NIN 95/20 - Draft Forms 12B and 14B - Information Required in Exchange Offering Prospectus of an Industrial Issuer and Information Required in Exchange Offering Prospectus of a Natural Resource Issuer [NIN - Rescinded]
Published Date: | 1995-04-28 |
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Effective Date: | 1995-04-26 |
As noted in NIN#94/17, the amendment repealing the statement of material facts exemption contained in section 58(1)(c) of the Securities Act will be brought into force once the exchange offering prospectus forms and the circumstances under which they will be used has been finalized.
Draft Form 12B is based on Form 12A - Information Required in Prospectus of a Junior Industrial Issuer and Draft Form 14B is based on Form 14A - Information Required in Prospectus of a Natural Resource Issuer. The disclosure requirements have been modified to recognize that issuers using the EOP Forms are reporting issuers listed on the Vancouver Stock Exchange and that senior issuers may use the EOP Forms.
The Commission anticipates that the EOP Forms will be made available for all distributions of securities made on or through the facilities of the Vancouver Stock Exchange provided the distribution is not an initial public offering. Accordingly, the use of the EOP Forms will be available to all issuers listed on the VSE and will not be restricted to issuers who are subject to the assessment report requirement under Local Policy Statement 3-17.
The Commission is requesting comment on the Draft EOP Forms. Specific comment is requested with respect to the following items:
· Is the extent of disclosure required under the EOP Forms appropriate for all issuers permitted to use the EOP Forms? Should a distinction be made between issuers listed on the venture board and issuers listed on the senior board, i.e., should an issuer listed on the senior board be permitted to omit certain of the detailed disclosure requirements (beyond those already permitted) of the EOP Forms and, if so, which requirements and why?
· Is the time period over which disclosure is required appropriate for distributions by issuers after their initial public offering and, if not, what is the appropriate time period and why?
· Is there additional disclosure that should be added and, if so, what disclosure and why?
Consistent with the Summary Prospectus Disclosure System available for junior industrial issuers filing on a Form 12A and natural resource issuers filing on a Form 14A, an EOP Summary Prospectus Disclosure System will also be introduced upon finalization of the EOP Forms. The EOP Summary Prospectus Disclosure System will make available to issuers filing an EOP the use of a summary prospectus and base disclosure document in the same manner as the Form 12A Summary Prospectus Disclosure System. (For a description of the Form 12A Summary Prospectus Disclosure System, please refer to NIN#94/17 and NIN#95/4.)
Request for Comment
The Commission is requesting written comment on the Draft EOP Forms. Comment letters should be submitted by June 16, 1995 to:
Brenda J. Benham
Director, Policy & Legislation
British Columbia Securities Commission
1100 - 865 Hornby Street
Vancouver, B.C.
V6Z 2H4
Comment letters submitted in response to Requests for Comment are placed on the public file and form part of the public record, unless confidentiality is requested. Although comment letters requesting confidentiality will not be placed on the public file, freedom of information legislation may require the Commission to make comment letters available. Persons submitting comment letters should therefore be aware that the press and members of the public may be able to obtain access to any comment letter.
DATED at Vancouver, British Columbia, on April 26, 1995.
Dean E. Holley
Superintendent of Brokers
References: NIN#94/17
NIN#95/4
Form 12A
Form 14A
LPS#3-17
The prospectus required for an industrial issuer where the distribution is to be done through the facilities of the Vancouver Stock Exchange in accordance with the Exchange Offering Prospectus Policy, shall be in the following form.
DRAFT FORM 12B
EXCHANGE OFFERING PROSPECTUS FORM
Securities Act
INFORMATION REQUIRED IN EXCHANGE OFFERING PROSPECTUS OF AN INDUSTRIAL ISSUER
GENERAL INSTRUCTIONS
1. This form provides a guideline to issuers in determining the extent of disclosure that is required to provide investors with full, true and plain disclosure of all material facts. Depending on the circumstances of the particular issuer, additional disclosure may be necessary.
2. All disclosure contained in the prospectus must be factual and non-promotional. Prospectuses are required to contain material facts. Statements of opinions, beliefs or views must not be made unless the statements are made on the authority of experts and consents are obtained and filed. Verification of disclosure may be required.
3. The disclosure contained in the prospectus must be understandable to readers and, in particular, should avoid the use of jargon. If technical terms are required, these terms shall be defined in a glossary that must be included in the prospectus.
4. Except where the context otherwise requires, "prospectus" refers to preliminary or final exchange offering prospectus as appropriate.
5. This Form may be used as a base disclosure document where the issuer elects to use a summary prospectus as permitted by Local Policy Statement 3-02. In that case, references to prospectus in this Form are to be replaced by references to base disclosure document.
6. In specific items, the instructions indicate that "issuer" includes the issuer's subsidiaries and proposed subsidiaries. In other circumstances, "issuer" may include the issuer's subsidiaries and proposed subsidiaries if the context reasonably requires. An entity can only be considered a proposed subsidiary if the entity will be a subsidiary on completion of the offering.
7. Where information as to the identity of a person is disclosed, disclose whether the person is at Arm's Length to the issuer or, if not, the relationship of the person to the issuer. Where the person is not at Arm's Length and is not an individual, disclose the name of any individual who is an insider of the person by virtue of paragraph (c) of the definition of insider in the Act.
8. Whenever disclosure is required to be made of costs paid or to be paid by the issuer, disclose the portion of the costs paid or to be paid to insiders or holders of performance shares or escrow securities.
9. When disclosure is required as of a specific date and there has been a significant or material change in the information subsequent to the date the information must be presented as of a date that reflects this change.
10. Each item outlines disclosure requirements. Instructions to assist you in providing this disclosure are printed in smaller type.
11. Certain terms used in this Form are defined in the Securities Act, S.B.C. 1985, c. 83 (the "Act"), Securities Regulation, B.C. Reg. 270/86 (the "Regulation") and the Interpretation Act, R.S.B.C. 1979, c. 206. Certain terms defined in specific sections of this Form are in bold. Other defined terms used in this Form, which are capitalized and in bold, are as follows:
"Arm's Length" means in relation to an arms length transaction, unless otherwise determined by the Superintendent or Exchange, a transaction between the issuer and a person that, at any time from the date of the transaction until the date of completion of the transaction, the person was not
(a) an insider, associate, affiliate or principal (as defined in Local Policy Statement No. 3-07) of the issuer,
(b) a person that
(ii) has a control person, insider or promoter that is an associate or affiliate of a control person, insider or promoter of the issuer
except where the persons insiders that are described in paragraphs (i) and (ii) hold in total less than 10% of the voting securities of the person.
"Development Costs" means costs incurred by the issuer, its subsidiaries and proposed subsidiaries relating to product research and development, material acquisitions of plant, equipment, technology and marketing rights, and does not include general and administrative costs.
"Exchange" means the Vancouver Stock Exchange.
"Funds Available" means the aggregate of
(a) the net proceeds to be derived by the issuer from the sale of the securities offered under the prospectus,
(b) the estimated minimum working capital available to the issuer, its subsidiaries and proposed subsidiaries as of the Most Recent Month End, and
(c) the amounts and sources of other funds that will be available to the issuer, its subsidiaries and proposed subsidiaries prior to or concurrently with the completion of the offering.
"Management" means all directors, officers, employees and contractors whose expertise is critical to the issuer, its subsidiaries and proposed subsidiaries in providing the issuer with a reasonable opportunity to achieve its stated business objectives.
"Most Recent Month End" means the latest month end prior to the date of the prospectus or revised preliminary prospectus or, where the date of the prospectus or revised preliminary prospectus is within ten days of the end of the latest month, the month end prior to the end of that month.
"Product" means any product, service or technology of the issuer
(a) that has a net book value representing more than 10% of the issuer's total assets,
(b) that generates more than 10% of the issuer's gross revenues,
(c) on which more than 10% of the proceeds of the offering will be spent, or
(d) that is or will be the focus of the issuer's stated business objectives.
"Stub Period" means the period between the issuer's most recently completed financial year and the Most Recent Month End.
1.1 Required language
[PRELIMINARY] EXCHANGE OFFERING PROSPECTUS
Head Office Address
Telephone Number]
Price to public | Agents discounts or commissions | Proceeds to issuer or selling security holder |
Per security | ....... | ....... | ....... |
Total | ....... | ....... | ....... |
3. Where the issuer has granted the Agent a "greenshoe" option, disclose the number of additional securities that may be issued if the option is exercised as a note to the table.
