Relationship Disclosure Document

Effective Date: January 2025

Securities legislation in Canada requires that Ocree Capital Inc. (“Ocree”) deliver to each client disclosure documentation which describes the nature of Ocree’s relationship with you, including the products and services that Ocree offers; and to inform you of any conflicts of interest that may arise between you and Ocree.

Information about Ocree and Registration

Ocree is registered as an exempt market dealer (EMD) in Ontario, Alberta and British Columbia, with our office located in Toronto, Ontario. The Ontario Securities Commission (OSC) is the principal regulator for Ocree. As an EMD, Ocree can trade and underwrite exempt market securities.

Business Activities

Ocree’s registration as an EMD allows it to provide exempt market dealing and private placement services to accredited investors and other clients who qualify to purchase private placements. In this capacity, Ocree acts as the client’s agent in the purchase or sale of a private placement investment, for the client.

Ocree deals exclusively in securities that are related or connected to Ocree, and it does not offer or act as a dealing agent for transactions in other securities.

Product Risks

There are risks associated with exempt market securities. Exempt market securities are typically not listed on any stock exchange so your ability to sell them is limited or not available. There could be a lockup period that applies to the security which restricts you from trading, selling, or transferring the security. Please see “Risk Disclosure” later in this document.

Issuers of exempt market securities do not have to file a prospectus. A prospectus describes the investment in detail and gives you some legal protections. There is a risk that the issuer will be unable to meet interest and principal payments on its obligations on a timely basis. Furthermore, the securities could be from a non-reporting issuer. This type of issuer does not have to publish financial information or notify the public of changes in its business.

Suitability of Investments

Ocree will determine that any investment action it takes, recommends, or decides on, for the client is suitable for the client and puts the client’s interest first.

The private placements of securities that Ocree deals in may not be suitable for all clients. Ocree is obligated to make a determination to ensure the proposed investment is suitable for you, unless you are a “permitted client” and have waived the suitability requirement. Should a Permitted Client not sign a suitability waiver, Ocree is required to obtain information relating to your investment objectives, risk tolerance, investment knowledge, financial position and other relevant information to make a suitability determination. In addition, Ocree is required to obtain information related to verifying your identity. This information pertains to the Know Your Client and Anti-Money Laundering requirements.

In a private placement of securities, the contractual agreement is between the client/investor and the issuer. The issuer provides clients/investors with a subscription agreement or other documentation that discloses the particulars of an investment, and it is signed by the client in order for the client to make an investment. This agreement may also be represented by tokens on a blockchain.

‘Know Your Client’ Process

‘Know Your Client’ (KYC) information is collected and documented before any client makes a trade. You, as our client, will receive, or otherwise have made available to you either in electronic format or on our website, review and where applicable, sign the following documents as part of the KYC package:

  1. Accredited Investor Certificate
  2. Permitted Client Waiver
  3. Relationship Disclosure Document
  4. Referral Arrangement Disclosure
  5. Politically Exposed Persons or Head of an International Organization
  6. Offering documentation and Subscription Agreement
  7. Know Your Client Information Form
  8. Complaints Process and Independent Dispute Resolution Service Document
  9. Privacy Consent
  10. Electronic Delivery of Documents
  11. Trusted Contact Person

We are required to obtain the following information before we open an account for you, in order to:

  • Establish your identity

  • Establish whether you are an insider of a publicly traded company

  • Ensure that we have adequate information regarding your personal circumstances to satisfy the required suitability determinations which includes assessing your financial circumstances, investment needs and objectives, investment knowledge, risk profile and investment time horizon.

For non-individual clients, we are required to verify the legal name of the entity, the type of legal entity, formation details, information about the beneficial owners of 25% or more of the shares or units of the legal entity etc.

On an annual basis, or on an ad hoc basis, as required, we will update your KYC information to ensure that it has current information to make suitable investment decisions for you which act in your best interest.

It is important for us to have current KYC information to ensure that we can accurately assess suitability for you. Therefore, if there are any significant changes to your circumstances, please inform us so that we may update your KYC documentation accordingly. A significant change is a change that affects your personal or financial situation, your investment needs and objectives, your risk profile or your investment time horizon, as well as any change that can reasonably be expected to have a significant impact on your net worth or on your income since the last update of your file. We are not responsible for any losses you may incur as the result of your failure to do so.

