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MDX Meldex

7.09
0.00 (0.00%)
Last Updated: 00:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Meldex LSE:MDX London Ordinary Share GB0032681628 ORD 1P
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.00% 7.09 0.00 00:00:00
Bid Price Offer Price High Price Low Price Open Price
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
  -
Last Trade Time Trade Type Trade Size Trade Price Currency
- O 0 7.09 GBX

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Meldex (MDX) Discussions and Chat

Meldex Forums and Chat

Date Time Title Posts
14/11/202422:42The Meldex Fraud(Moderated)5,514
20/4/202010:28Meldex 2010 - could this be it?94,004
19/2/201923:44Meldex International-Serious Investors Thread6,346
08/9/201703:44The Meldex Fraud1,819
14/2/201715:08Meldex Group making the world a healthy place47

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Meldex (MDX) Top Chat Posts

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Posted at 05/9/2024 21:25 by lexuss2
Walrus – I suspect you are as knowledgeable now, as you were in 2009 when you said my prognosis for the company was inaccurate (that it had nothing of value and was effectively bust).

Throughout your many past posts there are provable instances of misinformation and (in my view) you are in no small way responsible for many of the losses that some PIs incurred with MDX and then later when you encouraged the take up SLNs in the ‘new’ (but unlisted) company.

However, if you genuinely have something meaningful and accurate to say that could assist shareholders in MDX to a partial recovery, then I am positive most that still read this board would welcome your input.

Given your past record I am not holding my breath for that meaningful information - but I would love to be proven wrong in this instance.
Posted at 20/8/2022 05:04 by quazie12
What is the CGT position re this share, has anyone managed to successfully make a negligible value claim with HMRC yet ?
Posted at 25/7/2022 16:28 by the bull
I see some of the characters still work together here and at Penland Healthcare


WARNEFORD PARTNERS LIMITED
UK06352325
Risk Score
55
International Score
B
Credit Limit
£500
Contract Limit
£1,000
Status
Active
DBT
-
Industry DBT
-
Monitored

More Actions
Directors/Shareholders Summary
Current Directors
4
Current Secretaries
1
Previous Directors/Company Secretaries
3
Person's With Significant Control
1
Current Directors
Title
Mr
Function
Director
Name
Stephen Jeremy Martin
Nationality
British
Date of Birth
07/1965
Present Appointments
3
Latest Address
Chiltlee Manor Haslemere Road, Liphook, Hampshire
Appointment Date
07/04/2011
Postcode
GU30 7AZ
Occupation
COMPANY DIRECTOR
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Title
Dr
Function
Director
Name
Frank Ullrich
Nationality
German
Date of Birth
04/1956
Present Appointments
1
Latest Address
Chiltlee Manor Haslemere Road, Liphook, Hampshire
Appointment Date
07/04/2011
Postcode
GU30 7AZ
Occupation
COMPANY DIRECTOR
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Title
Mr
Function
Director
Name
Thomas Engelen
Nationality
Dutch
Date of Birth
04/1958
Present Appointments
1
Latest Address
Chiltlee Manor Haslemere Road, Liphook, Hampshire
Appointment Date
07/04/2011
Postcode
GU30 7AZ
Occupation
COMPANY DIRECTOR
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Title
Mr
Function
Director
Name
Simon Paul Raynor
Nationality
British
Date of Birth
06/1966
Present Appointments
4
Latest Address
Chiltlee Manor Haslemere Road, Liphook, Hampshire
Appointment Date
30/10/2009
Postcode
GU30 7AZ
Occupation
COMPANY DIRECTOR
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Current Company Secretary
Title
Mr
Function
Company Secretary
Name
Simon Raynor
Nationality
-
Date of Birth
-
Present Appointments
1
Latest Address
Chiltlee Manor Haslemere Road, Liphook, Hampshire
Appointment Date
06/05/2011
Postcode
GU30 7AZ
Occupation
-
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Top Shareholders
Name
Currency
Share Count
Share Type
Nominal Value
% of Share Count
FRANK ULLRICH GBP 3,000 ORDINARY 1 25
THOMAS ENGELEN GBP 2,000 ORDINARY 1 16.67
STEPHEN MARTIN GBP 2,000 ORDINARY 1 16.67
SIMON PAUL RAYNOR GBP 2,000 ORDINARY 1 16.67
MARGARET TRUEMAN GBP 1,500 ORDINARY 1 12.5
Posted at 11/5/2021 17:46 by waywardlad
Hope everyone is moving on even though with scars. It’s been a long time since this scam came to light with no one paying the price.

All the best m5 and the other good guys.
Posted at 27/10/2020 23:19 by stocktastic
Lexuss2, mad mike, niplad

Thanks for your efforts

It is particularly sad that in addition to the fraud by MDX directors, 'the system' has also been such a block

Your example of the bod agreeing the company was not performing to expectations, then MDX issuing am update to say otherwise, is just incredible.
Posted at 23/2/2020 14:55 by babazurie
Smiles and best wishes to all BPRG, MDX holders past and present
Posted at 18/1/2020 13:36 by babazurie
Am guessing the energy has long gone from BPRG and MDX threads to chase the crooks.

Best let go of and manifest better times.
Posted at 24/9/2019 22:37 by mots
It's exactly that - first they offer a couple quid a share for the stock, then of course, you need to pay for 'insurance' to 'safeguard the transaction'. I guess they get lucky every once in a while. I told them I thought I had 150k shares (I didn't) - their 'legal team' confirmed that I had lol
Posted at 18/6/2018 22:56 by the bull
Lexuss2 - 24 Jun 2017 - 20:30:56 - 5229 of 5319 The Meldex Fraud(Moderated) - MDX
Niplad (Nick Powell) was 20 metres from the second bomb that was exploded at Brussels Airport on 22 March 2016. When I visited him in hospital in Leuven he told me he actually saw the whites of the bombers eyes before the bomb was detonated; knew exactly what was about to happen; but couldn't get out of the way fast enough.

