NHS Health Solutions (fka NHSH)

[nodummy]

Been doing some more research on all of this and I'd like to post some of my findings.


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First the debt Notes

According the quarterly report filings for the period ending December 31, 2010 there is a $200,000 convertible debt Note on the balance sheet for NHSH:

http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=46193

This convertible debt Note was originally created on November 4, 2002 and originally belonged to David R Houston

http://www.sec.gov/Archives/edgar/data/1074507/000101968703001011/coinless_10ka1-123102.txt

On November 4, 2002, the Company issued a Secured Convertible Promissory Note to David R. Houston, with an annual interest rate of One Hundred Eight percent (108%) until such time as maker has tendered twelve (12) payments and fifty four percent (54%) during the remainder of the term of this Note and until the principal balance is paid in full. All or any portion of the outstanding balance may be converted at the option of the holder upon 30 days written notice. The per-share price at which any such conversion is effectuated shall be ten cents ($.10) per share. The principal of this Note is Two Hundred Thousand Dollars ($200,000).


We will have to assume at this point that all interest owed on that $200,000 debt Note was forgiven and just the principal balance of $200,000 carried over from the old owners of the NHSH to the new owners of the NHSH shell.

We'll have to also just assume that the transfer/sale of this debt Note to the new owners was completely legitimate and legal.

The one thing that really bothers me is that there was no mention of the debt Note in the 8K filed for when Jeff DiGenova purchased the NHSH shell from David Woo and Bryan Clark.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7643363

We'll just have to give them the benefit of the doubt and assume that in order to purchase the NHSH shell Jeff had to pay $140,000 plus take over the $200,000 debt Note.



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Now there is a possible misconception going around that Jeff DiGenova may have also been responsible for the interest that $200,000 debt Note had accumulated since it was signed on November 4, 2002. Based on all information available in the filings and everything I have learned through my research I am not so sure that this is true. At this point I believe what I was told which is that the interest that Note had accumulated over the last 9 years (which is in the millions of dollars) was forgiven/written off. If that wasn't the case then there are some fraudulent filings that somebody very well may have to answer to in the future.


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Jeff DiGenova did not have the $140,000 to purchase the NHSH shell or the $200,000 to pay for the David R Houston debt Note when he purchased the shell on December 18, 2010. He borrowed that money from creditors.

It is my understanding that Tom Favata loaned Jeff the $140,000 to purchase the shell. It is also my understanding that the $140,000 was turned into a debt Note in January of 2011. The filings give us no disclosure about if that $140,000 Note will accumulate any interest or what the conversion rate would be on that Note if Tom Favata is paid back in shares instead of cash. What we do know is that the $140,000 cannot be converted into free trading shares yet because the loan/Note is less than 12 months old.

The part that Jeff DiGenova didn't buy the shell with his own money bothers me some. That $140,000 payment will now come at the shareholders expense because it shows up as a liability on the balance sheet:

http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=46193

In the long run that $140,000 loan could end up being diluted into more than $140,000 worth of shares hurting the share price.


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From what I have been able to gather from my research the $200,000 David R Houston Note was divided in half between Tom Favata and Bill Harvey.

Tom Favata got $100,000 of the Note under his entity Lampert Limited. Bill Harvey got the other $100,000 of the Note under his entity Carlton Limited.

The terms of the Note were rewritten. Instead of the original terms of the Note requiring the Note to be converted into common shares at $.10/share, the new terms now allowed the Note to be converted into common shares at $.0015/share.


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There are allegations that not everybody paid for their portions of the $200,000 Note.

I have been told that Tom Favata let Jeff borrow $225,000 in early December which became a $225,000 Note in January. I guess that would be the $140,000 for the shell purchase plus another $85,000 for something else. I'm not sure if this is another $225,000 on top of the $250,000 ($140,000 + $100,000) or what. We'll have to hope that a future filing clears this up for us. In any case Tom has made it clear to me that he has paid for everything he got (which I believe at this point) and that he has paid the biggest chunk of the expenses for the NHSH shell by far. What all those expenses are we have not been told as NHSH has failed to keep its shareholders properly informed by offering public disclosure in their filings.

I am not so sure that Bill Harvey fully paid for everything he got.


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On February 7, 2011 Tom Favata converted $10,875 of his $100,000 Note into 7,250,000 shares. A conversion ratio of $.0015/share was used. NHSH was trading at $.59/share on February 7, 2011. At the time of conversion those 7,250,000 shares were worth $4,277,500.

http://www.centacom.com/images/Lampert_Limited_Conversion_1.pdf

That left Tom Favata with a balance of $89,225 remaining on his half of the debt Note.


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On February 7, 2011 Bill Harvey also converted $10,875 of his $100,000 Note into 7,250,000 shares. Again a conversion ratio of $.0015/share was used. NHSH was trading at $.59/share on February 7, 2011. At the time of conversion those 7,250,000 shares were worth $4,277,500.

http://www.centacom.com/images/Carlton_Limited.pdf

That left Bill Harvey with a balance of $89,225 remaining on his half of the debt Note.


