This Offering Memorandum is confidential. By their acceptance hereof, prospective investors agree that they will not transmit, reproduce or make available to anyone this Offering Memorandum or any information contained herein.

OFFERING MEMORANDUM

MCCAULEY DEVELOPMENT COOPERATIVE

(A COOPERATIVE FORMED UNDER THE LAWS OF THE PROVINCE OF ALBERTA)

Date: November 1, 2019

The Issuer:

Name: McCauley Development Cooperative (the “Issuer” or the “Cooperative”)

Address: c/o Edmonton Community Development Company 9613 111 Ave NW, Edmonton, AB T5G 0A9 Phone #: 403 866 6387 E-mail address: [email protected]

These securities do not trade on any exchange or market. McCauley Development Cooperative is not a reporting issuer McCauley Development Cooperative is a SEDAR filer

The Offering

Securities Offered: Up to 2,915 Class “B” Shares (the "Shares") in the capital of the Issuer for gross proceeds of up to $2,915,000 as described herein (the "Offering"). Price Per Security $1,000.00 per Share (“Subscription Price”). Minimum/Maximum The minimum gross offering is $1,000,000 and the maximum gross offering Offering is $2,915,000.

Minimum subscription The minimum subscription amount is $5,000. The maximum subscription amount: amount for Non-Eligible Investors is $10,000 over the previous 12 months. The maximum subscription amount for Eligible Investors is $30,000 over the

previous 12 months, or $100,000 if they receive suitable advice from an investment advisor. There is no maximum subscription for Accredited

Investors.

Payment Terms Cheque or bank draft payable to "Insight Law LLP, in trust" or “Canadian Workers Cooperative Federation” in the amount of the aggregate purchase price of the Shares subscribed for. See "Item 5.4 - Subscription Procedure", of this Offering Memorandum. Funds will not be released from trust until the Offering has closed and the minimum share offering threshold has been reached. Proposed Closing Date The closing date for this offer is 5 p.m. Mountain Standard Time, December 13, 2019.

15453958.1 Income tax consequences: There are important tax consequences to these securities. See Item 6 – “Income Tax Consequences and RRSP Eligibility”.

Selling agent: There is no selling agent for the Offering and no commission will be paid to dealers in respect of the sale of Shares in the Offering.

Resale restrictions: There is no organized secondary market through which the Shares may be sold. It may be difficult or even impossible for the investor to sell them. See Item 10 - “Resale Restrictions”.

Investor's rights: You have 2 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 – “Investors' 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.

Investment involves a high degree of risk and investors should not invest any funds in this Offering unless they are prepared to have their money invested for a long period of time, and have the capacity to absorb a loss of some or all of their investment.

Potential investors should also consult their professional advisors before investing. This is a risky investment. See Item 8 – “Risk Factors”.

15453958.1 TABLE OF CONTENTS

FORWARD-LOOKING STATEMENT DISCLOSURE ...... 4 ITEM 1 USE OF AVAILABLE PROCEEDS ...... 7

1.1 FUNDS ...... 7 1.2 USE OF AVAILABLE FUNDS ...... 7 1.3 REALLOCATION ...... 7 ITEM 2 BUSINESS OF THE ISSUER ...... 8 2.1 STRUCTURE ...... 8 2.2 OUR BUSINESS ...... 8 2.3 THE PIAZZA ...... 9 2.4 ACQUISITION AND FINANCING ...... 11 2.5 SHORT TERM OBJECTIVES AND STRATEGIES TO ACHIEVE THEM ...... 12 2.6 LONG-TERM OBJECTIVES ...... 12 2.7 INSUFFICIENT FUNDS ...... 13 2.8 MATERIAL AGREEMENTS ...... 13 ITEM 3 INTERESTS OF DIRECTORS AND FOUNDING MEMBERS ...... 14

3.1 COMPENSATION AND SECURITIES HELD ...... 14 3.2 BOARD OF DIRECTORS & ECDC EXPERIENCE ...... 15 3.3 PROPERTY MANAGEMENT EXPERIENCE ...... 18 3.4 PENALTIES, SANCTIONS AND BANKRUPTCY ...... 18 3.5 LOANS ...... 18 ITEM 4 CAPITAL STRUCTURE...... 18

4.1 SHARE CAPITAL ...... 18 4.2 LONG-TERM DEBT SECURITIES ...... 19 4.3 PRIOR SALES ...... 19 ITEM 5 SECURITIES OFFERED ...... 19

5.1 MEMBERSHIP SHARE CAPITAL ...... 19 5.2 INVESTMENT SHARE CAPITAL...... 19 5.3 VALUATION POLICY ...... 20 5.4 SUBSCRIPTION PROCEDURE...... 20 ITEM 6 INCOME TAX CONSEQUENCES AND RRSP ELIGIBILITY ...... 21 ITEM 7 COMPENSATION PAID TO SELLERS AND FINDERS ...... 22 ITEM 8 RISK FACTORS ...... 22 ITEM 9 REPORTING OBLIGATIONS ...... 27 ITEM 10 RESALE RESTRICTIONS ...... 27 ITEM 11 INVESTORS' RIGHTS ...... 27 11.1 TWO DAY CANCELLATION RIGHT...... 27 11.2 STATUTORY RIGHTS OF ACTION IN THE EVENT OF A MISREPRESENTATION ...... 27 ITEM 12 FINANCIAL STATEMENTS ...... 28 ITEM 13 DATE AND CERTIFICATE ...... 29

15453958.1 FORWARD-LOOKING STATEMENT DISCLOSURE

This Offering Memorandum may include forward-looking statements with respect to the Issuer. In particular, the information contained in Item 2.2 – "Our Business", Item 2.5 – "Short Term Objectives and Strategies to Achieve Them" and Item 2.6 – "Long Term Objectives" may constitute "forward-looking information" for the purpose of securities legislation, as it contains statements of the intended course of conduct and future operations of the Issuer. Such forward-looking statements reflect our current beliefs and are based on information currently available to us. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements, including, but not limited to, the factors discussed in Item 8 – "Risk Factors". Although the forward-looking statements contained in this Offering Memorandum are based upon what we believe are reasonable assumptions, we cannot assure investors that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward- looking statements are made as of the date of this Offering Memorandum and we do not assume any obligation to update or revise them to reflect new events or circumstances, except as required by law.

If and when included in this Offering Memorandum, the words "expects," "intends," "anticipates," "believes," "estimates," "may," "might," "will," "would," "project," and "predict," and analogous expressions are intended to identify forward-looking statements. Any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results or events to differ materially from those results or events predicted or anticipated by these statements, including any results described herein. Accordingly, you should not rely on these statements. Such risks and uncertainties include, among others, general economic and business conditions, changes in political, social and economic conditions, exchange rate fluctuations, environmental risks, interest rate risks and various other matters, many of which are beyond the Cooperative's control. The foregoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect the Cooperative’s operations or financial results are included under the heading "Risk Factors" in this Offering Memorandum.

THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF AND WERE APPROVED BY MANAGEMENT ON THE DATE OF THIS MEMORANDUM. THE FORWARD-LOOKING STATEMENTS ARE FOR USE IN THIS OFFERING MEMORANDUM ONLY AND SUCH INFORMATION MAY NOT BE APPROPRIATE FOR OTHER PURPOSES. THE ISSUER EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD- LOOKING STATEMENT CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE EXPECTATIONS OF THE ISSUER WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED. THE RISKS AND UNCERTAINTIES ATTRIBUTABLE TO THESE FORWARD-LOOKING STATEMENTS MAY ADVERSELY AFFECT THE DIVIDENDS THAT MAY BE PAID ON THE SHARES OF THE ISSUER.

Prospective investors should thoroughly review this Offering Memorandum and in particular, Item 8 – “Risk Factors”, and are also advised to consult with their own legal and tax advisors concerning this investment.

15453958.1 GLOSSARY

The following terms appear throughout this Offering Memorandum. Care should be taken to read each term in the context of the particular provision of this Offering Memorandum in which such term is used.

