EXHIBIT 99.3

JOINT MANAGEMENT INFORMATION CIRCULAR and PROXY STATEMENT

with respect to the proposed amalgamation of

GENTERRA INC.

and

CONSOLIDATED MERCANTILE INCORPORATED

This joint management information circular (the “Circular”) is furnished in connection with the solicitation of proxies by and on behalf of the management of Genterra Inc. (“Genterra”) for use at the special meeting of Genterra shareholders (the “Genterra Meeting”) at the time and place and for the purposes set out in the accompanying Notice of Genterra Meeting and any adjournment thereof.

This Circular is also furnished in connection with the solicitation of proxies by and on behalf of the management of Consolidated Mercantile Incorporated (“CMI”) for use at the special meeting of CMI shareholders (the “CMI Meeting”) at the time and place and for the purposes set out in the accompanying Notice of CMI Meeting and any adjournment thereof.

All information contained in this Circular with respect to Genterra was supplied by Genterra for inclusion herein, and with respect to such information, CMI and its board of directors and officers have relied on Genterra. All information contained in this Circular with respect to CMI was supplied by CMI for inclusion herein, and with respect to such information, Genterra and its board of directors and officers have relied on CMI.

No person has been authorized to give any information or make any representation in connection with any matters to be considered at the Genterra Meeting or the CMI Meeting other than as contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized.

Dated as of January 14, 2010

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TABLE OF CONTENTS

FORWARD-LOOKING INFORMATION 1

GENERAL DISCLOSURE INFORMATION 1

GLOSSARY 2

SUMMARY 6

PART I GENERAL PROXY INFORMATION 16

PART II THE AMALGAMATION 19

General 19

Redemption of CMI Class A Shares 19

Background to the Amalgamation 20

Summary of the Amalgamation and Related Transactions 21

Benefits of the Amalgamation 22

Background to Recommendation of Genterra and CMI Boards of Directors 23

Recommendation of the Genterra Board of Directors 24

Recommendation of the CMI Board of Directors 25

Conditions of the Amalgamation 25

Shareholder Approval 28

Method of Selection of HJF Financial Inc. and CVS 29

Genterra Valuation Summary 30

CMI Valuation Summary 33

Fairness Opinion 36

Regulatory Approvals and Filings 40

Dissent Rights 40

Resale of Amalco Shares 42

Exchange of Share Certificates 43

Effective Date of Amalgamation 43

Canadian Federal Income Tax Considerations 43

Risk Factors 45

PART III THE STOCK OPTION PLAN 50

PART IV THE GENTERRA MEETING 52

Approval of the Amalgamation 52

Other Business 54

PART V THE CMI MEETING 54

Approval of the Amalgamation 54

Other Business 55

PART VI INFORMATION CONCERNING GENTERRA 55

Name and Incorporation 55

Intercorporate Relationships 55

General Development of the Business 56

Description of the Business 57

Selected Financial Information 59

Management’s Discussion and Analysis 60

Description of Securities 73

Dividends 74

Stock Option Plan 74

Consolidated Capitalization 75

Stock Exchange Price 75

Principal Security Holders 76

Directors and Executive Officers 77

Executive Compensation 78

Interest of Insiders in Material Transactions 79

Corporate Governance 80

Interest of Experts 87

Material Contracts 87

Legal Proceedings 88

Auditor, Transfer Agent and Registrar 88

Additional Information 88

Board Approval 88

PART VII INFORMATION CONCERNING CMI 89

Name and Incorporation 89

Intercorporate Relationships 89

General Development of the Business 89

Description of the Business 89

Selected Financial Information 91

Management’s Discussion and Analysis 92

Description of Securities 102

Dividends 102

Stock Option Plan 103

Consolidated Capitalization 103

Stock Exchange Price 103

Redemption of CMI Class A Shares 104

Principal Security Holders 104

Directors and Executive Officers 105

Executive Compensation 106

Management Contract 110

Interest of Informed Persons in Material Transactions 110

Corporate Governance 110

Material Contracts 117

Interest of Experts 118

Related Party Transactions 118

Legal Proceedings and Regulatory Actions 119

Auditor, Transfer Agent and Registrar 119

Additional Information 119

Board Approval 119

PART VIII INFORMATION CONCERNING THE RESULTING ISSUER (AMALCO) 119

Name and Incorporation 120

Intercorporate Relationships 120

Description of the Business 120

Legal Proceedings 121

Taxation 121

Risk Factors 122

Description of Securities 126

Selected Pro Forma Financial Information 127

Pro Forma Consolidated Capitalization 129

Principal Security Holders 129

Directors and Officers 130

Executive Compensation 132

Stock Option Plan 133

Auditor, Transfer Agent and Registrar 133

PART IX GENERAL MATTERS 134

Stock Exchange Listing 134

Other Matters which may come before the Genterra Meeting 134

Other Matters which may come before the CMI Meeting 134

CONSENTS 135

SCHEDULES 141

SCHEDULE 1 - Amalgamation Agreement

SCHEDULE 1A – Amalco Option Plan

SCHEDULE 2 - Financial Statements of Genterra

SCHEDULE 3 - Financial Statements of CMI

SCHEDULE 4 - Pro Forma Financial Statements

SCHEDULE 5 - Dissent Rights

SCHEDULE 6 – Fairness Opinion relating to the Amalgamation

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FORWARD-LOOKING INFORMATION

This Circular contains certain statements or disclosures that may constitute forward-looking information under applicable securities laws. All statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that management of Genterra, CMI or Amalco, as applicable, anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as “forecast”, “future”, “may”, “will”, “expect”, “anticipate”, “believe”, “potential”, “enable”, “plan”, “continue”, “contemplate”, “pro forma” or other comparable terminology. Forward-looking information presented in such statements or disclosures may, among other things, relate to: the anticipated benefits and enhanced shareholder value resulting from the amalgamation of Genterra and CMI into Amalco; sources of income; forecasts of capital expenditures, including general and administrative expenses, and the sources of the financing thereof; expectations regarding the ability of Amalco to raise capital; movements in currency exchange rates; anticipated income taxes; Amalco’s business outlook; plans and objectives of management for future operations; forecast business results; and anticipated financial performance.

Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to Genterra, CMI or Amalco, as applicable, including information obtained from third-party sources. In some instances, material assumptions and factors are presented or discussed elsewhere in this Circular in connection with the statements or disclosure containing the forward-looking information.

Genterra, CMI and Amalco are not obligated to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking statements or disclosures. The foregoing statements expressly qualify any forward-looking information contained herein.

GENERAL DISCLOSURE INFORMATION

Unless otherwise stated, the information contained in this Circular is given as at January 1, 2010.

No person has been authorized by Genterra or CMI to give any information or make any representations in connection with the transactions herein described other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized by Genterra or CMI.

All information contained in this Circular with respect to Genterra has been supplied by Genterra for inclusion herein, and with respect to that information, CMI and its directors and officers have relied solely on Genterra. Based on their due diligence conducted in this respect, CMI has no reason to believe that such information is not accurate.

All information contained in this Circular with respect to CMI has been supplied by CMI for inclusion herein, and with respect to that information, Genterra and its directors and officers have relied solely on CMI. Based on their due diligence conducted in this respect, Genterra has no reason to believe that such information is not accurate.

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Definitions and Selected Abbreviations

Various terms used in this Circular, including the cover pages, are defined under “GLOSSARY”. Unless the context otherwise requires, use in this Circular of “Amalco”, the “Resulting Issuer”, “we”, “us” or “our” means Amalco and assumes that the steps outlined under “PART II - THE AMALGAMATION” have been completed and that Amalco is directly or indirectly carrying on the business currently conducted by Genterra and CMI.

Certain Information

Unless otherwise indicated or the context otherwise requires, all dollar amounts in this Circular are in Canadian dollars. Aggregated figures in graphs, charts and tables contained in this Circular may not add due to rounding. Historical statistical data and/or historical returns do not necessarily indicate future performance. Unless otherwise indicated, the market and industry data contained in this Circular is based upon information from industry and other publications and Amalco’s management’s knowledge of and experience in the markets in which Amalco operates. While management believes this data is reliable, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. None of Genterra, CMI or Amalco has independently verified any of the data from third party sources referred to in this Circular or ascertained the underlying assumptions relied upon by such sources.

Words importing the singular number only include the plural and vice versa, and words importing any gender include all genders.

GLOSSARY

Unless the context otherwise provides, the following terms used in this Circular and the schedules hereto shall have the meanings ascribed to them as set forth below:

“Affiliate”	Has the meaning ascribed thereto in the OBCA
“Amalco” or the “Resulting Issuer”	“Genterra Capital Inc.”, the corporation to be formed by the amalgamation of Genterra and CMI pursuant to the provisions of the OBCA upon the completion of the Amalgamation
“Amalco Class A Shares”	One or more Class A Preference Shares in the capital of Amalco to be issued to the former holders of Genterra Class A Shares pursuant to the terms of the Amalgamation Agreement
“Amalco Class B Shares”	One or more Class B Preference Shares in the capital of Amalco to be issued to the former holders of Genterra Class B Shares pursuant to the terms of the Amalgamation Agreement
“Amalco Common Shares”	One or more common shares in the capital of Amalco to be issued to the former holders of Genterra Shares and CMI Shares pursuant to the terms of the Amalgamation Agreement
“Amalco Option Plan”	The proposed option plan of Amalco which is set forth as Schedule 1A to this Circular
“Amalco Shareholder”	A holder of Amalco Shares
“Amalco Shares”	The Amalco Common Shares, the Amalco Class A Shares and Amalco Class B Shares to be issued pursuant to the terms of the Amalgamation Agreement
“Amalgamation”	The amalgamation of Genterra and CMI under Section 176 of the OBCA, on the terms and conditions set forth in the Amalgamation Agreement
“Amalgamation Agreement”	The Amalgamation Agreement dated April 27, 2009, as amended, between Genterra and CMI respecting the Amalgamation, in the form attached hereto as Schedule 1, and includes any agreement or instrument supplementary or auxiliary thereto
“Associate”	Has the meaning ascribed thereto in the OBCA
“Beneficial Shareholder”	A shareholder whose shares are not held in its own name but are registered in the name of a person or entity who is holding such shares on behalf of such beneficial shareholder
“Business Day”	A day on which commercial banks are generally open for business in Toronto other than a Saturday, Sunday or a day observed as a holiday in Toronto under the laws of the Province of Ontario or federal laws of Canada
“Circular”	This joint management information circular of Genterra and CMI including the Schedules hereto
“CMI”	Consolidated Mercantile Incorporated, a corporation existing under the OBCA having its head office in Toronto, Ontario
“CMI Amalgamation Resolution”	Has the meaning ascribed under the heading “PART V - THE CMI MEETING- Approval of the Amalgamation”
“CMI Class A Shares”	Class A Preference Shares in the capital of CMI
“CMI Management Designees”	Those individuals named as CMI management designees in the CMI instrument of proxy accompanying the Notice of CMI Meeting
“CMI Meeting”	The special meeting of the CMI Shareholders described in the Notice of CMI Meeting and the Circular
“CMI Option Resolution”	Has the meaning ascribed under the heading “Part V – The CMI Meeting – Approval of the Amalco Option Plan
“CMI Shareholder”	A holder of CMI Shares
“CMI Shares”	Common shares in the capital of CMI
“Company”	Unless specifically indicated otherwise, means a corporation, incorporated association or organization, body corporate, partnership, trust, association or other entity other than an individual
“Dissent Right”	The right of a Genterra Shareholder or CMI Shareholder, as the case may be, to dissent in respect of the Amalgamation pursuant to the OBCA.
“Dissenting Shareholder”	A Genterra Shareholder or CMI Shareholder, as the case may be, that validly exercises the rights of dissent under the OBCA in respect of the Amalgamation
“Effective Date”	The effective date of the Amalgamation, which is anticipated to be on or about March 1, 2010
“Excluded Shareholders”	Fred A. Litwin, Mark I. Litwin, Risa Shearer, Sutton Management Limited, the directors and senior officers of each of CMI and Genterra, their respective Associates and Affiliates
“Genterra”	Genterra Inc., a corporation existing under the OBCA and having its head office in Toronto, Ontario
“Genterra Amalgamation Resolution”	Has the meaning ascribed under the heading “PART III - THE GENTERRA MEETING Approval of the Amalgamation”
“Genterra Class A Shares”	Class A Preference Shares in the capital of Genterra
“Genterra Class B Shares”	Class B Preference Shares in the capital of Genterra
“Genterra Common Shares”	Common shares in the capital of Genterra
“Genterra Management Designees”	Those individuals named as Genterra management designees in the Genterra instrument of proxy accompanying the Notice of Genterra Meeting
“Genterra Meeting”	The special meeting of the Genterra Shareholders described in the Notice of Genterra Meeting and the Circular
”Genterra Option Resolution”	Has the meaning ascribed under the heading “PART IV – THE GENTERRA MEETING – Approval of the Amalco Option Plan”
“Genterra Shareholder”	A holder of Genterra Shares
“Genterra Shares”	The Genterra Common Shares, Genterra Class A Shares and Genterra Class B Shares
“Insider”	Has the meaning ascribed thereto in the OBCA
“ITA”	Income Tax Act (Canada), as amended
“Majority of the Minority Approval”	Approval by a simple majority of the votes cast at the Meeting by Minority Shareholders, as required under MI 61-101
“Minority Shareholders”	Holders of CMI Shares or Genterra Shares, other than Excluded Shareholders
“MI 61-101”	Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions
“Notice of Genterra Meeting”	The notice of the Genterra Meeting which accompanies this Circular
“Notice of CMI Meeting”	The notice of the CMI Meeting which accompanies this Circular
“Notices of Meetings”	Collectively, the Notice of Genterra Meeting and the Notice of CMI Meeting
“OBCA”	Business Corporations Act (Ontario), as amended
“Ordinary Resolution”	A resolution passed by a majority of the votes cast by Genterra shareholders who voted in respect of the resolution
“Person”	A Company or an individual
“Special Resolution”	A resolution passed by a majority of not less than two-thirds of the votes cast by the security holders entitled to vote and who voted in respect of that resolution
“TSX”	The Toronto Stock Exchange
“TSXV”	The TSX Venture Exchange

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SUMMARY

The following is a summary of information relating to Genterra, CMI and Amalco and should be read together with the more detailed information and financial data and statements contained elsewhere in this Circular. Capitalized terms used in this summary will have the meaning provided in the Glossary or elsewhere in this Circular. This summary is provided for convenience of reference only. Genterra Shareholders and CMI Shareholders are urged to review the Circular and the accompanying schedules in their entirety.

The Genterra Meeting

The Genterra Meeting will be held on February 25, 2010, at The Residence Inn by Mariott, 17 Reading Court, Toronto, Ontario, M9W 7K7, at 10:00 a.m. (Toronto time). At the Genterra Meeting, the Genterra Shareholders will be asked to approve the Amalgamation of Genterra and CMI, the Amalco Option Plan and related matters. The Genterra Amalgamation Resolution approving the Amalgamation and the Amalgamation Agreement must be passed, with or without variation, by: (i) two thirds of all votes cast with respect to the Genterra Amalgamation Resolution by each class of Genterra Shareholders, voting separately as a class, who are present in person or by proxy at the Genterra Meeting; and (ii) Majority of the Minority Approval in accordance with MI 61-101. In calculating the votes to determine the required level of Genterra Shareholder approval for the Majority of the Minority Approval, all votes attaching to Genterra Shares owned or over which control or direction is exercised, directly or indirectly, by Excluded Shareholders will be excluded from voting. To the knowledge of Genterra’s management, a total of 9,949,247 Genterra Common Shares, 326,000 Genterra Class A Shares, and 77,592 Genterra Class B Shares are anticipated to be excluded from voting on the approval of the Amalgamation pursuant to MI 61-101. See “Part II - THE AMALGAMATION - Shareholder Approval - Majority of the Minority Approval”. Pursuant to the provisions of the OBCA, those Genterra Shareholders who dissent with respect to the Amalgamation have the right to be paid the fair value of their Genterra Shares. The Genterra Option Resolution approving the Amalco Option Plan must be passed by not less than a majority of the votes cast by the Genterra Shareholders who vote in respect of the Genterra Option Resolution.

Genterra Meeting Record Date

Genterra has fixed January 15, 2010 as the record date for the Genterra Meeting for determining the Genterra Shareholders entitled to receive notice of and to vote at the Genterra Meeting.

The CMI Meeting

The CMI Meeting will be held on February 25, 2010, at The Residence Inn by Mariott, 17 Reading Court, Toronto, Ontario, M9W 7K7, at 9:00 a.m. (Toronto time). At the CMI Meeting, the CMI Shareholders will be asked to approve the Amalgamation of CMI and Genterra, the Amalco Option Plan and related matters. The CMI Amalgamation Resolution approving the Amalgamation and the Amalgamation Agreement must be passed, with or without variation, by: (i) two-thirds of all votes cast with respect to the CMI Amalgamation Resolution by CMI Shareholders present in person or by proxy at the CMI Meeting; and (ii) Majority of the Minority Approval in accordance with MI 61-101. In calculating the votes to determine the required level of CMI Shareholder approval for the Majority of the Minority approval, all votes attaching to CMI Shares owned or over which control or direction is exercised, directly or indirectly, by Excluded Shareholders will be excluded from voting. To the knowledge of CMI’s management, a total of 2,946,860 CMI Shares are anticipated to be excluded from voting on the approval of the Amalgamation pursuant to MI 61-101. See “Part II - THE AMALGAMATION – Shareholder Approval – Majority of the Minority Approval”. Pursuant to the provisions of the OBCA, those CMI Shareholders who dissent with respect to the Amalgamation have the right to be paid the fair value of their CMI Shares. The CMI Option Resolution approving the Amalco Option Plan must be passed by not less than a majority of the votes cast by the CMI Shareholders who vote in respect of the CMI Option Resolution.

CMI Meeting Record Date

CMI has fixed January 15, 2010 as the record date for the CMI Meeting for determining the CMI Shareholders entitled to receive notice of and to vote at the CMI Meeting.

Conditions of the Amalgamation

The Amalgamation Agreement contains a number of conditions precedent to the obligations of parties. Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Amalgamation will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. Such conditions include the Genterra Shareholders and CMI Shareholders approving the Amalgamation and that all other consents and approvals (including regulatory approvals) are obtained. For further description of the details of the conditions to the Amalgamation, see “PART II - THE AMALGAMATION - Conditions of the Amalgamation”. For complete details of the conditions to the Amalgamation, see the Amalgamation Agreement attached as Schedule 1.

Benefits of the Amalgamation

The Amalgamation is expected to yield benefits to the Genterra Shareholders and the CMI Shareholders. The principal purposes of the Amalgamation are: to allow for the businesses of Genterra and CMI to operate on a more expeditious and cost effective basis through the reduction of costs resulting from duplicate administrative, overhead and accounting facilities, and ongoing public company costs; to create a larger corporation with larger and more varied assets, a larger equity and income base, and greater opportunities, which will help facilitate the financing of future growth and expansion; and, to create a larger public float of shareholders which should result in increased market liquidity for the shareholders of the amalgamating corporations. See “PART II - THE AMALGAMATION - Benefits of the Amalgamation”.

Share Exchange Ratios

Based upon the advice of independent valuation experts, it had initially been proposed that each CMI Share be exchanged for 3.6 Amalco Common Shares and each Genterra Common Share be exchanged for one Amalco Common Share. Upon further consideration the respective boards of directors of CMI and Genterra determined that it will serve the best interests of the shareholders of each of the amalgamating companies to reduce the total number of Amalco Common Shares to be issued upon the Amalgamation by effecting the share exchange on a basis whereby the value of each Amalco Common Share is established as being equivelant to the value of the CMI Share. Accordingly each CMI Share will be exchanged for one Amalco Common Share and each 3.6 Genterra Common Shares will be exchanged for one Amalco Common Share. This modification to the share exchange does not change the relative valuations of CMI and Genterra, but the boards of directors of CMI and Genterra believe that the reduction in the total number of Amalco Common Shares issued will enhance the prospects for an increased trading price for the Amalco Common Shares and compliance with market listing requirements.

Accordingly, the Independent Committees and the boards of directors of the amalgamating corporations have determined, based primarily upon the valuation reports prepared by the independent qualified valuators retained by each Independent Committee as well as the fairness opinion delivered in connection with the Amalgamation, that the issued and outstanding shares of each of the amalgamating corporations, shall be converted into shares of Amalco, as follows:

·	The holders of the 19,339,211 issued Genterra Common Shares (less the 292,117 issued Genterra Common Shares held by CMI which will be cancelled on the Amalgamation) shall be entitled to exchange their shares, on 3.6 for 1 basis, into an aggregate of 5,290,860 Amalco Common Shares;

The holder of the 326,000 issued Genterra Class A Shares shall be entitled to exchange its shares, on a 1 for 1 basis, into an aggregate of 326,000 Amalco Class A Shares, on the same terms as the Genterra Class A Shares being exchanged except that the number of Amalco Common Shares issuable upon conversion of each Amalco Class A Share to be issued upon the Amalgamation shall be 5.56 (and not 20, as is the case in respect of the number of Genterra Common Shares issuable upon conversion of each Genterra Class A Share issued and outstanding immediately prior to the Amalgamation);

·	The holders of the 26,274,918 issued Genterra Class B Shares shall be entitled to exchange their shares, on a 1 for 1 basis, into an aggregate of 26,274,918 Amalco Class B Shares, on the same terms as the Genterra Class B Shares being exchanged; and

·	The holders of the 5,076,407 issued CMI Shares (less the 24 issued CMI Shares held by Genterra which will be cancelled on the Amalgamation) shall be entitled to exchange their shares, on a 1 for 1 basis, into an aggregate of 5,076,383 Amalco Common Shares.

Formal Valuations

Genterra

On 31 October 2008, the Independent Committee of the Board of Directors of Genterra engaged Corporate Valuation Services Limited ("CVS") to prepare and deliver to the Independent Committee a Formal Valuation of Genterra, under Multilateral Instrument 61-101, as at December 31, 2008 using audited Financial Statements as at September 30, 2008. This valuation was updated on December 11, 2009 as of November 30, 2009. CVS has been determined to be independent within the meaning of Rule 61-501.

Based upon and subject to the assumptions and qualifications contained in the Formal Valuation, CVS gave its opinion that as at the valuation date, the rounded Fair Market Value of all the Shares of Genterra is Twenty-Five Million Nine Hundred and Sixty-Five Thousand Dollars ($25,965,000.00). This is equivalent to $0.95 (rounded) for each of the 25,859,211 Genterra Common Shares to be issued on a fully diluted basis, assuming complete conversion of the 326,000 Genterra Class A Preference Shares, and $0.05 for each of the 26,274,918 Genterra Class B Preference Shares. The Transaction Based Value of $0.65 per Genterra Common Share, as outlined in the Formal Valuation (see “PART II - THE AMALGAMATION Genterra Valuation Summary”), is at a discount of 32% to the Fair Market Value.

The Formal Valuation was provided to the Independent Committee and the Board of Directors of Genterra solely for the purpose of their consideration of the Amalgamation.

The full text of the Formal Valuation, as updated, which sets forth the assumptions, qualifications and considerations in connection with the Formal Valuation, is available for inspection by Shareholders during regular business hours at the head office of Genterra at 106 Avenue Road, Toronto, Ontario. The Shareholders are urged to read the Formal Valuation in its entirety. A copy of the Formal Valuation will be sent without charge to any holder of Genterra Shares upon request. The Formal Valuation does not constitute advice or a recommendation as to whether Shareholders should vote in favour of the Acquisition or any other transaction.

See “PART II - THE AMALGAMATION Genterra Valuation Summary”

CMI

On November 10, 2008, the Independent Committee of the Board of Directors of CMI engaged HJF Financial Inc. ("HJF") to prepare and deliver to the Independent Committee a Formal Valuation of CMI, under Multilateral Instrument 61-101, as at December 31, 2008 using audited Financial Statements as at December 31, 2007 and interim unaudited Financial Statements as at September 30, 2008. This valuation was updated on November 30, 2009. HJF has been determined to be independent within the meaning of Rule 61-501.

Based upon and subject to the assumptions and qualifications contained in the Formal Valuation, HJF gave its opinion that as at the valuation date, the fair market value of all the issued and outstanding CMI Shares is in the range of Sixteen Million Two Hundred and Eighty-Six Thousand Four Hundred and One dollars Canadian ($16,286,401.00) or Three Dollars and Twenty-One Cents Canadian ($3.21) per share based on Five Million and Seventy Six Thousand Four Hundred and Seven (5,076,407) common shares outstanding.

The Formal Valuation was provided to the Independent Committee and the Board of Directors of CMI solely for the purpose of their consideration of the Amalgamation.

The full text of the Formal Valuation, as updated, which sets forth the assumptions, qualifications and considerations in connection with the Formal Valuation, is available for inspection by Shareholders during regular business hours at the head office of CMI at 106 Avenue Road, Toronto, Ontario. The Shareholders are urged to read the Formal Valuation in its entirety. A copy of the Formal Valuation will be sent without charge to any holder of CMI Shares upon request. The Formal Valuation does not constitute advice or a recommendation as to whether Shareholders should vote in favour of the Acquisition or any other transaction.

See “PART II - THE AMALGAMATION CMI Valuation Summary”

Fairness Opinion

CVS was retained to prepare and deliver an opinion to the Independent Committees that the terms of the proposed amalgamation of Genterra and CMI to form one continuing corporation described herein are fair to each of such corporations and their respective shareholders from a financial point of view.

The fairness opinion contemplates that upon the Amalgamation 3.6 Amalco Common Shares will be issued for each CMI Share and one Amalco Common Share will be issued for each Genterra Common Share. As noted above (See “SUMMARY Share Exchange Ratios”), upon further consideration the respective boards of directors of CMI and Genterra determined that the best interests of the shareholders would be served by modifying the share exchange to reduce the total number of Amalco Common Shares to be issued upon the Amalgamation. Consequently, each CMI Share will be exchanged for one Amalco Common Share and each 3.6 Genterra Common Shares will be exchanged for one Amalco Common Share.

In arriving at its fairness opinion, CVS considered the Formal Vaulations prepared in respect of each of CMI and Genterra wherein two independent valuation approaches for the CMI Shares and the Genterra Commmon Shares were obtained – the Adjusted Book Value and the Transaction Based Value. The Transaction Based Value reflects the average prices from stock trading on the TSX in respect of CMI and the TSXV in respect of Genterra. For purposes of the fairness opinion, CVS relied upon the respective fully diluted adjusted book values for CMI and Genterra, as the common shares of both companies trade at significant discounts to their respective Adjusted Book Values. CVS determined the discount of average trading price to Adjusted Book Value for the CMI Shares to be 24%, and for the Genterra Common Shares to be 32%.

A copy of the CVS opinion that the terms of the Amalgamation is fair to each of the amalgamating corporations and their respective shareholders is annexed as Schedule 6 to this Circular. Shareholders are urged to read the CVS Fairness Opinion in its entirety. The CVS Fairness Opinion is not a recommendation as to how Shareholders should vote with respect to the Amalgamation.

See “PART II - THE AMALGAMATION Fairness Opinion”

Recommendation of the Genterra Board of Directors

Genterra’s board of directors unanimously recommends that Genterra Shareholders vote in favour of the Genterra Amalgamation Resolution.

In reaching the foregoing conclusion, Genterra’s board of directors obtained and considered financial and legal advice and considered a number of other factors, which they believed to be relevant. See “PART II - THE AMALGAMATION Recommendation of the Genterra Board of Directors”.

Recommendation of the CMI Board of Directors

CMI’s board of directors unanimously recommends that CMI Shareholders vote in favour of the CMI Amalgamation Resolution.

In reaching the foregoing conclusion, CMI’s board of directors obtained and considered financial and legal advice and considered a number of other factors, which they believed to be relevant. See “PART II - THE AMALGAMATION Recommendation of the CMI Board of Directors”.

Effective Date of Amalgamation

It is anticipated that the Amalgamation will become effective after the requisite shareholder and regulatory approvals have been obtained and all other conditions to the Amalgamation have been satisfied or waived. It is anticipated that the Effective Date of the Amalgamation will be on or about March 1, 2010. See “PART II - THE AMALGAMATION - Effective Date of Amalgamation”.

Dissent Rights for Shareholders

Genterra Shareholders and CMI Shareholders have the right to dissent in respect of the Amalgamation and to be paid the fair value for their shares. See “PART II - THE AMALGAMATION - Dissent Rights”.

Stock Option Plan

The Genterra Shareholders and the CMI Shareholders will each be asked to approve the Amalco Option Plan, a copy of which is attached to this Circular as Schedule 1A. Pursuant to the Amalco Option Plan, options to purchase Amalco Shares may be granted by the board of directors to directors, officers and employees of Amalco and consultants to Amalco. Options granted under the Amalco Option Plan will have an exercise price which is not less than the price allowed by regulatory authorities, will be non-transferable and will be exercisable for a period not to exceed five years. See “PART III - THE STOCK OPTION PLAN”.

The text of the proposed resolutions approving the Amalco Option Plan are set forth in this Circular under the headings “PART IV - THE GENTERRA MEETING Approval of the Amalco Option Plan” and “PART V - THE CMI MEETING Approval of the Amalco Option Plan”. The Boards of Directors of Genterra and CMI, respectively, unanimously recommend that shareholders vote in favour of these resolutions.

Information Concerning Genterra

A description of the assets, business and operations of Genterra prior to the Amalgamation is presented in this Circular under the heading “PART VI - INFORMATION CONCERNING GENTERRA”.

Information Concerning CMI

A description of the assets, business and operations of CMI is presented in this Circular under the heading “PART VII INFORMATION CONCERNING CMI”.

The Corporation Resulting from the Amalgamation

A description of the material aspects of Amalco, including its business, share capital and proposed board of directors is presented in this Circular under the heading “PART VIII - INFORMATION CONCERNING THE RESULTING ISSUER (AMALCO)”.

Amalco’s Board of Directors and Management

Subject to shareholder approval at the Genterra Meeting and the CMI Meeting, it is anticipated that Amalco’s board of directors will consist of Fred Litwin, Stan Abramowitz, Mark Dawber, Sol Nayman, and Alan Kornblum. It is intended that the management team of Amalco will consist of Fred Litwin as President, Stan Abramowitz as Secretary and Chief Financial Officer and Mark Litwin as Vice-President. See “PART VIII - INFORMATION CONCERNING THE RESULTING ISSUER (AMALCO) - Directors, Officers and Promoters”.

Interests of Insiders

The following tables set forth the number of: (i) Genterra Shares and CMI Shares held by the proposed directors, officers and Insiders of Amalco and their Associates and Affiliates as of December 31, 2009; and (ii) Amalco Shares anticipated to be held upon completion of the Amalgamation.

	CMI SHARES	EXCHANGE RATIO	GENTERRA COMMON SHARES	EXCHANGE RATIO	AMALCO COMMON SHARES
CMI	-	1 to 1	292,117	To be Cancelled	-
DG Acquisition Corp.	1,475,394	1 to 1	-	3.6 to 1	1,475,394
First Corporate Equity Ltd	24,766	1 to 1	637,286	3.6 to 1	201,790
First Ontario Investments Inc.	-	1 to 1	412	3.6 to 1	114
Forum Financial Corporation	49,119	1 to 1	1,617,012	3.6 to 1	498,289
Genterra	24	To be Cancelled	-	3.6 to 1	-
Ianjoy Investments Corp.	-	1 to 1	55,602	3.6 to 1	15,445
Mar-Risa Holdings Inc.	1,137,500	1 to 1	687,500	3.6 to 1	1,328,472
Sutton Management Ltd.	167,641	1 to 1	6,659,312	3.6 to 1	2,017,450
Fred A. Litwin	92,416	1 to 1	-	3.6 to 1	92,416
Mark I. Litwin	-	1 to 1	2	3.6 to 1	1
Stan Abramowitz	-	1 to 1	2	3.6 to 1	1
Alan Kornblum	-	1 to 1	2	3.6 to 1	1
	2,946,860		9,949,247		5,629,373

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	GENTERRA CLASS A SHARES	EXCHANGE RATIO	AMALCO CLASS A SHARES	GENTERRA CLASS B SHARES	EXCHANGE RATIO	AMALCO CLASS B SHARES
CMI	-	1 to 1	-	-	1 to 1	-
DG Acquisition Corp.	-	1 to 1	-	-	1 to 1	-
First Corporate Equity Ltd	-	1 to 1	-	25,724	1 to 1	25,724
First Ontario Investments Inc.	326,000	1 to 1	326,000	1,677	1 to 1	1,677
Forum Financial Corporation	-	1 to 1	-	50,191	1 to 1	50,191
Genterra	-	1 to 1	-	-	1 to 1	-
Ianjoy Investments Corp.	-	1 to 1	-	-	1 to 1	-
Mar-Risa Holdings Inc.	-	1 to 1	-	-	1 to 1	-
Sutton Management Ltd.	-	1 to 1	-	-	1 to 1	-
Fred A. Litwin	-	1 to 1	-	-	1 to 1	-
Mark I. Litwin	-	1 to 1	-	-	1 to 1	-
Stan Abramowitz	-	1 to 1	-	-	1 to 1	-
Alan Kornblum	-	1 to 1	-	-	1 to 1	-
	326,000		326,000	77,592		77,592

Selected Pro Forma Financial Information

The following selected pro forma financial information is based on the assumptions described in the notes to the pro forma financial statements attached hereto as Schedule 4. The pro forma financial statements are not necessarily indicative of what Amalco’s financial position or results of operations would have been if the events reflected therein had been in effect on the dates indicated, nor do they purport to project Amalco’s financial position or results of operation for any future periods.

