Consolidated Mercantile F4/A Registration of securities (foreign) (amended) | SEC 26 Oct 09

EXHIBIT 23.8

HJF Financial Inc.

Business Valuations, Litigation Support Services

Educational Services and Independent Research

Tel: (416) 928-2740 & #160; 246 Cottingham Street

Fax: (416) 928-9523 & #160; Toronto

Cellular: (416) 457-4967 & #160; Ontario

Email: harryfigov@sympatico.ca 0; M4V 1C6

January 16, 2009

The Independent Committee

The Board of Directors

Consolidated Mercantile Incorporated

106 Avenue Road

Toronto

Ontario

M5H 2H3

To the Independent Committee of the Board of Directors of Consolidated Mercantile Inc.:

Comprehensive Valuation of the Shares of Consolidated Mercantile Incorporated as at December 31, 2008

INTRODUCTION

We have calculated the fair market value (“FMV”) of all the issued and outstanding common shares of Consolidated Mercantile Incorporated (the “Company” or “CMI”) at December 31, 2008 (the “Valuation Date”).

CMI is a public company whose shares are traded on the Toronto Stock Exchange (“TSX”) (symbol “CMC”) and until recently was also traded on The NASDAQ Stock Market.

DESCRIPTION OF THE PROPOSED TRANSACTION

We understand that the board of directors of CMI is proposing that CMI merge with Genterra Inc. (“Genterra”), a publicly listed and related company.

Genterra is an Ontario public company with significant interests in real estate properties located in Ontario, Canada, and investments in marketable securities.

It is intended that the proposed merger be in the form of a stock transaction whereby CMI will issue new common shares of CMI to existing Genterra shareholders.

The two (2) companies, Genterra and CMI, are both controlled by the Litwin family.

FAIR MARKET VALUE OF CMI

The fair market value of all the issued and outstanding common shares of CMI is in the range of SEVENTEEN MILLION THREE HUNDRED AND FIFTY EIGHT THOUSAND TWO HUNDRED AND EIGHTY ONE dollars Canadian ($17,358,281) or THREE DOLLARS AND FORTY TWO CENTS Canadian ($3.42) per share based on FIVE MILLION AND SEVENTY SIX THOUSAND FOUR HUNDRED AND SEVEN common shares outstanding as set out in Table # 1.

Table # 1

Fair Market Value of CMI at December 31, 2008

	Column		Table # 3
Common share capital Contributed surplus Retained earnings			Note # 10 Note # 10 Note # 10		$	2,688,939 59,411 14,609,931
Total common share capital		1			$	17,358,281
Number of common shares outstanding		2		��		5,076,407
Adjusted net book value per share	1 ÷ 2				$	3.42

This fair market value is predicated on the redemption of the Class A Preference shares prior to the merger.

MANDATE

We understand that the board of directors of CMI appointed an Independent Committee (“IC” or “you”) to consider the fair market value of CMI for the purposes of the merger of Genterra. In this context you have requested HJF Financial Inc. (“HJF”) to prepare a report setting out an independent calculation of FMV of all the issued and outstanding common shares of CMI as at Valuation Date.

Our comprehensive valuation report is prepared in accordance with the Canadian Institute of Chartered Business Valuators (“CICBV”) Standard 110 and Appendix A to Standard 110.

Considering the purpose of the valuation we have estimated the FMV of CMI common shares on an en-bloc basis, which is without applying minority discounts to the smaller share interests. We believe this approach is appropriate under circumstances as it treats all shareholders equally and is consistent with general practice in a valuation exercise of this nature. In making this assessment we have considered the fact that CMI has a majority shareholder and this valuation exercise is determining a FMV for the common shares owned by the minority shareholders’.

This report has been prepared in conformity with the Practice Standards of the CICBV.

INDEPENDENCE OF HJF FINANCIAL INC.

