Application by an issuer for a full revocation of a cease trade order issued by the Commission – cease trade order issued because the issuer had failed to file certain continuous disclosure materials required by Ontario securities law – defaults subsequently remedied by bringing continuous disclosure filings up-to-date – cease trade order revoked.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
SPARROW VENTURES CORP.
(Section 144 of the Act)
WHEREAS the securities of Sparrow Ventures Corp. (the Applicant) are subject to a temporary cease trade order dated October 13, 2015, issued by the Director of the Ontario Securities Commission (the Commission) pursuant to paragraph 2 of subsection 127(1) and sub-section 127(5) of the Act, as extended by a further cease trade order dated October 26, 2015 issued by the Director pursuant to paragraph 2 of subsection 127(1) of the Act (as extended, the Ontario Cease Trade Order), directing that all trading in the securities of the Applicant, whether direct or indirect, cease until the Ontario Cease Trade Order is revoked by the Director;
AND WHEREAS the Ontario Cease Trade Order was made on the basis that the Applicant was in default of certain filing requirements under Ontario securities law as described in the Ontario Cease Trade Order;
AND WHEREAS the Applicant has applied to the Commission under section 144 of the Act for a full revocation of the Ontario Cease Trade Order;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant was incorporated on July 4, 2006 under the Business Corporations Act (British Columbia) in the name of “0762477 B.C. Ltd.” and on December 17, 2007, changed its name to “Sparrow Ventures Corp.”.
2. The Applicant’s head office is located at 610 – 700 West Pender Street, Vancouver, BC, V6C 1G8.
3. The Applicant’s registered and records office is located at 700 – 1199 West Hastings Street, Vancouver, BC, V6C 3A6.
4. The Applicant is a reporting issuer under the securities legislation of the provinces of British Columbia, Alberta, and Ontario (the Reporting Jurisdictions). The Applicant is not a reporting issuer in any other jurisdiction in Canada. The Applicant’s principal regulator is the British Columbia Securities Commission (BCSC).
5. The Applicant’s authorized share capital consists of an unlimited number of common shares, without nominal or par value, of which 13,658,300 com-mon shares were issued and outstanding as of January 9, 2017. The Applicant also has (a) 60,000 stock options outstanding, each with an exercise price of $0.05 and expiring on May 27, 2021; (b) 330,000 stock options outstanding, each with an exercise price of $0.05 and expiring on June 17, 2024; (c) 105,000 charitable options outstanding, each with an exercise price of $0.10 and expiring on May 26, 2018; and (d) convertible debentures with a face value of $48,959, of which $28,754 mature on September 14, 2018, and $20,205 mature on December 9, 2018. Aside from the aforementioned, the Applicant has no other securities issued and outstanding.
6. The Applicant’s common shares were listed on Tier 2 of the TSX Venture Exchange until the listing was transferred to the NEX Board on June 17, 2014. Trading of the Applicant’s common shares was suspended effective June 29, 2015, due to the Applicant’s failure to maintain the services of a transfer agent in accordance with the policies of the TSX Venture Exchange. The Applicant’s common shares are listed only on the NEX Board at this time and are not listed on any other exchange or market in Canada or elsewhere.
7. The Ontario Cease Trade Order was issued as a result of the Applicant’s failure to file its unaudited interim financial statements, the related manage-ment's discussion and analysis (MD&A) and certifications of interim filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109) for the six months ended July 31, 2015 (the Interim Filings).
8. The Applicant is also subject to a similar cease trade order issued by the BCSC on October 6, 2015 (the BC Cease Trade Order, and together with the Ontario Cease Trade Order, the Cease Trade Orders). The BC Cease Trade Order is also effective in Alberta due to the Government of Alberta’s 2015 adoption of statutory reciprocal order provisions.
9. On August 15, 2016, the BCSC granted a partial revocation order to the BC Cease Trade Order to permit certain trades in connection with the private placement of secured convertible debentures (for gross proceeds of up to $250,000) to British Columbia and offshore subscribers. The Applicant completed the first tranche of the private placement for gross proceeds of $28,754 on October 3, 2016 and the second tranche of the private placement for gross proceeds of $20,205 on January 17, 2017.
10. The Applicant has concurrently applied to the BCSC for a full revocation of the BC Cease Trade Order.
11. Subsequent to the issuance of the Ontario Cease Trade Order, the Applicant failed to file with the Reporting Jurisdictions the following continuous disclosure documents within the prescribed time-frame in accordance with the requirements of securities laws:
(i) unaudited interim financial statements, related MD&A and NI 52-109 certificates for the nine months ended October 31, 2015;
(ii) audited annual financial statements, related MD&A and NI 52-109 certificates for the financial year ended January 31, 2016;
(iii) unaudited interim financial statements, related MD&A and NI 52-109 certificates for the three months ended April 30, 2016; and
(iv) unaudited interim financial statements, related MD&A and NI 52-109 certificates for the six months ended July 31, 2016.
(collectively, the Subsequent Filings)
12. Since the issuance of the Ontario Cease Trade Order, the Applicant has filed the Interim Filings and the Subsequent Filings with the Reporting Jurisdictions, as well as unaudited interim financial statements, related MD&A and NI 52-109 certificates for the nine months ended October 31, 2016.
13. The Applicant is (i) up-to-date with all of its continuous disclosure obligations; (ii) not in default of any requirements under applicable securities legislation or the rules and regulations made pur-suant thereto in any of the Reporting Jurisdictions, except for the existence of the Cease Trade Orders; and (iii) not in default of any of its obligations under the Cease Trade Orders.
14. The Applicant’s issuer profile on the System for Electronic Document Analysis and Retrieval (SEDAR) and issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI) are current and accurate.
15. The Applicant has paid all outstanding activity, participation and late filing fees that are required to be paid to the Commission.
16. The Applicant is not considering nor is it involved in any discussions related to, a reverse take-over, merger, amalgamation or other form of combin-ation or transaction similar to any of the foregoing.
17. Since the issuance of the Cease Trade Orders, there have not been any material changes in the business, operations or affairs of the Applicant that have not been disclosed to the public.
18. The Applicant held its Annual General and Special Meeting on December 7, 2016.
19. Upon the issuance of this revocation order, the Applicant will issue a news release announcing the revocation of the Ontario Cease Trade Order and concurrently file the news release and a related material change report on SEDAR.
AND UPON considering the application and the recommendation of the staff of the Commission;
AND UPON the Director being satisfied that it would not be prejudicial to the public interest to revoke the Ontario Cease Trade Order;
IT IS ORDERED pursuant to section 144 of the Act that the Ontario Cease Trade Order is revoked.
DATED at Toronto, Ontario on this 06 day of February, 2017.
Deputy Director, Corporate Finance
Ontario Securities Commission