“Act” means the Cooperatives Act, S.A. 2001, c. C-28.1 as amended, and any successor legislation;

“Articles” means the Articles of Incorporation of the Cooperative, as amended from time to time;

“Acquisition” means the proposed acquisition of the Property (as defined herein);

“Board” or “Board of Directors” means the Board of Directors of the Cooperative;

“Business Day” means a day other than a Saturday, Sunday or any day on which the principal office of the Cooperative’s bankers located in Edmonton, Alberta, is not open for business during normal banking hours;

“Bylaws” means the Bylaws of the Cooperative, as amended from time to time;

“Closing” means a closing of the sale of Shares as the Cooperative may determine from time to time;

“Cooperative” or “Issuer” means the McCauley Development Cooperative and its successors;

“Director” means a member of the Board of Directors;

“Fiscal Year” means the fiscal year for the Cooperative;

“McCauley” means principally the neighbourhood of McCauley and in general, the city of Edmonton, Alberta;

“Member” means a Member of the Cooperative;

“Membership Shares” means a Class “A” share in the capital of the Cooperative – See Item 5.1 Securities Offered – Membership Share Capital;

“Offering” means the offering of up to 2,915 Shares;

“The Piazza” or “Property” means – the strip mall in Little Italy in the neighbourhood of McCauley, Edmonton ascribed thereto in Item 2.3 Business of the Issuer – The Piazza;

“Investor” or “Subscriber” means a subscriber for Shares;

“Seller” means the current third-party owner of the Property;

“Shares” means a Class “B” investment share in the capital of the Cooperative – See Item 5.2 Securities Offered – Investment Share Capital;

“Shareholder” means those investors whose subscriptions to purchase Shares are accepted by the Cooperative and thereafter at any particular time the persons entered into the central securities register of the Cooperation as holders of Shares and the singular forms means one such registered holder;

“Subscription Agreement” means the subscription agreement to apply for membership and subscribe for Shares in the Cooperative;

“Subscription Price” means $1,000 per Share;

15453958.1 “Tax Act” means the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c.11, and the regulations promulgated thereunder, as amended from time to time.

REPORTING CURRENCY AND FINANCIAL INFORMATION

Unless otherwise indicated, “$” refers to Canadian dollars.

All financial statements and financial data derived therefrom included in this Offering Memorandum pertaining to the Cooperative have been prepared in accordance with IFRS.

15453958.1 ITEM 1 USE OF AVAILABLE PROCEEDS

1.1 Funds

The estimated total available funds to the Issuer after giving effect to the Offering are as follows:

Assuming min. Assuming max. offering offering(1) A. Amount to be raised by this Offering $1,000,000 $2,915,000 B. Selling commissions and fees Nil Nil

C. Estimated offering costs (e.g., legal, accounting, $40,000(2) $55,000(2) audit, property assessment, etc.)

D. Available funds: D = A - (B+C) $960,000 $2,860,000 E. Additional sources of funding required $1,900,000(3) Nil

F. Working capital deficiency Nil Nil G. Total: G = (D+E) – F $2,860,000 $2,860,000

Notes: (1) The Cooperative may only raise a portion of the maximum Offering. (2) The Directors have provided loans and paid on behalf of the Cooperative, all costs incurred in connection with the preparation for and completion of the Offering, including legal, accounting, audit, and property assessment fees. All costs incurred by the Directors in connection with the Offering will be repaid, without interest from funds received by the Cooperative from Subscribers or from additional debt financing from a debt provider. (3) Additional funding sources are expected to be secured through debt financing.

1.2 Use of Available Funds

The following table provides a detailed breakdown of how the Issuer will use the available funds:

Description of intended use of available funds listed Assuming min. Assuming max. in order of priority offering(1) offering

Purchase the Property $2,860,000 $2,860,000 Total: Equal to G in the Funds table above $2,860,000 $2,860,000

Notes: (1) Includes additional debt financing of $1,900,000.

1.3 Reallocation

We intend to spend the available funds as stated. We will reallocate funds only for sound business reasons as determined at the sole discretion of the Issuer.

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ITEM 2 BUSINESS OF THE ISSUER

2.1 Structure

The Issuer was incorporated on September 6, 2019 under the Alberta Cooperatives Act. The registered and records office of the Issuer is located at c/o Edmonton Community Development Company, 9613 111 Ave NW, Edmonton, AB T5G 0A9. The head office and principal place of business of the Issuer is located at 9613 111 Ave NW, Edmonton, AB T5G 0A9.

The Issuer is owned and operated by its Members. It currently has 9 Members. The membership is responsible for the overall direction of the Issuer. The Board of Directors of the Issuer are responsible for the management and operations of the Issuer.

2.2 Our Business

Overview of McCauley Development Cooperative

The Cooperative intends to raise capital from local residents to invest in local projects, with an initial focus on commercial and residential real estate with high social and acceptable financial returns. Their initial investment is dedicated to developing The Piazza, a cornerstone of Little Italy in Edmonton.

Summary of Cooperative investment process:

(a) Individual investors join the Cooperative by purchasing a membership share. Each membership share provides one vote (no matter how many investment shares are owned);

(b) The Directors of the Cooperative identify, complete due diligence, negotiate and recommend investment opportunities to its Members;

(c) Members purchase investment shares to invest in projects in the community that meet the objectives of the Cooperative;

(d) The Cooperative invests in projects and the Directors will determine how much and when capital (e.g. dividends) is returned to investors.

Why an Investment Cooperative?

(a) Demand for local investing opportunities

Historically, there have been limited opportunities for investors to invest locally, particularly in real estate projects for non-accredited investors. The Cooperative is a legal structure that permits local investors to direct their capital to local projects under applicable regulatory and securities laws.

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(b) Democratizes local capital

Each member has the same voting power, no matter how much capital they invest individually. This creates a level playing field for local investors to engage in projects for the collective benefit of the community.

(c) Investments are eligible for registered accounts (RRSPs and TFSAs)

Average investors contribute a significant amount of capital annually to their registered accounts (RRSPs/TFSAs), yet little of this investment makes its way to community-based projects or enterprises. The Cooperative’s Shares are RRSP and TFSA eligible, allowing for capital created in the local community to be re-invested into local opportunities that matter to investors the most.

2.3 The Piazza

The Cooperative’s first acquisition opportunity is The Piazza, one of Little Italy's central commercial centres. Upon successful closing of the Acquisition, investors can claim ownership of this strip mall and be part of its evolution as a bustling neighbourhood hub.

The Piazza Vision

Imagine a place where you can enjoy artisanal Italian gelato, a mug of locally-roasted coffee, where you can browse a great selection of hard-to-find wines, or meet up with friends for some Edmonton-brewed craft beer. Imagine sitting on a patio savouring western Canadian cuisine while watching the sun set over the trees and fountains of Edmonton's premiere downtown park, Giovanni Caboto Park.

The Piazza will be a cornerstone of Little Italy, a downtown destination for all Edmontonians looking for authentic, local engagement, a bustling hub of curated retail offering old-world charm with a contemporary urban vibe.

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Overview of the Property

Constructed: 1989

Site Area: 20,156 square feet

Leaseable Area: 10,093 square feet

Location: 108A Avenue & 95 Street NW, Edmonton, Alberta

Built in 1989, The Piazza is a single-storey 10,093 square foot free-standing retail mall on a 20,156 square foot lot on the corner of 95th Street and 108A Avenue in the heart of Little Italy. The Piazza is currently 100% leased, with six tenants. The Piazza is directly across from Giovanni Caboto Park, across the street from Zocalo and kiddy corner from Sorrentino's and the Italian Centre Shop in a popular destination for local and tourist shoppers.

These established "cornerstone" businesses bring people from all over Edmonton into the area and give this culturally and ethnically diverse neighbourhood its distinctly cosmopolitan character. In addition, festivals such as the Viva Italia Festival and Heart of the City Music and Arts Festival bring thousands more Edmontonians into the area each year and reinforce the vibrant and eclectic flavour of Little Italy.

