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TORONTO, July 12, 2018 /CNW/ - Revelstoke Equity Inc. (TSXV: REQ.H) (the "Corporation" or "Revelstoke") announces that, further to the Corporation's press release dated January 31, 2018 (the "Previous Press Release"), Revelstoke is pleased to provide more information in respect of the proposed transaction pursuant to which Revelstoke and Zonetail Inc. ("Zonetail") are expected to combine their business operations (the "Transaction"). Zonetail is a company which specializes in a mobile technology platform of local mobile content which, using a cloud-based content management system, connects user with their location and surroundings, as described in more detail in the Previous Press Release. Upon completion of the Transaction, the combined entity (the "Resulting Issuer") will continue to carry on the business of Zonetail.
Proposed Subscription Receipt Financing
As a condition to the Transaction, Zonetail is required to complete a private placement financing (the "Private Placement") which is currently scheduled to close on July 13, 2018 for gross proceeds of $2,003,416.56. The Private Placement is an offering of subscription receipts of Zonetail ("Subscription Receipts") at a price of $0.18 per Subscription Receipt (the "Private Placement Price"). Each Subscription Receipt issued in connection with the Private Placement will be automatically exchanged immediately prior to the completion of the Transaction (without any further action by the holder of such Subscription Receipt and for no further payment) for common shares of Zonetail ("Zonetail Shares"), each of which shall be exchangeable into one common share (a "Resulting Issuer Share") of the Resulting Issuer, upon satisfaction of certain escrow release conditions (the "Escrow Release Conditions"). The Subscription Receipts will be governed by a subscription receipt agreement (the "Subscription Receipt Agreement") to be dated the date of closing of the Private Placement (the "Closing Date") between Zonetail, Gravitas Securities Inc. ("Gravitas"), as lead agent for the Private Placement, and TSX Trust Company (the "Subscription Receipt Agent"), as registrar and transfer agent for the Subscription Receipts and as escrow agent to receive the proceeds of the Private Placement. The net proceeds of the Private Placement will be used for the initial development of Zonetail's blockchain application technology, sales and marketing efforts, and general working capital and corporate purposes
Revelstoke and Zonetail executed an engagement letter dated January 18, 2018 with Gravitas and Canaccord Genuity Corp. ("Canaccord"), which is expected to terminate and be superseded by an agency agreement to be entered on the Closing Date with Gravitas, Canaccord and Beacon Securities Limited (the "Agents"), as co-lead agents in connection with the Private Placement. Under the terms of the Agency Agreement, the Agents will be appointed to act as agents in connection with the Private Placement on a "best efforts" basis. In connection with the Private Placement, the Agents will be entitled to a cash commission (the "Commission") of 8% of the aggregate gross proceeds placed under the Private Placement payable in cash, other than certain subscriptions in the amount of: (i) $444,999.96, for which the Commission will be reduced to 6%; (ii) $250,000, in respect of which no Commission will be payable. 25% of the Commission will be paid to the Agents at closing of the Private Placement and the remaining 75% shall be paid to the Agents by the Subscription Receipt Agent from the funds held in escrow on the date that the Escrow Release Conditions set out in the Subscription Receipt Agreement are satisfied (the "Escrow Release Date"). The Agents will also be granted warrants by Zonetail ("Agents' Warrants") to acquire that number of Zonetail Shares equal to 8% of the total number of Subscription Receipts sold under the Private Placement, other than certain subscriptions in the amount of: (i) $444,999.96, for which the percentage of Agents' Warrants issued will be reduced to 6%; (ii) $250,000, in respect of which no Agents' Warrants are payable. Each Agents' Warrant will be exercisable at the Private Placement Price per Zonetail Share (or if exercised after closing of the Transaction, per Resulting Issuer Share), from the Closing Date and for a period of 24 months from the Escrow Release Date. In consideration of the Agents' services in connection with the coordination and review of the Private Placement, Zonetail will issue to the Agents 222,602 Zonetail Shares which is equal to 2% of the aggregate number of Subscription Receipts to be issued pursuant to the Offering. In addition to the foregoing compensation, Zonetail will also pay to the Agents a fee equal to $8,000 plus applicable tax; and (ii) issue to the Agents, 44,445 warrants (the "Work Fee Warrants"), as a work fee. Each Work Fee Warrant is exercisable on the same terms as the Agents' Warrants.
