Securities Law & Instruments

Headnote

Full revocation of a cease trade order -- Defaults under continuous disclosure requirements of legislation resulting in imposition of cease trade order now remedied -- Prospectus level disclosure in respect of issuer has now been filed on SEDAR.

Statutes Cited

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

Rules Cited

Ontario Securities Commission Rule 13-502 Fees, ss.4.1 and 6.1.

May 4, 2005

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5, AS AMENDED (the Act)

AND

IN THE MATTER OF

KING PRODUCTS INC.

 

ORDER

(Section 144)

WHEREAS the securities of King Products Inc. (the Issuer) are subject to a temporary order made by the Ontario Securities Commission (the Commission) on March 3, 2004 pursuant to paragraph 2 of subsection 127(1) and subsection 127(5) of the Act, which order was extended by an order of the Commission dated March 15, 2004 made pursuant to subsection 127(8) of the Act (collectively, the Cease Trade Order), directing that trading in securities of the Issuer cease until the Cease Trade Order is revoked by a further order of revocation;

AND WHEREAS the Issuer has made an application to the Commission pursuant to section 144 of the Act for an order revoking the Cease Trade Order;

AND WHEREAS the Issuer has represented to the Commission as follows:

1. The Issuer was amalgamated under the Business Corporations Act (Ontario) on January 1, 2000. The predecessor company to the Issuer was incorporated under the laws of the Province of Ontario by articles of incorporation dated March 11, 1988. Prior to February 1, 1994, the predecessor company to the Issuer operated under the name Wizard Lake Petroleum Corp. On February 1, 1994, the predecessor company to the Issuer changed its name to King Products Inc.

2. The Issuer is a reporting issuer or equivalent only in British Columbia, Alberta, Ontario and Nova Scotia and is also subject to orders of each of the Alberta Securities Commission (the ASC) and the British Columbia Securities Commission (the BCSC), which orders are identical in substance to the Cease Trade Order. The Issuer has applied to the ASC and the BCSC for a revocation of both of such orders.

3. The common shares of the Issuer are currently listed on the NEX board of the TSX Venture Exchange (the NEX) but such securities are suspended from trading because of the Cease Trade Order.

4. The authorized share capital of the Issuer consists of an unlimited number of common shares (Common Shares), an unlimited number of Class B shares designated as redeemable, voting, non-participating Class B Preference shares and an unlimited number of Class C shares issuable in series designated as Class C Preference shares. As at April 25, 2005, there are 53,593,270 Common Shares issued and outstanding and no Class B or Class C shares issued and outstanding.

5. The Issuer is currently inactive. In December, 2004, the Issuer entered into an agreement (the Merger Agreement) with Moto Goldmines Limited (Moto) of Western Australia to enter into a business combination with Moto by way of a scheme of arrangement under Australian law (the Merger). It is proposed that the merged entity will be listed on the Toronto Stock Exchange or the TSX Venture Exchange, with a secondary listing on the Australian Stock Exchange.

6. Moto is a mineral exploration company listed on the Australian Stock Exchange. Moto's principal asset is the Moto Gold Project located in the Democratic Republic of Congo.

7. Pursuant to the terms of the Merger Agreement:

(a) the Issuer will acquire all the issued and outstanding fully-paid ordinary shares in Moto and each Moto shareholder will receive one Common Share; and

(b) all Moto options will be cancelled and each Moto optionholder will receive for each Moto option held one warrant of the Issuer entitling such warrantholder to acquire one Common Share of the Issuer on similar terms as were applicable to the acquisition of Moto securities under the cancelled Moto options.

8. On April 7, 2005 the Commission granted an order (the Partial Revocation Order) partially revoking the Cease Trade Order to permit the Issuer to settle unsecured advances and trade debt in the amount of Cdn. $6,904,000 by the issuance of 26,796,635 pre-consolidated Common Shares at a deemed price of $0.26 per Common Share to VLL Investments Inc. (the Debt Settlement). The Partial Revocation Order also permits the trades and acts in furtherance of trades associated with the Merger and the Merger Agreement, including without limitation those trades and acts in furtherance of trades associated with the Debt Settlement, the Consolidation (as defined below) and the Continuance (as defined below). The Debt Settlement was completed on April 7, 2005. On February 23, 2005, NEX approved the Debt Settlement, conditional upon the revocation of the Cease Trade Order.

