Offering_Memorandum_2009-10 by shuifanglj

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									                                       OFFERING MEMORANDUM
Date: November 23, 2009
                                                       The Issuer

Name:


Head office:        Address:                Suite 111, 20434 – 64th Avenue, Langley, British Columbia
                    Phone Number:           604-530-7430 (Toll Free: 1-866-907-5407)
                    E-mail address:         dougal@vwrcapital.com
                    Fax Number:             604-514-0085
                    Website:                www.vwrcapital.com

Currently listed or quoted?........ No. These securities do not trade on any exchange or market.
Reporting issuer?....................... No
SEDAR filer?............................. No

                                                      The Offering
Securities offered:                      Class ‘A’ Preferred Non-voting Shares
                                         (New investors must also purchase one Common Share for $1.00)
Price per security:                      $1.00 per Share
Minimum / Maximum offering: 0 / $10,000,000
                                         There is no minimum. You may be the only purchaser. Funds available under
                                         the offering may not be sufficient to accomplish our proposed objectives.

Minimum subscription amount: There is no minimum subscription amount an investor must invest.
Payment terms:                           The subscription price for Shares purchased is payable in full on the
                                         applicable closing of the offering.
Proposed closing date(s):                December 1, 2009 – March 1, 2010 – June 1, 2010 – September 1, 2010
                                         If we do not require the funds, we may not having closings on one or more
                                         of such dates.
Income tax consequences:                 There are important tax consequences to these securities. See Item 6
                                         ‘Income Tax Consequences and RRSP Eligibility’.

Selling agent?............................. No

                                                  Resale restrictions

You will be restricted from selling your securities for an indefinite period. See Item 10 ‘Resale Restrictions’.

                                                  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 either for damages or to cancel the
agreement. See Item 11 ‘Purchasers’ Rights’.

          No securities regulatory authority or regulator 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 8 ‘Risk Factors’.
                                                              TABLE OF CONTENTS

Item        Description                                                                                                                                      Page

Item 1 – Use of Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                2
1.1     Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
1.2     Use of Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               2
1.3     Reallocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3

Item 2 – Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3
2.1     Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3
2.2     Description of Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3
2.3     Development of Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    8
2.4     Long Term Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               8
2.5     Short Term Objectives and How We Intend to Achieve Them . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          8
2.6     Insufficient Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8
2.7     Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              8

Item 3 – Interests of Directors, Management, Promoters and Principal Holders . . . . . . . . . . . . . . . . . . . 9
3.1     Compensation and Securities Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2     Management Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3     Penalties, Sanctions and Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4     Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Item 4 – Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1     Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3     Prior Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Item 5 – Securities Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1     Terms of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2     Subscription Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Item 6 – Income Tax Consequences and RRSP Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     14
6.1     Caution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       14
6.2     Description of Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            14
6.3     Eligibility for RRSPs and Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       15

Item 7 – Compensation Paid to Sellers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 8 – Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 9 – Reporting Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.1     Continuous Reporting Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.2     Access to Information about Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Item 10 – Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               18
10.1    Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        18
10.2    Description of Restricted Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    18
10.3    Manitoba Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  18

Item 11 – Purchasers’ Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Item 12 – Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Item 13 – Date and Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Item 1 – Use of Available Funds

1.1       Funds

The funds that will available to us from this offering, together with funds that will be available from other
sources, are set out in the following table.

                                                                                            Assuming                   Assuming
          Description                                                                   Minimum Offering            Maximum Offering

      A   Amount to be raised by this offering                                                        $ 0               $ 10,000,000

      B   Selling commissions and fees                                                                   0                             0

      C   Estimated offering costs (legal, accounting, audit, etc.)                                10,000                       10,000

      D         Available funds: D = A - (B+C)                                                 ($ 10,000)                $ 9,990,000

      E   Additional sources of funding available                                            15,675,000.*                 15,675,000.*

      F   Working capital deficiency                                                                     0                             0

      G         Total: H = (D+E) - F                                                       $ 15,665,000                 $ 25,665,000

          * Balance of the maximum amount of $35,000,000 available under our credit facility with the TD Bank as at the date of this
          Offering Memorandum. The amount available depends on the amount of qualifying mortgage loans we have made, therefore,
          the full amount of the credit facility may not be available. See Item 2.2 ‘Description of our Business – Credit Facility’. Additional
          funds will be also available to us from operating profits.


1.2       Use of Available Funds

We will use the funds available to us from this offering, together with funds that will be available from other
sources, as set out in the following table.

 Description of Intended Use of Available Funds                                           Assuming                     Assuming
 (Listed in Order of Priority)                                                         Minimum Offering             Maximum Offering

 Partial repayment of credit facility (1) and investment in residential                     $ 12,355,950                $ 22,355,950
 mortgages in British Columbia and Alberta (2)

 Interest and bank charges                                                                      1,400,000                   1,400,000

 Management fees (3)                                                                            1,150,000                   1,150,000

 Loan impairment                                                                                  500,000                     500,000

 Bad debts and unrecovered costs                                                                  175,000                     175,000

 Professional fees                                                                                 60,000                       60,000

 Office expenses                                                                                   20,000                       20,000

 Annual General Meeting expense                                                                      2,500                       2,500

 Insurance                                                                                           1,050                       1,050

 Licences and dues                                                                                     500                         500

 TOTAL                                                                                      $ 15,665,000                $ 25,665,000

(1)       See Items 2.2 ‘Description of our Business – Credit Facility’ and 4.2 ‘Share Capital – Long Term Debt’.



                                                                      2
(2)     Repayment of our credit facility by the amount of the net proceeds from this offering will allow us to borrow an equal or possibly
        larger (due to our ability to leverage funds borrowed) amount from the facility and invest it in residential mortgages. See Item
        2.2 ‘Description of Our Business’.

(3)     To be paid to Valley Financial Specialists Inc. (doing business as DLC Valley Financial Specialists), a company which is
        wholly-owned by our President, D. (Dougal) B. Shewan. See Item 2.2 ‘Description of Our Business – Investment Manager’.

(4)     Amounts shown do not include applicable taxes.

1.3     Reallocation

We intend to spend the available funds as stated. We will reallocate funds only for sound business reasons.


