fisgard capital offering memorandum

8/8/2019 Fisgard Capital Offering Memorandum

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OFFERING MEMORAND

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]

Web www.fsgard.com

Fisgard is an investment or people o all ages and fnancial m

It is an investment or young people, working people, and re

An investment or the average person and

Cover_Mar10.indd 1 4/15


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1

Form45106F2

OfferingMemorandumforNonQualifyingIssuers

Date: March31,2010

TheIssuer

Name: FisgardCapitalCorporation

HeadOffice: 3378DouglasStreet

VictoriaBC V8Z 3L3

Phone: (250)3829255or18663829255

Fax: (250)3829295or18663841498

Email: [email protected]

Currentlylistedorquoted? No

Reportingissuer? No

SEDARfiler? No

THEOFFERING

Securitiesoffered: 225,000,000ClassB(5yearmaturity)NonVotingshares

75,000,000ClassF(1yearmaturity)NonVotingshares

(theShares,anyoneofwhichisaShare)

Pricepersecurity: $1.00perShare

Minimum/Maximum offering: Minimumofferingof$0/Maximumofferingof$300,000,000ofwhich$230,790,910has

alreadybeensubscribedforasofMarch31,2010.

Paymentterms: Tobearrangedonapersubscriptionbasis.

Proposedclosing

date(s):

Closings

will

take

place

periodically

at

the

Issuers

discretion.

IncomeTaxconsequences: Thereareimportanttaxconsequencestothesesecurities.Seeitem6,IncomeTax

Consequences.

Sellingagent? No

ResaleRestrictions Youwillberestrictedfromsellingyoursecuritiesforanindefiniteperiod.

Seeitem10,ResaleRestrictions.

PurchasersRights Youhavetwo(2)businessdaystocancelyouragreementtopurchasethesesecurities.

IfthereisamisrepresentationinthisOfferingMemorandum,youhavetherighttosue

fordamagesortocanceltheagreement.Seeitem11,PurchasersRights.

NosecuritiesregulatoryauthorityhasassessedthemeritsofthesesecuritiesorreviewedthisOfferingMemorandum.Any

representationtothecontraryisanoffence.Thisisariskyinvestment.Seeitem8,RiskFactors.


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2

TABLEOFCONTENTS

Item1 UseofNetProceeds 3

Item

2

Business

of

Fisgard

Capital

Corporation

3

Item3 Directors,Management,PromotersandPrincipalHolders 9

Item4 CapitalStructure 10

Item5 SecuritiesOffered 12

Item6 IncomeTaxConsequences 18

Item7 CompensationPaidtoSellersandFinders 21

Item8 RiskFactors 21

Item9 ReportingObligations 25

Item10 ResaleRestrictions 25

Item11 PurchasersRights 26

Item12 FinancialStatements 28

FinancialStatements(Contents) 29

1.AuditorsReport 30

2.BalanceSheet 31

3.StatementofOperationsandRetainedEarnings 32

4.StatementofCashFlows 33

5.NotestotheFinancialStatements 34

Item13 DateandCertificateoftheIssuer 37

Schedule A SubscriptionAgreement 38

ScheduleB SubscriptionAgreement(Ontario) 47

Notes 55


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Item1UseofNetProceeds

1.1 NetProceedsThenetproceedsoftheofferingthatwillbeavailabletotheIssueraftertheofferingareasfollows:

Assumingmin.offering Assumingmax.offering

A Amounttoberaisedbythisoffering $0 $300,000,000

B

Sellingcommissions

and

fees

$0

$

21,000,000

C Estimatedofferingcosts(e.g.legal,accounting,audit) $0 $ 50,000

D Netproceeds:D=A(B+C) $0 $278,950,000

Notes:

1. This assumes the Issuer pays the maximum permitted commission. The Issuer may pay anaggregateofupto7%ofsubscriptionproceedstosellersofShares.

1.2 UseofNetProceedsAdetailedbreakdownofhowtheIssuerwillusethenetproceedsisasfollows:Descriptionofintendeduseofnetproceeds

listedin

order

of

priority

Assumingmin.offering Assumingmax.offering

Investinmortgagessecuredbyrealestatepropertylocated

inCanada.Fromtimetotimefunds

notinvestedinmortgageswillbeplacedinshortterm

CanadianDepositInsuranceCorporationinsured

investments(e.g.bankdeposits,GICs)

$0 $273,928,900

YearlyManagementFees1 $0 $5,021,100

1.3 ReallocationTheIssuerintendstospendtheavailablefundsasstated.TheIssuerwillreallocatefundsonlyforsoundbusinessreasons.

1.4 Working Capital Deficiency The Issuer has no working capital deficiency and, as a result of theIssuersbusiness,doesnotanticipateeverhavingaworkingcapitaldeficiency.

Item2BusinessofFisgardCapitalCorporation

2.1 StructureFisgardCapitalCorporationwascontinuedunderthelawsofBritishColumbiaonMarch13,2000andwasoriginallyincorporatedundertheCanadianfederaljurisdictiononApril11,1994.Itwasregistered

extraprovinciallyinAlbertaonNovember16,2001,inOntarioonApril28,2003,inManitobaonJuly10,2003,

inSaskatchewanonFebruary13,2006andinNorthwestTerritoriesonMay9,2007.

The Issuer may register extraprovincially in the future to conduct business in other Canadian

jurisdictionsas

may

be

approved

by

the

Issuers

directors.

1

Seeitem2.6,MaterialAgreements,ManagementServicesAgreement


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2.2 BusinessTheIssuercurrentlyqualifiesand,underitsArticlesofIncorporation,isrequiredtoremainqualifiedasaMortgageInvestmentCorporation(MIC)undertheIncomeTaxAct(Canada)(theTaxAct).Thiseffectively

enablestheIssuertooperateasataxfreeflowthroughconduitofprofittoitsshareholderssinceitdoesnotpay

incometaxesonnetearningsfromwhichdividendsarepaid.

TheIssuersbusinessobjectiveistoobtainasecurestreamofincomebyoptimizingitsinvestmentportfoliowithinthe

MICcriteriamandatedbytheTaxAct.Thesecriteriaprovide,amongotherthings,thatoneoftheprimaryinvestmentsa

MICmaymakeismortgageloanssecuredbyresidentialrealestate.TheTaxActsMICcriteriaarediscussedinfurther

detailbelow

(under

this

same

heading).

TheIssuersprimarybusinessisearningincomethroughinvestinginresidentialmortgages.Thereisanestablishedneed

forrealestatemortgagefinancingthatisnotreadilyprovidedbybanks,trustcompanies,creditunionsandother

traditionallenders.Shorttermmortgagefinancingisacontinuingneedofindividuals,buildersandrealestatedevelopers

and,becauseoftheirneedforflexibilityandquickresponse,theyoftenrequiretheservicesofprivatelendersand

organizationssuchastheIssuer.TheIssuersprimaryrevenuesourcehasbeen,andwillcontinuetobe,interestearned

onmortgageinvestments.MortgagesmaygenerateadditionalrevenuefortheIssuer,includingbonuses,duediligence

charges,administrativesetupfees,renewal(mortgageextension)anddischargefees,mortgageguaranteesand

mortgagestandbyfees.

TheTaxActsMICcriteriapermitrevenuesourcesotherthanmortgages,including,amongotherthings,equity

investmentsin

real

estate

and

investments

in

stocks

and

securities

of

Canadian

companies.

Notwithstanding

its

abilitytoinvestinthearrayofinvestmentsallowedundertheTaxAct,itistheIssuerspolicytoinvestitsnonCDIC

(e.g.bankdeposit)holdingsinmortgagessecuredbyCanadianrealestateproperty,primarilyresidentialrealestate

property.AMICsonlypermittedundertakingundertheTaxActcriteriaistheinvestingofitsfunds,anditis

specificallyprohibitedfrommanagingordevelopingrealproperty.

TheIssuersmanager,FisgardAssetManagementCorporation(theManager),islicensedundertheRealEstateAct

(BC)andtheMortgageBrokersAct(BC),andhasmanyyearsofexperience,eitheritselforthroughitspersonnel,asa

realtor,propertymanager,mortgagebroker,builder,propertydeveloper,projectmanagerandtrustee,andinarranging

thefinancingofvariousbusinessenterprises.ThesequalificationsandexperienceplacetheManagerinanadvantageous

positiontoprovideMICrelatedmanagement,administrative,advisory,development,realestatemarketingand

mortgagebrokerageandfinancingservicestotheIssuer,andtheIssuerhasengagedtheManagertodoso.The

Managerspersonnelalsohavesubstantialnetworksofestablishedrelationshipswithexperiencedowners,builders,

developers,appraisers,

property

managers,

bankers,

and

others

active

in

the

real

estate

industry.

The

Issuer

believes

the

ManageristhereforesuitablyqualifiedtolocateandrecommendinvestmentopportunitiesfortheIssuer.TheManager

hasprovidedtheseservicestotheIssuersinceitbeganitsMICactivitiesin1994.Seeitem2.6MaterialAgreementsfor

adiscussionofthemanagementagreementbetweentheIssuerandtheManager.

FromtimetotimetheIssuermaypayreferralfeestoofficers,directorsandemployeesoftheIssuerortheManagerfor

raisinginvestmentcapitaland/orprovidingmortgagesfortheIssuertoinvestin.


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TheTaxActsMICCriteria

Section130.1oftheTaxActsetsoutthecriteriagoverningaMICand,insummary,saysthatinordertoqualifyasa

MICforataxationyearacompanymusthavemetthefollowingcriteriathroughoutthattaxationyear:

1. Itsonlyundertakingwastheinvestingofitsfunds,anditdidnotmanageordeveloprealproperty;2. Itdidnotinvestin:

(a) mortgagesorpropertyoutsideCanada;(b) sharesofcompaniesnotresidentinCanada;or(c) realpropertyorleaseholdinterestsoutsideCanada;

3. Ithadatleasttwenty(20)shareholders,andnooneshareholdertogetherwithrelatedpartiestothatshareholderheldbetweenthemmorethan25%oftheissuedsharesofanyclassofsharesofthecompany;

4. Atleast50%ofthecompanysassetswerecomprisedof:(a) loanssecuredonhousesoronproperty included inahousingproject,asthosetermsaredefined in

theNationalHousingAct(Canada)*;

(b) depositsinsuredbytheCanadaDepositInsuranceCorporation(CDIC)(orQuebecDIC);(c) depositsinacreditunion;and/or(d) cash;

5. No more than 25% of the companys assets consisted of real property (excluding real property acquired byforeclosure);

6. TheMICdidnotexceed,generallyspeaking,a3:1debtequityratio,ora5:1debtequityratioifmorethantwothirds(2/3rds)ofthecompanyspropertyconsistedofResidentialMortgagesand/ordepositssecuredbythe

CanadaDepositInsuranceCorporation(orQuebecDIC)orcredituniondeposits.

*TheNationalHousingAct(Canada)providesthat:housemeansabuildingormovablestructure

intended forhumanhabitationcontainingnotmorethan two familyhousingunits,togetherwith

theland,ifany,onwhichthebuildingormovablestructureissituated;andthathousingproject

meansaprojectconsistingofoneormorehouses,oneormoremultiplefamilydwellings,housing

accommodation

of

the

hostel

or

dormitory

type,

one

or

more

condominium

units

or

any

combinationthereof,togetherwithanypublicspace,recreationalfacilities,commercialspaceand

otherbuildingsappropriatetotheproject,butdoesnotincludeahotel.

