A-Labs Capital II Corp. Announces Proposed Qualifying Transaction With RDARS Inc.

/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
VANCOUVER, British Columbia, Oct. 02, 2020 (GLOBE NEWSWIRE) — A-Labs Capital II Corp. (the “Company”) (TSX-V: ALAB.P) is pleased to announce that it has entered into a letter of intent (the “LOI”) dated October 1, 2020 with RDARS Inc. (“RDARS”). Pursuant to the LOI, the Company and RDARS have agreed to a proposed acquisition (the “Transaction”) by the Company of 100% of the issued and outstanding securities of RDARS in exchange for the issuance of securities of the Company. The Transaction is intended to constitute the Company’s Qualifying Transaction under Policy 2.4 – Capital Pool Companies of the TSXV Venture Exchange (the “Exchange”).About RDARSRDARS is a private corporation incorporated under the laws of the province of Ontario. Its primary business is the development and sale of its proprietary autonomous drone technology solution for the residential and small commercial security space. RDARS has created a fully autonomous “drone-in-a-box” and drone solution for real time alarm response, verification, and both autonomous and manual flight intervention. The drone technology is integrated into the properties security systems and is deployed autonomously upon a security breach. The drone system provides real-time data of the subject property and surroundings, and is transmitted in real time to the RDARS command & control center, in tandem with a security monitoring apparatus, that will dispatch authorities if necessary. The data can then be re-transmitted also in real time to the Public Safety Authorities providing an advance situation awareness for better preparedness and personnel safety upon approaching the property. RDARS is currently in discussions with the Federal Aviation Administration of the United States regarding the integration and standardization of the drone technology, and the Aircraft Worthiness Certifications and Drone Operational Certifications. RDARS expects to obtain regulatory approval for commercial usage by the end of first quarter 2021.Transaction TermsPursuant to the LOI, the parties will negotiate a definitive agreement (the “Definitive Agreement”) providing for the definitive terms of the Transaction. Other than certain provisions, including confidentiality and standstill provisions, the LOI is non-binding and is subject to the entering into of the Definitive Agreement. Either party may terminate the LOI if, among other things, the Definitive Agreement has not been entered into by November 16, 2020.The parties intend to complete a business combination – the structure of which will be determined after receiving tax, legal and other advice – whereby the Company will acquire all of the securities of RDARS that are issued and outstanding immediately prior to completion of the Transaction in exchange for the issuance of securities to RDARS securityholders in accordance with an agreed upon exchange ratio taking into account the respective valuations of the parties (the “Exchange Ratio”).The parties have agreed that the Transaction will proceed based on a deemed price per common share of the Company of approximately C$0.14035, before taking into account the proposed Consolidation (as defined below), subject to a downward adjustment to the deemed price per share in the event that the Company’s working capital at closing of the Transaction is less than C$50,000. The aggregate share consideration payable by the Company pursuant to the Transaction will be based upon the valuation of RDARS, on a partially-diluted basis (including the Bridge Financing on an as is converted basis, as defined below, but excluding any other convertible securities), pursuant to the Concurrent Financing (as defined below) on a pre-money basis.Accordingly, if the Transaction is completed, the common shareholders of RDARS will each receive, for every one (1) RDARS common share (“RDARS Share”) held immediately prior to the completion of the Transaction, such number of post-Consolidation common shares of the Company based on the Exchange Ratio. Furthermore, in connection with closing, the convertible securities of RDARS outstanding immediately prior to closing will either automatically adjust in accordance with their terms or will be replaced with equivalent convertible securities of the Company, with necessary adjustment to number and price to account for the Exchange Ratio.On closing of the Transaction, the business of the Company will be the business of RDARS, and, therefore, the Company is expected to operate in the Technology and Innovation or Diversified Industries sectors as defined by the Exchange.FinancingsPrior to the closing of the Transaction, RDARS proposes to complete: (i) a bridge financing of up to C$1,000,000 (the “Bridge Financing”); and (ii) a concurrent financing of a minimum of C$1,000,000 (the “Concurrent Financing”). The Bridge Financing is expected to involve the issuance of convertible securities of RDARS with each such security automatically convertible into RDARS Shares immediately prior to closing of the Transaction, at a price per RDARS Share equal to a lesser of (i) 20% discount to the price per RDARS Share in the Concurrent Financing; or (ii) a valuation of RDARS being C$10,000,000 on a non-diluted basis and not inclusive of the Concurrent Financing. The terms of the Concurrent Financing will be determined in the context of the market. Further terms of the Bridge Financing and the Concurrent Financing, including any proposed payment of broker or advisory fees, will be announced in a subsequent press release and/or the Filing Statement.Proposed Consolidation and Name ChangeThe common shares of the Company are expected to be consolidated prior to closing of the Transaction at a ratio to be determined by the parties in the context of the Transaction (the “Consolidation”). Upon completion of the Transaction, the Company will change its name to such name to be determined by RDARS Additional information regarding the proposed Consolidation and name change will be provided at a later date.Proposed Directors and Officers of the Resulting IssuerIn connection with closing of the Transaction, 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 five directors who shall be nominated by RDARS. Information and biographies regarding the incoming directors and officers will be provided at a later date.SponsorshipThe 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 pay the sponsorship fee in cash or common shares of the Company or a combination of cash and common shares of the Company. An agreement with a sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of completion.Trading HaltIn accordance with Exchange policies, the common shares of the Company are halted from trading and will remain so until certain documentation required by the Exchange for the Transaction can be provided to the Exchange. The common shares of the Company may resume trading following the Exchange’s review of the required documentation or may remain halted until completion of the Transaction.Conditions to Closing the TransactionClosing of the Transaction is conditional upon, among other things, receipt of all required regulatory, corporate, and third party approvals, including Exchange approval, the negotiation and execution of the Definitive Agreement, satisfactory due diligence by both the Company and RDARS, no material adverse change having occurred to the assets or share capital of either the Company or RDARS, completion of the Bridge Financing and Concurrent Financing, and, if required by the Exchange, filing of a sponsorship report with the Exchange. There can be no assurance that the Transaction will be completed on the terms proposed above or at all.The Transaction is an Arm’s Length Qualifying Transaction, as defined in the policies of the Exchange, and is therefore not ordinarily subject to shareholder approval by the Company’s shareholders. The Company may seek shareholder approval for special matters in connection with the Transaction, to the extent required by applicable law or as deemed advisable by the parties.For further information on the Company, please contact:Doron Cohen, CEO and Director of the Company
Email: [email protected]
Telephone number: 972-545-224-017
For further information on RDARS, please contact:Charles Zwebner, Director, President & CEO
Email: [email protected]
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 transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the 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 transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.Information concerning RDARS, including the proposed directors and officers, has been provided to the Company by RDARS for inclusion in this press release.Caution Regarding Forward-Looking InformationThe 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, anticipated plans regarding the business of RDARS, including receipt of U.S. Federal Aviation Administration approval, the proposed terms and closing of the Bridge Financing, Concurrent Financing and the Transaction, and the anticipated benefits of the Transaction, including the proposed business of the Company after completion of the Transaction. Because of these risks and uncertainties and as a result of a variety of factors, including with respect to the closing of the Transaction and related matters, including the expected timing for execution of a Definitive Agreement, the expected capitalization of the Company after completion of the Transaction, the proposed terms of financings, certain proposed directors and officers of the Company, the timing and receipt of all applicable regulatory, corporate, shareholder and third party approvals, the anticipated benefits from the 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 RDARS, 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.

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