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File: Capstream - NR - AnnouncingClosing of Qualifying Transaction.DOC

CAPSTREAM VENTURES INC.
Suite 530 - 625 Howe Street Vancouver BC V6C 2T6
T: 604.687.7767 F: 604.688.9895

NEWS RELEASE

May 12, 2016        TSXV Symbol: CSP.H

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES
OR FOR DISSEMINATION IN THE UNITED STATES.

CAPSTREAM ANNOUNCES COMPLETION OF QUALIFYING TRANSACTION

Vancouver, British Columbia - Capstream Ventures Inc. ("Capstream" or the "Company") is pleased to announce that it ha
--->s completed its Qualifying Transaction (as defined in Policy 2.4 - Capital Pool Companies of the Corporate Finance Man
--->ual (the "Manual") of the TSX Venture Exchange (the "Exchange"), as previously described in its press releases dated M
--->ay 12, 2015, October 6, 2015, December 23, 2015 and May 6, 2016, and more particularly set out in its filing statement
---> dated April 25, 2016 (the "Filing Statement"), which is available under the profile of the Company at www.sedar.com. 
---> As a result of the completion of the Qualifying Transaction, the Company will cease to be a Capital Pool Company (as 
--->defined in the Manual) and following receipt of final Exchange approval, the Company will be listed as a Tier 2 Invest
--->ment Issuer on the Exchange. The Company expects trading in its common shares to commence on the second business day f
--->ollowing receipt by the Company of the final Exchange bulletin in respect of the Qualifying Transaction. The common sh
--->ares will trade under the symbol "CSP".
The Company completed the Qualifying Transaction through the acquisition of:
shares of Axion Games Limited ("Axion") and Axion Entertainment Holdings Ltd. ("AEH") and Axion Entertainment Internat
--->ional Holdings Limited ("AIEH"), both formed for the sole purpose of holding Axion shares, pursuant to which Capstream
---> acquired an interest of approximately 29.29% of Axion (the "Axion Investment"); and
an unsecured one year convertible promissory note of Innovega Inc. ("Innovega") in the principal amount of US$350,000,
---> which bears interest at a rate of 8% and is convertible into shares of Innovega subject to a future eligible financin
--->g event and at a predetermined 15% discount to pre money value of such financing event (capped at US$16.5 million) (th
--->e "Innovega Investment" and together with the Axion Investment, the "Transactions").
With respect to the Axion Investment, Capstream acquired the ownership interest of approximately 29.29% of Axion throu
--->gh the acquisition by Capstream of: (i) 153,133 shares (or an approximate 37.57% interest in AEIH) of the total 407,60
--->0 issued and outstanding shares of AEIH which owns 39,917,691 Axion shares; (ii) 26,866 shares (or an approximate 53.7
--->3% interest in AEH) of the total 50,000 issued and outstanding shares of AEH, which owns 55,000,000 Axion shares (5,00
--->0,000 of which are held in trust for other holders and are excluded for interest calculation purposes); and (iii) 6,62
--->5,730 Axion shares directly, giving Capstream a beneficial interest in 48,489,579 (or an 29.29% interest) of the total
---> 165,553,290 issued and outstanding Axion shares. In exchange for the foregoing interest in Axion, the Company issued 
--->a total of 150,168,692 Capstream common shares (the "Exchange Shares") to the respective selling shareholders.
In addition, in accordance with the policies of the Exchange, the Company issued 1,000,000 non-transferable share purc
--->hase warrants (the "QT Finder Warrants"), entitling the finder to acquire up to 1,000,000 Capstream common shares at a
--->n exercise price of $0.25 per share exercisable within 24 months of the closing.
Private Placement
Concurrently with closing the Transactions, Capstream completed a private placement financing (the "Concurrent Financi
--->ng") raising aggregate gross proceeds of $1,150,000 through the issuance of 5,750,000 Capstream common shares at a pri
--->ce of $0.20 per share. $500,000 of the Concurrent Financing was completed by Canaccord Genuity Corp. ("Canaccord") on 
--->a commercially reasonable efforts brokered basis. In connection with the Concurrent Financing, Canaccord received a ca
--->sh commission of 6% of the gross proceeds raised by Canaccord in the brokered portion of the Concurrent Financing and 
--->2% on the balance of the Concurrent Financing. Canaccord was also issued 150,000 non-transferable share purchase warra
--->nts (the "Agent's Warrants"), representing 6% of the Capstream common shares sold by Canaccord under the Concurrent Fi
--->nancing. The Agent's Warrants are exercisable at $0.20 per Capstream common share for a period of 12 months following 
--->the closing. Capstream also paid a corporate finance fee to Canaccord in support of the Qualifying Transaction and the
---> brokered portion of the Concurrent Financing due diligence process. A 4% finder's fee was also paid on a portion of t
--->he non-brokered Concurrent Financing. For the intended use of proceeds of the Concurrent Financing, please see the Fil
--->ing Statement filed under Capstream's SEDAR profile at www.sedar.com on April 27, 2016. 
Directors and Officers
In connection with the Qualifying Transaction, certain directors and officers of the Company resigned and were appoint
--->ed, such that the directors and officers of the Company are now as follows:

Name
 Position
 
 Paul Larkin
 President, CEO and a Director
 
 Jonathan Younie
 CFO
 
 Erin Walmesley
 Corporate Secretary
 
 John Todd Bonner
 (non-executive) Chairman of the Board
 
 Ravinder (Rob) Kang
 Independent Director
 
 Stephen Willey
 Independent Director
 
 
For further biographical information about the foregoing persons, see the Filing Statement.
Escrow Shares
As disclosed in the Filing Statement, 95,319,550 of the 150,168,692 Exchange Shares have been deposited into an Exchan
--->ge escrow (either an Exchange surplus escrow agreement or Exchange value escrow agreement) pursuant to the policies of
---> the Exchange. In addition, 33,000,000 of the 150,168,692 Exchange Shares have been deposited into performance escrow.
---> For further information about the foregoing escrowed Exchange Shares, see the Filing Statement.
Stock Option Grants

In connection with the Qualifying Transaction, Capstream has granted an aggregate of 700,000 stock options to its dire
--->ctors, officers, employees and consultants with each stock option entitling the optionee to purchase one Capstream com
--->mon share at a price of $0.25 per share for a period of five years.   
Hold Periods
The common shares and the Agent's warrants issued in connection with the Concurrent Financing, the Exchange Shares and
---> the QT Finder's Warrants are all subject to a four month and one day hold period under applicable Canadian securities
---> laws or the policies of the Exchange. None of such securities have been or will be registered under the United States
---> Securities Act of 1933, as amended (the "1933 Act"), and none of them may be offered or sold in the United States abs
--->ent registration or pursuant to an applicable exemption from the registration requirements of the 1933 Act and applica
--->ble state securities laws.
About the Target Companies
About Axion

Axion, a private Cayman Islands corporation with primary operations in Shanghai, China, is an online video games devel
--->opment and publishing company.  Due to a high failure rate in video games, Axion specializes in and focuses on buildin
--->g high production value online multiplayer games where Axion can capitalize on its competitive advantages. In making g
--->ames of higher production value and complexity, Axion has a distinct advantage versus studios in developed countries w
--->ith respect to cost, and versus studios in emerging markets with respect to skills. Axion traces its advantages to its
---> joint venture roots with industry renowned, US based, Epic Games International Ltd. that was established in October 2
--->006. 
About Innovega

Innovega, a private Delaware corporation with offices in San Diego, California and Bellevue, Washington, is developing
---> proprietary display technology based on eyewear and contact lenses that enhance human vision allowing the wearer to s
--->imultaneously access digital media while remaining fully engaged in their normal activities. Specifically, Innovega's 
--->display technology aims to enhance the user's normal vision to make it possible to view virtual reality and augmented 
--->reality images in the same way the user views the real world. 

On behalf of Capstream Ventures Inc.

Paul Larkin
President and Chief Executive Officer
Telephone: 604 687 7767

Forward Looking Statements 

Certain statements contained in this press release constitute forward-looking information. These statements relate to 
--->future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "proj
--->ected", "estimated" and similar expressions and statements relating to matters that are not historical facts are inten
--->ded to identify forward-looking information and are based on Capstream's current belief or assumptions as to the outco
--->me and timing of such future events. Actual future results may differ materially. In particular, this release contains
---> forward-looking information relating to the commencement of trading on the Exchange. Various assumptions or factors a
--->re typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking informat
--->ion. Those assumptions and factors are based on information currently available to Capstream. Risk factors that could 
--->cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking informa
--->tion include, among other things: conditions imposed by the Exchange, the failure to obtain the required final approva
--->l for the Qualifying Transaction; changes in tax laws, general economic and business conditions; and changes in the re
--->gulatory regime. Capstream cautions the reader that the above list of risk factors is not exhaustive. The forward-look
--->ing information contained in this release is made as of the date hereof and Capstream is not obligated to update or re
--->vise any forward-looking information, whether as a result of new information, future events or otherwise, except as re
--->quired by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors 
--->should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward
--->-looking information contained herein. This press release does not constitute an offer to sell or a solicitation of an
---> offer to buy any securities in the United States. 
Investors are cautioned that, except as disclosed in the Filing Statement, any information released or received with r
--->espect to the Transactions 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.

The securities referred to in this news release have not been, nor will they be, registered under the United States Se
--->curities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or
---> benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements.
---> This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy 
--->any securities. 
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approve
--->d nor disapproved the contents of this press release.