1.5 Risk factors
1.7 Foreign issuers
1.9 Plan of distribution
2. TABLE OF CONTENTS
3. SUMMARY OF PROSPECTUS
(b) the securities offered by the issuer, including the offering price and the net proceeds expected to be realized by the issuer,
(c) the intended use of the Funds Available, including the amount allocated for each use,
(d) the stated business objectives that the issuer expects to accomplish using the Funds Available,
(e) the specific risks relating to the business disclosed in paragraph (a), and
(f) any other information considered appropriate under the circumstances.
1. Where this document is a base disclosure document used in connection with a summary prospectus, this section is not required in the base disclosure document.
2. Appropriate cross-references must be made to items and page numbers in the prospectus.
3. Normally, the summary should not exceed two pages in length.
4.1 Name and incorporation
(b) the laws under which the issuer was incorporated or organized, the laws under which the issuer is presently governed, and the date the issuer came into existence,
(c) the full name of each of the issuer's subsidiaries or proposed subsidiaries, the laws under which they were incorporated or organized, the laws under which they are presently governed, the date they came into existence and the date they became subsidiaries of the issuer,
(d) if applicable, that the issuer has been a party to any amalgamation, arrangement or continuance or has changed its name, the laws governing the event, any prior names of the issuer, and that the issuer has consolidated or split its share capital, the date of the share consolidation or split and the ratio,
(e) relevant details of the issuer's form of organization and structure, where the issuer is not a company, and
(f) if material, a summary of the differences with respect to security holder rights and remedies between the laws under which the issuer is presently governed and the British Columbia Company Act.
4.2 Intercorporate relationships
5. BUSINESS OF THE ISSUER
5.1 Description and general development
2. Where this document will be used as a base disclosure document, the disclosure in this section should be in sufficient detail so that when it is extracted to the summary prospectus from the base disclosure document it will provide investors with a reasonable understanding of the issuers business.
5.2 Summary and analysis of financial operations
TABLE
* Month Period Ending * | Year Ending * | Year Ending * | |
Sales Gross Profit Research and Development Expenses Sales and Marketing Expenses General and Administrative Expenses Net Income (Loss) Working Capital Property, Plant and Equipment Deferred Research and Development Other Intangibles Long Term Liabilities Shareholders' Equity Dollar Amount Number of securities |
(b) those balance sheet conditions or income or cash flow items that may be indicators of the issuer's liquidity condition,
(c) the requirements relating to working capital items (e.g. where significant quantities of inventory are required to be carried to meet rapid delivery requirements of customers or where extended payment terms have been provided to customers),
(d) the nature and extent of legal or practical restrictions on the ability of subsidiaries to transfer funds to the issuer and the impact such restrictions have had or are expected to have on the ability of the issuer to meet its obligations,
(e) whether the issuer is in arrears on the payment of dividends, interest, or principal payment on borrowing, and
(f) whether the issuer is in default on any debt covenants at the present time or was in default during the most recently completed financial year and any period subsequent to the most recent financial year end for which financial statements are included in the prospectus.
3. Where it would be meaningful to an investor, include in the table any prior periods covered by the financial statements included in the prospectus and provide an analysis of the issuer's results of operations for those periods.
4. Where the closing of the distribution under the prospectus is subject to a minimum subscription, adjust the required statement as appropriate.
5. The analysis must discuss all significant expenditures. An expenditure would generally be considered significant where the expenditure represents 20% or more of the total expenditures included in material classification, such as deferred or expensed research and development, sales and marketing expenses, or general and administrative expenses.
8. Where there has been a significant or material change in operations from the date of the information in the table, the analysis of operations and variations in operations must discuss the change.
5.3 Stated business objectives
Where sales performance is considered to be an important objective, it must be stated in general terms. For example, the issuer may state that it anticipates generating sufficient cash flow from sales to pay its operating costs for a specified period following completion of the offering.
2. Where the closing of the distribution under the prospectus is subject to a minimum subscription, the description of the issuer's stated business objectives should reflect both the minimum and maximum net proceeds to be derived by the issuer.
5.4 Milestones
2. The milestones must be cross-referenced to the related items in the prospectus.
(b) the actual or proposed date of each acquisition or disposition,
(c) the name of the vendor or purchaser and whether the transaction was or will be at Arm's Length,
(d) for an acquisition or disposition not at Arm's Length, the vendor's out of pocket costs as described in Local Policy Statement No. 3-07,
(e) the consideration, both monetary and non-monetary, paid or to be paid to or by the issuer,
(f) any material obligations that must be complied with in order to keep any acquisition or disposition agreement in good standing,
(g) how the consideration was determined (e.g. limited to out of pocket costs, valuation opinion or Arm's Length negotiations), and
(h) any valuation opinion required by a policy of a securities regulatory authority or a stock exchange to support the value of the consideration paid in connection with a transaction not previously approved by the Superintendent or the stock exchange, or that has been approved within the preceding financial year and the Stub Period, including the name of the author, the date of the opinion, the assets to which the opinion relates and the value attributed to the assets.
9. The disclosure required by this section is also required of all acquisitions and dispositions where material terms of the acquisition or disposition are still outstanding.
10. Out of pocket costs must be supported by either audited financial statements or an audited statement of costs.
11. The granting or acquiring of any material licence agreement by the issuer or any predecessor is considered to be an acquisition or disposition for purposes of this section.
12. In this section, "issuer" includes the issuer's subsidiaries, proposed subsidiaries and predecessor[s].
(a) state the individual's name, age, position and responsibilities with the issuer and relevant educational background,
(b) state whether the individual works full time for the issuer or what proportion of the individual's time will be devoted to the issuer,
(c) state whether the individual is an employee or independent contractor of the issuer,
(d) state the individual's principal occupations or employment during the five years prior to the date of the prospectus, disclosing with respect to each organization as of the time such occupation or employment was carried on:
(ii) if applicable, that the organization was an affiliate of the issuer,
(iii) positions held by the individual,
(iv) whether it is still carrying on business, if known to the individual,
(e) describe the individual's experience in the issuer's industry, and
(f) state whether the individual has entered into a non-competition or non-disclosure agreement with the issuer.
1. The description of the principal occupation of a member of Management must be specific. The terms "businessman" or "entrepreneur" are not sufficiently specific.
2. The disclosure in (d)(iv) is only required where the individual was or is an officer or director of the organization.
5.7 Organizational structure
5.8 Products
(b) the history of development of the Products, including estimated Development Costs to the Most Recent Month End,
(c) the stage of development of the Products, including whether they are at the design, prototype, market test or commercial production stage,
(d) if the Products are not at the commercial production stage or if part of the Funds Available will be used for research and development,
(ii) the major components of the proposed development program that will be funded using the Funds Available and provide a Breakdown of Costs, and
(iii) whether the issuer is conducting its own research and development, is subcontracting out the research and development or is using a combination of those methods,
(iv) any material regulatory approvals that are required for the issuer to achieve its stated business objectives,
(f) where the development of documentation is considered to be necessary in the issuer's industry, the stage of development of documentation, including manuals, relating to the Products, and
(g) the potential impact of any laws, such as industry or environmental regulations or controls on ownership or profit repatriation, or economic or political conditions that may materially affect the issuer's operations.
1. The disclosure in (g) need only summarize the potential impact.
2. In this section, "issuer" includes the issuer's subsidiaries and proposed subsidiaries.
5.9 Future developments
2. In this section, "issuer" includes the issuer's subsidiaries and proposed subsidiaries.
5.10 Proprietary protection
(b) if no proprietary protection has been obtained, the steps Management intends to take to secure proprietary protection and, if known, the time periods for completing these steps, or explain why this proprietary protection has not or will not be obtained, and
(c) the steps taken by the issuer, its subsidiaries and proposed subsidiaries to protect their respective know how, trade secrets and other intellectual property, including physical possession of source codes and any use of confidentiality or non-competition agreements.
