TSX Symbol FC TORONTO, May 9, 2012 /CNW/ - Firm Capital Mortgage
Investment Corporation (the "Corporation") (TSX FC), today released
its financial statements for the first quarter ended March 31,
2012. PROFIT & RETURN ON EQUITY Profit for the quarter ended
March 31, 2012 totaled $3,937,912 compared to $3,546,919 for the
quarter ended March 31, 2011. Profit for the quarter ended
March 31, 2011 exceeded dividends by $219,377 or $0.013 per
share. The first quarter Profit represents an annualized
return on average Shareholders' equity of 10.03% per annum.
This return on Shareholders' equity equates to 901 basis points per
annum over the average one year Government of Canada Treasury bill
yield for the quarter and is well in excess of the Corporation's
target yield objective of 400 basis points per annum over the one
year Treasury bill yield. DIVIDEND OVERVIEW: Monthly dividends for
the first quarter totaled $0.234 per share ($0.078 per share per
month). INVESTMENT PORTFOLIO HIGHLIGHTS: Details on the
Corporation's investment portfolio as at March 31, 2012 are as
follows: -- Total gross investment portfolio equals $299,175,460 --
Conventional first mortgages, being those mortgages with loan to
values less than 75%, comprise 70.8% of our total portfolio, and
total conventional mortgages with loan to values under 75% comprise
84.3% of our total portfolio. -- Non-conventional mortgages total
8.1% of the portfolio. -- Related investments total 7.6% of the
portfolio. -- Approximately 54% of the portfolio matures within 12
months. This results in a continuously revolving portfolio,
allowing management to assess market conditions. -- The average
face interest rate on the portfolio is 8.96% per annum. --
Regionally, the portfolio is diversified approximately as follows:
Ontario 76.0%, Alberta 11.6%, British Columbia 7.4%, with the
balance (5.0%) being in other provinces. -- Investment portfolio
breakdown by loan size is as follows: Investment Portfolio
Breakdown Amount Number of Investments Total Amount $0-$2,500,000
87 $ 83,021,841 $2,500,001-$5,000,000 23 81,072,031
$5,000,001-$7,500,000 13 78,011,589 $7,500,001 + 6 57,070,000 Total
129 $299,175,461 IMPAIRMENT PROVISION UPDATE: Management has always
taken a proactive approach to allowance provision reserves. This is
a prudent approach to protecting our Shareholders' equity.
Impairment provisions remained at $2,980,000 representing 1.00% of
the gross loan portfolio. UNRECOGNIZED INCOME COLLECTED: As at
March 31, 2012, the Corporation has banked non-refundable fee
income of $466,325, which will be recognized as income over the
term of the corresponding investments. DIVIDEND AND SHARE PURCHASE
PLAN: The Corporation has in place a Dividend Reinvestment Plan
(DRIP) and Share Purchase Plan that is available to its
Shareholders. The plans allows participants to have their monthly
cash dividends reinvested in additional shares at a 2% discount to
market and grants participants the right to purchase, without
commission, additional shares, up to a maximum of $12,000 per
annum. ABOUT THE CORPORATION The Corporation, through its Mortgage
Banker, Firm Capital Corporation, is a non-bank lender providing
residential and commercial short-term bridge and conventional real
estate financing, including construction, mezzanine and equity
investments. The Corporation's investment objective is the
preservation of Shareholders' equity, while providing Shareholders
with a stable stream of monthly dividends from investments. The
Corporation achieves its investment objectives by pursuing a
strategy of growth through investments in selected niche markets
that are under-serviced by large lending institutions. Lending
activities to date continue to develop a diversified mortgage
portfolio, producing a stable return to Shareholders. Full reports
of the financial results of the Corporation for the year are
outlined in the audited financial statements and the related
management discussion and analysis of Firm Capital, available on
the SEDAR website at www.sedar.com. In addition, supplemental
information is available on Firm Capital's website at
www.firmcapital.com. Forward-Looking Statements This news release
contains forward-looking statements within the meaning of
