RABI:CC - AdRabbit Limited Announces Proposed Reverse Takeover by Sanolla Ltd and Other Corporate Updates
(TheNewswire)
Vancouver, British Columbia– TheNewswire - August 19,2022 - AdRabbit Limited (TSXV:RABI) (the" Company ") is pleased to announce that ithas entered into a heads of agreement (the " HOA ") datedAugust 18, 2022 with Sanolla Ltd. (" Sanolla "), aprivate company based in Nesher, Israel that is in the business ofmanufacturing, selling and distributing AI-based infrasoundauscultation clinical device technologies. The HOA outlines theindicative commercial terms and conditions of a proposed businesscombination between the Company and Sanolla, which would result in areverse takeover of the Company by Sanolla and its shareholders (the" ProposedTransaction ").
Assuming the completion of the Proposed Transaction,the Company or the successor entity resulting from the ProposedTransaction (referred to as the " Resulting Issuer ") will operate the business of Sanolla, and be listedon the TSX Venture Exchange (the " Exchange ") as aTier 1 or Tier 2 technology and/or life sciences issuer. Theconsolidated available capital of the Resulting Issuer will be used topursue the business plan of Sanolla (based on an initial budget to beagreed-upon by the parties to the Proposed Transaction), and it isexpected that the Resulting Issuer would phase out aspects of thecurrent business of the Company as determined by the board ofdirectors and management of the Resulting Issuer.
Completion of the Proposed Transaction is and will besubject to customary terms and conditions, including, but not limitedto: the satisfactory completion of due diligence by both parties; thesuccessful negotiation and execution of a definitive agreement for theProposed Transaction (the " Definitive Agreement "); completion of theFinancing (as defined below); receipt of necessary approvals,including regulatory approvals and shareholder approval; and otherconditions typical for similar transactions that will be contained inthe Definitive Agreement.
Sanolla is a private limited liability company based inNesher, Israel, that is in the business of manufacturing, selling, anddistributing AI-based infrasound auscultation clinical devicetechnologies. The company has three product lines, all based onAI-powered detection and analysis of previously inaccessible bodyinfrasound and other critical vital signs (ECG, heart rate, oxygenlevel, body temperature, and respiratory cycle). Sanolla's productscan provide immediate and accurate assessment, reducing unnecessaryin-clinic visits, saving time and money, and lowering the associatedrisk of infection exposure. The company's first product, the VoqX –a smart stethoscopehas received FDA approval.
Summary of IndicativeCommercial Terms of the Proposed Transaction
The HOA contains non-binding indicative commercialterms for the Proposed Transaction, which are summarized below. TheHOA contemplates that the parties will negotiate and enter into aDefinitive Agreement to replace the HOA. Other than the non-bindingindicative commercial terms, the HOA is otherwise binding on theparties, including with respect to exclusivity, confidentiality andother provisions. Unless the parties agree otherwise, the HOA willterminate if, among other things, the Definitive Agreement has notbeen entered into by October 30 , 2022.
Pursuant to the HOA, the Company and Sanolla expect tocomplete the Proposed Transaction by way of a share exchange, merger,or other form of business combination, the final structure of whichwill be determined following guidance from tax, corporate andsecurities advisors. The business combination will not involve cashconsideration, but will result in the Resulting Issuer issuing sharesto the shareholders of Sanolla (the " Sanolla Shareholders ") such that the Sanolla Shareholders will own at least90% of the Resulting Issuer (on an undiluted basis but prior to takinginto account the Financing (as defined below) or any advisor or brokersecurities issued in connection with the Proposed Transaction), except where otherwise noted, as described inmore detail below. The business combination will therefore constitutea "reverse takeover" (within the meaning of Exchangepolicies) of the Company by Sanolla and the SanollaShareholders.
The Company and Sanolla expect that the ProposedTransaction will proceed based on respective valuations that willresult, upon completion of the Proposed Transaction, in shareholdersof the Company owning 5% of the Resulting Issuer (subject toadjustment to 10% as noted below) and the shareholders of Sanollaowning 95% of the Resulting Issuer (subject to adjustment to 90% asnoted below) on an undiluted basis, except where otherwise noted,prior to taking into account the Financing or other advisor or brokersecurities that may be issued.
