KGIC Inc. Announces Second Stage Closing of Ongoing Convertible Debenture Private Placement Financing

TORONTO, ONTARIO--(Marketwired - June 10, 2016) -

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KGIC Inc. ("KGIC" or the "Company") (TSX VENTURE:LRN) is pleased to announce that it has completed the second stage closing of its non-brokered private placement of convertible secured subordinated debentures (the "Debentures") for gross proceeds of $400,000 in principal amount (the "Offering"). The private placement is ongoing and the Company expects to close one or more additional tranches for maximum total gross proceeds to the Company of up to $6,500,000.

The Debentures will have a maturity date of one year from the date of issue (the "Maturity Date"), will bear interest at a rate of 5.0% per annum and will be convertible into units at the holder's option at a pre-consolidation conversion price of $0.02 per unit at any time prior to the Maturity Date, with each unit being comprised of one common share and one common share purchase warrant. Each common share purchase warrant will entitle the holder to purchase one common share of the Company at a pre-consolidation exercise price of $0.05 per share for a period of two years from the date of issuance of the Debentures. If a holder notifies the Company on or before the date that is 10 months following the date of issuance of the Debentures that the holder will not be converting its Debentures into units, the interest rate on the Debentures will be increased to 12.5% per annum, retroactive from the date of issuance of the Debentures.

The Offering was made pursuant to the grant of a "discretionary waiver" of the TSX Venture Exchange's ("TSXV") minimum $0.05 pricing requirement (the "Waiver") and is subject to acceptance by the TSXV. With respect to the Waiver, the Company may conduct a share consolidation of its outstanding common shares in such ratio as would result in a "post-consolidation" conversion price equal to or greater than $0.05 per common share (a "Consolidation") on or before the date that is six months following the closing date (the "Consolidation Deadline"). However, the Debentures may not be converted into common shares unless a Consolidation is completed on or before the Consolidation Deadline. If a Consolidation is not completed on or before the Consolidation Deadline, the conversion price will be deemed to be amended to $0.05 per common share in accordance with the TSXV's minimum pricing requirements and the interest rate on the Debentures will be increased to 12.5% per annum, retroactive from the date of issuance of the Debentures.