applicable securities laws including, among others, statements
concerning our objectives, our strategies to achieve those
objectives, our performance, our mortgage portfolio and our
distributions, as well as statements with respect to management's
beliefs, estimates, and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "outlook", "objective",
"may", "will", "expect", "intent", "estimate", "anticipate",
"believe", "should", "plans" or "continue" or similar expressions
suggesting future outcomes or events. Such forward-looking
statements reflect management's current beliefs and are based on
information currently available to management. These statements are
not guarantees of future performance and are based on our estimates
and assumptions that are subject to risks and uncertainties,
including those described in our Annual Information Form under
"Risk Factors" (a copy of which can be obtained at www.sedar.com),
which could cause our actual results and performance to differ
materially from the forward-looking statements contained in this
circular. Those risks and uncertainties include, among
others, risks associated with mortgage lending, dependence on the
Corporation's manager and mortgage banker, competition for mortgage
lending, real estate values, interest rate fluctuations,
environmental matters, Unitholder liability and the introduction of
new tax rules. Material factors or assumptions that were
applied in drawing a conclusion or making an estimate set out in
the forward-looking information include, among others, that the
Corporation is able to invest in mortgages at rates consistent with
rates historically achieved; adequate mortgage investment
opportunities are presented to the Corporation; and adequate bank
indebtedness and bank loans are available to the Corporation.
Although the forward-looking information continued in this new
release is based upon what management believes are reasonable
assumptions, there can be no assurance that actual results and
performance will be consistent with these forward-looking
statements. All forward-looking statements in this news release are
qualified by these cautionary statements. Except as required
by applicable law, the Corporation undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. Unaudited
Condensed Interim Financial Statements of FIRM CAPITAL
MORTGAGE INVESTMENT CORPORATION For the Three Months Ended
March 31, 2012 and 2011 (unaudited) NOTICE UNDER
NATIONAL INSTRUMENT 51-102 National Instrument 51-102: Continuous
Disclosure Requirements requires that these interim financial
statements be accompanied by this notice which indicates that these
financial statements have not been reviewed by the auditors of Firm
Capital Mortgage Investment Corporation. FIRM CAPITAL MORTGAGE
INVESTMENT CORPORATION Condensed Interim Balance Sheets (unaudited)
(in Canadian dollars) Mar. 31, 2012 Dec. 31, 2011 Assets Amounts
receivable and prepaid expenses $ 3,617,688 $ 3,478,338 Investment
portfolio (note 4) 296,195,461 271,048,591 Total assets $
299,813,149 $ 274,526,929 Liabilities and Equity Bank indebtedness
$ 24,086,696 $ 37,763,021 Accounts payable and accrued liabilities
1,757,191 1,354,639 Unearned income 466,325 556,991 Shareholder
dividend payable 1,326,036 2,008,118 Loans payable 14,714,605
15,649,081 Convertible debentures (note 5) 85,710,810 69,134,395
Total liabilities 128,061,663 126,466,245 Shareholders' Equity
171,853,935 148,382,510 Deficit (102,449) (321,826) Total equity
171,751,486 148,060,684 Commitments (note 4) Contingent liabilities
(note 11) Total liabilities and equity $ 299,813,149 $ 274,526,929
See accompanying notes to unaudited interim financial statements
FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION Condensed Interim
Statements of Comprehensive Income (unaudited) (in Canadian
dollars) Three Months Ended March 31, 2012 March 31, 2011 Interest
and fees earned $6,387,310 $5,166,007 6,387,310 5,166,007
Corporation manager interest allocation (note 9) 522,732 379,911
Interest expense (note 10) 1,731,397 1,044,315 General and
administrative expenses 195,269 194,862 Impairment loss on
investment portfolio (note 4) - - 2,449,398 1,619,088 Total
comprehensive income and profit for the period $3,937,912
