The Fort Worth Press - Melrose Group Publicly Files Complaint to the Ontario Securities Commission

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Melrose Group Publicly Files Complaint to the Ontario Securities Commission
Melrose Group Publicly Files Complaint to the Ontario Securities Commission

Melrose Group Publicly Files Complaint to the Ontario Securities Commission

Melrose Requests Exemptive Relief from the OSC so that it can extend and clarify its takeover bid as an "insider bid".

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Melrose Requests Exemptive Relief from the OSC so that it can extend and clarify its takeover bid as an "insider bid".

Request to Halt Trading of Hank Payments Shares

The Melrose Group requests a halt on trading Hank Payments shares and any further transactions until the provenance of its shares can be established. This will ensure that the Melrose Group's unsolicited insider bid can be made with the correct price and quantity of shares.

Request for Exemptive Relief from the OSC

The Melrose Group seeks exemptive relief from the OSC due to management's refusal to provide the public with correct information regarding the beneficial ownership of shares generally and specifically at the UpTempo Inc holding Corp level. Uptempo Inc is admitted by management to be the largest owner of Hank Payments.

Exemptive relief should be granted in the form of the Melrose Group being exempt from the requirement that its total shareholdings, bid price, and bid quantity be disclosed until the OSC can determine the full provenance of shares.

To be sure, the amounts used in the recent press releases by Melrose Group simply represent what management is admitting, this is without prejudice to its claims on many more shares and the majority. Should the Melrose Group have a majority as it sits today, a bid of any kind would be mooted. A simple shareholder vote would determine control.

The OSC should reverse any conversion of shares that may have occurred until the provenance of Hank Payments shares is determined. At the very least, allow the pre-conversion shareholders the ability to vote on the conversion offer because it leads to an 80% dilution of their shares.

The OSC should examine the Hank Payment & UpTempo Inc founders shares and cancel those where no consideration was paid.

Under Canadian corporate law, specifically the Canada Business Corporations Act (CBCA), there are several key requirements and remedies related to the formation of a new company (UpTempo Inc) and the issuance of shares where the new company takes over an established company. In this case, the established company was founded in 2006 and had more customers when the Hilmer/Ewart group was brought in in 2018 than it does now.

Legal Requirement for Consideration

When shares are issued by a corporation, the CBCA mandates that consideration must be received for those shares. According to Section 25(3) of the CBCA, a corporation cannot issue shares until it has received full consideration for them. This consideration can be in the form of money, property, or past services rendered to the corporation.

Remedies for Non-Payment of Consideration

The Hilmer/Ewart group has referred to themselves as founders since inception in an attempt to explain their failure to pay consideration for the shares. The following remedies are available:

  1. Cancellation of Shares: The corporation can cancel the shares that were issued without proper consideration. This action helps to rectify the situation by ensuring that only fully paid shares are outstanding.

  2. Legal Action: The corporation can take legal action against the shareholders who have not paid for their shares. This could involve suing for the unpaid amount or seeking other legal remedies to enforce payment.

  3. Directors’ Liability: Directors of the corporation may also be held liable if they knowingly authorized the issuance of shares without receiving proper consideration. Under Section 118(1) of the CBCA, directors can be held personally liable for authorizing such actions.

Call for Action by the OSC

The Melrose Group is publicly calling for action by the OSC. These actions affect not only the Melrose Group, which believes it is currently the controlling party and majority owner of UpTempo Inc. and, therefore, Hank Payments, but also the broader market. This will be determined once the OSC establishes the provenance of Hank's shares.

In an attempt to resolve this without OSC intervention, the Melrose Group has requisitioned shareholder meetings for both Hank Payments Corp. and UpTempo Inc. on October 21, 2024. The Melrose Group asserts that UpTempo Inc. has never held a valid shareholder meeting, violating subsection 133(1) of the CBCA. Since a shareholder meeting has not been held as required by the CBCA, the board of UpTempo had no proper authority to carry out any actions, including the purported transactions with Nobelium, now Hank Payments.

Attached are these requisitions and requests for information that went unanswered, dating back to the pre-IPO process. Attached are letters from the Fogler Rubinoff law firm and the Ticktin Law Group.

Summary of Share Ownership

There is a range of possible percentages of Hank Payments shares owned by the Melrose Group at present. This uncertainty is directly caused by the failure and malfeasance of the Hilmer and Ewart management group.

Therefore, the Melrose Group should be exempted from the requirement to determine the number of shares it needs to purchase to take over the company and the price it is willing to pay via independent valuation until these foundational issues are resolved by the OSC.

The following tables demonstrate the number of shares outstanding and the controlled percentages by the Melrose Group, highlighting this foundational issue:

Number of Shares

Type of Shares

Payment Shares

UpTempo Value Escrowed Shares

15,340,284

UpTempo Shares Held

24,886,059

Total Potential Shares at UpTempo

40,226,343

Melrose Venture Group of Joint Actors

7,786,767

Highest Potential Shares Controlled by Melrose Group

48,013,110

Lowest Potential Hank Shares Held by Melrose Group

7,786,767

Lowest Possible Total Shares

73,100,000

Highest Possible Total Shares

132,720,000

Possible Range of Shares Percentages Controlled by the Melrose Group of Hank Payments

Calculation

Percentage (%)

Lowest Possible Shares / Lowest Possible Total Shares

10.65%

Lowest Possible Shares / Highest Possible Total Shares

5.87%

Highest Possible Shares Controlled / Lowest Possible Total Shares

65.68%

Highest Possible Shares Controlled / Highest Possible Total Shares

36.18%

It is important to note that the Melrose Group's holdings holdings are likely much higher because of the consideration issue described above The result of such a finding might be the recision of the public offering.

The Melrose Group stands by its early warning report, citing its holding in excess of 10%, and likely well in excess of the 20% mandatory takeover threshold. Melrose Groups holdings must be determined in order for takeover bid to continue. We reiterate that this must be determined immediately by the OSC.

For further information, please contact:

For any questions, please contact Michael Trimarco, Principal of Melrose Ventures & Intelligent Payment Processing, at 516-848-3388.

SOURCE: Melrose Ventures

C.M.Harper--TFWP