FISGARD CAPITAL CORPORATION

OFFERING MEMORANDUM
 FISGARD CAPITAL CORPORATION
FORM 45-106F2
OFFERING MEMORANDUM FOR NON-QUALIFYING ISSUERS
The Issuer is a “connected issuer” of the Manager, within the meaning of applicable securities legislation, given the role of the Manager as
manager of the Issuer and that certain directors, officers and shareholders of the Manager are also directors, officers and/or shareholders of
the Issuer. See “2.6 Material Contracts – Management Services Agreement”, “Item 3: Management of the Issuer”, “Item 8: Compensation
Paid to Sellers and Finders” and “Item 9: Risk Factors and Conflicts of Interest – 9.2 Conflicts of Interest”.

Date: March 29, 2025

The Issuer
Name: Fisgard Capital Corporation
Head Office: 3378 Douglas Street
Victoria BC V8Z 3L3
Phone: (250) 382-9255 or 1-866-382-9255
Fax: (250) 384-1498 or 1-866-384-1498
Email: [email protected]
Website: www.fisgard.com
Currently listed or quoted? No. These securities do not trade on any exchange or market.
Reporting issuer? No.
The Offering
Securities offered: Class B (Retractable after 5 years) Non-Voting shares
Class D (Retractable after 3 years) Non-Voting shares
Class F (Retractable after 1 year) Non-Voting shares
(collectively, “Shares” and individually, a “Share”)
See “Item 5: Securities Offered – Terms of Securities” for a description of the
terms of the Shares.
Price per security: $1.00 per Share
Minimum/Maximum offering: $0 / no maximum.
There is no minimum or maximum offering. You may be the only
purchaser. However, Shares have been sold in prior offerings. For certain
information on prior sales of Shares, see “Item 4: Capital Structure – 4.4 Prior
Sales”.
Minimum subscription amount: There is no minimum subscription amount an investor must invest.
Payment terms: Cheque, preauthorized debit or bank draft payable to the Issuer at the time of
subscription. See “Item 5: Securities Offered – 5.2 Subscription Procedure”.
Proposed closing date(s): Continuous offering. Closings will occur periodically at the discretion of the
Issuer. See “Item 5: Securities Offered – 5.2 Subscription Procedure”.
Income tax consequences: There are important tax consequences to these securities. See “Item 7: Income
Tax Consequences”.

Insufficient Funds
Funds available under the offering may not be sufficient to accomplish the Issuer’s proposed objectives. See “Item 2.
Business of the Issuer and Other Information and Transactions – 2.5 Insufficient Funds”.

Compensation Paid to Sellers and Finders

A person has received or will receive compensation for the sale of securities under this offering. See “Item 8:
Compensation Paid to Sellers and Finders”.

Resale Restrictions
You will be restricted from selling your securities for an indefinite period. However, Shares are retractable in certain
circumstances. See “Item 11: Resale Restrictions” and “Item 5: Securities Offered”.
Payments to Related Party
Some of your investment will be paid to a related party of the Issuer. See “Item 1: Use of Available Funds – 1.2. Use
of Available Funds”.

Restrictions on Redemption Rights

You will have a right to require the Issuer to redeem the Shares you hold, but this right is qualified by certain
restrictions. As a result, you might not receive the amount of proceeds that you want. See “Item 5: Securities Offered
– Terms of Securities”.

Purchaser’s Rights
You have two business days to cancel your agreement to purchase these securities. If there is a misrepresentation in
this Offering Memorandum, you have the right to sue for damages or to cancel the agreement. See “Item 12:
Purchasers’ Rights”.
No securities regulatory authority has assessed the merits of these securities or reviewed this Offering
Memorandum. Any representation to the contrary is an offence. This is a risky investment. See “Item 9: Risk
Factors and Conflicts of Interest”.
 -i-

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS ........................................................................................................... 1

INCORPORATION BY REFERENCE OF CERTAIN MARKETING MATERIALS ...................................... 1
ITEM 1: USE OF AVAILABLE FUNDS ........................................................................................................... 2
1.1 Funds ...................................................................................................................................................... 2
1.2 Use of Available Funds .......................................................................................................................... 2
ITEM 2: BUSINESS OF THE ISSUER AND OTHER INFORMATION AND TRANSACTIONS ................. 3
2.1 Structure ................................................................................................................................................. 3
2.2 The Business .......................................................................................................................................... 3
Investment Objectives and Strategy......................................................................................................... 3
Mortgage Investment Guidelines ................................................................................................. 5
Non-mortgage Investments........................................................................................................... 8
Non-Mortgage Investment Guidelines ......................................................................................... 9
Use of Borrowing ....................................................................................................................... 10
Lending Flexibility ..................................................................................................................... 11
Operating Costs ......................................................................................................................... 12
Tax Act MIC Criteria ................................................................................................................. 12
2.3 Development of Business ..................................................................................................................... 13
Portfolio Summary................................................................................................................................. 13
Mortgage and Investment Portfolio Trends Previous Three years ............................................ 14
Mortgage and Investment Portfolio Summary (As at December 31, 2024) ............................... 14
Mortgage and Investment Portfolio Summary (As at February 28, 2025) ................................. 15
Mortgage Portfolio (As at February 28, 2025) .......................................................................... 15
Mortgage Allocation Graphs (As at February 28, 2025) ........................................................... 17
Mortgage Allocation Graphs (As at February 28, 2025) – cont. ............................................... 18
Mortgage Performance Table (As at February 28, 2025) ......................................................... 19
Real Property and Limited Partnership Investments (As at February 28, 2025) ....................... 19
Foreclosures and Non-Performing Mortgage Loans ................................................................. 19
Significant mortgage defaults in previous three years ............................................................... 22
Significant Real Property Investment Losses in Previous Three Years...................................... 22
Significant Limited Partnership Investment Losses in Previous Three Years ............................ 22
Reduction of Annual Portfolio Dividend Income ....................................................................... 22
Portfolio Performance............................................................................................................................ 23
Historical Returns ...................................................................................................................... 23
Growth Rates ............................................................................................................................. 23
Ongoing Disclosure ............................................................................................................................... 24
Major Events or Conditions ................................................................................................................... 24
2.4 Short and Long-Term Objectives ......................................................................................................... 24
2.5 Insufficient Funds ................................................................................................................................ 25
2.6 Material Contracts ................................................................................................................................ 25
Management Services Agreement ......................................................................................................... 25
ITEM 3: MANAGEMENT OF THE ISSUER .................................................................................................. 27
3.1 Directors, Officers and Promoters of the Issuer ................................................................................... 27
The Manager .......................................................................................................................................... 29
Directors and Officers of the Manager .................................................................................................. 30
3.2 Management Experience ...................................................................................................................... 30
3.3 Penalties, Sanctions, Bankruptcy, Insolvency and Criminal or Quasi-Criminal Matters ..................... 33
3.4 Certain Loans ....................................................................................................................................... 34
ITEM 4: CAPITAL STRUCTURE ................................................................................................................... 34
4.1 Share Capital ........................................................................................................................................ 34
4.2 Short-Term Debt .................................................................................................................................. 34
4.3 Long-Term Debt .................................................................................................................................. 35
4.4 Prior Sales ............................................................................................................................................ 35
 - ii -

4.5 Retraction History ................................................................................................................................ 36

ITEM 5: SECURITIES OFFERED ................................................................................................................... 36
5.1 Terms of Securities .............................................................................................................................. 36
5.2 Subscription Procedure ........................................................................................................................ 41
ITEM 6: CERTAIN DIVIDENDS OR DISTRIBUTIONS ............................................................................... 44
ITEM 7: INCOME TAX CONSEQUENCES ................................................................................................... 44
7.1 Independent Tax Advice ...................................................................................................................... 44
7.2 Summary of the Principal Federal Income Tax Consequences ............................................................ 44
7.3 Eligibility for Investment by Deferred Income Plans........................................................................... 46
ITEM 8: COMPENSATION PAID TO SELLERS AND FINDERS ................................................................ 46
8.1 Type and Estimated Amount of Compensation.................................................................................... 46
8.2 Relationship between the Issuer and Fisgard Asset Management Corporation.................................... 47
ITEM 9: RISK FACTORS AND CONFLICTS OF INTEREST ...................................................................... 47
9.1 Risk Factors.......................................................................................................................................... 47
Investment Risk ..................................................................................................................................... 47
Issuer Risk ............................................................................................................................................. 48
Industry Risk.......................................................................................................................................... 51
9.2 Conflicts of Interest .............................................................................................................................. 53
ITEM 10: REPORTING OBLIGATIONS ........................................................................................................ 54
10.1 Documents ......................................................................................................................................... 54
10.2 Availability of Information ................................................................................................................ 54
ITEM 11: RESALE RESTRICTIONS .............................................................................................................. 54
11.1 Restricted Period ................................................................................................................................ 54
11.2 Manitoba Resale Restrictions ............................................................................................................. 55
ITEM 12: PURCHASERS’ RIGHTS ................................................................................................................ 55
12.1 Statements Regarding Purchasers’ Rights .......................................................................................... 55
Two Day Cancellation Right ................................................................................................................. 55
Statutory Rights of Action in Event of a Misrepresentation .................................................................. 55
Contractual Rights of Action in Event of a Misrepresentation .............................................................. 60
12.2 Cautionary Statement Regarding Report, Statement or Opinion by Expert ....................................... 61
ITEM 13: FINANCIAL STATEMENTS ......................................................................................................... F-1
13.1 Audited Financial Statements (December 31, 2024) ......................................................................... F-1
ITEM 14: CERTIFICATE OF THE ISSUER.................................................................................................. C-1
 1

FORWARD-LOOKING STATEMENTS

This Offering Memorandum includes forward-looking statements with respect to the Issuer. A statement is forward-
looking when it uses what we know and expect today to make a statement about the future. Forward-looking
statements may include words such as “anticipate”, “believe”, “intend”, “expect”, “goal”, “may”, “outlook”, “plan”,
“seek”, “should”, “strive”, “target”, “could”, “continue”, “potential” and “estimated”, or the negative of such terms or
comparable terminology. You should not place undue reliance on the forward-looking statements. In particular and
without limitation, this Offering Memorandum contains forward-looking statements pertaining to the following: the
intended course of conduct and future operations of the Issuer, the intended mortgage portfolios and limited
partnership investments, the Issuer’s intended use of proceeds, the Issuer’s short- and long-term objectives and the
Issuer’s continuing intention to qualify as a “mortgage investment corporation” under the Tax Act (defined below).
These statements are based on assumptions made by the Issuer about the success of the Issuer’s investment policies
in certain economic and market conditions, relying on the experience of the Issuer’s and the Manager’s (as defined
below) directors, officers and employees and their knowledge of historical economic and market trends including: our
expectations regarding the composition of the mortgage portfolios, our expectation that we will complete the Offering,
the ability of the Issuer to establish and maintain relationships and agreements with key strategic partners, the ability
of the Issuer to maintain its mortgage broker license, the ability of the Issuer to adjust the mix of mortgages in the
mortgage portfolio in response to market conditions and investment opportunities and anticipated costs and expenses
of the Offering. Investors are cautioned that the assumptions the Issuer makes, and the success of the Issuer’s
investment policies are subject to a number of mitigating factors. Economic and market conditions may change, which
may materially impact the success of the Issuer’s policies as well as the Issuer’s actual course of conduct. By their
very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a
number of factors could cause actual results or events to differ materially from those anticipated in such forward-
looking statements. Investors are urged to consider various factors when considering these statements, including, but
not limited to the risks discussed under “Item 9: Risk Factors and Conflicts of Interest”. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. These forward-looking statements are made as of the date of this Offering
Memorandum and we disclaim any intention and have no obligation or responsibility, except as required by law, to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

INCORPORATION BY REFERENCE OF CERTAIN MARKETING MATERIALS

Certain written marketing materials delivered or made available to prospective purchasers in relation to the distribution
of Shares under this Offering Memorandum are incorporated by reference into this Offering Memorandum and are
considered to form part of this Offering Memorandum just as if they were printed as part of it. In Alberta,
Saskatchewan, Ontario, Quebec, New Brunswick and Nova Scotia all OM marketing materials (as defined below)
related to a distribution under this Offering Memorandum that are delivered or made reasonably available to
prospective purchaser before the termination of the distribution are hereby incorporated by reference into this Offering
Memorandum. For these purposes, “OM marketing materials” means a written communication, other than an OM
standard term sheet (as defined below), intended for prospective purchasers regarding a distribution of securities under
an Offering Memorandum delivered under section 2.9 of National Instrument 45-106 Prospectus Exemptions (“NI
45-106”) that contains material facts relating to the Issuer, Shares or otherwise to the offering of Shares. An “OM
standard term sheet” means a written communication intended for prospective purchasers regarding a distribution of
Shares under this Offering Memorandum delivered under section 2.9 of NI 45-106 that contains only certain prescribed
information set out in NI 45-106.
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ITEM 1: USE OF AVAILABLE FUNDS

1.1 Funds

The net proceeds of this offering that will be available to the Issuer after this offering are as follows:

Assuming Assuming
minimum offering ¹ maximum offering ¹
A. Amount to be raised by this offering $0 ¹ $15,000,000 ¹
B. Selling commissions and fees $0 ($1,050,000) 2
C. Estimated offering costs (including legal, ($50,000) ($50,000)
accounting and audit)
D. Available funds: D = A – (B + C) ($50,000) $13,900,000
E. Additional sources of funding required $0 3 $0 3
F. Working capital deficiency $0 4 $0 4
G. Total: G = (D+E) - F ($50,000) $13,900,000

Notes:
1. There is no minimum or maximum offering. The amount shown under “Assuming maximum offering” is an assumed amount
for illustrative purposes only. As of February 28, 2025, the Issuer had a total of 301,020,070, shares issued and outstanding
for gross proceeds of $301,020,070.
2. This assumes the Issuer pays the maximum permitted sales commission. The Issuer may pay an aggregate of up to 7% of
subscription proceeds to sellers of the Shares. See “Item 8: Compensation Paid to Sellers and Finders”.
3.
Although the Issuer intends to fund its investments primarily through capital raised from the issuance of Shares or other equity
financings, the Issuer may also fund investments using leverage by issuing debt obligations or otherwise borrowing funds
subject to limits applicable to the Issuer as a mortgage investment corporation and other limits imposed by the Issuer’s Board
of Directors from time to time. As at the date of this Offering Memorandum, the amount of any funds that may be raised
using leverage is not known. See “2.3 Development of Business”.
4.
As at the date of this Offering Memorandum, the Issuer does not have a working capital deficiency.

1.2 Use of Available Funds

The available funds (see G. above) will be used as follows:

Description of intended use of available funds listed in order Assuming Assuming

of priority minimum offering 1 maximum offering 1
Investments in mortgages 2 $0 $13,450,000 2
Operating expenses 3 $50,000 $450,000 2, 3
Total (equal to item G in the table above under “Item 1.1: $50,000 $13,900,000
Funds”)
Notes:
1 There is no minimum or maximum offering. The amounts shown under “Assuming maximum offering” are for illustrative
purposes only based on an assumed maximum offering of $15,000,000. As of February 28, 2025, the Issuer had a total
of 301,020,070 shares issued and outstanding for gross proceeds of $301,020,070.
2 The available funds (see G. above) will be invested primarily in mortgages secured by Canadian real estate property. Available
funds not immediately invested or otherwise required for operating expenses or general working capital purposes will
generally be held in cash and deposited with a Canadian financial institution. For further information, see “Item 2.2: The
Business” and “Item 2.3 Development of Business”.
 3

3 The operating expenses of the Issuer include fees payable to Fisgard Asset Management Corporation (defined above as the
“Manager”), the manager of the Issuer, for its general management and advisory services equal to 2.00% per year of the
Aggregate Capital (as defined below). Based on the assumed maximum offering of $15,000,000, these fees would amount to
$300,000 per year in relation to the funds raised as part of this offering. See “Item 2.6 Material Contracts – Management
Services Agreement” below. Other operating expenses are estimated to be approximately 1% of the funds raised. Based on
the assumed maximum offering of $15,000,000, these other operating expenses would amount to approximately $150,000 per
year.

ITEM 2: BUSINESS OF THE ISSUER AND OTHER INFORMATION AND

TRANSACTIONS

2.1 Structure

Fisgard Capital Corporation (defined above as the “Issuer”) is a corporation continued under the laws of British
Columbia on March 13, 2000 and was originally incorporated under the federal laws of Canada on April 11, 1994.

The Issuer intends to qualify as a “mortgage investment corporation” within the meaning of the Income Tax Act
(Canada) (the “Tax Act”) by investing primarily in a portfolio of mortgages on real estate properties located in British
Columbia, Alberta, Saskatchewan, Manitoba and Ontario. To the extent that available funds are not invested in
mortgages, such funds will be generally held in cash and deposited with a Canadian financial institution. The Issuer’s
investments will be made in accordance with its investment policies from time to time. See “Item 2.2: The Business”.
For a summary of the criteria that must be met for the Issuer to qualify as a mortgage investment corporation, see
“Item 2.2: The Business –Tax Act MIC Criteria”.

Fisgard Asset Management Corporation (the “Manager”) is the manager of the Issuer pursuant to the Management
Services Agreement (as defined below). See “2.6 Material Contracts”. The Manager’s principal place of business is
located at 3378 Douglas Street, Victoria, British Columbia V8Z 3L3.

2.2 The Business

Investment Objectives and Strategy

In the course of its business, particularly its mortgage investments, the Issuer will fund mortgage loans with a higher
risk level than conventional lenders such as banks, credit unions and trust companies. This is consistent with the
essential reason for alternative as opposed to conventional lending and follows the pattern of higher risk-higher return.
The Issuer funds mortgage loans including first (senior) mortgages, second (junior) mortgages, and real estate
investments that do not necessarily fall within the lending and investment parameters of conventional lenders. A risk
premium is charged by the Issuer for the extra due diligence, administration and risk associated with atypical and non-
standard mortgages.

Most conventional mortgages are first mortgage charges with loan-to-value (“LTV”) ratios that are prescribed by
government regulation. These restrictions do not apply to the Issuer as the Issuer is not a regulated lender such as a
bank, credit union or trust company. The Issuer sets LTV ratios on individual mortgage loans in accordance with the
Manager’s loan management experience, due diligence policy, valuation expertise, risk appetite and desired
expectation of return. Individual mortgages will not exceed a 75% LTV ratio at the time of origination.

The Issuer intends to engage in funding second mortgage loans with a non-issuer lender sitting in a first position to
the Issuer’s mortgage. These will generally be ordinary residential mortgages where the Issuer has closely examined
the amount and terms of the first mortgage and is satisfied that they are reasonable and are unlikely to present unusual
problems in the event of default and foreclosure. In these second mortgage situations, the Issuer will apply its usual
level of diligence on each property as well as the borrower(s), guarantor(s) and covenantor(s) to assure itself that the
aggregate principal of the first and second mortgages fall within the maximum LTV ratio prescribed by the Issuer.
 4

The Issuer will from time to time engage in mortgage lending on new, renovation, development, and construction
projects. This type of lending requires considerably more due diligence, expertise, management and on-going
administration. The risk in this type of lending is the relative uncertainty of construction and development costs,
uncertainty as to eventual sales of the finished product, fluctuation in interest rates the end buyer may face when
negotiating to buy the finished product (a home for instance) and uncertainty as to the cost and availability of materials
and labour. These risks are considered by the Issuer during the due diligence process, but the extent to which any risk,
or combination of risks, may change during the construction and development stage is unknown. A risk premium is
charged by the Issuer for the extra due diligence, management and risk associated with this type of lending.

The Issuer prefers a first (senior mortgage) position for mortgages on construction and development: however, second
mortgage positions are considered and may be taken in exceptional circumstances subject to special approval from
the Manager’s Credit Committee and, depending on the size of the mortgage loan, the Issuer’s Board of Directors.

The Manager’s Credit Committee consists of six members, including some members of the Manager’s executive team,
mortgage portfolio manager and mortgage investment specialists. It is the committee’s responsibility to review and
approve / decline mortgage investments that are between $1,000,000 and $5,000,000 and any mortgage investments
that the Board has deemed require an additional level of approval.

Where the Issuer elects to engage in mortgage lending on development and construction projects, a specialized
diligence valuation of the property both as is where is (prior to development and construction) and valuation of the
product ‘as complete’ will be conducted. This type of mortgage is termed by the Issuer as a ‘progressive performance
draw mortgage’ and will be administered by the Manager accordingly. In short, in a progressive performance draw
mortgage the Issuer advances funds to the borrower in stages and upon certain degrees of completion. This type of
mortgage usually involves a series of site inspections of the property by professionals including appraisers and quantity
surveyors, and funds are advanced by the Issuer based on satisfactory reports from such professionals.

