<PAGE> 1
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), Congress encouraged public companies to make "forward-looking statements"
by creating a safe harbor to protect companies from securities law liability in
connection with forward-looking statements. United Medicorp, Inc., including its
wholly owned subsidiaries United MoneyCorp, Inc., ("UMY") and Allied Health
Options, Inc. ("AHO"), hereinafter collectively referred to as "UMC" or the
"Company," intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All forward
looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events, and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of UMC. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, UMC undertakes no obligation to update
or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.
UMC provides the following risk factor disclosure in connection with its
continuing effort to qualify its written and oral forward-looking statements for
the safe harbor protection of the Reform Act and any other similar safe harbor
provisions. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include the disclosures contained in the Annual Report on Form 10-K to which
this statement is appended as an exhibit and also include, but are not limited
to:
CUSTOMER CONCENTRATION RISK
The percentage market mix of total revenue from continuing operations was:
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------
SEPTEMBER 30, 2000 1999 1998 1997
------------------ ----- ---- ----
<S> <C> <C> <C> <C>
WHC (all contracts)..... 38% 79% 66% 63%
Customer B.............. -- 4 23 23
Customer C.............. 17 6 -- --
Customer D.............. 17 -- -- --
Customer E.............. 5 -- -- --
Other customers......... 23 11 11 14
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>
A substantial portion of the Company's historical and current revenues and
cash flows were and are generated through hospital billing services provided to
the Washington Hospital Center
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<PAGE> 2
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD LOOKING STATEMENTS
("WHC"). On May 8, 2000, the Company received official notice of termination of
its last contract with WHC. Claim transmissions from this contract terminated
effective June 30, 2000. Management estimates that revenue from this contract
will rapidly ramp down through the remainder of the year. This contract
accounted for approximately 38%, 63%, 36% and 63% of total consolidated revenues
during the nine-month period ended September 30, 2000, and for the years ended
December 31, 1999, 1998, and 1997, respectively.
In addition to the aforementioned WHC contract, for the nine-months ended
September 30, 2000, the Company relied upon revenues from a limited number of
customers. The Company continues to pursue new business in order to reduce any
remaining customer concentration risk, but there can be no assurance that the
Company will be successful in these efforts. Any failure with respect to
retaining existing significant customers could have a material adverse effect on
UMC.
KEY MANAGEMENT AND BOARD OF DIRECTORS
The Company's success in general and its ability to grow its operations and
increase its shareholder value is heavily dependent upon, among other things,
the continued contributions of the Company's senior management and members of
the Board of Directors. The loss of services of any single member of senior
management or of the Board of Directors could have a material adverse effect on
the Company's business.
ON-GOING MANAGEMENT INITIATIVES
The Company faces several challenges in order to continue to develop
on-going management initiatives to enhance shareholder value. These challenges
include, but are not limited to: (i) developing and implementing initiatives to
reduce costs and enhance efficiencies, (ii) executing service agreements with
new customers, (iii) exploring and exploiting fragmented market niches, and (iv)
recruiting, hiring and retaining key management employees. There can be no
assurance that the Company will successfully meet these or other operating
challenges. Any failure with respect to the foregoing could have a material
adverse effect on UMC.
FACTORING ARRANGEMENT, PERSONAL GUARANTEES AND CREDIT AVAILABILITY
The Company relies upon its ability to factor its invoices pursuant to its
recourse factoring agreement executed on December 28, 1999. This agreement may
be terminated by either party with ten days notice. This agreement is personally
guaranteed by two officers of the Company. The officers may withdraw their
personal guarantee related to future factored invoices by providing notice to
the factor and to the Company. There can be no assurances that the factor
agreement will not be terminated by the factor, nor can there be any assurances
as to the continuing aforementioned personal guarantees. The termination of the
factoring agreement and/or the withdrawal of one or both of the aforementioned
personal guarantees without satisfactory replacement could have a material
adverse effect on UMC.
The Company currently leases its AS/400 computer and certain other office
equipment under long-term lease agreements. Should the Company not be able to
secure lease financing or other similar forms of credit, if required, upon terms
and conditions that are acceptable to the Company, alternative strategies to
fund equipment may be required. There can be no assurance that any of these
strategies could be effected on satisfactory terms.
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EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD LOOKING STATEMENTS
The Company has a bank promissory note which matures on January 4, 2001.
The terms of the Credit Facility are such that the Company could be deemed, from
time to time, to be in default due to a number of factors including, but not
limited to: a.) a material adverse change in the Company's financial condition
or if the lender believes the prospect of payment or performance of the Credit
Facility is impaired and, b.) the lender in good faith deems itself insecure
based on a change in the financial position of the Company. Upon default, the
lender may declare the entire outstanding balance of the Credit Facility, plus
accrued and unpaid interest, to be immediately due and payable. There can be no
assurance that the Company will be able to prevent the aforementioned events of
default from occurring. Any failure to prevent default could have a material
adverse effect on UMC.
TECHNOLOGICAL ADVANCES
Rapid technological change is inherent in the industry in which UMC
competes. UMC's success will depend in part upon its continued ability to
enhance its existing technology supporting billing, accounts receivable
management and collection agency services quickly and cost-effectively to meet
evolving customer needs and respond to emerging industry standards and other
technological changes. There can be no assurance that UMC will be able to
respond effectively to technological changes or new industry standards.
Moreover, there can be no assurance that competitors of UMC will not develop a
technological advantage, or that any such technological advantage will not have
a material adverse effect upon the operating results of UMC.