It was nothing short of a miracle that he survived the initial explosion and nothing short of superlative, extremely professional and very compassionate medical care that got him to hospital before he died from his injuries. Even so he spent many months in Belgium, enduring multiple operations and many surgical procedures.

Like me, he now has a completely different perspective on what is, and what is not, important in life. Like me, he is also realistic in his belief in what more can be achieved without substantive funding. That funding was asked for over a year ago on this board and other than one shareholder who did offer financial support, it was met with a resounding silence.

I have moved on, but if there is anyone out there who is prepared to (substantially) fund further action, then I will hand over all files and evidence to that person, once satisfied he/her is completely genuine.

I apologise for no heads on the platter - it was not for a lack of effort.




DC
Lexuss2 - 20 Dec 2015 - 21:08:13 - 4767 of 5319 The Meldex Fraud(Moderated) - MDX
I have received a number of emails asking if I could give some sort of progress report as to ‘where we areâ€482; at the moment and if ‘anything is still happeningâS64;™.

Firstly, I cannot over emphasise how much the road has been littered to obstruct our passage - and the very people charged to protect investorâ̈́4;™s interests were the ones to have [unfairly] placed most of that litter

It is my firm conviction the organisations with official legal power to make decisions and force people to obey the laws of the market, failed to do this in respect of Meldex and its shareholders. That failure started in late 2007 and was compounded over a period of years, so much so that any possibility of VOLUNTARY retrospective action occurring after such a lapse of time would be nothing short of a miracle. Voluntary retrospective action would only serve to expose the substantial inadequacies of the relevant authorities and those persons charged with their conduct - and turkeys donâ€482;t vote for Christmas.

For me, the most revealing aspect has been the arrogance (bordering on contempt) shown by one particular public authority (POTAM) to private investors who were merely seeking simple answers to simple questions. Those investors lodged over 50 specific complaints about the conduct of Meldex, its officers and others connected to it. Those complaints were over and above any other complaints they had made about a concert party and a breach of Rule 9 of the Code and clear evidence was provided to demonstrate that a dozen or more other rules of the Code had been likely breached during the periods POTAM was responsible for policing MDX. Taken in isolation some of those complaints were relatively minor and only deserving of a ‘slap on the wrist’ - but many of them were of sufficient gravity to warrant severe sanction.

The following is an example of one of those complaints:

Complaint 3.4.6.4

On 2 January 2008 MDXâ€482;s broker released information advising shareholders and the market of the directorsâS64;™ expectations in respect of future prospects and the likely profitability of the company.

Five months later the directors held a meeting to discuss the 2007 results and current trading position, prior to any statement being released to the market. The meeting was held on 14 May 2008 and the minutes of that meeting clearly state:

“It was agreed that trading could not be referred to as being strong or in line with market expectations�.

One day after that meeting (15 May 2008) the directors released the 2007 preliminary results by RNS. That RNS also commented on current trading and said:

“Trading to date in 2008 is broadly in line with management expectations�.

Prior to the 15 May 2008 announcement, the only expectations released to the market were those released on 2 January 2008 by the companyâ€;™s broker. Those expectations had been compiled from information and expectations given to the broker by MDX management. Consequently, management expectations and market expectations were one and the same.

The minutes of the directorsâS64;™ meeting of 14 May 2008 evidence that in private the MDX directors were aware of adverse trading conditions and had agreed trading was neither strong, or in line with market (management) expectations. However the statement released one day later (“;trading to date in 2008 is broadly in line with management expectationsâ€�) did not reflect that awareness and infers a contrary view to that which was accurate and truthful.

The 15 May statement appears to have been disseminated in a manner designed to deceive and to create or maintain a false market in MDX securities (Contrary to Principle 4 of the Code and Article 3.1 of Directive 2004/25/EC)




The above complaint appeared quite straightforward - independent evidence (board minutes) was available to prove the directors agreed trading was well below expectations and an independent RNS was available to show the directors issued a trading update deliberately couched in a manner to convey the opposite. As a consequence a false market had to have been created in the shares of Meldex; and the creation of a false market is considered a very severe breach of the Code

Despite numerous communications to POTAM the Panel’s Executive refused to inform us if the above complaint had been upheld or dismissed and similarly refused to give any information in respect of the other (non Rule 9) complaints we had lodged with it. POTAM’s Executive also refused to supply any information to give us reasonable confidence that each of our complaints had been investigated to a proper conclusion.

Having been repeatedly met by an effective wall of silence, we eventually determined to appeal POTAM’S refusal to supply reasonable information to us. As some of the complaints we had tabled were minor in nature; and as we wished to avoid any chance of obfuscation over these minor matters; we limited our appeal to one extremely serious complaint and referred to it in our appeal document as ‘The Test ComplaintâS64;™. Our appeal asked that we be told whether the ‘Test ComplaintâS64;™ had been deemed false by the Panel’s Executive, or if it had not been investigated to a definite conclusion by the Panel’s Executive, or if it had been upheld in whole or in part by the Panel’s Executive.

In the first instance our appeal was made through the office of Sir Gordon Langley, the Chairman of the Panel’s Hearings Committee. This involved many pages of argument and counter argument, all of which concluded with Sir Gordon Langley rejecting our appeal on the basis “we were not persons with sufficient interest (in the requested information) to justify its disclosureâ364;�.

