Total third-party debt decreased by $0.3 million between December 31, 2006 and March 31, 2007. The balance of third-party debt at March 31, 2007 was $29.5 million. Going forward the Company will not have to refinance any of its third-party debt until the end of 2010, and regular monthly blended repayments of principal and interest should result in an annual reduction of approximately $1.0 million per annum.

The Company is subject to certain debt service ratio ("DSR") and other covenants pertaining to long-term demand loans. Management believes the Company is in compliance with all DSR covenants at March 31, 2007 and as at the date of this report. As discussed above, under real estate development, the Company is considering proceeding with a joint venture to develop lands adjacent to its Toronto hotel property. There is some concern that, at least during the early stages of construction, hotel income may be affected to such a degree that the Company could be in breach of its DSR. Management has held discussions with the Company’s lender regarding this issue, and has obtained an agreement to postpone the DSR covenant during the first two years of construction.

Total debt due to related parties at March 31, 2007 amounted to $13.4 million, a decrease from $14.0 million at December 31, 2006. Debt due to related parties had increased over the last two years as certain related parties advanced funds to the Company to cover operating shortfalls, and to partially finance the repayment of third-party debt. With strong cash flows in the first quarter of 2007 the Company was able to repay $0.6 million of this related party debt, and expects to continue to reduce this debt substantially over the coming years. Of the total amount due at March 31, 2007, $5.3 million is due to the Company’s majority shareholder. This loan, which is due on demand, is unsecured and bears interest at a fixed rate of 9.0% per annum. A further $8.1 million is due to a minority shareholder of the Company. This debt is secured by a general security agreement and bears interest at a rate of prime plus 0.75% per annum (currently 6.75%).