Section130.1oftheIncomeTaxActauthorizesaMICtoborrowfundsandleverageitscapitalincertainratiosrelated

tothetypeofassetsheld.ProvidedonehalfofaMICsassetscompriseacombinationofresidentialmortgagesand/or

CDICinsuredinvestmentstheMICisauthorizedtoborrowuptoamaximumofthree(3)timestheamountofits

assets.ProvidedtwothirdsofaMICsassetscompriseacombinationofresidentialmortgagesand/orCDICinsured

investmentstheMICisauthorizedtoborrowuptoamaximumoffive(5)timestheamountofitsassets.

TheIssuerbelievesthatthisleverageopportunityisimportantintermsofitsdividendperformance, andtheIssuerwill

maximizeitsleverageopportunityundertheAct.TheIssuerwillborrowfundswheneverfundsareavailableprovidedit

iseconomical

and

prudent

to

do

so.

These

borrowings

may

take

the

form

of

Lines

of

Credit

from

banks

and

other

lendinginstitutionsand/orpromissorynotesandothertypesofdebtcontractswithindividualsandcompanies,asthe

casemaybe.Itisprobablethatdebtinstrumentswillformpartofafloatingchargeagainsttheassetsandequityofthe

Issuer,andintheeventofliquidationorwindup,willrankinprioritytotheoutstandingsharesoftheIssuer.


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AsaMICundertheTaxActtheIssuerisentitledtodeductfromitsincometheamountoftaxabledividendsitpays

toitsshareholders.TheIssuersArticlesofIncorporationrequireittopayasdividendssubstantiallyallofitsnet

incomeandnetrealizedcapitalgainseveryyear2and,asaresult,theIssueranticipatesthatitwillnotbeliableto

payincometaxinanyyear.TheresultisthattheIssuerisataxfreeconduitofprofittoitsshareholders.Referto

item6,IncomeTaxConsequences.

2.3 DevelopmentofBusinessTheIssuerbeganbusinessinMay1994.SincethattimetheIssuerhasbeenqualifiedasaMICundertheTaxActandhasbeensolelyengagedinraisingcapitalforinvestmentin

mortgagessecured

by

real

estate

property

located

in

Canada,

primarily

in

British

Columbia

and

Alberta.

FromJanuary,2005throughMarch,2010theIssuerraised$194,491,705inequitycapital,bringingtheIssuerstotal

equitycapitalto$230,870,08asatMarch31,2010.TheIssuerhasdistributedadividendeveryquartersince

beginningMICoperationsin1994.Itsaveragenetreturnperyearoverthisperiodonitsfive(5)yeartermClassB

Shareshasbeen8.853%basedoncashdividends.Itsaveragenetreturnperyearonone(1)yeartermClassFShares

hasbeen6.853%basedoncashdividends.

Dividendsfluctuate,andarenotguaranteed.Thefollowingtabledetailstheaverageyearlynetdividendand

historicalcumulativedividendineachoftheyearssincetheIssuermadeitsfirstquarterlydividendpayment

inJanuary1995.

AverageYearly

CASHDividend

(5yearterm)

AverageYearly

CASHDividend

(1yearterm)

YearYearly Historical Average Historical

Average Cumulative Yearly Cumulative

1995 13.645% 13.645% 11.645% 11.645%

1996 14.448% 14.046% 12.448% 12.046%

1997 10.561% 12.884% 8.561 % 10.884%

1998 10.257% 12.227% 8.257% 10.227%

1999 10.161% 11.814% 8.161% 9.814%

2000

13.425%

12.083

%

11.425

%

10.083

%

2001 12.007% 12.072% 10.007% 10.072%

2002 11.700% 12.025% 9.700% 10.025%

2003 11.763% 11.996% 9.763% 9.996%

2004 11.552% 11.952% 9.552% 9.952%

2005 11.281% 11.891% 9.281% 9.891%

2006 10.974% 11.815% 8.974% 9.815%

2007 10.474% 11.712% 8.474% 9.712%

2008 9.262% 11.537% 7.262% 9.537%

2009

6.000%

11.167%

4.000%

9.167%

2010YTD 5.120% 11.068% 3.120% 9.068%

TherateofreturntheIssuerearnsfromitsmortgageinvestmentsfluctuateswithprevailingmarketdemandfor

shorttermmortgagefinancing.InsomecasestheIssuersmortgageinvestmentsmaynotmeetfinancingcriteriafor

conventionalmortgagesfrominstitutionalsourcesand,asaresult,theseinvestmentsgenerallyearnahigherrateof

returnthanthatnormallyattainablefromconventionalmortgageinvestments.TheIssuerattemptstominimizerisk

bybeingprudentinitscreditdecisionsandinassessingthevalueoftheunderlyingCanadianrealestateproperty

offeredassecurity.

2

SubjecttothedirectorsdiscretiontoestablishreservesfortheIssuer.


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2.4 LongTermObjectivesAsinthepast,overthelongtermtheIssuerintendstoqualifyasaMIC,raiseinvestmentcapital,andinvestsubstantiallyallofitscapitalinCanadianmortgages,exceptforsmallresidualamountsofcapital

maintainedinshorttermCDICinsureddepositsawaitingmortgageplacement.Asinthepast,mostofthemortgages

theIssuerintendstoinvestinwillbeshorttermmortgagessecuredbyresidentialrealestatepropertyinCanada.As

itscapitalbaseexpandstheIssuermayplacesomeofitscapitalinlongertermmortgages.Fromtimetotimethe

Issuermayalsoinvestincommercialmortgages,butthistypeofmortgageisintendedtobetheexceptionrather

thantherule.OvertimetheIssueranticipatesexpandingitsmortgagebasetootherprovincesinCanada,beyondBC

andAlberta.

2.5 ShortTermObjectivesOverthenexttwelve(12)monthstheIssuersobjectiveistoraisefurtherequitycapital,investitpursuanttotheTaxActsMICcriteriawiththeintentofoptimizingreturn(asdescribedinmoredetailabove

underitems2.2,2.3and2.4),andcontinuepayingquarterlydividendstoitsshareholders.TheIssuersgoaloverthe

nexttwelve(12)monthsistoincreaseitssharecapitalbasefromitspresentamountof$230,790,910to

$250,000,000.TheIssuersbusinessplanisnotdependentonattainingthisgoal;itissimplyatarget.TheIssuer

anticipatesthatwhateverfundsareraisedwillbesufficientfortheIssuertocontinueimplementingitsbusinessplan.

TheOfferingMemorandumformrequiresthefollowingtabletobecompletedwithrespecttotheIssuers

objectivesoverthenexttwelve(12)months.Itshouldbenotedhoweverthatthisparticulartableformisnotwell

suitedtotheexpressionoftheIssuersbusiness.

WhatwemustdoandhowwewilldoitTarget

completion

date

or,

ifnotknown,numberof

monthstocomplete

Ourcosttocomplete

WhilethereisnothingtheIssuermustdoto

carryoutitsbusinessplan,sinceitalreadyhasa

substantialcapitalbaseinvestedincompliance

withtheTaxActsMICcriteria,theIssuersgoal

overthenext12monthsistoraiseatotalof

$250,000,000.00 inequitycapital.

12monthsSeeitem1,

UseofAvailableFunds.

2.6 MaterialAgreementsTheIssuerisapartytothefollowingmaterialagreements:ManagementServicesAgreement

TheIssuerandFisgardAssetManagementCorporationhaveenteredintoaManagementServicesAgreementdated

March5,2002underwhichtheManageradministerstheIssuersbusinessaffairsonadaytodaybasis,providesa

businessofficeforandongoingadvicetotheIssuer,raiseinvestmentcapitalfortheIssuer,and,asmayberequired

fromtimetotime,providestheIssuerwithrealestate,mortgageandfinancingservices.

TheManagerandtheIssuerarerelatedcompanies.WayneStrandlundcontrolstheManager(heholdsover50%of

itsvotingshares)andisitssoledirectorandpresident.Heisalsothefounder,apromoterandadirectorofthe

Issuer.HaliStrandlundisWayneStrandlundsdaughter,adirectoroftheManager,andadirectoroftheIssuer,and

theholder

of

25%

of

its

issued

voting

shares.

Rafer

Strandlund,

Wayne

Strandlunds

son,

is

adirector

of

the

Manager

andtheIssuer,andtheholderof25%oftheIssuersissuedvotingshares.

InadditiontoreimbursingtheManagerforitsassociatedcostsandexpenses,theIssuerwillpaythefollowingfees

totheManagerundertheManagementServicesAgreement:

1. InrespectoftheManagersgeneralmanagementandadvisoryservices,amanagementfeeof1.8%peryear,amonthlyfeeequalto0.15%oftheaggregatesumof:a)theloancapitalborrowedbytheMIC,plus

b)thepaidupcapitaloftheMICsissuedandoutstandingshares(together,theAggregateCapital).This

percentagefeewillbereviewedbythepartiesfrom


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timetotime,butinnocasewilltherebeachangeinthefeeunlesstheManagerandthe

Issueragreeinwriting.

2. Inrespectofanypropertymanagement,mortgageoriginationorbrokerage,realestatemarketingorcapitalraisingservices,thesewillbeprovidedonanadhocbasisuponagreementofthepartiesatthe

time,andtheIssuerwillpaytheManagerasagreedbetweenthematthetimetheparticularserviceis

initiated,butinnocasewilltheManagerbepaidafeewhichisgreaterthanfairmarketvalueforthe

service.

TheManagementServicesAgreementisforaninitialtermoften(10)yearsandisautomaticallyrenewablefor

furthertermsoften(10)yearseachaftertheexpirationoftheinitialterm,subjecttotheprovisionsfor

termination.TheIssuermayonlyterminatetheManagementServicesAgreementforcause,uponthe

affirmativevoteofatleast75%oftheIssuersdirectors.TheManagermayterminatetheManagementServices

Agreementasfollows:a)immediatelyuponthewindingup,bankruptcyorreceivershipoftheIssuer,orb)upon

sixty(60)daysnoticetotheIssuer.

ThoughtheIssuerandtheManagerexpresslyagreeintheManagementServicesAgreementthatneitherthe

ManagementServicesAgreementnortherelationshipbetweentheIssuerandtheManagerestablishthe

ManagerasafiduciarytotheIssuer,theManagerhasagreedthatitwillexerciseitspowersanddischargeits

dutiesundertheManagementServicesAgreementhonestly,ingoodfaithandinwhatitreasonablybelieves

tobe

in

the

best

interests

of

the

Issuer.

TheManagerwillbegivenreasonableadvancenoticeof(andagendasifavailable)andhastherighttoattendand

beheardatallmeetingsoftheIssuersshareholders,theIssuersboardofdirectorsandanycommittees

establishedbytheboardofdirectors,andtheManagerwillbeprovidedwithcopiesoftheminutesofany

resolutionspassedatallsuchmeetingswithinareasonabletimeafterthemeeting.