We then appealed his decision with the Panel’s Independent Appeal Board, chaired by Lord Collins of Mapesbury. Numerous pages of argument and counter argument were once again involved, but this time we achieved a margin of success. Lord Collins overruled Sir Gordon Langley and adjudged we were persons who did have a ‘sufficient interestâ̈́4;™ in the information we were seeking. Nevertheless, he then dismissed our appeal and did so on the grounds that whilst the Panel could have willingly given us much more information than they did (quote), there existed no basis on which they could be forced into doing so. (If anyone wishes to read the 20-page appeal judgment of Lord Collins, please email me on the above address and I will send, subject to certain conditions, a redacted copy).

As matters currently stand;

1 POTAM (a public authority) does not need to reply to anyone who makes a complaint to it about the actions of another person or company.

2. POTAM (a public authority) does not need to substantiate the scope, or quality, or quantity, of any investigation into a complaint made to it.

3. POTAM (a public authority) cannot be freely held to account by any member of the public it is supposed to serve.

4. No right whatsoever exists to any member of the public, either statutorily or in common law, that empowers them to ordinarily challenge ANYTHING done (or not done) by POTAM’s Executive.

(I believe the above also applies to the FCA)

We have now spent countless hours on this matter and have submitted in excess of a thousand pages of evidence/written argument to the authorities. Although we have tried to limit our expenditure we have also still collectively spent many thousands of pounds.

The road we are now able to travel without incurring substantial expense is pretty much ended. As matters stand there exists no current legislation to force POTAM to answer our question(s) and all reasonable avenues to persuade them to do so have been exhausted. We could continue to write to MPs or even demonstrate on the steps of Paternoster Square, but I believe neither would achieve anything worthwhile.

The only positive avenue that remains is to petition for a judicial review of the Panel’s conduct and their actions (or likely inactions) so as to establish if each complaint has been properly investigated and if each proven complaint has received a punishment appropriate to its severity (which if proven at least 17 did not). If it can be established the complaints were effectively whitewashed or if properly investigated, the punishment was inappropriately lenient, then the Panel, who publicly place great store on the importance of complete adherence to the Code, should be deemed guilty of acting in bad faith. As a consequence, Panel members would forfeit all personal indemnity granted them by statute for the losses or damages their bad faith had caused and a claim could be made against them directly.

However, to adopt such a strategy to a conclusion is expensive. The Panel, not being short of funds, could/would employ the very best litigants to fight our petition and defend their corner. We do not have that luxury and would need to raise a minimum of £100,000, before we could realistically countenance the start of such an action.

I suspect the appetite for funding such an operation is no longer out there but, just in case it is, I would invite any one who is willing to financially support a serious legal challenge to indicate the level of that support by emailing me on lexuss222@hotmail.co.uk before 11 January.

To demonstrate my own commitment I am prepared to contribute £10,000 to the fund. If sufficient support is forthcoming it would be my intention to form a private limited company to move this forward, membership of which would be via ownership of one or more of its shares priced at (say) £500 each. The company would pay no salaries to any of its officers, who must all agree to work pro bona and the formation of the company would be subject to a minimum subscription to 200 of its shares. All funds raised will be used solely for the purpose of petitioning for judicial review and then for legal charges that are incurred to present our case, should such a review be granted.

A serious legal challenge is now the only option and if there is insufficient financial support forthcoming to support one, I have to regrettably say that after seven years I have come to the end of my Meldex road.

Finally, I would like to place on record my indebtedness to Mike Martin (Mad Mike) and Nick Powell (Niplad), both of whom have spent their own money and sacrificed many hours in pursuing matters with me.


A very Happy Christmas to all innocent Meldex shareholders.
Posted at 08/12/2015 14:44 by chay01
From: Chay Andrew
To: foi@fca.org.uk; colin.evans@cib.gsi.gov.uk; enforcement.technical@cib.gsi.gov.uk; enquiries@bis.gsi.gov.uk
Subject: RE: Freedom of Information: Right to know request
Date: Fri, 24 May 2013 09:19:50 +0000

The following is copied to the Insolvency Service (Company Investigation Branch) & DBIS – request to forward the information to The Rt Hon Dr Vince Cable MP Secretary of State for Business, Innovation and Skills and President of the Board of Trade

Dear Susan Currington,

Following previous communication I wish to present to the FCA a number of documents in relation to criminal activity surrounding Meldex International Plc (“MDX”) (in liquidation) during the period May 2007 to December 2008. The directors of MDX, at the time of collapse, were as follows but the web of corruption clearly spreads well beyond this list: Richard Trevillion, Stephen Martin, Alan Clarke, James Murray, Stewart Atkins, Peter Ibbetson, Hiral Patel, Helmut Kerschbaumer and Klaus Kuehne. The following are former professional advisors of MDX and should be included in any subsequent investigation: Nomura, FinnCap and Houlihan Lokey.

Please acknowledge receipt of this email and enclosed files (Annex 1-20 plus additional documents) and provide feedback on any investigations the FCA will conduct and possible action that will be taken against any individuals.

Heavy financial losses have been collectively suffered by circa 5,500 MDX shareholders and the FCA has a duty to fully investigate all evidence presented and take appropriate action. I believe there should be more transparency and accountability from the FCA and will actively pursue this issue at the highest possible level.

In my opinion, MDX investors were clearly deceived into investing or retaining investment in MDX and those decisions (and subsequent losses) would not have occurred had we been properly informed with accurate and complete information, supplied in accordance with legal requirements. Again in my opinion, a false market clearly exited due to false and misleading announcements (including false accounting and misrepresented product pipeline and technology status) made to the stock market.

