RABI:CC - AdRabbit Limited Announces Amendments to Convertible Loan Financing
(TheNewswire)
Vancouver, British Columbia – TheNewswire - April 10, 2023 - AdRabbit Limited (TSXV:RABI) (the “ Company ”) ispleased to announce that it has entered into an amended and restatedconvertible loan agreement (the “ Amended Loan Agreement ”) with 12.64 Fund Limited Partnership (the “ Lender ”). TheAmended Loan Agreement amends the convertible loan agreement datedMarch 22, 2023 which was previously announced on March 23, 2023. Thematerial amendments, which were made at the request of the TSX VentureExchange (the “ Exchange ”) in order to ensure compliancewith the policies of the Exchange, include: (i) establishing a minimumconversion price of $0.05, and (ii) adding an additional ConversionCondition (defined below) requiring disinterested shareholder approvalin the event the conversion would create a new Control Person (as suchterm is defined in the policies of the Exchange).
Pursuant to the Amended Loan Agreement, subject toreceipt of approval of the Exchange, the Lender will advance to theCompany an unsecured, convertible loan in the principal amount ofUS$300,000. The Amended Loan Agreement forms part of a larger privateplacement of unsecured, convertible loans of up to US$700,000principal amount (the “ Offering ”). Other than the Amended LoanAgreement with the Lender, at this time, the Company has not enteredinto any further loan agreements under the Offering with otherpotential lenders, and there is no assurance that additional amountswill be raised under the Offering.
The following is a summary of the terms of the AmendedLoan Agreement, which are also applicable to the Offering as a whole.Other than as noted above, the principal terms summarized below arethe same principal terms as previously announced.
Unless earlier converted, the outstanding principalamount under the Amended Loan Agreement will mature 12 monthsfollowing the advance of funds under the Amended Loan Agreement, orsuch other date as may be agreed between the Company and the Lenderand provided that the Lender may extend the maturity date by up to anadditional six (6) months in Lender's discretion (such maturity date,the “ MaturityDate ”). Interest on the principal amountoutstanding under the Amended Loan Agreement will accrue at an annualrate of 6% and will be payable at the Maturity Date or upon Conversion(as defined below). Interest is payable in cash, or at the option ofthe Lender, converted as part of a Conversion. The Amended LoanAgreement contains typical events of default for a transaction of thisnature which accelerate the Maturity Date.
Pursuant to the Amended Loan Agreement, the principalamount under the Amended Loan Agreement will be automaticallyconverted (“ Conversion ”) into ordinary shares of theCompany immediately prior to the completion of specified events (each,a “ ConversionEvent ”), including a reverse takeover, mergeror amalgamation, arrangement, share exchange or similar transactioninvolving the Company and another person, or a sale of all orsubstantially all of the assets of the Company. A Conversion Eventdoes not include a transaction where the holders of voting securitiesof the Company immediately prior to such transaction hold at least 50%of the voting control or direction in such merged, arranged,amalgamated, reorganized or other continuing entity immediatelyfollowing the completion of such transaction.
The Conversion of the principal amount under theAmended Loan Agreement will be at a price per share (the“ ConversionPrice ”) that is equal to the greater of (i)C$0.05 and (ii) a 50% discount to: (A) the offering price ofsecurities issued under the financing completed concurrently with theConversion Event; or (B) if there is no such concurrent financing, thedeemed price per ordinary share of the Company under the ConversionEvent. The Conversion Price is subject to standard adjustmentprovisions, including on the occurrence of a share consolidation,split or other capital reorganization.
At the time of Conversion, the Company will, at theoption of the Lender, pay the accrued interest in cash or convert suchinterest into ordinary shares of the Company at the Conversion Price,provided that the Conversion Price with respect to the conversion ofsuch interest will be subject to a minimum conversion price of theMarket Price (as defined in the policies of the Exchange) at the timesuch interest becomes payable.
The Conversion is subject to the satisfaction or waiver(if capable of waiver) of the following conversion conditions:
(i) the receipt of all shareholder andregulatory approvals required in connection with the conversion andthe completion of the Conversion Event, which in the case of Exchangeapproval shall be satisfied by receipt of conditional approval fromthe Exchange in connection with the completion of the ConversionEvent;
(ii) if required by the Exchange, thecompletion of a consolidation of the ordinary shares of the Company inorder to meet the minimum pricing requirements of the Exchange for theconversion of convertible securities;
(iii) if the conversion will result in theLender becoming a new Control Person (as such term is defined in thepolicies of the Exchange), the receipt of disinterested shareholderapproval by the Company in accordance with the policies of theExchange; and
(iv) any other material conditions precedentto the completion of the Conversion Event (other than the conversionof the convertible loan, customary conditions contained in theconditional approval letter of the Exchange or other conditions whichby their nature cannot be completed prior to closing) have beencompleted, satisfied or waived, as determined by the Lender and theCompany, each acting reasonably.
