Zonetail Corporate Update – Full Version

Toronto, Canada, October 21, 2020 (TSXV:ZONE) — Zonetail Inc. (“Zonetail” or the “Company”) is pleased to update its shareholders on recent advancements to increase its market share, customer engagement, and revenue.

Zonetail provides mobile platforms to hotels and condominiums connecting the residents of a condo and the guests of a hotel to the amenities and services of their building through the convenience of their personal mobile device. Included on both platforms is an ‘Explore’ section highlighting the businesses and services in the local area. These businesses pay to be on the platform to reach the highly sought, but often difficult to reach hotel guests and condo residents. In addition to the advertising revenue, Zonetail is also engaged in transaction revenue, where the Company receives fees for merchandise and services purchased through the platforms.

 

Highlights

  • Zonetail is partnered with AAHOA, the largest association of hoteliers in the world, representing over 25,000 hotels and 50% of the US hotel market.
  • Zonetail is also partnered with Shiftsuite, one of the largest property management system software providers to the condo industry in Canada and is now ‘live’ and in revenue in approximately 85,000 households. It is expected that the current units will continue to grow.
  • The Company is close to completing a new residential platform and APIs designed to seamlessly integrate with other property management systems, including some of the world’s largest, potentially adding tens of thousands of new buildings, and millions of new users.
  • The Company has been steadily increasing the number of buildings we are servicing, and the number of users on the platform with 88% growth over this time last year and 230% growth from May to September of this year.
  • As a result, the Company’s guidance for revenue for the fourth quarter of 2020 is already higher than the first three quarters of 2020 combined.
  • We have selected two recent advertiser wins and two recent transaction revenue wins to highlight, below:
    • On March 9, 2020, the Company announced an agreement with one of Canada’s largest Telecommunication companies. https://finance.yahoo.com/news/zonetail-expands-condo-resident-offers-113000803.html Phase one launched on April 1, 2020, and has been deemed a success, in spite of the COVID-19 disruption. Phase two of the partnership has recently launched, which includes the introduction of a specified section on the app dedicated exclusively to our Telecom partner, where they market their telecom residential services directly to condo residents. Phase two is also planned to double the number of condo units they are currently participating in, thus doubling the revenue.
    • On October 7, 2020, the Company announced the signing of Insurance Store. https://ca.finance.yahoo.com/news/zonetail-signs-exclusive-ontario-wide-113000660.html This is a significant new partnership for both revenue and proof of concept. It clearly demonstrates two important trends: the Zonetail condo platform appeals to a broad range of companies from many differing industries and secondly, due to COVID, companies are in immediate need of a platform like ours as they adjust their sales techniques from face-to-face sales, to ‘touchless’, digital sales, without diminishing personalized service. Insurance Store is now advertising in over 69,000 units across Ontario, with added revenue derived from exclusivity, having their own section on the app, and the ability to run multiple ads for different insurance products.
    • It’s no secret that home delivery businesses are booming during COVID. As part of our transaction revenue stream, Zonetail announced on August 24, 2020 the signing of Plant Be. https://finance.yahoo.com/news/plant-toronto-partners-zonetail-bringing-110000723.html Plant Be is a unique vegan food delivery service offered directly to condo residents. Plant Be is currently targeting approximately 35,000 units across the GTA, with plans to expand into other cities in the near future. Zonetail receives $00 per delivery.
    • On September 24, 2020, Zonetail signed an agreement with Radical Road Brewing Company. Radical Road delivers a high-end selection of craft beer, wine and selected spirits straight to your door. They are going live in 35,000 condo units across the Greater Toronto Area, and are planned to go Province wide in approximately 70,000 units by the end of October. Before the end of the year, they intend to deliver straight across Canada. Radical Road is planning to offer a 15% discount on all orders that come through the Zonetail condo platform. For every order placed, Zonetail receives a flat fee of $2.50. Over time, this has the potential to be very profitable for both companies.
  • Currently, we are pitching and/or in negotiations with over 50 new National and Regional businesses, some of which we expect to sign over the coming days, weeks and months, as more and more businesses are attracted to our unique approach in targeting condo residents.

