Payfirma CEO confirms overwhelming majority support of shareholders and warns against false and misleading claims from Obstructing Directors
Michael Gokturk, CEO, Co-Founder and director at Payfirma, issues letter to shareholders announcing over 60% support to remove Roger Hardy, Marc Levy and Lance Tracey from the Board
Warns shareholders of misinformation from Hardy, Levy and Tracey who are trying to seize control of the Company to advance a dilutive financing
Urges shareholders to vote only their BLUE proxy by October 20, 2017 at 2:00pm (PDT) to chart a new strategic direction that will enhance value and provide a pathway to liquidity
VANCOUVER, Oct. 12, 2017 /CNW/ - Michael Gokturk, the CEO, Co-Founder and a director at Payfirma Company ("Payfirma" or the "Company") has released a letter to shareholders announcing that he has received the overwhelming majority support of Payfirma shareholders to remove Roger Hardy, Marc Levy and Lance Tracey (the "Obstructing Directors") from the board - with over 60% support. Despite the clear evidence that shareholders support the changes that Mr. Gokturk has put forward, the Obstructing Directors initiated a frivolous legal action to delay shareholders from voting at the special meeting of shareholders on October 24, 2017 at 2:00pm (PDT) (the "Meeting") which was decisively rejected by the British Columbia Supreme Court. Now they have launched a false and misleading campaign to confuse shareholders by purporting to call an unnecessary second shareholder meeting, in breach of the Company's bylaws and the Canada Business Corporations Act, on the same day as the Meeting at an earlier time in a futile attempt to circumvent the will of the majority of shareholders. Shareholders should not be fooled. Stay the course and vote only your BLUE proxy by October 20, 2017 at 2:00pm (PDT) to prevent the three Obstructing Directors from seizing control of the Board and implementing a self-interested agenda.
If you have already voted your BLUE proxy, take no further action. Do NOT vote on the WHITE or YELLOW proxies, there is no need.
Shareholders with questions or who need help voting should contact Kingsdale Advisors at 1-855-682-2031 or 1-416-867-2272 outside North America or by email at [email protected].
The full copy of the letter is set out below:
Dear Fellow Shareholders:
You are receiving this letter because, as a shareholder of Payfirma Company ("Payfirma" or the "Company"), there are some very important decisions to be made regarding your company. As an advocate of shareholders, I believe these are decisions you should be able to make, not decisions to be made unilaterally by a minority of the current board.
Most of you already know me through my personal contact with you over the years. My name is Michael Gokturk and I'm the CEO, Co-Founder and a director of Payfirma. Payfirma is a unique and innovative company and I own 9.29% of its outstanding shares. As the CEO as I have always been transparent with shareholders in both the good and the tough times. My goal is to continue that transparency as we move forward.
First, I'd like to express how humbled and thankful I am for the outpouring of support I have received from you, Payfirma's shareholders. In the past, you have been there to refer business to us, open doors, make introductions, provide advice and even just offer a shoulder to lean on. Today, you are delivering BLUE proxies and voting your shares to allow me to shift the strategic direction of the Company to enhance value and create a clear pathway towards liquidity for shareholders. Thanks to your great support it is clear that this needed strategic change is inevitable. We are receiving overwhelming majority votes on the BLUE proxy – over 60% to date – and continuing to receive more each day as we get closer to the special meeting of Payfirma shareholders on October 24, 2017 (the "Meeting").
The Right Choice – A Strategic Pathway to Liquidity
Despite Payfirma's recent operational successes, until today we have been unable to offer our shareholders a clear path to liquidity. But, having committed to achieving liquidity for our shareholders in past financing rounds, management followed-up on its word by conducting a rigorous market canvass of over 80 liquidity alternatives with the assistance of Raymond James Ltd. This process has resulted in a promising business opportunity - the Liquidity Pathway Transaction.
The Liquidity Pathway Transaction involves a proposed combination with an attractive fintech counterparty which is well-positioned for growth in the e-commerce payment space. This counterparty has committed to going public and the combined business will be a much stronger public company candidate than Payfirma on a standalone basis. In addition, the Liquidity Pathway Transaction represents a great strategic fit for Payfirma. Although Payfirma has achieved break-even cash flow, to more rapidly accelerate earnings and growth it will be necessary to undertake a bold shift in strategy. In particular, we need to expand Payfirma's operations into new markets that are not accessible through its existing vendor relationships, remove a number of structural constraints on Payfirma's ability to grow its business and expand Payfirma's partner base to include additional financial institutions. The Liquidity Pathway Transaction advances all of these strategic goals, as well as providing Payfirma with the experience of a leading executive with a strong track record of success in the e-commerce payment sector.
I, along with two supporting directors who are well-respected in the North American tech sector, John Rante and Ryan Holmes, believe the Liquidity Pathway Transaction that will be put forward to you is the right choice for Payfirma. Ultimately you will have the opportunity to cast a future vote on the Liquidity Pathway Transaction – but only if the Obstructing Directors are removed from the board.
