Mr. Kevin Hoffman reports

KADESTONE CAPITAL CORP. CLOSES $3,300,000 CONVERTIBLE NOTE PRIVATE PLACEMENT

Kadestone Capital Corp. has closed a non-brokered private placement of secured convertible notes and common share purchase warrants. Pursuant to the private placement, the company issued one convertible note in the aggregate principal amount of $3.3-million and 8.25 million warrants.

The convertible note issued pursuant to the private placement 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. The convertible notes are convertible, at the option of the holder, at any time following issuance into common shares in the capital of Kadestone at a conversion price of 40 cents per common share, provided that such conversion shall not result in the holder beneficially owning or controlling 9.9 per cent or more of the issued and outstanding common shares without the prior approval of the TSX Venture Exchange. Notwithstanding the foregoing, any conversion of interest accrued on the convertible notes, with the deemed issue price determined in accordance with TSX-V policies, will be subject to the prior approval of the TSX-V.

Each warrant will entitle the holder to purchase one common share at a price of 50 cents per common share for a period of 36 months from issuance, subject to customary adjustments.

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

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 the convertible notes will automatically convert into common shares at the conversion price, provided that such conversion does not result in the holder beneficially owning or controlling 9.9 per cent or more of the issued and outstanding common shares without prior approval of the TSX-V. Any conversion of accrued and unpaid interest will be subject to the prior approval of the TSX-V and will be issued at a price not less than the minimum price permitted under TSX-V policies at the time of conversion. 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 securities issued pursuant to the private placement, including any underlying common shares, will be subject to a four-month-and-one-day statutory hold period, expiring Oct. 12, 2026, in accordance with applicable Canadian securities laws. The private placement remains subject to the final approval of the TSX-V.

About Kadestone Capital Corp.

Kadestone was established to pursue the investment in, 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.

We seek Safe Harbor.