Star Metro - Sparta Capital Ltd. Provides Corporate Update on Reinstatement Review, Financial Statement Corrections and Governance Matters

TORONTO, ON / ACCESS Newswire / October 23, 2026 / Sparta Group (TSXV:SAY) (the "Corporation", the "Company", "Sparta Group", "Sparta Capital", "SAY.V" or "Sparta") reports on the status of the ongoing review by the TSX Venture Exchange (the "Exchange") of the Company's application for reinstatement to trading of its common shares and sets out clarifications and corrections to previously disclosed information.

Trading Reinstatement

The Exchange has completed its reinstatement review. The Company's common shares will be reinstated to trading soon.

Current Loans Receivable Clarification

The Company is clarifying the nature and settlement of a balance previously described in its financial statements as a current loan receivable owed by 1123747 B.C. Ltd., a company associated with a director of Re-ECO Tech Electronic Conversions Ltd. ("Re-ECO"), the Company's majority voting-controlled subsidiary. The Company advanced the underlying funds in connection with giving Re-ECO, through its ERS International division, access to the Nano Sorter AI-based recycling and sorting equipment for use in its e-waste processing and IT Asset Disposition operations. The balance was non-interest-bearing and included no interest, foreign exchange, or top-up component. The balance increased from $80,907 September 30, 2025, to $81,420 on December 31, 2025, and to $84,389 on March 31, 2026, because of G Suite subscription fees and legal fees paid by the Company on behalf of 1123747 B.C. Ltd., net of a repayment of $583. On June 30, 2026, the balance was settled in full through the transfer of the Nano Sorter equipment to Re-ECO, and no cash was received by the Company in connection with the settlement. The balance was accordingly reduced to $nil on June 30, 2026, as disclosed in Note 11 to the Company's unaudited condensed interim consolidated financial statements for the three and nine months ended June 30, 2026, filed on SEDAR+ on August 28, 2026 (the "Q3 2026 Interim Statements"). The Consolidated Statement of Cash Flows in the Q3 2026 Interim Statements presented the $84,389 settlement as a source of cash under investing activities. Because no cash was received, that amount should not have been presented as a cash inflow, and will instead be removed from investing activities and disclosed as a non-cash transaction. The recorded balance is correctly stated at $nil. The corrected cash flow presentation, together with note disclosure describing the non-cash settlement of the balance through the transfer of equipment, will be reflected in the Company's audited annual consolidated financial statements for the fiscal year ending September 30, 2026, required to be filed on or before January 28, 2027 under section 4.2(2) of National Instrument 51-102 - Continuous Disclosure Obligations.

Correction to Marketing Expense Disclosure and Related Internal Controls

The Company is correcting a negative (credit) balance of $(65,561) in marketing (business development) expense that appeared in its unaudited condensed interim consolidated financial statements for the six months ended March 31, 2026. The negative balance resulted from the reversal in fiscal 2026 of a commission accrual recorded at September 30, 2025, relating to revenues earned in fiscal 2025 that were not invoiced or paid until fiscal 2026, which accrual was included in business development expense of $155,683 in the Company's audited financial statements for the year ended September 30, 2025. The $(65,561) balance is a net amount, comprising the reversal of the commission accrual in the amount of $65,74, partially offset by $180 of marketing services expense recorded during the six months ended March 31, 2026. The accrual was reversed to avoid double counting when the related commission invoices were received. Commissions for the six months ended March 31, 2026, were, however, still recorded in consulting fees under the Company's prior practice, so no commission expense was recorded in the marketing account to offset the reversal. The Company has since separated commissions paid to parties that generate sales from fees paid to consultants who provide outside expertise, and the year-to-date commissions were reclassified from consulting fees to marketing expense on June 30, 2026. The negative balance was not attributable to new projects or changes in marketing activity. The three-month business development expense of $664,946 for the period ended June 30, 2026, principally reflects that reclassification of year-to-date commission expenses. The cumulative amount of $599,385 for the nine months ended June 30, 2026, is lower than the three-month amount because the accrual reversal reduced the year-to-date balance. Following its annual general meeting on May 21, 2026, the Company constituted a new Audit Committee (described below) that reviews the Company's quarterly financial statements prior to filing, and the Company has implemented additional review procedures for expense coding, related-party identification and TSXV filing requirements to reduce the risk of similar classification errors recurring.

Disclosure Regarding Share Issuances Prior to Receipt of Funds

In connection with a September 2017 convertible debenture financing, related receipts recorded in 2018, and a 2023 financing, the Company issued common shares prior to receiving, or without ultimately receiving, the related funds in full.

