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Momentex LLC
Risk Factors

Managerial

  1. Real Estate Use Approvals. As the Company must have the right to operate at toll plazas, its success in securing a pilot operation is dependent upon toll road approvals. With a limited operating history and bureaucratic management of some roads, there can be no assurance that the Company can secure such approvals quickly. To mitigate this, Momentex not only works with an influential network, but also understands the needs of the toll road operators and the benefits the Gulp & Go service brings to them.

  2. Market Acceptance of Toll Plaza Retailing. Gulp & Go beverage service is an innovation that will be dependent upon driver adoption for its success. The Company's marketing and public relations campaign is designed to educate drivers and publicize the availability and convenience of Gulp & Go service. Market research indicates that the Gulp & Go target market segment is amenable to innovation but there can be no assurance of driver adoption of the service. To mitigate this, Momentex will conduct thorough market research on each road before roll out to identify local price and time sensitivity, and beverage selection preferences.

  1. Dependence Upon Exclusivity. The business model is based upon the key assumption that Momentex can acquire exclusive rights from toll roads to retail products at points of driver interface. While Momentex has established relationships with the ten largest toll authorities in the United States, there is no assurance that it will be able to secure exclusive retailing contracts with these entities. To mitigate this, Momentex will continue to prove the operational model through live demonstrations and model the value it adds to specific roads.

  2. Limited Track Record. The Company believes that it has assembled a management team with breadth and depth of expertise, yet has limited experience working together. To mitigate this, Momentex understands the needs of management and advisors and uses a strong team-based management style.

  3. Competition. While the Company will take every step to protect its proprietary business model, there can be no assurance that competition will not ensue. The Company's potential competitors are much larger, with more resources, -and may have market power. To mitigate this, Momentex will form alliances with chief "deep pocket" competitor threats.

  4. Labor Force. In certain toll configurations, the Company must develop an arrangement where the toll collectors will also process beverage orders in full service lanes. This will require a discussion with the toll authority as well as the Teamsters Union. It is possible that the union may demand that the toll collectors' job classifications be changed to accommodate the addition of Gulp & Go service. Demands such as these could add significant delay to or otherwise impede the pilot implementation or the ensuing roll-out. To mitigate this, Momentex aims to tie-in ideas of local workers and avoid surprising the local unions.

  5. Cannibalization. In some configurations, the toll authority or food service providers at service plazas may perceive the Gulp & Go service as cannibalizing upon their sales. With market research demonstrating that restrooms are the largest draw to service plazas, and Gulp & Go providing more fluids and caffeine (a diuretic) to drivers, restroom stops at service plazas may increase, adding to their total foot traffic. To mitigate this, Momentex will relay the value proposition to stakeholders and understand their concerns.

  6. Potential Legislation. In some states, there have been referendums to eliminate tolls on turnpikes. While initiatives such these are unlikely to be approved because of existing bondholder claims to future toll revenues, proposals such as these draw negative publicity to toll roads. Additionally, as toll authorities begin to raise funds through increased commercial use of the toll authority land, the public might see this as improper use of government resources. Toll authorities need only suggest the alternative of raising taxes, and most will prefer the commercialization of the land to generate the necessary revenues. To mitigate this, Momentex will monitor and use proactive tactics to influence new legislation.

  7. Politics. If people start writing letters to their state representatives complaining about the Gulp & Go service, it may become a politically bad endeavor, regardless of how economically attractive it is. To mitigate this, Momentex will perform a detailed traffic analysis to localize service design and will perform a strategic driver education program prior to implementation,

0perational

  1. Traffic Flow. The Company must ensure that its service does not increase traffic delays at the toll plazas. Momentex will use computer simulation and determine the optimal plaza configuration to accommodate Gulp & Go. However, there is no assurance that all traffic flow issues can be anticipated and adequately resolved. To mitigate this, Momentex will model plaza specific traffic flow using a proprietary computer simulation.

  2. Technology. There are potential operational obstacles to instituting Gulp & Go service at toll plazas. In addition to modifying existing software, there are hardware requirements for beverage selection and dispensing. Until these systems are developed and tested, as well as during ongoing operations, they will pose the potential for technological uncertainty. To mitigate this, Momentex will contract to established toll systems integrators to integrate/install and thoroughly test the Gulp & Go service before installation and throughout pilot operation. In addition, Momentex will service the equipment frequently during on-going operations.

  3. Safety and Liability. While the Company has developed Gulp & Go service to address safety issues, the Company has no assurance that safety issues will not arise. The Company plans to have liability insurance to cover expected risk. To mitigate this, Momentex has designed the service with features and a process to enhance safety.

  4. Seasonality of Revenues. The Company expects that its operations will be concentrated in the Northeast portion of the United States. As a result, revenues may fluctuate with seasonal temperatures. To mitigate this, Momentex will look at offering service in stable climates such as California and Florida.

  5. Intellectual Property Risk. The Company's ability to compete is in part dependent on resources to protect and enforce Momentex intellectual property rights. To mitigate this, Momentex will monitor infractions on its intellectual property and design a situation specific strategy with legal counsel to approach each infringement.

  6. Dependence Upon Third Parties. With certain functions outsourced, the Company could become dependent upon certain contractors and be exposed to opportunistic renegotiations. To mitigate this, Momentex will aim to align incentives and continue discussions with their competitors.


Momentex LLC
Table of ContentsAppendices
1. Executive Summary
2. Company Overview
3. Service Description
4. Market & Strategy
5. Business Model
6. Management
7. Financials
8. Capitalization
9. Risk Factors
Market Research Survey
Hardware Integration
Software Integration
Internet Integration
Traffic Flow Analysis
Financial Assumptions
Income Statement
Balance Sheet
Cash Flow Statement
All information herein is confidential and belongs to Momentex