Securities Law & Instruments

Headnote

National Instrument 44-101 Short Form Prospectus Offerings, s. 8.1 -- requirement to have a current AIF and not be an issuer whose operations have ceased, or whose principal asset is cash, cash equivalents, or its exchange listing -- Qualification -- An issuer that does not have a current AIF or whose operations have ceased, or whose principal asset is cash, cash equivalents, or its exchange listing wishes to use the short form prospectus system in NI 44-101 -- the issuer has announced, but not yet completed, a restructuring transaction; the restructuring transaction includes a financing condition; if the restructuring transaction completes, the purchasers under the prospectus will have acquired an interest in an issuer that has a sufficient following in the marketplace and sufficient disclosure to support using a short form prospectus; if the restructuring transaction does not complete, the proceeds of the offering will be returned to the purchasers.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Offerings, s. 8.1.

September 2, 2016

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF LATERAL GOLD CORP. (the Filer)

DECISION

Background

1 The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the qualification criteria in sections 2.2(d)(ii) and 2.2(e) (the Qualification Criteria) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) that the Filer have a current annual information form (AIF) and not be an issuer whose operations have ceased, or whose principal asset is cash, cash equivalents or its exchange listing, do not apply to the Filer in connection with the Offering, as such term is defined below (the Exemption Sought).

Under the Process for Exemptive Relief Application in Multiple Jurisdictions (for a dual application):

(a) the British Columbia Securities Commission is the principal regulator for this application,

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, Saskatchewan, Manitoba, Nova Scotia, Newfoundland, New Brunswick and Prince Edward Island, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

3 This decision is based on the following facts represented by the Filer:

1. the Filer was incorporated under the laws of the Province of British Columbia on April 14, 1999;

2. the head office of the Filer is located in Vancouver, British Columbia;

3. the Filer is a reporting issuer under the securities legislation of British Columbia and Alberta and an electronic filer within the meaning of National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR) (NI 13-101);

4. the Filer is not in default of securities legislation in any jurisdiction or any of the rules, regulations or polices of the TSX Venture Exchange (the TSXV);

5. the Filer has filed current audited annual financial statements for its fiscal year ended June 30, 2016 on SEDAR;

6. as a venture issuer under National Instrument 51-102 Continuous Disclosure Obligations, the Filer is not required to file an AIF and has never filed an AIF;

7. the Filer was previously engaged in the business of mineral exploration but such operations have ceased;

8. the Filer is authorized to issue an unlimited number of common shares (each, a Share), of which 10,190,964 Shares are issued and outstanding as at the date hereof; the Shares are listed for trading on the TSXV under the symbol "LTG";

9. on May 3, 2016, the Filer announced its proposed acquisition of CANHaul International Corp. (CANHaul), a private company incorporated under the laws of the Province of Alberta, which, if completed, will result in CANHaul becoming a wholly-owned subsidiary of the Filer (the Transaction);

10. the Transaction will result in a reverse takeover of the Filer by CANHaul and thus will be a restructuring transaction for the purposes of NI 44-101;

11. the Transaction is subject to the prior approval of the TSXV and the Filer meeting TSXV Initial Listing Requirements upon completion of the Transaction;

12. in connection with the Transaction, the Filer is required to undertake a public offering of subscription receipts (each, a Subscription Receipt) to raise gross proceeds of $5,000,000, or such other amount as is determined by the Filer and CANHaul (the Offering);

13. each Subscription Receipt will entitle the holder thereof to receive one Share, without payment of additional consideration, upon the completion of the Transaction;

14. at the closing of the Offering, the subscription funds will be deposited with Computershare Trust Company of Canada, as escrow agent; if the Transaction does not close by October 15, 2016, or such other date as agreed to by the Filer, CANHaul, and the agents for the Offering, the applicable subscription funds will be returned by the Filer to the holder;

15. prior completion of the Offering is a condition to the closing of the Transaction;

16. assuming completion of the Transaction, the Filer will adopt the business of CANHaul, CANHaul will be the reverse takeover acquirer and the Filer will be the reverse takeover acquiree;

17. the Filer wishes to file a short form prospectus pursuant to NI 44-101 to qualify the distribution of the Subscription Receipts under the Offering (the Prospectus), but the Filer does not meet the Qualification Criteria because the Filer does not have a current AIF, its operations have ceased and its principal assets are cash and cash equivalents;

18. the Filer and CANHaul are both required to obtain the approval of their respective shareholders for completion of the Transaction;

19. in connection with obtaining shareholder approval, the Filer and CANHaul are preparing a joint management information circular in the form prescribed by TSXV Form 3D1 Information Required in an Information Circular for a Reverse Take-Over or Change of Business (the Information Circular);

20. the Information Circular will include prospectus-level disclosure with respect to CANHaul and its business, including audited annual consolidated financial statements of CANHaul for the fiscal years ended June 30, 2016 and 2015, and information with respect to the Filer, on a pro forma consolidated basis, assuming completion of the Transaction;

21. the preliminary short form prospectus will not be filed until after the Information Circular has been filed on SEDAR;

22. the Filer intends to incorporate the Information Circular by reference into the Prospectus;

23. an exemption from paragraph 2.2(d) of NI 44-101 is provided under subsection 2.7(2) of NI 44-101 to permit a successor issuer that does not have a current AIF to qualify to file a prospectus in the form of a short form prospectus, subject to certain conditions; in particular, the condition in paragraph 2.7(2) of NI 44-101 that an information circular relating to the restructuring transaction that resulted in the successor issuer was filed by the successor issuer or an issuer that was a party to the restructuring transaction, and such information circular: (i) complied with applicable securities legislation; and (ii) included disclosure in accordance with Section 14.2 or 14.5 of Form 51-102F5 Information Circular (51-102F5) for the successor issuer;

24. the Filer is unable to rely on the exemption in subsection 2.7(2) of NI 44-101 because it has not yet completed the Transaction and is therefore not a "successor issuer" as defined in NI 44-101; and

25. on August 22, 2016, the Filer filed on SEDAR a notice pursuant to section 2.8 of NI 44-101 declaring its intention to be qualified to file a short form prospectus.

Decision

4 Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that:

(a) the Information Circular complies with applicable securities legislation and includes disclosure in accordance with Section 14.2 or 14.5 of 51-102F5 in relation to the Transaction; and

(b) the Filer complies with the representations in sections 13, 14, 15, 16, 20, 21 and 22.

"Nigel P. Cave"
Vice Chair
British Columbia Securities Commission