The enclosed documents are not all original versions so I would urge you to obtain original copies, where appropriate, via the liquidator; McTear Williams & Wood (contact: SaraShreeve@mw-w.com). The following consists of three parts: (1) a summary of the relevant background (2) a summary of evidence provided, and (3) collective loss caused to MDX investors. Relevant documents are listed in sections below and are annexed to this letter.

Regards,

Charles Andrew

1. Background

Meldex was a drug and biotechnology development company whose shares were admitted to the Alternative Investment Market ("AIM"). Trading in its shares was suspended on 18 December 2008 and it entered administration on 23 September 2010. Prior to this, Meldex shares were one of the most-traded shares on AIM and highly visible to the market.

Focus of FCA investigation is primarily requested from the Company’s activities during the period May 2007 – December 2008. Commencing mid-2007 Meldex embarked on an aggressive strategy to acquire businesses and products within the healthcare sector. The Company used its shares, cash, and cash from placing its shares to finance the implementation of its strategy. Key to the success of its strategy was the maintenance of a high share price and high liquidity in its shares. The Company frequently reported its activities to the market via the RNS. The Company is entirely responsible for the accuracy and completeness of any announcement it makes using the RNS and is obligated by AIM Rules in particular and the FSA (now FCA) generally to ensure that an announcement fully discloses any and all facts that could have an influence on investment decisions and not create a false market in its shares.

In January 2008 the Company received an approach from Aquisitek Limited which caused the Company to enter an Offer Period. The Company appointed Houlihan Lokey as its financial advisor for any resultant transaction and did so within so short a space of time that it is clear that the Company failed to properly conduct a selection process one would expect of a public company in appointing a financial advisor. Following the appointment of Houlihan Lokey the Company was negligent in failing to manage the activities of Houlihan Lokey which caused a false market to be created in the Company’s shares.

In November 2008 the Company’s Nominated Advisor (“NOMAD”) caused the Company to employ David Newton ACA, FSI, an independent consultant, to report to the Company’s Directors regarding the accuracy of regulated announcements. Key findings of the report highlight, inter alia, potential and probable breaches of AIM Rules 10,11,17,26 and 31.The Company has never addressed the findings of the report and did not comply with the report’s recommendation to correct prior misleading announcements it had made to the market.

A copy of David Newton’s report is attached at Annex 1.

2. Summary of evidence provided

2.1 Offer period

On 14 January 2008, at 3.21 P.M. Meldex received an approach triggering the beginning of an Offer Period under the City Code on Takeovers and Mergers. The approach was from Aquisitek Limited.

Houlihan Lokey was engaged as financial advisor to Meldex on 16 January 2008, less than 48 hours after the approach from Aquisitek Limited. The speed of the appointment is a clear indication that no formal selection process from a range of financial advisors was employed in selecting Houlihan Lokey. This is in line with our understanding of the close friendship that existed between Mr McKay and Mr Trevillion, the then CEO of Meldex.

The RNS announcement published by the Company on 16 January 2008 announcing Houlihan Lokey's appointment as Meldex's financial adviser included a paragraph about Houlihan Lokey's standing, stating that it was "ranked as the No.1 M&A adviser for U.S. transactions under $1 billion. ... [and that] It annually serves more than 1,000 clients ranging from closely held companies to Global 500 corporations". Therefore, from the start of the engagement, significant emphasis was placed on Houlihan Lokey's reputation and expertise.

The engagement letter between Meldex and Houlihan Lokey confirmed that Houlihan Lokey was to act as Meldex's exclusive financial advisor in connection with any approach, potential offer or offer to acquire the issued share capital of Meldex or another acquisition or merger involving Meldex. Under the retainer, Houlihan Lokey's services included reviewing Meldex's financial condition and prospects, assisting Meldex in soliciting indications of interest regarding an offer and assisting in Meldex's preparation of the public documents required in connection with any offer. The engagement letter further provided that additional services that were not contained in the retainer (specifically the provision of a formal valuation opinion) would only be provided under a second engagement letter. The engagement letter is attached at Annex 2.

Note subsection (b) ("Success Fee") of section 3 ("Fees and Expenses") of the engagement letter in which Houlihan Lokey stood to earn considerable additional fees beyond its retainer should a transaction complete with equity value (as defined in the engagement letter) in excess of £167m, £192m or £217m.

Following its engagement, Houlihan Lokey began providing the services set out in its engagement letter with gusto. The conduct that forms the basis of the claims does amongst other matters fall squarely within the activities that Houlihan Lokey was retained to perform and which the Company is negligent in its failure to control. The principal areas arising from the Company’s failure to control the activities of Houlihan Lokey that give rise to grounds for complaint include:

i. The co-authorship by Houlihan Lokey of misleading and inaccurate RNS announcements approved by the Company; and

ii. An aggressive and deliberately misleading sales pitch in various communications between Mr McKay and Mr Scholl (a private investor in the Company) including the investor presentation which Houlihan Lokey was distributing with the Company’s approval (and which is referred to in more detail below).

2.2 Announcements to the market

As part of its duties, Houlihan Lokey regularly co-authored RNS announcements that the Company approved and released to the market. The Company is primarily and solely responsible for the accuracy and completeness of all announcements made to the market. The RNSs on 29 February 2008, 14 March 2008, 29 April 2008 and 1 August 2008 in particular contain negligent mis-statements. The full announcements are attached at Annex 3 to this letter. The relevant sections are extracted below (with our emphasis):

(a) 29 February 2008 [Meldex] has received a conditional proposal to acquire Meldex which, in the opinion of the Special Committee of the Board of Directors that was formed to evaluate its strategic options, significantly undervalues [Meldex]. Consequently it has been rejected.