Fees and Compensation

The fees applicable to any Ocree investment product are as set out in the documents on the Ocree Platform related to that product. The documentation also describes the costs that may be charged to you, the client, as operating expenses (audit fees, legal fees, etc.). Ocree, acting in its capacity as an exempt market dealer, currently does not charge clients any fees for the operation of their account on the Platform. You will be notified of any changes in fees charged to you the Investor at least 60 days before the date on which a change of fee becomes effective.

Referral Arrangements

Ocree may enter into referral arrangements with affiliated or non-affiliated registrants and non-registrants, so that we may provide services and products to referred clients. We may pay a referral fee to the referrer. A referral fee is any monetary or non-monetary benefits provided for the referral. We negotiate the referral fee with the referrer. Any fees and expenses paid by referred clients remains the same regardless of any referral fee paid by Ocree to the referrer. We will inform all referred clients under a referral arrangement.

Ocree may also receive a referral fee for referring its clients to other service providers.

Trade Confirmation and Monthly Account Statement

Following the completion of a transaction where Ocree has facilitated a trade, a trade confirmation will be promptly delivered to a client electronically.

Following the end of each month, Ocree will make available to each client a monthly statement of account showing the account activity for that month and the account holdings at the end of the month. The account statement will be available on the Ocree Platform.

Use of Borrowed Funds

Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. As a result, your losses would be larger than had you invested using your own money.

Conflicts of Interest

Ocree and its employees owe each client a duty of care and loyalty. In order to carry out these duties, Ocree must identify existing and potential relationships that do or could present a material conflict of interest, assess the impact of the conflict to its clients, devise policies and procedures to avoid, if possible, or manage such conflicts in a fair and equitable manner, and disclose such conflicts to its clients.

Ocree reviews its business and operations at least annually to determine where material conflicts of interest may exist between Ocree and its clients. Ocree will assess new business initiatives to determine whether the implementation of the initiative may create a material conflict of interest or require modifications to any existing procedures intended to mitigate conflicts of interest.

The purpose of this disclosure is to provide clients with a description of the conflicts of interest Ocree may encounter.

Related or Connected Issuers - Ocree is related or connected to any limited partnership created and managed by Ocree GP Inc., an affiliate of Ocree. Ocree Capital is considered a captive dealer in that it currently only distributes securities of related or connected issuers. Under all circumstances, Ocree will deal fairly, honestly, in good faith with and in the best interests of its clients.

A person or company is a “Related Issuer” to Ocree if, through the ownership of or direction or control over voting securities or otherwise, the person or company is an influential security holder of Ocree. Ocree is an influential security holder of the person or company, or if each of them is a Related Issuer of the same third person or company.

A person or company is a “connected issuer” to another person or company if, due to its relationships with such person, a prospective purchaser of securities of the person or company might question the other person or company’s independence from the first person or company.

Each time that Ocree confirms a client transaction in an Ocree limited partnership, Ocree will issue a trade confirmation with the following disclosure:

“Ocree limited partnership is a related or connected issuer to Ocree Capital Inc.”

Gifts and Business Entertainment - where Ocree’s employee accept gifts or business entertainment of more than minimal value from issuers, clients, or service providers, there is a potential that the individual may be incentivized to act in a manner which is not in the best interest of Ocree and its clients. Ocree has established standards for accepting gifts and business entertainment from persons or entities with which the Company has an existing or potential business relationship to attempt to minimize the potential for such conflict by imposing a threshold on the value of any gift or business entertainment that can be accepted by any employee, officer or director of Ocree.

Outside Business Activities of Employees - where employees of Ocree engage in outside business activities, Ocree has developed policies and procedures that employees must adhere to. Ocree has an approval process to review and to restrict outside business activities that would impede with an employee’s ability to act in the best interest of Ocree and its clients.

Dispute Resolution

Ocree will work with its clients to resolve a complaint. Complaints should be reported in writing to the attention of the Chief Compliance Officer. We will acknowledge your complaint in writing, investigate the matter, and provide you with a written response. As part of this process, we may request you to provide clarification or additional information to assist us with investigating your complaint. The Chief Compliance Officer can be reached at compliance@ocreefg.com.

For more information regarding our complaint handling process, please refer to the Complaints Handling Policy on our website at www.ocreefg.com.

Confidentiality and Privacy

Unless required by law, Ocree and its employees are prohibited from disclosing to any person not associated with Ocree any information relating to the securities holdings of any client account, any transactions executed for any client account, any client trading decisions, strategies or trading techniques, any information regarding the counterparties to any transaction involving a client account or non-public personal information. Non-public personal information means, non-public information concerning clients, employees, consultants and natural person service providers; such as name, address, social insurance number, tax identification number, net worth, total assets, income and other information that could be used to identify any such person.

