UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest reported): November 23, 2018

 

Novo Integrated Sciences, Inc.

(Exact name of small business issuer as specified in its charter)

 

Nevada   333-109118   59-3691650
(State or other jurisdiction   (Commission   (IRS Employer
of Incorporation)   File Number)   Identification Number)

 

11120 NE 2nd Street, Suite 200, Bellevue, WA 98004

(Address of principal executive offices)

 

(206) 617-9797

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.)

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CF$ 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

     
 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On November 23, 2018, Novo Integrated Sciences Inc. (the “Company”) and Novo Healthnet Limited (“NHL”), a wholly owned subsidiary of the Company, executed a binding letter of intent (“LOI”) with Activa Clinics (“Activa”). Pursuant to the terms of the LOI, the parties agreed to negotiate and enter into a definitive agreement pursuant to which NHL will acquire all of the issued and outstanding shares of Activa in exchange for shares of the Company (the “Proposed Transaction”).

 

Pursuant to the terms of the LOI, the parties agreed to enter into a definitive agreement that will provide for the following, among other things:

 

  1. The Company will acquire all of the issued and outstanding shares of Activa.
  2. The Company will issue, to the Activa shareholders, CAD $35,000,000 (approximately $26,435,337 per the x-rates.com exchange rate of 0.7552 on November 26, 2018) worth of restricted shares of the Company’s common stock. The total number of the Company’s common shares expected to be issued for this proposed transaction will be determined by calculating the 30-trading day average, based on the period ended November 23, 2018, with the application of a market acceptable discount to the determined average.
  3.

Activa has the right to exercise a claw back within a two-year period commencing on the closing date of the Proposed Transaction. The claw back would result in the mutual return of both Activa’s and the Company’s shares to the respective parties should targets, to de defined in the definitive agreement, not be met by the Company.

  4. The shares issued to the Activa shareholders will be subject to a two-year lockup coinciding with the claw back. If the claw back is waived prior to the two-year claw back period, the lockup will be removed.
  5. The Company will have the right to appoint one board member on Activa’s board of directors, and Activa will have the right to appoint one board member on the Company’s board of directors.
  6. Each of the Activa shareholders will enter into an employment agreement for a period of no less than two years from the closing of the Proposed Transaction.

 

The LOI provides that the parties will carry out due diligence and will proceed reasonably and in good faith toward the negotiation and execution of definitive documentation regarding the Proposed Transaction. Closing of the Proposed Transaction is conditioned upon completion of due diligence, among other customary closing conditions, including receipt of required regulatory approvals.

 

If a definitive agreement is not executed by the parties on or before December 31, 2018 (or such other date agreed to by the parties), the LOI will terminate.

 

The foregoing description of the LOI does not purport to be complete and is qualified in its entirety by reference to the full text of the LOI, a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K, and is incorporated herein by reference.

 

Item 7.01. Regulation FD Disclosure.

 

On November 29, 2018, the Company issued a press release announcing that on November 23, 2018, the Company and NHL executed a binding letter of intent with Activa. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the website is not a part of this Current Report on Form 8-K.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
     
10.1   Letter of Intent dated November 23, 2018 by and between the registrant, Novo Healthnet Limited, and Activa Clinics.
99.1   Press release of the registrant dated November 29, 2018.

 

     
 

 

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: November 29, 2018 By: /s/ Robert Mattacchione
    Robert Mattacchione
    Chief Executive Officer

 

     
 

 

 

 

November 23, 2018

 

Activa Clinics

6610 Turner Valley Road, Suite 200

Mississauga, Ontario L5N 2Pl

 

Attention: Neil Dhalla

 

RE: Binding Letter of Intent for the Acquisition, by Novo Healthnet Limited, of 100% of the issued and outstanding equity stock of Activa Clinics in exchange for Common Stock of Novo Integrated Sciences Inc.

 

This binding letter of intent (“LOI” or “Letter”) is to generally record terms and conditions of the proposed agreement whereby Novo Integrated Sciences Inc., a Nevada corporation (“NVOS”) and Novo Healthnet Limited, a wholly owned Canadian subsidiary of NVOS (“NHL”) , will acquire all of the issued and outstanding shares of Activa Clinics, a limited company incorporated under the laws of Ontario (“AC”) , in exchange for common shares of Novo Integrated Sciences, Inc. (the “ Transaction ”). This Letter represents only our good-faith intention to negotiate and enter into a definitive agreement in a form acceptable to NVOS, NHL and AC.