 

Business Outlook (and the effects of Covid-19)

On June 2, 2020 and July 3, 2020, the Company was pleased to complete a $1.295 million private placement of units. Raising capital under the shadow of COVID-19 had its challenges. However, smart investors realize that, although many businesses are struggling greatly, and many more have disappeared entirely due to COVID, some companies like Zonetail have the ability to quickly adapt to not only survive, but to thrive in these unprecedented conditions.

When considering unpredictable events such as COVID-19, it is important to keep in mind that Zonetail is at scale in two verticals, hotels and condos. As such, when one vertical, in this case hotels, is unexpectedly hit hard by the pandemic, Zonetail has the flexibility to place a greater emphasis on the other vertical, condos, without suffering major setbacks.

As a result of COVID-19, and throughout 2020, our efforts continue to be focused more predominantly on the condo vertical, as the hotel industry will take some time to recover. COVID has also had negative effects for some of our advertising clients as well, most notably restaurants. In response, Zonetail is offering a COVID relief discount to restaurants to assist them through these difficult times.

For some other industries, the pandemic has provided opportunity. The delivery business is booming, and many other companies are adopting new ‘touchless’ ways to sell their products and services. Zonetail’s condo platform provides a unique and innovative way for companies who previously relied on face-to-face sales techniques to transition into digital and ‘touchless’ communications, directly with their customers.

With the completion of our recent financing, increases in revenue, along with a laser-focused approach to operating under a lean budget in these challenging times, the Company is confident that it has ample runway and cashflow to carry us well into 2021, and projected profitability.

 

Product development

The amount of buildings we are in, and the number of residents that have downloaded the app once they are made aware of it, are two early and key metrics investors should consider when evaluating Zonetail’s revenue potential. Couple that with how many more buildings and users we can add over the coming months, and you are much closer to projecting not just the value of the Company today, but where it can be in the very near future. Technology plays a large role in influencing these metrics, and thus influencing future revenue.

The recent financing has provided the necessary capital to enhance our technology to achieve these three primary goals: an increase to the number of properties we service, an increase in the number of users on the platform, which collectively translates into increased revenue.

The Company is currently close to completing a major overhaul of the condo platform. The development of several new features, which include amenity booking, community calendar, viewing your accounting ledger, and the introduction of a new marketplace, where condo residents can interact with each other, have been features requested by both our condo users and the condo property management companies. This overhaul is specifically designed to drive downloads and increase monthly active users. It is anticipated that these updates to the platform will be released before the end of October.

A new user interface (UI) and a new user experience (UX) (pictured) is also close to completion. The new design of the app is being introduced to not only enhance the overall user experience, but to increase the visibility of all our advertisers. The easier it is for condo residents to see and interact with the clients on our platform, the more business those clients will receive. In addition, we are adding new data and analytic tools that are expected to increase the conversion rates of condo residents not only seeing the ads, but actually purchasing from the advertisers, as we will be able to hyper target users with offers that they are interested in. This data capture also lays the foundation for future planned developments in artificial intelligence, providing a much more personalized experience. This will provide condo residents with offers from our advertisers at the exact time they have expressed interest in them.

The Company is close to completing a new residential platform and APIs designed to seamlessly integrate with other property management systems, including some of the world’s largest, potentially adding significant amount of new buildings and users.

As a direct result of our current technology developments, and with the much-appreciated assistance of our Telecom partner, Zonetail has recently entered into promising discussions with a potentially new and substantial strategic partner in our condo vertical. Should this partnership be secured, it has the potential to add a large amount of new condo buildings to our portfolio. It also has the potential to introduce a third vertical by adding a sizable amount of apartment buildings across Canada to our residential portfolio. In addition, it is expected to provide the necessary stepping-stone to launch Zonetail’s residential platform in the United States. Readers and shareholders are politely encouraged to pay close attention over the coming days and weeks for updates on this exciting opportunity.

 

Condos: How it works

The condo platform is designed to connect condo residents to their building and their property management. Using the platform, residents can interact with their property management, accessing community news and activity feeds, receiving push notifications on things such as building maintenance and package deliveries, they can create and track maintenance requests and more. In combination with the new features soon to be released, and highlighted above, it offers great utility to condo residents, as it digitizes the communication process between the building management and the resident.

To generate downloads, Zonetail works with Shiftsuite, and the condo property management companies directly, to communicate the availability of the app to the condo residents. The building property management can simply email its residents letting them know that the building has an app, and all the great benefits it provides. With an easy click through link to download, embedded in the email, it couldn’t be easier.

Our tracking process has proven, time and again, that when residents become aware that there is an app for their building, they tend to download it. Download rates of 20% are common and continue to climb, with some exceeding 60%. With the steady increase in condo units and buildings going ‘live’ on the Zonetail platform, there is a steady increase in users.

From this time October of 2019 to today, we have experienced over 88% growth in user adoption, and from May to September, 2020 a 288% growth. The Company fully expects this number to rise considerably, given the new features and upgrades to the platform.

So, how does Zonetail translate this into revenue?’

Revenue in the condo vertical is currently derived in two ways. The first is advertising revenue and the second is transaction revenue, (where Zonetail takes a fee for purchases made directly through the platform). Our target advertisers are many including food and grocery delivery services, retail chains, restaurant chains, home improvement, telecommunications companies, insurance companies, furniture and appliance retailers, entertainment, automotive, finance, technology providers, and many, many others.

So, you may ask, ‘why do they care about Zonetail’?

Many businesses both large and small and from a wide range of industries, have long sought to penetrate the large and lucrative condo market. Direct mail is  the traditional method, but it has always had considerable limitations. One only needs to visit a mail room in a condo building to see the overflowing recycle bins. Condo residents rarely, if ever, take direct mail upstairs with them. Still, companies continue to spend significant amounts of their marketing dollars in this fruitless effort, until now.

 

Zonetail’s condo platform offers a strong alternative to direct mail by putting the advertiser’s message right on the condo resident’s mobile device, 24/7/365, and it’s not a small and annoying pop-up banner ad either. The ads are elegantly designed with information, photo galleries, unique offers and promotions, connectivity via web links, phone, text and mapping capabilities. In some circumstances, added information such as viewing menus, links to purchasing products and services, booking reservations, and ticket sales, are also included. The ads are organized into categories like food delivery, home improvement, telecommunications, insurance, grocery, retail shopping, etc. making everything very easy to find. In fact, it’s our goal to provide everything a condo resident needs, all in the palm of their hand.

All of this is easily controlled by the client (advertiser), through Zonetail’s content management system, allowing them full control over the message. They have the ability to update, edit and change that message as often as they like. From a budget standpoint, Zonetail has them covered too, where our pricing model comes in at a fraction of the cost of direct mail, which on average is $0.25 per piece.

Zonetail charges $0.10 per condo unit, per month, to advertisers. Pretty affordable for any budget. We are currently live and billing across approximately 85,000 units and growing. So, in other words if one client decides to go into all 85,000 units, Zonetail invoices them $8,500/month. As we add more units, that revenue continues to climb.

It is important for the reader to keep in mind that the condo platform is still very new. As the rollout across Canada continues, more and more condos in our portfolio come ‘live’, more and more property management companies announce the app to their residents, and more and more residents download and use it. As a result, more and more new businesses are and are expected to come on board. We are now at the stage of growth where it is an attractive offer to even the largest and most sophisticated companies in Canada, as our signing of one of Canada’s largest telecommunication companies is a clear example.

 

Hotels

Although we are emphasizing the condo vertical throughout 2020, let’s not forget that Zonetail has over 25,000 hotels in our portfolio, and our partnership with AAHOA is as strong as ever.