$3,546,919 Profit per share (note 7) Basic $0.258 $0.246 Diluted
$0.232 $0.244 See accompanying notes to unaudited interim financial
statements FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION Condensed
Interim Statements of Changes in Equity (unaudited) (in Canadian
dollars) Three Months Ended March 31, 2012 March 31, 2011
Shareholders' Equity Shares (note 6): Balance, beginning of period
$ 147,200,878 $ 137,343,502 Proceeds from issuance of shares
21,167,971 204,220 Offering Costs (829,058) - Conversion of
debentures to shares 2,498,000 1,797,000 Balance, end of period $
170,037,791 $ 139,344,722 Equity component of convertible
debentures (note 6): Balance, beginning of period $ 1,181,632 $
774,000 Conversion of debentures to shares (55,488) - Equity
component of debentures issued during the period 690,000 - Balance,
end of period $ 1,816,144 $ 774,000 TotalShareholders' equity $
171,853,935 $ 140,118,722 Deficit Deficit, beginning of period $
(321,826) $ (321,826) Dividends to shareholders (3,718,535)
(3,381,635) Comprehensive income and profit for the period
3,937,912 3,546,919 Deficit, end of period $ (102,449) $ (156,542)
Total Equity $ 171,751,486 $ 139,962,180 Shares issued and
outstanding (note 6) 17,000,465 14,547,060 See accompanying notes
to unaudited interim financial statements FIRM CAPITAL MORTGAGE
INVESTMENTCORPORATION Condensed Interim Statements of Cash Flow
(unaudited) (in Canadian dollars) Three Months Ended March 31, 2012
March 31, 2011 Cash provided by (used in): Operating activities:
Total comprehensive income and profit for the period $ 3,937,912 $
3,546,919 Adjustments for: Implicit interest rate in excess of
coupon rate - convertible debentures 64,671 23,516 Deferred finance
cost amortization - convertible debentures 142,806 95,603 Net
changes in non-cash items: Increase in amounts receivable and
prepaid (139,350) (649,800) expenses Increase in accounts payable
and accrued liabilities 402,552 338,252 Increase/(decrease) in
unearned income (90,666) 2,617 Decrease in dividend payable
(682,082) (993,181) Net cash flow from operating activities
3,635,843 2,363,926 Financing activities: Proceeds from issuance of
shares 21,167,971 204,326 Proceeds from convertible debenture
issued 20,485,000 - Debenture offering costs (983,550) - Offering
Costs (equity) (829,058) - Funding/repayment of loans payable (net)
(934,476) (400,895) Dividends to shareholders paid during the
period (3,718,535) (3,381,635) Net cash flow from financing
activities 35,187,352 (3,578,204) Investing activities: Funding of
investments (47,101,102) (39,548,508) Discharge of investments
21,954,233 26,169,084 Net cash flow used in investing activities
(25,146,869) (13,379,424) Bank indebtedness, beginning of period
(37,763,021) (5,005,825) Net (increase)/decrease in bank
indebtedness for the period 13,676,325 (14,593,702) Bank
indebtedness, end of period $ (24,086,696) $ (19,599,527) Cash
flows from operating activities include: Interest received $
5,296,730 $ 4,126,742 Interest paid $ 1,527,483 $ 255,055 See
accompanying notes to unaudited interim financial statements FIRM
CAPITAL MORTGAGE INVESTMENT CORPORATION Notes to Condensed Interim
Financial Statements Three months ended March 31, 2012 and 2011 (in
Canadian Dollars) Firm Capital Mortgage Investment Corporation (the
"Corporation"), through its mortgage banker, Firm Capital
Corporation, in a non- bank lender providing residential and
commercial short-term bridge and conventional real estate
financing, including construction, mezzanine and equity
investments. The shares of the Corporation are listed on the
Toronto Stock Exchange under the symbol "FC". The Corporation is a
Canadian mortgage investment corporation and the registered
office of the Corporation is 1244 Caledonia Road, Toronto,
Ontario, M6A 2X5. 1. Organization of Corporation: On November 30,
2010, Firm Capital Mortgage Investment Trust (the "Trust") entered
into a plan of arrangement ("Reorganization"), whereby the
Trust was converted from an income trust
structure into the public corporation, Firm Capital Mortgage
Investment Corporation, effective January 1, 2011. The
Corporation was incorporated pursuant to the Laws of the
Province of Ontario on October 22, 2010 for the purposes of