9. Prior to the completion of and in connection with the Merger:

(a) the Issuer will consolidate its existing Common Shares into 640,000 Common Shares (the Consolidation); and

(b) the Issuer will be continued from Ontario into British Columbia as a corporation subsisting under the Business Corporations Act (British Columbia) (the Continuance).

10. The completion of the Merger is subject to a number of conditions, including:

(a) obtaining all necessary shareholder, court and regulatory approvals; and

(b) the removal of all orders presently imposed in respect of the trading of the securities of the Issuer, including the Cease Trade Order.

11. In conjunction with the Merger, the Issuer will hold an annual general and special meeting of its shareholders on May 18, 2005 (the Meeting). At the Meeting, the Issuer will be seeking shareholder approval of the Consolidation, the Continuation and the Merger.

12. On April 29, 2005 the Issuer filed a management information circular (the Circular) with the Commission on SEDAR and delivered the Circular to the shareholders of the Issuer in connection with the Meeting. The Circular was prepared in accordance with the requirements of Form 51-102F5 Information Circular of National Instrument 51-102 Continuous Disclosure Obligations. The Circular set out the details of the Consolidation, the Continuation and the Merger and contains prospectus-level disclosure in respect of both the Issuer and Moto.

13. On April 29, 2005 the Issuer filed on SEDAR a technical report on Moto's Gold Project, located in the Democratic Republic of Congo in Central Africa.

14. The Issuer expects to complete the Merger by May 31, 2005. Until the completion of the Merger, the Issuer will file on its SEDAR profile any material information about Moto or the Merger necessary to maintain prospectus-level disclosure regarding the Issuer, Moto or the Merger, including but not limited to any audited or unaudited financial statements of Moto.

15. The Cease Trade Order was issued due to the failure of the Issuer to file and deliver to its shareholders audited financial statements for the years ended December 31, 2001 and 2002 (the CTO Annual Statements) and the failure of the Issuer to file and deliver unaudited financial statements in respect of the three-month periods ended March 31, 2002 and 2003, the six-month periods ended June 30, 2002 and 2003 and the nine-month periods ended September 30, 2002 and 2003 (the CTO Interim Statements). Subsequently, the Issuer failed to file and deliver audited financial statements for the year ended December 31, 2003 and interim unaudited financial statements for the periods ended March 31, 2004, June 30, 2004 and September 30, 2004 (the Other Statements).

16. Except for the Cease Trade Order, the Issuer is not, to its knowledge, in default of any of the requirements of the Act or the rules and regulations made thereunder, other than the Issuer having failed to file and deliver annual information forms in respect of the years ended December 31, 2001, 2002 and 2003 (the AIFs).

17. The Financial Statements and the AIFs were not filed in a timely manner with the Commission or sent to the shareholders of the Issuer because the Issuer was inactive and did not have the funds necessary to prepare and mail such statements.

18. The Financial Statements were filed on SEDAR on March 4, 2005 and have been delivered to the shareholders of the Issuer along with the Circular.

19. The Issuer has not filed the AIFs because the Issuer believes that the AIFs would not provide additional useful information concerning the present or future operations or financial circumstances of the Issuer that will not have been provided by the Financial Statements and the Circular.

20. The Issuer paid $1,500 on the filing of the application for the Partial Revocation Order.

AND UPON considering the application and the recommendations of staff of the Commission;

AND UPON the Commission 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 is revoked.

AND IT IS FURTHER ORDERED, pursuant to section 6.1 of Ontario Securities Commission Rule 13-502 Fees (Rule 13-502), that the Issuer is exempt from payment of the $1,500 activity fee under section 4.1 of Rule 13-502 due upon filing the application for the revocation order granted herein.

"John Hughes"
Manager, Corporate Finance