The foregoing valuations assume that Sanolla will raiseat least US$5,000,000 (the " Sanolla Funding Target ") of the aggregateamount raised under Financing from its investor network or shareholderbase (i.e., without the assistance of the Company or its advisors). In the event that the Sanolla Funding Target is not met:
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(A) the respective valuations willbe adjusted such that, upon completion of the Proposed Transaction,the shareholders of the Company will own 10% of the Resulting Issuerand the shareholders of Sanolla will own 90% of the Resulting Issueron an undiluted basis, except where otherwise noted, prior to takinginto account the Financing or other advisor or broker securities thatmay be issued; and
(B) at closing, the Resulting Issuer willissue to the Sanolla Shareholders such number of performance warrants(the " PerformanceWarrants ") that, if exercised, would resultin the Sanolla Shareholders holding the same amount of shares (in theaggregate) of the Resulting Issuer as would the timely achievement ofthe Sanolla Funding Target (i.e., the proportions between the Sanollashareholders and Company shareholders (taken as of the completion ofthe Proposed Transaction) will be 95%:5%, upon exercise of thePerformance Warrants in full, on an undiluted basis, except whereotherwise noted, but without taking into account the Financing orother advisor or broker securities that may be issued). The exerciseof the Performance Warrants will be subject to the achievement, within12 months of the completion of the Proposed Transaction, of twocommercial milestones (such milestones to be agreed upon in theDefinitive Agreement). The aggregate exercise price in respect of allissued Performance Warrants is expected to be US$100,000, and thePerformance Warrants are expected to have an exercise period of 36months after the later of the two commercial milestones isachieved.
In addition to other conditions to closing of theProposed Transaction, the MOU provides that the Company will settlecertain payables of the Company on or before closing through theissuance of shares and/or such other method acceptable to the parties,provided that any such issuance will not affect the percentageholdings of the Sanolla shareholders of the Resulting Issuer onclosing. Any such share issuance to settle payables will be subject toExchange approval, and if required, shareholder approval (includingmajority of the minority shareholder approval). Further detailsregarding this condition to closing will be provided in a subsequentpress release to follow.
In connection with, and as a condition to thecompletion of, the Proposed Transaction, it is expected that theparties will complete one or more financing(s) for aggregate proceedsbetween US$10,000,000 to US$15,000,000 (collectively, the" Financing ").
The structure and terms of the Financing have not beenfinalized and will be determined by the parties in the context of themarket. However, it is expected that the Financing may be undertakenin two separate financings:
(a) Sanolla will complete a financing of atleast US$5,000,000 in order to achieve the Sanolla Funding Target. TheSanolla Funding Target may be completed by Sanolla as a separatefinancing prior to closing of the Proposed Transaction by means ofconvertible debt or other non-repayable financing that will convert orbe exchangeable into securities of the Resulting Issuer in connectionwith completion of the Proposed Transaction, subject to applicablediscounts, if any, to the concurrent financing noted below; and
(b) Sanolla or the Company will complete afinancing for the balance of the Financing proceeds, expected to beundertaken as a concurrent financing within the meaning of Exchangepolicies.
Completion of the Proposed Transaction will beconditional on the parties raising a minimum of US$10,000,000,inclusive of the SNL Funding Target, under the Financing.
If a broker-agent is engaged in connection with all ora portion of the Financing, it is expected that the broker-agent wouldreceive broker's fees, including broker warrants, as is customarilypaid for such a transaction. The Financing may also involve thepayment of finder's fees as permitted by Exchange policies.
Proposed Bridge Financing
In addition to the Financing, it is expected that theCompany will undertake a bridge financing prior to the completion ofthe Financing and the Proposed Transaction in order to cover expensesin connection with the completion of the Proposed Transaction. Theterms of the bridge financing have not yet been determined and will beannounced in a subsequent press release.
Proposed Consolidationand Name Change
It is expected that the Company will undertake aconsolidation of its ordinary share and complete a name change inconnection with completion of the Transaction, the terms and detailsof which will be set out in the Definitive Agreement and/or asubsequent press release.
Proposed Directors,Officers and Principals of the Resulting Issuer
In connection with closing of the Transaction, exceptas noted below, it is expected that the current directors and officersof the Company will resign from their respective positions and theboard will be reconstituted with at least four directors: Dr. Doron Adler , PhD (the current CEO and founder of Sanolla); Mr. ElieBalas; one director nominated by the Company; and one director who ismutually agreed by the Company and Sanolla.
The proposed management of the Resulting Issuer isexpected to be the management of Sanolla or such other appointeesdetermined by Sanolla, and the current management of the Company isexpected to resign at closing of the Proposed Transaction.
Below are the biographies of Dr. Adler and Mr. Balas.Information and/or biographies regarding the other proposed incomingdirectors, officers and other anticipated principals of the ResultingIssuer will be provided at a later date in a subsequent pressrelease.
