The engines have fired up at last for MDX. ( BPRG ) At long last they are being recognised for the force they will become over the next two years. On the cusp of disclosing huge revenue-earning deals with Global pharmacists. These have been hinted at as being unrolled before the years end, but may be in the next days.You still have time to get in at a bargain-basement price before the SP takes off for real shortly.

Tabby, Be careful. I was born in the land of the Gods. Only came to England to have the experience of being a missionary.

deepak sharma - 8 Aug'09 - 15:01 - 14865 of 14893

WITHOUT PREJUDICE

18 Ernle Road
Wimbledon
London SW20 0HJ
Richard Alderman
Director
Serious Fraud Office
Elm House
10 16 Elm Street
London
WC1X OBJ


26th September 2008


Dear Mr. Alderman

Re: Meldex International Plc (Meldex or the Company)

Following correspondence between my solicitors SJ Berwin (contact Hilary OConnor) and Meldex International Plc, my former employers, it has been suggested I write directly to you alerting the Serious Fraud Office of my concerns. Essentially I have reason to believe, motivated through a 9.5 million earnout payment, that the vendors of one of Meldexs divisions (Melbrosin) have created and reported revenues that are not real and have in addition withdrawn working capital (cash) from the rest of the business for non business reasons. This has been done in conjunction with certain shareholders who have deliberately misled the market through miss claimed equity ownership and a sham bid for the Company.

I am the former CEO and was asked to leave when I reduced to writing my concerns contained in the enclosed letter. Capital missing amounts to almost 20 million.

For ease of reference Ive structured this letter in the following sections:
1. Historical background; and
2. Circumstances surrounding current situation.

Historical background

My dealings with what is now Meldex International Plc started when I was asked to rescue an ailing technology based company: BioProgress Plc (BioProgress). BioProgress was an AIM quoted business, relisted from the US OTC markets which had issued multiple profits warnings and misled the market in a number of respects. The Company had, at the time, limited scope to survive before administration, was burning 2.5m cash per month and was being pursued under multiple lawsuits. However, the Company also had some very valuable intellectual property enabling oral delivery of products which was worth rescuing. Through acquisition BioProgress was subsequently turned into a profitable 50m- 60m turnover business.

The inevitable restructuring involved a number of redundancies and the unwinding of a number of agreements created through the dealings of Barry Muncaster (Barry: one of the founders) and Graham Hind (the former CEO).

The strategy employed was to use the technology for products in the pharmaceutical and healthcare industries improving their function and consumer appeal. This required acquisitions for products and infrastructure; the 2 most fundamental of which Dexo (for prescription medicines) and Melbrosin (for OTC healthcare products) formed the basis of the new identity, Meldex. Meldex operates across a geography spanning the CEE region to the US.

All acquisitions were executed on an equity and earnout basis with small cash equity placings to finance growth. In theory the sales generated the cash flow for product development which numbered 40 products.

Meldexs shareholder base has always been mainly retail; one of the Companys biggest weaknesses. Many private investors were brought in by Barry (who netted approximately 16m profit on the AIM listing in 2003) and had seen the price rise to 1.60 and fall to 25p. They are particularly active on a number of investor bulletin boards notably:
- advfn (www.advfn.com); and
- iii (www.iii.com).

Ive kept contact with Barry on the basis that better the devil you know and tried to monitor his activities as he remains influential. He also appears to be involved in spreading rumours to benefit his own trading positions. As the business grew in value which was not reflected in the share price Barry attempted to construct a hostile acquisition of the business. However, this was demonstrated to be a sham. The share price rallied but then fell as a consequence of the failed bid. Part of the sham was Barrys claim of owning 8.9% of the companys equity. This holding, however, transpires to have been borrowed the false impression of which created substantial profits for certain share dealings.

Due to the up and down nature of the share price other potential bidders were unsure whether to proceed particularly when faced with the volatility. This volatility has been used by some shareholders most notably Gary Cressman to increase pressure on the Company. Gary Cressman is a FSA regulated hedge fund manager who had links with Barry via another individual Charles Tatnall. He also has a loan facility with the Company. There is considerable correspondence between Gary and the vendors of the Melbrosin business.