The Issuer will from time to time engage in mortgage lending on raw (un-serviced) land, serviced lots and land
development. The Issuer lends on land on a case-by-case basis and usually not for land speculation purposes.
Typically, the Issuer lends up to 65% of land value but is permitted to lend up to 75%, this is dependent upon the
location and mortgage type. If the land is to be developed for construction, the Issuer may consider a construction
mortgage as well.

Canada is a large country and greatly varied in terms of real estate values which may range between smaller rural
communities and vastly different, densely populated urban areas such as Toronto, Vancouver, Montreal, Calgary,
Edmonton, Winnipeg, etc. To minimize risk, enhance its security and strengthen its investment portfolio, the Issuer
pays close attention to considerations such as diversification and concentration and closely examines each mortgage
loan on a case-by-case basis to ensure that loans are made predominately in areas of Canada that demonstrate economic
stability and a reasonable likelihood of growth over time.

When funding mortgage loans, an important consideration for the Issuer is whether there is a reasonably active real
estate market for the properties accepted by the Issuer as security for each mortgage loan so that in the event of a
mortgage default and legal (foreclosure) action, the subject property(s) have a market in which to be sold. The Issuer
takes into consideration and prefers locales where there is a reasonable possibility of conventional mortgage funds
(known in the industry as take-out financing) available to replace the Issuer’s alternative mortgage loan as and when
necessary. Since most of the Issuer’s mortgage loans are shorter term loans, as compared to conventional loans, it is
important to the Issuer when funding its loans to be able to clearly identify an exit strategy (a way for borrowers to
retire the Issuer’s mortgages) as the Issuer’s mortgages mature.

Competition in all sectors of the investment market is strong. The Issuer must vigorously compete at all times. This
involves constant awareness of the needs and preferences of the borrowing and investing public, and a professional
and mature understanding of and sensitivity to the relationship between risk and reward at any given time. The Issuer
aims to be adept at gathering, assimilating, and assessing an array of data, and must act promptly and effectively
without compromising diligence and taking undue risk.
 5

The mortgage lending business is inextricably linked to the real estate market because the underlying security of a
mortgage is the value of the real estate charged by the mortgage. As the vast majority of the Issuer’s investments are
mortgages, the strength of the Issuer’s assets are tied directly to the real estate market and the value of the property(s)
that secure the Issuer’s mortgages. History has shown that real estate values fluctuate. While it is generally conceded
that real estate property tends to increase in value over time, the time required may be quite long (perhaps decades).
At the same time, there may be sharp fluctuations in real estate value over short periods. For these reasons, the
Issuer believes that the Shares are an investment an investor should consider only if the investor understands
the long-term nature of the investment and is not investing just for the short-term as short-term fluctuations
in real estate values may have an adverse effect on dividend returns and the Issuer’s ability to redeem the
investor’s Shares.

As described above, the Issuer is a “mortgage investment corporation” (known colloquially as a “MIC”) within the
meaning of the Tax Act. As a mortgage investment corporation under the Tax Act, the Issuer is generally permitted
to deduct dividends it pays in computing its income. The Issuer’s Articles require it to pay as dividends substantially
all of its net income and net realized capital gains every year (subject to the directors’ discretion to establish loan loss
provisions for the Issuer) and, as a result, the Issuer anticipates that it will not be liable to pay income tax in any year.
“Mortgage investment corporations” appear to have been designed to provide smaller retail investors with an
opportunity to invest in real estate related products, including mortgages, directly or through trusts governed by
Canadian registered plans such as registered retirement savings plans, registered retirement income funds, registered
education savings plans, registered disability savings plans and tax-free savings accounts, which are generally not
permitted to invest in real estate or borrow. Due to this special tax treatment, “mortgage investment corporations” are
subject to certain constraints.

Although the Tax Act’s “mortgage investment corporation” criteria would permit the Issuer to invest in a broader
range of investments (including, among other things, equity investments in real estate and investments in stocks and
securities of Canadian companies), it is the Issuer’s policy to invest its capital exclusively in:

(a) mortgages secured by Canadian real estate property, primarily (i.e., greater than 50%) residential real estate
property;

(b) cash or deposits with banks or other financial institutions; and

(c) investments in real property which are held directly or indirectly through units of limited partnerships or other
vehicles, only in the event of taking action to enforce the Issuer’s rights as a secured lender (for example, in
a foreclosure situation).

For information on the investment guidelines applicable to the Issuer’s investments, see “Mortgage Investment
Guidelines” and “Non-Mortgage Investment Guidelines” below.

The Issuer's investment objectives and strategies are established and implemented by the Manager's executive team
and mortgage portfolio manager. These individuals also set limits and restrictions on investments and monitor the
portfolio's performance.

The Issuer's investment objectives and strategies are established and implemented by the Manager's executive team
and mortgage portfolio manager. These individuals also set limits and restrictions on investments and monitor the
portfolio's performance.

Mortgage Investment Guidelines

All mortgage loans made by the Issuer will be made in accordance with the following investment guidelines:

1. The Issuer will not make a mortgage loan unless it is permitted for a “mortgage investment corporation”
under the Tax Act and will not result in the Issuer ceasing to qualify as a mortgage investment corporation
under the Tax Act.
 6

2. The Issuer will (a) have 50% or more of its capital invested in residential mortgages as opposed to non-
residential mortgages, (b) ensure that individual mortgages, except in the case of special circumstance
loans, do not exceed a 75% LTV ratio at the time of origination, and (c) require that individual mortgages
above $5,000,000 receive approval by the Board of Directors.

3. The Issuer will make mortgage loans only to borrowers that the Issuer or the Manager approve based on an
assessment of the value of the property or properties available as security, and the borrower’s income, net
worth, creditworthiness, and history of repayment.

4. Mortgage loans will not be made to directors or officers of the Issuer. The Issuer may make mortgage
loans to family members of directors or officers of the Issuer.

5. The Issuer does not intend to hold any mortgage loan to or other indebtedness of a person who is an
annuitant, beneficiary, subscriber or employer under a trust governed by a registered retirement savings
plan, registered retirement income fund, deferred profit sharing plan, registered education savings plan,
registered disability savings plan or tax-free savings account (each as defined under the Tax Act) that holds
Shares (a “Trust Party”), or to any other person who is a relative of or otherwise does not deal at arm’s
length with a Trust Party, or to anyone else who would cause Shares not to be a “qualified investment” to
the particular trust under the Tax Act.

6. All mortgage loans will be secured in favour of the Issuer, its agent or nominee, either as sole mortgagee
or co-mortgagee, and each mortgage will be registered in the appropriate land title office as a charge against
the real property subject to the mortgage.

7. Security for mortgage loans will consist of any one or more of the following:

(a) A first mortgage against real estate having a principal amount not exceeding 75% of the value of such
real estate as at the date of initial advance of the loan or, in the case of real estate under development,
having a principal amount not exceeding 75% of the value of such real estate upon completion of the
development.

(b) A second (junior) mortgage secured by real estate having a principal amount which, when added to
the principal amount of prior (first) mortgages, does not exceed 75% of the value of such real estate
as at the date of initial advance of the loan or, in the case of real estate under development, does not
exceed 75% of the value of such real estate upon completion of the development.

(c) An inter-alia mortgage (i.e., a blanket mortgage over two or more properties) secured by real estate
having a combined principal amount (including prior mortgages) not exceeding 75% of the value of
such real estate as at the date of initial advance of the loan or, in the case of real estate under
development, a combined principal amount (including prior mortgages) not exceeding 75% of the
value of such real estate upon completion of the development.

(d) A raw land development mortgage (residential or non-residential) secured by real estate having a
combined principal amount (including prior mortgages) not exceeding 65% of the value of such real
estate as at the date of initial advance of the loan or, in the case of real estate under development, a
combined principal amount (including prior mortgages) not exceeding 65% of the value of such real
estate upon completion of the development.

(e) At the date of renewal of any mortgage loan the principal amount including any prior charges may
exceed 75% of the value of such real estate or, in the case of real estate under development or
redevelopment, the principal amount (including prior mortgages) may exceed 75% of the value of
such real estate upon completion of the development or redevelopment.

Notwithstanding the guidelines above, in certain limited circumstances the LTV ratio for a mortgage may
be greater than 75% where approved by the Manager’s Credit Committee. See “Item 2.2: The Business”.
 7

This may occur for a variety of reasons such as renewal fees, legal fees and/or declining property value.
The mortgage may be renewed based on the borrower’s payment history, the borrower’s capacity to pay
or other factors satisfactory to the Manager’s Credit Committee.

The Issuer believes that there is no single perfect method of real estate valuation, and arriving at value is
at best the result of assembling information from many sources including, but not limited to, Accredited
Appraiser of the Canadian Institute (“AACI”) appraisals. The Issuer tends not to completely rely on a
single valuation method. The AACI appraisal, for example, is just one valuation source among many
including the Realtor CMA (Comparative Market Analysis) and valuation provided by professional
property managers and leasing agents, particularly for commercial real estate. Valuation is a best efforts
attempt to compile current and relevant data from as many sources as possible to arrive at an estimate of
value. Relevant data can generally be obtained from sources such as property tax assessment rolls, CMHC
and various other real estate and mortgage market reports and publications. Data and opinions of value
may be obtained from quantity surveyors, developers and builders, engineers, building inspectors,
accountants and lawyers specializing in development and business. When the Issuer refers to ‘value’, it is
generally referring to that value arrived at after appropriate market research. Value is essentially a
combination of opinions and data from a variety of sources. In the end, ‘value’ is an estimate, not an
absolute.

8. Additional security may be obtained by the Issuer, as and when available, in the form of a general security
agreement, depending on applicable provincial laws. A general security agreement secures personal
property assets of the borrower. These assets will not be considered for LTV ratio calculation purposes.

9. The term of a mortgage loan will generally not exceed 24 months after which time a mortgage loan may
be renewed or extended, subject to a mortgage underwriting review.

10. Workout loan agreements – A ‘workout loan agreement’ is an agreement between a lender and borrower
to renegotiate terms on a loan that is technically in default, so as to avoid foreclosure or liquidation. From
time to time, the Issuer may enter into workout loan agreements in relation to the Issuer’s existing mortgage
loans where it can be demonstrated that the workout mortgage loan agreement will likely result in an
improved position for the Issuer. Workout loan agreements are the result of a borrower cooperating with
the Issuer to explore alternatives to foreclosure or liquidation. This may involve the Issuer receiving
additional collateral, extending the term of the loan, providing additional mortgage funding to make the
repairs and improvements necessary to sell the property at its optimum price, rescheduling repayments, or
other negotiated terms and conditions. The goal of a workout loan is to help the defaulting borrower bring
the mortgage loan back into good standing and avoid foreclosure and possible loss to the Issuer. Workout
loans may, depending on the circumstances, exceed the Issuer’s 75% LTV ratio ceiling and must be
approved by the Manager’s Credit Committee. Depending on the size of the loan, approval of the Issuer’s
Board of Directors may also be required.

As at the date of this Offering Memorandum, the Issuer has no mortgage loans within the “workout loan
agreement” category.

11. Special circumstance loan agreements - From time to time the Issuer, may find itself in a position where
it has foreclosed on a property and is attempting to mitigate a possible loss. A buyer may be interested in
purchasing the subject property at a price that is attractive to the Issuer but only provided the Issuer is
prepared to finance the purchase on mortgage terms that are more favourable than the buyer can obtain
elsewhere in the mortgage market. These special circumstance terms may include, a lower interest rate,
lower payments, a longer term and a higher LTV ratio or other terms that are favourable and acceptable to
the buyer in exchange for the buyer paying a higher price for the property, which eliminates, or at least
mitigates, the Issuer’s possible loss on its investment. These loans are termed by the Issuer as ‘special
circumstance loans’ and are made only in unusual and atypical circumstances including those described
above. Typically, such loans fall outside of the usual lending policy of the Issuer in one aspect or another,
generally involving a higher LTV ratio (reduced cash requirement on the part of the buyer) and a reduced
interest rate. Special circumstance loans must be approved by the Manager’s Credit Committee and
depending on the amount of the loan, by the Issuer’s Board of Directors.
 8

As at the date of this Offering Memorandum, there are no mortgage loans classified in this category.

12. The Issuer seeks to maximize the amount of funds invested in mortgage loans. As a result, the Issuer may
elect to renew mortgage loans as they come due. Factors considered by the Issuer when determining
whether to renew mortgage loans may include the LTV ratio at the time of renewal, the borrower’s intended
use of the property, proposed timelines and loan payment history, the length of the borrower’s working
relationship with the Issuer and other factors.

13. The Issuer may, from time to time, provide first or second equity mortgage financing to builders and
developers for residential and non-residential projects.

14. The Issuer may, from time to time, provide interim, mezzanine or bridge mortgage loans (first and second)
to finance new construction and renovation, development and re-development of residential and non-
residential property.

15. The Issuer may, from time to time, provide first or second mortgage loans to land developers not only to
finance the purchase of the land but to finance the development as well (cost of services including clearing,
hauling, installation of water, sewer, power, telephone, cable, gas, roads, curbs, gutters, sidewalks, street-
lighting, signage and other services). Such financing may also include amounts to pay for permits, plans,
bonding, inspections, strata materials and filings, development cost charges and other costs and fees
associated with the development. These mortgages are likely to be progressive performance draw
mortgages with amounts advanced from time to time in accordance with development performance and
progress.

Non-mortgage Investments

As noted above, the Issuer intends to invest primarily in a portfolio of mortgages on real estate properties. To the
extent that available funds are not invested in mortgages, such funds will generally be held in cash and deposited with
a Canadian financial institution. In addition, from time to time the Issuer may experience defaults and impairments
in its mortgage investments and these defaults may result in foreclosures which the Issuer may resolve by taking title
to the mortgaged property directly or by having title to the property held indirectly through a limited partnership or
other vehicle. Accordingly, although the Issuer does not intend to raise capital for the purpose of investing in real
property it may from time to time acquire investments in real property a result of action taken to enforce the Issuer’s
rights as a secured lender. Any investments in real property held by the Issuer (including indirectly through
investments in limited partnerships or other vehicles) will be made and held in accordance with the investment
guidelines established by the Issuer for non-mortgage investments.

As noted, in a situation where the Issuer will acquire title to a mortgaged property, it will do so either by taking title
to the property directly or by having title held indirectly through a limited partnership or other vehicle depending on
the Issuer’s assessment of the structure that is in the best interests of the Issuer. The use of a limited partnership or
other vehicle may be preferable for several reasons, including, without limitation, to ensure that the Issuer maintains
its status as a “mortgage investment corporation” under the Tax Act (for example, to comply with the prohibition on
managing or developing real property) and to maximize the potential sale value of a property. In addition, when a
limited partnership or other vehicle is used, the Issuer will implement that structure in a way that it believes is in the
best interests of the Issuer. The guidelines for non-mortgage investments below reflects certain elements of the typical
structure used by the Issuer for these investments.
 9

Non-Mortgage Investment Guidelines

General - All investments in the Issuer’s non-mortgage portfolio will be made in accordance with the following
investment guidelines:

1. The Issuer will not make a non-mortgage investment unless it is permitted for a “mortgage investment
corporation” under the Tax Act and will not result in the Issuer ceasing to qualify as a mortgage investment
corporation under the Tax Act.

2. The Issuer’s non-mortgage investments will be limited to:

(a) cash, deposits with banks or other financial institutions insured by the Canada Deposit Insurance
Corporation or the Régie de l’assurance-dépôts du Québec, or deposits with a credit union; and

(b) investments in real property which are held directly or indirectly through limited partnerships or other
vehicles, as a result of action taken to enforce the Issuer’s rights as a secured lender (for example, in
a foreclosure situation) and meet the guidelines described below.

3. The Issuer will subject all non-mortgage investments to appropriate due diligence.

Guidelines for any real property investments – As discussed above, although the Issuer does not intend to raise
capital for the purpose of investing in real property, it may from time to time acquire investments in real property as
a result of action taken to enforce the Issuer’s rights as a secured lender (for example, in a foreclosure situation).
These investments may be held directly by the Issuer or indirectly through limited partnerships or other vehicles based
on the Manager’s assessment of what is in the best interests of the Issuer, including to ensure that the Issuer maintains
its status as a “mortgage investment corporation” under the Tax Act (for example, to comply with the prohibition on
managing or developing real property) and to maximize the potential sale value of a property.

Any investments in real property held by the Issuer directly will be made in accordance with the following investment
guidelines:

1. The real property must have been subject to a mortgage held by the Issuer which was in a state of foreclosure
or in other circumstances where an investment in the property is considered necessary to enforce the Issuer’s
rights as a secured lender.

2. The Issuer or the Manager believes that the value of the real property may be enhanced, or its value may not
be discounted to the same degree if the property can be sold as a ‘non-distressed’ property. A distressed
property is a property that is in foreclosure.

3. The real property must be held for sale only and must not be developed or managed.

4. The investment must be approved by the Board of Directors of the Issuer.

Additional guidelines for any investments in real property held through limited partnerships or other vehicles - In
addition to the guidelines above in relation to investments in real property held by the Issuer directly (with the
exception of #3), any investments in real property held by the Issuer indirectly through investments in limited
partnerships or other vehicles (which will be unsecured investments) will also be made in accordance with the
following investment guidelines:

5. The Issuer will participate in the limited partnership or other vehicle only as a limited partner or shareholder
(as applicable) and will not have any control in or over the management of the limited partnership or other
vehicle and, in the case of a limited partnership, the general partner of the limited partnership will not be a
“related party” to the Issuer as defined under the Tax Act. For financial statement and disclosure purposes
the Issuer follows international financial reporting standards where the related party definition differs in that
it includes reporting transactions which include close family members.
 10

6. The general partner or other party responsible for management of the limited partnership or other vehicle will
review on-going cash and capital requirements and determine the best option to meet on-going cash and
capital requirements from time to time. The general partner or other party will have the ability to obtain
additional capital from other sources, such as a mortgage or a loan from a bank, credit union or other lenders,
including raising capital from limited partners or shareholders. Any mortgage or loan will have priority over
the assets of the limited partnership or other vehicle.

7. The co-mingling of assets in a single limited partnership or other vehicle may increase potential exposure
based on spreading liability, capital gains or capital losses across the assets. Consideration must be given to
limit and avoid this contamination with all initial investments to either a new or existing shell limited
partnership or other vehicles.

8. Assets acquired by a limited partnership or other vehicle must be acquired at fair market value. This may
result in the Issuer recognizing a loss on the mortgage loan.

9. The Issuer must have a right of first refusal, exercisable in its discretion, in relation to any additional capital
required by the limited partnership or other vehicle so as not to dilute its investment; however, in no
circumstances will the Issuer be obligated to provide additional capital beyond the amount of its investment
in the limited partnership or other vehicle.

10. The Issuer may provide a mortgage loan to a limited partnership or other vehicle, subject to meeting the
mortgage loan investment guidelines.

Use of Borrowing

As a “mortgage investment corporation” under the Tax Act, the Issuer is strictly regulated as to the amount it can
borrow to fund mortgage loans and other types of investments. In general terms, under these requirements if 66% of
the Issuer’s capital is invested in mortgages secured by residential property, then the Issuer may borrow a maximum
of five times its shareholder capital, and if only 50% of the Issuer’s capital is invested in mortgages secured by
residential property, the Issuer may only borrow a maximum of three times its shareholder capital. As a result, the
Issuer’s ability to borrow (leverage) is considerably limited compared to the borrowing (leverage) power of institutions
such as banks, credit unions and trust companies which have vastly higher borrowing limits including deposit-taking
capability, sometimes taking on debt (GICs, bank deposits, etc.) at a ratio of twenty-five times its shareholder capital.

While leverage can be lucrative it also carries risk, particularly if borrowings are at floating as opposed to fixed rates
of interest. It is up to the Manager and the directors of the Issuer to use leverage carefully and wisely. It is important
that the Issuer’s shareholders are aware that the Issuer, after appropriate diligence, will entertain borrowing up to the
maximum allowed under the Tax Act, and will borrow from conventional banks, credit unions and trust companies as
well as private lenders, at no more than acceptable commercial rates of interest. Although the Issuer expects that any
such borrowings will be primarily from arm’s length financial institutions, the Issuer may borrow funds from private
lenders that have business or personal relationships with the Manager, Wayne Strandlund (the sole shareholder, the
Chief Executive Officer and a director of the Manager and a shareholder, the President and Chief Executive Officer,
and a director of the Issuer), or other directors and officers of the Manager or the Issuer, provided that such borrowings
are on terms no less favourable than those available from arm’s length third parties. Notwithstanding the foregoing,
in no circumstances will the Issuer borrow funds from the Manager, any director, officer or shareholder of the Manager
or any director or officer of the Issuer, or any immediate family member of or entity controlled by such persons.

