```md
Ontario Commission des 22<sup>nd</sup> 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
LENDIFIED HOLDINGS INC.
PARTIAL REVOCATION ORDER
Under the securities legislation of Ontario (the Legislation)
Background
1. Lendified Holdings Inc. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the Ontario Securities Commission (the Principal Regulator) on July 9, 2020.
2. The Issuer has applied to the Principal Regulator for a partial revocation order of the FFCTO.
Interpretation
Terms defined in the Legislation, National Instrument 14-101 – Definitions or 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
3. This decision is based on the following facts represented by the Issuer:
a) The Issuer was incorporated on August 13, 2018 pursuant to the provisions of the Canada Business Corporations Act under the name “Hampton Bay Capital Inc.”. The Issuer completed a qualifying transaction, announced on December 24, 2019 (the Qualifying Transaction), pursuant to which the Issuer merged with Lendified Holdings Inc. and changed its name to Lendified Holdings Inc.
b) The Issuer's registered office is located at 365 Bay Street, Suite 811, Toronto, Ontario M5H 2V1 and its head office is located at 365 Bay Street, Suite 811, Toronto, Ontario M5H 2V1.
c) The Issuer is a reporting issuer under the securities legislation of the provinces of Ontario, British Columbia and Alberta. The Issuer is not a reporting issuer in any other jurisdiction in Canada.
d) The authorized share capital of the Issuer consists of an unlimited number of common shares and an unlimited number of preferred shares (issuable in series). The Issuer currently has 95,154,575 common shares and no preferred shares issued and outstanding. In addition, the Issuer has issued 19,158,437 warrants to acquire common shares, has granted 841,463 stock options to acquire common shares and has outstanding $6,000,000 principal amount of debt convertible into 17,142,856 common shares.
e) The Issuer's Common Shares are listed on the TSX Venture Exchange under the symbol “LHI”. A trading halt was implemented on July 10, 2020 following the issuance of the FFCTO after the close of trading on July 9, 2020.
f) The FFCTO was issued as a result of the Issuer's failure to file the following continuous disclosure materials as required by Ontario securities law:
- audited annual financial statements for the year ended December 31, 2019 of Lendified PrivCo Holding Corporation (Subco), a wholly-owned subsidiary of the Issuer acquired in connection with the Qualifying Transaction, pursuant to section 4.10(2)(a)(i) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102).
(the Required Annual Filings).
g) The Required Annual Filings were not filed due to several factors including (i) the former Chief Financial Officer of the Issuer resigned, as disclosed in a press release dated June 9, 2020 and the Issuer only recently filled the position; (ii) the Issuer changed auditors from BDO Canada LLP to McGovern, Hurley LLP, which was disclosed on May 19, 2020 (iii) the COVID-19 pandemic had a significant effect on the Issuer; and (iv) the Qualifying Transaction took the time and attention of senior management to complete.
h) No later than July 14, 2020, the Issuer was required to file the following continuous disclosure materials:
i) Subco’s interim financial report for the three months ended March 31, 2020 as required by NI 51-102;
ii) the Issuer’s interim financial report for the three months ended March 31, 2020 as required by NI 51-102;
iii) the Issuer’s management’s discussion and analysis (the MD&A) for the period covered by the Interim Financial Report as required by NI 51-102; and
iv) certifications of the Interim Financial Report pursuant to National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings.
(collectively, the Required Interim Filings, and together with the Required Annual Filings, the Required Filings).
i) Although the Issuer did not file the Required Interim Filings by the July 14, 2020 deadline, the Issuer subsequently filed the Issuer’s interim financial report, MD&A and certifications referred to in (h)(ii), (iii) and (iv) above.
j) The Issuer is seeking a partial revocation of the FFCTO to complete a private placement (the Private Placement) for aggregate gross proceeds of up to $1,427,318 in order to raise the funds necessary to complete and file the outstanding Required Filings and fund the expenses as outlined below. The Private Placement securities will consist of units (the Units) at a price of a minimum of $0.015 per Unit, with each Unit comprised of one Common Share and one share purchase warrant (Warrant). Each Warrant is exercisable to acquire one Common Share at a price of $0.05 per share for a period of 36 months following the closing date of the Offering. Assuming the maximum proceeds are raised at a price of $0.015 per Unit, the Issuer will issue 95,154,575 Common Shares and 95,154,575 Warrants pursuant to the Offering.