participating in the Reorganization. Pursuant to the
Reorganization, units of the Trust were exchanged on a one-for-one
basis for common shares of the Corporation. Holders of units
therefore became the sole shareholders of the Corporation effective
January 1, 2011. As part of the Reorganization, the Trust was wound
up and its assets were distributed to the Corporation. The
Reorganization was treated as a change in business form rather than
a change in control, and therefore, has been accounted for as
a continuity of interest. The carrying amounts of assets,
liabilities, and unitholders' equity in the financial statements of
the Trust immediately prior to the Reorganization were the same as
the carrying values of the Corporation immediately following the
Reorganization. The Corporation's mortgage banker is Firm Capital
Corporation and the Corporation's manager is FC Treasury Management
Inc. 2. Basis of presentation: The condensed interim financial
statements of the Corporation have been prepared by management in
accordance with International Accounting Standards ("IAS") 34,
Interim Financial Reporting. The preparation of these
condensed consolidated interim financial statements is based on
accounting policies and practices in accordance with
International Financial Reporting Standards ("IFRS"). The
accompanying unaudited condensed interim financial statements
should be read in conjunction with the notes to the Corporation's
audited consolidated financial statements for the year ended
December 31, 2011, since they do not contain all disclosures
required by IFRS for annual financial statements. These
unaudited condensed interim financial statements reflect all normal
and recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the respective
interim periods presented. These unaudited interim financial
statements have been prepared on the historical cost basis, except
for financial instruments classified as fair value through profit
or loss, which are measured at fair value. These financial
statements are presented in Canadian dollars, which is the
Corporation's functional currency. 3. Significant accounting
policies: The accounting policies applied by the Corporation
in these unaudited consolidated interim financial statements are
the same as those applied by the Corporation's in its
financial statements as at and for the year ended December 31, 2011
and accordingly should be read in conjunction. 4. Investment
portfolio: The following is a breakdown of the investment portfolio
as at March 31, 2012 and December 31, 2011: Mar. 31, 2012 Dec. 31,
2011 Conventional first $ 211,845,200 70.81% $ 188,083,658 68.64%
mortgages Conventional 40,370,567 13.49% 41,927,607 15.30%
non-first mortgages Related investments 22,800,958 7.62% 19,958,571
7.28% Non-conventional 24,158,736 8.08% 24,058,755 8.78% mortgages
Total investments $ 299,175,461 100.00% $ 274,028,591 100.00% (at
cost) Impairment (2,980,000) (2,980,000) provision Investment $
296,195,461 $ 271,048,591 portfolio Conventional first mortgages
are loans secured by a first priority mortgage charge with loan to
values not exceeding 75%. Conventional non-first mortgages
are loans with mortgage charges not registered in first priority
with loan to values not exceeding 75%. Related
investments are loans that may not necessarily be secured by
mortgage charge security. Non-conventional mortgages are loans that
in some cases have loan to values that exceed or may exceed 75% and
are the investments that are the source of all special profit
participations earned by the Corporation. Investment portfolio is
stated at amortized cost as discussed in note 3(a). The
impairment loss in the amount of $2,980,000 as at March 31, 2012
represents the total amount of management's estimate of the
shortfall between the investment principal balances and the
estimated recoverable amount from the collateral securing the
loans. The loans comprising the Investment portfolio bear interest
at the weighted average rate of 8.96% per annum (December 31, 2011
- 9.06% per annum) and mature between 2012 and 2015. The
un-advanced funds under the existing investment portfolio
(which are commitments of the Corporation) amounted to $46,273,533
as at March 31, 2012 (December 31, 2011 - $30,845,331). Principal
repayments based on contractual maturity dates are as follows: 2012
$116,297,573 2013 120,991,910 2014 53,985,181 2015 7,900,798
$299,175,461 Borrowers who have open loans have the option to repay
principal at any time prior to the maturity date. 5. Convertible
debentures: Quarter Ended Year-Ended Mar. 31, 2012 Dec. 31, 2011
Total Debentures Total Debentures Principal balance, $69,134,395
beginning of period $53,628,803 Issued 18,811,450 23,822,547
Conversions (2,498,000) (9,093,000) Adjustment to fair 55,488 value
of conversion option 202,368 Implicit interest 64,671 rate in
excess of coupon rate 91,487 Deferred finance 142,806 cost
amortization 482,190 Principal balance, $85,710,810 $69,134,395 end
of period The breakdown of the Total Debentures for the quarter
ended March 31, 2012 presented in the above table is as follows:
6.00% 5.75% 5.40% 5.25% Convertible Convertible Convertible
Convertible Debenture Debenture Debenture Debenture TOTAL Principal
15,225,091 30,021,130 23,888,174 - 69,134,395 balance, beginning of
period $ $ $ $ Issued - - - $ 18,811,450 18,811,450 Conversions
(2,498,000) - - - (2,498,000) Adjustment 55,488 - - - 55,488 to
fair value of conversion Implicit interest 15,072 7,126 40,279
2,195 64,671 rate in excess of coupon rate Deferred finance cost
42,630 52,715 43,246 4,215 142,806 amortization Principal
12,840,281 30,080,971 23,971,698 18,817,860 85,710,810 balance, end
of period $ $ $ $ $ The breakdown of the Total Debentures for the
year ended December 31, 2011 is as follows: 6.00% 5.75% 5.40%
Convertible Convertible Convertible Debenture Debenture Debenture
TOTAL Principal balance, beginning of year $23,886,736 $29,742,067
- $53,628,803 Issued - - 23,822,547 23,822,547 Conversions
(9,093,000) - - (9,093,000) Adjustment to fair value of conversion
option 202,368 - - 202,368 Implicit interest rate in excess of
coupon rate 57,998 30,117 3,372 91,487 Deferred finance cost
amortization 170,989 248,946 62,255 482,190 Principal balance, end
of year $15,225,091 $30,021,130 $23,888,174 $69,134,395 In
2009, $536,000 of the 6% convertible debentures were
converted by the debenture holders to 45,617 shares of the
Corporation. In 2010, $20,000 of the 6% convertible
debentures were converted by the debenture holders to 1,702
shares of the Corporation. In 2011, $9,093,000 of the
6% convertible debentures were converted by the debenture
holders to 773,681 shares of the Corporation. In 2012,
$2,498,000 of the 6% convertible debentures were converted by
the debenture holders to 212,590 share of Corporation. In
the first quarter of
2012, the Corporation completed a
public offering of 20,485, 5.25%
convertible unsecured subordinated debentures at
a price of $1,000 per debenture for
gross proceeds of $20,485,000. The
debentures mature on March 31, 2019 and
interest is paid semi-annually on March 31 and
September 30. The debentures are
convertible at the option of the holder at any
time prior to the maturity date at a conversion
price of $14.80. The debentures may not be
redeemed by the Corporation prior to March 31, 2015.
On or after March 31, 2015, but
prior to March 31, 2016, the
debentures are redeemable at a price equal
to the principal, plus accrued interest, at the
Corporation's option on not more than
60 days' and not less than 30
days' notice, provided that the weighted average
trading price of the shares on the
Toronto Stock Exchange for the 20
consecutive trading days ending five trading days
preceding the date on which the
notice of redemption is given is not less
than 125% of the conversion price. On
or after March 31, 2016 and prior to the
maturity date, the debentures are redeemable at a price
equal to the principal amount plus accrued
interest, at the Corporation's option on not more than
60 days' and not less than 30 days'
prior notice. On redemption or at maturity,
the Corporation may, at its option, elect to
satisfy its obligation to pay all or a portion of the principal of
the debenture by issuing that number of shares of the Corporation
obtained by dividing the principal amount being repaid
by 95% of the weighted average trading price of
the shares for the 20 consecutive trading days ending
on the fifth trading day preceding the redemption or maturity date.
The convertible debentures were allocated into liability and equity
components on the date of issuance as follows: Liability
$19,795,000 Equity 690,000 Principal $20,485,000 As at March 31,
2012, debentures payables bear interest at the weighted average
effective rate of 5.57% per annum (December 31, 2011 - 5.68% per
annum). Notwithstanding the carrying value of the convertible
debentures, the principal balance outstanding to the debenture
holders is $90,519,000 as at March 31, 2012. 6. Shareholders'
equity: On January 1, 2011, all outstanding Units were exchanged on
a one-for-one basis for common shares of the Corporation, as
described in Note 1. The beneficial interests in the Corporation
are represented by a single class of shares which are unlimited in
number. Each share carries a single vote at any meeting of
shareholders and carries the right to participate pro rata in any
dividends. (a) Shares issued and outstanding: The following shares
were issued and outstanding as at March 31, 2012: # of shares $
Balance, beginning of period 15,213,018 147,200,878 New shares from
conversion of debentures 212,590 2,498,000 New shares from public
offering 1,541,000 20,726,450 New shares issued during the period
under 33,857 441,521 Dividend Reinvestment Plan Offering Costs
(829,058) Balance, end of period 17,000,465 170,037,791 The
following shares were issued and outstanding as at December 31,
2011: # of shares $ Balance, beginning of year 14,377,333
137,343,502 New shares from conversion of debentures 773,861
9,093,000 New shares issued during the period under 61,824 764,376
Dividend Balance, end of year 15,213,018 147,200,878 In the first
quarter of 2012, the Corporation completed a public offering of
1,340,000 shares at $13.45 per share. (b) Incentive option
plan: As at March 31, 2012, no options are outstanding (December
31, 2011 - nil). (c) Dividend reinvestment plan and direct share
purchase plan: The Corporation has a dividend reinvestment plan and
direct share purchase plan for its shareholders which allows
participants to reinvest their monthly cash dividends in additional
Corporation shares at a share price equivalent to the
weighted average price of shares for the preceding five day period.
7. Per share amounts: (a) Profit per share calculation: The
following tables reconcile the numerators and denominators of the
basic and diluted profit per share for the quarter ended March 31,
2012 and March 31, 2011. Basic profit per share calculation: Three
months ended Three months ended March 31, 2012 March 31, 2011
Numerator for basic profit per share: Profit $3,937,912 $3,546,919
Denominator for basic profit per share: Weighted average shares
15,280,894 14,406,864 Basic profit per share $0.258 $0.246 Diluted
profit per share calculation: Three months ended Three months ended
March 31, 2012 March 31, 2011 Numerator for diluted profit per
share: Profit: $3,937,912 $3,546,919 Interest on convertible
1,244,608 928,477 debentures Net profit for diluted profit per
$5,182,520 $4,475,396 share Denominator for diluted profit per
share: Weighted average shares 15,280,894 14,406,864 Net shares
that would be issued: Assuming debentures are 7,100,194 3,904,951
converted Diluted weighted average shares 22,381,088 18,311,815
Diluted profit per share: $0.232 $0.244 8. Dividends: The
Corporation intends to make dividend payments to the shareholders
on a monthly basis on or about the 15(th )day of each month.