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The following selected financial information was derived directly and indirectly from Amalco’s pro forma financial statements, which are attached as Schedule 4.

Selected Financial Information as at	September 30, 2009 ($)(1)
ASSETS
Cash and cash equivalents	22,187,658
Marketable securities	4,130,995
Accounts receivable	769,139
Prepaid expenses	267,796
Notes and mortgage receivable	612,975
Rental real estate properties	19,560,217
Future income taxes	680,172
Total assets	48,208,952
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued liabilities	938,662
Income taxes payable	1,239,327
Long-term financial liabilities	3,442,966
Future income taxes	3,027,309
Retractable preference shares	5,284,415
Total Liabilities	13,932,679
SHAREHOLDERS’ EQUITY
Share capital	20,986,333
Contributed surplus	62,398
Retained earnings	13,227,542

Total Shareholders’ Equity	34,276,273
Total Liabilities and Shareholders’ Equity	48,208,952

Note:

(1)

This information has been derived from Amalco’s unaudited pro forma balance sheet as at September 30, 2009. That unaudited pro forma balance sheet has been prepared from information derived from and should be read in conjunction with the following: (a) Genterra’s audited financial statements as at and for the year ended September 30, 2008 and the unaudited interim financial statements as at and for the nine months ended June 30, 2009; and (b) CMI’s audited financial statements as at and for year ended December 31, 2008 and the unaudited interim financial statements as at and for the nine months ended September 30, 2009. The pro forma balance sheet may not be indicative of the results that actually would have occurred if the events reflected therein had been in effect on the dates indicated or of the results which may be obtained in the future. See the notes to Amalco’s unaudited pro forma balance sheet in Schedule 4.

Canadian Federal Income Tax Considerations

Holders of Genterra Shares or CMI Shares will generally not realize any taxable gain or loss on the Amalgamation. See “PART II - THE AMALGAMATION - Canadian Federal Income Tax Considerations”.

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Stock Exchange Listing

The TSXV has conditionally approved the proposed Amalgamation and has advised that, subject to compliance with TSXV requirements, the Amalco Common Shares will be listed and posted for trading on the TSXV as a continuation of the existing listing of the Genterra Common Shares. The CMI Shares will be delisted from the TSX shortly after the Effective Date.

Listing and Market Price

The Genterra Common Shares are listed and posted for trading on the TSXV under the stock symbol “GIC”. The Genterra Common Shares were first traded on the TSXV on June 10, 2008. Prior to that date, the formerly issued and outstanding Class A Subordinate Voting Shares of Genterra were listed and posted for trading through the facilities of the TSXV under the stock symbol “GIC.A”.

The following table sets forth: (i) the monthly high, monthly low, and month end closing price; and (ii) volume of trading of the Genterra Common Shares for the months indicated:

MONTH	MONTH HIGH	MONTH LOW	MONTH END CLOSE	MONTHLY VOLUME
December 2009	0.60	0.60	0.60	11,977
November 2009	0.60	0.60	0.60	4,185
October 2009	0.60	0.60	0.60	2,306
September 2009	0.65	0.60	0.65	5,539
August 2009	0.70	0.60	0.60	11,825
July 2009	0.65	0.60	0.60	11,583
June 2009	0.74	0.57	0.62	18,874
May 2009	0.65	0.55	0.60	186,357
April 2009	0.74	0.60	0.60	50,582
March 2009	0.75	0.235	0.55	179,806
February 2009	0.23	0.23	0.23	6,101
January 2009	0.25	0.23	0.23	90,067
December 2008	0.215	0.20	0.215	7,989
November 2008	0.22	0.20	0.20	78,591
October 2008	0.30	0.22	0.22	113,223
September 2008	0.35	0.30	0.30	23,779
August 2008	0.35	0.335	0.35	14,931
July 2008	0.365	0.335	0.35	354,338
June 2008	0.36	0.34	0.35	25,335
May 2008	0.36	0.36	0.36	1,805
April 2008	0.35	0.35	0.35	6,417
March 2008	0.36	0.35	0.35	9,465
February 2008	0.35	0.35	0.35	4,198
January 2008	0.50	0.35	0.36	46,215

The CMI Shares are listed and posted for trading on the TSX under the stock symbol “CMC”. The CMI Shares were first traded on the TSX on July 5, 1950.

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The following table sets forth: (i) the monthly high, monthly low, and month end closing price; and (ii) volume of trading the CMI Shares for the months indicated:

MONTH	MONTHLY HIGH	MONTHLY LOW	MONTH END CLOSE	MONTHLY VOLUME
December 2009	2.80	2.50	2.65	25,500
November 2009	2.50	2.10	2.15	19,100
October 2009	2.35	1.80	1.90	7,508
September 2009	2.60	2.25	2.25	16,200
August 2009	2.25	2.10	2.25	600
July 2009	2.65	2.10	2.35	11,715
June 2009	2.60	2.25	2.60	28,950
May 2009	2.75	2.5	2.5	39,833
April 2009	2.75	2.05	2.60	98,285
March 2009	2.25	1.42	1.8	252,971
February 2009	1.50	1.35	1.49	136,839
January 2009	1.50	1.25	1.40	72,000
December 2008	1.50	1.25	1.25	14,846
November 2008	1.60	1.40	1.40	4,630
October 2008	1.88	1.50	1.62	14,743
September 2008	2.10	1.62	1.88	14,634
August 2008	2.49	2.15	2.15	169,580
July 2008	2.50	1.75	2.45	74,100
June 2008	2.50	1.50	2.15	25,360
May 2008	1.75	1.50	1.55	6,730
April 2008	1.80	1.45	1.80	1,000
March 2008	1.50	1.43	1.43	7,669
February 2008	1.90	1.24	1.50	22,666
January 2008	1.41	1.15	1.28	71,302

Redemption of CMI Class A Shares

Pursuant to the terms and conditions attaching to the CMI Class A Shares, the CMI Class A Shares may be redeemed by CMI at any time upon not less than thirty days’ notice in writing, at a price of $0.44 per share plus all declared but unpaid dividends thereon up to the date fixed for redemption. CMI intends to give such notice of redemption on January 15, 2010, and the date specified for redemption is February 19, 2010, after which date the holders of the CMI Class A Shares shall not be entitled to exercise any of the rights of shareholders in respect thereof.

Risk Factors

Amalco will be subject to numerous risk factors that you should carefully consider. Those risk factors include risks associated with investment in real property; the effect of negative economic and other conditions on tenants; risk of uninsured losses; environmental risks; foreign exchange exposure; growth risks; dividend policy risks; credit risks; conflicts of interest; future sales of Amalco Shares by significant shareholders; dilution of Amalco Shares due to distributions; volatility of Amalco Share price; and risks associated with having directors and officers that have significant control of Amalco. See “PART II - THE AMALGAMATION - Risk Factors”.

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PART I

GENERAL PROXY INFORMATION

Solicitation of Proxies

This Circular is furnished in connection with the solicitation of proxies by the management of each of Genterra Inc. and Consolidated Mercantile Incorporated for use at the Genterra Meeting and the CMI Meeting, each of which is to be held on February 25, 2010, at the times and places and for the purposes set forth in the Notices of Meetings. The cost of the solicitation of proxies by each of Genterra and CMI in connection with the Genterra Meeting and the CMI Meeting has been and will be borne by Genterra and CMI, respectively. Either Genterra or CMI may retain other persons, entities or companies to solicit proxies on its behalf. Solicitation may be by mail, phone, email or fax.

Voting of Proxies and Appointment of Proxyholder

The forms of proxy accompanying this Circular confer discretionary authority upon the proxy nominees with respect to any amendments or variations to matters identified in the Notices of Meetings or any other matters which may properly come before the Genterra Meeting or the CMI Meeting, as the case may be. On any ballot or poll, the shares represented by the proxy will be voted or withheld from voting in accordance with the instructions of the shareholder as specified in the proxy with respect to any matter to be voted on. If a choice is not so specified, or if both choices are specified, with respect to any such matter, the shares represented by a proxy given to management will be voted in favour of the resolutions referred to therein, for approval and adoption of each of the resolutions to be considered at the Genterra Meeting and the CMI Meeting. A shareholder has the right to appoint a person (who need not be a shareholder) to attend and act for the shareholder and on the shareholder’s behalf at the relevant meeting other than the persons designated in the form of proxy and may exercise such right by inserting the name in full of the desired person in the blank space provided in the form of proxy and striking out the names now designated. The forms of proxy for Genterra or CMI must be delivered by mail or fax to Computershare, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1 (fax: 416-981-9800), not later than 24 hours (excluding Saturdays, Sundays and statutory holidays in the Province of Ontario) before the Genterra Meeting or CMI Meeting, as the case may be, or any adjournment thereof.

If any amendments or variations are proposed at the meetings or any adjournment thereof to matters set forth in the proxy and described in the accompanying Notices of Meetings and this Circular, or if any other matters properly come before the meetings or any adjournment thereof, the proxy confers upon the shareholder’s nominee discretionary authority to vote on such amendments or variations or such other matters according to the best judgment of the person voting the proxy at the Meetings. At the date of this Circular, management of Genterra and CMI know of no such amendments or variations or other matters to come before the meetings.

Revocation of Proxies

A shareholder has the right to revoke a proxy at any time before it is exercised. A proxy may be revoked by a written revocation signed by the shareholder or the shareholder’s authorized attorney or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation. This revocation must be delivered, in the case of Genterra or CMI, to Computershare, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1 (fax: 416-981-9800), at any time up to and including the last Business Day preceding the Genterra Meeting or the CMI Meeting, as the case may be, or to the chairman at the Genterra Meeting or the CMI Meeting, as the case may be, or any adjournment of any such meeting. A proxy may also be revoked in any other manner provided by law.

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Advice to Beneficial Shareholders

Only registered shareholders or duly appointed proxyholders are permitted to vote at either the CMI Meeting or the Genterra Meeting. Shareholders who do not hold their shares in their own name (defined herein as “Beneficial Shareholders”) are advised that only proxies from shareholders of record can be recognized and voted at either the Genterra Meeting or the CMI Meeting. Beneficial Shareholders who complete and return an instrument of proxy must indicate thereon the person (usually a brokerage house) who holds their shares as a registered shareholder.

Every intermediary (broker) has its own mailing procedure, and provides its own return instructions, which should be carefully followed. The instrument of proxy supplied to Beneficial Shareholders is identical to that provided to registered shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder. If shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be registered in such shareholder’s name on the records of the company in question. Such shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities, which company acts as nominee for many Canadian brokerage firms). Shares held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers/nominees are prohibited from voting shares for their clients. The directors and officers of Genterra and CMI do not know for whose benefit the Shares registered in the name of CDS & Co. are held.

In accordance with National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer of the Canadian Securities Administrators, Genterra has distributed copies of the Notice of Genterra Meeting, this Circular and the proxies to the clearing agencies and intermediaries for onward distribution to non-registered shareholders. Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings unless the Beneficial Shareholders have waived the right to receive meeting materials. Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their Shares are voted at the Genterra Meeting or CMI Meeting, as the case may be. Often the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided by a company to its registered shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder. Should a non-registered shareholder receiving such a form wish to vote at the Genterra Meeting or CMI Meeting, as the case may be, the non-registered shareholder should strike out the names of the management proxyholders named in the applicable form of proxy and insert the non-registered shareholder’s name in the blank space provided. All references to shareholders in this Circular and the accompanying forms of proxy and Notices of Meetings are to shareholders of record unless specifically stated otherwise.

Record Date, Voting Shares and Principal Holders

Genterra

The record date for determining the Genterra Shareholders entitled to receive notice of, attend and vote at the Genterra Meeting was fixed by the Genterra board as January 15, 2010. As at December 31, 2009, there are 19,339,211 Genterra Common Shares, 326,000 Genterra Class A Shares and 26,274,918 Genterra Class B Shares outstanding. Each holder of Genterra Shares is entitled to vote such shares separately as a class in respect of the Amalgamation Resolution, and each such share is entitled to one vote. Only the Genterra Common Shares are entitled to be voted in respect of all other matters to be voted on at the Genterra Meeting, and each Genterra Common Share is entitled to one vote.

To the knowledge of the directors and officers of Genterra, as at December 31, 2009, no Person beneficially owns, directly or indirectly, or exercises control or direction over securities carrying more than 10% of the voting rights attached to any class of the issued and outstanding voting securities of Genterra entitled to be voted at the Genterra Meeting, other than Fred A. Litwin who indirectly controls 3,289,929 Genterra Common Shares (17.01%) and 77,592 Genterra Class B Shares (0.30%), Sutton Management Limited (“Sutton”) which controls 6,659,312 Genterra Common Shares (34.43%). The shares controlled by Fred Litwin and by Sutton, none of which will be counted in determining approval or disapproval of the Amalgamation Resolution, are comprised of the following:

(a)	1,617,012 Genterra Common Shares (8.36%) and 50,191 Genterra Class B shares (0.19%) beneficially owned by Forum Financial Corporation ("Forum"), which corporation is directly controlled by Fred A. Litwin.

(b)	637,286 Genterra Common Shares (3.30%) and 25,724 Genterra Class B Shares (0.10%) beneficially owned by First Corporate Equity Ltd. ("FICO"), which corporation is directly controlled by Fred A. Litwin.

(c)	292,117 Genterra Common Shares (1.51%) beneficially owned by Consolidated Mercantile Incorporated ("CMI"); Fred A. Litwin, beneficially owns or exercises control and direction over approximately 54.74% of the issued and outstanding CMI Shares.

(d)	55,602 Genterra Common Shares (0.29%) beneficially owned by Ianjoy Investments Corp. (“Ianjoy”), which corporation is indirectly controlled by Fred A. Litwin.

(e)	412 Genterra Common Shares (0.002%) and 1,677 Genterra Class B shares (0.01%) beneficially owned by First Ontario Investment Inc. (“First Ontario”), which corporation is indirectly controlled by Fred A. Litwin.

(f)	687,500 Genterra Common Shares (3.55%) beneficially owned by Mar-Risa Holdings Inc. (“Mar-Risa”), which corporation is indirectly controlled by Fred A. Litwin.

(g)	6,659,312 Genterra Common Shares (34.43%) beneficially owned by Sutton, which corporation is beneficially owned by the children of Fred A. Litwin, being Mark I. Litwin, President and a Director of the corporation and his sister, Risa Shearer.

CMI

The record date for determining the CMI Shareholders entitled to receive notice of, attend and vote at the CMI Meeting was fixed by the CMI board as January 15, 2010. As at December 31, 2009, there are 5,076,407 CMI Shares outstanding and entitled to be voted at the CMI Meeting. Each CMI Share is entitled to one vote with respect to the CMI Shareholder vote.

To the knowledge of the directors and officers of CMI, as at December 31, 2009, no Person beneficially owns, directly or indirectly, or exercises control or direction over securities carrying more than 10% of the voting rights attached to any class of the issued and outstanding voting securities of CMI entitled to be voted at the CMI Meeting, other than Fred A. Litwin who directly and indirectly controls 2,779,219 CMI Shares (54.75%) and Sutton Management Limited (“Sutton”) which controls 167,641 CMI Shares (3.30%). The shares controlled by Fred Litwin and by Sutton, none of which will be counted in determining approval or disapproval of the Amalgamation Resolution, are comprised of the following:

(a) 92,416 CMI Shares (1.82%) beneficially owned Fred A. Litwin.

(b)	1,137,500 CMI Shares (22.41%) beneficially owned by Mar-Risa Holdings Inc. (“Mar-Risa”), which corporation is indirectly controlled by Fred A. Litwin.

(c)	1,475,394 CMI Shares (29.06%) beneficially owned by DG Acquisition Corp. (“DG”), a wholly-owned subsidiary of Mar-Risa, which corporation is indirectly controlled by Fred A. Litwin.

(d)	49,119 CMI Shares (0.97%) beneficially owned by Forum Financial Corporation ("Forum"), which corporation is directly controlled by Fred A. Litwin.

(e)	24,766 CMI Shares (0.49%) beneficially owned by First Corporate Equity Ltd. ("FICO"), which corporation is directly controlled by Fred A. Litwin.

(f)	24 CMI Shares (0.00%) beneficially owned by Genterra Inc. ("Genterra"), which corporation is indirectly controlled by Fred A. Litwin and Sutton

(g)	167,641 CMI Shares (3.30%) beneficially owned by Sutton, which corporation is beneficially owned by the children of Fred A. Litwin, being Mark I. Litwin, President and a Director of the Corporation and his sister, Risa Shearer.

PART II

THE AMALGAMATION

General

Pursuant to the terms of the Amalgamation Agreement, Genterra and CMI have agreed to amalgamate pursuant to the OBCA to form a new company under the name “Genterra Capital Inc.”. Each Genterra Shareholder (other than Dissenting Shareholders) will receive one Amalco Common Share for every 3.6 Genterra Common Shares held and each CMI Shareholder (other than Dissenting Shareholders) will receive 1 Amalco Common Share in exchange for each CMI Share held (as applicable). Each holder of Genterra Class A Shares (other than Dissenting Shareholders) will receive 1 Amalco Class A Share in exchange for each Genterra Class A Share held (as applicable). Each holder of Genterra Class B Shares (other than Dissenting Shareholders) will receive 1 Amalco Class B Share in exchange for each Genterra Class B Share held (as applicable). Any fractional interests resulting from the foregoing transactions will be rounded up or down to the nearest whole Amalco Security.

Following the Amalgamation, Genterra Shareholders and CMI Shareholders will hold approximately 51% and 49% of the outstanding Amalco Common Shares, respectively. All of the Amalco Class A Shares and Amalco Class B Shares will be held by holders of the Genterra Class A Shares and Genterra Class B Shares, respectively. For information concerning Amalco’s anticipated fully diluted share capital following the completion of the Amalgamation. See “PART VIII - INFORMATION CONCERNING THE RESULTING ISSUER (AMALCO) - Pro Forma Consolidated Capitalization - Fully Diluted Share Capital”

Redemption of CMI Class A Shares

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Background to the Amalgamation

The provisions of the Amalgamation Agreement are the result of negotiations conducted between representatives of Genterra and CMI and their respective advisors. The following is a summary of the principal meetings, negotiations, discussions and actions between the parties that preceded the execution of the Amalgamation Agreement.

Genterra is a publicly owned real estate holding and management company, the common shares of which are listed and posted for trading on the TSXV. Its business consists of investment, ownership and leasing of various properties in Southern Ontario. For further information on Genterra, see “PART VI - INFORMATION CONCERNING GENTERRA”.

CMI is a publicly owned holding company, the common shares of which are listed and posted for trading on the TSX. CMI’s business objective is to create and maximize shareholder value through internal growth of investments and acquisitions of companies having synergistic product lines and technologies, management strength and a presence in markets with the potential for sales of complementary products. For further information on CMI see “PART VII - INFORMATION CONCERNING CMI”.

In the spring of 2008, the management of both Genterra and CMI determined that the businesses of Genterra and CMI were incurring increased costs resulting from duplicate administrative; overhead and accounting facilities, and ongoing public company costs, and that these costs could be significantly reduced through an amalgamation of the two companies. Management determined that a combination of the two entities, would allow them to operate on a more expeditious and cost effective; would create a larger corporation with larger and more varied assets, a larger equity and income base, and greater opportunities, which would help facilitate the financing of future growth and expansion; and, would create a larger public float of shareholders which would result in increased market liquidity for the shareholders of the amalgamating corporations.

In April of 2008, Genterra and CMI discussed entering into a transaction whereby Genterra and CMI would amalgamate and continue as one entity. On April 17, 2008 management of CMI prepared and delivered to the directors of CMI a discussion memorandum in connection with the proposed amalgamation. Shortly thereafter, management of Genterra delivered a similar presentation to Genterra’s directors. In late April, the boards of directors of the two companies established Independent Committees of directors to consider and make recommendations to their respective boards in connection with the proposed amalgamation. The Independent Committee of Genterra’s board of directors is comprised of Messrs. Mark Dawber, who serves as Chairman, and Alan Kornblum. The Independent Committee of CMI’s board of directors is comprised of Messrs. Ian Dalrymple, who serves as Chairman, and Sol Nayman. Each of the Independent Committees retained independent legal counsel to advise in connection with the proposed transaction. Each of the Independent Committees also retained a qualified independent valuator to prepare and deliver a formal valuation of Genterra and CMI, respectively, in order to comply with applicable securities regulatory requirements.

Thereafter the respective Independent Committees of Genterra and CMI discussed the transaction and voted upon it. As a result, CMI and Genterra entered into the Amalgamation Agreement, dated April 27, 2009, pursuant to which CMI and Genterra agreed to complete the Amalgamation, subject to shareholder and regulatory approval.

Under the Amalgamation Agreement, Genterra and CMI will combine by way of Amalgamation and continue as Amalco. Pursuant to the Amalgamation, the Genterra Shares will be exchanged for Amalco Shares on a 3.6 to 1 basis and the CMI Shares will be exchanged for Amalco Common Shares on the basis of 1 Amalco Common Share for each CMI Share.

As of December 31, 2009, Genterra has 19,339,211 Genterra Common Shares, 326,000 Genterra Class A Shares, and 26,274,918 Genterra Class B Shares issued and outstanding. As of December 31, 2009, CMI has 5,076,407 CMI Shares, and 315,544 CMI Class A Shares issued and outstanding. It is anticipated that CMI will redeem the CMI Class A Shares prior to the CMI Meeting. Pursuant to the Amalgamation and assuming there are no Dissenting Shareholders, it is expected that Amalco will issue an aggregate of 10,367,243Amalco Common Shares, 326,000 Amalco Class A Shares and 26,274,918 Amalco Class B Shares. As the CMI Class A Shares will be redeemed prior to the CMI Meeting, they will not be exchanged for Amalco Shares under the Amalgamation.

Summary of the Amalgamation and Related Transactions

The summary below is qualified in its entirety by the text of the Amalgamation Agreement which is attached as Schedule 1 to this Circular.

As of April 27, 2009 Genterra and CMI entered into the Amalgamation Agreement. In November, 2009, the Amalgamation Agreement was amended to provide for a new stock option plan for Amalco. Under the terms of the Amalgamation Agreement, Genterra and CMI will amalgamate under the OBCA and continue as Amalco. At the Genterra Meeting and the CMI Meeting, the Genterra Shareholders and the CMI Shareholders, respectively, will be asked to approve the Amalgamation.

Based upon the advice of independent valuation experts, it had initially been proposed that each CMI Share be exchanged for 3.6 Amalco Common Shares and each Genterra Common Share be exchanged for one Amalco Common Share. Upon further consideration the respective boards of directors of CMI and Genterra determined that it will serve the best interests of the shareholders of each of the amalgamating companies to reduce the total number of Amalco Common Shares to be issued upon the Amalgamation by effecting the share exchange on a basis whereby the value of each Amalco Common Share is established as being equivalent to the value of the CMI Share. Accordingly each CMI Share will be exchanged for one Amalco Common Share and each 3.6 Genterra Common Shares will be exchanged for one Amalco Common Share. The boards of directors of CMI and Genterra believe that the reduction in the total number of Amalco Common Shares issued will enhance the prospects for an increased trading price for the Amalco Common Shares and facilitate compliance with market listing requirements.

Pursuant to the terms of the Amalgamation Agreement, Amalco will issue:

1 Amalco Common Share for every 3.6 Genterra Common Shares issued and outstanding on the Effective Date;

1 Amalco Class A Convertible Share for every 1 Genterra Class A Convertible Share issued and outstanding on the Effective Date ;

1 Amalco Class B Non-convertible Share for every one 1 Genterra Class B Non-convertible Share issued and outstanding on the Effective Date

1 Amalco Common Share for every 1 CMI Share issued and outstanding on the Effective Date.

Any fractional interest resulting from the foregoing transactions will be rounded up or down to the nearest Amalco Security.

It is anticipated that the shares issued in the Amalgamation will trade in the United States on the "pink sheets" and in Canada on the TSXV. No trading symbols have been determined at this time.

The accompanying document provides a detailed description of the Amalgamation and the Stock Option Plan and is furnished in connection with the solicitation of proxies by and behalf of the management of Genterra and CMI for use at the special meetings of Genterra and CMI shareholders. You are urged to read these materials carefully. Please pay particular attention to the “Risk Factors” for a discussion of risks related to the Amalgamation. If you are in any doubt as to the action you should take, contact your broker, lawyer, accountant or other professional advisor without delay.

It is anticipated that on the Effective Date, Genterra will have 19,339,211 Genterra Common Shares, 326,000 Genterra Class A Shares and 26,274,918 Genterra Class B Shares issued and outstanding and CMI will have 5,076,407 CMI Shares issued and outstanding.

Pursuant to the Amalgamation, and assuming there are no Dissenting Shareholders, it is expected that Amalco will issue the following Amalco Shares in exchange for Genterra Shares and CMI Shares:

Ø	5,290,860 Amalco Shares for 19,339,211 Genterra Shares;

Ø	326,000 Amalco Class A Shares for 326,000 Genterra Class A Shares;

Ø	26,274,918 Amalco Class B Shares for 26,274,918 Genterra Class B Shares; and

Ø	5,076,383 Amalco Shares for 5,076,407 CMI Shares.

Steps of the Amalgamation and Related Transactions

Based on the terms of the Amalgamation and related transactions, and assuming the Amalgamation and related transactions receive regulatory and Shareholder approval and satisfaction or waiver of all conditions precedent, the remaining events listed below will occur and be deemed to occur in the following order:

1.	CMI redeems the CMI Class A Shares. (see “PART VII - INFORMATION CONCERNING CMI – Description of Securities”);

Genterra and CMI amalgamate pursuant to the OBCA to become Amalco and appropriate filings are made with the Ministry of Government and Consumer Services for the Province of Ontario, resulting in the certificates representing the Genterra Shares and CMI Shares being exchanged for certificates representing the corresponding Amalco Shares, in the following anticipated amounts (provided there are no Dissenting Shareholders):

(a)

5,290,860 Amalco Common Shares are exchanged for 19,339,211 Genterra Common Shares;

(b)

326,000 Amalco Class A Shares are exchanged for 326,000 Genterra Class A Shares;

(c)

26,274,918 Amalco Class B Shares are exchanged for 26,274,918 Genterra Class B Shares; and

(d)

5,076,383 Amalco Common Shares are exchanged for 5,076,407 CMI Shares; and

3.	Appropriate filings are made with the Exchange and the TSXV.

Benefits of the Amalgamation

Both Genterra and CMI believe that the Amalgamation should result in the enhancement of value for their respective Shareholders. The principal purposes of the Amalgamation are: to allow for the businesses of Genterra and CMI to operate on a more expeditious and cost effective basis through the reduction of costs resulting from duplicate administrative; overhead and accounting facilities, and ongoing public company costs; to create a larger corporation with larger and more varied assets, a larger equity and income base, and greater opportunities, which will help facilitate the financing of future growth and expansion; and, to create a larger public float of shareholders which should result in increased market liquidity for the shareholders of the amalgamating corporations.

The boards of CMI and Genterra did not identify any potential adverse effects of the transaction other than the costs of the transaction process, including legal, accounting and regulatory fees and expenses and management time and resources. The boards determined that the potential benefits of the transaction far outweighed these costs. The board of each amalgamating company addressed the potential concern of undisclosed liabilities in the other amalgamating company, and was satisfied that in view of the fact that the amalgamating companies had three common directors there is no basis for any significant concern with regard to undisclosed liabilities.

The boards of directors of Genterra and CMI have voted to recommend the Amalgamation to their respective shareholders for the following reasons:

(a) each of Genterra and CMI are engaged in active investment and management endeavours;

(b) management and a number of directors are common to each corporation;

(c)

control of both corporations ultimately rests indirectly with Fred A. Litwin, and his son and daughter; hence the Amalgamation will simplify the corporate structures by consolidating shareholdings into one entity;

(d)

the Amalgamation will enable shareholders of each corporation to be a part of a larger corporation with larger and more varied assets, a larger equity and income base, and greater opportunities, and will facilitate the financing of future growth and expansion;

(e)

the Amalgamation is expected to create a larger public float of shareholders which should result in increased market liquidity for the shareholders of the amalgamating corporations; and

(f)

the corporation resulting from the Amalgamation will benefit from the increased efficiency and reduced costs resulting from single administrative; overhead and accounting facilities, and ongoing public company costs such as transfer agent, auditing, and exchange listing and sustaining fees.

Background to Recommendations of the Genterra and CMI Boards of Directors

A number of CMI and Genterra's Board of Directors members and Management are common to both Companies. In April 2008 Management of both Companies circulated to both Board's, Counsel for the Corporation and to the Auditors a memo setting out various information relating to the two Companies, the potential benefits of an amalgamation, as well as a Pro-forma Balance Sheet and Shareholdings based upon a potential merger thereof and requested that Board Meetings of the respective Companies be convened to consider the merits thereof. On April 24 2008 separate Board Meetings for both CMI and Genterra were held to consider the issue. At these Board meetings CMI and Genterra's Boards agreed with Management that the potential merger should be further considered and Independent Committee's of Directors to evaluate and recommend on the Amalgamation process were set up for both CMI and Genterra. The Independent Committees for both CMI and Genterra held their first meeting on that same day. As part of their mandate, the respective Independent Committee's each engaged Independent Counsel and were tasked with selecting and engaging independent professional Valuators to prepare Formal Valuations for CMI and Genterra and for one of the professional Valuators to prepare a Fairness Opinion from a financial point of view of the terms of the Amalgamation.

The Independent Committee of CMI selected and engaged HJF Financial Inc. to prepare the CMI Formal Valuation. The Independent Committee of Genterra selected and engaged Corporate Valuation Services Limited to prepare the Genterra Formal Valuation. Corporate Valuation Services were also were also engaged to prepare the Fairness Opinion. A draft Amalgamation was prepared and provided to the two Independent Committees of Directors. The draft Amalgamation Agreement was reviewed by each Independent Committee with each Independent Committees Counsel prior to finalization. Draft Formal Valuations as at December 31, 2008 for CMI and Genterra were then prepared by HJF Financial Inc. and Corporate Valuation Services Limited respectively. These draft Valuations were reviewed by the members of the respective CMI and Genterra Independent Committees as well as their Independent Counsel. Once the draft valuations were approved by the respective Independent Committees, Corporate Valuation Services Limited utilized the CMI and Genterra December 31, 2008 Formal Valuations to finalize a draft Fairness Opinion as at that date. The draft Fairness Opinion was then circulated to the two Independent Boards for review. This too was reviewed by the Independent Counsel to the Independent Committees. Prior to the Fairness Opinion's final approval, a meeting of members of both Independent Committees, Counsel to the Corporation and Corporate Valuation Services was held to confirm the basis of the Amalgamation's relevant share exchange ratios.

At a meeting of the Independent Committee of CMI held on March 5, 2009 the Amalgamation Agreement, Formal Valuation and Fairness Opinion were formally approved. At a follow up meeting of the CMI Board of Directors held on March 6, 2009 the CMI Board approved the execution of the Amalgamation Agreement and the issuance of a related Press Release as well as the filing of the appropriate documentation with the Regulatory Authorities.

At a meeting of the Independent Committee of Genterra held on March 6, 2009 the Amalgamation Agreement, Formal Valuation and Fairness Opinion were formally approved. At a follow up meeting of the Genterra Board of Directors held on March 6, 2009 the Genterra Board approved the execution of the Amalgamation Agreement and the issuance of a related Press Release as well as the filing of the appropriate documentation with the Regulatory Authorities

The CMI and Genterra Boards held updates regarding the amalgamation process during their regularly scheduled Board Meetings.

Because of the time delay between the date of the December 31, 2008 Formal Valuations and the Fairness Opinion and the anticipated mailing date of the relevant documents to the CMI and Genterra Shareholders in anticipation of the CMI and Genterra Meetings, the respective Independent Committees engaged HJF Financial Inc. and Corporate Valuation Services Limited to prepare updates as at August 31, 2009 to the CMI and Genterra December 31, 2008 Formal Valuations. Corporation Valuation Services were also engaged to provide an update as at August 31, 2009 of the December 31, 2008 Fairness Opinion. In anticipation of the Genterra Formal Valuation Update, Integris Real Estate Counselors were engaged by Genterra to provide an up-to-date Fair Market Valuation of Genterra's five real estate properties. This up-to-date Fair Market Property Valuation was provided by Genterra to Corporate Valuation Services Inc. Draft updates as of August 31, 2009 to the Formal Valuations as at December 31, 2008 for CMI and Genterra were prepared by HJF Financial Inc. and Corporate Valuation Services Limited respectively. These draft Updates were reviewed by the members of the respective CMI and Genterra Independent Committees. Once the draft Updates were approved by the respective Independent Committees, Corporate Valuation Services Limited utilized the CMI and Genterra August 31, 2009 updates to the December 31, 2008 Formal Valuations to finalize a draft update to the Fairness Opinion as at that date. The draft Update to the Fairness Opinion was then circulated to the two Independent Boards for review and approval.

Recommendation of the Genterra Board of Directors

Genterra’s board of directors has determined based on, among other things, the considerations noted below, that the terms of the Amalgamation are in the best interests of Genterra and are fair to the holders of Genterra Shares and unanimously recommends that Genterra Shareholders vote in favour of the Genterra Amalgamation Resolution. In reaching its conclusion, Genterra’s board of directors considered, among other things, the following:

1.	management’s review of, and advice with respect to, results of operations and prospects of each of Genterra and CMI;

2.	the security exchange ratios provided for in the Amalgamation Agreement;

3.	management team of Amalco;

the fact that the Amalgamation must be approved by: (i) a Special Resolution passed by not less than two-thirds of the votes cast at the Genterra Meeting by each class of Genterra Shareholders voting separately as a class and; (ii) Majority of the Minority Approval of the Genterra Shareholders in accordance with MI 61-101 (see “PART II - THE AMALGAMATION - Shareholder Approval- Majority of the Minority Approval”); and

the fact that the Amalgamation includes provisions which will permit Genterra Shareholders who oppose the Amalgamation to, upon compliance with certain conditions, dissent from the approval of the Amalgamation Agreement in accordance with the OBCA and be paid the fair value of their Genterra Shares as provided therein.

