StageZero Life Sciences Ltd.

Order

Headnote

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, associated management's discussion and analysis and certifications of the foregoing filings -- issuer has applied for a partial revocation of the cease trade order to permit the issuer to proceed with a private placement to accredited investors -- issuer will use proceeds from the private placement to bring itself into compliance with its continuous disclosure obligations, pay outstanding filing fees and for working capital purposes -- partial revocation granted subject to conditions.

Applicable Legislative Provisions

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

STAGEZERO LIFE SCIENCES LTD.

PARTIAL REVOCATION ORDER

UNDER THE SECURITIES LEGISLATION OF ONTARIO (the Legislation)

Background

1. StageZero Life Sciences Ltd. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the Ontario Securities Commission (the Principal Regulator) on April 8, 2024.

2. The Issuer has applied to the Principal Regulator for a partial revocation order of the FFCTO.

Interpretation

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.

Representations

3. This decision is based on the following facts represented by the Issuer:

a. The Issuer was incorporated on February 20, 1997 under the Business Corporations Act (Ontario) (the OBCA) as "Lewis Brook Resources Ltd."

b. On June 1, 2000, the Issuer filed articles of amendment pursuant to the OBCA to change its name to "ChondroGene Limited."

c. On October 20, 2006, the Issuer filed articles of amendment pursuant to the OBCA to change its name to "GeneNews Limited."

d. On December 19, 2012, the Issuer filed articles of amendment pursuant to the OBCA to consolidate its common share capital.

e. On January 1, 2015, the Issuer completed a vertical short-form amalgamation with its wholly owned subsidiaries, GeneNews Corporation and GeneNews Inc. pursuant to articles of amalgamation filed pursuant to the OBCA.

f. On June 20, 2019, the Issuer filed articles of amendment pursuant to the OBCA to change its name to "StageZero Life Sciences Ltd.".

g. On September 8, 2020, the Issuer filed articles of amendment pursuant to the OBCA to consolidate its common share capital.

h. The Issuer's head office is located at 30-70 East Beaver Creek Road, Richmond Hill, Ontario L4B 3B2.

i. The Issuer is currently a reporting issuer in each of the provinces of Alberta, British Columbia, and Ontario (the Reporting Jurisdictions). The Issuer is not a reporting issuer in any other jurisdiction of Canada.

j. The Issuer's authorized capital consists of an unlimited number of common shares (Common Shares). As of March 10, 2025, the Issuer had issued and outstanding the following securities: 123,553,050 Common Shares, warrants to purchase up to 32,572,389 Common Shares, and stock options granted pursuant to the Issuer's stock option plan to purchase up to 8,394,500 Common Shares. As of April 25, 2025, the Issuer had no other securities (including debt securities) outstanding.

k. The Common Shares are currently listed, but halted for trading, on the Toronto Stock Exchange (the TSX) under the trading symbol "SZLS". In the United States, the Common Shares are also quoted on the Pink Market of the OTC Markets Group under the symbol "SZLSF".

l. The Issuer intends to apply to the TSX to lift the halt of the Common Shares as soon as the FFCTO is fully revoked.

m. The FFCTO was issued as a result of the Issuer's failure to file the following continuous disclosure documents, as required by Ontario securities law:

i. audited annual financial statements for the year ended December 31, 2023,

ii. management's discussion and analysis (MD&A) relating to the audited annual financial statements for the year ended December 31, 2023, and

iii. certification of the foregoing filings, as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109),

(collectively, the Unfiled Documents).

n. The Unfiled Documents were not filed in a timely manner as a result of financial difficulties.

o. Subsequent to the failure to file the Unfiled Documents, the Applicant also failed to file the following documents:

i. annual information form for the year ended December 31, 2023,

ii. certification by the chief financial officer of the Q2 Filings and the Q3 Filings (as defined below), as required by NI 52-109,

iii. audited annual financial statements for the year ended December 31, 2024,

iv. MD&A relating to the audited annual financial statements for the year ended December 31, 2024,

v. annual information form for the year ended December 31, 2024, and

vi. certification of the filings in subparagraphs i, iii, iv and v above, as required by NI 52-109,