 

This Letter is a binding agreement between us. Notwithstanding the foregoing, the parties acknowledge and confirm it is their intention that this Letter will serve only as a preliminary interim agreement in relation to the matters described herein, which will apply until the Definitive Agreement (as defined below) is concluded.

 

Statements below as to what we, or you, will do, or agree to do, or the like, are so expressed for convenience only, and are understood in all instances (except for the items identified below in Section 11) to be subject to our mutual continued willingness to proceed with the Transaction.

 

The following paragraphs reflect our preliminary agreement with respect to the Transaction (as defined below):

 

1. Structure: The parties intend to enter into a share exchange or other similar business combination in which:

 

  (i) NVOS will issue, based on a valuation of AC purchase price of 35 million CAD, the equivalent in NVOS common shares based on the 30-trading day average share price for the period ending on the date of execution of this LOI to include the application of a market acceptable discount to the determined average, in exchange for all issued and outstanding shares held by the shareholders of AC. The shares issued to AC will be subject to a two-year lock up coinciding with the claw-back identified in Section 1(viii) of this Agreement. In the event the claw-back is waived prior to the two-year claw-back term, the lock-up will be removed and normal rule 144 restrictions will apply.
     
  (ii) For the sake of clarity; the current shareholder structure is referenced in our filings.

 

11120 NE 2 nd Street, Suite 200 Bellevue, WA 98004 USA

Phone: (206) 617-9797

www.novointegrated.com

 

     
Page | 2

 

  (iii) Upon completion of the Transaction, NHL will hold all the issued and outstanding shares of AC and AC shall be a wholly-owned subsidiary of NHL.
     
  (iv) AC will have the right to appoint a board member to the NVOS Board of Directors.
     
  (v) NVOS-NHL will have the right to appoint a board member to the AC Board of Directors.
     
  (vi) Performance bonuses related to proprietary SOP’s and other AC intellectual property will be identifiable in a definitive agreement.
     
  (vii) Each AC shareholders shall enter into an employment agreement for a period of no less than two years from the close of the transaction. The employment agreement will identify specific bonus structures related to subsidiary revenue performance as well as total corporate performance.
     
  (viii) AC has the right to exercise a ‘ claw-back’ within a two-year period commencing the date of the closing of this transaction. The claw-back will result in the mutual return of AC and NVOS shares to the respective parties should targets not be met by NVOS as identified in a definite agreement.

 

2. Due Diligence: The parties will work promptly to carry out all required due diligence in respect of the proposed Transaction including without limitation, the completion of standard business, legal and other inquiries and a review of applicable laws and regulations. The parties will afford each other, its employees, auditors, legal counsel, and other authorized representatives all reasonable opportunity and access during normal business hours to inspect and investigate the business and financial affairs of the other party.
   
3. Definitive Agreement. We mutually agree to proceed reasonably and in good faith toward the negotiation and execution of definitive documentation which shall contain the terms and conditions set out in the LOI and such other terms, conditions, indemnities, representations, warranties, covenants as are customary for transactions of this nature (the “Definitive Agreement”). The parties shall cooperate in structuring the Transaction in the most effective manner having regard to applicable tax, corporate, and securities laws. Upon the execution and delivery of the Definitive Agreement, it will supersede this Letter.
   
4. Regulatory Approvals and Contractual Consents: Each of the parties will use its commercially reasonable best efforts to obtain:

 

  (i) the necessary board approvals and shareholder approvals for the Transaction prior to the execution of the Definitive Agreement; and
     
  (ii) all necessary regulatory approvals (including approvals from any licensing authorities) and third-party consents and the necessary shareholder approvals prior to the closing of the Transaction and to cooperate in providing any submissions necessary to affect the Transaction.

