AdRabbit Limited Provides Update to Proposed Reverse Takeover Transaction and Other Corporate Updates

(TheNewswire)

Vancouver, British Columbia – TheNewswire - December 9, 2022 - AdRabbit Limited (TSXV:RABI) (the "Company") provides an update with respect to the proposed transaction with Sanolla Ltd. ("Sanolla") which, if completed, would result in a reverse takeover of the Company by Sanolla and its shareholders (the "Proposed Transaction").

As previously announced in its press releases dated August 19, 2022 and October 25, 2022, the Company had entered into a heads of agreement (the "HOA") dated August 18, 2022 with Sanolla providing for certain indicative commercial terms and conditions of the Proposed Transaction, including the condition that the parties negotiate and enter into a definitive agreement. The HOA has expired in accordance with its terms and there is no binding agreement currently in place between the parties with respect to the Proposed Transaction. Nevertheless, the Company and Sanolla are continuing to negotiate the parameters of the Proposed Transaction, including among other things, the structure and terms. The Company believes that there are material conditions and open items remaining to negotiate – including conditions relating to final valuation, definitive transaction structure, and funding amount  –  before the parties would consider entering into a further exclusivity period or other binding agreement with respect to the Proposed Transaction, and, as such, readers are cautioned not to place undue reliance on these negotiations or the potential for entering into a definitive agreement. Since there is no binding agreement in place, either party is currently free to explore other opportunities and there is no obligation to negotiate toward the Proposed Transaction.

In light of the above, the Company is considering the following:

• Continue exploring a business combination with Sanolla to the extent the definitive commercial and other terms and conditions can be successfully negotiated and a binding agreement entered into; 

• Explore strategic alternatives that may be available to the Company to increase shareholder value which could include, among others, merger or other business combination with another party, including those that may be synergistic with the products of the Company, strategic investment, or other strategic transaction 

• Explore debt or equity financings to capitalize the Company in order to reach a successful merger and business growth 

• As discussed below, maintain its legacy product while continuing the pause of the development and rollout of its new platform, AdRabbit App (as defined below), as well as continuing to reduce expenses and  

• Consider settling payables or other debt as part of its strategic review in an effort to improve its financial position by reducing its accrued liabilities 

Since the HOA has expired, readers are cautioned that previously disclosed terms relating to the HOA (including those set out in the Company's press release dated August 19, 2022) are not necessarily indicative of the terms that may be negotiated between the parties.

Trading of the Company's ordinary shares on the Exchange was halted in connection with the announcement of the Proposed Transaction in accordance with Exchange policies and remains halted as of the date hereof. The Company intends to discuss with the Exchange the potential for a resumption of trading.

Update Regarding AdRabbit Business and Other Corporate Updates

As previously announced in the Company's press releases and in its MD&A for the third quarter ended September 30, 2022, following the strain on the global financial markets and in light of its consideration and negotiation of strategic transactions such as the Proposed Transaction, as well as other factors including those noted below, the Company has made changes to its business and plans and is continuing with its cost reduction strategy and pausing development and rollout of its new platform, the AdRabbit App (as defined below).

The Company currently maintains its legacy existing software-as-a-service (SaaS) offering (the "AppsVillage Platform") which allows SMBs to create apps for their business, although the Company has reduced spending in development, marketing and customer acquisition (as noted below).  The Company has removed from the app market the beta for AdRabbit (the "AdRabbit App"), a standalone app which the Company began developing and beta-testing in 2021 as an automation tool to power digital advertising campaigns using a backend Artificial Intelligence (AI) powered software. The AdRabbit App was initially planned for rollout in 2022, subject to further development and commercialization, which has been paused.