(together with the Unfiled Documents, the Unfiled Continuous Disclosure).

p. Subsequent to the issuance of the FFCTO, the Issuer filed the following documents:

i. unaudited interim financial statements for the interim periods ended March 30, 2024, June 30, 2024 (the Q2 Filings) and September 30, 2024 (the Q3 Filings),

ii. management discussion and analysis relating to the interim financial statements referred to in subparagraph i above, and

iii. certification by the chief executive officer of the foregoing filings, as required by NI 52-109.

q. The Issuer is seeking a partial revocation of the FFCTO to permit it to complete a private placement (the Private Placement) of either, or a combination of:

i. up to $2,000,000 of non-convertible notes bearing an interest rate of between 12% to 14% per annum (a Debt Offering), or

ii. a convertible debt offering (a Convertible Debt Offering) up to $800,000 of units (Units); each Unit consisting of $1,000 principal amount of unsecured convertible debentures (Convertible Debentures) bearing an interest rate of 8% per annum, and 12,500 common share purchase warrants (each, a Warrant),

provided that the aggregate gross proceeds from the Debt Offering and the Convertible Debt Offering would not exceed $2,000,000 on a combined basis.

Each Warrant is exercisable for one Common Share of the Issuer. The principal amount of the Convertible Debentures may be converted by the holders into Common Shares at a floor conversion price to be determined based on the market price (Market Price) of the Issuer's Common Shares on the TSX following recommencement of trading of the Issuer's Common Shares on TSX (as required by applicable TSX policies). Each Warrant shall be exercisable to purchase a Common Share at an exercise price that will be three cents higher than the Market Price for a period of 18 months. The terms and conditions of the Convertible Debentures and the Warrants will provide that the Convertible Debentures cannot be converted into Common Shares and the Warrants can not be exercised for Common Shares until a full revocation order is obtained in respect of the FFCTO.

r. The Private Placement will be conducted on a prospectus exempt basis and each distribution made in respect of the Private Placement will be to subscribers who qualify for the accredited investor prospectus exemption in accordance with section 73.3 of the Securities Act (Ontario) (the Act) and section 2.3 of National Instrument 45-106 Prospectus Exemptions.

s. The Private Placement is intended to take place with subscribers located in the provinces of Ontario, British Columbia and Alberta.

t. The Issuer intends to use the proceeds of the Private Placement to resolve outstanding fees, prepare audited annual financial statements and pay all other costs associated with applying for a full revocation of the FFCTO, with the remainder for general working capital purposes.

u. The Issuer intends to prepare and file the Unfiled Continuous Disclosure and pay all outstanding fees within a reasonable period of time following the completion of the Private Placement. The Issuer also intends to apply to the Principal Regulator for a full revocation of the FFCTO within that time period.

v. Other than the failure to file the Unfiled Continuous Disclosure, the Issuer is not in default of any of the requirements of the Act or the rules and regulations made under the Act and is not in default of the requirements of the FFCTO. The Issuer's SEDAR+ and SEDI profiles are up to date and accurate.

w. The Issuer intends to allocate the proceeds from the Private Placement as follows:

Description 
Audit fees owing to the Issuer's auditor for the year ended December 31, 2022.$258,434{*}
Audit fees payable to the Issuer's auditor in connection with the preparation and filing of the Issuer's late annual filings for the year ended December 31, 2023.$356,097{*}
Audit fees payable to the Issuer's auditor in connection with the preparation and filing of the Issuer's late annual filings for the year ended December 31, 2024.$248,787{*}
Legal fees payable to the Issuer's legal counsel in connection with the application for this partial revocation order.$25,000
Legal fees payable to the Issuer's legal counsel in connection with calling and holding an annual general shareholders meeting.$25,000
Legal fees payable to the Issuer's legal counsel in connection with advice and documentation for the Private Placement.$25,000
Legal fees payable to the Issuer's legal counsel in connection with application for a full revocation order.$15,000
Filing fees associated with obtaining the partial revocation order, filing the Unfiled Continuous Disclosure and the application for full revocation of the FFCTO, including fees payable to the applicable regulators, including (i) all amounts owing to the Principal Regulator, the British Columbia Securities Commission (BCSC) and the Alberta Securities Commission (ASC) for unpaid participation fees, filing fees and late fees, and (ii) all amounts payable to the Principal Regulator, BCSC and ASC for participation fees, filing fees and late fees when the Issuer files its late annual filings for the year ended December 31, 2023 and 2024, and any other continuous disclosure documents, fees payable to TSX with respect to the reinstatement of trading on TSX and the Private Placement .$63,623
Fees owing to the Issuer's Transfer Agent and Registrar.$26,147
Working capital, general, and administrative expenses: 
 - Reagents$58,560
 - Laboratory Costs$55,740
 - Payroll$174,000
Total (up to):$1,331,388{**}

{*} Where figures in the auditor confirmation e-mail are quoted in USD, the figure has been converted to CAD using an exchange rate of USD1 = CAD1.38215 (23 April 2025).

{**} If the proceeds from the Debt Offering and/or the Convertible Debt Offering exceed $1,331,388, the balance of the funds would be put towards repaying the Company's debt and investments in its business, applied as follows.

Application of Additional Funds in excess of $1,331,388 
Financing six (6) months of debt service$228,000
Repayment of amounts owing on corporate credit cards$30,000
Repayment of Mercury Bank US line of credit$20,000
Life Tech, Agilent equipment service and validation$355,000
Payment of fees owing to legal counsel$35,612
Total (up to):$668,612

x. The Issuer reasonably believes the Private Placement will be sufficient to bring its continuous disclosure obligations up to date and pay all related outstanding fees, pay costs in connection with an application for a full revocation of the FFCTO, and provide it with sufficient working capital to continue its business until the FFCTO is fully revoked.

y. As the Private Placement would involve a trade of securities and acts in furtherance of trades, the Private Placement cannot be completed without a partial revocation of the FFCTO.

z. The Private Placement will be completed in accordance with all applicable laws.

aa. Prior to completion of the Private Placement, the Issuer will:

i. provide any subscriber to the Private Placement with:

1. a copy of the FFCTO, and

2. a copy of this partial revocation order.

ii. obtain from each subscriber a signed and dated acknowledgment which clearly states that all of the Issuer's securities, including the securities issued in connection with the Private Placement, will remain subject to the FFCTO, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

bb. Upon issuance of this partial revocation order, the Issuer will issue a news release announcing the partial revocation order and the intention to complete the Private Placement. Upon completion of the Private Placement, the Issuer will issue a news release and file a material change report. As other material events transpire, the Issuer will issue appropriate news releases and file material change reports as applicable.

Order

4. The Principal Regulator is satisfied that a partial revocation order of the FFCTO meets the test set out in the Legislation for the Principal Regulator to make the decision.

5. The decision of the Principal Regulator under the Legislation is that the FFCTO is partially revoked solely to permit the Private Placement provided that:

a. prior to completion of the Private Placement, the Issuer will:

i. provide to each subscriber participating in the Private Placement with a copy of the FFCTO,

ii. provide to each subscriber participating in the Private Placement with a copy of this partial revocation order, and

iii. obtain a signed and dated acknowledgement from each subscriber participating in the Private Placement that clearly states that the securities of the Issuer acquired by the subscribers participating in the Private Placement will remain subject to the FFCTO until a full revocation order is granted, and that a partial revocation of the FFCTO does not guarantee the issuance of a full revocation order in the future.

b. The Issuer will make available a copy of the written acknowledgements referred to in paragraph a.iii above to staff of the Principal Regulator on request; and

c. This partial revocation order will terminate on the earlier of the closing of the Private Placement and 60 days from the date hereof.

DATED this 30th day of April, 2025.

"Leslie Milroy" 
Manager, Corporate Finance 
Ontario Securities Commission

OSC File #: 2024/0626