Item 2 – Our Business

2.1     Structure

We are a company incorporated under the British Columbia Business Corporations Act on October 18, 1993.

2.2     Description of Our Business

Overview

We are a ‘mortgage investment corporation’ (a “MIC”). Our business is to make a diversified range of
residential and other loans secured by first and second mortgages, and a very small number of third
mortgages, on real estate properties located in British Columbia and Alberta. We earn most of our income
from the interest paid on these mortgages. The balance of our income is earned from short term rental of
properties we acquire from foreclosures under mortgages held by us and capital gains when such properties
are sold.

Taxation of MICs

Under the Income Tax Act (Canada), a MIC is not taxed on its net income if such income is annually
distributed to the MIC’s shareholders. Therefore, to qualify as a MIC and receive this favourable tax
treatment, we annually distribute all of our net income to holders of our Preferred Shares by way of dividends.
The annual dividend is paid, at the election of each Preferred Shareholder, in cash or in further Preferred
Shares within 90 days of our fiscal year end. These dividends are subject to tax as described in Item 6
‘Income Tax Consequences and RRSP Eligibility’.

Businesses we are Permitted to Conduct as a MIC

To qualify as a MIC we are also restricted by the Income Tax Act to carrying on the following activities:

(a)     our business must be passive and of an investment nature (therefore, we cannot manage or develop
        residential or commercial real estate properties); and

(b)     our only business can be the investing of funds.

Furthermore, such investments are subject to the following restrictions:

(a)     at least 50% of the cost amount of all of our assets must consist of bank deposits or debts secured on
        Canadian homes or housing projects;


                                                                  3
(b)       no more than 25% of the cost amount of all of our assets can consist of ownership of, or lease
          interests in, real estate unless acquired through foreclosure;

(c)       we cannot invest our funds in

          (i)       real estate located outside Canada or in leasehold interests in such real estate,

          (ii)      debts of persons not resident in Canada unless the debt is secured by a mortgage on real
                    estate located within Canada, and

          (iii)     shares of corporations not resident in Canada;

(d)       our net leveraging (the ratio of the amount of our outstanding liabilities to the amount by which the
          cost of our assets exceeds our liabilities) cannot exceed a 3:1 ratio unless more than two-thirds of our
          investments are in residential mortgages and bank deposits, in which case it is entitled to be no more
          than a 5:1 ratio.

Rate of Return on Investment

The average return which our shareholders receive on their investments is determined annually by our auditor
as at our August 31st financial year end. The effective annual yield on adjusted share capital for our
shareholders for the past five years is set out in the following table.

 Dividends paid in              2009                 2008                   2007                  2006                  2005
          (1)
 Shares                       10.44%                11.65%                11.00%                10.25%                 12.16%

 Cash                         10.02%                11.36%            Not calculated (2)   Not calculated (2)     Not calculated (2)

(1)       The average rate of return, assuming re-investment of dividends, for the last 16 years since the inception of our business is
          11.23%.

(2)       Cash dividends were not paid until our 2008 financial year. Prior thereto, only share dividends were paid.


The factors which affect the amount of such return is described in Item 8 ‘Risk Factors’. The rates of return
are averages for all of our shareholders and may not reflect the return received by any one investor.
There is no guarantee that such rates of return will continue or that investors will receive similar
returns in future years.

Investment Manager

To provide for the management of our business we have entered into a Management Agreement dated
November 21, 2005 with Valley Financial Specialists Inc. (formerly named Centum Universal Financial
Services Inc.), which carries on its business as ‘DLC Valley Financial Specialists’. DLC is a registered
mortgage broker under the Mortgage Brokers Act (British Columbia) and is wholly-owned by our President,
D. (Dougal) B. Shewan of Langley, British Columbia.

The Management Agreement has a term expiring on December 31, 2009. We have signed a new Management
Agreement dated November 3, 2008 with DLC which will become effective on January 1, 2010 and
terminates on December 31, 2011. The new agreement contains the same terms as the current agreement. The
Management Agreement is non-assignable without the consent of the other party and may not be terminated
by either party.



                                                                  4
Under this Management Agreement, DLC is required to provide mortgage investment and management
services to us, including:

(a)     administering mortgage loans on our behalf within investment parameters established by our Board
        of Directors;

(b)     carrying out our day-to-day administration;

(c)     providing monthly reports on our operations to our Board of Directors;

(d)     communicating with our shareholders and answering shareholder queries;

(e)     preparing accounting information for our auditor; and

(f)     furnishing us with all necessary administrative services including providing office space, clerical staff
        and maintaining books and records, all to the extent required in connection with the services that
        DLC is required to render under the Management Agreement.

The Management Agreement provides that DLC will be paid a monthly fee for its management services equal
to 0.10833% (which is 1/12th of 1.30% per year) of our ‘mortgage receivables’ (the total of the outstanding
principal amounts due under all mortgages held by us) as of the last working day of each month. Payment
to DLC is made immediately after our month-end upon receipt of an account from it.

DLC has no right to participate in any loan or investment opportunities originated for or otherwise made
available to us. Furthermore, neither DLC nor its directors (which includes Shewan) may collect any
mortgage brokerage fees or discounts related to mortgages from borrowers in connection with mortgage loans
sourced from third party mortgage loan providers.

We are also required to reimburse DLC for its reasonable and necessary out-of-pocket disbursements
(excluding wages and the cost of office space, telephone, power, Internet service and maintenance of our
books and records) incurred in connection with administering our business. Such disbursements are only paid
once approved by us.

We have agreed to indemnify DLC from all claims incurred in respect of the origination, administration and
servicing of our mortgage portfolio except those caused by DLC’s negligence, fraud or willful misconduct.
DLC has agreed to indemnify us from any claims, losses, damages, costs and expenses suffered by us as a
result of its negligence, fraud or willful misconduct.

Credit Committee

Our Board of Directors has appointed a Credit Committee consisting of seven persons. The Committee is
independent from our Investment Manager and includes two of our directors (Kenneth C. McPherson and
Evan A. Brett) and a former director (Jonathan B. Young). While their backgrounds are varied, all members
have skills that enable them to carry out their duties, such as experience in banking, real estate and finance.
Members of the Committee are not paid any fee for their services.