5.11 Operations
(b) state whether the issuer is producing the Products itself, is subcontracting out production, is purchasing the Products or is using a combination of these methods,
(c) disclose the location of existing property, plant and equipment, indicating whether the property, plant or equipment is owned or leased by the issuer,
(d) state the payment terms, expiration dates and the terms of any renewal options of any material leases or mortgages, whether the leases or mortgages are in good standing and, if applicable, that the landlord or mortgagee is not at Arm's Length with the issuer,
(e) disclose any specialized skill or knowledge requirements necessary for the Products to be produced and describe the extent that this skill or knowledge is available to the issuer,
(f) disclose sources and availability of raw materials, component parts or finished products including factors that may have a material impact on the issuer's operations such as:
ii) potential shortages of raw materials, component parts or finished products, or
iii) any unusual payment terms under any agreements or other arrangements with the issuer's principal suppliers, that may impact on the issuer's cash flow,
(h) disclose the extent to which the issuer's business is dependent upon a single or a limited number of customers,
(i) where any existing or proposed principal customer is not at Arm's Length with the issuer, disclose its name, relationship with the issuer, the material terms of any contract or arrangement with the issuer and the proportion of the issuer's total net sales made to that customer during the preceding financial year and the Stub Period,
(j) describe any unusual payment terms under any agreements or other arrangements with the issuer's principal customers that may impact on the issuer's cash flow, and
(k) disclose any proposed material changes to plant, property and equipment, manpower or sources of supply required to enable the issuer to meet its stated business objectives and provide a Breakdown of Costs for the major components of the proposed material changes that will be funded using the Funds Available.
(b) describe material industry trends within the market segments and specific geographical areas referred to in paragraph (a) that may impact on the issuer's ability to meet the issuer's stated business objectives,
(c) describe the competition within the market segments and specific geographical areas referred to in paragraph (a) including, to the extent known after reasonable investigation by the issuer,
ii) a comparison of the principal aspects of competition (e.g. price, service, warranty or product performance) between the issuer and its principal competitors, and
iii) potential sources of significant new competition,
(e) if applicable, state that obsolescence is a factor in the issuer's industry and describe how the issuer intends to maintain its competitive position,
(f) describe the effect of any material market controls or regulations within the market segment and specific geographical area referred to in paragraph (a) that may affect the marketing of the Products (e.g. marketing boards or export quotas), and
(g) describe the effect of any seasonal variation within the market segment and specific geographical area referred to in paragraph (a) that may affect the sales of the Products.
2. In discussing competition, consideration must be given to substitute or alternative products that may impact on the issuer's ability to meet its stated business objectives.
(a) describe when, how and by whom the Products are or will be marketed and, if not at Arm's Length with the issuer, their relationship with the issuer,
(b) disclose any marketing programs actual or proposed to meet the issuer's stated business objectives and the major components of the marketing programs (e.g. trade shows, magazines, television or radio advertising),
(c) provide a Breakdown of Costs for major components of the marketing programs,
(d) disclose the issuer's pricing policy (e.g. at market, discount or premium), and
(e) where after sales service, maintenance or warranties are a significant competitive factor, describe the differences between the issuer's policies and those of its principal competitors.
(f)
Provide
(b) a Breakdown of Costs of the monthly administration costs disclosed in paragraph (a), including any anticipated variations.
2. The disclosure under this item is not required where the issuer has material operating revenues.
6. USE OF PROCEEDS
6.1 Funds Available
Provide a breakdown of Funds Available as follows:
(a) the net proceeds to be derived by the issuer from the sale of the securities offered under the prospectus,
(b) the estimated working capital available to the issuer, its subsidiaries and proposed subsidiaries as of the Most Recent Month End, and
(c) the amounts and sources of other funds that will be available to the issuer, its subsidiaries and proposed subsidiaries prior to or concurrently with the completion of the offering.
2. Where other sources of funds will be available to the issuer, identify the material terms, including the timing, and identity of the person providing the funds.
6.2 Principal purposes
State the following:
1. If there is a maximum subscription that differs from the minimum subscription, identify the order of priority for the principal purposes.
2. Statements as to principal purposes for which the Funds Available are to be used must be specific and be cross-referenced to the estimated costs disclosed in Item 5. Where the issuer has not had material operating revenues, the table must include the administrative costs required for the issuer to achieve its stated business objectives, or that will be incurred over a period of 12 months, whichever is greater.
3. Funds Available not allocated to one of the principal purposes must be identified as "Working Capital To Fund Ongoing Operations" and must be sufficient to fund the issuer's operations during the offering period and, following completion of the offering, to maintain the reporting issuer in good standing under corporate and securities legislation during the time frame contemplated by its stated business objectives.
4. Where Funds Available will be paid to an insider or holder of performance shares or escrow securities, identify, either in the table or by way of a note to the table, the person, amount of the payments and principal purposes to which the payments relate.
5. Where more than 10% of the Funds Available will be used to reduce or retire indebtedness and where the indebtedness was incurred within the two preceding years, the principal purposes for which the indebtedness was used and to whom the money was paid must be disclosed, and where the creditor is an insider to the issuer or is a holder of performance shares or escrow securities, identify the creditor and the nature of the relationship to the issuer.
6. Where the prospectus is used in connection with a special warrant or similar transaction, the principal purposes for which the funds raised in such transaction must be disclosed. Where all or a portion of these funds have been spent provide a cross-reference to the detailed discussion in Item 5 and explain how the funds were spent. The Funds Available must include the balance of the funds, if any, raised by the special warrant or similar transaction that have not been spent.
6.3 Conflicts of interest
7. FACTORS
(b) risks relating to the nature of the offering, and
(c) any other risks.
2. With respect to (a), the most significant risk factors should be disclosed at the top of the list.
3. In this Item, "issuer" means the issuer, its subsidiaries and proposed subsidiaries.
8. DIRECTORS, OFFICERS AND PROMOTERS
2. In sections 8.3 through 8.6, information for periods prior to those indicated in the section, depending upon the materiality of the events, may be required.
3. Provide the information required by this Item for each proposed nominee for election or appointment as a director of the issuer and indicate clearly that the individual is a proposed nominee.
8.1 Name, address, occupation and security holding
(b) the principal occupations during the five years prior to the date of the prospectus and, where the principal occupation is that of an officer of a company other than the issuer, state the name of the company and the principal business in which it was engaged, and
(c) the number of securities (including options) of the issuer beneficially owned, directly or indirectly, indicating the number of performance shares or escrow securities held in escrow and the percentage of the class to be held on conclusion of the offering.
2. Upon application, the disclosure required by this section may be waived where the operations of a subsidiary or a proposed subsidiary are not material to the issuer's operations.
3. The description of the principal occupation of a director, officer or promoter must be specific. The terms "businessman" or "entrepreneur" are not sufficiently specific.
4. Where the director, officer or promoter is a member of Management, the information in (b), other than a current occupation, may be disclosed by a cross-reference to the page on which the information required by section 5.6 is disclosed.
5. If there is a maximum subscription that differs from the minimum subscription, disclose the percentage of the class held by the directors, officers and promoters on both a minimum and maximum basis.
8.2 Aggregate ownership of securities
8.3 Other reporting issuers
8.4 Corporate trade cease orders or bankruptcies
(b) was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person, state the fact.
8.5 Penalties or sanctions
2. Information relating to other penalties and sanctions depending on the materiality of the events may be required.
8.6 Individual bankruptcies
8.7 Conflicts of interest
9. INDEBTEDNESS OF DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT
(b) the nature of the indebtedness and the purpose for which it was incurred,
(c) the amount presently outstanding,
(d) the rate of interest paid or charged,
(e) the terms of repayment,
(f) the nature of any security granted to the issuer, and
(g) if the person is an associate or affiliate of a director, officer or member of Management, the person's relationship to the director, officer or member of Management of the issuer.
2. Provide the information required by this Item for each proposed nominee for election or appointment as a director of the issuer and indicate clearly that the individual is a proposed nominee.
10. PAYMENTS TO INSIDERS AND PROMOTERS
10.1 Executive compensation
(b) in addition to the periods required under Form 41, disclosure must be provided for the Stub Period.
2. Where the issuer has material operating revenues, the issuer need not provide the information required by (a).
10.2 Related party transactions
(b) the nature of the assets or services,
(c) the form and value of the consideration, and
(d) where the issuer has acquired assets,
ii) where the consideration referred to in paragraph (c) above exceeds the seller's out of pocket costs, a cross-reference to the valuation opinion disclosed in section 5.5.
1. The disclosure required by this section is also required for all related party transactions where material terms of the transactions are still outstanding.
2. Information with respect to executive compensation need not be disclosed in this section.
3. Any debt settlement made by the issuer to any insider or promoter must be disclosed in this section.
4. For acquisitions where the consideration is not in excess of the greater of 10% of the aggregate compensation or consideration paid to the individual under sections 10.1 and 10.2 or $5,000, the information required by this item may be aggregated together and classified as "miscellaneous".
5. As an alternative to the disclosure required in (b), provide a cross-reference to the page(s) of the prospectus where the required disclosure is made.
