Peers Foster Kristiansen Inc. and Federal Mortgage Corporation Ltd.

In Bankruptcy (“PFK and FMC”)

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.

Inspector Update as at March 2012

Mike Boyd has resigned as an inspector due to personal reasons, primarily the significant time commitment required.

Status of the File as at November 2011

Real Estate Assets subject to prior encumbrances by other lenders

As at October 31, 2011, the Trustee has sold most of the properties which were encumbered by various banks ahead of FMC and PFK thereby reducing the amount of any residual claims from those secured creditors against the estate. Due to market conditions and the condition of the properties, the estate will see minimal realizations from these sales as most of the proceeds went to pay the secured creditors who were in priority to PFK or FMC.

Calgary Duplexes

The Calgary duplexes had significant structural and maintenance issues that were estimated to cost in excess of $150,000 to rectify. Most potential purchasers viewed the duplexes as a high risk investment and therefore were unwilling to submit an offer. After more than 6 months on the market and few bona fide offers, the estate accepted an offer of $1,050,000 for the two duplex. The proceeds of the duplexes will not be sufficient to cover the secured claim by HSBC who will now make a claim against the remaining assets of the estate of approximately $60,000 under their security. In addition, FMC had a mortgage in excess of $1.7 Million against these duplexes which will not be satisfied.

Springbank Warehouse

The Springbank warehouse had significant structural issues that were estimated to require more than $900,000 to rectify and had carrying costs of approximately $17,000 per month. Additionally, the market demand for this type of building was weak and therefore in the 6 months the warehouse was on the market, only two offers were received. Therefore, the Trustee sought court approval for the sale of this asset. The offer to purchase of $2,500,000 was significantly less than the outstanding mortgages held by ATB ($2.3 million) and FMC ($7.1 Million). The court approved the acceptance of the offer and the sale is scheduled to close at the end of November. A copy of the court order is attached.

Other Real Estate

The Parkdale lot and the Riverview Place home were both sold for amounts greater than their encumbrances, and therefore the estate realized approximately $225,000 proceeds on these assets.

Loans Receivable

The estate of PFK will receive monies from the liquidation of HME Evans Co. Ltd. Both of the properties held by HME Evans have been sold although the amount of the distribution available to PFK is not known at this time. The court appointed a third party to validate the claims against the assets of HME Evans and once the liquidator has been provided with the findings from the accounting firm, the liquidator will file for court approval to make the distributions. The Trustee anticipates funds of approximately $1,200,000 to $2,000,000 from the sale of these assets.

The Trustee continues to collect on other outstanding loans and mortgages receivable where assets or other collateral is registered although many of these loans have now been fully paid out by the borrowers. The trustee will continue to collect on these loans and where appropriate, will commence legal action against those borrowers who have not made payment arrangements with the Trustee. The gross amount of these loans is $ 6.6 Million although a significant proportion of these loans are unsecured or has questionable collectability. These are being assessed on an individual basis to determine appropriate action to be taken on each of these loans.

ABIL Claims

The Trustee was advised by its tax advisors, that the CRA will not issue a ruling on a question of fact or on a transaction that has already occurred. Therefore, the determination as to whether each investor’s investment in PFK/FMC is available for an allowable business investment loss is eligible will have to be determined by the CRA on a case by case basis as filed by investors with their annual tax returns. Each Investor should submit a claim for losses on their tax returns after discussing the details with their tax advisor.

Canyon Ridge Development

PFK was a joint venture partner in a residential property development located in Golden BC. These lands were held by the joint venture, although PFK had obtained a mortgage on the property from Federal Mortgage Corporation who in turn obtained a mortgage from Canadian Western Bank. The Trustee entered into an agreement where the joint venture partner paid approximately $350,000 of outstanding property taxes on the development and the estate received certain properties in exchange for its interest in the joint venture. Subsequently, the Trustee obtained refinancing of the properties in the Canyon Ridge development so as to pay out Canadian Western Bank which had commenced foreclosure proceedings. The Trustee may now market the properties held by the estate free and clear of any third party encumbrances. The Trustee is currently developing a marketing plan for these properties held in the estate. This marketing plan will include selling the properties as a block to interested developers as well as making individual lots available to interested parties.

The site plan for the development can be found at www.canyon-ridge.ca/siteplan.html.

At this time, sales of the lots will be open to PFK or FMC investors only. Any investor interested in purchasing one of the lots listed below should contact us by January 15, 2012 for more information.

Status of the File as at July 20, 2011

Assets

The trustee continues to dispose of the assets of the company as efficiently as possible. Unfortunately most of the properties are significantly encumbered with multiple mortgages or other security interests and therefore, the sale of any of these assets is very complicated and cumbersome. Claims of the various parties with registrations against the assets must be individually validated prior to the trustee being able to finalize sales and for any funds to come into the estate.

Many of the smaller, less entangled assets have been sold, although realizations for the estate have been minimal. Many of the remaining assets are in poor condition requiring significant repairs and market conditions for the sale of these assets are generally unfavourable at this time.

The non real estate assets of the company are largely unsecured loans to related companies and individuals. The trustee is continuing to investigate and realize on these loans and receivables although it appears that there are very few of these loans that are backed by registered mortgages or tangible assets. In the short term, it is unlikely the estate will see any material funds from these assets.