(b) 14 March 2008 Launch in US of new range of cough/cold products, based on advances with TabWrap and FastWrap, planned for 2008/9 season.

Meldex, in conjunction with its preferred OTC partner in the US, is pursuing a dual growth strategy for its products and developments involving its FastWrap technology.

Meldex confirms that NRobeTM, Meldex's powder enrobing technology that has been licensed out to FMC Magenta, is delivering royalty payments under the terms of the amended agreements. The commercialisation of the enabling technology is progressing successfully.

(c) 29 April 2008 On 14 January 2008, Meldex received an approach from Aquisitek which stated that it intended to make an offer for the entire share capital of the Company. On 15 February 2008, Meldex received a proposal from Aquisitek, which stated that it was prepared to submit a conditional bid for the entire share capital of the Company. Neither communication from Aquisitek provided details as to credible financing sources in support of any such transaction to the satisfaction of the Board of Directors of Meldex. Furthermore, the proposal was subject to receiving full due diligence access to confidential information. Despite requests from Meldex's advisers, Aquisitek failed to execute an appropriate confidentiality agreement to facilitate receipt of such information and also declined to provide any details on financing sources... In light of the highly conditional nature of the proposal, no visibility as to financing, refusal to sign a customary confidentiality agreement and a proposal which undervalued the Company, the Special Committee of the Board of Directors discontinued discussions with and subsequently rejected the proposal from Aquisitek whose identity was not disclosed at that time.

(d) 1 August 2008 Revenue growth in H1 2008 of 270% to circa £23.5 million from £8.7 million in H1 2007: results in line with Meldex's budget and towards the top end of market guidance.

Further cross-fertilisation of Group products across geographic infrastructure providing increased scope for revenue growth, for example, the Soluleaves product Melatonia in Italy, Melprotect in Germany and Menoflavon in France and other EU countries.

Increased demand and commercial interest in Group 'lifestyle' product launches such as the NRT Soluleaves product, DAOsin, Phytosulin and the new irritable bowel syndrome "IBS" product.

In the CEE region (including partnerships with Walmark a.s. and others) the moving annual total sales rate ("MAT") of the Melbrosin OTC business through 30 June 2008 has increased by almost 400% as compared to the MAT through June 2007.

Market feedback for Phytosulin, a product designed for the treatment of symptoms related to metabolic syndrome, suggests it should be marketed with a similar strategy to DAOsin, focused on the Type II diabetes indication, which the Company believes is the largest globally in value terms. The product will be generating revenues in H2 2008 in Austria and Germany.

There were significant inaccuracies in respect of these RNS announcements. The representations in the 14 March 2008 RNS were misleading as to the potential use of TabWrap, the status of its US partners and the receipt of royalty payments.

Also of concern are the contradictory announcements of both 29 February and 29 April 2008 that confirmed that the Aquisitek bid (of 95p) undervalued Meldex. Not only was this not the case, but we have seen email evidence which shows that Houlihan Lokey insisted on the misleading "undervalue" wording being added to the 29 April 2008 RNS announcement, despite that fact that the board of Meldex explicitly stated that to do so would be untrue. To be clear, this email shows that Houlihan Lokey knowingly insisted on a phrase in a RNS to the market that the board of Meldex considered was misleading. This email explains why the two announcements contain a very different emphasis on the reasons for the rejection. Despite the Company informing Houlihan Lokey in writing that the use of “undervalue221; wording was untrue it approved the release of this false statement to the market. We attach at Annex 4 a copy of the email chain.

The RNS releases for 29 February and 29 April 2008 stated that the proposal was rejected. In fact, the proposal was withdrawn. This is a significant inaccuracy and one that Houlihan Lokey and the Company was well aware of. Attached is a copy of an email from Mr Muncaster to Mr McKay indicating that the bid would be withdrawn by the close of 28 February 2008 at Annex 5.

In late 2008, Mr David Newton was engaged by Meldex to conduct a review of the historic public announcements made by Meldex and whether they were accurate. Mr Newton was independent of the Meldex board. Mr Newton's report provides an independent basis for concluding that the RNS announcements to the market (including those co-authored by Houlihan Lokey) were misleading.

2.3 Communications between Mr Scholl and Mr McKay

There were a number of telephone conversations and emails between Mr McKay and Mr Scholl from 18 January 2008 to 1 May 2008. A number of representations were made to Mr Scholl which we now know were not true. Mr Scholl, using an alias “I-_AM_A_WALRUS”, posted very detailed extracts of his conversations and email exchanges with Mr McKay to public bulletin boards read by many shareholders of the Company.

Key extracts from the telephone conversations and email included (with our emphasis added):

(i) 18 January 2008 Mr Scholl: I, along with some long term shareholders, some with a high net worth like Art Williams, would like to see the company stay intact
...

Mr Scholl: Art Williams III is the son of Arthur Lynch Williams Jr, the noted billionaire. Art, myself, and many others want to see Meldex's share price rise and see the company become a world class drug delivery company

Mr McKay: Robert, Houlihan Lokey is the number one Mergers and Acquisitions Company in this sector and have an excellent client list and reputation to recommend us. Houlihan Lokey has been retained by Meldex to explore all options available to the Company at this time.

Mr McKay: It seems to me that Art might have an opportunity here.

(ii) 19 Feb 2008 Mr McKay: Robert, we are nearing completion of the Meldex valuation and I said I would call you.

Mr Scholl: Thanks Brian, I am quite interested in seeing what your firm has put together.

Mr McKay: Before we can proceed along those lines, I have an NDA that has to be executed. We need that before you can review our report. I can have it emailed to you.

...
Mr McKay: We really believe this opportunity will be attractive to you. I'll send you some information after our call.
...
Mr McKay: Robert Meldex will be sold. There are already multiple parties interested.

