80,000
Associates LLC
______________________________________________________________________________________________
5. P. Sivadasan Shareholder $50,000 $50,000
______________________________________________________________________________________________
6. Donald L. Conover Shareholder $50,000 $50,000
______________________________________________________________________________________________
7. K.J. Dennis Owner of Property $3,804,350* $3,804,350
______________________________________________________________________________________________
*Based on the appraisal for the property covered by Exhibit 10.1, which
appraisal is contained in Exhibit 99.2.
With the exception of the related party transactions noted above, 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; or
* any relative, spouse, or relative of such spouse, of the above
referenced persons.
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.
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 permit us to adopt
bylaws which limit the liability of our Officers and Directors for monetary
damages to the fullest extent permitted by Delaware law. Consequently, our
directors may 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
for actions done as Directors and Officers in good faith. Our Bylaws also permit
us to secure insurance on behalf of any officer or director for any liability
arising out of his or her actions in that capacity. We expect to enter into
agreements to indemnify our Directors, Executive Officers and other employees as
determined by the board of directors. These agreements may 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.
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.
EXPERTS
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 AND SEPTEMBER 30, 2009 (UNAUDITED) FINANCIALS AND FOOTNOTES
MOMENTUM HEALTHCARE SERVICES, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
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.
As described in Note I to the financial statements the weighted average
common shares outstanding and the loss per share--basic and diluted for the
period ended June 30, 2009 have been restated. As described in Note I to the
financial statements, stockholders' equity (deficit) has been restated to
properly reflect stock subscription agreements.
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 E 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.
/s/ EFP Rotenberg, LLP
EFP Rotenberg, LLP
Rochester, New York
October 5, 2009
Except for Note I, as to which the date is January 6, 2010)
BALANCE SHEETS September 30, 2009 June 30, 2009
(In Dollars) (Unaudited) (Restated)
September 30, 2009 (unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 180 $ 13,074
TOTAL CURRENT ASSETS $ 180 $ 13,074
TOTAL ASSETS $ 180 $ 13,074
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES
ACCRUED EXPENSES -- DUE TO RELATED PARTIES $ 50,350 $ 500
TOTAL CURRENT LIABILITIES 50,350 500
TOTAL LIABILITIES $ 50,350 $ 500
STOCKHOLDERS' EQUITY (DEFICIT)
Class A Common Stock, $0.001 Par, 80,000,000
authorized, 0 issued and outstanding -- --
Class B Common Stock, $0.01 Par, 10,000,000
authorized, 2,254,000 issued and outstanding
at June 30, 2009 $ 22,540
Class B Common Stock, $0.001 Par, 20,000,000
authorized, 4,004,000 outstanding at
September 30, 2009 $ 4,004
Common Stock Subscribed but not Paid 2,000 37,500
Common Stock Subscription Receivable (100,000) (187,500)
Additional Paid in Capital 240,160 294,196
RETAINED EARNINGS (DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE) (250,370) (100,126)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) $ (50,170) $ 12,574
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 180 $ 13,074
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF OPERATIONS Three months ended Period from Date of Period from Date of
(In Dollars) September 30, 2009 Inception Inception (April 15,
(unaudited) (April 15, 2009) thru 2009) thru September
June 30, 2009 30, 2009)
(Restated) (Unaudited)
Sales
Expenses
Consulting $ 150,000 $ 100,000 $ 250,000
Bank Fees 244 126 370
Total Expenses $ 150,244 $ 100,126 $ 250,370
Net Loss $ (150,244) $ (100,126) $ (250,370)
Loss per Share - Basic and Diluted $ (0.04) $ (0.09) $ (0.14)
Weighted Average Common Shares 3,358,348 1,114,286 1,734,722
Outstanding
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(In Dollars)
Retained