TheIssueracknowledgesintheManagementServicesAgreementthattheManageranditsshareholders,

directorsandofficershave,orwillhave,interestsanddealingsinothercompanies,jointventures,limited

partnershipsand/orMICswhicharepresently,ormayinthefuture,beactivelyengagedinsimilarbusinessesas

theIssuer.TheIssueragreesthatneithertheManagernoritsshareholders,directorsorofficerswillbeliableto

theIssuerforanyconflictofinterestasaresultofsuchotherinterestsordealings,andthatsuchinterestsand

dealingsdonotandwillnotconstituteabreachoftheManagementServicesAgreementevenifcompetitive

withthe

business

of

the

Issuer,

and

even

if

the

business

opportunity

could

have

been

pursued

by

the

Issuer.

TheManagerwillnotbeliabletotheIssuerinrespectofanylossordamagesufferedbytheIssuer,including

anylossordiminutioninthenetassets(thatis,thevalueoftheIssuersassetslessitsliabilities)oftheIssuer,

unlesssuchlossordamageisadirectresultofgrossnegligence,grosswillfulmisconduct,ordishonestyby

theManagerinrelationtoitsdutiesandresponsibilitiesundertheManagementServicesAgreement.

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 Managers duties and

responsibilitiesundertheManagementServicesAgreement.

TrademarkLicenseAgreement

FisgardisatrademarkownedbyStrandlundInvestmentsLtd.andregisteredintheCanadianRegisterof

Trademarksasbeingassociatedwithfinancialservices,andinparticularmortgageinvestmentvehicles.

StrandlundInvestmentsLtd.hasgrantedtheIssueranonexclusivelicensetousetheFisgardtrademark

underaTrademarkLicenseAgreement(theAgreement)betweenStrandlundInvestmentsLtd.andthe

IssuerdatedJanuary1,2000andmodifiedonJanuary1,2003.

UndertheAgreementStrandlundInvestmentsLtd.maysetstandardsandspecificationsastothequalityofthe

financialservicesassociatedwiththeIssuersuseofthetrademark,andanyadvertising


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9

orotherusebytheIssuerofthetrademark.OnthefirstdayofJanuary,2003andonthefirstdayofeachmonth

thereafterwhilethisTrademarkLicenseAgreementisineffecttheLicenseeshallpaytotheOwneralicensefee.

Thefeeamountsto1/12thof0.15%oftheaggregatesumofborrowingsandissuedandpaidupsharecapitalof

theLicenseecalculatedasofthefirstdayofeachmonth,commencingJanuary1,2003.

TheAgreementisautomaticallyrenewedeveryyearunlessoneofthepartiesprovidesnoticeofterminationtothe

othernotlessthanthirty(30)dayspriortoananniversarydateoftheAgreement.TheAgreementalsoprovidesthat

itwillbeterminateduponcertainadversecircumstancesrelatingtotheIssuer,andthatStrandlundInvestmentsLtd.

mayterminate

it

upon

thirty

(30)

days

notice

to

the

Issuer.

Upon

termination

the

Issuer

must

cease

all

use

of

the

trademark,includingthedeletionofthemarkfromitscorporatename.

Item3Directors,Management,PromotersandPrincipalHolders

3.1 CompensationandSecuritiesHeldThefollowingtablesetsoutthespecifiedinformationabouteachdirector,officerandpromoteroftheIssuerandeachpersonwho,directlyorindirectly,beneficiallyownsorcontrols10%

ormoreofanyclassofvotingsecuritiesoftheIssuer(aprincipalholder).

Nameand

municipalityof

principalresidence

Positionsheld(e.g.,

director,officer,

promoterand/or

principalholder)and

thedateofobtaining

thatposition

Compensationpaidby

Issuerinthemostrecently

Completedfinancialyear

andthecompensation

anticipatedtobepaidinthe

currentfinancialyear

Number,typeand

percentageof

securitiesofthe

issuerheldafter

completionof

minimumoffering

Number,type

andpercentageof

securitiesofthe

issuerheldafter

completionof

maximumoffering

HaliStrandlund

Sidney,BC

President,

January15,2003

Director,

April11,1994

Paidlastyear: $0

Anticipatedthis

year: $0

N/A

120ClassAVoting

Shares(25%)

246,851ClassB

NonVotingShares

WayneStrandlund

Victoria,BC

CEO

September1,2008

Director,

February5,1997

Paidlastyear: $0

Anticipatedthis

year: $0

N/A928,024ClassB

NonVotingShares

GraemeNye

Saanich,BC

PastPresident,

November23,

1994to

January15,2003

Paidlast

year:

$0

Anticipatedthis

year: $0

N/A

120ClassAVoting

Shares(25%)

32,101ClassB

NonVotingShares

RaferStrandlund

Victoria,BC

Director,

February5,1997

ChairmanoftheBoard

September1,2008

Paidlastyear: $0

Anticipatedthis

year: $0

N/A

120ClassAVoting

Shares(25%)

208,792ClassB

NonVotingShares

DawnPaniz

Langford,BC

CFO

September1,2008

Secretary/Treasurer,

January2,2003

Paidlastyear: $0

Anticipatedthis

year: $0

N/A

120ClassAVoting

Shares(25%)

75,552ClassB

NonVotingShares

JasonStrandlund

Langford,BC

DirectorOctober1,2008

Paidlast

year:

$0

Anticipatedthis

Year:$0

N/A268,478

Class

B

NonVotingShares


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10

3.2 ManagementExperienceTheprincipaloccupationsofthedirectorsandseniorofficersoverthepastfive(5)yearsandtheirexperiencerelevanttotheIssuersbusinessareasfollows:

Name Principaloccupationandrelatedexperience

WayneStrandlund MortgageInvestmentManager&RealEstateAgent

HaliStrandlund MortgageInvestmentManager&RealEstateAgent

RaferStrandlund

MortgageInvestmentManager,CreditUnionAccountManager&

MortgageBroker

DawnPanizGeneralManagerofFisgardAssetManagementCorporationand

RealEstate&MortgageBrokerLicensee

JasonStrandlund MortgageUnderwriter&MortgageBroker

3.3 Penalties,SanctionsandBankruptcy(a) Thefollowingpenaltiesorsanctionshavebeenineffectduringthelastten(10)yearsagainst(i)adirector,

seniorofficer,orcontrolpersonoftheIssuer,or(ii)anissuerinwhichapersonorcompanyreferredtoin

(i)wasadirector,seniorofficerorcontrolpersonatthetime:

None

(b) Thefollowingdeclarationsoforvoluntaryassignmentsinbankruptcy,proposalsunderanybankruptcyorinsolvencylegislation,proceedings,arrangementsorcompromiseswithcreditorsorappointmentsofa

receiver,receivermanagerortrusteetoholdassets,havebeenineffectduringthelastten(10)years

against(i)adirector,seniorofficer,orcontrolpersonoftheIssuer,or(ii)anissuerinwhichapersonor

companyreferredtoin(i)wasadirector,seniorofficerorcontrolpersonatthetime:

None

Item4CapitalStructure

4.1 Share Capital The following table sets out information about the Issuers outstanding securities, includingoptions,warrantsandothersecuritiesconvertibleintoShares.

DescriptionofSecurity

Number

authorizedto

beissued

Number

outstanding

asat

March31,2010

Number

outstanding

afterminimum

offering

Number

outstanding

after

maximum

offering

ClassAVotingShares unlimited 480 N/A N/A

ClassBNonVotingShares unlimited 201,205,800 N/A N/A

ClassC

Non

Voting

Shares

unlimited 0 N/A N/A

ClassDNonVotingShares unlimited 0 N/A N/A

ClassENonVotingShares unlimited 0 N/A N/A

ClassFNonVotingShares unlimited 29,585,110 N/A N/A

Options N/A Nil N/A Nil

Warrants N/A Nil N/A Nil


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11

4.2 LongTermDebtTheIssuerdoesnothaveanylongtermdebt.4.3 NetSalesWithinthelasttwelve(12)monthstheIssuerhasissuedthefollowingsecurities(nosecurities

wereissuedforotherthancash):

DateofissuanceTypeofsecurity

issued

Numberof

securities

issued

PricepersecurityTotalfunds

received

April2009 ClassBShares 1,407,405 $1.00pershare $ 1,407,405

April2009 ClassFShares 1,452,582 $1.00pershare $ 1,452,582

May2009 ClassBShares 1,013,724 $1.00pershare $ 1,013,724

May2009 ClassFShares (656,810) $1.00pershare $ (656,810)

June2009 ClassBShares 3,736,625 $1.00pershare $ 3,736,625

June2009 ClassFShares (4,495,862) $1.00pershare $ (4,495,862)

July2009 ClassBShares 1,111,312 $1.00pershare $ 1,111,312

July2009 ClassFShares (1,510,044) $1.00pershare $ (1,510,044)

August2009 ClassBShares 965,639 $1.00pershare $ 965,639

August2009 ClassFShares 143,917 $1.00pershare $ 143,917

September2009 ClassBShares 3,661,343 $1.00pershare $ 3,661,343

September2009 ClassFShares (1,373,956) $1.00pershare $ (1,373,956)

October2009 ClassBShares 767,722 $1.00pershare $ 767,722

October2009 ClassFShares (245,295) $1.00pershare $ (245,295)

November2009 ClassBShares 890,704 $1.00pershare $ 890,704

November2009 ClassFShares 613,945 $1.00pershare $ 613,945

December2009

Class

B

Shares

3,385,740

$1.00

per

share

$ 3,385,740

December2009 ClassFShares (1,057,086) $1.00pershare $ (1,057,086)

January2010 ClassBShares 766,394 $1.00pershare $ 766,394

January2010 ClassFShares (1,100,998) $1.00pershare $ (1,100,998)

February2010 ClassBShares 1,642,416 $1.00pershare $ 1,642,416

February2010 ClassFShares (437,166) $1.00pershare $ (437,166)

March2010 ClassBShares 2,354,731 $1.00pershare $ 2,354,731

March2010 ClassFShares (868,307) $1.00pershare $ (868,307)

March31,2010 12,168,675 12,168,675


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Item5SecuritiesOffered

5.1 TermsofSecuritiesAdescriptionofthematerialtermsofthesecuritiesbeingofferedinclude:(a) VotingTheholdersofClassBandClassFSharesarenotentitledtonoticeofortoattendorvoteatmeetings

oftheIssuer.

(b) RedemptionTheIssuerinitssolediscretionmayredeemalloranyportionofashareholdersClassBorClassFShares

at

any

time

upon

payment

of

the

Redemption

Amount

(defined

below).

Upon

completion

of

the

redemptionprocesstheredeemedSharesarecancelled.

IfnotalloftheoutstandingSharesofanyclassorclassesofSharesaretoberedeemedtheSharestobe

redeemedmaybeselectedatthediscretionoftheDirectorsandneednotbeselectedeitherinproportionto

thenumberofSharesregisteredinthenameofeachshareholderorfromanyoreveryparticularshareholder.

TheRedemptionAmounttobepaidbytheIssuerinrespectofeachSharetoberedeemedwillbeanamount

equaltothepaidupcapitaloftheShareplustheaggregateofalldividendsdeclaredontheSharebutunpaid

plustheSharesproratashareofanyundistributednetincomeandnetcapitalgains.

