Vancouver, British Columbia – TheNewswire - August 19, 2022 - AdRabbit Limited (TSXV:RABI) (the "Company") is pleased to announce that it has entered into a heads of agreement (the "HOA") dated August 18, 2022 with Sanolla Ltd. ("Sanolla"), a private company based in Nesher, Israel that is in the business of manufacturing, selling and distributing AI-based infrasound auscultation clinical device technologies.  The HOA outlines the indicative commercial terms and conditions of a proposed business combination between the Company and Sanolla, which would result in a reverse takeover of the Company by Sanolla and its shareholders (the "Proposed Transaction").

 

Assuming the completion of the Proposed Transaction, the Company or the successor entity resulting from the Proposed Transaction (referred to as the "Resulting Issuer") will operate the business of Sanolla, and be listed on the TSX Venture Exchange (the "Exchange") as a Tier 1 or Tier 2 technology and/or life sciences issuer. The consolidated available capital of the Resulting Issuer will be used to pursue the business plan of Sanolla (based on an initial budget to be agreed-upon by the parties to the Proposed Transaction), and it is expected that the Resulting Issuer would phase out aspects of the current business of the Company as determined by the board of directors and management of the Resulting Issuer.

 

Completion of the Proposed Transaction is and will be subject to customary terms and conditions, including, but not limited to: the satisfactory completion of due diligence by both parties; the successful negotiation and execution of a definitive agreement for the Proposed Transaction (the "Definitive Agreement"); completion of the Financing (as defined below); receipt of necessary approvals, including regulatory approvals and shareholder approval; and other conditions typical for similar transactions that will be contained in the Definitive Agreement.

 

About Sanolla

Sanolla is a private limited liability company based in Nesher, Israel, that is in the business of manufacturing, selling, and distributing AI-based infrasound auscultation clinical device technologies. The company has three product lines, all based on AI-powered detection and analysis of previously inaccessible body infrasound and other critical vital signs (ECG, heart rate, oxygen level, body temperature, and respiratory cycle). Sanolla's products can provide immediate and accurate assessment, reducing unnecessary in-clinic visits, saving time and money, and lowering the associated risk of infection exposure. The company's first product, the VoqX – a smart stethoscopehas received FDA approval.

 

Summary of Indicative Commercial Terms of the Proposed Transaction

 

The HOA contains non-binding indicative commercial terms for the Proposed Transaction, which are summarized below. The HOA contemplates that the parties will negotiate and enter into a Definitive Agreement to replace the HOA. Other than the non-binding indicative commercial terms, the HOA is otherwise binding on the parties, including with respect to exclusivity, confidentiality and other provisions. Unless the parties agree otherwise, the HOA will terminate if, among other things, the Definitive Agreement has not been entered into by October 30, 2022.

 

Pursuant to the HOA, the Company and Sanolla expect to complete the Proposed Transaction by way of a share exchange, merger, or other form of business combination, the final structure of which will be determined following guidance from tax, corporate and securities advisors. The business combination will not involve cash consideration, but will result in the Resulting Issuer issuing shares to the shareholders of Sanolla (the "Sanolla Shareholders") such that the Sanolla Shareholders will own at least 90% of the Resulting Issuer (on an undiluted basis but prior to taking into account the Financing (as defined below) or any advisor or broker securities issued in connection with the Proposed Transaction), except where otherwise noted, as described in more detail below. The business combination will therefore constitute a "reverse takeover" (within the meaning of Exchange policies) of the Company by Sanolla and the Sanolla Shareholders.

 

The Company and Sanolla expect that the Proposed Transaction will proceed based on respective valuations that will result, upon completion of the Proposed Transaction, in shareholders of the Company owning 5% of the Resulting Issuer (subject to adjustment to 10% as noted below) and the shareholders of Sanolla owning 95% of the Resulting Issuer (subject to adjustment to 90% as noted below) on an undiluted basis, except where otherwise noted, prior to taking into account the Financing or other advisor or broker securities that may be issued.

