Securities Law & Instruments

Headnote

Section 144 -- application for variation of cease trade order -- issuer cease traded due to failure to file with the Commission annual financial statements -- issuer has applied for a variation of the cease trade order to permit the issuer to proceed with a private placement -- potential investors to be accredited investors and to receive copy of cease trade order and partial revocation order prior to making investment decision -- partial revocation granted subject to conditions.

Applicable Legislative Provisions

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

National Instrument 45-106 Prospectus and Registration Exemptions.

IN THE MATTER OF

THE SECURITIES ACT,

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

(the "Act")

AND

IN THE MATTER OF

CD ROM NETWORK CORP.

ORDER

(Section 144)

WHEREAS the securities of CD ROM Network Corp. (the "Issuer") are currently subject to a temporary order made by the Ontario Securities Commission (the "Commission") dated September 22, 2003 pursuant to subsection 127(1) and 127(5) of the Act, which order was extended by a further order of the Commission dated October 3, 2003 (collectively, the "Cease Trade Order"), directing that all trading in the securities of the Issuer cease;

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

AND WHEREAS the Issuer has represented to the Commission that:

1. The Issuer is a corporation formed on August 25, 1994 pursuant to the laws of the Province of Ontario by the amalgamation of Brightwest Resource Explorations Inc. and 1078598 Ontario Limited.

2. The Issuer's registered and head office is located at 56 Temperance Street, 10th Floor, Toronto, Ontario, M5H 3V5.

3. The Issuer is a reporting issuer in Ontario and is not a reporting issuer or the equivalent under the securities legislation of any other jurisdiction in Canada.

4. The authorized capital of the Issuer consists of an unlimited number of common shares (the "Common Shares") and an unlimited number of preference shares, issuable in series. As at April 22, 2010, 4,707,485 Common Shares were issued and outstanding.

5. Other than the Common Shares, the Issuer has no securities (including debt securities) issued and outstanding.

6. The Common Shares are not listed or quoted on any exchange or market.

7. The Issuer has been inactive for many years. It owns no material assets.

8. The Cease Trade Order was issued as a result of the Issuer's failure to file its audited annual financial statements for the year ended April 30, 2003, and the interim financial statements for all interim periods since January 31, 2003 (the "Financial Statements"). The Financial Statements 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 documents.

9. Since that time, the Issuer has filed the following documents on SEDAR:

(a) audited annual financial statements for the years ended April 30, 2007, 2008 and 2009 (the "Annual Financial Statements");

(b) interim financial statements for the interim periods ended July 31, 2009, October 31, 2009 and January 31, 2010 (the "Interim Financial Statements");

(c) management's discussion and analysis relating to the Annual Financial Statements and the Interim Financial Statements; and

(d) certificates required to filed in respect of the Annual Financial Statements and Interim Financial Statements under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109").

10. Except for the Cease Trade Order, the Issuer is not, in default of any of the requirements of the Act or the rules and regulations made thereunder, other than the Issuer's failure to file the following documents:

(a) audited annual financial statements for the years ended April 30, 2003, 2004, 2005 and 2006;

(b) interim financial statements for the interim periods beginning on July 31, 2003 and ending on January 31, 2008;

(c) management's discussion and analysis relating to the financial statements referred to in paragraphs (a) and (b) above; and

(d) certificates required to filed in respect of the financial statements referred to in paragraphs (a) and (b) above under NI 52-109.

11. The Issuer is seeking to effect a financing transaction to enable the Issuer to bring itself into compliance with its continuous disclosure obligations and to fund expenses as more properly outlined in paragraph 14 below. The actions associated therewith, may constitute a contravention of the Cease Trade Order. More specifically, the Issuer seeks a partial revocation of the Cease Trade Order to allow the Issuer to complete a brokered or non-brokered private placement of its securities (the "Private Placement") with accredited investors (as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions) resident in the Province of Ontario (each a "Potential Investor") to raise gross proceeds of up to $100,000. The Issuer is proposing to sell units (the "Units") comprised of one (1) Common Share and one (1) Common share purchase warrant (the "Warrants"), for a subscription price equal to $0.05 per Unit. Each Warrant shall entitle the investor to purchase one Common Share within 24 months from the closing date of the Private Placement, at an exercise price of $0.10 per Common Share.