Class B Class B Earnings
Class Class A Class B Class B Common Stock Common Stock Additional (Deficit Total
A Common # Shares Common Subscribed Subscription Paid in Capital Accumulated
# Stock Stock Receivable During
Shares Development
Stage)
INCEPTION (APRIL - $ - - $ - $ - $ - $ - $ - $ -
15, 2009) -
BALANCE
Common stock 60,040 (300,200) 240,160
subscribed
Common stock
issued for cash
at $0.05 per share
April 4,000 40 (40) 200 200
May 2,000,000 20,000 (20,000) 100,000 100,000
June 250,000 2,500 (2,500) 12,500 12,500
NET LOSS (100,126) (100,126)
June 30, 2009 - - 2,254,000 22,540 37,500 (187,500) 240,160 (100,126) 12,574
Balance (Restated)
Change in par (20,286) (33,750) 54,036
value due to
restated
certificate of
incorporation
Common stock
issued for cash
at $0.05 per share
July 750,000 750 (750) 37,500 37,500
August 1,000,000 1,000 (1,000) 50,000 50,000
NET LOSS (150,244) (150,244)
SEPTEMBER 30, - - 4,004,000 $ 4,004 $ 2,000 $(100,000) $294,196 $(250,370) $(50,170)
2009 - BALANCE
STATEMENTS OF CASH FLOWS
(In Dollars)
Three months ended September 30, 2009 (unaudited)
September 30, (April 15, 2009) (April 15, 2009)
2009 to June 30, to September 30, 2009
(Unaudited) 2009 (Unaudited)
Cash Flows from Operating Activities
NET INCOME (LOSS) $(150,244) $(100,126) $(250,370)
Changes in Assets and Liabilities
ACCRUED EXPENSES DUE TO RELATED PARTIES 49,850 500 50,350
Net Cash Flows from Operating Activities (100,394) (99,626) (200,020)
Net Cash Flows from Investing Activities -- -- --
Net Cash Flows from Financing Activities
ISSUANCE OF COMMON STOCK FOR CASH $ 87,500 $ 112,700 $ 200,200
Net Cash Flows from Financing Activities $ 87,500 $ 112,700 $ 200,200
Net Change in Cash and Cash Equivalents (12,894) 13,074 180
CASH AND CASH EQUIVALENTS - 13,074 -- --
BEGINNING OF PERIOD
Cash and Cash Equivalents - End of Period $ 180 $ 13,074 $ 180
The accompanying notes are an integral part of these financial statements.
MOMENTUM HEALTHCARE SERVICES, INC. (FORMERLY DENNIS HEALTHCARE SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The unaudited financial statements of Momentum Healthcare Services, Inc. (the
"Company") for the three months ending September 30, 2009 have been prepared in
accordance with generally accepted accounting principles in the United States of
America for interim financial information. Accordingly, the financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included. The results for the interim periods are not necessarily
indicative of the results to be expected for the year. The accompanying
financial statements should be read in conjunction with the audited financial
statements of the Company as of June 30, 2009, as included with these financial
statements.
NOTE B - THE COMPANY
Momentum Healthcare Services, Inc. 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, healthcare
support services and Healthcare Information Technology, 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 a history of operations limited to
negotiating and closing relationships with other companies, but our operations
have not involved any revenue to date.
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. The Contracting Agreement with
Conover Associates LLC was amended on October 16, 2009, to provide that the
total of $300,000 committed is to be paid over a 9 month period instead of a 6
month period. As of June 30, 2009 $112,500 had been paid, and as of September
30, 2009 $200,000 had been paid.
NOTE C - 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 ASC Topic 915-10
Development Stage Entities (formerly 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. Fiscal Year 2010 will
begin April 1, 2010.
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 or September 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 ASC Topic 260-10 Earnings
Per Share (formerly 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.
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 ASC Topic 740-10 Income
Taxes (formerly 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 reates 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 D - COMMON STOCK
The Company has 80,000,000 shares of authorized Class A Common Stock with $0.001
par value and 20,000,000 shares of authorized Class B Common Stock with $0.001
par value. The Company has 4,004,000 shares of Class B Common Stock outstanding
as of September 30, 2009.
