Adeptron Technologies Corporation and Artaflex Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief applications in Multiple Jurisdictions -- National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) -- the Filer requests relief from the requirement under paragraph 4.3(a) of NI 52-107 that audited annual financial statements of reverse takeover acquirer be required to be accompanied by an unmodified auditor's report -- auditor's report qualified because records destroyed due to water leak at reverse takeover acquirer's offices -- relief granted subject to conditions.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, ss. 4.3(a), 5.1(2).

December 16, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF ONTARIO

(THE JURISDICTION)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ADEPTRON TECHNOLOGIES CORPORATION

(THE FILER)

AND

ARTAFLEX INC.

(THE TARGET COMPANY)

DECISION

Background

The principal regulator in the Jurisdiction (the "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the "Legislation") requesting relief from:

(a) the requirement under Section 4.3(a) of National Instrument 52-107 -- Acceptable Accounting Principles and Auditing Standards ("NI 52-107") to have an unmodified auditor's opinion in respect of the annual financial statements for the Target Company for the (i) annual financial statements for the seven month period ended July 31, 2009 and (ii) the annual financial statements for the twelve month period ended December 31, 2008, being the third and fourth most recent completed financial years of the Target Company (collectively, the "Qualified Financial Statements") required to be included in the Filer's management information circular (the "Information Circular") for its shareholders meeting (the "Meeting") required to approve a proposed business combination between the Filer and the Target Company (the "Transaction") (the "Unqualified Report Exemption Sought"); and

(b) the requirement under subsection 4.2(1) of NI 52-107 for the Target Company financial statements for the financial periods ending July 31, 2010, and July 31, 2011, included in the Information Circular be prepared in accordance with Canadian GAAP -- Part V (the "IFRS Exemption Sought", and with the Unqualified Report Exemption Sought, the "Exemption Sought").

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

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

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in the Provinces of British Columbia, Alberta and Quebec.

Interpretation

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

Representations

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

1. The Filer has selected the Ontario Securities Commission as Principal Regulator for this application since the Filer's head office is located in the Province of Ontario.

2. The Filer was organized by amalgamation, under the Business Corporations Act (Alberta) on January 1, 2003. Prior to the amalgamation, the Filer was known as Electronics Manufacturing Group Inc. The Filer is in the process of continuing into Ontario.

3. The Filer's common shares trade on the TSXV under the trading symbol "ATQ".

4. The Filer is not in default of securities legislation in any jurisdiction.

5. The Filer plans to deliver the Information Circular to its shareholders on or about December 22, 2011. The Filer plans to hold the Meeting on or about January 27, 2011. Subject to the approval of the Filer's shareholders at the Meeting, the Filer and the Target Company plan to complete the Transaction on or about February 2, 2011.

6. The Transaction is "reverse takeover" (as defined in Policy 5.2 of the TSXV). Further, the Transaction constitutes a "reverse takeover" as defined in NI 51-102.

7. Section 14.2 of Form 51-102F5 requires that a management information circular delivered to shareholders to approve a "reverse takeover" transaction (involving the exchange of securities) to contain disclosure described in a form of prospectus (including financial statements) that the acquired company would be eligible to use immediately prior to the delivery of the management information circular for such transaction. However, Section 14.5 of Form 51-102F5 states that an information circular delivered for a "reverse takeover" transaction in accordance with TSXV policies will satisfy Section 14.2 of Form 51-102F5. The Filer intends to prepare and file the Information Circular pursuant to TSXV Policy 5.2.

8. Subsection 4.10(2) of NI 51-102 requires an issuer that has completed a reverse takeover to file, within a specific period of time, the financial statements for the reverse takeover acquirer that would have been required to be included in the form of a prospectus that the reserve takeover acquirer was eligible to use prior to the reverse takeover for a distribution of securities in the jurisdiction, to the extent that it has not already included such statements in an information circular or similar document previously filed. The form of prospectus that the Target Company is eligible to use is a long form prospectus prepared in accordance with the requirements of National Instrument 41-101 General Prospectus Requirements ("NI 41-101") and Form 41-101F1 Information Required in a Prospectus ("Form 41-101F1").

9. The Target Company financial statements required to be included in the Information Circular under TSXV Policy 5.2 are the same as the financial statements required to be included in a long form prospectus under Form 41-101F1. Therefore, the Target Company financial statements required to be included in the Information Circular under TSXV Policy 5.2 satisfies the continuous disclosure requirements under Subsection 4.10(2) of NI 51-102 described above.

10. The Target Company has changed its financial year end in 2009 from December 31 to July 31. As such, the most recent three financial years for the Target Company are as follows:

(a) twelve months ended July 31, 2011;

(b) twelve months ended July 31, 2010;

(c) seven months ended July 31, 2009 (transition year); and

(d) twelve months ended December 31, 2008.