 

The foregoing valuations assume that Sanolla will raise at least US$5,000,000 (the "Sanolla Funding Target") of the aggregate amount raised under Financing from its investor network or shareholder base (i.e., without the assistance of the Company or its advisors).  In the event that the Sanolla Funding Target is not met:

 

1. (A)the respective valuations will be adjusted such that, upon completion of the Proposed Transaction, the shareholders of the Company will own 10% of the Resulting Issuer and the shareholders of Sanolla will own 90% of the Resulting Issuer on an undiluted basis, except where otherwise noted, prior to taking into account the Financing or other advisor or broker securities that may be issued; and 

 

(B)         at closing, the Resulting Issuer will issue to the Sanolla Shareholders such number of performance warrants (the "Performance Warrants") that, if exercised, would result in the Sanolla Shareholders holding the same amount of shares (in the aggregate) of the Resulting Issuer as would the timely achievement of the Sanolla Funding Target (i.e., the proportions between the Sanolla shareholders and Company shareholders (taken as of the completion of the Proposed Transaction) will be 95%:5%, upon exercise of the Performance Warrants in full, on an undiluted basis, except where otherwise noted, but without taking into account the Financing or other advisor or broker securities that may be issued). The exercise of the Performance Warrants will be subject to the achievement, within 12 months of the completion of the Proposed Transaction, of two commercial milestones (such milestones to be agreed upon in the Definitive Agreement). The aggregate exercise price in respect of all issued Performance Warrants is expected to be US$100,000, and the Performance Warrants are expected to have an exercise period of 36 months after the later of the two commercial milestones is achieved.

 

In addition to other conditions to closing of the Proposed Transaction, the MOU provides that the Company will settle certain payables of the Company on or before closing through the issuance of shares and/or such other method acceptable to the parties, provided that any such issuance will not affect the percentage holdings of the Sanolla shareholders of the Resulting Issuer on closing. Any such share issuance to settle payables will be subject to Exchange approval, and if required, shareholder approval (including majority of the minority shareholder approval). Further details regarding this condition to closing will be provided in a subsequent press release to follow.

 

Proposed Financing

 

In connection with, and as a condition to the completion of, the Proposed Transaction, it is expected that the parties will complete one or more financing(s) for aggregate proceeds between US$10,000,000 to US$15,000,000 (collectively, the "Financing").

 

The structure and terms of the Financing have not been finalized and will be determined by the parties in the context of the market. However, it is expected that the Financing may be undertaken in two separate financings:

(a)        Sanolla will complete a financing of at least US$5,000,000 in order to achieve the Sanolla Funding Target. The Sanolla Funding Target may be completed by Sanolla as a separate financing prior to closing of the Proposed Transaction by means of convertible debt or other non-repayable financing that will convert or be exchangeable into securities of the Resulting Issuer in connection with completion of the Proposed Transaction, subject to applicable discounts, if any, to the concurrent financing noted below; and

 

(b)        Sanolla or the Company will complete a financing for the balance of the Financing proceeds, expected to be undertaken as a concurrent financing within the meaning of Exchange policies.

 

Completion of the Proposed Transaction will be conditional 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 or a portion of the Financing, it is expected that the broker-agent would receive broker's fees, including broker warrants, as is customarily paid for such a transaction. The Financing may also involve the payment of finder's fees as permitted by Exchange policies.

 

Proposed Bridge Financing

 

In addition to the Financing, it is expected that the Company will undertake a bridge financing prior to the completion of the Financing and the Proposed Transaction in order to cover expenses in connection with the completion of the Proposed Transaction. The terms of the bridge financing have not yet been determined and will be announced in a subsequent press release.

Proposed Consolidation and Name Change

 

It is expected that the Company will undertake a consolidation of its ordinary share and complete a name change in connection with completion of the Transaction, the terms and details of which will be set out in the Definitive Agreement and/or a subsequent press release.