We confirm that we have taken all reasonable steps to ascertain whether or not HJF or any of the valuators assigned to this engagement have any conflicts of interest related to our engagement to prepare this report. Based on our own investigations of relevant facts and considerations, we confirm that we are unaware of any existing, potential or perceived conflicts of interest by HJF or any of the valuators assigned to this engagement and that, to the best of our knowledge and belief, we are independent for purposes of providing a valuation in respect of the Proposed Transaction. We further confirm that:

1.	HJF was initially contacted in connection with this engagement on or around mid June 2008;

2.	The valuator preparing this report for HJF is Harry Figov, BSc, MBA, CA·CBV, CPA, CFA;

3.	HJF has not conducted a prior valuation of CMI;

4.	There are no understandings or agreements between HJF, Genterra and CMI with respect to future business dealings;

5.	HJF has no financial interest in CMI or Genterra, or in the outcome of the Proposed Transaction;

6.	HJF has not and currently does not provide other services to Genterra or CMI;

7.	HJF does not have any contemplated arrangements to provide future services to Genterra or CMI; and

8.	Under the terms of the engagement, the remuneration of HJF does not depend, in whole or in part, on our conclusions or on the success of the Proposed Transaction;

DEFINITION OF FAIR MARKET VALUE

For the purposes of our engagement, fair market value is defined as the highest price obtainable in an open and unrestricted market, between informed and prudent parties, acting at arm’s length and with no compulsion to transact, expressed in terms of money or money’s worth.

If we are asked to consider a different basis of value, our conclusions herein may change.

Fair market value as defined above is different from the price that may be realized between a buyer and a seller of the Company in an open market transaction. This difference may arise from a variety of factors that exist in the real market and do not exist in the notional marketplace contemplated by the aforementioned fair value definition. These factors may include, but are not limited to:

·	Differing negotiating ability of the buyer and seller;

·	The structure and consideration of the purchase price;

·	Differing levels of knowledge between the buyer and the seller;

·	Momentum and public market dynamics; and

·	Benefits relating to buyer-specific synergies and other economic benefits

Given the nature of the engagement, we have not exposed the shares of CMI to the marketplace to determine whether some purchasers, for their own particular reasons, might perceive a value different from that determined by us.

SPECIAL PURCHASERS

FMV generally takes into account the existence of special purchasers who may believe they can enjoy post-acquisition economies of scale, synergies or strategic advantages by combining the acquired businesses with their own and who, therefore, may be willing to pay higher prices. CMI may represent a special interest purchaser of Genterra. However, we have not been informed of any specific economic benefits accruing to CMI through the acquisition of Genterra other than the ability of the post acquisition combined entity to immediately utilize tax loss carry forwards incurred by CMI. The benefit of this tax loss carry forward has been assessed in determining the FMV of CMI.

Until a business is exposed for sale, the existence of special purchasers is speculative at best. Even where special purchasers can be identified, a conclusion that they could be negotiated into a position to pay for potential cost savings or synergies, would be equally speculative. Therefore, we have not specifically quantified and included in our analyses the extent to which such special purchasers may be willing to pay for post-acquisition economies of scale, synergies, or strategic advantages.

CMI - - TRADING PRICES AND VOLUME – FAIR MARKET VALUE VERSUS PRICE

The FMV of CMI is different from the recent stock market trading prices, illustrated in Table # 2 setting out the monthly trading price and trading volume from January 2008 to December 2008 on the Toronto Stock Exchange:

Table # 2

CMI – Monthly Trading Volume – Toronto Stock Exchange

Month	High	Low	Month End Closing	Monthly Volume	Monthly Trading Volume as Percentage of Float Outstanding Shares
	$	$	$	#	%
January 2008	1.40	1.15	1.28	71,300	3.35
February 2008	1.90	1.24	1.50	22,700	1.07
March 2008	1.50	1.43	1.43	7,700	0.36
April 2008	1.80	1.45	1.80	1,000	0.05
May 2008	1.75	1.50	1.55	6,700	0.31
June 2008	2.25	1.50	2.15	25,300	1.19
July 2008	2.50	1.75	2.45	74,100	3.48
August 2008	2.49	2.15	2.15	169,500	7.96
September 2008	2.10	1.62	1.88	13,300	0.62
October 2008	1.88	1.50	1.62	14,700	0.69
November 2008	1.60	1.40	1.40	4,600	0.22
December 2008	1.50	1.25	1.25	14,800	0.69

We have used 2,129,574 common shares as the float out of a total of 5,076,407 common shares issued and outstanding. This represents the common shares owned by the minority shareholders of CMI.

