Securities Law & Instruments

Headnote

Section 144 - application for partial revocationof cease trade order - issuer cease traded due to failure tofile with the Commission and send to shareholders annual financialstatements - issuer contemplating acquiring private oil andgas company - issuer has brought its filings up to date andhas placed on the public record disclosure about the proposedacquisition - partial revocation granted to permit shareholdersof the issuer to vote on the acquisition and to issue commonshares in connection with related private placement.

Applicable Ontario Statutory Provisions

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

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

THE NRG GROUP INC.

 

ORDER

(Section 144)

WHEREAS the securities of The NRG GroupInc. ("NRG" or the "Company") are subjectto a temporary order made by the Manager, Corporate Finance(the "Manager") of the Ontario Securities Commission(the "Commission") dated May 22, 2003 and extendedby an order of the Manager dated June 3, 2003 made under section127 of the Act (collectively referred to as the "CeaseTrade Order") directing that trading in the securitiesof NRG cease until it is revoked by a further order of revocation;

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

AND UPON the Company having representedto the Commission as follows:

1. The Company was formed by the amalgamationunder the laws of the Province of Ontario on March 10, 2000of 2FundEcom Inc. and its wholly-owned subsidiaries, The NRGGroup Inc., NRG Factory (Toronto) Inc., Solutions ArchitectureInc., Wealth Architecture Inc., Dynamic Education SolutionsInc. and KidsNRG Inc.

2. The authorized capital of the Company consistsof an unlimited number of common shares of which 28,198,240common shares were issued and outstanding as of August 26,2003. At its annual and special meeting of shareholders tobe held at 10:00 a.m. on Thursday, August 28, 2003 at theoffices of Lang Michener, 181 Bay Street, Suite 2500, Toronto,Ontario (the "Meeting"), the shareholders of theCompany will consider, and if thought fit, approve as a specialresolution an amendment to the articles of the Company tocreate a new class of non-voting special shares.

3. NRG has been a reporting issuer in Ontariosince April 26, 2000.

4. The Company's common shares were listedon the Toronto Stock Exchange (the "Exchange") butwere suspended from trading on the Exchange on October 25,2002 for failure to meet the Exchange's continued listingrequirements. On July 23, 2003, the Company was voluntarilydelisted from the Exchange.

5. The Cease Trade Order was issued as a resultof the Company's failure to file its audited annual financialstatements for the year ended December 31, 2002 (the "AnnualFinancial Statements") as a result of financial difficulties.Subsequently, the Company failed to file its interim financialstatements for the three month period ended March 31, 2003.

6. On August 7, 2003, the Company filed onSEDAR the Annual Financial Statements, its annual informationform for the period ended December 31, 2002 and its annualmanagement's discussion and analysis for the period endedDecember 31, 2002. On August 18, 2003, the Company filed onSEDAR its interim financial statements for the three-monthperiod ended March 31, 2003 and on August 26, 2003, the Companyfiled on SEDAR its interim financial statements for the six-monthperiod ended June 30, 2003 (collectively referred to as the"Interim Financial Statements"). The Annual FinancialStatements were mailed to NRG shareholders on August 7, 2003and the Interim Financial Statements were mailed to NRG shareholderson August 27, 2003.

7. Except for the Cease Trade Order, the Companyhas not been subject to any other cease trade orders issuedby the Commission, and the Company is not otherwise in defaultof any requirements of the Act or the rules or regulationsthereunder.

8. The Company is contemplating acquiringall of the outstanding shares of Welton Energy Limited ("Welton"),a private Alberta-based oil and natural gas company, for anaggregate purchase price of $1,600,000 (the "Acquisition").Each Welton shareholder is to receive $7.40 cash considerationor 370 NRG special shares for each Welton share held, or acombination thereof, subject to a maximum cash considerationof $932,000 and a maximum share consideration of 48 millionNRG special shares. Under the terms of the Acquisition, NRGwill also acquire all of the outstanding warrants to acquireshares of Welton in exchange for warrants to acquire NRG specialshares.

9. It is a condition of the Acquisition thatthe Company raise a minimum of $500,000 through the issuanceof 25 million NRG common shares at $0.02 per share by wayof private placement (the "Private Placement") priorto closing of the Acquisition. The proceeds of the PrivatePlacement will be used to pay part of the cash considerationdue to Welton shareholders who elect not to receive shareconsideration for their Welton shares.

10. The Acquisition and the Private Placementwill be subject to the approval of the shareholders of theCompany at the Meeting. The Company filed on SEDAR and sentto its shareholders on August 7, 2003, an information circular(the "Circular") outlining the terms of the PrivatePlacement and the Acquisition. The Circular contains detaileddisclosure about NRG, Welton and the Acquisition, and includescopies of the audited financial statements for Welton forthe fiscal years ended December 31, 2002 and December 31,2001.

11. The common shares of the Company are notlisted or quoted on any exchange or market in Canada or elsewhere.

12. The Company has applied for partial revocationof the Cease Trade Order to permit the shareholders of theCompany to consider the Private Placement and the Acquisitionand to issue NRG common shares under the Private Placementand NRG special shares under the Acquisition.

13. Following such approval by its shareholders,the Company intends to make a further application for a fullrevocation of the Cease Trade Order to permit the tradingof its securities generally.

AND UPON considering the applicationand the recommendation of staff of the Commission;

AND UPON the Director being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to Section 144of the Act, that the Cease Trade Order is partially revokedsolely to permit the shareholders of the Company to vote onthe Private Placement and the Acquisition and to issue NRG commonshares under the Private Placement and NRG special shares underthe Acquisition.

August 27, 2003.

"John Hughes"