Mr. Kevin Hoffman reports

KADESTONE CAPITAL CORP. ANNOUNCES PRIVATE PLACEMENT OF CONVERTIBLE NOTES AND WARRANTS

Kadestone Capital Corp. has arranged a non-brokered private placement of secured convertible notes and common share purchase warrants for aggregate gross proceeds of up to approximately $5.0-million. The private placement is expected to close in one or more tranches, subject to, among other things, receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.

The convertible notes will mature on the date that is 36 months after issuance, subject to acceleration upon the occurrence of an event of default, and will bear interest at a rate of 10 per cent per annum, compounded monthly and payable on redemption or conversion. On the maturity date, the principal amount of the convertible notes, together with accrued and unpaid interest, will be convertible into common shares in the capital of Kadestone at the option of the holder at a conversion price of 50 cents per common share. Notwithstanding the foregoing, any conversion of interest accrued on the convertible notes, including the conversion price applicable thereto, will be subject to the prior approval of the TSX-V.

Investors will also receive such number of warrants that is equal to the principal amount of convertible notes subscribed for, divided by the conversion price. Each warrant will entitle the holder to purchase one common share at a price of 60 cents per common share for a period of 36 months, subject to customary adjustments.

The convertible notes will automatically convert into common shares upon the occurrence of certain events, including upon the closing of an equity financing resulting in gross proceeds to the company of not less than $25-million and completion of a sale or other disposition of all or substantially all of the company's assets. Where an automatic conversion occurs pursuant to a qualifying transaction, the principal amount of convertible notes, together with accrued and unpaid interest, will automatically convert into common shares at a 20-per-cent discount to the applicable price per security payable in the qualifying transaction, subject to the prior approval of the TSX-V. In the event of a change of control transaction, the applicable conversion price will be equal to the conversion price, subject to, in the case of accrued and unpaid interest, the prior approval of the TSX-V.

The company will be entitled to repay the principal amount of the convertible notes, together with accrued and unpaid interest, at any time and without penalty upon notice to the holders.

The proceeds of the private placement will be used to pay down debt and for general corporate purposes.

It is anticipated that certain insiders of Kadestone will subscribe for securities in the private placement. The issuances of securities to such insiders will be considered related party transactions within the meaning of TSX-V Policy 5.9, Protection of Minority Securityholders in Special Transactions, and Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. The company intends to rely on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the fair market value of the private placement, insofar as it involves the insiders, will not be more than 25 per cent of the company's market capitalization. The company expects that closing of the private placement will occur within 21 days of this announcement and that it will not file a material change report in respect of this related party transaction at least 21 days before the closing. The company deems this circumstance reasonable in order to complete the private placement in an expeditious manners.

The securities issued pursuant to the private placement, including any underlying common shares, will be subject to a four-month statutory hold period in accordance with applicable Canadian securities laws.

About Kadestone Capital Corp.

Kadestone was established to pursue the investment in, and acquisition, development and management of, residential and commercial income-producing properties, and procurement and sale of building materials within major urban centres and high-growth, emerging markets in Canada. The company operates five complementary business lines spanning building materials procurement and supply, property development and construction, construction finance, asset ownership, and property management. These synergistic business lines have solidified Kadestone's vision to become a market-leading vertically integrated property company.

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