At least of three members of the Committee must approve all loans made by us. Alternatively, at least three
of our four independent directors (the fifth director, D. (Dougal) B. Shewan, must abstain from voting as he
is the principal of DLC and, therefore, not independent) may approve a loan. In either case, that approval is
usually obtained through conference, or individual, telephone calls initiated by our Investment Manager.



                                                       5
Investment Policy

Our investment policy is intended to enable us to qualify for the special tax treatment afforded to MICs under
the Income Tax Act. For this reason, we will invest the majority of our funds in residential mortgage loans
and the balance held in bank deposits. We may also invest our funds in construction, commercial and interim
mortgage loans, however, we rarely do so. No funds will be loaned in respect of any property in which our
directors or officers have a direct or indirect interest.

We believe the types of mortgage loans in which we have invested, and will invest in, are consistent with the
criteria for a MIC under the Income Tax Act. While we meet these criteria we should be accorded the ‘flow
through’ tax treatment given to MICs. That treatment results in us not being taxed on any of our net income,
all of which is distributed in the form of dividends to our Preferred Shareholders.

We have arranged financing from The Toronto-Dominion Bank (“TD Bank”) so we can seek to optimize our
earnings through reasonable leverage. We have arranged such financing in the form of a revolving demand
credit facility. This credit facility allows us, if our capital base is sufficient to satisfy the TD Bank, to borrow
additional funds with which we can make further mortgage loans and thereby leverage our capital base. While
we are permitted by the Income Tax Act to leverage our capital up to a 3:1 ratio (or in certain circumstances,
a 5:1 ratio) the TD Bank restricts our borrowing such that the leveraging is not more than a 1:1 ratio on
mortgages which are acceptable to it. See ‘Credit Facility’ below.

Operating Policy

Any residential loans made by us will be secured by first or second mortgages although, in very few cases,
we may accept third mortgages as security (for such third mortgage loans, both the first and second mortgages
are usually held by the same financial institution). Loans are limited to 75% of the appraised value of the
mortgaged property less the amount of any prior mortgages. The maximum term of the loans can be up to 36
months but generally will be made for a 12 month term only.

Independent appraisals are required before the approval of most mortgage loans. The loans are only made
where such appraisals and all other relevant materials including, where appropriate, credit, financial and
economic reports are satisfactory to our Investment Manager and either our Credit Committee or independent
directors.

While we will make loans relating to property outside the Lower Mainland area of British Columbia, we
significantly increase the requirements potential borrowers must meet before making loans secured by
properties in such areas to ensure protection of our capital. On that basis we have made loans in other parts
of British Columbia and in Alberta.

We exercise caution to ensure no significant mortgage loans are or will be made to any one borrower or for
any one project. As our capital base has grown, what constitutes a ‘significant mortgage loan’ has increased
to loans (including several loans to one borrower) of not more than $800,000 to $1,000,000 at the present
time. However, in the appropriate circumstances, the amount loaned could exceed these amounts.

From time to time, one or more of our directors carry out random ‘spot’ checks of our files to ensure that we
follow our Operating Policy in making our loans.




                                                         6
Credit Facility

We have established a revolving credit facility with the TD Bank equal to the lower of $35,000,000 or 75%
of ‘eligible mortgages’ pledged to the TD Bank as security for the amount loaned. Funds borrowed are
repayable on demand being made therefor by the TD Bank.

We may borrow funds under this facility in two ways, namely, by way of:

        •   demand loans in respect of which interest is charged to us on the outstanding balance from time-
            to-time at the TD Bank prime rate plus 1.00% (formerly 0.75%) per year; or

        •   banker’s acceptances (evidences of indebtedness, like promissory notes, issued and sold by the
            TD Bank through the financial markets to third parties, in respect of monies borrowed by us) in
            respect of which the TD Bank charges us a percentage discount (based on current market rates
            for short term financial instruments).

Both forms of lending are also subject to a 2.40% (formerly 2.15%) ‘stamping fee’ charged when the funds
are advanced.

Depending on the current interest rate it may be more economical for us to borrow by way of a demand loan
or a banker acceptance. For example, if we borrow $100,000 under a banker acceptance (they are restricted
to terms of 30 to 180 days, however, to simplify this example we are using an annual rate) the stamping fee
will be $2,400 (2.40%) and the discount might be $2,200 (2.20%) meaning we will receive $95,400, being
the $100,000 less the 2.40% stamping fee and 2.20% discount, but will have to pay the TD Bank the full
$100,000 on the banker’s acceptance maturity. If the sum of the 2.40% stamping fee and 2.20% discount is
less (on a yearly basis) than the prime rate plus 1.00%, we will borrow the required funds through banker’s
acceptances since our interest payments will be less than if we borrowed through demand loans.

The banker’s acceptances can be converted into fixed term loans of up to two years. At the date of this
Offering Memorandum, we have not converted any of the banker’s acceptances into term loans.

‘Eligible mortgages’ consist of first and second mortgages having a term of no more than two years on
residential properties (subject to no more than two properties per borrower) on houses, condominiums,
townhouses and apartment buildings in the Greater Vancouver Regional District and Fraser Valley areas of
British Columbia as well as in the cities of Victoria, Nanaimo, Kamloops, Kelowna, Vernon, Penticton,
Westbank, Ladysmith, Nanoose Bay, Parksville, Port Alberni, Qualicum Beach, Summerland, Duncan,
Sechelt and Gibsons, British Columbia and Calgary, Beaumont, Edmonton, Sherwood Park, Spruce Grove,
St. Albert, Airdrie, Cochrane, Okotoks and Red Deer, Alberta. The TD Bank requires us to obtain its written
approval to include as an ‘eligible mortgage’ any mortgage of more than $500,000 on a residence or any
mortgage of more than $300,000 on serviced residential land without a residence. In any event, the eligible
mortgages, together with prior financial encumbrances (such as a first mortgage), cannot exceed either
$750,000 or 75% of the appraised market value. Mortgages which are on (i) residential properties and are
more than 60 days in arrears of any payments, (ii) commercial, industrial or recreational properties, or (iii)
undeveloped land, do not qualify as ‘eligible mortgages’. The facility requires second mortgages not exceed
40% of our mortgage portfolio.