On August 12, 2009 the Company restated its 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. Pursuant to
the restated certificate of incorporation, Class B Common Stock can be converted
to Class A Common Stock on a one-for-one basis after a two-year lock-up period.
Initially the par value of the Company common shares was $0.01, but this was
changed to $0.001 in connection with the Restated and Amended Certificate of
Incorporation on August 12, 2009, resulting in a reduction in Class B Common
Stock and an increase in Additional Paid in Capital, as reflected in the
Statements of Changes in Stockholders Equity (Deficit).
NOTE E - 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 September 30, 2009 the Company has reported a net loss of $250,370.
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 F - GENERAL AND ADMINISTRATIVE EXPENSES
The Company incurred $250,000 of consulting expenses and $370 in bank fees from
inception to September 30, 2009.
NOTE G - RELATED PARTY TRANSACTIONS
The Company has entered into a Subscription Agreement with Donald L. Conover,
dated April 17, 2009, to purchase 4,000 shares of Class B Common Stock for $200.
The Company has entered into an Offer to Purchase Stock with K.J. Dennis and
Anoop S.R., dated May 14, 2009, to purchase 6,000,000 shares of Class B Common
Stock for $300,000. The Offer to Purchase Stock of K.J. Dennis and Anoop S.R.
was amended on October 16, 2009 to provide that the final $100,000 of the
subscription would be paid in installments of $30,000 on October 15, 2009 and
November 15, 2009, and installments of $20,000 on December 15, 2009 and January
15, 2010. As of January 5, 2010, 5,604,000 Class B Common Shares are outstanding
pursuant to these agreements, and all installments have been paid except that
due on January 15, 2010.
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. Consulting expenses of
$100,000 and $150,000 from inception to June 30, 2009 and for the three-months
ended September 30, 2009 respectively have been incurred and recorded in the
Statement of Operations. Future payments on the contract as of September 30,
2009 are $50,000 with an ending date of January 15, 2010.
The Company 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 the Company has either $10 million in revenue, or it has raised $2 million in
shareholders' equity.
On August 5, 2009, the Company 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.
NOTE H - SUBSEQUENT EVENTS
Subsequent events were evaluated through January 5, 2010, the date the financial
statements were issued.
Total shares of Class B Common Stock outstanding as of January 5, 2010, pursuant
to subscription agreements dated April 17, 2009 and May 14, 2009 respectively,
were 5,604,000 shares of Class B Common Stock. As of January 5, 2010, all but
$20,000 of the subscriptions had been paid.
On October 30, 2009, Momentum entered a term sheet with Universal EMR Solutions,
LLC. Pursuant to the terms of this term sheet, and subject to due diligence,
Momentum will acquire a non-exclusive sublicense and rights to sell Universal
EMR products for 200,000 Class B Common Stock, and Universal EMR Solutions, LLC
took an option to purchase 990,000 shares of Class A Common Stock after an IPO
is completed by Momentum at $5.00 per share. Momentum also agreed to purchase
20% of the outstanding ownership units of Universal EMR Solutions, LLC for
$1,000,000 cash contingent upon Momentum successfully raising $6.5 million in an
IPO, or $500,000 cash and $500,000 in Class A Common Stock of Momentum at the
IPO price of $5.00 per share contingent upon the Company successfully raising $5
million in an IPO. Both parties may withdraw from the term sheet at any time
before closing.
On December 21, 2009, Momentum entered into a term sheet with GCI MSC SDN BHD, a
Malaysian company, to purchase 100% of its outstanding shares for 1,000,000
shares of Class B Common Stock of Momentum.
NOTE I - RESTATEMENT
The weighted average common shares outstanding and loss per share--basic and
diluted for the period from inception (April 15, 2009) thru June 30, 2009 have
been restated to correct for an error in the weighted average common shares
outstanding calculation. The previously reported amounts of 714,935 and ($0.14),
respectively, for the weighted average shares and loss per share have been
restated to 1,114,286 and ($0.09), respectively.