Giving Shareholders a Say on Liquidity and Strategic Change - Requires the Removal of the Obstructing Directors
The three Obstructing Directors have opposed the Liquidity Pathway Transaction and the strategic benefits that come with it. They have also opposed and obstructed giving Payfirma's shareholders the opportunity to cast their vote on the Liquidity Pathway Transaction. At first, their obstruction was at the board level. This reluctantly forced me, and a majority of shareholders, to requisition the Meeting as the only way to allow shareholders to ultimately have a say on the Liquidity Pathway Transaction and the future of their investment. Then, the Obstructing Directors shifted their campaign against change to litigation. Fortunately, the courts have not agreed with them. This past Friday, the British Columbia Supreme Court ruled against the Obstructing Directors' petition to delay shareholders from voting at the Meeting and did not accept their allegations of inadequate financial reporting or violations of fiduciary duties in bringing the Meeting forward. The Court ultimately awarded an order of costs against the Obstructing Directors.
Now in a last ditch attempt to confuse and thwart the majority of shareholders who have already cast BLUE proxies, the Obstructing Directors have purported to call an unnecessary and overcomplicated second shareholder meeting which they refer to as the "first" meeting, in breach of the timeframes set out in the Company's bylaws and the Canada Business Corporations Act. This purported "first" meeting would to take place earlier on the same day as the Meeting requisitioned by the majority of shareholders. To clarify matters and provide a more straightforward voting process for shareholders, I had offered to combine both meetings into a simple single meeting where all agendas could be brought forth to shareholders for a vote. Rather than being practical, however, the Obstructing Directors rejected this offer, as they seem intent on introducing more confusion into the equation by wasting time and money with multiple meetings and multiple proxies. Do not be confused. There is only one proxy that matters – and that is the BLUE proxy. Ignore all others.
Results vs Suspect Oversight
Payfirma has achieved incredible results, thanks to shareholders like you who believed in our vision and supported us for the past seven years. I want to remind shareholders of some key achievements:
- Payfirma was the first financial technology startup in Canadian history to sign a major partnership with one of Canada's five largest chartered banks and, as of 2017, has over six financial institutions as referring partners;
- Payfirma raised $13 million of financing in 2015 and has not sought to raise further capital on a "down round" at lower valuations that unnecessarily dilute shareholders;
- Payfirma's sales channels are strong and producing more new deal flow monthly with half the personnel – our efficiency is greater;
- In the past 12 months, Payfirma has increased processing volumes by 11.5% and increased net revenue by 16%, while simultaneously decreasing our operating losses by 98%; and
- Payfirma has now achieved break-even cash flow and does not need to raise financing again because of prudent balance sheet and revenue management.
The Obstructing Directors have put forward a self-serving revisionist history which is false, misleading and ignores Payfirma's many successes. I choose not to engage with their unfounded "Monday morning quarterbacking" and in many cases outright lies. Instead, you should consider the gall and temerity of the Obstructing Directors in complaining of the Company's past financial and operational challenges – when they, themselves, had oversight of the Company at that time. They, along with shareholders have always been provided with regular updates and reports on the Company's performance. The fact is these same directors took precious little action to correct the situation and never rolled up their sleeves to assist with the direction of the Company. When it became apparent that the Company needed to control costs, under my leadership along with the assistance our experienced Chair, John Rante, and a dedicated management team, we righted the ship, meticulously reined in spending and increased transparency. I even reduced my personal salary to $1 to improve our financial situation. The Obstructing Directors, by contrast, sat on the sidelines offering little to no constructive assistance.
The Wrong Choice – The Obstructing Directors Provide No Real Plan, Just Dilution
Having failed to delay a shareholder vote before the Court, the Obstructing Directors have now launched a misleading campaign to scare or confuse you into changing your vote or casting one in their favor.
Many of the over-the-top and disparaging allegations they raise were recently rejected by the BC Supreme Court. Shareholders should reject those arguments too.
The Obstructing Directors have groundlessly insinuated that the Liquidity Pathway Transaction is an "insider deal" with a group of "friends". That is patently false. Neither I, nor Messrs. Rante, Holmes or Pathak, have any financial interest in the counter-party to the Liquidity Pathway Transaction. Our limited familiarity with its principals is only due to the financial success and prominence of their previous ventures in the e-commerce payment sector. Again, details of the Liquidity Pathway Transaction, its background and its arm's-length nature will be fully disclosed to shareholders in a circular – once the Obstructing Directors are removed.
Recognizing that a majority of Payfirma shareholders have cast BLUE proxies in support of my efforts to bring the Liquidity Pathway Transaction before them for a vote, the Obstructing Directors have now conveniently experienced a change of heart on the subject of liquidity. Notwithstanding their well-documented opposition to the Liquidity Pathway Transaction, the Obstructing Directors suggest that they too will now "seek consolidation opportunities with other public companies". This is too little, too late. They provide no concrete or near-term alternatives to the Liquidity Pathway Transaction.