10.3 Proposed compensation
2. Where the issuer has material operating revenues, the issuer need only provide the information required by Form 41.
11.1 Existing and proposed share and long-term debt
TABLE
_____________________________________________________________________
Column 1 Column 2 Column 3
Number of Price per Total
issued securities security consideration
(a) Issued as of [the Most Recent Month End] | ____________ | [N/A] | ____________ |
(b) Offering | |||
(c) To be issued if all securities being offered are sold | ____________ | [N/A] | ____________ |
2. If there is a minimum subscription, disclose the number of securities that are offered and that would be issued on both a minimum and maximum basis.
3. Set out in the table or a note thereto the number of securities of each class authorized to be issued.
4. The information shall be updated to the Most Recent Month End.
5. In columns 1 and 3 of the table, (c) is equal to the total of (a) and (b).
6. Where the issuer has outstanding long-term debt, the information required by Item 7 of Form 12 shall be provided.
7. As a note to the table, indicate whether there are restrictions on the transferability of the securities (e.g. hold periods, escrow or pooling agreements) and summarize the nature of the restrictions (including the dates hold periods expire and shares are released, and the related number of shares. Where the information is provided elsewhere the disclosure may be provided by a cross-reference to the page in the prospectus where the disclosure is contained.
11.2 Options and other rights to purchase securities
ii) the name of the grantor and the nature of the option granted to each person (e.g. options, Agent's warrants or other warrants),
iii) the designation number of the securities subject to the option, and any material anti-dilution provisions,
iv) the purchase price of the securities subject to the option or the formula by which the purchase price will be determined,
v) the expiration date of the option, and
vi) the market value of the securities subject to the option as of the date of grant and the Most Recent Month End.
(c) State the following:
2. In this section, "issuer" includes the issuer's subsidiaries and proposed subsidiaries.
3. The information shall be updated to the Most Recent Month End.
4. Where the issuer has material operating revenues, the information required for directors, officers and employees under (a) may be aggregated for options of the same type, grant date, exercise price and expiry date on the basis of the following categories:
(ii) all members of management of all subsidiaries of the issuer as a group and all directors of such subsidiaries who are not also members of management as a group, without naming them, excluding individuals referred to in clause (i),
(iii) by all other employees of the issuer as a group, without naming them, and
(iv) by all other employees of the subsidiaries of the issuer as a group, without naming them.
11.3 Fully diluted share capital
TABLE
Number of Percentage securities of Total
Recent Month End
(b) Offered under
the prospectus
(c) Securities reserved for
future issue as of
the Most Recent
Month End
Total _________ ________
100
________________________________________________________________
2. If there is a minimum subscription, disclose the number of securities offered and total on both a minimum and maximum basis.
3. (c) is the amount indicated in paragraph (b) from section 11.2 (with respect to options in securities of the issuer granted by the issuer only).
4. A separate table shall be prepared for each class or kind of securities that the issuer has issued or will have issued upon completion of the offering.
5. The information shall be updated to the Most Recent Month End.
11.4 Principal holders of voting securities
(b) control or direction over, or
(c) a combination of direct or indirect beneficial ownership of and of control or direction over,
TABLE
__________________________________________________________________
Column 1 | Column 2 | Column 3 | Column 4 |
Name and municipality of residence | Number of securities | Percentage of class prior to the offering | Percentage of class after the offering |
2. If voting securities will be issued prior to, concurrently with or immediately following the offering, indicate as far as practicable the respective holding of voting securities that will exist after giving effect to the issue.
3. If there is a maximum subscription that differs from the minimum subscription, disclose the percentage of the class held by the principal holders on both a minimum and maximum basis.
4. If, to the knowledge of the issuer or the Agent, more than 10% of any class of voting securities of the issuer are held or are to be held subject to any voting trust or other similar agreement/arrangement, state the designation of such securities, the number or amount held or to be held and the duration of the agreement. Give the names and addresses of the voting trustees and outline briefly their voting rights and other powers under the agreement.
5. Where a person identified in the table is a control person of the issuer and is not a director, officer or promoter of the issuer, provide the disclosure required for sections 8.3 - 8.6 for the control person. If the control person is a corporation, the disclosure must be provided for the control persons of the corporation.
6. A separate table shall be prepared for each class or kind of voting securities that the issuer has issued or will have issued upon completion of the offering.
7. The information shall be updated to the Most Recent Month End.
11.5 Performance shares or escrow securities
(b) the estimated percentage that the performance shares or escrow securities will represent of the total issued and outstanding voting securities of the issuer, upon the completion of the offering,
(c) the names of the beneficial owners of the performance shares or escrow securities and the number of performance shares or escrow securities owned by each and, with respect to owners of performance shares, why the person is a principal as defined in Local Policy Statement No. 3-07,
(d) the name of the escrow agent,
(e) the date of the escrow agreement and the conditions governing the transfer, release and cancellation of the performance shares or escrow securities, and
(f) the rights or obligations of a person who ceases to be a principal, dies or becomes bankrupt to retain, transfer or surrender to the issuer for cancellation the performance shares or escrow securities.
12. DIVIDEND RECORD
13. PRIOR SALES AND TRADING INFORMATION
14. PLAN OF DISTRIBUTION
14.1 Terms of the distribution agreement
(b) the date of the agreement,
(c) the nature of the Agents' obligation to take up and pay for any of the securities being offered,
(d) the number of securities expected to be sold by each of the Agents, and whether any arrangements have been made for selling group participation,
(e) the number of additional securities that may be issued, if the issuer has granted the Agent a "greenshoe" option,
(f) the conditions, if any, under which the Agent may "market out",
(g) the nature of the consideration to be paid to the Agent,
(h) the conditions, if any, under which any of the proceeds are to be held in trust or escrow pending completion of the offering,
(i) the number of days following the completion of the offering by which the issuer will receive the net proceeds of the offering from the Agents or the date by which the Agents are to purchase the securities, and
(j) whether there is any intention to stabilize the market.
14.2 Minimum and maximum subscription
14.3 Secondary offering
14.4 Extraprovincial offerings
15. DESCRIPTION OF SECURITIES OFFERED
15.1 Terms
(b) voting rights,
(c) liquidation or distribution rights,
(d) pre-emptive rights,
(e) conversion rights,
(f) if the securities are subscription warrants or rights, the period during which, and the price at which, the warrants or rights are exercisable,
(g) redemption, purchase for cancellation or surrender provisions,
(h) sinking or purchase fund provisions,
(i) if the securities are obligations, provisions with respect to interest rate, maturity, nature and priority of any security for the obligations, permissible substitutions for security, negative covenants, name of the trustee under any indenture relating to the obligations and the nature of any material relationship between the trustee and the issuer or any of its affiliates, and
(j) provisions as to modification, amendment or variation of any such rights or provisions.
15.2 Modification of terms
16. SPONSORSHIP AND FISCAL AGENCY AGREEMENTS
(b) the name of the registrant,
(c) the consideration, both monetary and non-monetary, paid or to be paid by the issuer, and
(d) a summary of the nature of the services to be provided, including the period during which the services will be provided, activities to be carried out and, where market making services will be provided, whether the registered broker or dealer will commit its own funds to the purchase of securities of the issuer or whether the registered broker or dealer will act as agent for others to do so.
17. INVESTOR RELATIONS ARRANGEMENTS
(b) the name, principal business and place of business of the person providing the services,
(c) the background of the person providing the services,
(d) whether the person has, or is known by the issuer to have
ii) control or direction over, or
iii) a combination of direct or indirect beneficial ownership of and of control or direction over
securities of the issuer,
(e) whether the person has any right to acquire securities of the issuer, either in full or partial compensation for services,
(f) the consideration both monetary and non-monetary paid or to be paid by the issuer, including whether any payments will be made in advance of services being provided,
(g) if the issuer does not have sufficient funds to pay for the services, how the issuer intends to pay for the services, and
(h) the nature of the services to be provided, including the period during which the services will be provided.
2. The disclosure in (c) and (h) need only summarize the background and nature of services.
3. Indicate whether the person providing promotional, investor relations or market stabilization securities has a market making account with the Exchange pursuant to Exchange rules.
