Aldeavision Inc. - MRRS Decision

Headnote

Mutual Reliance Review System For Exemptive Relief Applications -- National Instrument 51-102 Continuous Disclosure Obligations -- Issuer Copmpleted a Significant Acquisition Through Judicial Sale -- Prospectus Level Disclosure Required in Issuer's Information Circular -- Issuer Does Not Have Access to Historical Accounting Records of Acquired Business and Cannot Produce Audited Financial Statements for Acquired Business -- Issuer Previously Granted Relief from the Requirement to Include Audited Annual Financial Statements and Pro Forma Financial Statements in the Business Acquisition Report -- Issuer Granted Relief from the Requirement to Include Audited Financial Statements and Pro Forma Forma Income Statement in the Information Circular -- Information Circular to Incorporate by Reference Business Acquisition Report that Contains Unaudited Financial Statements and a Pro Forma Balance Sheet.

National Instruments Cited

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.

Forms Cited

Form 51-102F5, Item 14.2.

August 25, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

(The "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ALDEAVISION INC.

(The "Filer")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") (the "Requested Relief"):

(i) for an exemption from the requirement to include in the Filer's information circular (the "Circular"), for a proposed statutory arrangement (the "Proposed Transaction"), the audited financial statements of Invidex Inc. ("Invidex") of Invidex required by the Legislation, provided that the Filer incorporates by reference in the Circular the Business Acquisition Report of the Filer dated May 24, 2006, including the financial statements of Invidex attached to such Business Acquistion Report; and

(ii) for an exemption from the requirement to include in the Circular the pro forma income statement of the Filer required by the Legislation in respect of the acquisition by the Filer of substantially all of the assets of Invidex (the "Assets").

Application of the Principal Regulator System

Under Multilateral Instrument 11-101 Principal Regulator System ("MI 11-101") and the Mutual Reliance Review System for Exemptive Relief Applications:

(a) the Autorité des marchés financiers is the principal regulator for the Filer;

(b) the Filer is relying on the exemption in Part 3 of MI 11-101 in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland; and

(c) this MRRS Decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation that was incorporated on June 3, 1992 pursuant to the Canada Business Corporations Act ("CBCA").

2. The head office of the Filer is located in St-Laurent, Quebec.

3. The authorized capital of the Filer consists of an unlimited number of common shares and an unlimited number of preference shares issuable in series without nominal or par value. As of the date hereof, 6,227,279 common shares are issued and outstanding.

4. The Filer's common shares are listed on the TSX Venture Exchange under the symbol "AAN".

5. The Filer is a "venture issuer" as defined in National Instument 51-102 and is a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.

6. On June 1, 2006, the filer entered into a letter of intent with VGS Capital Ltd. ("VGS"), an Alberta corporation, in respect of the Proposed Transaction, pursuant to which certain investors would participate in an arrangement that would restructure the Filer, provide it with $2,970,000 in new financing and permit the Filer to realize some benefit from its accumulated tax losses.

7. The Filer issued a press release on July 31, 2006 describing the Proposed Transaction.

8. The Proposed Transaction will be structured as an arrangement under the Canada Business Corporations Act. The Filer will seek an interim order from the Superior Court of Quebec calling a special meeting (the "Meeting") of the security holders of the Filer to approve the Proposed Transaction.

9. In connection with the Meeting, the Filer will prepare the Circular which will be filed with the applicable securities regulatory authorities and delivered to the security holders of the Filer.

10. The Legislation requires that the Circular include the disclosure about the Filer prescribed by the applicable prospectus form, including the financial statements of the acquired business and pro forma financial statements for the periods specified in the Legislation.

11. The Filer's most recent fiscal year ended on December 31, 2005.

12. On February 24, 2006, the Filer acquired the Assets of Invidex, a Montreal-based private company that was a broadcast solution provider to the telecommunications industry.

13. At the request of two secured creditors of Invidex, namely, Capital Régional et Coopératif Desjardins and Desjardins Capital de Développement Montréal Métropolitain, Ouest et Nord du Québec (collectively, the "Desjardins Creditors"), the sale of the Assets to the Filer was made under a court order issued on February 23, 2006 by the Quebec Superior Court and ordering the judicial sale of the Assets under the provisions of the Civil Code of Quebec.

14. The Filer paid $1,640,000 for the Assets.

15. The purchase price was paid by the issuance of three convertible debentures for an aggregate value of $1,515,000 due in January 31, 2008 to the Desjardins Creditors and 9143-8655 Quebec Inc. and through the issuance of 1,250,000 common shares of the Filer to certain employees and officers of Invidex for an aggregate value of $125,000.

16. The purchase price was established based on unaudited annual financial statements of Invidex for the years ended December 31, 2004 and December 31, 2005. Invidex was not required to prepare audited financial statements because of its private company status.

17. The Filer and all of the parties involved in the sale of the Assets were arm's-length parties.

18. As a consequence of the sales of the Assets being made by way of a judicial sale, no compromises or arrangements, as defined under the Companies' Creditors Arrangement Act, were ever filed or proposed by Invidex.

19. After the sale of its assets to the Filer, Invidex ceased all of its operations and no longer employs any employees.

20. The Filer has made every reasonable effort to obtain access to, or copies of, the historical accounting records necessary to audit the financial statements of Invidex, but such efforts have been unsuccessful because Invidex has ceased its operations and the inability of AldeaVision to locate past employees of Invidex in charge of maintaining such historical accounting records.

21. As a result, the Filer does not have access to Invidex's financial historical records (working papers and the supporting documentations) that would be required to audit the unaudited financial statements of Invidex for the years ended on December 31, 2004 and 2005 and to prepare the interim financial statements of Invidex for the pre-acquisition period (as such term is defined in the Legislation) which are required by the Legislation.

22. In addition, the pro forma income statement of the Filer required by the Legislation would have to be prepared based on unaudited financial statements of Invidex.

23. Pursuant to the Legislation, the Filer is not required to include a pro forma balance sheet of the Filer in the Circular since the acquisition of the Assets will be reflected in the Filer's most recent balance sheet (as at March 31, 2006) incorporated by reference in the Circular.

Decision

(i) The Decision Makers being satisfied that they have jurisdiction to make this decision and that the relevant test under the Legislation has been met, the Requested Relief is granted.