We are required to provide the TD Bank with annual audited financial statements within 120 days of our
fiscal year end, unaudited interim financial statements within 45 days of each fiscal quarter end and a monthly
summary of our mortgage portfolio within 30 days of the month end. The TD Bank requires us to limit our
debt to tangible net worth (debt to equity) ratio to not more than 1:1 and our minimum tangible net worth to
not less than $35,000,000. The TD Bank also requires that D. (Dougal) B. Shewan not reduce his ownership


                                                      7
of our shares. Finally, we cannot grant a security interest to another party or incur additional indebtedness
without the TD Bank’s consent.

The credit facility is secured by General Security Agreements over all of our assets and a General
Hypothecation of Collaterals.

The facility is reviewed annually and not less than 10% of the mortgages are audited. We paid the TD Bank
a renewal fee of $7,000 in May 2009 and pay it fees of $1,000 per year and $250 per month for administering
the facility.

2.3     Development of Our Business

Overview

Since incorporation our business has grown steadily as a result of our prudent and conservative lending
practices. We believe this growth has resulted in acceptable rates of return on our invested capital relative to
alternative investment opportunities for our shareholders.

During our two most recently completed financial years there have not been any unusual events or conditions
that have favourably, or adversely, influenced the development of our business.

2.4     Long Term Objectives

We have two long term objectives. Firstly, to continue the development of our business and an orderly and
consistent growth of our earnings and assets and operations in accordance with prudent commercial lending
practices while minimizing both risk to our capital base and the number of foreclosures which must be
completed when borrowers default under their mortgage loans. Secondly, to continue to achieve a return on
capital on the order of 8% to 12% per year. There cannot be any assurance, however, that we will meet either
objective.

2.5     Short Term Objectives and How We Intend to Achieve Them

Our objectives for the next 12 months are the same as our long term objectives set out in Item 2.4 ‘Long Term
Objectives’. We intend to meet those objectives for the next 12 months as set out in the following table.

                                           Target completion date                 Our cost to complete
 What we must do                              or, if not known,
 and how we will do it                  number of months to complete       Minimum Offering   Maximum Offering

 Provide mortgage loans with a                   Next 12 months                     $0         $ 9,990,000
 reasonable and manageable level of
 risk in accordance with our existing
 lending practices


2.6     Insufficient Funds

Not applicable.

2.7     Material Agreements

We are currently a party to the following material contracts:



                                                       8
   (a)       Management Agreement dated November 21, 2005 (and a successor agreement dated November 3,
             2008) with Valley Financial Specialists Inc., carrying on business as DLC Valley Financial
             Specialists. See Item 2.2 ‘Description of Our Business – Investment Manager’;

   (b)       Demand Operating Facility Agreement dated February 8, 2007, Demand Operating Facility
             Agreement Amendments dated April 3, 2008, February 27, 2009 and May 14, 2009 and General
             Security Agreement and General Hypothecation of Collaterals thereunder, with the TD Bank. See
             Item 2.2 ‘Description of our Business – Credit Facility’; and

   (c)       Banker’s Acceptances due to the TD Bank maturing November 30, 2009 ($5,000,000), December
             15, 2009 ($5,000,000) and December 21, 2009 ($4,500,000). See Item 2.2 ‘Description of our
             Business – Credit Facility’.


   Item 3 – Interests of Directors, Management, Promoters and Principal Holders

   3.1       Compensation and Securities Held

   The following table discloses the compensation paid to, and securities held by, each of our directors, officers
   and promoters and each person who, directly or indirectly, beneficially owns or controls 10% or more of any
   class of our voting securities (a “Principal Holder”).

                                                                                            Number, Type & Percentage (2)
                                                        Compensation
                                                                                                  of Our Securities
                                                             Paid
                                                                                             held after completion of the:
                                   Positions             and Payable
Name                              Held & Date              by Us (1)
& Municipality                  of Obtaining that          Last Year                  Minimum                           Maximum
of Principal Residence              Position            (Current Year)                Offering                          Offering (3)

BRETT, Evan A.                     Director                     0                 1 common (0.35%)                  1 common (0.26%)
Langley, BC                    November 26, 2002               (0)             41,627 preferred (0.07%)          41,627 preferred (0.06%)

CHADNEY, Arnold P.                  Director                    0                1 common (0.35%)                  1 common (0.26%)
Langley, BC                     January 29, 1998               (0)            836,361 preferred (1.49%)         836,361 preferred (1.27%)

EDEN, Cary W.                      Director                     0                 1 common (0.35%)                  1 common (0.26%)
Abbotsford, BC                 December 3, 2007                (0)             73,879 preferred (0.13%)          73,879 preferred (0.11%)

McPHERSON, Kenneth C.         Secretary & Director              0                3 common (1.05%)                  3 common (0.78%)
Mission, BC                    January 26, 1995                (0)           1,618,963 preferred (2.89%)       1,618,963 preferred (2.45%)

SHEWAN, D. (Dougal) B.        President & Director       $ 1,131,865 (4)         3 common (1.05%)                  3 common (0.78%)
Langley, BC                    February 17, 1994        ($ 1,150,000 (4))   5,799,861 preferred (10.35%)       5,799,861 preferred (8.78%)

ZACHER, Gordon J.                  Director                     0                1 common (0.35%)                  1 common (0.26%)
Langley, BC                    December 2, 2008                (0)            850,000 preferred (1.52%)         850,000 preferred (1.29%)

   (1)       Paid by us in our most recently completed financial year. Amounts shown in parentheses are the compensation expected to
             be paid in the current financial year.

   (2)       Percentage held in each class of shares.

   (3)       Calculated on the basis of the number of shares of each class held and assuming a maximum of 10,000,000 shares consisting
             of 100 Common Shares and 9,999,900 Preferred Shares are sold. The final allocation between Common and Preferred Shares
             of the shares issued and the total number of shares issued will depend on the number of subscriptions from new and existing
             investors. We are unaware whether our directors and officers will purchase any shares in the offering but expect a number
             of the directors will invest their 2010 RRSP contributions in the purchase of Preferred Shares.

