Patient Home Monitoring Corp. et al.

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Application for exemptive relief in relation to proposed distributions of securities by an issuer through a committed equity facility (also known as an "equity line of credit") -- An equity line of credit is a type of financing which permits a public company to require, at a time or times of its choosing, that a purchaser purchase newly issued securities of the company at a discount to the market price of the securities at the time of the draw down -- the purchaser will generally finance its purchase commitments and offset market risk through short sales, resale or other hedging transactions in the secondary market during the pricing period with a view to monetizing the spread between the discounted purchase price and the market price -- a draw down under an equity line may be considered to be an indirect at-the-market distribution of securities of the issuer to investors in the secondary market with the equity line purchaser acting as underwriter -- purchaser requires dealer registration relief -- issuer will file shelf prospectus which will qualify resales, short sales and other hedging transactions by purchaser over a specified period -- relief granted to the issuer and purchaser from certain registration and prospectus requirements, subject to terms and conditions, including restrictions on the number of securities that may be distributed under an equity line, certain restrictions on the permitted activities of the purchaser, timely disclosure of each draw down, and certain notification and disclosure requirements.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 74(1), 147.

National Instrument 44-101 Short Form Prospectus Distributions, s. 8.1, Form 44-101F1 -- Item 20.

National Instrument 44-102 Shelf Distributions, s. 5.5.2, 5.5.3, 11.1.

October 28, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

PATIENT HOME MONITORING CORP.

(the Issuer),

YA GLOBAL MASTER SPV LTD.

(the Purchaser) AND

YORKVILLE ADVISORS, LLC

(the Purchase Manager and,

together with the Issuer and the Purchaser,

the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) that:

(a) the following prospectus disclosure requirements under the Legislation (the Prospectus Disclosure Requirements) do not fully apply to the Issuer in connection with the Distribution (as defined below):

(i) the statement in the Prospectus Supplement (as defined below) respecting statutory rights of withdrawal and rescission or damages in the form prescribed by item 20 of Form 44-101F1 Short Form Prospectus of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101); and

(ii) the statements in the Base Shelf Prospectus required by subsections 5.5(2) and (3) of National Instrument 44-102 Shelf Distributions (NI 44-102);

(b) the prohibition from acting as a dealer unless the person is registered as such (the Dealer Registration Requirement) does not apply to the Purchaser and the Purchase Manager in connection with the Distribution; and

(c) the requirement that a dealer send a copy of the Prospectus (as defined below) to a subscriber or purchaser in the context of a distribution (the Prospectus Delivery Requirement) does not apply to the Purchaser, the Purchase Manager or the dealer(s) through whom the Purchaser distributes the Shares (as defined below) and, as a result, rights of withdrawal or rights of rescission, price revision or damages for non-delivery of the Prospectus do not apply in connection with the Distribution (collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

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

The Issuer

1. The Issuer is incorporated under the laws of Alberta and has its head office in San Francisco, California.

2. The Issuer is a reporting issuer under the securities legislation of each of the provinces of Alberta, British Columbia and Ontario and is not in default of the securities legislation of any jurisdiction of Canada.

3. The Issuer's authorized share capital currently consists of an unlimited number of common shares (the Shares) of which 60,154,380 Shares were outstanding as at October 6, 2011.

4. The Shares are listed for trading on the TSX Venture Exchange (the TSX-V). Based on the closing price of $0.13 per Share on the TSX-V on October 6, 2011, the current market capitalization of the Issuer is approximately $7,820,069.

5. The Issuer is qualified to file a short form prospectus under section 2.2 of NI 44-101 and is also qualified to file a base shelf prospectus under NI 44-102.

6. The Issuer is eligible to and intends to file with the securities regulators in each of Alberta, British Columbia and Ontario (the Securities Commissions) a base shelf prospectus pertaining to various securities of the Issuer, including the Shares (such base shelf prospectus and any amendment thereto and renewal thereof being referred to herein as the Base Shelf Prospectus).

