Parlay Entertainment Inc. -- s. 144
Headnote
Application by an issuer for a revocation of a cease trade order -- Issuer subject to cease trade order as a result of its failure to file financial statements -- Issuer has brought its filings up-to-date -- Issuer is otherwise not in default of applicable securities legislation, except for certain matters which it intends to remedy -- Issuer is currently inactive, but intends to reactivate itself -- Issuer has provided an undertaking to the Commission that it will not complete (a) a restructuring transaction involving, directly or indirectly, an existing or proposed, material underlying business which is not located in Canada, (b) a reverse takeover with a reverse takeover acquirer that has a direct or indirect, existing or proposed, material underlying business which is not located in Canada, or (c) a significant acquisition involving, directly or indirectly, an existing or proposed, material underlying business which is not located in Canada, unless the issuer files a preliminary prospectus and a final prospectus with the Ontario Securities Commission and obtains receipts for the preliminary prospectus and the final prospectus from the Director under the Act.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127(1), 127(5), 127(8), 144.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED
(the "Act")
AND
IN THE MATTER OF
PARLAY ENTERTAINMENT INC.
ORDER
(Section 144)
WHEREAS the securities of Parlay Entertainment Inc. (the "Applicant") are subject to a cease trade order dated May 5, 2011 issued by the Director under paragraph 2 of subsection 127(1) and subsection 127(5) of the Act, as extended by a further order issued by the Director dated May 17, 2011 pursuant to subsection 127(a) of the Act (together, the "Cease Trade Order") ordering that trading in the securities of the Applicant cease until the Cease Trade Order is revoked by the Director;
AND WHEREAS the 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 Cease Trade Order;
AND WHEREAS the Applicant is also subject to a cease trade order dated May 10, 2011 made by the Executive Director pursuant to section 164 of theSecurities Act (British Columbia) (the "B.C. Cease Trade Order") ordering that the trading in the securities of the Applicant cease until the B.C. Cease Trade Order is revoked by the Executive Director;
AND WHEREAS the Applicant has made an application (the "Application") to the Ontario Securities Commission (the "Commission") for a revocation of the Cease Trade Order pursuant to Section 144 of the Act;
AND WHEREAS the Applicant has also made an application concurrently to the British Columbia Securities Commission for an order for a revocation of the B.C. Cease Trade Order;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant was created on November 30, 2004 pursuant to articles of amalgamation pursuant to the Business Corporations Act (Ontario) (the "OBCA").
2. The registered head office, the executive office and the mailing address of the Applicant is located at 5096 South Service Road, Suite 102, Burlington, Ontario, L7L 5H4.
3. The Applicant is a reporting issuer or its equivalent under the securities legislation of Ontario, British Columbia and Alberta (the "Jurisdictions"). Other than the Jurisdictions, the Applicant is not a reporting issuer in any other jurisdiction in Canada and is not subject to a cease trade order in any other jurisdiction.
4. The Applicant's authorized share capital consists of an unlimited number of common shares (the "Common Shares"), of which 13,499,265 Common Shares are issued and outstanding. Other than the Common Shares, the Applicant has no securities, including debt securities, outstanding.
5. The Applicant's Common Shares are listed on the TSX Venture Exchange ("TSXV") on the NEX board but the listing is presently suspended as a consequence of the Cease Trade Order. Once the Cease Trade Order has been revoked, the Applicant will proceed to apply to have the trading suspension lifted by the TSXV.
6. Prior to the Cease Trade Order, the Applicant carried on the business of software development in the field of Internet gaming. The Applicant developed and licensed the use of its software products and other intellectual property to customers throughout the world. The Applicant earned its revenues from several sources, including its assessment of installation and implementation fees, software licensing fees, fees for managed services and royalties from the use of its software. Additionally, the Applicant generated revenue on a fee for service basis by providing licensees with support services (such services included web site design and integration, custom products, corporate branding, systems consulting services and technical support, maintenance and software upgrades).