It is highly unlikely that the Issuer would be able to borrow five times its capital as the Issuer is not a deposit-taking
company; nor would the market lend to that level. It is highly improbable that the Issuer would find a lender that will
lend more than 25% of the value of the Issuer’s assets or five times the value of its assets (approximating 500% of its
capital). To a certain extent, this controls and minimizes the leverage (exposure to debt). Notwithstanding the above,
any borrowing or debt of the Issuer represents a risk to the Issuer and its shareholders.

The Issuer may enter a demand operating loan facility with a Canadian financial institution to provide revolving
working capital including bridging maturing mortgages and/or investor contributions. This facility will be
 11

collateralized by a general security agreement that provides the lender with a first charge on all the Issuer’s assets and
undertakings. Any amount borrowed under such a loan facility will be within the borrowing limits applicable to the
Issuer as a MIC. See “Item 4.2 Short-Term Debt”.

In addition, the Issuer may from time to time borrow funds by other means including through the issuance of short-
term debenture (debt) instruments and promissory notes to third parties. Borrowings under these instruments may
include corporate guarantees and covenants and may be secured by the assets of the Issuer. Any amounts borrowed
under such instruments will be within the borrowing limits applicable to the Issuer as a MIC.

Lending Flexibility

As a “mortgage investment corporation”, the Issuer is not a conventional lender, such as a bank, credit union or trust
company, but is an alternative lender with more flexible lending criteria. The main value of a mortgage investment
corporation (and one of the reasons the Issuer was formed to operate as a mortgage investment corporation) is that it
can often fund the mortgages of certain borrowers that conventional lenders cannot. Interest rates of a mortgage
investment corporation may be higher than a conventional lender and the default risk may also be greater.

The Issuer’s lending flexibility extends to the following:

(a) Geographical Areas. The geographical areas of Canada in which the Issuer may lend and invest. This area
will be the length and breadth of Canada – necessary prerequisites such as language, licensing, registration
and market, permitting.

(b) Mortgage Type. The full array of real estate property types including, but not limited to, residential (freehold
and strata) property, and non-residential (commercial and industrial).

(c) Mortgage Term. The term of its mortgage loans which will range from three months to five years or longer,
but generally being one to two years. Such short-term lending is designed to provide the Issuer with greater
ability to adapt to changing real estate market values and interest rates.

(d) LTV Ratios. Latitude in dealing with LTV ratios. While LTV ratios are generally regulated amongst
conventional lenders such as banks, credit unions and trust companies, the Issuer’s LTV ratio is not regulated.
The Issuer sets its own LTV ratios and commensurate fees, interest rates and other financial terms for the
mortgages it funds. The Issuer believes that to succeed financially, particularly in a low interest rate
environment, it must maximize its flexibility, including LTV ratios, and assess each mortgage investment on
its own merits. For further information, see “Mortgage Investment Guidelines” above.

(e) Due Diligence. Leeway to apply as it deems appropriate due diligence to each loan, valuing the property in
many ways, including third-party appraisals, property tax assessment data and opinions from realtors, leasing
agents, property managers and other valuations. The Issuer also assesses the strength and credit worthiness
of borrowers, covenantors and guarantors and their ability to sustain payments and to repay the mortgage
loan in each circumstance.

(f) Priority. The ranking or priority of its mortgage loans. The Issuer does not intend to restrict itself to investing
in first (senior) mortgages only and intends to also invest in second (junior) mortgages.

(g) Concentration of Mortgage Funds. The concentration of mortgage funds. For example, the ranking or priority
of the portfolio may have a significant weighting of first mortgages. The Issuer does its best to avoid
unreasonable concentration of mortgage loans with a particular borrower or group of related borrowers, a
particular locale or community or a particular type of real estate product (for example, commercial, industrial,
raw land development, construction, fee simple, strata property, etc.) except to the extent such concentration
is required to ensure the Issuer is considered to be a “mortgage investment corporation” within the meaning
of the Tax Act (for example, with respect to holdings in loans secured on certain residential properties).
 12

Operating Costs

It is the Issuer’s assessment that the Issuer’s costs associated with managing its mortgage portfolio are approximately
3.0% to 3.5% of capital per year, including, but not limited to, management, administration, licencing and registration,
legal and accounting, advertising and promotion. In addition to these costs, the Issuer will do its best to provide for
doubtful accounts by setting aside specific and general reserves.

Tax Act MIC Criteria

A corporation is a “mortgage investment corporation” throughout a taxation year if, throughout the year, it satisfies
the following conditions set out in subsection 130.1(6) of the Tax Act:

(a) the corporation was a Canadian corporation;

(b) the corporation’s only undertaking was the investing of funds of the corporation and it did not manage or
develop any real or immovable property;

(c) none of the property of the corporation consisted of

(i) debts owing to the corporation that were secured on real or immovable property situated outside Canada,

(ii) debts owing to the corporation by non-resident persons, except any such debts that were secured on real
or immovable property situated in Canada,

(iii) shares of the capital stock of corporations not resident in Canada, or

(iv) real or immovable property situated outside Canada, or any leasehold interest in such property;

(d) there were 20 or more shareholders of the corporation, and no person was a “specified shareholder” (see the
following paragraph on page 13 below) of the corporation for the purposes of paragraph 130.1(6)(d) of the
Tax Act;

(e) any holders of preferred shares (as defined in the Tax Act) of the corporation had a right, after payment to
them of their preferred dividends, and payment of dividends in a like amount per share to the holders of the
common shares (as defined in the Tax Act) of the corporation, to participate pari passu with the holders of
the common shares in any further payment of dividends;

(f) at least 50% of the corporation’s assets (as determined by the cost amount of the assets to the corporation)
were comprised of

(i) loans secured on “houses” or on property included in a “housing project”, as those terms are defined in
the National Housing Act (Canada) 1

(ii) deposits insured by the Canada Deposit Insurance Corporation (or Quebec DIC);

1
“House”, as defined in The National Housing Act (Canada), means a building or movable structure, or any part thereof, that is
intended for human habitation and contains not more than two family housing units, together with any interest in land appurtenant
to the building, movable structure or part thereof; and
“Housing project”, as defined in The National Housing Act (Canada), means:
(a) any building or movable structure, or any part thereof, that is intended for human habitation,
(b) any property that is intended to be improved, converted or developed to provide housing accommodation or services
in support of housing accommodation, or
(c) any property that is associated with housing accommodation, including, without limiting the generality of the
foregoing, land, buildings and movable structures, and public, recreational, commercial, institutional and parking
facilities.
 13

(iii) deposits in a credit union, and/or

(iv) cash.

(g) the cost amount (as defined in the Tax Act) to the corporation of all real or immovable property of the
corporation, including leasehold interests in such property, (except real or immovable property acquired by
the corporation by foreclosure or otherwise after default made on a mortgage, hypothec or agreement of sale
of real or immovable property) did not exceed 25% of the cost amount to it of all of its property.

(h) where at any time in the year the cost amount to the corporation of such of its property as consisted of property
described in above paragraph (f) was less than 2/3 of the cost amount to it of all of its property, the corporation
does not exceed a 3:1 debt to equity ratio; and

(i) where above paragraph (h) is not applicable, the corporation does not exceed a 5:1 debt to equity ratio.

For the purposes of above paragraph (d), a person will generally be a specified shareholder of a corporation if the
person, alone or together with any person related (as defined in section 251 of the Tax Act and as modified in paragraph
(d) of section 130.1(6) of the Tax Act) to the person, owns directly or indirectly, more than 25% of the issued shares
of any class of the capital stock of the corporation. “Related persons” include a corporation and the person or persons
that control the corporation, a parent corporation and its subsidiary corporation(s) and corporations that are part of the
same corporate group, and an individual and that individual’s spouse, common-law partner, or child under 18 years
of age. The rules in the Tax Act defining “specified shareholders” and “related persons” are complex, and investors
should consult with their own tax advisors in this regard.

As a “mortgage investment corporation” under the Tax Act the Issuer is entitled to deduct from its income the amount
of taxable dividends it pays to its shareholders. The Issuer’s Articles require it to pay as dividends substantially all of
its net income and net realized capital gains every year (subject to the directors’ discretion to establish loan loss
provisions for the Issuer) and, as a result, the Issuer anticipates that it will not be liable to pay income tax in any year.
See “Item 7: Income Tax Consequences”.

2.3 Development of Business

The Issuer began business in May 1994. The Issuer is qualified as a “mortgage investment corporation” under the
Tax Act and has been engaged in raising capital for investments described under “Item 2.2: The Business”.

The information contained in this section is as at the dates shown. The actual investments held, and the makeup of
these investment holdings will fluctuate over time and are not indicative of the future. All investments are made in
accordance with the information and guidelines described in “Item 2.2: The Business”.

Portfolio Summary

The following information provides a comparative analysis of the Issuer’s mortgage portfolio as at the dates indicated.
 14

Mortgage and Investment Portfolio Trends Previous Three years

As at December 31 in each of the previous three years and as at February 28, 2025 the Issuer’s mortgage and
investment portfolio was comprised as follows:

Mortgage and Investment Portfolio Summary (As at December 31, 2024)

As at December 31, 2024, the Issuer’s investment portfolio was comprised as follows:

1. $295,491,153 in mortgage receivables consisting of $297,452,078 in mortgage balances (527 mortgages)

less $1,264,525 in provisions for mortgage losses, less $923 in mortgage interest reserve and less $695,477
in unamortized lender and modification fees.1
2. (0) drawn down from an available $60,000,000 demand operating loan facility.
3. $3,260,596 in cash available for new mortgage funding.
4. $15,963 in other current assets.

1 Unamortized lender and modification fees are determined by summing the unamortized fees for each mortgage within the
mortgage portfolio where these lender and modification fees were collected. On each mortgage, the unamortized amount is
determined by dividing the fees collected, by the term of the mortgage (in months) and multiplying by the number of months
remaining to the mortgage’s maturity date.
 15

98.90%

0.00%

0.01% 1.09%
Mortgages Line of Credit Cash Other Current Assets

Mortgage and Investment Portfolio Summary (As at February 28, 2025)

As at February 28, 2025, the Issuer’s investment portfolio was comprised as follows:

1. $295,865,588 in mortgage receivables consisting of $297,871,675 in mortgage balances (505 mortgages)

less $1,264,525 in provisions for mortgage losses, less $741,562 in unamortized lender and modification
fees.1

2. ($0) drawn down from an available $60,000,000 demand operating loan facility.

3. $11,728,354 in cash available for new mortgage funding.

4. $14,762 in other current assets.

96.18%

0.00%
0.00% 3.81%
Mortgages Line of Credit Cash Other Current Assets

Mortgage Portfolio (As at February 28, 2025)

The average size of each residential mortgage is $494,977 representing on average 0.20% of the total mortgage
portfolio. The average size of each non-residential mortgage is $2,568,466 representing on average 0.90% of the total
mortgage portfolio. The average size of each construction mortgage is $1,043,612 representing on average 0.40% of
the total mortgage portfolio. The largest loan in the portfolio totals 2.08% of the portfolio. Only 3 of 505 current
mortgages are for amounts greater than 2.0% of the portfolio. For borrowers that require a greater loan amount than
 16

what the Issuer is prepared to offer itself or to reduce the risk of a specific borrower to the Issuer, the Issuer may
participate in the mortgage with another mortgage lender, who will then share the risk of the mortgage with the Issuer
(referred to as a “syndicated mortgage”). 90.44% of the portfolio’s mortgage balance as of February 28, 2025, was
held in mortgages maturing within one year.

Currently the Issuer invests in first mortgages and second mortgages in British Columbia, Alberta, Saskatchewan,
Manitoba and Ontario. The Issuer may lend up to 75% of the value of a property located in a community that evidences
a robust real estate market but only lend 65% of the value of a property located in a community that evidence a less
robust real estate market.

The Issuer holds a significant portion (97.69%) of its mortgage portfolio in first mortgages. While first mortgages are
a major emphasis, the Issuer invests in second mortgage loans and feels there is some room to increase second
mortgages as a percentage of the total mortgage portfolio.

The average credit score as of February 28, 2025, is 718. This is computed as the sum of the (primary borrower’s
credit score multiplied by the individual current balance divided by the aggregate current balance total for the
portfolio). Credit rating agencies consider scores of 300 to 579 as poor, 580 to 669 as fair, 670 to 739 as good, 740 to
799 as very good, and 800 to 900 as excellent.

Residential mortgage categories include (but are not limited to), single family homes, apartment buildings,
condominiums and townhouses, residential land, and residential construction and mixed-use properties (residential
and non-residential combined where the residential portion is 50% or greater). In the portfolio, the residential
component currently makes up 78.60%, construction mortgages total 4.55% and non-residential mortgages total
16.85% by dollar volume of the portfolio. Approximately 17.40% by dollar volume of the Issuer’s mortgages are
secured against raw land and land development.

In the following graphs and table:

(a) The “Loan Amount” value reflects the original approved amount of the mortgage loan at the time of funding.

(b) The “Current Balance” reflects the current balance of the mortgage loan.

(c) The “Interest Rate” for a specific aggregate line item is computed as the sum of the (individual current balances
divided by the aggregate current balances total for the line item) multiplied by the individual mortgage loan
rate.

(d) The “By Duration” reflects the amount of time a mortgage will have been in the Issuer’s mortgage portfolio at
its current maturity date and includes time due to a mortgage renewal or extension.
 17

Mortgage Allocation Graphs (As at February 28, 2025)

 18

Mortgage Allocation Graphs (As at February 28, 2025) – cont.

 19

Mortgage Performance Table (As at February 28, 2025)

Real Property and Limited Partnership Investments (As at February 28, 2025)

The Issuer may hold interests in certain real property indirectly through investments in units of limited partnerships
that hold interests in foreclosed properties of the Issuer. At the time of this offering there are not Limited Partnership
Investments held. The limited partnership structure used by the Issuer to hold interests in foreclosed properties was
the subject of a tax ruling obtained by the Issuer in 2013.

Foreclosures and Non-Performing Mortgage Loans

From time to time in the normal course of business, mortgage borrowers will default on their loans. This may happen
for a variety of reasons including, but not limited to, non-payment or late payment of mortgage payments, non-
payment of property taxes, non-payment of property insurance or not maintaining adequate property insurance, non-
payment of strata fees and other strata assessments and non-payment of the mortgage balance at maturity.

Depending on the severity of the default and the length of time and difficulty incurred in working through the default
and recovery process, the costs to the Issuer can be substantial, and often only part of such costs can be recovered.
Actual costs often exceed those costs that are allowed by a court. A prolonged foreclosure action, particularly a
complex action, vigorously opposed and perhaps taking place during a market down-turn, can be costly and involve
many professionals such as lawyers, receivers, appraisers, quantity surveyors, accountants, leasing agents, property
 20

managers and realtors. Often the Issuer must pay property taxes, property insurance, strata fees and assessments,
property maintenance, etc. in order to keep the property in good condition and marketable. If the Issuer’s mortgage
happens to be a second (junior) mortgage, the Issuer, to protect its position, may also have to keep the first (senior)
mortgage current and in good standing which may require making payments on the first mortgage. There may also be
lienholders and other first charges that have to be satisfied in priority to the Issuer’s mortgage. These default action
requirements take time, administration and money, and may result in a mortgage deficiency when the property is
eventually sold. This mortgage deficiency may be pursued further through personal judgment against borrower(s),
guarantor(s) and covenantor(s) until exhausted.

In accordance with the Issuer’s mortgage contract any of these defaults constitute a default in the mortgage and give
rise to legal action by the Issuer against the borrower(s), guarantor(s) and covenantor(s). The legal action taken is
governed by law with enforcement and collection processes varying from province to province. The default and
recovery process is organized and strictly managed by a standing department of the Manager.

While the process undertaken upon default varies from mortgage to mortgage and circumstance to circumstance, a
default proceeds along the following lines:

1. Notice of default and a request to rectify are sent by the Issuer or the Issuer’s lawyer to the borrower.

2. Notice of demand to repay the loan in full is sent to the borrower if the loan impairment is not rectified within
the legal time limit prescribed in the notice of demand.

3. Petition to court demanding payment in full of all outstanding principal, interest, costs and judgment against
the borrower(s), guarantor(s) and covenantor(s), as approved by the court. The petition will be circulated to as
many respondents as are impacted by the foreclosure action and will include such respondents as first
mortgage holders, lien holders, guarantors, covenantors, and other vested interests.

4. Petition to court to set a redemption date for the borrower to pay the loan and costs.

5. After the redemption date, and if the loan has not been paid as prescribed, a petition to court for a court-ordered
sale and conduct of sale by the Issuer. This may also involve a court order for vacant possession of the subject
property or the right of the Issuer to collect rents if the property is an income-generating property.

During this process, and as prescribed by the court, the subject property(s) securing the Issuer’s mortgage will undergo
a new valuation the (the “Revised Property Value”), so that the borrower’s equity can be established. The length of
the redemption period set by the court is often determined by the amount of equity the borrower has in the property(s).

After establishing the value of the property(s) and determining the LTV based on the Revised Property Value, the
Manager will measure the probability of a loss and set aside an appropriate reserve accordingly. If the probability of
a loss is remote the Manager may choose not to set aside a reserve.

From time to time and as appropriate in the circumstance a Receiver may be appointed. This is most likely to take
place if the subject property requires such attention as on-going management, rent collection, maintenance, completion
of construction or development, protection of the property and so forth. The Issuer, being a mortgage investment
corporation under the Tax Act, is not permitted to manage or develop property; therefore, a receiver may be required
to manage such affairs.

From time to time and depending on the circumstance the Issuer, instead of selling the property and sustaining a loss,
may choose to petition the court for an order absolute and take title to the property. Provided the property does not
involve management or development, the Issuer may hold the property awaiting a more favourable market in which
to sell or, as referenced above, have a receiver manage the property on behalf of the Issuer. From time to time, and as
appropriate, the Issuer may choose to have the property sold to a qualifying limited partnership or other vehicle in
which the Issuer may have a significant interest in (up to 99.99%) as discussed under “Item 2.2: The Business –
Investment Objectives and Strategy - Non-Mortgage Investments”.
 21

If a sale of the subject property or properties results in a shortfall and loss to the Issuer the Issuer will pursue recovery
of the shortfall through personal judgment against the borrower(s), guarantor(s) and covenantor(s), a process which is
administered through the Manager’s collection department.

The Manager, deciding on a case-by-case basis, may set up specific reserves for mortgage loans that are not necessarily
impaired or in default but are simply considered as having diminishing equity or experiencing problems or potential
problems that warrant extra care and attention.

The Issuer, as a precautionary measure, may classify a mortgage loan as non-performing even though it may not be in
default. In such cases the Issuer may choose to recognize the principal balance of the mortgage loan in its financial
records but cease to accrue interest on the mortgage loan. If in the end the mortgage loan does in fact perform, the
interest portion will be taken back into income.

As of February 28, 2025, the total number of mortgages in foreclosure or non-performing was 9. This represents 1.78%
of the number of mortgages in the Issuer’s mortgage portfolio and 3.31% of the total value of the Issuer’s mortgage
portfolio as at that date. The total number of foreclosure mortgages where there is a specific provision and/or an
expectation of a loss is two.

The table below outlines all mortgage loans in foreclosure and/or non-performing as of February 28, 2025 (the
mortgage is in foreclosure unless specifically indicated otherwise).

In the foregoing table:

1. The “Original Balance” value reflects the original approved amount of the mortgage loan at the time of
funding. This balance also includes any authorized release of any collateral security occurring after the initial
advance of the loan.

2. The “Original LTV” shows the loan to value of the mortgage loan at the time the loan was originally initiated.

3. The “Status” shows as an “F” if the mortgage is in foreclosure.

4. Notes depicting status of the individual mortgage files in the foregoing table:

1. Property is being listed for sale in March. Based on “Revised Value” expectations are to receive the full
balance owing.
 22

2. Property will be listed for sale in April. Based on the revised value and the extended legal action and
extra costs associated with the foreclosure there is a possibility of a small shortfall on the mortgage. If
that occurs, a judgment will be placed on the borrower to secure repayment and attempt to collect any
shortfall.