Should there be a breach to our safeguards of your personal information and it is determined the breach will cause significant harm, Ocree will provide details of the breach to the Privacy Commissioner and all affected individuals.

For more information, please refer to our Privacy Policy on www.ocreefg.com

Updates

If any material changes occur to this Relationship Disclosure Document, Ocree will take reasonable steps to provide each client with a revised copy of this disclosure document before it acts for that client.

Please do not hesitate to contact Ocree for a copy of our most current relationship disclosure document.

Risk Disclosures

General Risks:

  1. Before investing in the securities offered in this distribution, all investors should understand that there are inherent risks in an investment in securities and in the activities of the issuer. The following is a summary only of some, but not all, risk factors. We strongly encourage all investors to review the risks relating to their investment in the issuer with their own independent professional legal, tax, investment and financial advisors. All investors are encouraged to seek professional advice before purchasing any securities through this distribution to determine the appropriateness of their investment in relation to their financial and investment objectives and in relation to tax consequences of any such investment.
  2. In addition to the factors set forth elsewhere in the Ocree Platform, we encourage all investors to consider the risks outlined below. Any, or all of such risks, or other unidentified risks, may have a material effect on the issuer’s business and/or the return on investment to the investor.

Investment Risks:

  1. The securities offered by the issuer for each property, pursuant to the distribution details noted on the Ocree Platform, must be considered highly speculative and an investment in these securities involves a high degree of risk. The investment products offered on our Platform are highly speculative and involve a high degree of risk, including without limitation: (i) risk of substantial or total loss of investment; (ii) lack of diversification and concentration risk which can amplify losses that can occur from having a large portion of your holdings in the type of investment products we offer relative to your overall portfolio; and (iii) illiquidity because the investment products we offer are typically subject to holding period requirements, are often “restricted securities”, are not actively traded, and you may need to hold the securities indefinitely.
  2. A potential investor should carefully consider the following risk factors in addition to any other information contained in the documents found on the Ocree Platform prior to purchasing any securities. Due to the nature of the business and the present stage of development of the business of the issuer, the issuer may be subject to significant risks. The actual operating results may be very different from those expected as at the date of in the documents found on the Ocree Platform, in which event the trading price of the securities may decline, and a potential investor may lose all or part of his/her investment. The risk factors outlined below are not a definitive list of all risk factors associated with an investment in the securities offered pursuant to in the documents found on the Ocree Platform and investors are cautioned that they may lose their entire investment.
  3. The return on a prospective investor’s investment in his, her or its securities is subject to changes in Canadian federal and provincial tax laws, as well as any other tax laws applicable to the investor. There can be no assurance that the tax laws will not be changed in a manner which will fundamentally alter the tax consequences to investors of holding or disposing of securities.
  4. The issuer may never achieve a level of profitability that would permit a payment of distributions or other forms of distribution to its shareholders. Given the stage of the issuer’s business, it could be a long period of time before the issuer could be in a position to declare dividends or make distributions to its investors. The payment of any future distributions by the issuer will be at the sole discretion of the issuer’s management.
  5. Investors are cautioned not to place undue reliance on forward-looking statements and information. By their nature, forward-looking statements and information involves numerous assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking statements and information or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate.
  6. There is presently no public market for the securities offered pursuant to in the documents found on the Ocree Platform and none is expected to develop in the foreseeable future. The securities are governed by the Limited Partnership Agreement and accordingly the securities may not be resold or otherwise transferred, except in accordance with the issuer Limited Partnership Agreement or in accordance with applicable Canadian securities laws.
  7. The price for securities of the issuer is determined by the issuer’s management and may not bear any relationships to earnings, book value or other valuation criteria.
  8. Investments in real estate limited partnerships that develop property are typically long-term investments that can extend for the duration of a development project. You may not be able to resell your investment when you want or at all.
  9. There is no guarantee that projects or properties will be sold at a profit because the real estate market fluctuates and development costs can go over budget.
  10. The real estate limited partnership develops or purchases one specific property or real estate project. If the development project is never completed or sold, you could lose some or all of the money you have invested.