(c) CompassionateEarlyRedemptionTheIssuer,throughtheManager,mayconsiderapplicationsforearlyredemption

for

compassionate

reasons,

but

only

under

special

circumstances,

to

the

spouse

of

adeceased

shareholderwhoholdstheIssuersClassB(5year)Shares.

ThedecisionastowhetherornottograntanearlyredemptionisatthesolediscretionoftheManagerand

otherwisedependentupontheIssuersArticleslegallypermittingsuchearlyredemption.

Shouldashareholderpassaway,thesurvivingspousemayapplytotheIssuerforanearlyredemptionofallor

partofthedeceasedsShares,providedthatthedateofapplicationforearlyredemptionisatleastninety(90)

dayspriortotheoriginalredemptiondate.

TheManagermaythenconsiderredeemingtherequestednumberofSharesonorbeforethelastdayofthe

quarterimmediatelyfollowingthequarterinwhichtherequestforcompassionateearlyredemptionismade

bythesurvivingspouse.

Sincethedeceasedshareholderwouldhavebeenearningdividendsatthe5yearrate,butisredeemingearlier

thanfive(5)years,theredemptionamountwillbetheoriginalinvestmentplusaccrueddividendscalculatedasif

theoriginalShareshadbeenClassF(1year)Shares.

(d) RetractionRightsTheClassBandClassFShareshaveretractionrights,meaningtheirholdershavearighttopresentallorsomeoftheirSharestotheIssuerforcancellationandpaymenttotheshareholdersofthe

retractedSharesRedemptionAmounts(RedemptionAmountisdefinedaboveunderRedemption).

ThereareonlycertaindatesonwhichClassBandClassFSharesmayberetracted.TheClassBShares

retractiondateisfive(5)yearsfromthelastdayofthequarterinwhichtheSharesweresubscribedandthe

ClassFSharesretractiondateisone(1)yearfromthelastdayofthequarterinwhichtheShareswere

subscribed.Shares

acquired

by

way

of

re

invested

dividends

have

the

same

retraction

date

as

the

date

upon

whichtheoriginalSharesweresubscribed.


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AshareholderwishingtoretractSharesastheybecomeduemaydosobyprovidingtheIssuerwith

sixty(60)dayswrittennoticeoftheshareholderswishtoretract.IfaShareretractiondateexpires

withouttheSharebeingretracted,thenthenewretractiondatefortheShareis(i)inthecaseofa

ClassBShare,five(5)yearsfromtheexpiredretractiondate;and(ii)inthecaseofaClassFShare,one

(1)yearfromtheexpiredretractiondate.

TheshareholdersrighttoretracttheirSharesissubjecttosection27.1oftheIssuersArticlesof

Incorporationwhichprovidesasfollows:

27.1 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

IncomeTaxAct(Canada).Without limitingthegeneralityoftheforegoing,inaddition

toanyotherpowerandauthoritytheDirectorsmayhave,andnotwithstandingany

otherprovisionoftheseArticles,theDirectorsmayintheirsolediscretionrejectany

applications for Share Dividends or Share subscriptions, transfers, redemptions or

retractionswhere intheviewoftheDirectorssuchwouldnotbe intheCompanys

best interests as a Mortgage Investment Corporation under the Income Tax Act

(Canada).[Emphasisadded.]

Themostlikelyscenariowherethedirectorswouldusetheirdiscretiontorejectaretractionapplication

iswhere

the

retraction

would

put

the

Issuer

offside

of

the

Tax

Acts

MIC

criteria

regarding

shareholders,

whichrequiresthataMIChaveatleasttwenty(20)shareholders,andnooneshareholdertogetherwith

relatedpartiestothatshareholderholdsbetweenthemmorethan25%oftheissuedSharesofany

classofSharesoftheMIC.

(e) DividendsTheIssuersArticlesofIncorporationrequireittopayoutasdividendssubstantiallyallofitsnetincomeandnetrealizedcapitalgainseveryyear,subjecttothedirectorsdiscretiontoestablish

reservesfortheIssuer.TheIssuerwilldistributedividendsamongthedifferentclassesofissuedShares

suchthatwhenthedividendsareexpressedasapercentagerateofannualizedreturnoncapital

investedtherelativepercentageratesbetweentheclassesofissuedShareswillbeasfollows:

ShareClass RateofReturn

ClassA

Shares

Base

rate

ClassBShares(5YearMaturity) Baserate

ClassFShares(1YearMaturity) Baserateless2.0%

Forexample,ifthebaserateis8%therateforClassBShares(5YearMaturity)willbe8%andthe

rateforClassFShares(1YearMaturity)willbe6%.InvestorswillreceiveaT5taxreturnfor

interestincomeoncashinvestments,includingreinvesteddividends.

UndertheIssuerscurrentpolicyinvestorsmayelecttoreceivedividendseitherincashorintheform

ofadditionalShares.WhenpayingaShareDividend,ratherthanpayingthedividendincash,the

IssuerpaysthedividendbyissuingtotheinvestorSharesofthesameClassofSharesonwhichthe

dividendisbeingpaid(theDividendShares).DividendShareswillbeissuedatthepriceof$1.00per

DividendShare,

or

such

other

price

per

Dividend

Share

as

the

Issuer

gives

investors

not

less

than

ninety(90)dayspriorwrittennoticeof.

InvestorsmaychangetheirelectionastocashorShareDividendsbygivingtheIssuernoticeoftheir

electionchangenotlessthansixty(60)daysbeforethechangeinelectionistotakeeffect.


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14

ForDividendSharestheRetractionDatewillbedeemedtobethesamedateastheRetractionDateofthe

SharesoriginallysubscribedandthatgaverisetotheDividendShares.

TheIssuerreservestherighttoamendorcancelitspolicyregardingShareDividends.

(f) PreemptiveRightsExceptasotherwiserequiredby lawtheholdersofClassA,ClassBorClassFSharesare not entitled as such to subscribe for, purchase, or receive any part of any issue of shares, bonds,

debenturesorothersecuritiesoftheIssuer.

(g) Liquidation,Dissolution,orWindingUpIntheeventoftheliquidation,dissolutionorwindingupoftheIssuer,whethervoluntaryorinvoluntary,orintheeventofanyotherdistributionofassetsoftheIssuer

amongitsshareholdersforthepurposeofwindingupitsaffairs,theIssuerwilldistributetheassetsofthe

Issueramongtheshareholdersinthefollowingpriority:

(i) First,allholdersofeveryclassofShareswillreceivethereturnofthepaidupcapitalontheirShares.Ifthereareinsufficientassetstofullyreturnthepaidupcapitaltheassetswillbedistributedamong

alltheshareholdersproratainproportiontotheirpaidupcapital;

(ii) Second,anyremainingassetswillbedistributedamongtheholdersofthedifferentclassesofSharesinthesameproportionsasifitwereadividenddistribution,calculatedonthebasisofthepaidup

capitalon

the

books

of

the

Issuer

prior

to

the

application

of

paragraph

(i).

5.2 SubscriptionProcedurePersonswishingtosubscribeforSharesunderthisOfferingmaydosobycompletingthefollowingthreesteps:

(a) SubscriptionForms InvestorsmustcompletetheappropriateSubscriptionAgreementfortheirrespectivejurisdiction.

(b) Method forPaymentAchequeorbankdraftmadepayable toFisgardCapitalCorporation inanamountequalto$1.00multipliedbythenumberofSharesbeingsubscribed.

(c) Submitting Subscriptions Investors may deliver the completed subscription form and payment toFisgardCapitalCorporationbymailorinpersonto:

FisgardCapitalCorporation

3378DouglasStreetVictoriaBCV8Z3L3

Phone:(250)3829255orTollFree18663829255

Fax:(250)3829295orTollFree18663841498

(d) TwoDay Hold Period An investors subscription funds will be held until midnight on the second (2nd)businessdayaftertheinvestorsignstheSubscriptionAgreement.

(e) AcceptanceofSubscriptionsandClosingsSubscriptionsmaybeacceptedbytheIssuer,subjecttothetermsandconditionsoftheSubscriptionAgreementsignedbytheinvestor.Subscriptionswillbe

receivedsubjecttopriorsaleandsubjecttorejectionorallotment,inwholeorinpart,bytheIssuer

priorto

any

closing.

SubscriptionsmaybeacceptedorrejectedbytheIssuerinitssolediscretion.TheIssuerisnotobligatedto

acceptanysubscriptionnortoacceptsubscriptionsintheordertheIssuerreceivesthem.IftheIssuerrejects

asubscription,thesubscriptionfundsreceivedwillbereturnedtotheInvestor,withoutinterestor

deduction,alongwithnotificationoftherejection.


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15

ThisOfferingisnotsubjecttoanyminimumsubscriptionlevel,andtherearenoconditionsof

closing;thereforeanyfundsreceivedfromanInvestorareavailabletotheIssuerandneednot

berefundedtotheInvestor.ClosingswilltakeplaceperiodicallyattheIssuersdiscretion.

ThisOfferingmaybenullifiedatthesolediscretionoftheIssuer.Forexample,theIssuermightchoose

tonullifytheOfferingupontheoccurrenceofeventssuchasanymaterialadversechangeinthe

business,personnelorfinancialconditionoftheIssuerortheManager.IfthisOfferingisnullifiedfor

anyreason,theSubscriptionAgreementsandcashfundsreceivedbytheIssuerpriortothenullification

willbe

returned

to

Investors

without

interest

or

deduction

as

if

the

Investors

subscriptions

had

been

rejected(whetherornotthesubscription[s]hadpreviouslybeenacceptedbytheIssuer).

AprospectiveInvestorwillbecomeashareholderuponexecutionofaSubscriptionAgreement,

acceptanceoftheSubscriptionAgreementbytheIssuer,paymentofthesubscriptionprice,

andentryoftheInvestorsnameintheregisterofmembersoftheIssuerasashareholder.

(f) InvestorQualificationsInvestorqualificationsdifferbetweenresidentsofBritishColumbia,NewBrunswick,NovaScotia,NewfoundlandandLabradorandresidentsofAlberta,Manitoba,

NorthwestTerritories,Nunavut,PrinceEdwardIsland,QuebecandSaskatchewan.

InBritishColumbia,NewBrunswick,NovaScotia,NewfoundlandandLabrador,aninvestormay

purchaseSharesif,beforeoratthetimetheinvestorsignstheSubscriptionAgreement,theinvestor

purchasesasprincipal,theinvestorreceivesthisOfferingMemorandumandsignstheRisk

Acknowledgmentform,anddeliversittotheIssuer.