4. If there are no promotional or investor relations arrangements, or arrangements to stabilize the market, so state.
18. RELATIONSHIP BETWEEN ISSUER OR SELLING SECURITY HOLDER AND AGENT
ii) the name of each relevant related party of the Agent,
iii) the details of the ability of the Agent or any related party of the Agent to affect materially the operations of the issuer, and
iv) whether the issuer is indebted to the Agent or any related party of the Agent and, if so, provide particulars of such indebtedness, and
2. In this item, "issuer" means the issuer, its subsidiaries and proposed subsidiaries.
19. RELATIONSHIP BETWEEN ISSUER AND PROFESSIONAL PERSONS
2. In this section, responsible solicitor means the solicitor who is primarily responsible for the preparation of or for advice to the issuer, selling security holder or Agent with respect to the contents of the prospectus.
3. In this section, "issuer" includes the issuer's subsidiaries and proposed subsidiaries.
20. LEGAL PROCEEDINGS
21. AUDITOR
22. REGISTRAR AND TRANSFER AGENT
23. MATERIAL CONTRACTS
23.1 Particulars of material contracts
(b) the consideration paid or payable by or to the issuer, and
(c) the date of each contract,
(d) the general nature of each contract.
23.2 Inspection of material contracts.
24. OTHER MATERIAL FACTS
25. PURCHASERS' STATUTORY RIGHTS
26. FINANCIAL STATEMENTS, REPORTS AND OTHER EXHIBITS
27. CERTIFICATES
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IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE ACT OR THE REGULATION THAT, AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.
The prospectus required for a Natural Resource issuer where the distribution is to be done through the facilities of the Vancouver Stock Exchange in accordance with the Exchange Offering Prospectus Policy, shall be in the following form.
DRAFT FORM 14B EXCHANGE OFFERING PROSPECTUS FORM
Securities Act
INFORMATION REQUIRED IN EXCHANGE OFFERING PROSPECTUS OF A
NATURAL RESOURCE ISSUER
GENERAL INSTRUCTIONS
1. This form provides a guideline to issuers in determining the extent of disclosure that is required to provide investors with full, true and plain disclosure of all material facts. Depending on the circumstances of the particular issuer, additional disclosure may be necessary.
2. All disclosure contained in the prospectus must be factual and non-promotional. Prospectuses are required to contain material facts. Statements of opinions, beliefs or views must not be made unless the statements are made on the authority of experts and consents are obtained and filed. Verification of disclosure may be required.
3. The disclosure contained in the prospectus must be understandable to readers and, in particular, should avoid the use of jargon. If technical terms are required, these terms shall be defined in a glossary that must be included in the prospectus.
4. Except where the context otherwise requires, "prospectus" refers to preliminary or final exchange offering prospectus as appropriate.
5. This form may be used as a base disclosure document where the issuer elects to use a summary prospectus as permitted by Local Policy Statement 3-02. In that case, references to "prospectus" in this form are to be replaced by references to "base disclosure document".
6. In specific items, the instructions indicate that "issuer" includes the issuer's subsidiaries and proposed subsidiaries. In other circumstances, "issuer" may include the issuer's subsidiaries and proposed subsidiaries if the context reasonably requires. An entity can only be considered a proposed subsidiary if the entity will be a subsidiary on completion of the offering.
7. Where information as to the identity of a person is disclosed, disclose whether the person is at Arm's Length to the issuer or, if not, the relationship of the person to the issuer. Where the person is not at Arm's Length and is not an individual, disclose the name of any individual who is an insider of the person by virtue of paragraph (c) of the definition of insider in the Act.
8. Whenever disclosure is required to be made of costs paid or to be paid by the issuer, disclose the portion of the costs paid or to be paid to insiders or holders of performance shares or escrow securities.
9. When disclosure is required as of a specific date and there has been a significant or material change in the requested information subsequent to that date, the information must be presented as of a date that reflects this change.
10. Each item outlines disclosure requirements. Instructions to assist you in providing this disclosure are printed in smaller type.
11. Certain terms used in this Form are defined in the Securities Act, S.B.C. 1985, c. 83 (the "Act"), Securities Regulation, B.C. Reg. 270/86 (the "Regulation"), Interpretation Act, R.S.B.C. 1979, c. 206, and National Policy Statements, Nos. 2-A and 2-B. Certain terms defined in specific sections of the form are in bold type. Other defined terms used in this Form, which are capitalized and in bold type, are as follows:
"Agent" means underwriter.
"Arm's Length" means in relation to an arm's length transaction, unless otherwise determined by the Superintendent or Exchange, a transaction between the issuer and a person that, at any time from the date of the transaction until the date of completion of the transaction, the person was not
(a) an insider, associate, affiliate or principal (as defined in Local Policy Statement No. 3-07) of the issuer,
(b) a person that
(ii) has a control person, insider or promoter that is an associate or affiliate of a control person, insider or promoter of the issuer
"Breakdown of Costs" means a schedule of costs associated with the specific classification, separately itemizing each component that represents 10% or more of the total costs, with all other costs being grouped together under the heading "miscellaneous costs".
Exchange means the Vancouver Stock Exchange.
"Funds Available" means the aggregate of
(b) the estimated minimum working capital available to the issuer, its subsidiaries and proposed subsidiaries as of the Most Recent Month End, and
(c) the amounts and sources of other funds that will be available to the issuer, its subsidiaries and proposed subsidiaries prior to or concurrently with the completion of the offering.
"Most Recent Month End" means the latest month end prior to the date of the prospectus or revised preliminary prospectus or, where the date of the prospectus or revised preliminary prospectus is within ten days of the end of the latest month, the month end prior to the end of that month.
"Principal Properties" means the Properties on which the issuer intends to expend a material part of the Funds Available.
"Properties" includes all the properties, mines, plants, facilities, and installations presently owned, leased, held under option, or presently intended to be owned, leased, or held under option by the issuer, its subsidiaries and proposed subsidiaries.
"Stub Period" means the period between the issuer's most recently completed financial year and the Most Recent Month End.
1. FACE PAGE DISCLOSURE
1.1 Required language
1.2 Preliminary prospectus disclosure
1.3 Basic disclosure about the offering
Head Office Address
Telephone Number]
1.4 Distribution spread
Price to public | Agents discounts or commissions | Proceeds to issuer or selling security holder | |
Per security | . . . . . . . . | . . . . . . . . . . | . . . . . . . . . |
Total | . . . . . . . . | . . . . . . . . . . | . . . . . . . . . |
2. Only commissions paid or payable in cash by the issuer or selling security holder and discounts granted are to be included in the table. Other commissions or consideration, including warrants, options, finders fees, sponsorship fees, fiscal agency payments or other similar payments, shall be set out as a note to the table.
3. Where the issuer has granted the Agent a "greenshoe" option, disclose the number of additional securities that may be issued if the option is exercised as a note to the table.
4. Where the prospectus discloses a plan of distribution not involving an underwriting or other subscription guarantee, the closing of the distribution under the prospectus must be subject to a minimum subscription and, where the prospectus also discloses a maximum subscription that differs from the minimum subscription, totals must be provided for both the minimum and maximum subscriptions.
5. If any of the securities being offered are for the account of a security holder, provide a cross-reference to "Plan of Distribution - Secondary Offering".
6. Where the prospectus is used in connection with a special warrant or similar transaction, state the amount that has been received by the issuer in the sale of the special warrants or in a similar transaction as a note to the table. If the funds are held in a special trust disclose the conditions for release or whether the funds have already been released.
1.5 Risk factors
1.6 Public and insider ownership
1.7 Foreign issuers
1.8 Agent
1.9 Plan of distribution
2. TABLE OF CONTENTS
3. SUMMARY OF PROSPECTUS
(b) the name and location of the Principal Properties and the natural resource(s) being targeted.
(c) the securities offered by the issuer, including the offering price and the net proceeds expected to be realized by the issuer,
(d) the intended use of the Funds Available, including the amount allocated for each use,
(e) the expertise and experience of Management with respect to the business of the issuer,
(f) the specific risks relating to the business and to the Principal Properties disclosed in paragraph (a) and (b), and
(g) any other information considered appropriate under the circumstances.
2. Appropriate cross-references must be made to items and page numbers in the prospectus.
3. Normally, the summary should not exceed two pages in length.
4. CORPORATE STRUCTURE
4.1 Name and incorporation
(b) the laws under which the issuer was incorporated or organized, the laws under which the issuer is presently governed, and the date the issuer came into existence,
(c) the full name of each of the issuer's subsidiaries or proposed subsidiaries, the laws under which they were incorporated or organized, the laws under which they are presently governed, the date they came into existence and the date they became subsidiaries of the issuer,
(d) if applicable, that the issuer has been a party to any amalgamation, arrangement or continuance or has changed its name, the laws governing the event, any prior names of the issuer, and that the issuer has consolidated or split its share capital, the date of the share consolidation or split and the ratio,
(e) relevant details of the issuer's form of organization and structure, where the issuer is not a company, and
(f) if material, a summary of the differences, with respect to security holder rights and remedies, between the laws under which the issuer is presently governed and the British Columbia Company Act.