Mr Scholl: That's very good to hear. What do you think it will be sold for?

Mr McKay: A couple of pounds give or take a few pence.
...
Mr Scholl: And you just said you already determined there are valid parties interested in Meldex?

Mr McKay: Yes

(By email from Mr McKay to Mr Scholl, a copy of which is attached at Annex 6): Some of Meldex's key attributes include ... Proven, patented technology systems through XGEL polymer platform ... A strong development pipeline, with many new releases due in the short and medium term ... 44 products in development (40 due for launch in the next 24 months) ... Extensive in house sales and marketing infrastructure, with an existing cash generating product portfolio ... Powerful commercialisation potential, with a wide range of prospective technology applications.

(iii) 4 March 2008 Mr McKay: Robert, Meldex is going to be sold. If you and Art do have an interest, then we do need to get the NDA's executed promptly. As indicated in the RNS, several additional parties have approached Meldex.

(iv) 11 March 2008 Mr McKay: Robert, multiple parties have already seen this information and several are at level 3. They understand the return on investment will be massive in as little as two years.
...
Mr McKay: I expect the "Data Room" will be closed soon. If you and the Williams' want to sign the NDA and get in the picture then now is the time to act. If you want to talk it over with the Williams' I could hold the data room open. I can also give you a quick heads up if we are about to consider an offer and give you an opportunity to execute the NDA and review the data.
...

Mr McKay: Robert, as I said before, Meldex will be sold. That is a fact.
...

Mr McKay: Robert, I am not going to say anything negative about the Nomura analyst's report on Meldex, but we have complete access to everything Meldex has and have been able to put together a very comprehensive picture. For instance, do you know what the revenue figures will be for Meldex in 2008?

Mr Scholl: Yes, Brian I think I do based on the Nomura Code Broker's note, about £60 million. And given Meldex's RNS's late last year about new deals and new products coming to market, I would not be surprised if Meldex beat that number.

Mr McKay: I think you are going to be very surprised at Meldex's performance. Do you have any idea what the revenues for 2009 and 2010 will be? 2009 revenues are going to be much better than 2008 and the 2010 revenues will be massively bigger than 2009. In fact 2010 will be a watershed year for Meldex. 2010 really begins the serious growth phase for Meldex based on their product pipeline. And I feel these numbers are ringers. I don't think I could say that about any company I've ever worked with.

Mr Scholl: That's really incredible. It's much higher than Nomura's estimates. Are you counting on acquisitions to hit those numbers?

Mr McKay: No acquisitions are included in our forecasts. They are based on organic growth within the Company. Meldex has an incredible product pipeline coming to market over the next several years.

...

Mr McKay: [T]he revenue growth can be funded from internal cash flows. I have never seen a company whose IP is so opaque compared to the public domain information. The scope of the review in our report covers over 46 pipeline drugs, all third party agreements, and all the developed projects Meldex is involved in. I am actually amazed at the data in our report. It is much more comprehensive than what the shareholders or Nomura have access to. The public at large simply have the tip of the iceberg to look at in their valuation of this company.


We have been provided with a chain of emails commencing with an email from Mr Simon Raynor (then a Director of the Houlihan Lokey London office) to Mr Steve Martin (then a Director of Meldex) dated 1 May 2008. Mr Martin raised the issue of Mr Scholl quoting a £2 share price on his bulletin board following conversations with Houlihan Lokey. He informed Mr Raynor that there were reports of conversations with "Houlihan Lokey over the value of the business stating that it is significantly undervalued compared with what is out in the public domain. H&L are being dragged into all of this". In response, Mr Raynor replied that "We had made the connection between the Walrus and Scholl as Brian had spoken to him and told him something that we had told no-one else, which subsequently appeared on the boards word for word". This confirms that Mr McKay, on behalf of the Meldex, was having one-on-one conversations about Meldex with a particular shareholder in breach of the City Code on Takeovers and Mergers and that the Company was aware these conversations had taken place and that the price of £2 per share stated by Mr McKay was false. A copy of the email chain is attached at Annex 7.

Mr McKay and the Company can have been in no doubt about the importance of avoiding selective disclosure of information to shareholders - it would seem that he had correspondence with the Takeover Panel in relation to this specific issue. In an email dated 31 July 2008 to directors of the Company he states that the Takeover Panel expressed "concerns over selective disclosures to certain shareholders". He also states that "the Panel is taking this very seriously, and is conducting an investigation with a view to implementing disciplinary procedures". Mr McKay then goes on to state that "THERE SHOULD BE ABSOLUTELY NO SELECTIVE CONTACT WITH SHAREHOLDERS, PARTICULARLY AS THE COMPANY IS IN AN OFFER PERIOD". A copy of the email chain is attached at Annex 8.

2.4 Other Misrepresentations

2.4.1 Houlihan Lokey presentation approved by the Company

On 19 February 2008, Mr McKay sent Mr Scholl an undated Powerpoint presentation which was provided to recipients "in connection with the consideration of a possible transaction involving Meldex". This presentation contained inaccurate representations:

"Proven, patented technology with XGel polymer platform";

"Strong development pipeline, with over 40 products due for launch in the next 24 months";

In relation to TabWrap, "Huge development potential, with flexibility to adapt to multiple applications" and "Grant of core TabWrap patents approved in August 2007";

"44 products currently in development, 18 near term <6 months to launch, 22 Mid- term 6 months to 24 months and 4 Long term >24 months"; and

"Sustainable revenues with mix of own sales, up-front/milestone payments, manufacturing fees and royalty income".

