Xylitol Canada Inc. (TSXV:XYL) announced a private placement of promissory notes for gross proceeds of CAD 325,000 on July 19, 2016. The notes were issued at par. The promissory notes will be convertible into secured convertible debentures and common share purchase warrants.

The secured convertible debentures will have a maturity of four years from the effective closing date April 8, 2016. The debentures will carry interest rate equal to greater of an annual interest of 15% per annum or a royalty equal to 3% of sales per annum, subject to an annualized combined effective interest of a maximum of 24%. The debentures are convertible into common shares at a price of CAD 0.10 per share.

The company may redeem debentures at any time by paying principal amount of the debenture plus all the accrued and unpaid interest. The warrants will be exercisable for a period of two years at a price of CAD 0.08 per share.The transaction included participation from existing investor, Fountain Asset Corp. (TSXV:FA) for CAD 175,000 and Roger Daher, Director, for CAD 150,000.

As part of the transaction Fountain Asset Corp. (TSXV:FA) owns and controls 19,400,000 common shares representing 17.2% stake on an as converted basis.