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On April 13, 2011 Bill Harvey dipped into his debt Note again and converted $30,000 of his now $89,225 debt Note into 15,000,000 common shares. Once again a conversion ratio of $.0015/share was used. NHSH was trading at $.35/share on April 13, 2011. At the time of conversion those 20,000,000 shares were worth $7,000,000.

http://www.centacom.com/images/Carlton.pdf

That left Bill Harvey with a balance of $59,225 remaining on his half of the debt Note.


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Some time between April 13, 2011 and April 25, 2011 I am told that Bill Harvey transferred $22,500 of his remaining $59,225 Note over to Chris Parkin.

On April 25, 2011, Chris Parkin converted that $22,500 into 15,000,000 common shares using his business entity Ad Infinitum Investments Limited. Once again a conversion ratio of $.0015/share was used. NHSH was trading at $.35/share on April 25, 2011. At the time of conversion those 15,000,000 shares were worth $5,250,000.

http://www.centacom.com/images/Ad_Infinitum_Issuance.pdf

That left Chris Parkin with no more balance on his portion of the original $200,000 Note.


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Obviously those shares could not have all been sold at the price they were worth on the day of the conversions, but I'm sure some of those shares got sold which helped to push the share price down from $.59/share to $.35/share to under $.04/share where it sits now.

How many more of those free trading shares remain unsold could make a big difference in how much further down the share price ends up going. When the rest of those unsold shares start to get sold could also make a big difference in how much higher up the share price could end up going.

An even bigger factor in the long run will be how soon the remaining balances on that $200,000 debt Note start to get converted again.

Tom Favata still owns $89,225 of that Note and Bill Harvey still owns $36,725 of that Note. That is $125,950 still remaining which at $.0015/share can convert into another 83,966,666 common shares.


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Ad Infinitum, Lampert Limited, and Carlton Limited all share the same address - Gretton House P.O. Box 65 Pond Street Grand Turk, Turks and Caicos Island, B.W.I.

I think Gretton House is a group/organization located in the UK.

The use of a foreign entity in the British West Isles is a bit disturbing to me. Yes people do set up foreign entities for various purposes, but in my experience researching penny stocks it way too often turns out to be for shady reasons.

Private funders getting involved funding public companies is nothing unusual and nothing illegal. I can literally list dozens of examples from my research.

I've seen examples of stock promoters getting involved in buying Notes from publicly trading companies then promoting that stock. I've seen examples where shady companies or groups purchase the shell for others than sell the shell to a new buyer with the stipulations that they get to own debts or shares in the company which they can use to sell for a large profit at any time they choose. All you have to do is go back into many of my past posts I've made on the IHUB for just about any company and you can find examples of insiders enriching themselves using debt Notes often times hidden in secrecy with no disclosure ever given by the companies involved. One of the biggest keys in researching penny stocks and predicting future dilution/price drops is finding those debt Notes and the terms/details about those Notes. All too often companies wait to disclose debt Note conversion until after the dilution has started or they never disclose the debt Note conversions in filings at all.

I don't know that anything illegal was done through the NHSH debt Note arrangement. I'm not making this post to say that anything illegal was done. More than likely it was all legal, but one thing is undeniable. The debt Note arrangement was not done with the shareholders best interests in mind. The remaining balance on the Note does remain a risk to further hurt the NHSH share price in the future. Jeff bought a shell that he could not afford to own. I guess we'll have to wait and see if these liabilities now looming over the heads of the NHSH shareholders will ever amount to anything besides dilution. I'm sure the insiders involved will tell you that it will.


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The group involved in helping Jeff DiGenova purchase the NHSH has a little bit of history together. Tom, Chris, and Mark (another vested party in NHSH) were all invested together in TMSH. W. Darrell Whitney, the attorney that has been signing the opinion letters for the debt Note conversions for NHSH, was also hired by TMSH to do some legal work. Tom, Chris, and Mark all post on the IHUB regularly. Unfortunately only Tom makes his identity clear so the other two cannot be referred to by their IHUB aliases. I have talked to Tom and Chris in private in the past and as far as character goes they both seemed like good guys.

Bill Harvey I know nothing about.


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Back to the NSHS saga.

One April 19, 2011 Jeff DiGenova issued 450,000,000 shares to Centacom for the Centacom merger. The timing of those 450,000,000 shares being issued is important because if those shares would not have been issued before Bill Harvey did his second debt Note conversion, Bill Harvey's 30,000,000 shares would have made Harvey more than a 10% beneficial owner.

Things seemed ok between Centacom (James Owens) and Jeff DiGenova for the next few months.

On May 12, 2011, Jeff DiGenova put out a press release announcing that NHSH had closed a merger with Centacom Corp.

http://ih.advfn.com/p.php?pid=nmona&article=47656505


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For whatever reason in mid-August both Jeff DiGenova and James Owens (the owner of Centacom) had a falling out and began accusing each other of poor business practices. Things get really shaky at this point and it gets harder to know who to trust and what to believe.