3. Foreclosure proceedings have recently commenced. The borrower has the right to redeem the mortgage
for six months. If the mortgage has not been paid out by that time, the property will be put up for sale.
Based on the “Revised Value” expectations are to receive the full balance owing.

4. Property will be listed for in April. Based on “Revised Value” expectations are to receive the full balance
owing.

5. Borrower is currently arranging financing to payout the mortgage in full. No loss anticipated.

6. Property has an unconditional offered and is scheduled to close April 2025. No loss anticipated.

7. Once conduct of sale is granted the properties will be listed for sale. Based on the “Revised Value”,
expectations are to receive the full balance owing.

8. Once conduct of sale is granted the property will be listed for sale. Based on the “Revised Value” and
the economic uncertainty related to tariffs there is a possibility of shortfall on this mortgage. This
mortgage secures commercial land.

9. Once conduct of sale is granted the properties will be listed for sale. Based on the “Revised Value”,
expectations are to receive the full balance owing.

Significant mortgage defaults in previous three years

There have been no significant real property losses in the last three years.

Significant Real Property Investment Losses in Previous Three Years

There have been no significant real property losses in the last three years.

Significant Limited Partnership Investment Losses in Previous Three Years

There have been no significant losses from investments in limited partnerships in the last three years.

Reduction of Annual Portfolio Dividend Income

The tables below show the reduction of annual portfolio dividend income as a result of non-performance of significant
mortgage loan defaults and the reduction of annual portfolio dividend income as a result of the non-performance of
significant mortgage loan defaults when a limited partnership or other investment vehicle is used by the Issuer:

Significant Mortgage Defaults

Mortgage Dividend Income

Year Ending Outstanding Balance Reduction1
2022 $nil $nil
2023 $nil $nil
2024 $nil $nil
2025 YTD $nil $nil
1
The average mortgage portfolio return is utilized to calculate “Dividend Income Reduction” had the capital been deployed versus
the non-performance of the mortgage loan.
 23

Significant Mortgage Defaults - Limited Partnership and Real Property Investments

Dividend Income
Year Ending Total Investments Total Net Return1 Reduction2
2022 $100 $0 $199,301
2023 $0 $0 $0
2024 $0 $0 $0
2025 YTD $0 $0 $0
1 “Total Net Return” includes net income distributions, capital gains and capital losses for a corresponding year.
2
The average mortgage portfolio return for a corresponding year is utilized to calculate “Dividend Income Reduction” had the
capital been deployed in mortgage investments versus limited partnership(s).

Portfolio Performance

Historical Returns

The table below shows the annual rate of return of the Issuer for the last 10 fiscal years. The annual rate of return for
each period is determined based on the Issuer’s adjusted net income for the period divided by the weighted average
number of outstanding shares for the period. Past performance is not indicative of future returns.

Shares 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Class B 5.00% 5.00% 5.13% 5.57% 5.78% 6.36% 6.72% 5.55% 7.19% 8.34%
Shares
(5-year term)
Class D 4.00% 4.00% 4.13% 4.57% 4.78% 5.36% 5.72% 4.55% 6.19% 7.34%
Shares
(3-year term)
Class F 3.00% 3.00% 3.13% 3.57% 3.78% 4.36% 4.72% 3.55% 5.19% 6.34%
Shares
(1-year term)

The rate of return the Issuer earns from its mortgage investments fluctuates with prevailing market demand for
short-term mortgage financing. In some cases, the Issuer’s mortgage investments may not meet financing criteria for
conventional mortgages from institutional sources and, as a result, these investments generally earn a higher rate of
return than those normally attained from conventional mortgage investments. The Issuer attempts to minimize risk by
being prudent in its credit decisions and in assessing the value of the underlying Canadian real estate property offered
as security.

Growth Rates

The following table reflects the annual growth rate of the mortgage portfolio of the Issuer for the last ten years as at
each fiscal year end which is December 31st, unless otherwise indicated.
 24

Ongoing Disclosure

As of the date of this Offering Memorandum, other than the information contained in this Offering Memorandum, the
Issuer does not provide purchasers with any other disclosure about the Issuer’s portfolio.

Major Events or Conditions

As of the date of this Offering Memorandum, the economic outlook in the markets where the Issuer carries on business
remains stable. Inflation has subsided from its peak and is trending down and all indications are that interest rates will
be moving down through out the remainder of the year.

The announcement and implementation of tariffs have led to increased market volatility, affecting investor sentiment.
This uncertainty can influence the demand for real estate. Prolonged trade tensions and tariffs could heighten the risk
of an economic slowdown.

Other than as noted above, as of the date of this Offering Memorandum there are no major events that have occurred
or conditions that have influenced, whether favourably or unfavourably, the development or financial conditions of
the Issuer’s business over the past two recently completed fiscal years.

2.4 Short and Long-Term Objectives

As in the past, over the long term the Issuer intends to qualify as a mortgage investment corporation, raise investment
capital, and invest substantially all its capital in Canadian mortgages, except for amounts of capital invested as a result
of foreclosure in real property and/or limited partnership(s) and maintained in short-term bank deposits awaiting
mortgage placement. Most of the mortgages the Issuer intends to invest in will be shorter term (less than two years)
first mortgages secured by residential real estate property in Canada. The Issuer may place some of its capital in
longer-term mortgages, second mortgages and non-residential mortgages.

The short term and long-term objectives of the Issuer are to raise additional capital through the issuance of Shares, to
invest available funds in a portfolio of investments that grow in value over time and generate income sufficient to
allow the Issuer to pay quarterly dividends to shareholders and meet valid redemption requests as received, and to
carry on business in a manner that ensures its qualification as a mortgage investment corporation under the Tax Act.

The Issuer intends to do the following to meet its objectives for the next 12 months:
 25

Target completion date

(or, if not known, number of
Actions to be taken months to complete) Our cost to complete

Continue raising funds through the sale of Shares by Ongoing $50,000 1

sourcing investments from potential investors through the
Manager, arm’s length third parties and contacts of the
Issuer and the Manager and their respective directors,
officers and employees

Source and invest in mortgages and other qualified Ongoing as funds are raised and $100,000 2
investments originated by the Manager or others, and mortgages are retired and
administer the Issuer’s portfolio of investments through replaced from time to time
the Manager

1
Estimated costs of the offering including legal, audit and other professional services.
2 The costs of documenting loans is paid for by the borrowers; however, there are some due diligence costs associated with the
mortgage loans borne by the Issuer, such as a comparative market analysis.

2.5 Insufficient Funds

The funds available as a result of this offering may not be sufficient to accomplish all of the Issuer’s proposed
objectives over the next 12 months. There is no assurance that alternative financing will be available.

2.6 Material Contracts

Management Services Agreement

The Issuer and the Manager have entered into a management services agreement dated January 1, 2021 (the
“Management Services Agreement”) under which the directors of the Issuer have contracted to the Manager the
management and administration of the Issuer’s business affairs on a day-to-day basis, including providing a business
office for and on-going advice to the Issuer, raising investment capital for the Issuer and, as may be required from
time to time, providing the Issuer with real estate, mortgage and financing services.

The Manager and the Issuer are related companies. For more information, see “Item 9: Risk Factors and Conflicts of
Interest – 9.2 Conflicts of Interest”. The Issuer will pay a management fee to the Manager under the Management
Services Agreement for providing on-going management and operations including, but not limited to, executive
leadership, exempt market dealer activities (capital raising), sourcing, identifying and evaluating mortgage
investments, mortgage portfolio management, investment management for non-mortgage investments, general
financial management and accounting, compliance, licensing, information technology, human resources, and
reporting.

For the Manager’s scope of services as set out in the Management Services Agreement, the Issuer pays the Manager
a management fee equal to 2.00% per year (0.1667% per month) of the aggregate sum of: (a) the loan capital borrowed
by the Issuer, plus (b) the paid-up capital of the Issuer’s issued and outstanding shares (together, the “Aggregate
Capital”). In addition, for other services provided by the Manager from time to time on an ad hoc basis (including
property management, mortgage origination or brokerage, real estate marketing or capital raising services), the Issuer
will pay the Manager the fees as may be agreed to from time to time when the service is initiated.

The Manager is responsible for payment of its own expenses, such as its office rent and the salaries of its employees.
The Issuer reimburses the Manager for all out-of-pocket expenses incurred in connection with the provision of its
services, including without limitation certain expenses set out in the Management Services Agreement.
 26

The Manager intends to exercise its powers and discharge its duties under the Management Services Agreement
honestly in good faith and in what it reasonably believes to be in the best interests of the Issuer.

The Manager will be given reasonable advance notice of and agendas of the Issuer’s meetings, and the Manager has
the right to attend and be heard at all meetings of the Issuer’s shareholders, the Issuer’s Board of Directors and any
committees established by the board, and the Manager will be provided the minutes including any and all resolutions
passed at all meetings within a reasonable time after the meeting.

The Issuer acknowledges that the Manager and its shareholders, directors and officers have or will have interests and
dealings in other companies, joint ventures, limited partnerships and/or MICs which are presently, or may in the future,
be actively engaged in similar businesses as the Issuer. The Issuer agrees that neither the Manager nor its shareholders,
directors or officers will be liable to the Issuer for any conflict of interest as a result of such other interests or dealings
and that such interests and dealings do not and will not constitute a breach of the Management Services Agreement
even if competitive with the business of the Issuer, and even if the business opportunity could have been pursued by
the Issuer.

The Manager will not be liable to the Issuer for any loss or damage suffered by the Issuer, including any loss or
diminution in the net assets (that is, the value of the Issuer’s assets less its liabilities) of the Issuer, unless such loss or
damage is a direct result of gross negligence, gross willful misconduct, or dishonesty by the Manager in relation to its
duties and responsibilities under the Management Services Agreement. The Management Services Agreement also
provides that the Issuer will indemnify the Manager and its directors, officers and employees from any claims arising
in relation to the Manager’s duties and responsibilities under the Management Services Agreement.

The terms of the Management Services Agreement, including in relation to fees and expenses, may not be amended
except by written agreement between the Issuer and the Manager.

In addition to the management fee and the other compensation payable to it under the Management Services
Agreement, the Manager may also receive a commission from the Issuer in connection with the sale of Shares by the
Manager. See “Item 8: Compensation Paid to Sellers and Finders”.

Termination by the Issuer

The Issuer may not terminate the Management Services Agreement or the appointment of the Manager except:

(a) for Cause; or

(b) for any other reason, provided such termination has been approved by:

(i) a written resolution executed by at least seventy-five (75) percent of the Issuer’s Board members; and

(ii) a resolution approved by at least seventy-five (75) percent of the holders of all the issued and outstanding
voting shares in the Issuer; and

(iii) a resolution approved by at least seventy-five (75) percent of the holders of all the issued and outstanding
non-voting shares in the Issuer.

In recognition of the protracted and exclusive relationship between the Issuer and the Manager, and the irreparable
loss and damage that the Manager will suffer by reason of the termination of this Agreement according to the
provisions of sub-paragraph (b) above, the Issuer agrees to promptly pay, on termination, a fee equal to five (5) times
the highest aggregate annual fees paid by the Issuer to the Manager in any fiscal year of the Issuer during the ten (10)
year period immediately preceding the year in which the Manager is terminated provided that at any time prior to the
completion of the first ten (10) years of this agreement, the aggregate annual fees paid to be considered for purposes
of determining the termination fee shall include fees paid, accrued or earned by the Manager during the year of
termination itself, calculated on an annualized basis.
 27

The Issuer must give the Manager written notice, not less than one (1) year or greater than three (3) years as mutually
and reasonably agreed, of any termination of the Agreement pursuant to the provisions of sub-paragraph (b) above.
For the purposes of sub-paragraph (a) above, “Cause” will be deemed to exist only where:

(i) in providing the services described in the Management Services Agreement the Manager has acted or
has otherwise failed to act in a manner which is found by a court of competent jurisdiction to constitute
bad faith, wilful malfeasance or gross negligence;

(ii) the Manager becomes subject to the provisions of the Winding-up Act, the Companies’ Creditors
Arrangement Act, the Bankruptcy Act or any similar legislation;

(iii) the Manager enters into or is the subject of any composition, arrangement, proposal or petition under
applicable bankruptcy laws;

(iv) a receiver, receiver-manager or trustee in bankruptcy or similar officer, temporary or permanent, is

appointed to take charge of the Manager’s affairs or any of its property;

(v) dissolution proceedings are commenced by or against the Manager;

(vi) the Manager goes into liquidation, either voluntarily or under an order of a court of competent
jurisdiction;

(vii) the Manager makes a general assignment for the benefit of its creditors or otherwise acknowledges its
insolvency; or

(viii) there is a deemed assignment of this Agreement or an attempt by the Manager to assign this Agreement,
contrary to the Management Services Agreement.

Termination by the Manager

The Manager may terminate this Agreement at any time on written notice of not less than one (1) year or greater than
three (3) years as mutually and reasonably agreed with the Issuer.

ITEM 3: MANAGEMENT OF THE ISSUER

3.1 Directors, Officers and Promoters of the Issuer

The following table sets out the specified information about each director, officer and promoter of the Issuer and each
person who, directly or indirectly, beneficially owns or controls 10% or more of any class of voting securities of the
Issuer (a “principal holder”).
Compensation paid
by the Issuer or
related party in the
most recently
completed financial
Full legal name year and the Number, type and Number, type and
and place of Position held / compensation percentage of securities percentage of securities of
principal residence Relationship to expected to be paid of the Issuer held after the Issuer held after
or jurisdiction of Issuer / Date of in the current completion of minimum completion of maximum
organization obtaining position financial year offering4 offering1, 4
Charles Rafer Lake Director, April 6, $0 / $02 23 Class A Voting 23 Class A Voting Shares
Strandlund 2023 Shares (4.79%) (4.79%)
Victoria, BC Principal holder
March 31, 2023 665,364 Class B 665,364 Class B
Non-Voting Shares Non-Voting Shares
(0.2554%) (0.2554%)
 28

Compensation paid
by the Issuer or
related party in the
most recently
completed financial
Full legal name year and the Number, type and Number, type and
and place of Position held / compensation percentage of securities percentage of securities of
principal residence Relationship to expected to be paid of the Issuer held after the Issuer held after
or jurisdiction of Issuer / Date of in the current completion of minimum completion of maximum
organization obtaining position financial year offering4 offering1, 4
President, 23 Class A Voting 23 Class A Voting
Hali Nevada Noble September 7, 2022 $0 / $02 Shares (4.79%) Shares (4.79%)
Sidney, BC Director, April 11,
1994 690,434 Class B 690,434 Class B
Principal holder, Non-Voting Shares Non-Voting Shares
June 29, 1994 (0.2651%) (0.2651%)

Graeme James Nye Principal holder, $0 / $0 120 Class A Voting 120 Class A Voting
Saanich, BC June 29, 1994 Shares (25%) Shares (25%)

Roberta Dawn Director, September $0 / $02 44 Class A Voting 44 Class A Voting

Paniz 30, 2014 Shares (9.1667%) Shares (9.1667%)
Victoria, BC Chief Financial
Officer 546,875 Class B 546,875 Class B
August 28, 2008 Non-Voting Shares Non-Voting Shares
Secretary (0.2099%) (0.2099%)
/Treasurer,
January 2, 2003 2,564 Class D Non- 2,564 Class D Non-Voting
Principal holder, Voting Shares (0.0102%) Shares (0.0102%)
June 29, 1997
4,459 Class F Non-Voting
4,459 Class F Non-
Shares (0.0290%)
Voting Shares (0.0290%)

Alan Arvid Director $0 / $0

Frydenlund April 19, 2012 44 Class A Voting 44 Class A Voting
Vancouver, BC Principal Holder Shares (9.1667%) Shares (9.1667%)
June 17, 2020
94,135 Class B 94,135 Class B
Non-Voting Shares Non-Voting Shares
(0.0361%) (0.0361%)
Fisgard Asset Promoter $1,313,625 / 1,080,673 Class B 1,080,673 Class B
Management $9,000,0003 Non-Voting Shares Non-Voting Shares
Corporation (0.4149%) (0.4149%)
Victoria, BC 1,070,779 Class D 1,070,779 Class D
Non-Voting Shares Non-Voting Shares
(4.2577%) (4.2577%)
1,060,953 Class F 1,060,953 Class F
Non-Voting Shares Non-Voting Shares
(6.8956%) (6.8956%)

1.
The directors and officers may acquire Shares as part of the offering; however, the amount of any Shares they may acquire is
not known.
2. Hali Noble, Rafer Strandlund and Dawn Paniz are employees of the Manager and receive a salary from the Manager.
3. During the year ended December 31, 2024, the Issuer paid the Manager compensation totalling $8,837,661. During the partial
year ended February 28, 2028, the Issuer paid the Manager compensation totalling $1,313,625. The compensation anticipated
to be paid in the current financial year is $9,000,000. Total compensation consists of the management fees plus commissions.
See “2.6: Material Contracts” for a discussion of the services provided to the Issuer by the Manager and the fees it receives
for such services. See “Item 8: Compensation Paid to Sellers and Finders” for a discussion on the commissions received by
the Manager from the Issuer for selling shares of the Issuer.
4. There is no minimum or maximum offering.
 29

The Manager

Manager Expertise and History

The Manager is licensed under the Mortgage Brokers Act (British Columbia), the Real Estate Act of Alberta (Alberta),
the Mortgage Brokers Act (Manitoba) and the Mortgage Brokerages, Lenders, and Administrators Act, 2006 (Ontario).
The Manager is also registered as an exempt market dealer in certain provinces.

The Issuer chose to contract with an external manager as opposed to internalizing management. The Manager was
chosen for its extensive background in real estate marketing, valuation, construction, development, project
management experience, public company experience and experience as a trustee and receiver. The Manager has
extensive experience and expertise in the mortgage lending and mortgage brokerage field, and it is important to the
Issuer that the Manager be licensed and bonded in all the appropriate ways necessary to manage a mortgage investment
corporation properly and expertly. It is important that the first managers of the Manager are also of good reputation
and are properly licensed, registered and bonded where appropriate.

In addition to managing a number of trusts over the years, the Manager has managed a number of “mortgage
investment corporations” since 1994 including:

 Fisgard Financial Corporation

 Fisgard Mortgage Investment Corporation
 Fisgard Investors Ltd.
 Fisgard Capital Corporation
 Fisgard Capital II Corporation

(collectively, the “Fisgard MICs”)

Excluding the Issuer, the other three Fisgard MICs were systematically wound up at various times between 2006 to
2008. Under the oversight of the various Fisgard MICs’ boards of directors, administration and supervision of the
Manager, the Fisgard MICs were wound up with all shareholders receiving 100% of their capital plus all accrued
dividends. Most notable features at wind-up were as follows:

1. No defaults in dividend distributions throughout the duration of the Fisgard MICs.

2. No redemption defaults (all required redemptions were made at 100% of outstanding capital plus accrued
dividends) throughout the duration of the Fisgard MICs.

The strength of the Issuer’s Manager lies in a number of important areas:

1. The Manager’s reputation in the business community, particularly the real estate and mortgage lending
community;
2. The Manager’s adequate and appropriate licenses and registrations;
3. The Manager’s employees’ years of experience and depth of expertise in mortgage investment corporation
management and administration;
4. The Manager’s years of experience as a realtor, giving rise to a level of connections and expertise in real
estate assessment and valuation across Canada;
5. The Manager’s years of experience and cooperation with its low-cost back office administration and
Trustee, including direct online connection between the Manager and the back-office/Trustee;
6. The Manager’s qualification and ability to handle the full array of Canada’s registered funds;
7. The Manager’s proprietary mortgage investment corporation management and administration software
system, “MIST” (Mortgage Investment Software Technology);
8. The Manager’s simplicity and transparency in terms of management fees;
9. The Manager’s transparency in terms of conflict; i.e. management fees are based solely on the amount of
capital under management, and the Manager does not profit share nor participate in any way in brokerage
fees charged to the Issuer’s borrowers; and
10. The Manager’s protection of the Fisgard trademark.
 30

See “2.6: Material Contracts” for a discussion of the Management Services Agreement between the Issuer and the
Manager. The Manager is registered as an exempt market dealer under the securities legislation in the provinces of
British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.