   (4)       Paid by us to Valley Financial Specialists Inc., a private company wholly-owned by Mr. Shewan which carries on business as
             DLC Valley Financial Specialists. From this amount DLC pays Mr. Shewan and his staff as well as office rent, telephone,
             Internet service and the costs of maintaining our accounting and corporate books and records. See Item 2.2 ‘Description of
             Our Business – Investment Manager’. Amount shown do not include applicable taxes.

                                                                     9
3.2     Management Experience

The principal occupations of our directors and executive officers over the past five years and any relevant
experience in a business similar to ours are set out in the following table.

 Name & Position              Principal Occupation and Related Experience

 BRETT, Evan A.               Commercial realtor with Royal LePage Wolstencroft Realty (real estate brokerage
 Director                     firm) since July 1972

 CHADNEY, Arnold P.           Retired Professional Engineer
 Director

 EDEN, Cary W.                Chartered Accountant
 Director                     Partner of Meyers Norris Penny LLP (accounting firm) since June 2004

 McPHERSON, Kenneth C.        Real estate developer and investor
 Secretary & Director

 SHEWAN, D. (Dougal) B.       Realtor and Mortgage Broker
 President & Director         President of Valley Financial Specialists Inc. (registered mortgage broker carrying
                              on business as DLC Valley Financial Specialists) since July 2004
                              Principal of Shewan Real Estate Ltd. (real estate brokerage firm carrying on
                              business as Royal LePage Wolstencroft Realty) since 1976

 ZACHER, Gordon J.            Retired Chartered Accountant
 Director                     President of Preston Ventures Ltd. (private holding company) since January 2006
                              Partner BDO Dunwoody LLP (1975 to December 2005)


3.3     Penalties, Sanctions and Bankruptcy

None of our directors, executive officers or control persons or issuers of which they were a director, executive
officer or control person at the time, has been any time during the last 10 years:

(a)     subject to any penalty or sanction;

(b)     subject to any cease trading order in effect for more than 30 consecutive days; or

(c)     the subject of any declaration of bankruptcy, voluntary assignment in bankruptcy, proposal under any
        bankruptcy or insolvency legislation, proceedings, arrangement or compromise with creditors or
        appointment of a receiver, receiver manager or trustee to hold assets,

except for one of our directors, Evan A. Brett, who is also the Secretary and a director of Gemco Minerals
Inc., a mineral exploration company based in of Langley, British Columbia, which became subject to a Cease
Trade Order issued by the British Columbia Securities Commission on August 22, 2007. Gemco’s shares
trade on the OTC Bulletin Board in the United States of America. The order was issued due to Gemco’s
failure to prepare an offering memorandum in the form prescribed by applicable securities regulations in
British Columbia, including the filing of a geological report in the prescribed form to support the disclosure
contained in the offering memorandum. The Cease Trade Order was revoked on March 18, 2008 after Gemco
filed an offering memorandum and geological report in the proper form.

3.4     Loans

We are not indebted to any of our directors, management, Principal Holders or promoters, nor are any of them
indebted to us, for any loans.


                                                        10
Item 4 – Capital Structure

4.1     Share Capital

Our share capital is set out in the following table.

                                                                            Number
                                                                         outstanding
                                                                             as at            Number outstanding after the:
                                     Number               Price           the date of
 Description                        Authorized             per           this Offering           Minimum           Maximum
 of Security                       to be Issued          Security        Memorandum              Offering          Offering

 Common Shares                       unlimited             $1.00               286                   286              386

 Options                                  0                   –                  –                    –                 –

 Warrants                                 0                   –                  –                    –                 –

 Convertible Securities                   0                   –                  –                    –                 –

 Class ‘A’ Preferred                 unlimited             $1.00           56,033,620           56,033,620         66,033,520
 Non-voting Shares

(1)     Assuming a maximum of 10,000,000 shares consisting of 100 Common Shares and 9,999,900 Preferred Shares are sold. The
        final allocation between Common and Preferred Shares of the shares issued and the total number of shares issued will depend
        on the number of new and existing investors and subscriptions received.


4.2     Long Term Debt

Our current and long term indebtedness is set out in the following table.

                                                                                                      Amount Outstanding as
 Description of Debt               Interest Rate                       Repayment                        at the Date of this
 & Whether Secured *                  (annual)                           Terms                        Offering Memorandum

 Current

 Demand Loan                     TD Bank Prime             Interest payable monthly &                        $ 4,825,000
                                    + 0.75%               Principal repayable on demand

 Banker’s Acceptances                     –                 Repayable in 30 to 180 days                     $ 14,500,000

 Long Term

 Term Loans                               –               Interest repayable quarterly &                         $0
                                                          Principal repayable on maturity

        * All loans are secured as described in Item 2.2 ‘Description of our Business – Credit Facility’.


4.3     Prior Sales

Within the past 12 months, we have issued the following Common and Preferred Shares (including securities
convertible or exchangeable into Common and Preferred Shares ) as set out in the following table.




                                                                  11
                                                                                               Price               Total
                                            Type of                  Number of                  per                Funds
 Date of Issuance                        Security Issued           Securities Issued          Security            Received

 December 8, 2008                            Common                                 5           $1.00             $           5

                                             Preferred                      956,401             $1.00                  956,401

 March 2, 2009                               Common                               10            $1.00                        10

                                             Preferred                   1,181,803              $1.00                 1,181,803

 June 1, 2009                                Common                                5            $1.00                         5

                                             Preferred                   1,409,340              $1.00                 1,409,340

 September 1, 2009                           Common                               11            $1.00                        11

                                             Preferred                   2,404,907              $1.00                 2,404,907

 Totals                                     Common                              31              $1.00           $        31
                                           Preferred (1)                 5,952,451              $1.00           $ 5,952,451

(1)       Up to 5,053,354 Preferred Shares may be issued by way of a share dividend in respect of our income from our last financial
          year ended August 31, 2009. The actual allocation of income to be paid by way of share dividend and in cash has not yet been
          determined. Such shares are normally issued in December of each year.