12. All trades associated with the Private Placement will take place in Ontario and the Private Placement will be completed in accordance with applicable securities legislation.

13. The proceeds from the Private Placement shall be used to prepare and file all outstanding continuous disclosure documents with a view to obtaining a full revocation of the Cease Trade Order, to pay filing fees with respect thereto to the Commission, to pay outstanding fees to the Issuer's transfer agent, to fund the preparation of the application for the revocation of the Cease Trade Order. These expenses are more fully described in paragraph 14 below.

14. The Issuer propose to use the proceeds of the Private Placement as follows:

(a)

Legal, accounting and audit fees

$40,000

 

(b)

Fees and penalties for late filing of materials

$25,000

 

(c)

Funds required to prepare and mail information circular

$15,000

 

(d)

Project investigation cost

$20,000

 

 

Total

$100,000

15. The Issuer reasonably believes that it will have sufficient resources upon completion of the Private Placement to complete its required continuous disclosure documents, pay all outstanding fees owed to the Commission, prepare and mail an information circular for an annual and special meeting of shareholders, and fund project investigation costs.

16. As the Private Placement will involve trades in securities of the Issuer (including, for greater certainty, acts in furtherance of trades in securities of the Issuer), it cannot be completed without a variation of the Cease Trade Order.

17. Prior to the completion of the Private Placement, each Potential Investor in the Private Placement will receive:

(a) a copy of the Cease Trade Order;

(b) a copy of the partial revocation order; and

(c) written notice from the Issuer, and acknowledge that all of the Issuer's securities, including the securities issued in connection with the Private Placement will remain subject to the Cease Trade Order until it is revoked, and that the granting of the partial revocation does not guarantee the issuance of a full revocation order in the future.

18. Upon the issuance of the partial revocation from the Commission, the Issuer will:

(a) issue a press release and file a material change report announcing, among other things, the Private Placement and the partial revocation order;

(b) market the Private Placement and provide information relating to the Issuer to the Potential Investors in accordance with the provisions of the partial revocation order and in accordance with the Act and the rules and regulations made pursuant thereto; and

(c) issue securities in connection with the Private Placement.

19. Upon completion of the Private Placement, preparation of continuous disclosure documents, and identification or acquisition of a suitable project, the Issuer intends to apply to the Commission for full revocation of the cease trade orders, while concurrently applying for a listing on the Toronto Stock Exchange or the TSX Venture Exchange, as the case may be.

20. The Issuer undertakes to hold its annual meeting of shareholders within three months of the date that the Cease Trader Order is revoked in full.

21. The Issuer 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.

22. The Issuer has undertaken to the Commission that, in the event the Issuer convenes a meeting of shareholders within twelve months of the date of this partial revocation order to consider and approve any transaction described in the previous paragraph, the Issuer will deliver to the Commission a copy of the information circular relating to such meeting not less than twenty days prior to the date such information circular is delivered to the shareholders.

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

AND UPON 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 trades in securities of the Issuer (including, for greater certainty, acts in furtherance of trades in securities of the Issuer) that are necessary for and are in connection with Private Placement provided that:

(a) prior to completion of the Private Placement each Potential Investor will:

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

(ii) receive a copy of this partial revocation order; and

(iii) receive written notice from the Issuer, and acknowledge that all of the Issuer's securities, including the securities issued in connection with the Private Placement will remain subject to the Cease Trade Order until it is revoked, and that the granting of this partial revocation order does not guarantee the issuance of a full revocation order in the future; and

(b) this partial revocation order will terminate on the earlier of:

(i) completion of the Private Placement; and

(ii) 120 days from the date hereof.

DATED this 10th day of June , 2010.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission