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): March 9, 2020
Novo
Integrated Sciences, Inc.
(Exact
name of registrant as specified in its charter)
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Nevada
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333-109118
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59-3691650
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
Incorporation)
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File
Number)
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Identification
Number)
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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.)
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CF$ 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class
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Trading
Symbol(s)
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Name
of Each Exchange on which Registered
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N/A
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N/A
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N/A
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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
February 26, 2019, Novo Integrated Sciences, Inc. (the “Company”) and Novo Healthnet Limited (“NHL”) entered
into a Software License Agreement (the “Cloud DX License”) with Cloud DX Inc. (“Cloud DX”), pursuant to
which Cloud DX agreed to sell, and NHL agreed to purchase, a fully paid up, perpetual license, with 5-year conditional exclusivity,
for the Cloud DX Bundled Pulsewave PAD-1A USB Blood Pressure Device, up-to-date product releases and Licensed Software Products
(the “Licensed Software”). Pursuant to the terms of the Cloud DX License, Cloud DX also agreed to sell, and NHL agreed
to purchase, 4,000 fully functional Pulsewave PAD 1A USB blood pressure monitor devices bundled with the perpetual license discussed
above (the “Bundled Devices”).
The
Cloud DX License granted to NHL and its majority-owned subsidiaries, holding companies, divisions and affiliates, other than physiotherapy
clinics owned and operated by Closing The Gap Healthcare Inc., the right to use and sub-license the Licensed Software and re-sell
the Bundled Devices pursuant to the terms of the Cloud DX License in the physical therapy clinic marketplace in North America
in exchange for the purchase price as set forth below:
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●
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Upon
the closing, the Company issued 458,349 restricted shares of its common stock having a value (as calculated as set forth in
the Cloud DX License) of CAD$1,000,000 (approximately $758,567 as of February 26, 2019), and
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●
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Cloud
DX agreed to invoice CAD$250,000 (approximately $189,642 as of February 26, 2019) to NHL based on the following deliverables,
and paid on the following schedule:
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Cloud
DX deliverable
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Novo
payment (terms: Net 15)
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Heart
Friendly Program launches in Clinic #1
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CAD$50,000
(approximately $37,929 as of February 26, 2019)
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Novo-branded
Android app delivered as APK file
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CAD$35,000
(approximately $26,550 as of February 26, 2019)
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Novo-branded
Clinical portal website delivered
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CAD$35,000
(approximately $26,550 as of February 26, 2019)
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Pulsewave
PAD-1A devices – 1st delivery
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CAD$20,000
(approximately $15,171 as of February 26, 2019)
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Marketing
services / materials delivered
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CAD$25,000
(approximately $18,964 as of February 26, 2019)
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Cloud
DX hires dedicated Novo support FTE
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CAD$85,000
(approximately $64,478 as of February 26, 2019)
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On
March 9, 2020, the Company and NHL entered into that certain First Amendment to Cloud DX Perpetual Software License Agreement
(the “Cloud DX Amendment”) with Cloud DX, effective March 6, 2020, pursuant to which the parties thereto agreed that
the CAD$250,000 (approximately $186,231 as of March 6, 2020) that was to be paid by NHL based on the above deliverables would
be paid as a one-time payment of 465,578 restricted shares of Company common stock. In addition, pursuant to the terms of the
Cloud DX Amendment, the parties agreed to settle a $200,000 fee owed by NHL to Cloud DX through payment of 500,000 restricted
shares of Company common stock.
Except
as set forth in the Cloud DX Amendment, the remaining terms and conditions of the Cloud DX License remain in full force and effect.
The
foregoing description of the Cloud DX Amendment does not purport to be complete and is qualified in its entirety by reference
to the full text of the Cloud DX Amendment, 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
4.01. Changes in Registrant’s Certifying Accountant.
(a)
Dismissal of Independent Registered Accounting Firm
On
March 10, 2020, NVS Professional Corporation (formerly NVS Chartered Accountants Professional Corporation) (“NVS”)
resigned as the Company’s independent registered accounting firm because NVS has requested the Public Company Accounting
Oversight Board (“PCAOB”) to withdraw NVS’ registration with the PCAOB.
NVS’
reports on the Company’s financial statements for the fiscal years ended August 31, 2019 and 2018 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
Furthermore, during the Company’s two most recent fiscal years and through March 10, 2020, there have been no disagreements
with NVS on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to NVS’ satisfaction, would have caused NVS to make reference to the subject matter of the
disagreement in connection with its reports on the Company’s financial statements for such periods.
Except
as set forth below, for the fiscal years ended August 31, 2019 and 2018 and through March 10, 2020, there were no “reportable
events” as that term is described in Item 304(a)(1)(v) of Regulation S-K. In connection with its audit of the Company’s
financial statements for the fiscal years ended August 31, 2019 and 2018, NVS reported the existence of a material weakness in
the Company’s internal control over financial reporting to the Company’s Board of Directors. The ineffectiveness of
the Company’s internal control over financial reporting was due to the following material weakness which the Company identified
in its internal control over financial reporting: a lack of formalized controls and procedures as well as a lack of segregation
of duties, as well as the absence of an independent audit committee chair, resulting from the Company’s limited resources.
This material weakness has not been corrected.