InAlberta,Manitoba,NorthwestTerritories,Nunavut,PrinceEdwardIsland,Quebecand

Saskatchewan,aninvestormaypurchaseSharesiftheinvestormeetstherequirementssetout

aboveforBritishColumbiaresidents,plustheinvestoreither(i)isaneligibleinvestor;or(ii)is

acquiringShareswithanaggregatecostofnotmorethan$10,000.UndertheseAlberta,Manitoba,

NorthwestTerritories,Nunavut,PrinceEdwardIsland,QuebecandSaskatchewancriteria,aneligible

investoris:

(i)apersonorcompanywhose:(a) netassets,aloneorwithaspouse,inthecaseofanindividual,exceed$400,000;or(b) netincomebeforetaxesexceeded$75,000ineachofthetwo(2)mostrecentcalendar

years,andwhoreasonablyexpectstoexceedthatincomelevelinthecurrentcalendar

year,or

(c) netincomebeforetaxesaloneorwithaspouse,inthecaseofanindividual,exceeded$125,000ineachofthetwo(2)mostrecentcalendaryears,andwhoreasonablyexpects

toexceedthatincomelevelinthecurrentcalendaryear;

(ii) a company of which a majority of the voting securities are beneficially owned by eligibleinvestorsoramajorityofthedirectorsareeligibleinvestors;

(iii) ageneralpartnershipofwhichallofthepartnersareeligibleinvestors;(iv) alimitedpartnershipofwhichthemajorityofthegeneralpartnersareeligibleinvestors;(v) atrustorestate inwhichallofthebeneficiariesoramajorityofthetrusteesorexecutorsare

eligibleinvestors;


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16

(vi) anaccreditedinvestor3;or(vii) apersonwhohasobtainedadviceregardingthesuitabilityoftheinvestmentand,iftheperson

isresidentinajurisdictionofCanada,thatadvicehasbeenobtainedfromaneligibilityadviser.

InOntarioaninvestormaypurchaseSharesiftheinvestorisanaccreditedinvestorandpurchasesthe

Sharesasprincipal.UnderthisOntariocriteria,anaccreditedinvestoris:

(i) abanklistedinScheduleIorIIoftheBankAct(Canada),oranauthorizedforeignbanklistedinScheduleIIIofthatAct;

(ii) the Business Development Bank incorporated under the Business Development Bank Act(Canada);

(iii) aloancorporationortrustcorporationregisteredundertheLoanandTrustCorporationsActorundertheTrustandLoanCompaniesAct(Canada),orundercomparablelegislationinanyother

jurisdiction;

(iv) acooperativecreditsociety,creditunioncentral,federationofcaissespopulaires,creditunionor

league,

or

regional

caisse

populaire,

or

an

association

under

the

Cooperative

Credit

AssociationsAct(Canada),ineachcase,locatedinCanada;

(v) acompanylicensedtodobusinessasaninsurancecompanyinanyjurisdiction;(vi) asubsidiaryofanycompanyreferredtoinparagraph(i),(ii),(iii),(iv)or(v)wherethecompany

ownsallofthevotingsharesofthesubsidiary;

(vii) apersonorcompanyregisteredundertheSecuritiesAct(Ontario)(theOSA)orsecuritieslegislationinanotherjurisdictionasanadviserordealer,otherthanalimitedmarketdealer;

(viii) theGovernmentofCanadaorofanyjurisdiction,oranycrowncorporation,instrumentalityoragencyofaCanadianfederal,provincialorterritorialgovernment;

(ix) anyCanadianmunicipalityoranyCanadianprovincialorterritorialcapitalcity;(x) anynational, federal,state,provincial,territorialormunicipalgovernmentofor inanyforeign

jurisdiction,oranyinstrumentalityoragencythereof;

(xi) apensionfundthatisregulatedbyeithertheOfficeoftheSuperintendentofFinancialInstitutions(Canada)oraprovincialpensioncommissionorsimilarregulatoryauthority;

(xii) aregisteredcharityundertheIncomeTaxAct(Canada);(xiii) an individualwhobeneficiallyowns,orwhotogetherwithaspousebeneficiallyown,financial

assetshaving

an

aggregate

realizable

value

that,

before

taxes

but

net

of

any

related

liabilities,

exceeds$1,000,000;

(xiv) anyindividualwhosenetincomebeforetaxesexceeded$200,000ineachofthetwo(2)mostrecentcalendaryearsorwhosenetincomebeforetaxescombinedwiththatofaspouse

exceeded$300,000ineachofthoseyears,andwho,ineithercase,hasareasonableexpectation

ofexceedingthesamenetincomelevelinthecurrentcalendaryear;

3

Accreditedinvestorsincludebanks,securitiesdealersandadvisors,governments,individualswhohave(i)netassetsworth

morethan$1,000,000,or(ii)netincomebeforetaxesineachofthelasttwo(2)calendaryearsofmorethan$200,000,ormore

than$300,000whencombinedwiththeirspousesincome,andexpectstoexceedthoseincomelevelsinthecurrentcalendar

year;andacompanyorotherbusinessentitywithnetassetsofatleast$5,000,000.


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(xv) anindividualwhohasbeengrantedregistrationundertheOSAorsecuritieslegislationinanotherjurisdictionasarepresentativeofapersonorcompanyreferredtoinparagraph(vii),

whetherornottheindividualsregistrationisstillineffect;

(xvi) apromoteroftheIssueroranaffiliatedentityofapromoteroftheIssuer;(xvii) aspouse,parent,grandparentorchildofanofficer,directororpromoteroftheIssuer;(xviii) apersonorcompanythat,inrelationtotheIssuer,isanaffiliatedentityorapersonor

companyreferredtoinclause(c)ofthedefinitionofdistributioninsubsection1(1)ofthe

OSA;

(xix) theIssueracquiringsecuritiesofitsownissue;(xx) acompany,limitedpartnership,limitedliabilitypartnership,trustorestate,otherthana

mutualfundornonredeemableinvestmentfund,thathadnetassetsofatleast$5,000,000

asreflectedinitsmostrecentlypreparedfinancialstatements;

(xxi) a person or company that is recognized by the Ontario Securities Commission as anaccreditedinvestor;

(xxii) amutualfundornonredeemable investmentfundthat, inOntario,distributes itssecuritiesonlytopersonsorcompaniesthatareaccreditedinvestors;

(xxiii) amutualfundornonredeemable investmentfundthat, inOntario,distributes itssecuritiesunderaprospectusforwhichareceipthasbeengrantedbytheDirectorundertheOSA;

(xxiv) amanagedaccountifitisacquiringasecuritythatisnotasecurityofamutualfundornonredeemableinvestmentfund;

(xxv) anaccountthatisfullymanagedbyatrustcorporationregisteredundertheLoanandTrustCorporationsAct;

(xxvi) anentityorganizedoutsideofCanadathat isanalogoustoanyoftheentitiesreferredto inparagraphs(i)through(vii)andparagraph(xi)informandfunction;or

(xxvii) apersonorcompanyinrespectofwhichalloftheownersofinterests,directorindirect,legalorbeneficial,arepersonsorcompaniesthatareaccreditedinvestors.


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Item6IncomeTaxConsequences

6.1 Youshouldconsultyourownprofessionaladviserstoobtainadviceonthetaxconsequencesthatapplytoyou.6.2 Noapplicationhasbeenmadeforanadvanceincometaxrulingwithrespecttotheinvestmentdescribedin

thisOfferingMemorandum,norisitintendedthatanyapplicationbemade.

TheIssuerhaspreparedthefollowingcommentarywhichitbelievesisafairandadequatesummaryoftheprincipal

federalincome

tax

consequences

arising

under

the

Tax

Act

to

an

Investor

who

is

an

individual

resident

in

Canada

who

acquiresSharesunderthisOfferingMemorandum.

TheincometaxconsequenceswillnotbethesameforallInvestors,butmayvarydependingonanumberoffactors

includingtheprovinceorprovincesinwhichtheInvestorresidesorcarriesonbusiness,whetherSharesacquiredby

himwillbecharacterizedascapitalproperty,andtheamounthistaxableincomewouldbebutforhisparticipationin

thisOffering.

ThefollowingdiscussionoftheCanadianincometaxconsequencesisofageneralandlimitednatureonly,is

notintendedtoconstituteacompleteanalysisoftheincometaxconsequences,andshouldnotbe

interpretedaslegalortaxadvicetoanyparticularInvestor.Thissummarydoesnotaddressprovincialor

territoriallawsofCanadaoranytaxlawsofanyjurisdictionoutsideofCanada.EachprospectiveInvestor

should

obtain

advice

from

the

Investors

own

independent

tax

advisor

as

to

the

federal

and

provincial

income

taxconsequences ofhisorheracquisitionofShares,assuchconsequencescanvarydependinguponthe

particularcircumstancesofeachInvestor.

ThissummaryisbasedontheIssuersunderstandingofthecurrentprovisionsoftheTaxAct,theRegulationstothe

TaxAct,andthecurrentadministrativeandassessingpracticesofCanadaCustomsandRevenueAgency,Taxation

(CCRA).

ThissummaryoutlinestheCanadianfederalincometaxconsequencestoanInvestorbasedonimportantfacts

andassumptionsassetoutbytheIssuerintheOfferingMemorandumandparticularlyonadditionalfactsand

assumptionsasfollows:

(a) Investorsare,andwillnotceasetobe,individualsresidentinCanada;(b) Investors acquire Shares pursuant to this Offering Memorandum and hold the Shares as capital

property;

(c) InvestorsholdSharesforthepurposeofearningincomeandhaveareasonableexpectationofearningaprofitfromholdingtheShares;and

(d) TheIssuerwillqualifyatallmaterialtimesasaMICforthepurposesoftheTaxAct.ItisincumbentuponprospectiveInvestorstofullyinvestigateandsubstantiatetheexpectationsaboveand,withrespect

totheassumptionstatedin(c)above,itisincumbentonanInvestortoinvestigateandsubstantiatetheinvestors

expectationofearningaprofitfromholdingShares,havingregardtohisexpectedfinancingcostsandanyprojections

the

investors

may

wish

to

obtain

from

the

Issuer.

ThereisnoassurancethattheTaxActandrelatedRegulationswillnotbeamendedinamannerthatfundamentally

alterstheincometaxconsequencestoInvestorswhoacquireordisposeofSharesThissummarydoesnottakeinto

accountanychangesinlaw,whetherbywayoflegislativeorjudicialaction.

TherehasbeennoapplicationforanAdvanceIncomeTaxRulingfromCCRAonanyaspectofthetransactions

proposedintheOfferingMemorandum,norisitintendedthatsuchanapplicationwillbemade.Noopinionfrom

theIssuerslegalcounseloraccountantshasbeengivenwithrespectto


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19

theseincometaxconsiderations.Theanalysiscontainedhereinisnotallencompassingandshouldnotbeconstruedas

specificadvicetoanyparticularInvestorandisnotasubstituteforcarefultaxplanning,particularlysincecertainofthe

incometaxconsequencesofaninvestmentwillnotbethesameforalltaxpayers.Regardlessoftaxconsequencesa

decisiontopurchasetheSharesofferedshouldbebasedonthemeritsoftheinvestmentassuchandonanInvestors

abilitytobearanylossthatmaybeincurred.

TheIssuer

AsaMIC

the

Issuer

is

subject

to

special

rules

under

the

Tax

Act

that

permit

the

Issuer

to

be

operated,

in

effect,

as

atax

freeflowthroughconduitofitsprofittoitsshareholders.TheincomeoftheIssuerforpurposesoftheTaxAct

includesinterestearnedandthetaxableportionofanynetrealizedcapitalgains.TheIssuerispermittedtodeduct

fromitsnetincomealltaxabledividendsitpaystoitsshareholders,otherthancapitalgainsdividends,andthetaxable

portionofitsnetrealizedcapitalgainsdistributedtoshareholdersascapitalgainsdividendswithintheperiods

prescribedbytheTaxAct.IfandtotheextenttheIssuerhasincomeaftertheseandotherapplicabledeductions,such

incomeissubjecttotheprevailingtaxratesapplicabletoapubliccorporation.