7. The Applicant has not carried on business since August 31, 2011. The Applicant has no material assets other than cash held in trust, which will be used to fund payments on the liabilities of the Applicant which will be settled on the creditor proposal, as discussed below. At December 31, 2011, the total of cash and cash held in trust was $322,150. The Applicant has no liabilities at December 31, 2011 other than the following:
Accounts payable and accrued liabilities of subsidiary companies and accounts payable and accrued liabilities of the Applicant post September 29, 2011
$ 189.012
Liabilities of the Applicant to be discharged on the conclusion of the creditor proposal
870,927
Liabilities for professional fees pursuant to the creditor proposal
71,744
Due to Parlay Games Limited
6,417
Total
$1,138,100
8. The Cease Trade Order was issued as a result of the Applicant's failure to file with the Commission and mail to its shareholders audited annual financial statements for the year ended December 31, 2010, management's discussion and analysis ("MD&A") relating to the audited annual financial statements for the year ended December 31, 2010, and certificates of certifying officers pursuant to National Instrument 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109") relating to the audited annual financial statements for the year ended December 31, 2010.
9. Subsequently, the Applicant failed to file its interim financial statements, interim MD&A and certificates of certifying officers pursuant to NI 52-109 relating to the periods from and including the three months ended March 31, 2011 to the nine-months ended September 30, 2011.
10. The Applicant has concurrently applied to the British Columbia Securities Commission for an order for the revocation of the B.C. Cease Trade Order.
11. On May 6, 2011, the Applicant appointed BDO Canada Limited ("BDO") to assist it in a restructuring and to act as its proposal trustee in the filing of a Notice of Intention to Make a Proposal, and to make a Proposal to its creditors (the "BIA Filing") with the Superior Court of Justice, Province of Ontario, pursuant to the Bankruptcy and Insolvency Act (Canada).
12. On September 29, 2011, the creditors of the Applicant rejected the Proposal and, as a result the Applicant was deemed bankrupt and BDO was appointed Bankruptcy Trustee.
13. On November 29, 2011, the Bankruptcy Trustee executed a Letter of Intent with Mr. J. Scott Bending in anticipation of a transaction and, based on the Letter of Intent, the Bankruptcy Trustee offered a new Proposal to the creditors (the "New Proposal") and on January 19, 2012, the creditors accepted the New Proposal.
14. The New Proposal of the Applicant under theBankruptcy and Insolvency Act (Canada) was approved by the Court on February 6, 2012 and, on that date, the Applicant also ceased to be deemed bankrupt.
15. In connection with the New Proposal of the Applicant under the Bankruptcy and Insolvency Act (Canada), all creditors of the Applicant with proven and accepted claims were paid an interim distribution on or around January 13, 2012. Subject to the requirements of the Bankruptcy and Insolvency Act (Canada), BDO will move to complete the requirements of the New Proposal.
16. On September 29, 2011, on the deemed bankruptcy of the Applicant, Mr. Scott F. White, Mr. Perry N. Malone and Mr. Soren R. Mirzai resigned as directors of the Applicant. Mr. Scott F. White, Mr. Perry N. Malone and Mr. David Callander also resigned their officer positions with the Applicant.
17. On February 2, 2012, the Bankruptcy Trustee, appointed Mr. Scott F. White, Mr. Perry N. Malone and Mr. David Callander to the board of the directors of the Applicant; Mr. Scott F. White was appointed Chief Executive Officer of the Applicant; and Mr. David Callander was appointed Chief Financial Officer of the Applicant.
18. Following the revocation of the Cease Trade Order, the following changes will be made to the board of directors: Mr. Scott F. White will resign as a director, and as the Chief Executive Officer, of the Applicant; Mr. Perry N. Malone will resign as a director of the Applicant; Mr. Craig D. Schneider will be appointed a director and the Chief Executive Officer of the Applicant; Mr. Alan D. Vichert will be appointed a director of the Applicant; Mr. Schneider and Mr. Vichert will be appointed to the audit committee of the Applicant.
19. The Applicant has filed all outstanding continuous disclosure documents that are required to be filed under Ontario securities law. The Issuer has filed:
(i) Material change report May 6, 2011;
(ii) Form 13-502F1 Class 1 Reporting Issuers -- Participation Fee for the year ended December 31, 2010;
(iii) Audited consolidated financial statements and MD&A for the year ended December 31, 2010;
(iv) Certificates pursuant to NI 52-109 for the year ended December 31, 2010;
(v) Interim financial statements and MD&A for the period ended March 31, 2011;
(vi) Certificates pursuant to NI 52-109 for the period ended March 31, 2011;
(vii) Interim financial statements and MD&A for the period ended June 30, 2011;
(viii) Certificates pursuant to NI 52-109 for the period ended June 30, 2011;
(ix) Material change report September 2, 2011;
(x) Interim financial statements and MD&A for the period ended September 30, 2011;
(xi) Certificates pursuant to NI 52-109 for the period ended September 30, 2011;
(xii) Material change report March 30, 2012.
