An anonymous director reports
KHOT ANNOUNCES REVOCATION OF ITS CEASE TRADE ORDER AND PROPOSED CHANGE OF BUSINESS
Khot Infrastructure Holdings Ltd. has obtained an order from the Ontario Securities Commission revoking the cease trade order issued on May 5, 2017, for the company's failure to file audited annual financial statements for the year ended Dec. 31, 2016; management discussion and analysis relating to the audited annual financial statements for the year ended Dec. 31, 2016; and certification of annual filings for the year ended Dec. 31, 2016.
On Aug. 2, 2017, the company filed its annual filings, all of which are available under the company's profile on SEDAR.
With respect to its financial statement disclosure, AMZ, the company's Mongolian wholly owned subsidiary, has included road repair provisions in the company's annual filings based on its former auditor's opinion that the road repair provisions represent a theoretical possibility that the Ministry of Construction in Mongolia could demand a repavement of the road, and that an accounting estimation of what could happen was deemed to be necessary. The liabilities do not represent an actual cash amount that the company is required to pay, but rather is an estimate of future potential liability. The company has not received any communication from the Ministry of Construction and, as a result of its proposed change of business, will be disposing of its Mongolian subsidiary for a nominal amount, and the liabilities will subsequently disappear as a line item in its financial statements.
The company wishes to advise of the proposed changes to its board composition and management team as shown in the attached table.
Name Position held Position held
Erin Chutter Former director May 5, 2015, to date of AGM
Orgilmaa Siizkhuu Former director Nov. 14, 2011, to date of AGM
Kenneth Farrell Former director March 20, 2012, to date of AGM
James Passin Current and proposed director Nov. 14, 2011, to present
Donald Padgett Current and proposed director Nov. 14, 2011, to present
Andrew Clover Proposed director Director nominee
Jeremy Gardner Proposed director Director nominee
Wayne Lloyd Proposed director Director nominee
The proposed members of the audit committee, assuming they are elected at the annual general and special meeting of shareholders, will be Mr. Clover (proposed chair and an independent member), Mr. Padgett (not independent) and Mr. Passin (independent). The current members of the audit committee are Mr. Passin (independent), Mr. Padgett (not independent), Mr. Farrell (independent) and Ms. Chutter (independent).
The company will reschedule its recently cancelled annual general and special meeting of shareholders, which was to be held on Sept. 19, 2017, at the earliest opportunity, in order to approve, among other things, the election of directors, the appointment of the auditor and a change of business. The company will amend and restate its information circular dated Aug. 15, 2017, in order to incorporate its recently completed business plan and additional disclosure on its change of business. However, shareholders should not rely on the disclosure in the information circular respecting the proposed change of business.
The company is planning to develop broad-based indexing products and blockchain tracking metrics critical to financial services firms participating in blockchain applications. In anticipation of the further adoption of blockchain technologies in diverse industries, Khot intends to expand its indexing capabilities to cover multiple blockchains and cryptocurrency applications. Future Khot applications will be able to track industry participation, transaction velocity, aggregate KYC/AML (know your client/anti-money laundering) exchange data and peer-to-peer transactions, thus creating a transparent and robust data set for financial market participants. Khot intends to launch these blockchain intelligence products in a software-as-a-service (SaaS) model with a Web-enabled customer portal.
Pursuant to Canadian Securities Exchange Policy 8, Fundamental Changes and Changes of Business, the change of business must be approved by the Canadian Securities Exchange and the shareholders of the company prior to completion of the transaction. The information circular delivered to shareholders of the company must contain prospectus-level disclosure of the resulting company, including the financial statement disclosure set out in National Instrument 44-101, National Instrument 41-101, General Prospectus Requirements, and Form 41-101F1. The information circular must be reviewed by the Canadian Securities Exchange before being posted on the CSE website and delivered to shareholders. The issuer resulting from a fundamental change must meet the criteria for a new listing and make a complete initial application to qualify for listing by filing all of the documents and following the procedures set out in CSE Policy 2 concurrently with filing the information circular. The company is in the process of completing a listing statement for submission to the CSE and has provided an undertaking to the Ontario Securities Commission to hold an annual general and special meeting of shareholders to approve the change of business within three months of the date of the revocation order.
As a condition of revoking the Ontario cease trade order, the Ontario Securities Commission requested that the company undertake not to complete a restructuring transaction, significant acquisition or reverse takeover of a business not located in Canada unless the company first receives a receipt for a final prospectus in respect of such business. The company has given such undertaking.
We seek Safe Harbor.
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