Lotus Ventures Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Securities Act, s. 88 -- Cease to be a reporting issuer in BC -- The securities of the issuer are beneficially owned by not more than 50 persons and are not traded through any exchange or market -- The issuer is not an OTC reporting issuer; the securities of the issuer are beneficially owned by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders worldwide; no securities of the issuer are traded on a market in Canada or another country; the issuer is not in default of securities legislation except it has not filed certain continuous disclosure documents.

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Following an arrangement, all of the issuer's common shares were acquired by another company that is a reporting issuer and in compliance with its continuous disclosure obligations; the issuer has outstanding securities that are beneficially owned by more than 14 persons in a jurisdiction in Canada and more than 50 persons in total worldwide; the outstanding securities are exercisable for securities of the acquirer or redeemable based on the value of the shares of the acquirer; the issuer is not required under the terms of the outstanding securities to remain a reporting issuer; the issuer is in default of securities legislation for its failure to file by the prescribed deadline certain interim continuous disclosure filings, which filings were due after the completion of the arrangement.

Applicable Legislative Provisions

Securities Act, R.S.B.C. 1996, c. 418, s. 88.

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

Citation: 2024 BCSECCOM 451

October 18, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF LOTUS VENTURES INC. (the Filer)

ORDER

Background

¶ 1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):

(a) the British Columbia Securities Commission is the principal regulator for this application,

(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta,

(c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

¶ 2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

¶ 3 This order is based on the following facts represented by the Filer:

1. the Filer's head office is located in Armstrong, British Columbia;

2. the Filer is a reporting issuer in British Columbia, Alberta and Ontario;

3. the Filer was incorporated under the Business Corporations Act (British Columbia);

4. on January 17, 2024, the Filer initiated proposal proceedings under the Bankruptcy and Insolvency Act (Canada) (the BIA Proceedings) in the Supreme Court of British Columbia (the Court);

5. on April 8, 2024, the British Columbia Securities Commission issued a failure-to-file cease trade order (the FFCTO) as a result of the Filer's failure to file the following continuous disclosure for the year ended November 30, 2023 (the Required Records):

(a) audited financial statements;

(b) the related management's discussion and analysis; and

(c) certification of annual filings;

6. the Filer's failure to file the Required Records was a result of financial distress;

7. on May 7, 2024, the Filer filed a proposal (the Proposal) which was unanimously approved at a meeting of the Filer's creditors;

8. the Proposal was funded from the proceeds of a Subscription Agreement between the Filer and 5008679 Ontario Limited (the Purchaser) dated May 3, 2024 (the Subscription Agreement);

9. on July 29, 2024, the British Columbia Securities Commission granted a partial revocation of the FFCTO to permit the Filer to complete the Transactions (as defined below);

10. on August 16, 2024, the Filer completed the various transactions under the Proposal and the Subscription Agreement (collectively, the Transactions), which were effected in accordance with their terms and pursuant to the provisions of the approval and reverse-vesting order granted by the Court (the RVO);

11. as a result of the Transactions, among other things, all outstanding equity interests, including shares, convertible securities, or any other rights or interests to purchase the same, of the Filer were deemed cancelled for no consideration;

12. the Purchaser was issued 1,000 common shares of the Filer pursuant to the Transactions to become the sole securityholder of the Filer, and the Filer does not have any other securities issued and outstanding;

13. on August 20, 2024, the common shares of the Filer were delisted from the Canadian Securities Exchange and were removed from the over-the-counter trading market in the United States;

14. no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;

15. the Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;

16. the outstanding securities of the Filer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;

17. the Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer;

18. the Filer is not in default of securities legislation in any jurisdiction, other than the defaults that led to the issuance of the FFCTO and its obligations to file on or before April 29, 2024 its interim financial statements and related management's discussion and analysis for the three months ended February 29, 2024 and on or before July 30, 2024 its interim financial statements and related management's discussion and analysis for the six months ended May 31, 2024 as required under National Instrument 51-102 Continuous Disclosure Obligations and the related certificates as required under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (the Subsequent Records);

19. the Filer's failure to file the Subsequent Records was a result of financial distress;

20. the Filer has concurrently applied for a full revocation of the FFCTO;

21. the Filer is not eligible to use the simplified procedure under National Policy 11-206 Process for Cease to be a Reporting Issuer Applications as it is in default for failure to file the Required Records and the Subsequent Records; and

22. upon the granting of the Order Sought, the Filer will no longer be a reporting issuer or the equivalent in any jurisdiction in Canada.

Order

¶ 4 Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.

The decision of the Decision Makers under the Legislation is that the Order Sought is granted.

OSC File #: 2024/0533