Circumstances surrounding current situation

As mentioned above each large acquisition has been equity and earnout based i.e. the vendors consideration delayed until their business earnings were proved. In Melbrosins case of the 22 million total consideration 14.5 million was based on their sales in the second half of 2007 (the consideration was based on an initial payment locked in and a deferred payment. It appears from the register that the lock in agreements have been breached). They claimed to have reached the sales figure to trigger their earn out but the cash from the sales has yet to flow through to the business over 12 months from the sales apparently being generated. The average gross margin in the business is 50% with below line costs in the second half of the year amounting to 2 million. In other words of the 7 million in gross profit Meldex would have expected circa 5 million in cash. However the Melbrosin division up to September 2008 has been cash burning. In addition the 4.9 million working capital raised at the time of the acquisition, 6 million banking facility and 2 million in unsecured loans has evaporated without obvious benefit to the business e.g. stock or marketing spend.

It transpired that the vendors of Melbrosin had high personal debts (around 8 million) and a number of other business interests including a property company, boating assets and, Ive recently discovered, a competing business in the retail market. None of these issues came up in the financial and commercial due diligence for Meldex conducted by KPMG.

In July 2008 the vendors (Klaus Kuhne Klaus and Helmut Kerschbaumer Helmut) of Melbrosin at my request (but before my recent investigations) joined the main board of Meldex. This was partly to supplement the board as the business grew and also to aid the finance function which had lost its Finance Director (FD); a notable point.

As part of these new board roles Helmut in particular took over the finance function and I introduced him to a number of investors as would be normal for an FD. Part of the reason for the departure of the previous FD was the lack of information, controls including banking relationships and transparency which prompted a number of questions from me re sales and cash. As you would expect Helmut assumed control of the treasury function and accounts. My questions re transparency increased yet no answers were given. In fact the cash drained even faster from Group to the Melbrosin subsidiary. This prompted further questions and wider concerns yet I was instructed to not interfere.

As part of the investor relations role Helmut established a relationship with both Barry and Gary. This appears to have strengthened and had roots before their promotions despite the share price slide and both have given Klaus and Helmut their support. It is notable that from the shareholder register Klaus and Helmut continue to dispose of equity even though the Company is in a close period (another point I brought to the attention of the Board).

During the audit (for the year ended 2007 conducted by KPMG) of the business a number of issues arose including sales, the remuneration report and accounting for acquisitions. I refused to sign the accounts, a fact which remains undisclosed; a highly unusual situation for a PLC CEO. During the audit which lasted from September 2007 to May 2008 representations were made by Melbrosin critical of the FD. Unfortunately the FD was not strong enough to defend these representations and instead criticised the Melbrosin vendors. He was, however, outvoted and was asked to leave. He also made a number of critical mistakes including the audit approach itself which undermined his credibility. I had been vocal in this criticism and questioning of various aspects of the business but was requested not to interfere in the finance function of the business by the board. This diktat was issued in December 2007 and has been reinforced a number of times. This lack of credibility proved to be crucial in the lack of transparency.

As cash continued to drain I instigated measures to stop this issue including sight of invoices, cash claims etc. The drain was increasingly not making sense as the business in 2007 had sufficient cash and was profitable. Combined with the working capital raised and the apparent sales to trigger Klaus and Helmuts earn out an additional 5 million should have been generated. However, cash was less than a quarter of the figure at the end of the first half 2007 (2.3 million plus 2 million of receivables). I consequently put into writing my concerns raised at board level many times orally. This was after a number of emails asking for support to investigate.

In addition to the above it became clear that sales were being recorded even though made to connected companies of Melbrosin (Sanguisan for example is a notable client which transpires to be wholly owned by Helmut and Klaus and trading in a competitive market contrary to all agreements and employment contracts they have with the business) and sales made in 2007 had still not generated any cash.

Having received no answers to the questions outlined above as mentioned I felt no choice but to formerly write to the Board detailing my concerns. I took independent advice in this respect from SJ Berwin. Within a week of this letter being sent which has yet to be replied to I was asked to leave the Company. It appears from sources within the Company that just before this happened my desk was cleared and certain documents shredded including certain elements of the investigation I was conducting into the above.

The above is a summary of the position and in no way exhaustive in detail. I feel, however, it is my duty to ensure these concerns are addressed in an expeditious manner as shareholders have suffered a significant loss.