 

5. Other Conditions. The Definitive Agreement shall include, but will not be limited to, the following:

 

  (i) the parties having completed a due diligence investigation the results of which are satisfactory to the parties their sole discretion;

 

     
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  (ii) at the time of the Transaction, AC will have no liabilities, contingent or otherwise, unless such liabilities have been specifically agreed to by NHL in writing;
     
  (iii) AC will not be debarred or lose its status with any third-party or government payor/services for the provision of medical services because of the Transaction;
     
  (iv) AC will have received all regulatory approvals required to complete the Transaction;
     
  (v) the parties agree to cooperate to prepare for filing the necessary current reports with the Securities and Exchange Commission with respect to the Transaction, including a Form 8-K/A, within the regulatory required time limits following the closing of the Transaction;
     
  (vi) the representations and warranties of contained herein shall be true and correct in all material respects as of the closing of the Transaction; and
     
  (vii) no material adverse change shall have occurred in the business, assets, liabilities, results, financial condition, affairs or prospects of AC from the date hereof to the closing of the Transaction.

 

6. Adjustment of Officers and Directors: At the closing of the Transaction, both parties will appoint directors to each other’s boards as described above.
   
7. Confidentiality: Each party agrees that, subject to compliance with applicable laws, it will keep confidential, and not release to any other person, this proposal, the contents of this Binding Letter of Intent and any of the proprietary business, technical or other information obtained by it during its due diligence inquiries and any related negotiations. Each party’s obligations in this respect shall survive the closing of the Transaction or any termination of the proposed Transaction between the parties or the termination of this LOI.
   
8. Disclosure: No public announcement concerning the Transaction contemplated herein or the status of the discussions between the parties hereto shall be made by either party unless and until the same has been approved by both parties hereto, unless such disclosure is required by any government laws, rules or regulations, by any government regulatory authorities or any stock exchange having jurisdiction over either party provided prior written notice is provided to the other party respecting such disclosure or public announcement and such party has been provided reasonable opportunity to review and comment on the proposed disclosure.
   
9. Costs: The parties will each be solely responsible for and bear their own respective expenses, including, without limitation, expenses of legal counsel, accountants, and other advisors, incurred at any time in connection with pursuing or consummating the Transaction. Each party’s obligations in this respect shall survive the closing of the Transaction or any termination of the proposed Transaction between the parties. It is expressly understood that both parties’ counsel will be together, responsible for preparing the documents required to complete the Transaction including the filing statement required to be filed with the Securities and Exchange Commission in connection with the Transaction.

 

     
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10. Exclusivity: The parties hereby agree that until the Termination Date (as defined below) and the date the parities enter into the Definitive Agreement, that neither party, their respective directors, officers, agents and representatives will not, directly or indirectly:

 

  (i) solicit, initiate or encourage the initiation of any expression of interest, inquiries or proposals regarding, constituting or that may reasonably be expected to lead to any merger, amalgamation, take-over bid, tender offer, arrangement, recapitalization, liquidations dissolution, share exchange, sale of material assets involving the parties or a proposal or offer to do so (the “Acquisition Proposal”) (including without limitation, any grant of an option or other right to take any such action);
     
  (ii) participate in any discussions or negotiations regarding an Acquisition Proposal;
     
  (iii) accept or enter into, or propose publicly to accept or enter into, any agreement, letter of intent, memorandum of understanding or any arrangement in respect of an Acquisition Proposal; and
     
  (iv) otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any person to do any of the foregoing.

 

11. Binding Effect: The consummation of the Transaction is subject to the entry of the Definitive Agreement. The Definitive Agreement is subject to the board approval of each of the parties.
   
12. Termination: If the Definitive Agreement is not negotiated and executed by both parties on or before December 31st, 2018 or such other date as agreed to by the parties, (the “Termination Date”) the terms of this LOI will be of no further force or effect except for Section 7 (Confidentiality), Section 9 (Costs) and Section 13 (Governing Laws). Section 7 (Confidentiality) and Section 13 (Governing Laws) will remain in effect for a period of one (1) year following the date this LOI is terminated.
   
13. Governing Laws: This Letter of Intent will be governed by and be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The parties agree that any dispute arising out of or relating to this LOI shall be subject to the exclusive jurisdiction of the courts in and for the Province of Ontario and each party agrees to submit to the personal and exclusive jurisdiction and venue of such courts. Governing law and jurisdiction regarding the Definitive Agreement shall be negotiated between and agreed to by the parties and set out in the Definitive Agreement.