The balance sheet and statement of changes in stockholders' equity (deficit) for
the period ended June 30, 2009 have been restated to properly reflect the common
stock subscribed to but not paid and the common stock subscription receivable
balances pursuant to the Subscription Agreements as discussed in Note G.
RECENT SALES OF UNREGISTERED SECURITIES
ISSUANCE TO FOUNDERS
As of January 6, 2010, we had either issued shares to Founders or have
contracted to issue shares to Founders on the following basis:
Name & Address of Owner and Amount and Nature of Beneficial Percentage of Class Percentage of Class
Position if Applicable Ownership By Class* Before Offering** After Offering***
K.J. Dennis, Chairman of the Board of 3,000,000 Class B common stock 49.97% 37.48%
Directors
P.B. No. 169 Cocodale
M.O. Ward, Alleppey
Kerala, India 688 001
Anoop S.R., Director and Vice President 3,000,000 Class B common stock 49.97% 37.48%
46/1586, Preethi Buildings
Vyttila Jn., Kochi,
Kerala, India 682 019
P. Sivadasan, Director 1,000,000 Class B common stock*** 0.00% 12.50%
46/1586, Preethi Buildings
Vyttila Jn., Kochi
Kerala, India
Donald L. Conover, Director and 1,004,000 Class B common stock*** 0.06% 12.54%
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, 5,600,000 shares of Class B common stock are issued and outstanding,
and we expect the remaining 400,000 shares of Class B common stock so subscribed
will be issued and outstanding by January 15, 2010, as required by their
subscription agreement as amended. 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.
***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.
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 of
December 21, 2009
10.2 Subscription Agreement of April 17, 2009
10.3 Subscription Agreement of May 14, 2009 with Amendment of October 16, 2009
10.4 Contracting Agreement of May 14, 2009 with Amendment of October 16, 2009
10.5 Promoter's Share Agreement of May 14, 2009
10.6 Term Sheet with Universal EMR Solutions LLC
10.7 Term Sheet with GCI MSC SDN BHD
23.1 Consent of EFP Rotenberg LLP, January 6, 2010*
23.2 Consent of Diane Dalmy, Attorney at Law, October 15, 2009 (included in
Exhibit 5.1)*
99.1 Comparison of Cerner offerings to Momentum's Offerings.
99.2 Appraisal of Arakkonam land contained in Exhibit 10.1
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* Filed Herein
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.
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.
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 January 6, 2009. Note that the
original of all signatures herein indicated as conformed, as well as those in
all Exhibits, are on file at the Company offices.
MOMENTUM HEALTHCARE SERVICES, INC.
(Registrant)
/s/ Donald L. Conover
By: Donald L. Conover
Chief Executive Officer, President, and Director
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 January 6, 2010
/s/ Donald L. Conover Chief Executive Officer, President, January 6, 2010
and Director
/s/ Anoop S.R. Director January 6, 2010
/s/ P. Sivadasan Director January 6, 2010
/s/ John B. Thompson Treasurer and Chief Financial Officer January 6, 2010
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 of
December 21, 2009
10.2 Subscription Agreement of April 17, 2009
10.3 Subscription Agreement of May 14, 2009 with Amendment of October 16, 2009
10.4 Contracting Agreement of May 14, 2009 with Amendment of October 16, 2009
10.5 Promoter's Share Agreement of May 14, 2009
10.6 Term Sheet with Universal EMR Solutions LLC
10.7 Term Sheet with GCI MSC SDN BHD
23.1 Consent of EFP Rotenberg LLP, January 6, 2010*
23.2 Consent of Diane Dalmy, Attorney at Law, October 15, 2009 (included in
Exhibit 5.1)*
99.1 Comparison of Cerner offerings to Momentum's Offerings.
99.2 Appraisal of Arakkonam land contained in Exhibit 10.1
----------
* Filed Herein