During the ENC Material Time, the Respondents raised a total of approximately $436,000 from the sale of the ENC Royalty Units to the ENC Investors.ġ6. The Respondents provided the ENC Investors with subscription agreements and other documents to support their investment in the ENC Royalty Units.ġ5. The ENC Royalty Units entitled the ENC Investors to 0.01 percent of gross revenue from worldwide sales of the Encrypt-Stick Software and “all future products sold by ”.ġ4. As noted above, starting in March 2009, the Respondents began selling the ENC Royalty Units to the ENC Investors for the purpose of funding the ongoing operations of ENC.ġ3. THE DISTRIBUTION OF THE ENC AND ONIX ROYALTY UNITSġ2. Phipps incorporated Onix International and was a director, officer, and the directing mind of Onix International during the Material Time. During the Material Time, the registered office of Onix International was located in Ontario.ġ1. Onix International was provincially incorporated in Ontario on February 6, 2009. Neither Onix International nor Phipps was registered to trade in securities and the securities at issue were not qualified by a prospectus.ġ0. In total, the Respondents raised approximately $668,000 from approximately 38 investors between March 2009 and December 2009 (the “Material Time”).ĩ. The Respondents raised approximately $232,000 from 17 investors including residents of Ontario (the “Onix Investors”) between Apand Decem(the “Onix Material Time”).Ĩ. In April 2009, the Respondents also began selling royalty units to members of the public for the purpose of raising capital to fund the operations of Onix International (the “Onix Royalty Units”). The Respondents raised approximately $436,000 from 29 investors including residents of Ontario (the “ENC Investors”) between Maand J(the “ENC Material Time”).ħ. Starting in March 2009, the Respondents began selling royalty units to members of the public for the purpose of raising capital to fund the ongoing operations of ENC (the “ENC Royalty Units”). At the time it entered into the License Agreement, Onix International had no active business operations and its sole anticipated business related to ENC and the License Agreement.Ħ. On September 21, 2009, Onix International entered into a “World Wide License Agreement” with ENC that, among other things, granted Onix International the worldwide license to promote, distribute, market and sell the Encrypt-Stick Software (the “License Agreement”).ĥ. ENC is in the business of developing computer encryption software, including the Encrypt-Stick Software.Ĥ. ENC was incorporated pursuant to the laws of British Columbia and its operations are located primarily in British Columbia. (“ENC”) to market and sell ENC’s “encrypt-stick” encryption software (the “Encrypt-Stick Software”).ģ. Onix International was incorporated by Phipps in February 2009 for the purpose of entering into a business relationship with ENC Security Systems Inc. (“Onix International”) and Tyrone Constantine Phipps (“Phipps”) (collectively, the “Respondents”).Ģ. This proceeding involves the unregistered trading and illegal distribution of securities by Onix International Inc. Staff of the Ontario Securities Commission (“Staff”) make the following allegations:ġ. OF STAFF OF THE ONTARIO SECURITIES COMMISSION
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