SALT LAKE CITY (CN) - Fearing a securities shell game, a stock transfer agency wants to deposit 30 million shares of Mindpix Corp. with a court, and it says more shares may be on the way.
Standard Registrar & Transfer sued Nevada-based Mindpix, Emax Media and Premier Capital Holdings, in Salt Lake County Court.
Standard Registrar claims it has received conflicting instructions, from attorneys, about who is on the Mindpix board, and which attorney represents them.
In a May 13 press release issued through PR Newswire, Mindpix described itself as "a media company that primarily focuses on music and multi-media global television program content. MPIX is a go to source for the production, distribution and monetization of major music and entertainment events."
Mindpix shares closed at $0.0098 Thursday, down from 1 penny the day before, according to yahoo.com, checked this morning.
In its lawsuit, Standard Registrar claims that Mindpix, a publicly traded company, sent it a letter putting a "stop transfer" on 73,833,000 shares owned by Emax.
The complaint states: "On or about June 12, 2013, petitioner received an opinion letter from an attorney in Denver, Colo., named Andrew Andrade seeking to have the restrictive legend on Mindpix Cert No. 7144, representing 30 million shares and owned by Emax, removed and transferred or re-registered, legend-free, into the name of Premier.
"On or about July 1, 2013, Saul D. Federman, in his capacity as the Chief Operating Officer of Mindpix, sent Petitioner a letter placing a 'stop transfer' on 73,833,000 shares owned by Emax, shares that include the 30 million shares subject of Andrade's opinion. Federman's letter also included the same instructions relative to an additional 75 million shares registered in the name of Emax Worldwide, Inc., a presumed affiliate of Emax.
"Because Emax is believed to be an affiliate of Emax Worldwide, Inc., aggregating these shares together comprises nearly 149 million shares or approximately 11.44 percent of Mindpix's 1,302,054,343 or total issued and outstanding shares. This percentage exceeding 10 percent would make the two entities, if indeed affiliated with one another, 'affiliates' of the issuer, Mindpix, under federal securities laws. Such would arguably restrict their right to transfer and sell shares of Mindpix under certain circumstances.
"On or about July 5, 2013, Andrade supplemented his June 12, 2013, opinion letter with additional information and documentation.
"On or about the same day, July 5, 2013, Petitioner received an email from Mindpix's COO informing Petitioner that Petitioner should only accept opinion letters from an attorney in Ft. Lauderdale, Fla., named Jonathan D. Lienwand, in order to remove any restrictive legends from Mindpix shares.
"Aside from receiving conflicting instructions, Petitioner has concerns about the Andrade opinion."
After citing Rule 144(c) of the General Rules and Regulations of the SEC, the complaint continues: "Andrade's opinion, even as amended, makes no mention of the current and publicly available information requirement of Rule 144(c)(2), particularly as it pertains to affiliates or non-affiliates of a non-reporting company like Mindpix.
"In addition, due to lack of knowledge about its history, Petitioner has concerns that Mindpix may have been a 'shell company' at one time or another since inception as contemplated in Rule 144(i), as amended, Feb. 15, 2008.
"According to a press release of Mindpix available on Yahoo! Finance on July 12,
2013, Mindpix discloses the following: 'For the six-month period ended June 30, 2013 the Company reported no revenue and a net loss of $485,011 reflecting a marked decrease in compensation expenses from the prior fiscal year as a whole.'
"Mindpix's lack of any revenue during the last six months as indicated in its press
release concerns Petitioner that it may now or recently come under the rubric in Rule 144(i) of being a 'shell company,' that is, a company with nominal assets, operations or income. If so, Rule 144 is not available to Emax for the transfer and sale of Certificate No. 7144, thereby nullifying or invalidating the Andrade opinion in its entirety. ...
"Petitioner is fearful that it will be pressured to honor opinions and remove restrictive legends on Mindpix stock and transfer the same unlawfully. Further, it is fearful that it will be pressured to take direction from a board of directors that is not the lawful board of Mindpix, something that fundamentally undermines its duties and obligations as a stock transfer agency.
"In addition, petitioner may be faced with the requirement to effectuate transfer or be faced with personal liability to the proposed transferor under Article 8 of the Utah Uniform Commercial Code and otherwise."
Standard Registrar claims that it has, "in good faith," tried to "get the parties to resolve their disputes among themselves but does not believe that, at the present time, they are capable of doing so without the court's intervention."
Standard Registrar says: "In order to be legally justified in removing a restrictive legend lawfully, petitioner needs a court order addressing (1) whether the selling or transferring shareholder, Emax, when its holdings are aggregated with Emax Worldwide or anyone else, is not an 'affiliate' or 'control person' of Mindpix as those terms are defined in Rule 144 and other applicable federal securities laws; (2) whether Mindpix has current and publicly available information on itself in conformity with Rule 144(c)(2) and Rule 15c2-l 1 of the General Rules and Regulations of the Commission; and (3) whether Rule 144(i), that is, the 'shell company' prohibition, is inapplicable to Mindpix, historically and now. ...
"Perhaps more importantly than the foregoing confusion, it has suddenly come to petitioner's attention that a genuine dispute exists as to who is lawfully on the board of directors of Mindpix and who is thus in control of Mindpix. For example, petitioner's counsel has received instructions from one lawyer that certain persons are on its board of directors, only to receive another letter from an entirely different attorney stating that petitioner should ignore the previous lawyer and only follow his instructions as to who is on the board. This is evidenced by a July 12, 2013, letter from petitioner's counsel to the lawyers involved."
Standard Registrar, of Draper, Utah, says it will suffer irreparable harm unless the court clarifies things and issues an injunction.
It is represented by J. Michael Coombs with Mabey & Coombs.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
-
Contributor-Test-Post-2024-04-12 April 12, 2024