7. The statements required by subsections 5.5(2) and (3) of NI 44-102 to be included in the Base Shelf Prospectus will be qualified by adding the following ", except in cases where an exemption from such delivery requirements has been obtained".

The Purchaser and the Purchase Manager

8. The Purchaser is a company incorporated in the Cayman Islands with limited liability.

9. The Purchaser is managed by the Purchase Manager, a Delaware limited liability company, with its head office in Jersey City, New Jersey, United States.

10. Neither the Purchaser nor the Purchase Manager is a reporting issuer or registered as a registered firm as defined in National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103) in any jurisdiction of Canada. The Purchaser and the Purchase Manager are not in default of securities legislation in any jurisdiction of Canada.

The Distribution Agreement

11. The Issuer and the Purchaser entered into a standby equity agreement on June 1, 2010, as amended and restated on October 6, 2011 (the Distribution Agreement) pursuant to which the Purchaser agreed to subscribe for, and the Issuer will have the right but not the obligation to issue and sell, up to $5 million of Shares (the Aggregate Commitment Amount) over a period of 48 months in a series of drawdowns.

12. The Distribution Agreement will provide the Issuer with the ability to raise capital as needed from time to time. The Purchaser regularly engages in such transactions. The Purchaser may, in certain circumstances, finance its commitment to subscribe for Shares on a drawdown through short-sales or resales out of existing holdings of the Issuer's securities.

13. Under the Distribution Agreement, the Issuer will have the sole ability to determine the timing and the amount of each drawdown, subject to certain conditions, including a maximum investment amount per drawdown and the Aggregate Commitment Amount.

14. The subscription price per Share and therefore the number of Shares to be issued to the Purchaser for each drawdown will be calculated based on a predetermined percentage discount from the average daily volume-weighted price per Share on the TSX-V over a period of five consecutive trading days (Trading Days) following notice of a drawdown sent by the Issuer (the Drawdown Pricing Period). Specifically, the Shares will be issued at a subscription price equal to the average daily volume-weighted price per Share on the TSX-V during the Drawdown Pricing Period multiplied by 95% (the Purchase Price). The Issuer may fix in such drawdown notice a minimum Purchase Price below which it will not issue any Shares. The Issuer and the Purchaser can mutually agree in writing to amend the minimum price set forth in a drawdown notice during the applicable Drawdown Pricing Period. Notwithstanding the foregoing, the Purchase Price per Share may not be lower than the volume-weighted average price per Share on the TSX-V over a period of five consecutive Trading Days immediately preceding the applicable drawdown notice, less the permitted discount under the private placement rules of the TSX-V (the Floor Price).

15. On the seventh trading day following the date of each drawdown notice (each, a Settlement Date), the amount of the drawdown will be paid by the Purchaser in consideration for the relevant number of newly issued Shares.

16. The Distribution Agreement will provide that, at the time of each drawdown notice and at each Settlement Date, the Issuer will make a representation to the Purchaser that the Base Shelf Prospectus, as supplemented (the Prospectus), contains full, true and plain disclosure of all material facts relating to the Issuer and the Shares being distributed. The Issuer would therefore be unable to issue, or decide to issue, Shares when it is in possession of undisclosed information that would constitute a material fact or a material change.

17. On or after each Settlement Date, the Purchaser may seek to sell all or a portion of the Shares subscribed under the drawdown.

18. During the term of the Distribution Agreement, the Purchaser and its affiliates, associates or insiders, as a group, will not own at any time, directly or indirectly, Shares representing more than 9.9% of the issued and outstanding Shares.

