UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
On September 12, 2023, Novo Integrated Sciences, Inc., a Nevada corporation (the “Company”) entered into a securities purchase agreement (the “SPA”) with Mast Hill Fund, L.P., a Delaware limited partnership (the “Holder”), pursuant to which the Company issued an 12% promissory note (the “Note”) with a maturity date of September 12, 2024 (the “Maturity Date”), in the principal sum of $3,500,000 (the “Principal Sum”). Pursuant to the terms of the Note, the Company agreed to pay the Principal Sum to the Holder and to pay interest on the principal balance at the rate of 12% per annum. The Note carries an original issue discount (“OID”) of $350,000. Accordingly, on the Closing Date (as defined in the SPA), the Holder paid the purchase price of $3,150,000 in exchange for the Note. The Holder may convert the Note into the Company’s common stock (the “Common Stock”), at any time at a conversion price equal to the lesser of (i) $0.45 or (ii) 91.5% of the lowest volume weighted average price of our Common Stock on any trading day during the five (5) trading day period prior to the respective conversion date, subject to adjustment as provided in the Note (including but not limited to price protection provisions in case of future dilutive offerings, subject to certain customary exempt transactions) as well as beneficial ownership limitations.
Pursuant to the terms of the Note, the Company agreed to pay the Principal Sum and accrued interest as follows: (i) all accrued interest on December 12, 2023, (ii) $350,000 plus accrued interest on March 12, 2024, (iii) $350,000 plus accrued interest on April 12, 2024, (iv) $350,000 plus accrued interest on May 12, 2024, (v) $595,000 plus accrued interest on June 12, 2024, (vi) $595,000 plus accrued interest on July 12, 2024, (vii) $595,000 plus accrued interest on August 12, 2024, and (viii) all remaining amounts owed under the Note on the Maturity Date (each of the aforementioned payments are an “Amortization Payment”). If the Company fails to make any Amortization Payment, then the Holder shall have the right to convert the amount of such respective Amortization Payment into shares of Common Stock as provided in the Note at the lesser of (i) the then applicable conversion price under the Note or (ii) 85% the lowest volume weighted average price of our Common Stock on any trading day during the five (5) trading day period prior to the respective conversion date.
The Company may prepay the Note at any time prior to the date that an Event of Default (as defined in the Note) (each an “Event of Default”) occurs at an amount equal to the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium) plus $750.00 for administrative fees. The Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Note or SPA.
Upon the occurrence of any Event of Default, the Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125%. Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 16% per annum or the highest rate permitted by law.
The SPA contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, piggy-back registration rights with respect to the Common Stock underlying the Note. Further, pursuant to the SPA, the Company agreed to transfer its rights to the charges/mortgages evidenced by Instrument No. CE925256 (in the amount of $1,600,000 Canadian dollars) and CE888785 (in the amount of $1,800,000 Canadian dollars) on the property located at 1580 Rossi Drive, Tecumseh, Ontario, Canada, to the Holder as security for the Company’s repayment of the Note. In addition to the beneficial ownership limitations provided in the Note, the sum of the number of shares of Common Stock that may be issued under the SPA and Note shall be limited to 17,720,448 as further described in the SPA, unless shareholder approval to exceed such limitation is obtained by the Company.
The Company’s subsidiary, Acenzia Inc., an Ontario corporation (the “Guarantor”), entered into a guaranty with the Holder on September 12, 2023 (the “Guaranty”). The Guarantor guaranteed the repayment of the Note and granted the Holder a security interest in the assets of the Guarantor, including but not limited to the property located at 1580 Rossi Drive, Tecumseh, Ontario, Canada.
The foregoing descriptions of the Note, SPA, and Guaranty do not purport to be complete and are qualified in its entirety by reference to the full text of the Note, SPA, and Guaranty, copies of which are filed herewith as Exhibits 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
To the extent required by Item 2.03 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
To the extent required by Item 3.02 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference. The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), for the private placement of the equity securities pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the recipient is an accredited investor, the recipient acquired the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Promissory Note, dated as of September 12, 2023, by and between Novo Integrated Sciences, Inc. and Mast Hill Fund, L.P. | |
| 10.2 | Securities Purchase Agreement, dated as of September 12, 2023, by and between Novo Integrated Sciences, Inc. and Mast Hill Fund, L.P. | |
| 10.3 | Guaranty, dated as of September 12, 2023, by and between Acenzia Inc. and Mast Hill Fund, L.P. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Novo Integrated Sciences, Inc. | ||
| Dated: September 18, 2023 | By: | /s/ Robert Mattacchione |
| Robert Mattacchione | ||
| Chief Executive Officer | ||