4.2 Intercorporate relationships
5. BUSINESS OF THE ISSUER
5.1 Description and general development
2. Where this document will be used as a base disclosure document, the disclosure in this section should be in sufficient detail so that when it is extracted to the summary prospectus from the base disclosure document it will provide investors with a reasonable understanding of the issuer's business.
3. In this section, "issuer" includes the issuer's subsidiaries, proposed subsidiaries and predecessor(s).
5.2 Summary and analysis of financial operations
TABLE
*Month Period Ending | Year Ending | Year Ending | |
Revenues Gross Profit Exploration and Development Expenses General and Administrative Expenses Net Income (Loss) Working Capital Properties Deferred Exploration and Development Other Assets Long Term Liabilities Shareholders' Equity Dollar Amount Number of Securities | * | * | * |
(b) those balance sheet conditions or income or cash flow items that may be indicators of the issuers liquidity condition,
(c) the nature and extent of legal or practical restrictions on the ability of subsidiaries to transfer funds to the issuer and the impact such restrictions have had or are expected to have on the ability of the issuer to meet its obligations,
(d) whether the issuer is in arrears on the payment of dividends, interest, or principal payment on borrowing, and
(e) whether the issuer is in default on any debt covenants at the present time or was in default during the most recently completed financial year and any period subsequent to the most recent financial year end for which financial statements are included in the prospectus.
2. Where it would be meaningful to an investor, include in the table any prior periods covered by the financial statements included in the prospectus and provide an analysis of the issuer's results of operations for those periods.
3. Where the closing of the distribution under the prospectus is subject to a minimum subscription, adjust the required statement as appropriate.
4. In the discussion identify any unusual or extraordinary events or transactions or any significant economic changes that materially affect income from continuing operations and describe the extent to which income from continuing operations was affected.
5. Describe in the discussion the extent to which any changes in net sales or revenues are attributable to changes in selling prices or to changes in the volume or quantity of products being sold.
6. The analysis must discuss all significant expenditures. An expenditure would generally be considered significant where the expenditure represents 20% or more of the total expenditures included in a material classification, such as deferred or expensed exploration and development, properties, or general and administrative expenses.
7. Where there has been a significant or material change in operations from the date of the information in the table, the analysis of operations and variations in operations must discuss the change.
6. PROPERTIES OF THE ISSUER
2. All information required in this item shall be presented on a property by property basis.
3. When disclosure is required for the Properties of the issuer, describe all Principal Properties first, identifying them as such, before discussing the remaining Properties of the issuer.
4. Sufficient detail should be included in this item, so as to provide an investor with an opportunity to adequately evaluate the geological merits and/or economic prospects of the Principal Properties without having to refer to the Form 54 or Form 55 property reports.
5. At a minimum, include a property location map and a property plan map. Additional maps that would facilitate an investor's evaluation of the Properties may be required.
6. In this item, "issuer" includes the issuer's subsidiaries, proposed subsidiaries and predecessor[s].
6A MINERAL PROPERTIES
6.1 Location, description and acquisition
(b) the nature (claim, title, lease, option, or other interest) and status (patented, unpatented, etc.) of the interest under which the issuer has or will have the rights to hold or operate the Property, and the expiry date, if applicable, and
(c) the details of the acquisition or proposed acquisition of the Property by the issuer, including particulars of:
(ii) the name of the vendor and whether the transaction was or will be at Arm's Length,
(iii) for an acquisition not at Arm's Length, the vendor's out of pocket costs as described in Local Policy Statement No. 3-07,
(iv) the consideration, both monetary and non-monetary, including securities, carried interest, royalties and finders fees, paid or to be paid by the issuer,
(v) any material obligations that must be complied with in order to keep any acquisition agreement and property in good standing, including work progress with stated due dates where applicable,
(vi) how the consideration was determined (e.g. limited to out of pocket costs, valuation opinion, or Arm's Length negotiations), and
(vii) any valuation opinion required by a policy of a securities regulatory authority or a stock exchange to support the value of the consideration paid in connection with a transaction not previously approved by the Superintendent or the stock exchange, or that has been approved within the preceding financial year and the Stub Period, including the name of the author, the date of the opinion, the assets to which the opinion relates and the value attributed to the assets.
2. In providing the information requested by (b), indicate the type of interest (e.g., fee simple, leasehold, royalty, reservation, option, farmout, farmin or other type of interest and any variation thereof), including the percentage interest in the Properties held by the issuer, as well as the date on which the issuer has the right to hold or operate the Properties. In addition, indicate whether or not a title report has been obtained. If so, disclose any material qualifications to the title report and the relationship to the issuer of the individual providing the title report.
3. Out of pocket costs must be supported by either audited financial statements or an audited statement of costs.
4. The disclosure required by (c) need only be provided for all acquisitions within the last three years and for all acquisitions where material obligations under the terms of the acquisition are still outstanding.
6.2 Exploration and development history
(b) all prospecting, exploration, development and operations previously done by the issuer on the Properties, including a Breakdown of Costs for the work done, referring to section 5.2, where appropriate.
6.3 Geology, mineral deposits and reserves
(b) the type of, dimensions of, and grade of any mineralization,
(c) the mineral deposits and their dimensions, including the identity of their principal metallic or other constituents, in so far as known, and where the work done has established the existence of reserves of proven, probable or possible ore, or other mineralization,
(ii) whether the reserve is mineable or in situ, and
(iii) the name of the person making the estimates, the nature of the persons relationship to the issuer, and the date the estimates were made,
(e) the current extent and condition of any surface exploration and development, and any surface plant and equipment, and
(f) any other results that would allow for a more accurate evaluation of the geological merits of each Principal Property.
2. Disclose whether any of the Principal Properties are without a known body of commercial ore and whether the proposed program is an exploratory search for ore.
6.4 Proposed exploration and development program
(b) a Breakdown of Costs for this proposed program with reference to Item 8, and
(c) a description of the general topography, vegetation, climate, infrastructure, means of access, source of labour and power sources that may affect the program.
2. Significant components of the program include geological mapping, trenching, drilling, underground works, bulk sampling, feasibility study, etc.
3. If the exploration and development program is divided into stages, indicate whether proceeding with a subsequent stage in the program is contingent upon the results achieved on an earlier stage.
4. Disclose the name and relationship to the issuer of the engineer on whose recommendation or report the issuer is relying in formulating its exploration and development program.
5. The disclosure in (c) is only required when these factors may be potential impediments to commercial exploration. Examples may include limitations on the exploration season due to climate or effects on operations due to environmental regulations.
6.5 Other properties
6.6 Dispositions
6B OIL AND GAS PROPERTIES
6.7 Location, description and acquisition
(b) the nature (title, lease, option or other interest) and status of the interest under which the issuer has or will have the rights to hold or operate the Property, and the expiry date, if applicable,
(c) the working interest, the net revenue interest (both before and after pay out), together with the gross area of the lease, the assigned petroleum and natural gas rights (all depths, certain depths or formation), the expiry date of the lease and the royalties payable,
(d) the total number of wells, including producing, shut-in, disposal, suspended and abandoned (identifying separately oil and gas wells in each category), and the amount of acreage available for further exploration and/or development,
(e) the proximity of the Property to pipelines or other means of transportation, and
(f) the details of the acquisition or proposed acquisition of the Property by the issuer, including particulars of:
(ii) the name of the vendor and whether the transaction was or will be at Arm's Length,
(iii) for an acquisition not at Arm's Length, the vendor's out of pocket costs as described in Local Policy Statement No. 3-07,
(iv) the consideration, both monetary and non-monetary, including securities, carried interest, royalties and finders fees, paid or to be paid by the issuer,
(v) any material obligations that must be complied with in order to keep any acquisition agreement and property in good standing, including work progress with stated due dates where applicable,
(vi) how the consideration was determined (e.g. limited to out of pocket costs, valuation opinion or Arm's Length negotiations), and
(vii) any valuation opinion required by a policy of a securities regulatory authority or a stock exchange to support the value of the consideration paid in connection with a transaction not previously approved by the Superintendent or the stock exchange, or that has been approved within the preceding financial year and the Stub Period, including the name of the author, the date of the opinion, the assets to which the opinion relates and the value attributed to the assets.