The Obstructing Directors also have no strategic plan to accelerate the Company's earnings beyond its current moderate growth. They present no plan to access new markets, no plan to deal with Payfirma's current structural limitations and no plan to expand Payfirma's partner base.
The Obstructing Directors' lack of a strategic plan is not unexpected, however, given that they also lack any hands-on experience in operating an electronic payments business. Shareholders should think twice before turning their Company over to a group of directors with no operating experience in the industry. By contrast, I have managed electronic payment businesses for over 13 years. Payfirma's Chair, John Rante, is the Founder, CEO and Executive Chairman of BluePay Processing, Inc., a leading provider of payment processing technology in North America which processes approximately US$15 billion in payments per year. Mr. Rante has successfully founded and grown three electronic payment companies over his 30 year career, a process that has included the acquisitions of over 40 payment companies.
The true agenda of the Obstructing Directors is to forego any near-term liquidity and conduct one or more rights offerings, which would be backstopped by Lance Tracey – one of the Obstructing Directors. However, as the Company is currently operating on a cash neutral basis, there is no pressing need for additional capital at this time. The Obstructing Directors have presented no strategic vision or use of proceeds which justifies such an equity raise. It is simply a backhanded attempt for them to gain further control. Their proposed financing will require you to reach into your pockets to make an additional investment in Payfirma, with no liquidity event in sight. And if you don't invest, your interest will be diluted.
What's worse is that – unless the Obstructing Directors are removed – shareholders will not have a say over their blatantly self-interested and self-entrenching financing scheme. A rights offering does not require a shareholder vote and can simply be pushed through by the Obstructing Directors.
As we have highlighted in our circular, the Obstructing Directors are also misrepresenting their recent business track record to shareholders. They have conveniently failed to disclose their personal association with insolvencies (such as the insolvency earlier this year of Shoes.com Technologies Inc., where Mr. Hardy was CEO) or underperforming businesses which have lost value for shareholders (such as Avarone Metals Inc., where Mr. Levy currently serves as CEO). I do not want to rehash these facts, as they are all a matter of public record. What I want is to focus shareholders on the future and ensure that the decisions that need to be made are being put in the hands of responsible individuals who are transparent with investors and not in a conflict-of-interest.
To round out the board, I have nominated Mr. Paul Pathak to be elected as a true independent director. His experience will be a huge asset as Payfirma moves forward. Mr. Pathak has been a partner with the law firm of Chitiz Pathak LLP since 1996 and is a director of several public companies. As Mr. Pathak holds no shares, options or has any commercial relationship with Payfirma, myself or other board members, he would be an independent director of Payfirma. Many of our shareholders know Mr. Pathak and he comes highly recommended as a potential board nominee by several of our shareholders who invested in our $13 million financing in June 2015.
It is time for you to make the right decision and support a strategic change in direction and liquidity pathway for Payfirma - after all you invested for a return. I strongly urge you to exercise your right to vote.
Once the three Obstructing Directors are removed by shareholders, I will work swiftly to move the Liquidity Pathway Transaction forward and bring it before shareholders for a vote.
Conclusion - the choice for shareholders
The choice before shareholders is clear:
Pursue a necessary strategic shift in direction and near-term liquidity and give shareholders a say on the future of their investment
DO NOT
Keep Payfirma's shareholders locked into their investment
and give shareholders no say on future dilutive financings that benefit insiders
I have great confidence that you will join with the 60% of shareholders already in support of my plan to create a brighter future for their investment and the Company.
I look forward to seeing you at the Meeting and speaking with you about what we can achieve together.
Your vote is important no matter how many shares you own.
We need your help now more than ever.
Protect your rights and protect your investment by voting only your BLUE Proxy. If you have voted on another proxy you can still vote your BLUE Proxy. Only the later dated proxy will count.
If you have already voted your BLUE Proxy take no further action.
Shareholders are urged to vote only the BLUE Proxy before the deadline of Friday, October 20, 2017 at 2:00 p.m. (Pacific time) / 5:00 p.m. (Toronto time).
To keep current with further developments and information about voting your shares, visit www.YourPayfirma.com.
If you have any questions or need assistance in voting your BLUE proxy, please contact my strategic advisory and proxy solicitation agent Kingsdale Advisors at 1-855-682-2031 toll-free in North America or 1-416-867-2272 outside North America, or by email at [email protected].
Yours very truly,
(signed) Michael Gokturk
Michael Gokturk
CEO, Co-Founder and Director
SOURCE Michael Gokturk

Kingsdale Advisors at 1-855-682-2031 toll-free in North America or 1-416-867-2272 outside North America, or by email at [email protected]
Share this article