19. The Purchaser and its affiliates, associates and insiders will not hold a "net short position" in Shares during the term of the Distribution Agreement. However, the Purchaser may, after the receipt of a drawdown notice, seek to short-sell Shares to be subscribed for under the drawdown, or engage in hedging strategies, in order to reduce the economic risk associated with its commitment to subscribe for Shares, provided that:

(a) the Purchaser complies with applicable rules of the TSX-V and applicable securities regulations;

(b) the Purchaser and its affiliates, associates or insiders will not during the period between a drawdown notice and the corresponding Settlement Date, directly or indirectly, sell Shares or grant any right to purchase or acquire any right to dispose of, nor otherwise dispose of for value, any Shares or any securities convertible into or exchangeable for Shares, in an amount exceeding the number of Shares to be subscribed by the Purchaser under the applicable drawdown; and

(c) notwithstanding the foregoing, the Purchaser and its affiliates, associates or insiders will not, directly or indirectly, sell Shares or grant any right to purchase or acquire any right to dispose of, nor otherwise dispose of for value, any Shares or any securities convertible into or exchangeable for Shares, between the time of delivery of a drawdown notice and the filing of the news release announcing the drawdown.

20. Disclosure of the activities of the Purchaser and its affiliates, associates or insiders, as well as the restrictions thereon, the whole as described in paragraph 19 above, will be included in the Base Shelf Prospectus. In addition, the Issuer will disclose in the Base Shelf Prospectus, as a risk factor, that the Purchaser may engage in short-sales, resales or other hedging strategies to reduce or eliminate investment risks associated with a drawdown and the possibility that such transactions may result in significant dilution to existing shareholders and could have a significant effect on the price of the Shares.

21. No extraordinary commission or consideration will be paid by the Purchaser or the Purchase Manager to a person or company in respect of the disposition of Shares by the Purchaser to purchasers who purchase the same on the TSX-V through dealer(s) engaged by the Purchaser (the TSX-V Purchasers).

22. The Purchaser and the Purchase Manager will also agree, in effecting any disposition of Shares, not to engage in any sales, marketing or solicitation activities of the type undertaken by dealers in the context of a public offering. More specifically, each of the Purchaser and the Purchase Manager will not (a) advertise or otherwise hold itself out as a dealer, (b) purchase or sell securities as principal from or to customers, (c) carry a dealer inventory in securities, (d) quote a market in securities, (e) extend, or arrange for the extension of credit, in connection with transactions of securities of the Issuer, (f) run a book of repurchase and reverse repurchase agreements, (g) use a carrying broker for securities transactions, (h) lend securities for customers, (i) guarantee contract performance or indemnify the Issuer for any loss or liability from the failure of the transaction to be successfully consummated, or (j) participate in a selling group.

23. The Purchaser and the Purchase Manager will not solicit offers to purchase Shares in any jurisdiction of Canada and will sell the Shares to TSX-V Purchasers through one or more dealer(s) unaffiliated with the Purchaser, the Purchase Manager and the Issuer.

The Prospectus Supplements

24. The Issuer intends to file with the securities regulatory authority in each of Alberta, British Columbia and Ontario a prospectus supplement to the Base Shelf Prospectus (each a Prospectus Supplement) within two business days after the Settlement Date for each drawdown under the Distribution Agreement.

25. The Prospectus Supplement will disclose (i) the number of Shares issued to the Purchaser, (ii) the price per Share paid by the Purchaser, (iii) the information required by NI 44-102, including the disclosure required by subsection 9.1(3) thereof, (iv) other information required by NI 44-101 omitted from the Base Shelf Prospectus in accordance with NI 44-102, and (v) the following statement (the Amended Statement of Rights):

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. The securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment are not delivered to the purchaser, provided that the remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. However, such rights and remedies will not be available to purchasers of common shares distributed under this prospectus because the prospectus will not be delivered to purchasers, as permitted under a decision document issued by the Alberta Securities Commission on October ?, 2011.

The securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contain a misrepresentation, provided that the remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. Such remedies remain unaffected by the non-delivery of the prospectus, permitted under the decision document referred to above.

The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province for the particulars of these rights or consult with a legal adviser.

26. The Base Shelf Prospectus, as supplemented by the Prospectus Supplement, will qualify, inter alia, (a) the distribution of Shares to the Purchaser on the Settlement Date, and (b) the disposition of Shares to TSX-V Purchasers during the period that commences on the date of issuance of a drawdown notice to the Purchaser and ends on the earlier of (i) the date on which the distribution of such Shares has ended or (ii) the 40th day following the Settlement Date (collectively, a Distribution).