Shareholders

A. Dividends

Taxabledividends,

except

capital

gains

dividends,

received

by

aShareholder

are

taxable

in

the

hands

of

the

Shareholder

asinterestandnotasdividends.CapitalgainsdividendsreceivedbyaShareholderaretreatedascapitalgainsofthe

Shareholder,onehalfofwhichmustbeincludedasataxablecapitalgainincomputingtheShareholderstaxable

income.Asaresultoftherepealofthe$100,000capitalgainsexemption,suchcapitalgainsarenolongereligiblefor

thecapitalgainsexemption.

B. Dispositions

ThecosttoaShareholderofhisShares(plusorminuscertainadjustmentsrequiredundertheTaxAct)willbethe

adjustedcostbaseoftheSharesatanyparticulartime,againstwhichacapitalgainorcapitallosswillbemeasuredona

saleorotherdeemeddispositionoftheShares.

AShareholderwillbeconsideredtohavedisposedofhisShareswhenheassignsorsellshisShares,hisShareisthe

subjectof

agift,

he

dies,

or

where

the

Issuer

is

wound

up

or

otherwise

terminated.

A

Share

which

is

the

subject

of

a

giftorwhichisheldbyaShareholderwhenhediesisgenerallydeemedtobedisposedofforproceedsequaltofair

marketvalueatthattime.However,incertaincircumstancesacapitalgainorcapitallosswillbedeferredwheregift

orbequesttransferstheSharetotheShareholdersspouse.

GenerallyaShareholderwillrealizeacapitalgain(orsustainacapitalloss)equaltotheamountbywhichtheproceeds

receivedordeemedtohavebeenreceivedonthedispositionofaShareexceed,orareexceededby,theadjustedcost

baseoftheShare.

Shareholderswillincludeonehalfofanycapitalgainincomputingtaxableincomeasataxablecapitalgain.Similar

proportionsofacapitallosswillbeallowablecapitallossthatmaybeusedtooffsettaxablecapitalgainintheyear

thatthecapitallossissustained.Totheextenttheallowablecapitallossisnotoffsetagainsttaxablecapitalgainin

thatyear

it

may

be

carried

back

three

(3)

years

and

forward

indefinitely

to

offset

taxable

capital

gain

realized

in

those

years.

C. InterestonMoneyBorrowedtoPurchaseShares

AnInvestorwillgenerallybeentitledtodeductfromhisincomereasonableinterestpaidorpayablewithrespectto

moniesborrowedtoacquireShares,providedhehasareasonableexpectationofprofitfromholdingtheShares.Interest

expensedeductedbyanInvestorwillbeincludedincomputinghiscumulativenetinvestmentlosses.

AfterthedispositionofaSharebyataxpayerreasonableinterestexpenseonmoneyborrowedforthepurposeof

acquiringthatSharewillgenerallycontinuetobedeductibleuntiltheborrowingis


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20

repaidregardlessofwhetheragainorlosswasrealizedonthedispositionoftheShare,excepttotheextentany

proceedsofdispositionattributabletothatborrowedmoneyareusedtomakepersonalexpendituresbythetaxpayer

orarenototherwiseusedforthepurposeofearningincome.

DeferredIncomePlans(e.g.,RRSPs,RRIFs,DeferredProfitSharingPlans)

A. EligibilityforInvestmentbyDeferredIncomePlans

Aslong

as

the

Issuer

is

qualified

as

aMIC

under

the

Tax

Act

the

Shares

will

be

qualified

investments

for

trusts

governed

byaregisteredretirementsavingsplan(RRSP),deferredprofitsharingplansandregisteredretirementincomefunds,

providedtheIssuerdoesnotholdanydebtofanannuitantorarelatedparty.

B. InterestExpenseRegardingRRSPContributions

InterestandotherborrowingcostsincurredbyaShareholderforthepurposeofmakingacontributiontoanRRSParenot

deductible.Therefore,ifaShareholderholdsSharesinanRRSPtheShareholderwouldnotbeeligibletodeductfromhis

incomeanyinterestexpenseonmoneyborrowedforthepurposeofacquiringtheSharesheldintheRRSP.

C. DistributionsReceivedFromIssuerbyRRSP

Asnoted,

taxable

dividends

are

deemed

to

be

interest

income

to

the

Shareholder,

which,

together

with

one

half

of

capitalgainsdividends,areaddedtotheShareholderstaxableincomeiftheSharesareheldpersonallybythe

Shareholder.SuchdistributionspaidonSharesheldbyanRRSP,however,willnotbesubjecttotaxinthehandsofthe

RRSP,providedtheRRSPhasnotborrowedmoneyorcarriedonbusinessandtheannuitantundertheRRSPisalive.An

RRSPwillnotcarryonbusinessmerelybyholdingShares.ThedistributionspaidtotheRRSPwillbetaxabletothe

annuitantundertheRRSPonwithdrawalofthefundsfromtheRRSP,whichmustoccurnolaterthantheyearthe

annuitantbecomes69yearsold.

D. RRSPContributionLimits

Anindividualmaycontributecashoreligibleproperty(suchasaShare)toanRRSPinacalendaryearorwithinsixty

(60)daysaftertheendoftheyear,andmayclaimadeductionforthatcalendaryeartotheextentthattheamount

contributeddoesnotexceedthelimitsspecifiedbyCCRA.Theamountofanindividualscontributionwillbeequal

tothe

fair

market

value

of

any

property

contributed

as

of

the

day

of

contribution.

A

seven

(7)

year

carry

forward

of

unusedRRSPdeductionroomisavailableintheeventcontributionsmadetoanRRSPforaparticularyearareless

thantheallowablecontributionforthatyear.

ThetransferofaSharetoanRRSPwillresultinthedeemeddispositionforincometaxpurposesatanamountequal

tothefairmarketvalueoftheShareatthetimeofthetransfer.ForanindividualShareholderwhoholdsaShareas

capitalpropertythedispositionwillresultinacapitalgainequaltotheexcessofthefairmarketvalueoftheShare

overitsadjustedcostbase.ShouldthefairmarketvalueoftheSharebelessthanitsadjustedcostbaseupon

contributiontotheRRSP,nocapitallosswillbeallowed.

FundsorpropertywithdrawnfromanRRSParetaxabletotheannuitantundertheRRSPintheyearof

withdrawal.TheamountofanynonqualifiedinvestmentacquiredbyanRRSPinayearisincludedintheincome

ofthe

annuitant

for

the

year.

EACHPROSPECTIVE INVESTOR ISADVISEDTOSEEK INDEPENDENTADVICE INRESPECTOFTHE INCOMETAX

CONSEQUENCES OF HIS PARTICIPATION IN THE ISSUER, TAKING INTO ACCOUNT HIS OWN PARTICULAR

CIRCUMSTANCES.


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21

Item7CompensationPaidtoSellersandFinders

7.1 TypeandEstimatedAmountofCompensationTheShareswillbesoldbytheManager,theIssuer,andtheirrespectivedirectors,officersandemployees,andmaybesoldonabesteffortbasisbyAgentsauthorizedbytheIssuer.Inits

discretiontheIssuermaypaycommissionstopersonsorcompaniessellingShares.Thisincludestheofficers,directors,

andemployeesoftheIssuerandtheManager,whomayreceiveacommissioninrespectofanySharessoldbythem.Such

commissionmaybepaidincashimmediatelyupontheIssueracceptingtheparticularsubscription,orpaidovertime.If

theOffering

is

fully

subscribed

and

the

Issuer

pays

the

maximum

possible

commission,

the

Issuer

will

pay

$21,000,000

in

commissions.

TheIssuermayenterintoexclusiveornonexclusiveagencyagreementswithagentsunderwhichtheAgentswould

offertheSharesforsaletoinvestorsonabesteffortsbasis,andtheIssuerwouldberesponsibleforpaymentofthe

agentscommissions.AsofthedateofthisOfferingMemorandumnosuchagreementshavebeenenteredinto.

7.2 PercentageofGrossProceedsThe Issuer maypayamaximumof7%of theOfferingsgrossproceeds incommissions.

Item8RiskFactors

Thisis

aspeculative

Offering.

The

purchase

of

Shares

involves

anumber

of

risk

factors

and

is

suitable

only

for

Investors

whoareawareoftherisksinherentintherealestateindustryandwhohavetheabilityandwillingnesstoacceptthe

riskoflossoftheirinvestedcapitalandwhohavenoimmediateneedforliquidity.Thereisnoassuranceofanyreturn

onanInvestorsinvestment.

TheIssueradvisesthatprospectiveInvestorsshouldconsultwiththeirownindependentprofessionallegal,tax,

investmentandfinancialadvisorsbeforepurchasingSharesinordertodeterminetheappropriatenessofthis

investmentinrelationtotheirfinancialandinvestmentobjectivesandinrelationtothetaxconsequencesofanysuch

investment.

InadditiontothefactorssetforthelsewhereinthisOfferingMemorandumprospectiveInvestorsshouldconsiderthe

followingrisksbeforepurchasingShares.Anyoralloftheserisks,orotherasyetunidentifiedrisks,mayhaveamaterial

adverseeffectontheIssuersbusinessand/orthereturntotheInvestors.

8.1 InvestmentRiskRisksthatarespecifictotheSharesbeingofferedunderthisOfferingincludethefollowing:1. NoMarketforSharesThereisnomarketthroughwhichtheSharesmaybesold,andtheIssuerdoesnot

expectthatanymarketwilldeveloppursuanttothisOfferingorinthefuture.Accordingly,aninvestmentin

SharesshouldonlybeconsideredbyInvestors

whodonotrequireliquidity.TheSharesaresubjecttoonerousresalerestrictionsunderapplicable

securitieslegislation.Seeitem10,ResaleRestrictions,regardingresalerestrictionsapplicabletotheShares.

2. RetractionLiquidityTheSharesareretractable,meaningthatInvestorshavetherighttorequiretheIssuertoredeemthem,uponappropriateadvancenoticefromtheInvestortotheIssuer.Thedifferentclassesof

Shareshave

different

retraction

timings,

as

measured

from

the

date

on

which

the

Investor

is

issued

the

SharestothedateonwhichtheInvestorisentitledtocallfortheirredemptionbytheIssuer,withtheClassB

shareshavingafive(5)yearretractionperiodandtheClassFsharesaone(1)yearretractionperiod.Ifthe

InvestordoesnotprovidetheIssuerwiththeappropriatenoticeofretraction,therightofretractionis

suspendeduntilanadditionaltimeperiodhaselapsed.Seeitem5.1,TermsofSecurities.


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22

TheIssuergivesnoassurancethatanyInvestorwillbeabletoretractanyoralloftheirSharesatanytime.

RetractionandredemptionoftheSharesissubjecttotheIssuerhavingaccesstosufficientcash,orother

liquidassets,andbeingincompliancewithapplicablecorporateandsecuritieslegislation,andissubjectto

thetermsinthisOfferingMemorandum,allasdeterminedsolelybytheIssuer.Retractionandredemption

oftheSharesisalsosubjecttothediscretionofthedirectorstoactinthebestinterestsoftheMICunder

theTaxAct.AccordinglythisinvestmentisunsuitableforthoseprospectiveInvestorswhomayrequire

liquidity.