k) The Private Placement will be conducted on a prospectus exempt basis with subscribers in Ontario, British Columbia and other provinces who are accredited investors (as defined in [section 73.3](https://www.canlii.org/en/on/laws/stat/rso-1990-c-s5/latest/rso-1990-c-s5.html#sec73.3_smooth) of the [Securities Act (Ontario)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-s5/latest/rso-1990-c-s5.html) (the Act) and National Instrument 45-106 – Prospectus Exemptions.
l) The Issuer intends to prepare and file the Required Filings (other than the Issuer’s interim financial report, MD&A and certifications, which have been filed as of the date hereof) in order to bring itself into compliance with its disclosure obligations and pay all outstanding fees as set out below. The Issuer also intends to apply to the Principal Regulator to have the FFCTO fully revoked within a reasonable time following completion of the Private Placement.
m) The Private Placement is subject to the approval of the TSX Venture Exchange and will be completed in accordance with all applicable laws.
n) The Issuer is not considering, nor is it involved in, any discussions relating to a reverse take-over, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.
o) Other than the failure to file the Required Filings, the Issuer is not in default of any of the requirements of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-s5/latest/rso-1990-c-s5.html) or the rules and regulations made pursuant thereto. The Issuer's SEDAR and SEDI profiles are up to date.
p) The Issuer intends to allocate the proceeds from the Private Placement as follows:
Description
Cost
(thousands)
Payroll and other employee-related costs (but not including any fees payable to senior management);
$ 336
Accounting, audit and legal fees associated with the preparation and filing of the relevant continuous disclosure documents;
$ 163
Costs and fees associated with the Private Placement;
$ 98
Filing fees associated with obtaining the partial revocation order and the full revocation order, including fees payable to the applicable regulators, including the Principal Regulator;
$ 5
Legacy accounts payable, including accounting and legal fees, consulting fees and outstanding transfer agent fees; and
$ 675
Working capital and general and administrative expenses.
$ 150
Total:
$ 1,427
q) The Issuer reasonably believes that, while there are no assurances that the Private Placement will be completed in full, if completed in full it will be sufficient to bring its continuous disclosure obligations up to date and pay all related outstanding fees and provide it with sufficient working capital to enable it to continue operations.
r) 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.
s) Prior to completion of the Private Placement, the Issuer will:
i) provide any subscriber to the Private Placement with a copy of the FFCTO and a copy of the partial revocation order;
ii) obtain from each subscriber or recipient of Common Shares in connection with the Private Placement a signed and dated acknowledgment which clearly states that all of the Issuer's securities, including any common shares and warrants issued in connection with the Private Placement, will remain subject to the FFCTO, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future; and
iii) will make available a copy of the written acknowledgements referred to in paragraph 4(t) to staff of the Principal Regulator on request.
t) Additionally, 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 a material change report as applicable.
ORDER
4. The Principal Regulator 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.
5. The decision of the Principal Regulator under the Legislation is that the FFCTO is partially revoked solely to permit the trades in securities of the Issuer (including for greater certainty, acts in furtherance of trades in securities of the Issuer) that are necessary for and are in connection with the Private Placement, provided that:
a) Prior to completion of the Private Placement, the Issuer will:
i) provide to each subscriber under the Private Placement a copy of the FFCTO;
ii) provide to each subscriber under the Private Placement a copy of this Order; and
iii) obtain from each subscriber under the Private Placement a signed and dated acknowledgment, which clearly states that all of the Issuer’s securities, including the common shares and warrants issued in connection with the Private Placement will remain subject to the FFCTO, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.
b) the Issuer will make available a copy of the written acknowledgements referred to in paragraph 5(a)(iii) to staff of the Principal Regulator on request;
c) the partial revocation order only varies the FFCTO order and does not provide an exemption from the prospectus requirement; and
d) this Order will terminate on the earlier of (A) the closing of the Private Placement and (B) 60 days from the date hereof.
DATED this 14<sup>th</sup> day of August, 2020.
“Lina Creta”
___________________________
Lina Creta
Manager, Corporate Finance
Ontario Securities Commission
minicounsel