UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Date of earliest event reported)
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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:
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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).
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.
AJB Loan
On May 13, 2024, NovAccess Global Inc. (“we,” “NovAccess” or the “company”) entered into a securities purchase agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”) and issued a promissory note in the principal amount of $117,000 (the “note”) to AJB pursuant to the SPA. NovAccess used the loan proceeds to repay the June 20 and August 17, 2023 convertible promissory notes payable to 1800 Diagonal Lending LLC. We have now retired all of our debt with 1800 Lending.
The AJB note has an original issuance discount of 10% of the principal, bears interest at 12% a year, and is due on November 13, 2024. NovAccess must repay the note with the proceeds of an offering in connection with uplisting to a national securities exchange exceeding $5.0 million and may otherwise prepay the note at any time without penalty. Under the terms of the note, NovAccess may not sell a significant portion of its assets without the approval of AJB, may not issue additional debt that is not subordinate to AJB, must comply with the company’s reporting requirements under the Securities Exchange Act of 1934, and must maintain the listing of the company’s common stock on the OTC Market or other exchange, among other restrictions and requirements. NovAccess’ failure to make required payments under the note or to comply with any of these covenants, among other matters, would constitute an event of default. Upon an event of default under the SPA or note, the note will bear interest at 18%, AJB may immediately accelerate the note due date, AJB may convert the amount outstanding under the note into shares of NovAccess common stock at a discount to the market price of the stock, and AJB will be entitled to its costs of collection, among other penalties and remedies. In addition, depending on the nature of the default, all amounts outstanding under the note will be multiplied by two as a default penalty.
In connection with the loan, we issued two five-year prefunded stock purchase warrants to AJB to purchase a total of ten million shares of our common stock for $0.0001 a share (the “warrants). One warrant is to purchase seven million shares and one is for three million shares. If NovAccess repays AJB for all amounts owed to AJB by August 13, 2024, then the company may redeem the three million-share warrant for $1.00.
NovAccess provided customary representations and covenants to AJB in the SPA. NovAccess’ breach of any representation or failure to comply with the covenants would constitute an event of default. NovAccess also entered into a second amendment to the February 15, 2022 security agreement with AJB (as amended, the “security agreement”) pursuant to which NovAccess granted to AJB a security interest in all of the company’s assets, including the equity of StemVax, LLC, securing NovAccess’ obligations under the SPA and note. In addition, NovAccess entered into a registration rights agreement with AJB (the “registration agreement”) pursuant to which NovAccess agreed to file with the Securities and Exchange Commission a Form S-1 by August 11, 2024 to register for resale the shares issuable upon conversion of the note and exercise of the warrants.
The SPA, note, warrants, security agreement and registration agreement are filed as exhibits to this Current Report on Form 8-K. The descriptions above are qualified in their entirety by reference to the full text of these documents.
Acquisition of Fendix Shares
On May 17, 2024, we entered into a stock purchase agreement with Dawn Digital Limited, a company owned by David Sumner, and acquired an 18.6% ownership interest in Fendix Media Limited in exchange for 14,795,455 newly-issued unregistered shares of NovAccess common stock. Fendix is a healthcare marketing communications firm that is the United Kingdom’s leading digital engagement partner working with Britain’s National Health Service (NHS). Fendix provides digital communication between the NHS, its regional trusts, health boards, and NHS staff spread across Great Britain.
The Fendix stock purchase agreement 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 purchase agreement.
The Fendix transaction is a preliminary step in completing the previously disclosed investment by Mr. Sumner. On December 29, 2023, we entered into a securities purchase agreement with Sumner Global LLC, pursuant to which Sumner Global agreed to purchase 33.0 million shares of our stock for $0.11 a share, or $3.63 million in total, and to loan us $7.05 million. The transaction is subject to several contingencies, including Sumner Global completing its planned capital raise. As of the date of this report, the transaction has not been completed but based on assurances from Mr. Sumner is expected to close shortly. However, we cannot guarantee that the transaction will be completed when we expect, or whether the transaction will close at all.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure included under Item 1.01 above relating to the AJB note is incorporated by reference to this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure included under Item 1.01 above is incorporated by reference to this Item 3.02. The issuances of the note and the warrants to AJB were exempt from registration under Section 4(a)(2) of the Securities Act of 1933. The issuance of common stock to Dawn Digital Limited was exempt from registration under Section 4(a)(2) of the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits.
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: May 17, 2024 |
/s/ Dwain K. Irvin |
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By Dwain K. Irvin, Chief Executive Officer |