There are various factors that are present in the public market that can impact the price of public company stock that are not necessarily considered under the definition of FMV noted herein:

·	Differing negotiating ability of the buyer and seller;

·	The structure and consideration of the purchase price;

·	Differing levels of knowledge between the buyer and the seller;

·	Momentum and public market dynamics; and

·	Benefits relating to buyer-specific synergies and other economic benefits

Specifically, this difference may reflect the following factors, among other factors:

·	Lack of complete financial information regarding the investments of CMI;

·	CMI has a single majority shareholder and the market price may reflect a discount for minority shareholdings; and

·	Management holding companies may trade at a discount to their net asset value;

In addition, given the low monthly volume of CMI shares that are transacted for, the public market trading price at any one point in time may not be reflective of an open and unrestricted market as is contemplated in the definition of fair market value.

CURRENCY

All currency amounts expressed herein are in Canadian dollars, unless otherwise noted.

SCOPE OF REVIEW

In determining the FMV of all the issued and outstanding shares of CMI, we have reviewed and relied upon the following:

1.	Historical consolidated audited:

§	Balance Sheet

§	Statement of Retained Earnings

§	Statement of Accumulated Other Comprehensive Loss

§	Statement of Operations and Other Comprehensive Income

§	Schedule to Financial Statements

of CMI for the five (5) fiscal years ended December 31, 2003 to 2007;

2.	Quarterly consolidated unaudited interim financial statements for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008;

3.	CMI Annual Information Form dated March 17, 2008;

4.	Information obtained from the website of CMI;

5.	Schedules provided by CMI providing details and backup of ‘Cash and Cash Equivalents’ and investments at September 30, 2008 and October 31, 2008;

6.	Schedule of currency transactions in October 2008;

7.	General economic information relating to the economy on or about the Valuation Date;

8.	Historical trading price and trading volume for CMI on the Toronto Stock Exchange from the TMX – Money website for the period January 2008 to November 2008;

9.	Discussions with Mr. Stan Abramowitz, Secretary and Chief Financial Officer of CMI;

10.	Discussions with Mr. Ian Dalrymple, independent director of CMI;

Consistent with the terms of our engagement, we have not audited, corroborated or otherwise independently verified any of the information provided by CMI management and CMI upon which our conclusions are based.

We have received a letter of representation signed by Mr. Stan Abramowitz, Secretary and Chief Financial Officer of CMI, wherein they have confirmed certain representations made to us, including a general representation that:

1.	They have reviewed this report in draft form and have discussed it with us;

2.	They are satisfied with our explanations and the approach adopted by us as set out herein; and

3.	They have confirmed they have no information or knowledge not disclosed in the report with respect to our calculation of FMV of all the issued and outstanding common shares of CMI, which could reasonably be expected to alter our conclusions herein;

MAJOR ASSUMPTIONS

In determining the comprehensive FMV for all the issued and outstanding shares of CMI we relied upon the following assumptions in addition to the assumptions identified throughout our report:

1.	All historical annual and quarterly financial statements provided to us by CMI management present fairly, in all material respects, the financial position, the operating results and changes in the financial position of CMI for the relevant periods reported on;

2.	At the Valuation Date, CMI had no materially contingent liabilities, environmental issues, unusual contractual obligations, pending or threatened litigation or substantial commitments other than those disclosed in this report;

3.	At the Valuation Date there were no contracts being negotiated that would have a material effect on the future financial position or operating results of CMI other than those disclosed in this report;

4.	There have been no material events or changes that have occurred between the Valuation Date and date of this report in CMI’s financial position and operating results that may effect the calculations and conclusions contained in this report other than those disclosed in this report;

We have not considered the income tax consequences to CMI shareholders with respect to this transaction. Our comprehensive FMV for all the issued and outstanding common shares of CMI is based on the assumption that CMI shareholders would be able to consummate the proposed transaction without adverse income tax consequences;

OVERVIEW OF THE ECONOMY

The U.S. economy is in recession and interest rates have been lowered by the Federal Reserve. Interest rates have also been lowered by the Bank of Canada in Canada and are likely to be lowered further. Canada’s economy is slowing and may enter a recession in 2009.

