Medifocus Inc.

Headnote

National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions -- Section 144 of the Securities Act (Ontario) -- application for partial revocation of a cease trade order -- issuer cease traded due to failure to file audited annual financial statements and interim financial statements, related management's discussion and analysis and related certifications with the Commission -- issuer has applied for a variation of the cease trade order to permit the issuer to proceed with a reorganization plan under the Companies' Creditors Arrangement Act -- partial revocation granted subject to conditions.

Applicable Legislative Provisions

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

National Policy 11-207 Failure-To-File Cease Trade Orders and Revocations In Multiple Jurisdictions.

MEDIFOCUS INC.

PARTIAL REVOCATION ORDER

UNDER THE SECURITIES LEGISLATION OF ONTARIO (the Legislation)

Background

1. Medifocus Inc. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the Ontario Securities Commission (the Principal Regulator) on September 4, 2020.

2. The Issuer has applied to the Principal Regulator pursuant to section 144 of the Securities Act (Ontario) for a partial revocation order of the FFCTO.

Interpretation

3. Terms defined in National Instrument 14-101 Definitions or National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions have the same meaning if used in this order, unless otherwise defined.

Representations

4. This decision is based on the following facts represented by the Issuer:

a. The Issuer was incorporated under the Business Corporations Act (Ontario) on April 25, 2005.

b. The Issuer is a reporting issuer in each of the provinces of British Columbia, Alberta and Ontario. The Issuer is not a reporting issuer in any other jurisdiction in Canada.

c. The Issuer does not have a physical head office. The registered office of the Issuer is located at 1090 Don Mills Rd, Suite #404, Toronto, Ontario M3C 3R6 and the mailing address of the Issuer is located at 8630-M Guilford Rd #342 Columbia, MD USA 21046.

d. The Issuer is a medical device company that holds a portfolio of medical technologies that use a patented form of thermotherapy called Thermal-Dilatation Technology to treat benign prostatic enlargement and possible cancerous conditions.

e. The authorized share capital of the Issuer consists of an unlimited number of common shares (the Common Shares). As at the date hereof, there are 184,984,215 Common Shares outstanding. The Issuer has no other outstanding securities (including debt securities).

f. The Common Shares are listed on the TSX Venture Exchange (the TSXV) under the trading symbol "MFS". The Common Shares are also quoted for trading on the OTC Pink in the United States (the OTC Pink) under the symbol "MDFZF". The Common Shares were suspended from trading on the TSXV in connection with the FFCTO. The Issuer intends to delist the Common Shares from the TSXV and the OTC Pink following the completion of the Transaction (as defined herein).

g. The FFCTO was issued as a result of the Issuer's failure to file the following continuous disclosure materials as required by applicable Canadian securities laws:

(i) audited financial statements for the year ended March 31, 2020;

(ii) management's discussion and analysis relating to the audited annual financial statements for the year ended March 31, 2020;

(iii) interim financial statements for the period ended June 30, 2020;

(iv) management's discussion and analysis relating to the interim financial statements for the period ended June 30, 2020; and

(v) certifications of the foregoing filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings;

(collectively, the Unfiled Documents).

h. Except for certain press releases filed by the Issuer, the Issuer has not filed continuous disclosure documents required to be filed by applicable Canadian securities laws since the date of the FFCTO (together with the Unfiled Documents, the Unfiled Continuous Disclosure Documents).

i. The Issuer became insolvent and on September 8, 2021, filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act (Canada) (the NOI Proceedings). msi Spergel Inc. (MSI) was appointed as proposal trustee under the NOI Proceedings.

j. On October 7, 2021, the NOI Proceedings were continued under the Companies' Creditors Arrangement Act (theCCAA and such proceedings being theCCAA Proceedings) pursuant to an initial order(theInitial Order) granted by the Superior Court of Justice (Commercial List) (the Court). Pursuant to the Initial Order, the Court, inter alia, appointed MSI as monitor of the Issuer under the CCAA Proceedings (the Monitor) and authorized the Issuer to obtain a loan from Asset Profits Limited (APL), a corporation existing under the laws of the British Virgin Islands, in the maximum amount of $700,000 in order to finance the Issuer's working capital requirements and for other general corporate purposes and expenditures (the DIP Loan). As of the date hereof, there is $700,000 outstanding under the DIP Loan.

k. On February 8, 2022, the Court granted an order under the CCAA (the Transaction Approval and Reverse Vesting Order) pursuant to which, inter alia, (i) the Court vested all liabilities of the Issuer of any kind or nature whatsoever, other than the DIP Loan and liabilities accruing after the date of delivery of the Monitor's certificate, in 1000101532 Ontario Inc. (ResidualCo) and released the Issuer from same; and (ii) the Court authorized the completion of a reorganization transaction (the Transaction) partially comprised of the following steps:

(i) APL shall subscribe for 18,498,421,500 Common Shares (the Restructured Shares) via private placement pursuant to Section 2.11(a) of National Instrument 45-106Prospectus Exemptions, to be paid by the forgiveness by APL of the DIP Loan;

(ii) the Common Shares (including the Restructured Shares) shall be consolidated on the basis of one new Common Share for every 184,984,215 old Common Shares (the Consolidation) and any fractional Common Shares outstanding following the Consolidation shall be cancelled, such that APL shall become the sole shareholder of the Issuer; and

(iii) all equity interests, compensation plans and other securities in the Issuer, other than the Restructured Shares, shall be cancelled for no consideration such that APL shall become the sole securityholder of the Issuer.

l. Pursuant to the Transaction Approval and Reverse Vesting Order, the Court ordered that no shareholder approval or other approval is required to complete the Transaction.

m. ResidualCo is a wholly-owned subsidiary of the Issuer. The Issuer does not have any other subsidiaries. Pursuant to the Transaction Approval and Reverse Vesting Order, following the completion of the Transaction, the Monitor, for and on behalf of ResidualCo, will file an assignment in bankruptcy pursuant to the Bankruptcy and Insolvency Act (Canada).

n. APL is not a "related party" of the Issuer and is "arm's length" to the Issuer, as such terms are defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

o. The issuance of the Restructured Shares by the Issuer will occur in Ontario and the British Virgin Islands.

p. As the Transaction will involve trades and acts in furtherance of trades in securities of the Issuer, the closing of the Transaction is conditional on the partial revocation of the FFCTO.

q. Other than the Transaction, no further trading in securities of the Issuer will be made unless further relief from the FFCTO is sought by the Issuer.

r. Following the completion of the Transaction, the Issuer intends to apply for a full revocation of the FFCTO and a cease to be a reporting issuer order.

s. Except for having not filed the Unfiled Continuous Disclosure Documents and being subject to the FFCTO, the Issuer is not in default of securities legislation in any jurisdiction.

t. The Transaction will be completed in accordance with all applicable laws and pursuant to the Transaction Approval and Reverse Vesting Order.

Order

5. The Principal Regulator is satisfied that a partial revocation order of the FFCTO meets the test set out in the Legislation for the Principal Regulator to make the decision.

6. The decision of the Principal Regulator under the Legislation is that the FFCTO is partially revoked solely to permit the trades in securities of the Issuer (including for greater certainty, acts in furtherance of trades in securities of the Issuer) that are necessary for and are in connection with the Transaction, provided that:

a. prior to the completion of the Transaction, APL will receive:

(i) a copy of the FFCTO;

(ii) a copy of this order; and

(iii) written notice from the Issuer, to be acknowledged by APL in writing (the Acknowledgement), that all of the Issuer's securities, including the securities issued in connection with the Transaction, will remain subject to the FFCTO until a full revocation order is granted, the issuance of which is not certain;

b. the Issuer undertakes to make available a copy of the Acknowledgement to staff of the Principal Regulator upon request; and

c. This order will terminate on the earlier of:

(i) the completion of the Transaction; and

(ii) 60 days from the date hereof.

DATED this 4th day of August, 2022.

"Marie-France Bourret"

Manager, Corporate Finance

Ontario Securities Commission

OSC File #: 2022/0232