With upgrades to streetlights on 95th Street in 2018, public art, a beautiful fountain in Giovanni Caboto Park, sidewalk cafés on mature tree-lined streets and beautiful flower pots hanging from every lamp post, The Piazza is located at the very centre of an attractive, walkable shopping and dining district with a distinctly European vibe.

The Cooperative believes there is significant opportunity to transform The Piazza from its current state to a more attractive destination for local businesses and shoppers by putting ownership and control of the Property in the hands of individuals who want to create a downtown destination for all Edmontonians looking for authentic, local experiences. This in turn, will better contribute to the vibrant, sustainable growth of the local neighbourhood.

Tenants

The Property is intended to provide a steady stream of rental income from a diverse group of retail businesses. The Property is 100% occupied with six business, including:

• 871294 Alberta Ltd., operating as La Dolce Vita Cafe;

• Boyle McCauley Denture Clinic (1994) Ltd.;

• Alberta Pharmacy Relief and Health Services Inc. operating as Boyle McCauley Pharmacy & Home Health Care;

• 1973701 Alberta Inc. operating as Kuya Allan’s Lechon Pinoy; 10

• D. Fitz Holdings Inc. operating as Santos Restaruant; and

• Hintsa Semere operating as Hintsa’s Barbership

Current leases agreements expire in the next two to five years with a weighted-average lease rate of approximately $16.72 per square foot1. A report by NAI Commercial for Q2 20192 states that average rental rates for similar retail spaces for Greater Edmonton are $22.70 per square foot over the past 12 months. As such, the Issuer’s primary focus is to 1) increase leases to current market rates as they expire and, 2) replace some or all of the current tenants with new businesses aligned with the Issuer’s vision for revitalizing the local community whilst providing stable, long-term rental income.

More details on the Property and lease agreements can be viewed by investors following the signing of a strict non-disclosure agreement.

Building Appraisal and Assessment

The Issuer received an independent appraisal value by Gettel Appraisals of $2,880,000 as of October 7, 2019, which is $20,000 higher than the accepted offer to purchase price of $2,860,000. In addition, a building condition assessment was completed, the results of which indicate the Property is in good structural condition with no material structural improvements required. While structurally sound, the structure was built in 1989 and will require basic interior and exterior upgrades over time. The Cooperative will set aside a structural allowance for this purpose.

2.4 Acquisition and Financing

Acquisition Overview

On September 27, 2019, the Issuer and Seller of The Piazza entered into an agreement pursuant to which the Issuer has agreed to acquire a 100% interest in The Piazza for the Purchase Price $2,860,000. $100,000 of the Purchase Price has been deposited with a third-party escrow agent and a further $100,000 deposit will be due upon removal of all the Issuer’s conditions. See Item 2.8 – “Material Agreements”. The closing of the Acquisition is subject to customary closing conditions, which the Issuer expects to take place no later than January 13, 2020.

Financing the Acquisition

Assuming the minimum Offering, the Issuer will obtain a $1,900,000 mortgage on the property, which is anticipated to coincide with closing of the Acquisition.

1 Weighted by lease unit square footage. 2 https://www.naiedmonton.com/insights_resources/marketreport_Q2-2019.pdf. 11

2.5 Short Term Objectives and Strategies to Achieve Them

Objectives and Strategies to Achieve Target completion date Our cost to complete Them or, if not known, number of months to complete Carry out the Offering as described in No later than January $40,000 this Offering Memorandum and close 13, 2020(1) the Acquisition

Notes: (1) December 13, 2019 is the target date to close the Offering. In the event the Offering is not completed, the Issuer will consider extending the Offering or commence a new offering of Shares. January 13, 2020 is the target closing date at which time the Cooperative takes ownership and control of the Property. At that time the Property will be managed by a professional management company.

2.6 Long-Term Objectives

The Issuer has the following primary long-term objectives:

(a) Property improvements

While structurally sound, the Property will require basic interior and exterior upgrades to raise its standard to a level that is acceptable to the Directors. Structural allowance for this purpose will be set a side as per the financial proformas for the Property.

(b) Provide investors access to local commercial real estate investment opportunities to support more vibrant communities:

While local investment for community benefit is not a new concept in McCauley, the Issuer acts as an efficient, high impact investment vehicle for its investor members, who can consist of socially minded investors across Alberta. The Issuer is focusing on the Property as its investment in the McCauley area.

(c) Manage investments to provide stable income and distributions to shareholders:

The Issuer will work with the property management company to create long-term growth of capital through value added enhancements and organic growth in rental rates with respect to the Property to provide attractive, sustainable distributions to Shareholders.

(d) Provide an alternative source of capital to local property vendors:

The Issuer intends to provide local property vendors a reliable funding alternative for liquidity or partnership opportunities. This will require the Issuer to continue to grow its investor membership base and to identify attractive future investment opportunities.

There cannot be any assurance, however, that the Issuer will achieve these objectives. See Item 8 – “Risk Factors”.

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2.7 Insufficient Funds

The funds available as a result of the Offering either may not or will not be sufficient to accomplish all of the Issuer's proposed objectives. While debt financing has been arranged to support the purchase of the Property should the Issuer not meet its Maximum offering, there is no assurance that additional alternative financing will be available for additional development following the purchase of the Property.

2.8 Material Agreements

The following summarizes the material agreements, and the material terms thereof, to which the Issuer is currently a party or with a related party. Subscribers are advised to review these agreements in detail or to have these agreements reviewed by their own independent investment advisors and should not rely on the following summary. Copies of all such material agreements are located at the Issuer's office and also its registered and records offices and are available for inspection during normal business hours.

(a) Offer to Purchase

(i) the obligations of the Issuer and Seller to complete the Acquisition are subject to a number of customary closing conditions, including:

(A) the Issuer’s satisfactory review and approval of financing terms and conditions, including satisfactory approval by the Directors, and approval if required by a financing institution;

(B) the Issuer’s satisfactory review of the Seller’s phase I and phase II environmental assessments. Should the Seller not be able to provide one or both of these assessments, the Issuer or its agent or representative shall, at the Issuer’s cost, be permitted full access to the Property in order to conduct a phase I and, if required, a phase II environment assessment;

(C) the Issuer’s full property inspection;

(D) the Issuer’s satisfactory review of all leases, rental agreements and material contracts in relation to the Property;

(E) the Issuer’s satisfactory review of historic operating statements pertaining to the Property; and

(F) the representations and warranties of each party being true and correct in all material respects as of the time of closing the Acquisition.

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ITEM 3 INTERESTS OF DIRECTORS AND FOUNDING MEMBERS

3.1 Compensation and Securities Held

Name and Positions held and Compensation paid by Number, type and Number, type and municipality of the date of issuer or related party in percentage of percentage of principal residence obtaining that the most recently securities of the securities of the position completed financial year issuer held after issuer held after and the compensation completion of min. completion of anticipated to be paid in the offering (2) max. offering (2) current financial year Anna Bubel, Director 2019(1): $0 30 Class B Shares 30 Class B Shares Edmonton, Alberta September 4, 2019 at $1,000 per at $1,000 per share, Approx. 3% share, Approx. 1% of Shares of Shares Miranda Ringma Director 2019(1): $0 10 Class B Shares 10 Class B Shares Edmonton, Alberta September 4, 2019 at $1,000 per at $1,000 per share, Approx. 1% share, Approx. of Shares 0.3% of Shares

Ken Bregenser Member 2019(1): $0 10 Class B Shares 10 Class B Shares Edmonton, Alberta September 4, 2019 at $1,000 per at $1,000 per share, Approx. 1% share, Approx. of Shares 0.3% of Shares Jonathan Director 2019(1): $0 5 Class B Shares 5 Class B Shares Christenson September 4, 2019 at $1,000 per at $1,000 per Edmonton, Alberta share, Approx. share, Approx. 0.5% of Shares 0.2% of Shares Shafraaz Kaba Director 2019(1): $0 10 Class B Shares 10 Class B Shares Edmonton, Alberta September 4, 2019 at $1,000 per at $1,000 per share, Approx. 1% share, Approx. of Shares 0.3% of Shares

