The following questions were put to interim manager Ron Zayac about the financial statements recently released by Comfor.

Bad debts 2011, balance sheet says 0 but schedule of administrative expenses says $26,103 (in five months) this is a total of $97,132 in not even two years what is this bad debt?

This was internally generated bad debt (inter-company transfers).  While Sheraton was not running it continued to incur costs (insurance, accounting, legal etc.)  Comfor paid these costs and did not expect to be paid back for them (Sheraton was shuttered) so they were marked as bad debt.  When the final reconciliation of Sheraton is completed, these 'write offs' may be reversed, but it's a paper transaction.  Comfor was not owed money by any third party, that was not paid in full.

Receivable from Tahtsa Timber expected in a year, per statements, but what are terms, or expectation of getting the rest of the money owed and when?

When Tahtsa purchased the assets of Sheraton Holdings from Comfor, they effectively paid for just over half up front and paid the rest off over a six month term.  The debt is retired now - fully repaid by Tahtsa.  Tahtsa does not owe Comfor any money for the purchase of Sheraton Holdings as of this spring.

There is a marked loan receivable 鈥� Community Futures, with no explanation other then you expect to get it back this year? What does this  entail?

Comfor partners with Community Futures Nadina to extend the 'pool' of loanable capital available for local businesses to apply for.  CFDC has a process which small businesses can qualify for a loan to start/expand a business as long as they participate in the CFDC process.  This involves education and business planning exercises.  When CFDC has a local (located inside the Lakes TSA) business that qualifies for a loan, they approach Comfor with an opportunity to participate.

If the board agrees to partner on a loan, we put up half of the capital.  Comfor is paid back with interest, once the loan is retired.  We currently have a single loan out and CFDC reports that the business is in good standing and is making payments on-time as scheduled.

The primary reason to partner with CFDC is they have a great program to support the growth and expansion of small businesses in our region, but they have a limited pool of capital to loan out.  Comfor can increase the available pool of capital by participating in qualifying loans to local companies.

Have Director fees been increased substantially last year compared to other years - could we have the amount they are paid in the last five years so it can be compared to other years?

Directors fees for the past few years:

2012 - $30,285

2011 - $23,625

2010 - $19,426

2009 - $67,284

2008 - $107,790

Has there been an increase of wage and benefits for administrative and if so why ?

The reason this differs from previous statements is we have consolidated all staff into ComFor Management Services (CMSL), whereas before staff was split between CMSL and 亚洲天堂 Lake Community Forest (BLCF).  Now CMSL charges BLCF a single monthly management fee which includes staff wages.

Other income, for the five months (2011), is a little difference, as the investment lost money, but you are still donating to the community so are you using cash reserves to do this?

We have suspended the major community donation program until the final restructuring plan is made public.

Donations made to date are coming out of our cash reserves.  We historically have used the income from the investment portfolio to fund community grants, they have been funded through other allocations.

What was Sheraton Holdings purchased for, and sold for?  Also to note with this, while the financial statements show a profit from the discontinued operations of $322,716, $432,515 is showing in receivables from Tahtsa Timber, as money not yet received?  Is this correct?

Comfor sold Sheraton for less than they purchased it for.  The reason it  shows a profit from the sale of the assets was because the value of the assets had been 'written down' during previous financial reporting periods, so were on the books at a low value.  The transaction gets recorded at full value of the sale price but then a loan was extended to Tahtsa for the balance of the purchase price.  As mentioned above, that loan has now been fully paid down by Tahtsa.

Comfor investment holdings, this year was an unrealized gain $216,466, whose decision is it be investing in the stock in the market  as these investments are specifically for accrued reforestation costs - what happens if Comfor does not have a gain and you end up loosing the money? Would it not be better having principle guaranteed investments, with lesser return, and thus way less risk for the community?

The investments are handled by a professional money management company.  The process that the investments are managed is very conservative and in-line with the way that investments for groups like the 'Community Foundation' are handled. A portion of those assets are invested in equities, which have done well over the past year, which accounts for the gains.  A majority of the investment is in fixed income securities (bonds, GICs etc.).  The investment strategy is reviewed annually and we watch the statements monthly.  We trust that the investments are made for the 'long-term' and are conservative in nature.  Nobody is playing the market to maximize gains.  The portfolio is relatively large and is intended to cover our long-term silviculture liability.

Is there still a  liability out there or was that all settled related to the firing of the two long-term employees 鈥� just wondering if this relates to page 8, labeled provisions?

I cannot comment on legal or human resources related matters, but the statements on page 8 of the financial statements were generic boilerplate from the auditors.  They have no reference to any pending actions or liabilities associated with former employees.

Comfor is eight years into the 25 years of the 20,000 hectares license 鈥� how far along are you on this, i.e. have you completed 6,400 hectares, or鈥� just curious if you will harvest it quicker than 25 years?

That's not exactly how a community forest license works.  We have a license agreement that covers 20,000 ha and has a term of 25 years (but should be renewable).  Every 5 years, BLCF must conduct a Timber Supply Analysis which determines the AAC to be used for the next 5 year period.

We are currently in the final year of an annual allowable cut (AAC) of 260,000 m3.  This was a significant uplift that was aimed at aggressively managing the mountain pine beetle epidemic   The AAC for the license is set by the chief forester of the province.  Our AAC will decrease to 100,000 m3 for the next two years and then we will conduct another timber supply review to determine the long-term cut.

The cut calculations are is based on the entire timber harvesting land lase which has a number of additional constraints upon it (visuals, wildlife, old growth management etc.).

We won't cut a total of 20,000 ha over 25 years.  We will cut what the chief forester has determined is sustainable over the land base perpetually, based on the constraints and productivity of the existing and newly planted forest.

At the end of 25 years we will not have liquidated the entire forest.  The expectation is that we will start to re-enter second growth stands about 80 years after they were first harvested.  That being said, your observation that the cut was accelerated was true, due to the pine beetle epidemic.

Is there anyway we could be provided with individual financial statements from each company rather then a consolidated report?

Regarding your request for separate financials, we will discuss that further at the next board meeting.  There are some significant personnel and contractor rate related privacy concerns with releasing the non-consolidated financials publicly.  A competitor could reverse engineer logging and hauling rates and even the log sale prices, which impacts other parties outside of the Comfor.

鈥淧lease remember that the statements you are reviewing are per Oct. 31, 2012 and don鈥檛 reflect the remainder of this logging year,鈥� stated Zayac interim manager.