Consumers are being cautious with their spending, inflation is low and the stocks markets in both Canada and the U.S. have declined. The investment climate is likely to be difficult for the foreseeable future.

The Organization for Economic Co-operation and Development (“OECD”) believes that the world is entering the worst economic downturn in decades and that Canada will not be immune to this and will be affected as well.

OVERVIEW OF CMI

History of CMI

CMI was incorporated on August 12, 1940 in Ontario under the name of Erie Flooring and Wood Products Limited. It became a public company in 1948. The name of the company has been changed several times as follows:

·	Erie Diversified Industries Ltd. in 1968;

·	Lambda Mercantile Corporation Ltd. in 1973;

·	Consolidated Mercantile Corporation in 1987; and

·	Consolidated Mercantile Incorporated in 1998

CMI is a management holding company with its head office is located in Toronto, Ontario.

Business Objective of CMI

CMI’s objective is to create and maximize shareholder value through internal growth of investments and acquisitions of companies having synergistic product lines and technologies, management strength and a presence in markets with the potential for sales of complementary products. CMI’s investment strategy is to assist operating units in taking advantage of their strengths by investment in and by the provision of management and merchant bank services, with the objective of creating added value to CMI and their shareholders. The mission and strategies of CMI are currently under review.

Business of the Company

CMI, until December 2007, had interests in two operating companies, namely:

1.	22.15% interest in Polyair Inter Pack Inc. (“Polyair”), a manufacturer of products for the protective packaging industry. This interest was disposed of through a private sale on December 31, 2007; and

2.	50.33% interest in Distinctive Designs Furniture Inc. (“Distinctive”), a manufacturer and importer of leather and fabric upholstered furniture. This interest together with debt owed by Distinctive to CMI was disposed and sold to Distinctive’s other major shareholder on December 28, 2007;

The disposal of CMI’s two (2) operating investments has allowed CMI to utilize its available financial and management resources to seek out new long-term strategic acquisitions with potential for future growth.

The Company has in the interim period invested a portion of its working capital in a combination of relatively short-term income producing assets.

Management

Mr. Fred A. Litwin (“Mr. Litwin”) is the President of CMI and Mr. Stan Abramowitz is the Secretary and Chief Financial Officer of the Company. Both are also directors of the Company.

Principal Shareholders

Mar-Risa Holdings Inc. (“Mar-Risa”), an Ontario corporation holds an aggregate of 2,612,894 Common Shares of CMI. 1,475,394 of these Common Shares of CMI owned by Mar-Risa are held through a wholly owned subsidiary of Mar-Risa, DG Acquisition Corp. (“DG”), an Ontario corporation. Mar-Risa is indirectly controlled by Mr. Litwin.

Mr. Litwin controls 2,779,191 common shares of CMI. This includes the shares held by Mar-Risa.

We are not aware of any other person or company that beneficially owns, directly or indirectly, or exercises control or direction over securities carrying more than 10% of the voting rights attached to any class of outstanding voting shares of CMI.

Subsidiary Company

2041804 Ontario Incorporated is a wholly owned subsidiary of CMI with an investment in GAZ Metro Limited Partnership units.

Investments

CMI beneficially owns 292,117 common shares in Genterra.

Related Party Transactions

CMI does enter into transactions with various companies that are related by virtue of common ownership and management. These transactions with related parties are in the normal course of business.

Capital Stock

CMI has the following authorized capital stock:

·	Unlimited - $0.04 non-cumulative, non-voting, non participating, $0.44 redeemable Class A Preference shares;

·	Unlimited - Preference shares issuable in series; and

·	Unlimited – Common shares;

Currently, CMI has issued and outstanding Class A Preference shares and Common shares.

TAX LOSSES

CMI had the following tax loss-carry forwards:

Expiration Date	Amount
	$
2014 2015 2016	468,132 493,123 587,639
	1,548,894

We have been informed by management that these tax losses can be utilized by the merged company and will be fully used up in the first year of the merger.