Item 5 – Securities Offered

5.1       Terms of Securities

The securities being offered for sale by this offering memorandum are Class ‘A’ Preferred Non-voting shares
with a par value of $1.00 each (a “Preferred Share”) in our share capital. New investors must also each
purchase one common share with a par value of $1.00 (a “Common Share”) in our share capital.

All of our shares issued to date are, and those issued pursuant to this offering memorandum shall be, fully
paid and non-assessable.

Voting

Each Common Share has one vote at every meeting of shareholders. Our Preferred Shares do not have any
right to vote except in respect of any amendment to their special rights and privileges over our Common
Shares.

Conversion

Neither our Common Shares nor our Preferred Shares are convertible into the other form of share or security.

Dividends

All our profits available for the payment of dividends are paid to the holders of our Preferred Shares within
four months of our fiscal year end. The payment of dividends may be made by the issuance of further
Preferred Shares or by way of cash, as decided by the shareholder.

Preferred Shareholders will be entitled to receive dividends in respect of Preferred Shares owned at the end
of each of our fiscal quarters. After each fiscal year end we allocate the dividends payable at the end of each

                                                                 12
fiscal quarter. Any shareholder not holding a Preferred Share at the end of the fiscal quarter does not share
in the dividends for that quarter. Any acquisition from us of Preferred Shares as dividends entitles the
shareholder to receive dividends on such shares in the ensuing (but not the previous) fiscal year.

Holders of our Common Shares are not entitled to dividends.

Liquidation Entitlement

If we are liquidated, dissolved or wound-up, the proceeds after payment of all expenses and outstanding
indebtedness will be paid to the holders of our Preferred Shares in proportion to (and up to) the amount paid
to us for their Preferred Shares. If any net proceeds remain, then the holders of our Common Shares will share
in the remaining proceeds in proportion (and up to) the amount paid to us for their Common Shares. Finally,
if any net proceeds remain, the holders of the Common Shares and Preferred Shares shall equally split such
remaining proceeds in proportion to the number of shares (Common or Preferred) held. Since we pay out all
of our net profits each yet it is possible that on a liquidation, dissolution or winding-up our shareholders may
not be paid the full amount paid for their shares.

Transferability

Our shares (both Preferred and Common) are subject to restrictions on transfer:

(a)     contained in our Articles (our corporate charter) to comply with the provisions of the Income Tax Act
        respecting MICs; and

(b)     imposed by applicable securities legislation (see Item 10 ‘Resale Restrictions’).

Our Articles provide that a shareholder cannot transfer any of their Common Shares unless the transfer also
involves a transfer of Preferred Shares to the same transferee. Before such transfer can take place, the shares
sought to be transferred must be offered for sale to our existing shareholders who have 30 days to decide
whether to buy their portion of such shares. If the selling shareholder does not complete the sale they may
give us notice thereof within 30 days of our fiscal year end and we will purchase their shares at their book
value at the time plus any dividends declared but unpaid. This restriction does not apply to a transfer to the
shareholder’s Registered Retirement Savings Plan (RRSP) or an RRSP owned by the shareholder’s spouse.
A similar provision applies to any proposed transfer of Preferred Shares. As a result, a shareholder will
always own one Common Share and at least one Preferred Share.

The Income Tax Act requires that a MIC may not have fewer than 20 shareholders and no one shareholder,
together with their spouse, children under the age of 18 and companies controlled by any of them, may hold
more than 25% of its issued shares. Accordingly, our Articles also prohibit any transfer of shares if such
transfer would result in us having fewer than 20 shareholders or in any one shareholder, together with their
spouse, children under the age of 18 and companies controlled by any of them, holding more than 25% of
our issued shares.

Each transfer of our shares is subject to legal fees of approximately $70 payable by the shareholder.

Redemption of Shares

Any shareholder may require us to redeem some or all of their Preferred Shares. Shares may be redeemed by
a shareholder sending us a request for redemption by registered mail or hand delivered, in either case, to our
registered office (at MacCallum Law Corp., 6345 – 197th Street, Langley, British Columbia, V2Y 1K8) in
such a way that the request is received by us at least 90 days before our fiscal year end (the “Withdrawal


                                                      13
Date”). Our fiscal year end is August 31st of each year. Within 90 days after the Withdrawal Date we shall
redeem the shares at their book value at such time plus any dividends declared but unpaid by us.

If a planned redemption would result in us not meeting the requirements for a MIC under the Income Tax Act
or the solvency requirements of the Business Corporations Act, then we will only redeem such number of
shares as may be necessary for us to continue to meet such requirements.

After appropriate notice to redeem Preferred Shares has been given to us, any dividend entitlement on the
shares to be redeemed will only be paid in cash and may not be used to reinvest in further Preferred Shares..

Our Common Shares are not redeemable at the Common Shareholder’s option unless all of the shareholder’s
Preferred Shares are also being redeemed. Each redemption of our shares is subject to legal fees of $70
payable by the shareholder.

5.2     Subscription Procedure

If you wish to subscribe for our Preferred Shares (new investors must also subscribe for one Common Share),
please complete and sign a Subscription Agreement, and all schedules thereto, in the form accompanying this
offering memorandum and return the agreement to us together with a certified cheque, bank draft or money
order payable to our solicitors, ‘MacCallum Law Corp., In Trust’, for the number of shares you wish to
purchase.

All subscription funds will be held by our solicitors in trust pending and (as required by law) for a period of
at least two business days after, the closing of the offering. Closing will occur effective on or about the date(s)
set out on the cover of this offering memorandum and your share certificate(s) will follow by mail in a week
or two thereafter.

There are no conditions to any closing occurring, however, if we do not require the funds at the time, we may
elect not to have a closing, and will return your Subscription Agreement and funds, without interest or
deduction.


Item 6 – Income Tax Consequences and RRSP Eligibility

6.1     Caution

You should consult your own professional advisers to obtain advice on the tax consequences that apply to
you.

6.2     Description of Income Tax Consequences

The following information has been prepared with assistance from our auditor, Malish & Clark, Certified
General Accountants.

