Kaboose Inc. - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- filer experienced three years of consecutive losses, the most recent year being a very small loss, resulting in an anomalous result of the income test -- filer granted relief to use an alternative income test (the average of the absolute value of the losses incurred by the filer for the last three years) rather than income from continuing operations for the purposes of determining whether the filer was required to file a business acquisition report in respect of a recent acquisition.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations

June 11, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, NEW BRUNSWICK,

NOVA SCOTIA AND NEWFOUNDLAND AND LABRADOR

(the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

KABOOSE INC.

(the Filer)

MRRS DECISION DOCUMENT

Background

The local securities regulatory or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision pursuant to the securities legislation of the Jurisdictions (the Legislation) granting relief to use an alternative income test (as defined below) for purposes of its continuous disclosure obligations under the Legislation in respect of its acquisition (the Acquisition) of substantially all of the assets of Amazing Moms.com Inc. (Amazing Moms) (the Requested Relief).

Under the Mutual Reliance Review System for Exemptive Relief Applications (MRRS):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the 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 defined in this decision.

Representations

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

1. the Filer was formed by Articles of Incorporation under the Business Corporations Act (Ontario) on October 8, 1999;

2. the Filer is a reporting issuer in each province in Canada (except Quebec) and its common shares trade on the Toronto Stock Exchange;

3. The Filer is not in default of its obligations as a reporting issuer under the legislation of any jurisdiction in which it is a reporting issuer or its equivalent;

4. Amazing Moms is a corporation that was formed under the laws of the State of New York on November 30, 2006;

5. the Acquisition closed effective March 30, 2007 pursuant to which Kaboose acquired substantially all of the assets of Amazing Moms;

6. the consideration for the Acquisition was the payment of US$750,000 in cash at closing, with a further US$750,000 paid to Amazing Moms when certain post-closing milestones were achieved;

7. the application of the income test in Subsection 8.3(2)(c) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) using the income from continuing operations of the Filer for the year ended December 31, 2006 leads to anomalous results in that the significance of the Acquisition is out of proportion to its significance on an objective basis and in comparison to the results of the asset and investment tests required by NI 51-102;

8. the Filer incurred a small loss in the year ended December 31, 2006, resulting in virtually any acquisition exceeding 20% under the income test;

9. the Filer has incurred 3 years of consecutive losses: a loss of $90,000 for the year ended December 31, 2006, a loss of $3,313,000 for the year ended December 31, 2005 and a loss of $1,348,000 for the year ended December 31, 2004;

10. a review of the relative significance under the asset test and the investment test reveals that the Acquisition is not otherwise significant; and

11. the use of an alternative income test (the average of the absolute value of the losses incurred by the Filer for the years ended December 31, 2006, December 31, 2005 and December 31, 2004), rather than using income from continuing operations for the year ended December 31, 2006, provides a more realistic indication of the significance of the Acquisition and its results are consistent with the asset test and the investment test.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.