Mr. John Aird reports

GOLDEN LEAF HOLDINGS ANNOUNCES PRIVATE PLACEMENT OF CONVERTIBLE DEBENTURES

Golden Leaf Holdings Ltd. has entered into a letter of engagement with Dundee Securities Ltd. on behalf of a syndicate of agents including Liberty North Capital Corp. pursuant to which the agents have agreed to offer for sale convertible senior unsecured debentures of the company, on a private placement basis, subject to all required regulatory approvals, at a price per debenture of $1,000, for minimum gross proceeds of $4.5-million and maximum gross proceeds of $10-million.

The debentures will mature on the date that is 18 months from closing of the offering and will bear interest accruing at a rate of 10 per cent per annum from the closing of the offering, payable semi-annually on the last day of June and December of each year. The first interest payment will be made on June 30, 2016, and will consist of interest accrued from and including the closing date to June 30, 2016. Subject to certain conditions, the company may elect, from time to time, subject to applicable regulatory approval, to satisfy its obligation to pay interest on the debentures, on the date it is payable (i) in cash; or (ii) the equivalent value in common shares of the company at a price per common share equal to the 20-trading-day weighted average closing price of the common shares on the Canadian Securities Exchange (or such other Canadian stock exchange on which the common shares may trade) ending five trading days preceding the interest due date.

Subject to CSE approval, the debentures will be convertible at the holder's option into common shares at any time prior to the close of business on the maturity date at a conversion price equal to 67 cents per common share. Holders converting their debentures will receive accrued and unpaid interest thereon, up to, but excluding, the date of conversion. The lead subscriber in the offering has been granted certain rights with respect to anti-dilution and future equity issuances.

The debentures will rank pari passu in right of payment of principal and interest with all previously existing debentures of the company.

The company intends to use the net proceeds of the offering for financing of the strategic partnership and for working capital purposes.

The debentures will be offered by way of private placement to accredited investors in all provinces of Canada and in the United States to accredited investors within the meaning of Regulation D in transactions that are exempt from registration pursuant to Rule 506 of Regulation D under the United States Securities Act of 1933, and such other jurisdictions as may be agreed upon by the company and the agents.

Closing of the offering is scheduled to be on or about Feb. 11, 2016, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Canadian Securities Exchange and the applicable securities regulatory authorities.

In consideration for their services, the agents will receive a cash commission in an amount equal to 8 per cent of the gross proceeds of the offering (excluding sales to insiders of the corporation resident in the United States) and such number of compensation options equal to 8 per cent of the aggregate number of debentures issued and sold pursuant to the offering (excluding sales to insiders of the corporation resident in the United States) divided by 67 cents. Each compensation option shall be exercisable for one unit of the corporation at an exercise price of 67 cents for a period of 24 months following the closing date. Each unit shall consist of one common share and one-half of one common share purchase warrant. Each compensation warrant shall entitle the holder thereof to acquire one common share at an exercise price of 85 cents for a period of 24 months following the closing date.

The debentures and underlying common shares will be subject to a statutory hold period in Canada of four months plus one day from the closing date pursuant to Canadian securities laws. The securities mentioned herein have not been and will not be qualified by prospectus for sale to the public under applicable Canadian securities laws and will be subject to transfer and selling restrictions in certain jurisdictions, including the United States and Canada.

We seek Safe Harbor.