Real Estate Industry Investment Risk

  1. Real estate investments are generally subject to varying degrees of risk depending on the nature of the property. Such risks include the highly competitive nature of the real estate industry, changes in general economic conditions (i.e., availability and cost of mortgage funds), local conditions (i.e., the supply of office, industrial, retail space or warehousing or the demand for residential real estate in the area and thereby the prices at which serviced lots and parcels may be sold), government regulation and changes therein (i.e., planning, zoning, taxation of property and environmental legislation), changes in governments and the political environment in the applicable jurisdictions, competition from other available properties and the attractiveness of the property to potential purchasers, including builders. In addition, each segment in the real estate industry is capital intensive and is typically sensitive to interest rates and general economic conditions.

Risks Associated with Real Property

  1. All real property investments are subject to elements of damage and destruction such as fire, flood, and casualty as a result of natural disasters, criminal acts, or negligence that may result in significant losses for your investment holdings.
  2. Real estate values are affected by a number of factors, including: (i) general economic conditions; (ii) local real estate market conditions; (iii) changing demographics; (iv) supply and demand for premises; (v) location and attractiveness of the premises; (vi) competition from similar or competing premises; (vii) quality of project management and property management services; and (viii) failure or refusal of purchasers of the converted real estate properties to complete their transactions and other legal impediments to the completion of the sale of the real estate properties. Any inability of the issuer to sell any or all of the real estate properties will negatively affect the profitability of investments.

Issuer Risks:

  1. The issuer’s business will be significantly dependent on the issuer’s management team including outside management advisors and consultants. The loss of the issuer’s officers, employees, service providers, contractors, advisors or consultants could have a material adverse effect on the issuer. The issuer’s success depends, in part, on its ability to attract and retain key, technical, management and operating personnel, including contractors, service providers, consultants and members of the issuer’s board of directors. The issuer needs to develop sufficient expertise and retain consultants and contractors in areas such as research, sales and marketing, investor relations, financial expertise, and manual labour in order to successfully execute its business plan. The issuer may be unable to attract and retain qualified personnel or develop the expertise needed in these areas. If the issuer fails to attract and retain key personnel, it may be unable to execute its business plans and its business could be adversely affected.

  2. There is no guarantee that the issuer will achieve its investment objectives or earn a positive return.

  3. Real or perceived quality, whether or not ultimately based on fact and whether or not involving the issuer or incidents involving the issuer’s competitors, could cause negative publicity and reduced confidence in Ocree and the products and services listed on the Ocree Platform, which could cause harm to the issuer’s brand, reputation and sales, and could materially adversely affect the issuer’s business, financial condition and results of operations. The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared.

  4. The issuer has only a limited history upon which an evaluation of its prospects and future performance can be made. The issuer’s proposed operations are subject to all business risks associated with new enterprises. The likelihood of the issuer’s success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the expansion of a business, operation in a competitive industry and the development of a customer base. There is a possibility that the issuer may sustain losses into the future. If the issuer is unable to generate revenues or profits, investors might not be able to realize returns on their investment or prevent the loss of their investment.

  5. The issuer may be subject to litigation arising out of its operations. Damages claimed under such litigation may be material and the outcome of such litigation may materially impact the issuer’s respective operations and the value of its securities. The issuer will assess the merits of any lawsuit and defend such lawsuits accordingly; however, the issuer may be required to incur significant expense or devote significant financial resources and time to such defenses. In addition, the adverse publicity surrounding such litigation may have a material adverse effect on the issuer’s operations and financial position.

  6. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which could materially and adversely affect the issuer’s business. The issuer may not be able to compete successfully against current and future competitors and the failure to do so will harm the issuer’s business.

  7. There is no assurance that the issuer will be successful in marketing any of its products or services, or that the revenues from the sale of such products or services will be significant. Consequently, the issuer’s revenues may vary by quarter, and the issuer’s operating results may experience fluctuations.

  8. The financial success of the issuer may be sensitive to adverse changes in general economic conditions in Canada and the world, such as war, terrorist attacks, recession, inflation, labor disputes, demographic changes, whether or climate changes, pandemic and epidemic, unemployment and interest rates.

  9. The net proceeds from this distribution will be used for the purposes described in the documents on the Ocree Platform. The issuer reserves the right to use the funds obtained from this distribution for any general business purposes and such other purposes not presently contemplated which we deem to be in the best interest of the issuer and its shareholders. As a result of the foregoing, the success of the issuer may be substantially dependent upon the discretion and judgment of the issuer’s management with respect to application and allocation of net proceeds of the distribution. All investors will be entrusting their funds to the issuer’s management team, upon whose judgment and discretion the investors must depend.