The Amended Loan Agreement contains restrictivecovenants, whereby, until the Conversion or repayment of the loan, theCompany shall not, except with the written consent of the Lender orwith respect to a Conversion Event: (i) make material changes to thenature of its business or enter into material transactions not withinthe Company’s line of business; (ii) propose to pay a dividend; or(iii) incur indebtedness that ranks on parity to or is senior to theAmended Loan Agreement or repay any outstanding loan orindebtedness.
The Amended Loan Agreement also contains a “mostfavoured nation” provision, which provides that, if the Companyproposes to issue any subsequent convertible securities or convertibledebt (“ SubsequentConvertible Securities ”), the Company mustprovide notice of such Subsequent Convertible Securities to theLender, and if the Lender determines that the terms of the SubsequentConvertible Securities are preferable to the terms of the Offering,the Lender can require the parties to amend the terms of the AmendedLoan Agreement to match the terms of the Subsequent ConvertibleSecurities.
The net proceeds from the first closing of the Offeringunder the Amended Loan Agreement are expected to be used as follows:(i) expenses of the Company’s audit for fiscal 2022 and ongoingcontinuous disclosure, legal and public company expenses; (ii)expenses related to further exploration of potential strategictransactions and business combinations (as previously announced); and(iii) for working capital and general and administrative and othercorporate purposes. The net proceeds from the first closing of theOffering may also be used to repay the previously announced short termloans from the Lender to the Company in the amounts of C$20,000 andUS$60,000, plus any accrued interest, which loans will become due andpayable in accordance with their terms as a result of the initialclosing under the Offering, unless the parties to such loan agree todefer the repayment to a later date. The Company may reallocate theproposed use of proceeds for sound business reasons.
All securities issued in the Offering will be subjectto a statutory hold period of four months and one day.
The securities to be offeredpursuant to the Offering have not been, and will not be, registeredunder the U.S. Securities Act of 1933, as amended (the “ U.S. SecuritiesAct ”) or any U.S. statesecurities laws, and may not be offered or sold in the United Statesor to, or for the account or benefit of, United States persons absent registration or anyapplicable exemption from the registration requirements of the U.S.Securities Act and applicable U.S. state securities laws. This newsrelease shall not constitute an offer to sell or the solicitation ofan offer to buy securities in the United States, nor shall there beany sale of these securities in any jurisdiction in which such offer,solicitation or sale would be unlawful .
Disclosure Required under MI61-101
12.64 Fund Limited Partnership is considered a“related party” of the Company within the meaning of MultilateralInstrument 61-101 - Protection of Minority Security Holders in SpecialTransactions (“ MI 61-101 ”). As aresult, the Amended Loan Agreement is considered to be a “relatedparty transaction” as such term is defined by MI 61-101, requiringthe Company, in the absence of exemptions, to obtain a formalvaluation of, and minority shareholder approval of, the “relatedparty transaction”. Pursuant to MI 61-101, the Company intends torely on the exemptions from the formal valuation and the minorityshareholder approval requirements of MI 61-101 provided for insubsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as thefair market value of the Amended Loan Agreement does not exceed 25% ofthe Company's market capitalization as determined in accordance withMI 61-101, as well as the exemption from the formal valuationrequirement provided for in subsection 5.5(b) of MI 61-101 given thatno securities of the Company are listed or quoted on certain specifiedexchanges.
The Company does not expect to file a material changereport in respect of the related party transaction at least 21 daysprior to the closing of the transaction under the Amended LoanAgreement, which the Company deems reasonable in the circumstances inorder to close the transaction in an expeditious manner.
For further information, pleasecontact:
Max Bluvband, CEO and Director of the Company
Email: info@appv.io
Telephone: (604)283-6110
NEITHER THE TSX VENTURE EXCHANGE INC.NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THEPOLICIES OF THE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY ORACCURACY OF THIS RELEASE.
