Revelstoke Equity Inc. Announces Merger Agreement With Zonetail Inc., Conditional Acceptance of Qualifying Transaction and Filing of Filing Statement

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TORONTO, Nov. 7, 2018 /CNW/ - Revelstoke Equity Inc. (TSXV: REQ.H) (the "Corporation" or "Revelstoke") is pleased to announce that further to the Corporation's press release dated July 12, 2018 describing a proposed business combination with Zonetail Inc. ("Zonetail"), 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, the Corporation has entered into a definitive merger agreement dated November 5, 2018 (the "Merger Agreement") with Zonetail and Revelstoke Subco Inc. ("Revelstoke Subco"), a wholly-owned subsidiary of the Corporation. It is expected that the proposed transaction pursuant to the Merger Agreement (the "Transaction") will result in a reverse takeover of Revelstoke by Zonetail in accordance with the policies of the TSX Venture Exchange (the "TSXV"). Upon completion of the Transaction the combined entity (the "Resulting Issuer") will continue to carry on the business of Zonetail.

The Corporation is also pleased to announce that it has received conditional approval from the TSXV for the Transaction as the Corporation's "Qualifying Transaction", as such term is defined under TSXV Policy 2.4 – Capital Pool Companies. The conditional acceptance is valid for a 90 day period from October 25, 2018. The Corporation has filed on SEDAR its filing statement dated effective November 5, 2018 in connection with Transaction.

Subject to satisfaction of all conditions and approvals, including the satisfaction of the conditions of the TSXV, the Transaction is expected to close on or about November 8, 2018, or such other date as may be agreed upon by Revelstoke and Zonetail (the "Closing Date"). The Corporation expects that the common shares of the Resulting Issuer ("Resulting Issuer Shares") will commence trading under the symbol "ZONE" on November 14, 2018.

Merger Agreement

Under the terms of the Merger Agreement, the Transaction will be completed by way of a three cornered amalgamation under the laws of Ontario, whereby Revelstoke Subco will amalgamate with Zonetail (the surviving entity, referred to as "Amalco"). Concurrently with closing of the Transaction, Revelstoke is expected to change its name to "Zonetail Inc.", and following completion of the Transaction, it is anticipated that Amalco will immediately thereafter amalgamate with Revelstoke and the Resulting Issuer will hold all of Zonetail's assets and conduct the business of Zonetail.

Pursuant to the terms of the Merger Agreement:

(a)	each common share of Zonetail (the "Zonetail Shares") (including the Zonetail Shares issued upon the exercise of the existing subscription receipts and the conversion of the existing convertible debt of Zonetail) will be cancelled and replaced by one fully paid and non-assessable common share of Revelstoke ("Revelstoke Shares") (such ratio of 1:1 being the "Exchange Ratio");
(b)	all of the outstanding: (i) compensation warrants issued to certain agents for financings of Zonetail; (ii) common share purchase options of Zonetail; and (iii) common share purchase warrants of Zonetail, in each case that are not exercised prior to the Closing Date, shall be exercisable for Resulting Issuer Shares in accordance their terms at the Exchange Ratio;
(c)	the common shares of Revelstoke Subco ("Revelstoke Subco Shares") will be cancelled and replaced by common shares of Amalco ("Amalco Shares") on the basis of one Amalco Share for each Revelstoke Subco Share; and
(d)	as consideration for the issuance of the Revelstoke Shares to effect the Amalgamation, Amalco will issue to Revelstoke one Amalco Share for each Revelstoke Share issued to the previous holders of Zonetail Shares.

Upon closing of the Transaction, an aggregate of approximately 64,774,130 Resulting Issuer Shares will be issued and outstanding. It is expected that, immediately following completion of the Transaction: (i) the current Revelstoke shareholders will hold 3,789,300 Resulting Issuer Shares, representing approximately 5.9% of the outstanding Resulting Issuer Shares; (ii) the current Zonetail shareholders will hold 43,232,976 Resulting Issuer Shares, representing 66.7% of the outstanding Resulting Issuer Shares; and (iii) the holders of existing subscription receipts and convertible debt of Zonetail will hold 17,751,854 Resulting Issuer Shares, representing 27.4% of the outstanding Resulting Issuer Shares.

Pursuant to the terms of the Merger Agreement, completion of the Transaction will be subject to a number of conditions, including but not limited to, closing conditions customary to transactions of the nature of the Transaction, requisite shareholder approvals, approvals of all regulatory bodies having jurisdiction in connection with the Transaction and approval of the TSXV including the satisfaction of its initial listing requirements. There can be no assurance that the Transaction will be completed as proposed or at all.

The Transaction is considered a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), on the basis that Craig Leon, a director of the Corporation, is an indirect shareholder of Zonetail. The Corporation is not required to obtain a formal valuation under MI 61-101 with respect to the Transaction as it is able to rely on an exemption from the formal valuation requirement pursuant to Section 5.5(b) of MI 61-101. The Corporation is also exempt from the minority approval requirement of MI 61-101 in respect of the Transaction pursuant to Section 5.7(1)(b) of MI 61-101.

Trading Halt

The Revelstoke Shares are currently halted from trading, and the trading of Revelstoke Shares is expected to remain halted pending completion of the Transaction.

Additional Information

For further information concerning the Transaction and related matters, please refer to the press releases of the Corporation dated January 31, 2018, July 12, 2018 and July 13, 2018 available on SEDAR at www.sedar.com.

Investors are cautioned that, except as disclosed in the filing statement prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying 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.

All information contained in this press release with respect to Revelstoke and Zonetail was supplied by the respective parties, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Cautionary Statements

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. Although Zonetail and the Corporation believe 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 and Zonetail 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 and associated transactions, that the ultimate terms of the Transaction and associated transactions will differ from those that currently are contemplated, and that the Transaction, 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 Zonetail and the Corporation. The statements in this press release are made as of the date of this release. The Corporation and Zonetail undertake 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 the TSX Venture Exchange, Inc. 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.

Revelstoke Equity Inc.: Craig Leon, Chief Executive Officer, Chief Financial Officer, Corporate Secretary and Director, Telephone: [phone], [email protected]; Zonetail Inc.: Mark Holmes, President and Chief Executive Officer, Telephone: [phone] ext. 228, [email protected]