Item
1.01. Entry into a Material Definitive Agreement.
On
June 20, 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% unsecured promissory note (the “Note”) with a maturity date of June 20, 2024 (the “Maturity Date”),
in the principal sum of $445,000 (the “Principal Sum”). In addition, the Company issued a common stock purchase warrant for
the purchase of up to 776,614 shares of the Company’s common stock (the “Warrant”) to the Holder pursuant to the SPA.
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 $44,500. Accordingly, on the Closing
Date (as defined in the SPA), the Holder paid the purchase price of $400,500 in exchange for the Note and Warrant. The Holder may convert
the Note into the Company’s common stock (the “Common Stock”), at any time at a conversion price equal to $0.175 per
share, subject to adjustment as provided in the Note (including but not limited to certain price protection provisions in case of future
dilutive offerings, subject to certain customary exempt transactions) as well as certain beneficial ownership limitations.
Pursuant
to the terms of the Note, the Company agreed to pay accrued interest monthly as well as the Principal Sum as follows: (i) $44,500 on
December 20, 2023, (ii) 44,500 on January 20, 2024, (iii) $44,500 on February 20, 2024, (iv) $77,661.43 on March 20, 2024, (v) $77,661.43
on April 20, 2024, (vi) $77,661.43 on May 20, 2024, and (vii) 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
this Note at the lesser of (i) the then applicable conversion price under the Note or (ii) 85% of the lowest VWAP of our Common Stock
on any trading day during the five (5) trading days 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, Warrant, 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% (the “Default Amount”). 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
Warrant is exercisable for five years from June 20, 2023, at an exercise price of $0.25 per share (the “Exercise Price”),
subject to adjustment as provided in the Warrant. The Warrant also contains certain cashless exercise provisions as well as price protection
provisions providing for adjustment of the number of shares of Common Stock issuable upon exercise of the Warrants and the Exercise Price
in case of future dilutive offerings, subject to certain customary exempt transactions.
As
additional consideration for the purchase of the Note and pursuant to the terms of the SPA, the Company issued 741,666 restricted shares
of the Company’s Common Stock (the “Commitment Shares”) to the Holder at closing. 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 Commitment Shares as well as the shares of Common Stock underlying the Note and Warrant. In addition to the beneficial
ownership limitations provided in the Note and Warrant, the sum of the number of shares of Common Stock that may be issued under the
SPA (including the Commitment Shares), Note, and Warrant 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
foregoing descriptions of the Warrant, Note, and SPA do not purport to be complete and are qualified in its entirety by reference to
the full text of the Warrant, Note, and SPA, copies of which are filed herewith as Exhibits 4.1, 10.1, and 10.2, respectively, to this
Current Report on Form 8-K and are incorporated herein by reference.