I believe time is of the essence in the above circumstances and would be grateful if you could telephone to discuss. My contact details are: 07824 878007 (mobile) or 020 8947 2649 (home).

Yours sincerely




Richard Trevillion

The infamous letter from BB I presume

mad mike - 10 Aug'09 - 13:37 - 15061 of 15064

Quazie12, I'm not sure the company is (as you say) f**ked.

I'm just asking Barry if the change of SLN date from 11th Aug, to 11th Sept, now means Meldex must stay an unlisted compnay until at least May/June 2010.

He hasn't answered yet.

Andythat was a selective postpersonally I would be very happy to be unlisted until mid. 2010...I have my reasons would expect a cut and past from you when the answer is posted.
Jeffno family pictures posted on ADVplease..

LOL

tabasco,

The only reason I selected that post is the fact that, somewhat surprisingly, IMO, it has not been answered!

Barry is unusually quiet, and I think he really does need to answer the question.

I cannot imagine why he is ignoring it.

I will of course post any reply.

Ignore him Andy , anything of mine he's ever copy and pasted has always been done out of context.

tabasco,

And here it is, although not posted by him, but by "mad mike", who says he reeived it in an emai lfrom him, which is very curious!

----------

email from Barry:-
~~~~~~~~~~~~~~~~~

Good morning Mike,

When we do 2008 FY accounts we'll also do H1 2009, so as soon as they're finished we'll be current for admission to PLUS purposes.

Best wishes,
Barry

~~~~~~~~~~~~~~~~

Has he done ATEK's accounts yet ?

Andy.cheers
A little adviceto save a lot of time ...never doubt Barry.
Dil.you have lost the plot.try another allotmentfor someone that supposedly knows his onionsleave the cooking to the wife!!!.toddle pip

Tabasco,

Barry posts on the thread most days, don't you find it strange that he chose not to answer this question himself?

The question was repeated many times throughout the day.

I find this odd personally.

Bulls**t!

tabasco - 10 Aug 2009 15:16 - 7869 of 7876
Andythat was a selective postpersonally I would be very happy to be unlisted until mid. 2010...I have my reasons would expect a cut and past from you when the answer is posted.


Bulls**t!

tabasco - 11 Aug 2009 21:18 - 7875 of 7876
Andy.cheers
A little adviceto save a lot of time ...never doubt Barry.


Finally ................

"When we do 2008 FY accounts we'll also do H1 2009, so as soon as they're finished we'll be current for admission to PLUS purposes."

There is no earthly reason why these have not been done yet, none whatsoever!!

Interesting post regarding the 1.4m. You finally got an answer, Dil, and it reads like someone trying to justify the unjustifiable IMO. "I'll do what the others do". What a pile of crap! As noted above there is only one reason MDX is going through this and that's for all debtors to get as much back as possible (if possible!) before it heads round the U-bend. We have seen this many times over the years and we see it again here. Anyone believing it's for the good of the PIs is pissing in the wind. Mark my words.

Little yellow van to Gillingham please. The lunatics need to leave the asylum.

Later
Al
;-)

Oh, and regarding the update on 5th August, that should have been a signal for anyone daft enough to have thrown more dosh in, to get the hell out of there pronto.

I take it no-one did. Muppets!

Andy- 11 Aug 2009 22:47 - 7876 of 7878
Tabasco,
Barry posts on the thread most days, don't you find it strange that he chose not to answer this question himself?

Andy. what I do find it strange is that Barry answers as many questions as he does.whats more he will answer even more sensitive questions if you pay him a visit.same offer goes out to DilbouncyJeffor any other bb poster that has concerns about mine and other investors well-being
If any of you are still that fanatical about helping us poor investorsplease make an appointment and talk over those sensitive points with Barryand post for all to see
If you are not that fanaticalwhy post 24/7?..I do hope we can take even longer to re-list.next May will be fine by mehow about you Dil?

Next May / never ... who cares.

All the groovy gang caresthats who cares!...

I really don't think so and going by the response to the fund raising nor do the overwhelming majority of shareholders.

Move on.

Dilwhy would you and the groovy gang want me to move on?????

Move on from MDX for your own sake. You have nothing to say on any other company bar this and never have done. You're jst another muppet who threw their kitchen sink into this.

By all means stay on here spouting drivel. I like a good laugh now and then, and you are the perfect foil. ;-))