Directors and Officers of the Manager

The directors and officers of the Manager are as follows:

Name and municipality of

principal residence Positions held Date of obtaining position

Charles Rafer Lake Strandlund1 Chief Executive Officer March 6, 2023

Victoria, BC Director April 6, 2023

Roberta Dawn Paniz1 President June 5, 2020

Victoria, BC Chief Financial Officer August 28, 2008
Director June 15, 2023

Hali Nevada Noble1 Managing Director June 15, 2023

Sidney, BC
Jennifer Dawn Reade1 Chief Compliance Officer May 7, 2021
Victoria, BC
Nolan Foster Chief Operating Officer August 21, 2023

Jason Lee Strandlund Director June 15, 2023

1.
For further information, see below under “3.2 Management Experience”.

3.2 Management Experience

A description of the principal occupations of the Issuer’s directors and executive officers over the past five years and
their relevant experience associated with their principal occupations is set out below.

Full Legal Name Principal occupation and description of experience associated with the
occupation

Hali Nevada Noble President and Director

Hali is a founding Director and President of Fisgard Capital Corporation and is also
the Managing Director in charge of mortgage broker and lender communications,
relationships, and business advancement for the manager.

Having spent her entire professional business career, as a realtor, mortgage broker
and mortgage lender, Hali holds the necessary licenses, registrations and
certifications to qualify her for all areas of business activity applicable to her multi-
faceted role with fund-manager, Fisgard Asset Management Corporation (where she
has been licensed since 1989) and Fisgard’s mortgage lending and investment funds.

She has been involved extensively in all related trade association, education and
regulatory activity, having been the President of the provincial British Columbia
 31

Mortgage Brokers Association as well as Chair of the national Canadian Association

of Accredited Mortgage Professionals (Mortgage Professionals Canada).

Hali is a highly respected and sought-after speaker, guest panelist and moderator at
trade and regulatory conferences nationally and internationally dealing with
professional mortgage industry and regulatory activity. She is regularly interviewed
in local, national, and industry-related media on real estate, mortgage lending and
related topics, and she is regarded as one of Canada’s leaders and authorities in the
private mortgage field. She has provided consulting services to numerous
international corporations regarding Canada’s private and alternative mortgage
markets.

Hali has received several industry awards for innovation, dedication, education,
business practices and ethics. Most notable of these recognitions are the induction to
the Canadian Mortgage Hall of Fame and being presented with the British Columbia
Mortgage Brokers Association Pioneer Award for Lifetime Achievement in the
Mortgage Industry. She has also been awarded the Business Development Manager
of the Year by Mortgage Professionals Canada, named one of WXN Canada’s Top
100 Most Powerful Women in the category of Trailblazers and Trendsetters and a
nominee for the YWCA Woman of Distinction Award. In 2018 Canadian Mortgage
Professional Magazine featured Hali as an Industry Icon. Her latest recognition was
being one of 28 Canadian mortgage professionals on the Mortgage Global 100 list
which features the most dynamic mortgage professionals from around the world.

Roberta Dawn Paniz Director and Chairman of the Board

Dawn is a founding shareholder and director of the Issuer and holds the position of
Chief Financial Officer and Chairman of the Board.

In addition to her role with the Issuer Dawn is the President and Chief Financial
Officer of Fisgard Asset Management Corporation where she oversees the
operational structure and strategies of the company. Although she does not occupy a
Compliance Officer role with the manager, Dawn qualifies as a Compliance Officer
and is a member of Fisgard’s Credit Committee and Executive Committee where she
is involved in mortgage investment policy development, mortgage investment
selection and Capital Market strategies. Fisgard Asset Management Corporation
manages $300 million in mortgage assets, the capital for which has been raised
primarily through its internal exempt market dealing representatives.

With thirty years’ experience in the mortgage and investment industry Dawn’s
responsibilities at Fisgard Asset Management Corporation include information
technology oversight, internal accounting, audit and record keeping, securities
reporting and supervision of judicial and private trusts.

Dawn is also a current Director and President of the British Columbia MIC Managers
Association and was as an inaugural member of the British Columbia Securities
Commission’s advisory group, Corporate Finance Stakeholder Forum.

In addition to her career-long involvement in the mortgage lending and investment

industry she has participated in the real estate industry as a former member of the
Victoria Real Estate Board, the Vancouver Island Real Estate Board, the British
Columbia Real Estate Association, the Canadian Real Estate Association and the
Canadian Home Builders Association. Dawn is a member of the Mortgage Brokers
Association of British Columbia and the Private Capital Markets Association of
 32

Canada and has held her mortgage broker’s license with the British Columbia
Financial Institutions Commission since January 1997.

She is also a past director of the National Exempt Market Association (NEMA)
headquartered in Calgary, Alberta. NEMA was a national organization that
advocated on behalf of Canadian investors and Securities Issuers for the Exempt
Market in Canada. NEMA is now known as PCMA, Private Capital Markets
Association.

Charles Rafer L. Strandlund Director

Rafer is director of the Issuer and the CEO of the manager and a member of the Credit
Committee. Prior to this he was the First Vice President, Commercial Mortgage
Investments & Corporate Development and was responsible for the underwriting and
supervision of the commercial lending as well as expanding the issuers syndicate
lending relationships. During that time, he was instrumental in the growth and
success of the portfolio which has fund over 5,000 mortgages valued at more than 2
Billion dollars.

During his time with Fisgard, Rafer has also been the President of 4 Limited
Partnerships which included 2 large land developments, a condominium resort
property, and one of the largest bowling alley entertainment establishments in the
Greater Vancouver area. Each limited partnership ended in a successful conclusion
for the issuer.

Prior to joining Fisgard, Rafer held positions with a Canadian chartered bank and one
of British Columbia’s largest credit unions, both in real estate lending positions.
Rafer is a graduate of the British Columbia Institute of Technology and began his
professional career in 1989. He has completed numerous industry related courses
including the BC Real Estate Course, Canadian Securities, Personal Financial
Planning, Partners, Directors, and First Officers course, the Conducts and Practices
course (Canadian Securities Institute) and numerous ongoing professional
development courses.

Rafer is a member of Mortgage Investment Association of BC, Canadian Alternative

Mortgage Lenders Association, Canadian Mortgage Brokers Association, Mortgage
Professionals Canada, and the Urban Development Institute.

Alan Arvid Frydenlund K.C. Director

Alan has served as a Director of the Issuer since 2012. He is a lawyer who practices
commercial law with a specialty in real estate security realization and perfection.
Alan graduated from Simon Fraser University in 1979, with B.A. in Economics and
Commerce, and from the University of Victoria with his law degree in 1982. Called
to the bar in 1983, he is a shareholder of Owen Bird Law Corporation in Vancouver,
B.C. Alan's clients include Canadian Chartered Banks, Foreign Banks, Trust
Companies, Savings and Loan Companies, Finance Companies, Life Insurance
Companies, Crown Corporations, Mortgage Investment Companies, Credit Unions,
Pension Funds, REITs, Receivers, Trustees, Real Estate Developers, Hotels, Time
Share Corporations, lawyers and high net worth individuals. He also has experience
in real estate and resort development, time shares and fractional real estate
ownership. Alan is also a Director of a number of private companies and is a former
Director of Glacier National Life Insurance Company.
 33

Katherine Gregory Director

Kathy joined the board in August 2024. As an experienced CEO and Entrepreneur
Kathy’s professional experience is certainly highlighted as the Founder & CEO of
Paradigm, which is a full-service mortgage servicing, origination, lender & BPO. She
developed the Paradigm’s business model in 2003, commenced raising capital and
launched nationally in 2004. Kathy grew the company to over $30 billion of
mortgage assets, 350 employees & 37% EBITDA & from 2004 - 2021, ultimately
selling the organization in 2021.

Prior to founding Paradigm Kathy’s career primarily was focused at Financial

institutions, namely, Canada Permanent Trust, Canada Trust and TD Bank from
1983- 2003 in various leadership roles, ultimately as Senior VP, Residential Lending
and was responsible for the secured lending portfolio of over $150 billion. Kathy has
served as a board member for Canada Trust Mortgage Corp, Canadian Home
Builders Association, Ontario Home Builders Association and Canadian Industry
Mortgage Brokers & Lenders Board member (CIMBL)

In addition to her professional success, Kathy has fostered the growth of women in
leadership across Canada, participating in countless speaking events as a key note
speaker and as a strong advocate & supporter of the Canadian Women’s Foundation,
founded and launched Ontario & BC Financial Services Women’s annual golf
tournament & BC’s Mortgage industry Leadership Summit, raising funds for CWF
and Honorary Chair of the Princess Margaret Cancer one walk .

Professional Achievement Highlights Include, Top 100 Most Powerful Women in

Canada WXN, Canada’s 150 Birthday Induction of Canada’s Top 150 Women 2017,
Topmost inspiring Women 2021, Canadian Business Awards (E&Y), top
entrepreneur of the year 2019, inducted into the Mortgage Industry Hall of Fame
2020, Member of the YPO (International Presidents Organization) & Board Member
2007.

Kathy attended York University Economics, Queens University Finance & Harvard
University, Finance for CEO’s

3.3 Penalties, Sanctions, Bankruptcy, Insolvency and Criminal or Quasi-Criminal Matters

There are no penalties or other sanctions imposed by a court or regulatory body relating to a contravention of securities
legislation, or any order restricting that trading in securities, not including an order that was in effect for less than 30
consecutive days, that occurred during the 10 years preceding the date of this Offering Memorandum against: (i) a
director, executive officer or control person of the Issuer; or (ii) an issuer of which any of the foregoing persons was
a director, executive officer or control person at the relevant time.
There are no declarations of bankruptcy, voluntary assignments in bankruptcy, proposals under bankruptcy or
insolvency legislation, proceedings, arrangements or compromises with creditors or appointments of a receiver,
receiver manager or trustee to hold assets, that occurred during the 10 years preceding the date of this Offering
Memorandum with regard to any: (i) director, executive officer or control person of the Issuer; or (ii) issuer of which
any of the foregoing persons was a director, executive officer or control person at the relevant time.
None of the Issuer or a director, executive officer or control person of the Issuer have pled guilty to or been found
guilty of: (i) a summary conviction or indictable offence under the Criminal Code (Canada); (ii) a quasi-criminal
offence in any jurisdiction of Canada or a foreign jurisdiction; (iii) a misdemeanor or felony under the criminal
legislation of the United States of America, or any state or territory of the United States of America; or (iv) an offence
under the criminal legislation of any other foreign jurisdiction.
 34

3.4 Certain Loans

As at the date of this Offering Memorandum, to the knowledge of the Issuer, there are no debentures, bonds or loan
agreements between the Issuer and any of the directors, management, promoters, principal holders of the Issuer or any
other related party to the Issuer.

ITEM 4: CAPITAL STRUCTURE

4.1 Share Capital

The following table sets out information about the Issuer’s outstanding securities, including options, warrants and
other securities convertible into Shares.
Number Price Number Number Number outstanding
Description of security authorized to per outstanding as at outstanding after maximum
be issued security February 28, 2025 after minimum offering2
offering2
Class A Voting Shares3 unlimited $1.00 4802 4802 4802
Class B Non-Voting Shares1 unlimited $1.00 260,484,709 260,484,709 260,484,709
Class C Non-Voting Shares3 unlimited $1.00 0 0 0
Class D Non-Voting Shares1 unlimited $1.00 25,148,989 25,148,989 25,148,989
Class E Non-Voting Shares3 unlimited $1.00 0 0 0
Class F Non-Voting Shares1 unlimited $1.00 15,385,892 15,385,892 15,385,892
1
See the section called “5. Securities Offered – 5.1 Terms of Securities” for a description of the material terms of the Shares.
2
There is no minimum or maximum offering.
3
The Class A Voting Shares, Class C Non-Voting Shares and Class E Non-Voting Shares of the Issuer are not available for purchase
under this Offering Memorandum.

4.2 Short-Term Debt

Description of Short-Term Interest Rate Repayment terms Amount Outstanding1

Debt

Demand Operating Loan Facility Bank Prime + 0.80% On Demand ($0)

1
As at February 28, 2025.

The Issuer has a demand operating loan facility (the “Facility”) to provide revolving working capital including
bridging maturing mortgages and/or investor contributions. The Facility is with a major Canadian chartered bank for
up to $60,000,000. As at February 28, 2025, the Issuer had drawn down ($0) from the Facility. The Facility is
structured as a general security agreement representing a first charge on all the Issuer’s assets and undertaking, and
registered in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario consisting of: (a) residential eligible
mortgages: first and second mortgages on serviced land lots and on completed properties, including owner occupied
single family residential at time of funding, single family detached residences, condominiums, townhouses, and multi-
unit apartment buildings, limited to where the Bank would provide conventional residential mortgage financing, and
(b) non-residential: first mortgages on completed properties in larger urban centres.

In addition, the Issuer may from time to time borrow funds by other means including through the issuance of short-
term debenture (debt) instruments and promissory notes to third parties. Borrowings under these instruments may
include corporate guarantees and covenants and may be secured by the assets of the Issuer. Any amounts borrowed
under such instruments will be within the borrowing limits applicable to the Issuer as a MIC.
 35

4.3 Long-Term Debt

As at the date of this Offering Memorandum, the Issuer does not have any long-term debt.

4.4 Prior Sales

The Issuer raised the following new share capital from January 2021 to February 28, 2025.

Series of Shares 20211 20221 20231 20241 YTD 20251 YTD

Class B Shares (5 year term) 19,685,117 16,831,736 $44,434,856 12,123,379 3,896,603
Class D Shares (3 year term) 4,659,197 2,563,963 $1,554,983 3,127,473 436,319
Class F Shares (1 year term) 3,401,310 3,106,303 $2,814,998 3,344,281 1,192,629

1 Does not include transfers between classes – only new share capital raised.

The table below discloses information regarding the Preferred Shares of the Issuer issued within the 12 months before
the date of this Offering Memorandum. The information shown does not include securities issued upon the
reinvestment of dividends and does not include internal transfer into the same class of share. This does include shares
that have been transferred between classes as well as new capital.
 36

4.5 Retraction History

The table above summarizes the Issuer’s redemption history over the last two fiscal years and the current period to
February 28, 2025.

ITEM 5: SECURITIES OFFERED

5.1 Terms of Securities

A description of the material terms of the Shares is set out below. The rights and restrictions of the Shares are set out
in the Articles of the Issuer and the description below is subject to the terms of the Articles. A copy of the Articles
may be obtained upon request by contacting the Issuer as set out on the cover page of the Offering Memorandum.

(a) Identifying Name and Right of Retraction: The securities offered under this Offering Memorandum are
the following Shares of the Issuer (defined above collectively as “Shares” and individually as a “Share”),
each class with an associated investment period (as explained below), as follows:
Identifying Name Retractable After 1
Class B Shares 5 years
Class D Shares 3 years
Class F Shares 1 year
1 The Shares are retractable after 5, 3, and 1 year as stated. Each class of Shares has a designated base dividend
that corresponds to the period when no retraction rights are available. See below under "Dividends".

(b) Voting – The holders of Shares are not entitled to notice of or to attend or vote at meetings of the Issuer.
 37

(c) Retraction Rights – Each class of Shares has a specific period before which rights of retraction may be
exercised. See paragraph (f) below. The classes of Shares are used for identification only to correspond with
designated dividend rates for the particular class of Shares from time to time. See below under "Dividends".
Each class of Shares will have Redemption Rights (as described below) that corresponds to the particular
class.

The Class B shares, Class D shares and Class F shares are retractable, on the following basis:
(i) In the case of the Class B shares, five years from
(ii) In the case of the Class D shares, three years from
(iii) In the case of the Class F shares, one year from

The last day of the fiscal quarter in which the shares were issued.

A shareholder wishing to exercise retraction rights must deliver written notice to the Issuer setting out the
name and signature of the holder of the shares and the number of shares to be retracted. The shareholder must
deliver this notice not more than 60 and not less than 21 days before the Retraction Date. The Issuer in its
discretion may waive the requirement for notice, and the waiver will cure any default in giving notice,
whether the waiver is given before or after the retraction. The shareholder may choose to retract all, or a
portion of the shares held.

Subject to the Company Act and section 27.1 of the Articles of the Issuer, the Issuer will upon duly receiving
or waiving notice of retraction and receiving the share certificate (if applicable) representing the shares being
retracted redeem the share specified in the notice by paying the Redemption Amount of the shares to the
holder of the shares.

Notwithstanding any other provision of the Articles of the Issuer, where a shareholder has received dividends
by way of the issuance of fully paid up shares (the "Dividend Shares"), the Retraction Date in respect of the
Dividend Shares will for all purposes be deemed to be the same date as the Retraction Date of the shares
originally subscribed for by and issued from treasury to the shareholder (or to the shareholder's predecessor
in title to the shares) and which gave rise to the dividends for which the Dividend Shares were issued;

Notwithstanding any other provision of the Articles of the Issuer, where a shareholder does not exercise the
shareholder's retraction rights in respect of shares held by the shareholder by carrying out the appropriate
actions within the time frames set out in the Articles, then for the purpose of determining under subparagraph
(c) the next available date on which the shareholder may exercise retraction rights in respect of those shares,
the shares will be deemed to have been issued to the shareholder on the Retraction Date which has just expired
without retraction of the shares.

(d) Redemption by Issuer – Upon payment of the Redemption Amount (defined above) to the holders of the
shares to be redeemed, the Company may at its option redeem the whole or any part of the outstanding
shares of any class or classes of shares, on the following basis:

The Issuer will give not less than 21 days’ notice of redemption to the holders of shares to be redeemed
specifying a date and place of redemption. A shareholder entitled to notice may waive the requirement for
notice, and the waiver will cure any default in giving notice, whether the waiver is given before or after the
redemption. Upon the Issuer giving appropriate notice and depositing funds sufficient for the redemption
with any trust company or chartered bank of Canada, the holders of shares to be redeemed will have no
rights against the Company in respect of such shares, except to receive payment for them out of the funds
deposited upon the surrender of share certificates representing the shares to be redeemed;

If not all of the outstanding shares of any class or classes of shares are to be redeemed, the shares to be
redeemed may be selected by the Directors in their sole discretion, and need not be selected either in
proportion to the number of shares registered in the name of each shareholder or from every or any
particular holder of shares;
 38

If some but not all of a holder's shares represented by a share certificate are to be redeemed, then within a
reasonable time after the redemption is completed the Company at its expense will issue the holder with a
new certificate representing the shares which have not been redeemed; and

The amount to be paid by the Issuer in respect of each share to be redeemed will be an amount equal to the
paid-up capital of the share, plus the aggregate of all dividends declared on the share but unpaid, plus the
share's pro rata share of the Distributable Funds (the "Redemption Amount").

(e) Compassionate Early Redemption – The Issuer, through the Manager, may consider applications for early
redemption for compassionate reasons, but only under special circumstances where the spouse of a deceased
shareholder holds the Issuer’s Class B (5-year maturity) Shares or Class D (3-year maturity).

The decision as to whether to grant an early redemption is at the sole discretion of the Manager and otherwise
dependent upon the provisions of the Business Corporations Act (British Columbia) and the Issuer’s Articles
legally permitting such early redemption.

Should a shareholder pass away, the surviving spouse may apply to the Issuer for an early redemption of all
or part of the deceased’s Shares, provided that the date of application for early redemption is at least ninety
days prior to the original Redemption Date (defined below).

The Manager may then consider redeeming the requested number of Shares on or before the last day of the
quarter immediately following the quarter in which the request for compassionate early redemption is made
by the surviving spouse.

Since the deceased shareholder would have been earning dividends based on the rate attributable to the class
of the Share but is redeeming earlier than the retraction date for the Share redemption fees will apply.

The “Redemption Amount” in respect of each Share to be redeemed will be an amount equal to (A) $1.00
per Share (the “Redemption Price”) plus (B) the aggregate of all dividends declared on the Share but unpaid
less (C) any applicable redemption fees (as explained below), subject to adjustment as contemplated in the
rights, privileges, restrictions, or conditions attached to any particular series of Shares.

The redemption fee will be:

(1) Firstly, an amount based on the number of years of the shares of that class must be held before
retraction rights may be exercised less the number of days (expressed as years to 4 decimals) lapsed
since the date of issue of the redeemed Share] multiplied by [2.00% of original investment amount];
plus

(2) Secondly, an amount in respect of return of prior Dividends received (as described below) calculated
based on the Redemption Price multiplied by the Dividend Rate Adjustment table (see below)
multiplied by the number of days (expressed as years to 4 decimals) lapsed since the date of issue
of the redeemed Share.

