Securities Law & Instruments

Headnote

Section 144 - Partial revocation of cease trade order to permit trades of securities in connection with a financing.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127 and 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, C.S.5, AS AMENDED (THE ACT)

AND

IN THE MATTER OF

COGIENT CORP.

 

ORDER

(Section 144)

WHEREAS the securities of Cogient Corp. (the Applicant) are subject to a cease trade order issued by the Ontario Securities Commission (the Commission) on August 20, 2004 (the Cease Trade Order);

AND WHEREAS the Applicant has applied to the Commission pursuant to section 144 of the Act (the Application) for a partial revocation of the Cease Trade Order;

AND WHEREAS the Applicant has represented to the Commission that:

1. The Applicant was formed by articles of incorporation under the Business Corporations Act (Ontario) on April 29, 1983.

2. The Applicant has been a reporting issuer under the Act since July 11, 1983;

3. The Cease Trade Order was issued due to the failure of the Applicant to file with the Commission its audited financial statements (the Financial Statements) for the fiscal year ended March 31, 2004.

4. The Applicant is not, to its knowledge, in default of any of the requirements of the Act, or the rules and regulations made pursuant thereto, other than the failure to file the Financial Statements, interim unaudited financial statements for the three month period ended June 30, 2004 (the Interim Financial Statements) and failure to pay annual participation fees to the Commission.

5. Prior to the date hereof, the Applicant had not remedied the deficiencies described in paragraph 4, other than paying the applicable participation fee and related late fee, as it did not have sufficient funds to do so.

6. The Applicant has not previously been subject to a cease trade order of the Commission, except for a previous cease trade order dated September 13, 1995.

7. The Applicant's authorized capital consists of an unlimited number of common shares (the Common Shares) and 8,000,000 preference shares (the Preference Shares), issuable in series, of which approximately 40,291,600 Common Shares and 2,000,000 Preference Shares are issued and outstanding.

8. The Applicant is proposing to proceed with a $175,000 financing (the Proposed Financing) of convertible secured debentures (the Debentures) to various investors (the Potential Investors) sufficient to provide working capital to the Applicant.

9. Proceeds from the Proposed Financing will be used to permit the Applicant to pay for:

(a) the preparation and audit of the Financial Statements;

(b) the preparation of the Interim Financial Statements;

(c) the services of legal counsel with regard to the preparation for the Proposed Financing and the application for this Order and the final revocation order; and

(d) general working capital purposes.

10. Prior to completion of the Proposed Financing, each Potential Investor approached by the Applicant shall:

(a) receive a copy of the Cease Trade Order;

(b) receive a copy of this Order; and

(c) receive written notice from the Applicant, and acknowledge, in a form acceptable to the Commission, that all of the Applicant's securities, including any and all Debentures issued in connection with the Proposed Financing and any Common Shares issued upon conversion of the Debentures, will remain subject to the Cease Trade Order following the closing of the Proposed Financing.

11. Prior to the completion of the Proposed Financing, each of the Potential Investors who will be participating in the Proposed Financing will be required to execute and return to the Applicant a form of acknowledgement in a form acceptable to the Commission.

12. The Applicant is not considering, nor is it involved in any discussion relating to a reverse take-over, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.

13. Following the completion of the Proposed Financing, the Applicant intends to make a further application for a full revocation of the Cease Trade Order, on or about September 17, 2004, but in any event no later than September 30, 2004. At the time of this subsequent application, the Applicant will file with the Commission and provide proof that the Potential Investors have been provided with copies of the Financial Statements.

14. Trades in the Common Shares are reported on the Canadian Unlisted Board. The Applicant has no securities, including debt securities, listed or quoted on any exchange or market.

AND WHEREAS considering the Application and the recommendation of the staff of the Commission;

AND WHEREAS the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act, that the Cease Trade Order be and is hereby partially revoked solely to permit the trades and the acts in furtherance of trades

(a) that are necessary for and are in connection with the Proposed Financing; and

(b) that occur on or after the date of this Order.

September 1, 2004.

"John Hughes"

"Paul M. Moore"
"Harold P. Hands"