In the matter of Buzz Capital 2 Inc., 2018 CanLII 153686

Ontario Commission des 22^nd Floor 22e étage

Securities valeurs mobilières 20 Queen Street West 20, rue queen ouest

Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE “JURISDICTION”)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEFAPPLICATIONS

IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BUZZ CAPITAL 2 INC.

(THE “FILER”)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of Ontario (the “Legislation”) for an exemption from the requirements in subparagraph 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”) and item 5.2 of Form 51-102F3 Material Change Report (“51-102F3”) to file all of the financial statements of a reverse takeover acquirer that would be required to be included in the form of prospectus that the reverse takeover acquirer was eligible to use prior to the reverse takeover for a distribution of securities in the Jurisdictions (the “Exemption Sought”). Furthermore, the principal regulator in the Jurisdiction has received a request from the Filer for a decision (the “Confidentiality Sought”) that the application and this decision document (the “Confidential Material”) be kept confidential and not be made public until the earlier of: (i) the date on which the Filer advises the principal regulator that there is no need for the Confidential Material to remain confidential; (ii) the date on which the Filer publicly announces or files the Filing Statement; and (iii) the date that is 90 days from the date of this decision.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) The Ontario Securities Commission is the principal regulator for this application; and

(b) The Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in British Columbia and Alberta (collectively with Ontario, the “Jurisdictions”).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 51-102 have the same meanings if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was incorporated on May 8, 2018 under the laws of the Canada Business Corporations Act. The Filer is a capital pool company whose common shares (“Common Shares”) are listed on the TSX Venture Exchange (“TSXV”). As a result, the principal business of the Filer to date has been to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction, as that term is defined in Policy 2.4 of the TSXV Corporate Finance Manual.

2. The Filer’s head office is 116 Albert Street, Suite 300 Ottawa, Ontario, K1P 5G3.

3. The Filer is a reporting issuer in the Jurisdictions and is not in default of any securities legislation in any jurisdiction.

4. The Common Shares are listed and posted for trading on the TSXV under the trading symbol “BUZH.P”.

5. The Filer’s financial year end is December 31.

6. Heliene Inc. (“Heliene”) is a private company that was incorporated on October 8, 2009 pursuant to the Business Corporations Act (Ontario). Helene’s head office is 520 Allen’s Side Road, Sault Ste. Marie, Ontario, P6A 5K8.

7. Heliene is not in default of securities legislation in any jurisdiction.

8. Heliene is a domestic module manufacturer of high performance solar modules for utility-scale, commercial, and residential markets.

9. The Filer and Heliene entered into a letter of intent dated October 1, 2021 pursuant to which the Filer will acquire all of the outstanding shares of Heliene by way of an amalgamation between Heliene and a wholly-owned subsidiary of the Filer (the “Qualifying Transaction”).

10. The Qualifying Transaction will be a “reverse takeover” as defined in NI 51-102 and will serve as the Filer’s “Qualifying Transaction” under TSXV Policy 2.4 - Capital Pool Companies. In connection with the Qualifying Transaction, the Filer will file a filing statement (the “Filing Statement”) in the form of TSXV Form 3B2 – Information Required in a Filing Statement for a Qualifying Transaction (“Form 3B2”) pursuant to the policies of the TSXV. Form 3B2 requires disclosure of financial statements of the Filer and Heliene prescribed by National Instrument 41-101 General Prospectus Requirements (“NI 41-101”) and Form 41-101F1 Information Required in a Prospectus (“Form 41-101F1”). In addition to applying to the principal regulator for the exemptive relief requested herein, the Filer has made application to the TSXV for a waiver from the equivalent financial statement requirements under TSXV Form 3B2.

11. The Filing Statement will include the annual audited financial statements for Heliene as at January 1, 2019, as at December 31, 2020 and 2019 and for the years then ended, and the reviewed interim financial statements for Heliene for the three and nine month periods ended September 30, 2021 and 2020 (collectively, the “Financial Statements”).

12. In relation to the Financial Statements, the auditors were not appointed as auditors of Heliene (the “Auditors”) until June 25, 2021, and thus were not able to satisfy themselves concerning the inventory quantities held at January 1, 2019, either by observing the counting of the physical inventory or through alternative means.