 

Proposed Directors, Officers and Principals of the Resulting Issuer

 

In connection with closing of the Transaction, except as noted below, it is expected that the current directors and officers of the Company will resign from their respective positions and the board will be reconstituted with at least four directors: Dr. Doron Adler, PhD (the current CEO and founder of Sanolla); Mr. Elie Balas; one director nominated by the Company; and one director who is mutually agreed by the Company and Sanolla.

 

The proposed management of the Resulting Issuer is expected to be the management of Sanolla or such other appointees determined by Sanolla, and the current management of the Company is expected 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 incoming directors, officers and other anticipated principals of the Resulting Issuer will be provided at a later date in a subsequent press release.

 

Dr. Doron Adler, PHD

 

Dr. Adler is a serial entrepreneur with an impressive track record in establishing successful med-tech companies. He founded Sanolla after 15 years as the founder and CEO of Cbyond, which Olympus acquired for $2.1 billion. As a result of the deal, he was the CEO of Olympus Israel and CTO for Olympus Surgical US. Previously, Dr. Adler founded iSight and served as the vice president 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 Electrical Engineering from Technion – the Israel Institute of Technology, and he was recognized as one of the 100 most inspiring graduates of the Technion. Dr. Adler has filed more than 150 patents.

 

Mr. Elie Balas

 

Elie Balas is a multidiscipline serial entrepreneur who has built businesses into multimillion-dollar companies. He founded several services companies (MN, CT, PA) and sold these businesses to Utilicop United. In addition, he founded and served as the chairman of Munchies Group, a cost-to-cost network with more than 500 locations throughout North America. Elie also founded Zonu Optical and Medici Neapolitan. Aside from these companies, Elie is an active investor in real estate projects and a business consultant.

Elie graduated from the Israeli Air Force Academy and studied Electrical Engineering at the State University of New York at Buffalo. He has been certified as an Aircraft Technician on the Phantom, Skyhawk, CH, and Bell helicopters.

 

Sponsorship

 

The Company will seek a waiver from the Exchange to the requirement to engage a sponsor in connection with the Transaction. If a sponsor is required, the Company will identify a sponsor and may pay the sponsorship fee in cash or shares of the Company or a combination of cash and ordinary shares of the Company. An agreement with a sponsor should not be construed as any assurance with respect to the merits of the Proposed Transaction or the likelihood of completion.

 

Trading Halt

 

In accordance with Exchange policies, the ordinary shares of the Company have been halted from trading and will remain so until certain documentation required by the Exchange for the Proposed Transaction can be provided to and reviewed by the Exchange. The ordinary shares of the Company may resume trading following the Exchange's review of the required documentation or may remain halted until completion of the Proposed Transaction.

 

Update Regarding AdRabbit Business

 

Following the strain on the global financial markets, the Company is continuing with its cost reduction strategy by lowering its expenditures so it can work toward successfully completing the Proposed Transaction. To further reduce costs, the CEO and CTO positions will transition 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 that was initially planned for 2022 and has decided instead to reduce the number of employees to support its current subscriber base. The Company will reevaluate its existing service contracts and delay its decision to renew any such contracts until closing of the Proposed Transaction.

 

Management of the Company wish to focus their efforts on completing the Proposed Transaction and believe that it will create further value for its shareholders.

In addition, pursuant to the terms of the unsecured convertible loan financing (the "Series B Convertible Loan"), as previously announced on February 3, 2022, the Company announces that it has completed the conversion of the outstanding balance of US$168,000 plus applicable interest (the "Conversion") under the Series B Convertible Loan agreements through the issuance of an aggregate of 4,247,040 units, plus such number of additional units to satisfy the applicable interest (each, a "Unit") of the Company at the conversion price of C$0.05 per Unit. Each Unit is comprised of one ordinary share of the Company and one ordinary share purchase warrant (each, a "CLA Warrant"). Each CLA Warrant is exercisable into one ordinary share at an exercise price of C$0.05 per ordinary share until five years from the date of issuance. The Conversion was triggered in accordance with its terms upon the Company's effective de-listing and subsequent removal from the Official List of the Australian Securities Exchange, as previously announced on June 2, 2022.

