Mr. Paul Searle reports

GOLDEN LEAF HOLDINGS LTD. ANNOUNCES CLOSING OF SECOND TRANCHE OF NON-BROKERED PRIVATE PLACEMENT OF CONVERTIBLE DEBENTURES

Golden Leaf Holdings Ltd. (GLH) has closed the second tranche of its previously announced non-brokered private placement of convertible senior secured debentures of the company, at a price per debenture of $1,000, for gross proceeds of up to $12-million. An aggregate of $982,000 principal amount of debentures were issued in the second tranche of the offering.

The debentures mature on the date that is 18 months from issuance and bear interest accruing at a rate of 10.0 per cent per year from issuance, 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 Dec. 31, 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, in cash or 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 are 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 have been granted certain rights with respect to anti-dilution and future equity issuances. If the daily volume-weighted average price of common shares is $1 or greater for 10 consecutive trading days, the company may require that the holders of debentures convert into common shares.

The debentures are secured by a general security agreement over all of the assets of the company, and carry the benefit of a guarantee of the subsidiaries of the company of all indebtedness and liability of the company to the holders under the debentures. The company also pledged all of the outstanding securities of the subsidiaries under various pledge agreements.

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

We seek Safe Harbor.