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AdRabbit Limited Announces Convertible Loan Financing

AdRabbit Limited

Vancouver, British Columbia – TheNewswire - March 23, 2023 - AdRabbit Limited (TSXV:RABI) (the “Company”) is pleased to announce that it has entered into a convertible loan agreement (the “Loan Agreement”) with 12.64 Fund Limited Partnership (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 Loan Agreement 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 multiple closings, with the first closing being the completion of the loan advanced by the Lender under the Loan Agreement, subject to receipt of approval from the Exchange. Other than the Loan Agreement with the Lender, at this time, the Company has not entered into any further loan agreements under the Offering with other potential lenders, and there is no guarantee that additional amounts will be raised under the Offering. Below is a summary of the principal terms of the Loan Agreement, which are subject to approval and/or amendment as required by the Exchange.


Unless earlier converted, the outstanding principal amount under the Loan Agreement will mature 12 months following the advance of funds under the Loan Agreement, or such other date as may be agreed between the Company and the Lender and provided that the Lender 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 Agreement will accrue at an annual rate 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 of the Lender, converted as part of a Conversion. The Loan Agreement contains typical events of default for a transaction of this nature which accelerate the Maturity Date.


Pursuant to the Loan Agreement, the principal amount under the Loan Agreement will be automatically converted (“Conversion”) into ordinary shares of the Company immediately prior to the completion of specified events (each, a “Conversion Event”), including a reverse takeover, merger or amalgamation, arrangement, share exchange or similar transaction involving the Company and another person, or a sale of all or substantially all of the assets of the Company.  A Conversion Event does not include a transaction where the holders of voting securities of 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 immediately following the completion of such transaction.


The Conversion of the principal amount under the Loan Agreement will be at a price per share (the “Conversion Price”) that is equal to a 50% discount to: (A) the offering price of securities issued under the financing completed concurrently with the Conversion Event; or (B) if there is no such concurrent financing, the deemed price per ordinary share of the Company under the Conversion Event.  The Conversion Price is subject to standard adjustment provisions, including on the occurrence of a share consolidation, split or other capital reorganization.  The Conversion Price is also subject to the minimum pricing (including allowable discount) requirements under the policies of the Exchange, which requirements may include that the Company complete a share consolidation prior to the completion of the Conversion.


At the time of Conversion, the Company will, at the option of the Lender, pay the accrued interest in cash or convert such interest into ordinary shares of the Company at the Conversion Price, provided that in no event shall the Conversion Price with respect to the conversion of such interest be less than the Market Price (as defined in the policies of the Exchange) at the time such 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 and regulatory approvals required in connection with the conversion and the completion of the Conversion Event, which in the case of Exchange approval shall be satisfied by receipt of conditional approval from the Exchange in connection with the completion of the Conversion Event;


(ii)        if required by the Exchange, the completion of a consolidation of the ordinary shares of the Company in order to meet the minimum pricing requirements of the Exchange for the conversion of convertible securities; and


(iii)        any other material conditions precedent to the completion of the Conversion Event (other than the conversion of the convertible loan, customary conditions contained in the conditional approval letter of the Exchange or other conditions which by their nature cannot be completed prior to closing) have been completed, satisfied or waived, as determined by the Lender and the Company, each acting reasonably.


The Loan Agreement contains restrictive covenants, whereby, until the Conversion or repayment of the loan, the Company shall not, except with the written consent of the Lender or with respect to a Conversion Event: (i) make material changes to the nature of its business or enter into material transactions not within the Company’s line of business; (ii) propose to pay a dividend; or (iii) incur indebtedness that ranks on parity to or is senior to the Loan Agreement or repay any outstanding loan or indebtedness.


The Loan Agreement also contains a “most favoured nation” provision, which provides that, if the Company proposes to issue any subsequent convertible securities or convertible debt (“Subsequent Convertible Securities”), the Company must provide notice of such Subsequent Convertible Securities to the Lender, and if the Lender determines that the terms of the Subsequent Convertible Securities are preferable to the terms of the Offering, the Lender can require the parties to amend the terms of the Loan Agreement to match the terms of the Subsequent Convertible Securities.


The net proceeds from the first closing of the Offering under the Loan Agreement are expected to be used as follows: (i) expenses of the Company’s audit for fiscal 2022 and ongoing continuous disclosure, legal and public company expenses; (ii) expenses related to further exploration of potential strategic transactions and business combinations (as previously announced); and (iii) for working capital and general and administrative and other corporate purposes. The net proceeds from the first closing of the Offering will also be used to repay the previously announced short term loans from the Lender to the Company in the amounts of C$20,000 and US$60,000, plus any accrued interest, which loans will become due and payable in accordance with their terms as a result of the initial closing under the Offering.  The Company may reallocate the proposed use of proceeds for sound business reasons.


All securities issued in the Offering will be subject to a statutory hold period of four months and one day.