VALUATION APPROACHES AND METHODS

Valuation Approaches

When valuing a business, two (2) approaches to value can be considered:

1.	A going concern approach; or

2.	A liquidation approach;

According to the definition of FMV, we must choose the approach that will give the higher value.

The going concern approach assumes a continuing business enterprise with potential for economic future earnings. The liquidation approach assumes a situation where a business is not viable as a going concern, or the return on assets or equity on a going concern basis be inadequate. The determination of the most appropriate valuation approach in a particular situation first requires assessment of whether or not the business is a going concern.

Generally, the FMV of an asset may be estimated based on the appropriate application of the Income, Market, and Cost Approaches. Although all three (3) approaches may be considered in a valuation analysis, the nature of the asset and the availability of information will dictate which approach or approaches are applied to estimate the FMV of the asset. An overview of each of these approaches is discussed below.

Income Approach

The Income Approach focuses on the income-producing capability of the subject asset. The underlying premise of this approach is that the value of the asset can be measured by the present worth of the net economic benefit, (namely cash receipts less cash outlays) to be received over the life of the subject asset.

The steps followed in applying this approach include estimating the expected after-tax cash flows attributable to the asset over its life and converting these after-tax cash flows to present value through discounting. The discounting process uses a return that accounts for both the time value of money and investment risk factors. Finally, the present value of the after-tax cash flows over the life of the asset is totaled to arrive at an indication of the value of the asset.

Market Approach

The Market Approach is comprised of the comparable public company method and the comparable transactions method. The application of the Market Approach results in an estimate of the price reasonably expected to be realized from the sale of the subject business.

The comparable public company method focuses on deriving valuation factors for the subject business from reasonably similar publicly traded companies. The comparable transactions method focuses on deriving valuation factors for the subject business from the prices paid for reasonably comparable businesses. Adjustments are made to the valuation factors to compensate for differences between the subject business and the comparable public companies or comparable transactions.

Asset Approach

The Asset Approach relies on the principal of substitution and recognizes that a prudent investor would pay no more for an asset than the cost to replace it with an identical or similar unit of equivalent utility.

The Asset Approach includes the adjusted net assets method. Under this method, a valuation analysis is performed for a company’s identified capital, financial, and other assets and the liabilities. The individual values of these assets are then aggregated and the values of the liabilities are deducted to determine the value of the entity.

Holding Companies

A holding company generally is thought of as one that carries on no active business of its own, but whose principal activity is investment in various other assets. As such, the assets of holding companies may include investments in operating companies.

Earnings generated by a holding company in the form of dividends normally are less significant from a value perspective than is the appreciating value of the underlying investments themselves. Accordingly, holding companies typically are valued pursuant to the adjusted net book value methodology where each asset, investment, or division separately is valued on a market or going concern value basis as appropriate. As a result, holding companies generally are valued as a 'collection of individual assets' such that no intangible value (or goodwill) exists within the holding company itself.

Approach Selected

CMI is a management holding company and the appropriate valuation approach to determine fair market value of CMI is the Asset Approach. The fair market value of CMI is not necessarily related directly to the earnings of the Company, but rather is tied to the fair market value of the assets the Company holds.

Pursuant to the Asset Approach, the book values of CMI have been converted to their respective fair market values. Latent income taxes have been provided for on the actual and accrued gains associated with the assets.

Adjusted Net Book Value Approach

This approach utilizes an adjusted net book value approach where all assets and liabilities are restated to their fair market value as if these assets continue to be in use. This value would represent the highest value of CMI since it does not appear to have any goodwill value in its current state.

The adjusted net book value (or net tangible asset backing) underlying the outstanding equity of the CMI is determined by adjusting shareholder's equity as stated in the financial statements as follows:

·	Add (deduct) the amount by which the greater of the market value or depreciated replacement value of each of the CMI’s tangible asset pools exceeds (is less than) their respective book values;

·	Deduct (add) the amount by which the market value of the CMI’s liabilities exceeds (is less than) their respective book values; and

The asset values in an adjusted net book value calculation are based on a going concern assumption where their values are determined based on their net contribution to the business assuming continued use as opposed to value in exchange. The main difference between value in use and value in exchange in this context is that value in use:

·	Reflects the net cash inflows accruing from asset utilization; and

·	Includes all installation and start-up costs.