2. Out of pocket costs must be supported by either audited financial statements or an audited statement of costs.
3. The disclosure required by (f) need only be provided for all acquisitions within the last three years and for all acquisitions where material obligations under the terms of the acquisition are still outstanding.
6.8 Production history
6.9 Drilling activity
(b) the number of such wells completed as producing wells and the number abandoned as dry holes, and
(c) the amount expended by the issuer and its subsidiaries on these drilling and exploration activities with reference to section 5.2.
6.10 Geology and reserve summaries
(b) the net quantity (after the deduction of royalties) and type (crude oil, natural gas, natural gas liquids, sulphur, etc.) of the estimated reserves of the issuer, together with the value assigned to the reserves on a net cash flow basis, using discount rates at 0, 10, 15, and 20%, and
(c) any other relevant details that will be of assistance to a prospective investor in evaluating the geological merits of each Principal Property.
2. The information required by (b) should be provided by jurisdiction, category (producing, non-producing, etc.) and type of reserve.
3. In accordance with National Policy Statement No. 2-B, dollar values must be calculated at current prices and costs, unless under contract as to price, to all future time.
4. Provide a summary table of the assumptions employed regarding prices, costs, inflation and other factors used. Identify the source of the data used in the estimates, including any comments the author of the report might have respecting the soundness of the data.
5. Provide the estimated total capital costs necessary to achieve the net cash flow and the amount of such costs estimated to be incurred in each of the first two years of cash flow estimates.
6.11 Proposed exploration and development program
(b) a Breakdown of Costs for this proposed program with reference to Item 8, and
(c) a description of the general topography, vegetation, climate, infrastructure (including pipelines), means of access, source of labour and power sources that may affect the program.
2. If the exploration and development program is divided into stages, disclose whether proceeding with a subsequent stage in the program is contingent upon the results achieved on an earlier stage.
3. The disclosure in (c) is only required when these factors may be potential impediments to commercial exploration. Examples may include limitations on the exploration season due to climate or effects on operations due to environmental regulations.
4. Disclose the name and relationship to the issuer of the engineer on whose recommendation or report the issuer is relying in formulating its exploration and development program.
6.12 Other properties
6.13 Dispositions
7. ADMINISTRATION
(b) a Breakdown of Costs for the monthly administration costs disclosed in paragraph (a), including any anticipated variations.
2. The disclosure under this item is not required where the issuer has material operating revenues.
8. USE OF PROCEEDS
8.1 Funds Available
(b) the estimated working capital available to the issuer, its subsidiaries and proposed subsidiaries as of the Most Recent Month End, and
(c) the amounts and sources of other funds that will be available to the issuer, its subsidiaries and proposed subsidiaries prior to or concurrently with the completion of the offering.
2. Where other sources of funds will be available to the issuer, identify the material terms, including the timing, and identity of the person providing the funds.
8.2 Principal purposes
2. Statements as to principal purposes for which the Funds Available are to be used must be specific and be cross-referenced to the estimated costs disclosed in Items 6 and 7.
Where the issuer has not had material operating revenues, the table must include the administration costs required for the issuer to achieve its objectives or that will be incurred over a period of 12 months, whichever is greater.
3. When disclosing expenditures made on specific Properties, indicate whether they are Principal Properties, or not.
4. Funds Available not allocated to one of the principal purposes must be identified as "Working Capital to Fund Ongoing Operations".
5. Where Funds Available will be paid to an insider or holder of performance shares or escrow securities, identify, either in the table or by way of a note to the table, the person, amount of the payments and principal purposes to which the payments relate.
6. Where more than 10% of the Funds Available will be used to reduce or retire indebtedness and where the indebtedness was incurred within the two preceding years, the principal purposes for which the indebtedness was used and to whom the money was paid must be disclosed, and where the creditor is an insider to the issuer or is a holder of performance shares or escrow securities, identify the creditor and the nature of the relationship to the issuer.
7. Where the prospectus is used in connection with a special warrant or similar transaction, the principal purposes for which the funds were raised in such transaction must be disclosed. Where all or a portion of these funds have been spent, provide cross-reference to the detailed discussion in Item 6 and explain how the funds were spent. The Funds Available will include the balance of the funds, if any, raised by the special warrant or similar transaction that have not been spent.
8.3 Conflicts of interest
9. RISK FACTORS
(b) risks relating to the nature of the offering, and
(c) any other risks.
2. With respect to (a), the most significant risk factors should be disclosed at the top of the list.
3. In this Item, "issuer" means the issuer, its subsidiaries and proposed subsidiaries.
10. DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT
2. In sections 10.3 through 10.6, information for periods prior to those indicated in the section depending upon the materiality of the events may be required.
3. Provide the information required by this Item for each proposed nominee for election or appointment as a director of the issuer and indicate clearly that the individual is a proposed nominee.
10.1 Name, address, occupation and security holding
(b) the nature of expertise and relevant educational background in the issuer's business,
(c) the principal occupation during the five years prior to the date of the prospectus and, where the principal occupation is that of an officer of a company other than the issuer, state the name of the company and the principal business in which it was engaged, and
(d) the number of securities (including options) of the issuer beneficially owned, directly or indirectly, indicating the number of performance shares or escrow securities held in escrow and the percentage of the class to be held on conclusion of the offering.
2. Upon application, the disclosure required by this section may be waived where the operations of a subsidiary or a proposed subsidiary are not material to the issuer's operations.
3. The description of the principal occupation of a director, officer, promoter or other member of Management must be specific. The terms "businessman" or "entrepreneur" are not sufficiently specific.
4. If there is a maximum subscription that differs from the minimum subscription, disclose the percentage of the class held by the principal holders on both a minimum and maximum basis.
10.2 Aggregate ownership of securities
10.3 Other reporting issuers
10.4 Corporate cease trade orders or bankruptcies
(b) was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person, state the fact.
10.5 Penalties or sanctions
2. Information relating to other penalties and sanctions depending on the materiality of the events may be required.
10.6 Individual bankruptcies
10.7 Conflicts of interest
11. INDEBTEDNESS OF DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT
(b) the nature of the indebtedness and the purpose for which it was incurred,
(c) the amount presently outstanding,
(d) the rate of interest paid or charged,
(e) the terms of repayment,
(f) the nature of any security granted to the issuer, and
(g) if the person is an associate or affiliate of a director, officer or member of Management, the person's relationship to the director, officer or member of Management of the issuer.
2. Provide the information required by this Item for each proposed nominee for election or appointment as a director of the issuer and indicate clearly that the individual is a proposed nominee.
12. PAYMENTS TO INSIDERS AND PROMOTERS
12.1 Executive compensation
(b) in addition to the periods required under Form 41, disclosure must be provided for the Stub Period.
2. Where the issuer has material operating revenues, the issuer need not provide the information required by (a).
12.2 Related party transactions
(b) the nature of the assets or services,
(c) the form and value of the consideration, and
(d) where the issuer has acquired assets,
(ii) where the consideration referred to in paragraph (c) above exceeds the seller's out of pocket costs, a cross-reference to the valuation opinion disclosed in section 6.1(c)(vii) or 6.7(f)(vii).
2. Information with respect to executive compensation need not be disclosed in this section.
3. Any debt settlements made by the issuer to any insider or promoter must be disclosed in this section.
4. For acquisitions where the consideration is not in excess of the greater of 10% of the aggregate compensation or consideration paid to the individual under sections 12.1 and 12.2 or $5,000, the information required by this item may be aggregated together and classified as "miscellaneous".
5. As an alternative to the disclosure required in (b), provide a cross-reference to the page(s) of the prospectus where the required disclosure is made.
12.3 Proposed compensation
2. Where the issuer has material operating revenues, the issuer need only provide the information required by Form 41.
13. SHARE CAPITAL
13.1 Existing and proposed share and long-term debt capital
TABLE
Column 1 | Column 2 | Column 3 | |
Number of issued securities | Price per security | Total consideration | |
(a) Issued as of [the Most Recent Month End] | [N/A] | ||
(b) Offering | _________ | _________ | |
(c) To be issued if all securities being offered are sold | [N/A] |
2. Set out in the table or a note thereto the number of securities of each class authorized to be issued.
3. If there is a minimum subscription, disclose the number of securities that are offered and that would be issued on both a minimum and maximum basis.