Dividend Rate Adjustment table:

Elapsed Years Dividend Rate Adjustment

Less than 5 years and greater than 4 years 0.50%
Less than 4 years and greater than 3 years 1.00%
Less than 3 years and greater than 2 years 1.50%
Less than 2 years and greater than 1 years 2.00%
Less than 1 year 2.50%

The redemption fees described above will apply and be deducted from the Redemption Price as
described above and the Redemption Amount will be payable to the holder.
 39

Example: An investor invests $10,000 on January 31, 2020 in Class B Shares at a $1.00 per share.
On March 15, 2022, the Issuer agrees to a compassionate early redemption in relation to those Shares
(and the Shares issued on the reinvestment of dividends declared on those Shares) to redeem the
Shares for cash. What would the redemption fee amounts be and how would it be calculated?

The discussion below assumes the following:

 Throughout the period, the Dividend Rate on Class B shares declared was 5.0%.
 Throughout the period, the investor elected to have all dividends declared reinvested in Shares
resulting in the issuance of a total of 1,110.02 Shares.
 On the date of the redemption, the total value of the Shares to be redeemed is $11,110.02 and
this amount is the Redemption Price.
 At the date of the redemption, the investment would have been in place for a period of two
years and 43 days which is less than the five-year period for which the Shares must be held
before becoming retractable. Since the investment was only in place for two full years (rather
than the five-year investment period contemplated), redemption fees would be determined as
follows:

An amount reflecting ((1) above):

(i) The number of years for which Shares of the class must be held (5-2.1205) 2.8795
before becoming retractable (5 years) less number of days
(expressed as years to 4 decimals) elapsed since the date of
issue of the redeemed Shares (2.1205 years)
(ii) Multiplied by 2.00% of the original investment amount (2.00% $200.00 $575.90
of $10,000)
Redemption fee (1) $575.90

Dividend rate of return adjustment ((2) above):

(i) The Redemption Price $11,110.02

(ii) Multiplied by Dividend Rate Adjustment from the Dividend 1.5% $166.65
Rate Adjustment table (see above)
(iii) Multiplied by the number of days (expressed as years to 4 2.1205 $353.38
decimals) elapsed since the date of issue of the redeemed
Shares
Redemption fee (2) $353.38

Therefore, the total redemption fees would be $929.18 (i.e., $575.90 + $353.38), and based on the
Redemption Price of $11,110.02 (as noted above), the Redemption Amount paid to the investor
would be $10,180.74 (i.e., $11,110.02 - $929.28).

(f) Other Restrictions on Retraction– A holder’s right to demand redemption of a Share is subject to section
27.1 of the Issuer’s Articles which provides as follows:

27.1 Mortgage Investment Corporation

The directors will use their best efforts to ensure that the Company at all relevant times qualifies as
a “Mortgage Investment Corporation” pursuant to the Income Tax Act (Canada).Without limiting
the generality of the foregoing, in addition to any other power and authority the Directors may have,
and notwithstanding any other provision of these Articles, the Directors may in their sole discretion
reject any applications for stock dividends or share subscriptions, transfers, redemptions or
retractions where in the view of the Directors such would not be in the Company’s best interests as
a “Mortgage Investment Corporation” under the Income Tax Act (Canada).
 40

The directors may exercise their discretion to reject a redemption application in certain situations, such as
where: (a) the redemption would put the Issuer offside of the Tax Act’s mortgage investment corporation
criteria regarding shareholders, which requires that a mortgage investment corporation have at least twenty
shareholders, and no one shareholder together with related parties to that shareholder holds between them
more than 25% of the issued Shares of any class of Shares of the mortgage investment corporation, (b) the
Issuer is insolvent or if such redemption will render the Issuer insolvent, (c) such redemption will reduce the
Issuer’s cash reserves below a level which the Directors determine, in their sole discretion, to be prudent;
and where such redemption will cause the Issuer to breach the requirement that at least 50% of the cost
amount of its property must consist of bank deposits or mortgage loans made in respect of residential
properties.

(g) Dividends – The Issuer’s Articles require it to pay as dividends substantially all of its net income and net
realized capital gains every year, subject to the directors’ discretion to establish loan loss provisions for the
Issuer. The Issuer will distribute dividends among the different classes of issued Shares such that when the
dividends are expressed as a percentage rate of annualized return on capital invested the relative percentage
rates between the classes of issued Shares will be as follows:

Share Class Dividend Rate

Class B Shares (retractable after 5 years) Base rate
Class D Shares (retractable after 3 years) Base rate less 1.0%
Class F Shares (retractable after 1 year) Base rate less 2.0%

For example, if the base rate is 5%, the rate for Class B Shares (retractable after 5 years) will be 5%, the rate
of Class D Shares (retractable after 3 years) will be 4% and the rate for Class F Shares (retractable after 1
year) will be 3%.

For Dividend Shares (as defined below), the Redemption Date will be deemed to be the same date as the
Redemption Date of the Shares originally subscribed and that gave rise to the Dividend Shares.

The Board of Directors of the Issuer has the authority to suspend payment of dividends, pay or accrue any
amount in respect of a dividend payment, or vary or alter the dividend rate applicable to the dividends or any
particular payment thereof, as may be necessary or prudent in the discretion of the Board of Directors in order
to maintain the financial well-being or the legal status of the Issuer.

There is no guarantee that dividends payable to shareholders will be declared.

(h) Other matters - Investors will receive a T5 tax slip for interest income on cash investments, including
reinvested dividends.

Under the Issuer’s current policy investors may elect to receive dividends either in cash or in the form of
additional Shares. When paying a Dividend Share, rather than paying the dividend in cash, the Issuer pays
the dividend by issuing to the investor Shares of the same class of Shares on which the dividend is being paid
(the “Dividend Shares”). Dividend Shares will be issued at the price of $1.00 per Dividend Share, or such
other price per Dividend Share as the Issuer gives investors not less than 90 days prior written notice of.
Investors may change their election as to cash or Dividend Shares by giving the Issuer notice of their election
change not less than 60 days before the change in election is to take effect. The Issuer reserves the right to
amend or cancel its policy regarding the manner of payment of dividends.

(i) No Pre-emptive Rights – Except as otherwise required by law the holders of Shares are not entitled as such
to subscribe for, purchase, or receive any part of any issue of shares, bonds, debentures, or other securities of
the Issuer.

(j) Liquidation, Dissolution, or Winding-Up – In the event of the liquidation, dissolution or winding-up of the
Issuer, whether voluntary or involuntary, or in the event of any other distribution of assets of the Issuer among
 41

its shareholders for the purpose of winding up its affairs, the Issuer will distribute the assets of the Issuer
among the shareholders in the following priority:

(i) first, all holders of every class of Shares will receive the return of the paid-up capital on their Shares. If
there are insufficient assets to fully return the paid-up capital the assets will be distributed among all the
shareholders pro rata in proportion to their paid-up capital;

(ii) second, any remaining assets will be distributed among the holders of the different classes of Shares in
the same proportions as if it were a dividend distribution, calculated on the basis of the paid-up capital
on the books of the Issuer prior to the application of paragraph (i).

(k) No Certificates – Certificates are not issued for Shares.

5.2 Subscription Procedure

Persons wishing to subscribe for Shares under this offering may do so by completing the following three steps:

(a) Subscription Forms – Investors must complete the appropriate Subscription Agreement for their respective
jurisdiction as provided by the Manager.

(b) Purchase Price and Method for Payment – Investors must pay the purchase price for the Shares subscribed
for by cheque or bank draft made payable to the Issuer in an amount equal to $1.00 per Share multiplied by
the number of Shares being subscribed.

(c) Submitting Subscriptions – Investors may deliver the completed subscription form and payment of the
purchase price to the Issuer by mail or in person to:

Fisgard Capital Corporation

3378 Douglas Street Victoria BC V8Z 3L3
Phone: (250) 382-9255 or Toll Free 1-866-382-9255
Fax: (250) 384-1498 or Toll Free 1-866-384-1498

(d) Two-Day Hold Period – An investor’s subscription funds will be held until midnight on the second business
day after the investor signs the Subscription Agreement.

(e) Acceptance of Subscriptions and Closings – Subscriptions may be accepted by the Issuer, subject to the
terms and conditions of the Subscription Agreement signed by the investor. Subscriptions will be received
subject to prior sale and subject to rejection or allotment, in whole or in part, by the Issuer prior to any closing.

Subscriptions may be accepted or rejected by the Issuer in its sole discretion. The Issuer is not obligated to
accept any subscription nor to accept subscriptions in the order the Issuer receives them. If the Issuer rejects
a subscription, the subscription funds received will be returned to the investor, without interest or deduction,
along with notification of the rejection.

This offering is not subject to any minimum subscription level, and there are no conditions of closing;
therefore, any funds received from an investor are available to the Issuer and need not be refunded to
the investor. Closings will take place periodically at the Issuer’s discretion.

This offering may be terminated at the sole discretion of the Issuer. For example, the Issuer might choose to
terminate the offering upon the occurrence of events such as any material adverse change in the business,
personnel or financial condition of the Issuer or the Manager. If this offering is terminated for any reason,
the Subscription Agreements and cash funds received by the Issuer prior to the termination will be returned
to investors without interest or deduction as if the Investors’ subscriptions had been rejected (whether or not
the subscription(s) had previously been accepted by the Issuer).
 42

A prospective investor will become a shareholder upon execution of a Subscription Agreement, acceptance
of the Subscription Agreement by the Issuer, payment of the subscription price, and entry of the investor’s
name in the register of members of the Issuer as a shareholder.

(f) Investor Qualifications – Investor qualifications differ depending on the province or territory of residence
of the investor and the prospectus exemption being relied upon. A summary of the applicable qualifications
as at the date of this Offering Memorandum is set out below. The summary below is for reference only and
is qualified by the terms of the applicable exemptions, and the terms of the Subscription Agreement.

Offering Memorandum Exemption

In any Canadian province or territory, an investor may purchase Shares in reliance on the “offering
memorandum” exemption contained in section 2.9 of NI 45-106 if (a) the investor purchases the
Shares as principal (i.e., not for the benefit of others), (b) at the same time or before the investor
signs an agreement to purchase the Shares, the Issuer (i) delivers a copy of this Offering
Memorandum to the investor, and (ii) obtains a risk acknowledgement in the required form from the
investor, and (c) certain other requirements are complied with. In addition, if an investor is located
in a province or territory other than British Columbia and Newfoundland and Labrador, the investor
must either (A) qualify as an “eligible investor”, or (B) comply with certain investment limits. For
these purposes, an “eligible investor” includes:

(a) a person or company whose:

(i) net assets, alone or with a spouse, in the case of an individual, exceed $400,000;

(ii) net income before taxes exceeded $75,000 in each of the two most recent calendar years,
and who reasonably expects to exceed that income level in the current calendar year; or

(iii) net income before taxes alone or with a spouse, in the case of an individual, exceeded
$125,000 in each of the two most recent calendar years, and who reasonably expects to
exceed that income level in the current calendar year; and

(b) a company of which a majority of the voting securities are beneficially owned by eligible
investors or a majority of the directors are eligible investors.

Further information on the definition of “eligible investor” is set out in the required form of
Subscription Agreement.

Accredited Investor Exemption

In any Canadian province or territory, an investor may purchase Shares in reliance on the “accredited
investor” prospectus exemption contained in section 2.3 of NI 45-106 if the investor qualifies as an
“accredited investor” within the meaning of NI 45-106, purchases the Shares as principal (i.e., not
for the benefit of others) and if an individual, provides a risk acknowledgement in the required form.
Under NI 45-106, an “accredited investor” includes:

(a) an individual who beneficially owns, or who together with a spouse beneficially own, financial
assets having an aggregate realizable value that, before taxes but net of any related liabilities,
exceeds $1,000,000 of net investable assets;

(b) any individual whose net income before taxes exceeded $200,000 in each of the two most recent
calendar years or whose net income before taxes combined with that of a spouse exceeded
$300,000 in each of those years, and who, in either case, has a reasonable expectation of
exceeding the same net income level in the current calendar year;
 43

(c) a company, limited partnership, limited liability partnership, trust or estate, other than a mutual
fund or non-redeemable investment fund, that had net assets of at least $5,000,000 as reflected
in its most recently prepared financial statements; or

(d) a person or company in respect of which all of the owners of interests, direct or indirect, legal
or beneficial, are persons or companies that are accredited investors.

Further information on the categories of “accredited investor” is set out in the required form of
Subscription Agreement.

$150,000 Minimum Amount Investment Exemption – Non-Individuals Only

In any Canadian province or territory, an investor that is not an individual may purchase Shares in
reliance on the “minimum amount investment” prospectus exemption contained in section 2.10 of
NI 45-106 if the investor purchases Shares with an aggregate purchase price of not less than
$150,000 and purchases the Shares as principal (i.e., not for the benefit of others).

Family, Friends and Business Associates Exemptions

In any Canadian province or territory, an investor that has a certain prescribed relationship to the
Issuer or its directors, executive officers, control persons, affiliates or founders and purchases the
Shares as principal (i.e., not for the benefit of others) may purchase Shares in reliance on the “family,
friends and business associates” prospectus exemptions contained in NI 45-106 (as applicable
depending on the jurisdiction where the investor is located). An investor may qualify to purchase
in reliance on this exemption the investor is:

(a) a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer;

(b) a spouse, parent, grandparent, brother, sister, child or grandchild of a director, executive officer
or control person of the Issuer, or of an affiliate of the Issuer;

(c) a parent, grandparent, brother, sister, child or Issuer of the spouse of a director, executive officer
or control person of the Issuer or of an affiliate of the Issuer;

(d) a close personal friend of a director, executive officer or control person of the Issuer, or of an
affiliate of the Issuer;

(e) a close business associate of a director, executive officer or control person of the Issuer, or of
an affiliate of the Issuer;

(f) a founder of the Issuer or a spouse, parent, grandparent, brother, sister, child, grandchild, close
personal friend or close business associate of a founder of the Issuer;

(g) a parent, grandparent, brother, sister, child or grandchild of a spouse of a founder of the Issuer;

(h) a person of which a majority of the voting securities are beneficially owned by, or a majority
of the directors are, persons described in (a) to (g); or

(i) a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are
persons described in (a) to (g).

Further information on the investors eligible to purchase in reliance on these exemptions is set out
in the required form of Subscription Agreement.
 44

ITEM 6: CERTAIN DIVIDENDS OR DISTRIBUTIONS

Dividends paid by the Issuer in the two most recently completed financial years did not exceed cash flow from
operations. See “Item 5: Securities Offered – 5.1 Terms of Securities” for a description of the dividend rights attributed
to the Shares.

ITEM 7: INCOME TAX CONSEQUENCES

7.1 Independent Tax Advice

Investors should consult their own professional advisers to obtain advice on the income tax consequences that apply
to them.

No application has been made for an advance income tax ruling with respect to the investment described in this
Offering Memorandum, nor is it intended that any application be made.

7.2 Summary of the Principal Federal Income Tax Consequences

The Issuer has prepared the following which is, as of the date hereof, a fair and accurate summary of the principal
Canadian federal income tax considerations generally applicable to the acquisition, holding and disposition of Shares
by certain investors who acquire Shares pursuant to this Offering Memorandum. For the purposes of this summary,
an otherwise undefined term in quotation marks means that term as defined for the purposes of the Tax Act.

This summary is generally applicable to an investor who, for the purposes of the Tax Act and at all relevant times (a)
is resident in Canada, (b) deals at arm’s length with and is not affiliated with the Issuer, (c) holds Shares as capital
property, (d) is not a “financial institution” for the purposes of the “mark-to market” rules contained in the Tax Act,
(e) is not a “specified financial institution”, (f) does not report its “Canadian tax results” in a currency other than
Canadian currency, and (g) does not hold Shares as a “tax shelter investment” and is not an entity that an interest in
would be a “tax shelter investment”, and is referred to hereafter as a “Holder”. Generally, Shares will be considered
to be capital property to an investor provided that the investor does not hold such Shares in the course of carrying on
a business or as part of an adventure or concern in the nature of trade. Certain investors who are resident in Canada
and whose Shares do not otherwise qualify as capital property may, in certain circumstances, make an irrevocable
election to have their Shares and every other “Canadian security” owned by them deemed to be capital property.

This summary is based on the current provisions of the Tax Act, the Issuer’s understanding of the current
administrative policies and assessing practices of the CRA published by it prior to the date hereof and all specific
proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the
date hereof (such proposals referred to hereafter as the “Tax Proposals”). This summary does not otherwise take into
account or anticipate any changes in law, whether by legislative, governmental or judicial action, nor does it take into
account other federal or any provincial, territorial or foreign tax legislation or considerations. There can be no
assurance that the Tax Proposals will be enacted in the form publicly announced or at all.

This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to an
investment in Shares and does not describe the income tax considerations relating to the deductibility of interest
on money borrowed to acquire Shares. Moreover, the income and other tax consequences of acquiring, holding
or disposing of Shares will vary depending on an investor’s particular circumstances, including the province
or territory in which the investor resides or carries on business. Accordingly, this summary is of a general
nature only and is not intended to be legal or tax advice to any particular investor. Investors should consult
their own professional advisors to obtain advice on the income tax consequences that apply to them.
 45

The Issuer

The following summary assumes the Issuer qualifies as a “mortgage investment corporation” under the Tax Act at all
relevant times. For a summary of the criteria that must be met for the Issuer to qualify as a mortgage investment
corporation, see “Item 2.2 The Business – Tax Act MIC Criteria”.

If the Issuer qualifies as a mortgage investment corporation throughout a taxation year, the Issuer will be deemed to
be a “public corporation” for the purposes of the Tax Act; however the Issuer will generally be treated as a conduit
for most purposes under the Tax Act: a mortgage investment corporation is entitled to deduct (a) the total amount of
all taxable dividends, other than “capital gains dividends” which it pays during the year or within 90 days after the
end of the year to the extent that such dividends were not deductible by the mortgage investment corporation in
computing its income for the preceding year, and (b) provided the relevant election is made in the prescribed manner,
one half of all “capital gains dividends” paid by the corporation during the period commencing 91 days after the
commencement of the year and ending within 90 days after the end of the year.

The Issuer’s Articles require it to pay as dividends substantially all of its net income and net realized capital gains
every year (subject to the directors’ discretion to establish loan loss provisions for the Issuer) and, as a result, the
Issuer anticipates that it will not be liable to pay income tax in any year. To the extent the Issuer does not do so, any
taxable income will be subject to tax under the rules and at the rates generally applicable to public corporations.

Shareholders

Dividends (other than “capital gains dividends”) paid by the Issuer on the Shares to a Holder will be included in the
Holder’s income as interest, and not as dividends. Capital gains dividends paid by the Issuer on the Shares to a Holder
will be treated as realized capital gains of the Holder and will be subject to the general rules relating to the taxation of
capital gains described below. The ordinary gross up and dividend tax credit rules will not apply to dividends or
capital gains dividends paid by the Issuer to a Holder who is an individual.

If a Holder disposes or is deemed to dispose of Shares, the Holder will realize a capital gain (or capital loss) to the
extent that the proceeds of disposition of the Shares exceed (or are exceeded by) the Holder’s adjusted cost base of
the Shares and reasonable disposition costs.

Generally, if the Issuer redeems or acquires Shares held by a Holder, the Holder will be deemed to receive a dividend
equal to the amount, if any, by which the amount paid by the Issuer to the Holder on the redemption or acquisition
exceeds the “paid-up capital” of the Shares so redeemed or acquired. Any deemed dividend will be treated in the same
manner as other dividends received by the Holder from the Issuer as described above, and its treatment will depend
on whether the Issuer elects that the entire dividend be a capital gains dividend (to the extent the Issuer has realized
sufficient capital gains, net of any applicable capital losses, in the year). The balance of the amount paid by the Issuer
will be proceeds of disposition for the Shares for the purposes of calculating a capital gain (or capital loss).

Generally, one-half of the amount of any capital gain (a “taxable capital gain”) realized in the year is required to be
included in computing the Holder’s income for a taxation year. Subject to and in accordance with the provisions of
the Tax Act, one-half of the amount of any capital loss (an “allowable capital loss”) realized in a taxation year will
be deducted from taxable capital gains realized in the year by a Holder. Allowable capital losses in excess of taxable
capital gains may be carried back and deducted in any of the three preceding years or carried forward and deducted in
any following taxation year against taxable capital gains realized in such year to the extent and under the circumstances
described in the Tax Act.

