Armistice Resources Ltd. - s. 144

Headnote

Section 144 -- application for revocation of cease trade order -- mining company cease traded due to failure to file with the Commission and send to shareholders annual and interim financial statements and related MD&A -- company has remedied all filing deficiencies -- cease trade order revoked.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.

August 11, 2005

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

ARMISTICE RESOURCES LTD.

ORDER

(section 144)

WHEREAS the securities of Armistice Resources Ltd. (the "Company") are subject to a cease trade order issued by the Ontario Securities Commission (the "Commission") on June 18, 2003 (the "Cease Trade Order"), which order extended a temporary cease trade order issued on June 6, 2003;

AND WHEREAS the Company has applied to the Commission pursuant to section 144 of the Act (the "Application") for a revocation of the Cease Trade Order;

AND WHEREAS the Company has represented to the Commission that:

1. The Company was formed under the Canada Business Corporations Act on December 1, 1998, by the amalgamation of Armistice Resources Ltd. and Armistice Mines Limited.

2. The Company is a reporting issuer under the securities legislation (the "Legislation") of the provinces of Ontario, British Columbia, Alberta and Quebec.

3. The Company's authorized capital consists of an unlimited number of common shares (the "Common Shares"), of which approximately 138,509,911 Common Shares are issued and outstanding on a non-diluted basis.

4. The Common Shares were previously quoted on the Montreal Exchange. The Company presently has no securities, including debt securities, listed or quoted on any exchange or market recognized by the Commission.

5. The Cease Trade Order was issued due to the failure of the Company to file with the Commission its interim financial statements for the period ended March 31, 2003, and for failure to pay annual participation fees, as required by the Act. These failures were due to a lack of funds to pay for the preparation and audit of such statements and to effect payment of such fees.

6. The Company is also subject to cease trade orders of the British Columbia Securities Commission (the "BCSC") dated July 16, 2003, the Alberta Securities Commission (the "ASC") dated September 26, 2003, and the Autorité des marchés financiers (the "AMF") dated September 26, 2003. The Company has concurrently applied to the BCSC, ASC and the AMF for a revocation of these cease trade orders.

7. On May 6, 2004, the Commission issued an order (the "Partial Revocation Order") pursuant to section 144 of the Act partially revoking the Cease Trade Order to permit the Company to, among other things, proceed with a limited financing (the "Financing"). The Partial Revocation Order allowed the Company, among other things:

(a) to convert certain existing indebtedness into units of the Company;

(b) to issue securities to accredited investors in Ontario under a private placement to allow the Company to fund the settlement of certain litigation, to reorganize the Company's affairs and to provide working capital.

8. On August 13, 2004, the Commission issued an order (the "Amended Partial Order") to vary the Partial Revocation Order to extend the time period within which the Company could complete the Financing.

9. Pursuant to the Partial Revocation Order, on June 30, 2004 the Company completed the conversion of existing indebtedness, a private placement raising gross proceeds of $2,000,000 as part of Financing, and the settlement of the litigation.

10. Prior to completion of the Financing, the Company paid to the Commission its outstanding participation fees, and filed with the Commission and provided to potential investors a technical report prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects as well as financial statements for the periods ending March 31, 2003, June 30, 2003 (audited), September 30, 2003, December 31, 2003, and March 31, 2004. The Company's audited financial statements for the year-ended June 30, 2004 and unaudited statements for the interim periods ending September 30, 2004 and December 31, 2004 have also since been filed with the Commission within the time periods prescribed by National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102"). All of the aforementioned continuous disclosure documents have been filed and are available on the System for Electronic Document Analysis and Retrieval ("SEDAR").

11. The Company held an annual and special shareholders meeting on April 28, 2005, and has filed all documentation in connection therewith on SEDAR.

12. Other than as described in paragraph 5, the Company is not otherwise in default of any requirements of the Act or the rules or regulations made pursuant thereto.

13. The Company now wishes to make application for a full revocation of the Cease Trade Order so as to permit trading of its securities generally in the Province of Ontario.

The OSC Investigation

14. On December 21, 2004, the Commission issued a Notice of Hearing relating to certain allegations made by staff in a statement of allegations dated December 21, 2004 (the "Allegations") against Firestar Capital Management Corp., Kamposse Financial Corp., Firestar Investment Management Group, Michael Ciavarella and Michael Mitton (collectively, the "Respondents").

15. Firestar Capital Management Corp. ("Firestar Capital") is registered as a limited market dealer with the Commission. Firestar Capital acted as the sole agent in the June 2004 Financing (described in the Partial Revocation Order and the Amended Partial Order) that raised $2,000,000.

16. IMM Investments Inc. ("IMM") owns 14.4% of the Company on a non-diluted basis, and 22.92% on a fully-diluted basis. IMM acquired this interest in the Company in the Financing described in the Partial Revocation Order and the Amended Partial Order.

17. The Company understands, based on a review of the public record, that Pender International Inc. ("Pender") acquired 100% of the stock of IMM in July 2004. The Company similarly understands that Pender is a corporation with its head office in Thornhill, Ontario. Pender trades on the National Association of Securities Dealers Over the Counter Bulletin Board.

18. The Company similarly understands that, until recently, Pender owned all of the issued and outstanding shares of IMM and that Pender's only asset was its indirect holdings in the Company. According to a press release issued by Pender on or about June 30, 2005, Pender sold all of its interest in IMM to Blazing Holding Inc. ("Blazing"). According to an agreement of Purchase and Sale between Pender and Blazing dated June 17, 2005 and other ancillary documents obtained by the Company's counsel from the Electronic Data Gathering, Analysis and Retrieval system of the Securities and Exchange Commission, Blazing paid for the IMM shares by way of promissory note and until such time as such note is paid in full, the IMM shares have been pledged by Blazing to Pender.

19. Staff have alleged in the Allegations that the Respondents have engaged in certain "conduct that was contrary to Ontario securities law and contrary to the public interest in that during the material time, trading in the shares of Pender was dominated by trading that was arranged ... in a way that created a misleading appearance of trading activity and artificially increased the share price of Pender."

20. Staff of the Commission advised the Company that, in view of the Allegations, the entry into an escrow agreement by IMM in relation to its holdings in the Company would be a condition to Staff making a recommendation that the Cease Trade Order be revoked.

21. IMM has entered into an escrow agreement, the form of which is acceptable to Staff and a copy of which has been supplied to Staff.

AND WHEREAS considering the Application and the recommendation of the staff of the Commission;

AND WHEREAS the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act, that the Cease Trade Order be and is hereby revoked;