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 am., ss. 127, 144.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
SEPROTECH SYSTEMS INCORPORATED
WHEREAS the securities of Seprotech Systems Incorporated (the Applicant) were subject to a cease trade order issued by the Director dated February 24, 2011 under paragraph 2 of subsection 127(1) and subsection 127(5) of the Act, as extended by a further order made by the Director dated March 8, 2011 pursuant to subsection 127(1) of the Act (together, the Cease Trade Order) directing that trading in the securities of the Applicant cease until the Cease Trade Order is revoked;
AND WHEREAS the Applicant has applied to the Ontario Securities Commission (the Commission) pursuant to section 144(1) of the Act (the Application) for a full revocation of the Cease Trade Order;
AND WHEREAS the Applicant has represented to the Commission that:
1. The Applicant was incorporated pursuant to the Canada Business Corporations Act on September 5, 1985.
2. The Applicant's registered and head office is located at 2378 Holly Lane, Ottawa, Ontario K1V 7P1.
3. The Applicant is a reporting issuer in Ontario, British Columbia, Alberta and Manitoba.
4. The authorized capital of the Applicant consists of an unlimited number of common shares. As at February 28, 2011, 50,921,926 common shares were issued and outstanding. The common shares are listed for trading on the TSX.V.
5. Other than the common shares, the Applicant has outstanding debt of $700,000 owing to the Unity Savings and Credit Union Limited and other syndicate lenders, and options for 2,862,500 common shares outstanding under the Applicant's employee stock option plan.
6. The Cease Trade Order was issued as a result of the Applicant's failure to file its audited annual financial statements, annual management's discussion and analysis (MD&A) and certification of annual filings for the fiscal year ended August 31, 2010, and its unaudited interim financial statements for the quarters ended November 30, 2010 and February 28, 2011 ( the Unfiled Documents).
7. The Unfiled Documents were not filed in a timely manner due to management's discovery of an over-billing of a significant customer, which resulted in a need to restate interim unaudited financial statements for the quarters ended November 30, 2009, February 28, 2010 and May 31, 2010. Resolution of the over-billing amount has been resolved with the customer, and the restated interim financial statements have been filed on SEDAR on March 25, 2011.
8. The Applicant has completed and filed with SEDAR on May 10, 2011 audited financial statements for the fiscal year ended August 31, 2010, and the related MD&A and officer certifications. Unaudited financial statements for the quarters ended November 30, 2010 and February 28, 2011 were filed with SEDAR on May 13, 2011 and May 17, 2011, respectively. All material change reports pertaining to the subject filings have also been filed on SEDAR.
9. The Applicant is also subject to cease trade orders issued by the British Columbia Securities Commission dated February 24, 2011, and by the Manitoba Securities Commission dated April 19, 2011 for failure to file the required filings (the Other Cease Trade Orders).
10. The Applicant has filed an application with each of the BCSC and the MSC for a full revocation of the Other Cease Trade Orders.
11. Other than the failure to file the Unfiled Documents, which has been subsequently rectified, the Applicant is not in default of any of the requirements of the Act or the rules and regulations made pursuant thereto.
12. The Applicant's SEDAR and SEDI profiles are up to date.
13. Completed personal information forms and authorizations in the form of Appendix A of National Instrument 41-101 General Prospectus Requirements for each director and officer have accompanied the application .
14. The Applicant is up-to-date with all of its other continuous disclosure obligations and has paid outstanding participation fees, filing fees and late fees associated with those obligations owing to the Commission in connection with the Unfiled Documents and has filed all of the forms associated with such payments.
15. The Applicant is not considering, nor is it involved in any discussions relating to a reverse take-over, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.
16. Upon the issuance of this Order, the Applicant will issue a press release announcing the revocation of the Cease Trade Order. The Applicant will concurrently file the press release and the material change report on SEDAR.
AND UPON considering the Application and the recommendations of staff of the Commission;
AND UPON the Director 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 is revoked.
DATED this 29th day of July, 2011