In the context of adjusted net book value, value in use is never less than value in exchange.

ADJUSTED NET BOOK VALUE

Table # 3

Consolidated Mercantile Incorporated – Balance Sheet

Adjusted Net Book Value

	Balance Sheet September 30, 2008	Adjustments	Adjusted Net Book Value	Note
ASSETS	$	$	$	#
CURRENT Cash & cash equivalents Short-term investments Accounts receivable Prepaid expenses Notes receivable	13,243,644 3,468,594 16,424 45,973 79,935	1,043,342 (232,626)	14,286,986 3,235,968 16,424 45,973 79,935	1 2 3 4 8
INVESTMENTS NOTES RECEIVABLE TAX LOSS CARRY FORWARD	16,854,570 321,291 437,578	810,716 (29,174) (420,953) 508,705	17,665,286 292,117 16,625 508,705	5 8 6
	17,613,439	869,294	18,482,733
LIABILITIES
CURRENT Accounts payable & accrued liabilities Income taxes payable Future income taxes	143,483 842,130 27,239	(27,239)	143,483 842,130 0	7
DEFERRED GAIN	1,012,852 420,953	(27,239) (420,953)	985,613 0	8
	1,433,805	(448,192)	985,613
SHAREHOLDERS’ EQUITY
CAPITAL STOCK 315,544 Class A Preference shares 5,076,407 Common Shares CONTRIBUTED SURPLUS RETAINED EARNINGS	141,826 2,688,939 2,830,765 59,411 13,289,458	(2,987) 1,320,473	138,839 2,688,939 2,827,778 59,411 14,609,931	9 10 10 10
	16,179,634	1,317,486	17,497,120
	17,613,439	869,294	18,482,733
Shares outstanding Preference Common	315,544 5,076,407		315,544 5,076,407
Adjusted net book value per common share			$3.42	10

ANALYSIS OF ASSETS AND LIABILITIES ADJUSTMENTS TO NET BOOK VALUE

The notes explain all the adjustments to the book value of the assets and liabilities of CMI.

1.	Cash and Cash Equivalents

Balances at September 30, 2009 at FMV

	U.S.	Rate US-Cdn	Canadian	Total
	$	$	$	$
Cash				32,237
Cash equivalents Deposit Deposit Commercial paper Commercial paper	6,532,616 2,244,502	1.0642 1.0642	2,760,625 6,952,010 1,110,173 2,388,599	13,211,407
				13,243,644

Notes:

1.	Exchange rate per Bank of Canada at September 30, 2008 US$1 = Cnd$1.0599;

2.	Rate of US$1 = Cdn$1.0642 used by CMI;

3.	The U.S dollars have been disposed of subsequent to September 30, 2008 and the actual gain will be used in calculation of fair market value;

4.	The U.S. dollars were sold for a profit of $1,043,342 on book value in October 2008;

5.	The gain on the conversion of the U.S. dollars to Canadian dollars is a capital gain;

2.	Short-term Investments.

Balances at September 30, 2008 at FMV

	Amount	Note
	$	#
Limited Partnership # 1	1,010,799
Limited Partnership # 2	1,043,266
Limited Partnership # 3	846,000	2
Limited Partnership # 4	335,903	3
	3,235,968

Notes:

1.	Values supplied by CMI;

2.	Limited Partnership # 3 – cashed in December 2008 for $846,000 versus a book value of $1,078,626;

3.	Limited Partnership # 4 – this investment is held by 2041804 Ontario Inc., a wholly owned subsidiary of CMI;

3.	Accounts Receivable – Assume fully collectable;

4.	Prepaid Expenses – Assume these expenses can be fully utilized;

5.	Investments

CMI beneficially owns 292,117 common shares in Genterra. There are 19,339,188 shares of Genterra outstanding.

