Mr. Rosen

Dimethaid Research Inc. requested a hearing and review of the Director's decision objecting to the use of prospectus and registration exemptions for a proposed rights offering.

The Director objected because Dimethaid's annual financial statements did not comply with Canadian GAAP, specifically regarding the valuation of the consideration owing for the acquisition of Oxo Chemie AG.

Dimethaid argued that discounting equity was not required by Canadian GAAP and would be confusing.

The Ontario Securities Commission upheld the Director's decision, finding that the transaction was a business combination to be recorded at fair value, and that applying a proper discount to the non-interest bearing future payment obligations was the most appropriate method to determine fair value.