RABI:CC - AdRabbit Limited Announces Convertible Loan Financing
(TheNewswire)
Vancouver, British Columbia – TheNewswire - M arch 23, 2023 -AdRabbit Limited (TSXV:RABI) (the “ Company ”) ispleased to announce that it has entered into a convertible loanagreement (the “ LoanAgreement ”) with 12.64 Fund LimitedPartnership (the “ Lender ”). Pursuant to the Loan Agreement,subject to receipt of approval of the TSX Venture Exchange (the“ Exchange ”), the Lender will advance to the Company an unsecured,convertible loan in the principal amount of US$300,000. The LoanAgreement forms part of a larger private placement of unsecured,convertible loans of up to US$700,000 principal amount (the“ Offering ”). The Offering is expected to be completed in multipleclosings, with the first closing being the completion of the loanadvanced by the Lender under the Loan Agreement, subject to receipt ofapproval from the Exchange. Other than the Loan Agreement with theLender, at this time, the Company has not entered into any furtherloan agreements under the Offering with other potential lenders, andthere is no guarantee that additional amounts will be raised under theOffering. Below is a summary of the principal terms of the LoanAgreement, which are subject to approval and/or amendment as requiredby the Exchange.
Unless earlier converted, the outstanding principalamount under the Loan Agreement will mature 12 months following theadvance of funds under the Loan Agreement, or such other date as maybe agreed between the Company and the Lender and provided that theLender may extend the maturity date by up to an additional six (6)months in Lender's discretion (such maturity date, the “ Maturity Date ”).Interest on the principal amount outstanding under the Loan Agreementwill accrue at an annual rate of 6% and will be payable at theMaturity Date or upon Conversion (as defined below). Interest ispayable in cash, or at the option of the Lender, converted as part ofa Conversion. The Loan Agreement contains typical events of defaultfor a transaction of this nature which accelerate the MaturityDate.
Pursuant to the Loan Agreement, the principal amountunder the Loan Agreement will be automatically converted(“ Conversion ”) into ordinary shares of the Company immediately prior tothe completion of specified events (each, a “ Conversion Event ”),including a reverse takeover, merger or amalgamation, arrangement,share exchange or similar transaction involving the Company andanother person, or a sale of all or substantially all of the assets ofthe Company. A Conversion Event does not include a transaction wherethe holders of voting securities of the Company immediately prior tosuch transaction hold at least 50% of the voting control or directionin such merged, arranged, amalgamated, reorganized or other continuingentity immediately following the completion of suchtransaction.
The Conversion of the principal amount under the LoanAgreement will be at a price per share (the “ Conversion Price ”)that is equal to 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. The Conversion Price is alsosubject to the minimum pricing (including allowable discount)requirements under the policies of the Exchange, which requirementsmay include that the Company complete a share consolidation prior tothe completion of the Conversion.
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 in no event shall the Conversion Price with respect tothe conversion of such interest be less than the Market Price (asdefined in the policies of the Exchange) at the time such interestbecomes 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 completionof the Conversion Event;
(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; and
(iii) any other material conditionsprecedent to the completion of the Conversion Event (other than theconversion of the convertible loan, customary conditions contained inthe conditional approval letter of the Exchange or other conditionswhich by their nature cannot be completed prior to closing) have beencompleted, satisfied or waived, as determined by the Lender and theCompany, each acting reasonably.
The Loan Agreement contains restrictive covenants,whereby, until the Conversion or repayment of the loan, the Companyshall not, except with the written consent of the Lender or withrespect to a Conversion Event: (i) make material changes to the natureof its business or enter into material transactions not within theCompany’s line of business; (ii) propose to pay a dividend; or (iii)incur indebtedness that ranks on parity to or is senior to the LoanAgreement or repay any outstanding loan or indebtedness.
The Loan Agreement also contains a “most favourednation” provision, which provides that, if the Company proposes toissue any subsequent convertible securities or convertible debt(“ Subsequent ConvertibleSecurities ”), the Company must provide noticeof such Subsequent Convertible Securities to the Lender, and if theLender determines that the terms of the Subsequent ConvertibleSecurities are preferable to the terms of the Offering, the Lender canrequire the parties to amend the terms of the Loan Agreement to matchthe terms of the Subsequent Convertible Securities.