Alayne Sinclair Director 2019(1): $0 30 Class B Shares 30 Class B Shares Edmonton, Alberta September 4, 2019 at $1,000 per at $1,000 per share, Approx. 3% share, Approx. 1% of Shares of Shares Teresa Spinelli Director 2019(1): $0 50 Class B Shares, 50 Class B Edmonton, Alberta September 18, at $1,000 per Shares, at $1,000 2019 share, 5% of per share, 1.72% shares of shares Dr. Sian Williams Director 2019(1): $0 5 Class B Shares 5 Class B Shares Edmonton, Alberta September 4, 2019 at $1,000 per at $1,000 per share, Approx. share, Approx. 0.5% of Shares 0.2% of Shares

Karen Gingras Director 2019(1): $0 10 Class B Shares 10 Class B Shares Edmonton, Alberta September 18, at $1,000 per at $1,000 per 2019 share, Approx. 1% share, Approx. of Shares 0.3% of Shares

Notes: (1) The Cooperative was incorporated on September 6, 2019 and none of the Directors will receive any compensation in the current fiscal year. 14 (2) The number of shares represent the minimum number of shares owned by the Directors at the end of the offering.

3.2 Board of Directors & ECDC Experience

The Issuer’s Board of Directors and founding members includes the following individuals:

Name Principal occupation and related experience

Anna Bubel Anna has worked as a consultant for the past 25 years. Her practice focuses on community economic development. She teaches a 3rd year business class in Social Enterprise as well as a Social Enterprise bootcamp. Anna has started two social enterprises and has written business plans for numerous start ups. She was involved in the creation of the Social Enterprise Fund, the Edmonton Community Development Company and the Central Edmonton Community Land Trust. She has won the YWCA Woman of Distinction Award in entrepreneurship as well as two awards from the Canadian Institute of Planners.

Anna has extensive experience with new construction and renovation of residential and commercial properties in Edmonton’s inner city. She has overhauled a number of small commercial properties and developed 14 new duplex units in McCauley as co-owner of A Better Lot. Housing clients include InnRoads Housing Coop, Technical Services Advisory Group and Women Building Futures (mixed use project.) Recently, Anna renovated an historic building using a Social Enterprise Model.

Anna’s formal qualifications include a Masters of Business Administration (2000), Masters of Community Economic Development (1999) and a Masters of Environmental Design (1989). Her relevant, previous, volunteer work includes sitting on the City of Edmonton’s Derelict Housing Committee, and serving as a Board member of Right at Home Housing Society, the McCauley Community League Zoning committee, and Home Ed.

Ken Bregenser Ken spent about a decade in property management, a decade in silviculture, half a decade in landscape design and development and a decade-and-a-half running Zocalo, a plant, flower and gift gallery in Edmonton's Little Italy with his partner, Miranda Ringma. They have been partnering with the City of Edmonton’s Blooming Boulevard's program for the last decade, working with a number of Business Improvement Areas supplying street flower baskets and streetside flower barrels.

Ken studied Communications at Simon Fraser University, is a past Board Member of the Chinatown Little Italy Business Association and a present Board member of Viva Italia District Association.

15 Jonathan Christenson Jonathan is the artistic director of Catalyst Theatre. The company creates original stage productions that have been presented at local, national and international festivals and theatres, including in London's West End and New York's Broadway district. These productions have been recognized with more than 135 British, Canadian and American awards and nominations. His plays have been published in the United States and Canada, his music can be found online at iTunes and Broadway Records, and his productions are featured in leading magazines across North America.

Jonathan has led directing and creation seminars in the United States, England and Canada and has taught in the graduate directing and undergraduate acting programs at the University of Alberta. He was instrumental in the conversion of a disused warehouse into a 150-seat black box theatre in Old Strathcona and in the renovation of the Maclab Theatre and lobby in downtown Edmonton. He previously worked in the UK as the coordinator of a teen arts festival, was the administrator of festivals and schools at the Citadel Theatre, and co-curated an international theatre festival which hosted the work of artists from across Europe, Africa and North America.

Jonathan was named one of “Alberta’s Fifty Most Influential People” by Venture Magazine and Alberta Playwrights Network chose him as one of Alberta’s one hundred most significant theatre artists of the past one hundred years. He lives with his wife and son in Little Italy, overlooking Giovanni Caboto Park in the heart of McCauley.

Shafraaz Kaba Shafraaz is an Integrated Project Delivery (IPD) expert and architect who thrives on facilitating problem solving of any kind that is ecologically aware. He is previously known for his work at Manasc Isaac Architects, where he focused on net-zero energy and carbon-emission reducing goals for buildings. Shafraaz now facilitates the creation of regenerative, net zero energy, and carbon neutral architecture using Lean culture and design thinking. He brings together architects, engineers, trades, contracts and clients to enable high performance results. Miranda Ringma A resident of McCauley for almost 30 years, Miranda has run Zocalo—a garden cafe and gift gallery in Little Italy—with her partner, Ken Bregenser for the last 16 years. After a stint as a professor of philosophy, Miranda spent a few years doing editing, writing and design consulting work before opening their retail store. She has committed a host of volunteer hours working with community groups that particularly focus on the continual growth and thriving of a strong, independent retail strip of Little Italy, where she lives and works.

Alayne Sinclair, B.A, Alayne is a retired municipal manager, a former member of the Law Society of LLB Alberta, and a former director of Public Agency Appointments with the Government of Alberta. She worked for the City of Edmonton in several roles including, City Clerk, Executive Director of the Office of the City Manager, Acting Director of Operations, Director of Governance and Legislative Services, and Executive Director of the Landlord and Tenant Advisory Board. She serves as a member on the City of Edmonton Ward Boundary Commission, the Governance Committee of the Multicultural Family Resource Society, and is a member of the Community and Social Services and Children’s Services Appeal Panels. Alayne has recently moved back to McCauley community, having lived there before for 14 years.

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Teresa Spinelli Teresa wasn’t destined to lead her family’s grocery business. But life takes many turns and the leader is what she became. Born in Edmonton in 1961 Teresa grew up at the Italian Centre Shop, taking her first steps in the pasta isle. By age 13 she was working in the store regularly as a cashier, never dreaming she would one day ascend to the Presidency of the company. Family misfortune changed the course of Teresa’s life, “We were a traditional Italian family, and I had a brother, so automatically, because he was the boy, he was going to take the business.”

With her vision of changing the business from a local grocery store to a major importer and distributor, in her first year of Presidency, she grew the business to 12 million in sales. Today, the company has grown 8 times with 4 stores (located in Edmonton and Calgary), over 500 employees and sales exceeding 70 million. “For me, it’s not about selling salami. For me, it’s about people. The reason I get up in the morning is because I want to grow people.” ~Teresa Spinelli~

Teresa is President Viva Italia District Association, 2018 MacEwan University Allard Chair in Business, 10 years running in Canada's Top 100 Women Entrepreneurs as ranked by Profit magazine.

Dr. Siân Williams Siân is the owner of Alinio Chiropractic, a newly-opened multi-disciplinary clinic located in the Ice District. She obtained her Doctor of Chiropractic at Canadian Memorial Chiropractic College in Toronto, where she graduated Magna Cum Laude and was valedictorian for her year. After beginning her practice in Adelaide, Australia, Siân returned to Canada to continue her work here in Edmonton.

Originally from Wales, Siân completed her undergraduate degree in Theatre and Television at King Alfred's College in Winchester, England before coming to Canada to obtain a Master of Arts in Theatre at the University of Alberta. After completing her theatre studies, Siân worked as a professional actor, writer and arts educator. Her work as a performer took her to theatres and festivals across the UK and Canada. During this time, she also taught undergraduate theatre students in the University of Alberta's Department of Drama and high school students from across the province at Theatre Alberta's Artstrek.

Siân sits on the Victoria School Foundation Board of Directors, has given her time to various committees in downtown Edmonton, and has volunteered at the Boyle McCauley Health Clinic. She has completed seven marathons (in Toronto, Vancouver, Victoria, Winnipeg, Mississauga and Edmonton). She lives, shops and socializes in McCauley.

Edmonton Community The Edmonton Community Development Company is a non-profit company Development Company owned by the Edmonton Community Foundation, the United Way of the Alberta Capital Region and Homeward Trust. The ECDC engages and collaborates with urban core neighborhoods to understand their needs and aspirations and to help build community capacity to further their economic and social development. The ECDC is providing in-kind services to the Issuer to support the Offering and closing of the Acquisition.

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3.3 Property Management Experience

The Directors collectively have 75 years of property management experience as independent business owners, consulting on commercial and residential real estate projects and in municipal government positions. The Directors have qualified experience to manage the operations of the Property, however, believe it is in the best interests of Shareholders to appoint a professional property management company, which is expected by closing of the Acquisition.

3.4 Penalties, Sanctions and Bankruptcy

To the knowledge of the Directors of the Issuer, no penalty or sanction has been in effect during the last 10 years, nor has any cease trade order been in effect for a period of more than 30 consecutive days during the past 10 years against a director, executive officer or control person of the Issuer or an issuer of which any of the foregoing persons was a director, executive officer or control person.

To the knowledge of the Directors of the Issuer, no director, executive officer or control person of the Issuer or an issuer of which any of the foregoing persons was a director, executive officer or control person at that time, has declared bankruptcy, or made a voluntary assignment in bankruptcy or proposal under any bankruptcy or insolvency legislation, or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such person during the last 10 years.

3.5 Loans

The Directors and ECDC have loaned approximately $140,000 to the Issuer, on a short- term interest free basis, that is to be repaid from the proceeds of the Offering or from additional debt financing provided by the debt provider.

ITEM 4 CAPITAL STRUCTURE

4.1 Share Capital

Description of Number Price per Number Number Number security authorized to security outstanding outstanding outstanding be issued as of the date after min. after max. of the offering offering Offering

Class “A” Shares – Unlimited $250 9 TBD(1) TBD(1) Membership

Class “B” Shares – Unlimited $1,000 0 1,000 2,915 Investment

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Notes: (1) All subscribers of Class B Shares are required to hold at least one Class A share. Therefore, the number of Class A shares will be determined by the number of Subscribers for the Offering upon Closing.

4.2 Long-Term Debt Securities

As of the date of this Offering Memorandum, the Issuer has been approved, in principle, for a loan in the amount of $1,900,000 by a debt provider subject to successful completion of the minimum Offering. This loan will be secured by a first mortgage on the Property.

4.3 Prior Sales

The Issuer has not issued any securities of the class being offered under the Offering Memorandum (or convertible or exchangeable into the class being offered under the Offering Memorandum).

ITEM 5 SECURITIES OFFERED

5.1 Membership Share Capital

The Cooperative is authorized to issue the following Membership Shares which are called Class “A” Shares:

(a) An unlimited number of non-par value voting membership Class “A” Shares issued only to members of the Cooperative.

(b) Class ”A” Shares shall be issued at a price of $250.00 each or such greater price as may be set from time to time by the Board of Directors.

(c) Each holder of a Class “A” Share shall be entitled to receive notice of, and to attend and to cast one vote at every meeting of the Members of the Cooperative. No Class “A” shareholder has more than one vote, regardless of the number of Class “A” shares held by the shareholder.

(d) Class “A” shares may not be redeemed by members who voluntarily withdraw from membership.

(e) The redemption price for members whose membership shares have been terminated shall be the price paid for the shares without interest.

(f) Class “A” shares will only be issued to members who have purchased investment Shares.

5.2 Investment Share Capital

The Cooperative is authorized to issue the following investment Shares to Members which are known as Class “B”:

(a) An unlimited number of voting Class “B” Shares without par value, in one or more series, at a maximum price of $1,000.00 each which may be issued to Members of the Cooperative. The Directors of the Cooperative are authorized to fix the number of each series of Class "B" Shares, and to determine the designation, rights, privileges, restrictions and conditions attached to each series pursuant to Section 110(1) (b) of the Act (or successor legislation). 19

(b) Class “B” Shares carry the right to dividends in such amounts as may be declared by the Board of Directors of the Cooperative from time to time.

(c) Class “B” Shares may be redeemed either by the Cooperative or at the request of the Shareholder, at the said price of $1,000.00 per share, plus all unpaid dividends (whether declared or not) subject to any terms or conditions set out in the Bylaws but only after 5 years from the date of issue of the Class “B” Share.

5.3 Valuation Policy

The Property will not be externally appraised in any given year. The Directors will determine whether a change in fair value has occurred since the date of the most recent external appraisal using an internal valuation process which requires the use of estimates such as future cash flows from assets (such as tenant profiles, future revenue streams and overall repair and condition of the Property), capitalization and discount rates applicable to the Property. These estimates will be based on market conditions existing at the reporting date.

5.4 Subscription Procedure

Shares may only be issued to subscribers who purchase the Shares as principal, and on the condition that at the same time or before the Subscriber signs the Subscription Agreement, the Issuer delivers this Offering Memorandum to the Subscriber and obtains a signed Risk Acknowledgement Form from the Subscriber.

In order to subscribe for Shares, a Subscriber must complete, execute and deliver to a duly authorized representative of the Issuer:

(a) one (1) completed and signed copy of the Subscription Agreement in the form prescribed by the Issuer (the "Subscription Agreement") and including any and all attachments thereto;

(b) a Risk Acknowledgement Form; and

For non-registered cash investments:

(c) a cheque, certified cheque or bank draft for the subscription amount made payable to: "Insight Law LLP, in trust";

For RRSP and TFSA cash investments or cash transfers:

(d) a cheque, certified cheque or bank draft for the subscription amount made payable to: "Canadian Workers Cooperative Federation" (CWCF); and

(e) one (1) completed and signed copy of CWCF’s registered account application, deposit and transfer forms, as applicable and required;

Insight Law LLP, as legal counsel to the Cooperative will hold the subscription funds "in trust", until a signed and dated Subscription Agreement is duly accepted by the Cooperative and a Closing has officially occurred. Interest will not be payable on a Subscriber's subscription funds held by the Issuer or by Insight Law LLP in escrow pending Closing. Subject to applicable securities laws and the Investor's two-day cancellation right, a subscription for Shares, evidenced by a duly completed Subscription Agreement

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delivered to the Cooperative shall be irrevocable by the Subscriber. See Item 11 – “Investors' Rights”.

Subscriptions for Shares will be received, subject to rejection and allotment, in whole or in part, and subject to the right of the Cooperative to close the subscription books at any time, without notice. If a subscription for Shares is not accepted, all subscription proceeds will be promptly returned to the Subscriber without interest. On Closing, the net proceeds will be delivered to the Issuer pending issuance of the share certificates and all other closing matters have been attended to. Closings will occur at such times and on such dates as may be reasonably determined by the Issuer from time to time. The Issuer intends to complete the initial closing under this Offering Memorandum as soon as practicable, with the intent that such initial closing is expected to occur on or about December 13, 2019. Funds available under this offering may not be sufficient to accomplish our proposed objectives.

Notwithstanding the above, Subscription Agreements from trustees for RRSPs or TFSAs under the Tax Act will be accepted by the Cooperative without the accompanying payment, to accommodate their administrative procedures. In such case, the share certificates for the Shares will be delivered by the Cooperative in exchange for payment of the Subscription Price.

Should the Subscriber's subscription payment be submitted to the Issuer's lawyers, in trust or otherwise, then the Subscriber agrees that the solicitors shall have no accountability to the Subscriber whatsoever, and acknowledges that the solicitors are merely recipients for the Issuer and have no solicitor's obligations of any nature to the Subscriber. The Subscriber agrees that submission of the payment to the solicitors in trust is to be deposited into the trust account of the Issuer and shall be the property of the Issuer at that point. The only duty the solicitors shall have to the Subscriber is to deliver the subscription agreement (as delivered) and the subscription monies to the Issuer, all solely at the Issuer's instruction, and the solicitors shall require no further instruction from the Subscriber in order to deliver the same to the Issuer. Under no circumstances shall the Issuer's solicitors be considered to be giving legal or other advice or services to the Subscriber and no communication between the Subscriber and such solicitors shall be considered advice (at the most only administrative subscription assistance on behalf of the Issuer) but the Subscriber shall rely solely and exclusively on his own judgment and the advice of his own counsel.

The Subscriber should carefully review the terms of the Subscription Agreement accompanying this Offering Memorandum for more detailed information concerning the rights and obligations of the Subscriber and the Issuer. Execution and delivery of the Subscription Agreement will bind the Subscriber to the terms thereof, whether executed by the Subscriber or by an agent on their behalf. The Subscriber should consult with their own professional advisors.

ITEM 6 INCOME TAX CONSEQUENCES AND RRSP ELIGIBILITY

The Investor should consult their own professional advisers to obtain advice on the income tax consequences that apply to them.

The Issuer has assumed that all subscribers will be residents of Canada. Non-resident subscribers should consult their own professional advisors.

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Provided that the Issuer is, at all relevant times, a “cooperative” for purposes of the Tax Act, the Shares will be a qualified investment under the Tax Act for trust governed by registered retirement savings plan (“RRSP”) or tax-free savings account (“TFSA”), each as defined in the Tax Act (collectively, “Plans”). If the Issuer does not qualify or ceases to qualify as a cooperative, the Shares will not be qualified investments for Plans at that time.

ITEM 7 COMPENSATION PAID TO SELLERS AND FINDERS

No person has or will receive any commission, corporate finance fee or finder's fee in connection with this Offering.

Only the approximately $45,000 of start up and offering costs will be directly reimbursed.

ITEM 8 RISK FACTORS

In addition to factors set forth elsewhere in this Offering Memorandum, potential Subscribers should carefully consider the following factors, many of which are inherent to the ownership of the Shares. An investment in the Shares involves various risks and severe uncertainties. The risks discussed in this Offering Memorandum can adversely affect the Issuer's operations, operating results, prospects and financial condition. This could cause the value of the Shares to decline and cause investors therein to lose part or all of their investment. In addition to those set out below and elsewhere in this Offering Memorandum, other material risks and uncertainties of which the Issuer is not presently aware may also harm its business. The following is a summary only of some of the material risk factors involved in an investment in the Shares. Prospective investors should review the risks with their legal and financial and tax advisors.

It is strongly recommended that each Subscriber, in order to assess tax, legal and other aspects of an investment in the Shares, obtain independent legal and tax advice with respect to the Offering and this Offering Memorandum.

(a) Investment Risk

No Guarantee that Investment in Shares will ever be Profitable

There can be no guarantee against losses resulting from an investment in Shares and there can be no assurance that the Issuer's strategy of investing in the Issuer's products will be successful or that the objective of earning a profit on the eventual sale of the Issuer's products will be achieved. The success of the Issuer in these objectives will depend to a certain extent on the efforts and abilities of the management of the Issuer and on a number of other external factors such as, among other things, the general economic conditions that may prevail from time to time, which factors are out of the control of the management of the Issuer.

No Guarantee of Dividends

There is no guarantee that an investment in the Shares will earn any positive return in the short or long-term. While the Cooperative intends to retain funds sufficient to satisfy its distribution objectives, these potential distributions are not guaranteed and the Cooperative may cease making distributions at any time.

Investments Not Liquid

Investments in non-public securities tend to be relatively illiquid, with the degree of liquidity generally fluctuating in relation to demand for, and for the perceived desirability of, the investment. If it was necessary to liquidate all or a portion of the Cooperative’s property, the proceeds to the 22

Cooperative might be significantly less than the total value of its investment on a going concern basis.

The Shares will be subject to a number of resale restrictions, including a restriction on trading. Until the restriction on trading expires, a Shareholder will not be able to trade the Shares unless it complies with very limited exemptions from the prospectus and registration requirements under applicable securities legislation. As the Cooperative has no intention of becoming a reporting issuer in any jurisdiction in Canada, these restrictions in trading will not expire. There is no market over which the Shares may be traded and it is very unlikely that one will develop. Consequently, Shareholders may not be able to liquidate their investment in a timely manner, if at all, or pledge their Shares as collateral for loans. See "Item 10 – “Resale Restrictions”.

Highly Speculative

The purchase of the Shares is highly speculative. A potential Subscriber should purchase Shares only if it is able to bear the economic risk of the entire loss of its investment. An investment in the Shares should not constitute a significant portion of a Subscriber's investment portfolio.

Securities Not Insured

The Cooperative is not a member institution of the Canada Deposit Insurance Cooperative and the Shares offered pursuant to this Offering Memorandum are not insured against loss through the Canada Deposit Insurance Cooperative.

Rights of Shareholders

The rights of Shareholders are outlined in the attached Articles and Bylaws of the Cooperative.

No Involvement of Registered Dealers

No exempt market dealer or independent investment dealer has made any review or investigation of the terms of this Offering, the structure of the Cooperative or the background of the directors and officers.

(b) Issuer Risk

Operating History

The Cooperative’s operations are subject to all the risks inherent in the establishment of a new business enterprise, including a lack of any short-term or long-term operating history. The Cooperative cannot be certain that its investment strategy will be successful. The likelihood of success of the Cooperative must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. If the Cooperative fails to address any of these risks or difficulties adequately, its business will likely suffer. Future profits, if any, will depend upon various factors, government regulations and enforcement and general economic conditions. There is no assurance that the Cooperative can operate profitably or that it will successfully implement its business plan.

Acquisition Risk

The Issuer intends to acquire the Property and other properties selectively. The acquisition of properties entails risks that investments will fail to perform in accordance with expectations. In undertaking such acquisitions, the Issuer will incur certain risks, including 23

the expenditure of funds on, and the devotion of management’s time to, transactions that may not come to fruition. Additional risks inherent in acquisitions include risks that the properties will not achieve anticipated occupancy levels and that estimates of the costs of improvements to bring an acquired property up to standards established for the market position intended for that property may prove inaccurate.

Reliance on Directors

Decisions regarding the management of the Cooperative’s affairs will be made exclusively by the officers and directors of the Cooperative and not by the Shareholders. In this respect, the experience and ability to manage are often considered among the most significant factors in the success of a business. Accordingly, subscribers must carefully evaluate the personal experience and business performance of the officers and directors of the Cooperative. The Cooperative may retain independent contractors, including affiliates of the Cooperative, to provide services to the Cooperative. These contractors have no fiduciary duty to the Shareholders and may not perform consistently with the fiduciary duty owed to Shareholders by the Cooperative.

The success of the Cooperative will be largely dependent upon the performance and decision making of its board of directors. There is a risk that the death or departure of any member of management or any key employee could have a material adverse effect on the Cooperative and the value of the Cooperative’s products and services.

Reliance on a Property Management Company

The Cooperative will delegate certain secretariat and day-to-day administration of the Property to a professional property management company. Shareholders of the Cooperative will have no rights to make any decisions with regards to the Cooperative’s business and affairs. No prospective Shareholder should purchase Shares in the Cooperative unless such prospective Shareholders is willing to entrust certain aspects of the management of the Cooperative to the property management company.

Leverage of the Issuer

The Issuer may borrow, incur indebtedness or need to rely on funding by other third parties for any purpose, including for the purpose of acquiring investments. As well, such other sources of funding may not be available or may not be available under terms that are acceptable to the Issuer. Any borrowings by the Issuer will take priority over the distribution of income or other amounts to the Shareholders and such amounts will be required to be repaid before any distributions of income or other amounts are made to the Shareholders.