3. AbsenceofManagementRightsTheClassBandClassFSharesbeingsoldunderthisOfferingdonotcarryvotingrights,andconsequentlyanInvestorsinvestmentinSharesdoesnotcarrywithitanyright

totakepartinthecontrolormanagementoftheIssuersbusiness,includingtheelectionofdirectors.

InassessingtherisksandrewardsofaninvestmentinShares,potentialInvestorsshouldappreciatethatthey

arerelyingsolelyonthegoodfaith,judgmentandabilityofthedirectors,officersandemployeesoftheIssuer

andtheManagertomakeappropriatedecisionswithrespecttothemanagementoftheIssuer,andthatthey

willbeboundbythedecisionsoftheIssuersandtheManagersdirectors,officersandemployees.Itwouldbe

inappropriateforInvestorsunwillingtorelyontheseindividualstothisextenttopurchaseShares.

4. LackofSeparateLegalCounselTheInvestors,asagroup,havenotbeenrepresentedbyseparatecounsel.NeithercounselfortheIssuernorcounselfortheManagerpurporttohaveactedfortheInvestorsnorto

haveconducted

any

investigation

or

review

on

their

behalf.

8.2 IssuerRiskRisksthatarespecifictotheIssuerincludethefollowing:1. MICTaxDesignationUndertheIssuersarticlestheIssuersdirectorsarerequiredtousetheirbestefforts

toensurethattheIssuerqualifiesasaMICpursuanttotheTaxAct.Aswell,theIssuersArticlesof

Incorporationgrantthedirectorsthediscretiontorejectanyapplicationsforsharedividendsorshare

subscriptions,transfers,redemptionsorretractionswhere,intheviewofthedirectors,suchwouldnotbe

intheIssuersbestinterestsasaMICundertheTaxAct.

There can be no assurance, however, that the Issuer will be able to meet the Tax Acts MIC

qualificationsatallmaterialtimes.

Asacompany

qualified

as

aMIC

the

Issuer

may

deduct

taxable

dividends

it

pays

from

its

income,

and

the

normalgrossupanddividendtaxcreditruleswillnotapplytodividendspaidbytheIssuerontheShares.

Rather,thedividendswillbetaxableinthehandsofshareholdersasiftheyhadreceivedaninterest

payment.IfforanyreasontheIssuerfailstomaintainitsMICqualificationinaparticularyear,the

dividendspaidbytheIssuerontheShareswouldceasetobedeductiblefromtheincomeoftheIssuerfor

thatyearandthedividendsitpaysontheShareswouldbesubjecttothenormalgrossupanddividendtax

creditrules.Inaddition,theSharesmightceasetobequalifiedinvestmentsfortrustsgovernedbyRRSPs,

DeferredProfitSharingPlansandRegisteredRetirementIncomeFunds,withtheeffectthatapenaltytax

wouldbepayablebytheInvestor.

2. RelianceonFisgardAssetManagementCorporationInaccordancewiththetermsof

the

Management

Services

Agreement

between

the

Issuer

and

the

Manager,

the

Manager

has

significant

responsibilityforassistingtheIssuertoconductitsaffairs.AnyinabilityoftheManagertoperformcompetently

oronatimelybasiswillnegativelyaffecttheIssuer.

3. KeyPersonnelTheoperationsoftheIssuerandtheManagerarehighlydependentuponthecontinuedsupportandparticipationoftheirkeypersonnel.Thelossoftheirservicesmaymateriallyaffectthetimingor

theabilityoftheIssuertoimplementitsbusinessplan.


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23

TheIssuersandManagersmanagementteamsconsistofseveralkeypersonnel.Inordertomanagethe

IssuerandtheManagersuccessfullyinthefutureitmaybenecessarytofurtherstrengthentheir

managementteams.Thecompetitionforsuchkeypersonnelisintense,andtherecanbenoassuranceof

successinattracting,retaining,ormotivatingsuchindividuals.Failureinthisregardwouldlikelyhavea

materialadverseeffectontheIssuersbusiness,financialcondition,andresultsofoperations.

4. Conflict of Interest Conflicts of Interest exist, and others may arise, between Investors and thedirectorsandofficersoftheManagerandtheIssuerandtheirassociatesandaffiliates.

Thereisnoassurancethatanyconflictsofinterestthatmayarisewillberesolvedinamannermost

favorabletoInvestors.PersonsconsideringapurchaseofSharespursuanttothisOfferingmustrelyon

thejudgmentandgoodfaithofthedirectors,officersandemployeesoftheManagerandtheIssuerin

resolvingsuchconflictsofinterestasmayarise.

TheIssueranditsshareholdersaredependentinlargepartupontheexperienceandgoodfaithofthe

Manager.TheManagerisentitledtoanddoesactinasimilarcapacityforothercompanieswith

investmentcriteriasimilartothoseoftheIssuer.Assuch,thereisarisktheManagerwillnotbeableto

originatesufficientsuitableinvestmentopportunitiestokeeptheIssuersfundsfullyinvested.Also,the

directorsoftheIssuerandtheManagerareemployedbyoractinothercapacitiesforothercompanies

involvedinmortgageandlendingactivities.Seeitem2.6,MaterialAgreements.

5. FutureOperationsandPossibleNeedforAdditionalFundsTheIssuerrequiressignificantfundstocarryoutitsbusinessplan.IntheeventtheIssuerisunabletoraisesufficientfundsbythisOffering

and/orfutureofferingsand/orotherdebtorequityfinancingtheIssuermayhaveinsufficientfunds

availabletoimplementitsbusinessplan,andInvestorsmayreceivenoreturnontheirShares.Certain

uninsurableoruninsuredeventsmayalsooccurwhichcansubstantiallyreducetheabilityoftheIssuer

tocarryonbusinessinaprofitablemanner,includingnaturalormanmadedisasters.

TheIssueranticipatesthatasubstantialportionofthenetproceedsofthisOfferingwillbeexpended

bytheIssuerininvestinginresidentialmortgages,andalsoanticipatesthatthenetproceedsofthe

OfferingandanticipatedcashflowfromoperatingrevenueswillbesufficienttocarryouttheIssuers

businessplan.Therecanbenoassurances,however,thattheIssuerwillgeneratesufficientcashflow

fromoperationsorthatitwillnotencounterunexpectedcostsinconnectionwithimplementingits

businessplan

and,

as

aconsequence,

there

can

be

no

assurances

that

the

Issuer

will

not

require

additionalfinancing.TheIssuerhasnocurrentarrangementswithrespecttoanyotheradditional

financing,andtherecanbenoassurancethatanysuchadditionalfinancingcanbeobtainedonterms

acceptabletotheIssuer,oratall.Failuretoobtainadditionalfinancingwouldlikelyhaveasubstantial

materialadverseeffectontheIssuer.Moreover,intheeventtheIssuerweretoobtainsuchadditional

financing,itcouldhaveadilutiveaffectonInvestorsparticipationintherevenuesgeneratedthrough

theIssuersoperations.


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24

8.3 IndustryRiskTherearealsorisksfacedbytheIssuerbecauseoftheindustryinwhichitoperates.Realestateinvestmentissubjecttosignificantuncertaintiesdue,amongotherfactors,touncertaincostsofconstruction,

developmentandfinancing,uncertaintyastotheabilitytoobtainrequiredlicenses,permitsandapprovals,and

fluctuatingdemandfordevelopedrealestate.TheanticipatedhigherreturnsassociatedwiththeIssuersmortgageloans

reflectthegreaterrisksinvolvedinmakingthesetypesofloansascomparedtolongtermconventionalmortgageloans.

Inherentintheseloansarecompletionrisksaswellasfinancingrisks.Inaddition,prospectiveInvestorsshouldtakenote

ofthefollowing:

1. InsuranceTheIssuersmortgageloanswillnotusuallybeinsuredinwholeorinpart.Aswell,therearecertaininherentrisksintherealestateindustry,someofwhichtheIssuermaynotbeabletoinsureagainstor

whichtheIssuermayelectnottoinsureduetothecostofsuchinsurance.Theeffectofthesefactorscannot

beaccuratelypredicted.

2. PriorityFinancialchargesforconstructionandotherfinancingfundedbyconventionalthirdpartylendersmayrankinprioritytothemortgagesregisteredinfavoroftheIssuer.Intheeventofdefaultbythemortgagor

underanypriorfinancialcharge,theIssuermaynotrecoveranyorallofthemoniesadvanced.

3. DefaultIfthereisdefaultonamortgageitmaybenecessaryfortheIssuer,inordertoprotecttheinvestment,toengageinforeclosureorsaleproceedingsandtomakefurtheroutlaystocompletean

unfinishedprojectortomaintainpriorencumbrancesingoodstanding.Insuchcasesitispossiblethatthe

totalamount

recovered

by

the

Issuer

may

be

less

than

the

total

investment,

resulting

in

loss

to

the

Issuer.

Equityinvestmentsinrealpropertymayinvolvefixedcostsinrespectofmortgagepayments,realestate

taxes,andmaintenancecosts,whichcouldadverselyaffecttheIssuersincome.

4. YieldTheyieldsonrealestateinvestments,includingmortgages,dependonmanyfactorsincludingeconomicconditionsandprevailinginterestrates,thelevelofriskassumed,conditionsintherealestateindustry,

opportunitiesforothertypesofinvestments,legislation,governmentregulationandtaxlaws.TheIssuer

cannotpredicttheeffectthatsuchfactorswillhaveonitsoperations.

5. CompetitionTheearningsoftheIssuerdependontheIssuersability,withtheassistanceoftheManager,tolocatesuitableopportunitiesfortheinvestmentandreinvestmentoftheIssuersfundsandontheyields

availablefromtimetotimeonmortgagesandotherinvestments.TheinvestmentindustryinwhichtheIssuer

operatesissubjecttoawidevarietyofcompetitionfromprivatebusinessesinCanadaandtheUnitedStates,

manyof

whom

have

greater

financial

and

technical

resources

than

the

Issuer.

Such

competition,

as

well

as

any

futurecompetition,mayadverselyaffecttheIssuerssuccessinthemarketplace.Thereisnoassurancethatthe

Issuerwillbeabletosuccessfullymaintainitsbusinessplanoroperateprofitably.

Existingcompetitorsmayhavegreaterfinancial,managerialandtechnicalresources,andnamerecognition

than the Issuer. Competitors may reduce the interest rates they charge, resulting in a reduction of the

Issuersshareofthemarket,reducedinterestratesonloansandreducedprofitmargins.


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Item9ReportingObligations

9.1 TheIssuerisnotareportingissuerasthattermisdefinedinapplicablesecuritieslegislation,norwillitbecomeareportingissuerfollowingthecompletionoftheOffering.AsaresulttheIssuerwillnotbesubjecttothecontinuous

disclosurerequirementsofsuchsecuritieslegislation.However,Investorswillreceivequarterlystatementsreflecting

theirinvestmentintheIssuerandquarterlydividendcheques,ifapplicable,andwillreceiveyearlyT5taxreturnsforcash

investmentincome.

