Library Information Software Corp. - s. 144

Order

Headnote

Section 144 - application for revocation of cease trade order - issuer subject to cease trade order as a result of its failure to file with the Commission annual and interim financial statements - issuer has brought filings up to date - full revocation granted.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O., c. S.5, as am., ss. 127(1), 127(5), 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5 AS AMENDED

(THE "ACT")

AND

IN THE MATTER OF

LIBRARY INFORMATION SOFTWARE CORP.

 

ORDER

(Section 144)

WHEREAS the securities of Library Information Software Corp. (the "Company") are subject to a cease trade order made by the Director dated May 6, 2003 pursuant to subsection 127(1) of the Securities Act (Ontario) (the "Act"), which order was made in connection with a temporary cease trade order made by the Director dated April 24, 2003 pursuant to subsections 127(1) and 127(5) of the Act (collectively, the "Cease Trade Order") directing that trading in the securities of the Company cease unless revoked by a further order of revocation;

AND WHEREAS the Company has applied to the Ontario Securities Commission (the "Commission") pursuant to Section 144 of the Act (the "Application") for a revocation of the Cease Trade Order;

AND WHEREAS the Company has represented to the Commission that:

1. The Company was formed under the Business Corporations Act (Ontario) on February 5, 1999 as a result of the amalgamation of Library Information Software Corp. and 1337387 Ontario Inc.

2. The Company is a "reporting issuer" under the securities legislation of the Province of Ontario. The Company is not a reporting issuer in any other jurisdiction in Canada.

3. The Company currently has no securities of any class listed for trading on any stock exchange recognized by the Commission. The Class A Shares were added to the Canadian Dealer Network for trade reporting on November 27, 1997 but its application for quotation was denied on December 14, 1999.

4. The authorized share capital of the Company consists of an unlimited number of common shares, an unlimited number of Class A shares and an unlimited number of Class B preferred shares. As at the date hereof, 754,936 common shares (the "Common Shares") and 10,357,716 Class A shares are issued and outstanding on a diluted basis and no Class B preferred shares are issued and outstanding.

5. The Company is currently inactive. On March 16, 2006, the Company, Starwood Manufacturing Inc. ("Starwood") and the Starwood shareholders (the "Vendors") came to an agreement in principle pursuant to which the Company would acquire from the Vendors all the issued and outstanding shares of Starwood in exchange for Common Shares of the Company (the "Acquisition"). The transaction is subject to: (i) the receipt of all required regulatory approvals pursuant to all applicable laws, regulations and policies; (ii) all required approvals by the shareholders of the Company; (iii) the completion of satisfactory due diligence by each of the Company, Starwood and the Vendors; (iii) compliance with all applicable laws, rules, regulations and policies of all applicable jurisdictions; (iv) completion of legal documentation to the satisfaction of each party; and (v) revocation by the Commission of the Cease Trade Order.

6. The Acquisition will be realized by way of a share exchange agreement to be entered into between the Company, Starwood and the Vendors on the basis of a share exchange ratio which shall be agreed to by the parties. In connection with the Acquisition, it is anticipated that an aggregate of approximately 25 million Common Shares of the Company will be issued in favour of the Vendors.

7. Starwood is a company incorporated under the Canada Business Corporations Act whose head office is located at 2370 South Sheridan Way Mississauga, Ontario, L5T 2M4. Starwood is a manufacturer of hardwood flooring products.

8. In connection with the proposed Acquisition, the Company called an annual general and special shareholders meeting (the "Meeting") which was held on April 28, 2006, and filed all documentation in connection therewith on SEDAR (the "Meeting Materials"). At the Meeting, the Company obtained shareholder approval of the Acquisition, which included the approval of a majority of the minority shareholders, as required by Commission Rule 61-501 Insider Bids, Issuer Bids, Business Combination and Related Party Transactions.

9. The management information circular (the "Circular") distributed in respect of the Meeting was prepared in accordance with the requirements of Form 51-102F5 Information Circular of National Instrument 51-102 - Continuous Disclosure ("NI 51-102"). The Circular sets out the details of the Acquisition and contains prospectus-level disclosure in respect of both the Company and Starwood in accordance with section 14.2 of Form 51-102F5.

10 The Cease Trade Order was issued due to the failure of the Company to file with the Commission its audited annual financial statements for the fiscal year ended November 30, 2002. Subsequently, the Company failed to file and deliver annual audited and interim unaudited financial statements, related MD&A and required CEO and CFO certifications for the annual and interim financial periods for the years ended November 30, 2003 and 2004, respectively.

11. Except for the Cease Trade Order, the Company 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 Company having failed to file and deliver its annual audited financial statements and its interim financial statements and corresponding management's discussion and analysis in respect of the fiscal years ended November 30, 2002, 2003 and 2004. This documentation was not filed in a timely manner with the Commission or sent to the shareholders of the Company because the Company was inactive and did not have the funds necessary to prepare and mail such statements.

12. On April 3, 2006, the Company filed with the Commission its audited annual financial statements ("Financial Statements") for the three fiscal years ended November 30, 2003, 2004, and 2005, Management's Discussion and Analysis ("MD&A") prepared by the Company in respect of such fiscal periods and annual financial statements CEO and CFO certifications pursuant to Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings. All of the aforementioned continuous disclosure documents have been filed and are available on SEDAR.

13. The Company is up-to-date with all its other continuous disclosure obligations, has paid all filing fees associated with those obligations, and has complied with National Instrument 51-102 Continuous Disclosure Obligations regarding delivery of financial statements.

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

AND WHEREAS the Commission being satisfied that it would not be prejudicial to the public interest to revoke the Cease Trade Order;

IT IS ORDERED, pursuant to Section 144 of the Act, that the Cease Trade Order be revoked.

DATED May 2, 2006.

"John Hughes"
Manager, Corporate Finance
Ontario Securities Commission