The Agents have also been granted the option to acquire up to an additional 15% of the number of Subscription Receipts sold under the Private Placement, exercisable in whole or in part at any time on or prior to the date that is 30 days following the closing date of the Private Placement, on the same terms as the Subscription Receipts sold under the Private Placement.
The closing of the Private Placement is conditional upon, among other things, the completion of satisfactory due diligence by the Agents, the receipt of all necessary corporate and regulatory approvals, and the execution of the Agency Agreement.
Summary of Financial Information
The following table sets forth certain select annual and interim unaudited financial information of Zonetail for the periods indicated.
Three months ended March 31, 2018
December 31, 2017
December 31, 2016
Controlling Security holders of Zonetail
No person, either directly or indirectly, holds a controlling interest in or otherwise controls or directs Zonetail.
It is currently anticipated that the Transaction will occur as a three-cornered amalgamation between Zonetail, Revelstoke and a to be incorporated wholly-owned subsidiary of Revelstoke ("Subco"), the final structure of the Transaction being subject to receipt of tax, corporate and securities law advice for both the Corporation and Zonetail. It is expected that the structure of the Transaction will be finalized in a definitive agreement (the "Definitive Agreement") entered into between the parties. Subject to finalization of the Definitive Agreement and based on the capitalization , it is currently anticipated that Revelstoke will satisfy the transaction price for the Zonetail Shares by issuing in the aggregate 57,584,711 Resulting Issuer Shares to the holders of Zonetail Shares at a deemed price of $0.18 per Resulting Issuer Share for aggregate consideration of $10,365,247.98.
The Transaction is subject to regulatory approval, including the approval of the Exchange, and the satisfaction of customary closing conditions, including the approval of the Definitive Agreement and the Transaction by the board directors of each of Revelstoke and Zonetail and completion of due diligence investigations to the satisfaction of each of Revelstoke and Zonetail, as well as the conditions described below. The Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a "Non-Arm's Length Qualifying Transaction", as such term is defined under the policies of the Exchange.
In connection with the Transaction, it is expected that the Corporation will hold an annual general and special meeting to, among other items of business, change its name to "Zonetail Inc." upon completion of the Transaction. It is not anticipated that the Transaction will be subject to approval of the Revelstoke shareholders at this time.
In due course once available, Revelstoke and Zonetail will provide further details by press release in respect of the Transaction, including the final terms of the Definitive Agreement and the applicable security exchange ratios and the further details of any meetings of the shareholders of Revelstoke and Zonetail required to approve the Transaction and matters related thereto (as applicable).
Proposed Directors and Officers of Resulting Issuer
As will be further described in the filing statement to be filed by the Corporation in connection with the Transaction, the following individuals have been identified as proposed directors and officers of the Corporation following completion of the Transaction:
Mark Holmes, President, CEO, Corporate Secretary and Director
Having owned and managed Kingsway Agencies, a leading company in hospitality content and marketing services, Mark brings fifteen years of category learning and leadership to Zonetail. Mark's experience and network, in both the hotel and retail/restaurant industries, along with Kingsway's 55 year old legacy, are an integral component in the success of Zonetail.
Daniel Crandall, CFO
Dan has more than 10 years of experience working with public companies. He specializes in providing Chief Financial Officer services, accounting, regulatory compliance, and management advisory services to numerous issuers on the TSX, the Exchange, CSE and other international exchanges. He is a CPA, CA with an Honours Bachelor of Accounting (Co-op) degree from Brock University.