The long-term effects of COVID-19 are projected by many to change the way hotels do business permanently. Using technology to go ‘touchless’ in their communication with their guests is considered inevitable. For many hotels, the need for the Zonetail hotel platform is only increasing as time goes on. Even now, the Company continues to be contacted by hotels in Canada and the U.S. that want to use this downtime to implement the current Zonetail hotel platform into their properties. They aim to use the platform to minimize all contact between their guests and their staff. Smart thinking. However, there is work to be done to provide our hotel partners with industry leading technology to answer this growing need.

Fortunately the technology development that is currently underway for the condo vertical, can easily be introduced to a new hotel platform planned for 2021, saving a huge amount of cost and time. The new platform will include a new UI/UX, very similar to the condo platform, and new features, such as mobile check in, integration with hotel management software, a booking engine, among others.

The Company is also currently in late-stage discussions with a potential technology partner in the hotel vertical that offers the opportunity to charge each hotel a monthly service fee, deriving revenue directly from the hotels themselves, on top of the advertising and transaction revenue. This technology also has the potential to provide a much more effective method in getting the Zonetail hotel application into the hands of literally millions of hotel guests. The potential this partnership offers can have a significant impact on the hotel revenue in 2021 and beyond. Keep an eye out for future announcements.

The hotel industry will bounce back from COVID-19, and when that happens, the Company is expecting to be in a strong position to capitalize on it.

 

Other Developments

Following up on the announcement made in May 2019, https://finance.yahoo.com/news/zonetail-explores-strategic-partnership-pineapple-110000888.html the Company is now working with our legal team, finalizing the necessary requirements to move from LOIs into contract agreements with potentially three cannabis related companies. Technology development is necessary to, among other things, create an adult gated section on our platforms to be in compliance with the laws surrounding cannabis related products. In addition to expected quarterly advertising revenue, it is planned that Zonetail will receive a transaction fee of 10% of the sales made through our platforms. Further announcements will be made in due time.

The Company is also in the final stages of obtaining its OTCQB listing allowing for many of our partners and colleagues in the U.S., whom have expressed interest in purchasing stock, the ability to do so easily.

Today the Company is perhaps in the best position that it has ever been in. The opportunities for substantial growth are not on the horizon, but are in fact here, now. Management continues to improve the technology, build strong strategic partnerships, expand our property portfolio, increase the user base, all to drive revenues and add value for all of our stakeholders.

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.

 

About Zonetail

Zonetail Inc. (TSXV:ZONE) is a mobile platform for hotels and condominiums  providing guests and residents access and interaction with building amenities and services as well as neighbouring restaurants, stores, services, and other businesses. Zonetail is partnered with AAHOA, the largest association of hoteliers in the world, representing over 25,000 hotels and 50% of the US market. Zonetail is also partnered with Shiftsuite, one of the largest property management system software providers to the condo industry in Canada. The condo platform is now live in over 80,000 condominium households.

Please visit https://www.zonetail.com.

 

For more information, please contact:

 

Mark Holmes, President and CEO

Zonetail Inc.

Telephone: (416) 583-3773 ext. 228

mark@zonetail.com

 

Legal Disclaimer and Forward-Looking Statements

This press release contains forward-looking statements that relate to Zonetail’s current expectations and views of future events. In some cases, these forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “aim”, “estimate”, “intend”, “plan”, “seek”, “believe”, ”potential”, “continue”, “is/are likely to” or the negative of these terms, or other similar expressions intended to identify forward-looking statements. Certain matters discussed in this announcement contain statements, estimates and projections about the growth of Zonetail’s business, potential distribution partnerships and/or clients, and related business strategy. Such statements, estimates and projections may constitute forward-looking statements within the meaning of the federal securities laws. Factors or events that could cause our actual results to differ may emerge from time-to-time. Zonetail undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The recipient of this information is cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are based on certain assumptions and analysis made by Zonetail in light of its experience and perception of historical trends, current conditions and expected future developments and other factors Zonetail believes are appropriate, and, are subject to risks and uncertainties. Although Zonetail believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, prospective purchasers should not place undue reliance on these forward-looking statements.