Tax Payable by Us

In general, a MIC does not pay income tax as long as it distributes its net income (and any capital gains) to
its shareholders. Tax is payable by you when our income is passed on to you as a dividend.




                                                        14
Tax Payable by You

The dividends you receive on your Preferred Shares, whether you take your dividends as cash or as new
Preferred Shares, may result in you having to pay tax. The result depends on how your Preferred Shares are
held.

Preferred Shares held in a Registered Plan

Any dividends paid to an RRSP, Registered Retirement Income Fund (RRIF), Deferred Profit Share Plan
(DPSP), Registered Pension Plan (RPP), Registered Education Savings Plan (RESP) or Tax Free Savings
Account (TFSA) (“Registered Plans”) will be received on a tax-deferred basis whereby tax is not paid by
you on such dividend until it is removed from the Registered Plan. Furthermore, until removed, any income
earned on such dividends (for example, interest earned on the dividends) within a Registered Plan is earned
tax-free.

Preferred Shares held outside of Registered Plans

If you are an individual and hold our Preferred Shares outside of a Registered Plan you must declare
dividends paid to you by us as taxable interest (or, in certain cases, as capital gains). This is the case whether
our dividends were paid to you in cash or through additional Preferred Shares. The amount of the dividend
you receive is based on the number of Preferred Shares you own. The nature of the dividend (that is, whether
it is taxed as interest or as a capital gain) depends on how we initially received the funds – as interest or a
capital gain. Each year we will issue a T5 reporting slip to you indicating how much of your dividends are
income and how much are capital gains.

Redeeming Shares

If you redeem your Preferred Shares you will generally receive $1.00 per Share redeemed. If, however, we
do not have sufficient funds to pay such amount you may receive less than $1.00 per share in which case you
will realize a capital loss. Since we must annually pay out all of our profits as dividends it is unlikely you will
receive more than $1.00 per Preferred Share redeemed.

In general, the capital loss will be equal to the difference between the amount of you receive on the
redemption (less any costs of the redemption) and the adjusted cost base (“ACB”) of the shares (which is
calculated in accordance with the requirements set out in the Income Tax Act). Capital losses may be applied
(depending on your circumstances) to capital gains to reduce your overall tax payable. We will provide you
with details on the proceeds from your redemption of our shares. However, in order to calculate your capital
loss, you need to know the ACB of your shares before the redemption.

6.3     Eligibility for RRSPs and Other Plans

In the opinion of our auditor, Malish & Clark, Certified General Accountants, the Preferred Shares, if issued
on the date hereof, would be qualified investments under the Income Tax Act (Canada) and the regulations
thereunder for Registered Plans. In the opinion of our auditor, the Preferred Shares, if issued on the date
hereof, would not constitute ‘foreign property’ for the purpose of the tax imposed under Part XI of the Income
Tax Act on the Registered Plans, registered investments and certain other tax exempt entities, including most
RPPs or registered pension funds. RRSPs, RESPs and TFSAs are not subject to the foreign property rules.




                                                        15
Item 7 – Compensation Paid to Sellers and Finders

No person has or will receive any compensation by way of commission, corporate finance fee or finder’s fee
in connection with this offering.


Item 8 – Risk Factors

Nature of a Mortgage Investment Company

When you invest in a MIC you do so by buying its shares. The MIC then invests the money raised from you
and a group of investors with similar investment objectives in mortgages that are professionally managed by
the MIC’s investment manager.

As a result, when you buy shares of a MIC you are indirectly buying these underlying mortgages. The value
of your investment is determined by the performance of these underlying mortgages so you and the investors
in the MIC share in any gains or losses generated by the MIC from these mortgages.

Generally, you can sell your shares back to the MIC (in other words, the MIC will redeem your shares) in
order to take you money out of the MIC. When you sell you shares back to the MIC, the value of your
original investment may have increased or decreased.

How risk is related to return

Generally, there is a strong relationship between the amount of risk associated with a particular investment,
and that investment’s long-term potential to increase in value.

Investments that have a lower risk also tend to have lower returns because factors that can affect the value
of the investment, the risks, are well know or are well controlled and have already been worked into the price
of the investment. On the other hand, investments that could have potentially higher returns if conditions for
success are favourable also risk generating equally higher losses if conditions become unfavourable. This is
because the factors affecting the value of such investments are unknown or difficult to control.

What are the risks of investing in MICs?

Like any investment, there are risks associated with investing in MICs. Below we explain the specific risks
that can apply to us.

Your Investment is Not Guaranteed: Unlike guaranteed investment certificates (GICs) or money you have
deposited in a bank account, your investment in a MIC is not guaranteed by the Canada Deposit Insurance
Corporation, by any other government insurer or by us.

Your Investment will Fluctuate in Value: The value of a MIC’s underlying investments changes from day
to day, which in turn affects the value of the MIC. Some of the factors that can affect the value of a MIC’s
investments include:

•       current economic conditions;

•       changes in interest rates;

•       events in financial markets; and


                                                     16
•       financial conditions of the borrowers to which the MIC has advanced funds.

As a result of the changing value of the underlying mortgages, the value of your investment in a MIC can go
up or down over time, and there is no guarantee that when you sell or redeem your shares in the MIC they
will be worth the price you paid for them.

Your Investment is Subject to Changes in Interest Rates: MICs are subject to interest rate risk. Our mortgage
investments earn a fixed rate of interest. When interest rates rise, existing investments in mortgages become
less valuable because new mortgages will pay the new, higher rate of interest. Conversely, if interest rates
fall, the value of an existing mortgage with a higher rate of interest will rise.

Our Borrowers are or could become a Bad Credit Risk: When you invest in a MIC you are essentially making
a loan to the borrower (usually a homeowner) or the business borrowing the money. The risk is that they may
not be able or refuse to pay back this loan when it becomes due.

While we believe our lending policy is conservative and minimal losses are anticipated, if a loss does occur
it will be spread over all of our capital. Such losses could amount to a reduction in anticipated return or
investment or in the worst circumstances result in an investor losing their entire investment or failing to
receive return their investment as expected.

We might be Unable to Redeem Your Shares: Under exceptional circumstances, we may suspend your right
to redeem your Preferred Shares for example, if the redemption would render us insolvent or if it would cause
us not to meet the requirements for a MIC under the Income Tax Act.