Recommendation of the CMI Board of Directors

CMI’s board of directors has determined based on, among other things, the considerations noted below that the terms of the Amalgamation are in the best interests of CMI and are fair to CMI Shareholders, and recommends that CMI Shareholders vote in favour of the CMI Amalgamation Resolution. In reaching its conclusion, CMI’s board of directors considered, among other things, the following:

1.	management’s review of, and advice with respect to, results of operations and prospects of each of Genterra and CMI;

2.	the security exchange ratios provided for in the Amalgamation Agreement;

3.	management team of Amalco;

the fact that the Amalgamation must be approved by: (i) a Special Resolution passed by not less than two-thirds of the votes cast at the CMI Meeting by CMI Shareholders; and (ii) Majority of the Minority Approval of the CMI Shareholders in accordance with MI 61-101. “PART II - THE AMALGAMATION - Shareholder Approval- Majority of the Minority Approval”); and

the fact that the Amalgamation includes provisions which will permit CMI Shareholders who oppose the Amalgamation to, upon compliance with certain conditions, dissent from the approval of the Amalgamation Agreement in accordance with the OBCA and be paid the fair value of their CMI Shares as provided therein.

Conditions of the Amalgamation

The Amalgamation Agreement contains a number of conditions precedent to the obligations of parties. Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Amalgamation will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. The Amalgamation Agreement does not contain any provision for termination fees. For complete details of the conditions to the Amalgamation, see the Amalgamation Agreement attached as Schedule 1 hereto.

Among other things, the closing of the Amalgamation is subject to the following conditions:

(a)

the Amalgamation shall have been approved by not less than two-thirds of the votes cast by holders of CMI Shares at the CMI Meeting in accordance with applicable laws;

(b)

the Amalgamation shall have been approved by not less than two-thirds of the votes cast by holders of Genterra Shares at the Genterra Meeting in accordance with applicable laws;

(c)

the TSX or the TSXV shall have conditionally approved the listing thereon of the Amalco Common Shares to be issued pursuant to the Amalgamation as of the Effective Date;

(d)

all other appropriate regulatory approvals shall have been obtained or received from the persons having jurisdiction in the circumstances, and all other applicable regulatory requirements and conditions shall have been complied with, the failure to obtain which would, individually or in the aggregate, have a material adverse effect on Genterra, CMI or Amalco after the Effective Date;

(e)

there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated under the Amalgamation Agreement and there shall be no proceeding, whether of a judicial or administrative nature or otherwise, in progress that relates to or results from the transactions contemplated under the Amalgamation Agreement that would, if successful, result in an order or ruling that would preclude completion of the transactions contemplated under the Amalgamation Agreement in accordance with the terms and conditions hereof or thereof;

(f)

there shall not exist any prohibition at law against the completion of the Amalgamation;

(g)

none of the consents, orders, regulations or approvals contemplated herein shall contain terms or conditions or require undertakings or security deemed unsatisfactory or unacceptable by any of the parties hereto acting reasonably;

(h)

the Amalgamation Agreement shall not have been terminated; and

(i)

no holder of CMI Shares and no holder of Genterra Shares shall have exercised Dissent Rights.

The above conditions are for the mutual benefit of Genterra and CMI and may be waived, in whole or in part, by Genterra and CMI at any time.

The obligation of Genterra to complete the Amalgamation is subject to the satisfaction of each of the following conditions at or prior to the Effective Date or such other time as is specified below:

(a)

CMI shall have performed or complied with, in all material respects, each of its obligations, covenants and agreements under the Amalgamation Agreement to be performed and complied with by it on or before the Effective Date;

(b)

each of the representations and warranties of CMI under the Amalgamation Agreement shall be true and correct in all respects on the date of the Amalgamation Agreement and as of the Effective Date as if made on and as of such date except: (i) for such representations and warranties made as of a specified date, which shall be true and correct as of such specified date, (ii) as affected by transactions contemplated or permitted by the Amalgamation Agreement; or (iii) where the failure of such representations and warranties in the aggregate to be true and correct in all respects would not be reasonably expected to have a material adverse effect on CMI;

(c)

except as disclosed in writing to Genterra, since the date of the Amalgamation Agreement, there shall have been no material adverse effect with respect to CMI or any event, occurrence or development, including the commencement of any action, suit or other legal proceeding which would be reasonably expected to have a material adverse effect on CMI;

(d)

Genterra shall have received a certificate of CMI addressed to Genterra and dated the Effective Date, signed on behalf of CMI by two senior executive officers of CMI, confirming that certain conditions have been satisfied;

(e)

since the date of the Amalgamation Agreement, no action, suit or proceeding shall have been taken before or by any governmental entity or by any private entity that would, if successful, have a material adverse effect on CMI, in the sole discretion of Genterra, acting reasonably;

(f)

the board of directors of Genterra shall have received the opinion of a qualified independent valuator as to the fairness of the Amalgamation to the shareholders of Genterra;

(g)

CMI’s board of directors and the CMI Shareholders shall have adopted all necessary resolutions and all other necessary corporate action shall have been taken by CMI to permit the consummation of the Amalgamation and the transactions contemplated in the Amalgamation Agreement; and

(h)

all consents and approvals under any agreements to which CMI may be a party or bound which are required or necessary or desirable for the completion of the transactions contemplated under the Amalgamation Agreement shall have been obtained or received.

The above conditions are for the benefit of Genterra and may be waived, in whole or in part, by Genterra at any time.

The obligation of CMI to complete the Amalgamation is subject to the satisfaction of each of the following conditions at or prior to the Effective Date or such other time as is specified below:

(a)

Genterra shall have performed or complied with, in all material respects, each of its obligations, covenants and agreements under the Amalgamation Agreement to be performed and complied with by it on or before the Effective Date;

(b)

each of the representations and warranties of Genterra under the Amalgamation Agreement shall be true and correct in all respects on the date of the Amalgamation Agreement and as of the Effective Date as if made on and as of such date except: (i) for such representations and warranties made as of a specified date, which shall be true and correct as of such specified date, (ii) as affected by transactions contemplated or permitted by the Amalgamation Agreement; or (iii) where the failure of such representations and warranties in the aggregate to be true and correct in all respects would not be reasonably expected to have a material adverse effect on Genterra;

(c)

since the date of the Amalgamation Agreement, there shall have been no material adverse effect with respect to Genterra or any event, occurrence or development, including the commencement of any action, suit or other legal proceeding which would be reasonably expected to have a material adverse effect on Genterra;

(d)

CMI shall have received a certificate of Genterra addressed to CMI and dated the Effective Date, signed on behalf of Genterra by two senior executive officers of Genterra, confirming that certain conditions have been satisfied;

(e)

since the date of the Amalgamation Agreement, no action, suit or proceeding shall have been taken before or by any governmental entity or by any private entity that would, if successful, have a material adverse effect on Genterra, in the discretion of CMI, acting reasonably;

(f)

the board of directors of CMI shall have received the opinion of a qualified independent valuator as to the fairness of the Amalgamation to the shareholders of CMI;

(g)

Genterra’s board of directors and the Genterra Shareholders shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by Genterra to permit the consummation of the Amalgamation and the transaction contemplated in the Amalgamation Agreement; and

(h)

all consents and approvals under any agreements to which Genterra may be a party or bound which are required or necessary or desirable for the completion of the transactions contemplated under the Amalgamation Agreement shall have been obtained or received.

The above conditions are for the benefit of CMI and may be waived, in whole or in part, by CMI at any time.

Shareholder Approval

Corporate Law Shareholder Approval

The Amalgamation must be approved by (i) a Special Resolution of the Genterra Shareholders and CMI Shareholders in accordance with the OBCA; and (ii) Majority of the Minority Approval of the Genterra Shareholders and the CMI Shareholders in accordance with MI 61-101 (see below “PART II - THE AMALGAMATION - Shareholder Approval - Majority of the Minority Approval”).

Pursuant to Section 185 of the OBCA with respect to the Amalgamation, Genterra Shareholders and CMI Shareholders are entitled to exercise rights of dissent in respect of the Amalgamation and, if the Amalgamation becomes effective, to be paid the fair value for their shares. Genterra Shareholders wishing to dissent with respect to the Amalgamation must send written objection to Genterra at or prior to the Genterra Meeting to the head office of Genterra at 106 Avenue Road, Toronto, Ontario, M5R 2H3, Attention: President. CMI Shareholders wishing to dissent with respect to the Amalgamation must send written objection to CMI at or prior to the CMI Meeting to the head office of CMI at 106 Avenue Road, Toronto, Ontario, M5R 2H3, Attention: President. A vote against the Special Resolution regarding the Amalgamation or a withholding of a vote does not constitute such a written objection. See “PART II - THE AMALGAMATION - Dissent Rights”.

Majority of the Minority Approval

The Amalgamation is a “Related Party Transaction” and a “Business Combination” in relation to both CMI and Genterra under MI 61-101 because both CMI and Genterra are directly or indirectly controlled by Fred A. Litwin, Mark Litwin, and Risa Shearer. See “PART VI - INFORMATION CONCERNING GENTERRA – Principal Security Holders”, and “PART VII – INFORMATION CONCERNING CMI – Principal Security Holders”.

MI 61-101 requires that, in addition to approval of two-thirds of the votes cast by the CMI Shareholders and two-thirds of the votes cast by Genterra Shareholders, in order to complete the Amalgamation, Majority of the Minority Approval of the Genterra Shareholders and Majority of the Minority Approval of the CMI Shareholders must be obtained. In calculating the votes to determine the required level of approval for the Majority of the Minority Approval, all Excluded Shareholders will be excluded from voting. To the knowledge of the management of Genterra and CMI, a total of 2,946,860 CMI Shares, 9,949,247 Genterra Shares, 326,000 Genterra Class A Shares, and 77,592 Genterra Class B Shares are anticipated to be excluded from voting on the approval of the Amalgamation pursuant to MI 61-101. The following table sets out the shareholdings of those persons anticipated to be excluded from voting on the Genterra Amalgamation Resolution and the CMI Amalgamation Resolution for the Majority of the Minority Approval.

	CMI SHARES			GENTERRA SHARES			GENTERRA CLASS A SHARES			GENTERRA CLASS B SHARES
CMI				292,117 Cancelled
DG Acquisition Corp.		1,475,394
First Corporate Equity Ltd.		24,766			637,286						25,724
First Ontario Investments Inc.					412			326,000			1,677
Forum Financial Corporation		49,119			1,617,012						50,191
Genterra Inc.	24 Cancelled
Ianjoy Investments Corp.					55,602
Mar-Risa Holdings Inc.		1,137,500			687,500
Sutton Management Ltd.		167,641			6,659,312
Fred A. Litwin		92,416
Mark I. Litwin					2
Stan Abramowitz					2
Alan Kornblum					2
TOTAL		2,946,860			9,949,247			326,000			77,592
Total Issued and Outstanding		5,076,407			19,339,211			326,000			26,274,918
Percentage of Outstanding to be Excluded from Vote		58	%		51	%		100	%		0.3	%

Method of Selection of HJF Financial Inc. and CVS

At the April 24 2008 Board Meetings for both CMI and Genterra wherein the potential Merger was initially considered, Independent Committee’s of Directors of both CMI and Genterra were set up with the mandate to evaluate and recommend on the Amalgamation process. The Independent Committees for both CMI and Genterra, as part of this mandate, each engaged separate Independent Counsel. Independent Counsel to the CMI and Genterra Independent Committee’s advised that as part of the merger process, separate Formal Valuations for both Companies, prepared by separate qualified Business Valuators, would need to be prepared. Independent Counsel to the Independent Committees also advised that in addition to the Formal Valuations, an Opinion as to the Fairness of the Amalgamation to the Shareholders would also be required and that this could be prepared by one of the Business Valuators. The Independent Committees identified a number of qualified business valuators based upon prior engagements, professional credentials and educational background. Individual interviews were then conducted with those candidates that the Independent Committees were most confident with.

Having been previously satisfied with CVS’s services to Genterra and the fact that because of these services CVS already possessed a substantial knowledge base on Genterra, the Genterra Independent Committee felt that CVS was best suited to prepare the Genterra Formal Valuation. James Catty, the president of CVS is a Chartered Accountant - Ontario, Chartered Financial Analyst - US, Chartered Business Valuator - Canada, Certified Public Accountant, and a Certified Fraud Examiner. Genterra’s Independent Committee met with CVS and engaged them to prepare the Genterra Formal Valuation. CVS were paid $6,500 by Genterra for the Genterra Formal Valuation and $3,000 for the update thereto. CVS is not entitled to any further compensation contingent upon the completion of the Amalgamation.

CMI’s Independent Committee interviewed a number of qualified Business Valuators regarding their possible engagement to prepare the CMI Formal Valuation. Based upon these interviews CMI’s Independent Committee decided that HJF Financial Inc. were best suited and engaged them to prepare the CMI Formal Valuation. CMI and HJF Financial Inc. did not have any prior relationship. Harry Figoff, the president of HJF Financial is a Chartered Business Valuator (CBV) – Canada, Certified Public Accountant (CPA), Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and Chartered Accountant - Canada. HJF Financial Inc. were paid $10,500 by CMI for the CMI Formal Valuation and $3,500 for the update thereto.HJF is not entitled to any further compensation contingent upon the completion of the Amalgamation.

Genterra Valuation Summary

The following is a summary of the Formal Valuation, dated 26 January 2009, of all the Shares of Genterra as at 31 December 2008 for the purpose of its acquisition through amalgamation by CMI.

On 31 October 2008, the Independent Committee of the Board of Directors of Genterra engaged Corporate Valuation Services Limited ("CVS") to prepare and deliver to the Independent Committee a Formal Valuation of Genterra, under Multilateral Instrument 61-101, as at December 31, 2008 (the “Valuation Date”), using audited Financial Statements as at September 30, 2008. CVS has been determined to be independent within the meaning of Rule 61-501.

Procedures and methods followed by CVS in preparing the Genterra Formal Valuation:

Information used for the Valuation

In reaching its conclusions of its Formal Valuation, CVS has reviewed and relied upon the following documents and information relating to the assets and liabilities of Genterra:

1.	2007 Annual Report, with Consolidated Financial Statements, audited by Kraft, Berger LLP, Chartered Accountants, Toronto.

2.	Unaudited Interim Financial Report, 30 June 2008.

3.	Audited Consolidated Financial Statements, as at 30 September 2008, dated 23 January 2009.

4.	Notice of Meeting and Management Information Circular for an Annual and Special Meeting of the Shareholders of Genterra Inc. held March 4, 2008.

5.	Current Full Narative Appraisal Reports on: 1095 Stellar Drive, Newmarket; 140 Wendell Avenue, Toronto; and 200 Glendale Avenue, Hamilton; as of 1 August 2008, prepared by Integris Real Estate Counsellors, Toronto.

6.	Current Full Narrative Appraisal Report on 480 Dobbie Drive, Cambridge, ON, as of 15 July 2008 prepared by Integris.

7.	Appraisal of “A Studio/Loft Rental Property, 90 Ontario Street, Toronto, Ontario” as of 21 November 2007, prepared by MacKenzie, Ray, Heron & Edwardh, Real Estate Appraisers & Consultants, Toronto.

CVS’s Formal Valuation is issued subject to the following restrictions and qualifications:

CVS reserves the right, but is under no obligation, to revise or withdraw its Formal Valuation, if any information, trends or changed conditions affecting our conclusions, that were in existence before the Valuation Date, become known to CVS after its issue. However, CVS has no responsibility to update it as a result of subsequent events and circumstances;

CVS’s Formal Valuation is not intended for general circulation or publication; it is not, and under no circumstances is to be construed to be an offering of securities; any use or reproduction of it for any purpose other than that stated is prohibited without our specific written permission, unless ordered by a court;

CVS hereby disclaims all liability to any party other than Genterra, with such liability restricted to negligence on CVS’s part. In particular, CVS denies all responsibility or liability for any losses occasioned to Genterra, its Shareholders, or any other party, resulting from unauthorized circulation, publication, reproduction or use of CVS’s Formal Valuation; neither its author nor CVS makes any representation or warranty as to its accuracy or completeness, and shall have no liability for any representation, expressed or implied, contained in it, or for any omissions from it;

·	The analyses and research used in CVS’s Formal Valuation were carried out by CVS as an independent and neutral expert. No party has put any restrictions on the scope of CVS’s work, estimates or conclusions;

·	CVS did not conduct an audit or review of the consolidated financial position of Genterra, nor seek external verification of any of the information used. CVS cannot express an opinion as to its accuracy, but consider it to be reliable.

Assumptions

CVS’s Formal Valuation of the Shares of Genterra makes the following specific assumptions:

·	All information supplied by the Company is true and correct;

·	Management has informed CVS of all significant factors, contracts or agreements in effect at the Valuation Date that have a bearing on the value of the shares, and they are reflected in CVS’s Formal Valuation;

·	At the Valuation Date, no contracts or agreements were being negotiated that would have a material effect on the operating results of the Company and are not disclosed in CVS’s Formal Valuation;

·	All litigation, pending or threatened, related to Genterra, has been disclosed to CVS;

·	No material adverse change has taken place in the operations or financial position of Genterra between the Valuation Date and the date of CVS’s Formal Valuation;

·	There were no employment contracts, stock option plans, share purchase arrangements or Shareholder Agreements in force at the Valuation Date that would have any material effect on the value of the Shares of Genterra and are not disclosed in CVS’s Formal Valuation;

·	There are no environmental issues which would have a material effect on the operating results of Genterra;

·	Considering the purpose of CVS’s Formal Valuation, no investigation was necessary into potential economies of scale, cost savings or other synergies that might be achieved by a sale of the Shares of Genterra to a special purchaser, nor was any attempt made to identify any such entity;

·	Federal and Provincial Income Tax laws, regulations and rates, in force at the Valuation Date in Canada, will not change for at least the next five years.

Approach to Valuation

In valuing a business, there is no single standard or specific mathematical formula; the approach and factors considered depend on individual circumstances. However, for all businesses, there are three generally accepted approaches: Asset Based, including Replacement Cost; Earnings Based, also comprising Discounted Cash Flows, and Transaction Based, covering stock market activity.

Asset Based Approach

The Asset Based approach is used when either: a purchaser is looking primarily at the underlying financial, physical or intangible assets, or because different segments of the business are more valuable to separate purchasers than as a single ongoing operation. Under this approach, shares are generally valued by one of the following methods:

·	Adjusted Shareholders' Equity - the total of all financial, physical and intangible assets at Fair Market Values, on a going concern basis, less liabilities and any related income taxes.

·	Net Worth/Goodwill Value - the Adjusted Shareholders' Equity, plus an estimate of the effective goodwill based on the application of appropriate rates of return to the financial, physical and intangible assets.

·	Liquidation Value - the total amount expected to be realized on the sale of all assets including intangible items and the winding-up of the business on an orderly basis.

Approach Adopted

Usually there are as many sale prices for a business interest as there are purchasers, and each buyer for a particular business, whether represented by shares or the related assets, will pay a price based on its ability to utilize the resources. In an open market transaction, a purchaser will consider the available synergies, such as reduced competition, assured material supply, guaranteed sales, economies of scale, cost savings, location and proximity to other properties owned by the buyer, etc. Theoretically, each purchaser is able to enjoy such economies of scale in varying degrees, and might therefore pay a different price for a particular pool of assets.

Where no specific third-party purchaser has been clearly identified, it is difficult to be certain of the price that would be paid in an open market transaction. Since control of Genterra has not been offered for sale, CVS could not determine interests and possible synergies available to an outside purchaser. Considering all circumstances, CVS has adopted the Asset Based approach, using the Adjusted Shareholders' Equity method. As the Common Shares are publicly quoted, Transaction Based Values using the stock market activity method have also been taken into account.

Each of the 326,000 Class A Preference Shares is convertible into 20 Common Shares and has $0.31 ($101,819 in total) of accrued dividends. Converting all the 326,000 Class A Preference Shares into Common Shares would require the issuance of 6,520,000 new shares for a total of 25,859,211 Common Shares, a 33.7% increase. The overall dilution in the Fair Market Value is 7.4%.

	Ratio		of Shares		Value		Per Share		Dilution
Class A Preference		20		6,520,000		4,991,819	$	0.766		-29.3	%
Common		1		19,339,211		20,953,574	$	1.083
				25,859,211		25,945,393	$	1.003		-7.4	%

The equivalent price of the Class A Preference Shares is $20.00 each.

Based upon and subject to the assumptions and qualifications contained in the Formal Valuation, CVS gave its opinion that as at the Valuation Date, the rounded Fair Market Value of all the Shares of Genterra is Twenty Seven Million Two Hundred and Fifty Thousand Dollars ($27,250,000). This is equivalent to $1.00 (rounded) for each of the 25,859,211 Genterra Common Shares to be issued on a fully diluted basis, assuming complete conversion of the 326,000 Genterra Class A Preference Shares, and $0.05 for each of the 26,274,918 Genterra Class B Preference Shares.

On 6 July 2009 CVS were engaged by the Independent Committee of the Board of Directors of Genterra to prepare and deliver and update to the Genterra Formal Valuation as at August 31, 2009. The update to the Genterra Formal Valuation was dated 9 September 2009. The updated Estimate of Fair Market Value of all the Shares of Genterra at 31 August 2009 was determined by CVS as Twenty Five Million Nine Hundred and Sixty-Five Thousand ($25,965,000). This is equivalent to $0.95 (rounded) for each of the 25,859,211 Genterra Common Shares to be issued on a fully diluted basis, assuming complete conversion of the 326,000 Genterra Class A Preference Shares, and $0.05 for each of the 26,274,918 Genterra Class B Preference Shares.

The Transaction Based Value of $0.65 per Genterra Common Share, is at a discount of 32% to the Fair Market Value.

On December 11, 2009 CVS delivered a further update to the Genterra Formal Valuation and concluded that there was no adjustment as at November 30, 2009 to the fair market value of the outstanding shares of Genterra based on the Update Report as at August 31, 2009.

The Formal Valuation and the updates thereto were provided to the Independent Committee and the Board of Directors of Genterra solely for the purpose of their consideration of the Amalgamation.

The full text of the Formal Valuation and the updates thereto, which sets forth the assumptions, qualifications and considerations in connection with the Formal Valuation, is available for inspection by Shareholders during regular business hours at the head office of Genterra at 106 Avenue Road, Toronto, Ontario. The Shareholders are urged to read the Formal Valuation in its entirety. A copy of the Formal Valuation and the updates thereto will be sent without charge to any holder of Genterra Shares upon request. The Formal Valuation does not constitute advice or a recommendation as to whether Shareholders should vote in favour of the Acquisition or any other transaction.

CMI Valuation Summary

The following is a summary of the Comprehensive Valuation Report, dated January 16, 2009, prepared by HJF Financial Inc. (“HJF”) setting out the comprehensive fair market value (“FMV”) of all the issued and outstanding common shares of Consolidated Mercantile Incorporated (“CMI”) at December 31, 2008 (“Valuation Date”) for the purpose of the merger of CMI with Genterra, a publicly listed and related company, publicly listed in Canada.

On November 10, 2008, the Independent Committee of the Board of Directors of CMI engaged HJF Financial Inc. ("HJF") to prepare and deliver to the Independent Committee a Formal Valuation of CMI, under Multilateral Instrument 61-101, as at December 31, 2008 (the “Valuation Date”), using audited Financial Statements as at December 31, 2007 and interim unaudited Financial Statements as at September 30, 2008. HJF has been determined to be independent within the meaning of Rule 61-501.

Procedures and methods followed by HJF in preparing the CMI Formal Valuation:

In preparing the CMI Formal Valuation as at December 31, 2008 HJF reviewed and relied upon the following:

1.	CMI Historical consolidated audited:

·	Balance Sheet

·	Statement of Retained Earnings

·	Statement of Accumulated Other Comprehensive Loss

·	Statement of Operations and Other Comprehensive Income

·	Schedule to Financial Statements

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

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

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

4.	Information obtained from the website of CMI;

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

6.	Schedule of currency transactions in October 2008;

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

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

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

10.	Discussions with Mr. Ian Dalrymple, independent director and Chairman of CMI Independent Committee of Directors;

HJF did not audit, corroborate or otherwise independently verified any of the information provided by CMI management and CMI upon which HJF’s conclusions are based.

HJF were provided a letter of representation signed by Mr. Stan Abramowitz, Secretary and Chief Financial Officer of CMI, wherein CMI confirmed certain representations made to HJF, including a general representation that:

1.	CMI has reviewed HJF’s report in draft form and have discussed it with HJF;

2.	CMI is satisfied with HJF’s explanations and the approach adopted by HJF as set out in their report; and

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

Major Assumptions

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

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

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

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

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

HJF did not consider the income tax consequences to CMI shareholders with respect to this transaction. HJF’s comprehensive FMV for all the issued and outstanding common shares of CMI is based on the assumption that CMI shareholders would be able to consummate the proposed transaction without adverse income tax consequences.

Valuation Approaches and Methods Considered by HJF

Valuation Approaches

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

1.	A going concern approach; or

2.	A liquidation approach.

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

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

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

Asset Approach

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

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

Holding Companies

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

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

Approach Selected

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

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

Based upon and subject to the assumptions and qualifications contained in the Formal Valuation, HJF gave its opinion that as at the Valuation Date, the fair market value of all the issued and outstanding CMI Shares is in the range of Seventeen Million Three Hundred and Fifty Eight Thousand Two Hundred and Eighty One dollars Canadian ($17,358,281) or Three Dollars and Forty Two Cents Canadian ($3.42) per share based on Five Million and Seventy Six Thousand Four Hundred and Seven (5,076,407) common shares outstanding. This fair market value is predicated on the redemption of the CMI Class A Preference shares prior to the merger.

On 25 June 2009 HJF were engaged by the Independent Committee of the Board of Directors of CMI to prepare and deliver and update to the CMI Formal Valuation as at August 31, 2009. The update to the CMI Formal Valuation was dated September 2, 2009. The updated Estimate of The fair market value of all the issued and outstanding common shares of CMI at August 31, 2009 was determined by HJF as Sixteen Million Two Hundred and Eighty-Six Thousand Four Hundred and One Dollars ($16,286,401.00) or Three Dollars and Twenty One Cents ($3.21) per share based on Five Million and Seventy Six Thousand Four Hundred and Seven (5,076,407) common shares outstanding.

On November 30, 2009 HJF delivered a further update to the CMI Formal Valuation and concluded that there was no adjustment as at November 30, 2009 to the fair market value of the outstanding common shares of CMI based on the Update Report as at August 31, 2009.

The Formal Valuation and the updates thereto were provided to the Independent Committee and the Board of Directors of CMI solely for the purpose of their consideration of the Amalgamation.

The full text of the Formal Valuation and the updates thereto, which sets forth the assumptions, qualifications and considerations in connection with the Formal Valuation, is available for inspection by Shareholders during regular business hours at the head office of CMI at 106 Avenue Road, Toronto, Ontario. The Shareholders are urged to read the Formal Valuation in its entirety. A copy of the Formal Valuation and the updates thereto will be sent without charge to any holder of CMI Shares upon request. The Formal Valuation does not constitute advice or a recommendation as to whether Shareholders should vote in favour of the Acquisition or any other transaction.

Fairness Opinion

On October 31, 2008 CVS was retained to prepare and deliver to the Independent Committees of Genterra and CMI an opinion that the terms of the proposed Amalgamation of Genterra and CMI to form one continuing corporation described herein are fair to each of such corporations and their respective shareholders from a financial point of view. A copy of the CVS opinion that the terms of the Amalgamation is fair to each of the amalgamating corporations and their respective shareholders is annexed as Schedule 6 to this Circular. Shareholders are urged to read the CVS Fairness Opinion in its entirety. The CVS Fairness Opinion is not a recommendation as to how Shareholders should vote with respect to the Amalgamation.

Genterra and CMI’s Independent Committees met with CVS and jointly agreed to engage CVS to prepare the requisite Fairness Opinion. CVS were paid $3,000 for the initial Fairness Opinion and $3,800 for the update thereto. The cost of the Fairness Opinion and the update thereto were born equally by Genterra and CMI. CVS is not entitled to any further compensation contingent upon the completion of the Amalgamation.

Approach used by CVS in preparing the Fairness Opinion:

The purpose of CVS’s Fairness Opinion and the update thereto is to supply information to the Directors and shareholders of both Genterra and CMI in considering and approving the acquisition through the amalgamation of all the Shares of Genterra by CMI.

Relative Values

In a “Comprehensive Valuation of the Shares of Consolidated Mercantile Incorporated as at December 31, 2008” dated January 16, 2008 and prepared under Multilateral Instrument 61-101, HJF Financial Inc., Chartered Business Valuators, determined that the Fair Market Value of the 5,076,407 issued and outstanding common shares of CMI was $17,358,000 or $3.42 each.

On January 26, 2009, CVS issued a Formal Valuation, under Multilateral Instrument 61-101, setting out its estimate of Fair Market Value of all the shares of Genterra, as at December 31, 2008. CVS’s estimate of Fair Market Value of all the Shares of Genterra was determined as TWENTY SEVEN MILLION TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($27,250,000). This is equivalent to $1.00 (rounded) for each of the 25,859,211 Genterra Common Shares to be issued on a fully diluted basis, assuming complete conversion of the 326,000 Genterra Class A Preference Shares, and $0.05 for each of the 26,274,918 Genterra Class B Preference Shares.

Bases upon these Valuation Reports CVS compared the relative Financial Positions and Fair Market Values of the shares of both Companies.

Exchange Ratios

The relative Fair Market Values of the common shares ($3.42 for CMI and $1.00 for Genterra) suggested an exchange ratio of 3.4 AMALCO common shares for each CMI common share and one (1) AMALCO common share for each Genterra common share. However there were certain other factors considered by CVS.

CMI

The bulk (95%) of the CMI assets are either cash (77%) or easily convertible into cash (18%). This gives the CMI portfolio two characteristics at the Valuation Date. The first is CMI’s very much lower risk than that of Genterra, which is substantially invested in real estate. The second is minimal potential returns for CMI (0.71% for Treasury Bills on the Valuation Date).

Such low rates (even when upgraded to Bankers Acceptances at 1.41%) are not likely to generate sufficient taxable income for CMI to use up all of its tax losses which expire in 2026 at the latest. Management has stated that after the Amalgamation, the taxable income of Genterra should be sufficient to absolve the whole CMI loss carry forward in one year. Allowing for this reduction in tax benefits to CMI, CVS has determined that the value of a CMI common share on its own, will be only $3.34.

Genterra

The real estate appraisals underlying the Fair Market Value of the Genterra shares took place during late 2007 and the summer of 2008. Since then, liquidity in the ICI (Industrial, Commercial and Investment) real estate market has been substantially reduced. However there is not enough evidence to establish the amount, if any, of a reduction in the Fair Market Value (as defined) of the Genterra properties. However CVS determined that a small premium for the CMI shares over the relative Fair Market Values to reflect the lower risk and return of its portfolio seems appropriate.

At a joint telephone meeting of certain Directors of both companies attended by a representative of CVS, exchange ratios of 3.6 AMALCO common shares for each CMI common share and one (1) AMALCO common share for each Genterra common share were proposed. The members of both Boards present during the meeting, unanimously agreed to those ratios. They result in a small dilution (-1.9%) for Genterra shareholders and a 7.8% premium for the CMI Shareholders to reflect their lesser risk.

Stock Market Trading

CMI is listed on the Toronto Stock Exchange (TSX), while Genterra trades on the TSX Venture Exchange. Values for the common shares of CMI and Genterra were obtained by two independent approaches, the Adjusted Book Value and the Transaction Based Value, reflecting average prices from stock trading. For this Fairness Opinion, CVS relied on the fully diluted Adjusted Book Values, as the shares of both companies trade at significant discounts to their Adjusted Book Values.

Conclusion

The directors of CMI and Genterra agreed on the following exchange ratios:

Each share of	Shares of AMALCO
CMI Common	3.6 Common
Genterra Class A Series 1 Preference	1 Class A Preference
Genterra Class B Preference	1 Class B Preference
Genterra Common	1 Common

CVS determined that in its opinion, the ratios set out above are fair from a financial point of view, to the shareholders of both CMI and Genterra.

The directors of CMI and Genterra subsequently determined that it is in the best interest of all shareholders to reduce the number of AMALCO common shares to be issued by establishing their value as equivalent to that of a CMI common share. Accordingly, each CMI common share will be exchanged for one AMALCO common share, as will each 3.6 Genterra common shares. This does not change the relative valuations of CMI and Genterra, but the directors believe that the lesser number of issued AMALCO common shares will enhance their prospects for an increased trading price and compliance with market listing requirements.

On September 9, 2009, based upon August 31, 2009 updates to the CMI and Genterra December 31, 2008 Formal Valuations prepared by HJF Financial Inc. and CVS respectively, CVS provided an update to the “fairness from a financial point of view” of the terms of the Amalgamation share exchange ratios to form AMALCO. In this update, CVS determined that based on August 31, 2009 updates to the CMI and Genterra Valuations, the exchange of 1 AMALCO common shares for each CMI common share and 1 AMALCO common share for each 3.6 Genterra common shares, the ratios selected by the Directors of Genterra and CMI, are still fair, from a financial point of view, to the shareholders of both companies.

On December 11, 2009, based upon November 30, 2009 updates to the CMI and Genterra December 31, 2008 Valuations prepared by HJF Financial Inc. and CVS respectively, CVS provided a further update to the “fairness from a financial point of view” of the terms of the Amalgamation share exchange ratios to form Amalco . In this update CVS concluded that the ratios selected by the Directors of Genterra and CMI are still fair from a financial point of view to the shareholders of both companies.

A copy of the CVS opinion and the updates thereto, that the terms of the Amalgamation is fair to each of the amalgamating corporations and their respective shareholders is attached as a schedule to this Circular. Shareholders are urged to read the CVS Fairness Opinion in its entirety. The CVS Fairness Opinion is not a recommendation as to how Shareholders should vote with respect to the Amalgamation.

Genterra Formal Valuation

In 2008 Genterra acquired all of the shares of Ninety Ontario Street Inc. (a related party) and undertook a Share Capital Reorganization. Both of these transactions required prior Shareholder Approval and required Genterra to obtain the following:

-	A Formal Valuation of Ninety Ontario Street Inc.

-	A Fairness Opinion regarding the acquisition of Ninety Ontario Street Inc.

-	A Fairness Opinion of the proposed Share Reorganization

Prior to these two transactions in 2008, CVS had provided Genterra with (i) a Fairness Opinion dated October 29, 1996, in connection with the amalgamation on February 28, 1997 of Genterra Capital Corporation, First Corporate Capital Inc. and Mutec Equities Ltd., to form Genterra Capital Incorporated, a predecessor corporation of Genterra Inc., and (ii) a Formal Valuation and Fairness Opinion, dated January 17, 2003, with an addendum thereto dated March 17, 2003, in connection with the amalgamation on December 31, 2003 of Mirtronics Inc. and Genterra Investment Corporation, to form Genterra Inc.

These documents were prepared for Genterra by CVS. CVS charged Genterra $11,720 or the preparation of these three documents.

Having been previously satisfied with CVS’s services to the Company and the fact that because of these services CVS already possessed a substantial knowledge base on the Company, The Genterra Independent Committee felt that CVS was best suited to prepare the Genterra Formal Valuation. Genterra’s Independent Committee met with CVS and engaged them to prepare the Genterra Formal Valuation. CVS were paid $6,500 by Genterra for the Genterra Formal Valuation and $3,000 for the update thereto. CVS is not entitled to any further compensation contingent upon the completion of the Amalgamation.

CMI Formal Valuation

CMI’s Independent Committee interviewed a number of qualified Business Valuators regarding their possible engagement to prepare the CMI Formal Valuation. Based upon these interviews CMI’s Independent Committee decided that HJF Financial Inc. were best suited and engaged them to prepare the CMI Formal Valuation. CMI and HJF Financial Inc. did not have any prior relationship. HJF Financial Inc. were paid $10,500 by CMI for the CMI Formal Valuation and $3,500 for the update thereto.HJF is not entitled to any further compensation contingent upon the completion of the Amalgamation.

Fairness Opinion

Genterra and CMI’s Independent Committees met with CVS and jointly agreed to engage CVS to prepare the requisite Fairness Opinion. CVS was paid $3,000.00 for the initial Fairness Opinion and $3,800.00 for the update thereto. The cost of the Fairness Opinion and the update thereto were born equally by Genterra and CMI. CVS is not entitled to any further compensation contingent upon the completion of the Amalgamation.

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Regulatory Approvals and Filings

Neither Genterra nor CMI are aware of material licences or regulatory permits which might be adversely affected by the Amalgamation or of any approval or other action by any federal, provincial, state or foreign government or administrative or regulatory agency that would be required to be obtained prior to the completion of the Amalgamation, other than by the Exchange.

Dissent Rights

The following description of the rights of Dissenting Shareholders to dissent in respect of the Amalgamation is not a comprehensive statement of the procedures to be followed by a Dissenting Shareholder who seeks payment of the fair value of such holder’s shares and is qualified in its entirety by the reference to the full text of section 185 of the OBCA, in respect of the Amalgamation, which is attached to this Circular as Schedule 5. A registered shareholder who intends to exercise the right of dissent and appraisal should carefully consider and comply with the provisions of that section. Failure to strictly comply with the provisions of that section and to adhere to the procedures established therein may result in the loss of all rights thereunder.

Genterra Dissent Rights

A Genterra Shareholder is entitled, in addition to any other right such holder may have, to dissent and, if the Amalgamation becomes effective, to be paid by Genterra the fair value of the Genterra Shares held by such holder in respect of which such holder dissents, determined as of the close of business on the last Business Day before the day on which the resolution from which such holder dissents was adopted. A Genterra Shareholder may dissent only with respect to all of the Genterra Shares held by such holder or on behalf of any one beneficial owner and registered in the Dissenting Shareholder’s name. Only registered holders of Genterra Shares may dissent. Persons who are beneficial owners of Genterra Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should be aware that they may only do so through the registered owner of such Genterra Shares. A registered holder, such as a broker, who holds Genterra Shares as nominee for beneficial holders, some of whom wish to dissent, must exercise dissent rights on behalf of such beneficial owners with respect to the Genterra Shares held for such beneficial owners. In such case, the demand for dissent should set forth the number of Genterra Shares covered by it.

A Dissenting Shareholder must send to Genterra a written objection to the Special Resolution, which written objection must be received at the head office of Genterra before the Genterra Meeting, or by the chairman of the Genterra Meeting at or before the Genterra Meeting. A Genterra Shareholder wishing to exercise the right to dissent with respect to such holder’s Genterra Shares shall not vote the holder’s Genterra Shares at the Genterra Meeting, either by the submission of a proxy or by personally voting in favour of the Special Resolution. An application may be made to the Court by Genterra or by a Dissenting Shareholder to fix the fair value of the Dissenting Shareholder’s Genterra Shares. If such an application to the Court is made by Genterra or a Dissenting Shareholder, Genterra must, unless the Court otherwise orders, send to each Dissenting Shareholder a written offer to pay the Dissenting Shareholder an amount considered by the board of directors to be the fair value of the Genterra Shares. The offer, unless the Court otherwise orders, will be sent to each Dissenting Shareholder at least ten days before the date on which the application is returnable, if Genterra is the applicant, or within ten days after Genterra is served with notice of the application, if a shareholder is the applicant. The offer will be made on the same terms to each Dissenting Shareholder and will be accompanied by a statement showing how the fair value was determined. A Dissenting Shareholder may make an agreement with Genterra for the purchase of such holder’s Genterra Shares in the amount of the offer made by Genterra (or otherwise) at any time before the Court pronounces an order fixing the fair value of the Genterra Shares.

A Dissenting Shareholder is not required to give security for costs in respect of an application and, except in special circumstances, will not be required to pay the costs of the application and appraisal. On the application, the Court will make an order fixing the fair value of the Genterra Shares of all Dissenting Shareholders who are parties to the application, giving judgment in that amount against Genterra and in favour of each of those Dissenting Shareholders, and fixing the time within which Genterra must pay that amount payable to the Dissenting Shareholders. The Court may in its discretion allow a reasonable rate of interest on the amount payable to each Dissenting Shareholder calculated from the date on which the Genterra Shareholder ceases to have any rights as a Genterra Shareholder, until the date of payment.

Upon the Amalgamation becoming effective, or upon the making of an agreement between Genterra and the Dissenting Shareholder as to the payment to be made by Genterra to the Dissenting Shareholder, or upon the pronouncement of a Court order, whichever first occurs, the Genterra Shareholder will cease to have any rights as a Genterra Shareholder other than the right to be paid the fair value of such holder’s Genterra Shares, in the amount agreed to between Genterra and the Genterra Shareholder or in the amount of the judgment, as the case may be. Until one of these events occurs, the Genterra Shareholder may withdraw its dissent, or Genterra may rescind the Special Resolution, and in either event the dissent and appraisal proceedings in respect of that Genterra Shareholder will be discontinued.

Genterra shall not make a payment to a Dissenting Shareholder under section 185 of the OBCA: (a) if there are reasonable grounds for believing (i) that Genterra is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) that the realizable value of the assets of Genterra would thereby be less than the aggregate of its liabilities; or (b) if on the Effective Date the Dissenting Shareholder is not the owner of the subject Genterra Shares. In such event, Genterra shall notify each Dissenting Shareholder that is unable lawfully to pay Dissenting Shareholders for their Genterra Shares, in which case the Dissenting Shareholder may, by written notice to Genterra within 30 days after receipt of such notice, withdraw such holder’s written objection, in which case Genterra shall be deemed to consent to the withdrawal and such Genterra Shareholder shall be reinstated with full rights as a Genterra Shareholder, failing which such Dissenting Shareholder retains a status as a claimant against Genterra to be paid as soon as Genterra is lawfully entitled to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of Genterra but prior to its shareholders.

CMI Dissent Rights

A CMI Shareholder is entitled, in addition to any other right such holder may have, to dissent and, if the Amalgamation becomes effective, to be paid by CMI the fair value of the CMI Shares held by such holder in respect of which such holder dissents, determined as of the close of business on the last Business Day before the day on which the resolution from which such holder dissents was adopted. A CMI Shareholder may dissent only with respect to all of the CMI Shares held by such holder or on behalf of any one beneficial owner and registered in the Dissenting Shareholder’s name. Only registered holders of CMI Shares may dissent. Persons who are beneficial owners of CMI Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should be aware that they may only do so through the registered owner of such CMI Shares. A registered holder, such as a broker, who holds CMI Shares as nominee for beneficial holders, some of whom wish to dissent, must exercise dissent rights on behalf of such beneficial owners with respect to the CMI Shares held for such beneficial owners. In such case, the demand for dissent should set forth the number of CMI Shares covered by it.

A Dissenting Shareholder must send to CMI a written objection to the Special Resolution, which written objection must be received at the head office of CMI before the CMI Meeting, or by the chairman of the CMI Meeting at or before the CMI Meeting. A CMI Shareholder wishing to exercise the right to dissent with respect to such holder’s CMI Shares shall not vote the holder’s shares at the CMI Meeting, either by the submission of a proxy or by personally voting in favour of the Special Resolution. An application may be made to the court by CMI or by a Dissenting Shareholder to fix the fair value of the Dissenting Shareholder’s CMI Shares. If such an application to the Court is made by CMI or a Dissenting Shareholder, CMI must, unless the Court otherwise orders, send to each Dissenting Shareholder a written offer to pay the Dissenting Shareholder an amount considered by the board of directors to be the fair value of the CMI Shares. The offer, unless the Court otherwise orders, will be sent to each Dissenting Shareholder at least ten days before the date on which the application is returnable, if CMI is the applicant, or within ten days after CMI is served with notice of the application, if a shareholder is the applicant. The offer will be made on the same terms to each Dissenting Shareholder and will be accompanied by a statement showing how the fair value was determined. A Dissenting Shareholder may make an agreement with CMI for the purchase of such holder’s CMI Shares in the amount of the offer made by CMI (or otherwise) at any time before the Court pronounces an order fixing the fair value of the CMI Shares.

A Dissenting Shareholder is not required to give security for costs in respect of an application and, except in special circumstances, will not be required to pay the costs of the application and appraisal. On the application, the Court will make an order fixing the fair value of the CMI Shares of all Dissenting Shareholders who are parties to the application, giving judgment in that amount against CMI and in favour of each of those Dissenting Shareholders, and fixing the time within which CMI must pay that amount payable to the Dissenting Shareholders. The Court may in its discretion allow a reasonable rate of interest on the amount payable to each Dissenting Shareholder calculated from the date on which the shareholder ceases to have any rights as a shareholder, until the date of payment.

Upon the Amalgamation becoming effective, or upon the making of an agreement between CMI and the Dissenting Shareholder as to the payment to be made by CMI to the Dissenting Shareholder, or upon the pronouncement of a court order, whichever first occurs, the CMI Shareholder will cease to have any rights as a CMI Shareholder other than the right to be paid the fair value of such holder’s shares, in the amount agreed to between CMI and the CMI Shareholder or in the amount of the judgment, as the case may be. Until one of these events occurs, the CMI Shareholder may withdraw its dissent, or CMI may rescind the Special Resolution, and in either event the dissent and appraisal proceedings in respect of that CMI Shareholder will be discontinued.

CMI shall not make a payment to a Dissenting Shareholder under section 185 of the OBCA: (a) if there are reasonable grounds for believing (i) that CMI is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) that the realizable value of the assets of CMI would thereby be less than the aggregate of its liabilities; or (b) if on the Effective Date the Dissenting Shareholder is not the owner of the subject shares. In such event, CMI shall notify each Dissenting Shareholder that is unable lawfully to pay Dissenting Shareholders for their shares, in which case the Dissenting Shareholder may, by written notice to CMI within 30 days after receipt of such notice, withdraw such holder’s written objection, in which case CMI shall be deemed to consent to the withdrawal and such CMI Shareholder shall be reinstated with full rights as a CMI Shareholder, failing which such Dissenting Shareholder retains a status as a claimant against CMI to be paid as soon as CMI is lawfully entitled to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of CMI but prior to its shareholders.

Resale of Amalco Shares

The Amalco Shares to be issued in exchange for Genterra Shares or CMI Shares pursuant to the Amalgamation will be issued in reliance on exemptions from prospectus and registration requirements of applicable Canadian securities laws. Amalco Shares will generally be “freely tradable” (other than as a result of any “control person” restrictions which may arise by virtue of ownership thereof and subject to customary restrictions of general application) under applicable Canadian securities laws.

All Amalco Shareholders are urged to consult their legal advisor to ensure that the resale of their Amalco Shares complies with applicable securities legislation. Holders of Amalco Shares residing elsewhere than in Canada are urged to consult their legal advisor to determine the extent of all applicable resale provisions.

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Exchange of Share Certificates

Upon completion of the Amalgamation, Genterra Shareholders and, CMI Shareholders (other than Dissenting Shareholders) will be deemed to be Amalco Shareholders as of the Effective Date and former registered Genterra Shareholders and CMI Shareholders will be entered into the register of holders of Amalco Shares without further act or formality. Enclosed with this Circular are letters of transmittal for Genterra Shareholders and CMI Shareholders. Those letters of transmittal are to be used to exchange share certificates of CMI or Genterra, as applicable, for certificates representing Amalco Shares. The letters of transmittal contain complete instructions on how shareholders are to exchange their Genterra or CMI share certificates. Registered shareholders (other than Dissenting Shareholders) should read and follow those instructions. The Genterra letter of transmittal and the CMI letter of transmittal, when properly completed, executed and returned together with a certificate or certificates representing Genterra Shares or CMI Shares, as applicable, and all other required documents, will enable each registered Genterra Shareholder or CMI Shareholder (other than Dissenting Shareholders) to obtain the certificates representing the number of Amalco Shares to which it is entitled under the Amalgamation.

The enclosed letters of transmittal, together with certificates representing Genterra Shares and CMI Shares, should be returned only after the Genterra Amalgamation Resolution and the CMI Amalgamation Resolution have been approved at the Genterra Meeting and the CMI Meeting, respectively, and a joint public announcement has been made by Genterra and CMI that specifies the Effective Date of the Amalgamation.

Amalco will not issue fractional shares to Shareholders as a result of the Amalgamation. In the event that a Shareholder would otherwise be entitled to a fractional share, the number of shares issued to such Shareholder shall be rounded up to the next greater whole number of shares if the fractional entitlement is equal to or greater than 0.5 and shall, without any additional compensation, be rounded down to the next lesser whole number of shares if the fractional entitltement is less than 0.5. In calculating such fractional interests, all shares registered in the name of or beneficially held by such Shareholder or their nominee shall be aggregated.

To the extent that a holder of Genterra Shares or CMI Shares which were exchanged pursuant to the Amalgamation shall not have complied with the provisions of the Amalgamation with respect to exchange of securities on or before the date which is six years after the Effective Date, then the Amalco Shares issued to such holder of Genterra Shares or CMI Shares pursuant to the Amalgamation shall be cancelled automatically without any repayment of capital in respect thereof and the certificates representing such Amalco Shares held by Computershare Trust Company of Canada shall be delivered to Amalco and cancelled and the interest of such holder of Genterra Shares or CMI Shares, as the case may be, in such Amalco Shares shall be terminated.

Effective Date of Amalgamation

Canadian Federal Income Tax Considerations

This summary is of a general nature only and is not intended to be, nor shall it be construed to be, legal or tax advice to any particular shareholder. Accordingly, holders of Genterra Shares and CMI Shares are urged to consult their own tax advisors for advice regarding the income tax consequences of the Amalgamation and the exercise of dissent rights having regard to their particular circumstances.

The following summary describes, as of the date of this Circular, the material Canadian federal income tax considerations under the ITA of the Amalgamation applicable to Genterra Shareholders and CMI Shareholders who at all relevant times and for purposes of the ITA deal at arm’s length and are not affiliated with Genterra or CMI, and who hold their Genterra Shares or CMI Shares, and will hold their Amalco Shares, as capital property.

Genterra Shares, CMI Shares and Amalco Shares will generally be considered to be capital property to the holder provided that the holder does not hold such securities in the course of carrying on a business and has not acquired such securities in a transaction or transactions considered to be an adventure in the nature of trade. This summary does not take into account the “mark-to-market rules” in the ITA that apply to “financial institutions”. Holders that are “financial institutions” for the purposes of these rules should consult their own tax advisors.

This summary is based on the current provisions of the ITA, the current regulations thereunder (the “Regulations”) and counsel’s understanding of the current published administrative and assessing practices of the Canada Revenue Agency. This summary also takes into account all specific proposals to amend the ITA and the Regulations publicly announced by the Minister of Finance (Canada) prior to the date of this Circular (collectively, the “Proposed Amendments”). No assurance can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes to the law, whether by judicial, governmental or legislative action or changes in the administrative practices and policies of the Canada Revenue Agency, nor does it take into account provincial, territorial or foreign tax legislation or considerations, which may differ from the Canadian federal income tax considerations discussed herein.

Holders Resident in Canada

The following portion of this summary is applicable to holders of Genterra Shares or CMI Shares and those persons who become holders of Amalco Shares as a consequence of the Amalgamation, who, for the purposes of the ITA and any applicable income tax convention, at all relevant times, are resident in Canada or are deemed to be resident in Canada. Certain Canadian resident holders whose Genterra Shares or CMI Shares might not otherwise qualify as capital property may make an irrevocable election in accordance with subsection 39(4) of the ITA to deem the shares and every “Canadian security” (as defined in the ITA) owned by such holders to be capital property in the taxation year of the election and in all subsequent taxation years. A Canadian security is defined to include shares of a corporation resident in Canada but does not include warrants or options. Any holder of Genterra Shares or CMI Shares contemplating making such election should first consult their tax advisor as its completion will affect the income tax treatment of their disposition of other Canadian securities.

Holders of Genterra Shares on Amalgamation

Holders of Genterra Shares (other than holders of Genterra Shares who dissent from the Amalgamation) will realize neither a capital gain nor a capital loss on the Amalgamation as a result of the Genterra Shares being disposed of in exchange for Amalco Shares.

The aggregate adjusted cost base of the Amalco Shares received by a Genterra Shareholder on the Amalgamation will be equal to the aggregate adjusted cost base to the Genterra Shareholder of the Genterra Shares disposed of in exchange for such Amalco Shares by virtue of the Amalgamation. The holder’s cost of such Amalco Shares must be averaged with the adjusted cost base of any other Amalco Shares held by the holder to determine the holder’s adjusted cost base of such Amalco Shares.

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Holders of CMI Shares on Amalgamation

Holders of CMI Shares (other than holders of CMI Shares who dissent from the Amalgamation) will realize neither a capital gain nor a capital loss on the Amalgamation as a result of the CMI Shares being disposed of in exchange for Amalco Shares.

The aggregate adjusted cost base of the Amalco Shares received by a CMI Shareholder on the Amalgamation will be equal to the aggregate adjusted cost base to the holder of the CMI Shares disposed of in exchange for such Amalco Shares by virtue of the Amalgamation. The holder’s cost of such Amalco Shares must be averaged with the adjusted cost base of any other Amalco Shares held by the holder to determine the holder’s adjusted cost base of such Amalco Shares.

Shareholders Not Resident in Canada

The following portion of the summary is generally applicable to holders of Genterra Shares or CMI Shares who, for purposes of the ITA and any applicable income tax convention, have not been and will not be resident or deemed to be resident in Canada at any time while they have held the Genterra Shares or CMI Shares and who do not use or hold and are not deemed to use or hold the Genterra Shares or CMI Shares in carrying on a business in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to a non-resident that is an insurer carrying on business in Canada and elsewhere.

Taxation of Capital Gains and Losses

A Non-Resident Holder of Genterra Shares or CMI Shares who participates in the Amalgamation will generally be subject to the same tax consequences as a Canadian resident holder on the Amalgamation, as discussed above. Accordingly, a Non-Resident Holder who disposes of Genterra Shares or CMI Shares in exchange for Amalco Shares on the Amalgamation will generally realize neither a capital gain nor a capital loss, as discussed above under the heading, “PART II - THE AMALGAMATION - Canadian Federal Income Tax Considerations - Holders of Genterra Shares on Amalgamation”.

Dissenting Shareholders

Any shareholder who is considering dissenting in respect of the Amalgamation is urged to consult its own tax advisors with respect to the income tax consequences to them of such action.

Risk Factors

Upon completion of the Amalgamation, Amalco will carry on the business of Genterra and CMI. Accordingly, Amalco’s business will consist of the business currently carried on by Genterra and CMI. There are a number of inherent risks associated with the business currently carried on by Genterra and CMI. The following are certain risk factors that will be related to the business to be carried on by Amalco, which you should carefully consider. The following information is a summary only and highlights the material risk factors that could significantly affect Amalco’s operations and profitability and are qualified in their entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this Circular.

Amalco will be subject to a number of broad risks and uncertainties including general economic conditions. In addition to these broad business risks, Amalco will have specific risks that it will face, the most significant of which are detailed below.

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The Anticipated Benefits Of The Amalgamation Are Contingent On The Successful Integration Of The Operations Of Genterra And CMI.

The success of the amalgamation will depend, in part, on the ability of Amalco to realize the anticipated synergies and growth opportunities from integrating Genterra’s and CMI's businesses. Amalco’s success in realizing these benefits, beyond the savings in public company and administration costs to be realized from eliminating one public company, and the timing of this realization depends upon the successful integration of the operations of Genterra and CMI. We cannot assure you that the amalgamation will result in the realization of the full benefits we anticipate.

Failing To Consummate The Amalgamation Will Result In Costs To Both Genterra And CMI With No Associated Benefits And The Expiration Of Some Of CMI’s Non-Capital Loss Carry Forwards.

In the event that Genterra and CMI are unable to consummate the Amalgamation, CMI may lose some of its non-capital loss carry forwards as these losses may expire before the generation by CMI, on its own, of sufficient taxable income necessary for the use thereof. In addition, both Genterra and CMI have expended large amounts of managerial time and effort and incurred substantial regulatory, professional and other costs in working towards the Amalgamation. In the event that they were unable to consummate the Amalgamation, these costs will have no benefit to either of Genterra or CMI.

The Amalgamation Exchange Ratios Will Result In The CMI Shareholders Receiving A Premium And Genterra Common Shareholders Ownership Interest Being Diluted By 2.7%.

Based upon their respective Valuations, the relative fully diluted Fair Market Values of the CMI and Genterra Common Shares indicates an exchange ratio of 1 Amalco Common Share for each CMI Common Share and 1 Amalco Common Share for each 3.37 Genterra Common Shares. The proposed exchange ratio has been set at 1 Amalco Common Share for each CMI Common Share and 1 Amalco Common Share for each 3.6 Genterra Common Shares. This results in a dilution of 2.7% for the Genterra Common Shareholders and a 4.1% premium to the CMI Shareholders.

Uncertain Return on Short-Term Investments Could Have a Material Adverse Effect On Our Business, Financial Condition And Results Of Operations.

Amalco’s return on its short-term investments will be contingent upon the performance of its various professional investment managers and the public financial markets.Difficult market and economic conditions may adversely affect our business and profitability. Our revenues and profitability are likely to decline during periods of poor performance of our various professional investment managers and the public financial markets. The financial markets are by their nature, risky and volatile and are directly affected by many factors that are beyond our control. Our operations may suffer to the extent that ongoing market volatility of the recent past was to persist which could adversely affect our financial condition and cash flow and our ability to satisfy debt service obligations.

Cash Deposits Held At Banks May Exceed The Amounts Of Insurance Provided On Such Deposits And Any Loss Arising There From Could Have A Material Adverse Affect On Our Business, Financial Condition And Results Of Operations.

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. If we were to suffer a loss as a result of a failure of one of these Banks and the insurance provided thereon was insufficient to cover the amount of the deposit our operations may suffer. This could adversely affect our financial condition and cash flow.

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Adverse Currency Fluctuations on Cash Deposits Held In Foreign Denominated Currencies Could Have A Material Adverse Affect On Our Business, Financial Condition And Results Of Operations.

Currency risk is the risk that a negative variation in exchange rates between the Canadian Dollar and foreign currencies will affect the Company’s operating and financial results. If the Company holds funds denominated in a foreign currency and the value of this currency experiences a negative fluctuation due to a change in exchange rates this could have a material adverse affect on our business, financial condition and results of operations.

Declines In Invested Amounts As A Result Of Changes In Prevailing Interest Rates Could Have A Material Adverse Affect On Our Business, Financial Condition And Results Of Operations.

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market rates. Some of the cash, cash equivalents and securities that the Company may invest in are subject to interest rate risk. This means that an adverse change in prevailing interest rates may cause the principal amount of the investment to fluctuate and the amount of the investment to decline. Such a decline could have a material adverse affect on our business, financial condition and results of operations

The Need To Maintain Liquidity And Financial Condition Could Be Adversely Affected By Market And Economic Conditions.

A liquidity risk arises from Amalco’s management of working capital and principal repayments on its debt obligations to avoid difficulty in meeting its financial obligations as they become due. Liquidity is essential to our business and may be impaired by circumstances that we may be unable to control, such as general market disruption or an operational problem which in turn could affect our financial condition and ability to satisfy debt service obligations.

Real Property Investment Tend to be Relatively Illiquid and Could Affect Our Need to Maintain Liquidity and Financial Condition Which May Have A Material Adverse Effect On Our Business, Financial Condition and Results of Operations

All real property investments are subject to elements of risk. Such risks include general economic conditions, local real estate market conditions, demand for real property generally and in the local area, competition for other available premises and various other risk factors.

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 tend to limit Amalco’s ability to vary its portfolio promptly in response to changing economic or investment conditions. If a property was to incur a vacancy either by the continued default of a tenant under its lease or the expiration of a lease, and if the vacancy was to continue for a long period of time and Amalco was required to liquidate one or all of its real property investments, the resale of the property or properties could be diminished and the proceeds to Amalco might be significantly less than the aggregate value of its properties on a going concern basis. This could have a material adverse effect on our business, financial condition and results of operations.

We Have Large Single Purpose Tenants And Are Dependent On Them For A Large Portion Of Our Rental Revenue, So Our Success Is Dependent On Their Financial Stability And Continuation Of Their Leases.

The need to renew and release upon lease expiration is no different for Amalco than it is for any other real estate portfolio. Properties that are single tenant occupied, in particular the properties located at Dobbie Drive, Cambridge, Ontario, and Glendale Avenue North, Hamilton, Ontario, with their large single purpose tenant, have tenant specific leasehold improvements.

These two properties, which are both leased to The Cambridge Towel Corporation (“Cambridge”), will together account for 12% and 21% of Amalco’s assets and rental revenue, respectively, as at December 31, 2008, and therefore constitute a significant credit concentration. The term for both leases expires on January 31, 2011. In the event that Amalco was to lose this tenant, or the tenant was unable to pay its rent as it becomes due, and Amalco is not successful in replacing it with a similar tenant, this would have a significant impact on Amalco’s revenue, financial condition and ability to satisfy its debt service obligations. In addition, a significant amount of demolition could be required to remove tenant specific leasehold improvements. Accordingly this credit concentration could be considered a risk factor

We Are Dependant On Our Tenants For A Large Portion Of Our Revenue So Our Cash Flow And Accordingly Our Success Is Dependent On The Financial Stability Of Our Tenants.

The effect of negative economic and other conditions on tenants, the impact on their ability to make lease payments and the resulting impact on property cash flows could be considered a risk. For the most part, Amalco’s tenants will be suppliers to the retail market and therefore are vulnerable to adverse economic conditions that impact retail sales. To the extent that any one of Amalco's tenants is negatively impacted by such a change in economic conditions and is no longer able to meet its rental obligations, this could impact Amalco as expenditures, including property taxes, capital repair and replacement costs, maintenance costs, mortgage payments, insurance costs and related charges must be made throughout the period of ownership regardless of whether the property is producing any income. In addition, if Amalco is unable to meet mortgage payments on its properties, loss could be sustained as a result of the mortgagee’s exercise of its rights of foreclosure and sale. If a lease is terminated, we cannot assure you that we will be able to lease the property for the rent previously received or sell the property without incurring a loss.

Loss Of Tenants Could Affect Leasing Flexibility, Reduce Our Revenue, Net Income And Financial Condition.

The relocation by an existing tenant could adversely affect Amalco’s ability to generate income. The property located at Wendell Avenue, Toronto, Ontario is a multitenant facility with 55.6% of the building occupied by one tenant. The balance of the building is occupied by smaller tenants. In the event that one or more of these tenants was to vacate their unit Amalco may find it difficult to provide appropriate space to prospective tenants. This could have an adverse effect on our financial performance through reduced revenues and cash flows which in turn may affect our ability to satisfy our debt service obligations.

Amalco May Not Be Able To Renegotiate Financing Terms As They Come Due Which Could Affect Our Liquidity And Financial Condition.

We cannot assure you that Amalco will be able to successfully renegotiate mortgage financing on favourable terms on the various properties as the existing mortgages fall due. This could impact our liquidity, financial condition and our ability to meet working capital requirements.

General Uninsured Losses My Result In Amalco Losing Its Investment In And Cash Flows From Properties And Could Reduce Our Net Income.

Amalco will carry comprehensive general liability for fire, flood, extended coverage and rental loss insurance with policy specifications, limits and deductibles customarily carried for similar properties. There are however certain types of risks (generally of a catastrophic nature such as wars or environmental contamination) that are either uninsurable or not insurable on an economically viable basis. Should an uninsured or underinsured loss occur, the value our assets will be reduced by such uninsured loss. In addition, Amalco could lose its investment in and anticipated revenues, profits and cash flows from one or more of its properties, but Amalco would continue to be obliged to repay any recourse mortgage indebtedness on such property which in turn will reduce our net income. Accordingly an uninsured or underinsured loss could impact our financial condition.

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Environmental Legislation And Contamination May Affect The Operating Results And The Ability To Borrow Against Or Sell Real Estate.

Environmental legislation and policies has become an increasingly important feature of real property ownership and management in recent years. Under various laws, property owners could become liable for the costs of effecting remedial work necessitated by the release, deposit or presence of certain materials, including hazardous or toxic substances and, accordingly, environmental contamination could be considered a risk factor. Amalco’s tenants will include companies in the textile manufacturing business which represents a potential environmental risk. In addition, the migration of third party offsite contamination to one of Amalco’s properties could be considered a risk. The failure by Amalco to affect any necessary remedial work may adversely affect Amalco’s ability to sell real estate or to borrow using the real estate as collateral and could result in claims against Amalco. The cost of defending against claims of liability, complying with environmental regulatory requirements, or remediating any contaminated property could materially adversely affect the business, assets or results of operations of Amalco. Amalco will introduce an environmental maintenance program to oversee Amalco’s compliance with Ministry of the Environment guidelines.

You May Have Difficulty Selling Your Shares Of AmalcoBecause Of The Limited Trading Volume.

Historically, the securities of Genterra and CMI have experienced a very limited trading volume. As a result there may be less coverage by security analysts, the trading price may be lower, and it may be more difficult for our stockholders to dispose of our securities. The risks and uncertainties discussed above highlight the material risks that could significantly affect Amalco’s operations and profitability. They do not represent an exhaustive list of all potential issues that could affect the financial results of Amalco.

Dividends

Amalco does not anticipate paying any dividends on its outstanding shares. Payment of dividends in the future will be dependent on, among other things, the cash flow, results of operations and financial condition of Amalco, the need for funds to finance ongoing operations and other business considerations as Amalco’s board of directors considers relevant.

Conflicts of Interest

The directors or officers of Amalco may also be directors or officers of other real estate companies or otherwise involved in real estate investment and development and situations may arise where they are in a conflict of interest with Amalco. Conflicts of interest, if any, which arise will be subject to and governed by procedures prescribed by the OBCA which require a director or officer of a corporation who is a party to, or is a director or an officer of, or has some material interest in any Person who is a party to, a material contract or proposed material contract with Amalco disclose his or her interest and, in the case of directors, to refrain from voting on any matter in respect of such contract unless otherwise permitted under the OBCA.

Future Sales of Amalco Shares

Upon completion of the Amalgamation there may be certain Amalco Shareholders owning a significant number of Amalco Common Shares. If any Amalco Shareholders sell a substantial number of Amalco Common Shares in the public market, the market price of the Amalco Common Shares may fall. In addition, the perception by the public that such sales may occur could also cause such effect.

Amalco may issue additional Amalco Common Shares in the future, which may dilute a shareholder’s holdings in Amalco. Amalco’s articles permit the issuance of an unlimited number of Amalco Common Shares and Amalco Shareholders will have no pre-emptive rights in connection with such further issuances. Amalco’s directors have the discretion to determine the price and the terms of issue of further issuances of Amalco Common Shares. Also, additional Amalco Common Shares will be issued by Amalco on the exercise of stock options under Amalco’s stock option plan and may be issued pursuant to other share compensation arrangements.

Unpredictability and Volatility of Amalco Share Price

The market price of the Amalco Common Shares could fluctuate significantly as a result of many factors, including the following: economic and stock market conditions generally, and specifically as they may impact participants in the real estate industry; Amalco’s earnings and results of operations and other developments affecting Amalco’s businesses; substantial sales of Amalco Common Shares into the market by Amalco Shareholders; changes in financial estimates and recommendations by securities analysts following the Amalco Common Shares; earnings and other announcements by, and changes in market evaluations of, participants in the real estate industry; changes in business or regulatory conditions affecting participants in the real estate industry; trading volume of the Amalco Common Shares; additions or departures of key personnel; and competitive pricing pressures in the real estate industry.

In addition, the financial markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance of such companies. Accordingly, the market price of the Amalco Common Shares may decline even if Amalco’s operating results or prospects have not changed.

Control of Amalco

Amalco anticipates that Amalco’s executive officers and directors and entities affiliated with them will, collectively, beneficially own, directly or indirectly, or exercise control or direction over, approximately 54.30% of the outstanding Amalco Common Shares following the completion of the Amalgamation. Amalco’s executive officers, directors and affiliated entities, if acting together, would be able to control or influence significantly all matters requiring approval by Amalco Shareholders, including the election of directors, fundamental changes, and the approval of mergers or other significant corporate transactions. Those shareholders may have interests that differ from yours, and they may vote in a way with which you disagree and that may be adverse to your interests. In particular, Fred A. Litwin, our Chairman and a director, together with Mark Litwin, and Risa Shearer will beneficially own, directly or indirectly, or exercise control or direction over, approximately 54.30% of the outstanding Amalco Common Shares following the completion of the Amalgamation. This concentration of ownership could have the effect of discouraging, delaying or preventing a change in control of Amalco or unsolicited acquisition proposals that a shareholder might consider favourable and may also have the effect of influencing the completion of a change in control that may not necessarily be in the best interests of all Amalco Shareholders.

PART III

THE STOCK OPTION PLAN

The Genterra Shareholders and the CMI Shareholders will each be asked to approve the Stock Option Plan attached as Schedule 1A to this Circular (the “Amalco Option Plan”).

The purpose of the Amalco Option Plan is to attract and retain directors, officers, employees and consultants of the Amalco and its subsidiaries, and to provide a strong incentive for employees and consultants to put forth maximum effort for the continued success and growth of the Amalco and its subsidiaries.

The Amalco Option Plan will be administered by the Compensation Committee. Each of the Board of Directors and the Compensation Committee will have full and complete authority to interpret the Amalco Option Plan, to prescribe such rules and regulations as it deems necessary for the proper administration of the Amalco Option Plan and to make such determinations and to take such actions in connection therewith as it deems necessary or advisable. The aggregate maximum number of Common Shares that may be reserved for issuance under the Amalco Option Plan is 2,000,000 representing approximately 19.3% of the issued and outstanding Common Shares (on a non-diluted basis) of Amalco upon the Amalgamation.

The Amalco Option Plan provides that any grant of Options pursuant to thes Plan is subject to the following conditions: (i) the number of Common Shares reserved for issuance, within any twelve month period, to any one Participant shall not exceed 5% of the Outstanding Common Shares; (ii) the number of Common Shares reserved for issuance, within any twelve month period, to any one Consultant of the Company may not exceed 2% of the Outstanding Common Shares; (iii) the aggregate number of Common Shares reserved for issuance, within any twelve month period, to Employees or Consultants conducting Investor Relations Activities may not exceed 2% of the Outstanding Common Shares; and (iv) in the case of Options granted to Employees, Consultants, or Management Company Employees, the Company represents that the Participant is a bona fide Employee, Consultant or Management Company Employee, as the case may be.

The maximum number of Common Shares reserved for issuance to Insiders of the Amalco and their Associates when taken together with any other share compensation arrangements cannot exceed 10% of the issued and outstanding Common Shares, and the maximum number of Common Shares which may be issued to Insiders of the Amalco and their Associates under the Amalco Option Plan within any one year period, when taken together with any other share compensation arrangements, cannot exceed 10% of the issued and outstanding Common Shares for all such Insiders and Associates in the aggregate and, in the case of any one Insider and his or her Associates, cannot exceed 5% of the issued and outstanding Common Shares.

Options granted under the Amalco Option Plan must have an exercise price of not less than theDiscounted Market Price of the Common Shares (as defined in the rules of the Exchange), or such other price as may be determined under the applicable rules and regulations of all regulatory authorities to which the Corporation is subject, including the Exchange.

Options granted under the Amalco Option Plan are exercisable for a period not to exceed five years. The term and vesting of stock options is at the discretion of the Compensation Committee. Options typically vest equally over a five year period as to one-fifth after the first anniversary of the date of grant and as to additional one-fifths after the second, third, fourth and fifth anniversaries of the date of grant, with the Board of Directors or Compensation Committee having the authority to accelerate the vesting of all or any part of the options. Options are not assignable and terminate: (i) 90 days following the termination of an optionee's employment for any reason other than death; and (ii) within a period of six months following the death of an optionee, subject to any extension or acceleration of the right to exercise at the sole discretion of the Board of Directors or the Compensation Committee.

In the event that: (i) there is any change in the Common Shares of the Amalco through subdivisions or consolidations of the share capital of the Amalco, or otherwise; (ii) the Amalco declares a dividend on Common Shares payable in Common Shares or securities convertible into or exchangeable for Common Shares; or (iii) the Amalco issues Common Shares, or securities convertible into or exchangeable for Common Shares, in respect of, in lieu of, or in exchange for, existing Common Shares, the number of Common Shares available for option, the Common Shares subject to any option, and the option price thereof, will be adjusted appropriately by the Board of Directors, subject to the prior consent of the TSX Venture Exchange or such other stock exchange or quotation system upon which the Common Shares are listed and posted or quoted for trading (hereinafter referred to in this Part as the “Exchange”). If there is a consolidation, merger or statutory amalgamation or arrangement of the Amalco with or into another Amalco, a separation of the business of the Amalco into two or more entities or a transfer of all or substantially all of the assets of the Amalco to another entity, upon the exercise of an option under the Amalco Option Plan, the holder thereof shall be entitled to receive the securities, property or cash which the holder would have received upon such consolidation, merger, amalgamation, arrangement, separation or transfer if the holder had exercised the option immediately prior to such event, unless the directors of the Amalco otherwise determine the basis upon which such option shall be exercisable, subject to Exchange approval.

Under the terms of the Amalco Option Plan, the Board of Directors reserves the right to amend, modify or terminate the Amalco Option Plan at any time if and when it is advisable in the absolute discretion of the Board of Directors without shareholder approval. Certain types of amendments to the Amalco Option Plan or to an option granted thereunder, as more particularly set forth below, shall be effective only upon approval of the shareholders of the Amalco. Any amendment to any provision of the Amalco Option Plan shall be subject to any necessary approvals by any stock exchange or regulatory body having jurisdiction over the securities of the Amalco.

The types of amendments to the Amalco Option Plan or an option granted under the Amalco Option Plan that would require shareholder approval are: (a) amendments to the number of Common Shares (or other securities) issuable under the Amalco Option Plan; (b) any amendment which reduces the exercise price of an option; (c) any amendment extending the term of an option beyond its original expiry date except as otherwise permitted by the Amalco Option Plan; and (d) amendments required to be approved by shareholders under applicable law or pursuant to the requirements of the Exchange.

Where shareholder approval is sought for amendments under subsections (b) and (c) above, the votes attached to Common Shares held directly or indirectly by insiders benefiting from the amendment will be excluded. Other than as specified above, the Board may approve all other amendments to the Amalco Option Plan or options. Without limiting the generality of the foregoing, the following types of amendments would not require shareholder approval: (a) amendments of a “housekeeping” or ministerial nature including, any amendment for the purpose of curing any ambiguity, error or omission in the Amalco Option Plan or to correct or supplement any provision of the Amalco Option Plan that is inconsistent with any other provision of the Amalco Option Plan; (b) amendments necessary to comply with the provisions of applicable law (including, without limitation, the rules, regulations and policies of the TSXV); (c) an increase in the exercise price of an option; (d) an expansion of the scope of persons eligible to participate in the Amalco Option Plan; (e) amendments respecting administration of the Amalco Option Plan; (f) any amendment to the vesting provisions of the Amalco Option Plan or any option; (g) any amendment to the early termination provisions of the Amalco Option Plan or any option, whether or not such Option is held by an insider, provided such amendment does not entail an extension beyond the original expiry date; and (h) amendments necessary to suspend or terminate the Amalco Option Plan.

PART IV

THE GENTERRA MEETING

Approval of the Amalgamation

The Genterra Shareholders will be asked to pass a Special Resolution, the text of which is set forth below, in respect of approval of the Amalgamation (the “Genterra Amalgamation Resolution”). In order to be effective, a Special Resolution requires the approval by not less than two-thirds of the votes cast by each class of Genterra Shareholders, voting separately as a class, who vote in respect of the resolution. The Genterra Amalgamation Resolution must also be approved by Majority of the Minority Approval of the Genterra Shareholders in accordance with MI 61-101. To the knowledge of Genterra’s management, a total of 9,949,247 Genterra Common Shares, 326,000 Genterra Class A Shares and 77,592 Genterra Class B Shares is anticipated to be excluded from voting on the approval of the Genterra Amalgamation Resolution in respect of Majority of the Minority Approval. See “PART II - THE AMALGAMATION Shareholder Approval - Majority of the Minority Approval”. In the absence of contrary directions, the Genterra Management Designees intend to vote proxies in the accompanying form in favour of the Genterra Amalgamation Resolution. The text of the Genterra Amalgamation Resolution will be presented as follows, with or without modification:

“BE IT RESOLVED that:

the amalgamation (the “Amalgamation”) of Genterra Inc. (“Genterra”) and Consolidated Mercantile Incorporated (“CMI”) as provided for in and subject to the terms and conditions set forth in the amalgamation agreement (the “Amalgamation Agreement”) dated as of April 27, 2009, as amended, between Genterra and CMI, is hereby approved and authorized, with such restrictions or conditions as may be imposed by the TSX Venture Exchange (the “Exchange”) and with discretion to modify the terms of the transaction provided that such terms are not material at any time prior to the completion thereof, subject to the approval of the Exchange, all as more particularly described in the joint management information circular of Genterra dated January 14, 2010 (the “Circular”);

2.	the Amalgamation Agreement, substantially in the form attached to the Circular as Schedule 1, be and is hereby approved and ratified;

notwithstanding that this resolution has been passed (and the Amalgamation Agreement and the Amalgamation adopted) by the Genterra Shareholders, the directors of Genterra are hereby authorized and empowered without further notice to or approval of the Genterra Shareholders (i) to amend the Amalgamation Agreement to the extent permitted by the Amalgamation Agreement, and (ii) subject to the terms and conditions of the Amalgamation Agreement, not to proceed with the Amalgamation; and

any director or officer of Genterra be, and such director or officer of Genterra hereby is, authorized, instructed and empowered, acting for, in the name of and on behalf of Genterra, to do or to cause to be done all such other acts and things in the opinion of such director or officer of Genterra as may be necessary or desirable in order to fulfill the intent of this resolution and the matters authorized hereby.”

Approval of the Amalco Option Plan

The Genterra Shareholders will be asked to pass an Ordinary Resolution, the text of which is set forth below, in respect of approval of the Amalco Option Plan (the “Genterra Option Resolution”). See “PART III - THE STOCK OPTION PLAN”. In order to be effective, an Ordinary Resolution requires the approval by not less than a majority of the votes cast by the Genterra Shareholders who vote in respect of the resolution. In the absence of contrary directions, the Genterra Management Designees intend to vote proxies in the accompanying form in favour of the Genterra Option Resolution. The text of the Genterra Option Resolution will be presented as follows, with or without modification:

“BE IT RESOLVED” that:

1.	the stock option plan, a copy of which is attached as Schedule 1A to the joint management information circular of Genterra dated January 14, 2010, is hereby authorized and approved; and

any director or officer of Amalco is hereby authorized and directed to execute and deliver such agreements, documents and instruments and take all such other actions as such director or officer may determine to be necessary or advisable to implement this resolution and the matters authorized hereby, and the approval by such director or officer of the text and form of such documents or instruments and the taking of such actions shall be conclusive proof of the approval thereof by the Genterra Shareholders.”

Other Business

Genterra’s management is not aware of any other matters to come before the Genterra Meeting other than those set out in the Notice of Genterra Meeting. If other matters come before the Genterra Meeting, it is the intention of the Genterra Management Designees to vote the same in accordance with their best judgment in such matters.

PART V

THE CMI MEETING

Approval of the Amalgamation

The CMI Shareholders will be asked to pass a Special Resolution, the text of which is set forth below, in respect of approval of the Amalgamation (the “CMI Amalgamation Resolution”). In order to be effective, a Special Resolution requires the approval by not less than two-thirds of the votes cast by shareholders who vote in respect of the resolution. The CMI Amalgamation Resolution must also be approved by Majority of the Minority Approval of the CMI Shareholders in accordance with MI 61-101. To the knowledge of CMI’s management, a total of 2,946,860 CMI Shares is anticipated to be excluded from voting on the approval of the CMI Amalgamation Resolution in respect of Majority of the Minority Approval. See “PART II - THE AMALGAMATION Shareholder Approval - Majority of the Minority Approval”. In the absence of contrary directions, the CMI Management Designees intend to vote proxies in the accompanying form in favour of the CMI Amalgamation Resolution. The text of the CMI Amalgamation Resolution will be presented as follows, with or without modification:

“BE IT RESOLVED that:

the amalgamation (the “Amalgamation”) of Consolidated Mercantile Incorporated (“CMI”) and Genterra Inc. (“Genterra”) as provided for in and subject to the terms and conditions set forth in the amalgamation agreement (the “Amalgamation Agreement”) dated as of April 27, 2009, as amended, between CMI and Genterra, is hereby approved and authorized, with such restrictions or conditions as may be imposed by the TSX Venture Exchange (the “Exchange”) and with discretion to modify the terms of the transaction provided that such terms are not material at any time prior to the completion thereof, subject to the approval of the Exchange, all as more particularly described in the joint management information circular of Genterra and CMI dated January 14, 2010 (the “Circular”);

2.	the Amalgamation Agreement, substantially in the form attached to the Circular as Schedule 1, be and is hereby approved and ratified;

notwithstanding that this resolution has been passed (and the Amalgamation Agreement and the Amalgamation adopted) by the CMI Shareholders, the directors of CMI are hereby authorized and empowered without further notice to or approval of the CMI Shareholders (i) to amend the Amalgamation Agreement to the extent permitted by the Amalgamation Agreement, and (ii) subject to the terms and conditions of the Amalgamation Agreement, not to proceed with the Amalgamation; and

- -

any director or officer of CMI be, and such director or officer of CMI hereby is, authorized, instructed and empowered, acting for, in the name of and on behalf of CMI, to do or to cause to be done all such other acts and things in the opinion of such director or officer of CMI as may be necessary or desirable in order to fulfill the intent of this resolution and the matters authorized hereby.”

Approval of the Amalco Option Plan

The CMI Shareholders will be asked to pass an Ordinary Resolution, the text of which is set forth below, in respect of approval of the Amalco Option Plan (the “CMI Option Resolution”). See “PART III - THE STOCK OPTION PLAN”. In order to be effective, an Ordinary Resolution requires the approval by not less than a majority of the votes cast by the CMI Shareholders who vote in respect of the resolution. In the absence of contrary directions, the CMI Management Designees intend to vote proxies in the accompanying form in favour of the CMI Option Resolution. The text of the CMI Option Resolution will be presented as follows, with or without modification:

“BE IT RESOLVED that:

1.	the stock option plan, a copy of which is attached as Schedule 1A to the joint management information circular of CMI dated January 14, 2010, is hereby authorized and approved; and

Other Business

CMI’s management is not aware of any other matters to come before the CMI Meeting other than those set out in the Notice of CMI Meeting. If other matters come before the CMI Meeting, it is the intention of the CMI Management Designees to vote the same in accordance with their best judgment in such matters.

PART VI

INFORMATION CONCERNING GENTERRA

Name and Incorporation

Genterra was amalgamated on December 31, 2003 pursuant to the OBCA under the name “Genterra Inc. ” The head office and registered office of Genterra is located at 106 Avenue Road, Toronto, Ontario, M5R 2H3.

Intercorporate Relationships

Genterra has four wholly-owned subsidiaries: Rallets Realty Inc., which owns the property at 1095 Stellar Drive in Newmarket, Ontario; Ninety Ontario Street Inc., which owns the property at 90 Ontario Street in Toronto, Ontario; 127627 Ontario Limited; and 767705 Ontario Limited. Each of these subsidiaries was incorporated pursuant to the laws of the Province of Ontario, Canada. Genterra also has one wholly-owned subsidiary which is completely inactive, First Ontario Properties Inc., which was incorporated pursuant to the laws of the Province of Ontario, Canada.

General Development of the Business

History

Genterra is a real estate holding and management company which was created by the amalgamation of Mirtronics Inc. (“Mirtronics”) and Genterra Investment Corporation (“Genterra Investment”) by Articles of Amalgamation filed December 31, 2003. Mirtronics was incorporated under the Business Corporations Act (Ontario) by Articles of Incorporation dated March 20, 1985. By Articles of Amendment dated April 30, 1985, the name was changed to Mirtone International, Inc. By Articles of Amendment dated February 2, 1988, the name was changed to International Mirtone Inc., and the company was recapitalized whereby each two issued shares, whether Common Shares or Class A Shares, was exchanged for one new Common Share and one Non-Voting, Non-Participating, Cumulative, Redeemable Preference Shares, Series 1 ("New Preference Shares").

By Articles of Amendment dated February 21, 1990, the name was changed to Mirtronics Inc.

By Articles of Amendment dated May 15, 1997, Mirtronics recapitalized whereby each New Preference Share was exchanged for one Non-Voting, Non-Participating, Non- Cumulative, Redeemable Convertible (until December 31, 1997) Class B Preference Share. Mirtronics was a holding company whose principal holding at the time of the aforementioned amalgamation was a 20.5% (31.1% fully diluted) equity interest in Synergx Systems Inc. (“Synergx”), a public company whose shares trade on NASDAQ. Synergx produces and services control systems for fire, life safety, commercial security and other purposes in the Metropolitan areas of New York City and Dallas, Texas.

Until September 30, 2002, Mirtronics effectively controlled Synergx through ownership of 31.3% of its issued shares (41% on a fully diluted basis). On September 30 2002, Synergx completed a private placement of shares and warrants to third parties, and on October 17, 2002, Mirtronics sold 140,000 Synergx shares to third parties. In May 2003 Mirtronics sold a further 30,000 shares of Synergx to a third party. As a result, Mirtronics holdings in Synergx were reduced to 20.5% (31.1% fully diluted), and Mirtronics no longer effectively controlled Synergx.

In December 2003, Mirtronics exercised a previously granted warrant to purchase an additional 620,000 common shares of Synergx. Genterra Investment held 161,668 common shares of Synergx at the date of the amalgamation which became the property of Genterra. In September 2004, Genterra sold 25,000 common shares of Synergx to third parties. During the fourth quarter ended September 30, 2005 Genterra sold 684,750 common shares of Synergx. As a result, at September 30, 2005, Genterra's percentage holding in Synergx was reduced to 17.13%, fully diluted. Accordingly, Genterra no longer exercised significant influence over the operations of Synergx and effective June 30, 2005 ceased recording its share of earnings of Synergx and accounted for this investment on the cost basis.

In January 2007, Genterra sold its entire remaining position in Synergx to an unrelated third party.

Genterra Investment was formed under the laws of the Province of Ontario by Articles of Amalgamation dated April 30, 1999, amalgamating Genterra Capital Incorporated and Unavest Capital Corp. under the name Genterra Investment Corporation. Genterra Capital Incorporated was formed by Articles of Amalgamation dated February 28, 1997, amalgamating Genterra Capital Corporation, First Corporate Capital Inc. and Mutec Equities Ltd. Genterra Capital Corporation was formed by Articles of Amalgamation dated September 1, 1995, amalgamating Equican Capital Corporation, Wendellco Realty Inc. and Glendale Realty Holdings Inc. Equican Capital Corporation was incorporated in Ontario by Articles of Amalgamation dated December 4, 1987.

In June 2008, Genterra completed the reorganization of its share capital and its acquisition of all of the outstanding shares of Ninety Ontario Street Inc. (“Ontario Street”). Both the reorganization and the acquisition were approved by shareholders at Genterra’s annual and special meeting held on March 4, 2008. As a result of the reorganization, Genterra’s Class A Subordinate Voting shares, Class B Multiple voting shares and the six classes of non-voting preferred shares were reclassified into one class of voting common shares and two classes of non-voting convertible Preference shares – the Class A Series 1 Preference shares and the Class B Preference shares. The new common shares were listed and began trading on the TSXV under the symbol “GIC” on June 10, 2008.

Description of the Business

Reference to Genterra includes the operations of its subsidiaries except where the context otherwise requires.

a) Real Estate:

Genterra's real estate investments are primarily in Canada within the Southern Ontario region. Investments are primarily in industrial commercial real estate and financed through equity and commercial/institutional first mortgages. The properties are managed by Genterra in conjunction with third party property managers. Properties are acquired for both income and capital gain appreciation. Genterra primarily acquires property that provides cash flow coverage for financing purposes that may or may not provide a return on equity in the short term and with possible long term capital gain.

The properties located at 140 Wendell Avenue and 90 Ontario Street are managed by Aristocrat Property Management Inc., as a third party property manager.

There is no specific policy as to the amount or percentage of assets which are invested in any specific property.

The real estate properties consist of the following:

Property	Character	Ownership	Occupancy	Number of tenants occupying more than 10% of the building	Business carried on from the building	Average effective annual rental per square foot

140 Wendell Avenue Toronto, Ontario	Commercial	100% owned - Mortgage of $2,736,570 @ Sept 30, 2009	2006-95% 2007-85% 2008-89%	One	Warehousing and Insurance Agency	2006-$7.40 2007-$6.67 2008-$7.16
200 Glendale Avenue N., Hamilton, Ontario	Commercial	100% owned - Mortgage of $182,587 @ Sept 30, 2009	2006-100% 2007-100% 2008-100%	One	Warehousing	2006-$2.07 2007-$1.27 2008-$0.70
450 Dobbie Drive, Cambridge, Ontario	Commercial	100 % owned - Clear Title	2006-100% 2007-100% 2008-100%	One	Manufacturer of Towels	2006-$4.17 2007-$3.05 2008-$2.25
1095 Stellar Drive, Newmarket, Ontario	Commercial	100% owned Mortgage of $743,782 @ Sept 30, 2009	2006-100% 2007-100% 2008-100%	One	Health Club and Chiropractor	2006-$11.38 2007-$12.04 2008-$12.92
90 Ontario Street, Toronto, Ontario	Commercial	100% owned -Clear Title	2006-98% 2007-98% 2008-96%	None	Artistic Studios and Small Businesses	2006-$13.48 2007-$13.75 2008-$14.02

Leases expire before	Number of Tenants **	Square Footage	Annual Basic Rental	Percentage of Annual Rental
September 30, 2009	3	31,426	159,153	7.25%
September 30, 2010	57	56,605	729,536	33.21%
September 30, 2011	2	422,300	640,175	29.14%
September 30, 2012	-	-	-	-
September 30, 2013	-	-	-	-
September 30, 2014	-	-	-	-
September 30, 2015	-	-	-	-
September 30, 2016	1	113432	667,847	30.40%
September 30, 2017	-	-	-	-
September 30, 2018	-	-	-	-

**	2009 represents 1 tenant at 90 Ontario Street, 1 tenant at 1095 Stellar Drive and 1 tenant at 140 Wendell Avenue

2010 represents 55 Tenants at 90 Ontario Street, 1 tenant at 1095 Stellar Drive and 1 tenant at 140 Wendell Avenue.

2011 represent 1 tenant at 200 Glendale Avenue and 1 tenant at 450 Debbie Drive

2016 represents 1 tenant at 140 Wendell Avenue

b) Investment in Real Estate Mortgages:

Genterra may invest in first or second mortgages and there is no requirement for such mortgages to be insured. As well there is no restriction on the proportion or amount of assets invested in any type of mortgage or any single mortgage. Mortgaging activities, if any, are committed to on a property by property one off basis. There is no program for actively creating, servicing and warehousing of mortgages or any requirement of portfolio turnover. Investments in mortgages are geared toward industrial and commercial properties.

Genterra is a participant (together with other non-related parties) in a first mortgage construction loan with interest bearing at a floating rate of the greater of 9% or the Toronto-Dominion Bank Posted Bank Rate of Prime plus 3%. The loan has a one year term. Genterra’s original participation in the mortgage was $477,250, $263,000 of which was outstanding as at September 30, 2009.

c) Securities of or Interests in Persons Primarily Engaged in Real Estate Activities:

There is no restriction or requirement on the types of securities or interests in persons engaged in real estate activities in which Genterra may invest or in the amount or proportion of its assets which may be invested in each such type of security or interest.

Primary investment activities do not include the investment in mortgage sales or in persons engaged in real estate activities and therefore there are no specific criteria for this category of investment.

d) Investment in Other Securities:

Genterra may purchase bonds, common stock, or preferred stock. There is no restriction on industry groups or the percentage of its assets which it may invest.

The purchases in securities may include but are not limited to those listed on national securities exchanges. There are no specific criteria or limitations on the investment in other securities.

Genterra holds 97,500 Firm Capital Mortgage Trust Units, a Unit Trust listed on the TSX (TSX Symbol: FC.UN).

Selected Financial Information

The following selected financial information was derived directly and indirectly from Genterra’s financial statements, which are attached as Schedule 2.

	June 30	September 30
Selected Financial Information as at	2009	2008	2007
	($)	($)	($)
ASSETS
Cash and cash equivalents	7,726,343	6,824,707	7,936,046
Marketable securities	1,774,493	1,917,693	2,162,025
Accounts receivable	598,927	932,036	407,846
Prepaid expenses	377,727	191,529	154,204
Note and mortgage receivable	612,975	614,125	249,000
Rental real estate properties	16,301,939	16,563,924	11,119,393
Future income taxes	198,688	269,642	254,749
Total Assets	27,591,092	27,313,656	22,283,263
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued liabilities	507,210	475,224	279,998
Income taxes payable	120,742	20,985	22,950
Long-term financial liabilities	3,442,966	3,662,939	4,004,987
Future income taxes	2,165,101	2,224,315	1,183,794
Retractable preference shares	5,284,415	4,991,819	-
Total Liabilities	11,520,434	11,375,282	5,491,729
SHAREHOLDERS’ EQUITY
Share capital	12,134,546	12,134,546	13,133,945
Retained earnings	3,936,112	3,803,828	3,657,589
Total Shareholders’ Equity	16,070,658	15,938,374	16,791,534
Total Liabilities and Shareholders’ Equity	27,591,092	27,313,656	22,283,263

- -

Selected Financial Information	For the Nine Months Ended						For the Year Ended			For the Year Ended
	June 30, 2009 ($)			June 30, 2008 ($)			September 30, 2008 ($)			September 30, 2007 ($)
REVENUE
Rent		2,323,872			1,712,793			2,613,587			2,575,203
Investment income (loss)		28,912			260,304			169,571			492,202
		2,352,784			1,973,097			2,783,158			3,067,405
EXPENSES
Administrative and general		359,061			424,344			782,709			533,952
(Gain) loss on foreign exchange		(459,823	)		(91,698	)		(264,872	)		625,215
Rental real estate operating expenses		1,279,701			890,212			1,266,062			1,107,517
Amortization		455,775			389,155			544,633			571,975
Dividends on retractable preference shares		292,596			-			101,819			-
Interest on long-term debt		125,303			156,485			204,136			230,698
Gain on sale of investments		-			-			-			(1,158,950	)
Income taxes (recovery)		167,887			(10,704	)		(153,988	)		277,414
		2,220,500			1,757,794			2,480,499			2,187,821

Net earnings		132,284			215,303			302,659			879,584
Other comprehensive income		-			-			-			61,749

Comprehensive income		132,284			215,303			302,659			941,333

Earnings per share
Basic		0.007			0.011			0.02			0.04
Diluted		0.007			0.011			0.02			0.04
Cash dividends declared		-			-			-			-

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) provides a review of the financial condition and results of operations of Genterra for year ended September 30, 2008 and the nine months ended June 30, 2009. This MD&A should be read in conjunction with Genterra’s September 30, 2008 audited consolidated financial statements and Genterra’s June 30, 2009 unaudited interim consolidated financial statements included as Schedules elsewhere herein.

In this document, in Genterra’s audited consolidated financial statements and in Genterra’s unaudited consolidated financial statements, unless otherwise noted, all financial data is prepared in accordance with Canadian Generally Accepted Accounting Principles (“Canadian GAAP”). All amounts, unless specifically identified as otherwise, in the audited consolidated financial statements, the unaudited consolidated financial statements and this MD&A, are expressed in Canadian dollars.

Management’s Discussion and Analysis contains forward-looking statements, including statements concerning possible or assumed future results of operations of Genterra. Forward-looking statements typically involve words or phrases such as “believes”, “expects”, “anticipates”, “intends”, “foresee”, “estimates” or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions, as described from time to time in Genterra’s reports and filed with securities commissions in Canada, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. In addition, Genterra expressly disclaims any obligation to publicly update or alter its previously issued forward-looking statements.

In June 2008, the Company completed the reorganization of its share capital and its acquisition of all of the outstanding shares of Ninety Ontario Street Inc. (“Ontario Street”) from First Ontario Investments Inc, (“FirstOnt”). Both the reorganization and the acquisition were approved by shareholders at the Company’s annual and special meeting held on March 4, 2008. As a result of the reorganization, the Company’s Class A Subordinate Voting shares, Class B Multiple voting shares and the six classes of non-voting preferred shares were reclassified into one class of voting Common shares and two classes of non-voting convertible Preference shares – the Class A Preference shares and the Class B Preference shares. The new Common shares were listed and began trading on the TSXV under the symbol “GIC” on June 10, 2008.

Overview

Genterra is a real estate holding firm that owns and manages a portfolio of five buildings in Ontario, consisting of a total of 743,000 Square Feet ("SF"), 430,000 SF of which is industrial and the remaining 313,000 SF is commercial. The purpose is to deliver a reliable and growing cash flow with the potential for future capital appreciation over the longer term. The Company accomplishes this by following a strategy of focusing on owning, developing and operating commercial and industrial real estate. Genterra has grown its business by using prudent strategies, core competencies, conservative financial leverage and by adapting to changing trends in commercial and industrial real estate. Genterra’s investment strategy is to focus on stable, lower risk real estate properties in order to create stable cash flows and over time capital appreciation.

The tightening in the credit markets arising from the current economic conditions has created an environment where buyers, who were previously active acquirers, may no longer be able to participate and where sellers may view the disposition of real estate as a means of raising capital. This environment should create more opportunities to acquire real estate on an opportunistic basis. As part of this process, Genterra’s Board of Directors have after review, decided that an amalgamation with CMI will be in the best interests of Genterra as it amongst other things, will enable Genterra Shareholders to be part of a larger corporation with larger more varied assets, a larger equity and income base, greater opportunities and reduced operating costs, all of which should assist in facilitating the financing of future growth and expansion. Genterra’s Board believe that with the Amalgamation, Amalco’s strengthened balance sheet will allow it to analyze larger potential real estate investments and to capitalize on favourable market conditions and to expand its real estate income producing portfolio.

Liquidity and Capital Resources

Genterra's principal sources of liquidity are cash on hand, marketable securities and cash flow from rental, finance and investment operations.

September 30, 2008

Genterra's working capital amounted to $9,545,491 at September 30, 2008, compared to $10,102,541 at September 30, 2007. The ratio of current assets to current liabilities was 13.1:1 at September 30, 2008 and 16.1:1 at September 30, 2007. The decrease in working capital and the current ratio is primarily due to the cash utilized to redeem the shares of shareholders dissenting to Genterra’s recent reorganization, the costs associated with the reorganization and the acquisition of Ontario Street.

During the year ended September 30, 2008, Genterra’s cash position decreased by $1,111,339 to $6,824,707. The change was due to the net result of the following increases and utilizations:

Ø	Operating Activities increased cash by $391,151. This was as a result of $678,402 in cash generated from operations and $287,251 of cash utilized for the changes in non-cash components of working capital.

Financing Activities utilized $1,470,268 of cash. Genterra utilized $342,048 to make scheduled repayments of mortgage obligations, $295,240 for reorganization costs and $934,799 for the purchase of shares from shareholders dissenting to the reorganization. Genterra incurred dividends on its newly issued retractable preferred shares of $101,819.

Investing Activities decreased cash by $32,222. Genterra utilized $365,125 in cash for investment in a mortgage receivable and $13,375 in cash for additions to rental real estate properties. Genterra realized $274,343 from a decrease in marketable securities and acquired cash of $71,935 on the acquisition of Ontario Street.

Ø	Cash and cash equivalents were positively impacted by a $264,845 unrealized foreign exchange gain.

The following table provides a summary of certain information with respect to Genterra’s capital structure and financial position:

	September 30, 2008	September 30, 2007
Net debt : Shareholders’ equity	0.54 : 1	0.24 : 1
Net debt : Total capitalization	0.35 : 1	0.19 : 1

June 30, 2009

Genterra's working capital amounted to $9,972,920 at June 30, 2009, compared to $9,545,491 at September 30, 2008. The ratio of current assets to current liabilities was 11.7:1 at June 30, 2009 and 13.1:1 at September 30, 2008. The increase in working capital is primarily due to the cash generated from operations during the period.

During the nine month period ended June 30, 2009, Genterra’s cash position increased by $901,636 to $7,726,343. The change was due to the net result of the following increases and utilizations:

- - Operating Activities increased cash by $1,275,218. This was as a result of $996,564 in cash generated from operations, net of an unrealized gain of $8,332 on foreign exchange, and $278,654 of cash realized due to the changes in non-cash components of working capital.

- - Financing Activities decreased cash by $219,973. Genterra utilized $219,973 to make scheduled repayments of mortgage obligations.

- - Investing Activities decreased cash by $153,609. Genterra utilized $193,790 for expenditures on rental real estate properties, generated $1,150 in cash from investment in a mortgage receivable and realized $39,031 from a change in Genterra’s holdings in marketable securities.

- -

The following table provides a summary of certain information with respect to Genterra’s capital structure and financial position:

	June 30, 2009	September 30, 2008
Net debt : Shareholders’ equity	0.54 : 1	0.54 : 1
Net debt : Total capitalization	0.35 : 1	0.35 : 1

Genterra anticipates that it will require approximately $2,900,000 in order to meet its ongoing expected costs for the next twelve months. These costs include real estate operating expenses, fees for management and administrative services provided to Genterra, legal and audit fees, financing expenses, public company shareholder costs and income taxes. Genterra expects to generate the revenue required in order to service these expenditures from rental revenue from existing leased real estate, finance and investment income. Genterra also has scheduled long-term debt repayments of approximately $300,000 in the next twelve months. Cash flow from operations will be used to finance these regularly scheduled debt repayments.

Results Of Operations

Review of Year-End Results ended September 30, 2008 and 2007

Revenue. Rental revenue for the year ended September 30, 2008 was $2,613,587, an increase of $38,384 as compared to $2,575,203 for the comparable 2007 period. The increase in rental revenue was attributable to the acquisition of Ontario Street and the increase in rent resulting from the finalization of lease negotiations with a tenant at Genterra’s Wendell Avenue property. This increase was offset by the 2007 renegotiation of leases with Genterra’s large single purpose tenant on its properties located in Cambridge and Hamilton at rates lower than the pre-existing lease and the short term vacancies at the Wendell Avenue property. Investment income for the year ended September 30, 2008 was $169,571 compared to $492,202 for the comparable 2007 period. The decrease in investment income was due to the poor performance of the equity markets during the period.

Administrative Expenses. Administrative expenses include fees for management and administrative services, legal and audit fees, financing expenses and public company shareholder costs. Administrative expenses for the year ended September 30, 2008 were $782,709 compared to $533,952 in the comparable 2007 period. The increase for the year ended September 30, 2008 is due to the inclusion of a bonus paid to an officer of Genterra, additional expenses associated with the purchase of Ontario Street and increased costs associated with public company regulatory compliance requirements.

Gain on Foreign Exchange. Genterra holds certain amounts of its cash in United States dollars. Genterra experienced a foreign exchange gain of $264,872 during the year ended September 30, 2008. This compares to a foreign exchange loss of $625,215 for the comparable 2007 period. The gain for the year ended September 30, 2008 resulted from the strengthening of the United States Dollar.

Rental Real Estate Operating Expenses. Rental real estate operating expenses for the year ended September 30, 2008 were $1,266,062 compared to $1,107,517 for the comparable 2007 period. The increase in rental real estate operating expenses was primarily due to the acquisition of Ontario Street during the year.

Other Expenses. Interest expense for the year ended September 30, 2008 was $204,136 compared to $230,698 for the comparable 2007 period. Amortization for the year ended September 30, 2008 was $544,633 compared to $571,975 for the comparable 2007 period. On June 27, 2008 Genterra issued retractable preference shares for the purchase of Ontario Street. These shares are classified as debt and the cumulative dividends are recorded as an expense of operations. During the year ended September 30, 2008 Genterra recorded cumulative dividends of $101,819 on these preference shares.

Income Tax Provision. During the twelve month period ended September 30, 2008 Genterra recorded an income tax recovery of $153,988. This compares to an income tax expense of $277,414 for the comparable 2007 period. The year ended September 30, 2008 includes a future income tax recovery of approximately $194,000 to reflect the January 1, 2008 reduction of statutory income tax rates from 36.1% to the substantively enacted tax rate of 29%. The effective tax rates were (103.6)% and 24.0% for the years ended September 30, 2008 and 2007 respectively. The difference between Genterra’s statutory tax rate and its effective tax rate is due to permanent differences primarily associated with the tax treatment of dividends on retractable preference shares and capital gain transactions and the above noted tax recovery.

Net Earnings. Net earnings for the year ended September 30, 2008 was $302,659 compared to net earnings of $879,584 for the comparable 2007 period. The 2008 results were impacted by the poor performance of equity markets during the period, increased administrative expenses, the dividends on the cumulative retractable preference shares, a gain on foreign exchange and a future tax recovery due to tax rate adjustments. The 2007 net earnings included approximately $950,000 (net of taxes) from a gain on the sale of Genterra’s investment in Synergx Systems Inc (“Synergx”).

Inflation. Inflation has not had a material impact on the results of Genterra’s operations during the periods under review and it is not anticipated to materially impact Genterra’s operations during the current fiscal year.

Review of Third Quarter and Nine-Month Period Results ended June 30, 2009 and 2008

Revenue. Rental revenue for the third quarter ended June 30, 2009 was $784,667, an increase of $295,980 as compared to $488,687 for the comparable 2008 period. Rental revenue for the nine months ended June 30, 2009 was $2,323,872, an increase of $611,079, as compared to $1,712,793 for the comparable 2008 period. The increase in rental revenue compared to the 2008 period was attributable to the inclusion of rental revenue from the June 2008 acquisition of the Ontario Street property (“Ontario Street”). Investment income for the three months ended June 30, 2009 was $243,626 as compared to investment income of $88,070 for the comparable 2008 period. Investment income for the nine months ended June 30, 2009 was $28,912 as compared to investment income of $260,304 for the comparable 2008 period. Investment results for the three months ended June 30, 2009 were positively impacted by the improved performance of the equity markets during the period under review. The decrease in investment income for the nine months ended June 30, 2009 was due to the poor performance of the global equity markets during the period.

Administrative Expenses. Administrative expenses include fees for management and administrative services, legal and audit fees, financing expenses and public company shareholder costs. Administrative expenses for the three months ended June 30, 2009 were $89,477 as compared to $127,629 for the comparable 2008 period. Administrative expenses for the nine months ended June 30, 2009 were $359,061 as compared to $424,344 for the comparable 2008 period.

Gain (Loss) on Foreign Exchange. The Company holds certain amounts of its cash in United States dollars. The Company incurred foreign exchange losses of $8,425 and $25,252 for the three month periods ended June 30, 2009 and 2008 respectively. Gain on foreign exchange for the nine month period ended June 30, 2009 was $459,823 compared to $91,698 for the comparable 2008 period. The gain for the nine month period ended June 30, 2009 resulted from the strengthening of the United States Dollar. The Company disposed of the majority of its United States Dollars during the first quarter of fiscal 2009.

Rental Real Estate Operating Expenses. Rental real estate operating expenses for the three months ended June 30, 2009 were $392,121 as compared to $255,595 for the comparable 2008 period. Rental real estate operating expenses for the nine months ended June 30, 2009 were $1,279,701 as compared to $890,212 for the comparable 2008 period. The increase in rental real estate operating expenses is primarily due to the inclusion of expenses relating to the Ontario Street property.

Other Expenses. The Company incurred interest expense of $39,360 and $48,997 for the three month periods ended June 30, 2009 and 2008 respectively. Interest expense for the nine month periods ended June 30, 2009 and 2008 were $125,303 and $156,485 respectively. Amortization for the three months ended June 30, 2009 and 2008 were $156,784 and $125,311 respectively. Amortization for the nine month periods ended June 30, 2009 and 2008 was $455,775 and $389,155 respectively. During the three and nine month periods ended June 30, 2009 the Company recorded cumulative dividends of $97,532 and $292,596 respectively on its retractable preference shares. These shares are classified as debt and the cumulative dividends are recorded as an expense of operations.

Income Tax Provision. During the three and nine month periods ended June 30, 2009 the Company recorded income taxes of $89,912 and $167,887 respectively. This compares to income taxes of $13,164 and an income tax recovery of $10,704 respectively for the comparative 2008 periods. The effective tax rates were 36.8% and (208.9%) for the three month periods ended June 30, 2009 and 2008 respectively. The effective tax rates were 55.9% and (5.2%) for the nine month periods ended June 30, 2009 and 2008. The difference between the Company’s statutory tax rate and its effective tax rate is due to permanent differences primarily associated with the tax treatment of dividends on retractable preference shares and the tax treatment of capital transactions.

Net Earnings (Loss). The Company reported net earnings of $154,682 for the three months ended June 30, 2009 compared with net loss of $19,464 for the comparable 2008 period. Net earnings for the nine months ended June 30, 2009 was $132,284 as compared to net earnings of $215,303 for the comparable 2008 period. The 2009 results were impacted by the poor performance of global equity markets, the dividends on the cumulative retractable preference shares and the foreign exchange gain resulting from the strengthening of the U.S. Dollar.

Inflation. Inflation has not had a material impact on the results of the Company’s operations during the periods under review and it is not anticipated to materially impact the Company’s operations during the current fiscal year.

Related Party Transactions

Genterra entered into transactions and had outstanding balances with various companies related by common ownership and management.

The transactions with related parties are in the normal course of business and are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

Related party transactions for the year ended September 30, 2008 are summarized as follows:

In June 2008, Genterra completed the acquisition of Ontario Street from First Ontario Investments Inc. (“FirstOnt”). In consideration of the acquisition, Genterra issued 326,000 Class A Preference shares, Series 1 to FirstOnt. The Class A Preference shares are redeemable and retractable at $15 per share, carry a cumulative dividend of 8% per annum and represent the purchase price of $4,890,000. Genterra incurred a 2008 cumulative dividend of $101,819 on theses shares. Mark Litwin and Stan Abramowitz are officers and/or directors of Genterra and FirstOnt.

Genterra leases its property situated at 450 Dobbie Drive, Cambridge, Ontario to The Cambridge Towel Corporation ("Cambridge"). The lease term commenced March 1, 2008 and ends January 31, 2011, at an annual net, net rental of $500,175. The results of operations include rental revenue of $500,175 pertaining to this lease for the period from October 1, 2007 to September 30, 2008. Mark I. Litwin and Stan Abramowitz are officers and/or directors of Genterra and Cambridge.

Genterra leases its property situated at 200 Glendale Avenue North, Hamilton, Ontario to Cambridge. The lease term commenced March 1, 2008 and ends January 31, 2011, at an annual net, net rental of $140,000. The results of operations include rental revenue of $140,000 pertaining to this lease for the period from October 1, 2007 to September 30, 2008. Mark I. Litwin and Stan Abramowitz are officers and/or directors of Genterra and Cambridge.

Until March 31, 2008, Genterra leased one of its units located at 140 Wendell Avenue, Toronto, Ontario to Distinctive Designs Furniture Inc. (“Distinctive”) for $5,241 per month. The results of operations include rental revenue, inclusive of expense recoveries, of $125,076 pertaining to this rental arrangement. Alan Kornblum is a director of Genterra and an officer, director and the indirect majority shareholder of Distinctive.

Genterra leases one of its units located at 1095 Stellar Drive, Newmarket, Ontario to Fitcity Health Centre Inc. ("Fitcity"). The lease term commenced January 1, 2003 and ends December 31, 2008 at an annual net, net rental of $111,240 per year. The results of operations include rental revenue, inclusive of expense recoveries, of $262,704 pertaining to this lease for the period from October 1, 2007 to September 30, 2008. The lease is currently on a month-to-month basis. The parties are currently negotiating a long-term extension thereof. A wholly owned subsidiary of Genterra is a party to a loan agreement with Fitcity bearing interest at prime plus 1% per annum and repayable on demand. During the year ended September 30, 2008 Genterra received $19,584 of interest on this loan. As of the date hereof, Fitcity owes an aggregate amount of $298,514 of secured debt under this facility. In 2005 Genterra and Fitcity agreed that annual repayments on this debt will be based on fifty percent (50%) of Fitcity’s annual free cash flow beginning with its 2006/2008 fiscal year. Since the inception of this agreement, Fitcity has repaid Genterra $109,019 of this debt. Mark I. Litwin is a director and/or officer of Genterra and, until September 30, 2009, was the majority shareholder of Fitcity.

·	Management Contracts

During the year ended September 30, 2008, Forum Financial Corporation (“Forum”) provided administrative services to Genterra for fees of $200,000. These services include office facilities and clerical services, including bookkeeping, accounting and shareholder related services. Forum also assists in the decision making process relating to Genterra’s various investment interests. When requested, additional services are also provided on a fee-for-service basis. Stan Abramowitz is an officer and director of Forum and of Genterra. Fred A. Litwin owns or exercises control and direction over Forum and 17.0% of Genterra.

During the year ended September 30, 2008, FirstOnt provided property management services to Genterra for fees of $134,800. Stan Abramowitz and Mark I. Litwin are directors and/or officers of FirstOnt and Genterra. Fred A. Litwin owns or exercises control and direction over FirstOnt and 17.0% of Genterra.

During the year ended September 30, 2008 Lowa Realties Limited (“Lowa”) provided property management services to Genterra for fees of $2,000. Mark I. Litwin is a director and officer of Lowa and Genterra. Fred A. Litwin owns or exercises control and direction over Lowa and 17.0% of the Company.

During the year ended September 30, 2008 consulting services were provided to Genterra by Mark I. Litwin for fees of $36,000. Mark I. Litwin is president of Genterra.

During the year ended September 30, 2008 Genterra paid to Stan Abramowitz, the Chief Financial Officer of Genterra, a bonus of $150,000 for services rendered to Genterra over the past number of years.

Related party transactions for the nine month period ended June 30, 2009 are summarized as follows:

In June 2008, Genterra completed the acquisition of Ontario Street from First Ontario Investments Inc. (“FirstOnt”). In consideration of the acquisition, Genterra issued 326,000 Class A Preference shares, Series 1 to FirstOnt. The Class A Preference shares are redeemable and retractable at $15 per share, carry a cumulative dividend of 8% per annum and represent the purchase price of $4,890,000. During the period Genterra incurred a cumulative dividend of $292,596 on theses shares. Mark Litwin and Stan Abramowitz are officers and/or directors of Genterra and FirstOnt.

Genterra leases its property situated at 450 Dobbie Drive, Cambridge, Ontario to The Cambridge Towel Corporation ("Cambridge"). The lease term commenced March 1, 2007 and ends January 31, 2011, at an annual net, net rental of $500,175. The results of operations include rental revenue of $375,130 pertaining to this lease for the period from October 1, 2008 to June 30, 2009. Genterra leases its property situated at 200 Glendale Avenue North, Hamilton, Ontario to Cambridge. The lease term commenced March 1, 2007 and ends January 31, 2011, at an annual net, net rental of $140,000. The results of operations include rental revenue of $105,000 pertaining to this lease for the period from October 1, 2008 to June 30, 2009. Mark I. Litwin and Stan Abramowitz are officers and/or directors of Genterra and Cambridge.

Genterra leases one of its units located at 1095 Stellar Drive, Newmarket, Ontario to Fitcity Health Centre Inc. ("Fitcity"). The lease term commenced January 1, 2003 and ended December 31, 2008 at an annual net, net rental of $111,240 per year. The lease is currently on a month to month basis as the parties negotiate a long-term extension thereof. The results of operations include rental revenue, inclusive of expense recoveries, of $165,180 pertaining to this lease for the period from October 1, 2008 to June 30, 2009. A wholly owned subsidiary of Genterra is a party to a loan agreement with Fitcity bearing interest at prime plus 1% per annum and repayable on demand. During the nine month period ended June 30, 2009 Genterra received $8,822 of interest on this loan. As of the date hereof, Fitcity owes an aggregate amount of $352,359 of secured debt under this facility. In 2005 Genterra and Fitcity agreed that annual repayments on this debt will be based on fifty percent (50%) of Fitcity’s annual free cash flow beginning with its 2006/2007 fiscal year. Since the inception thereof, Fitcity has repaid Genterra $109,019 of this debt. Mark I. Litwin is a director and/or officer of Genterra and Fitcity and is the majority shareholder of Fitcity.

·	Management Contracts

During the nine month period ended June 30, 2009, Forum Financial Corporation (“Forum”) provided administrative services to Genterra for fees of $150,000. The services provided include office facilities and clerical services, including bookkeeping, accounting and shareholder related services. Forum also assists in the decision making process relating to Genterra’s various investment interests. When requested, additional services are also provided on a fee-for-service basis. Stan Abramowitz is an officer and director of Forum and of Genterra. Fred A. Litwin owns or exercises control and direction over Forum and 17% of Genterra.

During the nine month period ended June 30, 2009, FirstOnt provided property management services to Genterra for fees of $154,500 and First Ontario Services Inc. provided rental collection services to Genterra for fees of approximately $6,000. Stan Abramowitz and Mark I. Litwin are directors and/or officers of FirstOnt and Genterra and Mark I. Litwin is a director and officer of First Ontario Services Inc. Fred A. Litwin owns or exercises control and direction over FirstOnt, First Ontario Services Inc. and 17% of Genterra.

During the nine month period ended June 30, 2009 consulting services were provided to Genterra by Mark I. Litwin for fees of $27,000. Mark I. Litwin is President of Genterra.

Share Data

The following table sets forth the outstanding share data for Genterra as at August 27, 2009:

	Authorized	Issued

Common Shares	Unlimited	19,339,211

Class A preference shares, issuable in series: Series 1 - non-voting, non-participating, redeemable and retractable at $15.00 per share, 8% cumulative, convertible into either Common shares at the rate of 20 Common shares for each Class A Preference share or 300 Class B Preference shares for each Class A Preference share.	Unlimited	326,000
Class B preference shares non-voting, non-participating, redeemable at $0.05, $0.0024 non-cumulative, convertible until July 15, 2008 into Common shares at the rate of 1 Common share for each 15 Class B Preference shares.	Unlimited	26,274,918

Risks And Uncertainties

GENTERRA’S RESULTS ARE DEPENDENT ON ITS RENTAL REAL ESTATE PROPERTIES

The following items could be considered as risk factors related thereto:

Real Property Investment Tend to be Relatively Illiquid

Large Single Purpose Tenants and Credit Concentration

The need to renew and release upon lease expiration is no different for Genterra than it is for any other real estate portfolio. Properties that are single tenant occupied, in particular the properties located at Dobbie Drive, Cambridge, Ontario, and Glendale Avenue North, Hamilton, Ontario, with their large single purpose tenant, have tenant specific leasehold improvements.

These two properties, which are both leased to The Cambridge Towel Corporation (“Cambridge”), will together account for 20% and 21% of Genterra’s assets and rental revenue, respectively, as at June 30, 2009, and therefore constitute a significant credit concentration. The term for both leases expires on January 31, 2011. In the event that Genterra was to lose this tenant, or the tenant was unable to pay its rent as it becomes due, and Genterra is not successful in replacing it with a similar tenant, this could have a significant negative financial impact on Genterra. In addition, a significant amount of demolition could be required to remove tenant specific leasehold improvements. Accordingly this credit concentration could be considered a risk factor.

There Is a Need For Rental Income To Maintain Cash Flow

The effect of negative economic and other conditions on tenants, the impact on their ability to make lease payments and the resulting impact on property cash flows could be considered a risk. For the most part, Genterra’s tenants will be suppliers to the retail market and therefore are vulnerable to adverse economic conditions that impact retail sales. To the extent that any one of Genterra's tenants is negatively impacted by such a change in economic conditions and is no longer able to meet its rental obligations, this could impact Genterra as expenditures, including property taxes, capital repair and replacement costs, maintenance costs, mortgage payments, insurance costs and related charges must be made throughout the period of ownership regardless of whether the property is producing any income. If Genterra is unable to meet mortgage payments on its properties, loss could be sustained as a result of the mortgagee’s exercise of its rights of foreclosure and sale.

Loss Of Tenants Could Affect Leasing Flexibility

The relocation by an existing tenant could adversely affect Genterra’s ability to generate income. The property located at Wendell Avenue, Toronto, Ontario is a multi-tenant facility with 55.6% of the building occupied by one tenant. The balance of the building is occupied by smaller tenants. In the event that one or more of these tenants was to vacate their unit Genterra may find it difficult to provide appropriate space to prospective tenants.

The Need To Renegotiate Financing Terms As They Come Due

Genterra might not be able to successfully renegotiate mortgage financing on favourable terms on the various properties as the existing mortgages fall due.

General Uninsured Losses May Result In Genterra Losing

Its Investment In and Cash Flows From Properties

Genterra will carry comprehensive general liability for fire, flood, extended coverage and rental loss insurance with policy specifications, limits and deductibles customarily carried for similar properties. There are however certain types of risks (generally of a catastrophic nature such as wars or environmental contamination) that are either uninsurable or not insurable on an economically viable basis. Should an uninsured or underinsured loss occur, Genterra could lose its investment in and anticipated profits and cash flows from one or more of its properties, but Genterra would continue to be obliged to repay any recourse mortgage indebtedness on such property.

Environmental Legislation And Contamination May Affect

Genterra's Ability to Borrow Against or Sell Real Estate.

Environmental legislation and policies have become an increasingly important feature of real property ownership and management in recent years. Under various laws, property owners could become liable for the costs of effecting remedial work necessitated by the release, deposit or presence of certain materials, including hazardous or toxic substances and, accordingly, environmental contamination could be considered a risk factor. Genterra’s tenants will include companies in the textile manufacturing business which represents a potential environmental risk. In addition, the migration of third party offsite contamination to one of Genterra’s properties could be considered a risk. The failure by Genterra to affect any necessary remedial work may adversely affect Genterra’s ability to sell real estate or to borrow using the real estate as collateral and could result in claims against Genterra. Genterra will introduce an environmental maintenance program to oversee Genterra’s compliance with Ministry of the Environment guidelines.

The risks and uncertainties discussed above highlight the more important factors that could significantly affect Genterra’s real estate operations and profitability. They do not represent an exhaustive list of all potential issues that could affect the financial results of Genterra.

Liquidity Risk

Liquidity risk arises from Genterra’s management of working capital and principal repayments on its debt obligations. It is the risk that Genterra will encounter difficulty in meeting its financial obligations as they become due.

Short-term investments invested with professional hedge fund managers represent 26% of the short-term investment portfolio and can be withdrawn in any given month and therefore liquidity risk is minimal.

Credit Risk

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal credit risk.

Currency Risk

Currency risk is the risk that a variation in exchange rates between the Canadian dollar and foreign currencies will affect Genterra’s operating and financial results.

Genterra currently holds minimal funds denominated in United States dollars. The value of this currency fluctuates due to changes in the exchange rate, which is beyond the control of Genterra. In the event that the Canadian dollar was to appreciate in value against the United States dollar this would have a nominal negative financial impact on Genterra and therefore the currency risk is minimal.

Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market rates. Genterra has reduced the exposure to interest rate risk over the cash flows through the use of fixed rate instruments on certain of its financial liabilities. Genterra has not used derivative financial instruments to alter the exposure to interest rate risk.

The primary objective of our investment activities is to preserve capital while at the same time maximizing the income we receive from our investments without significantly increasing risk. Some of the securities that we invest in may have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the principal amount of our investment could decline. We currently maintain an investment portfolio consisting of short-term deposits, Canadian bond obligations and equity investments. Due to the relative short-term nature of these investments, we believe that we have no material exposure to interest rate risk arising from our investments.

Other Price Risk

Other price risk is the risk that the market value or future cash flows of financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). Genterra moderates this risk through a careful selection and diversification of securities and other financial instruments within the limits of Genterra’s objectives and strategy. Price fluctuations of the global equity markets could impact the performance of Genterra’s short-term investments.

Critical Accounting Policies And Estimates

Genterra’s discussion and analysis of its results of operations and financial condition are based upon its consolidated financial statements that have been prepared in accordance with generally accepted accounting principals in Canada. The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Estimates and assumptions are evaluated on an ongoing basis and are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those assumed, may differ from estimates.

Genterra believes that the following accounting policy is critical to its business operations and the understanding of results of operations and affects the more significant judgements and estimates used in the preparation of its consolidated financial statements:

Future Income Taxes – Genterra follows the asset and liability method of accounting for income taxes. Under this method, future tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying value and tax basis of the assets and liabilities. Consistent with this policy, Genterra recognizes future tax assets net of a valuation allowance. Based on current projections of future taxable income over the periods in which the future income tax assets are deductible, management believes it is more likely than not that Genterra will realize the benefits of the future tax assets. Changes in future profitability of Genterra may impact the realization of these future tax assets.

Recently Issued Accounting Pronouncements

In February 2008, the CICA issued amendments to Handbook Section 1000, “Financial Statement Concepts” to clarify the criteria for recognition of an asset and the timing of expense recognition. The new requirements are effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. Genterra applied the amendments to Handbook Section 1000 commencing October 1, 2008. The implementation of the amendments to Handbook Section 1000 does not have an impact on Genterra’s results of operations, financial position and disclosures as these amendments are clarifications on the application of Handbook Section 1000.

In February 2008, the CICA issued a new accounting standard, Handbook Section 3064, concerning goodwill and intangible assets. The new section replaced the existing guidance on goodwill and other intangible assets and research and development costs. The new section provides additional guidance on measuring the cost of goodwill and intangible assets. The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. The implementation of this new standard does not have any impact on Genterra’s results of operations, financial position and disclosures.

The Emerging Issues Committee (“EIC”) issued a new abstract on January 20, 2009, concerning the measurement of financial assets and financial liabilities (“EIC-173 – Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”) (the “Abstract”). The Abstract was issued to consider the diversity in practice as to whether an entity’s own credit risk and the credit risk of the counter-party are taken into account in determining the fair value of financial instruments. The Committee reached a consensus that these risks should be taken into account in the measurement of financial assets and financial liabilities. The Abstract is effective for all financial assets and financial liabilities measured at fair value in interim and annual financial statements issued for periods ending on or after the date of issuance of the Abstract with retrospective application without restatement of prior periods. Genterra applied the new Abstract at the beginning of its current fiscal year. The implementation does not have a significant impact on Genterra’s results of operations, financial position and disclosures.

In January 2009, the CICA issued new accounting standards, Handbook Section 1582 “Business Combinations”, Handbook Section 1602 “Non-Controlling Interests”, and Handbook Section 1601 “Consolidated Financial Statements”, which are based on the International Accounting Standards Board’s (“IASB”) International Financial Reporting Standard 3, “Business Combinations”. The new standards replace the existing guidance on business combinations and consolidated financial statements. The objective of the new standards is to harmonize Canadian accounting for business combinations with the international and U.S. accounting standards. The new standards are to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011, with earlier application permitted. Assets and liabilities that arose from business combinations whose acquisition dates preceded the application of the new standards shall not be adjusted upon application of these new standards. Section 1602 should be applied retrospectively except for certain items. Genterra is currently assessing the impact these new standards may have on its results of operations, financial position and disclosures.

On April 29, 2009, the CICA amended Section 3855, “Financial Instruments – Recognition and Measurement”, adding/amending paragraphs regarding the application of effective interest method to previously impaired financial assets and embedded prepayment options. The amendments are effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011 with early adoption permitted. These amendments are not expected to have a significant impact on Genterra’s accounting for its financial instruments.

In June 2009, the CICA amended Section 3862, “Financial Instruments – Disclosures”, to adopt the amendments recently issued by the IASB to International Financial Reporting Standard 7, “Financial Instruments” Disclosures” (“IFRS 7”), in March 2009. These amendments are applicable to publicly accountable enterprises and those private enterprises, co-operative business enterprises, rate-regulated enterprises and not-for-profit organizations that choose to apply Section 3862. The amendments were made to enhance disclosures about fair value measurements, including the relative reliability of the inputs used in those measurements, and about the liquidity risk of financial instruments. The amendments are effective for annual financial statements for fiscal years ending after September 30, 2009, with early adoption permitted. To provide relief for preparers, and consistent with IFRS 7, the CICA decided that an entity need not provide comparative information for the disclosures required by the amendments in the first year of application. Genterra will apply these amendments for its 2010 annual consolidated financial statements. The impact of the amendments to the fair value measurement and liquidity risk disclosure requirements of Genterra are not expected to be significant.

International Financial Reporting Standards (“IFRS”)

The Canadian Accounting Standards Board (“AcSB”) confirmed that the adoption of IFRS would be effective for the interim and annual periods beginning on or after January 1, 2011 for Canadian publicly accountable profit-oriented enterprises. IFRS will replace Canada’s current GAAP for these enterprises. Comparative IFRS information for the previous fiscal year will also have to be reported. These new standards will be effective for Genterra in its first fiscal quarter of 2011.

We are currently in the process of evaluating the potential impact of IFRS to our consolidated financial statements. This will be an ongoing process as new standards and recommendations are issued by the International Accounting Standards Board and the AcSB. Genterra continues its work on the initial planning and assessment stage of the changes to IFRS. This includes the impact IFRS will have on accounting policies, choices among policies permitted, internal control over financial reporting and disclosure and control procedures. Accounting staff members continue to attend various IFRS training courses as part of the ongoing process in becoming proficient in understanding the impact of the transition to IFRS.

Disclosure Controls And Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including Genterra’s Chief Executive Officer and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. Management of Genterra, with the participation of the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of Genterra’s disclosure controls and procedures as at September 30, 2008 as required by Canadian securities laws. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer, have concluded that, as of September 30, 2008, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in Genterra’s annual filings and interim filings (as such terms are defined under Multilateral Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings) and other reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified by those laws and that material information is accumulated and communicated to management of Genterra, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for accurate disclosure to be made on a timely basis.

Internal Control Over Financial Reporting

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. The Chief Executive Officer and Chief Financial Officer have also concluded that there has been no change in Genterra’s internal control over financial reporting during the year ended September 30, 2008 that has materially affected, or is reasonably likely to affect, Genterra’s internal control over financial reporting.

Outlook

Genterra’s asset base is comprised of rental real estate properties, equity investments and loans. In 2007 Genterra sold its remaining investment in Synergx Systems Inc. providing further impetus for management to seek to capitalize on favourable real estate market conditions and to expand its portfolio of income producing real estate. In 2008 Genterra completed the acquisition of Ontario Street located in Toronto’s downtown core. The property, which is fully tenanted, provides Genterra with substantial rental income and the potential for future redevelopment and capital gain appreciation. In 2008 Genterra also completed a reorganization of its share capital designed to simplify Genterra’s share structure. Management is considering various strategies designed to reduce costs and enhance profitability. If one or more appropriate long-term strategic investment opportunities are identified, it is possible that a portion of our cash or near cash resources may be deployed into such investments.

Description of Securities

Common Shares

Genterra is authorized to issue an unlimited number of common shares (previously defined as “Genterra Common Shares”). Holders of Genterra Common Shares are entitled to dividends, if, as and when declared by Genterra’s board of directors. Holders of Genterra Common Shares are also entitled to one vote per share at the meetings of Genterra Shareholders and, upon liquidation, to share equally in the assets of Genterra that are distributable to Genterra Shareholders. As at December 31, 2009, there are 19,339,211 Genterra Common Shares issued and outstanding as fully paid and non-assessable shares.

Genterra Class A Preference Shares

Genterra is authorized to issue an unlimited number of Class A Preference Shares (previously defined as “Genterra Class A Preference Shares”). The Genterra Class A Preference Shares may be issued from time to time in one or more series, each consisting of a number of Genterra Class A Preference Shares as determined by Genterra’s board of directors which also may fix the designations, rights, privileges, restrictions and conditions attaching to the shares of each series of Genterra Class A Preference Shares. The Genterra Class A Preference Shares are non-voting, redeemable and retractable, and carry the right to a preferential annual dividend equal to 8% of their stated value. The first and only series of Genterra Class A Preference Shares issued to date is the “Class A Preference Series 1 Shares”, which has a cumulative annual preferential dividend equal to 8% of stated value, a redemption value of $15 per share, and is be redeemable, retractable and convertible into Genterra Common Shares or Genterra Class B Preference Shares. As at December 31, 2009, there are 326,000 Genterra Class A Preference Series 1 Shares issued and outstanding as fully paid and non-assessable shares.

Genterra Class B Preference Shares

Genterra is authorized to issue an unlimited number of Class B Preference Shares (previously defined as “Genterra Class B Preference Shares”). The Genterra Class B Preference Shares are non-voting, redeemable at the option of the Corporation at $0.05 per share, and carry a non-cumulative annual dividend of $0.0024 per share. For a four-month period prior to July 15, 2008 (the “Conversion Period”), the Genterra Class B Preference Shares were convertible into Genterra Common Shares, on the basis of one (1) new Common Share for every fifteen (15) Class B Preference Shares. During the Conversion Period 6,274,962 Genterra Class B Preference Shares were converted into 418,332 Genterra Common Shares. As at December 31, 2009, there are 26,274,918 Genterra Class B Preference Shares issued and outstanding as fully paid and non-assessable shares.

Dividends

Genterra currently does not anticipate dividends on the Genterra Common Shares or the Genterra Class B Shares in the immediate future and intends to retain its earnings to finance the growth and development of its business. Any future determination by Genterra to pay cash dividends on the Genterra Common Shares or the Genterra Class B Shares will be at the discretion of the board of directors of Genterra and will depend upon Genterra’s financial condition, results of operations, capital requirements and such other factors as the board of directors of Genterra considers relevant. It is anticipated that the outstanding cumulative dividend on the Class A Shares, which is reflected as a liability on Genterra’s balance sheet, will be declared and paid prior to the Effective Date.

Stock Option Plan

Genterra has a Stock Option Plan (the "Plan") which provides for the granting of options to directors, officers and employees of Genterra and its affiliates to purchase Genterra's Class A shares. Pursuant to a reorganization of share capital which became effective on June 10, 2008, Genterra’s Class A Shares were reclassified as Genterra Common Shares. To the extent any options would be issued and outstanding under the Plan, the references in the Plan to “Shares” would be designated pursuant to the terms of the Plan to apply to Genterra Common Shares.

The Plan is designed to assist Genterra in attracting, retaining and motivating its key personnel by providing a means for participating in the future of Genterra. The Plan is administered by the board of directors of Genterra who have the discretion to choose from time to time from among full-time employees, officers and directors of Genterra and its affiliates those persons to whom options are granted and the number of Class A shares of Genterra covered by each such grant. The Plan provides that the maximum number of Class A shares in the capital of Genterra that may be reserved for issuance for all purposes under the Plan shall be equal to 2,000,000 Class A Shares. Any Class A shares subject to a share option which for any reason are cancelled or terminated without having been exercised shall again be available for grant under the Plan.

The Plan provides that the maximum number of Class A shares which may be reserved for issuance to any participant pursuant to share options may not exceed 5% of the Class A shares outstanding at the time of grant (on a non-diluted basis) less the aggregate number of Class A shares reserved for issuance to such person under any other option to purchase Class A shares from treasury granted as a compensation or incentive mechanism. The maximum number of Class A shares that may be issued to any one insider and its Associates within a one year period may not exceed 5% of the outstanding issue.

Under the Plan the maximum number of Class A shares that may be reserved for issuance to insiders of Genterra is limited to 10% of the Class A shares outstanding at the time of the grant (on a non-diluted basis) less the aggregate number of Class A shares reserved for issuance to insiders under any other share compensation arrangement. The maximum number of Class A shares that may be issued to insiders of Genterra within a one-year period may not exceed 10% of the outstanding issue. To date, no options have been issued.

Consolidated Capitalization

The following table sets forth the consolidated capitalization of Genterra as at the date of the most recent balance sheet contained in the Circular and as the date hereof:

Designation of Security	Amount authorized or to be authorized	Amount outstanding as of December 31, 2008	Amount outstanding as of September 30, 2009
Common Shares	Unlimited	19,339,211 shares $9,983,862	19,339,211 shares $9,983,862
Class A Preference Shares	Unlimited	326,000 shares $4,991,819	326,000 shares $5,383,019
Class B Preference Shares	Unlimited	26,274,918 shares $2,150,684	26,274,918 shares $2,150,684
Loan Capital Mortgages Payable		$3,590,121	$3,368,619

Notes:

(1) There are no outstanding options to acquire securities of Genterra.

Stock Exchange Price

Genterra Shares are listed and posted for trading on the TSXV under the stock symbol “GIC”.

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The following table sets forth: (i) the monthly high, monthly low, and month end closing price; and (ii) volume of trading of the Genterra Common Shares for the months indicated:

MONTH	MONTH HIGH	MONTH LOW	MONTH END CLOSE	MONTHLY VOLUME
December, 2009	0.60	0.60	0.60	11,977
November, 2009	0.60	0.60	0.60	4,185
October 2009	0.60	0.60	0.60	2,306
September 2009	0.65	0.60	0.65	5,539
August 2009	0.70	0.60	0.60	11,825
July 2009	0.65	0.60	0.60	11,583
June 2009	0.74	0.57	0.62	18,874
May 2009	0.65	0.55	0.60	186,357
April 2009	0.74	0.60	0.60	50,582
March 2009	0.75	0.235	0.55	179,806
February 2009	0.23	0.23	0.23	6,101
January 2009	0.25	0.23	0.23	90,067
December 2008	0.215	0.20	0.215	7,989
November 2008	0.22	0.20	0.20	78,591
October 2008	0.30	0.22	0.22	113,223
September 2008	0.35	0.30	0.30	23,779
August 2008	0.35	0.335	0.35	14,931
July 2008	0.365	0.335	0.35	354,338
June 2008	0.36	0.34	0.35	25,335
May 2008	0.36	0.36	0.36	1,805
April 2008	0.35	0.35	0.35	6,417
March 2008	0.36	0.35	0.35	9,465
February 2008	0.35	0.35	0.35	4,198
January 2008	0.50	0.35	0.36	46,215

Principal Security Holders

To the knowledge of Genterra's directors and officers, no person or company beneficially owns, directly or indirectly, or exercises control or direction over securities carrying more than 10% of the voting rights attached to any class of outstanding voting securities of Genterra entitled to be voted at the Genterra Meeting other than Fred A. Litwin who indirectly controls 3,289,929 Genterra Common Shares (17.01%) and 77,592 Genterra Class B Shares (0.30%)), and Sutton Management Limited (“Sutton”) which controls 6,659,312 Genterra Common Shares (34.43%). The shares controlled by Fred A. Litwin and by Sutton, none of which will be counted in determining approval or disapproval of the Amalgamation Resolution, are comprised of the following:

(a)	1,617,012 Genterra Common Shares (8.36%) and 50,191 Genterra Class B Shares (0.19%) beneficially owned by Forum, which corporation is directly controlled by Fred A. Litwin.

(b)	637,286 Genterra Common Shares (3.30%) and 25,724 Genterra Class B Shares (0.10%) beneficially owned by First Corporate Equity Ltd. ("FICO"), which corporation is directly controlled by Fred A. Litwin.

(c)	292,117 Genterra Common Shares (1.51%) beneficially owned by Consolidated Mercantile Incorporated ("CMI"); Fred A. Litwin, beneficially owns or exercises control and direction over approximately 54.74% of the issued and outstanding shares of CMI.

(d)	55,602 Genterra Common Shares (0.29%) beneficially owned by Ianjoy Investments Corp. (“Ianjoy”), which corporation is indirectly controlled by Fred A. Litwin.

(e)	412 Genterra Common Shares (0.002%) and 1,677 Genterra Class B Shares (0.006%) beneficially owned by FirstOnt which corporation is indirectly controlled by Fred A. Litwin.

(f)	687,500 Genterra Common Shares (3.55%) beneficially owned by Mar-Risa Holdings Inc. (“Mar-Risa”), which corporation is indirectly controlled by Fred A. Litwin.

(g)	6,659,312 Genterra Common Shares (34.43%) beneficially owned by Sutton, which corporation is beneficially owned by the children of Fred A. Litwin, being Mark I. Litwin, President and a Director of Genterra and his sister, Risa Shearer.

Directors and Executive Officers

The following table sets forth the Directors of Genterra as at December 31, 2009.

The statement as to the shares of Genterra beneficially owned or over which control or discretion is exercised by the directors hereinafter named is in each instance based upon information furnished by the person concerned. The names of the directors, their positions with Genterra, the year they become a director of Genterra and the number of shares beneficially owned, directly or indirectly, or over which control or direction is exercised by each of them is as follows:

Name and Municipality of Residence	Principal Occupation	Director Since	Number of Shares Beneficially Held (1)	Unexercised Options at Fiscal Year End
Mark I. Litwin (2), President Ontario, Canada	President, Sutton Management Limited	February 21, 1990 (5)	2 Common (2)	Nil
Stan Abramowitz, Secretary Ontario, Canada	Executive, Forum Financial Corporation	March 16, 1999 (5)	2 Common	Nil
Alan Kornblum (3) (4) Ontario, Canada	President, Distinctive Designs Furniture Inc.	June 4, 1991 (5)	2 Common	Nil
Sol D. Nayman (3)(4)(6) Ontario, Canada	President, S.D. Nayman Management Inc.	February 23, 2006	Nil	Nil
Mark E. Dawber (3)(4) Ontario, Canada	Chartered Accountant & Consultant	October 23, 2006	Nil	Nil

Notes:

(1)	The information as to shares beneficially owned not being within the knowledge of the Corporation has been furnished by the respective directors individually.

(2)	6,659,312 Genterra Shares are beneficially owned by Sutton, which corporation is beneficially owned by Mark I. Litwin, President and a Director of Genterra and his sister, Risa Shearer.

(3)	Member of Audit Committee.

(4)	Member of Corporate Governance Committee.

(5)	On December 31, 2003, Mirtronics Inc. and Genterra Investment Corporation completed an amalgamation to form Genterra Inc. This refers to the date that the person became a Director of Mirtronics Inc.

(6)	During the ten-year period prior to the date hereof, Sol D. Nayman was a director of Ntex Incorporated, which was subject to a cease trade order for failure to file financial statements. The order was never revoked as Ntex Incorporated made an assignment in bankruptcy.

The following table sets forth the Executives of Genterra as at December 31, 2009.

Name and Municipality of Residence	Position	Principal Occupation	Number of shares beneficially owned, directly or over which control or direction is exercised	Unexercised Options at Fiscal Year End
Mark I. Litwin Ontario, Canada (1)	President and CEO	President, Sutton Management Limited	2 Common(1)	Nil
Stan Abramowitz Ontario, Canada	Secretary and CFO	Executive, Forum Financial Corporation	2 Common	Nil

Notes:

(1)	6,659,312 Genterra Shares are beneficially owned by Sutton, which corporation is beneficially owned by Mark I. Litwin, President and a Director of Genterra and his sister, Risa Shearer.

Executive Compensation

The information contained below is provided as required under Form 51-102F6 contained in National Instrument 51-102 (the “Instrument”) for venture issuers, as such term is defined in the Instrument,

The following table provides a summary of compensation earned during each of Genterra's last three fiscal years by Genterra's Chief Executive Officer and Chief Financial Officer (the “Named Executive Officers”). There are no other executive officers of Genterra whose total salary and bonus exceeded $150,000.00 during any such year

	Annual Compensation				Long Term Compensation
Name & Principal Position	Year	Salary	Bonus	Other Annual Compensation	Number of Common Shares Under Option Plan
Mark I. Litwin President & CEO	2008 2007 2006	$5,000 $5,000 $5,000	Nil Nil Nil	$ 36,000 $ 36,000 $ 36,000	Nil Nil Nil
Stan Abramowitz Chief Financial Officer	2008 2007 2006	Nil Nil Nil	$150,000 Nil Nil	Nil Nil Nil	Nil Nil Nil

Long Term Incentive Plans

Genterra does not have any long-term incentive plans.

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Options Granted During Fiscal Year Ended September 30, 2008

The board of directors of Genterra is authorized to grant options to directors, officers and key employees of Genterra and its subsidiaries pursuant to Genterra's Stock Option Plan. During the fiscal year ended September 30, 2008, the board of directors did not grant any stock options under the Plan.

Options Exercised During Fiscal Year Ended September 30, 2008

No stock options have ever been exercised under the Plan.

Employment Contracts

There are no employment contracts between Genterra and the Named Executive Officers and compensatory plan or arrangement with respect to the Named Executive Officers that results or will result from the resignation, retirement or any other termination of employment of such officers’ employment with Genterra, from a change in control of Genterra or a change in the Named Executive Officers’ responsibilities following a change-in-control together with the amount involved.

Compensation of Directors

Each director of Genterra who is not a salaried officer or employee of Genterra or its operating subsidiaries is entitled to an annual retainer fee of $5,000. The Chairman of the Audit Committee is paid an additional annual retainer fee of $5,000.

Indebtedness of Directors and Officers

Except as disclosed in INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS, no present or proposed director or officer and none of their respective Associates or Affiliates is or has been indebted to Genterra or its subsidiaries at any time since September 30, 2008.

Management Contracts

During the 2008 fiscal period, administrative services were provided by Forum Financial Corporation (“Forum”), 106 Avenue Road, Toronto, Ontario to Genterra for fees of $200,000. The services provided include office facilities and clerical services, including bookkeeping and accounting. Forum also assists in the decision making process relating to Genterra’s various investment interests. When requested, additional services are also provided on a fee-for-service basis. Forum is wholly-owned by Fred A. Litwin, the indirect significant shareholder of Genterra. Stan Abramowitz is an officer and director of Forum and Genterra.

During the 2008 fiscal period, FirstOnt provided property management services for fees of $134,800. FirstOnt is controlled by Fred A. Litwin. Mark I. Litwin is an officer and a director of FirstOnt and Genterra. Stan Abramowitz, a director and officer of Genterra, is an officer of FirstOnt.

During the 2008 fiscal period, Lowa Realties Ltd. (“Lowa”) provided property rental services for a fee of $2,000. Lowa is controlled by Fred A. Litwin, the President and director of Forum. Mark I. Litwin is an officer and director of Lowa and Genterra.

Interest of Insiders in Material Transactions

In June 2008, Genterra completed the acquisition of Ontario Street from FirstOnt. In consideration of the acquisition, Genterra issued 326,000 Class A Preference shares, Series 1 to FirstOnt. The Class A Preference shares are redeemable and retractable at $15 per share, carry a cumulative dividend of 8% per annum and represent the purchase price of $4,890,000. Fred A. Litwin, indirectly is a significant shareholder of Genterra and the controlling shareholder of FirstOnt. Mark I. Litwin and Stan Abramowitz are officers and/or directors of Genterra and FirstOnt.

Genterra leases its premises situated at 450 Dobbie Drive, Cambridge, Ontario to Cambridge. The lease is for a term commenced on March 1, 2007 and ends January 31, 2011, at an annual net, net rental of $500,175. Fred A. Litwin, indirectly is a significant shareholder of Genterra, and is a director of Cambridge. Mark I. Litwin and Stan Abramowitz are officers and/or directors of Genterra and Cambridge.

Genterra leases its premises situated at 200 Glendale Avenue North, Hamilton, Ontario to Cambridge. The lease term commenced March 1, 2007 and ends January 31, 2011, at an annual net, net rental of $140,000 for the first five years and at a negotiated rate thereafter. Fred A. Litwin, indirectly is a significant shareholder of Genterra, and is a director and senior officer of Cambridge. Mark I. Litwin and Stan Abramowitz are officers and/or directors of Genterra and Cambridge.

Genterra leases one of its units situated at 1095 Stellar Drive, Newmarket, Ontario to Fitcity. The lease term commenced January 1, 2008 and ended December 31, 2008 at an annual net, net rental of $111,240 per year. A wholly subsidiary of Genterra is also party to a loan agreement with Fitcity bearing interest at prime plus 1% per annum and repayable on demand. As of the date hereof, Fitcity owes an aggregate amount of $298,514 of secured debt under this facility. In 2005, Genterra and Fitcity agreed (the “Repayment Agreement”) that annual repayments on this debt will be based on fifty percent (50%) of Fitcity’s annual free cash flow beginning with its 2006/2007 fiscal year. Since the inception of the Repayment Agreement, Fitcity has repaid Genterra’s subsidiary $109,019 of this debt. Mark I. Litwin, a director and officer of Genterra, is the majority shareholder of Fitcity.

Until March 2008, Genterra leased one of its units situated at 140 Wendell Avenue, Toronto, Ontario to Distinctive for $5,241 per month. Alan Kornblum is a director of Genterra and an officer, director and the indirect majority shareholder of Distinctive.

Corporate Governance

Corporate governance relates to the activities of the Board, the members of which are elected by and are accountable to the shareholders, and takes into account the role of the individual members of management who are appointed by the Board and who are charged with the day to day management of Genterra. The Board is committed to sound corporate governance practices which are both in the interest of its shareholders and contribute to effective and efficient decision making. National Policy 58-201 Corporate Governance Guidelines establishes corporate governance guidelines which apply to all public companies.

Genterra has reviewed its own corporate governance practices in light of these guidelines. In certain cases, Genterra's practices do not comply with the guidelines, however, the Board considers that some of the guidelines are not suitable for Genterra at its current stage of development, and therefore these guidelines have not been adopted. National Instrument 58-101 Disclosure of Corporate Governance Practices mandates disclosure of corporate governance practices in Form 58-101F2 for Venture Issuers, which disclosure is set out below.

Board of Directors

Structure and Compensation

The Board is currently composed of five (5) directors, being Mark I. Litwin, Stan Abramowitz, Alan Kornblum, Sol D. Nayman and Mark E. Dawber.

Form 58-101F2 suggests that the board of directors of every listed company should be constituted with a majority of individuals who qualify as "independent" directors under Multilateral Instrument 52-110 ("MI 52-110"), which provides that a director is independent if he or she has no direct or indirect "material relationship" with the corporation. "Material relationship" is defined as a relationship which could, in the view of the corporation's Board of Directors, be reasonably expected to interfere with the exercise of a director's independent judgment. Of the current members of the Board of Directors, two (2), being Mark I. Litwin, President of Genterra, and Stan Abramowitz, Secretary and Chief Financial Officer of Genterra, are "inside" or management directors, and accordingly are not considered "independent" within the meaning of MI 52-110. In assessing Form 58-101F2 and making the foregoing determinations, the circumstances of each director have been examined in relation to a number of factors.

The quantity and quality of the Board compensation is reviewed on an annual basis. At present, the Board is satisfied that the current Board compensation arrangements, which currently only include an annual retainer fee of $5,000 for “outside” directors, an annual retainer fee of $5,000 to the Chairman of the Audit Committee and incentive stock options, adequately reflect the responsibilities and risks involved in being an effective director of Genterra.

The following directors of Genterra are directors of other reporting issuers as follows:

- Stan Abramowitz: Consolidated Mercantile Incorporated

Sol D. Nayman:

Consolidated Mercantile Incorporated

- Mark E. Dawber: Consolidated Mercantile Incorporated

Mandate of the Board

The mandate of the Board, as prescribed by the OBCA, is to manage or supervise the management of the business and affairs of Genterra and to act with a view to the best interests of Genterra. In doing so, the board oversees the management of Genterra's affairs directly and through its audit committee and corporate governance committee. In fulfilling its mandate, the Board, among other matters, is responsible for reviewing and approving Genterra's overall business strategies, reviewing and approving the forecast, reviewing and approving significant capital investments, reviewing major strategic initiatives to ensure that Genterra's proposed actions accord with shareholder objectives, reviewing succession planning, assessing management's performance against approved business plans and industry standards, reviewing and approving the reports and other disclosure issued to shareholders, ensuring the effective operation of the Board and safeguarding shareholders' equity interests through the optimum utilization of the Genterra's capital resources. The Board also takes responsibility for identifying the principal risks of Genterra’s business and for ensuring these risks are effectively monitored and mitigated to the extent reasonably practicable.

In keeping with its overall responsibility for stewardship of Genterra, the Board is responsible for the integrity of Genterra's internal control and management systems and for the Genterra's policies respecting corporate disclosure and communication.

Each member of the Board understands that he is entitled to seek the advice of an independent expert if he reasonably considers it warranted under the circumstances.

The positions of President and CEO are combined. The Board believes Genterra is well serviced and the independence of the Board from management is not compromised by the combined role. The Board does not, and does not consider it necessary to have any formal structures or procedures in place to ensure that the Board can function independently of management. The Board believes that its current composition in which only two of five are or will be members of management, is sufficient to ensure that the Board can function independently of management.

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Nomination and Assessment

The Board determines new nominees to the Board, although a formal process has not been adopted. The nominees are generally the result of recruitment efforts by the Board members, including both formal and informal discussions among Board members and the President/CEO. The Board monitors, but does not formally assess, the performance of individual Board members or committee members.

The Board does not at present have a formal process in place for assessing the effectiveness of the Board as a whole, its committees or individual directors, but will consider implementing one in the future should circumstances warrant. Based on Genterra's size, its stage of development and the limited number of individuals on the Board, the Board considers a formal assessment process to be inappropriate at this time. The Board plans to continue evaluating its own effectiveness on an ad hoc basis. All directors are free to make suggestions on improvement of the board's practice at any time and are encouraged to do so. The current size of the Board is such that the entire Board takes responsibility for selecting new directors and assessing current directors. Proposed director's credentials are reviewed in advance of a Board Meeting with one or more members of the Board prior to the proposed director's nomination.

The Corporate Governance Committee will be responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of prospective board Members as well as the composition of the Board as a whole. This assessment will include member's contribution, qualification as independent, as well as consideration of diversity, age, skills and experience in the context of the needs of the Board.

New directors are provided with an information package about Genterra and are briefed on strategic plans, short, medium and long-term corporate objectives, business risks and mitigation strategies, corporate governance guidelines and existing corporation policies.

The skills and knowledge of the Board of Directors as a whole is such that no formal continuing education process is currently deemed required. The Board is comprised of individuals with varying backgrounds, who have over 75 years of collective experience in managing and maintaining operations of publicly traded companies. Board members are encouraged to take courses that will continue to update their knowledge of any changes in regulatory and reporting requirements, as well as communicate with management, auditors and technical consultants to keep themselves current with industry trends and developments and changes in legislation, with management's assistance. Board members have full access to Genterra's records.

Meetings of the Board

The Board meets at least quarterly to review, among other things, the performance of Genterra. Results are compared and measured against a previously established plan and performance in prior years. The Board also holds a meeting each year to review and assess Genterra's overall strategic objectives. Other meetings of the Board are called to deal with special matters as circumstances require. The Board met six (6) times during the year ended September 30, 2008.

Ethical Business Conduct

Business Conduct

The Board has adopted and implemented policies regarding a Code of Business Conduct and Ethics, which Genterra distributed to all of its directors, officers, employees, agents and representatives, including consultants. The objectives of this Code are summarized as follows:

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Code of Business Conduct and Ethics:

This Code states that all directors, officer, employees, agents and representatives, including consultants, of Genterra must:

- obey applicable laws and regulations governing Genterra's business conduct;

- avoid all conflicts of interest between work and personal affairs;

- refrain from insider trading;

-	respect the rights of and deal fairly with Genterra's customers, suppliers, competitors and employees, and not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice;

-	avoid any discrimination or harassment against any group or individual, whether on the basis of race, colour, religion, national or ethnic origin, age, gender, sexual orientation, marital status, physical or mental disability, or on the basis of any other personal characteristics protected by law;

-	strive to create a safe workplace and to protect the environment;

-	promote honest and accurate recording and reporting of information in order to make responsible business decisions;

-	maintain the confidentiality of confidential information;

-	protect and preserve Genterra's assets and ensure their efficient use;

-	avoid giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business; and

-	co-operate in internal investigations of misconduct.

Expectations of Management

The Board expects management to operate the business of Genterra in a manner that enhances shareholder value and is consistent with the highest level of integrity.

Committee Responsibilities and Activities

Genterra currently has two committees, being the Audit Committee and Corporate Governance Committee. A summary of the responsibilities and activities and the membership of each of these Committees are set out below.

The Audit Committee

The Audit Committee's Charter & Mandate

The Audit Committee assists the Board in fulfilling its responsibilities relating to the Genterra's corporate accounting and reporting practices. The Audit Committee is responsible for ensuring that management has established appropriate processes for monitoring Genterra's systems and procedures for financial reporting and controls, reviewing all financial information in disclosure documents, monitoring the performance, fees and expenses of Genterra's external auditors and recommending external auditors for appointment by shareholders. The Audit Committee is also responsible for reviewing Genterra's quarterly and annual financial statements prior to approval by the Board and release to the public. The Audit Committee also meets periodically with Genterra's external auditors to discuss and review specific issues as appropriate.

In accordance with MI 52-110, Genterra's Audit Committee established procedures for:

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(a)	the receipt, retention and treatment of complaints received by Genterra regarding accounting, internal accounting controls or auditing matters; and

(b)	the confidential, anonymous submission by employees of Genterra of concerns regarding questionable accounting or auditing matters.

Genterra has implemented a "Whistleblower" Policy to satisfy the obligations under MI 52-110, as recommended by the Audit Committee. This Policy is available to all directors, officers, employees, consultants and contractors of Genterra.

Composition

The Committee must be comprised of three directors as determined by the Board of Directors, all of whom shall be free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Committee. The Audit Committee is currently comprised of Alan Kornblum, Sol D. Nayman and Mark E. Dawber.

All members of Genterra's Audit Committee are financially literate and have a working familiarity with basic finance and accounting practices. For the purposes of Genterra's Charter, the definition of "financially literate" is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by Genterra's financial statements.

The members of the Audit Committee are required to be appointed by the Board of Directors at its first meeting following the annual shareholders' meeting. Unless a Chair is elected by the full Board of Directors, the members of the Audit Committee may designate a Chair by a majority vote of the full Committee membership.

Meetings

The Audit Committee meets quarterly, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least quarterly with the Chief Financial Officer (or individual acting in that capacity, if there is no such position) and the external auditors in separate sessions. The Audit Committee met four (4) times during the year ended September 30, 2008.

Responsibilities and Duties

To fulfill its responsibilities and duties, the Committee shall:

Documents/Reports Review

(a) Review and update this Charter annually.

(b)

Review Genterra's financial statements, MD&A and any annual and interim earnings, press releases before Genterra publicly discloses this information and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion, or review rendered by the external auditors.

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External Auditors

(a)

Review annually, the performance of the external auditors who shall be ultimately accountable to the Board of Directors and the Committee as representatives of the shareholders of Genterra.

(b)

Obtain annually, a formal written statement of external auditors setting forth all relationships between the external auditors and Genterra, consistent with Independence Standards Board Standard 1.

(c)

Review and discuss with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors.

(d)

Take, or recommend that the full Board of Directors take, appropriate action to oversee the independence of the external auditors.

(e)

Recommend to the Board of Directors the selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval.

(f)

At each meeting, consult with the external auditors, without the presence of management, about the quality of Genterra's accounting principles, internal controls and the completeness and accuracy of the Genterra's financial statements.

(g)

Review with management and the external auditors the audit plan for the year-end financial statements and intended template for such statements.

Financial Reporting Processes

(a)

In consultation with the external auditors, review with management the integrity of Genterra's financial reporting process, both internal and external.

(b)

Consider the external auditors' judgments about the quality and appropriateness of Genterra's accounting principles as applied in its financial reporting.

(c)

Consider and approve, if appropriate, changes to Genterra's auditing and accounting principles and practices as suggested by the external auditors and management.

(d)

Review significant judgments made by management in the preparation of the financial statements and the view of the external auditors as to appropriateness of such judgments.

(e)

Following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

(f)

Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

(g)

Review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented.

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(h)

Review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters.

(i) Review certification process.

(j)

Establish a procedure for the confidential, anonymous submission by employees of Genterra of concerns regarding questionable accounting or auditing matters.

Other

(a) The Committee also reviews any related-party transactions.

Audit Committee Oversight

At no time since the commencement of Genterra's most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor not adopted by the Board of Directors.

Reliance on Certain Exemptions

At no time since the commencement of Genterra's most recently completed financial year has the Corporation relied on the exemption in Section 2.4 of MI 52-110 (De Minimis Non-audit Services), or an exemption from MI 52-110, in whole or in part, granted under Part 8 of Multilateral Instrument 52-110.

Pre-Approval Policies and Procedures

The Committee has adopted specific policies and procedures for the engagement of non-audit services as described above under the heading "External Auditors".

Corporate Governance Committee

The Board of Directors established a Corporate Governance Committee in 2004 to monitor and implement Genterra's corporate governance practices. This committee currently consists of Alan Kornblum, Sol D. Nayman and Mark E. Dawber. Upon the implementation of NI 58-101 and NP 58-201, the Corporate Governance Committee reviewed Genterra's corporate governance practices to determine how best to ensure continued compliance with the new guidelines.

Compensation Committee

Management and the Board are of the opinion that Genterra currently has no requirement for a Compensation Committee. However, if the size of the Board of Directors is increased and if Genterra deems it necessary, a Compensation Committee will be appointed which will be comprised of unrelated directors. A Compensation Committee would be responsible for reviewing all overall compensation strategy, objectives and policies; annually reviewing and assessing the performance of the executive officers; recommending to the Board the compensation of the executive officers; reviewing executive appointments; and recommending the adequacy and form of directors' compensation.

Meetings of the Board and Committees

During the fiscal year ended September 30, 2008 the number of Board and Committee meetings held and the attendance of directors at these meetings were as follows:

- -

► 6 Board meetings;

► 4 Audit Committee meetings; and

► 4 Corporate Governance Committee Meetings

Director	Board Meetings	Committee Meetings
Mark I. Litwin	6 of 6 (100%)	N/A
Stan Abramowitz	6 of 6 (100%)	N/A
Sol D. Nayman	6 of 6 (100%)	10 of 10 (100%)
Alan Kornblum	6 of 6 (100%)	11 of 11 (100%)
Mark E. Dawber	6 of 6 (100%)	11 of 11 (100%)

Interests of Experts

Effective October 31, 2008, Kraft Berger LLP, Chartered Accountants, the former auditor, resigned as auditor of Genterra and BDO Canada LLP, Chartered Accountants, the current auditor of Genterra, was approved for appointment as the new auditor of Genterra by the board of directors.

Kraft Berger LLP, the former external auditors, reported on the fiscal 2007 audited consolidated financial statements. Kraft Berger LLP had no registered or beneficial interest, direct or indirect, in any securities or property of Genterra, or any of Genterra’s Associates or Affiliates when it prepared the report on Genterra’s 2007 consolidated financial statements, or after such time, nor does it expect to receive any such securities or other property.

Fees paid to Kraft Berger LLP for its services rendered are as follows:

Financial Year Ending	Audit Fees	Audit Related Fees	Tax Fees	All Other Fees
September 30, 2008(1)	$50,800	Nil	$2,880	Nil
September 30, 2007	$54,060	Nil	$2,850	Nil
September 30, 2006	$43,430	Nil	$9,185	Nil

Notes:

(1) Payment regarding Financial Year Ended September 30, 2007, billed and paid during Fiscal 2008.

Material Contracts

Genterra is party to a management contract with Forum Financial Corporation whereby Forum has agreed to provide administration, management and consulting services for an annual fee of $200,000. These services include office, administrative and clerical services, including bookkeeping and accounting services.

Genterra is party to a management services contract with First Ontario Investments Inc., whereby FirstOnt has agreed to provide property management services for an annual fee of $206,000.

Genterra is the mortgagor under a First Mortgage on its property located at 200 Glendale Avenue North, Hamilton, Ontario. The mortgage bears interest at prime plus 1.75% and is repayable in monthly instalments of $5,217 plus interest and matures on August 1, 2011.

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Genterra is the mortgagor under a First Mortgage on its property located at 140 Wendell Avenue. Toronto, Ontario. The mortgage bears interest at 4.63% and is repayable in blended monthly instalments of $25,005 and matures on July 1, 2010.

Genterra is the mortgagor under a First Mortgage on its property located at 1095 Stellar Drive. Newmarket, Ontario. The mortgage bears interest at the lender’s base rate plus 0.2% and is repayable in monthly instalments of $4,453 plus interest and matures on September 1, 2022.

Genterra leases 96,613 square feet at 140 Wendell Avenue, Toronto, Ontario to Sleep Country Corporation at rates increasing from $4.50 per square foot to $6.25 per square foot. The Company also leases 16,819 square feet at 140 Wendell Avenue, Toronto, Ontario to Sleep Country Corporation at rates increasing from $6.50 per square foot to $8.25 per square foot. Both leases expire on April 15, 2016.

Genterra leases its properties at 450 Dobbie Drive, Cambridge, Ontario and 200 Glendale Avenue North, Hamilton, Ontario to The Cambridge Towel Corporation for annual rental of $640,175. The leases for these properties expire on January 31, 2011.

Other than the discussions leading to the Amalgamation Agreement, there have been no material contracts between Genterra and CMI.

Legal Proceedings

Genterra’s management is not aware of any legal proceedings, contemplated or actual, involving Genterra which could materially affect Genterra.

Auditor, Transfer Agent and Registrar

Genterra’s Transfer Agent is:

Computershare Investor Services Inc.

100 University Avenue, 9th Floor

Toronto, Ontario M5J 2Y1

Canada

Genterra’s Auditor is:

BDO Canada LLP, Chartered Accountants

Royal Bank Plaza

P.O. Box 32

Toronto, Ontario, Canada M5J 2J8

Additional Information

Additional information relating to Genterra, including Genterra’s audited year end financial results and unaudited quarterly financial results, can be accessed on SEDAR (www.sedar.com).

Board Approval

The contents of this Circular as related to Genterra and the sending of this Circular to Genterra shareholders have been approved by Genterra’s board of directors.

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PART VII

INFORMATION CONCERNING CMI

Name and Incorporation

CMI was incorporated on August 12, 1940 under the Companies Act of the Province of Ontario under the name of “Erie Flooring and Wood Products Limited”. It became a public company on December 2, 1948 changed its name to “Erie Diversified Industries Ltd.” on December 5, 1968, changed its name to “Lambda Mercantile Corporation Ltd.” on August 10, 1973, changed its name to “Consolidated Mercantile Corporation” on September 30, 1987.

By Certificate and Articles of Amalgamation filed pursuant to the Business Corporation Act (Ontario) and effective on December 30, 1994, Consolidated Mercantile Corporation amalgamated with Lam-Tar Inc. and continued as Consolidated Mercantile Corporation. On October 22, 1998, Consolidated Mercantile Corporation changed its name to “Consolidated Mercantile Incorporated”.

The head office of CMI is located at 106 Avenue Road, Toronto, Ontario M5R 2H3.

Intercorporate Relationships

CMI owns 100% of the issued and outstanding shares of, 2041804 Ontario Inc., an Ontario corporation which holds investments in marketable securities.

CMI also holds a 1.44% equity interest in Genterra.

General Development of the Business

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

Description of the Business

Over the past number of years, CMI’s investment interests in both Polyair Inter Pack Inc. (“Polyair”) - a manufacturer of protective packaging products, and Distinctive Designs Furniture Inc. (“Distinctive”) - a manufacturer of furniture, incurred substantial operating losses. During this period, management of CMI spent considerable time and effort in assisting these business units in restructuring their operations and enhancing their ability to be more competitive in their respective industries. These efforts provided CMI with the opportunity to maximize shareholder value, culminating in the December 2007 sale of both units.