Following closing of the Company's 2023 private placement, subscription receivables totaling $99,500 were outstanding, comprising $79,500 relating to the 2023 private placement and $20,000 carried forward from the earlier financing records. Of the $79,500 relating to the 2023 private placement: (i) $25,000 was collected on January 15, 2024 from ERS International; (ii) $30,000 was owed by Alyn Patterson, the Company's Chief Financial Officer at the time, who was issued 1,000,000 common shares for which payment was not received, an amount disclosed as a related-party amount due from the Chief Financial Officer in the Company's annual filings for fiscal 2023, 2024 and 2025; and (iii) $24,500 was not received. The $20,000 balance traces to a $365,000 convertible debenture financing completed in September 2017. The historical records initially described $75,000 as receivable and subsequently recorded $85,000 as a receivable under "conversion of debentures"; $65,000 was collected between October and December 2018 and recorded as private-placement proceeds, although no shares were issued for that receipt. The remaining $74,500, being $30,000, $24,500 and $20,000, was written off by the Company as uncollectible and recorded as bad debt expense. All common shares issued in respect of the written-off receivables remain issued and outstanding. The share issuance records for these financings were administered by the Company's former President prior to his death in October 2023 and were not fully transferred to current management. The Company has reviewed the available transfer-agent, subscription and payment records and will continue to reconcile the historical accounting entries as additional predecessor-management records become available.

The Company has adopted the practice, effective for all issuances going forward, that it will not issue, or characterize as issued or pending in connection with a financing, common shares until (i) in the case of a private placement, applicable subscription funds have been received and cleared, in accordance with TSX Venture Exchange Policy 4.1 - Private Placements; or (ii) in the case of a debt settlement or services-based issuance, the news release announcing the issuance expressly discloses that the shares are issued for non-cash consideration and does not characterize the transaction as a "private placement," in accordance with TSX Venture Exchange Policy 4.3 - Shares for Debt. As additional remedial and corrective measures, the Company has designated its Chief Financial Officer as responsible for confirming that subscription funds have been received and cleared before instructing the Company's transfer agent to issue any shares in connection with a private placement, and the Company's Audit Committee will review share issuance records, including any outstanding subscription receivables, as part of its quarterly review of the Company's financial statements.

Clarification of October 2, 2024, Private Placement ($102,030)

The Company is correcting the characterization of the transaction announced in its news release dated October 2, 2024, in the amount of $102,030. That amount reflected the aggregate deemed value of common shares issued by the Company in October 2024, and did not represent cash proceeds raised by way of a private placement, as follows: (i) 2,601,510 common shares (together with 2,601,510 warrants exercisable at $0.10 per share for eighteen months) issued at a deemed value of $52,030 (comprising $50,000 principal and $2,030 accrued interest) to Gerald T. Miller in settlement of outstanding debt; and (ii) 2,500,000 common shares (together with 2,500,000 warrants exercisable at $0.10 per share for eighteen months) issued at a deemed value of $50,000 to Advisir Ventures Ltd. for advertising-related services. The Company's October 2, 2024, news release stated that proceeds would be used to fund audit, legal and licence fees; the Company is clarifying that no cash proceeds were received in connection with these share issuances, and that the previously disclosed use of proceeds does not apply to this transaction. Mr. Miller is the Company's external legal counsel; he has never been a director or officer of the Company and does not hold more than 10% of the Company's voting shares. Advisir Ventures Ltd. is an unrelated, arm's-length party to the Company.

Catch-Up Regulatory Filings

In connection with the reinstatement review, the Company confirms that it has made or submitted the following filings to the Exchange:

• Shares for Debt: a shares-for-debt application under TSX Venture Exchange Policy 4.3 (Submission #SUB-743746) in respect of $619,167 of bona fide indebtedness for consulting and management services owed to seven creditors, to be settled through the issuance of 30,958,350 common shares at a deemed price of $0.02 per share. The indebtedness comprises $310,000 for services rendered in the year ended September 30, 2024, and $309,167 for services rendered in the year ended September 30, 2025. The fiscal 2024 obligations were originally included in accounts payable and accrued liabilities as of September 30, 2024, and were reclassified during fiscal 2025 to common shares to be issued. The fiscal 2025 obligations were recorded as consulting fees with a corresponding credit to common shares to be issued. The aggregate $619,167 is disclosed in Note 10 to the Company's financial statements as common shares to be issued and is not included in current liabilities as of June 30, 2026. The creditors are: Tony Peticca, President and a director (9,500,000 shares); Shawn Leon, Chief Executive Officer and a director (5,500,000 shares); Peter Quattro, Chairman and a director (1,000,000 shares); Gerald T. Miller, the Company's external legal counsel (9,000,000 shares); Taylor O'Bireck (4,500,000 shares); Marty Marshall, a former director (500,000 shares); and Joseph Cimorelli, a former director (958,350 shares). This amount excludes the Company's separate 2026 compensation arrangement with director Edward Vranic, which will be addressed under a separate filing when applicable. Because shares are being issued to non-arm's-length parties, the transaction requires disinterested shareholder approval under section 6.3 of TSX Venture Exchange Policy 4.4. The Company intends to seek disinterested shareholder approval of the transaction at its next annual general meeting of shareholders, and votes attached to common shares held by the non-arm's-length creditors participating in the transaction and their associates and affiliates will be excluded from that approval. Completion of the transaction remains subject to receipt of disinterested shareholder approval and final acceptance of the Exchange, and the terms of the transaction, including the deemed price and number of shares to be issued, may be subject to adjustment as required by the Exchange.