Our Shares are Subject to Restrictions on Resale: Our Preferred Shares are not traded on any stock exchange
and may not be resold to third parties, therefore, you cannot liquidate your investment through selling your
Preferred Shares. See Item 10 ‘Resale Restrictions’.

The Loss of our Investment Manager could Adversely Affect Our Business: We rely solely on our Investment
Manager to review suitable investments for us. The loss of our Investment Manager would require us to retain
another manager to perform such services at a possibly higher cost to us and with less successful investments
than our current Investment Manager. This would have a material adverse effect on the rate of return obtained
on our capital and, therefore, on the value of your investment in our Preferred Shares.

A Change in Tax Legislation could Adversely Affect Our Business: We have been created to comply with
the MIC requirements of the Income Tax Act. Our Preferred Shares are intended to appeal to individuals
having Registered Plans such as RRSPs, RRIFs, TFSAs and RESPs. While it is not anticipated the Income
Tax Act as it pertains to such registered funds will change, there is always the possibility that it could be
altered so that the Preferred Shares would not longer be eligible investments for such funds. Such changes
could have an adverse effect on your investment.

We intend our business to be operated so that it complies at all times with the current requirements for MICs
under the Income Tax Act. Failure to meet such requirements could have a material adverse effect on our
financial performance.

The provisions of the Income Tax Act could be changed so that our profits could be taxable in our, rather than
your, hands. This could affect the value of your investment, especially if you own our Preferred Shares in a
Registered Plan.




                                                     17
Risk of Dealing with Trustees: We will deal with the trustees of Registered Plans as necessary but we will
not undertake any responsibility for the administration of any self-directed registered funds by such trustees.
The trust company of your registered fund may impose conditions upon us with which we are unable or
unwilling to comply. As a result, your trustee may refuse to allow our Preferred Shares to be an eligible
investment for your registered fund.


Item 9 – Reporting Obligations

9.1     Continuous Reporting Documents

The Business Corporations Act (British Columbia) governs how we conduct our corporate affairs (as opposed
to our business affairs).

That Act requires us to provide our shareholders with audited financial statements for each financial year. The
statements must be sent to our Common Shareholders (each of whom is also a Preferred Shareholder) in
connection with our annual general meeting of Common Shareholders held in the fall of each year. At the
same time, we send a letter to shareholders reporting on our previous year’s business.

From time to time, we may send out on our own accord, or in response to a request from one or more
shareholders, further information to all shareholders such as a reporting letter and interim financial statements.

9.2     Access to Information about Us

Since our Preferred Shares are not publicly traded no corporate or securities information is available from a
government, regulatory authority, stock exchange or quotation and trade reporting system. However,
information is available from our Investment Manager, Centrum Universal Financial Services Inc., at the
phone and fax numbers and e-mail address set out on the front cover.


Item 10 – Resale Restrictions

10.1    Overview

These securities [that is, both the Common Shares and Preferred Shares] will be subject to a number of resale
restrictions, including a restriction on trading. Until the restriction on trading expires, you will not be able
to trade the securities unless you comply with an exemption from the prospectus and registration requirements
under securities legislation.

10.2    Description of Restricted Period

Unless permitted under securities legislation, you cannot trade the securities [that is, Common Shares and
Preferred Shares acquired under this offering memorandum] before the date that is four months and a day
after the date we become a reporting issuer in any province or territory of Canada.

Currently we do not have any intention to become a reporting issuer in any Canadian province or territory
or a SEDAR (the System for Electronic Document Analysis and Retrieval established by the Canadian
Securities Administrators for reporting (public) companies in Canada) filer.

10.3    Manitoba Resale Restrictions

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

                                                       18
        (a)      we have filed a prospectus with the regulator in Manitoba with respect to the
                 securities you have purchased and the regulator in Manitoba has issued a receipt for
                 that prospectus, or

        (b)      you have held the securities 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.


Item 11 – Purchasers’ Rights

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

1.      Two Day Cancellation Right

You can cancel your agreement to purchase these securities. To do so, you must send a notice to us by
midnight on the second business day after you sign the agreement to buy the securities.

2.      Statutory Rights of Action in the Event of a Misrepresentation

If there is a misrepresentation in this offering memorandum, you have a statutory right to sue

(a)     us to cancel your agreement to buy these securities, or

(b)     us, our directors as at the date of this offering memorandum and every signatory to this offering
        memorandum, for damages.

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

If you sue for damages, the amount you may recover will not exceed the price that you paid for your Preferred
Shares and will not include any part of the damages that we prove does not represent the depreciation in value
of the shares resulting from 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 within 180 days after the issuance to you of the
Preferred Shares. You must commence your action for damages within the earlier of 180 days after learning
of the misrepresentation and three years after the issuance to you of the Preferred Shares.

3.      Contractual Rights of Action in the Event of a Misrepresentation

If the securities legislation where you are resident does not provide a comparable statutory right and there is
a misrepresentation in this offering memorandum, you have a contractual right to sue us

(a)     to cancel your agreement to buy these securities, or

(b)     for damages.



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This contractual right to sue is available to you whether or not you relied on the misrepresentation. However,
in an action for damages, the amount you may recover will not exceed the price that you paid for your
securities and will not include any part of the damages that we prove does not represent the depreciation in
value of the securities resulting from the misrepresentation.

We have a defence if we prove that you knew of the misrepresentation when you purchased the securities.

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
purchase the securities. You must commence your action for damages within the earlier of 180 days after
learning of the misrepresentation and three years after you signed the agreement to purchase the securities.


Item 12 – Financial Statements

Following are our audited financial statements for our last completed financial year.




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Item 13 – Date and Certificate


Dated: November 23, 2009

This offering memorandum does not contain a misrepresentation.



                                             The Issuer



                                 (signed) D. (DOUGAL) B. SHEWAN
                                               President
                                   and acting Chief Financial Officer



                                     On Behalf of the Directors



        (signed) ARNOLD P. CHADNEY                                (signed) EVAN A. BRETT
                   Director                                                 Director

								
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