Recourse to Issuer Assets

Issuer assets, including any investments made by the Issuer and any capital held by the Issuer, are available to satisfy all liabilities and other obligations of the Issuer. If the Issuer itself becomes subject to a liability, parties seeking to have the liability satisfied may have recourse to Issuer assets generally and may not be limited to any particular asset, such as the investment giving rise to the liability.

General Real Estate Ownership Risks

All real estate property investments are subject to a degree of risk and uncertainty. Property investments are affected by various factors including general economic conditions, local real estate markets, demand for leased premises, competition from other available premises and

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various other factors. The value of real estate property and any improvements thereto may also depend on the credit and financial stability of the tenants. Distributable cash flow will be adversely affected if one or more major tenants or a significant number of tenants of the Property become unable to meet their obligations under their leases or if a significant amount of available space in the Property is not able to be leased on economically favorable lease terms. In the event of default by a tenant, delays or limitations in enforcing rights as lessor may be experienced and substantial costs in protecting the Issuer’s investment may be incurred. The ability to rent un-leased space in the Property will be affected by many factors. Costs may be incurred in making improvements or repairs to the Property required by a new tenant. A prolonged deterioration in economic conditions could increase and exacerbate the foregoing risks. The failure to rent un-leased space on a timely basis or at all would likely have an adverse effect on the Issuer’s financial condition. The Issuer may, in the future, be exposed to a general decline of demand by tenants for space in the Property. As well, certain of the leases of the Property held by the Issuer may have early termination provisions which, if exercised, would reduce the average lease term.

Illiquidity of Real Property Investments

Real property investments tend to be relatively illiquid with the degree of liquidity generally fluctuating in relation to demand for and the perceived desirability of such investments. Such illiquidity may limit the Issuer’s ability to vary its portfolio promptly in response to changing economic or investment conditions. If the Issuer were to be required to liquidate its real property investments, the proceeds to the Issuer might be significantly less than the aggregate carrying value of its properties.

Tenancy Risk

The value of real property and any improvements thereto may also depend on the credit and financial stability of the tenants and upon the vacancy rates in Property. Revenue would be adversely affected if a significant number of tenants were to become unable to meet their obligations under their leases or if a significant amount of available space in the Property were not able to be leased on economically favourable terms. In addition, revenue would be adversely affected by increased vacancies in the Property. Upon the expiry of any lease, there can be no assurance that the lease will be renewed or the tenant replaced. The terms of any subsequent lease may be less favourable than the existing lease. In the event of default by a tenant, delays or limitations in enforcing rights as lessor may be experienced and substantial costs in protecting an investment in the Property may be incurred. Furthermore, at any time, a tenant of any of the Property may seek the protection of bankruptcy, insolvency or similar laws that could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in the cash flow available. The ability to rent unleased space in the Property will be affected by many factors. Delays in re-leasing the Property as vacancies arise would reduce the revenues and could adversely affect operating performance. Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges must be made throughout the period of ownership of real property regardless of whether a property is producing any income. If the Co-operative is unable to meet mortgage payments on the Property, losses could be sustained as a result of the mortgagee’s exercise of its rights of foreclosure or sale.

Valuation of the Issuer’s Investments

Valuation of the Issuer’s investments, including the third-party appraisal of the Property, may involve certain judgmental determinations and, if such valuations should prove to be incorrect, the value of the Issuer’s assets could be adversely affected. Independent pricing information may not at times be available regarding certain of the Issuer’s investments. 25

Potential Conflicts of Interest

The directors and officers of the Cooperative are also directors and officers of other affiliates or companies that may be engaged and will continue to be engaged in activities that may put them in conflict with the business strategy of the Cooperative. Consequently, there exists the possibility for such directors and officers to be in the position of conflict. All decisions to be made by such directors and officers involved in the Cooperative are required to be made in accordance with their duties and obligations to act honestly and in good faith with a view to acting in the best interests of the Cooperative. In addition, such directors and officers are required to declare their interest in, and such directors are required to refrain from voting on, any matter in which they may have a material conflict of interest.

(c) Industry Risk

Competition

The Issuer competes with other investors, developers, and owners of similar competitive products and services. Some of the competitors of the Issuer are newer, better located or better capitalized than the Issuer. Certain of these competitors have greater financial and other resources and greater operating flexibility than the Issuer. The existence of competing companies could have a material adverse effect on the ability of the Issuer to market the Issuer's products and services and could adversely affect the profitability of the Issuer.

Fluctuations in Capitalization Rates

As interest rates fluctuate in the lending market, so do capitalization rates which affect the underlying value of real estate. As such, when interest rates rise, so do capitalization rates. Over the period of investment, capital gains and losses at the time of disposition can occur due to the movement of these capitalization rates.

Fluctuations in Interest Rates

A financing may include indebtedness with interest rates based on variable lending rates that will result in fluctuations in the Issuer’s cost of borrowing.

Political and Economic Climate

The Province of Alberta, in which the head office of the Issuer is located, presents economic and political conditions that are in the midst of some uncertainty. A Federal election has just been completed and municipal elections will be taking place in 2021. Any level of government could implement policies or regulations that would have an adverse effect on the value of the Shares. In addition, the Alberta and Canadian economies are being negatively impacted by the declining price of oil and, therefore, any projections regarding future growth may not be accurate.

Tax Aspects

Canadian federal and provincial tax aspects and local tax aspects should be considered prior to investing in the Shares. See "Item 6 – “Income Tax Consequences and RRSP Eligibility". The return on a Shareholder's investment is subject to changes in Canadian tax laws. The Issuer's brief discussion of income tax considerations in this Offering Memorandum is based upon current income tax laws. There can be no assurance that tax laws or judicial or administrative interpretations will not be changed in a manner which fundamentally alters the tax consequences to investors of holding or disposing of Shares.

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Environmental Matters

Environmental laws provide for sanctions for non-compliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. The cost of defending against claims of liability, of complying with environmental regulatory requirements, or of paying personal injury claims could be substantial and reduce the value of the investment in the Shares. The Issuer may be subject to liability for undetected pollution or other environmental hazards against which it cannot insure, or against which it may elect not to insure where premium costs are disproportionate to the Issuer's perception of relative risk.

The foregoing risk factors do not purport to be a complete explanation of all risks involved in the purchasing of Shares. Potential investors should read this entire Offering Memorandum and the Subscription Agreement and consult with their legal and other professional advisors before determining to invest in the Shares.

ITEM 9 REPORTING OBLIGATIONS

The Issuer is not, and currently has no intention of becoming, a reporting issuer in any of the provinces or territories of Canada. The Issuer is governed under the provisions of the Cooperatives Act (Alberta) and will provide to its members annual financial statements in accordance with the provisions thereof.

Copies of certain corporate information with respect to the Issuer, including information on the terms contained in its Articles of Incorporation and certain information with respect to the Directors and Shareholders of the Issuer, may be obtained from the secretary of the Issuer, if such request is in writing.

Corporate information about the Issuer is available from the Alberta Corporate Registry System (https://cores.reg.gov.ab.ca/) (“CORES”). Access to CORES is restricted to accredited individuals working in authorized service provider offices, such as registry agents and law firms.

ITEM 10 RESALE RESTRICTIONS

There is no secondary market for these shares and transfer of shares from one owner to another must be approved by the Directors of the Cooperative.

ITEM 11 INVESTORS' RIGHTS

If an Investor purchases these securities they will have certain rights, some of which are described below. For information about their rights, an Investor should consult a lawyer.

11.1 Two Day Cancellation Right

An Investor can cancel their agreement to purchase these securities. To do so, they must send a notice to the Issuer by midnight on the 2nd business day after the Investor signs the agreement to buy the securities.