The operating policies of the Corporation set out that the
Corporation intends to distribute to shareholders within 90 days
after the year end at least 100% of the net income of the
Corporation determined in accordance with the Income Tax Act
(Canada), subject to certain adjustments. For the quarter ended
March 31, 2012, the Corporation record dividends of
$3,718,535 (2011 - $3,381,635) to its shareholders. Dividends
were $0.234 per share (2011 - $0.234 per share). 9. Related party
transactions and balances: Transactions with related parties
are in the normal course of business and are recorded at the
exchange amount which is the amount of consideration established
and agreed to by the related parties, and are measured at fair
value. The Corporation Manager (a company controlled by some of the
directors) receives an allocation of interest, referred to as
Corporation Manager spread interest, calculated as 0.75% per annum
of the Corporation's daily outstanding performing investment
balances. For the quarter ended March 31, 2012, this amount
was $522,732 (2011 - $379,911). Included in accounts payable and
accrued liabilities at March 31, 2012 are amounts payable to the
Corporation Manager of $182,988 (December 31, 2011 - $204,988). The
total directors' fee paid for the quarter was $45,750
(2011 - $45,750). The listing of the members of the board of
directors is shown in the annual report. The key management
personnel are also directors of the Corporation and receive
compensation from the Corporation Manager. The Mortgage Banker (a
company controlled by a director) receives certain fees from the
borrowers as follows: loan servicing fees equal to 0.10% per annum
on the principal amount of each of the Corporation's
investments; 75% of all the commitment and renewal fees generated
from the Corporation's investments; and 25% of all the special
profit income generated from the non-conventional investments after
the Corporation has yielded a 10% per annum return on its
investments. Interest and fee income is net of the loan
servicing fees paid to the Mortgage Banker of approximately $70,000
for the quarter ended March 31, 2012 (2011 - $50,000). The Mortgage
Banker also retains all overnight float interest and incidental
fees and charges payable by borrowers on the Corporation's
investments. The Corporation's share of commitment and renewal fees
is recorded in income for the quarter ended March 31, 2012
was $342,498 (2011 - $169,534) and applicable special profit income
for the quarter ended March 31, 2012 was $55,928 (2011 - $30,518).
The Corporation Management Agreement and Mortgage Banking Agreement
contains provisions for the payment and termination fees to the
Corporation Manager and Mortgage Banker in the event that the
respective agreements are either terminated or not renewed. Several
of the Corporation's investments are shared with other investors of
the Mortgage Banker, which may include members of management
of the Mortgage Banker and/or Officers or directors of the
Corporation. The Corporation ranks equally with other
members of the syndicate as to receipt of principal and income.
Mortgages totalling $15,560,000 (December 31, 2011 - $15,560,000)
were issued to borrowers controlled by certain directors of
the Corporation. Each investment is dealt with in accordance
with the Corporation's existing investment and operating policies
and is personally guaranteed by the related directors. 10. Interest
expense: Three months ended March 31, 2012 March 31, 2011 Bank
interest expense $313,152 $75,927 Loans payable interest expense
173,637 39,911 Debenture interest expense 1,244,608 928,477
Interest expense $1,731,397 $1,044,315 Deferred finance cost
amortization - 142,806 (95,603) convertible debentures Implicit
interest rate in excess of (60,281) (23,517) coupon rate -
convertible debentures Change in accrued interest (286,439)
(789,260) Cash interest paid $1,527,483 $135,936 11. Contingent
liabilities: The Corporation is involved in certain litigation
arising out of the ordinary course of investing in loans. Although
such matters cannot be predicted with certainty, management
believes the claims are without merit and does not consider
the Corporation's exposure to such litigation to have an
impact on these financial statements. 12. Fair value of financial
instruments: The fair value of amounts receivable, bank
indebtedness, accounts payable and accrued liabilities and
shareholder dividend payable approximate their carrying
values due to their short-term maturities. The fair value of
investment portfolio approximate its carrying value as the majority
of the loans are repayable in full at any time without penalty, and
have floating interest rates. The fair value of loans payable
approximate their carrying values due to the fact that the majority
of the loans are (i) repayable in full, at any time upon the
borrower under the underlying loan that secures the loan
payable repaying their loan without penalty, and (ii) have floating
interest rates linked to bank prime. The fair value of the
convertible debentures, including their conversion option, has been
determined based on the closing price of the debentures of the
Corporation on the TSX for the respective date. The
fair value has been estimated at March 31, 2012 to be
$92,562,984 (December 31, 2011 - $73,722,648). This is a
level 1 input which is based on a quoted price in an active market.
Firm Capital Mortgage Investment Corporation CONTACT: Firm Capital
Mortgage Investment CorporationEli DadouchPresident & Chief
Executive Officer(416) 635-0221
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