Capital gains realized and dividends received by a Holder that is an individual or a trust (other than certain trusts) may
give rise to alternative minimum tax under the Tax Act and any such Holders should consult their own tax advisors
with respect to the application of alternative minimum tax.
 46

7.3 Eligibility for Investment by Deferred Income Plans

The Shares will be a qualified investment for trusts governed by a registered retirement savings plan (“RRSP”),
registered retirement income fund (“RRIF”), registered education savings plan (“RESP”), registered disability savings plan
(“RDSP”), tax-free savings account (“TFSA”), first home savings account (FHSA) or deferred profit sharing plan (each
one a “Deferred Income Plan”) at a particular time provided (a) the Issuer qualifies as a mortgage investment
corporation under the Tax Act at that time, and (b) the Issuer does not hold as part of its property at any time during a
calendar year in which the particular time occurs any indebtedness, whether by way of mortgage or otherwise, of a
person who is an annuitant, beneficiary, employer or subscriber under, or a holder (as applicable) of the Deferred
Income Plan or of any other person who does not deal at arm’s length with that person for the purposes of the Tax
Act.

Notwithstanding the foregoing, the annuitant or holder (as applicable) of a Deferred Income Plan that is an RRSP,
RRIF or TFSA will be subject to a penalty tax in respect of a Share held in the Deferred Income Plan if the Share is a
“prohibited investment” of the Deferred Income Plan. A Share generally should not be a “prohibited investment” for
an RRSP, RRIF or TFSA provided the annuitant or holder of the Deferred Income Plan does not hold a “significant
interest” in the Issuer and the Issuer deals at arm’s length with the annuitant or holder for the purposes of the Tax Act.
Generally, an annuitant or holder will not have a significant interest in the Issuer unless the annuitant or holder owns
10% or more of the value of the Issuer’s outstanding shares, either alone or together with persons and partnerships
with which the annuitant or holder is related or does not deal at arm’s length for the purposes of the Tax Act. In
addition, a Share will not be a “prohibited investment” if the Share is “excluded property” for the Deferred Income
Plan. Tax Proposals contained in the Canadian federal budget released on March 22, 2017 provide that the “prohibited
investment” rules will also apply to a trust governed by a RESP or RDSP effective after March 22, 2017. Holders,
subscribers, and annuitants of a RRSP, RRIF, RESP, RDSP, FHSA or TFSA should consult their own tax advisers
with respect to whether a Share would be a prohibited investment having regard to their particular circumstances.

Prospective investors who intend to hold Shares in a Deferred Income Plan should consult their own
professional advisers regarding the income tax consequences of investing in Shares of the Issuer. Not all
securities are suitable for investment through a Deferred Income Plan.

EACH PROSPECTIVE INVESTOR IS ADVISED TO SEEK INDEPENDENT ADVICE IN RESPECT OF

THE INCOME TAX CONSEQUENCES OF THEIR PARTICIPATION IN THE ISSUER, TAKING INTO
ACCOUNT THEIR OWN PARTICULAR CIRCUMSTANCES.

ITEM 8: COMPENSATION PAID TO SELLERS AND FINDERS

8.1 Type and Estimated Amount of Compensation

The Shares will be sold by the Manager on a best-effort basis or by agents authorized by the Issuer. In its discretion,
the Issuer may pay a sales commission to the Manager, to other registered dealers or their representatives, or where
permitted, to other persons. The maximum commission payable is 7% of the subscription amount. Any such
commissions may be paid in cash upon acceptance of the subscription or on other terms agreed to. Notwithstanding
the foregoing, the Issuer will not pay a commission to its directors, officers, or employees. Although there is no
maximum offering size, for example, if $15,000,000 of Shares are issued as part of this offering, the total maximum
commission payable by the Issuer would be $1,050,000. In the fiscal year ending December 31, 2024, the Issuer paid
a commission to the Manager in connection with the distribution of Shares in the amount of $2,674,361. The Issuer
also paid a commission to external exempt market dealers of $0. For the period ending Feb 28, 2025, the Manager has
earned commissions in connection with the distribution of Shares in the amount of $270,361 and external exempt
market dealers have earned commissions in the amount of $0.

The Issuer may enter into exclusive or non-exclusive agency agreements with agents under which the agents offer the
Shares for sale to investors on a best efforts or other basis and the Issuer would be responsible for payment of any
commissions or other compensation payable to such agents. As of the date of this Offering Memorandum, no such
agreements have been entered into.
 47

8.2 Relationship between the Issuer and Fisgard Asset Management Corporation

The Issuer is a “connected issuer” of the Manager, within the meaning of applicable securities legislation, given the
role of the Manager as manager of the Issuer and that certain directors, officers and shareholders of the Manager are
also directors, officers and/or shareholders of the Issuer. The Manager was involved in the decision to distribute the
Shares and the determination of the terms of the distribution. The Manager will be entitled to a sales commission in
connection with the offering of Shares (see above under this Item) and a management fee for its services as manager
of the Issuer. See “2.6 Material Contracts – Management Services Agreement”, “Item 3: Management of the Issuer”
and “Item 9: Risk Factors and Conflicts of Interest – 9.2 Conflicts of Interest”.

ITEM 9: RISK FACTORS AND CONFLICTS OF INTEREST

9.1 Risk Factors

This is a speculative offering. The purchase of Shares involves several risk factors and is suitable only for investors
who are aware of the risks inherent in the real estate industry and who have the ability and willingness to accept the
risk of loss of their invested capital and who have no immediate need for liquidity. There is no assurance of any return
on an investor’s investment.

The Issuer advises that prospective investors should consult with their own independent professional legal, tax,
investment and financial advisors before purchasing Shares in order to determine the appropriateness of this
investment in relation to their financial and investment objectives and in relation to the tax consequences of any such
investment.

In addition to the factors set forth elsewhere in this Offering Memorandum prospective investors should consider the
following risks before purchasing Shares. Any or all of these risks, or other as yet unidentified risks, may have a
material adverse effect on the Issuer’s business and/or the return to the investors.

Investment Risk

Risks that are specific to the Shares being offered under this offering include the following:

1. Speculative Nature of Investment - This is a speculative offering. The purchase of Shares involves several
significant risk factors and is suitable only for investors who are aware of the risks inherent in mortgage
investments and the real estate industry and who have the ability and willingness to accept the risk of the
total loss of their invested capital and who have no immediate need for liquidity.

2. Return on Investment - There is no assurance that sufficient revenue will be generated by the Issuer from
which dividends can be declared by the directors and paid to the investors.

3. No Guaranteed Dividends - The dividends in which the investors are entitled to participate are not
cumulative and will not be paid unless such dividends have been declared by the directors. The directors have
the sole discretion as to whether any such dividends are declared. Therefore, there is no guarantee that
dividends payable to shareholders will be declared.

4. No Review by Regulatory Authorities - This Offering Memorandum constitutes a private offering of the
Shares by the Issuer only in those jurisdictions where and to those persons to whom, they may be lawfully
offered for sale under exemptions in applicable securities legislation. This Offering Memorandum is not, and
under no circumstances is to be construed as a prospectus, advertisement, or public offering of these Shares.
Subscribers to this Offering Memorandum will not have the benefit of a review of the material by any
regulatory authority.

5. Restrictions on the Transfer or Assignment of Shares - The Shares cannot be transferred or assigned
unless such transfer or assignment is approved by the directors and is in compliance with applicable securities
 48

laws. The Shares are subject to onerous resale restrictions under applicable securities legislation. See “Item
11: Resale Restrictions” regarding resale restrictions applicable to the Shares. However, Shares are
retractable in certain circumstances. See “Item 5: Securities Offered”.

6. No Market for Shares – There is no market through which the Shares may be sold, and the Issuer does not
expect that any market will develop pursuant to this offering or in the future. Accordingly, an investment in
Shares should only be considered by investors who do not require liquidity.

7. Redemption Liquidity – The Shares are redeemable, meaning that investors have the right to require the
Issuer to redeem them, upon appropriate advance notice from the investor to the Issuer. The different classes
of Shares have different redemption dates, as measured from the date on which the investor is issued the
Shares to the date on which the investor is entitled to call for their redemption by the Issuer, with the Class B
shares having a five year redemption period, the Class D shares have a three year redemption period and the
Class F shares a one year redemption period. If the investor does not provide the Issuer with the
appropriate notice of redemption, the right of redemption is suspended until an additional time period
has elapsed. See “5.1: Terms of Securities”.

The Issuer gives no assurance that any investor will be able to redeem any or all of their Shares at any time.
Retraction and redemption of the Shares is subject to the Issuer having access to sufficient cash, or other
liquid assets, and following applicable corporate and securities legislation, and is subject to the terms in this
Offering Memorandum, all as determined solely by the Issuer. Retraction and redemption of the Shares is
also subject to the discretion of the directors to act in the best interests of the Issuer under the Tax Act.
Accordingly, this investment is unsuitable for those prospective investors who may require liquidity.

8. Absence of Management Rights – The Shares being sold under this offering do not carry voting rights, and
consequently an investor’s investment in Shares does not carry with it any right to take part in the control or
management of the Issuer’s business, including the election of directors.

In assessing the risks and rewards of an investment in Shares, potential investors should appreciate that they
are relying solely on the good faith, judgment and ability of the directors, officers and employees of the Issuer
and the Manager to make appropriate decisions with respect to the management of the Issuer, and that they
will be bound by the decisions of the Issuer’s and the Manager’s directors, officers and employees. It would
be inappropriate for investors unwilling to rely on these individuals to this extent to purchase Shares.

9. Lack of Separate Legal Counsel – The investors, as a group, have not been represented by separate counsel.
Neither counsel for the Issuer nor counsel for the Manager purport to have acted for the investors nor to have
conducted any investigation or review on their behalf.

Issuer Risk

Risks that are specific to the Issuer include the following:

1. Reduction of Annual Portfolio Dividend Income – The Issuer currently has no non-performing loans or
limited partnership investments which have caused a reduction in the dividends otherwise payable to
shareholders. See “Item 2.3: Development of Business – Portfolio Summary – Reduction of Annual Portfolio
Dividend Income”.

2. Financial Risk – Asset risk is the possibility of devaluation of the Issuer’s securities (its assets), real estate
and otherwise. This is a market condition variable that cannot be controlled by the Issuer. Interest rate risk is
the possibility of an adverse mismatch between the Issuer’s cost of borrowing and the amount of interest it
receives on its mortgage investments.

3. Higher Risk Loans – The Issuer will undertake higher risk loans than many conventional lenders such as
banks and as a result, there is a greater risk of default. Although the Issuer performs due diligence with
 49

respect to each loan and attempts to reduce risk by diversification of its portfolio, defaults on significant loans
may affect the dividends payable to shareholders. See “Item 2.2: The Business”.

The Issuer does its best to avoid unreasonable concentration of mortgage funds in a particular borrower or
group of related borrowers, concentration in a particular locale or community and concentration in a
particular type of real estate product (e.g. commercial, industrial, raw land development, construction, fee
simple vs strata property) with the obvious exception of residential real estate which type is a statutory
requirement applicable to the Issuer as a “mortgage investment corporation” under the Tax Act.

4. Higher Risk Unsecured Non-Reporting Equity Investments – From time to time, the Issuer may
experience defaults and impairments in its mortgage investments, and these defaults may result in
foreclosures which the Issuer may resolve by taking title to the mortgaged property or by having title to the
property held by a limited partnership or other vehicle. See “Item 2.2: The Business”. The investment in
these limited partnerships or other vehicles will generally be unsecured and are typically higher risk than
investments in secured debt securities. There is no guarantee that these investments will earn a positive return
and in fact, there is a risk that the Issuer could lose its entire investment. In addition, as these limited
partnerships and other vehicles will generally be private, non-reporting entities, there may be additional risks
associated with the more limited disclosure provided by these types of entities.

5. MIC Tax Designation – Under the Issuer’s Articles, the Issuer’s directors are required to use their best
efforts to ensure that the Issuer qualifies as a “mortgage investment corporation” under the Tax Act. As well,
the Issuer’s Articles grant the directors the discretion to reject any applications for dividend shares or share
subscriptions, transfers, redemptions or retractions where, in the view of the directors, such action would not
be in the Issuer’s best interests as a mortgage investment corporation under the Tax Act.

There can be no assurance, however, that the Issuer will be able to meet the Tax Act’s MIC
qualifications at all material times.

As the Issuer is qualified as a “mortgage investment corporation”, the Issuer may deduct taxable dividends it
pays from its income, and the normal gross-up and dividend tax credit rules will not apply to dividends paid
by the Issuer on the Shares. Rather, the dividends will be taxable in the hands of shareholders as if they had
received an interest payment. If for any reason the Issuer fails to maintain its mortgage investment corporation
qualification in a particular year, the dividends paid by the Issuer on the Shares would cease to be deductible
from the income of the Issuer for that year and the dividends it pays on the Shares would be subject to the
normal gross-up and dividend tax credit rules. In addition, the Shares might cease to be qualified investments
for trusts governed by RRSPs, Deferred Profit-Sharing Plans and Registered Retirement Income Funds, with
the effect that a penalty tax would be payable by the investor.

6. Reliance on Fisgard Asset Management Corporation – In accordance with the terms of the Management
Services Agreement between the Issuer and the Manager, the Manager has significant responsibility for
assisting the Issuer to conduct its affairs. Any inability of the Manager to perform competently or on a timely
basis will negatively affect the Issuer.

7. Key Personnel – The operations of the Issuer and the Manager are highly dependent upon the continued
support and participation of their key personnel. The loss of their services may materially affect the timing
or the ability of the Issuer to implement its business plan.

The Manager’s management team consists of several key personnel. To manage the Issuer successfully in
the future it may be necessary to further strengthen its management team. The competition for such key
personnel is intense, and there can be no assurance of success in attracting, retaining, or motivating such
individuals. Failure in this regard would likely have a material adverse effect on the Issuer’s business,
financial condition, and results of operations.

8. Bank Borrowing - The Issuer will borrow funds whenever funds are required and available provided it is
economical and prudent to do so. These borrowings may take the form of lines-of-credit from banks and
 50

other lending institutions, and borrowings from private lenders. It is probable that these borrowings will be
secured by a charge against the assets and equity of the Issuer, and in the event of liquidation or wind-up,
will rank in priority to the outstanding shares of the Issuer and/or may force the Issuer to de-leverage (repay
borrowings) on short notice, perhaps having to use cash reserves and/or sell assets to repay such borrowings.
For further information, see “2.2 The Business – Use of Borrowing”, “4.2 Short-Term Debt” and “4.3 Long-
Term Debt”.

9. Other Borrowings – Short-Term Debentures (Debt) Instruments and Promissory Notes – The Issuer
may from time to time borrow funds through the issuance of short-term debenture (debt) instruments and
promissory notes to third parties. Borrowings under these instruments may include corporate guarantees and
covenants and may be secured by the assets of the Issuer. Any amounts borrowed under such instruments
will be within the borrowing limits applicable to the Issuer as a MIC.

In the event of a liquidation or wind up of the Issuer, the borrowings under such debentures and promissory
notes will rank in priority to any distributions of the assets of the Issuer among the holders of outstanding
Shares of the Issuer and/or may force the Issuer to de-leverage (repay) the borrowings on short notice, which
may require the Issuer to use its cash reserves and/or sell the Issuer’s assets to repay the borrowings. For
further information, see “2.2 The Business – Use of Borrowing”, “4.2 Short-Term Debt” and “4.3 Long-
Term Debt”.

10. Conflicts of Interest – Conflicts of interest exist, and may arise from time to time, between investors and
the directors and officers of the Manager and the Issuer and their associates and affiliates.

There is no assurance that any conflicts of interest that may arise will be resolved in a manner favorable to
investors. Persons considering a purchase of Shares pursuant to this offering must rely on the judgment and
good faith of the directors, officers and employees of the Manager and the Issuer in resolving such conflicts
of interest as may arise.

The Issuer and the Manager are affiliates and negotiations between them have not been, and will not be,
conducted at arm’s length. Therefore, the Issuer may be subject to various conflicts of interest arising from
its relationship with the Manager. The risk exists that such conflicts will not be resolved in the best interests
of the Issuer or its shareholders. However, the Manager will make any decision involving the Issuer honestly
and in good faith.

The Manager may establish in the future, other investment vehicles which have or may have investment
objectives that are the same as or similar to those of the Issuer and may act as advisor and/or manager to such
vehicles.

In addition, there are a number of material conflicts of interest that arise or may arise in the Manager’s
capacity as an exempt market dealer involved in the sale of the Shares. For a description of conflicts of
interest associated with the Manager’s activities as an exempt market dealer, investors should refer to [the
Manager’s Relationship Disclosure Information document under the heading “Conflicts of Interest”].

Additional specific conflicts of interest that may arise are described in the applicable sections of this Offering
Memorandum.

11. Termination of the Management Services Agreement - The Management Services Agreement between
the Issuer and the Manager can be terminated for (a) cause and (b) any other reason duly approved by the
Issuer. If the Management Services Agreement is terminated for any other reason there are specific terms
and conditions (i.e. notice period of one year) that apply. This provision would cause increased costs to the
Issuer.

12. Cyber Security Risk - The Issuer’s and its service providers’ use of internet, technology, and information
systems may expose the Issuer to potential risks linked to cyber security breaches of those technological or
information systems. Cyber security breaches, amongst other things, could allow an unauthorized party to
 51

gain access to proprietary information, customer data, or assets, or cause the Issuer and/or its service
providers to suffer data corruption or lose operational functionality.

Industry Risk

There are also risks faced by the Issuer because of the industry in which it operates. Real estate investment is subject
to significant uncertainties due, among other factors, to uncertain costs of construction, development and financing,
uncertainty as to the ability to obtain required licenses, permits and approvals, and fluctuating demand for developed
real estate. The higher returns expected from the Issuer’s mortgage investments reflect the greater risks involved in
making these types of loans as compared to long-term conventional mortgage loans.

Prospective investors should take note of the following:

1. General Economic Risk (External Economic and Political Environment) - The Issuer cannot predict the
real estate market’s future values which may include declines in values. It is not possible for the Issuer to
predict with any accuracy influences such as world affairs, global and local politics and economies, labour
markets, environmental impacts and unexpected events such as the outbreak of infectious illnesses or other
public health issues. These are unknowns and the Issuer makes no representations or warranties as to being
an authority on these causes and effects. Real estate markets and certain economies may result in declining
real estate values and lower interest rates, either or both of which may result in lower returns to the Issuer
and lower dividends to its shareholders.

2. General Risks of Real Estate Investments - Investments in real estate are subject to many risks, including
those posed by the highly competitive nature of the real estate industry, changes in general or local conditions,
changes in property values, increases in interest rates, the lack of available financing, increases in real estate
tax rates and vacancy rates, overbuilding, changes in governmental regulations and monetary policies, and
other factors that are beyond the control of the Issuer.

The real estate investment, including the mortgage investment, is generally large compared to other
investments such as stocks, bonds, term deposits, GICs, and so forth. Being of considerable size, a real estate
property investment or portfolio is relatively less liquid than other investments, so the Issuer and its
shareholders may find that it takes longer to sell real estate property than it does to sell smaller and more
liquid investments such stocks, bonds, mutual funds and so forth.

Real estate values are also subject to other costs that can change quickly and unpredictably, materially
affecting value. Such costs may include property taxes, property insurance, property maintenance and
management, strata corporation fees and other levies. Degree of demand for land to develop and build on and
demand for finished real estate products will affect value and cannot be accurately anticipated.

In the case of real estate and construction some of the myriad factors that may affect real estate values are
supply and demand, employment, availability of services (sewer, water, electricity, telephone, gas, cable),
costs of development and construction (permits, licenses, labour, materials, plans, marketing, insurance,
bonding), world affairs, local politics, environmental concerns, interest rates and so forth. Another important
factor is sheer competition amongst developers and builders.

3. Higher Risk Mortgage Loans – The potential higher returns associated with the Issuer’s mortgage
investments reflects the greater risks associated with the Issuer’s mortgage portfolio and the type of
mortgages in which the Issuer invests; for example, mortgages that are second as well as first, mortgages on
construction and development, mortgages that are high ratio LTV, and so forth. Should any of these risks
materialize they may adversely affect the return to the Issuer in connection with its mortgage loans and
therefore may adversely affect returns to investors.

4. Prior Mortgages and Charges - The Issuer invests in second (junior) as well as first (senior) mortgages.
When the Issuer invests in a second mortgage its mortgage will be subject to a first (senior mortgage) charge
sitting in front of the Issuer’s mortgage. Financial charges for construction and other financing funded by
 52

conventional third-party lenders may also rank in priority to the mortgages registered in favor of the Issuer.
In the event of a default in the first mortgage the Issuer may find itself in a position of having to protect its
interest by either paying out the first mortgage or maintaining payments on the first mortgage to keep it in
good standing and keep it from foreclosing. If foreclosure takes place, the property is sold, and the sale price
is not sufficient to cover both the first mortgage and the Issuer’s mortgage, the Issuer may not recover all or
part of its mortgage investment, resulting in a loss.