27. The Prospectus Delivery Requirement is not workable in the context of the Distribution as the TSX-V Purchasers will not be readily identifiable, because the dealer(s) acting on behalf of the Purchaser may combine the sell orders made under the Prospectus with other sell orders and the dealer(s) acting on behalf of the TSX-V Purchasers may combine a number of purchase orders.

28. The Prospectus Supplement will contain an underwriter's certificate in the form set out in section 2.2 of Appendix B to NI 44-102 signed by the Purchaser.

29. At least three business days prior to the filing of the first Prospectus Supplement to be filed in connection with a distribution pursuant to the equity line facility under the Distribution Agreement, the Issuer will provide for comment to the Decision Makers a draft of such Prospectus Supplement.

News Releases / Continuous Disclosure

30. Following the execution of the Distribution Agreement, the Issuer:

(a) filed on SEDAR a news release dated June 2, 2010 and a material change report dated June 4, 2010 disclosing the material terms of the Distribution Agreement, including the Aggregate Commitment Amount; and

(b) on October 6, 2011, filed a copy of the Distribution Agreement on SEDAR.

31. Promptly upon the issuance of each drawdown notice, regardless of the size of the drawdown, the Issuer will issue and file on SEDAR a news release disclosing the aggregate amount of the drawdown, the maximum number of Shares to be issued, the minimum price per Share, if any, the Floor Price and the availability on SEDAR of the Base Shelf Prospectus and the Prospectus Supplement and specifying how a copy of those documents can be obtained.

32. Promptly upon any amendment to the minimum price set forth in a drawdown notice, the Issuer will issue and file on SEDAR a news release disclosing the amended minimum price per Share and the maximum number of Shares to be issued in the drawdown.

33. The Issuer will:

(a) on, or as soon as practicable after, the last day of each Drawdown Pricing Period, issue and file on SEDAR a news release disclosing for the relevant drawdown:

(i) the number of Shares issued to, and the price per Share paid by, the Purchaser;

(ii) that the Base Shelf Prospectus and each Prospectus Supplement will be available on SEDAR and specifying how a copy of these documents can be obtained; and

(iii) the Amended Statement of Rights; and

(b) file a material change report on SEDAR within ten days of each Settlement Date, if the relevant Distribution constitutes a material change under applicable securities legislation, disclosing at a minimum the information required in subparagraph (a) above.

34. The Issuer will also disclose in its financial statements and management's discussion and analysis filed on SEDAR under National Instrument 51-102 Continuous Disclosure Obligations, for each financial period, the number and price of Shares issued to the Purchaser pursuant to the Distribution Agreement.

Deliveries upon Request

35. The Issuer will deliver to the securities regulatory authority in each of Alberta and Ontario and to the TSX-V, upon request, a copy of each drawdown notice delivered by the Issuer to the Purchaser under the Distribution Agreement.

36. The Purchaser and the Purchase Manager will provide to the securities regulatory authority in each of Alberta and Ontario, upon request, full particulars of trading and hedging activities by the Purchaser or the Purchase Manager (and, if required, trading and hedging activities by their respective affiliates, associates or insiders) in relation to securities of the Issuer during the term of the Distribution Agreement.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that:

(a) as it relates to the Prospectus Disclosure Requirements:

(i) the Issuer complies with the representations in paragraphs 7, 20, 25, 26, 28, 30, 31, 32, 33, 34 and 35; and

(ii) the number of Shares distributed by the Issuer under the Distribution Agreement does not exceed, in any 12 month period, 20% of the aggregate number of Shares outstanding calculated at the beginning of such period;

(b) as it relates to the Prospectus Delivery Requirement and the Dealer Registration Requirement, the Purchaser and/or, as applicable, the Purchase Manager comply with the representations in paragraphs 19, 21, 22, 23, 28 and 36; and

(c) this decision will terminate 25 months after the execution of the Distribution Agreement.

For the Commission: