Electromed Inc. - s. 147

Headnote

Issuer's U.S. agent on a specialwarrant offering not required to sign a prospectus certificateunder s. 59(1) of the Act - certificate in a second prospectusqualifying securities underlying special warrants sold to Ontariopurchasers will be signed by Issuer's Canadian underwriter.

Statutes Cited

Securities Act, R.S.O. 1990,c. S.5, as am., ss. 58(1), 59(1) and 147.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5,AS AMENDED (the "Act")

AND

IN THE MATTER OF

ELECTROMED INC.

ORDER

(Section 147 of the Act)

UPON the application(the "Application") of Electromed Inc. (the"Issuer") to the Ontario Securities Commission(the "Commission") for an order made undersection 147 of the Act exempting the Issuer from the requirementsof Section 59(1) of the Act in respect of a prospectus to befiled by the Issuer in order to qualify the distribution of8,188,714 common shares of the Issuer and 4,094,357 common sharepurchase warrants of the Issuer issuable upon the exercise of8,188,714 special warrants of the Issuer;

AND UPON consideringthe Application and the recommendation of the staff of the Commission;

AND UPON the Issuer representedto the Commission that:

1. The Issuer is incorporatedunder the laws of the province of Québec and is a reportingissuer in each of the provinces of British Columbia, Alberta,Saskatchewan, Manitoba, Ontario, Québec and Newfoundlandand Labrador.

2. The common shares of theIssuer are listed and posted for trading on the Toronto StockExchange (the "TSX") under the symbol MED.

3. On April 11, 2002, theIssuer distributed 16,266,333 special warrants at a priceof $0.39 per special warrant, for gross proceeds of $6,343,870.Each special warrant is exercisable into one common shareand one-half of one common share purchase warrant. Each wholewarrant entitles its holder to purchase one common share untilOctober 11, 2004 at a price of $0.43 per common share.

4. The Issuer has agreed tofile and obtain a receipt for a final prospectus in certainprovinces in Canada qualifying the distribution the commonshares and warrants to be issued upon the exercise of thespecial warrants by July 11, 2002. In the event that suchreceipt is not issued by each of the applicable provincialsecurities regulators on or before July 11, 2002, each specialwarrant will entitle the holder to acquire 1.1 common sharesand 0.55 warrants of Issuer.

5. Of the 16,266,329 specialwarrants issued, a total of 8,188,714 special warrants weresold to residents of the United States by Commonwealth Associates,L.P. (the "Commonwealth Issue") pursuantto the terms of an agency agreement entered into with theIssuer. The Issuer obtained an order under section 12 of theSecurities Act (Québec) from the QuébecSecurities Commission authorizing the Commonwealth Issue ona prospectus-exempt basis. Commonwealth Associates, L.P. isnot registered as a dealer anywhere in Canada but is a memberfirm of the National Association of Securities Dealers asan investment bank and broker dealer in the United States.

6. Except for 384,615 specialwarrants issued pursuant to a subscription agreement betweenthe Issuer and Bridge Capital International Inc. (the "SubscriptionIssue"), the remaining 7,693,000 special warrantswere sold under various private placement prospectus exemptionsto purchasers in the provinces of Québec, Ontario,Alberta and British Columbia by Yorkton Securities Inc. (the"Yorkton Underwriting") pursuant to the termsof an underwriting agreement entered into with the Issuer.

7. In order to qualify thesecurities underlying the special warrants sold pursuant tothe Yorkton Underwriting and the Subscription Issue, the Issuerhas filed a prospectus (the "Yorkton Prospectus")in the provinces of British Columbia, Alberta, Ontario andQuébec under the Mutual Reliance Review System forProspectuses and Annual Information Forms.

8. In order to qualify thesecurities underlying the special warrants sold pursuant tothe Commonwealth Issue, the Issuer will file a prospectus(the "Electromed Prospectus") in the provinceof Ontario in a form substantially similar to the final YorktonProspectus.

9. The Electromed Prospectuswill be filed in the province of Ontario on the basis thatthe TSX is the only market for the common shares of the Issuerand there is a significant likelihood that the common sharesof the Issuer to be distributed upon the exercise of the specialwarrants issued to residents of the United States pursuantto the Commonwealth Issue will be sold to purchasers residentin the province of Ontario and may come to rest in the provinceof Ontario after a receipt for the final Electromed Prospectusis issued by the Commission.

10. As Commonwealth Associates,L.P. is not registered as a dealer in Ontario, it cannot signthe certificate that is required to be contained in the ElectromedProspectus pursuant to section 59(1) of the Act. The ElectromedProspectus will contain the certificate of the Issuer requiredpursuant to section 58(1) of the Act.

AND UPON the Commissionbeing satisfied that to do so would not be prejudicial to thepublic interest;

IT IS ORDERED, pursuantto section 147 of the Act, that the Issuer be exempt from therequirements of Section 59(1) of the Act in connection withthe Electromed Prospectus.

June 14, 2002.

"Robert W. Korthals"                    "HaroldP. Hands"