5. High Loan Ratios - The Issuer may make mortgage loans in excess of what a typical conventional lender
might make in terms of LTV ratio. For example, conventional mortgage loans may be in the range of 65% to
70% LTV whereas the Issuer may decide to lend, for example, in the range of 70% to 75% or higher in special
circumstances.

The Issuer may also lend against development and construction projects where the LTV depends on the value
of the project as it progresses through development and construction. These development and construction
mortgage loans depend for their success on a variety of variables and forces including cost of labour and
materials, weather, market and other unknowns. The risk is that these unknown influences could, without
prior warning, have an adverse effect on the value of the property and may even result in the project faltering
or stalling or not being completed, resulting in a loss to the Issuer should the property end up being sold for
an amount less than the Issuer’s mortgage balance.

6. High Recovery Costs - There are many costs associated with default action and recovery against a borrower,
not the least of which are legal and Court costs, receiver costs, payment of arrears of property taxes, insurance,
strata fees and assessment, property upkeep, valuation costs, marketing costs and so forth. These costs
associated with loan recovery can often be high and, particularly in a declining real estate market requiring a
long hold and marketing period, can result in the property being sold for less than the Issuer’s mortgage
balance, resulting in a loss.

7. Potential Liability under Environmental Protection Legislation - Environmental and ecological

legislation has become increasingly important and onerous, and the amount of regulation and penalties for
non-compliance is growing. This represents a risk to lenders as well as property owners and borrowers as it
is possible that the liability for non-compliance can pass to the lender (the Issuer) if the property
owner/borrower defaults in terms of environmental requirements. Under various laws it is possible that the
Issuer could become liable for the costs of removal of toxic or hazardous substances and remediation of the
subject property as well as neighboring property(s). Where the Issuer suspects possible environmental issues,
the Issuer will complete environmental diligence including obtaining necessary professional environmental
reports and clearances.

8. Mortgage Insurance and Property Insurance - The Issuer’s mortgage loans will not usually be insured in
whole or in part by default insurers such as Canadian Mortgage and Housing Corporation (CMHC). As well,
there are certain inherent risks in the real estate industry, some of which the Issuer may not be able to insure
against or which the Issuer may elect not to insure due to the cost of such insurance. The effect of these
factors cannot be accurately predicted.

The Issuer requires that property insurance be carried by the borrower on all property(s) securing the Issuer’s
mortgage. The risk is that the borrower may not obtain adequate insurance coverage or the right type of
coverage or may not maintain the insurance in good standing, letting it lapse. To mitigate this risk the Issuer
retains the right to maintain adequate insurance and apply the cost of premiums to its mortgage.

9. Default – If there is default on a mortgage it may be necessary for the Issuer, in order to protect the
investment, to engage in foreclosure or sale proceedings and to maintain prior encumbrances in good
standing. In such cases it is possible that the total amount recovered by the Issuer may be less than the total
investment, resulting in a loss to the Issuer. Equity investments in real property may involve fixed costs in
respect of mortgage payments, real estate taxes, and maintenance costs, which could adversely affect the
Issuer’s income.
 53

10. Yield - Yields on real estate investments, including mortgages, depend on many factors including economic
conditions and prevailing interest rates, the level of risk assumed, conditions in the real estate industry,
opportunities for other types of investments, legislation, government regulation and tax laws. The Issuer
cannot predict the effect that such factors will have on its operations.

11. Competition - Earnings of the Issuer depend on the Issuer’s ability, with the assistance of the Manager, to
source suitable opportunities for the investment of the Issuer’s funds and on the yields available from time
to time on mortgages and other investments. The investment industry in which the Issuer operates is subject
to much competition from competitors many of whom have greater financial and technical resources than the
Issuer. Such competition may adversely affect the Issuer’s success in the marketplace. There is no assurance
that the Issuer will be able to successfully maintain its business plan or operate profitably.

12. Unsecured Equity Investments - There are risks faced by the Issuer due to the nature of the industries in
which it invests through equity units of the limited partnerships. There is a higher risk of a lower return on
capital invested as well as a risk of loss of the invested capital.

Limited partnerships are actively managed businesses in a wide variety of potential industries including but
not limited to: real estate development, construction, leasing, manufacturing, retail, wholesale and
distribution businesses. In essence whatever the underling property or business that was associated with a
prior mortgage provided by the Issuer may become or be a part of the business of the limited partnerships.
Depending on the business carried out by each of the limited partnerships the Issuer invests in may have
significant risks associated with them.

All businesses are subject to significant uncertainties due to, among other factors, costs of business
operations, development and financing, uncertainty as to the ability to generate sufficient net income,
uncertainty of obtaining required licenses, permits and approvals, and fluctuating demand for their products.
The anticipated higher returns associated with the Issuer’s investment reflect the greater risks involved in
making these types of investments as compared to continuing the process of foreclosure on an existing
mortgage loan of the Issuer. Inherent in these investments are completion risks as well as financing risks.

13. “Interest Only” Mortgages – A significant portion of the Issuer’s investment portfolio may be invested in
“interest only” mortgages. An interest only mortgage is a mortgage which, for a set term, the borrower pays
only the interest on the principal balance, with the principal balance unchanged. Because these types of
mortgages do not involve the borrower making payments towards the principal balance during the term of
the loan, they may expose the Issuer to greater risks than a mortgage that involves payments towards the
principal balance (i.e., because the principal balance remains outstanding in full). The risks associated with
interest only mortgages will generally be less for short term mortgages because in a short term mortgage the
outstanding principal is only slightly reduced during the term (i.e., meaning that the risk associated with such
a mortgage not being repaid on maturity is not materially different from other mortgages).

9.2 Conflicts of Interest

The Issuer and its shareholders are dependent upon the experience and good faith of the Manager. The Manager is
entitled to act in a similar capacity for other companies with investment policies similar to that of the Issuer and,
accordingly, conflicts may arise. Certain directors and officers of the Issuer are also directors and officers of the
Manager. If the Manager is obligated to provide other companies with an adequate ongoing supply of investments and
there are limited investments available, the supply of investments provided by the Manager to the Issuer may be
affected.

Furthermore, certain of the directors and officers of the Issuer are also directors, officers and/or shareholders of other
mortgage investment corporations and conflicts of interest may arise between their duties as directors of the Issuer
and as directors of such other companies. All such possible conflicts will be disclosed in accordance with the
requirements of applicable law and the directors concerned will govern themselves in respect thereof to the best of
their ability and in accordance with the obligations imposed on them by law.
 54

Certain directors and officers of the Issuer may be involved in the sale of Shares offered hereunder, but no commissions
will be paid or payable to such directors and officers.

As noted above, The Issuer is a “connected issuer” of the Manager, within the meaning of applicable securities
legislation, given the role of the Manager as manager of the Issuer and that certain directors, officers and shareholders
of the Manager are also directors, officers and/or shareholders of the Issuer. The Manager was involved in the decision
to distribute the Shares and the determination of the terms of the distribution. The Manager will be entitled to a sales
commission in connection with the offering of Shares (see above under this Item) and a management fee for its services
as manager of the Issuer. See “2.6 Material Contracts – Management Services Agreement”, “Item 3: Compensation
and Security Holdings of Certain Persons” and “Item 9: Risk Factors.

ITEM 10: REPORTING OBLIGATIONS

10.1 Documents

We are not required to send you any documents on an annual or ongoing basis.

The Issuer is not a “reporting issuer” as that term is defined in applicable securities legislation, nor will it become a
reporting issuer following the completion of the offering. As a result, the Issuer will not be subject to the continuous
disclosure requirements of such securities legislation that are applicable to reporting issuers. However, investors will
receive quarterly statements reflecting their investment in the Issuer, quarterly dividend cheques, if applicable, and
yearly T5 tax returns for cash investment income.

The Issuer’s fiscal year commences January 1 in each year and ends December 31 of the same year. The Issuer will
prepare audited financial statements for each fiscal year and make the statements available to investors on its website
at secure.fisgard.com within the “client login” area accessed on the header bar.

The audited financial statements of the Issuer as at December 31, 2024 are included below under the heading “13.
Financial Statements”.

10.2 Availability of Information

This Offering Memorandum and certain other documents about the Issuer are available via the System for Electronic
Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. Additionally, certain corporate or securities
information about the Issuer is available on the following websites:
 British Columbia Securities Commission – www.bcsc.bc.ca
 Alberta Securities Commission – http://www.albertasecurities.com
 Ontario Securities Commission – www.osc.gov.on.ca

ITEM 11: RESALE RESTRICTIONS

11.1 Restricted Period

The Issuer is not:

(a) a reporting issuer in any Canadian province or territory, or

(b) a SEDAR filer and a reporting issuer in any Canadian province or territory.

Unless permitted under securities legislation, you cannot trade Shares before the date that is four months and a day
after the date the Issuer becomes a reporting issuer in any province or territory in Canada. The Issuer will not become
a reporting issuer upon completion of this offering and does not currently anticipate becoming a reporting issuer. The
 55

resale restriction on Shares may therefore never expire. However, Shares are retractable in certain circumstances. See
“Item 5: Securities Offered”.

11.2 Manitoba Resale Restrictions

Unless permitted under securities legislation, you must not trade Shares in Manitoba without the prior written consent
of the regulator in Manitoba unless:

(a) the Issuer has filed a prospectus with the regulator in Manitoba with respect to the Shares you have purchased,
and the regulator in Manitoba has issued a receipt for that prospectus, or

(b) you have held the Shares for at least 12 months.

The regulator in Manitoba will consent to your trade if the regulator is of the opinion that to do so is not prejudicial to
the public interest. However, Shares are retractable in certain circumstances. See “Item 5: Securities Offered”.

ITEM 12: PURCHASERS’ RIGHTS

12.1 Statements Regarding Purchasers’ Rights

If you purchase Shares, you will have certain rights, some of which are described below. For more information about
your rights, you should consult a lawyer.

The following summaries of investors’ legal rights are subject to the express provisions of the securities laws of the
applicable province in which they are resident, and reference is made thereto for the complete text of such provisions.
The rights of action described below are in addition to and without derogation from any right or remedy available at
law to the investor and are intended to correspond to the provisions of the relevant securities legislation and are subject
to the defences contained therein.

As used herein, except where otherwise specifically defined, “misrepresentation” means an untrue statement of a
material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement
in this Offering Memorandum not misleading in light of the circumstances in which it was made.

Two Day Cancellation Right

You can cancel your agreement to purchase Shares. To do so, you must send a notice to the Issuer by midnight on the
second business day after you sign the agreement to buy the Shares. Emails can be sent to [email protected].

Statutory Rights of Action in Event of a Misrepresentation

British Columbia Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, together with any amendment hereto, is delivered to a purchaser resident in British
Columbia who purchases Shares in reliance on the “offering memorandum” exemption set out in section 2.9 of NI 45-
106 and contains a misrepresentation and it was a misrepresentation at the time of purchase, you have a statutory right
to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum, and
every person who signed this Offering Memorandum.
 56

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, the above noted
parties have a defense if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy Shares. You
must commence your action for damages within the earlier of 180 days after learning of the misrepresentation and
three year after you signed the agreement to purchase the Shares.

Alberta Investors – Statutory Rights of Action in the Event of a Misrepresentation

Where an offering memorandum, such as this Offering Memorandum, together with any amendment to it, is delivered
to a purchaser of Shares resident in Alberta in connection with the distribution of Shares in reliance on the “offering
memorandum” prospectus exemption set out in section 2.9 of NI 45-106 or the “minimum amount investment”
exemption in section 2.10 of NI 45-106 and contains a misrepresentation, you have a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of 180 days after you first had knowledge of the facts
giving rise to the cause of action and three year after you signed the agreement to purchase the Shares.

Manitoba Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum is delivered to a purchaser of Shares resident in Manitoba and contains a
misrepresentation, you have a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum, and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, the above noted
parties have a defense if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of 180 days after the day you first had knowledge of the
facts giving rise to the cause of action and two years after you signed the agreement to purchase the Shares.

Ontario Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, together with any amendment hereto, is delivered to a purchaser of Shares resident in
Ontario and contains a misrepresentation, subject to the qualifications set forth below, you have a statutory right of
action against the Issuer:

(a) to cancel your agreement to buy the Shares, or

 57

(b) sue for damages.

This statutory right of action is available to you whether or not you relied on the misrepresentation if such statement
or omission was a misrepresentation at the time of your purchase of the Shares. However, there are various defences
available to the persons or companies that you have a right to sue. In particular, the Issuer has a defense if it proves
that you purchased the Shares with knowledge of the misrepresentation.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement to buy the Shares within 180 days of the date upon which you entered
into such agreement. You must commence your action for damages no later than the earlier of (i) 180 days after you
first received knowledge of the facts giving rise to the cause of action; and (ii) three years after the date upon which
you entered into the agreement to purchase the Shares.

Saskatchewan Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in
Saskatchewan and it contains a misrepresentation, a purchaser who purchases a security covered by this Offering
Memorandum or any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy these Shares, or

(b) for damages against:

(i) the Issuer;

(ii) every promoter and director of the Issuer at the time this Offering Memorandum or any amendment to it
was sent or delivered;

(iii) every person or company whose consent has been filed respecting the offering, but only with respect to
reports, opinions or statements that have been made by them;

(iv) every person who or company that, in addition to the persons or companies mentioned above, signed this
Offering Memorandum or the amendment to this Offering Memorandum; and

(v) every person who or company that sells Shares on behalf of the issuer or selling security holder under
this Offering Memorandum or amendment to this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of one year after you first had knowledge of the facts
giving rise to the cause of action and six years from the date upon which you entered into the agreement to purchase
the Shares.

New Brunswick Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in New
Brunswick and it contains a misrepresentation, a purchaser who purchases a security covered by this Offering
Memorandum or any amendment to it is, has a statutory right of action against the Issuer:

(a) to cancel your agreement to buy the Shares, or

 58

(b) sue for damages against the Issuer, the selling security holder or whose behalf the distribution is made, every
person who was a director of the issuer at the date of the Offering Memorandum and every person who signed
the offering memorandum.
This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of one year after you first had knowledge of the facts
giving rise to the cause of action and six year after you signed the agreement to purchase the Shares.

Nova Scotia Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in Nova
Scotia and it contains a misrepresentation at the time of the purchase, a purchaser who purchases a security covered
by this Offering Memorandum or any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement or for damages within 120 days after the date on which payment was
made for the Shares or after the date on which the initial payment for the securities was made where payments
subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to.

Prince Edward Island Investors – Statutory Rights of Action in the Event of a Misrepresentation
If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in Prince
Edward Island and it contains a misrepresentation, a purchaser who purchases a security covered by this Offering
Memorandum or any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of 180 days after you first had knowledge of the facts
giving rise to the cause of action and three year after you signed the agreement to purchase the Shares.
 59

Newfoundland and Labrador Investors – Statutory Rights of Action in the Event of a Misrepresentation
If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in
Newfoundland and Labrador and it contains a misrepresentation, a purchaser who purchases a security covered by
this Offering Memorandum or any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.
This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of 180 days after you first had knowledge of the facts
giving rise to the cause of action and three year after you signed the agreement to purchase the Shares.

Yukon Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in Yukon
and it contains a misrepresentation, a purchaser who purchases a security covered by this Offering Memorandum or
any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of 180 days after you first had knowledge of the facts
giving rise to the cause of action and three year after you signed the agreement to purchase the Shares.

Northwest Territories Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in
Northwest Territories and it contains a misrepresentation, a purchaser who purchases a security covered by this
Offering Memorandum or any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
 60

must commence your action for damages within the earlier of 180 days after you first had knowledge of the facts
giving rise to the cause of action and three year after you signed the agreement to purchase the Shares.

Nunavut Investors – Statutory Rights of Action in the Event of a Misrepresentation

If this Offering Memorandum, or any amendment to it, is sent or delivered to a purchaser of Shares resident in Nunavut
and it contains a misrepresentation, a purchaser who purchases a security covered by this Offering Memorandum or
any amendment to it is, has a statutory right to sue:

(a) the Issuer to cancel your agreement to buy the Shares, or

(b) for damages against the Issuer, every director of the Issuer at the date of this Offering Memorandum and
every person or company who signed this Offering Memorandum.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are
various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense
if you knew of the misrepresentation when you purchased the Shares.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must
commence your action to cancel the agreement within 180 days after you signed the agreement to buy the Shares. You
must commence your action for damages within the earlier of 180 days after you first had knowledge of the facts
giving rise to the cause of action and three year after you signed the agreement to purchase the Shares.

Contractual Rights of Action in Event of a Misrepresentation

Rights for Investors in Québec

Notwithstanding that the securities legislation in Québec does not provide or require the Issuer to provide to purchasers
resident in Québec any rights of action in circumstances where this Offering Memorandum or any amendment to this
Offering Memorandum contains a misrepresentation, the Issuer grants to such purchasers the same rights of action for
damages or rescission as those afforded to residents of British Columbia who purchase Shares in reliance on the
“offering memorandum” exemption set out in section 2.9 of NI 45-106, as described above under “British Columbia
Investors - Statutory Rights of Action in the Event of a Misrepresentation”.

Rights for Investors in British Columbia Purchasing as “Accredited Investors”, in Reliance on the “Friends,
Family and Business Associates” Exemption or under the “Minimum Amount Investment” Exemption

Investors resident in British Columbia who purchase Shares in reliance on the “accredited investor”, the friends, family
and business associates, or the “minimum amount investment” exemptions set out in sections 2.3, 2.5 and 2.10 of NI
45-106, respectively, will be entitled to the same rights of action for damages or rescission as those afforded to
residents of British Columbia who purchase Shares in reliance on the “offering memorandum” exemption set out in
section 2.9 of NI 45-106, as described above under “British Columbia Investors - Statutory Rights of Action in the
Event of a Misrepresentation”.

Rights for Investors in Alberta Purchasing as “Accredited Investors” or in Reliance on the “Friends, Family and
Business Associates” Exemption

Investors resident in Alberta who purchase Shares in reliance on the “accredited investor” or the friends, family and
business associates, or the exemption set out sections 2.3 and 2.5 in NI 45-106 will be entitled to the same rights of
action for damages or rescission as those afforded to residents of Alberta who purchase Shares in reliance on the
“offering memorandum” exemption set out in section 2.9 of NI 45-106, as described above under “Alberta Investors
- Statutory Rights of Action in the Event of a Misrepresentation”.
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12.2 Cautionary Statement Regarding Report, Statement or Opinion by Expert

This Offering Memorandum references the Issuer’s Audited Financial Statements for the year ended December 31,
2024, prepared by KPMG LLP, Chartered Professional Accountants, as the auditor of the Issuer, including the
Independent Auditor’s Report dated March 19, 2024. You do not have a statutory right of action against this party for
a misrepresentation in this Offering Memorandum. You should consult a legal adviser for further information.

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ITEM 13: FINANCIAL STATEMENTS

13.1 Audited Financial Statements (December 31, 2024)

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ITEM 14: CERTIFICATE OF THE ISSUER

Dated the 24th day of March 2025

This Offering Memorandum does not contain a misrepresentation.

Fisgard Capital Corporation

(signed) Hali Nevada Noble (signed) Roberta Dawn Paniz

Hali Nevada Noble Roberta Dawn Paniz
President and Director Chairman of Board, CFO and Director

(signed) Alan Arving Frydenlund K.C (signed) Charles Rafer L. Strandlund

Alan Arving Frydenlund K.C. Charles Rafer L. Strandlund

(signed) Katherine Gregory

Katherine Gregory

On behalf of Fisgard Asset Management Corporation (in its capacity as promoter)

(signed) Robert Dawn Paniz (signed) Charles Rafer L. Strandlund

Roberta Dawn Paniz Charles Rafer L. Strandlund
President Director & CEO

Statements made in this Offering Memorandum are those of the Issuer. No person is authorized to give any information
or to make any representation in connection with this offering other than as referred to in this Offering Memorandum,
and any information or representation not referred to in this Offering Memorandum must not be relied upon as having
been authorized by the Issuer.
Fisgard Capital Corporation
3378 Douglas Street, Victoria BC V8Z 3L3

General Inquiries 250.382.9255

Toll Free Phone 866.382.9255
Toll Free Fax 866.384.1498
Email [email protected]
www.fisgardcapital.com