Genterra is a related company with the same controlling group of shareholders as CMI. It is an Ontario public company with significant interests in real estate properties located in Ontario, Canada, and investments in marketable securities.

Corporate Valuation Services (“CVS”) has determined that the fair market value of the Genterra shares is one dollar ($1.00) per share at Valuation Date. CMI has an unrealized loss of $29,174 on the book value of the Genterra shares.

The values are summarized:

Genterra Shares

Book Value	Fair Market Value	Unrealized Loss
$	$	$
321,291	292,117	(29,174)

6.	Tax Loss Carry Forward

CMI has the following the following tax loss-carry forwards:

	$	$
Value of tax losses		2,198,169
Realized taxable currency capital gain Less: 50% capital gain exemption	1,298,550 649,275
Taxable gain	649,275	(649,275)
Tax loss carry forward		1,548,894
Value of tax loss at 33.5%		518,879
Discounted at 2% for one year		508,705

7.	Future Income Taxes

The future income tax liability has been reversed since it relates to an unrealized gain on U.S. dollar denominated deposits, which has been realized.

8.	Deferred Gain

The proceeds on the sale of CMI’s investment interest in Distinctive were satisfied by a promissory note issued by the purchaser. The note does not bear interest, is discounted and is repayable in ten (10) equal consecutive annual installments of $100,000. The note is secured by shares of Distinctive. CMI only recognizes the gain on the sale in the Statement of Operations to the extent that it has been realized and the Deferred Gain on the sale represents the unrealized gain. The first installment on the note is due January 2009. The balance of the note has been netted off the Deferred Gain and the adjusted Deferred Gain has been added to the common shareholders’ equity;

9.	Class A Preference Shares

CMI has issued and outstanding 315,544 $0.04 non-cumulative, non-voting, non-participating, $0.44 redeemable Class A Preference shares.

We have been informed that it is intended that these shares will be redeemed at $0.44 per share prior to the merger. CMI has the resources to redeem the preference shares and we have valued these preference shares at their redemption value of $0.44 per share (see Table # 3).

The redemption value has been calculated as follows:

Class A Preferred Shares

Shares Outstanding	Redemption Price per Share	Redemption Value	Book Value	Difference Gain/(Loss)
1	2	1 x 2
#	$	$	$	$
315,544	0.44	138,839	141,826	(2,987)

10.	Adjusted Net Book Value Per Common Share

The adjusted net book value per share has been calculated as follows:

	Column
Common share capital Contributed surplus Retained earnings		$ 2,688,939 59,411 14,609,931
Total common share capital	1	$17,358,281
Number of common shares outstanding	2	5,076,407
Adjusted net book value per share	1 ÷ 2	$3.42

RESTRICTIONS

Our calculation of FMV for all the issued and outstanding shares of CMI is prepared as at December 31, 2008 as required by our mandate based on current and prospective information publicly available and made available to us by CMI as at the date of this report. Events and changes in circumstances that occur after the date of our report and the passage of time may render the conclusions contained in this report inappropriate for any date other than the Valuation Date.

This report may be used in any offering document related to this particular transaction and submitted to appropriate regulatory authorities where required. However, this report is not intended for general circulation or publication, nor is it to be reproduced, referred to or used for any other purpose other than outlined herein, without our written consent in each specific instance. We do not assume any responsibility or liability for losses incurred by any parties as a result of the circulation, publication, reproduction or use of this report contrary to the provisions of this paragraph.

We reserve the right, but will be under no obligation, to review all calculations and conclusions included or referred to in this report and, if we consider necessary, to revise our calculations and conclusions in light of any information existing at the Valuation Date which becomes known to us after the date of this report.

Furthermore, the comprehensive FMV presented in this report and our conclusions is intended solely for the use by the Independent Committee of the Board of Directors and the Board for the specific purpose stated in the Mandate section of this report and is not to be interpreted as a recommendation to buy, sell, or engage in other transactions of CMI shares.

Toronto, Canada

January 16, 2009

HJF Financial Inc.

Per:

Harry Figov, BSc, MBA, CA, CPA, CFA, CA*CBV

Schedule # 1