Dr. Doron Adler, PHD
Dr. Adler is a serial entrepreneur with an impressivetrack record in establishing successful med-tech companies. He foundedSanolla after 15 years as the founder and CEO of Cbyond, which Olympus acquired for $2.1 billion. As a result of thedeal, he was the CEO of Olympus Israel and CTO for Olympus SurgicalUS. Previously, Dr. Adler founded iSight and served as the vicepresident of R&D for Given Imaging, later acquired by Covidien for$860 million.
Dr. Adler holds a Ph.D., M.Sc., and B.Sc. degrees in ElectricalEngineering from Technion – the Israel Institute of Technology, andhe was recognized as one of the 100 most inspiring graduates of theTechnion. Dr. Adler has filed more than 150 patents.
Mr. Elie Balas
Elie Balas is a multidiscipline serial entrepreneur whohas built businesses into multimillion-dollar companies. He foundedseveral services companies (MN, CT, PA) and sold these businesses toUtilicop United. In addition, he founded and served as the chairman ofMunchies Group, a cost-to-cost network with more than 500 locationsthroughout North America. Elie also founded Zonu Optical and MediciNeapolitan. Aside from these companies, Elie is an active investor inreal estate projects and a business consultant.
Elie graduated from the Israeli Air Force Academy andstudied Electrical Engineering at the State University of New York atBuffalo. He has been certified as an Aircraft Technician on thePhantom, Skyhawk, CH, and Bell helicopters.
The Company will seek a waiver from the Exchange to therequirement to engage a sponsor in connection with the Transaction. Ifa sponsor is required, the Company will identify a sponsor and may paythe sponsorship fee in cash or shares of the Company or a combinationof cash and ordinary shares of the Company. An agreement with asponsor should not be construed as any assurance with respect to themerits of the Proposed Transaction or the likelihood ofcompletion.
Trading Halt
In accordance with Exchange policies, the ordinaryshares of the Company have been halted from trading and will remain sountil certain documentation required by the Exchange for the ProposedTransaction can be provided to and reviewed by the Exchange. Theordinary shares of the Company may resume trading following theExchange's review of the required documentation or may remain halteduntil completion of the Proposed Transaction.
Update Regarding AdRabbitBusiness
Following the strain on the global financial markets,the Company is continuing with its cost reduction strategy by loweringits expenditures so it can work toward successfully completing the ProposedTransaction. To further reduce costs, the CEO and CTO positions willtransition from an employee to a consultancy basis.
In addition, in support of the Proposed Transaction,the Company has decided to pause the rollout of its new platform thatwas initially planned for 2022 and has decided instead to reduce thenumber of employees to support its current subscriber base. TheCompany will reevaluate its existing service contracts and delay itsdecision to renew any such contracts until closing of the ProposedTransaction.
Management of the Company wish to focus their effortson completing the Proposed Transaction and believe that it will createfurther value for its shareholders.
In addition, pursuant to the terms of the unsecuredconvertible loan financing (the " Series B Convertible Loan "), as previously announced on February 3, 2022, theCompany announces that it has completed the conversion of theoutstanding balance of US$168,000 plus applicable interest (the" Conversion ") under the Series B Convertible Loan agreementsthrough the issuance of an aggregate of 4,247,040 units, plus suchnumber of additional units to satisfy the applicable interest (each, a" Unit ") of the Company at the conversion price of C$0.05 perUnit. Each Unit is comprised of one ordinary share of the Company andone ordinary share purchase warrant (each, a " CLA Warrant ").Each CLA Warrant is exercisable into one ordinary share at an exerciseprice of C$0.05 per ordinary share until five years from the date ofissuance. The Conversion was triggered in accordance with its termsupon the Company's effective de-listing and subsequent removal fromthe Official List of the Australian Securities Exchange, as previouslyannounced on June 2, 2022.
The Company also announces that it intends to amend theexercise price of 82,509,749 of the Company'soutstanding warrants (which includes the 4,247,040 CLA Warrants describedabove) having an exercise price of $0.05 and expiring on February 3,2027, which were originally issued as part of a unit of the Company on February 3, 2022 inconnection with the Company's unsecuredconvertible loan financing (the " CLA Financing ").The Company intends to amend the exercise price to $0.025(pre-Consolidation), representing a price per share that is above the10 days volume weighted average price of the Company's ordinary sharesprior to this release, or such other price as required or permitted bythe Exchange. Any amendments to the exerciseprice of the CLA Financing warrants will be s ubject to, among other things, the Consolidation andacceptance of the Exchange. Full details of theterms of the warrant repricing will be provided in a subsequent pressrelease to follow.
In addition, subject to completing certain conditionsnoted below, the Company has agreed to reprice certainoptions to purchase up to an aggregate of30,608,702 ordinary shares in the capital of the Company havingexercise prices ranging from $0.06 to $0.16 with expiry dates rangingfrom February 25, 2024 to February 3, 2027. The option repricingwill be s ubject to the Consolidation in order tomeet the minimum pricing requirements of the Exchange, obtainingshareholder approval and acceptance of the Exchange. Full details of the option repricing will be provided in asubsequent press release to follow.