 

If the terms outlined above are acceptable to you please sign and date this Letter in the space provided below and return a signed copy to the undersigned.

 

  Very truly yours,
   
  By: /s/ Robert Mattacchione
    Robert Mattacchione
    CEO, Novo Integrated Sciences, Inc.
    Chairman, Novo Healthnet Limited
     
  ACKNOWLEDGED AND AGREED to on 11/23/18
     
  By: /s/ Dr. Neil Dhalla
    Dr. Neil Dhalla
    CEO, Activa Clinics

 

     
 

 

 

Novo Integrated Sciences, Inc. Announces Binding Letter of Intent with Activa Clinics

 

BELLEVUE, Wash., November 29, 2018 (GLOBE NEWSWIRE) — via OTC PR WIRE — Novo Integrated Sciences, Inc. (OTCQB:NVOS) (“Novo Integrated Sciences”, or the “Company”) and Novo Healthnet Limited (“NHL”), a wholly owned subsidiary of the Company, announced today that on November 23, 2018, the Company and NHL executed a binding letter of intent (“LOI”) with Activa Clinics (“Activa”), a private Canadian company involved in the delivery of multi-disciplinary primary healthcare services and programs through its seven strategically located Southern Ontario clinics.

 

The LOI contemplates that the Company and NHL will enter into a share exchange agreement with Activa and the Activa shareholders, pursuant to which NHL will acquire 100% of Activa’s total share capital, non-dilutive, and in exchange the Activa shareholders will be issued CAD $35,000,000 worth of restricted shares of the Company’s common stock. The total number of the Company’s common shares expected to be issued for this proposed transaction will be determined by calculating the 30-trading day average, based on the period ended November 23, 2018, with the application of a market acceptable discount to the determined average. If a definitive agreement is not executed by all parties, on or before December 31, 2018 or such other date as agreed to by the parties, the LOI will terminate.

 

Mr. Robert Mattacchione, Novo Integrated Sciences’ CEO and Board Chairman stated, “The addition of Activa’s seven operating clinics to NHL’s multi-disciplinary primary healthcare clinic footprint in Canada is an exciting step in our expansion strategy. Eliminating Activa as marketplace competition, combined with adding Activa’s substantial market access, operational procedures expertise and proprietary treatment solutions, will greatly enhance NHL’s superior level of service and programs offered to our patients. Combining the exemplary talent of both the NHL and the Activa management teams will allow for greater organic growth and improved efficiencies company wide.”

 

Dr. Neil Dhalla, Activa Clinic’s CEO and President, stated, “Activa has built a solid reputation in the rehabilitation field and has grown to become one of Canada’s market leaders in providing rehabilitation solutions for its patients. We are excited to join the NHL family and expand the extended offering of services across the NHL group of clinics. Working together, we expect to become Canada’s most dynamic and innovative rehabilitation services provider while continuing to offer Canadians unparalleled quality of care.”

 

About Novo Integrated Sciences, Inc. and Novo Healthnet Limited

 

Through Novo Healthnet Limited, a wholly owned subsidiary of Novo Integrated Sciences, we deliver multi-disciplinary primary healthcare to over 400,000 patients annually through our 16 corporate-owned clinics and a contracted network of 88 affiliate clinics and 234 eldercare centric homes located across Canada. Our team of practitioners and staff are trained for assessment, diagnosis, treatment, pain management, rehabilitation and primary prevention. Our specialized services and products include physiotherapy, chiropractic care, occupational therapy, eldercare, laser therapeutics, massage therapy, acupuncture, chiropody, neurological functions, kinesiology, concussion management and baseline testing, women’s pelvic health, sports medicine therapy, assistive devices, and private personal training.

 

For more information concerning Novo Integrated Sciences, please visit www.novointegrated.com . For more information on NHL, please visit www.novohealthnet.com.

 

     
 

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in Novo Integrated Sciences’ filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond Novo Integrated Sciences’ control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects Novo Integrated Sciences’ current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Novo Integrated Sciences assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

 

The contents of any website referenced in this press release are not incorporated by reference herein.

 

Chris David

President

Novo Integrated Sciences, Inc.

cdavid@novointegrated.com

(206) 617-9797