TheIssuers

fiscal

years

commence

January

1in

each

year

and

end

December

31

of

the

same

year.

Issuer

will

prepare

financialstatementsforeachfiscalyear,andprovidethemtoInvestorsuponrequest.

9.2 CorporateorsecuritiesinformationabouttheIssuerisavailablefromthefollowingwebsiteaddresses:BritishColumbiaSecuritiesCommissionwww.bcsc.bc.ca

AlbertaSecuritiesCommissionwww.albertasecurities.com

ManitobaSecuritiesCommissionwww.msc.gov.mb.ca

OntarioSecuritiesCommissionwww.osc.gov.on.ca and

SaskatchewanFinancialServicesCommission,SecuritiesDivisionwww.sfsc.gov.sk.ca

Item10ResaleRestrictions

10.1 Thesesecuritieswillbesubjecttoanumberofresalerestrictions,includingarestrictionontrading.Untiltherestrictionontradingexpires,youwillnotbeabletotradethesecuritiesunlessyoucomplywithanexemptionfromthe

prospectusandregistrationrequirementsundersecuritieslegislation.

10.2 RestrictedPeriod TheIssuerisnot:(a) areportingissuerinanyCanadianprovinceorterritory,nor(b) aSEDAR filerandareportingissuerinanyCanadianprovinceorterritory.

Unlesspermittedundersecuritieslegislationyoucannottradethesecuritiesbeforethedatethatisfour(4)months

andaday

after

the

date

the

Issuer

becomes

areporting

issuer

in

any

province

or

territory

in

Canada.

TheIssuerwillnotbecomeareportingissueruponcompletionofthisOffering,anddoesnotcurrentlyanticipate

becomingareportingissuer.TheresalerestrictionontheSharesmaythereforeneverexpire.

10.3 Manitoba Resale Restrictions Unless permitted under securities legislation, you must not trade the securitieswithoutthepriorwrittenconsentoftheregulatorinManitobaunless:

(a) theIssuerhasfiledaprospectuswiththeregulatorinManitobawithrespecttothesecuritiesyouhavepurchased,andtheregulatorinManitobahasissuedareceiptforthatprospectus,or

(b) youhaveheldthesecuritiesforatleasttwelve(12)months.The

regulator

in

Manitoba

will

consent

to

your

trade

ifthe

regulator

is

of

the

opinion

that

to

do

so

is

not

prejudicial

to

thepublicinterest.


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26

Item11PurchasersRights

Ifyoupurchasethesesecuritiesyouwillhavecertainrights,someofwhicharedescribedbelow.Forinformation

aboutyourrightsyoushouldconsultalawyer.

1. TwoDayCancellationRightYoucancancelyouragreementtopurchasethesesecurities.TodosoyoumustsendanoticetotheIssuerbymidnightonthe2

ndbusinessdayafteryousigntheagreementtobuythesecurities.

2. STATUTORYRights

of

Action

in

Event

of

aMisrepresentation

AlbertaInvestorsStatutoryRightsofActionintheEventofaMisrepresentation

Ifthereisamisrepresentationinthisofferingmemorandum,youhaveastatutoryrighttosue:

(a) theIssuertocancelyouragreementtobuythesesecurities,or(b) fordamagesagainsttheIssuer.

Thisstatutoryrighttosueisavailabletoyouwhetherornotyoureliedonthemisrepresentation.However,thereare

variousdefensesavailabletothepersonsorcompaniesthatyouhavearighttosue.Inparticular,theyhaveadefense

ifyouknewofthemisrepresentationwhenyoupurchasedthesecurities.

Ifyouintendtorelyontherightsdescribedin(a)or(b)above,youmustdosowithinstricttimelimitations.Youmust

commenceyouractiontocanceltheagreementwithin180daysafteryousignedtheagreementtobuythesecurities.

Youmustcommenceyouractionfordamageswithintheearlierof180daysafterlearningofthemisrepresentationand

one(1)yearafteryousignedtheagreementtopurchasethesecurities.

ManitobaInvestorsStatutoryRightsofActionintheEventofaMisrepresentation



Thisstatutoryrighttosueisavailabletoyouwhetherornotyoureliedonthemisrepresentation.However,thereare

variousdefenses

available

to

the

persons

or

companies

that

you

have

aright

to

sue.

In

particular,

they

have

adefense

ifyouknewofthemisrepresentationwhenyoupurchasedthesecurities.




three(3)yearsafteryousignedtheagreementtopurchasethesecurities

OntarioInvestorsStatutoryRightsofActionintheEventofaMisrepresentation

IfthisOfferingMemorandum,togetherwithanyamendmenthereto,containsanuntruestatementofamaterialfact

oromitstostateamaterialfactthatisrequiredtobestatedorthatisnecessaryinordertomakeanystatementherein

notmisleadinginlightofthecircumstancesinwhichitwasmade(referredtohereinasamisrepresentation),subject

tothe

qualifications

set

forth

below,

you

have

astatutory

right

of

action

against

the

Issuer:

(a) tocancelyouragreementtobuythesesecurities,or(b) suefordamages.


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Thisstatutoryrightofactionisavailabletoyouwhetherornotyoureliedonthemisrepresentationifsuchstatementor

omissionwasamisrepresentationatthetimeofyourpurchaseofthesesecurities.However,inanactionfordamages,

theamountthatyoumayrecoverwillnotexceedthepricethatyoupaidforyoursecuritiesandwillnotincludeallorany

partofthedamagesthattheIssuerprovesdonotrepresentthedepreciationinvalueofyoursecuritiesasaresultofthe

misrepresentation.TheIssuerhasadefenseifitprovesthatyoupurchasedthesecuritieswithknowledgeofthe

misrepresentation.


commenceyour

action

to

cancel

the

agreement

to

buy

the

securities

within

180

days

of

the

date

upon

which

you

enteredintosuchagreement.Youmustcommenceyouractionfordamagesnolaterthantheearlierof(i)180days

afteryoufirstreceivedknowledgeofthefactsgivingrisetothecauseofaction;and(ii)three(3)yearsafterthedate

uponwhichyouenteredintotheagreementtopurchasethesecurities.

SaskatchewanInvestorsStatutoryRightsofActionintheEventofaMisrepresentation



Thisstatutory

right

to

sue

is

available

to

you

whether

or

not

you

relied

on

the

misrepresentation.

However,

there

are

variousdefensesavailabletothepersonsorcompaniesthatyouhavearighttosue.Inparticular,theyhaveadefenseif

youknewofthemisrepresentationwhenyoupurchasedthesecurities.




six(6)yearsfromthedateoftheIssuerhavingacceptedyoursubscriptiontopurchaseShares.

3. CONTRACTUALRightsofActioninEventofaMisrepresentation

BritishColumbiaInvestorsContractualRightsofActionintheEventofaMisrepresentation

IfthereisamisrepresentationinthisOfferingMemorandum,youhaveacontractualrighttosuetheIssuer:

(a) tocancelyouragreementtobuythesesecurities,or(b) fordamages.

Thiscontractualrighttosue isavailabletoyouwhetherornotyoureliedonthemisrepresentation.However, inan

actionfordamages,theamountyoumayrecoverwillnotexceedthepricethatyoupaidforyoursecuritiesandwillnot

includeanypartofthedamagesthattheIssuerprovesdoesnotrepresentthedepreciationinvalueofthesecurities

resulting from themisrepresentation. The Issuerhasadefense if itproves thatyouknewof the misrepresentation

whenyoupurchasedthesecurities.


commenceyouractiontocanceltheagreementwithin180daysafteryousignedtheagreementtopurchasethe

securities.You

must

commence

your

action

for

damages

within

the

earlier

of

180

days

after

learning

of

the

misrepresentationandthree(3)yearsafteryousignedtheagreementtopurchasethesecurities.

Item12FinancialStatements


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28

FISGARD CAPITAL CORPORATION

FINANCIAL STATEMENTS

DECEMBER 31, 2009


30/56


29

DECEMBER 31, 2009

CONTENTS

Page

AUDITOR'S REPORT 1

FINANCIAL STATEMENTS

Balance Sheet 2

Statement of Operations and Retained Earnings 3

Statement of Cash Flows 4

Notes to the Financial Statements 5


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30

AUDITOR'S REPORT

To the Shareholders ofFisgard Capital Corporation

I have audited the balance sheet of Fisgard Capital Corporation as at December 31, 2009 and thestatements of operations and retained earnings, and cash flows for the year then ended. These financialstatements are the responsibility of the company's management. My responsibility is to express an

opinion on these financial statements based on my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Thosestandards require that I plan and perform an audit to obtain reasonable assurance whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position ofthe company as at December 31, 2009 and the results of its operations and the cash flows for the year thenended in accordance with Canadian generally accepted accounting principles.

Victoria, BC

April 6, 2010 CERTIFIED GENERAL ACCOUNTANT

Schell & Associates204 - 2840 Nanaimo Street

Victoria, BC V8T 4W9

Certified General Accountant

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BALANCE SHEET

DECEMBER 31, 2009

ASSETS

2009 2008

CURRENT

Cash and cash equivalents $ 32,758,835 $ 15,083,635Accrued interest - 13,626Mortgage loans receivable (note 3) 167,426,300 188,640,611Other current assets 40,246 20,791

200,225,381 203,758,663

MORTGAGE LOANS RECEIVABLE (note 3) 30,228,072 12,026,750

LAND AND BUILDING 119,645 -

$ 230,573,098 $ 215,785,413

LIABILITIES

CURRENT

Accounts payable and accrued liabilities $ 57,845 $ 6,000Interest reserve 1,936,979 1,570,395Large corporation tax payable (note 4) 4,532 4,000Witholding tax payable (note 5) 25,073 -Interest payable 35,288 -

Redeemable shares (note 6) 228,512,901 214,204,538

230,572,618 215,784,933

SHAREHOLDERS' EQUITY

SHARE CAPITAL (note 7) 480 480

$ 230,573,098 $ 215,785,413

APPROVED ON BEHALF OF THE BOARD:

____________________________ Director

____________________________Director

The accompanying notes are an integral part of these statementsSchell & Associates


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STATEMENT OF OPERATIONS AND RETAINED EARNINGS

YEAR ENDED DECEMBER 31, 2009

2009 2008

REVENUE

Interest on mortgage loans (note 2b) $ 17,716,306 $ 21,508,722Other revenue 2,848,084 3,960,687

20,564,390 25,469,409

EXPENDITURES

Advertising 876,083 849,832Dividends on redeemable shares 12,549,472 16,984,361Financing costs 2,138,991 2,928,662Large corporation tax 2,089 3,500Management fees 4,181,746 3,694,152Interest on loans payable - 246,992Office and administration 128,018 171,352Professional fees 159,861 97,922Provision for mortgage losses 528,130 492,636

20,564,390 25,469,409

NET EARNINGS, BEING

RETAINED EARNINGS END OF YEAR $ - $ -

The accompanying notes are an integral part of these statementsSchell & Associates


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NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2009

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1. PURPOSE OF THE ORGANIZATION:

Fisgard Capital Corporation makes investments and operates its business at all times in such a manner as to

qualify as a mortgage investme

fisgard capital offering memorandum

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