Additional Information
The parties expect that the Proposed Transaction willconstitute an arm's length transaction within the meaning of thepolicies of the Exchange.
It is expected that the Company will seek shareholderapproval for the Proposed Transaction as required pursuant to thepolicies of the Exchange and as may be further required by applicablelaw or as deemed advisable by the parties.
A more comprehensive news release will be issued by theCompany disclosing further details of the Proposed Transaction andFinancing, including the names and backgrounds of all persons who willconstitute insiders of the Resulting Issuer following completion ofthe Proposed Transaction, once definitive agreements for the ProposedTransactions have been finalized and additional information isavailable.
For further information on theCompany, please contact:
Max Bluvband, CEO and Director of the Company
Email: max@appv.io
Telephone: (604)283-6110
For further information on Sanolla , please contact:
Dr. Doron Adler, CEO
Email: doron@sanolla.com
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.
Completion of the ProposedTransaction is subject to a number of conditions, including but notlimited to, Exchange acceptance and if applicable pursuant to Exchangerequirements, disinterested shareholder approval. Where applicable,the Proposed Transaction cannot close until the required shareholderapproval is obtained. There can be no assurance that the ProposedTransaction will be completed as proposed or at all.
Investors are cautioned that, exceptas disclosed in the management information circular or filingstatement to be prepared in connection with the Proposed Transaction,any information released or received with respect to the ProposedTransaction may not be accurate or complete and should not be reliedupon. Trading in the securities of the Company should be consideredhighly speculative.
The TSX Venture Exchange Inc. has inno way passed upon the merits of the proposed transaction and hasneither approved nor disapproved the contents of this pressrelease.
This news release does notconstitute an offer to sell or the solicitation of an offer to buy anysecurities in any jurisdiction. The securities referred to herein havenot been, nor will they be, registered under the United StatesSecurities Act of 1933, as amended (the U.S. Securities Act") orany state securities laws, and may not be offered or sold in theUnited States or to, or for the account or benefit of, U.S. personsabsent registration under the U.S. Securities Act and applicable statesecurities laws or an applicable exemption from such registrationrequirements is available. This news release shall not constitute anoffer to sell or the solicitation of an offer to buy nor shall therebe any sale of the securities in any State in which such offer,solicitation or sale would be unlawful.
Information concerning Sanolla,including the proposed directors and officers and their respectivebiographies, has been provided to the Company by Sanolla for inclusionin this press release and the Company has relied on the accuracy ofsuch information without independent verification.
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. These statements are based uponassumptions that are subject to significant risks and uncertainties.Forward looking statements in this news release include, but are notlimited to, expectations regarding entry into a Definitive Agreement,anticipated plans regarding the business of Sanolla, includingproposed business operations, partners and related negotiations, theproposed terms and closing of the Proposed Transaction (includingobtaining requisite shareholder and Exchange approval), the ability toclose the Financing and related transactions, the anticipated benefitsof the Transaction, including the proposed business of the Companyafter completion of the Transaction, the receipt of the requisiteshareholder approval and Exchange approval for the settlement ofcertain payables, the proposed warrant amendment, and the proposedoption repricing. Because of these risks and uncertainties and as aresult of a variety of factors, including with respect to the closingof the Proposed Transaction, Financing and related matters, includingthe expected timing for execution of a Definitive Agreement, theexpected capitalization of the Company after completion of theProposed Transaction, the proposed terms of the Financings, certainproposed directors and officers of the Company, the proposed warrantamendment, the proposed option repricing, the timing and receipt ofall applicable regulatory, corporate, shareholder and third partyapprovals and to satisfy other conditions (including the settlement of certain payables) to theconsummation of the Proposed Transaction on the terms and at the timesproposed, the anticipated benefits from the Proposed Transaction,changes in general economic, business and political conditions,including changes in the financial markets, the diversion ofmanagement time on the Proposed Transaction, and the satisfaction ofother conditions to closing, the actual results, expectations,achievements or performance may differ materially from thoseanticipated and indicated by these forward looking statements.Although the Company or Sanolla, as the case may be, believes that theexpectations reflected in forward-looking statements are reasonable,it can give no assurances that the expectations of any forward-lookingstatement will prove to be correct. Except as required by law, theCompany disclaims any intention and assumes no obligation to update orrevise any forward-looking statements to reflect actual results,whether as a result of new information, future events, changes inassumptions, changes in factors affecting such forward-lookingstatements or otherwise.
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