These representations were grossly misleading. One of the most egregious examples is the misleading references to the technologies in the XGel Polymer platform which were at a very primitive stage of development at that time. Further, the timelines given for product development was never achievable given the state of Meldex's facilities and resources. The presentation is attached at Annex 9. Houlihan Lokey and the Company had no proper basis on which to make these representations.

2.4.2 AGM

Houlihan Lokey accompanied the Meldex board in its presentation to investors at Meldex's AGM on 26 June 2008. Houlihan Lokey had a role in reviewing and approving the presentation. The presentation painted a very optimistic view of Meldex's financials and product pipeline which was not justified by its true prospects. Reference is made to the commercialisation and first orders for products which were actually at an embryonic state of development. The script that accompanied the presentation also brazenly stated that Meldex was immune to the product pipeline issues which affected larger pharmaceutical companies. The Company made this presentation with the knowledge that it was untrue in many aspects, particularly in reference to its ability to achieve the projected sales revenues and profits shown in the presentation. The AGM presentation and its supporting script are attached at Annex 10.

2.4.3 Houlihan Lokey and the Company had no basis for its representations

Houlihan Lokey and Mr McKay had numerous dealings with shareholders of Meldex and led them to believe that Meldex had exceptional development potential and high current share value. We now know that these representations could never have been true due to (i) the fundamental flaws in Meldex's finances and (ii) an embryonic product and technology pipeline which was not even vaguely in line with the Company’s and Houlihan Lokey's optimistic representations. Houlihan Lokey was tasked with reviewing both of these areas under its engagement letter. These issues would have been obvious to any competent financial adviser and the Company was negligent in failing to control representations made by Houlihan Lokey.

2.4.4 Meldex's financial position

It would have been obvious to any competent financial advisor that Meldex was in a very weak financial position in 2008. Meldex was delisted from AIM on 4 March 2009 and is now in liquidation. There were very clear warning signs commencing September 2007 continuing throughout Houlihan Lokey's engagement that Meldex was fundamentally unsound and Houlihan Lokey knew about these and the Company failed to control Houlihan Lokey’s representations made to the contrary:

i. Meldex did not have the working capital to properly fund its acquisition strategy in 2006 and 2007. Having made a large number of acquisitions Meldex dramatically increased its overhead costs but had received little in gross profit contributions from the acquired companies;

ii. Meldex was not paying its trade creditors and the employees of its subsidiaries as and when required to do so;

iii. Management accounts indicated cash-flow problems, trade losses and missed budget targets;

iv. Meldex was having to issue equity and request facility increases in order to satisfy its debts;

v. Potential purchasers were telling Houlihan Lokey and the Meldex board throughout the offer period that they did not see value to Meldex beyond the share prices that it traded at; and

vi. In April 2008 Meldex breached its banking covenants with Fortis Bank and failed to report this to the market.

2.4.5 Meldex's product pipeline

Houlihan Lokey had extensive experience in the biotechnology industry and was tasked with reviewing the product pipeline under the engagement letter.

We have had access to a copy of the Supplementary Information Package ("SIP") dated March 2008 and produced by Houlihan Lokey, a copy of which is attached at Annex 11. This document sets out the basis of Houlihan Lokey's revenue forecast of Meldex's product pipeline. The methodology is flawed, not in line with the market's standard approach to valuation and includes probability weightings that were aggressively optimistic. Such a document can give no valid grounds for Houlihan Lokey to make the representations that it did and which were approved by the Company.

The SIP shows how dangerous it was for Houlihan Lokey to conclude that Meldex was due for a (according to Mr McKay) "massive" increase in revenues. The projected revenue growth by 2017 is predicated almost entirely on the pipeline drugs. By contrast, the projected revenue growth for existing products was marginal. A further risk exposed by the SIP was that, of the pipeline drugs, only three were to contribute to the main bulk of the projected revenue.

There were multiple development obstacles and issues with the product pipeline. A Claimant Group have undertaken very significant analysis of the product pipeline and highlights only a few of the problems below. Houlihan Lokey should have been aware of these flaws and caveated the representations it made and the Company was negligent in allowing such representations to be made:

i. The XGel technology Platforms were not even close to being commercially exploitable. In particular, TabWrap, which was time and again said to be commercially exploitable was at a very primitive stage of development and faced a number of obstacles. We have been provided with a letter from GB Innomech Limited dated 4 September 2007 which highlights the key development problems with the TabWrap proof of principle machine and states the concerns that GB Innomech Limited had with the TabWrap market announcements. This is attached at Annex 12;

ii. Meldex did not have the resources in place to develop the products it purported to. In particular, its facilities and staff numbers were very limited and its Tampa plant was not registered to US pharmaceutical standards;


iii. The drug referred to as DBP 121/122 was subject to a "volunteer pilot study" which was said to be "very positive". The study was said in the SIP to relate to "mild to moderate smokers". The "volunteer pilot study" was included in an RNS dated 31 May 2007 and specifically refrred to in an RNS dated 7 November 2007 copies of which are attached as Annexe 13. We have had access to the volunteer pilot study documents which included Ed Nowak as one of the patients. Mr Nowak is not and never has been a smoker and did not take part in the "volunteer pilot study" or any other study on the subject matter carried out by the Company. The Company falsified the "volunteer pilot study" and in doing so knowingly created a false market in its shares. A copy Mr Nowak’s alleged results from the "volunteer pilot study" is attached at Annexe 14.

iv. The order for the drug referred to as DBP 171 (Soluleaves nicotine strip) was commercially unviable; 50,000 packs of 20 strips were ordered at a price of 50p per pack, although it was known at the time that the product could not be produced for less than $0.07 per strip (i.e. $1.40 per pack). Moreover, the product could never have been commercialised because it had been shown to be unstable.