11.2 Statutory Rights of Action in the Event of a Misrepresentation

If an offering memorandum contains a misrepresentation when a person or company purchases a security offered by the offering memorandum, securities legislation in Alberta provides that every Investor shall have a right of action for damages against the Issuer, every director of the issuer at the date of the offering memorandum, and every person or company who signed the Offering Memorandum. The Investor may also elect to exercise 27

a right of rescission against the Issuer, in which case the Investor has no right of action for damages. Investors should refer to the applicable provisions of the securities legislation in their Offering Jurisdiction for particulars of those rights or consult with a lawyer. This right of action may be summarized as set forth below:

If there is a misrepresentation in this Offering Memorandum, the Investor has a statutory right to sue:

(a) the Issuer to cancel the agreement to buy these securities, or

(b) for damages against the Issuer, every director of the Issuer at the date of the Offering Memorandum and every person or company who signed the Offering Memorandum.

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

If an Investor intends to rely on the rights described in (a) or (b) above, they must do so within strict time limitations. They must commence their action to cancel the agreement within 180 days after they signed the agreement to purchase the securities. They must commence their action for damages within the earlier of 180 days after learning of the misrepresentation and 3 years after they signed the agreement to purchase the securities.

The Cooperative acknowledges that the limitation period described above extends the limitation period provided by the Limitations Act (Alberta) and agrees to the extension.

ITEM 12 FINANCIAL STATEMENTS

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McCauley Development Cooperative Financial Statements September 18, 2019 Independent Auditor's Report

To the Members of McCauley Development Cooperative:

Opinion

We have audited the financial statements of McCauley Development Cooperative (the "Cooperative"), which comprise the statement of financial position as at September 18, 2019, and the statements of loss and other comprehensive loss and changes in members' equity for the period then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Cooperative as at September 18, 2019, and its financial performance and its cash flows for the period then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Cooperative in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Cooperative’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Cooperative or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Cooperative’s financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Cooperative’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management  Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Cooperative’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Cooperative to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Edmonton, Alberta

October 31, 2019 Chartered Professional Accountants McCauley Development Cooperative Statement of Financial Position As at September 18, 2019

2019

Assets Current Receivable from members 2,250

Liabilities Current Accounts payable 7,810

Equity Share capital (Note 5) 2,250 Deficit (7,810)

(5,560)

2,250

Approved on behalf of the Board of Directors {{esl:Signer1:Signature:size(200,80)}} signed "Miranda Ringma" signed "Karen Gingras" Director Director

The accompanying notes are an integral part of these financial statements

1 McCauley Development Cooperative Statement of Loss and Comprehensive Loss For the period ended September 18, 2019

2019

Expenses Professional fees 7,810

Loss and total comprehensive loss for the period (7,810)

The accompanying notes are an integral part of these financial statements

2 McCauley Development Cooperative Statement of Changes in Members’ Equity For the period ended September 18, 2019

Share capital Deficit Total equity

Issuance of common shares on incorporation 2,250 - 2,250 Net loss for the period - (7,810) (7,810)

Balance September 18, 2019 2,250 (7,810) (5,560)

The accompanying notes are an integral part of these financial statements

3 McCauley Development Cooperative Notes to the Financial Statements For the period ended September 18, 2019

1. Reporting entity

McCauley Development Cooperative (the “Cooperative”) was incorporated under the Alberta Cooperatives Act on September 6, 2019. The Cooperative is domiciled in Canada. The address of the Cooperative’s registered office is 9613 111 Ave NW, Edmonton, AB.

The financial statements were approved by the Board of Directors and authorized for issue on October 31, 2019.

2. Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International Accounting Standards Board (“IASB”).

3. Basis of preparation

Basis of measurement The financial statements have been prepared in the historical basis except for the revaluation of certain non-current assets and financial instruments. Functional and presentation currency These financial statements are presented in Canadian dollars, which is the Cooperative’s functional currency.

Significant accounting judgments, estimates and assumptions The preparation of the Cooperative’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. These estimates and assumptions have been made using careful judgment; however, uncertainties could result in outcomes that would require a material adjustment to the carrying amount of the asset or liability affected in the future. The estimates and underlying assumptions are prepared based on management's best knowledge of current events and actions that the Cooperative may undertake in the future. These estimates and underlying assumptions are reviewed on an ongoing basis and revisions to accounting estimates are recognized prospectively in comprehensive income in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

4. Summary of significant accounting policies

Except as noted above, the following principal accounting policies have been adopted in the preparation of these financial statements.

Financial instruments Financial assets Recognition and initial measurement The Cooperative recognizes financial assets when it becomes party to the contractual provisions of the instrument. Financial assets are measured initially at their fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through profit or loss are expensed in profit or loss when incurred. Classification and subsequent measurement Subsequent to initial recognition, all financial assets are classified and subsequently measured at amortized cost. Interest revenue is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss. Financial assets measured at amortized cost are comprised of accounts receivable from members.

4 McCauley Development Cooperative Notes to the Financial Statements For the period ended September 18, 2019

4. Summary of significant accounting policies (Continued from previous page)

Reclassifications The Cooperative reclassifies debt instruments only when its business model for managing those financial assets has changed. Reclassifications are applied prospectively from the reclassification date and any previously recognized gains, losses or interest are not restated. Impairment The Cooperative recognizes a loss allowance for the expected credit losses associated with its financial assets, other than debt instruments measured at fair value through profit or loss and equity investments. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions and forecasts of future economic conditions. The Cooperative applies the simplified approach for accounts receivable that do not contain a significant financing component. Using the simplified approach, the Cooperative records a loss allowance equal to the expected credit losses resulting from all possible default events over the assets’ contractual lifetime. Financial assets are written off when the Cooperative has no reasonable expectations of recovering all or any portion thereof. Derecognition of financial assets The Cooperative derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire. Financial liabilities Recognition and initial measurement The Cooperative recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Cooperative measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss. Where an instrument contains both a liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability component measured initially at fair value and the equity component assigned the residual amount. Classification and subsequent measurement Subsequent to initial recognition, all financial liabilities, being accounts payable, are measured at amortized cost using the effective interest rate method. Interest, gains and losses relating to a financial liability are recognized in profit or loss. Distributions to holders of instruments classified as equity are recognized directly in equity. Derecognition of financial liabilities The Cooperative derecognizes a financial liability only when its contractual obligations are discharged, cancelled or expire.

5 McCauley Development Cooperative Notes to the Financial Statements For the period ended September 18, 2019

5. Issued capital 2019

9 Class "A" voting common shares 2,250

Common shares Number of shares Share capital Share premium

Issue of shares for cash 9 2,250 -

Balance at September 18, 2019 9 2,250 -

The Cooperative is authorized to issue:

 An unlimited number of Class "A" (Membership) Shares (voting);  An unlimited number of Class "B" Shares (voting)  An unlimited number of Class "C" Shares (non-voting)  An unlimited number of Class "D" Shares (non-voting)  An unlimited number of Investment Shares (non-voting)

6. Events after the reporting period

Subsequent to the reporting date, aggregate loans of $23,500 were received from individuals, the majority of whom are founding members of the Cooperative, to fund start-up costs. The loans are non-interest bearing, unsecured and have no set repayment terms. On September 27, 2019, the Cooperative received a $100,000 loan from the Edmonton Community Development Corporation. The loan is non-interest bearing and is payable upon the closing or cancellation of the building purchase. Also on September 27, 2019, the Cooperative paid a $100,000 deposit related to a signed offer to purchase a building in the McCauley community of Edmonton, AB. The agreed upon purchase price of $2,860,000 will be paid by way of a second $100,000 deposit upon removal of purchaser's conditions, and $2,660,000 on closing. The purchase is subject to five primary conditions:

 Purchaser's approval of financing terms and related appraisal;  Purchaser's review of existing environmental assessments and option to conduct further assessments;  Purchaser's satisfactory full property inspection;  Purchaser's satisfactory review of all leases, rental agreements and material contracts pertaining to the property; and  Purchaser's satisfactory review of recent operating statements of the property. On October 11, 2019, the Cooperative received preliminary approval for a loan from the Alberta Social Enterprise Venture Fund ("ASEVF") for financing of up to $1,900,000 for the Cooperative's purchase of a building (as noted above). Final terms of the loan will be determined at a future date upon satisfaction of various conditions and final review and risk assessment.

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