Application by an issuer for a 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.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as amended, ss. 127 and 144.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
SILCOM SYSTEMS INC.
(Section 144 of the Act)
WHEREAS the securities of Silcom Systems Inc. (the “Applicant”) are subject to a cease trade order dated May 25, 2015 issued by the Director of the Ontario Securities Commission (the “Commission”) pursuant to paragraph 2 of subsection 127(1) of the Act (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 pursuant to section 144 of the Act to revoke the Ontario Cease Trade Order;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant was formed on October 8, 2013 under the Business Corporations Act (British Columbia).
2. The Applicant's head office is located at 137 Ranelagh Avenue, Burnaby, BC, V5B 3N2.
3. The Applicant is a reporting issuer under the securities legislation of the provinces of British Columbia, Alberta and Ontario (“Reporting Jurisdictions”) and is not a reporting issuer in any other jurisdiction.
4. The Applicant's authorized share capital consists of an unlimited number of common shares (the “Common Shares”). As of the date hereof, there are 4,797,129 Common Shares issued and outstanding.
5. The Applicant does not have any outstanding debt securities.
6. The Applicant is also subject to a cease trade order issued by the British Columbia Securities Commission dated May 8, 2015 (the “BC Cease Trade Order”) and a cease trade order issued by the Alberta Securities Commission on August 7, 2015 (the “Alberta Cease Trade Order”) (collectively, together with the Ontario Cease Trade Order, the “Cease Trade Orders”). The Applicant has concurrently applied for revocation of the BC Cease Trade Order and Alberta Cease Trade Order.
7. The Cease Trade Orders were issued as a result of the Applicant's failure to file its audited annual financial statements and related management’s discussion & analysis (“MD&A”) for the year ended December 31, 2014 within the prescribed time frame as required under National Instrument 51-102 Continuous Disclosure Obligations and related certifications (the “NI 52-109 Certificates”) as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.
8. Since the issuance of the Cease Trade Orders, the Applicant has filed the following continuous disclosure documents with the Reporting Jurisdictions:
(a) audited annual financial statements, MD&A and NI 52-109 Certificates for the year ended December 31, 2016; and
(b) unaudited interim financial statements, MD&A and NI 52-109 Certificates for the three month period ended March 31, 2017.
9. The Applicant has not filed the following:
(a) the audited annual financial statements, MD&A and NI 52-109 Certificates for the years ended December 31, 2014 and December 31, 2015; and
(b) the unaudited interim financial statements, MD&A and NI 52-109 Certificates for the periods ended March 31, 2015 to September 30, 2016
(collectively, the “Outstanding Filings”).
10. The Applicant has filed all outstanding continuous disclosure documents that are required to be filed in the Reporting Jurisdictions other than the Outstanding Filings.
11. The Applicant has requested that the Commission exercise its discretion in accordance with sections 6 and 7 of National Policy 12-202 Revocation of a Compliance-related Cease Trade Order and elect not to require the Applicant to file the Outstanding Filings.
12. Except for the failure to file the Outstanding Filings, the Applicant (i) is up-to-date with all of its other continuous disclosure obligations; (ii) is not in default of any of its obligations under the Ontario Cease Trade Order; and (iii) is not in default of any requirements under the Act or the rules and regulations made pursuant thereto, other than as set out in paragraph 18 below.
13. The Applicant’s securities are not listed or quoted on any other exchange or market in Canada or elsewhere.
14. As of the date hereof, the Applicant has paid all outstanding activity, participation and late filing fees that are required to be paid to the Commission and has filed all forms associated with such payments.
15. Since the issuance of the Cease Trade Orders, the Applicant has been dormant and there have not been any material changes in the business, operations or affairs of the Applicant that have not been disclosed to the public.
16. As of the date hereof, the Applicant's profiles on the System for Electronic document Analysis and Retrieval (“SEDAR”) and the System for Electronic Disclosure by Insiders (“SEDI”) are current and accurate.
17. The Applicant has given the Commission a written undertaking that the Applicant will hold an annual meeting of shareholders within three months after the date on which the Ontario Cease Trade Order is revoked.
18. On April 4, 2017, the Applicant issued a news release announcing an option agreement with Cypress Development Corp. (“Cypress”) to acquire an 80% interest in Cypress’ 100% owned Gunman Zinc-Silver Project in White Pine County, Nevada in consideration of an aggregate of US$550,000 cash, the issuance of 2,000,000 common shares of the Applicant and expenditures of US$2,950,000 in exploration expenses (the “Option Agreement”). Staff of the Commission have advised that this may have been an act in furtherance of a trade in contravention of the Ontario Cease Trade Order. All prospective investors have been made aware of the Cease Trade Orders. Closing of the Option Agreement remains subject to revocation of the Cease Trade Orders. Except for the announcement of the Option Agreement, there have been no material changes in the business, operations or affairs of the Applicant since the issuance of the Cease Trade Orders.
19. The Applicant is not considering nor, except as described in paragraph 18 above, is it involved in any discussions related to, a reverse takeover, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.
20. Other than the Cease Trade Orders, the Applicant has not previously been subject to a cease trade order issued by any securities regulatory authority.
21. Upon the revocation of the Ontario Cease Trade Order, the Applicant will issue a news release and concurrently file a material change report on SEDAR announcing the revocation of the Ontario Cease Trade Order and outlining the Applicant’s future plans.
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, this 16th day of August, 2017.
Manager, Corporate Finance
Ontario Securities Commission