Other matters

There is a class action lawsuit being undertaken against the Peers and various Directors of the companies. The lawyer heading the class action is Mr. Louis Belzil of Rackel Belzil LLP. This lawsuit is separate from the work of the trustee. It is the trustee’s understanding that Mr. Belzil has sent a letter to all investors and creditors of the companies inquiring about their interest to participate in a class action.

The Alberta Securities Commission (ASC) is continuing its investigation into the operation of these two companies. The status or findings of this investigation is not known to the trustee.

Status of the File as at March 23, 2011

On January 31, 2011, the Trustee mailed to all known shareholders of Peers Foster Kristiensen Inc. ("PFK"), at the addresses of record based on the books and records of PFK, a letter updating shareholders as to the status of the file and administration of the estate. This was done in an effort to provide information to non-creditors and reduce the administration of handling large numbers of inquiries from shareholders. A copy of the letter sent to shareholders is attached below.

In addition, as outlined in our update of February 11, 2011, on February 28, 2011, the Trustee mailed T5's, which were prepared by PFK's accountant, to investors which were paid interest in 2010 by Federal Mortgage Corporation Ltd. or PFK. Should there be any questions or concerns regarding the T5's received, please contact Ian Cameron of the Trustee's office at ian.g.cameron@ca.pwc.com.

Letter to Shareholders

Inspector Update as at March 22, 2011

Further to the Third Inspectors Meeting, it was confirmed that two inspectors, Charlie Cappello and Lori Griffith, have resigned as inspectors due to personal reasons, primarily the significant time commitment required.

The inspectors are now administering the estates as a combined estate pursuant to the March 2, 2011 Consolidation Order. The remaining inspectors are:

• Peter Stack
• Ean Sharp
• Allan McInnes
• Mike Boyd

Status of the File as at March 7, 2011

Since the First Meeting of Creditors on January 12, 2011, the Trustee has been investigating the affairs in the estates of PFK and FMC. In general, the operations and assets of PFK and FMC are closely connected, convoluted and involve many complex legal arrangements such as re-mortgaging of properties, mortgages on mortgages and intercompany transactions. In many cases, multiple parties are involved and positions have to be assessed before any determination of recovery can be made. This process has been very time consuming both from a legal and financial review perspective and has produced very few recoveries to date.

Also, the Trustee has conducted a cursory forensic review with the approval of the Inspectors. As a result of the review, the Trustee has obtained a Court Order to obtain electronic information from the estates’ service provider, Sentai Software Inc. A copy of the Court Order, along with the Second Report of the Trustee has been posted to the website. Further forensic procedures are required; however, the decision to pursue this will be brought forth to the Inspectors for discussion.

Further, as indicated in the Trustee’s Preliminary Report, the vast majority of funds were used to fund Titanwall group of companies and Metaform Ventures Corp. Although steps are being taken by the Trustee for the collection of these loans, based on a preliminary investigation, we cannot be optimistic that there will be any recoveries without incurring significant expenses.

Of necessity, certain information regarding the investigation of the estates has been kept confidential as disclosure of such information may be potentially prejudicial to the outcomes. Where possible, the Trustee will post updates as it continues to focus its efforts on pursuing recoveries; however, at this juncture, prospects of any recovery are slim.

With the approval of the Inspectors, the Trustee has obtained an order to consolidate the estates of PFK and FMC as a means to reduce administrative costs. A copy of the Consolidation Order can also be found on the website.

We sincerely appreciate the predicament of many of the investors and we will continue to pursue all possible recoveries in as cost effective a manner as possible.

Consolidation Order

Order regarding Sentail Software Inc.

Status of the File as at February 11, 2011

T5 slips will be issued in respect of interest paid by PFK or FMC during 2010. T5 slips will not be issued in respect of interest obligations due, but not paid. PwC is not in a position to confirm whether obligations due will be paid or whether such amounts were added and capitalized to the investment account.

Status of the File as at January 31, 2011

Century Services Inc., on behalf of the Trustee, will be holding an auction of the office equipment of PFK at the office of PFK, located at 11207-103 Avenue, on Wednesday February 2, 2011 starting with a preview between 4:00 and 6:00 PM with the auction commencing at 6:00 PM.

Status of File on December 9, 2010

On December 9, 2010, Peers Foster Kristiansen Inc. (“PFK”) and Federal Mortgage Corporation Ltd. (“FMC”) filed assignments into Bankruptcy and PricewaterhouseCoopers Inc. was appointed as Trustee of the estate of the bankrupts.

All parties who are owed money as of the date of the bankruptcy may have a claim in the estates of PFK or FMC.

The first meeting of creditors of the bankrupts will be held on Wednesday January 12, 2011 at a location to be determined shortly.  Notice of the bankruptcies will be sent to all known creditors of the estate providing the date, time and location for the first meeting of creditors.  Notice of the meeting will also be advertised in the Edmonton Journal. In addition, this website will be updated with all current information.

At the meeting, the Trustee will provide information on PFK and FMC’s financial affairs, the causes of its bankruptcy and certain other matters.

Form 19 - 24-1440762

Form 19 - 24-1440761

This Web site will be updated as information becomes available.

For more information, please contact: PricewaterhouseCoopers Inc., Telephone: 780-441-6730, Fax: 780-441-6776, Email.