Paul Scott, and Director
Paul has been the President of Scott Analytics since 2008 and was also the Founder of Agency for Cycling Ethics. Prior to his work as an entrepreneur, Paul was a Patent attorney in the Manhattan offices of Sidley and Austin.
Chip Rogers, Director
Chip serves as President and CEO of AAHOA, the nation's largest hotel owners association. Chip serves as a member of the Forbes Nonprofit Council, the California State University Hospitality & Tourism Management Education Alliance Advisory Panel, member of the American Legislative Exchange Council Private Enterprise Advisory Board of Directors, member of the California Hotel and Lodging Association Board of Directors and member of the Community Leaders of America Board of Directors. Prior to joining AAHOA, Rogers had a long career as a small business owner and public servant. He previously served in the Georgia General Assembly, being elected six times. Senator Rogers was unanimously elected to serve two-terms as the Senate Majority Leader.
Adam Topp, Director
Adam Topp has worked in the health care sector for more than twenty-five years developing a unique background that combines financial, clinical and operational leadership as well as consulting. Prior to forming BIG Healthcare, Adam was a Senior Associate Consultant with HayGroup Health Care Consulting. Adam also worked with Hay Group between his appointments at the Winnipeg Regional Health Authority and Sunnybrook & Women's College Health Sciences Centre. In Winnipeg, Mr Topp was Chief Operating Officer simultaneously for both Winnipeg Health Sciences Centre and Grace General Hospital. At Sunnybrook for 10 years, Adam was Vice President Clinical Operations, and prior to that, Vice President Corporate Performance & Chief Financial Officer.
The common shares of Revelstoke are currently halted from trading and are not expected to resume trading until completion of the Transaction.
For further information concerning the Transaction, please refer to the press release of the Corporation dated January 31, 2018 available on SEDAR at www.sedar.com. If and when a Definitive Agreement between the Corporation and Zonetail is executed, the Corporation will issue a subsequent press release in accordance with the policies of the Exchange containing the details of the Definitive Agreement and additional terms of the Transaction.
Completion of the Transaction is subject to a number of conditions including, but not limited to, completion of the Private Placement, the satisfaction of the Corporation and Zonetail in respect of the due diligence investigations to be undertaken by each party, the completion of a Definitive Agreement in respect of the Transaction, closing conditions customary to transactions of the nature of the Transaction, approvals of all regulatory bodies having jurisdiction in connection with the Transaction, Exchange acceptance of the Transaction as the Qualifying Transaction of Revelstoke and, if required by the Exchange policies, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction, the Private Placement, the Definitive Agreement and the Agency Agreement, the use of proceeds of the Private Placement and the proposed directors and officers of the Resulting Issuer. The information about Zonetail contained in the press release has not been independently verified by the Corporation. Although the Corporation believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Transaction, the Private Placement, the Definitive Agreement, the Agency Agreement, the Subscription Receipt Agreement, the completion of the Escrow Release Conditions, the appointment of the proposed directors and officers of the Resulting Issuer, the completion of the Escrow Release Conditions and associated transactions, that the ultimate terms of the Transaction, the Private Placement, the Agency Agreement, the Subscription Receipt Agreement, the Definitive Agreement, the appointment of the proposed directors and officers of the Resulting Issuer, completion of the Escrow Release Conditions and associated transactions will differ from those that currently are contemplated, and that the Transaction, the Private Placement, the Agency Agreement, the Subscription Receipt Agreement, the Definitive Agreement, the completion of the Escrow Release Conditions, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The terms and conditions of the Transaction may change based on the Corporation's due diligence (which is going to be limited as the Corporation intends largely to rely on the due diligence of other parties of the Transaction to contain its costs, among other things) and the receipt of tax, corporate and securities law advice for both Revelstoke and Zonetail. The statements in this press release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation, Zonetail, their securities, or their respective financial or operating results (as applicable).
Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The common shares have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
SOURCE Revelstoke Equity Inc.