The Company undertook or is undertaking the following cost reduction strategies and other operational changes, among others:  

• The Company has reduced the salaries of its CEO and CTO executive positions and has transitioned such positions from an employee to a consultancy basis; 

• The Company has reduced the number of employees to support and maintain the existing AppsVillage Platform and its current subscriber base and pausing all of its marketing, promotional, and development activities resulting in churn or pausing of its SaaS subscriptions, thereby leading to decreased revenues. The Company has also transitioned the remaining employees required to support the AppsVillage Platform to a consultancy basis; 

• The Company will continue to re-evaluate its existing SaaS subscriptions with its current AppsVillage Platform subscriber base and delay its decision to renew any such subscriptions while it continues to explore strategic transactions such as the Proposed Transaction; and  

• The Company has paused further development and the proposed rollout of the commercial version of the AdRabbit App (initially planned for 2022) and has pulled the AdRabbit App beta product from the app market due to, among other reasons: rising costs and budget constraints associated with maintaining and promoting the product 

In contemplation of potential strategic transactions such as the Proposed Transaction, the Company is focusing on rebuilding shareholder value and will continue to re-evaluate its business plans, operations and product offerings, further details of which, once known, will be provided in a subsequent press release.

Please also refer to the Company's MD&A for the third quarter ended September 30, 2022 in respect of the above matters, available under the Company's profile on SEDAR at www.sedar.com.

As previously announced in the Company's press release dated November 29, 2022, in connection with the board resignations and replacements, the board of directors has been reconstituted, and the current directors and officers are: Max Bluvband (Chief Executive Officer and Director), Gidi Krupnik (Chief Financial Officer), Shahar Hajdu (Chief Technology Officer and Director), Noah Herscovici (Director), and Moshe Cohen (Director). As previously announced, the Company is searching for additional directors to be appointed to the Board to ensure compliance with Australian corporate law and TSXV requirements, in terms of both residency requirements and the inclusion of independent Board members.  The Company is also seeking a replacement corporate secretary, including considering one of its current officers to assume such role.

For further information, please contact:

Max Bluvband, CEO and Director of the Company
Email: [email protected]
Telephone: (604) 283-6110

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.

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: the results of the negotiations regarding the Proposed Transaction and the ability to successfully enter into a definitive agreement; plans and expectations regarding other strategic business combinations, transactions, or equity or debt financings; the ability to manage and reduce expenses or settle or manage accrued liabilities, the ability to continue operations or growth strategies; plans and expectations regarding the business and its products (including the AppsVillage Platform and the AdRabbit App) and subscribers; the expectation to identify appropriate additional director candidates; the expectation regarding resumption in trading.

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: a steady improvement in the global financial markets and other general economic factors;  the Company's ability to maintain its current subscriber base for its legacy platform; that costs can be managed or reduced based on current strategies; its ability to execute on its business plans and strategies; its ability to identify and/or negotiate  strategic transactions (including Proposed Transaction) on acceptable terms;  its operations and overall financial performance; no changes in the competitive environment or legal or regulatory developments affecting its business; its ability to mitigate inflationary pressures; its 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 its 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 related to these forward-looking statements, which include, but are not limited to, the Company's ability to remain attractive, economic or other conditions, its ability to reduce expenses and manage debt so as to remain attractive for potential strategic transactions, its ability to manage the legacy business and maintain value, if any, in the paused AdRabbit App. In addition, there is no guarantee or assurance that the Company's ordinary shares will resume trading. Furthermore, given that the HOA has expired, the terms should not be taken as indicative of the terms of any future deal whether with Sanolla or any other party, with respect to the Proposed Transaction, or any other strategic transaction, business combination, reverse takeover, or similar transaction or with respect to any financing (any such transaction, an "Alternative Transaction"), and investors should not place undue reliance on any such plans or proposals unless definitive terms have been disclosed in a subsequent press release, and subject to the terms and conditions described therein. The Company does not have any binding agreement with any party with respect to any such planned transaction, and there is no guarantee the Company will be able to complete any such Alternative Transactions or what the terms would be. 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 business, to the extent its re-evaluating its 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 www.sedar.com.

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.

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