EasTower Wireless Inc.
National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions -- Section 144 of the Securities Act (Ontario) -- application for a partial revocation of a cease trade order -- issuer cease traded due to failure to file audited annual financial statements -- issuer has applied for a partial revocation of the cease trade order to permit the issuer to proceed with a private placement under prospectus exemptions -- issuer will use proceeds from private placement to prepare and file continuous disclosure documents and pay related fees -- partial revocation granted subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.
Citation: 2023 BCSECCOM 410
PARTIAL REVOCATION ORDER
EASTOWER WIRELESS INC.
UNDER THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Legislation)
1 EasTower Wireless Inc. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the regulator or securities regulatory authority in each of British Columbia (the Principal Regulator) and Ontario (each a Decision Maker) respectively on May 8, 2023.
2 The Issuer has applied to each of the Decision Makers for a partial revocation order of the FFCTO.
3 This order is the order of the Principal Regulator and evidences the decision of the Decision Maker in Ontario.
Terms defined in National Instrument 14-101 Definitions or in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions have the same meaning if used in this order, unless otherwise defined.
4 This decision is based on the following facts represented by the Issuer:
(a) The Issuer was incorporated under the Canada Business Corporations Act (CBCA) on November 30, 2016. On March 11, 2022, the Issuer completed its qualifying transaction (the Qualifying Transaction) pursuant to the policies of the TSX Venture Exchange (the TSXV), resulting in a reverse takeover of the Issuer by EasTower Group Inc., a corporation incorporated in the State of Florida. In connection with the Qualifying Transaction, the Issuer continued from being a corporation governed by the CBCA to the Business Corporations Act (British Columbia). On March 29, 2022, the Issuer's common shares (the Common Shares) commenced trading on the TSXV under the symbol "ESTW", and as a result of ceasing business operations, as of April 28, 2023, the Issuer's Common Shares were transferred to the NEX Board of the TSXV and the Issuer's trading symbol changed from "ESTW" to "ESTW.H". The Common Shares are also quoted on the OTCQX International Exchange under the symbol "ETWLF". The Issuer's securities are not listed or quoted on any other exchange or marketplace in Canada or elsewhere.
(b) The Issuer's head office is located in Boynton Beach, Florida.
(c) The Issuer is a reporting issuer in each of the provinces of British Columbia, Alberta, and Ontario.
(d) The authorized capital of the Issuer consists of an unlimited number of Common Shares, of which 104,754,309 Common Shares are issued and outstanding. In addition, the Issuer has warrants outstanding which are exercisable into 15,810,422 Common Shares of the Issuer, and stock options which are exercisable into 1,925,000 Common Shares of the Issuer.
(e) The Issuer does not currently hold any assets of value and is not carrying on any active business.
(f) The FFCTO was issued by the Decision Makers due to the failure of the Issuer to file its audited annual financial statements, annual management's discussion and analysis, and the certification of the annual filing for the year ended December 31, 2022 (collectively, the Unfiled Documents).
(g) The Issuer's failure to file the Unfiled Documents was a result of financial distress, namely, insufficient funds to pay the auditors to audit the financial statements for the year ended December 31, 2022.
(h) Other than the failure to file the Unfiled Documents, and the Issuer's interim financial statements, interim management's discussion and analysis, and certifications of the interim filing for the three months ended March 31, 2023, the Issuer is not in default of any of the requirements of the Legislation. The Issuer's SEDAR+ and SEDI profiles are up to date.
(i) The Issuer is seeking a partial revocation of the FFCTO in order to complete a debt financing of $60,000 (the Proposed Financing) in the province of Ontario through the issuance of on demand unsecured promissory notes accruing interest at 8.5% per annum. The Issuer has ceased operations and has no available cash and has historically relied upon debt and equity financings to fund its expenditures. The purpose of the Proposed Financing is to raise funds to prepare and file all outstanding financial statements and continuous disclosure records, pay for certain accounts payable and ongoing general and administrative expenses, and obtain sufficient working capital to ensure the continuity of the Issuer during the period that the FFCTO remains in effect, in each case until the Issuer is in a position to raise capital from other sources upon the issuance of a full revocation order in respect of the FFCTO.
(j) It is anticipated that the Proposed Financing will be conducted on a prospectus exempt basis to one or more investors who are accredited investors (as defined in National Instrument 45-106 Prospectus Exemptions).
(k) The Issuer intends to use the proceeds of the Proposed Financing to allow the Issuer to accomplish the items as follows:
Audit, legal fees and other professional fees related to the preparation and completion of the Unfiled Documents
Legal, transfer agent and TSXV fees related to the Proposed Financing
Filing fees and penalties to securities regulators
Unallocated working capital
(l) The Issuer reasonably believes that the proceeds from the Proposed Financing will be sufficient to bring its continuous disclosure obligations up to date, pay all related outstanding fees, and provide it with sufficient working capital to continue its business.
(m) The Proposed Financing would involve a trade of securities of the Issuer and acts in furtherance of trades in securities of the Issuer, and as such, neither can be completed without a partial revocation of the FFCTO.
(n) Within a reasonable time following the completion of the Proposed Financing, the Issuer intends to apply for and obtain a full revocation of the FFCTO.
(o) While the Issuer intends to commence a process of identifying and evaluating businesses or assets with a view of completion a Change of Business or Reverse Takeover (as such terms are defined by the TSXV), no such agreement or understanding in respect of a Change of Business or Reverse Takeover has been identified or consummated.
(p) Since the issuance of the FFCTO, there have been no material changes in the business, operations or affairs of the Issuer which have not been disclosed by news release and/or material change report and filed on the Issuer's SEDAR+ profile.
(q) Upon issuance of a Partial Revocation Order, the Issuer will issue a press release announcing the Partial Revocation Order and the intention to complete the Proposed Financing. Upon completion of the Proposed Financing, the Issuer will issue a press release and file a material change report. As other material events transpire, the Issuer will issue appropriate press releases and material change reports as applicable.
5 Each of the Decision Makers is satisfied that a partial revocation order of the FFCTO meets the test set out in the Legislation for the Decision Maker to make the decision.
6 The decision of the Decision Makers under the Legislation is that the FFCTO is partially revoked as it applies to the Issuer solely to permit the Proposed Financing, provided that
(a) prior to completion of the Proposed Financing, the Issuer will
(i) provide each investor in the Proposed Financing a copy of the FFCTO and a copy of this Partial Revocation Order; and
(ii) obtain a signed and dated acknowledgement from each investor in the Proposed Financing which clearly states that all of the Issuer's securities will remain subject to the FFCTO until such orders are revoked and that the issuance of the partial revocation order does not guarantee the issuance of a full revocation in the future; and
(b) the Issuer undertakes to make available a copy of the written acknowledgement to staff of the Decision Makers on request.
7 August 25, 2023