11. Subsection 32.2(4) of Form 41-101F1 states that if a transition year is less than nine months in length, the transition year is deemed not to be a financial year for the purposes of the requirement to provide financial statements under NI 41-101. However, subsection 32.2(5) of Form NI 41-101F1 provides that, despite subsection 32.2(4), all financial statements of the issuer for a transition year must be included in a prospectus to satisfy the requirements under NI 41-101. As such, the Filer plans to include annual financial statements of the Target Company for both its third most recently completed financial year ended on July 31, 2009 and its fourth most recently completed financial year ended December 31, 2008, representing all of the financial statement of the Target Company for its transition year.

12. The Filer is proposing to include the following Target Company financial statements in the Information Circular filed in connection with the Transaction (the financial statements in paragraphs (c) and (d) being the Qualified Financial Statements):

(a) Audited annual statements in accordance with IFRS for the twelve month period ended July 31, 2011;

(b) Audited annual statements in accordance with IFRS for the twelve month period ended July 31, 2010;

(c) Audited annual statements in accordance with Canadian GAAP (transition year) for the seven month period ended July 31, 2009 with an auditor's qualification with respect to inventories, cost of sales, income taxes and net loss; and

(d) Audited annual financial statements in accordance with Canadian GAAP for the twelve months ended December 31, 2008 with an auditor's qualification with respect to inventories, cost of sales, income taxes and net loss.

13. Under subsection 4.2(2) of NI 41-101, any financial statements included in a long form prospectus filed in the form of Form 41-101F1 must be audited in accordance with NI 52-107 unless an exception in section 32.5 or subsection 35.1(3) of Form 41-101F1 applies. No exceptions in section 32.5 or subsection 35(1)(3) of Form 41-101F1 applies to the Qualified Financial Statements. Therefore, the Qualified Financial Statements must be audited in accordance with NI 52-107.

14. Paragraph 4.3(a) of NI 52-107 requires, among other things, financial statements that are required by securities legislation to be audited be accompanied by an auditor's report that expresses an unmodified opinion. The Target Company's auditor's report on the Qualified Financial Statements does not satisfy this requirement in paragraph 4.3(a) of NI 52-107.

15. The basis for the Target Company's auditors' qualification with respect to their report on the Qualified Financial Statements will read substantially as follows:

"Since we were appointed as auditors subsequent to July 31, 2009 we did not observe the counting of physical inventories at December 31, 2008 and January 1, 2008 and due a water leak in the branch office in 2010 that destroyed certain inventory records, we were unable to confirm or verify by alternative means inventories included in the financial statements as at December 31, 2008 and January 1, 2008. Since inventories enter into the determination of results of operations and cash flows, we were unable to determine whether adjustments might have been necessary to the amounts shown in the balance sheet for inventories at December 31, 2008, cost of sales, income taxes and net loss reported in the statements of operations and the components of cash flows from operating activities reported in the statements of cash flows for the seven month period ended July 31, 2009 and year ended December 31, 2008."

16. The current auditors of the Target Company did not act as auditors to the Target Company during the financial period included in the Qualified Financial Statements. Prior to the auditor's report accompanying these Qualified Financial Statements, the Target Company did not obtain an auditor's report by a predecessor auditor covering this financial period.

17. In 2009, the Target Company experienced a change of management and elected a new board of directors which resulted in a new business approach to the Target Company.

18. Certain of the Target Company's accounting records have been destroyed and cannot be reconstructed. In 2010, the Target Company suffered a water leak at its offices that resulted in the destruction and loss of certain financial data with respect to the financial periods covered in the Qualified Financial Statements. In particular, the Target Company lost financial records concerning fiscal 2008 and 2009 packing slips, weigh bills and sales postings and 2008 GST returns.

19. The audit of the Qualified Financial Statements will be subject to qualifications with respect to inventories, cost of sales, income taxes and net loss because the Target Company's current auditors are unable to provide an unqualified audit report due to the destruction and loss of certain financial records described in the above paragraph and cannot satisfy themselves through alternative means.

20. Part 5 of NI 52-107 provides that the regulator or securities regulatory authority may grant an exemption from NI 52-107, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Make to make the decision.

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

(a) the Information Circular includes the Target Company's audited annual financial statements set out in representation 12, above;

(b) the Information Circular includes the Target Company's auditor's qualification set out in representation 15, above;

(c) the Information Circular includes disclosure of the reason underlying the Target Company's auditor's qualification set out in representation 18, above;

(d) the Target Company's audited annual financial statements included in the Information Circular otherwise satisfies all applicable requirements under NI 52-107;

(e) the Target Company's financial statements for the financial periods ending July 31, 2010, and July 31, 2011, included in the Information Circular are prepared in accordance with IFRS;

(f) the Filer delivers the Information Circular to its shareholders by January 31, 2012; and

(g) the Filer and the Target Company complete the Transaction by February 29, 2012.