Xylitol Canada Inc. Announces Proposed Convertible Debenture Financing

TORONTO, ONTARIO--(Marketwired - Feb. 8, 2016) - Xylitol Canada Inc. ("Xylitol Canada", or the "Company") (TSX VENTURE:XYL) is pleased to announce a proposed offering of convertible debentures (the "Debentures"), on a private placement basis, for aggregate gross proceeds of up to $3,000,000 (the "Offering"). The Debentures will accrue interest at a rate of 10% per annum with a maturity date that is three years from the date of issuance, subject to automatic conversion and redemption as described below. The principal amount of each Debenture and all accrued and unpaid interest thereon will be convertible into common shares of the Company (the "Common Shares") at a price per Common Share of $0.10. The Offering is subject to approval of the TSX Venture Exchange (the "Exchange").

In connection with the issuance of the Debentures, the Company will issue warrants (the "Warrants") equal to 20% of the aggregate number of Common Shares issuable upon the conversion of the Debentures. The Warrants will entitle the holder thereof to acquire one Common Share at an exercise price per Common Share of $0.15, for a period of three years from date of issuance.

The Debentures and all accrued and unpaid interest thereon will automatically convert into Common Shares upon the occurrence of the following: (a) the Common Shares closing at a trading price at or above $0.20 for a period of twenty consecutive trading days; (b) at the option of the Company, provided that the trading price of the Common Shares at the time of conversion is greater than the conversion price of the Debentures; or (c) if the Company is required to convert by any regulatory authority.

Subject to providing not more than 60 days' and not less than 30 days' prior notice, the Company may redeem the Debentures, in whole or in part at any time prior to the maturity date, at 110% of the principal amount of the Debentures then outstanding plus accrued and unpaid interest thereon.

The Debentures will be subject to a statutory hold period of four months plus one day from the date of issuance. Proceeds from the Offering will be used for general working capital purposes and the Company may pay customary finders fees and commission to eligible arm's length third parties. The Offering is expected to close on or around March 15, 2016.

About Xylitol Canada Inc.

Xylitol Canada operates two business units that address the growing xylose and xylitol markets. Xylitol Canada's consumer packaged goods division is based in Denver Colorado and has grown from under $500,000 in revenue in 2010, to over $8,600,000 in 2014. Xylitol Canada operates a 50,000 square foot xylitol facility where it produces and packages a full catalog of natural sugar free products, most notably its natural sugar alternatives. Through this Denver based facility, the Company services major retail customers such as Loblaws, Whole Foods, Costco, Sprouts, and many others.

Xylitol Canada markets xylitol and xylitol based-products and is focused on becoming a major low-cost manufacturer of xylitol and related products, serving the global market from operations in North America. Xylitol Canada's business strategy is to leverage novel proprietary technology and processes to become North America's premier manufacturer of low cost, high quality xylitol from readily available environmentally-sustainable biomass. Xylitol is a natural sweetener which is marketed globally including Canada and the United States and is accepted by the American Food and Drug Administration, the World Health Organization and the American Dental Association. Xylitol contains 75% less carbohydrates and 40% less calories than sugar, has a myriad of oral health benefits including the prevention of tooth decay and is safe for diabetics. To date, wider spread use of xylitol has been limited by the lack of a reliable, low cost, high quality supplier.

Forward Looking Statements

This press release contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Xylitol Canada to be materially different from any future anticipated results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of Xylitol Canada to complete the Offering. While Xylitol Canada anticipates that subsequent events and developments may cause its views to change, Xylitol Canada specifically disclaim any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing Xylitol Canada's views as of any date subsequent to the date of this press release. Although the Xylitol Canada has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect Xylitol Canada. Additional factors are noted under "Risk Factors" Xylitol Canada's financial statements and related management's discussion and analysis.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.