4. The information shall be updated to the Most Recent Month End.
5. In columns 1 and 3 of the table, (c) is equal to the total of (a) and (b).
6. Where the issuer has outstanding long-term debt, the information required by Item 7 of Form 14 shall be provided.
7. As a note to the table, indicate whether there are any restrictions on the transferability of the securities (e.g. hold periods, escrow or pooling agreements) and summarize the nature of the restrictions (including the dates hold periods expire and shares are released, and the related number of shares). Where the information is provided elsewhere the disclosure may be provided by a cross-reference to the page in the prospectus where the disclosure is contained.
13.2 Options and other rights to purchase shares
(ii) the name of the grantor and the nature of the option granted to each person (e.g. options, Agent's warrants or other warrants),
(iii) the designation, number of the securities subject to the option and any material anti-dilution provisions,
(iv) the purchase price of the securities subject to the option or the formula by which the purchase price will be determined,
(v) the expiration date of the option, and
(vi) the market value of the securities subject to the option as of the date of grant and the Most Recent Month End.
(c) State the following:
2. In this section, "issuer" includes the issuer's subsidiaries and proposed subsidiaries.
3. The information shall be updated to the Most Recent Month End.
4. Where the issuer has material operating revenues, the information required for directors, officers and employees under (a) may be aggregated for options of the same type, grant date, exercise price and expiry date on the basis of the following categories:
(ii) all members of management of all subsidiaries of the issuer as a group and all directors of such subsidiaries who are not also members of management as a group, without naming them, excluding individuals referred to in clause (i),
(iii) by all other employees of the issuer as a group, without naming them, and
(iv) by all other employees of the subsidiaries of the issuer as a group, without naming them.
13.3 Fully diluted share capital
Number of Securities | Percentage of Total | |
(a) Issued as of the Most Recent Month End (b) Offered under the prospectus (c) Securities reserved for future issue as of the Most Recent Month End | ||
Total | __________ | ___________ 100 |
2. If there is a minimum subscription, disclose the number of securities offered and total on both a minimum and maximum basis.
3. (c) is the amount indicated in paragraph (b) from section 13.2 (with respect to options on securities of the issuer granted by the issuer only).
4. A separate table shall be prepared for each class or kind of securities that the issuer has issued or will have issued upon completion of the offering.
5. The information shall be updated to the Most Recent Month End.
13.4 Principal holders of voting securities
(b) control or direction over, or
(c) a combination of direct or indirect beneficial ownership of and of control or direction over,
TABLE
Column 1 | Column 2 | Column 3 | Column 4 |
Name and municipality of residence | Number of securities | Percentage of class prior to the offering | Percentage of class after the offering |
2. If voting securities will be issued prior to, concurrently with or immediately following the offering, indicate as far as practicable the respective holding of voting securities that will exist after giving effect to the issue.
3. If there is a maximum subscription that differs from the minimum subscription, disclose the percentage of the class held by the principal holders on both a minimum and maximum basis.
4. If, to the knowledge of the issuer or the Agent, more than 10 per cent of any class of voting securities of the issuer are held or are to be held subject to any voting trust or other similar agreement/arrangement, state the designation of such securities, the number or amount held or to be held and the duration of the agreement. Give the names and addresses of the voting trustees and outline briefly their voting rights and other powers under the agreement.
5. Where a person identified in the table is a control person of the issuer and is not a director, officer or promoter of the issuer, provide the disclosure required for sections 10.3 - 10.6 for the control person. If the control person is a corporation, the disclosure must be provided for the control persons of the corporation.
6. A separate table shall be prepared for each class or kind of voting securities that the issuer has issued or will have issued upon completion of the offering.
7. The information shall be updated to the Most Recent Month End.
13.5 Performance shares or escrow securities
(b) the estimated percentage that the performance shares or escrow securities will represent of the total issued and outstanding voting securities of the issuer, upon the completion of the offering,
(c) the names of the beneficial owners of the performance shares or escrow securities and the number of performance shares or escrow securities owned by each and, with respect to owners of performance shares, why the person is a principal as defined in Local Policy Statement No. 3-07,
(d) the name of the escrow agent,
(e) the date of the escrow agreement and the conditions governing the transfer, release and cancellation of the performance shares or escrow securities, and
(f) the rights or obligations of a person who ceases to be a principal, dies or becomes bankrupt to retain, transfer or surrender to the issuer for cancellation the performance shares or escrow securities.
14. DIVIDEND RECORD
15. PRIOR SALES AND TRADING INFORMATION
16. PLAN OF DISTRIBUTION
16.1 Terms of the distribution agreement
(b) the date of the agreement,
(c) the nature of the Agents' obligation to take up and pay for any of the securities being offered,
(d) the number of securities expected to be sold by each of the Agents and whether any arrangements have been made for selling group participation,
(e) the number of additional securities that may be issued, if the issuer has granted the Agents a "greenshoe" option,
(f) the conditions, if any, under which the Agents may "market out",
(g) the nature of the consideration to be paid to the Agents,
(h) the conditions, if any, under which any of the proceeds are to be held in trust or escrow pending completion of the offering,
(j) whether there is any intention to stabilize the market.
16.2 Minimum and maximum subscription
16.3 Secondary offering
16.4 Extraprovincial offerings
17. DESCRIPTION OF SECURITIES OFFERED
17.1 Terms
(b) voting rights,
(c) liquidation or distribution rights,
(d) pre-emptive rights,
(e) conversion rights,
(f) if the securities are subscription warrants or rights, the period during which, and the price at which, the warrants or rights are exercisable,
(g) redemption, purchase for cancellation or surrender provisions,
(h) sinking or purchase fund provisions,
(i) if the securities are obligations, provisions with respect to interest rates, maturity, nature and priority of any security for the obligations, permissible substitutions for security, negative covenants, name of the trustee under any indenture relating to the obligations and the nature of any material relationship between the trustee and the issuer or any of its affiliates, and
(j) provisions as to modification, amendment or variation of any such rights or provisions.
17.2 Modification of terms
18. SPONSORSHIP AND FISCAL AGENCY AGREEMENTS
(b) the name of the registrant,
(c) the consideration, both monetary and non-monetary, paid or to be paid by the issuer, and
(d) a summary of the nature of the services to be provided, including the period during which the services will be provided, activities to be carried out and, where market making services will be provided, whether the registered broker or dealer will commit its own funds to the purchase of securities of the issuer or whether the registered broker or dealer will act as Agent for others to do so.
19. INVESTOR RELATIONS ARRANGEMENTS
(b) the name, principal business and place of business of the person providing the services,
(c) the background of the person providing the services,
(d) whether the person has, or is known by the issuer to have:
(ii) control or direction over, or
(iii) a combination of direct or indirect beneficial ownership of and of control or direction over,
securities of the issuer,
(f) the consideration both monetary and non-monetary paid or to be paid by the issuer, including whether any payments will be made in advance of services being provided,
(g) if the issuer does not have sufficient funds to pay for the services, how the issuer intends to pay for the services, and
(h) the nature of the services to be provided, including the period during which the services will be provided.
2. The disclosure in (c) and (h) need only summarize the background and nature of services.
3. Indicate whether the person providing promotional, investor relations or market stabilization services has a market making account with the Exchange pursuant to Exchange rules.
4. If there are no promotional or investor relations arrangements, or arrangements to stabilize the market, so state.
20. RELATIONSHIP BETWEEN ISSUER OR SELLING SECURITY HOLDER AND AGENT
(ii) the name of each relevant related party of the Agent,
(iii) the details of the ability of the Agent or any related party of the Agent to affect materially the operations of the issuer, and
(iv) whether the issuer is indebted to the Agent or any related party of the Agent and, if so, provide particulars of such indebtedness, and
2. In this item, "issuer" means the issuer, its subsidiaries and proposed subsidiaries.
21. RELATIONSHIP BETWEEN ISSUER AND PROFESSIONAL PERSONS
2. In this section, "responsible solicitor" means the solicitor who is primarily responsible for the preparation of or for advice to the issuer, selling security holder or Agent with respect to the contents of the prospectus.
3. In this section, "issuer" includes the issuer's subsidiaries and proposed subsidiaries.
22. LEGAL PROCEEDINGS
23. AUDITOR
24. REGISTRAR AND TRANSFER AGENT
25. MATERIAL CONTRACTS
25.1 Particulars of material contracts
(b) the parties to each contract,
(c) the consideration paid or payable by or to the issuer, and
(d) the general nature of each contract.
25.2 Inspection of contracts and reports
26. OTHER MATERIAL FACTS
27. PURCHASERS' STATUTORY RIGHTS
28. FINANCIAL STATEMENTS, REPORTS AND OTHER EXHIBITS
29. CERTIFICATES
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