Anitech Enterprises Inc. - s. 144

Headnote

Section 144 -- variation of cease trade order to permit meeting of shareholders, amalgamation and related transactions.

Applicable Ontario Statutory Provision

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

IN THE MATTER OF

THE SECURITIES ACT,

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

(the ACT)

AND

IN THE MATTER OF

ANITECH ENTERPRISES INC.

ORDER

(Section 144)

WHEREAS the securities of Anitech Enterprises Inc. (the Applicant) are subject to a cease trade order made by the Director dated June 7, 2004 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 May 26, 2004 pursuant to subsections 127(1) and 127(5) of the Act (collectively, the Cease Trade Order) directing that trading in the securities of the Applicant cease unless revoked by a further order of revocation;

AND WHEREAS the Applicant has applied to the Ontario Securities Commission (the Commission) pursuant to section 144 of the Act for an order to vary the Cease Trade Order with respect to three proposed transactions: i) to hold an annual and special meeting of its shareholders to, among other things, approve a proposed amalgamation (the Amalgamation) of the Applicant with AMtag ID Inc. (AMtag), ii) to complete, subject to shareholder approval, the Amalgamation; and iii) the issue of shares of the amalgamated corporation (Amalco) on the conversion of a $4,475,770 convertible debenture of Amalco and exchangeable shares of a subsidiary of Amalco that will have been issued in connection with the Asset Acquisition (as defined below);

AND WHEREAS the Applicant has represented to the Commission that:

1. The Applicant was incorporated on April 4, 1986 under the laws of Alberta, was subsequently continued under the laws of British Columbia, and finally continued under the Business Corporations Act (Ontario) on July 6, 1993. The Applicant does not maintain a head office since it has no active operations. The Applicant's mailing address is currently Suite 6, PO Box 105, 14845 Yonge Street, Aurora, Ontario, L4G 6P6. The Applicant's records are currently located at the offices of Fasken Martineau DuMoulin LLP, at 66 Wellington Street West, Suite 4200, Toronto Dominion Bank Tower, Toronto-Dominion Centre, Toronto, Ontario, M5K 1N6.

2 The authorized share capital of the Applicant consists of an unlimited number of common shares, of which 19,160,496 common shares are issued and outstanding as of January 25, 2006. Other than its common shares, the Applicant has no securities, including debt securities, outstanding.

3. The Applicant is a reporting issuer under the securities legislation of the provinces of Ontario, British Columbia and Alberta. The Applicant is not a reporting issuer in any other jurisdiction in Canada.

4. The common shares of the Applicant are listed on the NEX board of the TSX Venture Exchange but have been suspended from trading, and are not listed or quoted on any other exchange or market in Canada or elsewhere.

5. The Cease Trade Order was issued due to the failure by the Applicant to file with the Commission audited financial statements for the year ended December 31, 2003 and interim financial statements for the three months ended March 31, 2004 (the Financial Statements) as required by the Act.

6. The Applicant is also subject to cease trade orders issued by the British Columbia Securities Commission dated June 2, 2004 and the Alberta Securities Commission dated June 30, 2004 for failure to file the Financial Statements. The Applicant has concurrently applied for a partial revocation of these cease trade orders.

7. The Financial Statements were not filed with the Commission due to a lack of funds to pay for the preparation and audit of such statements.

8. The audited financial statements for the years ended December 31, 2003 and 2004, and unaudited financial statements for the nine months ended September 30, 2005, were filed with the Commission, via SEDAR on December 21, 2005.

9. The Applicant is up to date in its continuous disclosure obligations, has paid all outstanding filing fees associated therewith, and is no longer in default of the requirements of the Act or any of the rules or regulations made thereunder.

10. The Applicant has entered into an agreement with AMtag whereby the Applicant has agreed to amalgamate with AMtag (the Amalgamation), subject to shareholder approval, to form an amalgamated corporation which will be called "iPico Inc." or such other name as the board of directors of the Corporation, in its sole discretion but subject to applicable regulatory approval, deems appropriate. On the Amalgamation, each of the current shareholders of the Applicant will receive one common share of the amalgamated corporation (Amalco) for every 191.6049 common shares of the Applicant held on the date of the Amalgamation; provided, however, that Shareholders who hold fewer than 19,161 common shares of the Applicant, or who would otherwise be entitled to receive a fractional share of Amalco, will instead receive a cash payment equal to one dollar ($1.00) multiplied by the number of shares (including fractional shares) of Amalco that would otherwise have been issuable to such shareholder. The shareholders of AMtag will receive one common share of Amalco for each common share of AMtag and one 5% cumulative redeemable convertible Class A Share of Amalco for each 5% cumulative redeemable convertible Class A Share of AMtag, as the case may be, held on the date of the Amalgamation. In addition, each obligation of AMtag to issue shares (whether an option, warrant, convertible debt instrument, exchangeable shares of a subsidiary or other contractual obligation) will become an obligation to issue an equal number of common shares or Class A Shares of Amalco, as the case may be. As a result of the Amalgamation, the shareholders of AMtag will own a minimum of approximately 99.73% of the issued and outstanding shares of Amalco, while the current shareholders of the Applicant will hold a maximum of approximately 0.27% of the issued and outstanding shares of Amalco. It is expected that immediately after the Amalgamation Amalco will have 24,650

11. In connection with, and as a condition of, the Amalgamation, AMtag has entered into agreements with iPico Holdings (Pty) Limited (iPico), its subsidiaries, and certain licencees of iPico (collectively, the iPico Group), to purchase certain assets of the iPico Group, principally intellectual property and material contracts (the Asset Acquisition), for consideration consisting of $5,520,000, 2,873,910 shares (the Exchangeable Shares) of iPico South Africa (Pty) Ltd. (iPico South Africa), a wholly-owned subsidiary of AMtag, which will be exchangeable for 2,873,910 common shares of AMtag, and a $4,475,770 debenture (the Debenture) convertible into 4,475,770 common shares of AMtag. Upon the completion of the Amalgamation, the Exchangeable Shares will be exchangeable for an equal number of common shares of Amalco, and the Debenture will be convertible into an equal number of common shares of Amalco.