The net proceeds from the first closing of the Offeringunder the 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 will also be used to repay the previously announced shortterm loans from the Lender to the Company in the amounts of C$20,000and US$60,000, plus any accrued interest, which loans will become dueand payable in accordance with their terms as a result of the initialclosing under the Offering. The Company may reallocate the proposeduse 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.
In the event that the Exchange does not provideapproval for the completion of the Offering under the terms currentlyproposed and/or requires amendments to such terms which are notacceptable to the parties, the Loan Agreement and/or the Offering maybe terminated and not completed.
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 absentregistration or any applicable exemption from the registrationrequirements of the U.S. Securities Act and applicable U.S. statesecurities laws. This news release shall not constitute an offer tosell or the solicitation of an offer to buy securities in the UnitedStates, nor shall there be any sale of these securities in anyjurisdiction in which such offer, solicitation or sale would beunlawful .
Disclosure Required under MI61-101
12.64 Fund Limited Partnership holds more than 10% ofoutstanding ordinary shares of the Company and is considered a“related party” of the Company within the meaning of MultilateralInstrument 61- 101 - Protection of Minority Security Holders inSpecial Transactions (“ MI 61-101 ”). As aresult, the Loan Agreement is considered to be a “related partytransaction” as such term is defined by MI 61-101, requiring theCompany, in the absence of exemptions, to obtain a formal valuationof, and minority shareholder approval of, the “related partytransaction”. Pursuant to MI 61-101, the Company intends to rely onthe exemptions from the formal valuation and the minority shareholderapproval requirements of MI 61-101 provided for in subsections 5.5(a)and 5.7(1)(a) of MI 61-101, respectively, as the fair market value ofthe Loan Agreement does not exceed 25% of the Company's marketcapitalization as determined in accordance with MI 61-101, as well asthe exemption from the formal valuation requirement provided for insubsection 5.5(b) of MI 61-101 given that no securities of the Companyare listed or quoted on certain specified exchanges.
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 Loan Agreement,which the Company deems reasonable in the circumstances in order toclose 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 Loan Agreement; the expected use ofproceeds 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 the LoanAgreement and the Offering; the expectation that the terms of the LoanAgreement and the Offering as described herein will be acceptable tothe Exchange without amendment; the closing of any further amounts, ifany, under the Offering, and the conversion, if any, of loans underthe Offering in accordance with its terms; a steady improvement in theglobal financial markets and other general economic factors; theCompany’s ability to identify and/or negotiate strategictransactions on acceptable terms; the Company’s operations andoverall financial performance; no changes in the competitiveenvironment or legal or regulatory developments affecting itsbusiness; the Company’s ability to mitigate inflationary pressures;the Company’s ability to manage its liabilities and expenses,including its ability to negotiate acceptable deferral or settlementwith its current or future vendors and creditors; and the Company’sability to maintain key personnel such as directors and officers ofthe Company. 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 Loan Agreement and the Offering or the Conversion thereunder, ifany, in the future, including that the current terms of the LoanAgreement will not be acceptable to the Exchange and the risk that anyamendments requested by the Exchange to the terms of the LoanAgreement will not be acceptable to the parties to the Loan Agreement,leading to termination of the Loan Agreement and failure to completethe Offering; accrued and unpaid interest thereon; the ConversionEvent not occurring and the Company being required to service or repaythe debt in full; the Company defaulting under the 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 Loan Agreementrestricting the Company from taking certain actions, such as payingdividends or seeking additional debt financing or convertible securityofferings; the Company’s inability to reduce expenses and managedebt so as to remain attractive for potential strategic transactionsor for lenders or investors; and general economic and other conditionsaffecting the Company. Investors should not place undue reliance onany plans or proposals regarding strategic transactions, includingpotential business combinations or equity or debt financings, unlessdefinitive terms have been disclosed in a subsequent press release,and subject to the terms and conditions described therein. The Companywill require further capital, and in light of the current status ofcredit and equity markets, there is a substantial risk that theCompany will not be able to complete such transactions or upon termssatisfactory to the Company . TheCompany's current or proposed business, subject to the previouslyannounced changes and re-evaluation to its operations, business plansand product offerings, remains subject to the risks identified in theCompany's listing application dated November 15, 2021 available underthe Company's profile 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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