  10. An issuer may use third-party debt to finance their investments in the real estate properties. Leveraging increases the potential for capital gains and increased income, but at the same time increases the possibility of sustaining losses. There can be no assurance that the leveraging strategies employed by the issuer will enhance returns. The use of leverage may reduce returns and further, the use of leverage exposes the Partnership to greater losses than would non-leveraged investments.

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

  12. The issuer’s success, ability to increase revenue and operate profitably depends in part on Ocree’s ability to acquire new customers and retain existing customers, so that they continue to purchase the products listed on the Ocree Platform. The issuer may fail to acquire new customers and/or retain customers across distribution channels due to negative value and quality perceptions, a lack of new and relevant products and services or failure to fulfill customers’ needs in a timely manner.

  13. The nature of the issuer’s business may necessitate the use of other existing technologies and processes, which are currently, or in the future will be, subject to patents, copyrights, trademarks, trade secrets or other intellectual property rights held by other parties, in which case the issuer may need to obtain one or more licenses to use those other technologies. If the issuer is unable to obtain such licenses, on reasonable commercial terms, from the holders of such intellectual property rights, the issuer may be required to halt its operations or redesign its technology, failing which, the issuer may bear a substantial risk of litigation for misuse of such technologies. In any such event, the business and operations of the issuer may be materially adversely affected.

  14. The issuer’s management and key personnel may have interest in other businesses, which could result in conflicts of interest. The conflicts may arise from their roles as directors, officers or shareholders in other companies. There can not be assurance that any such conflicts will be resolved in favor of the issuer or its investors. Investors should be aware that the issuer may engage in transactions with related parties, which may be conducted on an arm’s length basis.

The following are market and economic risks for the issuer:

  1. A downturn in the homebuilding market could adversely affect its operations.

  2. An increase in mortgage interest rates could decrease the issuer’ ability or desire to obtain financing and adversely affect the issuer’s business or financial results.

  3. Real estate is a very competitive industry, and competitive conditions could adversely affect the issuer’s business or financial results.

  4. The underlying real estate assets may depreciate due to economic downturns, changes in market conditions, or factors affecting specific geographic areas or property types. As a result, a decrease in property values can reduce the value of tokenized assets, affecting investment returns.

  5. As real estate is often sensitive to changes in interest rates, rising rates could increase borrowing costs or decrease property values. Therefore, increased expenses or reduced asset values could erode investment returns.

The following are operational risks for the issuer:

  1. The issuer may be subject to significant potential liabilities due to building defects related liability claims made against us.

  2. Products supplied to the issuer and work done by subcontractors can expose the issuer to risks that could adversely affect its business.

  3. Supply shortages and risks related to the demand for skilled labour and building materials could increase costs and delay deliveries.

  4. Increased interest rates on the mortgages it may obtain will increase the cost of the homes it builds.

  5. Failure to comply with the covenants and conditions imposed by the issuer’s credit facilities could restrict future borrowing or cause the issuer’s debt to become immediately due and payable.

  6. The issuer relies on third party service providers for various aspects of its operations. The performance of these third parties is outside the issuer’s control , and any failure by them to deliver services as expected could adversely affect the issuer’s business, financial condition and result of operations. Additionally, any issues related to quality, security or reliability of the services provided by these third parties could negatively impact the issuer’s reputation and investor confidence.

The following are regulatory risks for the issuer:

  1. Legal and regulatory changes may adversely impact the issuer such as changes to capital gains rates by the federal government of Canada.

  2. The issuer may be adversely impacted by laws and regulations directed at the investment industry.

  3. Governmental regulations regarding land use and environmental matters could increase the cost and limit the issuer’s development and homebuilding projects' availability and adversely affect the issuer’s business or financial results.

  4. The issuer can be injured by improper acts of persons over whom it does not have control.

  5. The regulatory environment for digital assets and real estate tokenization is complex and rapidly evolving. Changes in laws or regulations affecting real estate investment, digital assets, or tokenization could impact the legal standing or profitability of investments.

  6. Potential legal challenges or changes in the regulatory framework could delay or prevent the execution of projects, affecting investor returns.

The following are other risks for the issuer:

  1. The issuer’s results of operations could be adversely affected if legal claims against the issuer are not resolved in its favour.

  2. There could be changes to the taxation rules governing the sale of homes, some of which could have an adverse effect on the issuer’s business