12. In connection with, and as a condition of, the Asset Acquisition, AMtag must complete a financing (the Private Placement) for gross proceeds of at least $15,000,000 consisting of a private placement of common subscription receipts (each exercisable for one common share and half of a common share purchase warrant) for gross proceeds of at least $10,000,000, and a private placement of preferred subscription receipts (each exercisable for one Class A Share and Class A Share purchase warrant) for gross proceeds of at least $5,000,000). It is expected that the financing will result in the issuance of 10,000,000 common shares, 5,000,000 Class A Shares, 5,000,000 common share purchase warrants and 5,000,000 Class A Share purchase warrants. The proceeds of the Private Placement will be used to finance the Asset Acquisition, to pay the costs of the Asset Acquisition, the Private Placement and the Amalgamation, and to provide working capital for Amalco.

13. After the completion of the Private Placement, the Asset Acquisition and the Amalgamation, Amalco will have sufficient funds to cover its operating costs for twelve months.

14. The terms of the Amalgamation, Asset Acquisition and Private Placement are described in the Management Information Circular of the Applicant dated February 10, 2006, for the annual and special meeting of the Applicant's shareholders to be held on or about March 3, 2006 (the Circular). The audited financial statements for the years ended December 31, 2003 and 2004, and unaudited financial statements for the nine months ended September 30, 2005 will be mailed to the shareholders of the Applicant together with the Circular.

15. At the annual and special meeting, the shareholders of the Applicant will be asked to approve the Amalgamation. In order to be effective, the Amalgamation must be approved by (i) two-thirds of the votes cast by shareholders present at the meeting in person or by proxy, and (ii) a majority of the votes cast by disinterested shareholders present at the meeting in person or by proxy. "Disinterested shareholders" will be all shareholders other than certain directors of the Applicant who transferred to AMtag, in exchange for 151,000 common shares of AMtag, a debt of $159,000 owed by the Applicant to them for loans which they made to the Applicant in the past. These directors will not continue with Amalco if the Amalgamation is completed, except for one director, Simon Lewis, who was owed $40,000 of this debt and received 38,000 common shares of AMtag.

16. The Amalgamation will be subject to, and will be completed in compliance with, all applicable policies of the TSX Venture Exchange (the Exchange).

17. The Applicant has applied to the Exchange for approval of the Amalgamation and the listing of the common shares of Amalco on Tier 2 of the Exchange.

18. The Circular contains a description of the Cease Trade Order, a description of this Order, a notice that the Commission will consider issuing a final revocation order at the time of the completion of the Amalgamation, and a notice that if the Amalgamation is completed before the final revocation of the Cease Trade Order is granted, all securities of Amalco, including all securities issued pursuant to the Amalgamation, the Private Placement and the Asset Acquisition will remain subject to the Cease Trade Order until such order is revoked by the Commission.

19. Prior to the completion of the Private Placement, the Asset Acquisition, and the Amalgamation, the current shareholders of AMtag and the proposed recipients of securities of AMtag under the Private Placement and the Asset Acquisition will receive: (i) a copy of the Cease Trade Order; (ii) a copy of this Order; (iii) written notice from the Applicant and AMtag that the Commission will consider issuing a final revocation order at the time of the completion of the Amalgamation; and (iv) written notice from the Applicant and AMtag that if the Amalgamation is completed before the final revocation of the Cease Trade Order is granted, all securities of Amalco, including all securities issued pursuant to the Amalgamation, the Private Placement and the Asset Acquisition will remain subject to the Cease Trade Order until the final revocation of the Cease Trade Order by the Commission. The current shareholders of AMtag and the proposed recipients of securities of AMtag will be required to acknowledge in writing the receipt of these documents from AMtag and the Applicant.

20. The variance of the Cease Trade Order is in the best interests of the present shareholders of the Applicant, as it will allow the Applicant to proceed with the Amalgamation, the Private Placement and the Asset Acquisition. These three transactions will result in the Applicant once more having assets and an active business.

AND WHEREAS considering the Application and the recommendation of staff to the Director;

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

IT IS ORDERED, pursuant section 144 of the Act, that the Cease Trade Order be varied solely to permit:

i) the holding of the annual and special meeting of the shareholders of the Applicant to, among other things, approve the Amalgamation;

ii) the Amalgamation, as described in paragraph 10 of this Order; and

iii) the issuance of common shares of Amalco upon the exchange of the Exchangeable Shares and the conversion of the Debenture, as described in paragraph 11 of this Order;

provided that:

i) prior to the completion of the Amalgamation, the Circular is mailed to all shareholders of the Corporation in accordance with National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer;

ii) prior to the issuance of securities pursuant to the Private Placement and prior to the issuance of securities pursuant to the Asset Acquisition, the Applicant provides the written documentation described in paragraph 19 of this Order to each individual or corporation which will receive securities of AMtag (which will be converted into securities of the Applicant upon the completion of the Amalgamation); and

iii) prior to the issuance of securities pursuant to the Private Placement and prior to the issuance of securities pursuant to the Asset Acquisition, the Applicant receives the written acknowledgements referred to in paragraph 19 of this Order.

DATED this 13^th day of February 2006.