Since the time of sale of both Polyair and Distinctive, CMI with its strengthened financial and management resources has sought out new long-term strategic acquisitions, targeting companies with synergistic product lines and technologies, management strength and a presence in markets with the potential for future growth with the objective of adding value to CMI and its shareholders. While CMI’s management have analyzed a number of potential acquisition targets during this period, to date none have been consummated. In keeping with its history of being primarily engaged in the business of investing in and managing of majority owned operating companies, CMI’s management continues to seek out target acquisitions that they believe will offer future growth and added value to CMI and its shareholders.

- -

As part of this process, CMI’s Board of Directors have after review, decided that an amalgamation with Genterra will be in the best interests of CMI as it amongst other things, will enable CMI shareholders to be part of a larger corporation with larger more varied assets, including Genterra’s substantial income producing real estate portfolio, a larger equity and income base, greater opportunities and reduced operating costs, all of which should assist in facilitating the financing of future growth and expansion. CMI’s Board believe that with the amalgamation, Amalco’s strengthened balance sheet will allow it to analyze larger potential investments, to capitalize on favorable market conditions and to, amongst other things, consider expanding Amalco’s real estate income producing portfolio.

In the interim period, CMI has invested a portion of its working capital in a combination of relatively short-term income producing assets as well as limited investment, as a limited partner, in a number of Canadian limited partnerships. These limited partnerships generally seek to achieve capital appreciation through investments, primarily in equity based securities, and attempt to maximize returns while protecting capital. The limited partnerships are managed by their general partners who receive management fees in return for their services. CMI’s management meet with the various managers on a regular basis to review CMI’s investments therein and to determine any required changes thereto. In late 2008, as a result of deteriorating international banking conditions, management of CMI reallocated a substantial portion of its working capital assets into Government of Canada Treasury bills as a protective measure. CMI’s management continues to review the allocation of working capital assets to determine any required changes thereto.

Furniture ProductsUntil December 2007 CMI’s furniture division (the "Furniture Division") consisted primarily of a 50.33% interest in Distinctive, a private Ontario corporation which manufactures and importes leather and fabric upholstered furniture for sale to major Canadian department stores, mass merchants and independent furniture stores, as well as to a number of customers in the United States. Furniture Product sales for 2007 and 2006 were approximately $19 million and $30 million respectively. Approximately $4 million of the 2007 and $12.5 million of the 2006 Furniture sales were to customers in the United States. The remaining sales were to customers in Canada. As CMI sold its investment interest in Distinctive in December 2007 there were no Furniture Product sales in 2008.

In August 2007 Distinctive filed a Proposal to restructure its unsecured liabilities. The Proposal was accepted by Distinctive’s unsecured creditors and approved by the Ontario Superior Court of Justice. In August 2007 CMI announced its intention to initiate a process to sell its investment interest in Distinctive and effective December 28, 2007, sold its shares and the debt owed by Distinctive to Distinctive’s other major shareholder. Accordingly, the operating results of Distinctive have been reported by CMI as Discontinued Operations.

Protective Packaging Products Until December 2007, CMI had a 22.15% interest (44.5% until March 2004) in Polyair. Polyair is a publicly traded Ontario holding company which manufactures and distributes protective packaging products through its wholly-owned U.S. and Canadian subsidiaries. Protective Packaging Products sales for 2007 and 2006 were approximately $132 million and $142 million respectively. Approximately $116 million of the 2007 and $123 million of the 2006 Protective Packaging Products sales were to customers in the United States. The remaining sales were to customers in Canada. As CMI sold its investment interest in Polyair in December 2007 there were no Protective Packaging Products sales in 2008.

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In March 2004, CMI completed the sale of approximately 48% of its holdings in Polyair to Glencoe Capital LLC (“Glencoe”), a Chicago-based private equity firm. On December 31, 2007, CMI completed a private sale of all of its remaining shareholdings in Polyair.

Selected Financial Information

The following unaudited financial information was derived directly and indirectly from CMI’s financial statements, which are attached as Schedule 3.

Selected Financial Information as at	September 30, 2009 ($)		December 31, 2008 ($)		December 31, 2007 ($)
ASSETS
Cash and cash equivalents		14,600,154		14,178,399		10,961,412
Marketable securities		2,356,661		2,880,094		5,461,581
Accounts receivable		1,220		20,797		26,351
Prepaid expenses		429,358		49,010		23,446
Notes receivable		-		99,935		1,289,972
Investments		295,626		292,427		378,746
Total Assets		17,683,019		17,520,662		18,141,508
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued liabilities		301,749		121,181		693,078
Income taxes payable		1,118,585		839,565		849,469
Deferred gain		-		42,050		420,953
Total Liabilities		1,420,334		1,002,796		1,963,500
SHAREHOLDERS’ EQUITY
Share capital		2,830,765		2,830,765		2,833,307
Contributed surplus		59,411		59,411		59,411
Retained earnings		13,372,509		13,627,690		13,285,290
Total Shareholders’ Equity		16,262,685		16,517,866		16,178,008
Total Liabilities and Shareholders’ Equity		17,683,019		17,520,662		18,141,508

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The following table sets forth items derived from the consolidated statements of operations for the nine month periods ended September 30, 2009, and September 30, 2008 and the years ended December 31, 2008 and 2007:

Selected Financial Information	For the Nine Months Ended						For the Year Ended
	September 30, 2009 ($)			September 30, 2008 ($)			December 31, 2008 ($)			December 31, 2007 ($)
REVENUE
Interest income		87,214			271,731			361,211			194,304
Investment income (loss)		344,047			(464,263	)		(1,045,628	)		359,629
		431,261			(192,532	)		(684,417	)		553,933
EXPENSES
Administrative and general		663,706			410,614			536,873			1,083,445
(Gain) loss on foreign exchange		1,766			(638,680	)		(1,657,741	)		342,732
Impairment loss on note receivable, net		57,000			-			58,675			-
Equity (earnings) loss on investments		(3,199	)		(2,436	)		26,428			795,294
Gain on sale of investments		-			-			-			(5,403,001	)
Income taxes (recovery)		9,219			28,839			3,985			(20,325	)
(Gain) loss from discontinued operations		(42,050	)		-			-			547,033
		686,442			(201,663	)		(1,031,780	)		(2,654,822	)
Net earnings (loss)		(255,181	)		9,131			347,363			3,208,755
Other comprehensive income (loss)		-			-			-			757,088

Comprehensive income (loss)		(255,181	)		9,131			347,363			3,965,843

Earnings (loss) per share (basic and diluted)
From continuing operations		(0.06	)		0.00			0.07			0.74
From discontinued operations		0.01			0.00			0.00			(0.11	)
Earnings (loss) per share		(0.05	)		0.00			0.07			0.63
Cash dividends declared		-			-			-			-

Management’s Discussion and Analysis

The following Management’s Discussion and Analysis (MD&A) provides a review of the financial condition and results of operations of CMI for the year ended December 31, 2008 and the nine months ended September 30, 2009. This MD&A should be read in conjunction with CMI’s December 31, 2008 audited consolidated financial statements and CMI’s September 30, 2009 unaudited consolidated financial statements included as Schedules elsewhere herein.

In this document and in CMI’s audited consolidated financial statements and in CMI’s unaudited consolidated financial statements, unless otherwise noted, all financial data is prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP). All amounts, unless specifically identified as otherwise, in the audited consolidated financial statements, the unaudited consolidated financial statements and this MD&A, are expressed in Canadian dollars.

Management’s Discussion and Analysis contains forward-looking statements, including statements concerning possible or assumed future results of operations of CMI. Forward-looking statements typically involve words or phrases such as “believes”, “expects”, “anticipates”, “intends”, “foresees”, “estimates” or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions, as described from time to time in CMI’s reports and filed with the United States Securities and Exchange Commission and securities commissions in Canada, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. In addition, CMI expressly disclaims any obligation to publicly update or alter its previously issued forward-looking statements.

Review of Year-End Results ended December 31, 2008 and 2007

Revenue. In August 2007 CMI announced its intention to initiate a process to sell its 50.33% investment interest in Distinctive and effective December 28, 2007 sold all of its shares to Distinctive’s other major shareholder. Accordingly the 2007 operating results of Distinctive have been classified as discontinued operations. Revenue Loss for the year ended December 31, 2008 was $684,417 compared to Revenue Income of $553,933 for the comparable 2007 period. Revenue Loss for 2008 includes interest income on cash and cash equivalents of $361,211 and share of loss from investments in Limited Partnerships of $1,045,628. Revenue for 2007 includes interest income on cash and cash equivalents of $194,304 and share of income from investments in Limited Partnerships of $359,629. The increase in interest income in 2008 is due to the substantial increase in the period in cash and cash equivalents resulting from the proceeds received by CMI from the December 2007 sale of Distinctive and Polyair. The 2008 Loss from investments was due to the poor performance of the global equity markets arising from the current economic conditions, particularly in the second half of the year, and the impact thereon on CMI’s investments in Limited Partnerships.

Administrative and General Expenses. Administrative and general expenses include fees for management and administrative services, legal and audit fees, and public company shareholder costs. Administrative and general expenses for the year ended December 31, 2008 were $536,873 compared to $1,083,445 in the comparable 2007 period. The decrease in administrative and general expenses for the year ended December 31, 2008 from the comparable period was as a result of the 2007 management compensation incurred upon the completion of CMI’s disposition of its investment interest in Polyair.

Gain (loss) on Foreign Exchange. CMI holds certain amounts of its cash in United States dollars. CMI experienced a foreign exchange gain of $1,657,741 during the year ended December 31, 2008. The gains were as a result of the strengthening of the United States Dollar. This compares to a foreign exchange loss of $342,732 for the year ended December 31, 2007.

Other expenses. Effective December 28, 2007, CMI sold all of its investment interest in Distinctive to Distinctive’s other major shareholder. The proceeds from the sale of the shares was satisfied by a promissory note issued by the purchaser. The note which is non-interest bearing has been discounted and is repayable in ten equal consecutive annual instalments of $100,000, with the first instalment due on January 15, 2009. This note is only due and payable in any given year if Distinctive continues its business. Over the past number of years Distinctive incurred substantial operating losses. Distinctive continues to be impacted by a difficult retail environment as a result of competitive market conditions and the poor global economy and accordingly, management of CMI believes a reserve is appropriate. As a result, the deferred gain on the sale of this investment has been adjusted and the reduction has been set off against the impairment loss on note receivable resulting in the net loss of $58,675.

Equity Earnings (loss). Equity earnings for the year ended December 31, 2008 were $4,572 compared to an equity loss of $723,175 for the comparable 2007 period. On December 31, 2007, CMI completed a private sale of all of its remaining shareholdings in Polyair. The equity loss for the year ended December 31, 2007 includes CMI’s share of equity loss of Polyair CMI recorded adjustments to the carrying value of an investment in a significantly influenced company of $31,000 and $140,000 in 2008 and 2007 respectively.

Gain on Sale of Investments (2007). In December 2007 CMI sold its shares in Distinctive. The shares were paid for by the delivery to CMI of a $1 million promissory note payable in ten equal consecutive annual instalments. The promissory note was discounted to its present value resulting in a gain of approximately $550,000. Under Emerging Issue Committee Abstract #79, the gain on sale is only recognized in the Statement of Operations to the extent that it is realized. Accordingly, $420,953 of the gain was deferred and reflected in the liability section of the Balance Sheet. In December 2007 CMI also sold its remaining shareholdings in Polyair for $6.0 million, resulting in a gain of approximately $5.3 million.

Income Tax Provision. The effective tax rate for the year ended December 31, 2008 and 2007 was 1.1% and (0.5%) respectively. The difference between CMI’s statutory tax rate and its effective tax rate is primarily attributable to the permanent differences associated with the tax treatment of capital gain transactions and the valuation allowance provided against certain future tax benefits.

Discontinued Operations. In August 2007 CMI announced its intention to initiate a process to sell its 50.33% investment interest in Distinctive. Effective December 28, 2007 CMI sold its shares and the debt owed by Distinctive to Distinctive’s other major shareholder. Accordingly, the operating results of Distinctive for the year ended December 31, 2007, a loss of $1,186,997, has been classified by CMI as discontinued operations. The consolidated financial statements for the year ended December 31, 2007 also include CMI’s share of Polyair’s discontinued operations. On December 31, 2007, CMI completed a private sale of all of its remaining shareholdings in Polyair.

Net Earnings (loss). Net earnings for the year ended December 31, 2008 were $347,363 as compared to net earnings of $3,208,755 for the comparable 2007 period. The results for the year ended December 31, 2008 were impacted by the poor performance of the equity markets and the gain on foreign exchange. The 2007 earnings resulted from the gain on the sale of CMI’s investments in Distinctive and Polyair offset by the discontinued operation loss from Distinctive of $1,186,997.

Inflation. Inflation has not had a material impact on the results of CMI’s operations in its last quarter and is not anticipated to materially impact on CMI’s operations during its current fiscal year.

Review of Third Quarter and Nine-Month Period Results ended September 30, 2009 and 2008

Revenue. Revenue for the three months ended September 30, 2009 was $141,708 compared to a loss of $306,534 for the comparable 2008 period. Revenue for the three months ended September 30, 2009 includes interest income on cash and cash equivalents of $23,814 and share of income from investments in Limited Partnerships of $117,894. Revenue for 2008 includes interest income on cash and cash equivalents of $88,235 and share of loss from investments in Limited Partnerships of $394,787. Revenue for the nine months ended September 30, 2009 increased to $431,261 compared to a loss of $192,532 for the comparable 2008 period. Revenue for the nine months ended September 30, 2009 includes interest income on cash and cash equivalents of $87,214 and share of income from investments in Limited Partnerships of $344,047. Revenue for the nine months ended September 30, 2008 includes interest income on cash and cash equivalents of $271,731 and share of loss from investments in Limited Partnerships of $464,263. The decrease in interest income in 2009 is due to the substantial decrease in interest rates following the current economic conditions and the resulting tightening in the credit markets. Investment income increased in 2009 due to the improved results achieved from CMI’s Limited Partnership investments during the period.

Administrative and General Expenses. Administrative and general expenses for the three months ended September 30, 2009 and 2008 were $141,221 and $114,314 respectively. Administrative and general expenses for the nine months ended September 30, 2009 and 2008 were $663,706 and $410,614 respectively. Administrative and general expenses normally include fees for management and administrative services, legal and audit fees, and public company shareholder costs. The expenses for the nine month period ended September 30, 2009 include a provision for non-deductible interest expenses of approximately $250,000 which may arise from the potential reassessment of prior year taxes.

Gain (loss) on Foreign Exchange. Loss on foreign exchange for the three months ended September 30, 2009 was $777 compared to a gain on foreign exchange of $380,707 for the comparable 2008 period. Loss on foreign exchange for the nine months ended September 30, 2009 was $1,766 compared to gain on foreign exchange of $638,680 for the comparable 2008 period. During the period under review CMI held minimal funds denominated in United States dollars. The gain for the 2008 period resulted from the effect of the strengthening of the United States Dollar on CMI’s U.S. dollar holdings on hand at that time.

Other Expenses. Effective December 28, 2007, CMI sold all of its investment interest in Distinctive to Distinctive’s other major shareholder. The proceeds from the sale of the shares was satisfied by a promissory note issued by the purchaser. The note which is non-interest bearing has been discounted and is repayable in ten equal consecutive annual instalments of $100,000, with the first instalment due on January 15, 2009. The first instalment was received in April 2009. This note is only due and payable in any given year if Distinctive continues its business. Over the past number of years Distinctive incurred substantial operating losses. Distinctive continues to be impacted by a difficult retail environment as a result of competitive market conditions and the poor global economy and accordingly, management of CMI believes a reserve is appropriate. As a result, CMI has reserved $57,000 against the accretion interest on this discounted note for the nine months ended September 30, 2009.

Equity Items. Equity earnings of significantly influenced company was $2,027 for the third quarter of 2009 as compared to equity loss of $428 for the comparable 2008 period. Equity earnings for the nine months ended September 30, 2009 were $3,199 compared to equity earnings of $2,436 for the comparable 2008 period.

Income Tax Provision. The effective tax rate for the three months ended September 30, 2009 and 2008 was (8.7%) and (67.1%) respectively. The effective tax rate for the nine months ended September 30, 2009 and 2008 was (3.2%) and 75.9% respectively. The difference between CMI’s statutory tax rate and its effective tax rate is primarily attributable to the permanent differences associated with non-deductible items, the tax treatment of capital gain transactions and the valuation allowance provided against certain future tax benefits.

Discontinued Operations. During the period under review CMI recognized a deferred gain of $42,050 from the 2007 sale of its investment interest in Distinctive.

Net Earnings (Loss). Net loss for the third quarter of 2009 and 2008 were $18,763 and $67,811 respectively. Net loss for the nine months ended September 30, 2009 was $255,181 compared to net earnings of $9,131 in the comparable 2008 period. Net loss for the nine months ended September 30, 2009 was impacted by the provision for interest on a potential reassessment of prior year taxes. Net earnings for the nine months ended September 30, 2008 were impacted by the poor performance of the equity markets and the foreign exchange gain resulting from the strengthening of the United States Dollar during the period.

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Liquidity and Capital Resources

CMI’s principal sources of liquidity are cash on hand, short-term investments and cash flow from operations.

December 31, 2008

CMI's working capital amounted to $16.3 million at December 31, 2008 compared to $15.8 million at December 31, 2007. The ratio of current assets to current liabilities increased to 17.9:1 at December 31, 2008 from 11.2:1 at December 31, 2007.

During the twelve months ended December 31, 2008 CMI’s cash position increased by approximately $3.2 million to $14.2 million from $11.0 million at December 31, 2007. The net increase was due to the following:

Ø	Operating Activities increased cash by $62,315. This was a result of $664,130 in cash generated from operations, including an unrealized gain of $8,136 on foreign exchange, offset by $601,815 of cash used for changes in non-cash components of work capital;

Ø	Financing Activities utilized $7,505 of cash for the purchase of common shares for cancellation;

Ø	Investing Activities increased cash by $3,162,177. This was due to the repayment of notes receivable of $752,459, proceeds of $59,891 received on the redemption of shares in a significantly influenced company and a decrease in short-term investments of $2,349,827.

September 30, 2009

CMI's working capital amounted to $16.0 million at September 30, 2009 compared to $16.3 million at December 31, 2008. The ratio of current assets to current liabilities was 12.2:1 at September 30, 2009 and 17.9:1 at December 31, 2008.

During the nine months ended September 30, 2009 CMI’s cash position increased by approximately $422,000 to $14.6 million from $14.2 million at December 31, 2008. The net increase was due to the following:

Ø	Operating Activities decreased cash by $237,940. This was a result of $336,757 in cash utilized for operations and $98,817 of cash generated from changes in non-cash components of work capital;

Ø	Investing Activities increased cash by $660,535 as a result of the decrease in CMI’s short-term investments of $560,600 and the collection of $99,935 from the note receivable.

CMI’s ongoing expected costs include administrative expenses, fees for management and administrative services provided to CMI, legal and audit fees and public company shareholder costs. CMI expects to generate the revenue required in order to service these expenditures from interest and investment income.

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Related Party Transactions

CMI entered into transactions and had outstanding balances with various companies related by common ownership and management. These transactions are in the normal course of business and are summarized as follows:

Related party transactions for the year ended December 31, 2008 are summarized as follows:

CMI paid to Forum Financial Corporation (“Forum”) an agreed upon fee of $240,000 for administrative, management and consulting services rendered for the year ended December 31, 2008. These services include office, administrative and clerical services, including bookkeeping and accounting. Forum also assists in the decision making process relating to CMI’s and its subsidiary’s various investment interests. Fred A. Litwin, the President, a director and indirect controlling shareholder of CMI, is an officer, director and controlling shareholder of Forum. Stan Abramowitz is an officer and director of both CMI and Forum.

Related party transactions for the nine month period ended June 30, 2008 are summarized as follows:

CMI paid to Forum Financial Corporation (“Forum”) an agreed upon fee of $180,000 for administrative, management and consulting services rendered for the nine months ended September 30, 2009. These services include office, administrative and clerical services, including bookkeeping and accounting. Forum also assists in the decision making process relating to CMI’s and its subsidiary’s various investment interests. Fred A. Litwin, the President, a director and indirect controlling shareholder of CMI, is an officer, director and controlling shareholder of Forum. Stan Abramowitz is an officer and director of both CMI and Forum.

Share Data

The following table sets forth the Outstanding Share Data for CMI as at December 31, 2009:

	Authorized	Issued

Preference Shares, issuable in series	Unlimited
Class A Preference shares $0.04 non-cumulative, non-voting, non-participating, $0.44 redeemable	Unlimited	315,544

Common Shares	Unlimited	5,076,407

CMI's Common Shares are the only class of shares entitled to vote.

Risk Factors

CMI is subject to a number of broad risks and uncertainties including general economic conditions. In addition to these broad business risks, CMI has specific risks that it faces, the most significant of which are detailed below.

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Credit Risk. Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal credit risk.

Currency Risk. Currency risk is the risk that a variation in exchange rates between the Canadian dollar and foreign currencies will affect CMI’s operating and financial results. CMI currently holds minimal funds denominated in United States dollars. The value of this currency fluctuates due to changes in the exchange rate, which is beyond the control of CMI. In the event that the Canadian dollar was to appreciate in value against the United States dollar this would have a nominal negative financial impact on CMI and therefore the currency risk is minimal.

Interest Rate Risk. Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market rates. CMI has not used derivative financial instruments to alter the exposure to interest rate risk.

The primary objective of CMI’s investment activities is to preserve capital while at the same time maximizing the income received from investments without significantly increasing risk. Some of the securities that CMI may invest in have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if CMI holds a security that was issued with a fixed interest rate at the then-prevailing interest rate and the prevailing interest rate later rises, the principal amount of the investment could decline. CMI currently maintains an investment portfolio consisting of short-term deposits, Canadian treasury bills and equity investments. Due to the relative short-term nature of these investments, CMI believes that it has no material exposure to interest rate risk arising from our investments.

Other Price Risk. Other price risk is the risk that the market value or future cash flows of financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). CMI moderates this risk through a careful selection and diversification of securities and other financial instruments within the limits of CMI’s objectives and strategy. Price fluctuations of the global equity markets could impact the performance of CMI’s short-term investments.

The risks and uncertainties discussed above highlight the more important factors that could significantly affect CMI’s operations and profitability. They do not represent an exhaustive list of all potential issues that could affect the financial results of CMI.

Outlook

Over the past few years, CMI’s former investment interests in both Distinctive and Polyair incurred substantial operating losses. Management of CMI spent considerable time and effort in assisting these former business units in restructuring their operations and enhancing their ability to become more competitive in their respective industries. These efforts provided CMI with the opportunity to maximize shareholder value, culminating in the December 2007 sale of both units. With the divestiture transactions completed, CMI now has the financial and management resources to seek out new long-term strategic acquisitions with the potential for future growth.

CMI recently announced that its directors have approved a business combination by way of a proposed Amalgamation with Genterra Inc., a company whose shares are traded on the TSX Venture Exchange. The transaction is subject to the approval of the shareholders of both companies and the approval of the regulatory authorities. The combined company will benefit from the synergies resulting from a larger corporation with larger and more varied assets, a larger equity and income base and greater opportunities, which will help facilitate the financing of future growth and expansion. The combined entity will allow for the businesses of both companies to operate on a more expeditious and cost effective basis.

In the interim, CMI’s working capital is held in a combination of cash and liquid marketable securities with risk-adjusted returns.

Critical Accounting Policies and Estimates

CMI’s discussion and analysis of its results of operations and financial condition are based upon its consolidated financial statements that have been prepared in accordance with generally accepted accounting principles in Canada. The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Estimates and assumptions are evaluated on an ongoing basis and are based on historical and other factors believed to be reasonable under the circumstances.

The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those assumed, may differ from estimates.

CMI believes the following accounting policy is critical to its business operations and the understanding of results of operations:

Future Income Taxes – CMI follows the asset and liability method of accounting for income taxes. Under this method, future tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying value and tax basis of the assets and liabilities. Consistent with this policy CMI recognizes future tax assets net of a valuation allowance, taking into account whether it is more likely than not that the recognized future tax assets will be realized. Changes in future profitability of CMI may impact the realization of these future tax assets.

Accounting Standards Implemented in 2009

CMI applied the amendments to Handbook Section 1000 commencing January 1, 2009. The implementation of the amendments to Handbook Section 1000 does not have any impact on CMI’s results of operations, financial position and disclosures as these amendments are clarifications on the application of Handbook Section 1000.

In February 2008, the CICA issued a new accounting standard, Handbook Section 3064, concerning goodwill and intangible assets. The new section replaces the existing guidance on goodwill and other intangible assets and research and development costs. The new section provides additional guidance on measuring the cost of goodwill and intangible assets. The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. The implementation of this new standard does not have any impact on CMI’s results of operations, financial position and disclosures.

The Emerging Issues Committee (“EIC”) issued a new abstract on January 20, 2009, concerning the measurement of financial assets and financial liabilities (“EIC-173 – Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”) (the “Abstract”). The Abstract was issued to consider the diversity in practice as to whether an entity’s own credit risk and the credit risk of the counter-party are taken into account in determining the fair value of financial instruments. The Committee reached a consensus that these risks should be taken into account in the measurement of financial assets and financial liabilities. The Abstract is effective for all financial assets and financial liabilities measured at fair value in interim and annual financial statements issued for periods ending on or after the date of issuance of the Abstract with retrospective application without restatement of prior periods. CMI applied the new Abstract at the beginning of its current fiscal year. The implementation does not have a significant impact on CMI’s results of operations, financial position and disclosures.

Recently Issued Accounting Pronouncements

In January 2009, the CICA issued new accounting standards, Handbook Section 1582 “Business Combinations”, Handbook Section 1602 “Non-Controlling Interests”, and Handbook Section 1601 “Consolidated Financial Statements”, which are based on the International Accounting Standards Board’s (“IASB”) International Financial Reporting Standard 3, “Business Combinations”. The new standards replace the existing guidance on business combinations and consolidated financial statements. The objective of the new standards is to harmonize Canadian accounting for business combinations with the international and U.S. accounting standards. The new standards are to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011, with earlier application permitted. Assets and liabilities that arose from business combinations whose acquisition dates preceded the application of the new standards shall not be adjusted upon application of these new standards. Section 1602 should be applied retrospectively except for certain items. CMI is currently assessing the impact these new standards may have on its results of operations, financial position and disclosures.

On August 20, 2009, the CICA issued various amendments to Section 3855. “Financial Instruments”, and Section 3025, “Impaired Loans”. The amendments include changing the categories into which debt instruments are required and permitted to be classified and eliminating the distinction between debt securities and other debt instruments. As a result, debt instruments not quoted in an active market may be classified as loans and receivables, and impairment will be assessed using the same model for impaired loans. Loans and receivables that the company intend to sell immediately or in the near term must be classified as held-for-trading and loans and receivables for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, must be classified as available-for-sale. The amendments also permit reclassifying assets from the held-for-trading and available-for-sale categories into the loans and receivables category under specified circumstances. They also require reversing an impairment loss relating to an available-for-sale debt instrument when, in a subsequent period, the fair value of the instrument increases and the increase can be objectively related These amendments are not expected to have a significant impact on CMI’s accounting for its financial instruments.

In June 2009, the CICA amended Section 3862, “Financial Instruments – Disclosures”, to adopt the amendments recently issued by the IASB to International Financial Reporting Standard 7, “Financial Instruments” Disclosures” (“IFRS 7”). These amendments are applicable to publicly accountable enterprises and those private enterprises, co-operative business enterprises, rate-regulated enterprises and not-for-profit organizations that choose to apply Section 3862. The amendments were made to enhance disclosures about fair value measurements, including the relative reliability of the inputs used in those measurements, and about the liquidity risk of financial instruments. The amendments are effective for annual financial statements for fiscal years ended after September 30, 2009, with early adoption permitted. To provide relief for preparers, and consistent with IFRS 7, the CICA decided that an entity need not provide comparative information for the disclosures required by the amendments in the first year of application. CMI will apply these amendments for its 2009 annual consolidated financial statements. The impact of the amendments to the fair value measurement and liquidity risk disclosure requirements of CMI are not expected to be significant.

International Financial Reporting Standards (“IFRS”)

CMI is currently in the process of evaluating the potential impact of IFRS to our consolidated financial statements. This will be an ongoing process as new standards and recommendations are issued by the International Accounting Standards Board and the AcSB. CMI continues its work on the planning and assessment stage of the changes to IFRS. This includes the impact IFRS will have on accounting policies, choices among policies permitted, internal control over financial reporting and disclosure and control procedures. Accounting staff members continue to attend various IFRS training courses as part of the ongoing process in becoming proficient in understanding the impact of the transition to IFRS.

The Canadian Securities Administrators issued Staff Notice 52-321, Early Adoption of International Financial Reporting Standards, which provides issuers with the option to early adopt IFRS effective January 1, 2009. It is not CMI’s intention to early adopt these standards.

Disclosure Controls And Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Company’s Chief Executive Officer and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures as at December 31, 2008 as required by Canadian securities laws. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer, have concluded that, as of December 31, 2008, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the Company’s annual filings and interim filings (as such terms are defined under Multilateral Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings) and other reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified by those laws and that material information is accumulated and communicated to management of the Company, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for accurate disclosure to be made on a timely basis.

Internal Control Over Financial Reporting

Management is also responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. The Chief Executive Officer and Chief Financial Officer have also concluded that there has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2008 that has materially affected, or is reasonably likely to affect, the CMI’s internal control over financial reporting.

As required by National Instrument 52-109 (Certification of Disclosure in Issuers’ Annual and Interim Filings), the Chief Executive Officer and the Chief Financial Officer have caused to be evaluated under their supervision the effectiveness of such internal controls over financial reporting using the framework established in ‘Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO)’. Based on that evaluation, they have concluded that the design and operation of CMI’s internal controls over financial reporting were effective as at December 31, 2008.

In designing and evaluating such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect misstatements. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Additionally, management is necessarily required to use judgment in evaluating controls and procedures.

Changes in Internal Control Over Financial Reporting

The Chief Executive Officer and Chief Financial Officer have also evaluated whether there were changes in CMI’s internal controls over financial reporting that occurred during the year ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, CMI’s internal control over financial reporting. The Chief Executive Officer and Chief Financial Officer have determined that no material changes occurred during this period.

Description of Securities

CMI is authorized to issue an unlimited number of CMI Shares and an unlimited number of CMI Class A Preference Shares.

Common Shares

The CMI Shares are the only class of shares entitled to vote. As at December 31, 2009, 5,076,407 CMI Shares are issued and outstanding, each having the right to one vote per share.

Class A Shares

The CMI Class A Shares are non-voting, non-cumulative, and non-participating shares, which are redeemable at $0.44 per CMI Class A Share. As at December 31, 2009, 315,544 CMI Class A Shares are issued and outstanding.

Dividends

CMI currently does not anticipate dividends on the CMI Shares and the CMI Class A Shares in the immediate future and intends to retain its earnings to finance the growth and development of its business. Any future determination by CMI to pay cash dividends will be at the discretion of the board of directors of CMI and will depend upon CMI’s financial condition, results of operations, capital requirements and such other factors as the board of directors of CMI considers relevant.

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Stock Option Plan

CMI has a single Stock Option Plan. The Plan is designed to secure for CMI and its shareholders the benefits of the incentive inherent in share ownership by those directors, officers and key employees responsible for the management and growth of CMI’s business. The Plan does not include any provision whereby the vesting of options granted thereunder is in any way limited or restricted. Options granted under the Plan may be exercised for such period as may be determined by the Board of Directors at the time such option is granted. CMI accounts for stock-based compensation and other stock-based payments using the fair value-based compensation method, compensation costs attributable to CMI employees are measured at fair value at the date of the grant, amortized over the vesting period on a straight-line basis, and charged to earnings with a related credit to contributed surplus. Consideration paid by employees on exercise of stock options is recorded as share capital. CMI has not granted any new options since the adoption of these recommendations.

The maximum number of CMI Shares which may be reserved for issuance to any one person under the plan is 5% of the CMI Shares outstanding at the time of the grant.

The number of CMI Shares reserved for issuance under the Stock Option Plan is currently limited to 500,000 CMI Shares at an option price not to be less than the market price at the date of issuance.

As at December 31, 2009, CMI has no outstanding stock options.

Consolidated Capitalization

The following table sets forth the consolidated capitalization of CMI as at the date of the most recent balance sheet contained in this Circular and as at the date hereof:

Designation of Security	Amount authorized or to be authorized	Amount outstanding as of December 31, 2008	Amount outstanding as of December 31, 2009
Common Shares	Unlimited	5,076,407 $2,688,939	5,076,407 $2,688,939
Class A Preference Shares	Unlimited	315,544 $141,826	To be Redeemed Prior to Amalgamation (1)
Loan Capital	NIL	NIL	NIL

Notes:

(1)	see “PART II - THE AMALGAMATION - Redemption of CMI Class A Shares”

Stock Exchange Price

The CMI Shares are listed and posted for trading on the Exchange under the stock symbol CMC.

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The following table sets forth: (i) the monthly high, monthly low, and month end closing price; and (ii) volume of trading of the CMI Shares for the months indicated:

MONTH	MONTHLY HIGH	MONTHLY LOW	MONTH END CLOSE	MONTHLY VOLUME
December 2009	2.80	2.50	2.65	25,500
November 2009	2.50	2.10	2.15	19,100
October 2009	2.35	1.80	1.90	7,508
September 2009	2.60	2.25	2.25	16,200
August 2009	2.25	2.10	2.25	600
July 2009	2.65	2.10	2.35	11,715
June 2009	2.60

CONSOLIDATED MERCANTILE INC 6-K