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Annual report 2013 Related Party Transactions Fund Manager The Fund Manager is related to the Fund because of the management arrangement, certain common directors and officers, and certain non-independent directors of the Fund and Fund Manager who also control voting shares in both entities. The Fund Manager is responsible for the day-to-day operations, including administration of the Fund's mortgage loan investments. In respect of these services, the Fund pays to the Fund Manager a management fee. For the year ended February 28, 2013, the Fund incurred management fees of $81,045 (February 29, 2012 – $65,254), of which $22,230 (February 29, 2012 – $20,489) remains payable at year end. On June 1, 2012, the Fund and the Fund Manager mutually agreed to revise the management fee on a goforward basis. Subsequent to June 1, 2012, the management fee paid by the Fund is equal to 7.5% of the Fund's revenue, and is calculated monthly and paid quarterly. The Fund Manager's eligibility to receive the management fee for any month is subject to the Fund generating an increase in net assets from operations that is sufficient to provide a minimum 8% annualized return on the opening monthly capital of the Fund. Prior to June 1, 2012 the Fund Manager's management fee was calculated as 10% of the Fund's revenue and was not subject to achieving a hurdle rate. In addition, $881 (February 29, 2012 – $2,900) is payable by the Fund to the Fund Manager at February 28, 2013 for the reimbursement of Fund operating expenses paid by the Fund Manager. In respect of capital raised, the Fund incurred $85,596 (February 29, 2012 – $32,128) in service fees to the Fund Manager during the Year, of which $27,083 (February 29, 2012 – $32,128) remains payable at year end. As a result of the restructuring that occurred during the Year, the following transactions were also completed between the Fund and Fund Manager: • The Fund incurred $7,373 (February 29, 2012 – $55,168) in share issue costs to the Fund Manager for subscriptions to the Fund's preferred shares that occurred prior to June 1, 2012. After June 1, 2012 the Fund does not pay share issue costs in respect of the distribution of Class A and Class B preferred shares. 16 • The Fund received a repayment of $99,421 (February 29, 2012 – $nil) from the Fund Manager during the Year to offset the Fund's unamortized share issue balance at June 1, 2012. This repayment was in respect of share issue costs that were previously paid to the Fund Manager under the terms of the Fund's structure prior to June 1, 2012. • The Fund made a repayment of unearned income to the Fund Manager of $16,100 (February 29, 2012 – $nil). This repayment was in respect of structural changes to the Fund that occurred on January 21, 2013. Other Related Party Transactions As at February 28, 2013, the Fund has co-invested as a syndicate with one non-independent director who is also an officer and common shareholder of the Fund in a mortgage loan secured by real estate that is owned by a third party. The Fund's share in the mortgage investment is $475,000 (February 29, 2012 – $nil). The Fund Manager has been retained by the director to provide loan administration services. As at year end, related parties, including certain directors that are not independent of management, voting shareholders, and their immediate families and related corporations, held 150,984.31 (February 29, 2012 – 183,848.03) Class A preferred shares, with a total dollar value of $1,509,843.10 (February 29, 2012 – $1,838,480). The above related party transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

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