2.5 Scope of Houlihan Lokey's role

Houlihan Lokey was not retained to produce a comprehensive company valuation. At a time when Mr McKay was quoting a £2 per share price to Mr Scholl and referencing the "Houlihan Lokey valuation", he was retained under an engagement letter that specifically ruled out "the provision of a specific valuation opinion" from the agreed services.

The truth is that Houlihan Lokey was never engaged in a serious valuation of Meldex or its revenue potential. An email from Anthony Clegg of Houlihan Lokey to Richard Trevillion (CEO of Meldex) stated that Mr Clegg was not aware of the independent valuation that Mr Richard Trevillion referred to (which according to Mr Trevillion priced Meldex at £1.86 per share – in line with the £2/share valuation told to Mr Scholl). Mr Clegg stated that "while we did some high level calculations back in January, we don't have anything that would be applicable at the current time". A second email dated 19 September 2008 from Mr Raynor to Mr Martin confirmed that "we never had any realistic numbers with which to go to work". Houlihan Lokey had no proper basis whatsoever for making the representations as to the value or prospects of Meldex. Meldex was aware that there was no basis for any valuation provided by Houlihan Lokey and it failed to control the dissemination of such a valuation. Copies of these emails are enclosed at Annex 15.

2.5 False Accounting

2.5.1 Pre-Close Trading Update 1 August 2008

On 1 August 2008 the Company issued via RNS a Pre-Close Trading Update. A copy of the RNS is attached as Annexe 16.

We have had access to an Expert’s Report carried out by the Forensic Accounting Team of KPMG. The report concludes that sales revenues of c.€3.7 million and gross profit of c.€400,000 should not have been included in the sales revenue and profit figures given by the Company in the RNS. / The reason for this conclusion is that there is no evidence that the related transactions occurred. A copy of the Expert’s Report and attachments is attached as Annexe 17.

We have had access to other documents used by the Company in preparing the trading update which show that, in total, c.€10 million sales revenue transactions similar and in addition to those referred to above should not have been included in the sales revenue and profit figures given by the Company in the RNS. Copies of these documents and the Company’s financial statements for the year 2008 as audited by KPMG are attached as Annexe 18.

Following publication of the Pre-Close Trading Update comments appeared in the Daily Mail that, inter alia, Meldex would announce a profit warning, a fall in sales revenues and a cash call and that certain of its activities were under investigation by Kroll Associates. Certain members of a Claimant Group spoke with Company’s CEO to seek, and were given, assurances that there would be no profit warning, no warning about sales revenues and no cash call. Certain members of the Claimant Group then emailed the Company’s Public Relations firm. The email from certain members of the Claimant Group asked the PR company to have the directors and the secretary as a group confirm that the assurances given by the CEO can be relied upon. The email stated that “in the absence of a reply, I will continue to hold [shares] on the understanding that statements made to me and others are true and that all directors are aware of the same”. Those certain members of the Claimant Group received no further comment to its email and continued to hold their shares in reliance on the assurances given. A copy of the email to the Company’s PR company is attached as Annexe 19.

2.5.2 Interim Financial Statement 30 September 2008

On 30 September 2008 the Company issued via RNS its interim financial statement. The Company included in its sales revenue and profit figures transactions referred to in 2.1, which it should not have done and which created a false market in its shares. A copy of the interim financial statement is attached as Annexe 20.

2.6 Legal Claims

2.6.1 False Representations

In his conversations and other written communications (including the PPT presentation) with Mr Scholl, Mr McKay made a number of assertive representations about the strength of Meldex's product pipeline and future revenues, the value of Meldex's share price, the strength of interest in Meldex among potential purchasers and the status of Houlihan Lokey's apparent "valuation" of Meldex. These representations were false and exaggerated and approved by the Company. Given Houlihan Lokey and Mr McKay's engagement to review the finances of Meldex, their expertise in the biotech industry and the obvious nature of the problems facing Meldex, it is inconceivable that Houlihan Lokey and Mr McKay did not know the true position when making the statements, it is further inconceivable that the Company did not know that such representations were being made but still failed to control their dissemination. Certainly the statements were made with reckless disregard for their truth. Investors were influenced by Houlihan Lokey's strong reputation and relied on the statements and the fact that they were approved by Meldex when investing in Meldex.

When Mr McKay was speaking with Mr Scholl he did so from a position of expertise and knowledge as regards Meldex's finances and drug pipeline. Investors did not have comparable knowledge of Meldex and so placed great reliance on Mr McKay's words as repeated by Mr Scholl on public bulletin boards and as approved by and with the knowledge of the Company.

2.6.2 Negligent Mis-statement

In co-authoring RNSs that were designed to update the market, the Company and Houlihan Lokey owed a duty of care to potential Meldex investors not to mis-state the position. This is in light of their position of specialist knowledge about Meldex's financial affairs. The emails exchanged prior to the 29 April 2008 RNS show that the Company and Houlihan Lokey were quite prepared to knowingly make statements to the market that were not correct. The Company therefore clearly breached its duties of care to Meldex investors.

3. Loss

Meldex International Plc investors relied on the false or negligent representations made by the Company and Houlihan Lokey and Mr McKay. Owing to Houlihan Lokey's market reputation and financial expertise, and RNSs and other statements approved by the Company, they believed what they were being told. They did so to their detriment by retaining shares that they would otherwise have sold. In some cases further shares were purchased as a result of the Company’s mis-statements and Houlihan Lokey's mis-statements approved by the Company.

Investors suffered loss equal to the value of the shares purchased as a consequence of the Company’s representations and/or the value of the shares that would have been sold but for the Company’s false statements. Collectively this amounted to many millions of pounds.
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