 

The Company also announces that it intends to amend the exercise price of 82,509,749 of the Company's outstanding warrants (which includes the 4,247,040 CLA Warrants described above) 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 in connection with the Company's unsecured convertible 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 the 10 days volume weighted average price of the Company's ordinary shares prior to this release, or such other price as required or permitted by the Exchange. Any amendments to the exercise price of the CLA Financing warrants will be subject to, among other things, the Consolidation and acceptance of the Exchange. Full details of the terms of the warrant repricing will be provided in a subsequent press release to follow.

 

In addition, subject to completing certain conditions noted below, the Company has agreed to reprice certain options to purchase up to an aggregate of 30,608,702 ordinary shares in the capital of the Company having exercise prices ranging from $0.06 to $0.16 with expiry dates ranging from February 25, 2024 to February 3, 2027.  The option repricing will be subject to the Consolidation in order to meet the minimum pricing requirements of the Exchange, obtaining shareholder approval and acceptance of the Exchange. Full details of the option repricing will be provided in a subsequent press release to follow.

Additional Information

 

The parties expect that the Proposed Transaction will constitute an arm's length transaction within the meaning of the policies of the Exchange.

 

It is expected that the Company will seek shareholder approval for the Proposed Transaction as required pursuant to the policies of the Exchange and as may be further required by applicable law or as deemed advisable by the parties.

 

A more comprehensive news release will be issued by the Company disclosing further details of the Proposed Transaction and Financing, including the names and backgrounds of all persons who will constitute insiders of the Resulting Issuer following completion of the Proposed Transaction, once definitive agreements for the Proposed Transactions have been finalized and additional information is available.

 

For further information on the Company, 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 THE POLICIES OF THE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

 

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, disinterested shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

 

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

 

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction. The securities referred to herein have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act") or any state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration under the U.S. Securities Act and applicable state securities laws or an applicable exemption from such registration requirements is available.  This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be 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 respective biographies, has been provided to the Company by Sanolla for inclusion in this press release and the Company has relied on the accuracy of such information without independent verification.

 

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. These statements are based upon assumptions that are subject to significant risks and uncertainties. Forward looking statements in this news release include, but are not limited to, expectations regarding entry into a Definitive Agreement, anticipated plans regarding the business of Sanolla, including proposed business operations, partners and related negotiations, the proposed terms and closing of the Proposed Transaction (including obtaining requisite shareholder and Exchange approval), the ability to close the Financing and related transactions, the anticipated benefits of the Transaction, including the proposed business of the Company after completion of the Transaction, the receipt of the requisite shareholder approval and Exchange approval for the settlement of certain payables, the proposed warrant amendment, and the proposed option repricing. Because of these risks and uncertainties and as a result of a variety of factors, including with respect to the closing of the Proposed Transaction, Financing and related matters, including the expected timing for execution of a Definitive Agreement, the expected capitalization of the Company after completion of the Proposed Transaction, the proposed terms of the Financings, certain proposed directors and officers of the Company, the proposed warrant amendment, the proposed option repricing, the timing and receipt of all applicable regulatory, corporate, shareholder and third party approvals and to satisfy other conditions (including the settlement of certain payables) to the consummation of the Proposed Transaction on the terms and at the times proposed, the anticipated benefits from the Proposed Transaction, changes in general economic, business and political conditions, including changes in the financial markets, the diversion of management time on the Proposed Transaction, and the satisfaction of other conditions to closing, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although the Company or Sanolla, as the case may be, believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.

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