Caution Regarding Forward-LookingInformation
The information in this news releaseincludes certain information and statements about management's view offuture events, expectations, plans and prospects that constituteforward-looking statements. Forward-looking statements are statementsthat relate to future, not past, events. In this context,forward-looking statements often address expected future events,plans, prospects, business, and financial performance, and oftencontain words such as “anticipate”, “believe”, “plan”,“estimate”, “expect”, and “intend”, statements that anaction or event “may”, “might”, “could”, “should”, or“will” be taken or occur, or other similar expressions. Allstatements, other than statements of historical fact, included hereinare forward-looking statements, including, without limitation,statements regarding: expected completion of the Offering, includingthe advance of funds under the Amended Loan Agreement; the expecteduse of proceeds under, and the expected benefits of, the Offering; theexpectations regarding application or receipt of regulatory andshareholder approvals; and plans and expectations regarding otherstrategic business combinations, transactions, or equity or debtfinancings, or other operational activities.
These statements are based uponfactors and assumptions that are subject to significant risks anduncertainties. Such factorsand assumptions include, but are not limited to: the ability of theCompany to receive regulatory, Exchange and shareholder approval, asrequired, in connection with the completion of the loan under theAmended Loan Agreement and the Offering; the expectation that theterms of the Amended Loan Agreement and the Offering as describedherein will be acceptable to the Exchange without further amendment;the closing of any further amounts, if any, under the Offering, andthe conversion, if any, of loans under the Offering in accordance withits terms; a steady improvement in the global financial markets andother general economic factors; the Company’s ability to identifyand/or negotiate strategic transactions on acceptable terms; theCompany’s operations and overall financial performance; no changesin the competitive environment or legal or regulatory developments affecting its business; theCompany’s ability to mitigate inflationary pressures; theCompany’s ability to manage its liabilities and expenses, includingits ability to negotiate acceptable deferral or settlement with itscurrent or future vendors and creditors; and the Company’s abilityto maintain key personnel such as directors and officers of theCompany. While the Company considers these expectations andassumptions to be reasonable, many expectations and assumptions arebased on factors and events that are not within its control and thereis no assurance that they will prove to be correct.
There are a number of risks anduncertainties related to these forward-looking statements, whichinclude, but are not limited to: the Company being unable to use theproceeds of the Offering as described, or the proceeds beinginsufficient for the Company’s purposes; legal or regulatoryimpediments regarding the Amended Loan Agreement and the Offering orthe Conversion thereunder, if any, in the future, including that thecurrent terms of the Amended Loan Agreement will not be acceptable tothe Exchange and the risk that any amendments requested by theExchange to the terms of the Amended Loan Agreement will not beacceptable to the parties to the Amended Loan Agreement, leading totermination of the Amended Loan Agreement and failure to complete theOffering; accrued and unpaid interest thereon; the Conversion Eventnot occurring and the Company being required to service or repay thedebt in full; the Company defaulting under the Amended Loan Agreementleading to, among other things, an inability to pay its debts as theybecome due or repay the loan at the maturity date (or accelerationthereof) or at all; restrictive covenants under the Amended LoanAgreement restricting the Company from taking certain actions, such aspaying dividends or seeking additional debt financing or convertiblesecurity offerings; the Company’s inability to reduce expenses andmanage debt so as to remain attractive for potential strategictransactions or for lenders or investors; and general economic andother conditions affecting the Company. Investors should not placeundue reliance on any plans or proposals regarding strategictransactions, including potential business combinations or equity ordebt financings, unless definitive terms have been disclosed in asubsequent press release, and subject to the terms and conditionsdescribed therein. The Company will require further capital, and inlight of the current status of credit and equity markets, there is asubstantial risk that the Company will not be able to complete suchtransactions or upon terms satisfactory to the Company . The Company's current or proposedbusiness, subject to the previously announced changes andre-evaluation to its operations, business plans and product offerings,remains subject to the risks identified in the Company's listingapplication dated November 15, 2021 available under the Company'sprofile on SEDAR at www.sedar.com .
Although the Company has attemptedto identify important factors that could cause actual actions, events,conditions, results, performance or achievements to differ materiallyfrom those described in forward-looking statements, there may be otherfactors that cause actions, events, conditions, results, performanceor achievements to differ from those anticipated, estimated orintended. There can be no assurance that forward-looking statementswill prove to be accurate, as actual results and future events coulddiffer materially from those anticipated in such statements.Forward-looking statements are provided for the purpose of providinginformation about management's expectations and plans relating to thefuture, as at the date they are provided. The Company disclaims anyintention or obligation to update or revise any forward-lookingstatements whether as a result of new information, future events orotherwise, or to explain any material difference between subsequentactual events and such forward-looking statements, except to theextent required by applicable law. Accordingly, investors should notplace undue reliance on forward-looking statements. All theforward-looking statements are expressly qualified by the foregoingcautionary statements.
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