BCSC-OSC Partial Revocation of Cease Trade Order

Citation: 2020 BCSECCOM 256

Partial Revocation Order

Kalytera Therapeutics, Inc.

Under the securities legislation of British Columbia and Ontario
(the Legislation)

Background

¶ 1 Kalytera Therapeutics, Inc. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the regulator or securities regulatory authority in each of British Columbia (the Principal Regulator) and Ontario (each a Decision Maker) respectively on June 22, 2020.

¶ 2 The Issuer has applied to each of the Decision Makers for a partial revocation order of the FFCTO.

¶ 3 This order is the order of the Principal Regulator and evidences the decision of the Decision Maker in Ontario.

Interpretation

¶ 4 Terms defined in National Instrument 14-101 Definitions or in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions have the same meaning if used in this order, unless otherwise defined.

Representations

¶ 5 This decision is based on the following facts represented by the Issuer:

(a) The Issuer (previously named Santa Maria Petroleum Inc. “Santa Maria”) was incorporated under the laws of the Province of Ontario on October 15, 2004. On December 30, 2016, the Issuer completed a change of business and reverse takeover (the Merger). Pursuant to the Merger, the privately held Delaware corporation that carried on the business of Kalytera prior to the Merger (previously named Kalytera Therapeutics and then named Kalytera Therapeutics (Delaware), Inc.) became a wholly-owned subsidiary of Santa Maria. In connection with the Merger, Santa Maria changed its name from Santa Maria Petroleum Inc. to Kalytera Therapeutics, Inc., effected a consolidation of its capital, and continued under the laws of British Columbia as the current Issuer.

(b) The Issuer’s head office is in Suite 200, 4040 Civic Center Drive, San Rafael, California, 94903.

(c) The Issuer is a reporting issuer in British Columbia, Ontario, and Alberta. The Issuer is not a reporting issuer in any other jurisdiction.

(d) The Issuer has an authorized share capital of an unlimited number of common shares, of which 525,450,000 common shares are issued and outstanding as of the date hereof.

(e) The common shares are listed on the TSX Venture Exchange (the TSXV); trading of the common shares has been halted because of the FFCTO.

(f) The FFCTO was issued due to the failure of the Issuer to file its annual audited financial statements, annual management’s discussion and analysis and certification of annual filings for the year ended December 31, 2019 (the Unfiled Documents).

(g) Subsequent to the failure to file the Unfiled Documents, the Issuer has not filed any further financial statements or any continuous disclosure documents required by applicable securities legislation (together with the Unfiled Documents, the Unfiled Continuous Disclosure), except for news release discussing the FFCTO and its impact on previously announced transactions and informing the public of the Issuer’s actions to address the FFCTO.

(h) Other than the failure to file the Unfiled Continuous Disclosure, the Issuer is not in default of the securities legislation in any jurisdiction and the Issuer’s SEDAR and SEDI filings are up-to-date.

(i) The Issuer is seeking a partial revocation of the FFCTO in order to complete a private placement of up to 32,304,800 units at a price of CAD $0.015 per unit (the Unit) for gross proceeds of up to approximately CAD $484,572, in tranches, with each Unit consisting of one common share and one-half of one share purchase warrant (the Private Placement). Each full warrant would entitle the holder to purchase one common share of the Issuer for CAD $0.05 per share exercisable for 24 months from the date of closing of the relevant tranche of the Private Placement. The warrants issued as part of the Private Placement are subject to an acceleration clause where at any time on or after the date that is 4 months from the closing date, if the daily volume weighted average trading price of the common shares of the Issuer on the TSXV equals or exceeds CAD $0.10 per share for a period of at least 10 consecutive trading days, then the Issuer is entitled to accelerate the expiration date of the warrants to the date that is 30 days from the date that notice of such acceleration is given. From and after the new accelerated expiration date, no warrant may be exercised, and all unexercised warrants shall be void.

(j) The Private Placement will be offered to various subscribers in British Columbia, Ontario, and Alberta and other jurisdictions relying on the accredited investor exemption contained in section 2.3 of National Instrument 45-106 Prospectus Exemptions and offshore investors meeting the aforementioned exemption and the exemption in their local jurisdiction. It is anticipated that these offshore investors will be mainly from the United States and will be accredited investors under United States securities laws.

(k) The Private Placement will not result in the creation of a new control person of the Issuer.

(l) The Issuer seeks to conduct the Private Placement to raise sufficient funds to prepare and file all outstanding financial statements and continuous disclosure records; obtain the TSXV for approval of the Private Placement; pay accounts payable necessary to keep the Issuer operational; and provide the Issuer with sufficient working capital to continue its operations until it can apply for and receive a full revocation of the FFCTO.

(m)The Issuer intends to allocate the proceeds from the Private Placement as follows:

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

(o) The Issuer reasonably expects that the proceeds raised from the Private Placement will be sufficient to bring its continuous disclosure up to date and to apply for a full revocation of the FFCTO and pay all outstanding related fees.

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

Order

¶ 6 Each of the Decision Makers is satisfied that a partial revocation order of the FFCTO meets the test set out in the Legislation for the Principal Regulator to
make the decision.

¶ 7 The decision of the Decision Makers under the Legislation is that the FFCTO is partially revoked as it applies to the Issuer solely to permit the Private Placement, provided that prior to completion of the Private Placement, the Issuer will:

(i) provide each investor in the Private Placement with a copy of the FFCTO;

(ii) provide each investor in the Private Placement with a copy of this Partial Revocation Order; and

(iii) obtain a signed and dated acknowledgement from each investor in the Private Placement, which clearly states that the common shares and warrants purchased in the Private Placement will remain subject to the FFCTO until a full revocation order is granted, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

¶ 8 July 14, 2020

Michael L. Moretto, CPA, CA
Chief of Corporate Disclosure
Corporate Finance
British Columbia Securities Commission

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