Ontario Superior Court of Justice, Court File No.: CV-17-578980-00CP
For more information about this action, or to obtain a copy of the most recent statement of claim, please contact the Firm at info@morgantilegal.com.

This securities class action relates to the Defendants releasing core documents and making other statements containing material misrepresentations by omitting material facts and a material change about an alleged equity investment in a Turkish company with no operations (“Turcolt“), entered into by the Individual Defendant Nikolas Perrault, if not all of the Defendants, and thereby distorting the investment risk and artificially inflating the Company’s perceived value and share price.

Sometime between July 13, 2016 and August 29, 2016, and despite the fact that Colt Resources Inc. (“Colt“) reported that it did not generate any cash from operations or earn significant revenue during 2015 and only had $17,866 in cash as at June 30, 2016, then-CEO Nikolas Perrault (and possibly others at Colt) made an unauthorized $736,800 equity investment in Turcolt. The Company did not release a Material Change Report disclosing this equity investment, despite its material sum for a company of Colt’s size and resources. On August 29, 2016, Colt released its interim Financial Statement and corresponding Management Discussion and Analysis (“MD&A”) for the quarter ended June 30, 2016 and similarly omitted to disclose any material facts about the investment in Turcolt.

On November 30, 2016, Colt released its interim Financial Statement and MD&A for the quarter ended September 30, 2016 and disclosed for the first time that:

  1. On or about July 13, 2016, Colt made the $736,800 investment in Turcolt, but the shareholder agreement supporting the ownership interest was unknown;
  2. “Substantially all cash in the Company” was “held by Turcolt with a local Turkish bank”, which was not available for the Company’s use; and
  3. Colt had generated a net loss of $4.05 million for the 9 months ended September 30, 2016 and the Company did not have sufficient capital to meet its needs for the next twelve months (despite closing a private placement raising over $1.42 million for the Company only weeks prior).

Colt subsequently announced on December 21, 2016 that it was immediately replacing Nikolas Perrault as CEO and President of the Company without disclosing any further details about his departure.  On January 31, 2017, Colt announced that its July 2016 investment in Turcolt was done by Perrault without authorization, and the investment in Turcolt plus the funds transferred to Turcolt’s bank account in Turkey had gone missing.  On this news, on February 15, 2017 the TSX Venture Exchange halted trading of Colt’s securities.

Claim Issued: July 14, 2017

Class Period (Statutory): July 13, 2016 to November 30, 2016 or January 31, 2017

Class Period (Common Law): July 13, 2015 to August 30, 2016 and who held some or all of those securities until November 30, 2016

Motion Record in Support for Statutory Claim Due: January 9, 2018

Shareholders’ Counsel: Andrew Morganti, Morganti Legal

Corporate Defendant’s Counsel: Scott Kugler, Gowling WLG

Next Hearing Date: December 12-14, 2018