Item
1.01. Entry into a Material Definitive Agreement.
On
December 18, 2018, Novo Integrated Sciences, Inc. (the “Company”) and Novo Healthnet Limited, a wholly owned Canadian
subsidiary of the Company (“NHL”), entered into a Share Exchange Agreement (the “SEA”) with CannaPiece
Group Inc. (“CannaPiece”).
Pursuant
to the terms of the SEA, CannaPiece agreed that it would issue to NHL shares representing 25% of CannaPiece’s outstanding
shares, which shares are valued at CAD $25,000,000 ($18,672,500) in the aggregate, based on an agreed pre-revenue, post-licensing
valuation of CannaPiece in the amount of CAD $100,000,000 ($74,690,000). The CannaPiece shares will be shares of a new class (the
“New Class”) to be created by CannaPiece following execution of the SEA. The New Class will be convertible into common
shares on a basis that ensures that the aggregate number of common shares in the capital of CannaPiece into which the CannaPiece
shares are convertible will be equal to 25% of all issued and outstanding CannaPiece stock. The New Class will otherwise have
rights equivalent to the common shares of CannaPiece.
In
exchange for the issuance of the CannaPiece shares to NHL, the Company agreed to issue to CannaPiece CAD $25,000,000 ($18,672,500)
worth of Company restricted common stock. The number of shares of Company common stock to be issued will be based on a per share
price of $0.92, as determined by establishing the 30-trading day closing average ($1.15 per share) on October 10, 2018, the execution
date of the binding letter of intent between the parties, with a 20% discount to the determined average.
In
addition, CannaPiece agreed to execute one or more subscription agreements for Company common stock with an aggregate value of
CAD $5,000,000 (approximately $3,734,500) no later than January 7, 2019. CannaPiece’s obligation is independent of the closing
of the exchange. The parties agreed that the per share price for the subscription agreements will be $0.92 per share, determined
by establishing the 30-trading day closing average ($1.15 per share) on October 10, 2018, the execution date of the binding letter
of intent among the parties, with a 20% discount to the determined average. Of this aggregate subscription amount, $501,929 was
paid prior to execution of the SEA. In addition, on December 18, 2018, the Company accepted a $1,867,250 subscription agreement
from CannaPiece for 2,029,620 shares of the Company’s restricted common stock, resulting in an effective price per share
of $0.92.
The
Company and NHL together have the right to appoint one board member, with voting rights, to CannaPiece’s board of directors,
and CannaPiece has the right to appoint one board member, with voting rights, to the Company’s Board of Directors. As of
the closing, the Company and CannaPiece will take such actions as required to expand the size of each board of directors such
that the Company and CannaPiece can each appoint one member to the other party’s board of directors.
The
obligation of the parties to close the exchange is subject to customary closing conditions. The parties also agreed that the Company’s
shares issued to CannaPiece and the CannaPiece shares issued to NHL pursuant to the terms of the SEA will be held in escrow until
the earlier of the termination date (June 1, 2019, as the same may be amended by the parties) or the date on which CannaPiece
receives approved Licensed Producer Status under the Cannabis Act (Canada) and its associated regulations.
The
SEA may be terminated in certain circumstances including, among others, by the mutual written consent of the Company, NHL and
CannaPiece; and by the Company and NHL, or by CannaPiece, if certain closing conditions have not been met by June 1, 2019.
The
foregoing description of the SEA does not purport to be complete and is qualified in its entirety by reference to the full text
of the SEA, a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K and is incorporated herein by reference.