COMPETITION
The business of medical insurance claims processing, accounts receivable
management and collection agency services is highly competitive. UMC competes
with certain national and regional electronic claims processing companies,
claims collection companies, claims management companies, factoring and
financing firms, software vendors and traditional in-house claims processing and
collections departments of hospitals and other healthcare providers. Many
competitors of UMC are several times larger than the Company and could, if they
chose to enter the market for the Company's line of services, devote resources
and capital to the market that are much greater than those which the Company
currently has available or may have available in the future. There can be no
assurance that competition from current or future competitors will not have a
material adverse effect upon the Company.
INDUSTRY AND MARKET CHANGES
Potential industry and market changes that could adversely affect the
billing and collection aspects of UMC include (i) a significant increase in
managed care providers relative to conventional fee-for-service providers,
potentially resulting in substantial changes in the medical reimbursement
process, or the Company's failure to respond to such changes, (ii) new alliances
between healthcare providers and reduction of central business offices, and
(iii) continued cost containment measures employed by healthcare providers as
healthcare expenditures have grown as a percentage of the U.S. Gross National
Product. There can be no assurance that potential industry and market changes
will not have a material adverse effect on UMC.
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EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD LOOKING STATEMENTS
GOVERNMENTAL INVESTIGATIVE RESOURCES AND HEALTHCARE REFORM
The federal government in recent years has placed increased scrutiny on the
billing and collection practices of healthcare providers and related entities,
and particularly on possible fraudulent billing practices. This heightened
scrutiny has resulted in a number of high profile civil and criminal
investigations, lawsuits and settlements.
In 1996, Congress enacted the Health Insurance Portability and Accounting
Act of 1996, which includes an expansion of provisions relating to fraud and
abuse, creates additional criminal offenses relating to healthcare benefit
programs, provides for forfeitures and asset-freezing orders in connection with
such healthcare offenses and contains provisions for instituting greater
coordination of federal, state and local enforcement agency resources and
actions.
In recent years, the focus of healthcare legislation has been on budgetary
and related funding mechanism issues. Both the Congress and the Clinton
Administration have made proposals to reduce the rate of increase in projected
Medicare and Medicaid expenditures and to change the funding mechanisms and
other aspects of both programs. In late 1995 and 1997, Congress passed
legislation that would substantially reduce projected expenditure increases and
would make significant changes to Medicare and Medicaid programs. The Clinton
Administration has proposed alternate measures to reduce, to a lesser extent,
projected increases in Medicare and Medicaid expenditures. There can be no
assurance that these changes will not have a material adverse effect on UMC.
EXISTING GOVERNMENT REGULATION
Existing government regulations can adversely affect UMC's business
through, among other things, its potential to reduce the amount of reimbursement
received by UMC's customers upon which UMC's billing and collection fees are
based. UMC's billing and collections activities are also governed by numerous
federal and state civil and criminal laws. In general, these laws provide for
various fines, penalties, multiple damages, assessments and sanctions for
violations, including possible exclusion from Medicare, Medicaid and certain
other federal and state healthcare programs.
Submission of claims for services that were not provided as claimed, or
which violate the regulations, may lead to civil monetary penalties, criminal
fines, imprisonment and/or exclusion from participation in Medicare, Medicaid
and other federally funded healthcare programs. Specifically, the Federal False
Claims Act allows a private person to bring suit alleging false or fraudulent
Medicare or Medicaid claims or other violations of the statute. Such actions
have increased significantly in recent years and has increased the risk that a
company engaged in the healthcare industry, such as UMC and its customers, may
become the subject of a federal or state investigation, may ultimately be
required to defend a false claim action, may be subjected to government
investigation and possible criminal fines, may be sued by private payors and may
be excluded from Medicare, Medicaid and/or other federally funded healthcare
programs as a result of such an action. Any such proceedings or investigation
could have a material adverse effect on UMC.
Credit collection practices and activities are regulated by both federal
and state law. The Federal Fair Debt Collection Practices Act sets forth various
provisions designed to eliminate abusive, deceptive and unfair debt collection
practices by collection agencies. Various states have also promulgated laws and
regulations that govern credit collection practices.
There can be no assurance that current or future government regulations or
current or future healthcare reform measures will not have a material adverse
effect on UMC.
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EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD LOOKING STATEMENTS
ASCENDING LIABILITY TO UMC AS A PARENT CORPORATION FOR THE OBLIGATIONS OF AHO,
ITS WHOLLY OWNED SUBSIDIARY
On October 14, 1999, AHO filed a voluntary petition in the United States
Bankruptcy Court for the Northern District of Texas to liquidate pursuant to
Chapter 7 of Title 11 of the United States Bankruptcy Code. The filing was made
primarily due to the insolvency of AHO. At October 14, 1999, the net liabilities
of AHO totaled approximately $2.7 million of which approximately $1,059,000
represents unsecured intercompany loans and other forms of working capital
provided by UMC. AHO's accounts were deconsolidated on October 14, 1999.
It is the opinion of UMC's management, supported by the opinion of legal
counsel, that the liabilities of AHO, including the Medicare settlement reserve,
do not ascend to UMC as the sole shareholder of AHO. This opinion is based on
management's assertion that it has maintained appropriate organizational and
operational segregation and control in order to preserve the corporate integrity
and separateness of UMC and AHO. It is management's' opinion that the corporate
veil of AHO is intact and will provide adequate protection to UMC as the sole
shareholder of AHO. Any failure with respect to preserving or defending the
corporate veil of AHO could have a material adverse effect on UMC.
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