In the event that the Exchange does not provide approval for the completion of the Offering under the terms currently proposed and/or requires amendments to such terms which are not acceptable to the parties, the Loan Agreement and/or the Offering may be terminated and not completed.


The securities to be offered pursuant to the Offering have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.


Disclosure Required under MI 61-101


12.64 Fund Limited Partnership holds more than 10% of outstanding ordinary shares of the Company and is considered a “related party” of the Company within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). As a result, the Loan Agreement is considered to be a “related party transaction” as such term is defined by MI 61-101, requiring the Company, in the absence of exemptions, to obtain a formal valuation of, and minority shareholder approval of, the “related party transaction”. Pursuant to MI 61-101, the Company intends to rely on the exemptions from the formal valuation and the minority shareholder approval 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 of the Loan Agreement does not exceed 25% of the Company's market capitalization as determined in accordance with MI 61-101, as well as the exemption from the formal valuation requirement provided for in subsection 5.5(b) of MI 61-101 given that no securities of the Company are listed or quoted on certain specified exchanges.  


The Company does not expect to file a material change report in respect of the related party transaction at least 21 days prior to the closing of the transaction under the Loan Agreement, which the Company deems reasonable in the circumstances in order to close the transaction in an expeditious manner. 


For further information, please contact:


Max Bluvband, CEO and Director of the Company


Telephone: (604) 283-6110



Caution Regarding Forward-Looking Information


The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward-looking statements. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future events, plans, prospects, business, and financial performance, and often contain words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend”, statements that an action or event “may”, “might”, “could”, “should”, or “will” be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein are forward-looking statements, including, without limitation, statements regarding: expected completion of the Offering, including the advance of funds under the Loan Agreement; the expected use of proceeds under, and the expected benefits of, the Offering; the expectations regarding application or receipt of regulatory and shareholder approvals; and plans and expectations regarding other strategic business combinations, transactions, or equity or debt financings, or other operational activities.


These statements are based upon factors and assumptions that are subject to significant risks and uncertainties. Such factors and assumptions include, but are not limited to: the ability of the Company to receive regulatory, Exchange and shareholder approval, as required, in connection with the completion of the loan under the Loan Agreement and the Offering; the expectation that the terms of the Loan Agreement and the Offering as described herein will be acceptable to the Exchange without amendment; the closing of any further amounts, if any, under the Offering, and the conversion, if any, of loans under the Offering in accordance with its terms; a steady improvement in the global financial markets and other general economic factors; the Company’s ability to identify and/or negotiate  strategic transactions on acceptable terms;  the Company’s operations and overall financial performance; no changes in the competitive environment or legal or regulatory developments affecting its business; 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 settlement with its current or future vendors and creditors; and the Company’s ability to maintain key personnel such as directors and officers of the Company. While the Company considers these expectations and assumptions to be reasonable, many expectations and assumptions are based on factors and events that are not within its control and there is no assurance that they will prove to be correct.


There are a number of risks and uncertainties related to these forward-looking statements, which include, but are not limited to: the Company being unable to use the proceeds of the Offering as described, or the proceeds being insufficient for the Company’s purposes; legal or regulatory impediments regarding the Loan Agreement and the Offering or the Conversion thereunder, if any, in the future, including that the current terms of the Loan Agreement will not be acceptable to the Exchange and the risk that any amendments requested by the Exchange to the terms of the Loan Agreement will not be acceptable to the parties to the Loan Agreement, leading to termination of the Loan Agreement and failure to complete the Offering; accrued and unpaid interest thereon; the Conversion Event not occurring and the Company being required to service or repay the debt in full; the Company defaulting under the Loan Agreement leading to, among other things, an inability to pay its debts as they become due or repay the loan at the maturity date (or acceleration thereof) or at all; restrictive covenants under the Loan Agreement restricting the Company from taking certain actions, such as paying dividends or seeking additional debt financing or convertible security offerings; the Company’s inability to reduce expenses and manage debt so as to remain attractive for potential strategic transactions or for lenders or investors; and general economic and other conditions affecting the Company. Investors should not place undue reliance on any plans or proposals regarding strategic transactions, including potential business combinations or equity or debt financings, unless definitive terms have been disclosed in a subsequent press release, and subject to the terms and conditions described therein. The Company will require further capital, and in light of the current status of credit and equity markets, there is a substantial risk that the Company will not be able to complete such transactions or upon terms satisfactory to the Company. The Company's current or proposed business, subject to the previously announced changes and re-evaluation to its operations, business plans and product offerings, remains subject to the risks identified in the Company's listing application dated November 15, 2021 available under the Company's profile on SEDAR at


Although the Company has attempted to identify important factors that could cause actual actions, events, conditions, results, performance or achievements to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events, conditions, results, performance or achievements to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management's expectations and plans relating to the future, as at the date they are provided. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law. Accordingly, investors should not place undue reliance on forward-looking statements. All the forward-looking statements are expressly qualified by the foregoing cautionary statements.