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Centacom's side of the Story:


On August 23, 2011, James Owens the founder of Centacom Inc and owner of the majority voting rights with his 450,000,000 NHSH shares issued the following press release:

http://www.centacom.com/images/Press_Release_8.23.pdf

On August 23, 2011, under the direction of Mr. James Owens, the controlling and majority shareholders along with the Board of Directors has removed Mr. Jeff Digenova from his position of CEO and officer of the company. It is further resolved that Daniel DiGenova was removed as Vice President of the company


Here is a copy of that Corporate action filed by James Owens with the Nevada Secretary of state removing Jeff DiGenova and Daniel DiGenova from their officer positions:

http://www.centacom.com/images/Corporate_Action_Record.pdf


That press release and corporate action were followed up by this letter from James Owens explaining the removal of Jeff DiGenova and Daniel DiGenova from their officer positions:

http://www.centacom.com/images/James_Owens_Letter0001.pdf

The primary reason for the decision by James Owens to attempt to remove Jeff DiGenova as the CEO of NHSH is the non-disclosure by Jeff of the debt Note arrangement and other misleading information that Jeff shared with James.

Information about this drama as presented by Centacom Corp can be followed on their website at the following address:

http://www.centacom.com/investorrelations.php


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Centacom has a good point. I know of no common shareholders that knew about the terms of this $200,000 debt note before Centacom started disclosing the information on their website.

The lack of disclosure is one of the things that bothered me the most when I first started learning about the debt Note saga.


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Jeff DiGenova's side of the story:


On August 24, 2011, Jeff put out a press release announcing the cancellation of the NHSH / Centacom Corp merger - keep in mind that the merger already closed on May 12, 2011:

http://ih.advfn.com/p.php?pid=nmona&article=48945444

On August 21, 2011, NHS Health Solutions, Inc. ("NHSH" or "Company") rescinded the Share Exchange Agreement with Centacom Corporation dated May 12, 2011. The basis for the dissolution of this Agreement is outlined in the Board of Directors resolution, dated August 21, 2011, that is hosted on the NHSH web-site: [www.nhshinc.com]. Despite numerous requests to Centacom founder, Mr. James Owens, Centacom Holding Corporation has failed to sign over the Operating Company Shares of both Centacom Corporation and Centaflix Corporation to NHSH, a requisite step for the Share Exchange Agreement to be finalized. Final resolution of the transformation of the NHSH Board of Directors was subject to Centacom Holding Corporation honoring the terms and conditions of the Share Exchange Agreement.

Notice of, and supporting documentation for, the dissolution of the Agreement was provided to Mr. James Owens on Monday, August 22, 2011. The Company will be taking any and all necessary action in order for Mr. Owens to return the control shares of NHSH to the Company. Once this step has been completed, there will be a further reduction of the outstanding share count as the Company moves forward with Mineseeker, and fully focuses on executing all aspects of their business plan.


Here is a copy of the Board Resolution filed by Jeff DiGenova with the Nevada SOS dated August 21, 2011 (notice the 21 hand written in):

http://www.nhshinc.com/BOD-NULL8-21.pdf

In the document Jeff justifies the resolution as being made by the existing board of directors prior to May 12, 2011 (the date of the Centacom merger closing).

Jeff declares in his resolution that NHSH did not receive the requested shares of Centacom stock needed to close the merger and that Centacom failed to disclose $31,000 due to attorney, Mohammad Bataineh, for legal services he previously performed for Centacom Corp. The resolution further states that Mohammad Bataineh is threatening legal action to collect the money owed to him.

Jeff declares the merger canceled and demands back the 450,000,000 NHSH shares issued to Centacom.

In his resolution, Jeff removed Carmen Howard as an officer of the company putting himself as the Secretary/Treasurer of the company in her place.

Jeff also put himself in place of Carmen Howard as the new signatory for the corporate account with the transfer agent, ClearTrust LLC.


There has also been much made on Jeff's side about James Owens' past which includes a long list of bad checks being passed.


Information about this drama as presented by Jeff DiGenova can be found on the NHSH website:

http://www.nhshinc.com/investors.html



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I think the creditors loyalty lies with Jeff DiGenova as would be expected since they were so directly involved with Jeff even before the NHSH shell was purchased.


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That is my best understanding at this point of the NHSH saga and all things related. Hopefully the details I have shared thus far are accurate. I did my best to make sure they are.

Who will ultimately gain control of the NHSH shell I do not know. Nor do I know how things will play out once the controlling party is determined. I'm sure each party fighting for control of NHSH has their own plans for the shell if they get clear control.

Like QASP before NHSH this saga will probably offer a few more twists and turns along the way and no sure final resolution will be determined any time soon.

Buckle up NHSH shareholders you paid for a lot more than just shares when you bought into this stock.