13. Since opening inventories enter into the determination of financial performance and cash flows, the Auditors ‎were unable to determine whether any adjustments to the consolidated ‎financial performance and consolidated cash flows might be necessary for the year ended ‎December 31, 2019.

14. As a result, the Auditors expressed a modified opinion relating to inventory on Heliene’s statement of financial position as at January 1, 2019 and on the financial performance and cash flows for the year ended December 31, 2019 (the “Inventory Qualification”).

15. The only modification in the Auditor's report on the audited statement of financial position as at January 1, 2019 and the audited annual financial statements of Heliene for the year ended December 31, 2019 is the Inventory Qualification. The auditor’s report for the audited annual financial statements for Heliene as at December 31, 2020 and for the year then ended contain an unmodified opinion.

16. With respect to reverse takeover transactions, Section 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”) and item 5.2 of 51-102F3 Material Change Report (“Form 51-102F3”) require that a reporting issuer file, within specified periods, the financial statements as prescribed by the appropriate prospectus form for the reverse takeover acquirer, being Form 41-101F1. The reverse takeover acquirer in respect of the Filer is Heliene.

17. Subsection 4.10(2)(a) of NI 51-102 provides that if a reporting issuer completes a reverse takeover, it must file the following financial statements for the reverse takeover acquirer, unless the financial statements have already been filed:

    1. financial statements for all annual and interim periods ending before the date of the reverse takeover and after the date of the financial statements included in an information circular or similar document, or under item 5.2 of the Form 51-102F3 Material Change Report, prepared in connection with the transaction; or

    2. if the reporting issuer did not file a document referred to in subparagraph (i), or the document does not include the financial statements for the reverse takeover acquirer that would be required to be included in a prospectus, the financial statements prescribed under securities legislation and described in the form of prospectus that the reverse takeover acquirer was eligible to use prior to the reverse takeover for a distribution of securities in the jurisdiction.

18. Item 5.2 of Form 51-103F3 requires a material change report filed in respect of a closing of the Qualifying Transaction to include, for each entity that results from the Qualifying Transaction, disclosure (including financial statements) prescribed under securities legislation and described in the form of prospectus that the entity would be eligible to use.

19. The financial statement requirements for a prospectus are found in NI 41-101 and Form 41-101F1.

20. NI 41-101 requires that the Financial Statements be audited in accordance with National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (“NI 52-107”). The Inventory Qualification is contrary to the subsection 3.3(1)(a)(i) of NI 52-107.

21. Item 32.1 of Form 41-101F1 includes the following requirements:

The financial statements of an issuer required under this item to be included in a prospectus must include:

1. the financial statements of any predecessor entity that formed, or will form, the basis of the business of the issuer, even though the predecessor entity is, or may have been, a different legal entity, if the issuer has not existed for 3 years,

2. the financial statements of a business or businesses acquired by the issuer within 3 years before the date of the prospectus or proposed to be acquired, if a reasonable investor reading the prospectus would regard the primary business of the issuer to be the business or businesses acquired, or proposed to be acquired, by the issuer, [emphasis added] and

3. ...

22. Subsection 5.3(1) of the Companion Policy to NI 41-101 notes that both a reverse takeover and a qualifying transaction for a capital pool company are examples of when a reasonable investor might regard the primary business of the issuer to be the acquired business.

23. The Financial Statements, together with the other disclosure prescribed by Form 3B2 that will be included in the Filing Statement, will provide disclosure of all material facts relating to the Filer, Heliene and Heliene’s business and will contain sufficient information to permit investors to make a reasoned assessment of the Filer’s business following completion of the Qualifying Transaction.

24. Provided the Exemption Sought is granted, the Filing Statements will include the Inventory Modification and shall be filed following acceptance by the TSXV.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

1. the Filing Statement includes the Financial Statements; and

2. the Filing Statement is filed on SEDAR forthwith following acceptance by the TSXV.

Furthermore, the decision of the principal regulator is that the Confidentiality Sought is granted.

DATED at Toronto this 14th day of December, 2021.

‘Lina Creta’

Lina Creta

Manager, Corporate Finance

Ontario Securities Commission

OSC File #: 2021/0582