Mr. Paul Searle reports

GOLDEN LEAF HOLDINGS ANNOUNCES NON-BROKERED PRIVATE PLACEMENT OF CONVERTIBLE DEBENTURES

Golden Leaf Holdings Ltd. is offering for sale convertible senior secured debentures of the company, on a non-brokered private placement basis, subject to all required regulatory approvals, at a price per debenture of $1,000, for minimum gross proceeds of up to $8-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 10.0 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 Dec. 31, 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) by issuing the equivalent value in common shares of the company at a price per common share equal to the 20-trading-day volume-weighted average 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.

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 30 cents per common share. Holders converting their debentures will receive accrued and unpaid interest thereon, up to, but excluding, the date of conversion. The subscribers in the offering will be granted certain rights with respect to anti-dilution and future equity issuances. If the common shares close at $1.00 for 10 consecutive trading days, the company may require that the holders of debentures convert into common shares. The company has also agreed to reduce the conversion price of $9,702,000 principal amount of its convertible debentures issued since March 11, 2016, to 30 cents per share.

The debentures will be secured by a charge on all of the assets of the company.

The company intends to use the net proceeds of the offering for working capital purposes.

Closing of the offering is scheduled to be on or about Oct. 6, 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.

As a result of any subsequent offering at a lower price than the company's previous convertible debenture offering, the company would have been required to pay or issue up to $2.0-million of additional convertible debentures as part of an anti-dilution provision in certain debentures. To settle this debt, certain convertible debenture holders have agreed to collectively accept up to three million additional common shares in lieu of the $2.0-million debenture payment.

The company has retained AlphaNorth Asset Management as its financial adviser. AlphaNorth will receive a cash payment in an amount equal to 8.0 per cent of the gross proceeds of the offering and such number of compensation options equal to 8.0 per cent of the aggregate number of debentures issued and sold pursuant to the offering divided by 30 cents. Each compensation option shall be exercisable for one unit of the company at an exercise price of 30 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 30 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 from the closing date pursuant to Canadian securities laws.

We seek Safe Harbor.