(xiii) Form 13-502F1 Class 1 Reporting Issuers -- Participation Fee for the year ended December 31, 2011;
(xiv) Audited consolidated financial statements and MD&A for the year ended December 31, 2011;
(xv) Certificates pursuant to NI 52-109 for the year ended December 31, 2011;
(xvi) Interim financial statements and MD&A for the period ended March 31, 2012; and
(xvii) Certificates pursuant to NI 52-109 for the period ended March 31, 2012.
20. Other than the Cease Trade Order, the Applicant is not in default of any of the requirements of the Act or of the rules and regulations made pursuant thereto except as discussed below.
21. The Applicant has paid all outstanding participation fees, filing fees and late fees owing to the Ontario Securities Commission and the British Columbia Securities Commission.
22. Other than the Cease Trade Order, the Applicant has not been subject to any cease trade order by the Commission.
23. The Applicant has not held an annual meeting of shareholders since June 23, 2010 and therefore has been in default of the annual meeting requirements under the OBCA. The Applicant has provided the Commission with an undertaking that it will hold an annual meeting of shareholders within three months after the date on which the Cease Trade Order is revoked. All matters relating to the meeting will be conducted in accordance with the OBCA and applicable securities legislation.
24. Except for the events leading up to the Applicant's bankruptcy on September 29, 2011 (as described above), the departure of old directors and officers and the appointment of new directors and officers, the Applicant has not had any "material changes" within the meaning of the Act since it was cease traded and is not otherwise in default of requirements to file material change reports under applicable securities legislation. The events leading up to the Applicant's bankruptcy on September 29, 2011 are disclosed in the Applicant's MD&A for the financial year ended December 31, 2011.
25. The Applicant's SEDAR profile and SEDI issuer profile supplement are up-to-date.
26. The Applicant is currently inactive and following the revocation of the Cease Trade Order, the Applicant intends to reactivate itself. The Applicant does not have any definitive plans in place for the operation of the business going forward. In particular, the Applicant is not presently considering, nor is it involved in any discussions relating to, an acquisition, a reverse takeover or similar transaction. However, it is the intention of management of the Applicant to investigate opportunities going forward. The Applicant has provided the Commission with an undertaking that it will not complete:
(a) a restructuring transaction involving, directly or indirectly, an existing or proposed, material underlying business which is not located in Canada,
(b) a reverse takeover with a reverse takeover acquirer that has a direct or indirect, existing or proposed, material underlying business which is not located in Canada, or
(c) a significant acquisition involving, directly or indirectly, an existing or proposed, material underlying business which is not located in Canada,
unless
i. the Applicant files a preliminary prospectus and a final prospectus with the Commission and obtains receipts for the preliminary prospectus and the final prospectus from the Director under the Act,
ii. the Applicant files or delivers with the preliminary prospectus and the final prospectus the documents required by Part 9 of National Instrument 41-101 General Prospectus Requirements ("NI 41-101") including a completed personal information form and authorization in the form set out in Appendix A of NI 41-101 for each current and incoming director, executive officer and promoter of the Applicant, and
iii. the preliminary prospectus and final prospectus contain the information required by applicable securities legislation.
27. The Applicant has filed completed personal information and authorization forms for each director and officer of the Applicant in the form of Appendix A of National Instrument 41-101 General Prospectus Requirements.
28. The Applicant has been inactive for more than seven months and had no material assets as at March 31, 2012 other than cash held in trust in the amount of $106,927.
29. Forthwith after the revocation of the Cease Trade Order, the Applicant will issue and file a news release and file a material change report on SEDAR disclosing the revocation of the Cease Trade Order and outlining the Applicant's future plans. The material change report will include disclosure on the Applicant's directors and officers, the Applicant's audit committee members, the Applicant's principal shareholder, what remedial continuous disclosure documents have been filed on SEDAR, and a description of the undertakings referred to in paragraphs 23 and 26 above.
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON being satisfied that to make this order would not be prejudicial to the public interest;
IT IS ORDERED, pursuant to Section 144 of the Act, that the Cease Trade Order is hereby revoked.
DATED this 6th day of July, 2012