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
September 1, 2023
(Date of earliest event reported)
NovAccess Global Inc.
(Exact name of registrant as specified in its charter)
| Colorado | | 000-29621 | | 84-1384159 |
| (State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| 8584 E. Washington Street, No. 127, Chagrin Falls, Ohio 44023 |
| (Address of principal executive offices) (Zip Code) |
(213) 642-9268
(Registrant’s telephone number, including area code)
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:
☐ 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 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None | N/A | N/A |
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 8.01 Other Events.
On September 1, 2023, NovAccess Global Inc. entered into a term sheet (the “term sheet”) with Sumner Investment Group Inc. (“Sumner”) summarizing the terms of a proposed transaction with Sumner in which Sumner would acquire 33.0 million newly issued shares of our unregistered common stock for $0.11 a share, or $3.63 million in total, and loan us $7.05 million (collectively, the “transaction”). Sumner is a global company that has created value across a diverse range of assets focusing on the procurement of products and services for governments and corporations around the world with an emphasis on healthcare, defense and logistics.
Sumner would acquire the shares in two tranches, with the first $200,200 upon signing a more complete definitive agreement and the remaining $3.43 million at a closing to be held by December 31, 2023. The loans would also be made in two tranches, with $3.05 million on December 31, 2023 and the remaining $4.0 million on March 15, 2024. The loans would have a five-year term, bear interest at 10% a year, and be convertible into shares of NovAccess common stock at $0.11 a share. In connection with the transaction, Sumner would have the right to appoint up to three new members to our board of directors. We are working with Sumner to prepare definitive agreements reflecting the terms of the transaction in additional detail and expect to execute the agreements by September 30, 2023.
The transaction with Sumner is subject to numerous contingencies, including Sumner raising the capital necessary to fund the transaction, the completion of definitive agreements reflecting the transaction, and the conversion of our outstanding shares of preferred stock to common. As a result, we cannot guaranty that the transaction will be completed on the terms summarized in the term sheet, when we expect the closing to occur, or at all.
The term sheet is filed as an exhibit to this Current Report on Form 8-K. The description above is qualified in its entirety by reference to the full text of the term sheet.
Item 9.01 Financial Statements and Exhibits.
Exhibit 20.1 NovAccess Global Common Stock Offering Term Sheet dated September 1, 2023 between NovAccess Global Inc. and Sumner Investment Group Inc.
Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL)
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 thereunto duly authorized.
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NovAccess Global Inc.
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Dated: September 11, 2023
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/s/ Dwain K. Irvin
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By Dwain K. Irvin, Chief Executive Officer
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NONE
false
0001039466
0001039466
2023-09-01
2023-09-01
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The Company
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NovAccess Global Inc. (OTCQB: XSNX)
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Investors
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Investor group led by the Sumner Investment Group (“SIG”)
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Common Shares
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33,000,000 newly issued shares of the Company’s unregistered common stock, no par value (the “Shares”), for $0.11 a Share, or $3,630,000 (“Subscription Amount”) in total.
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Convertible Notes
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$7.05 million in convertible promissory notes of the Company (the “Notes”) with a five-year term and bearing interest at 10% per annum to be disbursed in two tranches:
Tranche 1 of $3.05 million on December 31, 2023; and Tranche 2 of $4.0 million on March 15, 2024.
Six months after issuance, the Notes may be converted by the holder into common shares at a conversion price of $0.11 a share, subject to typical adjustments for stock splits, combinations, and similar transactions.
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Director Appointments
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The Investors have the right to appoint up to three additional directors to the Company’s board of directors.
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Closing
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Initial closing on the Shares as soon as practicable, but no later than December 31, 2023.
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Purchase Agreement
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The purchase of the Shares and Notes would be made pursuant to a securities purchase agreement drafted by counsel to NovAccess containing typical representations and warranties in connection with a private placement of common stock (the “SPA”). The SPA will provide Investors with piggy-back registration rights.
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Expenses
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Each party agrees to pay its own fees and expenses arising in connection with the transactions contemplated by this Term Sheet.
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Expiration
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Unless agreed to by both parties, this Term Sheet will expire on September 30, 2023.
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Disclosure
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The Company may publicly disclose this Term Sheet in a Form 8-K or other filing with the Securities and Exchange Commission.
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Conditions Precedent
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The completion of the transactions outlined in this Term Sheet (the “Transactions”) are contingent upon:
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1. The Transactions does not trigger any takeover requirements;
2. The Shares remain listed on the OTC Markets or are uplisted to the NASDAQ Market or other national securities exchange;
3. All of the outstanding shares of the Company’s Series B Preferred stock are converted into unregistered shares of common stock pursuant to the terms of the preferred shares (10,000 shares of common stock per preferred share); and
4. Completion of a definitive SPA and other documents required to effectuate the Transactions by September 30, 2023.
5. Upon the execution of such Definitive Agreements, the Investors will make an initial investment of US$200,200 representing 1,820,000 shares subject to its sole discretion and depending on SIG’s cashflow reserves.
6. The Investors have the express decision-making power in relation to the use of funds including but not limited to the funding of the provisions of healthcare services for the Philippines Logistics Corp project.
7. For avoidance of doubt, the completion of the subscription of Common Shares and the Convertible Notes is subjected to the completion of SIG’s own fund-raising exercise which is expected to complete by December 31, 2023.
The parties agree to cooperate in good faith and use their reasonable efforts to finalize the Transaction documents by September 30, 2023 and complete the closing on the Shares on or before December 31, 2023.
Provided, however, that neither party will be liable or responsible to the other party, nor be deemed to have defaulted under or breached this Term Sheet, for any failure or delay in fulfilling or performing any term of this Term Sheet, when and only to the extent that such failure or delay is caused by or results from acts beyond the control of the impacted party, including, without limitation, the following force majeure events: (a) acts of God; (b) flood, fire, earthquake, epidemic (but not the ongoing COVID-19 epidemic) or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or actions; (e) embargoes or blockades in effect on or after the date of this Term Sheet; (f) national or regional emergency; and (g) other similar events beyond the control of the impacted party. The impacted party will use diligent efforts to end the failure or delay and ensure the effects of such force majeure event are minimized. The impacted party will resume the performance of its obligations as soon as reasonably practicable after the removal of the cause.
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The parties have executed this Term Sheet as of September 1, 2023.