Annual General Meeting, Board and Audit Committee Update

The Company held its annual general meeting on May 21, 2026, at which shareholders elected Keith Whann, Ralph Goldsilver, Philip Chen and Edward Vranic to the Company's board of directors, joining continuing directors Tony Peticca, Shawn Leon and Peter Quattro. Immediately following the annual general meeting, the board of directors held its first meeting, at which Shawn Leon was appointed Chief Executive Officer of the Company, Peter Quattro (the Company's former Chief Executive Officer) was appointed Chairman of the Board, and a new Audit Committee was constituted, comprised of Ralph Goldsilver (independent), Keith Whann (independent) and Shawn Leon (non-independent, by virtue of his position as Chief Executive Officer), consistent with the venture-issuer exemptions available under section 6.1 of National Instrument 52-110 - Audit Committees.

Additional Disclosure - Continued Listing Requirements

The Company does not currently meet the working capital criterion of the Exchange's Continued Listing Requirements. Based on the Company's unaudited condensed interim consolidated financial statements as of June 30, 2026, the Company has a working capital deficiency of $137,848 and does not meet the Exchange's six-month general and administrative expense requirement of approximately $4,612,000.

The Company intends to address its working capital deficiency and work toward satisfying the Exchange's Continued Listing Requirements through a combination of operating performance and new financing. The Company's working capital position has fluctuated with the cyclical nature of ERS International's recycling and IT asset disposition business and has improved significantly from the position that existed when trading was suspended. The Company returned to profitability in fiscal 2025. Although ERS International's revenue and profitability declined in fiscal 2026, the expenses incurred during that period included investments made in anticipation of a return to profitable growth in fiscal 2027, which management expects to have a positive impact on the Company's working capital position. Following the resumption of trading, the Company also intends to pursue an equity financing at the corporate level, separate from ERS International, targeting gross proceeds of approximately $500,000 to $1,500,000. The final size, pricing, structure and timing of the financing have not been determined and will be subject to market conditions and applicable regulatory approvals and Exchange acceptance. The Company has had preliminary discussions with prospective investors and has received non-binding expressions of interest, but no definitive subscription agreements or other commitments have been entered into. If completed, the Company expects to use the net proceeds to provide working capital and fund ongoing corporate operations and growth initiatives. The Company also intends to complete the proposed shares-for-debt transaction described in item (f) above and to explore a restructuring, extension, refinancing or settlement of the $355,000 convertible debentures in each case subject to required shareholder approval and Exchange acceptance. There can be no assurance that the Company will complete any financing or other measure, or that it will meet the Continued Listing Requirements, and if it does not, the Exchange may transfer the Company's listing to the NEX board or take other action under its policies.

About Sparta Capital Ltd.

Sparta Capital Ltd. is a publicly traded company listed on the TSX Venture Exchange under the symbol "SAY." The Company operates through a decentralized structure with active business units in two primary verticals: Environmental Services, through ERS International (a division of Re-ECO Tech Electronic Conversions Ltd.), which provides e-waste processing, IT Asset Disposition and related environmental services; and Health Technology, through Sparta Health Corporation's Doc-in-a-Box clinician-facing advisory and decision-support platform.

Forward-Looking Information: This news release contains forward-looking information within the meaning of applicable Canadian securities legislation, including statements regarding the reinstatement of the Company's common shares to trading, the disclosure to be included in the Company's audited annual consolidated financial statements for the year ending September 30, 2026, the proposed shares-for-debt transaction and the receipt of disinterested shareholder approval and Exchange acceptance thereof, any future restructuring, extension, refinancing or settlement of the Company's convertible debentures, the Company's anticipated return to profitable growth in fiscal 2027, the expected effect of operating performance on the Company's working capital position, and the Company's intention to pursue an equity financing following the resumption of trading. Such forward-looking information is based on management's current expectations and assumptions and is subject to known and unknown risks and uncertainties, including that the Exchange may not reinstate the Company's common shares to trading, that required shareholder or regulatory approvals may not be obtained, that market conditions may not permit the Company to complete a financing on acceptable terms or at all, that non-binding expressions of interest may not result in definitive commitments, and that the Company may be unable to remedy its working capital deficiency or meet the Exchange's Continued Listing Requirements. Actual results may differ materially from those expressed or implied. The Company undertakes no obligation to update forward-looking information except as required by applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information, contact:

Tony Peticca, President
416.648.6506
Sparta Capital Ltd.
Email: [email protected]

SOURCE: Sparta Group

View the original press release on ACCESS Newswire

G.Boudreau--SMC