The
Company provided NVS with a copy of the disclosure contained herein, prior to its filing with the Securities and Exchange Commission
(the “Commission”), and requested that NVS furnish the Company a letter addressed to the Commission stating whether
or not it agreed with the statements herein and, if not, stating the respects in which it does not agree. NVS’ letter to
the Commission is attached hereto as Exhibit 16.1.
(b)
Engagement of New Independent Registered Accounting Firm
On
March 10, 2020, the Company’s Board of Directors appointed SRCO Professional Corporation (“SRCO”) as the Company’s
new independent registered accounting firm. During the Company’s two most recent fiscal years and through March 10, 2020,
neither the Company nor anyone acting on the Company’s behalf consulted SRCO with respect to any of the matters or reportable
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
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.
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Novo
Integrated Sciences, Inc.
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Dated:
March 12, 2020
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By:
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/s/
Robert Mattacchione
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Robert
Mattacchione
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Chief
Executive Officer
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Exhibit
10.1
FIRST
AMENDMENT TO CLOUD DX PERPETUAL SOFTWARE LICENSE AGREEMENT
THIS
FIRST AMENDMENT TO THE CLOUD DX PERPETUAL SOFTWARE LICENSE AGREEMENT (this “First Amendment”) is entered into as of
March 6, 2020, by and between CLOUD DX INC. (“Cloud Dx”), a corporation incorporated under the laws of the State of
Delaware (“Licensor”); NOVO INTEGRATED SCIENCES, INC., a corporation incorporated under the laws of the State of Nevada
(the “Parent”) and NOVO HEALTHNET LIMITED, a wholly owned Canadian subsidiary of the Parent (the “Licensee”)
(collectively “the parties”). Capitalized terms used but not otherwise defined in this First Amendment shall have
the respective meanings ascribed to them in the Agreement (as defined below), which will remain in full force and effect as amended
hereby.
WITNESSETH:
WHEREAS,
the parties entered into that certain Cloud Dx Perpetual Software License Agreement, dated as of February 26, 2019 (the “Agreement”);
WHEREAS,
the Parties hereto desire to amend certain terms and provisions of the Agreement, as set forth herein.
WHEREAS,
the total Licensor Price of the perpetual license including an initial bundled Pulsewave device stocking order as described in
Schedule “A” (d) and the Additional Services and Privileges as described in Schedule “D”, of the Agreement,
was CAD$1,250,000.00 (the “Licensor Fee”);
WHEREAS,
upon closing of the Agreement, CAD$1,000,000 was paid to Cloud Dx, by the Parent, in the form of 458,349 Parent restricted common
shares, par value $0.001, (the “Payment Shares”);
WHEREAS,
the parties desire to define updated terms for payment of the additional CAD$250,000 portion of the Licensor Fee which converts
to USD$186,231 (the “Additional Payment”).
WHEREAS,
the parties desire to provide the payment terms for a USD$200,000.00 one-time fee related to the Licensor granting the Licensee
the herein defined amendment payment terms (the “One-Time Fee”) to be paid in Parent restricted common shares, par
value $0.001, at a prescribed value of USD$0.40.
NOW,
THEREFORE, in consideration of the mutual agreements and covenants set forth herein and for other valuable consideration, the
sufficiency of which is hereby acknowledged, the Parties hereto agree, subject to the terms and conditions hereinafter set forth,
as follows:
1.
Amendments to the Agreement.
1.1
Amended Payment Terms.
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i.
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Specific
to settling the Additional Payment amount of CAD$250,000 (USD$186,231) owed by the Licensee to the Licensor, the Licensor
agrees to accept a one-time payment of 465,578 Parent restricted common shares, par value $0.001, as determined by dividing
the USD$186,231 Additional Payment amount by USD$0.40.
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ii.
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Specific
to settling the One-Time Fee amount of USD$200,000 owed by the Licensee to the Licensor, the Licensor agrees to accept a one-time
payment of 500,000 Parent restricted common shares, par value $0.001, as determined by dividing the USD$200,000 One-Time Fee
amount by USD$0.40.
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[Signature
page follows]
IN
WITNESS WHEREOF, the Parties have caused this First Amendment to be executed and delivered by their duly authorized representatives,
as of the date written above.
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Licensor
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CLOUD
DX, INC.
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By:
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/s/
Robert Kaul
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Name:
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Robert
Kaul
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Title:
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CEO
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Licensee
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NOVO
HEALTHNET LIMITED
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By:
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/s/
Robert Mattacchione
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Name:
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Robert
Mattacchione
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Title:
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Chairman
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Parent
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NOVO
INTEGRATED SCIENCES, INC.
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By:
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/s/
Robert Mattacchione
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Name:
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Robert
Mattacchione
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Title:
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CEO
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Exhibit
16.1
March
12, 2020
U.S.
Securities and Exchange Commission
Office
of the Chief Accountant
100F
Street Northeast
Washington,
DC 20549-2000
RE:
NOVO INTEGRATED SCIENCES, INC.
Dear
Sir or Madam:
We
have read Item 4.01 of Form 8-K dated March 12, 2020 of NOVO INTEGRATED SCIENCES, INC (“the Registrant”) and are in
agreement with the statements contained therein as it pertains to our firm.
We
have no basis to agree or disagree with any other statements of the Registrant contained in Item 4.01.
Yours
truly,
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/s/ NVS Professional Corporation
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NVS
Professional Corporation
Chartered
Professional Accountants